The Benefits of Paying Your Debt Off Early and How

So, you have debt, which isn’t great but on the flip side, you have a little extra money on hand. So, is it better to pay off your loans early or should you just keep on making the normal monthly payments?

paying off loans

You can only make the decision once you have evaluated what you get from the loan against the cost of keeping the loan around. You will be able to save quite a lot of money when you get rid of your loan debt early, but it might not always be the best thing to do.

Here is a look at the benefits of paying your debt early and how you can do this.

The Benefits of Paying Your Debt Early

Save Money by Paying Off Loans

One of the main reasons as to why you would want to pay off your debt early is so that you stop paying the interest, which will then allow you to save money.The interest that you are charged doesn’t actually buy you anything, but rather gives you the ability to pay slowly.

There are loans that can drag on for years and the interest on these can certainly add up. Other loans may have a shorter term, but these generally carry a higher interest rate, which then makes them more expensive. When it comes to high cost debt, you should definitely be paying more than the minimum.

So, when you pay your debt down early, you won’t be able to use that extra money, which could mean that you will not be able to enjoy those extra luxuries in the month or you will have a smaller financial cushion, which may make it harder to pay for any surprise expenses.

Also, you will have to come up with extra money to put towards other goals that you may have like your retirement or making a down payment on a home, for instance.

However, paying off loans early saves you money on the interest and you can stop paying a monthly repayment, which you can then use to save.

Give Your Finances Strength

You will become stronger financially when you pay down debt. The money that you have been putting towards the monthly repayment will become available and you can use this for other purposes and it can be used to fund your other goals.

You will also become a more viable option for lenders. Lenders have to be sure that you have enough money to repay loans and that any loans that you have aren’t eating up too much of monthly income, which is known as your debt to income ratio. Your debt to income ratio improves when you pay off debt and this will help you to secure a loan in the future.

Also, when you pay down debt, your credit score can also improve. Part of your credit score is based on the amount that you are borrowing in relation to the maximum that you potentially could borrow. If you have maxed out then you will have a low credit score, but when you pay down debt that you have, you will create more wiggle room.

Just Relax

There are some that just hate debt, so they pay off loans as soon as possible, which is fine as long as you know what you are doing.

You might be looking for peace of mind so that you don’t have to worry about debt. Your goal might be to eliminate any debt that you have before you retire or you might just be sick of paying monthly payments.

personal loans

When you are looking at paying off debt, you need to look at the big picture and make a decision that you are able to live with and makes the most financial sense.

So, how can you pay off your debt early?

How to Pay Off Debt Early

In many cases paying off debt earlier just involves sending extra money, whether you pay a little extra each month or you just do it all at once. You can ask your lender how you can do it so that your payments are correctly credited to your account and so that you know exactly the amount you need to send.

Here are some tips on how to pay off debt early.

Just Send Money

The easiest way to pay off your debt early is to pay a little or even a lot extra when you are able to. This is also the hardest strategy to implement as you will need to have discipline to do this.

However, if you are confident in your ability to send extra payments and pay off your debts then just send extra payments.

When you send these extra payments, you should include a note that says ‘apply to principal’ so that your lender doesn’t get confused and they see that you are trying to pay extra. If they need things to be done differently they will contact you.

Just the One Extra Payment

You will be able to pay off debts quicker when you add an extra monthly payment each year. You can pay the extra monthly payment anytime during the year as a lump sum, but if you are like most people and you find it hard to come up with the extra payment, you can spread this extra payment throughout the year.

pay off debt

You can divide the monthly payment by 12 and add that amount to each of your monthly payments. This will help you to pay your debt off earlier.

Try Biweekly Payments

Instead of paying every month, you can look at paying every two weeks, which will be the same as one extra payment per year. When you go for the biweekly option, you will see a huge change in your monthly expenses, but you will also save huge as you pay off your debt over the years.

Help from Your Lender

You should speak to your lender as they may have options available that will help you to pay off your debt more quickly. However, be careful as these programs may have additional fees attached. You need to see if these programs are worth it to you and if they are, then pay the fees.

If you don’t want to pay extra fees, then you can find a way to pay extra and avoid the fees like automatic monthly payments that you can set up through your banks’ online banking portal. Just make sure that you attach a note that says ‘apply to principal’.

