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Posts Tagged ‘credit’

If you have never applied for a credit card before, there are things you will need to know about them. Credit cards can bring you a convenience which is unrivaled by using cash or checks. Despite this, using your credit card improperly and can lead to a financial hardship which is difficult to overcome. Many credit card companies will now allow you to apply for cards online. This has made it easy for people to compare credit card offers.

The first thing you want to do is look for a credit card which interests you. It should be a card which has a low interest rate, and you will also want to get cards which have no annual fees. Some companies offer an introductory rate of 0% APR for the first 6 months. There are a large number of reputable sites online where you can compare credit card offers side by side. Make sure that the site you use is encrypted.

When you apply for the card, you will need to have some basic information on hand. You will need your social security number, driver’s license information and your address. You may also have to submit your date of birth. Once you submit your application, the credit card company or bank will review it. The amount of time it takes for them to approve or reject your application varies. It could take a few weeks, and the better your credit, the faster the process will take.

When you go online, remember that not all websites may be secure. Look for sites which use an SSL encryption system. You don’t want to submit your personal information to sites you’re not sure about. You can apply for one credit card, or multiple credit cards. It is important to remember that having too many accounts could lower your credit score. There are limits to how many cards you can have, and this is usually based on your income. It is also not necessary to have a bank account in order to be approved.

If you have detailed questions, it is best to contact the customer service department. Shopping for credit cards online can allow you to compare the different offers available from the comfort of your home. You can look for the best interest rates and features. While shopping for credit cards online is fast, it is important to remember that some websites are fraudulent. Applying for credit cards has never been easier.

If there’s one thing it’s always worth doing, it’s shopping around for best deal. This is generally true for all purchases you’re going to make, but one place it’s more important than most is with loans. Many people don’t think about it too much, but loans are for many people, the single biggest financial transactions they’ll make in their lives.

All the major purchases you’ll make will involve credit of some sort. If you’re buying a house you’ll be searching for a mortgage. If you’re buying a new car it’ll be auto finance. When you travel you’ll likely need a credit card if you don’t already have one. Remodelling your home, paying for college, for almost everyone, they involve a significant amount of credit.

Shop Around

So it’s worth shopping around. If we spend a day or more looking for a good deal on a pair of jeans, why should we accept the first credit offer we receive? Loan rates and terms can vary enormously from lender to lender. All of them offer many different rates at the same time depending on the promotion you’re applying under. They will also be setting the rate according to your credit rating. The important thing to remember is that credit is a very flexible market and pretty much all lenders will be willing to negotiate rates and terms with you.

You’ve Got To Haggle

For example, if a rate seems too high to you, simply tell them that, and ask if there’s a better rate available. Often their first offer is not the lowest they’re willing to lend at. Another thing you can do is offer security for the loan. If you own you’re home and are confident in your ability to repay the loan, maybe ask what the rate would be if it was secured over your home. You’d be surprised at the difference in rate you’ll get simply for offering security.

Mortgages

If it’s a mortgage you’re negotiating, ask for both the variable and fixed rate. Typically the variable mortgage will be a good 0.2% to 0.5% cheaper. This is because you will be bearing the risk of an increase in interest rates. Auto finance is one of the most varying areas in the market. You’re dealer might be offering you what seems like a good credit rate, but often if you agree to pay cash, the price of the car becomes cheaper, which means the loan is actually more expensive than it appears. If this is the case, try and get the finance from another lender and get the dealer’s cash price for the car.

One other way of making a loan cheaper is by dropping optional extras such as loan repayment insurance. This is often offered when you take out a loan and can make a big difference to the cost of the loan.

Secured loans are a popular way of raising funds for homeowners, and there’s no denying that taking one out can be a great way of organizing your finances. Debt consolidation, financing home improvements, even paying for a new car – secured loans can be used for all of this. However, as with any financial agreement, it’s only sensible to take your time when deciding whether to proceed. After all, with a secured loan, you could be betting your home on a successful outcome. So what things do you need to consider before finalizing your application?

Firstly, as just alluded to, it’s an inescapable fact that taking out a loan that’s secured on your home could potentially put your home at risk. Should you fall behind on your repayments, the lender can apply to seize your property, evict you from it, and then sell it at less than market value to clear the debt. Scary, huh?

This is, of course, a fairly rare outcome, and most lenders are happy to work with you if you do get into trouble, using repossession as a last resort, but you should consider this carefully before taking out a loan, especially if you’ll be converting existing unsecured debt into secured though debt consolidation.

The second problem with secured loans is that they tend to be for fairly high amounts, and repaid over a fairly long term. This means that the amount of interest you’ll pay over the entire term may be substantially higher than you might think. Even with a low APR, secured loans aren’t necessarily a cheap option.

Thirdly, if you use a secured loan to wipe out some existing unsecured debt, you may get the illusion that your debt levels have lessened. There’s then always the temptation to use your credit cards etcetera to build up fresh debts, so you now have secured AND unsecured debt hanging over your head, and you’ll be in a worse position than ever before.

A fourth problem with a secured loan is that you’ll by its very nature be removing equity from your home. In other words, the value of your home and the amount of debt secured on it will be much closer. Considering that today’s property prices are at record highs, and that many experts are predicting a fall in the near future, you could then be left in the unenviable situation of owing more than your home is worth – that is, you could fall into negative equity.

The fifth problem we’ll cover is also related to the removal of equity from your home. Should you in the future wish to take advantage of a refinancing offer to reduce your mortgage costs, it helps to have as much equity available as possible in order to secure the best deal. A secured loan now could harm your remortgage prospects in the future.

So has all this put you off the idea of getting a secured loan? It shouldn’t do, as you may still benefit greatly from the financial restructuring one will allow you to do. However, it’s a big decision, and this is why you need to be aware of the possible problems first, so that your decision can be as informed as possible.