Installment Loans From Credit Unions FAQ

Installments loans are personal loans that are advanced by several types of banking and financial institutions. Installment loans are unlike payday loans in that the loans are not paid back completely in a single or few payments. Installment loans are paid in installments of a set period of time depending on the amount. These amounts can vary depending on the customer, institution, and state and federal state regulations. However, most institutions do have limits. These limits are based on the customers’ ability to repay, as well as, the stated regulatory authorities. Some installment loans are offered from lenders that many deem as predatory. However, people in need should not incur this type of debt without the ability to repay.

However, these loans can be a welcome addition to a struggling business or family that can afford the loan because the repayment is being spread out over time. Installment loans in some cases can be considered lines of credit. In this manner, the customer is advanced the loan issued directly from the lending company. These loans can sustain companies and individuals without them incurring massive one time repayments. Most installment loans originate either from banks or lending institutions that specialize in personal loans. Some of these companies do engage in reckless lending practices and predatory means of lending with exorbitant interest rates.

To avoid these scenarios, people can access installment loans from credit unions. Credit unions are regulated by federal, state and local laws. This means that their lending practices are heavily scrutinized for irregular behavior. Often, credit union installment loans are also offered as lines of credit. However, this is not as important because the loans are paid back the same as all installment loans. Credit unions offer these loans in several scenarios. If the loans are secured by the amount of money being saved by the customer at the credit union, the loans are considered secured. This means that the loan limit in most cases will not exceed this amount.

Unsecured installment loans and installment loans used as lines of credit also feature limits. However, these limits are assessed by the lending authorities. This diligence is necessary because the loans are not secured with matching funds. This is why some institutions offer installment loans as lines of credit to those that may be deemed risky. Banks and credit unions have some access to the loan when lending in this manner. This mitigates the risk of unsecured loans in general. Credit unions are by far the best alternative to payday lending companies that are masking payday loans by referring to them as installment loans.

Are Home Equity Loans Favorable Options Versus Signature or Personal Loans

Will a Home Equity loan or a personal loan work better for you

If you are short on cash there are a couple of ways you can look into to get some into your pocket. If you have good credit you could apply for a personal loan and borrow against your good credit history and reliability. If you are a homeowner and have some equity built up in your home you could borrow against that in a couple of different way. You could apply for either a home equity loan or a home equity line of credit.

A couple of important features that might determine the way you want to borrow your money might be whether the loan is fixed or has an adjustable rate and if the term of the loan and pay-off dates are set. A home equity loan and home equity line of credit are both made with the value of your home in mind. They borrow against the equity in your home but are for a shorter term than your first mortgage. A home equity loan is a one-time lump sum that will usually need to be paid off over a certain amount of time. It will probably have a fixed interest rate and the same amount for a payment each month. If you secure a home equity line of credit you will be able to borrow against it for a set amount of time but you will be able to draw against whenever you need money and more than once. Lines of credit are accessed by checks drawn from the account or by using a credit card. The balance rotates up and down as you borrow money and pay it off. Most lines of credit have a variable interest rate that goes up or down over time. Payments vary on the interest rate. When the life span of the line of credit has expired the entire amount will need to be paid off.

A personal loan, also called a consumer loan, can be secured or unsecured by the asset it is used to purchase. You may be required to use a co-signer that guarantees the loan will be paid off if you cannot do so for some reason. All personal loans and non secured loans will have unique guidelines and restrictions, based on the area you live in. The loan is made for a set amount and is usually paid back through a fixed amount over a fixed term.

The type of loan you decide to get depends on the terms you are looking for. You will have to decide whether you want a fixed term or an adjustable percentage rate and learn what the current interest rates are. You may also want to know if interest rates are going up or down. An adjustable rate loan works well when interest rates are down as long as you remember that they can go up or down, which means your payment, will too, at any time.

Tips For Students Heading To College This Fall To Find The Right Credit Card Offer

Graduating college is an exciting time in one’s life. However, going into the world with a degree in hand and no credit can present its challenges. Moving into your own place for example could be costly with high deposits, or you could be denied all together without a credit history. Even starting up utilities or Internet, TV, and phone service could cost you a hefty deposit. Without a credit history, companies cannot assess how credit-worthy you will be going forward and must assume you may be a high risk. As a result, many of them will require a deposit to protect their interests. In fact, even getting a job can prove to be challenging, as many companies require a credit check, and you could lose out on a great opportunity if your credit history comes up empty. So, while there are always risks to starting a credit line while in school, the risks of not starting one may be higher. Students typically find themselves inundated with credit card offers. So, while in school, it would be wise to review the credit card offers you receive. So how do you choose which one is right for you?


