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Student Loans – Types, Eligibility, and More, The Art of Manliness, types of loans.#Types #of #loans


What Every Young Man Should Know About Student Loans

Types of loans

Back-to-school time is once again right around the corner. Millions of recent high school graduates will be heading off to colleges and universities to fill their minds with knowledge and their bellies with ramen. New students are thinking about a lot of things what friends they’ll make, what classes they’ll take, and what it’ll be like being away from home for the first time.

What they’re probably not thinking about, unfortunately, are the loans they’ve likely taken out to pay for the education and experience that awaits them. This aversion is understandable the world of student loans is confusing, overwhelming, and seems disconnected from the present. It’s something you can worry about in 4-6 years, right?

Wrong. Taking the time right now to understand how student loans work will save you money and headaches down the road. So if you’re a young gent (or the parent of one) who’s heading off to college this year or next, we offer this accessible primer on the basics you should know about student loans.

If this info comes too late for you, as you’ve already graduated and are struggling with your student debt, later this week we’ll offer tips for paying it down.

Reduce the Amount You Need to Borrow

Before you consider taking out student loans, it’s financially prudent to find as many ways as possible to reduce the amount you need to borrow in the first place. The less debt you take on now, the less you have to pay back after college. It’s hard to overestimate how much you’ll appreciate even a small reduction in your total debt later on, but trust me, someday you will.

Know that about 2/3 of all college students graduate with student debt, and the average debt is about $30,000. It’s hard for a young man to put that into perspective, but when you’re repaying that loan, the average bill per month is about $320. When combined with other bills and debts, and especially when you get married, it will be a large chunk of your monthly budget. In fact, only about 60% of all student loans are being actively repaid at any given time; this means that just under half of all borrowers can’t afford that monthly payment (and failing to pay has dire consequences which we ll discuss next time). These are just numbers, of course, but are sobering nonetheless, and hopefully give some credence to the reality of student loans and the necessity of reducing them as much as you can.

Save for college. Sure, you’re probably not going to be able to save enough money from your high school job to pay for the entirety of your college education, but every little bit helps. So get out there and get a job. Use some of that money for fun, but be sure to set aside a chunk for school.

If you’re a parent with young children, start thinking ahead by opening up a 529 account with your state to save money for your kid’s future education. Contribute a little bit each month. The money you contribute is taxable, but it grows interest-free. Also consider asking family members to contribute as Christmas and birthday gifts, especially early on when Junior won’t know the difference anyway.

Apply for scholarships. I wish I sought out more scholarships when I was applying for my undergraduate degree. I think I applied for like five, and I ended up getting one for a few hundred dollars. But I had only scratched the surface there are literally thousands of opportunities out there. Don’t just apply for the scholarships that your school offers a lot of organizations have scholarship funds available, and in many cases that money doesn’t even get dispersed because no one ever applies for it. Thanks to the internet, hunting for scholarships is a breeze. Search these sites for scholarship opportunities:

Once you put together a big list of scholarships, dedicate a few hours each weekend to submitting the applications. Sure, it’s tedious and boring, but if you can score a few thousand dollars to go towards your tuition, it’s completely worth it.

“Moneyball” your way through college. Last year AoM guest contributor Jay Cross published an article on how to use CLEP exams to reduce the amount you pay in college tuition. The tests cost just $80 each, but if you pass, you don’t have to take that class in college, saving yourself hundreds or thousands of dollars.

Coupling CLEP exams with taking AP classes (and passing the exam) in high school is another effective way to save big-time money and months of your time. Using a combination of AP exam credit and CLEP exams, I was able to shave off a whole year of college. It was awesome!

Go to a community college the first two years. If you can’t CLEP out of some of your general ed requirements, consider attending a local community college for the first two years of your schooling. Sure, you’re not getting the “full college experience,” but you’ll save a lot of money.

Live at home. My first semester of college I lived in the dorms at OU. It was a blast, but my grades suffered, and it cost me several thousand dollars. At the end of the semester, I decided to transfer to a college in my hometown and move back in with my folks. The tuition was much cheaper, plus I saved a ton of money on living expenses. And as a bonus, I had a 4.0 my second semester.

If it’s an option, consider living with your folks while you’re in college. Sure, they’ll cramp your style some, but you’ll be amazed at how much money you’ll save and how much more productive you’ll be.

Don’t take the full amount of student loans offered you. Before school starts, you’ll get a letter telling you how much in student loans you’ve been approved for. You don’t have to accept the full amount. Take a look at your whole financial situation and decide how much you need to make it through the college year. Many students take the full amount and use what’s left over after tuition and books as spending money. But if you work while you’re going to school, you won’t need to do that. Which brings me to my next point…

Work your way through college. Yes, school should be your top priority. But with efficient use of your time, you can make room for a part-time job. I waited tables and made smoothies throughout college. And most schools offer on-campus jobs that are pretty easy to get, and of course flexible with your class schedule.

