It is a fact of life these days that getting hold of a personal loan is much more difficult than it used to be. That doesn’t alter the fact that emergencies still happen, cars break down, people get sick and need to fund treatment, accidents still happen around the home and the repairs cannot be left unattended.

It is also a fact of life that not everyone has the immediate funds to hand to take care of these sort of emergencies. If you find yourself in this situation remember to stay smart, if you need to borrow some short term funds don’t borrow more than you need to and never forget that what you are borrowing you will need to pay back. So keep it within your reach, this is an emergency situation that you found yourself in and those types of emergency are normally outside of your control so don’t make things worse by over extending yourself.

There seems to be a stigma associated with cash advances but sometimes they are unavoidable and can provide a reasonable solution to brief or temporary cash flow problems. Fortunately you can research the internet to find the best deal for you, it is a great resource for finding short term emergency loans that can hold you over until the next pay day. Just make sure that is all it is, far too many people get themselves into financial problems because they use short term cash advance loans in the wrong way.

Always remember that the level of interest you pay on these types of loan is astronomic compared to many other forms of personal loan and they really should only be used as a last resort. In fact the government provide help and advice on different ways of borrowing and it is definitely worth exploring that advice before committing to a short term cash advance. You can find the US Government advice on the subject here http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm

Typical loan amounts of this type would range from $0 to $1500 but more typically the maximum is $500 and would need to be repaid within 2 weeks. Remember this is an emergency personal loan to fulfill an immediate and urgent requirement, for the lender it is a high risk unsecured loan so the charges will be in proportion to the level of risk and the amount of cash offered will be limited. In other words they won’t lend you much and they will charge a lot for the privilege.

If you need a longer term loan or more money you should be looking at alternative ways of borrowing. A secured loan is probably one of the cheapest ways to borrow but of course you have to have the collateral available in order to do that, securing the loan is likely to take a little longer and as always if you fail to meet your repayments then you are liable to lose that collateral against the loan.

Borrowing on line does offer some benefits, privacy and security for example. You can also get an answer pretty much instantly, there are online forms to fill in and sometimes you may need to provide proof of earnings or financial status, not always but that shouldn’t be unexpected. If you really have exhausted all the other options and you think you have the discipline not to be tempted into using these loans as other than a one off solution to an immediate emergency, then it might just be worth exploring the option. Anything more than that…..stay well away from it.

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Before you get started it is worth knowing that there is still time to request mortgage assistance, the Home Affordable Program has been further extended and is now set to end on the 31st December 2015. These dates have been extended several times for both the ‘Home Affrodable Refinance Program (HARP)’ and the ‘Home Affordable Modification Program (HAMP)’.

You might also be wondering if you are actually eligible for HAMP, perhaps you failed to meet all the repayments through a trial period or your debt to income ratio was 31% or lower. While the good news is that the criteria for eligibility has changed and there is a possibility that you are now eligible where previously you were not. The only way to find out for sure is to check with your mortgage provider. But, as a guideline, changes have been made to the eligibility criteria to include the following homeowners:

  • those that had a HAMP permanent modification but defaulted on their payments
  • those that were in the trial period plan but defaulted on their payments
  • those that are applying for a modification on a home that is not their main residence, but the property is rented or up for rent.
  • those that didn’t previously qualify because their debt to income ratio was 31% or lower

Keeping up to date with the Home Affordable programs can be a little tricky as they are constantly being revised and modified, dates extended and eligibility criteria modified. This is sort of to be expected as understanding of real needs and realistic targets evolve over time.

So the answer is to be patient and to remember the place you will get your real answer to eligibility is from your mortgage provider. Everything else has to come under the description of general guidelines that, yes, will give you an idea, but ultimately every individual case is different and has to be treated as such. This is where you can see the latest guidelines for HAMP & HARP:

 

 

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Before you decide to take out a payday loan, consider some alternatives.

  1. Consider a small loan from your credit union or a small loan company. Some banks may offer short-term loans for small amounts at competitive rates. A local community-based organization may make small business loans to people. A cash advance on a credit card also may be possible, but it may have a higher interest rate than other sources of funds: find out the terms before you decide. In any case, shop first and compare all available offers.
  2. Shop for the credit offer with the lowest cost. Compare the APR and the finance charge, which includes loan fees, interest and other credit costs. You are looking for the lowest APR. Military personnel have special protections against super-high fees or rates, and all consumers in some states and the District of Columbia have some protections dealing with limits on rates. Even with these protections, payday loans can be expensive, particularly if you roll-over the loan and are responsible for paying additional fees. Other credit offers may come with lower rates and costs.
  3. Contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith. They may offer an extension on your bills; make sure to find out what the charges would be for that service — a late charge, an additional finance charge, or a higher interest rate.
  4. Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost. You may want to check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.
  5. Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. At the same time, try to build some savings: small deposits do help. A savings plan — however modest — can help you avoid borrowing for emergencies. Saving the fee on a $300 payday loan for six months, for example, can help you create a buffer against financial emergencies.
  6. Find out if you have — or if your bank will offer you — overdraft protection on your checking account. If you are using most or all the funds in your account regularly and you make a mistake in your account records, overdraft protection can help protect you from further credit problems. Find out the terms of the overdraft protection available to you — both what it costs and what it covers. Some banks offer “bounce protection,” which may cover individual overdrafts from checks or electronic withdrawals, generally for a fee. It can be costly, and may not guarantee that the bank automatically will pay the overdraft.