- image source, flickr

The first thing to look for is the interest rate. Make sure you select one with the lowest rate, especially after the introductory period. While it is nice to obtain an introductory interest rate, do not be lured in by zero percent interest for the first six months, only to find you are hit with a staggering APR rate after the promotional period expires. Instead, focus on the normal interest rate when comparing offers. Students should typically find a rate somewhere in the mid-teens, (e.g., 15%) and should avoid anything that is above 20 percent. The reason for focusing on the APR is because most students tend to carry a balance and the interest on that balance will obviously be lower if you select a credit card with a favorable interest rate.

Aside from the interest rate, you should also review all fees associated with the credit card. It is possible to avoid those with annual fees; and this is another important consideration when selecting a credit card. Also, watch out for any hidden fees in the fine print. In fact, it is wise for students to always read the fine print before signing up for any credit card. Additionally, credit cards that offer a free gift are probably not the best ones to choose. Many of these offers typically require you to carry a balance and the APR rate on that balance is likely to be higher than what you can find with other offers.

Another feature you may wish to consider if you have good grades is a cash-back option with the credit card you select. Some companies will offer an incentive to students with good grades (who also pay their credit card bill on time) with a 1%-5% cash-back reward. Again, just remember to read the terms and conditions of the cards to make sure you are receiving the most “bang for your buck”.

Finally, the most important thing a student should remember when selecting a credit card is to not open up too many accounts. Rewards, gifts, and credit lines can be very tempting. However, getting into a large debt with credit cards that snowballs into late and missing payments will not help you after you graduate. If you are not disciplined enough to manage the credit (and making the required payments), it may be best to not get one at all. The bottom line is look for the best interest rate on one card and pay that on time, every time and you will be ready to transition into life after college.

Living Paycheck to Paycheck Increases Potential For Poor Financial Decisions

Living paycheck to paycheck leaves people vulnerable to financial disaster. The biggest problem is the future uncertainty that this presents should a life altering event take place. Employees think they are safe in their job and have no risk of unemployment. This mindset deceives them into managing their money in a careless manner. They do not feel the threat of financial troubles because they are use to a regular paycheck. Basically, they take this regular check for granted. As a result, they spend every cent they earn as fast as they can. It is a sense of entitlement. They think if they work hard enough, then they have a right to spend however they choose. People do have a right to spend as they wish. However, people also have a responsibility to pay for expenses that are not in their control. Things happen last minute and must be paid for. Oftentimes, living paycheck to paycheck makes people unable to meet this responsibility.

People resort to borrowing from friends and family when money is tight. This is a bad choice for anyone who cares about their relationships with others. Borrowing money from friends and family causes unnecessary stress in the relationship. Loved ones become resentful when they are not paid back, or they see the borrower making purchases with money that is owed to them. People damage relationships by borrowing money from friends and family.

Some people can’t get through the week with their paycheck. They have to get payday loans or cash advances. This method of getting through the week is not advised, as it can lead to financial hardship. The same circumstances, that led to the lack of cash flow, remain in effect week after week. Payday loans do not improve cash flow. It only creates more financial problems. Payday loan companies charge outrageous fees and interest for their services. These companies take advantage of people that cannot manage their money properly. Oftentimes, a payday loan company requires collateral on a loan. With almost impossible terms of repayment, they eventually take the property. If someone doesn’t have the money to get through the week, then how would they have the extra cash to pay on a loan a week later?

Credit cards are similar to payday loans, except credit cards are for long term use. However, when not used properly, credit cards can ruin someone financially. People use credit cards to supplement expenses or a lifestyle they cannot afford. Credit cards lead to long term debt that requires payment. If payments are not made, then interest rates go up. Eventually, credit card companies leave negative information on the borrower’s credit report. With a bad credit rating, the borrower finds it difficult to get credit in the future. Credit cards serve a valuable service when used properly, but they can destroy someone living paycheck to paycheck.

People who live this way never build up a savings account. They cannot establish a foundation for retirement or leave an inheritance for their children. Living paycheck to paycheck leaves people vulnerable to unemployment and unexpected expenses. People who manage their money wisely avoid these pitfalls. Those that choose to spend every cent suffer in the end.