Because I had money to pay for my living expenses, I didn’t have to take the full loan amount I was offered each semester. I typically just took enough to cover my tuition and books, and I saved thousands of dollars because of that.

Understand the Two Types of Student Loans

So you’ve done all you can to reduce the amount you need to borrow, but you still have to take on some loans.

Student loans will come in two broad categories: federal student loans and private loans. With federal student loans, the U.S. government is your lender. Thanks to various laws, money lent by the government comes with provisions to help you manage your student debt, such as fixed, relatively low-interest rates, grace periods, and flexible repayment plans.

With private loans, a bank or some other institution is your lender. The company you borrow the money from sets the rules on repayment and they’re not as generous as Uncle Sam.

To help you navigate the various types of student loans out there, we’ve created this handy-dandy chart:

Determining Your Eligibility for Federal Student Loans

To be eligible for any federal student loan, you must meet a few baseline requirements. Most are what you’d expect: graduate high school, be enrolled or accepted to an accredited college, have a valid Social Security Card.

The one eligibility requirement that I didn’t know about and that is unique to men is that you have to be registered with the Selective Service if you’re between the ages of 18 and 25. Uncle Sam won’t give you any loans unless you’re willing to be drafted into World War III.

If you meet the above requirements, then you just need to fill out and submit a Free Application for Federal Student Aid (FAFSA). You can submit applications for the fall semester after January 1. The earlier you submit your FAFSA application, the better. It takes awhile to fill out, so look to set aside about an hour if you’re a first-time applicant.

When Do You Have to Start Paying Back Your Student Loans?

With both federal subsidized and unsubsidized student loans, you’re a given a six-month grace period before you’re required to start paying back your loan. The grace period starts after you gradate, leave school, or drop below half-time enrollment. Just remember, with unsubsidized student loans, you’ll be accruing interest during your grace period and the interest will be added to your total principal. With subsidized loans, the grace period is interest-free.

When it comes to student loans, a little knowledge goes a long way. Do what you can to reduce the amount you borrow, understand the nature of the loans you’re taking, and start thinking now about how you’ll pay them back after you get your sheepskin.

If you’ve already graduated and are having trouble making your loan payment, on Thursday we’ll offer you some tips on paying back that debt.


Types of Federal Student Loans, types of loans.#Types #of #loans


Types of Federal Student Loans

The first step to managing your student loan debt is understanding what types of loans you have. Many repayment options and other programs are available for only certain types of loans, so you need to know which type you have. This article covers the most common types of federal loans.

(If you are struggling with student loan debt, after you figure out what types of loans you have, see our Student Loan Debt area. You can get information on loan cancellation, deferment, and more.)

What Are Guaranteed Loans?

In the past, most student loans were provided by private lenders and guaranteed by a guarantee agency and then by the federal government these are called Federal Family Education Loans (FFELs). The guarantee means that the government will reimburse your lender if you default, and can then go after you to collect on the loan.

In 1993, the federal government began providing loans directly to students called Direct loans. As of July 2010, FFELs are no longer available to students. However, if you (like many Americans), took out a student loan prior to July 2010, you very well may have a FFEL. Through these and other programs, the federal government provides about 70% of all student aid.

Student Loan Terminology

Guaranty agency. A guaranty agency is a state or private nonprofit company that insured your loans and pays the holder if you default.

Loan holder. The holder owns your loan or was hired by the owner to service it (that is, collect and process payments). Your loan holder may be your lender or a company that has purchased your loan from the lender. If you re in default, the holder will be a guaranty agency, the Department of Education, or a collection agency working for the Department.

Sometimes finding out who holds your student loan is tricky. To learn how to do this, see Who Is My Student Loan Holder?

Lender. The lender is the institution from which you obtained your loan. This may be a bank, a savings and loan, a credit union, your school, or the federal government.

Types of Federal Student Loans

Here are the details of FFELs, Direct loans, and other common federal loans.

Federal Family Education Loans (FFELs)

FFELs may be one of the following:

  • Stafford loans, (previously called Guaranteed Student Loans or GSLs or Federal Insured Student Loans (FISLs))
  • PLUS loans (loans to parents or to graduate students)
  • SLS loans, or
  • consolidation loans (to learn more, see Student Loan Consolidation).

