Personal Finance Loans Options: What’s Best for You?

Life isn’t perfect. There will be times when you find yourself in a bind financially, and there is no other option but to apply for a loan. Fortunately for you, there are a number of personal finance loan options that you can look into. The question is: what’s best for you?

Personal loans come in many forms. There’s debt consolidation, fixed-rate, variable-rate, and unsecured. If you go back to the question of which is best for you, the answer is: it depends. You see, all of these types have their own advantages and disadvantages. So basically, the best option will be determined by your current circumstance. Let’s delve into these even further.

Most commonly, people apply for personal loans that are unsecured but with fixed payments, although others prefer secured and other types of loans. But why is that so? It works best for them, again, depending on each circumstance and other factors, which include their credit score, as well as the time set to repay the said loan. Unfortunately, those with a poor credit score don’t have many options when it comes to interest rates and loan terms. 

To give you an idea of what makes each loan type different (or similar) to each other, let’s get deeper into each one.

Different Personal Loan Types Options

Secured Personal Loan

A secured personal loan is typically backed by any form of collateral, which makes it less risky for creditors.  In case there’s a default on your loan, your lender can seize this collateral, such as in the case of car loans and mortgages. Under these circumstances, you need to secure the title of your car and house, respectively.  People borrow against their assets, personal savings, home, or car from online lenders and banks, as well as credit unions.

Unsecured Personal Loan

This is the riskier type for creditors because you don’t need to present any form of collateral with an unsecured loan, like your car or home. What’s the catch though? Since there are no collaterals required in this loan, lenders charge rather higher percentage rates annually. Your credit score plays a huge role in getting approved of an unsecured loan. The terms of payment range from one to seven years, with about a 5-36% rate.

Variable-Rate Loan

Banks set a base interest rate on a variable-rate loan. This means the rate, the monthly payment, and total interest cost could fluctuate should there be a shift on the benchmark rate. One month it could be higher, and the next month it could be lower, depending on the variable. One benefit of a variable-rate loan is it carries a rather lower APR compared to a fixed-rate loan. Also, there is a cap limiting the highest rate given for a specific period and through the life of your loan. This might work for those who prefer loans with shorter repayment terms. Yes, the rates may actually rise, but it will be rather unlikely to surge within a short period.

Fixed-Rate Loan

A typical personal loan incurs a monthly fixed rate, hence the name. Here, your installments or monthly payment remains the same as long as you have this loan unpaid. This works for individuals who prefer paying consistently at a fixed rate on a monthly basis. Also, you don’t have to worry about increasing rates associated with a long-term loan. You could say that having a fixed monthly rate makes budgeting easier, and you will be at ease for unchanging payments.

Co-Sign Loan

If you have no credit history – or you have a very thin one – and you don’t qualify for any loan under your own name, another person of good credit standing may co-sign a loan with and for you. This means another person will assume the responsibility of repaying the loan, should you fail to do so.  Lenders somehow get the assurance and guarantee of repayment from a co-signer.

The good thing about a co-signed loan is that you are more likely to get favorable terms and lower rates with a co-signer of strong credit. The downfall is that it might not be easy for everyone to find someone who is willing to assume this responsibility.

Debt Consolidation Loan

If you have multiple debts, there is a loan that will roll these into one new loan called debt consolidation. You should be able to save on interest rates since this loan carries a lower APR compared to your current debts’ rate. Additionally, debt consolidation will simplify payment on your debt through a fixed payment every month since several debts are combined into one.

Personal Line of Credit

If you have an emergency or ongoing expenditures, borrowing from your personal line of credit works best.  This type of loan is more like using your credit card instead of getting a personal loan. You can access your credit line for borrowing cash every time you need it, instead of a one-time lump sum. Your interest payment is solely based on the amount you borrowed.

Pawnshop Loan

People prefer secured loans if possible since you can use your assets to borrow some money. Now, it doesn’t need to be your car or home. Electronics and jewelry are common items you can pawn for a period of time in exchange for money. APR here can reach as high as 200%, not to mention the rates are pretty high. However, it’s not as high compared to a payday loan. On the plus side, your credit score isn’t affected at all, and no debt collector is ever going to hound you. The downside is that you will lose your possession if you fail to repay your loan since the pawnshop has the right to sell unclaimed pawned assets.

Credit Card Cash Advance

This option is available but seldom used and least preferred due to the high-interest rates. You can borrow cash for a short period using your credit card but with an additional cash advance charge. This can be about $5-$10 or as high as 5% of the principal, which is somewhat higher if you use your credit card for purchases.

Payday Loan

When you need less than a few hundred dollars, think about a short-term loan option called the payday loan. This is a type of unsecured loan, and as such, it comes with a high-interest rate and is very risky. As the name suggests, you borrow money with the intent to pay on your next payday and not on installments. The problem with this loan is that you can easily get entangled with a web of additional loans. Since it’s easy to get one, you can easily add more on top of the loan until the charges on your interest rate mount up. Be careful, as you might end up paying higher APRs.

How are you going to improve your creditworthiness? Try improving your own credit score. In doing so, the following factors must be considered.

3 C’s of a Loan or Credit: How Do They Affect Your Personal Loan?

It’s as equally important to know if you are qualified for a loan or credit as much as knowing the available loans you can apply for at any time. To be creditworthy in the eyes of creditors, you must know that they look into the 3 C’s of a potential borrower. Of course, one’s credit score plays a crucial role in affecting one’s ability to pay a loan. But the most important factor you must understand is that your credit score is affected by previous or existing loans, your outstanding debt, if any, as well as your recent salary.

Since credit scores are dynamic, you can already assume that your attitude towards accrued debts and managing your bills will be largely affected. It may play to your advantage or disadvantage. In other words, it could have a positive or negative impact on your creditworthiness, depending on your 3 C’s of loan or credit.

So what are these 3?

Character

Believe it or not, a potential lender may judge your character based on your credit score. It’s nothing personal, but creditors need to assess your honesty, as well as your reliability in repaying your debt, among other considerations. These may include, but not limited, to the following:

  • History of previous credit
  • Paying bills as scheduled or on time
  • Length of residency at your current address
  • Length of employment at current workplace

Capital

Do you have assets of value, such as personal property, real estate, savings, or investments? Lenders will definitely look into these things to ensure your debt will be repaid should your main source of income become unavailable due to unavoidable circumstances.

Capacity

Your capacity to pay any debt is crucial for lenders. Your current employment and income are looked into to gauge whether these will be sufficient in providing future loan payments. How will lenders determine all of these? Several factors play a role, which may include the following:

  • Your monthly salary
  • Your current loans
  • Your current living expenditures
  • Your existing debts
  • Your number of dependents

Finding the Best Personal Finance Loans

There is nothing wrong or to be ashamed of with borrowing money. The reality is that almost everyone will find themselves needing money for many reasons. It could be personal, medical, emergency, investment, and others. The options are there for you to choose from. You just need to know which of the loan types is best for you. Ask yourself these questions:

  • What is your circumstance?
  • What do you need the loan for?
  • What are the interest rates?
  • How much are you planning to borrow?
  • What is the loan term?
  • Will your income be sufficient to repay the loan?

Generally, your decision is guided by these factors. However, understanding why these factors are important is crucial. Keep in mind that all of these loans differ from each other despite the similarities.

Knowing Your Purpose

Do you need to borrow money? Why? Is it an emergency? Do you have a continuing monthly bill you need to pay off? Do you need to invest in a business? Do you plan on a major renovation or home improvement plan? Perhaps you plan on moving to a new place, and the moving expenses exceeded your allotted budget? Remember that loans are an additional monetary obligation on your part. Don’t put yourself in a binding position by securing a loan for an unimportant purchase or expenditure, unless you have the capacity to repay it.

Comparing Different Loan Types

It’s critical to compare different loan types available. A loan with a low-interest rate means big savings on your part. Look into the loan requirements and monthly payment schemes of the institution. The goal is to get the best interest rate and affordable payment per month suitable to your budget or capacity. 

High Fees Might Put You in the Deep

Quick cash from payday loans might have its perks, but watch out for those high fees that are almost equating to 400% APRs. You will be paying percentage rates annually that’s above the roof, whereas a two year term personal loan might just incur about 10-11% APR.

Probability of Losing Your Property or Assets

Secured loans may sound more appealing because of lower interest rates and possibly more flexible payment terms. However, don’t forget that you take your loan by pledging your property and assets as collateral. And should there be a default to repay the debt on your part, there is a possibility that these lending institutions will repossess or foreclose your property. Lenders could even seize your savings, car, or home as a form of payment on your loan.

With so many loan type options available for you, it’s clearly fairly easy to get any loan at any time. The point is, you should start working on improving your credit score and maintaining a good credit standing to get the best interest rates and terms. Be informed to come up with a wise decision.

