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How Does an Installment Loan Work Exactly?

How Does an Installment Loan Work Exactly?


How Does an Installment Loan Work Exactly?

Americans carry over $14 trillion dollars in debt.

There are many types of loans that people can take out that contribute to this debt. Some are for specific purposes, while others are more general and you can use the money how you please. 

Loan products work in different ways. For example, credit cards are a type of revolving credit whereas an auto loan is a type of installment loan. How does an installment loan work? That’s what we’re going to dig into here. Check it out!

What Is an Installment Loan?

Installment loans go by many names — mortgages, car loans, student loans, personal loans, and more. 

Understanding how installment loans work is quite simple. They get the name because you take out a lump sum and then pay it back in installments over a period of time. Your payment is set at a certain amount each month and you keep making payments until you pay off the loan.

This is different from credit cards where you can keep taking out small amounts and either pay in full each month or make smaller payments. As long as you make the minimum payment you don’t get in trouble, but you do pay a lot of interest. 

Smaller installment loans, like personal loans up to $5,000, are easy to get online through a lender like bonsaifinance.com. The process is quick and you can usually get approval in minutes after filling out a simple application. 

Benefits of Installment Loans

With a set repayment period and monthly payment amount, consumer installment loans can offer lower interest rates than credit cards. The higher your credit score, the lower an interest rate you’ll pay. 

Some installment loans come with built-in collateral, like a home loan, or you can offer collateral. Collateral is an asset that the lender can seize if you default on the loan. This lowers their risk, allowing them to lower your interest rate even more.

If you’re having trouble with high credit card balances, one option is to take out a debt consolidation loan. This is an installment loan that you use to pay off your high-interest credit cards. Afterward, you make payments on this lower-interest loan to finally clear your debt. (As long as you don’t keep charging those credit cards, that is.) 

Generally, even if you have poor credit, you can work with a lender to take out an installment loan. Keep in mind, however, that your interest rate will be a bit higher. You can also use installment loans to help boost your credit score by making on-time payments in full. 

How Does an Installment Loan Work? It’s Simple!

So how does an installment loan work, exactly? We hope this quick crash course answered your main questions. As usual with loan products, installment loans can be a helpful financial tool if used correctly. While it’s harder to get in trouble with installment loans than with credit cards, you should still be vigilant in how you use these so you don’t get in over your head.

Looking for more great advice? Check out more articles on our site!

 

 

 

Business

How to Get a Payday Loan in 5 Simple Steps

How to Get a Payday Loan in 5 Simple Steps


How to Get a Payday Loan in 5 Simple Steps

More than 40% of millennials in the United States are utilizing payday loans.

Payday loans are short-term and typically offer less than $500. This money has helped people pay bills and get food on the table.

If you are falling behind and need an extra boost, a payday loan may be just what you need. 

Continue reading to learn how to get a payday loan online, so that you can get control of your finances again! 

1. Know What You Need

If you want to learn how to get a payday loan that will benefit you, you must know what you need.

Before diving into the endless loan options, you should consider the time length you want for the loan, the size, and how it will impact your life. Some of the most common types of loans are mortgage loans, auto loans, student, and small business. 

Evaluate your situation so that you know what to research.  

2. Check Your Credit Score 

Do you know what your credit score is? When was the last time you checked?

Many credit companies can run free credit checks throughout the year. If you don’t have this option, you can get a free score once every year. When your credit score falls below average, interest rates and options become limited.

The better your credit score, the better your terms and conditions will be for your payday loan. Take the time to give it a boost if you need to! 

3. Do Your Research 

While you are working on increasing your credit score, you should also be researching various loan companies.

By comparing rates and benefits, you can determine the best loan that you qualify for. This step can become overwhelming if you don’t know what you are looking for, so be sure to follow step 1, mentioned above. Another excellent way of researching loans is by asking friends and family for referrals or checking online reviews. 

4. Apply for the Loan

Once you have a solid credit score and have found a loan that works for you, you can begin applying online! 

When applying, you will likely need documents proving your employment, social security number, and ID. Depending on the type of lending company you are working with, you may also need to provide proof of income along with a list of your other debts. 

5. Move Forward

Within a day or two of applying for your loan, you will find out if you have been approved or not. 

If you are approved, details will be sent over, reviewing your loan and repayment terms. For those that find themselves unapproved for a loan, you may want to try another option. Take a look at the reasons why they declined you so that you can fix them moving forward. 

Learn How to Get a Payday Loan Today 

By learning how to get a payday loan, you can prevent financial problems in the future and get control of your life. 

If you are seriously considering applying, you will want to do your research and get your credit score above average. Doing these, before applying to a loan, can help save you money. 

Be sure to check out our blog for more articles about loans and how you can get better control of your finances! 

Business

Stress Over Debt?: How to Get Rid of Student Loan Debt

Stress Over Debt?: How to Get Rid of Student Loan


Stress Over Debt?: How to Get Rid of Student Loan Debt

Over half of young adults that went to college in 2018 took on debt. If you are one of the many people that have student debt, it can be very stressful to be under the weight of paying off thousands of dollars in debt from going to school.

We are here to help you see the light at the end of the tunnel. Continue reading this article to learn how to get rid of student loan debt.

Student Loan Repayment Assistance

One of the things that will become more popular is student loan repayment assistance programs. Many employers that are competing for top talent will offer these programs as a benefit to get people to come to work for their company. If you can find an employer that offers this as a benefit, you might be able to get a chunk of your loans repaid.

Enroll In Income-Driven Repayment

Do you feel like you’re drowning under the weight of the debt you owe for student loans? If you don’t feel like you can afford what you have to pay for your student loans, you can apply to lower your payments according to your income.