Stafford loans are the most common; they help pay for college or graduate school education. These loans have been around in one form or another since the 1960s. If a student qualifies for a subsidized Stafford, the student does not have to pay any interest on the loan for the time the student is in school or after leaving school, in the grace period.

As of July 2010, FFEL loans are no longer available. So, if you got your loans after June 30, 2010, they are not FFEL loans.

Direct Loans

Direct loans were first made available in about 1993. These loans are made directly by the federal government, rather than by a bank or other lender. Direct loans may be a:

Direct loans have had a more favorable repayment option then FFELs for students who do not have sufficient income to pay the standard payments. But as of July 2009, both types of loans will have similar flexible repayment plans available.

Most existing federal loans are either FFELs or Direct loans. (As mentioned above, loans made after June 30, 2010 cannot be FFELs.)

Perkins Loans

A Perkins loan is a low-interest loan for under-graduate or graduate students with very low incomes. These loans were previously known as National Direct Student Loans, and before that, National Defense Student Loans. The federal government guarantees repayment of Perkins loans but, unlike other loans, Perkins loans are made by the school with a combination of federal and school funds. This means that the school, not a bank or the government, is the lender.

PLUS Loans

These loans are available to creditworthy parents and graduate and professional students. These loans are either federally guaranteed or direct federal loans.


Types of Loan Programs: Conforming, Jumbo Loans, FRM, ARM, Balloon Mortgage, types of loans.#Types #of #loans


types of loans

Types of loans

Types of loans

Types of loans

Types of loans

Types of Mortgage Loans

Conventional and Government Loans

Any mortgage loan other than an FHA, VA or an RHS loan is conventional one.

The Federal Housing Administration (FHA), which is part of the U.S. Dept. of Housing and Urban Development (HUD), administers various mortgage loan programs. FHA loans have lower down payment requirements and are easier to qualify than conventional loans. FHA loans cannot exceed the statutory limit. Go to FHA Programs page to get more information.

If you are looking for an FHA home loan right now, please feel free to request personalized rate quotes from HUD-approved mortgage lenders via our website.

VA loans are guaranteed by U.S. Dept. of Veterans Affairs. The guaranty allows veterans and service persons to obtain home loans with favorable loan terms, usually without a down payment. In addition, it is easier to qualify for a VA loan than a conventional loan. Lenders generally limit the maximum VA loan to $203,000. The U.S. Department of Veterans Affairs does not make loans, it guarantees loans made by lenders. VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan.

VA-guaranteed loans are obtained by making application to private lending institutions. If you are interesting in obtaining a VA-guaranteed loan you can try our VA loan request form.

Please see also pamphlets published by VA.

RHS Loan Programs

The Rural Housing Service (RHS) of the U.S. Dept. of Agriculture guarantees loans for rural residents with minimal closing costs and no downpayment. Visit our page RHS programs for details.

Ginnie Mae which is part of HUD guarantees securities backed by pools of mortgage loans insured by these three federal agencies – FHA, or VA, or RHS. Securities are sold through financial institutions that trade government securities.

State and Local Housing Programs

Many states, counties and cities provide low to moderate housing finance programs, down payment assistance programs, or programs tailored specifically for a first time buyer. These programs are typically more lenient on the qualification guidelines and often designed with lower upfront fees. Also, there are often loan assistance programs offered at the local or state level such as MCC (Mortgage Credit Certificate) which allows you a tax credit for part of your interest payment. Most of these programs are fixed rate mortgages and have interest rates lower than the current market.

Conventional loans may be conforming and non-conforming. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. By doing so, Fannie Mae and Freddie Mac, like Ginnie Mae, provide a continuous flow of affordable funds for home financing that results in the availability of mortgage credit for Americans.

Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Fannie Mae and Freddie Mac announces new loan limits every year.

The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Since early 2008, a series of legislative acts have temporarily increased the one-unit limit to up to $729,750 in certain high-cost areas in the contiguous United States. Permanent limits, which apply to the Enterprises’ acquisitions of certain mortgages originated prior to July 1, 2007, are set under the terms of the Housing and Economic Recovery Act of 2008 (HERA).

For every county and county-equivalent in the country, maximum loan limits for mortgages can be found at: http://www.fhfa.gov/Default.aspx?Page=185

The 2013 conforming loan limits for first mortgages remain at the limits set in 2006, 2007, 2008, 2010 and 2011:


Student Loans – Types, Eligibility, and More, The Art of Manliness, types of loans.#Types #of #loans


What Every Young Man Should Know About Student Loans

Types of loans

Back-to-school time is once again right around the corner. Millions of recent high school graduates will be heading off to colleges and universities to fill their minds with knowledge and their bellies with ramen. New students are thinking about a lot of things what friends they’ll make, what classes they’ll take, and what it’ll be like being away from home for the first time.

