Home Equity Loans: Use an Equity Loan to Finance Education, Medical Bills and More

Homeowners can leverage the equity built in their home without selling the property. Those with immediate cash needs can take out a home loan to help pay for medical bills, renovations, or other expenses that require immediate funds.

How Home Equity Loans Work

An equity loan differs from the closely related home equity line of credit. A house loan is for a set amount of money, with a repayment schedule and a fixed interest rate. A home equity line of credit is a revolving account with a borrowing limit, and a monthly repayment depending on the amount of credit issued at the time.

A home loan can be a smart choice when a large sum of money is needed for a one-time payment, while a line of credit is more appropriate for ongoing cash needs.

How To Borrow Money Using a Home Equity Loan

Lenders are more likely to approve a home loan than an unsecured loan. If the borrower defaults on the loan, the property is repossessed. Using the family home as collateral makes the borrower more attractive as a home loan candidate, but it carries a degree of risk. Use house loans for necessary expenses, not luxuries such as vacations or expensive vehicles.

In their Home Equity Lending Survey Report, the American Banker’s Association notes that banks average a 1.25% return on assets when issuing home equity loans, compared to a 1% return on all products. Simply put, banks find house loans attractive because they make more money, with less risk.
Approach the lender with a request for the amount of money required, but beware the amount offered. Some lenders offer loans of up to 125% of the value of the equity in the home. This puts the borrower in a position of owing more on the house than it is actually worth. Borrow only the amount needed for the project or expense at hand.

Using a House Loan to Consolidate Other Debts

Home loan interest rates are far lower than the rates paid on credit cards or unsecured lines of credit. An equity loan is one option for consumers in need of debt consolidation. A home equity loan with a term of 5 to 15 years can allow the borrower to pay off consumer debt at once, then pay back into the home loan a predetermined monthly amount.

The advantages of this consolidation strategy include a lower interest rate, one payment rather than several to different lenders, and the peace of mind in knowing the debt repayment amount each month.

Beware Home Equity Loan Scams

In this March 16, 1998 press release, the Federal Trade Commission identified several unethical and abusive lending practices. Among them:

  • Equity stripping- the lender considers only the value of the home, and not the borrower’s ability to repay the loan. Unethical lenders may offer the loan to individuals lacking the income to repay the money so they can seize the property when the borrower defaults.
  • Packing- this is the practice of tacking additional investment or insurance products onto the loan, to increase the lender’s profits.
  • Flipping- the lender entices the borrower into refinancing several times in a short period, to repeatedly profit from high fees.

Avoid lenders who try to engage in these practices. Always seek the advice of a qualified lending professional before refinancing or taking out a home equity loan.

Doorstep Loan Providers: Choosing the Best UK Doorstep Cash Loans

Doorstep loan providers may be able to help, even when you’ve been declined for credit elsewhere. The banks have rejected your loan application because you have a bad credit history, a low income or you’re unemployed and claiming state benefits. This is because they use credit scoring to help decide whether they should lend you money or not. Provided that you’re able to afford the repayments, you may be able to get a doorstep cash loan.

How Doorstep Loan Providers Help You Raise Urgent Cash

Reputable doorstep loan companies operate completely differently to the major high street banks. They’re prepared to lend new customers up to £500, regardless of how personal credit has been managed during the last 6-years. You can also get doorstep credit if you’re currently unemployed and on state benefits.

Just submit your application online and they’ll provide a decision in principle within just minutes. If you’d prefer to speak to an agent at your own home, this can normally be arranged within 72 hours. Bad credit, CCJs and low income aren’t a problem provided that the weekly repayments are affordable to you.

Affordable Doorstep Cash Loans from Provident Personal Credit

Provident are currently the leading doorstep loan provider and have been assisting customers for the last 125 years. They boast a 95% customer satisfaction rate. They’re a member of the Consumer Credit Association and believe in responsible lending so they’ll only lend you what you can afford to repay.

Examples of Rates on Doorstep Cash Loans for New Customers:

  • A £500 loan over 52 weeks costs £17.50 per week. You’ll pay back £910 at an APR of 272.2%.
  • A £250 advance over 31 weeks costs £12.50 per week. You’ll repay £387.50 at 365.1% APR.

Doorstep loan providers offer new customers the chance to borrow between £50 and £500 over up to 52 weeks. Existing customers are offered preferential terms and can get a quick cash advance of up to £2,500 over up to 106 weeks. Payment is collected weekly by a local agent over the next x weeks.

Doorstep Collection Loans from Greenwood Personal Credit

Greenwood specialise in helping customers who’ve already been turned down elsewhere. They provide a weekly home-collected doorstep credit service with the opportunity to spread the cost of repayment over a period of up to 33 weeks. Just submit your doorstep cash loan application online or call 0800 409 6654 for a quick decision.

