Getting a financial advisor in your 20s is a responsible thing to do. At the every least, it means that you are serious about your finances. Finding one in your local area is not hard, especially with SmartAsset free matching tool, which can match you up to 3 financial advisors in under 5 minutes. However, you must also remember that a quality financial advisor does not come free. So, before deciding whether getting a financial advisor in your 20s makes financial sense, you first have to decide the cost to see a financial advisor.
What can a financial advisor do for you?
A financial advisor can help you set financial goals, such as saving for a house, getting married, buying a car, or retirement. They can help you avoid making costly mistakes, protect your assets, grow your savings, make more money, and help you feel more in control of your finances. So to help you get started, here are some of the steps you need to take before hiring one.
Need help with your money? Find a financial advisor near you with SmartAsset’s free matching tool.
1. Financial advice cost
What is the cost to see a financial advisor? For a lot of us, when we hear “financial advisors,” we automatically think that they only work with wealthy people or people with substantial assets. But financial advisors work with people with different financial positions. Granted they are not cheap, but a fee-only advisor will only charge you by the hour at a reasonable price – as little as $75 an hour.
Indeed, a normal rate for a fee-only advisor can be anywhere from $75 an hour $150 per hour. So, if you’re seriously thinking about getting a financial advisor in your 20s, a fee-only advisor is strongly recommended.
Good financial advisors can help you with your finance and maximize your savings. Take some time to shop around and choose a financial advisor that meets your specific needs.
2. Where to get financial advice?
Choosing a financial advisor is much like choosing a lawyer or a tax accountant. The most important thing is to shop around. So where to find the best financial advisors?
Finding a financial advisor you can trust, however, can be difficult. Given that there is a lot of information out there, it can be hard to determine which one will work in your best interest. Luckily, SmartAsset’s free matching tool has done the heavy lifting for you. Each of the financial advisor there, you with up to 3 financial advisors in your local area in just under 5 minutes.
3. Check them out
Once you are matched with a financial advisor, the next step is to do your own background on them. Again, SmartAsset’s free matching tool has already done that for you. But it doesn’t hurt to do your own digging. After all, it’s your money that’s on the line. You can check to see if their license are current. Check where they have worked, their qualifications, and training. Do they belong in any professional organizations? Have they published any articles recently?
Related: 5 Mistakes People Make When Hiring a Financial Advisor
4. Questions to ask your financial advisor
After you’re matched up with 3 financial advisors through SmartAsset’s free matching tool, the next step is to contact all three of them to interview them:
Experience: getting a financial advisor in your 20s means that you’re serious about your finances. So, you have to make sure you’re dealing with an experienced advisor — someone with experience on the kind of advice you’re seeking. For example, if you’re looking for advice on buying a house, they need to have experience on advising others on how to buy a house. So some good questions to ask are: Do you have the right experience to help me with my specific needs? Do you regularly advise people with the same situations? If not, you will need to find someone else.
5 Reasons You Need to Hire A Financial Consultant
Fees – as mentioned earlier, if you don’t have a lot of money and just started out, it’s best to work with a fee-only advisor. However, not all fee-only advisors are created equal; some charges more than others hourly. So a good question to ask is: how much will you charge me hourly?
Qualifications – asking whether they are qualified to advise is just important when considering getting a financial advisor in your 20s. So ask find about their educational background. Find out where they went to school, and what was their major. Are they also certified? Did they complete additional education? if so, in what field? Do they belong to any professional association? How often do they attend seminars, conferences in their field.
Their availability – Are they available when you need to consult with them? Do they respond to emails and phone calls in a timely manner? Do they explain financial topics to you in an easy-to-understand language?
If you’re satisfied with the answers to all of your questions, then you will feel more confident working with a financial advisor.
In sum, the key to getting a financial advisor in your 20s is to do your research so you don’t end up paying money for the wrong advice. You can find financial advisors in your area through SmartAsset’s Free matching tool.
Find a financial advisor – Use SmartAsset’s free matching tool to find a financial advisor in your area in less than 5 minutes. With free tool, you will get matched up to 3 financial advisors. All you have to do is to answer a few questions. Get started now.
You can also ask your friends and family for recommendations.
Follow our tips to find the best financial advisor for your needs.
Articles related to “getting a financial advisor in your 20s:”
How to Choose A Financial Advisor
5 Signs You Need A Financial Advisor
5 Mistakes People Make When Hiring A Financial Advisor
Thinking of getting financial advice in your 20s? Talk to the Right Financial Advisor.
You can talk to a financial advisor who can review your finances and help you reach your saving goals and get your debt under control. Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
The post Steps to Getting A Financial Advisor in your 20s appeared first on GrowthRapidly.
You just learned of the passing of a loved one. During this stressful and emotionally taxing time, you also find out that you’re receiving an inheritance. While you’re grateful for the unexpected windfall, knowing what to do with an inheritance can bring its own share of stress.
