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7 Things Lenders Look for Before You Apply for A Personal Loan
  • 3 MIN READ|
  • 0 Comment |
  • 649 |
  • by David Owens|
  • July 15, 2021 |
  • Loans

What do lenders look for before lending money?

Millions of Americans use personal loans for different reasons. These reasons include paying for unexpected expenses, consolidating multiple debts, and even making home improvements. According to TransUnion, the number of personal loan borrowers has risen from 15 million to about 20 million in recent years.

How Personal Loans Work

Personal loans are installment loans, which means you can borrow a fixed amount of cash and pay back a set monthly amount with interest over the loan term. Personal loans tend to range from about 12 to 84 months.

After paying your loan in full, your account will automatically be closed. However, if you still need more money, you can always apply for a new loan.

It is vital to know that loan amounts typically vary from lender to lender. The amount tends to range from $1,000 to $100,000, depending on different factors. Most of the time, the loan amount you are qualified for will be mostly based on your credit status.

What Lenders Look For In Your Application

Placing your best foot forward in applying for a personal loan can be pretty challenging, especially when you don't know what lenders need from you. Below are the factors that lenders look into to decide if you are qualified to take a loan or not.

Credit Score

Most lenders will look at your credit reports and credit score. It gives them an idea of how well you managed the money you borrowed in the past. If you have a poor credit history, the lender might look at your loan application as a potential risk of default. It scares them off as it puts them at risk of not getting their money back.

The higher your credit score, the better your chances of getting your loan application approved. To get better loan deals, the best credit score for a personal loan ranges from 700 to 800.

Income and Employment History

Lenders need to ensure that you can pay back the money they will lend you. So, they need to evaluate if you have consistent and sufficient income. Most of the time, the income requirements depend on the amount you borrow. Besides that, lenders will also require you to show steady employment proof.

Debt-To-Income Ratio

The debt-to-income ratio is the percentage of your monthly debt compared to your monthly income. Lenders prefer borrowers with a low debt-to-income ratio. So, if you have a debt-to-income ratio higher than 43%, most lenders will reject your loan application.

You might still get a loan even with a high debt-to-income ratio. However, this needs to be accompanied by a good credit score and a reasonably high income. If you'd like to increase your chances of loan approval, lower your debt-to-income ratio by paying down outstanding debts asap.

Collateral

Some personal loans might require you to pledge collateral. These loans are known as secured loans, and they usually have lower interest rates than unsecured loans.

The value of the collateral also determines how much you can borrow. For example, when you buy a car, you cannot borrow more than the car's current value. It is because the lender needs to be sure that you will repay your loan amount.

Down Payment

Some lenders would require you to give a down payment. The size of your down payment will determine how much you can borrow. For example, if you buy a car, paying more in down payment means you won't need more cash to borrow. In most cases, you can take out a loan without a down payment. However, you should know that you might end up paying more in interest.

Liquid Assets

Lenders would also like to see if you have any money market account or cash in savings. It assures the lenders that even if you experience a temporary setback, such as losing a job, you will still repay your loan.

Loan Term

Lenders would want to lend you money for a shorter loan term, with which you will more likely pay it back shortly. However, it is vital to know that a shorter loan term means a higher monthly payment.

If you pick a shorter loan term, you will pay interest for only a few years. On the other hand, if you choose to get a longer term, you will pay lower monthly payments and pay interest for a couple of years.

In Conclusion

Many people resort to taking out personal loans to pay for their needs. So, if you plan to get one, it is best to know what lenders look for when it comes to approval. That way, you can prepare for your personal loan application in advance.

Author Bio:

Finance Blogger David Owens

David Owens is a seasoned content writer specializing in finance - debt management, entrepreneurship, and business finance. When not writing, he travels with his cat, Mellie.

Line of Credit vs. Loan: What's the Difference?
  • 7 MIN READ|
  • 0 Comment |
  • 709 |
  • by Joseph Priebe|
  • May 19, 2021 |
  • Loans

line of credit and loan difference

Everyone reaches a point in their life or business development when they need a little extra cash. 51.3% of Americans say they have taken out a personal loan to supplement their funds.

Loans often come with a lot of terms and stipulations regarding how you can use them; if you need something that offers a bit more flexibility and freedom, you might want to consider taking out a personal or business line of credit.

What is the difference between a line of credit and a loan, and which one is right for you? This guide will tell you everything you need to know.

How Does a Personal Line of Credit Work?

A line of credit is when you take out a fixed amount of money from a bank or lending institution. You can draw upon this money as needed to pay for different personal expenses.

Repayment Structures

In many ways, a line of credit (LOC) functions like a credit card. If you take out a line of credit for $50,000, but you don't use the money, you won't pay any interest. Let's say a few months later you use $10,000 to get a new car. You will then only need to pay interest on the $10,000. The repayment structure is also similar to a credit card. Each month the lending agency will send you a statement with your balance, interest summary, and minimum payment due. To remain in good standing and avoid the risk of having your LOC revoked, you will be expected to pay the minimum every month.

Secured vs. Unsecured

A line of credit can be taken out in one of two ways. Having a secured LOC entails using collateral, such as your home or business. These often come with lower interest rates because the lending institution can take over your property should you default on repayment.

An unsecured line of credit has higher interest rates because there the lender has nothing to seize should you be unable to pay back the line of credit. This type of LOC is often more challenging to obtain. When seeking an unsecured line of credit, you will need to show proof of exceptional credit.

Pros of a Personal LOC

There are many benefits for getting a personal line of credit, the most obvious being flexibility. This is across all areas of the borrowing process, including repayment, usage, and the amount.

With a credit line, you only borrow what you need, rather than being limited to a fixed amount. It's ideal for long-term projects or expenses where you are unsure of the final costs. It is also an excellent option for temporarily supplementing your funds during an unanticipated life event or emergency.

Getting your money is quick and easy. Once you are approved for a LOC, you will have unlimited access to your available funds. This allows you to use them as needs arise, rather than applying each time you need cash.

A line of credit is also a renewable source of funds. Going back to the car example, once you pay back the $10,000 you borrowed, you will once again have a $50,000 credit limit.

Cons of a Personal LOC

There are a few downsides when taking out a personal line of credit. Even with a secure line of credit, interest rates are often higher than you would get with a personal loan. They also tend to have variable rates vs. fixed Annual Percentage Rates (APR). Which means you could end up paying back more than you originally intended.

Accounts come with annual service fees, regardless of whether you are using the money or not.

In addition, they aren't the best option for people with poor spending habits as they allow flexibility for overspending. Although they can be used as a short-term cash supplement, this is often a dangerous line to walk and unsuitable for achieving long-term financial stability.

Personal Line of Credit vs. Loan

Loans and credit lines are types of debt issued by banks or lending agencies. Both loan and line of credit types depend upon the intended use, your financial standing, and credit history. Your relationship with the lending institution will also play a role in what is available to you.