What they’re probably not thinking about, unfortunately, are the loans they’ve likely taken out to pay for the education and experience that awaits them. This aversion is understandable the world of student loans is confusing, overwhelming, and seems disconnected from the present. It’s something you can worry about in 4-6 years, right?

Wrong. Taking the time right now to understand how student loans work will save you money and headaches down the road. So if you’re a young gent (or the parent of one) who’s heading off to college this year or next, we offer this accessible primer on the basics you should know about student loans.

If this info comes too late for you, as you’ve already graduated and are struggling with your student debt, later this week we’ll offer tips for paying it down.

Reduce the Amount You Need to Borrow

Before you consider taking out student loans, it’s financially prudent to find as many ways as possible to reduce the amount you need to borrow in the first place. The less debt you take on now, the less you have to pay back after college. It’s hard to overestimate how much you’ll appreciate even a small reduction in your total debt later on, but trust me, someday you will.

Know that about 2/3 of all college students graduate with student debt, and the average debt is about $30,000. It’s hard for a young man to put that into perspective, but when you’re repaying that loan, the average bill per month is about $320. When combined with other bills and debts, and especially when you get married, it will be a large chunk of your monthly budget. In fact, only about 60% of all student loans are being actively repaid at any given time; this means that just under half of all borrowers can’t afford that monthly payment (and failing to pay has dire consequences which we ll discuss next time). These are just numbers, of course, but are sobering nonetheless, and hopefully give some credence to the reality of student loans and the necessity of reducing them as much as you can.

Save for college. Sure, you’re probably not going to be able to save enough money from your high school job to pay for the entirety of your college education, but every little bit helps. So get out there and get a job. Use some of that money for fun, but be sure to set aside a chunk for school.

If you’re a parent with young children, start thinking ahead by opening up a 529 account with your state to save money for your kid’s future education. Contribute a little bit each month. The money you contribute is taxable, but it grows interest-free. Also consider asking family members to contribute as Christmas and birthday gifts, especially early on when Junior won’t know the difference anyway.

Apply for scholarships. I wish I sought out more scholarships when I was applying for my undergraduate degree. I think I applied for like five, and I ended up getting one for a few hundred dollars. But I had only scratched the surface there are literally thousands of opportunities out there. Don’t just apply for the scholarships that your school offers a lot of organizations have scholarship funds available, and in many cases that money doesn’t even get dispersed because no one ever applies for it. Thanks to the internet, hunting for scholarships is a breeze. Search these sites for scholarship opportunities:

Once you put together a big list of scholarships, dedicate a few hours each weekend to submitting the applications. Sure, it’s tedious and boring, but if you can score a few thousand dollars to go towards your tuition, it’s completely worth it.

“Moneyball” your way through college. Last year AoM guest contributor Jay Cross published an article on how to use CLEP exams to reduce the amount you pay in college tuition. The tests cost just $80 each, but if you pass, you don’t have to take that class in college, saving yourself hundreds or thousands of dollars.

Coupling CLEP exams with taking AP classes (and passing the exam) in high school is another effective way to save big-time money and months of your time. Using a combination of AP exam credit and CLEP exams, I was able to shave off a whole year of college. It was awesome!

Go to a community college the first two years. If you can’t CLEP out of some of your general ed requirements, consider attending a local community college for the first two years of your schooling. Sure, you’re not getting the “full college experience,” but you’ll save a lot of money.

Live at home. My first semester of college I lived in the dorms at OU. It was a blast, but my grades suffered, and it cost me several thousand dollars. At the end of the semester, I decided to transfer to a college in my hometown and move back in with my folks. The tuition was much cheaper, plus I saved a ton of money on living expenses. And as a bonus, I had a 4.0 my second semester.

If it’s an option, consider living with your folks while you’re in college. Sure, they’ll cramp your style some, but you’ll be amazed at how much money you’ll save and how much more productive you’ll be.

Don’t take the full amount of student loans offered you. Before school starts, you’ll get a letter telling you how much in student loans you’ve been approved for. You don’t have to accept the full amount. Take a look at your whole financial situation and decide how much you need to make it through the college year. Many students take the full amount and use what’s left over after tuition and books as spending money. But if you work while you’re going to school, you won’t need to do that. Which brings me to my next point…

Work your way through college. Yes, school should be your top priority. But with efficient use of your time, you can make room for a part-time job. I waited tables and made smoothies throughout college. And most schools offer on-campus jobs that are pretty easy to get, and of course flexible with your class schedule.