While the amounts vary greatly, the Federal Reserve Board’s Survey of Consumer Finances reports that an average of roughly 1.7 million households receive an inheritance each year. First words of wisdomâresist the urge to spend it all at once. According to a study funded by the Bureau of Labor Statistics, one-third of people who receive an inheritance spend all of itâand even dip into other savingsâin the first two years.
Not me, you say? Still, you might be asking, “What should I do with my inheritance money?” Follow these four steps to help you make smart decisions with your newfound wealth:
1. Take time to grieve your loss
Deciding what to do with an inheritance can bring with it mixed emotions: a sense of reprieve for this unexpected financial gain and sadness for the loss of a loved one, says Robert Pagliarini, certified financial planner and president of Pacifica Wealth Advisors.
During this time, you might feel confused, upset and overwhelmed. âA large inheritance that pushes you out of your financial comfort zone can create anxiety about how to best manage the money,” Pagliarini says. As an inheritor, Pagliarini adds that you may feel the need to be extra careful with the funds; even though you know it is your money, it could feel borrowed.
The last thing you want to do when deciding what to do with an inheritance is make financial decisions under an emotional haze. Avoid making any drastic moves right away, such as quitting your job or selling your home. Some experts suggest giving yourself a six-month buffer before using any of your inheritance, using the time instead to develop a financial plan. While you are thinking about things to do with an inheritance, you can park any funds in a high-yield savings account or certificate of deposit.
âA large inheritance that pushes you out of your financial comfort zone can create anxiety about how to best manage the money.â
2. Know what you’re inheriting
Before you determine the things to do with an inheritance, you need to know what you’re getting. Certified financial planner and wealth manager Alex Caswell says how you use your inheritance will largely depend on its source. Typically, Caswell says an inheritance will come in the form of assets from one of three places:
Real estate, such as a house or property. As Caswell explains, if you receive assets from real estate, you will transfer them into your name. As the inheritor, you can choose what to do with the assetsâtypically sell, rent or live in them.
A trust account, a legal arrangement through which funds are held by a third party (the trustee) for the benefit of another party (the beneficiary), which may be an individual or a group. The creator of the trust is known as a grantor. âIf someone inherits assets through a trust, the trust documents will stipulate how these assets will be distributed and who ultimately decides how they are to be invested,” Caswell says. In some cases, the assets get distributed outright to you; in other instances, the trust stays intact and you get paid in installments.
A retirement account, such as an IRA, Roth IRA or 401(k). These accounts can be distributed in one lump sum, however, there may be requirements related to the amount of a distribution and the cadence of distributions.
When considering things to do with an inheritance, know that inherited assets can be designated as Transfer on Death (TOD) or beneficiary deeds (in the case of real estate), which means the assets can be transferred to beneficiaries without the often lengthy probate process. An individual may also bequeath cash or valuables, like jewelry or family heirlooms, as well as life insurance or stock certificates.
Caswell says if your inheritance comes in the form of investment assets, such as stocks or mutual funds, you’ll want to think of them as part of your own financial picture. âAll too often, we see individuals end up treating inherited assets as a living extension of their passed relative,” Caswell says. Consider how the investments can be used to support your financial goals when thinking about things to do when you get an inheritance.
An average of roughly 1.7 million households receive an inheritance each year.
3. Plan what to do with your financial gain
Just like doing your household budgeting, it’s important to “assign” your inheritance to specific purposes or goals, says Pacifica Wealth Advisors’ Pagliarini. Depending on your financial situation, the simple concepts of save, spend and give may be a good place to start when deciding on things to do when you get an inheritance:
Bolster your emergency fund: You should have at least three to six months of living expenses saved up to avoid unexpected financial shocks, such as job loss, car repairs or medical expenses. If you don’t and you’re deciding what things to do with an inheritance, consider parking some cash in this bucket.
Save for big goals: Now could be a good time to boost your long-term savings goals and pay it forward. Things to do when you get an inheritance could include putting money toward a child’s college fund or getting your retirement savings on track.
Tackle debt: If you’re evaluating what to do with an inheritance, high-interest debt is something you could consider paying off. Spending on debt repayment can help you save on hefty interest charges.
Reduce or pay off your mortgage: Getting closer to paying off your homeâor paying it off entirelyâcan also save you in interest and significantly lower your monthly expenses. Allocating cash here is a win-win.
Enjoy a little bit of it: It’s okay to use a portion of your inheritance on something you enjoy or find rewarding. Planning a vacation, investing in more education or paying for a big purchase could be good moves.
Donate funds to charity: Thinking about your loved one’s causes or your own can continue legacy goals and provide tax benefits.
When deciding what to do with an inheritance, taxes will need to be considered. “It is extremely important to be aware of all tax ramifications of any decision around inherited assets,” Caswell says. You could be required to pay a capital gains tax if you sell the gift (like property) that was passed down to you, for example. Also, depending on where you live, your inherited money could be taxed. In addition to federal estate taxes, several U.S. states impose an inheritance tax and/or an estate tax.