When you are paying off your debt, you will need to exercise discipline so that you can get it done. It can be tough to pay extra on your monthly payments but in the long run, you can save money. Make sure that you will be saving more than what it is costing you. You need to make an informed decision about paying off your debt off early but paying off loans early can be a huge financial relief.

Money Milestones You Should Hit Before Having Kids

Having and raising children is one of those joys in life but raising children does come with quite a large price tag. Usually, we hear that buying a home is the largest expense that we will take on but raising a couple of children can actually exceed that for many people, especially when you factor in the price of education.

money milestones

However, like most financial decisions, you might want to get everything in order before you decide to have children. Here is a look at money milestones that you should hit before you have kids.

Have a Stable Career

It is vital that you have a secure work situation before you have children. This could be traditional employment, self-employment or a combination of both. You will want to have an established foundation that will be able to support your growing family.

You need to think about the career paths that you can continue on once you have a child and careers that offer a salary that is adequate to cover the expenses of a child as well as your other expenses.

The salary from a job is important, but also look at other benefits like healthcare, maternity/paternity leave, the sick leave or personal leave policy and other such things. After all, you don’t want to have to take a day off to care for a sick child and then find out that you don’t get paid for that day.

Your Disposable Income

The fact is raising just one child is expensive, so you will need to do some calculations so that you can get a better idea of how much a child would cost each year. You can use online calculators to do this. This will determine if you have enough room in your budget to have a child before all the expenses start rolling in.

Making these calculations will give you an idea of how much your disposable income will need to be allocated to raising a child. You can even plan in advance and save up a year or more of these estimated costs so that you are ready to have a child and be able to afford it.

Wait…Here are some more financial milestones…

Create an Emergency Fund

Parenting is an adventure and you can never know what may happen, but it pays to be prepared financially for any unexpected event. Having an emergency fund in place is a true necessity when you have children.

Your emergency fund should be at least three to six months of expenses so that when life’s messes arise like a broken leg or your teens first fender bender, you and your family are protected.

Save for Retirement Before

As children get older, the expenses for them also increases. You should then make sure that you are able to save for retirement before you have a child. Saving for your retirement is solely your responsibility, so being able to contribute to your retirement fund before you have kids helps to secure your future and relieves your children from the financial burden of having to care of you when you are older.

save money

Make Sure You Can Save for Education

Education and especially university is expensive and the cost continues to rise. Many students have to take on a student loan, but these are pricey and can see your child being in debt for years to come.

You are able to relieve the financial burden of education for you and your future children by saving. You need to ensure that you are in a position to save for your kids’ education from the moment they are born or even before so at least by the time they are ready for university, you will be able to pay for it.

If you are not able to save the full amount then you can part pay and perhaps take a personal loan for the rest, that you are able to afford to pay each month. The interest rates on personal loans are lower than other loan types and are flexible in terms of the repayment periods.

Don’t panic if you can’t hit these milestones…

These milestones are of course the best-case scenario, but just because you are not able to hit all of these it doesn’t mean you shouldn’t have children or that you will face financial ruin if you do.

It is best to have a financial plan in place before you have kids, but there are a number of financial products that can help you on your journey when you are raising children. You can consider getting a personal loan for educational purposes provided that you can repay the payments or you can use a loan to pay for an unexpected emergency and pay it back over a few months and so on.

After all, sometimes the best laid plans don’t go the way you want them to and you might not be able to plan right down to the second of when you will have kids. Just be aware of the costs involved and see what you are able to achieve and discover ways that you can reduce your financial worries.

Getting an Online Loan

Online banking has been around for years, but nowadays you are also able to find a number of good online lenders to choose from. Online loans are changing the way that we borrow money as you no longer need to fill out the same old forms with your bank.

online personal loan

So, how do you get a loan online and what is the process.

The Benefits of Borrowing Online

Online lenders aim to make borrowing a lot easier and there are a number of benefits when you choose to borrow money through an online lender.

Quick Approval

Online lenders have the ability to pretty much almost tell you immediately whether you have been approved or not.

Traditional banks are different, even if you are able to fill out an online application, you may need to wait a while to find out if you have been approved as someone will need to review the application and then you may still have to visit the branch in person.

