SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information … [Read more…]
SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information … [Read more…]
SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information … [Read more…]
SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information … [Read more…]
SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments.
We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
© 2023 SmartAsset, all rights reserved.
Source: smartasset.com
SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments.
We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
© 2023 SmartAsset, all rights reserved.
Source: smartasset.com
SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments.
We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
© 2023 SmartAsset, all rights reserved.
Source: smartasset.com
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Many Americans have income that fluctuates from week to week. When incomes are unsteady, any unexpected expense can leave you coming up short. If you don’t have a fully funded emergency fund, you may find yourself looking around for loans to bridge the gap and get you to your next paycheck. Payday loans are out there, but at a high cost to borrowers. Before taking out a payday loan you may want to first make a budget. You can work with a financial advisor who can help you make a long-term financial plan that you can budget your finances to meet.
What are payday loans? Say you’re still 12 days away from your next paycheck but you need $400 for emergency car repairs. Without the $400 your car won’t run, you won’t make it to work, you’ll lose your job and possibly lose your housing too. High stakes.
If you go to a payday lender, they’ll ask you to write a future-dated check for an amount equal to $400 plus a financing fee. In exchange, you’ll get $400. You’ll generally have two weeks or until your next paycheck to pay that money back. Say the financing fee is $40. You’ve paid $40 to borrow $400 for two weeks.
If you pay back the money within the loan term, you’re out $40 but you’re not responsible for paying interest. But the thing is, many people can’t pay back their loans. When that happens, the money they borrowed is subject to double-digit, triple-digit or even quadruple-digit interest rates. It’s easy to see how a payday loan can lead to a debt spiral. That’s why payday loans are illegal in some places and their interest rates are regulated in others.
When your loan term ends, you can ask your payday loan lender to cash the check you wrote when you agreed to the loan. Or, you can roll that debt into a new debt, paying a new set of financing fees in the process. Rolling over debt is what leads to a debt spiral, but it’s often people’s only choice if they don’t have enough money in their account to cover the check they wrote.
Not all debt is created equal. An affordable mortgage on a home that’s rising in value is different from a private student loan with a high-interest rate that you’re struggling to pay off. With payday loans, you pay a lot of money for the privilege of taking out a small short-term loan. Payday loans can easily get out of control, leading borrowers deeper and deeper into debt.
And with their high-interest rates, payday loans put borrowers in the position of making interest-only payments, never able to chip away at the principal they borrowed or get out of debt for good.
Payday loans don’t require a credit check. If you pay back your payday loan on time, that loan generally won’t show up on your credit reports with any of the three credit reporting agencies (Experian, TransUnion and Equifax). Paying back a payday loan within your loan term won’t boost your credit score or help you build credit.
But what about if you’re unable to repay your payday loan? Will that payday loan hurt your credit? It could. If your payday lender sells your debt to a collection agency, that debt collector could report your unpaid loan to the credit reporting agencies. It would then appear as a negative entry on your credit report and lower your credit score. Remember that it takes seven years for negative entries to cycle off your credit report.
Having a debt that goes to collections is not just a blow to your credit score. It can put you on the radar of some unsavory characters. In some cases, debt collectors may threaten to press charges. Because borrowers write a check when they take out a payday loan, debt collectors may try to press charges using laws designed to punish those who commit fraud by writing checks for accounts with non-sufficient funds (these are known as NSF checks).
However, future-dated checks written to payday lenders are generally exempt from these laws. Debt collectors may threaten to bring charges as a way to get people to pay up, even though judges generally would dismiss any such charges.
If you’re having a liquidity crisis but you want to avoid payday lenders, there are alternatives to consider. You could borrow from friends or family. You could seek a small personal loan from a bank, credit union or online peer-to-peer lending site.
Many sites now offer instant or same-day loans that rival the speed of payday lenders, but with lower fees and lower interest rates. You could also ask for an extension from your creditors, or for an advance from your employers.
Even forms of lending we don’t generally love, like credit card cash advances, tend to have lower interest rates than payday loans do. In short, it’s usually a good idea to avoid payday loans if you can. Instead, consider working on a budget that can help you get to your next paycheck with some breathing room, and make sure you have a rainy day fund.