Since every situation is unique and tax laws can change, when considering things to do with an inheritance, consult a financial advisor or tax professional for guidance.
Make your windfall count
Receiving an inheritance has the potential to change your financial picture for good. When thinking about the things to do when you get an inheritance, be sure to give yourself ample time to grieve and to understand all of your options. Don’t be afraid to lean on the experts to get up to speed on any tax and legal implications you need to consider.
Planning can go a long way toward making the right decisions concerning your newfound wealth. Being responsible with your inheritance not only helps ensure your financial future, but will also honor your loved one’s legacy.
The post 4 Smart Things to Do When You Get an Inheritance appeared first on Discover Bank – Banking Topics Blog.
This year took so many twists and turns we havenât been able to keep countâ often leaving us in complete overwhelm with a whirlwind of thoughts and emotions. Grief, anxiety, and sheer disappointment are just a handful that comes to mind when we reflect on the endless amount of curveballs life has thrown over the past year. Tragedy and loss plagued the entire world, leaving us speechless day after day. Despite the darkness that loomed for what seems like an eternity there has been an outpour of positives that we canât forget to remember. As 2020 quickly comes to a close, letâs take the time to decompress and reflect on the happier moments we were lucky enough to live through and witness. Even though Thanksgiving may look less traditional than previous years, we still can readily name some things that shift our hearts to a place of gratitude.
Letâs face it â the hustle and bustle of life impact our family and friends more than weâd like to admit. Competing schedules, conflicts, and not making enough time for those that matter are often reasons why we are unable to nurture the people we hold near and dear. Because of restrictions on travel and other entertainment, we were forced to become more creative with our time indoors; in turn, helping us to restore the meaning of family and work-life balance. Quite frankly, it allowed us to hit the pause button on everything that probably was unintentionally too high on the priority list in the past. Our families served as the safety net itâs supposed to be when the weight of the world (and social media) became overbearing with less than desirable news. We utilized technology to a new degree when scheduling virtual happy hours, catch up sessions with our loved ones, and birthday celebrations in other geographic areas. It made us truly appreciate the very thing we took for granted; all the people that make up our family tribe. Â
Curating and developing passions
2020 generated a newfound level of introspection, leaving our minds to really consider what it is that we really cherish the most. Whether it be career-related or new passion projects, this year made room for some much-needed self-reflection, making us reassess where our fulfillment really comes from. Leveraging books, social media outlets, and various streams of consuming knowledge-based information sent us on a path of rediscovery. Remember that âotherâ to-do list thatâs filled with the things you really donât want to do around the house? It even made that list appear fun-filled! Home improvement projects and DIY tasks were done with enjoyment while being budget-friendly. Adulthood can be full of things that arenât as exciting, but mustering up the courage to take ideas from ideation to execution served as a second wind. New business ventures and side hustles were birthed with unmatched creativity, a place many of us havenât been in quite some time. Existing businesses were able to thrive despite the unprecedented events occurring nationally. Funding was also provided to various business owners which granted many small businesses to increase their visibility while positively generating profit.Â
The importance of sustainment
There are a countless number of families that were impacted by job loss and/or unexpected expenses. It doesnât matter if things started off rocky financially â what matters most is youâre still standing. Getting caught up on bills, eliminating some debt and saving are all things to be very proud of. Temporary hardships donât have to turn into permanent problems. Creating a plan of action and sticking to it no matter what arises will always be rewarding. Celebrating the small wins should never be overlooked. Weâve all handled this year in different ways â but whatâs most important is discovering what works for you. Rule of thumb for those that are battling with the ânot enoughâ emotions: donât believe the hype. While there is a multitude of people accomplishing great things, there are also many imposters. Social media is a highlight reel, a virtual platform where people can share whatever information they choose, at their discretion. People are more likely to share their highs versus their lows, so be sure to keep in mind you may only be getting a small piece of the overall story. Donât look at someone elseâs life and fail to recognize what youâve done on your own. Financial progress, no matter how insignificant you may think it is â is still progress. We all make financial missteps and life has a way of making things very difficult that hit us where it really hurts. Keeping your head above water, remaining afloat, maintaining your health, and providing for your family should never be considered a small feat. Grant yourself some grace and reflect on the dedication it took for you to get (and stay) where you currently are.
Back to the basics
This year forced us to really hone in on what matters and prioritize accordingly. This applies to our lives, but most importantly our finances. Pulling back the curtain to really take a look and evaluate where money was going served as a constant reminder that we should be doing this more than the occasional once or twice a year. Itâs never too late (or too early) to create new money habits! Financial stability is essential â and maybe the cushion we imagined should be enough proved itself to be untrue. Our willingness to make changes at a faster rate to ensure the financial security of our families felt less painful and so much more intentional. The uncertainty of everything occurring allowed us to complain less while redefining comfort levels with our contingency plans.
