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How To Find a Lender When Credit Score is Between 500 and 650

This consumer is looking for a $10,000 loan to help with the purchase of a small boat and wants to know how to find a lender when credit score is between 500 and 650. The following paragraph provides some information on credit ratings and what it means.

Lenders rely a great deal on credit scores to provide them with an indication of how trust worthy an applicant is regarding the repayment of a loan, mortgage or even credit card debt. A credit score of 750 to 850 means you have an excellent rating. Good credit is between 700 to 750 and 650 to 700 is considered a fair rating. Anything below 650 is considered poor to bad. If you are under 350 it means you do not have any credit rating. The national average is 687.

The lower your credit score, the more risk the lenders feel they will be exposed to. To compensate, they either refuse to lend money or they raise the interest rate of the loan. With a fair rating, most consumers will still be approved by lenders, however they will typically be charged a higher interest rate. This means that your loan will cost you more money than someone who has an excellent rating.

In addition to credit ratings, lenders also consider employment, time on the job, recent credit activity and other factors that each lender feels is important. Most consumers with a record of employment, a good record of repaying loans etc will be able to borrow money for a variety of purposes. If they are able to offer something as equity towards the loan, e.g. a boat this may improve their chances of being approved.

Consumers with bad credit scores can improve them, although it takes time and effort to bring it back into the fair or good area. The longer in time you go with no unpaid debts, a record of meeting all financial obligations, work history etc, the better your credit rating will be and the faster it will improve.


How To Consolidate $40000 Without Home Equity

Many consumers find themselves in the position that this writer has asked about. He wants to consolidate $40000 without home equity to use to secure his loan. A secured loan would give him a better interest rate and lower his overall costs for the loan. The chart at the bottom of this post shows the difference in the amount of interest paid for someone paying credit card rates vs. an unsecured loan and also one that is secured over a 20 year period. The period and interest rates were chosen randomly for illustrative purposes only, but are typical of what consumers would pay. There is over a $60,000 difference in the amount of interest paid over the term of this loan which is substantial. It illustrates why that you want to find the lowest interest rate possible.

A lower interest rate also affects the monthly payment significantly as well. There is over a $250 difference in the monthly payment between the highest interest rate and the lowest rate. Anyone can use $250 a month to pay bills etc as well as to pay off a loan more quickly.

Consumers should look for loans to consolidate their debt with low interest rates. While they will not find loans that are as low as secured loan rates, there will still be significant savings for them vs. credit card interest rates. While this consumer has a car loan which has a competitive interest rate, there is the advantage as well of combining all payments into one easy payment. He should remember that he likely will not have his car after 20 years and if he consolidates this debt he is in effect deferring payment on a depreciating item which is not considered the best approach.

Financially he would be better off consolidating his credit card debt with a low interest unsecured loan, keep his car loan separate and use the money he is saving to retire the car loan as quickly as possible.


How To Consolidate Debt Between $10K and $50K in 2015

This consumer has a very good question about how to consolidate debt. His total debt is $28 thousand consisting mainly of credit card debt at high interest rates. He does not have any equity to speak of other than the small amount of equity he has in his car. He currently rents and does not own any property for personal use or investments. He is looking for assistance in finding a debt consolidation loan. He has also asked us to keep this application general so that no one can link him back to his employer.

Many consumers find it difficult to consolidate their debt in these situations due to the fact that they are considered higher risk borrowers. They typically are only eligible for non secured personal loans at interest rates that depend on their credit rating. Consumers with excellent credit ratings can often qualify for personal loans with competitive interest rates. If your credit rating is not in the excellent category, these consumers will pay a higher interest rate on a personal loan due to the perceived higher risk associated with their lower credit ratings.

Consumers in this category, particularly with low credit ratings may often not qualify for personal loans at traditional lenders. As a result they often turn to payday loan lenders who charge very high interest rates and fees associated with processing the loan. Consumers would be better off just continuing to pay their monthly payments and avoid payday loans of this type. The cost of borrowing is just too high.

Debt consolidation loans in general are usually a smart approach to take, however as with most things in life, the devil is in the details. We urge consumers to do the math and compare their current costs with those of the debt consolidation solution. Don’t forget to include any fees that may be needed when you make the comparison. Once consumers have compared their debt consolidation solution, the monthly payments and the cost of borrowing a debt consolidation loan, consumers can make the right decision for their particular solution.

As a final note, regardless of what solution is settled on, consumers are encouraged to meet all of the terms of their loans to maintain and / or improve their credit rating and ability to borrow funds in the future.


$30000, $40000, $50000 Loans For Debt Consolidation

The latest contributor to this web site has a pretty standard need for debt consolidation. Basically he spent some money on trips and home renovations, charged all of this to his credit cards and is now faced with high interest rates on the unpaid balance. Credit cards will charge upwards of 19% or more while personal loans are much lower. They can be as low as 3% at time of writing depending on credit ratings and any security that is provided by the applicant. This is a significant difference for anyone who is paying credit card debt. The savings could be put towards paying off this debt if he can be approved for a low interest debt consolidation loan.

This consumer appears to be in an excellent position to be approved for a debt consolidation loan. He has a secure job, makes decent money and has little debt other than his mortgage on his home in addition to the credit card debt. His car is paid for and he has always paid his monthly payments for utilities, taxes and debts on time. As a result he has a very good credit rating.

