It could be a desperate friend in dire need for quick cash, or one who has not been able to maintain a good credit score for whatevrr reasons; and now you are asked to be a guarantor for their loans. Being a guarantee means taking the responsibility of someone’s loan repayment, and that brings forth some major risks . If you have been asked for being a guarantor, you need to see if you are prepared for being one or not. Below are some pointers that can aid your self assessment:
Your are the Prime Financial Risk Bearer
When you are co-signing a loan for any of your friends or acquaintances, you are basically signing up for a good amount of risk. In case the borrower fails to pay back the debt, it will be you doing the honours. This could be perhaps because the borrower is below the age limit of acquiring credit or has had some bad experience repaying the debt.
Your Credit History is at Stake
One thing which many people tend to ignore while they sign for a loan as a guarantor is that their liabilities aren’t only limited to the immediate financial ones. In case the debtor fails to pay off the amount of loan, the responsibility of doing so is in your shoulder. But it doesn’t stop here, because if you fail to do that too (because perhaps you haven’t planned for this contingency or have some immediate expenses and thus no money to pay off the debt) your credit score/history would be affected. Putting your credit history at risk is quite a huge undertaking, thus it is better to do your part of the research when being a guarantor or that if you are ready for it.
You are Aware of the Borrower
If you are stuck in the quest to be a guarantor, it is better to ask yourself if you know the borrower well. This is because you will be incurring huge financial responsibility on behalf of that individual. Also, your credibility as a borrower will be at risk for the same. Thus, it is better to go for signing for the loans of close family members or friends whom you know well as a guarantor, can guide in loan repayment process, and communicate on a regular basis about it. The more intimate the connection is, the easier it is to be a guarantor for someone.
You Have The Needed Documentations
Being a guarantor it is important to get a hold of all the necessary documents of the loan which include the amount, interest and the repayment schedule and time frame. Make sure you will be getting all of this without much hassle before you sign up to be a guarantor. Also, if you think you will be informed with any of the changes in credit or plans pertaining to it, then only go for it with full security of your own credit rapport and finances.
It is important to check with the essentials of being a guarantor before you take a decision as major as this one. You also need to be sure of exact liabilities you’ll be having and sign up only if you are comfortable, no matter what.
People with poor credit ratings have very few options available when it comes to applying for loans. Lenders are making their requirements stricter for such people by the passing, which leave them with no choice but to apply for payday loans. These loans have a very high interest rate and people with all credit ratings can apply for this type of loan. But, due to high interest rate, you will be paying a lot more than what you loaned initially, which can lead to increasing the level of your debt in the long run.
However, people with low credit ratings have another option at their disposal: guarantor loans. These loans have relatively lower interest rates than payday loans, but require the borrower to have a signed consent of a guarantor. The loan is for a fixed period which can span for 1 to 5 years. There are several benefits of opting for a guarantor loan, some of the major ones are as follows.
1. Prompt Loan Approval Process
Taking out a guarantor loan is a relatively quick and easy process. You can get the guarantor loan approved and the amount in your bank account within 24 hours. The only time consuming part in the whole process is finding a guarantor with good credit rating. Once you have such a person, the lenders will check the guarantor’s financial stability and credit rating, and approve your loan right away.
2. Easily Accessible
The best thing about guarantor loans is that they are designed for people with poor credit ratings, as they find it difficult to borrow money from traditional sources. All they have to do is find a guarantor who is 21 or older, financially stable, and willing to sign the loan agreement with you. Moreover, you also have to show that you are not bankrupt, or are in a debt management program or an Individual Voluntary Arrangement (IVA). This will ensure the lender that you will make the payments on time.
3. Higher Loan Amounts
Guarantor loans allow you to borrow large amount of money because the guarantor provides the assurance that the repayment will be made in full and on time. Moreover, if the guarantor is a homeowner, then you will be able to get lower interest rate along with higher loan amount.
4. Longer Repayment Terms
The repayment terms are decided upon considering the amount of money you borrow and how much you can repay in a month. Usually, the repayment terms in guarantor loans are quite versatile, and the repayment duration can span up to 7 years. However, keep in mind that the longer you take to repay the loan, the more interest will be charged.