No matter what has transpired this year, what are you most thankful for? As things come to mind be sure to jot them down. Reference them when your days seem laborious or when your feelings try to force you to reflect on things that arenât as positive. Itâs clear we donât know what the future holds, but we do know (and have been reintroduced) to the moments, things, and people that continually keep us hopeful and thankful â no matter what lies ahead.
The post Gratitude in a Difficult Year appeared first on MintLife Blog.
This page may include affiliate links. Please see theÂ disclosure pageÂ for more information. For most of my adult life, I never really considered debt a four letter word. You know the type I mean. Those coarse, offensive type you start using as a teenager to act cool around your friends. I always viewedÂ debtÂ as a necessity, a…
The post Debt is a Four Letter Word appeared first on Debt Discipline.
If you are a homeowner with a mortgage, you might have heard about your right to redemption. For those who have been struggling to make their house payments, this is one route that can be taken to avoid foreclosure.Â Â
What is the Right of Redemption?
If you own real estate, making mortgage payments can be hard, but foreclosure is something that most people want to avoid. The right of redemption is basically a last chance to reclaim your property in order to prevent a foreclosure from happening. If mortgagors can manage to pay off their back taxes or any liens on their property, they can save their property. Usually, real estate owners will have to pay the total amount that they owe plus any additional costs that may have accrued during the foreclosure process.Â
In some states, you can exercise your right to redemption after a foreclosure sale or auction on the property has already taken place, but it can end up being more expensive. If you wait until after the foreclosure sale, you will need to come up with the full amount that you already owe as well as the purchase price.Â Â
How the right of redemption works
In contrast to the right of redemption, exists the right of foreclosure, which is a lenderâs ability to legally possess a property when a mortgager defaults on their payments. Generally, when you are in the process of purchasing a home, the terms of agreement will discuss the circumstances in which a foreclosure may take place. The foreclosure process can mean something different depending on what state you are in, as state laws do regulate the right of foreclosure. Before taking ownership of the property through this process, lenders must notify real estate owner and go through a specific process.Â
Typically, they have to provide the homeowner with a default notice, letting them know that their mortgage loan is in default due to a lack of payments. At this point, the homeowner then has an amount of time, known as a redemption period, to try to get their home back. The homeowner may have reason to believe that the lender does not have the right to a foreclosure process, in which case they have a right to fight it.Â
The right of redemption can be carried out in two different ways:
You can redeem your home by paying off the full amount of the debt along with interest rates and costs related to the foreclosure before the foreclosure sale OR
You can reimburse the new owner of the property in the full amount of the purchase price if you are redeeming after the sale date.Â
No matter what state you live in, you always have the right to redemption before a foreclosure sale, however there are only certain states that allow a redemption period after a foreclosure sale has already taken place.Â
Redemption before the foreclosure saleÂ
Itâs easy to get behind on mortgage payments, so itâs a good thing that our government believes in second chances. All homeowners have redemption rights precluding a foreclosure sale. When you exercise your right of redemption before a foreclosure sale, you will have to come up with enough money to pay off the mortgage debt. Itâs important that you ask for a payoff statement from your loan servicer that will inform you of the exact amount you will need to pay in order save your property.Â
Redemption laws allow the debtor to redeem their property within the timeframe where the notice begins and the foreclosure sale ends. Redemption occurring before a foreclosure sale is rare, since itâs usually difficult for people to come up with such a large amount of money in such a short period of time.Â
The Statutory Right of Redemption after a foreclosure saleÂ
While all states have redemption rights that allow homeowners to buy back their home before a foreclosure sale, only some states allow you to get your home back following a foreclosure sale. Known as a âstatutoryâ right of redemption, this right as well as the amount of time given to exercise it, has come directly from statutes of individual states.Â
In the case of a statutory right of redemption, real estate owners have a certain amount of time following a foreclosure in which they are able to redeem their property. In order to do this, the former owner must pay the full amount of the foreclosure sale price or the full amount that is owed to the bank on top of additional charges. Statutory redemption laws allow for the homeowners to have more time to get their homes back.Â
Depending on what state you live in, the fees and costs of what it takes to exercise redemption may vary. In many cases during a foreclosure sale, real estate will actually sell for a price lower than the fair market value. When this happens, the former owner has a slightly higher chance of being able to redeem the home.Â
What You Should Know About the Right of Redemption is a post from Pocket Your Dollars.
If you need to borrow money but your credit is less than stellar, itâs possible youâll wind up with a bad credit loan. These loans are geared toward individuals with imperfect credit histories who can prove their income and ability to repay the loan. As a result of their bad credit, however, consumers who use bad credit loans typically pay much higher interest rates and loan fees. Bad credit loan customers may also be limited in how much they can borrow as well as the terms of their loanâs repayment.
From our perspective, LendingClub is the overall best option when it comes to getting a loan when you have bad credit.
Borrow Money with LendingClub
What To Do If You Think You Have Bad Credit
Step 1 â Get Your Actual FICO Score
The only way to find out if you have bad credit is to take a look at your FICO score, which isnât difficult since many companies offer online access for free. While your FICO credit score isnât the only credit score you have, itâs the one used by most lenders that offer personal loans.