  • A £500 loan over 33 weeks costs £25 per week. You’ll then repay £825 at an APR of 433.4%.
  • A £300 advance over 33 weeks will cost you £15 per week. You’ll repay £495 at an APR of 433.4%.

Quaestor RMS, an independent research company, revealed that 83% of existing customers would consider Greenwood Personal Credit once they’ve paid off their current agreement. Both Greenwood and Provident Personal Credit are strictly regulated by the Consumer Credit Act 1974.

Choosing Between Doorstep Loan Companies

An examination of the APR figures reveals that Provident are the cheaper doorstep loan provider. You can also spread the repayments over an extended period of time, especially once you’ve established your creditworthiness. Although doorstep loan lenders are less expensive than payday companies, you should explore the credit union alternative prior to signing up.

Best Auto Loan Debt Settlement Techniques for Fast Results

Negotiating a lower payment, partial debt settlement, or the elimination of amounts owed requires due diligence. Lenders expect full payment when extending an auto loan. Nevertheless, changed circumstances often convince lenders to work cooperatively with borrowers who experience financial difficulty. Because auto loans are secured by collateral, the current condition of a vehicle and market value also play important roles. Success negotiating a debt settlement normally requires verifiable supporting documentation. In appropriate circumstances, options available to borrowers are almost unlimited.

Understanding an Auto Loan and a Secured Transaction

All auto loans are risky from a lender’s perspective. Owners may neglect maintenance. Insurance adjusters may deny coverage following an accident. Portable collateral may disappear. Because of these inherent risks, lenders tend to charge significantly higher interest rates on vehicle installment notes as compared to mortgages.

Before extending credit, lenders look closely at credit ratings, monthly cash flow, and the amount of discretionary income available to make monthly payments. After extending credit, lenders must accept the current financial condition of a borrower. At this point, lenders have placed a bet and look primarily to collateral value for security.

Changed circumstances are a fact of life. In the current economic climate throughout the U.S. today, job loss is common, lack of health insurance coverage causes medical bankruptcy, and divorce is on the rise. Anyone who experiences one of these unfortunate circumstances faces significant challenges making monthly payments to creditors. In these circumstances, repossession of collateral is a creditor’s last resort for payment.

Debt Settlement Techniques for Personal Automobiles

All lenders hope debtors pay on time. When payments are habitually a few days late, they become somewhat concerned yet enjoy collecting late fees. When payments slip more than 30 days past due, all lenders monitor status closely. The degree of concern directly correlates to the severity of lateness.

Few financial institutions consider altering payment terms when notes are current. In addition, few creditors give serious consideration to a naked request for payment reductions. Success negotiating better terms requires proof of financial hardship with documentation that is verifiable through independent sources.

Before requesting better terms, individuals or their representatives should consider the example provided by the credit card debt settlement services. These services frequently provide copies of letters terminating employment, bank statements, medical records, divorce petitions, and other evidence of hardship. The ideal time to provide documentation of hardship is before attempting to renegotiating terms. The best credit card debt settlement services do this automatically.

A simple cover letter is all that is necessary when mailing documents to a lender or collection agency. The letter should list all included items and state that the borrower will call regarding current payment status. In addition, a vehicle photograph may be helpful, especially when the appearance of a car is less than pristine.

The Best Result Depends on Unique Personal Circumstances

Borrowers who prove significant hardship have the best chance of lowering payments when collateral value drops below the total amount owed. If either condition is not present, the chance for success renegotiating terms drops dramatically. When both conditions are present, wise lenders tend to evaluate reasonable requests carefully. At this point, renegotiating terms and the settlement of auto loan debts becomes much easier.

The 7 Myths About Auto Loans: Protect Yourself By Knowing What You Sign For When Financing a Car

A good credit score takes years to build, but only months to lose. Every year, thousands of car buyers succumb to these myths about auto loans, but knowing the truth can save borrowers money and stress.

The Car Doesn’t Run Anymore

Every auto loan has a clause that stipulates that the signer agrees to pay the full amount borrowed, plus interest, even if the car is inoperable or destroyed. What that means is, if the vehicle isn’t running for any reason, the borrower is still expected to make timely payments, even if the vehicle is stolen or wrecked and the borrower no longer has it.

The Payments Shouldn’t Be This High- Promised a Lower Interest Rate?

Many people sign contracts without reading them first. This is especially true when purchasing a car because the process is so long and drawn out, with endless pages of documents to sign.

Dealers count on that to get people to sign for loans with higher interest rates than what was verbally agreed upon or to unknowingly purchase additional ancillary products, such as extended warranties, protective coatings for the exterior or upholstery of the vehicle, and others.