Online loans takes this away as the whole process is conducted online and you are able to submit any supporting documents through their system, which makes the approval process a lot quicker.

Better Rates

You should always shop around for a loan and you will find that online lenders will usually charge less than anywhere else. With online lenders, you will usually find lower interest rates and smaller service fees. This is because online only lenders do not carry the same overheads that banks carry with physical branches.

Easier Approval

It is a lot easier to get a loan when you have good credit, but if you are still building credit or if you are suffering with bad credit, then you might find joy with an online lender. You may find that online lenders are more willing to approve you even if you have a lower credit score as they will rather assess your ability to pay the loan back and use information like your income and utility payments, for instance

This then means that approval can be granted to those with low or even bad credit.

Unsecured Loans

The majority of online loans are unsecured, which means you are not required to pledge collateral in order to get approved. If you fail to repay an unsecured loan, then your credit score will drop, but you don’t risk any assets being repossessed.

Wait…You still need to know how you can get an online personal loan…

How to Borrow Online

Getting an online loan is not that much different to the traditional way of getting a loan, but the whole process feels a lot easier and you don’t have to leave your home in order to apply.

With online borrowing, you will need to provide personal information like your ID number and address as well as financial information like your income.

All you need to do is find a reputable online lender and then start the application. These applications can take between 5 and 15 minutes and once you have been approved, you can receive your loan in a matter of hours in some cases.

What About Payday Loans?

When you are looking for online loans, you will get plenty of hits for loans that are payday loans. Payday loans are short term loans that carry a high interest rate. These type of loans can work for you, but they can also work against you.

payday loans

The idea of a payday loan is to help customers that are in a financial bind and need money quick. The loan is then repaid once you receive your next pay check, which can cause problems for that month. If you do decide to take a payday loan then you need to make sure that you can afford it.

Payday Loans can be recognised in a number of ways.

Firstly the term for the loan is very short in that you have a month to pay the loan back. Rather find a loan where you have months to pay off the debt.

Secondly, the interest rate on payday loans is high. You will need to shop around for the best interest rates and find one that suits you.

Thirdly, payday loans will advertise that they don’t check your credit, but the fact is that you will need to have decent credit to get a decent loan.

Lastly, online lenders that ask for up-front payments should be avoided. Legitimate lenders may charge fees, but these fees will generally come from your loan proceeds.

Payday loans do have a purpose and can help in times of an emergency, but they should be treated with caution.

If you are looking for a loan then you will need to shop around and the great thing about online lenders is that you have the ability to compare loan offers easily. Online personal loans are a great option and the application and approval is easier and quicker, which means you will be able to get the money you need quickly.

Should You Get a Loan for Your Wedding

A wedding is a day of celebration and everybody wants their wedding to be memorable and to mark the beginning of you and your partner’s life together. You will want to have a beautiful setting and some great food to help set the mood and share it with friends and family.

Wedding Loan

However, weddings are expensive and you may not have the money to throw into such a day, but does that mean you should get a loan to pay for your wedding?

Many people do borrow money for weddings, but it does carry risks. So, let’s look at what it means to get a loan for your wedding.

Should You Get a Wedding Loan?

If you decide to take a loan to pay for your wedding then it means that you will go into debt and you will then start your married life in debt, which could cause problems down the road. You want to then get off on the right foot and not have the financial stress that comes with borrowing money.

Ideally, you want to start by building a future with your spouse, for instance, you could save for a home or save to have a child in the near future, start a retirement fund and so on. Those monthly payments that you are paying towards a loan could be used to build your savings.

If You Decide to Borrow

If you do decide to get a loan for your wedding then you need to borrow wisely. The majority of loans, even if they are marketed as wedding loans are just personal loans. This means you will not need to pledge collateral against the loan and your income and credit score will influence whether you will get the loan.

You will then need to check your credit before you apply for a loan to make sure there are no errors or negative marks.

If you have bad credit or not enough income to qualify for a loan then you and your spouse could co-sign for a loan. This means that you both equally share the responsibility for the loan and its repayment. This would make you equal partners with an equal responsibility, but if something goes wrong then you will both end up with bad credit.

personal loan

If you want to get the best terms then you need to look for a loan that has these characteristics.

Firstly, you need to get an unsecured loan so that you do not need to put up any collateral, which means you won’t lose your car or home if you fail to repay.

