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Why Apply for a Loan?
There are many reasons why consumers take out loans. Two of the most common types of loans used by most consumers at some point during their lives are homeowner loans and motor loans. Mortgages are required by most home buyers who need financing to help cover the costs of purchasing property. Some existing homeowners also rely on their property to secure second charges for various purposes. Most car buyers also obtain lender financing to help cover the costs of the vehicle purchase.
While property purchases are among the more common loans types, borrowers rely on financing or credit various reasons. Some borrowers use personal loans, or the second charges mentioned, to consolidate debt created by other loans, renovate or upgrade property, go on a vacation, make a large purchase, or other important needs. Loans that are secured by property usually come with more favorable rates and terms because they pose less risk to the creditor. This is why secured loans are popular for consolidating debt from higher rate loan and credit balances.
Another type of loan used by some budget-oriented consumers is pay day loans. These are loans that are awarded in advance of a pay period. They are used by consumers who rely on paycheck income to cover basic expense requirements. Some borrowers use these loans to cover financial needs in advance of a pay period. These loans are often secured by personal property, such as a vehicle. They are generally short term loans.
Along with the aforementioned loans, many consumers regularly shop with credit cards. Credit cards are commonly used to cover basic purchases using a ‘Buy now, pay later’ mentality. They are useful at times to cover important purchases, by consumers are often irresponsible with credit cards.
The key with any type of loan is to only take out an amount that is needed and no more. Some consumers do not fully understand the risk posed by taking on debt. Taking on too much in loan debt can create significant financial burdens for consumers. Not meeting monthly debt obligations can lead to a poor credit score, which ultimately makes it more difficult to acquire a loan when it is needed for an important home or auto purchase, or even insolvency and foreclosure in extreme cases. Consumers need to take out loans responsibly, when it makes financial sense to do so. Taking out a loan for discretionary spending or non-essential purchases is generally not advised.
Simple Guides for Fresh Graduates
Going to college is no easy feat. Great parties and long holidays aside, it is one of the hardest times young people have to go through. During these times, their finances are tested to the limits. They also get to take their first dip into the world of personal loans in the form of student loans. So when graduation comes, students cant help but feel finally relieved to be free from their studies.
But not for long though. As soon as the caps tossed up in the air, the reality of the real world sets in. As graduates, they are now on their own and the responsibilities are much harder than before. In the real world, they have to worry about finding a career, managing expenses, transport,living, savings, the list goes on and on. So heres a quick guide for graduates on how to get started in the real-world.
Job
In finding a job, one must try to stick to his or her field. This is going to be worth it in the long run because it will allow them to move forward in their career. A job that pays higher but is unrelated is surely tempting. However, it can possibly cause dissatisfaction and career stagnation in the future.
Income
With a full time job one must refrain from mindlessly spending all of their pay check. They must learn how to budget and save. If they have student loans, now is the best time to pay them off. Student loans are low rate interest loans so they should be easy to pay off slowly.
New Place
New employment, sometimes requires one to move cities. They can opt to rent with a friend or someone who is looking for the same deal. This will enable them to save on rent money. Another good way of saving is subletting.
In most cases, a landlord would require money-orders or checks as deposits. Therefore opening a bank account (if a person is new to the city) is important. Keeping money in the bank acts as security for any financially independent individual.
New Car
Taking a car loan is a crucial decision. Fresh graduates must be able to afford at least a 20% down payment. This way paying it off from salary becomes easier. Having good insurance for the vehicle is also a must. This should be researched efficiently to get the best insurance deal.
These are only a few but essential things to consider in the real world. However, expenses do not stop there. As ones income increases, so does their financial responsibilities such as taxes, mortgage, health care and so on. Budgeting, saving and careful research is the key. When all three are managed well, theyll support themselves just fine in the world.