5. The APR Rate is Low
If you compare the APR rate of a guarantor loan with that of a payday loan, you will see a gigantic difference. This is because due to the involvement of a guarantor, the lenders offer attractive APR rates. This is one of the major benefits of guarantor loans, which appeals to most of the applicants.
One of the first things most lenders consider before giving out a loan is whether the individual has employment or not. All lenders will ask for proof of income before they go on to approve the loan. If there is no proof of income, then it can seriously create problems for individuals in obtaining a loan. For such situations, it is always a good idea to get an unsecured loan for the unemployed.
Since this loan is meant for unemployed people, there is no need for unnecessary formalities or requirements. In most of the cases, the borrowers will take the money from these loans to pay off existing debts or when they have immediate cash requirements.
Features of this loan
Unsecured loans for the unemployed are different from usual loans. A great feature about these loans is that the borrower will not have to submit any form of collateral for acquiring the loan. Another great feature is that in some of the cases, these loans offer lower interest rates. With low interest rates, the loan amount that is provided is also less.
The loan repayment period will also be shorter as compared to the usual loans, and in most of the cases, the repayment period will depend on how much money is borrowed. There will not be any credit check for this loan and the amount of involved paperwork will be less.
Conditions for the loan
While the loan is a lot more flexible than the other types that are available out there, borrowers would still have to fulfill some of the conditions attached to it. For instance, they would need to have an active bank account. Additionally, loan will only be approved once the personal information of the candidate will be given. Other than this, the borrower should also have a repayment plan.
People eligible to apply for the loan
The loan can be made available to all types of people no matter if they are a tenant, a paying guest, or a student. Even people having a bad credit history can apply for the loan such as payday loans. An unsecured loan is ideal for unemployed individuals who need to get money in an easy manner to pay off their pending expenses.
Unsecured loans really come in handy in certain situations and therefore it is really important for individuals to get to know more about them. The more they research on the topic and find out about different types of loans, the better it will be for them to get to know about the exact type of loan that will be beneficial for them.
A collateral is a guarantee made by the borrower that institutes and obligation of pledging a certain property to the lender. This property is to serve as security until the loan is repayed in full. In case the borrower defaults (is not able to return the loan) the property, which serves as collateral, it can be seized and sold by the lender in order to sell it and return the money he invested in the loan. The borrower forfeits the pledged property and the lender becomes the owner so the property is at his disposal. When it comes to mortgages, the typical scenario is that the loan is secured by the property being bought by the borrower.
The real estate bought (an apartment, a house, a building etc.) serves as collateral, in case the borrower defaults. If this happens, the ownership of the real estate is transferred to the bank. Bank has legal instruments which allow it to obtain the real estate serving as collateral.
Collaterals are not limited to real estate, although when it comes to mortgage. Real property serves as the usual way of securing the loan (typically called asset-based loans). When it comes to trading, however, there are a number of complex collateralization arrangements in use (capital market collateralization). Unilateral obligations such as surety, property, guarantee or other collateral are commonly used in the financial markets.
Types of collateral
If the collateral is such that it can be exchanged for money fairly quickly, under normal market conditions and at current fair market value, we speak of marketable collateral. These types of collateral mean an exchange of financial assets, which most oftenly include stocks and bonds. Loans that are secured with marketable collateral always involve financial institutions and a borrower.
The conditions under which these collaterals are exchanged for money are based upon current market conditions and various methods and institutions exist which form the prices of many financial instruments like stocks and bonds. The main risk involved with marketable collaterals is the reduction of collateral values. The market value of a collateral can fall very quickly (but it can rise as well) which could jeopardize the lenders capital.
There are designated financial institutions organized so they can closely watch on the market value of many financial assets. This way they can take appropriate measures if the value of collateral goes down enough, below the loan-to-value ratio determined in the loan conditions. Loan contracts will usually define such situations.
Sometimes cross-collateralization can occur. This happens when collateral for one loan is used as collateral for another loan. For instance, a person buys a home and secures the loan with the same house, buys a car and secures this loan with the same car and so one. In this situation, if the same bank provided the loan. These asset can be used to secure all the loans taken by the same person.