Secondly, it is a good idea to get a short term loan as the term is shorter, you will pay less in interest over the life of the loan. You are then able to get the loan done and dusted with sooner.

Lastly, with a fixed interest rate loan, you will know what you will have to repay each month, which then makes it easier to budget for the loan repayment.

Where You Can Borrow

If you want to get the best rates then a personal loan from a bank or an online lender are the best places to look.

You can also consider a peer to peer lender as they generally offer short term loans with competitive rates. However, if you don’t think you can pay this loan off in a few years then another option might be best.

Credit cards are a risky option to fund your wedding. Credit cards are easy to use but they can easily get out of control. If you have good credit and a plan in place to pay off your loan in 6 months to a year then you could opt for a 0% interest credit card, where you won’t pay interest for a certain period of time, but if you fail to repay the balance within in this time then you will start paying a high interest and may get in over your head.

Wait…You might want to explore some other options…

Alternatives to a Loan

Here are some alternatives to a loan that you could consider to pay for your wedding. If you don’t have the funds to pay for your dream wedding then something will have to give.

Budget and Save

Unless you are getting married in the next month then you will have some time to plan and start putting some money aside to pay.

You should pay for what you can yourself and save. This will develop a good habit for you and your spouse in the years to come.

Family and Friends

There are some people that might feel embarrassed to ask family and friends to help pay for their wedding, but if you are not one of these people then think of creative ways to get help. The simplest way would be to ask for money and crowdfund the wedding.

Another way though would be to ask family and friends to offer their time, skills and other resources. You might know someone that has a beautiful property, for instance, that you could use for your big day, or maybe someone is a chef or you have a great photographer friend. There is no shame in asking for help and your friends and family will be more than willing to help.

Defer Costs

You could hold off on buying an expensive ring and rather start with something that you are able to afford right now and then upgrade later in life like on an anniversary.

loan

Make Cut Backs

You may have to make difficult decisions about your wedding day. You may consider inviting fewer people or make the event more modest. You could have a cash bar instead of an open bar and so on. Your guests will remember the feeling of your wedding and you being happy not the specifics.

You can take a personal loan to help pay for your wedding, but you and your spouse need to know the ins and outs and make sure that you will be able to pay it off once you are married and not let it lead you down a road where you will drown in debt.

Signs You Need to Get a Personal Loan

Personal loans are more expensive than secured loans, but this is because you do not need to put any collateral up in order to get a personal loan. When a personal loan is used sensibly it can completely change things in times of need. A personal loan can ease sudden expenditures like high medical bills, moving costs, credit card balances that have got out of hand or expenditures that are more than what you budgeted for.

personal loan

Financial burdens can be eased through the use of a personal loan when they are borrowed and repaid on time. Take a look at these common uses for a personal loan and see if getting a personal loan is right for you.

Medical and Dental Bills

Health insurance is great to have, but it may not cover everything, which means that some medical bills can start to eat your savings. There are some insurance covers that won’t cover elective surgeries or aftercare, which means you will be stuck with these bills. You are able to use a personal to cover any missed payments for medical or dental bills that you currently have before these defaults start to affect your credit.

Consolidating Your Existing Debt

Credit card debt, small loans and other types of debt can quickly get out of hand. You will need to manage the monthly payments on each debt plus pay different interest rates and you may not be able to keep up with all these payments. A personal loan can be used to consolidate all these debts under one fixed rate loan with a closed end term. This will mean that you will only need to manage a single debt repayment each month with a single interest rate.

Lose High Interest Credit Cards

If you are struggling with a high interest credit card debt then a personal; loan could be your solution. An unsecured loan is more expensive than a home equity loan, but the interest rates will be lower than what you are paying on your credit card. You can use a personal loan to settle the amounts on your high interest credit cards and get rid of these.

Paying for Home Improvements

You can use a home equity loan for remodelling your home or making improvements as this will cost less than a personal loan, but if you don’t have a lot of home equity and you need to make repairs or upgrades then you can get a personal loan. There are some home repairs that can’t wait and if you are remodelling your home or making improvements then you should make ones that offer the greatest return on investment in terms of home value.

