Tips on Using Payday Loans Responsibly

Payday loans have come under criticism in certain quarters recently for a verity of reasons. The amount of interest which users are thought to pay back is one of the main gripes that some people have, as well as the ease at which payday loans can be gotten from different short term loan companies. There are myths, half truths and pure speculation regarding certain issues with payday loans, all of which will be cleared up within this post; but even with this in mind, it’s still necessary to borrow sensibly.

So how do you use payday loans responsibly?

First of all, understand when you should apply. For example, if you desperately need money to pay for emergency repairs or outstanding bills, then you should definitely consider getting a payday loan. However, if you require the money just to head out with friends, knowing full well that you may not be able to pay this off on your next payday, then you may want to consider staying in and saving your money instead. As a rule of thumb, with whatever circumstance you face, if it’s going to cost you more by not taking out a payday loan, then you definitely need to consider this as an option.

H&T leave payday loan market - photo of coins and notes

Only borrow the money if you know you can pay the money back in full (including any fees and interest) on your next payday. This means that, depending on what you earn, this should dictate the amount you borrow. Lenders will consider this anyway when you apply for a loan, so they will never lend you more than what you can actually pay back anyway, but you do need to think about only borrowing just what you need, and no more.

Early repayment is a good idea if you are using a lender that breaks down your loan interest on a daily basis. However, some lenders will calculate the interest you pay based on your next payday. With this in mind, it may not actually benefit you repaying the loan any earlier. However, it’s always best to check with the lender you choose before applying.

This brings us on to doing your research. Always check the lender’s terms and conditions before applying for a payday loan. That means, check how much you are likely to pay in terms of interest, as well any additional fees and charges. The amount of interest you pay isn’t always as daunting as it looks. For example, some sites state an interest in excess of 2000%. However, it is extremely unlikely that you’ll pay 2000% on what you borrow, unless you don’t repay the lender for an entire year. It’s more likely that you’ll repay around 25% for every £100 you borrow per month. In any case, it’s always worth checking the interest of the lender before you apply.

With this in mind, also check the quality of the lender. Don’t be put off that most lenders will borrow you money. Whilst the payday loans industry still have guidelines to who they can lend to, it’s just not as stringent as banks and other financial institutions. This is no bad thing, as it means getting instant cash advances is a great deal easier than speaking to the bank – ideal if you’re in a financial emergency. Instant Payday Loans lenders – Uncle Buck is one that we recommend you to check out.

Always be completely honest when completing you application form, and never rush this process, as the smallest of errors may take your application longer to verify. Considering you’ll probably be in an emergency when needing the money, you’ll want the process to be a swift as possible, so just take your time – it only takes about 5 minutes anyway.

How to make loan calculations?

There may come a time when you require money immediately, but you will not be in a position to mobilize the required money. Under the circumstances, you will have no other alternative but to go in for a loan. When you decide to take a loan, it will be good for you to know, before hand, as to the total cost of the loan you are going to avail. How do you get this figure? You collect offers of loans from different sources which will include rates of interest, payment terms, etc. Based on the amount of loan you need, you can work out the total cost of the loan. After analyzing the details gathered from various sources, you can take a decision in the matter.

Online calculators are helpful to make the calculations

When you decide to take a loan, it will be better for you to work out the loan calculation yourself. It is only then you will get to know every detail connected with the loan. Thus you become fully acquainted with the whole aspects of the loan. And you have full knowledge about the payments to be made every month and for how long. The over-all cost of the loan, including interest payments, fees, if any, will be clear to you. In case you feel it necessary, you will do well to make the required changes in some of the loan calculation components.

What is the need for a loan calculation, some people may be wondering. It is most important for you to have full and detailed information regarding the cost of the loan which you are going to avail. This will give you a clear idea in the matter of monthly outgo, duration of the loan period, penal fees, if any, for delayed payment and/or foreclosure. As said earlier, if there is any need, some of the loan calculation components could be changed. Some changes, effected thus, are likely to bring a total difference in the outcome.

loan calculations

How will you calculate the cost of a loan?

