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Monthly Archives: January 2017

Myths vs. Facts about Title Loans

Myth 1: A title loans cause unnecessary debt and bad credit issues.

Fact: Like any loan, if the borrower does not make repay it in time, his credit will suffer. Therefore, title loans should not be singled out for bad credit ratings. Since your car is a prized possession, title loans should be availed only when necessary and if you are sure of paying off the loan within the payment period.

Myth 2: You can avail of a title loan from any lender that you come across.

Fact: All lenders may not work on the same conditions so it is sensible to explore the market and gather information before coming to a decision. Unscrupulous lenders may induce you to borrow without actually being precise about the repercussions of defaulting on your loan, which could spell disaster for you.

Myth 3: A title loans has a low interest rate.

Fact: The rate of interest charged on title loans offered by companies varies depending on their location. Consumers should decide to avail of such loans only after calculating the yearly rate. Most lenders quote monthly rates that appear low and therefore attractive. The annual percentage rate (APR) on interest may range from 36 to as high as 600. Lenders may also charge additional fees.

The most important fact before you opt for a title loan is to consider the risks involved before diving for it. Auto title loans come with high interest rates, which may further escalate in case of rollover payments. You may have to pay an even heavier penalty in the form of your car if you fail to pay.

 

Homeowners Loans

Sometimes people mix up loans for homeowners with home loans or home mortgage loans. It is important to point out that these concepts are not the same and that the fact that the applicant is a homeowner does not necessarily imply that the loan requested is secured. On the contrary, homeowners can apply for secured or unsecured loans and still get better terms due to being homeowners.

Which Homeowner Loans DO Require A Mortgage

Homeowners can get any kind of loans and being owners provides them with benefits both at the time of approval and on the actual loan terms. However, the property does not need to be used as collateral for the loan. Only home loans and home equity loans require the property to be used as collateral. Home loans secure the money lent to purchase the property with the actual property while home equity loans secure a new loan (when there is already a mortgage loan present) with the remaining equity available on the property.

Both these loan types require a mortgage which guarantees the repayment of the loan and provides the lender with a more secure transaction. Furthermore, in case of default the property can be repossessed by the lender and sold in order to recover the amount lent.

When Is It Advisable To Request Secured Loans

This is an interesting question and the answer is not an easy one. Truth is that it will all depend on your needs and whether you have enough equity on your home or not. If you are seeking to purchase a house there is no doubt as to the whether you should request a mortgage loan or not. You do not have other possibility unless you have saved a lot of money. But if you need money for other purposes whether to choose a secured or unsecured loan is really up to you.

For smaller amounts it makes no sense going through the verification processes that are needed for a secured loan. Yet, for higher loan amounts, a second mortgage loan can provide what you need and you will have to pay less money towards interests with the resulting savings that this implies.

Mortgage And Mortgage Loan

The mortgage is a guarantee, it is a security that protects a loan but is not the actual loan. The mortgage is a lien on your property that attaches the asset to the debt that it guarantees. The debt then, follows the property which means that whoever the owner is, the property will still guarantee the loan. This does not exclude you as a debtor as debts are personal obligations. It is important that you understand this fact as it should have a major importance in your decisions.

 

Home Improvement Loans Facts

Home Improvement Loans Nature

What makes a loan a home improvement loan is the use that the money receives. This use can be a condition for the loan approval and thus there are penalties that can be applied if you do not comply with that requirement. However, those home improvement loans that are unsecured are actually personal loans and the use you give to the money is really up to you. They are just promoted as home improvement loans to attract customers but those loans are nothing but personal unsecured loans.

Home Improvement Loans And Equity

Home Improvement Loans do not necessary require equity but unsecured home improvement loans are too expensive when compared to home improvement loans based on equity. Therefore it is always advisable to obtain a home equity loan for home improvements. These loans use the available equity on your home to secure the money borrowed and since the money is used to improve the property that will be used as collateral, qualifying for these loans is a lot easier.

125% Home Improvement Loans

These loans let you use 125% of the value of the property as guarantee of repayment. Thus, even if you do not have enough equity on your home, you can still obtain these loans. The idea is simple: the money will be used to improve the property which will in turn raise its value making more equity available and with few monthly payments, the accumulated debt (mortgage plus home equity loan) will equal 100% of the value of the property and so, both lenders will be fully protected.

Requirements For Approval On Home Improvement Loans

Home improvement loans, especially those based on equity are very easy to qualify for. The risk involved in the transaction is very little. The chances of default are greatly reduced and in the event of default, repossession assures the lender that he will recover the investment. Therefore, a moderate credit score and history will be enough; there is no need for your credit to be good or perfect. Only serious delinquencies like bankruptcies or defaults can ruin your chances. Other than that, your income needs to let you afford the payments with ease. There are no further requirements because as the loan is used for improvements, it raises the value of the property which is the asset guaranteeing repayment.

Legally Fixed Purpose On Home Improvement Loans

Do remember that on most home improvement loans the fact that the loan has to be used for making home improvements is one of the contract’s clauses. Therefore, you may be required to show proof of the improvements you are going to make like constructor’s plans, designer’s plans, etc. Any other use can result in the cancelation of the loan program and the payments becoming immediately due. Therefore, be careful and read the contract thoroughly.

 

How Auto Title Loans Works?

• Auto title loans are short-term loans that are secured using your auto title, that is, by using your car or any other vehicle you own as collateral. Getting an auto title loan does not require a credit check. The lender will give you the money and at the end of the auto title loan period, you pay it back with interest. During the loan period, you can continue to use your vehicle; however, the lender will keep a spare set of the keys as well. If you default on your loan payment, the lender repossesses your vehicle.

• Since your vehicle has a clear title, a loan can be got without the processing delays that plague other types of loans.

• Auto tile loans are short-term loans with the repayment period varying from 14 days to a month of the loan being issued.

• Rollover plans are available in case one is not able to pay off the auto title loans when due. Rollovers are, however, accompanied by large interest payments. You could end up paying an amount many more times the auto title loan amount secured under such schemes. It so happens sometimes that the annual percentage rates (APRs) on many auto title loans are in triple digits because of repeated rollovers.

Is an auto title loan right for you?

Auto title loans can be a very high financial risk for auto owners, especially those who borrow an extravagant amount as loan. A single miss in the repayment of an auto title loan could result in your auto being reclaimed immediately. To add to your woes, you cannot prevent the lender from generating additional funds by selling your auto above retail value.

For this very reason, auto title loans are a very low financial risk for lenders. Borrowers often secure loans for far less than the value of their autos but get embroiled in a vicious cycle of rollovers and repayments, which costs more than they can imagine.