Because I had money to pay for my living expenses, I didn’t have to take the full loan amount I was offered each semester. I typically just took enough to cover my tuition and books, and I saved thousands of dollars because of that.

Understand the Two Types of Student Loans

So you’ve done all you can to reduce the amount you need to borrow, but you still have to take on some loans.

Student loans will come in two broad categories: federal student loans and private loans. With federal student loans, the U.S. government is your lender. Thanks to various laws, money lent by the government comes with provisions to help you manage your student debt, such as fixed, relatively low-interest rates, grace periods, and flexible repayment plans.

With private loans, a bank or some other institution is your lender. The company you borrow the money from sets the rules on repayment and they’re not as generous as Uncle Sam.

To help you navigate the various types of student loans out there, we’ve created this handy-dandy chart:

Determining Your Eligibility for Federal Student Loans

To be eligible for any federal student loan, you must meet a few baseline requirements. Most are what you’d expect: graduate high school, be enrolled or accepted to an accredited college, have a valid Social Security Card.

The one eligibility requirement that I didn’t know about and that is unique to men is that you have to be registered with the Selective Service if you’re between the ages of 18 and 25. Uncle Sam won’t give you any loans unless you’re willing to be drafted into World War III.

If you meet the above requirements, then you just need to fill out and submit a Free Application for Federal Student Aid (FAFSA). You can submit applications for the fall semester after January 1. The earlier you submit your FAFSA application, the better. It takes awhile to fill out, so look to set aside about an hour if you’re a first-time applicant.

When Do You Have to Start Paying Back Your Student Loans?

With both federal subsidized and unsubsidized student loans, you’re a given a six-month grace period before you’re required to start paying back your loan. The grace period starts after you gradate, leave school, or drop below half-time enrollment. Just remember, with unsubsidized student loans, you’ll be accruing interest during your grace period and the interest will be added to your total principal. With subsidized loans, the grace period is interest-free.

When it comes to student loans, a little knowledge goes a long way. Do what you can to reduce the amount you borrow, understand the nature of the loans you’re taking, and start thinking now about how you’ll pay them back after you get your sheepskin.

If you’ve already graduated and are having trouble making your loan payment, on Thursday we’ll offer you some tips on paying back that debt.


The Different Types of Loans: A Primer, types of loans.#Types #of #loans


The Different Types of Loans: A Primer

The other day a friend of mine asked me about different loan types, as she was on her way to the bank to consolidate some high-interest credit card debt. I was surprised at the seemingly elementary questions she was asking she is an intelligent well-established gal who is pretty good with numbers (the credit card debt is another story).

It made me realize that maybe she is not alone. Although you may know what the various debt vehicles and loan types are, do you know all their inherent characteristics? If you re not sure, here is a loan primer to refresh your knowledge.

Secured vs. Unsecured

All loans, no matter what they are, are either secured or unsecured.

Secured Loans

These are secured (or borrowed) against an asset you own, such as your home, which is offered up as collateral. Ultimately if you default on the loan, the bank will get their money back by way of foreclosing your house (or otherwise seizing the collateral).

The interest rate should be very low (and often negotiable), hovering close to prime rate. The better your credit rating is, the more bargaining power you have with the terms, including loan amount and repayment period.

Payment terms are flexible, and can even be structured as interest-only.

If the loan is secured against the equity in your home, the application process usually involves a drive by appraisal of your home and some legal fees, that together amount to a few hundred (up to a thousand) dollars. As such, it s usually best to apply for a higher loan qualification amount than you think you need (as long as you know yourself well enough not to get into more debt unnecessarily). This way if you wish to borrow more money later on, new appraisals and legal fees can be avoided.

Examples of secured loans:

  • Car loans
  • Boat (and other recreational vehicle) loans
  • Mortgages
  • Home equity loans
  • Home equity lines of credit

Unsecured Loans

These are (as they sound) not secured against any assets. The bank can only utilize collectors (and freeze your accounts) if you default.

The loan amount granted is largely attributable to your credit history and income/assets/debts at the time of application. There is a considerably higher assumption of risk on the bank s part with an unsecured loan. Thus, the interest rate is much higher.

Examples of Unsecured Loans:

  • Personal loans
  • Personal lines of credit
  • Student loans
  • Credit cards/department store cards

Loan Types

There are a few different ways the bank can lend you money.

Line of Credit

Similar to a credit card,you are given a maximum allowable balance, and each month you can borrow as much as you wish from the line of credit up to the maximum.

Monthly minimum payments vary from a percentage (e.g. 3%) of the outstanding balance (as for most unsecured lines of credit), to as little as interest only (as for some secured lines of credit).

You can pay as much as you wish above the minimum payment amount, whenever you wish.