Student Loan Forgiveness and Stimulus Package Amid Coronavirus

For those that have student debt and are worried about how to pay premiums each month, there is good news coming from the federal government. Due to the coronavirus pandemic, ensuing state shutdowns and general social distancing, many are currently out of a job and have no idea when they will return to the workforce. But after weeks of negotiations, the government has agreed on a massive stimulus plan which will help Americans in need and severely lessen the burden of student loans.

Initially, the pause on student loan payments was for 60 days. Starting on March 23, 2020, loan borrowers could put their payments on hold. The interest rates on those loans also dropped to zero percent during that time.

But the new government stimulus package, known as the CARES Act, grants many more benefits to borrowers of student loans. Here are the key points concerning student loan forgiveness:

  • Loans payments can be paused until September 30, 2020.
  • No interest will accrue on student loans through September 30, 2020.
  • Your employer has the option to pay up to $5,250 of your student loans tax-free.

Continuing to Pay Has Great Advantages

While payments can be put on hold, that does not prevent borrowers from continuing to pay down their loans if they choose to. And if you can afford to do it, the next six months provide an opportunity for normal payments to go 100% towards the principle amount of the loan, as there is zero interest being charged during this time.

What’s in the Government Stimulus Package?

For weeks the government negotiated a stimulus package to help keep the economy from completely crashing, as well as to relieve families that have been adversely affected by the coronavirus. The government finally reached an agreement for a $2 trillion package.

Here are the key points from the 880-page stimulus package:

  • Americans will receive close to $900 billion in payments.
    • Checks for $1,200 will be sent to individual taxpayers who made less than $75,000.
    • Checks for a little less than $1,200 will be sent to individuals who made between $75,000 and $100,000.
    • No checks will be given for individuals who make over $100,000 per year.
    • For those filing jointly, a check for $2,400 will be sent out if your combined income is less than $150,000.
    • Families will receive an additional $500 per child.
    • Unemployment assistance will be increased by $600 per week for up to four months.
  • Small businesses can receive loans that will be forgiven if they do not lay off workers and continue to send them paychecks throughout the crisis. There has been $350 billion allocated for these loans.
  • Big businesses have $500 billion allocated to them, with $425 billion going to struggling corporations and $75 billion going to specific industries, such as airlines.
  • State and local governments are receiving $150 billion to deal with virus related expenses.
  • The healthcare industry is receiving $100 billion to help buy crucial supplies.

Student Loan Forgiveness on a Larger Scale

While the halt on payments and interest is great news for those with student loan debt, what if people still can’t pay those bills after September 30th? Many families will be worse off financially due to long stretches without employment. While the country is recovering, families that are strapped with large student loan bills and have seen their employment hours lessened may not be able to keep up once payments are resumed.

The worry is that, even if payments get pushed back, the country is likely in the midst of a recession. The expected, or current, recession should not look like the Great Recession of 2008, but we still do not have any idea how long it might last. To ensure that families don’t get too far behind payments, many in the government are calling for student loan forgiveness on a larger scale, with varying amounts.

Many democrats believe that the longer reprieve on payments should only be the start and have suggested largescale debt forgiveness on top of the pause in monthly bills.

Presidential candidate Joe Biden is one who has spoken out, suggesting that a minimum of $10,000 of student loans be forgiven for each person. Biden said the following on Twitter:

“We should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues. Young people and other student debt holders bore the brunt of the last crisis. It shouldn’t happen again.”

Joe Biden on Twitter

Democrats in both the House and the Senate are hoping for even more relief. Numerous senators proposed that the Education Department (ED) should cancel $30,000 of student debt for each person.

Minnesota democrat Ilhan Omar and Massachusetts democrat Ayanna Pressley have gone as far as to introduce legislation called the Student Debt Relief Act. The bill calls for suspended loan payments and $30,000 of debt forgiveness for borrowers. The Student Debt Relief Act also would stop the government from taking wages and Social Security checks from defaulted borrowers.

In a statement, the two lawmakers said the following:

“During this public health emergency, no person should have to choose between paying their student loan payment, putting food on the table or keeping themselves and their families safe and healthy.”

Bernie Sanders has been leading the charge for total debt forgiveness, as free tuition is a key part of the platform for his presidential campaign. Other progressive democrats have joined Sanders in calling for complete debt forgiveness to those with student loans.

American Debt Crisis

According to the Federal Reserve Bank of New York, overall household debt has never been more of a crisis for American families. In the fourth quarter of 2019, the total debt balances of all households increased by $193 billion.

The increase was 1.4% more than the previous quarter and put the total national household debt at $14.16 trillion. In their findings, the Federal Reserve went on to say that debts have been steadily on the rise for the past five years in aggregate. In nominal terms, the total debt is now $1.5 trillion higher than it was in its previous peak, the third quarter of 2018. Overall, household debt was 26.8% higher in the fourth quarter of 2019 than it was in the second quarter of 2013.

Total Student Loan Debt

In the four quarter of 2019, the total amount of student loan debt in the country stood at $1.51 trillion. Of that debt, 11.1% was 90+ days delinquent, rising from 9.2%.

How to Get SBA Loans for Women

It isn’t easy to be an entrepreneur, but if you’re also female, you are likely to face even more challenges to operate and own a business. Until H.R. 5050 passed in 1988, most states did not allow women to receive a business loan unless they had a male cosigner. With this legislation passing, resources are more readily available to female business owners. Still, it can be tough to get small business loans for women and the right financing.

If you want to start a business or are a female business owner, there is hope. You can find many resources available, and one of them is the Small Business Administration (SBA).

The SBA offers many resources to female entrepreneurs, which includes affordable loan programs. It’s important to know as much as you can so that you can get the funding you need to start or run your business.

What Is the Small Business Administration?

In 1953, the SBA was founded to offer assistance to small company owners. It provides many resources to help these entrepreneurs become more successful. Services can include counseling online or in-person, advocacy, and low-cost training. Of course, one of its most noted resources is the low-interest loan programs that are available.

Many times, business owners find it tough to secure a conventional loan from a credit union or bank, even if they have an account there. Such financial institutions often view a small business as a risk, even if there is a proven track record. Since traditional lenders want to avoid risky borrowers, it can be more challenging for a small business owner to get one.

While you can consider an alternative lender with fewer requirements, less favorable terms, and higher rates, this isn’t the best choice. You can turn to the SBA to receive a loan with competitive terms and rates, even if you have already been turned down for loans through other means.

How the SBA Can Help Women-Owned Businesses

Through the SBA, there is an Office of Women Business Ownership, which was created to empower and enable female entrepreneurs. You can find counseling and training available in many states. This section collaborates with other organizations to give women more resources. We’ll talk about some of them later.

Women can also find federal contracting opportunities through the SBA and Women-Owned Small Business Federal Contracting organization. Through the program, certified businesses that are women-owned can then compete for federal contracts.

There is no discrimination from the SBA, so women-owned companies can take advantage of what it has to offer. Therefore, small business loans for women are provided, as long as the woman meets all of the requirements set forth by the SBA. Such a loan can open up other funding opportunities so that women can grow or launch their companies.

You should be aware that the SBA isn’t a lender. The organization has, instead, created guidelines to keep repayment terms flexible and interest rates low. The money is loaned through an intermediate. This can be a credit union or nonprofit lender, as well as others. These lenders are more willing to help you now because the SBA takes the risk away. It guarantees a large percentage of the loan. Therefore, lenders can loan to a small business without as much worry.

Qualifying for an SBA Loan

Small business loans for women can be easier to find through the SBA. If you’re female and don’t qualify for a conventional loan, you can still utilize the programs from the Small Business Administration.

Many times, a lot of capital is needed to expand or start a small business. You need to buy equipment, lease or purchase the commercial property, and have money for daily expenses. Most entrepreneurs can’t handle such a financial burden alone, and the SBA can be highly beneficial.

As long as you meet all of the requirements, you can apply for any of the SBA loan products offered. Of course, you need to be considered a small business through the SBA. It limits your annual revenues, number of employees, and even the business’s net worth.

You must also have a company based in the US. Many of the loan programs are available only to for-profit businesses, but some options are open for nonprofit childcare centers. Some industries are not eligible to utilize SBA loans, and these include:

  • Gambling companies
  • Government-owned businesses
  • Any illegal business/industry
  • Religious institutions

Keep in mind that your personal credit score is going to be an approval factor when applying for a loan through the SBA. While credit requirements can vary between lenders, most intermediaries of the SBA require credit scores in the mid-600s. Some may want a score of 700 or better. Also, the credit report cannot contain any:

  • Tax liens
  • Recent bankruptcies
  • Government loan defaults

If you have negative items on your report, you may need to explain them to the lender. Depending on how negative these things are, you might be disqualified from getting a loan.