For any loan, there will be some interest payable on the principal amount plus some sort of fees. These things will be clearly mentioned in the loan offers. However, in case you find it difficult to get a clear idea of the details concerning the loan offer, you can do the calculation yourself, taking each item one by one. For this purpose, you may apply the usual formula. However, if necessary, you can make use of an online calculator. You need not consider those loan offers which indicate lower interest rates with ‘no fees’ or ‘very little fee’, as the best available in the market. The fact may be different. You better consider all other aspects and take a decision in the matter of choosing the ideal offer.

A loan taken is repaid in two ways. One way is, you pay only interest every month until you repay the loan amount in full – a one- time payment. If you choose to go along this way, you have a clear idea as to the amount required for the monthly payments, till the loan is repaid. The second way is this: you choose to pay a certain amount of money every month which will include a part of the principal amount too apart from the interest amount. This type of payment is known as ‘amortization.’  If you choose this method and, after a certain period of time, if you are eager to find out how much of the principal amount you have paid back, you will get the ‘shock’ of your life. Large portion of the amounts you have paid would have been adjusted against interest, leaving the principal balance almost at the same level!

Debt Consolidation Firms

Do you have average or excellent skills at handling your finances? Unless you are a clumsy or careless money manager, you might have an easy enough time balancing out your monthly expenses with the earnings that you are receiving regularly. However, one wrong move could have a domino effect on your finances.

A medical emergency, redundancy at work or any other change in your lifestyle could affect your financial life enormously and suddenly. In the same vein, having one or more credit cards makes it easy to fall into a debt trap wherein you are borrowing more than what you are actually earning. As a result, you will have this mounting debt wherein the minimal payments that you are allotting for each credit card account will not even make a dent on the total that you owe.

Debt Consolidation Firms: The Basics

If you are in a situation wherein you are seriously considering filing for bankruptcy, the good news is that there are several alternatives that you can go for. One of the most common solutions that those who are in debt consider is taking out a loan. The danger of this move is that if you are not that good in handling your finances in the first place, you might end up taking on more debt rather than consolidating them all into one easy-to-pay-for loan. You will almost always pay back much more in the long run by consolidating debt in this way, as the monthly payments are brought down by extending the loan over a much longer period.

Debt Consolidation Firms

The better alternative is to approach one of the more reputable debt consolidation firms online. You will be assigning a debt expert to assess your financial situation and recommend a solution. If debt consolidation is the way to go, then they will be the one to negotiate with your creditors so that a lower monthly payment can be made, interest rates will stop getting charged, and you will have an overall easier time at managing your debts.

Finding Reputable Debt Consolidation Firms

To get you started on learning how to choose the best among the debt consolidation firms out there, here is a list of the things that you need to keep in mind:

  • When looking for debt consolidation firms online, make sure that they have excellent feedback from personal users. Check the online reviews or get personal references from friends or relatives who have taken advantage of such services.
  • Check on the number of years that the debt consolidation firm has been in service. The longer that they have been specializing in offering debt consolidation services, the better.
  • Inquire about perks like free assistance regarding debt repayments, how to create a monthly budget and how not to fall in further debt traps in the future.
  • Naturally, you should make sure that the debt consolidation firm is operating legally and properly licensed, so that you will not be cheated out of the money that you should have otherwise used to pay off your debts.

Preparing to Shop for a Mortgage Loan

Are you looking to purchase a home or do you want to refinance your current mortgage to a lower interest rate? If so, ask yourself a few questions before signing on the dotted line.

What Is My Credit Score?

One of the first things a borrower should understand before moving forward with any credit application is what your current credit looks like. Are there any erroneously reported items? Are there credit items that are correct but need to be addressed? To put yourself in position to get the lowest rate available, it is in your best interest to do your credit homework.

What Is the Current Mortgage Rate Environment?

It is important to understand where rates are when you are considering a new mortgage or a refinance. You should find out what the interest rate range is, as well as the volatility of the market. Mortgage interest rates move with Treasury notes and bonds as market conditions change. Find out where the rates are hovering and be aware of the overall market volatility. You can use this information to help you calculate an affordable payment.

Mortgage Loan

What Can I Afford?

Whether you are purchasing a new home or refinancing your current residence, you must take an honest, objective look at your goals and what you can comfortably afford. Understanding the following items will help you find the best type of loan for your situation.