Some lines of credit come with checks, or can be linked to your bank card for debit transactions.

Can be secured or unsecured.

Conventional Loans

Conventions loans include personal loans, home equity loans, car loans, etc.

The repayment terms and amortization is pre-determined and consistent. For example, a $5,000 loan payable over 3 years in equal payments at 8% interest.

You cannot add to this loan without applying for a new loan entirely.

You can usually pay off the loan faster than schedule without penalty.

Monthly minimum payments will often be higher than they would with a Line of Credit, due to the shorter amortization (period of time to pay it back).

Can be secured or unsecured.

Mortgage

Mortgages are always secured loans, with the collateral usually being real estate. They are for large amounts of money, and are payable over long periods of time.

Maximum amortizations (repayment periods) for a mortgage range from 25 to 30 years, depending on where you live.

You can borrow up to a certain percentage of the appraised value of the property, subject to some restrictions and insurance provisions.

Interest terms can be either fixed or variable. Fixed interest locks your rate in for a fixed period, typically five years. Variable interest rates will fluctuate with the prime rate, and have little to no lock-in period.

The penalty to break a fixed rate mortgage mid-term can be outrageous. So if the interest rates go down dramatically, you are stuck with the rate you have until the term (e.g. five years) is up. On the flip side, if the interest rates go up dramatically, your interest rate is protected for the duration of the term.

All the interest is paid up front. In the first few years of having a mortgage, almost all of your payments are comprised of interest, with only a few dollars reducing the principal. It is not until the later years of a mortgage that the reduction of your principal loan amount picks up momentum.

Althoughp you can t always repay as much as you wish, you can usually make additional payments which directly reduce your principal loan amount.

Credit Cards

Known in some circles as the antithesis of all things good and pure, credit cards tend to get a bad rap. Depending on how they are used and abused, they can admittedly be bad news.

You are allocated a maximum balance, with freedom to charge as much or little to it within the limit.

Standard credit cards are always unsecured, so the interest rate is high: usually 9-19% (with the average being closer to 18%)

The minimum payment is usually quite small expressed sometimes as a percentage of the outstanding balance, but in some cases it is little more than just the interest.

Ifyou pay off the balance in full before the due date, you are not usually charged any interest (this depends on the credit card).

Each type of debt serves a specific purpose, although they can be interchanged depending on your situation. The most important thing in managing your debt is to be realistic about what you can handle. Underestimate the amount of money you have to pay towards your debt each month to be safe, in order to avoid getting in too deep.

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Types of loans


Loan for Pensioners, Finance in India, Types of bank loan #1 #hour #loans


#loans for pensioners
#

Loan for Pensioners

Loans are worthwhile when someone is in immediate need of financial assistance. In earlier days senior citizens were usually deprived of regular loans because of their inability to show proof of a regular income. But the scenario has been changed now and banks are taking care of economical independence of retired individuals by offering a unique pension loan.

Pension loans are of two types. Pensioners loan and Mortgage loan for senior citizen. Through Pensioners loan, a senior citizen can take a loan against their Pension, fixed deposits, National Savings Certificates, Kisan Vikas Patras, Life Insurance Polices and RBI Relief Bonds etc where mortgage loan demands collateral in the form of an asset such as a home or land. The maximum age limit of a pensioner to apply for a loan is 70.

The main advantage of this loan is its low interest rate. The maximum amount of loan avail may varies from bank to bank and depends upon individuals repayment capacity. This loan shall be disbursed through Savings Bank A/c other than the account in which your pension is credited every month. Loan prepayment charges and processing fees are free. These loans can be prepaid any time without any penalty.

Documents required for Pension Loans are:

Proof of Identity ie; Passport Copy or Voters ID Card or Driving License etc.

  • Address Proof ie; Ration card, Telephone or Electricity Bill or Passport Copy etc.
  • Last 6 months Bank Statement or Bank Passbook.
  • Proof of Retirement and the organization last worked for, including the Pension Slip.


  • Installment Loan – The Types and Advantages #payday #lenders


    #installment loans
    #

    Installment Loan – The Types and Advantages

    Installment loan is a consumer loan in which principal and interest are paid off through equal monthly payments.

    Installment loans are generally taken to purchase home, car, furniture etc. The loan comprises of specified amounts that are to be repaid over a predetermined repayment period. The payments can include both the principal and the interest or it may contain only the interest amount with the principal being paid in a lump sum amount with the final loan installment.

    Installment loans are available in the market as:

    • Unsecured loans:

    These loans are riskier for lending institutions and are hence available at higher rate of interest. The loan is available only if the borrower has a good standing in terms of credit score, payment history and job status. Example; Personal loans, student loans, etc.