It is also important that you show you make enough revenue to pay the loan payment each month. The lender is going to evaluate your current debts and revenue during the approval process to make sure you can afford this loan.

Sometimes, the lender is going to require that you pay a down payment or put up some collateral to secure your loan. Fees may also be part of the deal and can include:

  • Origination fees
  • Closing costs
  • Guarantee fees
  • Loan service fees
  • Packaging fees

It is important that you have invested your own money and time into the company to qualify for small business loans for women through the SBA. This means you’ve exhausted other financing options first.

What If You Have Bad Credit?

One of the drawbacks here is that you need a solid and good credit score to get an SBA loan (and almost every other type of loan). The SBA doesn’t set the score requirements, but it is still an important factor for the intermediary lenders.

Most lenders look for scores of at least 620, but 700 is preferred. If you do fall below the 620 mark or have negative items on your report (foreclosures, collections, bankruptcies, etc.), you have a lower chance of getting an SBA loan.

Even if that happens, you do have some options. The first thing you should do is request your credit report and make sure there are no inaccuracies. Then, you should work toward paying off your debts and building your score higher. Once you meet the SBA loan requirements, you can reapply.

While this is a lengthy process, it is important now and in the future. Having an excellent credit score is going to open up other affordable financing options for you, which includes SBA loans. If you have a pressing need for financing, it is possible to go to bad-credit borrowers, but you should be wary. These options have higher interest rates, less favorable terms, and are much more expensive.

Types of Small Business Loans Available to Women

Now that you understand SBA loans a bit better, it’s time to find out which ones work best for businesses owned by women. While any SBA loan product is available to a female entrepreneur, there are three that stand apart from the crowd. These include: Microloans, CDC/504 Loans, and SBA 7(a) Loans.

SBA 7(a) Loans

This type of loan is one of the most popular for small business owners. Through the program, you could receive up to $5 million, which can be used for almost anything relating to the business. That includes expanding an existing business, purchasing a building, paying startup costs, and refinancing your current debt.

The repayment terms can be up to 10 years for working capital and are based on your ability to repay the loan. You can also get terms up to 25 years for a loan used to buy commercial real estate. The maximum interest rate for this loan is prime rates plus markups of anywhere between 2.2-4.75%.

Depending on the amount you need, collateral may be required. Of course, if you are a woman and own the business, you could also qualify for the Community Advantage loan through the SBA. With it, you could get up to $250,000, which can be used for almost anything business-related. Repayment terms are the same with interest rates at prime plus 6%.

Microloans

If your capital needs are smaller, a microloan may be suitable. You can get up to $50,000 with this program, though the average is about $13,000. They’re provided through a nonprofit lender and can be used to buy fixtures and equipment, as working collateral, or to pay for improvements.

The repayment terms are six years, with interest rates varying based on the cost of funds for the lender. Lenders can add up to 8.5% when distributing the loan.

CDC/504 Loans

If you’re updating your facility or buying commercial real estate, you may want to apply for the CDC/504 loan. This option works differently than other programs through the SBA because there are two lenders involved.

The money you borrow can be used to buy long-term equipment, land, buildings, new construction costs, updating the facility, and refinancing debts that are connected to buying/updating facilities and equipment.

You work with a certified development company (CDC) licensed through the Small Business Administration, and it provides 40% of the project costs for up to $5 million. Then, a private lender provides 50% of the project costs. You pay that remaining 10%. Repayment terms on this type of loan can be 10 or 20 years. The interest rates vary depending on the lender and the US Treasury.

Small business loans for women can be hard to come by, but it isn’t impossible. Options are available through the SBA and other means. It might be a good idea to go through the Small Business Administration so that you have many choices available and can pick the one that best fits your needs. There are plenty of resources if you know where to go. By taking advantage of what’s available to you, it’s possible to start, grow, or build your company.

What Loans and Grants Can I Get to Pay for College?

Student loans are beyond stressful. It is one of the most important loans you are ever going to take out, and it’s during one of life’s most pivotal and challenging times to boot. If you go in blind and don’t manage your finances, you are going to end up buried beneath a mountain of debt before you’ve even given yourself a chance. 

Going to university can cost thousands of dollars, sometimes even tens of thousands, and unless you’ve been blessed with an ungodly amount of money, you’re going to need to find a way to fund that from an outside source. 

There are grant schemes, scholarships, and programs offered by various colleges for a variety of circumstances, but the people who get chosen for these are few and far between. Chances are, you aren’t going to be so lucky, so you’re going to have to do it the hard way. 

That’s where student loans come in. You’re going to need one of these on account of education costing the same as a house, and because it’s this much money we’re dealing with, it is going to be a very long-term loan.

When we’re talking about this much time and money, you need to be sure that you know what you’re getting yourself in for. There are a few things to keep in mind, but one of the biggest is the difference between the two types of loans, subsidized and unsubsidized.

The Difference Between Subsidized and Unsubsidized Student Loans

An unsubsidized loan is a standard federal student loan that anyone can get. You have to qualify for a subsidized loan. That’s because, given that subsidized means for something to be partially financially funded, it is going to cost you less in interest in the long run. 

So the big differences are, firstly, with a subsidized loan, you need to be able to demonstrate a financial need for the money. You need to show the institute you’re borrowing from proof of income, potentially your household’s earnings, as well as other financial documentation related to your ability to fund yourself through college. 

Due to the fact that the government is essentially paying off a part of your student tuition for free, you need to be able to show them you actually need them to. 

This is not the case for unsubsidized, where there is no need to demonstrate a financial need for the loan. 

The amount of money you can actually borrow differs drastically between the two as well.

Again, considering the government is paying for a percentage of a subsidized loan, the upper limit on these is going to be set lower than an unsubsidized loan, which has a very high limit on how much you can borrow. It shouldn’t be so low as to be too little to actually pay for your tuition, but if you’re planning on applying for a subsidized loan, make sure that you can actually borrow the amount that you need.

Now, the big selling point of subsidized loans is that the Department of Education pays the interest on the loan while you’re in college. The typical rate is between 4-5%, and while that does not seem like much, it can save you a ton over the course of your tuition. 

This is just over the course of your tuition, though, as the financial support endssix months after you graduate, unfortunately. Although, hopefully by then, you’ve secured yourself a decent job using your newly earned degree and can pay back the whole thing by yourself.

Of course, with unsubsidized loans, you don’t have this helping hand. Your interest accrues regardless of whether or not you’re in college, and every cent of it needs to be coming out of your pocket.

There is one more key difference between the two, and that’s who can actually apply for each loan.

Subsidized loans are designed to help new students just entering university-level education. That means that only undergraduates (people without a college or university level qualification) can apply for it. 

For unsubsidized loans, undergraduates, graduates, or professional degree students can all apply no problem. 

It is worth noting, though, that your school determines how much you can borrow with a subsidized loan, and that amount is proportional to your financial needs at the time.

Whether you are an independent student or a dependent one, also factors into how much you are allowed to borrow. 

For example, if you’re a dependent student whose parents are eligible for a plus loan, your first-year loan limit is $5,500 dollars, with no more than $3,500 of that being in subsidized loans. That amount increases by $1,000 dollars for each year you are in school, up to your third and final year.

If you are an independent or a dependent student whose parents cannot get a plus loan, that amount starts at a $9,500 dollar limit, with the same $3,500 limit on the subsidized amount, which again increases by $1,000 dollars for each of the three years you’re studying.

For graduates and professionals, this amount it wildly higher: $20,500 dollars in unsubsidized funds only. At this point, you are considered an independent student regardless of circumstance. 

There is one exception to these limits, and that’s if you are a medical student. In that case, you are eligible for higher limits on your loans, on account of the education costing more. So if you are, then speak to the financial aid office in your school about the limits you are eligible for. 

Are There Any Other Options?

Grants

You may not want to take on so much debt so early into your professional life, and understandably so. In that case, there are a few unique grants that you may take advantage of depending on circumstance. Keep in mind that you don’t have to pay these back, so if you’re eligible for one, then go for it. 

First is the Pell Grant. This is a grant for undergraduate students with a financial need or for a student studying a post-baccalaureate teacher certificate and is up to $5,920 dollars.

Learner’s parents who were killed in action in Afghanistan or Iraq post 9/11 are also eligible for this grant.

The Iraq and Afghanistan Service Grant is for those ineligible for the Pell Grant, whose parents died while performing military service in the above countries after the 9/11 terrorist attacks.

There is also the Federal Supplemental Educational Opportunity Grant. This is a grant of up to $4,000 dollars, depending on the availability of it at any particular school. The only prerequisite for this grant is that you are a student with exceptional financial need.