In the case mentioned, for example, if the person who has still to pay off the loan for the house and wants to sell the car, may not be able to do so because the bank will have the right to veto the sale because the car is used as cross-collateral for the house loan.
When you decide to make your personal financial plan, it is important to understand the different types of saving account, in order you can store your money on the appropriate way. According other people’s experience, there aren’t lot of benefits when you are using a saving account. Even though, your money will be safely tucked away from a temptation, but it will still be very reachable, with or without additional fees for unplanned withdrawals. Below are different types of saving account, so if you plan to save money and put it into an account, we recommend you to study them wisely.
Regular saving account
Like the name suggest it self, regular saving account require from you to put away money every month. You will be offered compensatory interest rates, but terms and conditions will be strict. For example: they will limit your amount of withdrawal and they will force you to make monthly deposits. These type of account are offered almost in every bank, the process of singing up is very easy, it can be done in person, or via phone or internet. This type of account can be linked with your checking account in order to have an easy transfer. If you are hoping to earn money on your savings, then don’t hold your hopes up, because this saving account will offer you low interest rates.
Money Market Account
This type of account is highly recommended for being a safe place to invest your money, because of its high liquidity. Money market account are insured by the FDIC and these is no risk involved at all. When you use this account, you deposit will have to be bigger than minimal amount, something between 100 and 2,500 dollars and the interest will be higher than with regular saving account. Money market account will limit your monthly withdrawal.
Certificates of Deposit (CDs)
This is another popular way of saving accounts, these type of accounts allow users to receive interest periodically, as long as they investment lasts. They are available at most banks that have FDIC insurance and they have time limitation over one to five years.
The longer you keep your money on saving account, the bigger interest you will get. If you decide to receive high interests, the bank will limit your amount of withdrawal. If you withdraw your money before it has reached maturity, you will have to pay small penalty charge.
Automatic Saving Plans
For people who usually spend more money than they are able to save, automatic saving plan can be perfect solution to get their budget in order. It is offered in most banks to help clients get lower banking fees, this savings plan will directly wire money from checking account into the saving account, for a certain amount of money you choose.
It may be hard for you to watch your money leaving your account every month, but on the other hand your saving account will grow every month with interest.
Credit cards enable you to borrow money from the bank by paying the bill in store or withdrawing it in the bank or ATM. All credit cards are credit lines. When issuing a credit card for any customer, the bank sets a limit on the amount that you can spend using the card. That limit is only up to your activity that is presented to bank and it goes from a few hundreds to several thousands of dollars. You can then use the card to pay for goods or withdraw cash from banks, up to the limit set on the day of agreement.
Once in a month you will get the monthly report about your credit card. There you will find all data about your payments during the month and also the debt from earlier period, if there is one. Banks can allow a sort of grace period which means that you will be able to pay the debt by making new expenses on the card without calculating the interest.
You can also choose to pay less amount than it is calculated, and it is usually noted as minimal payment amount on monthly report. Of course, you can pay the whole amount or any that you can at the moment, but minimal is obligated. The bank will calculate the interest on remaining amount of debt, in order to terms from the agreement of credit card you signed. The interest is usually calculated upon on daily amounts of debt during the period of one month.
Advances of credit card
If you are questioning for advances of credit card usage, here are some facts about that. Payback time – instead of permanent paying the bill, credit cards provide paying some expensive goods and services during some period, which makes the expense more easy to handle. Safety – having a credit card is much safer than carrying cash around. If you lose the card, you can stop abasement by calling the bank immediately 24/7. Simple currency exchange – credit cards often offers good exchange rate when paying in foreign currency, so you won’t have to carry much cash or visit the exchange offices when having a trip to foreign country.
Every credit card is linked with the agreement which includes all rules and terms which apply to the relation between you and the bank. The agreement will precise all sorts of wages, expenses, exchange course alignment and also penalty interest in case of delaying orderly payments. Check out some usually expenses that you can meet on your credit card:
It is charged on the remaining unpaid portion of the debt.
The fee for delay in repayment of debt
it is charged when your payment is not made on the deadline given by the monthly report. Some banks increase the interest rate in case of frequent delays in payments, so be aware and orderly pay your debts.