  • Secured loans:

    These loans are offered by the bank or a financial institution against collateral. The bank can even sell the property if the loan isn’t paid back. The interest rates for secured loans are comparatively lower than unsecured loans. Example; mortgage home equity loan. home equity line of credit are secured loans.

  • Why borrowers prefer Installment loans

    There are certain advantages of dealing with installment loans which makes them a preferable choice.

    • Borrowers are aware of the amount of monthly payment that they have to make and the time period allowed to pay off the loan. So they can take the right financial move by planning a proper budget.
  • Installment loans have extremely competitive rates which vary in the 5 to 7 percent range.

  • Repaying an installment loan includes interest payments and after a certain period, an increasing portion of principal amount is also paid back. This helps in steady reduction in the principal amount during the loan term.

  • Four Types of Debt Consolidation Loans #loans #for #people #with #poor #credit


    #debt consolidation loans
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    Types of Debt Consolidation Loans

    There are a few different types of loans you can use to consolidate your debt.

    Home Equity Loans

    A home equity loan is a loan that s taken out using the equity in your home as collateral. You typically must have a fair amount of equity in your home and good credit to qualify for a home equity loan. While the interest rates are typically lower than other types of loans, the drawback is that your home is now on the line for your credit card debt. If the payments become unaffordable, you face foreclosure on your home.

    Because of that it s generally not a good idea to use a home equity loan as a debt consolidation loan.

    Credit Card Balance Transfers

    A low interest rate balance transfer involves transferring all your credit card balances onto a single credit card. Low balance transfer interest rates are typically promotional rates that expire after a certain period of time. If you choose this option, make sure you know when the low rate will expire and the interest rate that will go into effect. If you want to use a credit card balance transfer as a debt consolidation loan, you ll need a credit card with a large enough credit limit to hold all your credit card debt.

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    There could be a downside to consolidating debt with a balance transfer – a hit to your credit score. Putting too much debt on one credit card could have a negative impact on your credit score as your credit utilization goes up.

    Personal Loan

    Personal loans can be used as debt consolidation loans. A personal loan is an unsecured loan that has fixed payments over a fixed period of time. Once you re approved for a personal loan, you can use it to consolidate your debts. Depending on your credit rating, you could have trouble getting approved for a personal loan. If you have bad credit you may be approved but at a higher interest rate, or you may not be approved at all.

    Debt Consolidation Loans

    Debt consolidation loans are offered by banks and credit unions for the sole purpose of combining your debts. Debt consolidation loans vary, so it s important that you choose wisely. Debt consolidation loans ideally have a lower interest rate than the rates you re currently paying. They allow you to lower your monthly debt payments by increasing the repayment period.

    Choosing a Debt Consolidation Loan Type

    Know that with a debt consolidation loan, you re not really getting rid of your debt. Instead, you re simply shuffling it around so that it becomes easier to pay. You ll feel like you have less debt and may be tempted to borrow more. Practice discipline and avoid borrowing until after your debt consolidation loan has been completely repaid. Even then, it s important that use good judgment in taking on additional debt.


    Unsecured Debt – Types and Solutions #bankruptcy #loans


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    Unsecured Debt

    Unsecured debt is any debt that is not tied to an asset. This most commonly means credit card debt, but can also refer to items like personal loans and medical debt. Unsecured debt typically creates less stress and fewer problems than secured debt.

    If you fall behind on payments for unsecured debts, your lenders have no claim on your property and cannot repossess items or foreclose on your home. That’s the big difference between unsecured and secured debt. It’s also what allows you to explore debt reduction options such as settlement to help you clear your debt faster and for less money.

    Credit Card Debt

    Credit card debt is the most pervasive type of unsecured debt, with Americans currently carrying $672 billion on their cards. It is a revolving line of credit, meaning you can continue to borrow each month and carry balances over. As with other loans and debts, it’s best to pay more than the minimum payment each month. However, this is an especially important principle as credit card interest rates can be very high. Paying more than the minimum will get you out of debt faster and save money in interest.

    Personal Loans

    Private Student Loans

    Medical Debt

    Medical bills are a unique form of unsecured debt. While you can choose to make purchases on a credit card, and you can choose to fund an education with student loans, no one chooses to fall ill and incur medical bills. Still, studies show that 29 percent of U.S. adults have medical debt and/or problems paying medical bills.

    • Learn more about medical debt.

    Apartment Leases

    While rent isn’t typically thought of in terms of debt, when you fall behind on paying it, you actually become indebted to your landlord. If this happens, your landlord is likely to take action in order to evict you. However, since you are not at risk of losing any belongings, your debt is considered unsecured.