The Teacher Education Assistance for College and Higher Education Grant, or TEACH, is a supplemental grant with a limit of $4,000 dollars. However, for any grant that is disbursed after October 2019 and before October 2020, that amount is reduced by 6% down to $3,764 dollars.

The maximum amount awarded by the grant is $6,195 dollars, but like the TEACH Grant, that amount is decreased by six percent between the Octobers down to $5,830 dollars. 

As well as the two circumstances mentioned above, there are additional requirements to qualify for this grant. First, you cannot receive the grant for more than 12 semesters. Secondly, you must have been younger than 24 or enrolled part-time at college when a parent or guardian died in service.

Direct Plus Loan

The last finance option available to you comes in the form of a loan, not a grant, available to your parents. 

The Direct Plus Loan is a funding option parents can take out to make up the difference between the cost of their child’s education, and the amount that their child could borrow themselves.

The limit it the cost of attendance to the college minus any additional financial supplementation that the student has received. 

Aside from being in college, the only requirement for this loan is to not have an adverse credit history. 

Private Student Loan

On the topic of federal loans versus private loans, you are better off going with federal first nearly all of the time. 

Private loans have a reputation for being brutal and unforgiving, and that stigma is well earned. 

Private student loans carry much higher rates of interest than federal ones, and if the student has no credit history, which chances are they don’t, then it also requires a co-signer. Federal loans are far more forgiving and offer plenty of borrower repayment plans to help you get by the best you can financially. 

The only time you should be considering a private loan is when you need to make up the difference in terms of your student loan limit and the college’s cost of admission. Even then, you should still try to get a Direct Plus Loan first. 

If you can’t, and you have to go private, just make sure that you compare all of the institutes you find. Check what people are saying about them, and don’t forget to check the interest rates. As well as that, you need to know the repayment and forbearance options each institute offers before you borrow as well. 

Anything Else?

The landscape of the student financing world is constantly changing, and the options available to you in two years’ time may be drastically different than the ones available to you now. 

There may be more grants, higher or lower loan limits, different repayment plans, and so on. So get some advice before you commit to anything. Speak to your school’s financial aid office or a career guidance counselor. They have been through it all, and their wisdom and advice can make the difference between a happy and thriving career and a lifetime of misery and debt.  

How Student Loans and Life Insurance Go Hand-in-Hand

Do you have some student loans that you’re trying to pay off right now? It can be tough to pay them back, especially if you’re struggling to get a job with your newly achieved education. Still, most people know how to pay off student loans. They make the monthly payments and try to pay extra, which goes to the principle.

However, many other people wonder what might happen if the person who got the student loan passed away before the loan was repaid. The shocking truth is that the co-signer or someone else might be responsible for paying back the loan. Therefore, life insurance could be highly beneficial for your student.

There are many factors to consider here, and we are going to go over each one for you.

Loans with Death Forgiveness

The first thing you need to know is what type of loan you have. Is it going to be forgiven if you pass away and haven’t paid it off?

To answer that question, you need to know if you have a private or federal loan. Federal student loans are always forgiven at death through the Total Death and Disability Discharge.

That’s the good news because many people focus on federal loans to get them through college. They often have lower interest rates and don’t require repayment until you’re out of school.

However, if you have private student loans, they aren’t covered by the TDDD. If you pass away before those loans are paid off, the co-signer is responsible. Often, students have to have a co-signer, such as a parent, aunt, or grandparent, because they have not established a good enough credit history to qualify alone. Therefore, that person is responsible for the debt if you die.

Co-signers and Life Insurance

A co-signer is someone who also signs the loan with you, meaning there are two signatures. They are legally responsible for repayment if you default (even because of death). Often, the co-signer is someone who has a steady income and a good credit history.

Now, if you have a co-signer on the loan, you may want to take out a life insurance policy on yourself. How do you pay off student loans after you die? Your co-signer is responsible. With a life insurance policy, it covers your debts (including student loans) if you pass away. Still, it is a good idea to make sure that the co-signer is a beneficiary on your policy. Plus, you don’t need to have an extensive one in place. It just has to be enough to cover your loan obligation. Often, young people can find inexpensive options because of their age and good health.

While a co-signer is often a parent, it could be a spouse. You and your spouse may choose to refinance a loan with the spouse as the co-signer. Alone, you might not be able to refinance or take on the current debt, but you can with someone else also being legally responsible.

In a situation like this, the lower-earning spouse should have a life insurance policy to protect the other person.

Community Property States

Those who don’t have co-signers don’t have to worry about how to pay off student loans after they die because the obligation isn’t going to pass to someone else. However, if you are married and live in a community property state, your spouse might be held responsible for repayment, even if they weren’t a co-signer.

Nine states are considered community property states, including California, Louisiana, Arizona, Idaho, New Mexico, Washington, Nevada, Wisconsin, and Texas. Alaska also has an opt-in community property law, so if both parties agreed, their property is considered to be community property.

If you happen to live in one of those states, you should look at your loan terms because the lender could possibly come after your estate. This is highly unusual, but you should still be aware of what the lender can legally do.

Death Forgiveness

While it sounds a little morbid, some lenders do offer student loan death forgiveness. It is a good idea to see if that is an option on your loan. That means if you live in a community property state or have a co-signer, you might not need the life insurance policy. The lender is going to forgive your debt if you pass away, which means it doesn’t move to someone else.

However, some lenders haven’t caught up with the times yet. If your debts aren’t covered by death forgiveness, a life insurance policy might still be needed and could be a smart move. Otherwise, an alternative is to refinance your student loans with another lender that can offer death forgiveness.

What Is Life Insurance Anyway?

Life insurance is a sum of money that is paid upon your death to a beneficiary of your choosing. To get the life insurance, you have to pay a premium, usually monthly, to the company. It’s a contract between you and the company and provides you with the terms of the agreement. You should know the lump-sum amount the beneficiary is going to receive, your monthly premiums, and who your beneficiaries are.

You can find life insurance policies that are primarily there for student loan forgiveness upon death. These are often less expensive than traditional policies, and you can cancel it once your loans are paid off.

How to Choose Life Insurance for Student Loans

You’ve probably wondered how to pay off student loans yourself. In this case, life insurance isn’t going to help you and is another bill that you must pay each month. You can consolidate your loans through refinancing and other means.

If you are worried that you could die in a freak accident and leave your co-signer to pay the rest of your loan off, it is a good idea to get life insurance. Still, there are a variety of companies out there, as well as policies. How do you know which one is best?

The first step is to find out where to buy life insurance. You can often do this from your bank or credit union. There are also many private insurance companies out there. Of course, you are going to have to research your options thoroughly to ensure that you pick the right company with the best deals and the proper coverage.

You need to know your coverage needs and how much money you are going to need to cover that loan. Often, students prefer to go a little over their loan amount. That way, the policy can cover funeral costs and may even give your parents a little extra to help them get by.

Make sure that you know the loan balance, as well as the interest that is going to accrue. You should also know how long it could take to pay off the loan entirely.

Generally, private loans have a variable interest rate, so you should factor that into the equation. For example, the overall interest rate for a private student loan is about 7.99%. With a $13,600 loan and a ten year term length, you are going to pay almost $19,800 with interest.

The policy should cover your full loan plus interest amount. Make sure it lasts as long as you are going to have the loan.

Options Available

You can find two types of life insurance, including term and whole life. Whole life insurance is permanent with cash value that doesn’t expire. However, it costs up to ten times as much as a term life insurance policy.

Often, students need term life insurance. You buy a policy for a specific term. If you die during that time frame, your beneficiary receives your death benefit. They can use the money for whatever they want, but the ultimate goal here is to pay off your student loan and possibly your funeral expenses.

Term life is often the right option for many people, and it is what you want to cover student loan debts.

There are other things to consider here, as well.

  • Is the life insurance company a match for your health? Carriers might offer better rates for people with few if any health issues. Still, some companies are going to focus on particular conditions more. For example, one company might be more favorable if you have a history of diabetes or depression.
  • What policies are offered? You know you need term life insurance, but most policies have other features you may want to consider. These can include a return of the premium or an accelerated death benefit.
  • Is it available online? Shockingly, many insurance companies still do everything by fax machine and snail-mail. If you do most of your banking and payments online, it’s good to have an insurance company that’s up with the times.
  • Does it come highly rated? You should be aware that life insurance companies are rated and regulated. Make sure yours is financially stable and has been rated high by consumer protection and financial agencies.

Many people wonder how to pay off student loans. However, they focus on the monthly payments and rarely think about dying. Of course, you are young, so you aren’t worried about heart attacks, diabetic complications, and other things that usually happen to older adults. Still, accidents happen, and issues can arise. Therefore, term life insurance may be your best bet, as it can absolve your loved one from having to pay back the loan.