Loans are granted for one-time usage and have a fixed repayment term, whereas lines of credit can be used when and how you please. With credit lines, lending agencies monitor your usage and credit status. If you haven't used your LOC in some time, they could reduce or close it.

Like LOCs, loans can be secured or unsecured. All personal loans are unsecured because they are not backed by collateral. In contrast, a home or car loan is classified as a secure loan and often includes stipulations on how you can and cannot spend money.

If you take out a home loan for $500,000 but only end up using $450,000, you won't be able to spend the other $50,000 getting a new car.

A personal loan provides the freedom to use the money as you see fit. However, since you have to take the entirety of the loan at once, you will be incurring fees from day one. Even if most of the money is sitting in your bank account waiting to be used, you will be expected to pay the minimum principal and interest fees every month.

With a line of credit, you will have a bit more freedom and only pay fees on what you use. Even a secure line of credit is not linked to a specific purpose and is great for everyday use and unexpected emergencies.

When to Apply for a Personal Line of Credit

There are three primary reasons to apply for a personal line of credit vs. a loan.

1. You're not sure how much money you'll need

Sometimes, you might not be able to predict how much everything is going to cost. A personal line of credit gives you the financial flexibility to use what you need rather than being tied down to a specific amount. They are also a great way to consolidate your debt.

2. Your expenses may be spread out over the years

You might have many different expenses coming up, such as home improvement projects or a significant life event like a wedding. A line of credit is something that you can access over and over. Use it for one expense, pay it off, and have the entire amount ready for the next thing life throws your way.

3. Your credit is in good condition

If you plan to apply for an unsecured personal line of credit, it is vital to have good credit. Having bad credit will affect your ability to get approved and leave you paying steep interest rates.

When to Apply for a Personal Loan

Depending on your situation, getting a personal loan might be the better option. Here are two reasons to consider getting a loan.

1. You know how much you need to borrow

Let's say you have hired a company to remodel your kitchen. You know exactly how much everything will cost and have no other expenses coming up that require extra cash. Loans come with more flexibility in how much you can borrow at once and lower repayment rates.

2. You want to limit the amount of debt you take on

If you know that you tend to overspend when money is available, a loan might be the better option. The money focuses on one expense versus allowing flexibility which could lead to additional spending. Loans also tend to have fixed interest rates and less of an immediate impact on your overall credit score.

Business Line of Credit vs. Loan

A business line of credit is very similar to a personal line of credit. The main difference is that it is intended for short-term needs. You can use a business line of credit as needed, so long as you faithfully pay your monthly minimum and any associated annual fees.

Business LOCs are an excellent option for startups that need to have flexibility regarding cash flow. If your business is already established and you're looking for a more extensive credit line, you can put up collateral to get a secured line of credit. This might include business real estate, additional fleet vehicles, or inventory.

One business line of credit and loan difference is a loan is designated for a specific purpose. Long-term loans are geared towards investments and other expenses that take time, such as an office remodel. Short-term business loans have a quick repayment schedule and are intended for immediate needs, such as building up inventory.

When You Should Apply for a Business Line of Credit

There are a few factors to consider when applying for a business line of credit vs loan.

1. You need ongoing access to cash

If your business is going through a stage of change—expansion, redesign, or restructuring—you might need to access cash with some irregularity. New expenses and unexpected costs can throw off your normal budget. A line of credit will provide you with peace of mind, knowing the cash is there should you need it.

2. You need payment flexibility

With a business line of credit, you will only need to worry about repaying the minimum each month. This is different from a loan where you have a principal in addition to interest and a fixed repayment term. A business LOC gives you the flexibility to focus on your business now and worry about complete repayment later.

When You Should Apply for a Business Loan

Business loans can be the preferred choice depending on your company's needs and stage of development.

1. You know how much you need to borrow

Perhaps you are adding a new real estate holding to your business. Since you don't require regular access to additional funds, a business loan might be the better route. Your interest rates will often be lower, and you won't have to worry about the annual fees associated with a LOC.

2. You want to have set repayment costs

Business loans often come with a fixed APR. You can choose your repayment term, so you know what you're paying overtime. This is extremely helpful when trying to budget for your business.

How to Apply for a Personal Line of Credit

You will need two things when you apply for a personal line of credit: your credit history and a solid credit score. Beyond that, the application process is very similar to applying for a personal loan.

Take some time to consider which lender to borrow from. Look into their rate structure, annual fees, and lending limits. How much you can borrow will depend heavily on your credit score.

Once you've decided on a lender, it's time to fill out the application. Many lenders will allow you to apply online or even over the phone. Once you have been approved for a line of credit, your funds will be accessible in as little as one business day.

Should I Get a Loan or Line of Credit?

Deciding whether to get a line of credit vs. a loan depends on why you need the money and how you intend to use it. There are pros and cons to each, including different interest rates, accessibility, and spending freedom.

If you are looking at long-term flexibility and unknown costs, a line of credit is a good option for you or your business. For those who know exactly where the money is going and need a stable and fixed repayment option, a personal or business loan is often the better option.

If you live in Utah, Idaho, Kansas,or Missouri, CASH 1 can help you with all your line of credit needs. Apply online or over the phone.

What Are the Different Types of Lines of Credit?
  • 6 MIN READ|
  • 0 Comment |
  • 1444 |
  • by Joseph Priebe|
  • April 23, 2021 |
  • Loans

different types of lines of credit

Less than half (41%) of Americans could not cover a $1,000 emergency with their savings. This is unsurprising as the cost of living continues to rise without significant changes in wages.

If you are part of the majority that could not cover an emergency of this size, a line of credit may help. If you already have a few lines of credit and wonder, how many lines of credit should you have? Don't worry. This guide will cover all of your questions and help you understand the different types of lines of credit.

What Is a Line of Credit?

A line of credit (LOC) is a type of revolving credit that customers can use to get funds. The maximum loan amount, interest rates, payment sizes, and withdrawal amount gets determined by the lender.

You'll have access to the funds in a line of credit if you don't go over the limit and meet any requirements necessary. One of the significant factors is making your minimum payments on time.

Types of Lines of Credit

There are different types of lines of credit that have various benefits. The general advantages of each line of credit are flexibility, including flexible payment and financial safety.

LOCs are flexible because you can request any amount up to your limit without drawing the entire amount. You'll only pay interest on the amount you draw out, not the total available amount.

If you continue to meet your minimum payment requirements, you can adjust how much you pay, making the repayment schedule flexible. You can pay off your whole balance or only keep up with the minimum.

As a general rule, you should pay as much off as you can at one time. A line of credit also works as a financial safety net if you run into trouble because of unforeseen circumstances. Until your next paycheck, you can cover the unexpected expenses with a line of credit.

The different lines of credit are personal, home equity, business, secured, and unsecured.