Affordability Checklist

• What is the stability of your income? Is it going to rise over time?
• How much money do you have available for a down payment? (Make sure you also maintain some reserves)
• How does your estimated mortgage payment (don’t forget to include taxes and insurance in your calculation) affect what you can afford, when combined along with your other debts such as car payments, student loans, and utilities?
• How long do you intend to live in this home?
• If you are purchasing a home, evaluate where you would like to live. Is the price range in your chosen neighborhood affordable, based upon what you know so far?

Begin Shopping For a Mortgage

Begin by comparing products and interest rates from different lenders. A fast and easy way to do this is via the Internet. The Internet allows you to compare lenders side by side using the same loan scenarios. As you are comparing similar products, look at the interest rate, fees charged by the lender, and the annual percentage rate (APR). If you have used the Affordability Checklist in this article, you can start to understand what product is best for you. Mortgage products range as follows:

• Loan Term – 15 or 30 year amortization
• Product Type – Conventional or government loan
• Rate – Fixed rate or an adjustable rate mortgage (ARM)

If you have questions along the way, lenders are eagerly waiting to assist you with your mortgage financing questions.  Doing your homework in advance will better prepare you to make your most informed mortgage loan decision.

Saving and budgeting

We have all heard all sorts of advice about saving and budgeting. Experts tell us what we should be doing and how we should be doing it the best way. Family members tell us what we should be doing and how we should be doing it. Friends who seem to be doing better financially than we are will tell us how they have do in and what has worked for them. We should save more. We should save less. We should save three months of income for emergencies. We should have at least a years’ worth of savings. We don’t need savings as long as we have income, investments and credit. We should never rely on income investments or credit to live on. It all gets confusing and overwhelming. As for budgeting, that just plain seems scary and hard to stick to. Let’s look at 5 ways to think about saving and budgeting that will make them seem clearer and less confusing.

1. It’s never too late to start saving – In a perfect world we would have all started to save at age 20 and would have added regularly to it every month from then on. Obviously we don’t live in a perfect world. There are all sorts of circumstances and situations which get in the way of saving. There is nothing wrong with that. There is also nothing wrong with starting to save whenever you can. Starting at age 40 might not be as good as starting at age 20, but it is a whole lot better than starting at 50. The best time to begin is right now.


2. There is no such thing as too little – Some people don’t want to start saving because by the time they have paid all of their other bills they are only left with a little bit of money, so it doesn’t seem worth it. This is silly. Even a little bit makes a big difference. You have to consider that something is better than nothing, that you are benefiting from the interest which is letting your money grow and you are getting in the habit of saving, so you will be able to save more when you start making money. Start saving now, no matter how much you can save!

3. Don’t save too much – This sounds like contrary advice, but it really isn’t. Saving is important, but so is living today. If you are saving so much now that you can’t do or enjoy anything, then you begin to dislike savings. You will resent it and you will quit doing it. You are much better off saving a reasonable and sustainable amount now and continuing at that level for years to come.

4. Don’t think of it as a budget – Budget sounds like a negative word. It is all about constraints. Try calling it a spending plan instead. That sounds so much more positive and will make it easier to stick with it over the long run.

The Trouble with Skipping an IFA for a Pension

Trying to think about the future when it comes to your pension needs or even an annuity down the road? You’re not the only one. Many people in the UK today are more concerned about retirement than ever before. Many are waking up to realize that if they don’t plan ahead as much as possible, they’ll actually end up without a comfortable retirement. This means working until they die, and who really wants to wake up to that type of future? No one that we know, of course. So if you’re really serious about making sure that you’re going to have the best future possible, then you definitely owe it to yourself to start thinking through what you’re going to do.

Some people skip over hiring an IFA (independent financial advisor), because they’ve been told that the IFA will charge a commission in order to work with them. They work on commission and they will give you advice — that’s the way it works. But if you’re thinking that you’re better off skipping over them completely, then you might want to think again. The truth is that you actually get more out of going with an IFA than directly to the pension provider.

Why is it this way, you might wonder? Well, it’s really simple — you will have to calculate in the fact that the pension providers aren’t trying to give you the type of advice that you need to really determine what’s right for you. Even if you’re trying to avoid the commission, you might find that they’ll charge you just as much even without the commission. And you’ll go without the independent advice that could help you avoid making a huge mistake.