There are different types of repayment plans available depending on your situation, so make sure to check into every option.

Qualify for Federal Student Loan Forgiveness Programs

If your student loans are through the federal government, you might be able to qualify for federal student loan forgiveness programs. There are different programs, but one of the most popular programs is the Public Service Loan Forgiveness program. Under this program, if you work in public service for 10 years, your loans can be forgiven.

Consolidate Your Student Loan Debt

While consolidating your student loan debt isn’t going to make it go away, it can make it easier to manage. Instead of trying to figure out what you owe and when you owe it, you’ll be able to have one loan and can easily see the balance.

If you find that you miss payments a lot because you can’t keep track of your loans, this might be a good option for you.

Refinance Your Student Loans

If you have private student loans, instead of continuing to pay high-interest rates, you might be able to refinance your loan to get a better interest rate. If you can get a lower interest rate, your payment could be a lot lower, or you could continue to pay the bigger payment and pay off your loan a lot faster.

Make sure the new interest rate is low enough that it is worth the trouble of refinancing your student loans.

Now You Know How to Get Rid of Student Loan Debt 

Now you know how to get rid of student loan debt. With the information you have, you can start working toward your financial freedom from student loans.

Do you want to learn more about personal finance, education, and other important topics? Keep reading our blog to get the information you need.

Business

Getting a Payday Loan: What to Know and Some Different Options

Getting a Payday Loan: What to Know and Some Different


Getting a Payday Loan: What to Know and Some Different Options

The average amount of loan debt that a person in the United States carries is $38,000. For some of you, that number might seem rather high but the truth is, if you put 10 adults in a room, chances are that a good portion of them are in serious debt.

Given our nation’s debt crisis and the fact that bills never slow down, it stands to reason that many people might get to a place where there’s not enough money to meet their financial obligations.

A popular solution to this problem is to take out a payday loan.

Are you experiencing serious getting payday loan FOMO? Are you curious to know more about what these loans entail?

You’ve come to the right place.

Below, we breakdown payday loans and share with you a handful of potentially helpful alternatives.

Getting Payday Loan: What Does It Entail?

A payday loan is a lending product. The way that they work, in many cases, is that you write your lender a check for the amount of money that you’re borrowing. This amount should equal to or lesser than the amount of money you’re planning on getting from your next paycheck.

Once your paycheck goes through, your lender will cash the check that you’ve given them, plus interest, and your debt will be paid.

In the interim, with your loan in hand and secured by the promise of next month’s check, you can use your borrowed cash to buy whatever it is that you need that could not wait until your next pay period.

Why Do Payday Loans Get a Bad Rap?

It’s hard to find a story today that showcases payday loans in a favorable light. The reason for this is that payday loans come with what is called an interest rate.

Interest rates are pretty simple.

If you borrow $100.00 at a 10% interest rate, you’d owe your lender at the end of the month $110.00 (your original loan amount plus 10%). If you didn’t pay your lender on time, at the end of the month, your loan balance would continue compounding and you’d now owe your lender $110.00 + 10% interest ($121.00).

Most payday loan providers do not offer loans at low-interest rates like 10%. Some charge interest rates that are 50% or higher. Furthermore, certain loan vendors will add a ton of miscellaneous fees to your borrowed money which is also eligible for interest accrual.

Given these seemingly dishonest tactics and the fact that poor people are payday loan provider’s biggest customers, many financial experts and politicians have condemned them.

What Are Payday Loan Alternatives?

If you’d rather not get caught up in the cycle of paying back payday loans, you might have other options to get out of the financial situation that you’re in. Here are some quick-fire suggestions that may be worth exploring.

Talking to Friends and Family Members

If you’re in a tight spot financially and have people that love you, those people might be willing to help you out. It’s always a dicey proposition borrowing money from friends and family since you don’t want to lose your relationship if you can’t pay them back.

Still, if you’re close with people that you know would want to help, let them.

Take Out a Loan From Your Bank

Dealing with payday loan lenders can be tricky since not everyone is offering transparent products like the First Finance payday loan or similar reputable products.

To make sure that you’re borrowing from a lender that is not likely to burn you, try to get a loan from a bank that you trust.

Getting bank loans is subject to credit approval. That means that you could be rejected.

It’s certainly worth trying to get approval though, no matter how bad your credit is, if your alternative is taking out a predatory payday loan.

Talk to the People That You Owe

Communication can go a long way when you owe people money. They’d rather work with you and get what they’re owed back as opposed to putting so much pressure on you that you break and choose to default.

Reach out to the people that you owe and try to arrange to have them forgive portions of your debt or spread it out before going down the getting payday loan path.

You might be surprised by the arrangement that you’re able to come to.

Explore Financial Help

At the end of the day, if you’re really falling on financially hard times, no amount of reading generalized blog posts is going to solve your situation. Sometimes, you need the help of a professional that can look at your specific situation and guide you.

That expert is usually what is called a financial advisor and many communities offer them for free to low-income people.

Go to city hall or run a quick Google search to see if there are free financial planners that work in your area. Steer clear of any planner that works on commission as they might try to move you towards buying products that will only hurt your situation.

Closing Out Our Guide on All Things Payday Loans

Thousands of people type “information about getting payday loan” into Google every day in hopes of seeing whether or not this lending product makes sense.

While we can’t advise you specifically on whether or not you should take the payday loan leap, we do hope that you now feel more informed and can make that decision for yourself.

If you find that you’re in need of more help, our team is here for you! Check out more of the content on our blog and start growing your financial savvy!