    Cellphone and Utility Bills

    As with unpaid rent, unpaid cellphone and utility bills are unsecured debts. If you are late paying your bills, servicing companies may disconnect your phone or utilities. However, they are not entitled to any of your assets or belongings.

    Auto Repossession Overage Balances

    If you miss enough payments on your auto loan, your lender will likely repossess your car. The lender then sells the car to make back the money you owed. If your car has lost value faster than you’ve repaid the loan, it’s possible the funds from the sale will not cover the entire amount you owe. The difference, called the auto repossession overage balance, is your responsibility. Since your lender has already confiscated the only asset to which it is entitled, this debt is unsecured.

    Short Pay Mortgage Balances

    A short payoff is one way to sell your home if you are underwater, meaning you owe more than the house is worth. Your mortgage-holder may agree to accept less than you owe. In return, you take on the balance as unsecured debt. This transaction is called a short payoff.

    For example, assume your home is worth $100,000 and you owe $120,000 on it.  Your lender may be willing to settle the debt for only $110,000, but this leaves a gap of $10,000 that you owe. You will continue to make payments on this balance even after your home is sold.

    Short payoff is usually only an option for borrowers who are current with their mortgage payments and have good credit. It saves money and does not harm your credit score.

    Settling Unsecured Debt

    Any unsecured debt may be eligible for settlement, a debt-reduction strategy aimed at reducing the total amount you owe. It is a useful strategy for individuals who find themselves with more debt than they can handle and want to get their finances back on track. It is often done with the help of a debt settlement specialist, who can speak to your creditors on your behalf and often negotiate reduced balances.


    Financial Aid Student Loan Types – Financial Aid #same #day #loans #for #people #on #benefits


    #fafsa student loans
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    Student Loan Types

    There are several different types of loans that students may be eligible to receive. It is important to remember that these are loans and must be repaid once you have left school.

    William D. Ford Federal Direct Loan Program

    The William D. Ford Federal Direct Loan Program provides for two types of students loans: Subsidized and Unsubsidized.

    • Must demonstrate financial need based on the FAFSA.
    • Must be enrolled at least half-time (6 or more credits).
    • Student may borrow up to listed amount but cannot exceed their Cost of Attendance.
    • A Master Promissory Note (MPN) and Entrance Counseling must be completed prior to the first loan disbursement at www.studentloans.gov
    • First-year, first-time borrowers will be subject to a required 30-day hold on the first disbursement of their loan.
    • A loan fee is proportionately deducted from each loan disbursement. The amount varies depending on when the loan is first disbursed.
      • 1.073% if loan is first disbursed on or after October 1, 2014, and before October 1, 2015
      • 1.068% if loan is first disbursed on or after October 1, 2015, and before October 1, 2016
    • Borrowers graduating in the current year must complete an Exit Loan Counseling Session within 20 days of the end of the semester at www.nslds.ed.gov  or www.studentloans.gov
    • The loan will be disbursed in two disbursements, regardless of your loan period.
    • Fixed interest rate for the 2015-2016 academic year is 4.29%.
    • Interest on the loan is paid by the Federal government until you are required to begin repayment after you graduate or drop below half-time enrollment.
    • Subsidized loan repayment may be consolidated with Perkins and Nursing loans.
    • Must complete a FAFSA, but do not have to demonstrate financial need.
    • Must be enrolled at least half-time (6 or more credits).
    • Student may borrow up to listed amount but cannot exceed their Cost of Attendance.
    • A Master Promissory Note (MPN) and Entrance Counseling must be completed prior to the first loan disbursement at www.studentloans.gov
    • First-year, first-time borrowers will be subject to a required 30-day hold on the first disbursement of their loan.
    • A loan fee is proportionately deducted from each loan disbursement. The amount varies depending on when the loan is first disbursed.
      • 1.073% if loan is first disbursed on or after October 1, 2014, and before October 1, 2015
      • 1.068% if loan is first disbursed on or after October 1, 2015, and before October 1, 2016
    • Borrowers graduating in the current year must complete an Exit Loan Counseling Session within 20 days of the end of the semester at www.nslds.ed.gov  or www.studentloans.gov
    • The loan will be disbursed in two disbursements, regardless of your loan period.
    • Fixed interest rate for the 2015-2016 academic year is 4.29%.
    • Student is responsible for all interest that accrues on the loan and interest will be charged until the loan is fully repaid.
    • You do have the option of capitalizing the interest and not paying anything until you are required to begin repayment after you graduate or drop below half-time enrollment.  If you choose this option, the interest will be added to the principal balance for your loan.