Personal Lines of Credit

Personal lines of credit allow a borrower to repay the funds on a revolving basis. When applying for this type of credit, a lender will check your current credit score.

To qualify for a line of credit with CASH 1 Loans, you'll need:

  1. To be a resident of the state where you apply
  2. To be 18 Years of Age or Older
  3. To have an Open Checking Account
  4. To have Proof of Income
  5. Not to be on Active Duty in Military

A personal line of credit is used when you face an emergency issue. If you need something dealt with right away but don't have the necessary funds, you'll likely opt for a personal line of credit.

Home Equity Lines of Credit

Home equity lines of credit (HELOC) is a form of available secured credit because you'll offer your house as collateral. Your available credit gets determined by the amount of equity in your home.

You can borrow as much as you need up to that available limit. The maximum is usually around 80% of what your home is valued at, minus how much you currently owe on the mortgage (otherwise known as equity).

After the draw period is over, the balance you used is due, and repayment begins. You'll typically have ten years or less before reaching the draw period.

There are some additional costs to getting a HELOC. For example, the cost of getting your home appraised is factored in.

This line of credit is best used for large expenses or to consolidate debt that you already have with high interest rates. Many opt for this line of credit to help with debt because of the low interest rates and tax benefits.

The line of credit is only tax-deductible on the interest paid. HELOC money must also improve, build, or purchase the home up for collateral to be tax-deductible.

Business Lines of Credit

A business line of credit is used for businesses. Shocker, right? Instead of taking out a separate high-interest loan, a business owner can borrow money when needed through a line of credit. The lender bases the amount given on the profitability of the business.

A lender will also check the market value of the business and any risks to determine specific loan details. Business owners can benefit by taking out money when they need it without getting approval from the lender.

This line of credit is flexible in the world of business. You can use it on inventory, equipment, services, or any other business expense.

Secured vs. Unsecured Lines of Credit

Chances are, you already have a form of secured or unsecured line of credit. The differences are as follows:

Secured Credit

To receive a secured line of credit, you must offer up collateral. A typical example of these loans is a car or home loan. If you fail to make payments and cover your debt, the lender has the right to seize the asset you put up for collateral.

These loans have lower interest rates and higher amounts than unsecured LOCs because it is less risky for the lender. This is their way of securing payment in advance.

Unsecured Credit

Most lines of credit are unsecured, meaning you don't offer up any collateral to the lender. Since this is a risk for the lender, they will make interest rates higher.

Credit cards are the most common type of unsecured line of credit. Your credit limit is how much you can borrow. You'll only pay interest on the amount you use.

A lender cannot take anything from you as collateral if you fail to make payments on a credit card or another unsecured line of credit. However, your credit score will start to decrease.

Open-End vs. Closed-End Credit

The different lines of credit will fall into one of two categories; open-end/revolving credit or closed-end credit. They differ in the following ways:

Open-End/Revolving Credit

Open-end/revolving credit lets a borrower take out amounts during the draw period. They can make payments throughout the life of the loan. Credit cards, HELOCs, and personal lines of credit are all great examples of an open-ended credit product. When an amount of available credit gets withdrawn and repaid, the money is available to borrow again.

Because of this, an open-ended credit line is mainly used to fund needs that cost a lot of money over a long-term time frame. This line of credit has its advantages, but keeping the product open may come with fees.

Closed-End Credit

Otherwise known as an installment loan, a closed-end line of credit allows the borrower to get a specific lump sum amount. This is used for something that needs payment upfront.

Many use it for a specific purpose, making it less flexible than an open-end credit. Money gets disbursed in a lump sum and cannot be drawn out again even after repayment.

Money is lent for a specific amount of time before repayment begins. Repayment is made through regular, scheduled payments, not all at once. The borrower will also pay the principal and interest at this time.

What Would You Need a Line of Credit for?

There are many instances where you may need or find a line of credit useful. Below are some circumstances where you could use a line of credit.

Car Repair

When you need an auto repair but don't have the means to pay for it yourself, a line of credit can help. Emergency car repairs can be unexpectedly expensive.

If you rely on your vehicle to get to work every day, you'll want to fix the problem as soon as possible. You can use a line of credit in this instance by taking out a personal loan or applying for a new credit card.

Unexpected Utility Bill

Unexpected utility bills come as a shock to people that don't have money saved up to cover them. If your utility bills change every month, this occurrence may happen to you.

To pay off the expenses with a low interest rate, you can take out a line of credit. There is no reason to get penalized for not paying a bill when you have this option available.

Appliance Repair

An appliance issue can make your daily life more complicated. It's best to get these fixed right away.

The most common appliance repairs homeowners need are stovetop repairs, refrigerator repairs, oven repairs, etc. If you don't have enough room in your budget to pay for these necessary repairs, get a line of credit.

Fees for Your Child's Schooling

If your kids are on their way to college, you'll have to figure out how to pay for it. You may have saved up for this moment for years, but with the increasing schooling costs, you still might not have enough.

With a line of credit, you can take a lump sum out to cover the necessary schooling costs. You won't have to begin repayment until your child graduates from school.

Unexpected Dental Work

Whether you have a tooth that's been bothering you for years, or you slipped and knocked a tooth out, a line of credit can cover the dental costs. Even with insurance, you may have to pay out-of-pocket fees for dental work.

Veterinarian Bill

If your pet needs immediate surgery or has to take a visit to the vet because they are sick, your insurance won't cover the cost. Instead, use a line of credit to cover the bill all at once.

Understanding the Different Lines of Credit

Navigating the answer to how many lines of credit you should have doesn't have to be complicated. As long as you educate yourself on each type and read the fine print, you'll be in good hands. Using a line of credit is a great way to pay off unexpected occurrences, remodel or rebuild your home, cover business expenses, and boost your credit score.

If a traditional bank has denied you a line of credit, all hope is not lost. Apply online in Idaho, Kansas, or Utah with CASH 1 Loans to get approved for a line of credit in minutes.

How to Get a Line of Credit with Bad Credit
  • 5 MIN READ|
  • 0 Comment |
  • 1138 |
  • by Joseph Priebe|
  • April 19, 2021 |
  • Loans

How to secure a line of credit when you have no credit or your score is low

Did you know that sixty-eight million people have bad credit scores? Unfortunately, low credit scores can make your life difficult in a lot of ways. They can make it challenging to apply for mortgages, credit cards, and other types of loans. It's tough to take advantage of a line of credit with a poor credit score, but it's not impossible.

All you need to do is know is where to look for suitable lenders. We'll walk you through how to secure a line of credit when you have no credit or your score is low. Let's get started!

What is Considered a Bad Credit Score?

The first thing you should check when looking for a line of credit is your credit score. A credit score is a rating that lenders use to determine whether you're a reliable borrower. These ratings are typically determined by FICO, or the Fair Isaac Corporation, model of scoring. If you have a low credit score, then it likely means that you miss payments often.

