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Almost every day, you are involved
in some type of financial transaction requiring an
educated decision. And we all need extra cash from
time to time. Maybe you need extra funds to purchase
your "dream" home, or a more reliable
vehicle. Perhaps you want to provide that "fairy
book" wedding for your only daughter, or take
that once-in-a lifetime paradise vacation.
Sometimes it is simply not practical to make a
purchase by saving up the cash, and that's where a
loan can help. Nearly everyone needs to borrow at some
time in their life--to finance a house, buy a new
automobile or send the kids to college. But with so
many different types of loans from so many different
financial institutions, how do you decide which is
best for you?
When you set out to borrow money you are barraged with
the jargon of the banking industry. Revolving loans,
points, adjustable rates, bridge loans, beacon scores,
amortization and on and on and on. It is important to
understand these terms in order to get your best
possible deal at the lowest interest rates that are
currently available. Take some time, research the
terminology and become a smart money shopper.
Not many years ago, banks were the only "boys on
the block" when it came time to obtain a loan.
You got dressed in your finest outfit, got a haircut,
and shined your shoes in advance of your meeting with
the bank manager. Today, loan providers are
everywhere. Supermarkets, credit unions, television
ads, daily credit card offers in the mail, finance
companies, and the payday loan building on the corner.
Where do you start? Obviously the first question--how
much money do I need?--must be answered. If you are
shopping for a home, for example, you will not be
using a credit card. Here is where your neighborhood
bank can help. And even Uncle Sam--if you get a
Veteran's Administration (VA) or a Federal Housing
Administration (FHA) loan.
Other types of loans available include: car loans,
business loans, debt consolidation loans, home
improvement loans, home equity loans, refinance loans,
personal loans, payday loans, and bridging loans (used
to "bridge" a short-term financial gap when
cash is needed for a special project). There are
nearly as many loan types available as there are
reasons to borrow money. Approval for loans is based
upon a number of factors, such as age, employment,
income, and credit rating.
Even if you have a poor credit rating or bad credit
history, you can still find a range of "bad
credit" personal loans, although the interest
rates are generally higher than on standard loans.
Beware, however, of the "payday" loans.
Sometimes called cash advance loans, check advance
loans, deferred deposit check loans or post-dated
check loans, however check cashers or finance
companies refer to them--they are EXPENSIVE.
Usually, a borrower writes a personal check payable to
the lender for the amount needed plus a fee. Let's say
you need a quick $100 and write a check to the lender
for $115. You receive $100 and the lender agrees not
to deposit your check until your pay day arrives three
days in the future. It cost you $15 to borrow $100 for
three days! You don't even want to know the Annual
Percentage Rate (APR)on that loan.
When you need credit, shop carefully. Compare offers
and institutions. Look for loans with the lowest APR.
Compare the total finance charges, which include fees,
interest and of types of credit costs. By going online
you can obtain a multitude of loan options including:
interest rates, length of the loan and the actual
total monthly payment cost.
Learn the lending terminology, understand the
different types of loans that are readily available
and then make a choice that is best for your unique
situation. In the borrowing world, there is no
"one-size-fits all" solution. Your credit
history, ability to repay the loan in a timely
fashion, and the purpose of the loan should all be
thoroughly considered.
By www.LoanFolks.com
Author Info:
Larry Denton is a retired history teacher having
taught 33 years at Hobson High in Hobson, Montana. He
is currently Vice President of Elfin Enterprises, an
Internet business providing useful information and
valuable resources on a variety of timely topics. For
a bank vault full of information, resources and
suggestions about loans, visit
http://www.LoanFolks.com
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