Wait…There are more common uses for a personal loan below…

Improving Your Credit Score

If you have consolidated your debts with a personal loan, then you can improve your credit score as long as you have paid the personal loan on time for at least 6 months. If your personal loan pays off existing debt, then ensure that the information about your account has been correctly reported to the credit bureaus. This means making sure that your old debts have been marked as paid.

Paying for a Wedding

Weddings are expensive even if you have a small wedding. Wedding costs include the dress, food, venue, flowers, music and more. You are able to pay for your wedding or just part of it with a personal loan, which will avoid you draining your bank account and your savings account.

Holiday Time

Whether it’s a honeymoon or a trip of a lifetime it can be expensive, but a personal loan is often used to pay for these types of trips. Travel is expensive, but if it’s a once in a lifetime trip and you will be able to pay the loan back then it could be your key to travel to your dream destination.

get a personal loan

Financing a Car

A popular way to finance a vehicle like an RV, car or bike is to use a secured loan, but if you do not have a credit history or don’t have any equity then you can use a personal loan to fund your vehicle. This could be your first loan and can be a great way to start building a credit history.

Paying for a Move

If you are facing a sudden career transfer or a new job in a different city then your savings can take a hit. You can fund an unexpected move like packing boxes, moving vans, a down payment on a new home and other such things with a personal loan.

Pay for a Funeral

This is something that many of us do not like to think about, but funerals can be expensive. A funeral includes a casket, burial or cremation costs, funeral home fees, food, flowers, transport and more. There are many people that buy insurance in order to cover these costs, but a personal loan can help to cover any shortfalls or if you do not have cover to pay for the full funeral costs.

Personal loans can completely change your situation and allow you to pay for things that you were struggling or unable to pay for before. You should keep in mind that a personal loan is only beneficial when you are able to repay the monthly amount on time.

How to Get a Personal Loan for Christmas

The holidays are in full swing and Christmas is just around the corner and you might be stressing about if you can afford it. There are gifts to buy, decorations, Christmas parties and the kids are on their festive break.

It is not the best idea to get a personal loan to cover these expenses, but if it’s your only option then you will need to know how to get the best terms for your loan.

Getting the Best Personal Loan for Christmas

When you are looking for a personal loan for anything, including Christmas then you need to make sure that you get the lowest interest rate possible. Your credit score will influence this, so you will need to know your score.

If you have a low credit score then you will pay higher interest rates. You can use a reputable credit reporting company to find out where you stand with your credit score.

Apart from the interest rate, you also need to take into account fees that the loan provider will charge. There is usually an origination fee and it’s generally a percentage of the total amount that you are borrowing. This fee could be deducted from your loan proceeds.

If your credit score is not that great, then you are able to find loans for people with bad credit. These loans are short term loans and may carry a high interest rate. You are able to compare offers though and choose the one that is the best option for you.

If you want to boost your credit score then you need to make sure that you pay every bill on time, pay off your debt and ensure that there are no errors on your credit report.

Also, make sure you don’t apply for any more credit around this time as every time you apply for credit, your credit score actually drops a few points.

You might be wondering how you can limit your debt over Christmas…

Limit Your Debt During the Holidays

There are a few ways in which you can limit your debt over the holiday season.

What are the Options

If you are going into debt over the holiday season then you should do this without paying a lot of interest. You can ask a family member for a small loan, for instance, just make sure you do not ruin your relationship with that person because of money, but this can help you to save money.

Another alternative if you have good credit is to apply for a credit card that has 0% APR promotion. You will be given a certain amount of time with these credit cards where you will not need to pay any interest on your purchases.

When you are shopping for a short-term cash loan, make sure you compare offers from lenders so that you are able to get the best deal and limit your debt.

Have a Budget

You will need to establish a budget for how you will use the loan funds. You should compile a list of everything that you expect to spend.

This will help you in not borrowing more than you need and it will make sure that you only spend what you have budgeted for.

Also, just because you have borrowed a certain amount, it doesn’t mean that you have to spend it all. If you find something that is under your budgeted amount then you don’t have to spend the rest.

Give the Gift of Time

You don’t have to spend money on a gift, instead, you can offer your time. You can babysit, for instance, for a family member or you can help elderly relatives with something they need doing. You will need to put some thought into what you can offer, but as you are not spending money, you will not need to worry about debt.

