An emergency money situation might send you looking for a direct online payday lender, but if you have set financial goals, you may be able to divert the need for a short-term loan. Perhaps you set money aside or saved a credit card balance to use just for extreme needs. Part of making financial goals is to protect current needs while planning for future ones.
Of course a secured loan has the advantages of allowing you to borrow more money and at a lower rate of interest simply because your repayment is secured with the asset you pledged. On the down side, a secured loan can take a while to be improved, at least several days and sometimes a couple of weeks.
In contrast, let’s look at a debt consolidation program. Let’s say that you have several different credit cards, with different limits, interest rates, minimum payments and due dates. With a debt consolidation program, all of this will be eliminated. You meet with a counselor either in person or on the phone, and you give them all your account information. The counselor then contacts each credit card company and works out new terms for you. Many times they work directly for the credit card companies themselves, and will be able to get the credit cards to reduce or freeze all interest, as well lower the principal amount that you owe. Sometimes they can even arrange to get late fees reduced or waived.
A lot of companies work on the policy that the interest owed on your debt is paid first. How else do the companies get their money back? Makes sense if you are lending the money out, but for us individuals that have borrowed the money it is a different story. Know the interest rate you are paying when taking out a loan. Find out how your payment is made up. How much of it is interest and how much is principal. Are there penalties for paying more than you are required?
If you know the loan value of a car, you can figure out how much you need to come up with to pay for your car site. If you buy a car from a dealer for 5000 dollars, the loan value is about 4000 dollars. You would be negotiating with the dealers about the down payment of 1000 dollars. This calculation also helps you stay within budget. For every car you look at you can figure out the cost of the down payment and you won’t be going out of your price range. With a loan value less than the cost of the car you have a little more of a safety net as well.
Looking to buy a home? How about hoping to retire some day? These long-term goals are crucial to plan for. Every other goal will reflect on your ability to plan for future needs. If you are going to buy a new home, it is crucial to distinguish between what you can afford to pay each month and what you can comfortably afford to pay each month. In order to make all your other goals work as well as plan for retirement, avoid from buying too much home. Many financial advisers would recommend that your mortgage be no more than 28%. Your total debt should not be more than 36% of your net monthly income. Plan your short-term and medium-term goals in accordance with long-term ones. There will be months that all the payments strap your income and make something unaffordable.
No one can deny the fact that the unsecured second mortgage are easily available but they are usually more expensive than their counterparts.Also, if the amount is large, getting an unsecured loan becomes very difficult. So, the safest bet is to go for a secured loan.