So, what factors affect a credit score? A credit score is split into a variety of areas, each with its percentages. For example, 35% of your credit score is based on your payment history on past credit. FICO considers 30% of the score by the amount you owe, and your credit history's length makes up 15%.

The final 20% is divided between the amount of new credit you have and the amount of existing credit. When all of these factors are tallied up, you get a score. The range of scores fall into these categories:

  • 800 to 850 is an excellent credit score
  • 740 to 799 is a very good credit score
  • 670 to 739 is a good credit score
  • 580 to 669 is a fair credit score
  • 300 to 579 is a poor credit score

Generally, fair and poor credit scores are in the bad range of credit score rankings. If you want to learn more about your credit score and how it works, then make sure to check out this resource here.

What is a Line of Credit?

A line of credit is an option that allows you to access the amount of cash that you need. When it comes time to pay, you only owe interest in the amount you borrow. Many different lenders utilize this type of lending option since it often works as a flexible loan.

Once you withdraw money from your account, you can either pay it back immediately or extend it out over a specified period. This type of lending option is often more sought after than credit cards since it gives you access to funds when you need them without applying for a loan.

Make sure to read our line of credit FAQs for more details. If you need cash for an emergency, you can easily access funds. However, like credit cards, a line of credit does require monthly payments.

Secured Line of Credit Vs. Unsecured Line of Credit

There are two popular types of lines of credit: secured and unsecured. Secured lines of credit provide the lender with a lien to an asset that the borrower owns. That means that if the borrower defaults on payments, then the lender can seize this asset. Often this collateral comes in the form of a home or a car.

Secured credit is easy to get, and the interest rates are lower. However, if you aren't able to make payments, then it can backfire on you. Lenders who issue unsecured lines of credit, on the other hand, can't seize your assets if you default on payments.

Because of this, unsecured lines of credit are riskier for lenders. As such, they often have higher interest rates.

How to Get a Line of Credit with Poor Credit

So, you found out you have a bad credit score. The good news is that this isn't the end of the world. It's still possible to get different types of lines of credit even if your score isn't great. In this section, we'll walk you through how to do it.

1. Know Your Credit Score Before Going Into the Process

As we mentioned, it's important to know your credit score before you begin looking for options. This will give you an idea of what to expect when it comes to lenders. If you fall in the FICO credit score's poor or fair sections, it's considered bad credit. Most lines of credit options can cater to people with scores of 550 or higher.

However, keep in mind that many of these options come with interest rates higher than traditional loans. Or, you will receive a small limit. That's due to the high-risk nature of lending to someone with a bad credit score. So, what should you do if you have a score below 550 and still want a personal line of credit? If your credit score is low, you can check out these tips on boosting your credit score.

2. Use Any Assets As Collateral For a Line of Credit

If you want to avoid higher rates, then consider putting your property up as collateral. This can lead to lower rates while still maintaining a full line of credit. For example, if you own a home, you can borrow using any equity you have in it for collateral. This is known as a HELOC or a Home Equity Line of Credit.

However, be careful with these types of lines of credit. If you cannot make payments, you can easily lose any asset you put up as collateral. As such, it pays to be financially disciplined, so you don't overspend with your credit line.

3. Make Payments on Time

Once you get approved for your line of credit, you must stay on top of your repayment schedule. If you can, try and make your payments as soon as they occur. That way, your credit improves instead of further decreasing. This is especially important if you have a secured line of credit. If you aren't careful, you can lose your home, business, or car if you miss a payment.

So, how do you make sure that you stick to your repayment schedule? Try budgeting out the monthly amounts that you make on loan payments. Prioritize these payments over everything else if you can. Remember that if you make your payments on time, then you can also increase your credit limit in the future.

That means that you can borrow more if you ever need it. If you're able to make consistent payments, you can also expect your credit history to improve, allowing you to apply for more involved loans.

Have You Been Denied a Line of Credit? Contact CASH 1

We hope this article helped give you some tips on securing a line of credit for poor credit. As you can see, it's by no means impossible to secure credit when you're credit history isn't great. Unfortunately, it will take a little more work to find a lender that's willing to take a bad credit line of credit.

Most of the time, a bank isn't likely to approve you for a line of credit if you have poor credit. Luckily, the bank isn't the only option. Direct online lenders like CASH 1 have higher approval rates. We fund your loan directly. Apply online if you live in Idaho, Kansas, or Utah.

For over two decades, CASH 1 has been helping our communities get the financial help they deserve. If you're interested in exploring your options, make sure to get in touch with us today.

Are Unsecured Personal Loans Right for You?
  • 3 MIN READ|
  • 0 Comment |
  • 909 |
  • by David Owens|
  • April 9, 2021 |
  • Loans

Is an unsecured personal loan right for you?

Unsecured personal loans are funding options you can use for just about anything. This includes unexpected expenses, debt consolidation, and the like. Not only that, but unsecured personal loans are considered installment loans. This means you will borrow a certain amount of money and repay it with interest charges on a fixed monthly payment schedule.

How To Qualify For an Unsecured Personal Loan

Lenders most likely want to be sure that you are capable of repaying the loan on time. Hence, before they approve your loan application, they still might need to assess the risk by evaluating various factors. The following are some of the factors lenders commonly check to determine whether you qualify to take out an unsecured personal loan:

Credit Scores

Credit scores will give the lender an idea of how likely you are to repay debts. The higher your credit score, the more likely you will get a loan with favorable terms and a low interest rate. But if your credit score is low, you're likely to land a loan offer with significantly higher interest and more stringent terms.

Income

Your income is one factor that lenders will look into because they want to make sure you make enough money to handle your debts. That is why it is best to consider your income before deciding to get any loan type for your needs.

Debt-to-income Ratio

The debt-to-income ratio shows your debts to your income. This helps the lender see if you have too much debt or can't handle adding another loan. Moreover, the lower this ratio is, the better chances you have of getting your loan application approved.

Benefits of Unsecured Personal Loans

The main difference between the two types of loans is that a secured loan requires collateral, and an unsecured loan doesn't. Besides that, there are other advantages to unsecured loans as well:

  • You can take advantage of an unsecured personal loan to pay a wide variety of expenses. This includes unexpected repairs and major purchases.
  • They usually come with fixed monthly payments and fixed interest rates. This makes your finances easier to budget.
  • Most of the time, unsecured personal loans offer borrowers flexible repayment terms. This will most likely range from 12 to 84 months.
  • You can choose from a wide range of loan amounts that might range from $1,500 to $100,000.

What You Need to Watch Out For

Although unsecured personal loans carry many advantages and are a good option for most people, it would be best to watch out for the following:

Interest Rates

Since collateral is not required, unsecured personal loans tend to have higher interest rates than secured loans. Interest rates usually range from 5% to 36%. However, this will depend on your creditworthiness and the lender.