The withdrawal fee
It is charged when you use your credit card to withdraw money from the bank or on the ATM.
Due fee – the fixed amount that is charged monthly or yearly, and it includes the service of possessing the credit card.
Fees and charges may be calculated on the basis of a fixed amount or to be based on the percentage of the transaction amount, or both. In some cases, banks have the right to change the interest rate for credit cards, so make sure you understand the circumstances that allow the bank to change the interest rate.
We have all probably heard about payday loans. This is a simple fix for all of our financial problems. This can sometimes be very good for us and sometimes can take us into massive debt. Users of these loans are various because if you are trying to have something and you cannot afford it then you will go into debt. Sometimes there are some serious problems which have to be dealt with like if the car broke down or you need to do some repairs on your house or you are paying the bills etc. These loans can be quite easy to acquire and this is why they are so popular.
One of the most popular places for the loans is definitely banks. There you can loan all sorts of types of loans but one of the most popular are short loans or “payday loans”.
Advantages of payday loans
The advantages of payday loans aren’t just great in the banks. You can get these loans even on some other places like AdvanceAMerica.com. On this site you can apply for a simple loan and then you can get a sum you’ve been asking for. This is a very easy and simple process which is very good for people who are in a hurry and I must say that their administration is very polite. The process of applying is almost the same like in the bank and you will need some personal info, as well. One of the information is your personal incomes.
When it comes to bad things then those are interest rates. Throughout history people in a need of cash turned to pawn shops and placed their items of worth to the pawn shop owner but also some of them went to the loaners. Interest rates were really high in the past times. This gave advantage to the bank owners to get rich.
Now days, these rates aren’t low but they are fixed nonetheless. This means that your interest rate won’t oscillate. This is a great advantage but even with it people are getting into massive debts and this can be sometimes very hard to understand or to face with.
When it comes to these debts then probably the hardest thing is to get rid of them. This can be achieved with some help or by finding a better job etc. Online loaning companies are giving you great relieves when it comes to repaying your debt but nonetheless the debt stays. This can be very hard for some people to repay.
Think twice before you go into the bank or on online loaning web page to loan some money. It can be lethal for you.
Payday loans are short term loans which are meant to help all sorts of people in their need for quick money. The purpose of this can vary from situation to situation. Some people need this money in order to pay their rents or to pay their bills. Some of them even need car repairs or something else entirely. When they have a similar problem they are turning to loans and loan money there. One of the most popular sorts of quick loans today is online versions. In America Advance Loans is one of the most popular online loaning houses.
One of the greatest things when it comes to these payday loans is that you can get them in the banks. These loans just as any other can be really good for you and for the you need some paperwork to fill and some personal documentation. Next day the money is yours. One of the best advantages when it comes to these sorts of loans is their availability. You should think about interest rates although. Interest rates are something really hard to define.
Throughout history many people were really rich because of their robbing ambitions. They’ve managed to create really high interest rates and then they started to plunder people in that way. Today, interest rates have their fixed condition but nonetheless they are really high. When it comes to banks, if you are not in ability to repay your debt, the bank seizes your properties and assets. Online loan organizations will wait until you have the money.
When it comes to comparing these two then one of the greatest advantages of online loan companies are quickness and availability. You don’t need to wait in order if you are trying to get the loan and after successfully application your money will be deposited over night to your bank account.
Advantages on online payday loans
There are all sorts of interesting advantages and you should check it by yourself. The most popular online web page for payday loans is Advance America where you can in a simple manner raise very large amounts of money.
There are all sorts of things where you can invest this money. This can be very important for your studies for example and thus we have loans for students. Students need this money very much in order to cover up their bills and their rents. This can be very important in a simple student’s life. If a TV is broken or a car needs a repair and you do not have money at the moment then this loan is something very important for someone who cannot afford it all.
One of the greatest fears when it comes to this are definitely massive debts in which various people gets itself in to. These debts are very hard to repay and you should be careful of massive borrow. This can also cost your life or your career and these loans are pretty much expensive so you should check out some other options that you might have in order to avoid this.