Tag Archives: interest rates
The Severe Drawbacks of Payday Loans
Although payday loans may seem like the easy way to fix your current financial problems, they are not. Instead there are many drawbacks to using payday loans, and you can benefit by learning about these before ever applying for, or receiving, a payday loan.
The extremely high interest rates charged by payday loan companies is one of the biggest drawbacks, and it is something that should deter you from ever using one to hold you over until payday. Some states have gone so far as to ban payday lending companies from offering loans to residents because of the predatory interest rates. In fact, some interest rates are so high that the companies can easily be considered ‘loan sharks’. These companies are often making huge profits by giving high interest loans to desperate people.
Why would people even consider applying for a payday loan with the high interest rates? For one thing the advertising campaigns run by most loan companies make it appear extremely easy to get a loan and just as easy to pay it back. The companies will simply ask for a canceled check to get your bank information and will get their money back directly from your account. What the ad doesn’t tell you is that because of the high borrowing fees and interest rates you will have double, triple, or quadruple the amount that you actual borrowed taken back from your bank account.
Harassment for non-payment is also a drawback to using a payday loan company. The amount which you are loaned must be paid back, and this may not be accomplished with just one paycheck if you took out a large sum of money. Instead the company will work with you to set up a payment plan that is explained to you before the loan is finalized. The company will make the payment plan seem reasonable and convenient hiding that you are often paying back additional fees. If you are late on a payment or a payment attempt is returned because of insufficient funds companies will call your home and work place constantly. Some will even contact your neighbors and family members to embarrass and harass you. Many payday loan companies have even found ways to go around the laws set in place by the Fair Debt Collection Act so that they can harass loan holders without fear of legal retribution.
Finally the largest drawback to payday loans is the fact that they are not a permanent solution to a long-term financial problem and can often cause more financial woe. If you are living paycheck to paycheck and experience a sudden emergency that requires quick cash, a payday loan will only cause more headaches for you rather than actually help you. You will still end up with an additional bill to pay to a lender that will usually not be reasonable if you experience repayment problems. It is important that you realize this and find alternatives to getting the cash you need in order to avoid serious financial problems later or even bankruptcy.
The first step – Finding out about college loan consolidation (Page 1 of 2)
We might think that for a regular college student the main concern is to attend classes, study for exams and turn in the papers before the deadlines. However, this is not the case in North America. The students in the United States and Canada have to deal with quite complicated financial decisions throughout their years of higher education. The reason is that higher education in these countries is provided by private institutions, which offer quality education but at quite spicy costs. In these conditions, students and their families have to face tough financial decisions when they choose a college to attend. For most of them, the fees are too expensive so the first step is to try obtaining a full scholarship or partial financial aid. For the rest of the expenses, there is the widespread option of contracting a college loan.
Students can contract more than one college loan during their four years of college. If they also pursue graduate studies, it is likely that they will end up with a collection of college loans that they end up paying back for many years after graduation. It thus turns out that a college loan is not something you leave behind at graduation, along with all the other college stories, but it is a life-long commitment. The practice of contracting a college loan is so common that an entire business has developed around it covering financial and legal services for the loan contractors.
A college loan can be offered by either a governmental agency or by a private company that takes care of such financial services. If the student contracts all his student loans from the government, than he can use the option of college loan consolidation. College loan consolidation is extremely advantageous because it actually means replacing a whole set of different loans with various interest rates with just one loan having a unique rate. The main benefit of college loan consolidation is that it gives the chance to lock in the interest rate at its current value (the value at the time when the consolidation is made) thus offsetting changes in interest rates taking place over the next years, when the loan is being repaid. Nowadays, all recent graduates are advised to pursue college loan consolidation as soon as they can because rates for college loans are at an all time low and they will not remain so for too lone. Doing college loan consolidation now means that the student makes sure he or she will pay the same low rate for the following ten or more years, although interest rates for college loans may increase by 10% or more in this period.
College loan consolidation is most commonly done by recent graduates, who are starting to face the difficulties of starting to pay back the loans. Usually, during the college years, the government will subsidize the payment of the rates for students. During the first six months after graduation, young people can still be saved the trouble of having to think about college loan consolidation because they are given a grace period during which no payments should be made. The wisest of them start thinking about college loan consolidation in this time though. They consider alternative options and decide which scheme for college loan consolidation is most beneficial for them. College loan consolidation may be a tough decision to make, the financial packages offered include details that may be tedious to follow and understand. That is why recent graduates may end up postponing thinking about it. However, they are being pressured more and more to become responsible and do college loan consolidation now because of the low interest rates they should be taking advantage of.