According to myFICO.com, the credit score ranges are as follows:
Exceptional: 800 and up
Very Good: 740 to 799
Good: 670 to 739
Fair: 580 to 669
Poor: 579 or below
If your credit score falls below 579, thereâs a good chance you could only get approved for a bad credit loan. If your credit is just âfair,â on the other hand, thereâs still a chance youâll wind up with a loan for bad credit.
Get My FICO Scores
Step 2 â Compare Multiple Offers
Once you have determined your credit score, you’ll want to start comparing offers from different lenders to see what fits your needs. You can use this tool to start that process.
Continue reading to find out how Good Financial Cents breaks down the best loans for bad credit and what you should watch out for.
Best Bad Credit Loans of 2021
If you feel youâre a candidate for a bad credit loan, it still makes sense to compare loan options to find the best deal. Loans for bad credit may come with higher interest rates and more fees, but some are still better than others.
For the purpose of this guide, we compared all the bad credit lenders to see how their loan products stack up. The following loans are the best of the best when it comes to loans for poor credit:
Bad Credit Loan Reviews
Before you apply for a loan with one of the bad credit lenders above, it helps to have a basic understanding of their loan offerings, interest rates, and any other important details they offer. The following individual loan reviews can help you determine which lender offers loans that might work for your situation.
LendingClub is a peer-to-peer lender that operates outside of traditional banks. This means loans funded through the platform are initiated by private investors instead of banks, and it also means you may be able to get funding through LendingClub if you canât get approved for a loan elsewhere.
Investors in search of higher returns on their money can agree to offer loans to consumers with bad credit who present a higher risk. As a result, LendingClub personal loans come with APRs that range from 6.95% to 35.89%. Obviously, loans with rates on the higher end of the scale will go to those with low credit scores.
Before you apply, it’s important to be aware that LendingClub charges an origination fee that can equal up to 6% of your loan amount. You can repay your loan anywhere from 36 to 60 months, and thereâs no prepayment penalty if you pay your loan off early.
Pros: No minimum credit score requirement: check your rate online without a hard inquiry on your credit report
Cons: Potential for a high origination fee and interest rate
Get a Loan from LendingClub Today
Avant is another lender that often extends personal loans to consumers with low credit scores. With Avant, your interest rate will fall somewhere between 9.95% and 35.99% and you can repay your loan from 24 to 60 months. A loan funding fee of up to 4.75% of your loan amount is required as well, which will push up the cost of borrowing.
Avant claims that they have loaned $4 billion dollars to more than 600,000 consumers so far and that they have a 95% customer satisfaction rate. You can apply for a personal loan through Avant online, and you can even check your rate without a hard inquiry on your credit report.
Pros: No minimum credit score requirement; you can check your rate online without a hard inquiry on your credit report
Cons: High APRs and loan fees for bad credit
Borrow Better and Faster with Avant
LendingPoint is another bad credit lender that offers personal loans to consumers who are willing to pay whatever APR it takes. Loans from LendingPoint come with APRs between 15.49% and 35.99%, and your loan origination fee can be as high as 6% of your loan amount.
You can repay your loan for anywhere from 24 to 48 months, and loans are offered in amounts up to $25,000. LendingPoint also lets you check your rate online without a hard inquiry on your credit report. You do need a minimum credit score of 585 to qualify for one of their loans.
Pros: Check your rate without a hard inquiry; low minimum credit score requirement
Cons: Pricey APRs and loan origination fee; loans not available in every state
Sign Up Today with LendingPoint
#4: OneMain Financial
OneMain Financial offers personal loans in amounts between $1,500 and $20,000, and you can repay your loan for anywhere from 24 to 60 months. Interest rates range from 18.00% to 35.99%, and an origination fee may apply as well.
You can apply for a bad credit loan with OneMain Financial online, and you can get your loan approved and funded within a matter of days. You can even check your rate and gauge your ability to qualify without a hard inquiry on your credit report.
Finally, note that OneMain Financial has 1,600 physical locations in 44 states. To have your loan funded, youâll need to visit a OneMain Financial location and meet with a loan specialist.
Pros: No minimum credit score requirement; borrow up to $20,000
Cons: Potential for pricey APR and loan origination fee; you are required to visit a physical branch to have your loan funded
Get Started with OneMain Financial
Upstart is a unique online lender that makes it easier for borrowers with poor credit to qualify for a loan. This company considers more than your credit score when approving you for a personal loan, meaning they may give more weight to additional factors like your income and how much education you have.
Borrowers who qualify can access between $1,000 and $50,000 in loan funds with a repayment period of 3 or 5 years. Interest rates range from 5.69% to 35.99%, however, depending on creditworthiness and other factors.
Fortunately, loans from Upstart donât come with any prepayment penalties. You can also check your rate online without a hard inquiry on your credit report.
