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Monthly Archives: July 2017

Lenders Mortgage Insurance

This is all hypothetical of course however that is what most insurance policies are based around, a cover just in case the worst happens even though we all hope it never does.

Depending on how much deposit you have managed to save you may need to pay LMI on your loan. If you have saved up a 20% deposit plus stamp duty, or you have a property with available security to the same value then you won’t need any LMI as you are borrowing 80% or less of the value of the property.

Anything over 80% will incur an LMI charge and unfortunately the cost depends on the amount you are borrowing and the value of the property. There are calculators available or you can contact your Lender for an estimate.

Rest assure, LMI seems like a bad thing but without it so many people would be unable to get into the property market and whilst it is an added expense, the fee is charged to your loan after funding so it’s not more cash you need to come up with.

LMI is a great help to anyone who hasn’t saved the 20% deposit to get into their home however there is another option worth considering and that is using a security guarantor. This is when a guarantor can use cash or property as security to avoid paying any LMI.

Payday Loans Work

Sometimes it is called a cash advance or a check advance, or a post-dated check loan, or a deferred-deposit check loan. No matter how you describe it, a payday loan is a short-term unsecured high interest loan. They generally range between $100 to $1,000 for periods of a few days to a few months. A typical payday loan would be $300 for two to three weeks.

A typical payday loan borrower is in full-time employment, aged 25 to 45, with average income. As the name suggests, a “payday loan’ is designed to bridge the gap in your cash flow until your next pay is received.

With a payday loan gives you the cash you need now, and you repay the lender on your next payday when the lender presents your check to the bank for payment, or by direct debit to your bank account. It is your obligation to ensure that your account has sufficient funds to meet the loan payment. Loan payments can usually be spread over more than one payday.

Payday loans have advantages and disadvantages.

On the positive side:

  • Often a credit check is not required (individual lenders vary, however).
  • The processing time is usually very fast, with funds available immediately or overnight
  • There are no up-front costs, and the best lenders won’t even charge an application fee.
  • The process is private, nobody need know what you are doing.
  • It’s convenient – there are thousands of street-front and internet providers to choose from at any hour of the day
  • A payday loan is often available to borrowers who have been refused a loan from the banks or finance companies, or other traditional sources
  • A payday loan can be for an amount which is too small for other lenders (e.g. $100)

On the negative side:

  • If your short-term expenses are greater than your short-term income, a payday loan will only make your financial situation worse
  • If your income is spasmodic, or unreliable, a payday loan may not be flexible enough for you, because high fees apply when you extend or delay payment
  • If you already have a payday loan, chances are another loan will only make your financial situation worse. (Financial counselling would help you identify a better solution.)
  • If you usually have trouble managing money, the speed and convenience of a payday loan can lead you to over-commit. (Check your budget carefully, and seek another opinion if you have any doubts.)
  • Unfortunately some payday lenders will not discourage you from over-committing. (Don’t deal with a lender who does not take the time to establish whether you can afford the loan in the first place).
  • Some payday lenders will not discourage you from rolling over or extending your loan, which can be very damaging to your finances (Remember: A payday loan is designed for the short-term. A long term payday loan can be extremely expensive).

Bad Type of Loan

Many people who use payday loans are unable to get cash advances from traditional banks. This is often due to their credit history. Banks will typically reject people who either have no credit or bad credit. This has left open a large market for payday loan companies to make money from. Many services are now offered online, making it easier than ever for people to borrow money. The irony of this is that many banks are now giving credit to payday loan companies in order to tap into the market.

This allows the banks to make money off the payday loan industry without having to directly provide loans to the customers it normally rejects. This fact alone should make anyone who uses payday loans angry. With the rise of the internet many people don’t even have to fax information to be approved anymore. It is not necessary to show a credit history when applying for a payday loan, and this is why the industry has become so large. Many people argue that payday loans are good for people that need cash for emergencies.

My answer to that is people should save money for emergencies. If you save money consistently, you should rarely have to use a payday loan. These loans are easy to get but come with a lot of strings. Many people become dependent on them, and begin using them between each paycheck. This puts them in a state of being dependent on a loan company that doesn’t have their best interests in mind. The large interest rates they charge guarantee they will get more money back than they loan out to you.

My advice for payday loans is to avoid them unless you have a large emergency and no money is available. If you save a large amount of your income every month, you should never have to use a payday loan. These loans can put you into a cycle of debt which is hard to break free from. As soon as you pay back one loan, you will probably have to borrow another one. Some companies even ask for collateral, such as your car. If you default on your payments, your car could be taken from you. This is something you should want to avoid at all costs.

The payday loan industry will continue to grow larger, especially due to the popularity of the internet. Many of these companies are only allowing new customers to borrow $500 until they can demonstrate a good payment history. While some would say that this is a good thing, I think that this will entice more people to jump on board and begin borrowing money. It is important to understand that the payday loan companies win, not you. You are not going to get ahead financially by using their services.

Info of Bad Credit Cash Loans

A payday advance loan is for those who have credit issues but also have an emergency state that needs some additional finances. You do not have to provide information about what you need the loan for, or in fact provide any information other than simply your job position and your bank information. Factors in the approval process are that you have a working checking account from which they will deduct the amount that is due when it is due and are assured a return on their finances.

You may not be turned down for bad credit or no credit and in many cases once the information that you offer to them is verified, finances are transferred to your checking account within hours of the application procees completion. Basic information is necessary; valid identification, checking account information and job status and information. Your lender will verify your employment status and your account activity.

As with any other loan, certain terms and conditions will apply such as the length of time you have been employed, and the direct deposit of your paycheck into your checking account. You must have residence in one place for in excess of a year and in most cases will need to be over the age of 18 to make the contract. Some bad credit companies will require you to make a certain amount of money each month, and assure themselves that you do not have loans with other payday advance companies into the bargain.

Much higher interest rates will apply than those which are charged for the normal loan. When you are looking for a new payday loan or for any source of credit, it is imperative that you research fully the information available to you and be certain that you get the best deal you can for your own advantages.

It is also imperative that you know and understand the loan process and how you will be expected to repay the loan. Most will deduct the amount from your checking account on the day that it is due, whether or not you can afford that payment. If you do not repay the loan in the day it is due, more interest accrues for which you are responsible.

If you find that you cannot make the payment in full, it is important for you to pay the interest at least so that you do not fall into default. Paying the interest alone does not touch the principle amount of the loan, but will help you to avoid a default.