Origination Fees

Most of the time, lenders charge you fees to cover the loan process. These fees most likely range from 1% to 6% of your loan amount.

Prepayment Penalties

In some cases, lenders will charge you fees if you pay the monthly payment earlier than expected. However, when you pay your loan early, this means you can save some cash on interest charges. That is why it would be best to avoid unsecured personal loans with prepayment penalties.

What if You Default on an Unsecured Personal Loan?

Having late or missed payments and defaulting on an unsecured personal loan will not cost you any collateral. However, it will most likely hurt your credit score because your payment history is one of your credit score's most significant factors, and even one late payment can affect it.

If you miss a payment, the lender will inform you (most likely more than once) regarding the matter. Also, the lender might provide you with a 30-day grace period to help bring your account current. Moreover, if you fail to do so, the lender will be left with no choice but to try to get payment from you one way or another.

Unlike other types of installment loans, like home loans and auto loans, unsecured personal loans don't require you to place the item you are purchasing as collateral. However, this does not mean that the lender can't go after you to recover its losses if you start to default on your loan. The lender has the option to either take you to court to try to garnish your wages, send your account to a collection agency, or attempt to get hold of your property to pay your debt.

In Conclusion

Unsecured personal loans are a great funding option for just about anything you need. It also offers a wide range of loan amounts, flexible repayment terms, and fixed interest rates. However, you need to note that an unsecured loan is not your only option. So, before you decide what loan type is right for you, it would be best to consider how much you need to borrow, the purpose of getting a loan, and how quickly you can pay off the debt.

Author Bio:

Finance Blogger David Owens

David Owens is a seasoned content writer specializing in finance - debt management, entrepreneurship, and business finance. When not writing, he travels with his cat, Mellie.

What Is Revolving Credit & How Does It Work?
  • 7 MIN READ|
  • 0 Comment |
  • 813 |
  • by Joseph Priebe|
  • March 6, 2021 |
  • Credit

what is revolving credit?

It can be easy to get overwhelmed by the different types of credit options.

When doing research, you come across so many different terms. One that you'll almost certainly come across is the term "revolving credit." This may lead you to ask, "What is revolving credit?" What types of borrowing fall under this category? And what advantages and disadvantages does this type of debt offer the average consumer? Knowing this information will help you borrow responsibly, preserve your credit score, and could even save you thousands of dollars down the road.

In this article, we'll break it down so you can make more informed financial decisions.

Revolving Credit Examples

At its root, revolving credit means that borrowers are given money that is repaid and then borrowed again. As opposed to a one-time loan, you're able to borrow against your credit line after you've paid back what you owe.

This type of borrowing is ongoing or revolving, meaning you can continue to borrow against your line of credit as you see fit. In some cases, you may even be able to get approved for a larger credit amount. There are different types of credit lines. Below is an outline of revolving credit examples to help you understand each kind you might get or apply for.

Credit Cards

Given the definition, you might have put it together already that credit cards are an example of revolving credit.

Credit cards are typically issued with a credit maximum (i.e., $5,000) and a fixed interest rate. This means borrowers can put no more than the maximum on their account and must pay back what they owe at that rate. If you have poor credit or don't have a credit history at all, interest rates can be between 20 and 30 percent. The average is usually between 15 and 17 percent.

HELOCs

A home equity line of credit (HELOC) is a type of revolving credit where the borrower puts their home down as collateral.

The amount borrowed comes from the equity in your home, which is the difference between how much you owe on your mortgage and how much of it you've paid back.

If the loan is not repaid in the predetermined amount of time, the lender reserves the right to sell your home or establish new terms that may force you to take out more debt on your home.

Store Credit Cards

Many outlet and retail stores offer their in-house credit options for shoppers.

Stores like Kohl's, Walmart, and other retailers typically offer customers incentives in exchange for signing up. Sometimes, merely seeing if you're approved for a store credit card (without signing up) can score you savings.

Like a credit card, this amount must be paid off each month, or it accrues interest. Each store's terms are different, so understanding what you're signing up for is key.

Bank Accounts With Overdraft Protection

Have you ever swiped your debit card for a purchase that cost more than how much was in your account?

If so, there's a chance that overdraft protection kicked in. This feature is available at many banks and covers the difference between how much is left in your account and how much you need to cover the charge made.

While this is technically a line of credit extended to you, it can happen in your checking or savings account or using a debit card. Check with your bank to understand their requirements for using overdraft protection. In some cases, you don't even have to pay a fee if you reimburse the bank promptly.

Gas Station Cards

Like store credit cards, some gas stations offer revolving lines of credit. They can only be used at one specific chain (usually) and be put towards fuel or in-store purchases.

These are beneficial to people who drive a lot for work or who need to fill up. As a customer, you typically are given cashback rewards or save on fill-up by swiping the card.

Personal Lines of Credit

A personal line of credit is more like a credit card than a personal loan.

With a personal loan, you borrow a set amount and pay it back. Once finished, the agreement is over. On a personal line of credit, you can continue to make revolving charges to your account and pay interest only on what you owe.

Business Lines of Credit

A business line of credit is the same as outlined above—just for your company's needs.

Some entrepreneurs and business owners take out a line of credit when expanding or pivoting their business. The line of credit gives them the flexibility to make purchases and pay it back as they go.

Margin Investment Accounts

There are even common types of revolving credit in the brokerage world. The most popular is known as a margin investment account.

Here, borrowers pay a portion of a stock price, and the broker lends them the difference. As the borrower, you then pay interest on the loan. If the stock makes money or you earn interest, this helps offset the cost.

Difference Between Revolving Credit and Installment Loans

Both can be popular (and helpful) options in the face of a financial crisis. But knowing the difference between revolving credit and installment loans is important.

In short, revolving credit is a more flexible type of borrowing. As outlined earlier, the borrower pays interest only on what they borrow. As it's paid back over time, the borrower can choose to take more if they want. They may even be able to secure more funding if they are responsible about borrowing.

An installment loan is a set amount of money paid back over a specific period. Your car loan, for example, is probably an installment loan. Perhaps you agreed to pay it back at $300 per month for four years. Once that's done it's paid off, and that line of credit no longer exists.

The difference between revolving credit and installment loans is significant because it appears differently on your credit score. Racking up a lot of debt on your revolving credit can negatively affect your score. Typically, borrowers should aim to owe 30 percent of their credit limit or less.

How to Use Revolving Credit to Your Advantage

Being a responsible borrower is the key to taking advantage of your revolving credit options. We outline some of the things you can take advantage of below.

Manage Your Cash Flow

Suppose you have irregular income or need to pay lots of expenses throughout the month. In that case, a revolving line of credit can help. Instead of constantly worrying about how much is in your account, you can borrow against your line of credit or credit card then pay it all off at the end of the month.

Plan Ahead if You Need a Loan

If you think you'll need a loan or line of credit, it's also an excellent time to pay down the debts you owe.