Pros: No minimum credit score requirement; borrow up to $50,000
Cons: Potential for pricey APR and loan origination fee
Get the Loan You Deserve with Upstart
How We Chose the Best Loans for Bad Credit
The lenders above offer loans that can be exorbitantly expensive when you factor in interest rates and fees. Since expensive loans are the norm for consumers with bad credit, however, these still represent the best loan options for people with risky credit profiles.
With that in mind, here are the factors we considered to come up with the loans for this list:
Easy Rate Check
Having the ability to check your loan rate online without a hard inquiry on your credit report is beneficial for potential borrowers who arenât quite ready to fill out a full loan application. We ranked lenders who offer this option higher as a result. With an easy rate check, you can get an idea of your interest rate and loan fees before you apply.
Check Your Credit Score for FREE
No Prepayment Fees
While loans for bad credit typically come with high interest rates and more loan fees, we think prepayment penalties cross the line. We looked for bad credit loans that donât charge prepayment penalties since borrowers should have the option to pay their loans off early.
Ability to Apply Online
Lenders that let you apply for a personal loan online are considerably more convenient, so we gave a better loan score to loan companies that offer this option. Bonus points were applied if you can complete the full loan application online and have your loan funded electronically.
We also looked at individual loan reviews on company loan pages and websites like Trustpilot. While all lenders have their share of poor loan reviews, the lenders that made our list boast considerably more positive user reviews than bad ones. Most of the lenders that made the cut for our ranking have customer approval rates over 90%.
Loans for Bad Credit: What to Watch Out For
Bad credit loans are not ideal since they come with high rates and fees that push up the total cost of borrowing. However, some bad credit loans are also considerably âbetterâ than others based on how they charge fees and the rates they offer. Hereâs everything you should watch out for before you apply.
Consider the Impact of High Rates
First, it can be immensely helpful to check your rate with multiple lenders in this space before you apply. Thereâs a huge difference between paying 25.00% APR and 35.99% APR even though both rates arenât great, so youâll want to pay the lowest interest rate that you can.
How much difference can it make? Imagine for a moment you need to borrow $10,000 and repay it over 60 months. Hereâs what your monthly payment would look like â and how much interest you would pay overall â if you repaid your loan over 60 months with three different rates:
Total Interest Paid
Avoid Origination Fees If You Can
Also try to avoid loan origination fees if you can, although this may be difficult if your credit score is on the low end of the scale. Loan origination fees are charged as a percentage of your loan upfront, so you canât avoid them â even if you pay your loan off early. They also add unnecessary expense to your bad credit loan without any benefit for you, the borrower.
Check for Prepayment Penalties
Also, make sure to check for any prepayment penalties that may apply to your loan, and if you can, opt for a lender that doesnât charge these fees. It would be nice to have the option to pay your loan off early without a penalty if you wind up having the money you need to do so. If youâre able to pay your loan off ahead of schedule, you could pay a lot less in interest over your loanâs term.
Bad Credit Loans: Should You Improve Your Credit First?
If youâre worried about the impact of a bad credit loan on your finances, it can make sense to spend some time improving your score before you apply. If youâre able to pay all your bills early or on time for several months, for example, you could have a positive impact on your score. Thatâs because your payment history is the most important factor that makes up your FICO score. According to myFICO.com, this factor alone makes up 35% of your score.
The same is true if youâre able to pay down debt to decrease your credit utilization. This advice is based on the fact that how much you owe in relation to your credit limits is the second most important factor making up your FICO score at 30%.
In the meantime, try to avoid opening and closing too many accounts since either of these moves can also ding your score.
If you were able to move the needle and boost your credit score in the âfairâ or âgoodâ range, thereâs a very good chance you could qualify for a less expensive personal loan with better rates and terms. Of course, this isnât always possible if you need to borrow money sooner rather than later.
The Bottom Line
Bad credit loans may come with pricey APRs, but they are often the only option of last resort for borrowers whose credit has taken a hit. If youâre in the market for a loan and know youâll need to get a loan for bad credit, the best thing you can do is compare loan options to find the best deal.
Keep an eye out for bad credit loans with the lowest interest rate and origination fee you can qualify for.
Also, look for lenders that let you check your rate and get prequalified online and before you fill out a full loan application.
With enough research, you should end up with a bad credit loan that helps your finances instead of making them worse.
The post What Are the Best Loans If You Have Bad Credit? appeared first on Good Financial CentsÂ®.
The post How to Pay Off Debt – Fast! appeared first on Penny Pinchin' Mom.
Americans are in debt.Â It’s one of the main reasons couples fight and a leading cause of stress.Â Fortunately, there is a way you can get out of debt.
Anything worth having in life takes hard work and dedication.Â And, the sense of accomplishment and joy when you can tackle what seems to be the impossible, is a great feeling.
The same is with your debt. Â Paying it off is NOT easy. Â It is going to take a lot of time, but it is so well worth it!
