Friday, June 20, 2008

Fast Loans to Avoid

Because of the recent economic situation, people look for different ways just to have their ends meet. Many businesses offers fast loans where you can get money right away but of course you have to pay an interest for that.

According to Smartmoney dot com, below are top 5 loans to avoid, if we can.

First is the Payday Loan, we all know what payday loan is. They're small in size, The typical borrower takes on just $300 to $500.The fee is typically $15 per $100 borrowed, and there's no interest. They're meant to be paid off within two weeks, so a $45 or $60 fee to help you patch things up until the next paycheck seems like a small price to pay.

Next, is the Car Title Loan, Car title loans are very similar to payday loans. They are advertised as modest short-term loans, in which the lender takes as collateral the borrower's car. Unlike the average payday loan, though, car title loans can be as high as several thousand dollars and are often based on what your car is worth, averaging 55% of its value, according to a recent report on car title loans by the Consumer Federation of America. The median smallest loan amount was $175, according to the CFA, and the highest median: $2,500. Car title loans typically have to be paid back after one month, although the specific terms can vary; some lenders structure the loan to be repaid in several installments, over a longer period of time.

The 3rd top 5 loans to avoid if we can is the Cash Advance ,When you're in a cash crunch, your credit card can conveniently help out with some quick cash at any ATM. But these cash advances also come with a very steep price tag. First, there's the interest you'll be charged. Right now the average is 22%, according to the latest credit-card survey by Consumer Action, a consumer advocacy group. Cash advances also can carry pretty steep fees, ranging between 2% and 5% of the amount borrowed, with no cap.

Fourth is the Overdraft Loans, Anyone with a checking account these days has what most banks advertise as "courtesy overdraft protection," which allows you to draw money from an ATM or use your debit card in stores, even if your account balance is $0. That comes in exchange for a seemingly small fee of $35 on average.

The last one is the 401(k) loan, If you have a 401(k) plan at work, chances are you can borrow as much as half of your savings balance, for any reason you like. More than 83% of 401(k) plans allow such loans these days.
401(k) is a retirement benefit from your employer. I have the same benefit as 401k but ours is 403(b), it is a also a retirement benefit. It is a like our own savings which they take out from our payroll every payday and that depends how much percentage you have allowed to take from your payroll.
401(k) loan is not really as bad as other loans, because you borrow from your own savings, and pay yourself back via payroll deductions at a reasonable interest rate .

source smartmoney dot com through aol money...

1 buzz me:

Joy0z said...

thanks for dropping again Rets


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