Even though it’s true that you can transfer your pension around and around if that’s what you really want to do, the reality is that there are fees involved every time you transfer. There could be stiff penalties for messing with that money. Therefore, you’re much better off finding the type of policy that you really can count on. It’s better to do that than try to figure out everything on your own without the adviser’s help. Keep in mind that this is exactly what they do for a living. If you don’t spend your days mulling over annuities and pensions, then what chance do you have of surpassing what they can do for you? Internet research is important, yes — but there is something special to be said about professional advice.

You have to realize that there are limits to the IFA’s. You can get compensation if the advice they give you is faulty, but that doesn’t mean that you get compensated if your pension pot goes down due to the market. It’s something that you have to deal with as par for the course. Losses do happen but you stand to gain a lot more if you explore the pension world carefully. Good luck!

New Data Shows That Lottery Winners Aren’t as Happy As We Once Thought

What would your life be like if you won the lottery? What would you buy first? Who would you bring into your life…or push out of it? Most people assume that their lives would be incredibly amazing if they could just win the Lottery. However, a new story out indicates that all that glitters really isn’t golden after all.

It starts with a cluster of 12 bus drivers who pooled their money to buy lottery tickets. They won and they had to split the prize pot.

Sounds good, right? Well, many of the bus drivers have had to deal with outright strangers asking them for money, along with family members getting into the fights. The rising stress has turned many back to old habits — such as smoking and drinking. Hospital visits have become common. The overall stress of having a lot of money to manage tends to make things very difficult for people. If you have negative thoughts about money, coming into a lot of money isn’t going to necessarily change anything. You will suddenly be part of a group that you used to envy. This is a pretty painful thing for a lot of people. There’s no need to fall into this trap though.

First and foremost, you need to think about a solid plan for the money. Quitting your job when you have no idea what you’re going to do with your life isn’t going to make matters any better. You’re just going to make yourself tired, lonely and confused. Why would you want to put yourself through that type of pain if you could avoid it? Why would you want to make yourself miserable?

You want to sit down and have a good discussion with your spouse. One of your spouse’s highest fears is losing you to a new life of wealth and power. If you make sure that they know they are still one of your highest priorities, you will be good to go. Don’t change anything for a while. Have money, but make sure that you are in control and not the other way around. The trouble comes from people thinking that money has to change them. There’s nothing that says that your life has to suddenly become focused with luxury cars and travel. If that’s to what you really want out of life, you don’t have to pursue it.

Let the money sit and collect interest — there’s nothing wrong with that. And if you’re trying to become entrepreneurial and let your money grow, going with an independent financial adviser is really the best way to go.

Trust in your own instincts. This is a sad tale for the 12 Lottery winners, but that doesn’t mean it has to be YOUR story, either. Good luck!

Save Money – Choose an Online Only Bank!

Here’s something you probably already know: we’re a mobile society that’s always on the go. There’s just no getting around that. Yet there does come a point where you have to look at how well things fit into your new mobile life. If you’re on the go, shouldn’t your banking be too?

That’s the subject of debate in a lot of banking circles. Getting account info on your phone is cool, but there are security issues that every banking institution has to think about. It can’t just be a matter of customer convenience. Your sensitive financial information has to be protected at all costs. Hackers could get your information and have a field day. Not what you really want to look forward to at all.

The conversation naturally tilts towards online banking. After all, it isn’t like we don’t know how to protect customer information online. We’ve gotten good at encrypting things. Online banking is full of regulations involving security, so you wouldn’t have to worry too terribly much about your information.

Online banking has been around for a while now, so it’s not like you’re missing out on too much. You can get an online bank account without any stress, giving you a new world to explore. If you bank from a physical location, you probably have online access to your account as well. If you’re someone that travels a lot though, it might be wise to think about an online only bank. The overhead is less which means that you can get better rates than a traditional bank where the overhead is so high.

The nice part about online banking is that it’s available anywhere you have an online connection. So if you happen to move away from that particular location where the physical bank is located, you’re not going to want to drive all the way back just to use their services.

In a troubled economy, cutting costs is a good thing. Services that we like in the online banking sector include ING Bank and Ally Bank. There are plenty of other ones out there, so make sure that you truly explore all of your options.