Of course, before you can start to pay off debts, you need to follow the right steps. Â It is imperative that you’ve already done the following before you start working on paying off those debts you have. Â These include:
Preparing your Net Worth and Debt Paydown Forms
Understanding your Money Attitude
Creating Your Budget
Learning How to Use a Cash Budget (Envelope System)
Setting up Your Emergency Fund
Once you’ve tackled these steps, then you get to start the fun part, which is paying off your debts!Â If you haven’t, you will want to take the time to read each post and follow the steps.Â You really should not try to get out of debt until these steps are done.
HOW TO GET OUT OF DEBT FAST
It is fun to watch your debts slowly disappear!Â Â However, it is important that you are ready.Â If you are ready, then read on!
KNOW HOW MUCH DEBT YOU HAVE
You need to make sure you know exactly how much you owe and to whom.Â I recommend completing aÂ debt pay down form.
This form should list all ofÂ the debts you owe, listed from the lowest balances to the highest, as well as your minimum monthly payment.
Debt Payoff Forms Bundle
To begin, review your budget.Â Hopefully, you were able to find some “extra” money.Â By extra money, it means money you have left over after meeting your needs.Â Â When you can free this up in your budget, it is what you will pay towards your debt.
For example, if you were able to lower your grocery bill from $800 to $650 a month, that means you now have $150 to apply to your debt.Â My husband and I did this, and it made a HUGE difference.Â We did everything we could to reduce our grocery budget from using coupons to menu planning and changing the foods we ate.
Because getting our debt paid off was so important, we eliminated dining out from our budget. For us, it was important to sacrifice in the short term to get ourselves out from underneath our debt.
When you find this extra money, you apply that to your debt. Start by paying any additional money towards the debt on which you owe the least.Â Here is an example:
Continue to make the payments to these debts as listed. Â Then, when Citibank it paid off, you will roll the $35 payment into the Visa payment, like this:
Visa – $875 owed — minimum payment $15 monthly payment $50
Ford — $10,475 owed — required monthly payment $375
Continue this same process.Â And, as there is more money freed up in your budget, apply it towards this debt.Â Once you start seeing the balances decrease, you will be more motivated to cut your spending and slash your debt.
That is what happened to us.Â We were so excited to see those balances decrease that we kept finding more ways to not only reduce our monthly spending but to find more money!
HOW TO PAY OFF YOUR DEBTS MORE QUICKLY
Of course, the first step to paying off debts is to find money in your budget to apply towards them. Â It can also be beneficial to use larger amounts of cash towards your debts, or even find ways to free up even more money. Â Here are some things you might try:
Sell items on Craiglist, eBay or other methods.Â If you have extra things lying around the house, you may wish to sell them and raise some money and then turn around and make a nice big payment on that smallest debt.
Get another job.Â If you can swing it, pick up a part-time job and apply all of your earnings towards your debt.Â You can try your hand as an Uber driver or even a freelance proofreader.Â You can find more ideas on how you can make money from home.
Reduce savings and pay down debts.Â If you happen to have MORE than $1,000 in the bank currently, but still have debts, you should take any amounts above $1,000 and pay down your debts BEFORE you are saving.Â The reason is why are you saving money for yourself and paying more in interest to someone else than you are making yourself?
Get creative! Â There are many ways you can find extra money in your budget. Â One of these 50 ways to make money to pay off your debt might be the perfect solution for you!
HOW TO USE YOUR TAX REFUND
So, what about that nice big tax return that might be coming your way? Â Experts say that you should use the rule of thirds:
1/3 towards the past — use to pay off debts
1/3 towards the present — have some fun
1/3 towards the future — savings
If you genuinely want to get out of debt, I would recommend you do the following:Â Make sure that you have at least $1,000 in the bank, so your Emergency Fund is funded.Â Then, apply any leftover tax refund towards your debt.
We would all love to blow our return on something fun, such as a new TV or vacation.Â But, you have to decide if you want that instant gratification (which may turn to guilt) or if you want to get yourself out of debt. Â While I can only recommend that you work on the debt first, this is a question only you can answer.
WHY NOT CONSIDER INTEREST RATES?
I hear this over and over again “You should pay off the highest interest rate debt first!” Â I do not agree with this, and the reason is this – behavior.
Most people need to see that they are reaching goals. Â We need to seeÂ the fruits of our labor.Â By paying off the smallest balance first, it gives you a sense of accomplishment.
You see what you are doing is actually working and you keep working to pay down other debts. Â That gives the motivation to keep on as you can see that you are paying off debts and can do this! Â GO YOU!!!!
If you work on only the balance with the highest interest rate first, it may take longer actually to pay it down.Â Because the rate is higher, it may take longer to tackle the principal balance, since most of your payment always goes towards interest.Â This can result in more frustration and youÂ wanting to quit as you feel you are getting nowhere.
Look at it this way; if you were not trying to get out of debt, you would still increase debt due to interest rates, right? Â So, if you can do something that gets you on track to start to pay them down one at a time, you are already making a difference in how you look at your debts.