Plan in Advance

This may not help this year, but you can already start planning for next year. You should evaluate how much you spend at Christmas and save this amount throughout the year.

Another option to plan for next year is to actually shop for Christmas gifts throughout the year. You can create a gift list for next year and keep a copy in your purse or wallet, then when you see the right gift at a good price, you can get it and cross it off and not buy anything else for that person.

Borrowing money for Christmas is not the ideal situation, but sometimes it’s necessary. You just need to make sure that the loan is affordable and you will be able to repay it.

You should definitely use a loan comparison site so that you can find the best deal and also limit the amount that you have to borrow. Also, start getting ready for next year by saving each month or by buying gifts throughout the year.

A short-term cash loan can help this festive season, but avoid borrowing more than you can afford and make sure you can pay the loan back and on time.

How to Budget for the Festive Season

The festive season is here and it’s not called the silly season for nothing. It’s the time of year where we seem to throw our budgets out the window and spend, spend and spend, but just because it is the season of giving, it doesn’t mean you have to blow your budget.

There is a lot of pressure to spend money over the season on amazing gifts, but you can still treat your friends and family without draining your bank account and you can stay in budget.

How to Budget for the Festive Season

Setting the Budget

The first thing that you need to do is to create a budget. You will need to figure out what you are able to afford and work out who you need to get gifts for, so you can spread the amount you can spend.

The perfect situation would be to save up throughout the year, but it’s never too late to figure something out. You could consider taking a cash loan over the festive season, but you need to be sure that you are able to pay the loan back.

Another thing you could do is to look at your spending patterns and see what you can save for gifts. You may see that you can temporarily cut down on things so that you can increase the amount of spending on gifts.

Set a solid number for yourself, so you have a hard limit and work within this limit to make the holiday season slightly easier. You do not want to end up in debt just because of Christmas.

Limit Your Spending

The easiest way to make sure you stay within your budget is to limit how much you spend on gifts.

These limits can be set in a number of ways, for instance, you can have a limit per family, per couple or per individual.

You should see what you can afford and go from there.

Making a List

Once you have your limits set for everyone you need to buy for, it helps to create a list of gifts and the amount that they cost, so you know you are sticking to your limits.

You need to be specific about what they want or what you think they would like and what it will cost. If you then see something awesome that uses the whole budget for your partner let’s say, then you know that is all they will be getting.

It will also help to keep you organised, which comes in handy when you are out shopping and are overwhelmed by sales or when you receive an email informing you of a special deal.

The easiest way to stick to your budget and spending limits is to get a gift card or to give the exact amount of cash, but these can be seen as impersonal.

There are still great tips to know…so keep reading…

The 4 Gift Rules

The 4 gift rule is popular with parents for kids, but you can use it for anyone.

The key is to get something:

  • They want
  • They need
  • They can wear
  • They can read

That is, it. You can use this rule with your spending limits and it also puts a limit on how many gifts you can buy, which will help you to focus when shopping.

The rule is practical and stops you from buying gifts just for the sake of buying them. You don’t have to spend a ton of money to have a jolly Christmas, so forget the pressures and just keep it simple.

Focusing on these four areas will create less stress year after year.

What About a Gift Exchange?

This is a great idea for those that have huge families, because your spending can easily get out of hand if you have lots of people to buy for. So, instead of spending a fortune on individual gifts, why not suggest a gift exchange.

A gift exchange is where each person from the family just brings one gift valued at a certain amount and you do a type of lucky dip.

This can work with friends, at work, your immediate family and of course your extended family.

Try a Giftless Holiday Experience

Many people get caught up with the buying and spending over the holidays and they forget actually what the holidays are all about, which is to spend time with loved ones.

A giftless holiday experience is not a popular option, but there are some that celebrate the holidays by spending time rather than money.

You can still get into the holiday spirit by perhaps volunteering or donating to a charity during the holidays.

The idea here is to create new holiday traditions that aren’t focused on presents. You and your family can just get together and enjoy a meal, play games or watch a movie. There is nothing wrong with doing something different for Christmas.

Go Down the DIY Road

If your family is not keen on the giftless or fewer gifts option, then you can save money by making presents yourself. Presents that you have made are more thoughtful and you don’t have to spend a lot of money to make a nice present.