Bank Loans

In the borrowing and lending process of loans the one lender has to be trustworthy as well along with the borrowers. Giving out loans was started by banks officially and that is why they are the most trusted and reliable source of loans to date. Although today several other lending institutions have also emerged bank financing remains as the most obvious choice of source when it comes to taking loans. The reason behind this trust could be their experience and also the transparency of policies and the way in which these policies are clearly communicated to the borrower.

Banks today deal in all sorts of loans such as bank loans to individual borrowers and banks loans to institutions and businesses etc. Banks also deal in the two broad categories of loans: secured loans and unsecured loans. Secured loans are guaranteed to be paid back and a property such as a house is used as collateral. The loan is typically decided according to the value of the collateral.

Typically the loan will not equal the entire value of the house but may be around 60 to 80% of the value of the house. In case of default in paying back the loan the bank can sell the property off to recover the money that they loaned to the owners of the property. The interest rates for secured loans are lower then the unsecured loans. The bank interest rates for unsecured loans are high because the bank has no security or guarantee that the loan will be paid back. Typical examples of secured loan is mortgage banking by the bank in which the house being financed is used as a collateral and car finance is also a similar secured loan example.

In the event of default in paying back the loan taken to buy the house or the car the house or the car is confiscated by the bank after a few warnings. An example of unsecured loan would be credit cards which are more fitted to the debt category but are still a short term loan. Bank rates may be higher for such unsecured loans. Another event in which the bank rates will be higher is if you have a bad credit rating.

The credit banking side of the financial banks deals in credit lines to businesses called the corporate credits and individual personal credits like credit cards etc. Credit banking rates vary from customer to customer. Several banks now offer affordable credit solutions to small businesses but at higher interest rates than they do to most established companies. Banks consider several factors when extending a bank loan to businesses.

Some common factors include whether or not the business has a checking account with that particular bank, the credit history of the owner (in case of private firm) and the company’s credit history, and the business performance and life span of the company. Similarly, the credit card limits vary from person to person based on their credit rating. Credit card payment records also have an effect on the credit rating although they are not considered important by most people. Loans to small businesses and credit cards are usually unsecured loans.

Unlike typical banks business does not come easy in mortgage banking. Mortgage banks are entities that are licensed to give out mortgage loans. They can also be called a home loan bank when dealing with house mortgage specifically. But it is not just houses that they deal in. Mortgage banks offer specialized mortgage loans to consumers and these are licensed institution constituted to cater to this need. As consumers do not deposit any money in mortgage banks they can not earn from this source and hence, require other secondary sources of income.

Operations of mortgage banking are governed by the state laws of the state that they are operating in. As these banks service only mortgage loans they have to stay very competitive to keep the business up and like general banking they can not rely on other departments to cover for the losses or the bad business in a particular month. It is becoming a trend for mortgage banks to only create a loan and earn from it and later sell it off to a mortgage servicing company which will pay the bank for the loan and then service the loan for the borrower and earn from its servicing till the borrower keeps the loan.

An investment bank would usually help companies, governments or individual investors in raising money and investing etc. These banks also advice these entities regarding their business decisions and investment options etc. Apart from financial banking and banks loan side of the banks investment banking usually deals with consultancy and advisory mainly. Investors dealing on behalf of the investment bank and dealing with the customer’s money try to get the best out of his trading decisions and tries to get the best bank rates. An investment bank is typically divided into three parts: front office, middle office, and back office.

The main interaction of the bank is with the capital market after the client where they buy and sell securities through traders. In investment banking the main services are helping clients raise funds and advisory services regarding mergers and similar business decisions. Bank financial aspect deals with corporate finance. Sales or trading constitute the basic revenue for the investment banks. These banks also have a research division which analyzes the buy and sell aspects of various companies.

This division does not contribute anything to the revenues but the information that the division collects can help in many strategic decisions like the mergers and acquisitions advice that the bank services its clients in. Several products have been floated in the market by investment banks to facilitate their clients and new products are being added to their portfolios as the needs of the people seeking services of these banks change. Pension, mutual and hedge funds are some of the products of an investment bank among other products. An investment bank also monitors and works around different level risks to get to a profit trade for their client.

Powered by Credit Blog | Great Banking Tips.