There are several potential solutions available for this consumer to consolidate his debt. The first is to assume a personal loan at the prevailing rates for unsecured loans and make the payments over a three to five year term. He will save money on interest, but this solution does not provide him with the flexibility he is looking for.

Another solution is to add the debt to his mortgage and spread the payments over 20 or 25 years. The disadvantage is that this will spread his payments over a long period of time and increase his mortgage. The advantage is that his monthly payments will be much lower and he will save a great deal of money on interest since the mortgage rate is secured and will be much lower.

The last solution is to apply for a line of credit, secure it with the equity in his home to obtain a low interest rate and draw on the loan as needed. This solution would allow him to consolidate his credit card debt at a low interest rate, save a great deal of interest and also provide him with the flexibility he needs to draw on the additional funds as needed when he plans to complete his additional renovation work.


Is The Wealthy Barber Mutual Fund Method Still Valid in 2015

A reader has asked if the wealthy barber mutual fund is still valid in 2015 and also whether his approach of refinancing his mortgage to put money into conservative mutual funds would be a good strategy to catch up on saving for retirement.

This is a complicated question and we have to stress that we are not financial planners and cannot provide professional advice regarding these questions. Reading the Wealthy Barber Returns and other financial books is a great start and one that should be considered for all consumers. The Wealthy Barbers advice includes to begin saving when you are young and watch your money grow as well as paying yourself first. If you start saving later in life and do not have a pension, your retirement may not be what you had planned. Even a wealthy barber can enjoy a very comfortable retirement by following this simple advice.

This reader plans to remortgage his home, take the proceeds and invest in a mutual fund. He hopes to catch up on his retirement savings by following this approach. He has a good credit rating and no other debt which is enviable. Provided that his home has the equity that he needs there should not be any problem being approved for this mortgage refinancing.  We strongly recommend that he hire an accountant to ensure that he follows the appropriate process to enable his plan to deduct interest costs against the income he generates from his mutual fund. Most investment advisers will also recommend that the investments should be completed on a diverse basis to avoid any major losses from being invested in only one  or two investments. Finally all investors should be aware that mutual funds charge MER’s which are an additional cost when you invest in mutual funds.


How To Gamble Responsibly and Not Grow Debt

Our most recent contact has indicated that he is looking for suggestions on how best to consolidate his credit card and gambling debt and also how to gamble responsibly and not grow debt even further than he has. He is applying for $30,000 which could be either a personal loan or it could be consolidated with the mortgage on his home to take advantage of the equity that he has in his home. He wants to know which is the better approach. He also wants suggestions regarding how to control his gambling so that he does not owe a lot in the future from gambling.

We are not gambling addiction experts and we really have no professional suggestions regarding gambling. We have heard many people have just simply stayed away from casinos to avoid the temptation. If they must go to the casino, they will take a limited amount of money with them to gamble with and when it is gone, they leave. They also leave their debit cards and credit cards at home when they go to the casino to avoid any temptation. Other than those small suggestions we suggest a call to gamblers anonymous for further help and suggestions.

Regarding how he should finance his $30,000 debt, there are two main alternatives which he has mentioned. The chart at the end of this post illustrated the interest costs and monthly payments covering the $30,000 consolidated with his mortgage at 5% over 25 years compared to a 5 year loan and a higher personal loan interest rate.

Bottom line is that consolidating this $30,000 loan with his mortgage will result in much lower monthly payments over a long period of time with corresponding much higher interest costs even though the interest rate is much lower than a personal loan. The personal loan will cost about half as much in terms of total interest costs, due to a much shorter term, however the monthly payment will be 4 times that of the mortgage payment.

It basically comes down to cash flow. If the client can afford the higher payments, then they are much better off in the long run to take the personal loan and pay the loan off quickly to minimize the total interest cost of the loan.


How Much Does A Debt Relief Service Cost (20000,30000,40000,50000)

The latest applicant has asked some really good questions about debt service relief and the associated costs. Debt relief service costs are real and they are charged by the companies that will help you with your debt solution. How much they cost really depends on just how much debt you have and what option or options you eventually decide on as solutions to your debt problems.

We always like to first learn how much debt the customer has and what it is costing him or her today. The customer should know this as well. Unfortunately this applicant only told us that they had credit card debt. Credit card debt is usually in the 20% range for most bank credit cards and 30% for store based credit cards. For example on forty thousand dollars of credit card debt, this client might be paying as much as $8000 a year in interest charges alone. Compared to a 7% loan, that charges interest on the declining balance this is very expensive. Remember that store credit card debt has even higher charges.

Debt releif service costs can include the following, again depending on the solution that is selected. There are transfer fees to transfer the debt to a new loan, hopefully at lower interest rates. There may also be registration fees and miscellaneous processing fees. There may also be an  annual management fee for as long as the company is managing your debt. There will be also an interest charge on the outstanding debt which should be much lower than the rate that was paid on the credit cards, unless your credit rating indicates that you are a high risk client. In this case fees and interest rates my be higher to reflect the high risk that comes with a bad credit rating.

As a consumer who is in this kind of situation, they need to compare the costs they are currently paying along with the monthly payments to the total fees and monthly payments they would pay under a debt relief situation. This comparison should tell them which is the better solution. Neither solution is going to be very good, however you are selecting the best one available given your situation.