You can create cards, decorations, write a poem, retell a favourite story, knit blankets, scarves or gloves, make your own soap, bake treats and create goodie baskets and so much more.

If you are thinking about getting crafty and making presents then it is a good idea to stick to one idea so you can buy the materials in bulk and save money.

Budgets over the holiday season may seem restrictive, but it is a tool to help you to not blow all of your money and maybe end up in debt. You don’t want to stress about your credit card bill over this time. If you take a cash loan, don’t take more than you can afford, so you know you can pay it back.

Your loved ones will understand that you don’t want to spend more than you have and that it’s not what Christmas is about. Focus on spending time with your loved ones and appreciate the moments with them and they will be grateful and appreciate your thoughts behind your actions.

 

Surprising Benefits of Instant Payday Loans

Bills don’t wait for you and financial emergencies always seem to arise when you are the least prepared for them whether it is a hospital bill or a car repair.

However, if you are in a financial crux then you do have options like instant payday loans, which aim to help people. These loans are smaller loans with short terms that will help you through a rough patch until your next paycheck.

Here is a look at some surprising benefits of instant payday loans.

Quick Cash

An instant payday loan is instant, which means you will be able to get the money that you need and fast.

A payday loan is easy to apply for and you will receive the money that you need within just a few hours. This is highly useful for someone that needs to pay an unexpected bill immediately so that they are able to avoid any late fees.

You can easily end up in more and more debt by missing payments and getting a payday loan to cover these will supply you with more time to get your finances back on track.

There are No Credit Checks

The majority of payday loan lenders will not even look at your credit report after you have applied. This can be a huge benefit to those that have had a knock on their credit report and are now sitting with bad credit.

Usually, if you have bad credit traditional lenders will reject your application, but payday loan lenders will give you the approval that you need and quickly and you can get the money.

Your Credit Rating Is Protected

Generally, payday loans are not reported to credit reporting companies, so your credit score will not be affected.

This then makes payday loans a good way to work on your immediate debt without it creating penalties on your credit rating.

However, you will need to make sure that you are able to pay off the instant payday loan, because if you can’t then the lender does have the right to report you to a debt collector and this will appear on your credit report.

Wait…There are more benefits…

You Don’t Have Any Credit

There are many young people that have not yet built up enough credit, which means they will struggle to get a loan from a bank.

Making monthly payments on a car or a mortgage, shows banks that you are able to repay debt on time and without this, they may not even look at your application.

However, you may face the same financial situations as an adult, but without any credit, you are not able to get a traditional loan, but you are able to get an instant payday loan, which will then help you in times of emergency.

A payday loan does not require you to show proof of credit in order to be approved. You will just need to be 18 years old, have a checking account and a steady income.

Interest Rates are Capped

There is another side of instant payday loans though. In return for getting the cash that you need quickly, the interest rates are higher than longer term loans.

The interest rate on a payday loan can be anything between 15 and 30 percent.

However, many countries have capped the amount of interest that can be charged on a payday loan, so have a look and see if there are caps on the interest rate for the loan you are interested in.

Getting Higher Amounts

You will need to be aware of the amount that you are able to borrow through an instant payday loan. A payday loan is a short-term loan, which means the amounts that you can borrow are quite small.

Have a look at the maximum that you are able to borrow and comfortably afford and determine if it is enough to cover all of your expenses that you need to pay.

If not, then you will need to look at building equity so you can borrow more.

You can do this by proving that you are worth the risk. If you have borrowed from the lender before and paid the loan amount and the interest back on time then they may allow you to borrow more the second time and slowly raise the amount of money they will lend you.

Also, the amount that you are able to borrow from a payday lender will depend on your monthly salary as they will not lend you more than you can afford.

They Are Just Easy

Payday loans are super convenient and you are able to apply and be approved online. You will not need to go anywhere or have wads of paperwork to apply for a payday loan as you can do everything from the comfort of your home with a computer.

Also, instant payday loans give you cash, which means you are able to use the loan on anything you like. Traditional loans usually have a specific purpose attached like a car loan can only be used for a car.

With cash that is paid directly into your bank account, you have the freedom to spend it on what you need.

Instant payday loans are beneficial to those that need them for a financial situation that may arise and as long as you pay the loan and the interest back on time, you will have no issues using an instant payday loan.