Of course, if you feel better about listing via interest rate, that is what you need to do. Â There is not a right or wrong way to pay off your debts. Â Just keep in mind that if you find yourself frustrated with progress, you might try to change it around and tackle that lowest balance first. Â It just might make the difference for you.
Getting out of debt is not easy. I’ve been there and know how difficult and challenging it can be. Â However, having the tools you need to make it happen is key to your success.
Read our Financial Reboot Book or take the Financial Reboot course to learn even more about not only getting out of debt but how to better manage your money.
The post How to Pay Off Debt – Fast! appeared first on Penny Pinchin' Mom.
In borrowing, there are two types of debts, recourse and nonrecourse. Recourse debt holds the person borrowing money personally liable for the debt. If you default on a recourse loan, the lender will have license, or recourse, to go after your personal assets if the collateralâs value doesnât cover the remaining amount of the loan that is due. Recourse loans are often used to finance construction or invest in real estate. Hereâs what you need to know about recourse loans, how they work and how they differ from other types of loans.
What Is a Recourse Loan?
A recourse loan is a type of loan that allows the lender to go after any of a borrowerâs assets if that borrower defaults on the loan. The first choice of any lender is to seize the asset that is collateral for the loan. For example, if someone stops making payments on an auto loan, the lender would take back the car and sell it.
However, if someone defaults on a hard money loan, which is a type of recourse loan, the lender might seize the borrowerâs home or other assets. Then, the lender would sell it to recover the balance of the principal due. Recourse loans also allow lenders to garnish wages or access bank accounts if the full debt obligation isnât fulfilled.
Essentially, recourse loans help lenders recover their investments if borrowers fail to pay off their loans and the collateral value attached to those loans is not enough to cover the balance due.
How Recourse Loans Work
When a borrower takes out debt, he typically has several options. Most hard money loans are recourse loans. In other words, if the borrower fails to make payments, the lender can seize the borrowerâs other assets such as his home or car and sell it to recover the money borrowed for the loan.
Lenders can go after a borrowerâs other assets or take legal action against a borrower. Other assets that a lender can seize might include savings accounts and checking accounts. Depending on the situation, they may also be able to garnish a borrowerâs wages or take further legal action.
When a lender writes a loanâs terms and conditions, what types of assets the lender can pursue if a debtor fails to make debt payments are listed. If you are at risk of defaulting on your loan, you may want to look at the language in your loan to see what your lender might pursue and what your options are.
Recourse Loans vs. Nonrecourse Loans
Nonrecourse loans are also secured loans, but rather than being secured by all a personâs assets, nonrecourse loans are only secured by the asset involved as collateral. For example, a mortgage is typically a nonrecourse loan, because the lender will only go after the home if a borrower stops making payments. Similarly, most auto loans are nonrecourse loans, and the bank or lender will only be able to seize the car if the borrower stops making payments.
Nonrecourse loans are riskier for lenders because they will have fewer options for getting their money back. Therefore, most lenders will only offer nonrecourse loans to people with exceedingly high credit scores.
Types of Recourse Loans
There are several types of recourse loans that you should be aware of before taking on debt. Some of the most common recourse loans are:
Hard money loans. Even if someone uses their hard money loan, also known as hard cash loan, to buy a property, these types of loans are typically recourse loans.
Auto loans. Because cars depreciate, most auto loans are recourse loans to ensure the lender receive full debt payments.
Recourse Loans Pros and Cons
For borrowers, recourse loans have both pros and and at least one con. You should evaluate each before deciding to take out a recourse loan.
Although they may seem riskier upfront, recourse loans are still attractive to borrowers.
Easier underwriting and approval. Because a recourse loan is less risky for lenders, the underwriting and approval process is more manageable for borrowers to navigate.
Lower credit score. Itâs easier for people with lower credit scores to get approved for a recourse loan. This is because more collateral is available to the lender if the borrower defaults on the loan.
Lower interest rate. Recourse loans typically have lower interest rates than nonrecourse loans.
The one major disadvantage of a recourse loan is the risk involved. With a recourse loan, the borrower is held personally liable. This means that if the borrower does default, more than just the loanâs collateral could be at stake.
Loans can be divided into two types, recourse loans and nonrecourse loans. Recourse loans, such as hard money loans, allow the lender to pursue more than what is listed as collateral in the loan agreement if a borrower defaults on the loan. Be sure to check your stateâs laws about determining when a loan is in default. While there are advantages to recourse loans, which are often used to finance construction, buy vehicles or invest in real estate, such as lower interest rates and a more straightforward approval process, they carry more risk than nonrecourse loans.
Tips on Borrowing
Borrowing money from a lender is a significant commitment. Consider talking to a financial advisor before you take that step to be completely clear about how it will impact your finances. Finding a financial advisor doesnât have to be difficult. In just a few minutes our financial advisor search tool can help you find a professional in your area to work with. If youâre ready, get started now.
For many people, taking out a mortgage is the biggest debt they incur. Our mortgage calculator will tell you how much your monthly payments will be, based on the principal, interest rate, type of mortgage and length of the term.