Strategies to Pay Your Student Loans Quickly

Getting a tertiary level of education is an important step in cementing your entry into your field of choice. Be that as it may, tuition costs can be astronomical. The average college student needs financing to get through school.

While some parents can afford to pay for a tertiary education, most of them simply can’t. This is the reason that students try so hard to get scholarships and grants. However, not every student is so lucky. This is where student loans come into the mix.

Getting a student loan allows you to complete your education by providing you with a credit option that helps you to finance your tuition. When your program ends, you are required to repay the student loan.

This is typically done based on a repayment plan that was established. This plan sets out the duration of payment, the frequency of payment, and more. Many standard repayment options translate to students spending ten or more years repaying the loan.

This is a very long time to be stuck paying a loan, so naturally, you are probably interested in finding out what you can do to pay off your student loan much quicker than you’re required to.

Here is an outline of some of the strategies that you can use, which should help you to pay off your loan in a speedy manner.

Focus Your Additional Earnings on Paying the Loan

When you’re making a specific amount of money at work, you organize your spending based on that amount. At some point, you are likely to get a raise, a promotion, or a better-paying job.

Should you get any of these things, the result is that you have more disposable income. Of course, inflation reduces the spending power of money, but that reduction is not significant enough to prevent you from having extra to spend.

Many people tend to use this extra for all sorts of things that they couldn’t afford and did without before the raise. Having the extra money does not mean that you should irresponsibly blow your way through it.

What you should do is channel the additional income towards paying your loan. There is a lot of financial freedom to be had when your loan is paid, so use the opportunity to strengthen your position against the loan.

You should consider using your tax refund in a similar manner. It might feel like free money for you to spend carelessly, but why not put it towards the worthwhile cause of getting rid of your student loan?

Make Financial Sacrifices

Many people don’t want to hear this because they think that they should always be able to enjoy the things that they want to in life. There’s nothing wrong with wanting to enjoy nice things, but sometimes you need to concentrate on the more important tasks at hand.

Pencil out the things that you do with your earnings so you can see what you can cut back on. You don’t need a paid subscription to every movie streaming platform that’s available.

Exceed the Minimum Required Payment

While minimum payments are convenient in terms of what they cost, they can be the reason that you spend ages paying off the loan. These payments don’t make a dent in the grand scheme of things, and interest has a lot to do with that.

Remember that the loan consistently accrues interest, and any payment you made is first used to cover the interest. The principal only gets covered if there is anything left after outstanding interest has been accounted for.

This is the reason that you need to attack this loan and aggressively reduce that balance. Here’s something to consider. Paying the minimum payment figure over the typical ten year duration with a typical 6% interest rate could result in interest adding up to an additional 25% of the initial amount borrowed.

Even a slight increase in your payment schedule can take years off your repayment term and lead to high savings on the cost of interest.

Consider Refinancing

Obviously, this option is not available to everyone, but that doesn’t make it any less of a viable option for clearing your student loan. An appropriate credit score, good payment history, and a consistent source of income are all the ingredients you need to make your mountain of student loans much easier to deal with.

The idea behind refinancing is to reduce the amount of interest and the number of loan sources that you need to deal with.

To this end, you consolidate all your existing student loans into a single private loan, which pays off the others. This new loan ideally has a lower interest rate. Selecting a shorter repayment term is a great way to get yourself into the habit of making larger payments.

If you can, try to acquire the loan from a credit union, as such an institution is known for the favorable interest rates that it offers.

Explore the Option of Autopay

If refinancing is not an option for you, then maybe you can consider using autopay, which could help you in reducing the interest rate associated with your loan.

If you got the loan via federal student loan services, you might be eligible for an interest rate discount. You get this discount when you allow the entity to deduct your payments from your bank account. Not all private lenders offer this, but there are some that do.

Note that the discount offered is not typically a large one; however, any interest reduction is welcome, since it provides some level of extra money that can be used to clear the loan.

Get a Side Hustle

If you’re able to live and meet all your expenses with your current earnings, then that means that your needs fall within the boundaries of what your earnings can cover. For many people, though, the money they earn doesn’t leave much excess to enjoy once those expenses have been covered.

If this sounds like you, then a side hustle could be the perfect solution to your problem. Since you can cover everything as is, that means that you can dedicate the money from the side hustle exclusively to paying off your student loan.

If you want some ideas for a side hustle, here are some of the most popular ones:

  • If you own a car, then you can earn some extra money by transporting passengers for either Lyft or Uber.
  • You can make deliveries for Amazon or Uber Eats, and you are paid per delivery.
  • Get into dog walking or dog sitting. Of course, you do need to do a bit of research if you’ve never done it before. Many people are willing to pay for the convenience of not having to walk or attend to their dogs for a time period.
  • Babysitting is something that you can consider. There are websites that you can use to advertise your babysitting services. Note also that mastery of special skills, such as CPR, make people more likely to hire you.
  • Become an online freelancer. Upwork, Freelancer, and Fiverr are three of the top freelancing sites available. Many freelance jobs are available, and you can use them to your advantage to make some extra cash. Some of these jobs require specials skills, but others, such as writing and being a virtual assistant, are jobs that you can learn to do as you work.
  • Renting your car is another option that you can check out. The car rental industry is very lucrative, and it provides you with a passive income. This means that you don’t have to actively do anything to earn consistently. However, you may end up stepping outside the lines of your insurance company, so be sure that you talk to them before you make the decision.

Establish a Budget

A budget is one of the most underrated tools that is available to you. This is because it helps you to get a real handle on where your money is going. Sometimes you don’t realize how much of your money you unnecessarily burn through until you lay it out in the form of a budget.

Creating a budget is one thing. You also need to stick with it for the best results. One of the cool things about establishing a budget is that you are likely to discover that there is extra money that you didn’t even realize you had.

What better way is there to use this surplus of cash than to throw it at your student loan?

Use the Debt Snowball Method

This method has helped many people pay their loans off to great effect. The concept of a debt snowball is quite simple. Lay out all your debts to get an idea of the smallest to largest ones. Start by channeling your focus and resources into the smallest one. Once that is done, any money that was going to it is now available for you to use on another loan.

Repeat the process and focus on clearing the one with the smallest balance first.  Keep doing this until you’ve cleared them all. You’d be surprised at how effective this method can be.

Consume Motivational Material

This one may sound a bit weird, since it’s not a way to help you come up with more money, but it helps. Many people take a lax or nonchalant attitude with student loans because the time it takes to pay them off can seem like forever.

Find some motivational material to either read, watch, or listen to that helps you to remember that each step on the journey is a badge of pride.

Mastering Student Loan Repayment

From the moment you’re old enough to understand the concept of school, you start hearing it. You need to get a proper education in order to succeed. By the time you’ve finished high school, you’ve gotten to the point where it is career advancement time.

There’s just one more milestone left to go. College is next on your radar, to get the specialized education needed to break into the field that interests you. While you’re at the college level though, you quickly learn that chasing your dreams is not a cheap process.

Before you even get to your living expenses, there’s the matter of your tuition fees. You’ve probably never seen such a price attached to anything, but you know it must be paid. If it’s not, how can you get the education that you need to blossom into who you’re to become as a professional in the working world?

Thankfully, student loans are available, so you use them as your ticket to get past that massive tuition hurdle. Obviously, it’s a loan, and you need to pay it back, but there’s no time to worry about that now. You’re at school for a reason, and that is priority one.

Eventually, you make it to the end. There were many hard times, and there were courses that felt like unwarranted punishment, but you did it. You got your degree, and you’ve now graduated.

This is where it comes back to you. The student loan route is the one you had taken, and since the lender honored its commitment back then, it’s time for you to honor yours now. This is an overview of all the information you need on how to pay back student loans.

Student Loan Statistics

The fact is that most people simply cannot avoid using a student loan to pay for their college tuition. There are some who get scholarships and grants and others who can afford to pay the tuition out of pocket, but this isn’t as frequent and sometimes doesn’t cover everything. Saving for college is not in the cards for many people because it’s not practical to save that kind of money.

According to Forbes, student loan debt in 2019 in the United States was at its highest recorded level in history. In fact, it’s now being billed as a student loan debt crisis. There were approximately 45 million borrowers recorded last year. These people borrowed a combined total of almost $1.5 trillion. This figure makes this form of debt the second-highest, as it only falls behind mortgage debt.

Even credit cards that are notorious for their unbelievable interest rates fall behind this education-related debt. A little over 50% of college students go the route of getting a student loan to pay for their education. There is an average per borrower amount of over $35,000.