 

Basic Requirements for a Payday Loan

Payday loans do have many advantages and one of these is that the requirements for potential borrowers are pretty basic. There is not a huge amount of paperwork to go through like with traditional loans where the criteria is pretty strict. It is actually quite easy to get approval for a payday loan compared to other loan types.

All payday loan lenders will have their own criteria, but the basic requirements are:

  • You need to be a citizen of South Africa
  • You will need to be over the age of 18 and provide a proof of identity
  • You will need to provide contact details like a telephone number, address and a proof of address like a utility bill
  • You will need to provide a proof of income and you may need to earn a certain minimum
  • You will need to have a valid banking account.

No matter what your credit score is you are able to apply for a payday loan. You will not need to provide any collateral in order to take the loan either. It is then pretty easy to apply and qualify for a payday loan. You should check your lender’s criteria before you apply and make sure that you meet their requirements.

Improve Your Credit and Qualify for a Personal Loan

One way that you are able to meet your financial needs or to consolidate high interest debt is to get a personal loan. This is because a personal loan will usually have a lower interest rate compared to credit cards and offer structured repayments.

However, if you want to qualify for a personal loan then you will need to have the acceptable minimum credit. The better your credit score is then the more advantageous the terms of your personal loan will be.

If you need to improve your credit before you can qualify for a personal loan then here are some ways you can do this.

Know Your Credit Score First

The first thing that you need to know before you start improving your credit is to know how your credit score is calculated. Your credit score is a 3 digit number that ranges and as a general rule the higher your credit score the better it is. Anything below 600 or so can be considered a risk.

The score that you have is based on your payment history, how old your accounts are, your credit usage, the types of credit you have and how many new accounts you apply for. These all carry a percentage and contribute a certain amount to your score.

Once, you know how your credit score is calculated, you are able to take steps to make sure that you don’t hurt your credit score.

If you wish to improve your credit then you will need to know where the problem is by getting your credit report.

You might be wondering how you can get your credit score higher…

Time to Improve Your Credit Score

Once you have a copy of your credit report, you should first check it for any inaccuracies. Go through your report and see if there are any mistakes, like someone else’s credit under your name. You should get these mistakes fixed as soon as possible by reporting them to the credit bureaus.

Other inaccuracies may include untrue information like a debt is reported as default when it is actually now brought as current and paid. You should contact the creditor directly and ask them to fix the issue. You should also notify the credit bureau of this mistake.

A good percentage of your score is based on the amount of available credit you use. Lenders do not want to see that you have maxed out credit cards or high credit usage as this shows that you are actually living beyond your means and that you might find it difficult to keep up with payments in the future. Your credit usage should be around 30% of the credit that is available to you and if it is more, you should focus on paying these debts.

You should contact your creditors and ask them to remove black marks. If you have a good relationship with your creditor that is reporting a late payment, you can call them and ask them if they will be willing to remove the record of the late payment. There are some creditors that will do this, especially if this is your first late payment.

If you are trying to improve your credit then you should refrain from opening new cards. If you open too many cards then you will have too many inquiries on your credit report. Lenders may see this as you are about to go on a spending spree. You should not take any new loans or open new cards if you plan on applying for a new loan in the close future.

Lenders like to see that you have different types of credit as it can show that you have been responsible for paying various types of loans off like a credit card, mortgage debts and car loans.

If you have a friend or a family member that has good credit then you should see if they are willing to list you as an authorized signer on one of their cards. This will mean that you do not have to apply and they don’t even have to give you the card. Once you are an authorized signer, the credit history of that account will be reflected on your report and this could raise your credit score.

If you are applying for a personal loan with your bank then they might be willing to use traditional underwriting standards. This means that your entire application is looked at and not just your credit score when they decide whether or not to give you a loan. If they are willing to do this, then they may also take into account evidence of why you have bad credit like if you lost your job, for instance, and give you a loan anyway even if your credit is not the best. This is also based on that your past mistakes are unlikely to repeat on the new loan.

Once you have improved your credit, you will find it easier to qualify for a personal loan that you may need. Focus your efforts on improving your credit. You are able to get a loan with bad credit, but you will often face very high interest rates and the only way to avoid this is by creating a better credit score.