The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck — and still have enough to make it to next payday.

The source of this information comes directly from the US government ref: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm

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The best way to get a loan depends very much on your personal circumstances and to a large extent, what you want the loan for. You should also remember that the interest rate you end up paying on a loan may be significantly different to another person. Some of  the factors that need to be considered when you are going to apply for a loan are as follows:

Your Creditworthiness or Credit Score

A poor credit score could well result in you being offered a loan at a higher interest rate than someone that has a good credit score. So, if you can, try and improve your credit score.

Typical ways of ensuring you get a good credit worthiness rating is to have a good credit history. How you do that is reasonably obvious, make sure you meet all your loan payments on time and don’t leave any debts unpaid after the time they were due to be cleared.

Also contrary to what some people might believe, if you have never had a loan before, you might meet some resistance from lenders towards them giving you a loan. This is basically because you have no credit history and consequently the lenders do not know how much of a risk they are taking if they lend you money. This can be quite tricky to deal with. So it might be worth you creating a bit of a credit history. Taking out a credit card for example, then using it to pay bills you may have otherwise paid in cash and then clearing the full balance by the due date each month.

If you do that you will not incur any charges and you will be demonstrating that you can manage your finances and make necessary repayments on time. Don’t, however fall into the trap of not paying off the credit card in full, as that will mean you will incur charges and possibly demonstrate an inability to manage your finances.

Tangible Assets or Collateral

If you have any assets you can use to provide some sort of guarantee to a lender that they will be able to recover their money should you default, you are likely to be offered a loan at a better rate of interest. Any item that offers genuine resale value could potentially be used to help secure a loan.

Another form of guarantee is to have someone act as a guarantor to the loan, young people sometimes ask their parents to co-sign a loan, once again it is a way for a lender to be sure they can recover the value of the loan should you default. The co-signer is in a tricky situation however because they really must trust you to pay the loan, they have little to gain and a lot to lose, but it is a way of securing a loan if you do not have a personal credit history or have had problems in the past.

How to Keep Costs Down

Many people take out insurance protection to cover the cost of the loan if they default. This is most commonly known as ‘payment protection insurance’. These types of insurance policies are typically very expensive and can actually contribute to you not being able to make a payment. This is because the loan becomes much more expensive with insurance on top. Always consider very carefully if you need payment protection, because if you can make the repayments you really don’t need it. Far better to be sensible about how much you borrow and to stay within a budget that you know you are going to be able to repay comfortably.

Know What You Are Borrowing and What Has to be Repaid

The technical term for what has to be repaid is ‘TAR’ total amount repayable. In many ways this is a better measure of what you can afford to borrow than comparing interest rates. Why, because you know exactly where you stand. Comparing interest rates especially APR (annual percentage rates) can be confusing and you may miss the point of exactly what the loan is going to cost you. But knowing the TAR and how many months you need to pay the loan back over, gives you a very good idea of what the loan actually costs you and whether you can afford it.

Understand the Type of Loan and What You are at Risk of Losing

A secured loan, as mentioned previously, very often offers lower interest rates. But if you do end up defaulting you could lose what you offered as the security. Frequently this is the home you live in and losing it could have a devastating affect. Also secured loans sometimes have variable rates of interest, which means what you start to pay on a monthly basis could actually increase. It could also decrease of course, which would be good, but overall it means you have a more complicated means of making repayments.  This isn’t typically the case with an unsecured loan, they tend to be a series of fixed payments for a predefined number of months. So knowing the differences and even more importantly understanding the differences between different types of loan can be crucial to your financial well being.

Never be Afraid to Shop Around

The Internet provides the perfect media for finding the best type of loan for you. You can compare the differences between, secured loans, unsecured loans and even cheap deal credit cards. One thing for sure is that there are horses for courses and the type of loan you should be looking for needs to be matched to your personal circumstances, the type of loan you need and the reason you actually need a loan.

As a final word of caution, if the reason you are looking for a loan is to pay off an existing higher cost loan, be sure there are no surrender charges involved, because it is quite possible you may end up with a cheaper loan but more to actually repay than the original would have cost you.

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