Maintaining a high balance might disqualify you from certain loan agreements or lead to a higher interest rate offer.

Control Your Spending

People get in trouble with their credit account when they let spending get out of hand.

But if you can keep it under control, that's awesome! Sometimes, you can borrow money and not even pay interest if you get your balance back to zero quickly enough.

There are other perks to controlling your spending with revolving credit.

For example, many rewards cards offer 1 or 2 percent cash back on purchases. You get half when you buy and the other half when you pay it off.

According to the IRS, that money is not only free—it's also not counted as taxable income. Some rewards programs offer miles or hotel stays instead of cash. Look into what fits your lifestyle!

Pay More Than the Minimum

You always want compound interest on your side with revolving credit lines. The best way to do that is by paying more than your minimums each month.

For example, if you took out a $5,000 line of credit at a 14 percent interest rate and only paid the minimum of $200 on it each month, it would take 2.5 years to pay off.

In that time, you'd wind up paying $946 extra dollars in interest! If you paid $800 a month, you'd be done in 7 months with only $223 in interest.

The power of compound interest shouldn't be taken lightly. There's a reason Einstein called it the eighth wonder of the world.

Disadvantages of Revolving Credit

Like any financial decision, there are potential drawbacks to using revolving credit.

Here are some downsides you should consider when deciding if it's the right option for you.

Failing to Pay Back What You Borrow Each Month

Revolving credit certainly has its advantages. It's flexible and helpful in many situations. But not paying your debts back can stink. Some companies, especially credit cards, set ruthless terms for those who borrow and don't pay back.

The average penalty fee is just under 28 percent APR on your credit card. That's a steep number that could be 2 or 3 times your average interest rate.

Easy to Make Impulse Purchases

Sometimes it's hard to remember that your line of credit constitutes real money. For some, it's easier to rack up charges than see their savings account get low or their cash disappear.

Revolving lines of credit aren't great if you tend to impulse spend or shop emotionally. You could quickly put yourself in a position that's hard to come out of, accruing hundreds in interest each month.

Missing Payments Can Damage Your Credit Score

Missing payments can hurt your future self, too. Besides owing a lot more money than before, creditors can report your delinquent accounts to the three credit bureaus.

A bad credit score makes it harder for you to borrow money in the future. Most delinquency cases for consumer credit stay on your credit for up to seven years.

Getting a mortgage, taking out another personal loan, or even getting a new store credit card could be more challenging in the future. And they'll also likely charge you higher interest rates as a result of your poor payment history.

How Can Revolving Accounts Impact Your Credit?

Your credit score consists of a few factors:

  • Payment history
  • Accounts owed
  • Length of credit history
  • Credit mix (ratio of consumer debts vs. business debt, etc.)

It isn't an equal weight, either. Payment history makes up the largest part of your score. So if you miss payments frequently, borrowing money could significantly impact your credit score.

It is, however, possible to boost your credit score. In some cases, you can dispute claims sent to the bureaus and have them taken off your account.

But for most people, it requires merely buckling up and building their credit back up from scratch. This can take years, and even with a flawless record of five years of repayment, those old unpaid debts can still come back to haunt you.

Revolving Credit is a Useful Financial Tool

Hopefully, that helps clarify the question, "What is revolving credit?" From credit cards to HELOCs to gas station rewards cards, revolving credit is a flexible form of debt. You can make payments on it as you see fit (so long as you hit the minimums) and borrow more in the future.

Have you been denied a line of credit? You can apply online with CASH 1 if you live in Idaho, Kansas, or Utah.

 

Qualities to Look For in a Cryptocurrency Broker
  • 4 MIN READ|
  • 0 Comment |
  • 669 |
  • by David Owens|
  • February 16, 2021 |
  • Personal Finance

qualities to look for in a cryptocurrency broke

Qualities to Look For in a Cryptocurrency Broker Trading With Cryptocurrency Is Now One of the Most Sought-After Trading To choose a cryptocurrency broker wisely, read this list of qualities that will save you from any complications or scams in the future. broker wisely. Below are some qualities to look for in a cryptocurrency broker before finalizing one

From coffee corners at work to dinner with friends, time and again, you may be hearing about exciting ventures people are making into the world of trading with cryptocurrency. When you are buying cryptocurrencies through an exchange, then you are purchasing the coins. To start with trading, you will need to create an exchange account and store the cryptocurrency tokens in your e-wallet. You can then decide to sell it or keep it as it is.

As the cryptocurrency market is decentralized, it is not issued or backed by any government or central authorities. It runs across a network of computers wherein you can buy and sell cryptocurrencies through an exchange and store them in wallets. They exist only as a shared digital record of ownership as opposed to traditional currencies. This record is further stored on a blockchain. A digital wallet is used when cryptocurrency owners want to sell the units to another user. It is then verified and added to the blockchain, without which it is not completed.

As the trading and investment in cryptocurrencies rise, brokers' demand in the same field has gone up too. While there are numerous stories of brokers who have helped new and accomplished traders in this field, many stories of people are being scammed by the same. Hence you must choose a broker wisely. Below are some qualities to look for in a cryptocurrency broker before finalizing one.

Online Platform

This is an absolute first aspect to look at when you are looking for a cryptocurrency broker. If they do not have any online platform for its users, that should be your vital red flag that this broker cannot be trusted. Trusted online broker platforms https://www.trusted-broker-reviews.com/olymp-trade-india/ provide many benefits to its users.

These platforms can help users deal with crypto trading with ease. When you are provided a well-designed platform, you can choose from many options available at your convenient location. It is simple to understand if you are a novice or an experienced trader. Make sure you find a platform that is up to date and features the latest news about cryptocurrency trading. You can also check to see whether the platform is secure by looking at the top left of your search bar. If there is a visible SSL certificate, then it is a safe site, and your private information will not be leaked to hackers.

Credibility

Though the crypto trading market is new, it doesn't mean that all the brokers that you find will be inexperienced. Look for credible and experienced brokers who can help you trade properly. Check their credentials, licenses, and even reviews. Reviews can provide important insight into the services of the broker to determine if they are a right fit for you or not. Another important aspect to look for when checking the broker's credibility and their platform is to check how long they have been in the market. When a broker platform is in the market for a long time, it indicates that they are providing the right services as people continue to rely on them.

Customer Service Provided

As a trader, there will be many times when you will need to contact the customer service of the broker platform for a query. As crypto trading can be done regardless of what time it is, you should have access to customer support at any time of day. Therefore, look for a broker platform that provides customer service 24/7. They should be competent and help you answer any questions or queries promptly. If the customer service is not up to the mark and takes a long time to reply to you, then you could, in later stages, be frustrated when facing a problem and waiting for the reply.