Turning the Car in to Avoid Paying Off the Loan

Repossessed vehicles are sold to the highest bidder at private auctions, open only to dealers. The winning bid is usually well below the wholesale value of the vehicle and, because cars depreciate so quickly, the borrower almost always owes more for the vehicle than what it’s worth.

The difference between the auction proceeds and the balance still owed on the loan is known as a deficiency balance, which the lender can collect on by suing the borrower to obtain a judgment for the deficiency balance, plus court costs and attorney fees.

This balance continues to accrue interest until paid in full. Once the lender has a judgment, they can garnish the borrower’s wages, seize bank accounts and place liens on assets, such as a home, boat or other vehicles.

Co-Signers Also at Risk

This is one of the biggest mistakes that people make. Lenders report all parties on a loan exactly the same with the credit bureaus, with no distinction as to who is the primary signer and who is the co-signer.

Because the lender may take the same action against a co-signer that they can against the primary, it is unwise to co-sign loans for others, even family members.

Straw Purchases

Financing a vehicle for a third party to drive and pay for it is known as a “straw purchase.” This is illegal in all fifty states and is considered fraud.

Under most contracts, it’s also grounds for default; in other words, if a lender learns that a third party not on the loan drives the vehicle, they may repossess it even if the loan is not delinquent in order to protect their investment.

Hide the Car So There’s no Repossession on a Credit Report

Repossessing secured collateral for non-payment is a lien holder’s right and they may take legal action against the borrower, such as filing a replevin (also known as writ of possession) to force the surrender of the vehicle, or charging the account off and accelerating the loan, which means that the lender is now demanding the full loan payoff and not just the delinquent amount. They can then obtain a judgment and garnish the borrower’s wages, in many cases collecting far more every month than what the car payment would’ve been.

In addition to that, the lender may report the loan status as “Subscriber cannot find” or “P&L writeoff.” These are black flags that show potential creditors that the borrower has defaulted on a debt and skipped out on his obligations.

To some lenders this is worse than a repossession because lenders approve loans knowing that at any time the borrower may default, but there is less risk with a borrower from whom they can repossess their collateral and cut their losses than with one who doesn’t pay and then disappears with the vehicle.

Old Debts Not Wiped Out

If a debt is paid over 30 days late ten times during a five year loan, that’s what will be reported for at least seven years on the borrower’s credit history, even if the payments are eventually caught up and the final payment is made on time. Depending on the number of trades on a credit report, though, an item may remain on the debtor’s credit even longer than that.

Why it’s Important to Compare Credit Cards: How a Credit Card Comparison Can Save You Money

The market is literally flooded with different cards. To make matters even more confusing, the T&C’s are changing all the time. It is important to compare credit cards every 12 months to ensure that interest, fees and charges are kept to an absolute minimum. It is possible to perform a credit card comparison online at sites, such as moneysupermarket.com, in order to compare the factors that are most important to the borrower. It is important to appreciate that certain factors may not be relevant.

Perform a Credit Card Rate Comparison

A low rate credit card is an important consideration for those who don’t usually clear their balance at month end. The Consumer Action credit card survey reviewed the rate of interest on 41 different cards from 20 different banks. Although the median APR was 13.54%, interest rates ranged from 6% to 22.75%. At a time when providers are increasing rates due to rising default rates, signing up to the most competitive deal has rarely been more important.

Compare Credit Cards for Fees for Exceeding the Limit

The Pew Safe Credit Cards Project revealed that 92% of cards imposed a charge for exceeding the credit limit. The average charge was $39. Most card providers subsidise the headline APR on charge cards by imposing fees. Trawling through the market to identify a card that doesn’t impose a fee for going over the limit or late payment could prove invaluable.

A Credit Card Comparison for Annual Charges

The recent legislative changes in the U.S. means that it is important to compare credit cards to identify those cards that don’t charge their customers an annual fee. This is an up-front fee that is paid just for having the card. The Aite Group survey revealed that 64% of respondents deemed the absence of an annual fee was very important. According to Consumer Action, the average annual fee amongst providers who imposed this charge was $43.50.

Zero Percent Balance Transfer Offers

Should the customer have an unpaid balance, performing a 0% credit card balance transfer could help to save hundreds of dollars a year. For example, let’s assume that customer x has $10,000 of unpaid credit card debt at 14% APR. After taking into account the 4% transfer fee, the customer saves $1,000 a year in interest payments. Performing a succession of transfers could help those who are in debt. Not a relevant consideration for individuals who rarely carry any debt on their charge card.

Why a Credit Card Comparison is Important

It is important to compare credit cards because it allows the customer to identify a card that is most appropriate for their needs. Whilst most people are attracted to a card offering a low headline rate of interest, this isn’t an important consideration for those who settle their balance in full each month. However, finding a card with no annual fee could help to save money. Scan through the different criteria in order to identify the credit card deal with the most appropriate features.