Just five years prior, the student loan total debt was $1.06 trillion, which means that there has been a 33% increase.

Know Your Balance and Interest

There are many people who just start making payments without bothering to understand how much is owed. Before you start making your payment, you need to know all the parameters surrounding the amount that you owe.

The first of these is the figure that you owe on each loan, which helps you to understand the aggregate total you owe on all the loans. Remember that there are multiple student loan services, and it’s not just one big loan, so finding out the balances for each service is a great way to help you plan your roadmap.

Establish which of the loans are private and which ones are federal. Remember that private loans are a bit more aggressive, as their interest rates are steeper than those of federal loans. Understanding which loan is which also helps you to calculate the outstanding interest on each (unless the private loans use a fixed pre-calculated interest rate that is baked into your payments).

On the matter of interest rates, you should also gather all the information you can on the applicable interest on each of these loans.

Gathering all this information helps you to understand where you stand so that you can select a repayment plan that best suits you.

The Grace Period

The one saving grace that you have where student loans are concerned is the grace period. When you’ve finished college, the next step is usually to start doing something with the degree. Some people find a job, while some start their own businesses. In fact, there are some students who managed to secure an earning vehicle before they completed their degree. This means that they don’t have to go through a job search once university has ended.

Though some people are that fortunate, lenders understand that most students need some time to find a source of income so they can start paying back the loans. Therefore, a grace period is allocated, which allows students to do so.

On average, you’re given a six-month grace period before you need to start making payments. You should note, however, that if you go below half-time status or drop out, the grace period countdown begins at that time.

Whatever the case may be, the grace period is meant to help you get into a position where you can realistically start making repayments.

Don’t make the mistake of thinking that this is free time in which you don’t need to worry about your loans. On the contrary, this is the time that you need to use to start planning the way forward when payment becomes mandatory.

The first order of business is to do your research. There are different repayment plans and options that offer varying levels of convenience. Find out all you need to about them so you can decide which one of them best suits you.

Don’t underestimate the power of creating a budget. This step is hard to take before you find a means of income. Once you do, however, plan a budget that focuses on reducing your student loan debt and meeting your other expenses. Remember to make the loan your priority here.

You may also want to set up an automatic payment system so that you never have to deal with late fees.

Repayment Options

As stated before, it’s very important that you choose a repayment option that best suits you. Here’s a look at the ones that you can choose from.

Standard Repayment

Your loan is typically automatically assigned this plan when it’s time for repayment. You need to request a change if you want one. All borrowers are eligible for this plan, and the payment period spans ten years. There are no penalties for early repayment, so feel free to use the opportunity to pay off the loan in the shortest order when you can.

Graduated Repayment

The payments you make under the standard plan tend to have a fixed payment figure. The graduated repayment plan also features a ten year payment period, but it doesn’t have a fixed rate. Instead, the payments start off lower, and they gradually increase. This plan is used by people who intend to pay off their student loans as quickly as possible. If your income is expected to increase over time, this is a perfect selection.

Pay as You Earn Repayment

Your monthly payment is calculated as 10% of your net pay. This 10% is much higher for some people than it is for others, so there is a caveat. The figure cannot exceed the amount that you would pay on the standard plan.

If you’re interested in Public Service Loan Forgiveness or a low monthly payment suits you, then this is the best plan for you.

Extended Repayment

This is the extended version of the standard plan. Instead of ten years, loan repayment can be done over a period of up to 25 years. This means that monthly payments are much lower, but interest is calculated over a longer period. Federal Family Education and Direct Loan recipients are eligible for this option.

The people who typically go for this option have larger loans and need to have lower monthly payments.

Income-Sensitive Repayment

This repayment option is only available to those who are FFEL borrowers. The repayment period here spans 15 years, and the monthly payments are based on what you earn each year.

The only use case for this option is for FFEL borrowers who are not comfortable with the payment figures for standard or graduated plans.

Income-Based Repayment

Based on when you borrowed your loan, your monthly payment can be either 10% or 15% of your net pay. Eligibility is based on what your payment would be under the standard plan versus what it would be under this plan. If your income translates to this plan, resulting in a lower payment, then you are eligible. If your federal student loan debt is either higher than your annual net pay or makes up a significant portion of it, you are likely to make this requirement.

When your debt is high and you need low monthly payments based on a low income, this is the plan you want.

Income-Contingent Repayment

Once you have an eligible loan as a Direct Loan borrower, you qualify for this repayment plan. There are two potential calculations for your monthly payment. Whichever is lower is the one that is paid. The calculations are 20% of your net pay or a payment based on a fixed amount that ends in 12 years.

If you can dedicate more of your income to repaying a loan, but not as much as the standard repayment option, then this plan is for you.

Revised Pay as You Earn Repayment

Once you are a Direct Loan Borrower with an eligible loan, you qualify for this repayment plan. You are required to pay 10% of your net pay towards the loan.

If you need a lower monthly payment and you have no problem with potentially paying more in interest than you would with a standard plan, then this one’s for you.

Pay Away

Paying your student loans requires proper planning and execution. All you need to pull that off is access to the necessary information. Use your grace period to start the planning process, and find out which repayment method suits you. After that, just commit to it, and get your loan paid.

How to Choose the Best Online Payday Loans

Payday loans are quite tempting to everyone. For example, what would you do if you had an important bill to pay and were $300 short? Your payday isn’t for another ten days, you have maxed out your credit card, and you can’t or don’t want to borrow from family and friends. What are you going to do?

The answer isn’t as straightforward as you may think because there aren’t many options available. You are likely going to use a payday loan to bridge that gap between the money you need and when you get paid, but it could get you deeper into debt.

Your first step is to find out what a payday loan is and how it works. Then, you can find out how to get the best online payday loans.

How Does a Payday Loan Work?

When you obtain a payday loan, you ultimately use your paycheck as collateral against the amount of money you borrow. Applying for one is often easier than a traditional loan because you don’t need good credit or any history at all. The lender primarily looks to make sure you have a steady income. Most lenders require that you have the payment automatically withdrawn from your account. This means on the appointed day, the money is taken from your paycheck to pay back the loan. That can minimize the risk to lenders.

If you go directly to the lender, it might allow you to provide a postdated check for the amount of the loan plus interest. Then, the check is deposited when you get your paycheck. However, going online means that you allow the lender to automatically withdraw the funds from your checking account when you’ve been paid.

The Risks Associated with Payday Loans

Some people believe that good reasons for online payday loans don’t exist, but there are times where it makes sense. You can get some great terms, but it is up to you to shop around. Of course, it is also important to understand the risks of payday loans so that you are prepared and can ensure that you don’t fall into the trap of recurring debt.

Payday loans are more accessible than a cash advance from a credit card or personal loan, so they can seem like they are too good to be true. If you aren’t careful, they can cause significant issues, such as lowering your credit score.

Being short on cash often makes you desperate, so you take out the payday loan without thinking about repaying it. You know that it is going to come out of your next check, but that is in the future. However, the money you earn is likely going to be needed to cover other expenses. To offset this, you can set money aside to pay the loan back.

There is a thing called rolling over the loan. If you can’t repay your full loan amount, it’s possible to roll it over into another loan. However, interest still accrues, which makes it harder and harder to pay off the full debt. Plus, the lender can add late fees to the final amount because you didn’t pay it all off on the specified date.

It’s quite difficult to get out of that cycle once you’re in it. Therefore, when you take out the payday loan, you need to ensure that there is a plan in place to pay it off quickly. Those who have larger paychecks may not have as much of an issue. They can set aside the funds they need to repay the loan soon. Also, you can offset the cycle of recurring debt by only taking out a loan for what you know you can repay. In other words, do not take out such a large sum that you cannot pay it back with your next paycheck and cover other bills.

How to Repay a Payday Loan

In most cases, a payday lender charges you a fee with every $100 that you borrow. This can range from $10 up to $30 and depends on where you live and which lender you choose. While the fees may not seem like a lot, they do add up. For example, a $15 fee is about equal to an APR of nearly 400 percent for an average two-week loan.

You must pay back the full loan amount plus the fee with your next paycheck. With a personal loan, you can usually make smaller payments over a longer period. That isn’t the case with a payday loan. It must be paid back when you get your paycheck; if you can’t do that, you can roll it over to the next payday. Just remember that you are going to have more fees with which to contend.

Let’s say that you borrow $100; with the lender’s fee of $15, you now owe $115. You get your paycheck two weeks later and realize you can’t pay it back. Therefore, you pay another $15 fee to roll over the loan. Now, you owe the same amount ($115) because you didn’t pay anything back on the principal and have a new fee and paid the first $15 fee.

If you keep repeating that cycle of rolling it over, you could end up owing much more than what you initially borrowed.