Technical Support

While customer support will provide you solutions to more generic problems, it is the technical support offered by trading platforms that helps you deal with more intense ones. Customer service and technical support are not the same. Technical support teams help users with problems that require professional help in specialized areas. Many cryptocurrency brokers do not have technical support, which is a huge drawback. Technical support is critical to solving user problems in the crypto industry that require more experience. These professionals know all the in and out of how everything works and can help solve a problem within minutes. Look for a broker platform where the technical support is prompt as that can save a lot of your time.

Sign Up Process

User experience is gaining more importance than ever before. An easy sign-up process is one telltale sign of how your experience on that platform in the future will be. A good broker platform can easily be identified by checking if the sign-up process is accessible or not. If there is a large depositing fee requested during the sign-up process, that is a red flag. This is mostly done when the broker platform is going to scam you. Good cryptocurrency brokers take little to no money for signing up potential users. When you have found such a broker, do not let your guard down but rather also check the commission and fees charged by them in later stages. This will prepare you for any financial risk, and you can make your decision on trading accordingly.

Bitcoin App

The Whole Point Is To Have Convenience Of Trading

The whole idea of hiring a crypto broker is to get the benefit of convenience. If that is not provided, it loses the point. The crypto industry is galloping at a fast pace and going through rapid changes. To stay on top of everything, you need a variety of features from the broker so you can make timely decisions. The platform should be compatible with different gadgets so you can conveniently trade from a laptop or your phone. The visibility and mobile-friendliness of the broker will be an integral point when you need to access your account on the go and not miss out on anything important.

Author Bio:

Finance Blogger David Owens

David Owens is a seasoned content writer specializing in finance - debt management, entrepreneurship, and business finance. When not writing, he travels with his cat, Mellie.

How to Make Money With Your Car in Las Vegas
  • 5 MIN READ|
  • 0 Comment |
  • 987 |
  • by Joseph Priebe|
  • January 28, 2021 |
  • Personal Finance

Legitimate ways to make money with a car in Las Vegas

When you live in Las Vegas, you can never have too much money to meet your family's needs. This is why side gigs have become such a common and popular way to earn money these days.

If you are looking for side hustles in Las Vegas and own a car, you can do many things to earn extra money. Most of the time, it includes significant driving. So if you love driving, you'll love your job!

Here's a list of popular and legitimate ways to make money with a car. A lot will also depend on your car's condition and age as well as your personal preferences.

Drive for Ride-Hailing Apps

Becoming a driver is a no brainer when it comes to making money with a car. You can become a driver for any of the ride-hailing apps to make money. Drop people from one point to another and receive a fair share of the money paid through the app. It's that simple.

Every company values its customers above everything. So, becoming an employee of these apps requires that your driving record is clean, you have no criminal record, meet the minimum vehicle age, and meet quality standards.

A profitable ridesharing driver does not stick to a 9-5 typical job schedule and usually works during rush hours to make substantial money. If we talk about any other city, it would have been an issue for people working different jobs.

But Vegas never sleeps, baby! The city is always bustling with activities. You can always find customers from the city and beyond wanting to hail a ride. Becoming a driver can make you a lot of money, especially in Vegas. If you are looking for apps, here's something that may help.

Uber

We all know about this one! Uber is the most popular ridesharing app in States. To apply as a driver for Uber, you must be at least 21-years or older and US-licensed with at least one year of driving experience and a relatively clean driving record. The vehicle you own must be newer than 15 years old with four doors.

Lyft

Lyft is the biggest competitor of Uber. The most significant advantage for you here is that in-app tipping is mandatory. The requirements for Lyft are similar to Uber. They also offer a rental car for driving from their express drive for those who do not own a car.

The exciting thing about becoming a driver is that you don't need to work exclusively under a single banner. You can switch between Uber and Lyft anytime you want. You can also sign up for both the apps and choose your rides depending on your time and the cash you need.

Rent Your Car

If you are not a driver or don't want to drive, you can always rent your car to others. Many tourists storm Vegas every day who would like to rent a car for however long they are staying.

If you are working other jobs on the weekdays, this is the best way to earn extra money. Many sites and companies will rent your car.

You can approach them to rent out yours and make money with your car. If you don't need your vehicle for most of the week, why not put it to good use and earn money?

Turo

Turo is a popular rental service where you can register your car for rent. It's an excellent opportunity for people who want to earn money withtheir vehicle in Vegas.

Your earnings depend on the market price and how long someone wants to rent your car.

You have a good chance of earning at least 60-65 % of the income, depending on your vehicle's use and availability. You also have the leeway to choose the mileage, and the car is returned to you fully fueled.

Getaround

Getaround will let you rent your car out to people in your vicinity. So if you don't want your vehicle to go too far, you can trust Getaround to keep it safe in the city and pay you for renting your car.

You'll get paid every month, and most people will make an average of $10,000 per year. You set the hours your car will be available and is fully covered by insurance during the rental period.

HyreCar

You can rent your car with HyreCar. Unlike other services, there is no strict and specific requirement for the drivers to register their vehicles.

You can easily register your vehicle with them. The service takes a 15 percent commission on all rentals. However, you can set your price and choose to accept or decline a rental offer.

HyreCar does not take care of any insurance or gas responsibilities. This is because most of the deals take place between the owner and the client. You should note that during any complaint from the client, the renter can get fined.

Food Delivery

Food delivery is another way to make money with a car in Vegas. Today, with UberEats and other such food delivery apps, you can now deliver to multiple restaurants and earn benefits. You can look for opportunities in:

UberEATS

UberEATS is an extension of the Uber ride-hailing app. Only here the drivers, instead of picking up riders, pick up food and deliver it to the customers. It also has similar requirements for the drivers.

The drivers must be at least 21 years or older and pass a driving test. Usually, UberEATS offers flexible schedules for the drivers.

DoorDash

DoorDash also offers pickup and food delivery services. However, it only caters to businesses that do not have time to run out and pick up food orders for the company. The flat rate per delivery is 5 dollars, and the rates may vary depending on the market. To become a DoorDash driver, the person must be 18 years and older and carry a driver's license.

Grubhub

Grubhub is another popular food delivery and pickup app in Vegas. Make use of your car and become their delivery driver to earn money. You can have a flexible schedule while making $13/hour with Grubhub.

Grubhub requires that the drivers have at least two years of driving experience with a valid license, registration, and insurance. The drivers must be 19 years or older and pass a background check. Also, you must have a checking account for direct deposit of paychecks.

Deliver Groceries and Earn Money

Who knew delivering groceries can help you earn money? Now you can make money with your car by delivering groceries to other people. Some apps and companies provide such services. You can join these organizations for an excellent side hustle in Las Vegas.

Shipt

Shipt is one of those on-demand grocery delivery services that provide door-to-door services. You need to be at least 18 years or older to become a Shipt driver with a trusted vehicle. Additionally, you should also have a license, insurance, and registration of your car.