When considering a short-term loan, it’s important to not just look for low-interest rates. Between fees and insurance policies, lenders sometimes find ways to bump effective interest rates to triple-digit levels even if they cap their APRs. The risks of taking a payday loan bring home the importance of working hard to build up an emergency fund that you can draw on.
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There are very few times when taking out more debt to pay off credit card debt makes sense. Using a personal loan to pay off your credit card debt is only moving the money around. The debt is still there. However, it might just be a pile of debt with better terms for you and your family. These are three times it might make sense to pay off credit card debt with a personal loan. If you want more help in your loan repayment process, consider seeking a consultation with a trusted financial expert. SmartAsset’s financial advisor matching tool can pair you up with a professional who can provide guidance that suits your specific needs.
The most important aspect of a debt consolidation loan is to lower the annual interest rate of your debts. Often, a personal loan can be the perfect instrument for you to lower the annual interest rates of your debt. You should not consider a personal loan to consolidate your credit card debts if it does not lower the annual interest rate you are already paying. Paying a lower interest rate will allow you to pay off more principal each month, help you get out of debt faster, and lower the total cost of your debt.
Consolidating several credit card payments into one personal loan is a great achievement. Having one loan payment allows you to focus all of your time, attention, and energy into that one payment. It is much easier to concentrate on and pay off one debt instead of having several smaller debts that always seem to nip at your heels.
Of course, you must also strive to not rack up your credit card balances after consolidating your credit card debt with a personal loan. It will not do you much good to focus on one large debt if you begin accumulating smaller balances again on your credit cards. You have to avoid playing a shell game with your debts, and you will need to address the underlying, fundamental reason why you are in debt. Do you have a spending problem? Do you not stick to your family’s monthly budget? You have to address these issues in order to get out of debt and stay out of debt.
Using a personal loan to consolidate your debts can also lower your total monthly payments for the debts that you owe. You will have to run the numbers, but often you will find that your monthly minimum payment for your one personal loan that consolidated your debt is lower than the total of all your separate credit card minimum monthly payments.
Lowering your monthly payments can help you create a debt snowball and assist you in paying off your credit card and now personal loan debt faster. For example, if you were originally paying $500 per month in minimum payments to the credit card companies and now found yourself paying only $400 per month on your new personal loan, you can afford to apply the other $100 per month directly to your loan’s principal. This strategy will help you get out of debt faster.
If you are not saving money by restructuring your credit card debts using a personal loan, either by cutting down your monthly payments or lowering your interest rates, it is probably not a good idea to restructure your debt. Make moving your debt around worthwhile to you. Insist on a lower interest rate for your debt, lower your monthly payment so you can pay off your debt faster and take back control over your finances with one lower monthly payment.
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Co-signing your friend’s loan might seem like a nice thing to do. But it can put many things in your life at risk, including your finances, your credit score and even your friendship. While it’s possible to co-sign a friend’s loan and never face any negative consequences, it might not be worth it. Check out five reasons why you shouldn’t co-sign a friend’s loan.
No matter how trustworthy or wonderful your friend may be, he might end up defaulting on the loan he took out. Anything could happen. Your friend could lose his job or find out that a relative needs help paying for medical treatment.
If your friend can’t pay back the money he borrowed, you would have to pay for the loan if you co-signed it.
If you co-sign a friend’s loan and he misses a single loan payment deadline, your credit score could drop. If that happens, it might be harder for you to buy a house or get a low interest rate on a loan in the future.
If your friend fails to pay back whatever he owes, the lender might sue you first. In the lender’s eyes, you are far more likely to pay back the loan since your credit score is probably higher.
Sometimes a co-signer will secure a loan with his or her own property. If you (the co-signer) put up your car or house as collateral and your friend doesn’t pay back the loan, you could potentially lose your property.
If you’re forced to cover the cost of the loan you co-signed, you could end up resenting your friend. After all, it can be difficult to remain friends with someone who put you in a complicated financial situation.
Co-signing your friend’s loan could make qualifying for another loan more difficult. For example, if you co-sign your friend’s car loan and then you try to take out a personal loan, a lender might reject your application. Co-signing your friend’s loan will affect your debt-to-income ratio (the amount of debt you’re paying off compared to your monthly gross income). A lender might not want to lend money to someone who already has a lot of debt to pay off.
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