Do Payday Loans Affect Credit Scores/Reports?

Most payday lenders aren’t going to impact your scores much. These loans are smaller and are short-term, so most lenders aren’t going to make a hard inquiry on your report and score to ensure eligibility.

Often, payday loan payments aren’t reported to the three major credit bureaus. Therefore, if you pay the loan off in the time period provided, your score isn’t going to change.

However, payday loans can affect your credit score if you don’t pay them back. For example, if there aren’t sufficient funds in the account, the payment bounces. Your bank might close the account, sending you to collections. Those things are reported and can negatively affect your score.

Some lenders may also take you to court to collect on the unpaid debt. If you lose the case, that information is likely to be reflected in the credit report and could lower your score for seven years.

Choosing the Best Payday Loan

When you know that a payday loan is the right choice for you, it comes down to finding the best online payday loans. To do that, you need to know a few things.

The first step is to research payday lenders in your area. Yes, you are applying online, so you may not need to worry about the specific location. Use lenders that are credible and have been in the industry for at least ten years. They have established that they have the funds you need and do enough business to stay in the game.

Apply for three to four loans from various lenders. The documents and information you need to provide can vary. Once you are approved, you can decide which option is best for you. For example, you should compare interest rates and choose a lower option. Most of the time, it is going to be easier to repay your loan at a lower rate. Sometimes, you can negotiate with the lender, though this isn’t always possible.

Consider the repayment methods available to you. Most online payday lenders are going to require that you allow them to automatically withdraw funds from your account. This means providing them with the routing and account number. Therefore, you should ensure that the website is secure so that your information is protected.

In some cases, the lender provides the rates and fees on its website. This can make it much easier for you to find out what it is going to cost on top of the amount you need to borrow. Simple math can tell you the full price you are going to pay.

What You Need to Get a Payday Loan

Often, you aren’t going to need a high credit score to get a loan. While some lenders vary, most of them require you to have a:

  • Social security number
  • Identification (government-issued)
  • Proof of income
  • Valid email address
  • Active checking account

When Are You Approved?

If you apply online, you can get approved in minutes. However, it could take a few days to get the money deposited into your account. Just know that it is going to be automatically added, so you need to make sure that the information you provide is accurate.

Advantages of Borrowing Online

Applying for a payday loan online is highly beneficial for many reasons. Of course, you get faster approval because the lender tells you almost instantly if you are approved and for how much. Traditional lenders are different. While you can fill out the application online, it can take days to get an answer because someone from the institution has to review your application. Sometimes, you are required to go to the branch in person to finish the transaction, which doesn’t happen with a payday lender.

You may also get decent rates, though it does require some research on your part. Online lenders may charge less, especially if they don’t have a physical location. They don’t have to pay overhead and have fewer regulations with which to deal. Those savings might be passed down to you.

When to Apply

There is no wrong time to apply for an online payday loan because you can do so any time of day. Some people worry that buying a house isn’t the best time to get a short-term loan, but it might not matter. For one, the loan isn’t going to be reported to the credit bureaus, so it isn’t going to affect your mortgage rates and ability to get the loan. Also, it could help you cover expenses while you’re trying to cut down your debt.

The best online payday loans are those that come from reputable lenders. You should always focus on getting the best terms and may find it easier to get the money you need because there are fewer rules and restrictions. Still, it is important to be cautious about these types of loans because they have shorter repayment terms and can cause you to get into a recurring cycle of debt if you aren’t careful.

How Hard is It to Get a Small Business Loan?

If you have a small business or you are thinking about starting one, you might need to look into a loan. There are some small businesses that you can start without any financial investment, but in most cases, this is simply not true. So excited entrepreneurs might want to look into getting a small business loan. The question is, however, how hard is it to get a small business loan?

Is It That Hard?

It would be really nice if we could simply say getting a small business loan is easy. It would also be nice to say, “getting a small business loan is really hard.” At least you know what you are facing, right? Unfortunately, for some people, it’s going to be easy, and for others, it will be hard. How hard it will actually be depends on a lot of factors including the following:

  • How is your business doing right now?
  • What do you need funding for?
  • What industry are you in?
  • How much are you willing to invest on your own?

So the best thing we can do is to show you all of the different business loan types out there and rank them by how easy or difficult they are to get for the average person. Just keep in mind that not everyone is going to get the easiest loans, and some people will easily get the difficult loans.

Types of Small Business Loans

Merchant Cash Advance

A merchant cash advance (MCA) is the easiest type of small business loan to qualify for. However, it’s important to mention that this is not actually a loan.

With an MCA, a lender will give your company future credit card revenue in advance, which you will then repay each day with a percentage of the credit card sales your company has. This process can be expensive, and the amount of money you will pay for them is more than other types of loans. However, again, if you are in a pinch, these are pretty easy to qualify for. All you need is the following:

  • A personal credit score that is at least 400
  • At least $75,000 in annual revenue
  • At least five months in business

Invoice Financing

Another pretty easy type of small business loan to look into is called invoice financing. This is when a lender will give your business a percentage of an outstanding invoice’s value. For this service, you must then pay the lender a percentage of interest every week until the invoice is fulfilled. To qualify for this, you need:

  • At least $50,000 in annual revenue
  • A business that is at least six months old

Business Line of Credit

You also might want to consider a business line of credit. Essentially, this is like a business credit card. You can use this credit to pay for things, and you simply pay back what you spend, plus any interest. To qualify, you need:

  • At least $50,000 in annual revenue
  • A business that is at least six months old

Short-Term Business Loan

A short-term loan might also be an option. If you qualify, you will get a certain amount of money from a lender and then pay it off over time, including interest. You will find that the available loan amounts are smaller, and the APRs are higher than other loans, and in general, you have to pay these back each week and sometimes each day. Here’s what you need to qualify:

  • At least $50,000 in annual revenue
  • A minimum 550 personal credit score
  • At least a year in business

Equipment Financing

Do you need to get a small business loan in order to buy equipment? If this is the case, you can look into equipment financing. You can finance 100 percent of the cost of your equipment, and the equipment you are buying is the only collateral you need. To qualify, you will need the following:

  • At least $100,000 in annual revenue
  • One to two years in business, depending on the lender
  • A personal credit score of at least 600

Term Loans

Term loans are more difficult to get, and these are the typical small business loans that people think of when thinking about loans. You will get a lump sum and then have to pay it off, plus interest, each month. To qualify, you need the following:

  • At least $90,000 in annual revenue
  • A personal credit score of at least 600
  • At least one year in business

SBA Loans

Finally, consider SBA loans. These are the best small business loans, as they are partially guaranteed by the Small Business Administration, and they are the cheapest. However, they are harder to qualify for than other loans. Here’s what you need:

  • At least $100,000 in annual revenue
  • A personal credit score of at least 640
  • At least two years in business

Your Application

If you qualify for these loan options, the next thing you need to worry about is the application. Remember, even if you meet these qualifications, your application really matters.

Some of the business loan applications out there are really involved, and the answers you give to the questions on the application can make or break the possibility of you getting a loan or not.

In general, some types of business loan applications are more involved than others, simply because the lender requires more information. All of them will take time, and all of them should be well-thought out before you submit them.

Invoice Financing

In general, the application for invoice financing is pretty easy and straightforward. All you really need is the value of your invoice and to fill out the application. Now, there are usually some things that the lender needs before they will approve it, so try to have the following available. If you do, you might get this in as little as a day:

  • The invoice you want to finance
  • A voided business check
  • Company bank statements
  • Driver’s license
  • Credit score

Short-Term Loans

The application for a short-term business loan is also pretty quick and easy to fill out, and again, you can get funding for this in about a day, as long as you have everything ready to go. Typically, lenders ask for the following:

  • Personal tax returns
  • Personal credit score
  • Driver’s license
  • Proof of business ownership
  • Bank statements
  • Voided business check

Business Line of Credit

A business line of credit can also get approved rather quickly, sometimes in a day’s time. There is more paperwork involved, however, which could slow things down a bit. Here’s, in general, what you need:

  • Personal tax returns
  • Business tax returned
  • Credit score
  • Driver’s license
  • Bank statements
  • Profit and loss statements
  • Balance sheet
  • Voided business check

Equipment Financing

The time needed for the application approval for equipment financing is a bit longer. Usually you have to wait a few days for approval, but in some situations, you can get this type of financing in a couple of days. The good thing about this type of financing is that you typically don’t have to fill out a lot of paperwork, and you don’t have to provide a lot of documentation. You will generally need the following:

  • Voided business check
  • Credit score
  • Business tax returns
  • Bank statements
  • Driver’s license
  • Quote for the equipment that you want to finance

Term Loans

A term loan application can also be approved in a matter of a couple of days. Again, it depends on how quickly you can get the paperwork together, and in the case of these loans, they require a lot of paperwork. This includes the following:

  • Voided business check
  • Credit score
  • Driver’s license
  • Business balance sheet
  • Bank statements
  • Personal tax returns
  • Business tax returns
  • Profit and loss statements

Merchant Cash Advance

Remember, a merchant cash advance is typically the easiest type of small business loan to get, but they are definitely not the fastest. Typically, a merchant cash advance takes about a week to get funded because the lender generally has to set up merchant services, or at least verify it. This, of course, slows down the process.  In general, you will have to supply the following with your application:

  • Credit score
  • Voided business check
  • Credit card processing statements
  • Business tax returns
  • Bank statements
  • Driver’s license

SBA Loans

Finally, we have SBA loans. Remember, these loans are partially guaranteed by the Small Business Administration. Since these are guaranteed, they are the most difficult to get. Also, since these applications have to go through the government, it takes a lot longer to get approval or not. Typically, you can expect to wait three weeks or more for the application to be processed and your funding to get to you. Of course, you also need to make sure that you gather up all of the required paperwork. This includes the following:

  • Bank statements
  • Driver’s license
  • Balance sheet
  • Voided business check
  • Business plan
  • Business tax returns
  • Personal tax returns
  • Profit and loss statements
  • At least three weeks of a business debt schedule

What’s Next?

So now you know, or at least you have an idea, of how hard it might be to get a small business loan. You know that there are a lot of options out there, but depending on your personal situation, it could be difficult or easy to get one of these. What you need to do next is determine which of these loan types might be right for you.

Remember, the small business loans that are easiest to get are generally the most expensive to get. This means that you need to put more of an investment into getting the loan, and over time, it will cost you more. However, the cheapest loans are the most difficult to get, and not everyone is going to qualify for them.

Fortunately, there are a lot of resources out there that you can rely on to make this process smoother, and even by reading this guide, you are taking the first step in securing funding for your small business.

Finally, we want to say that, even though they might take more effort, SBA and term loans are worth the time and effort to apply for, as you won’t be spending as much to get the loan. You can also use a number of online resources to get more hints and tips to make the process easier.

How Do Student Loans Work?

If you have any aspirations of getting a higher education, the tuition fees can play the role of a roadblock in your path. Unfortunately, there’s not much that some students can do out of pocket since most parents simply can’t afford it.

Some students manage to make it work with the assistance of scholarships and bursaries, but not everyone has access to these. Fortunately, all hope isn’t lost because student loans provide opportunities for many people to get the education that they need to enter the career path that they desire.

Though it may not have been such a staple requirement in the past, there are many jobs that seem to be unattainable without higher education. The idea of incurring a loan expense during your college life can sound like a deterrent, but it doesn’t need to be a disaster if you manage your loan right.

What Is a Student Loan?

A student loan refers to any funding you receive for your education via a lending agreement. You usually receive the funds as you enter a school year, and you are required to start repayment upon the completion of your degree. While there are some cases where loans don’t need to be repaid with interest or at all, the normal occurrence is that you are required to repay the loan in increments with added interest.

When you are starting a college, there are usually scholarship, grant, and loan options listed as financial aid. Of course, the smart thing to do is to look to the grants and scholarships first. Even if they don’t cover the entirety of your tuition, they can cover enough of it to make any loan you have to take significantly less.

Many people would like to imply that student loans fall under the category of “bad debt” because of the millions of Americans that now have student loan debts paying off. This is one of those things that you need to view on a case by case basis. It is possible for the debt to get out of control. However, if managed well based on your situation, it can be a “good debt.”

Remember, you didn’t borrow money to splurge on something unnecessary. This is funding for an education. This education may be the reason that you manage to become eligible to take up a position in your field of interest. It is an investment in yourself and your future.

How Much Are You Allowed to Borrow?

This is one of the most common questions about student loans. No one wants to try to take out a student loan only to hear that it’s not enough to cover the cost of their tuition. You can rest assured that this isn’t the case. Student loans were made to be comprehensive enough to cover the tuition for just about any program.

The idea is that whatever program you choose should be coverable by a loan. Of course, if you manage to find other sources of funding that cut the amount of money you’d need to borrow, you can apply for a smaller loan, which means you have less to repay when you’re course of study has ended.

Remember that the important thing is to borrow only what is needed. Unnecessary borrowing just increases your debt for no good reason.

Types of Loans

Of course, the powers that be don’t automatically know that you need a loan and hand it to you. You must apply for a loan to be considered. Student loans can be considered as either federal or private. It is a wise idea to consider federal funding before you look to private lenders. There are typically better interest rates and terms since federal loans don’t simply exist to fund a business.

Federal Loans

Federal loans are those which are offered through the US government. This comes from the country’s budget for education. The point of these loans is to provide an attractive source of funding for borrowers that also benefits the country. The government doesn’t need to charge an arm and a leg in interest for there to be some benefit to the country.

There are unsubsidized and subsidized loans that fall under the federal umbrella. This sweetens the pot even more, as qualifying for a subsidized loan can take quite a bit of stress off you. An unsubsidized student loan works like any other loan type that you can imagine. You borrow an amount that starts to accrue interest immediately. This interest increases your balance at intervals, and eventually, you pay everything off.

Subsidized loans provide some breathing room for students. During the tenure of your degree program, the government takes care of all interest charges. Both loan types offer a six-month grace period during which you don’t need to make any payments after you graduate. Unsubsidized loans accrue interest during the grace period, while subsidized loans don’t. Note that subsidized loans are not offered to graduate students.

Private Loans

Private loans are those that are offered by lenders that are not associated with the government. If a family member offered you a loan to pay for your education, it would be counted as a private loan. The more likely scenario, however, is that you go through an institution, such as a credit union or bank.

Note that some of these loans require you to start the repayment process while you’re still attending school, so that can complicate things if you don’t have an income source while you’re working on your degree. Additionally, the interest rates tend to be higher than those you’d get with a federal loan.

The consensus is that you only go with a private loan if you can’t get a federal one. The only exception is if the private loan is offering you better terms. For example, a wealthy family member might give a loan to your immediate family for your education. That person may give you a year post-graduation to start your payments. This loan may also be interest-free. Those terms are better than even a subsidized federal loan, so this would be a more viable option.

How Are Funds Received?

The way you receive your funds depends on the avenue that you used when you were applying for the loan initially. If you got a federal loan, for example, the money doesn’t pass through your hands. Your application would have included various details such as the school and program of choice, which allows the funding to be sent directly to the financial aid arm of the institution. This is what is done with these loans.

Private loans can be handled in different ways, depending on the lending institution and the terms of the loan. A private loan can be given directly to the borrower, or it can also be sent to the financial aid office. If it is sent to the office, then the amount is applied to the student’s account. Any leftover funds after all payments are accounted for are given to the student as a refund.

When Are Loans Repaid?

Student loan repayment depends on the kind of loan you got and the conditions that came along with it. If you got a federal loan, then you are given six months after you graduate before payments are due to begin. That gives you some breathing room to get a job, plan your payments, and make changes to your plan based on your income and expenditure.

Private loans are likely not to provide any breathing room, but this heavily depends on the source of the loan. While there may be loans that have a grace period, there are others that may require you to start your payments as early as the month after you get the loan.

How Are Loans Repaid?

This is another question that doesn’t have a single answer. This depends on the lender and the terms that are associated with the loan.

A federal loan tends to provide you with flexible repayment options. This applies to both the payment method you use and the repayment specifics, such as your monthly payment and your term of payment. There are eight different payment plans that are available for federal loans. Standard and graduated repayment are the most common, but the others can be more favorable, depending on your situation. Note that every repayment type is not available to every borrower.

Private loan repayment is based on the agreement. The repayment specifics are typically discussed and laid out in the initial phase, so there isn’t a negotiation after that.

What’s the Penalty for Not Repaying?

The penalties that are synonymous with a lack of payment on loans can be different based on your loan type. A borrower is a payment delinquent if no payment is made by the time a due date arrives.

Though the payment may be late at that point, it can still be made to remove the delinquent status. There may be a small charge whenever payments are late.

Things begin to go downhill if you get to the default stage. You are considered in default whenever a loan payment is unreasonably late. If you were to be late on a payment by even a month, you wouldn’t be considered as anything more than a delinquent.

The default stage happens when you’re about a year late on a federal loan or about four months late on a private loan. When you get to this stage, the loan becomes a financial burden that can make your life a nightmare. Charges start getting thrown in, which means your payments are less effective.

If it’s a federal loan, it can start messing with other areas of your life. For example, the government can simply intercept your refunds and start seizing a percentage of your salary.