It would be best if you also had a cooler for cold grocery delivery and a smartphone. The drivers are required to have a general idea about the groceries, brands, and stores. A Shipt driver earns $25 per hour along with a free Shipt plus membership. Overall, it's a good deal!

Instacart

Instacart is another popular grocery delivery app. If you're working for Instacart, you must have your car to become a contractor of the brand.

You also have the liberty to work flexible and unlimited hours. You keep 100% of the tip with a $9-$20/hour shift depending on demand and rush.

Amazon Flex

While drones are yet to take the stage for deliveries, Amazon Flex offers independent contractor drivers $25 per hour to deliver the Amazon packages.

You'll have a flexible schedule and can choose your own time to deliver the packages. You must have a driver's license and a vehicle that has valid registration and insurance.

Make Money with Your Car!

Now, you have plenty of options to explore. If you rarely use your vehicle, the best thing you can do is rent it to someone else. Renting your car will make your commute comfortable whenever you need it and help you earn some extra money.

Las Vegas is a busy city that is always buzzing with activity, take advantage of this, and you can soon figure out what is best for you and your car!

If you find that you are short on cash today and don't have the time to get an extra job, consider a title loan in Las Vegas from CASH 1. You can get up to $50,000 using your vehicle title as collateral.

Things You Need to Know About Credit Scores for RV Financing
  • 4 MIN READ|
  • 0 Comment |
  • 930 |
  • by Lauren Cordell |
  • January 27, 2021 |
  • Loans

RV financing and your credit score

Hitting the road and going to beautiful destinations in an RV sounds appealing. With its built-in beds, fully-equipped kitchen, and other home amenities, you have the freedom to go and stay as you please. Comfort and convenience wise, you can never go wrong with an RV trip.

However, it's probably one of the most significant purchases you'll ever make. With a price tag ranging from $10,000 to over $1 million, many people have to turn to financing to buy and own an RV. There are many RV loans out there, but it's not always easy to get approved for one. Certain factors will affect your chances to get RV financing, and your credit score is among them.

Here are essential things you need to know about credit scores for RV financing. It would be best to equip yourself with them, especially if you're planning to get your RV.

How Does RV Financing Work?

Financing an RV is pretty much similar to financing a car or a house. You'll get it from lenders or creditors who are offering RV loans, such as banks, credit unions, or RV dealers. Just like a car loan, you will be required to put in a downpayment and then make monthly repayments within a certain period.

Most RV loans are secured, meaning the RV itself serves as collateral to guarantee the loan. If you can't make your monthly payments, the lender has the right to repossess the RV. Although some lenders offer unsecured RV loans, the interest rates would be significantly higher.

RV loans' cost may vary depending on the interest rate the lender charges you and the loan term or amount of time you have to repay the loan. Thus, it would be best to compare different lenders' options to get the most affordable RV loan possible for you. But note that these lenders look at several factors when deciding to give you credit or not.

Understanding The Role of Credit Score

A credit score is among the factors that lenders use to evaluate how suitable you are to receive the loan. Since a credit score is based on credit history, which includes the number of your open accounts, total levels of your debts, and your repayment history, the lender will have an idea of how likely you are to repay the loan on time.

Although it's only one component, credit scores can make or break RV financing. Find out how a good or bad credit score affects your chances for better rates and terms and your RV loan approval.

Good Credit Score

As with any loan product, having good credit usually works in your favor. A credit score around 700 or higher will make it easier and faster for you to get an RV loan. If you have such a high score, lenders are likely to perceive you as low credit risk. Thus, you will get better and lower rates for your loan.

Bad Credit Score

On the other hand, having bad credit doesn't necessarily mean you won't get approved for RV financing. But though it's not entirely impossible to get an RV loan when you have a low credit score, it can certainly limit your options. Many lenders may offer RV loans to borrowers with scores of 550 but with higher interest rates and income requirements.

How To Improve Your Credit Score

If you want to better your chances for good credit RV financing, but you're currently struggling with credit challenges, don't lose hope. There are several ways to improve your credit though it requires a great effort on your part.

Instead of bearing sky-high interest rates and fees on your RV loan due to bad credit, consider the following to boost your credit score before you apply for RV financing.

Review Your Credit Report

The first step in improving your credit is finding out which factors affect your scores the most. To do this, you would have to get a copy of your credit report and review every item. Once you know what factor helps or hurts your score, you can better make changes to improve them.

There are also instances where there are mistakes in your credit report, such as wrong account status, duplicated debts, and incorrect balances. These errors could drag down your score. By checking your credit report, you can correct and remove them by filing a dispute.

Pay Bills On Time

Your payment history determines 35% of your credit score and has the biggest impact. Thus, the easiest way to boost your credit is to make payments on time. If you're behind on any payment, pay them as soon as possible. It will also help if you use automatic payment or calendar reminders to ensure you pay on time each month.

Remember that lenders are interested to know how reliable you are in paying your bills. They consider your payment history as a good predictor of future performance. If you fail on this aspect, work on this as soon as you can.

Reduce The Amount of Debt

The amount of debt you have can also affect your credit score. If you're carrying multiple debts, it's better to pay them off before applying for RV financing. Paying off your outstanding balances can help boost your credit score since you're lowering your credit utilization. Note that a low credit utilization ratio tells lenders how well you manage your credit.

Essential Points To Remember

There is no shortcut to improve your credit score. It may take some time and effort before you can see the changes. Moreover, the negative information on your credit report may remain for a certain period. When you've done everything you could, all you need to do is wait until the negative items fall off.

Takeaway

Your credit score may not only affect your chances of getting RV financing. But it can also affect your financial health and life in general. When you have poor credit, you may not get the home and job you want since landlords and employers may run a credit check. Therefore, you must always take care of your credit score whether you're applying for RV financing or not.

Author Bio:

Finance Blogger Ella Baker

Lauren Cordell is a financial expert who writes in various entrepreneur magazines. Her writings are always packed with data and real-life experiences. In her free time, you'll likely find her reading books about business and personal finance.

What Are the Different Types of Car Titles?
  • 4 MIN READ|
  • 0 Comment |
  • 1279 |
  • by Joseph Priebe|
  • January 8, 2021 |
  • Personal Finance

What are the different types of title loans?

Most of us know that a car title serves as a certificate of legal ownership, but who knew it is also called a pink slip? When a car is purchased, the title is transferred to the new owner.

Your state's DMV, MVD, or Secretary of State issues you the title. It indicates who the owner is and information about the car, such as the make and model. If you need to sell your vehicle, refinance or buy one, it's essential to know what each car title represents.

There are different classifications of car titles, and the main types include:

Clear Title

Out of all of the different types of titles, a clear title means you have 100% equity in your car. This makes you eligible to sell your car to another party. This title indicates there is no outstanding financial burden on the vehicle to prevent it from being sold.

Lienholder Title

If your vehicle has a title loan or you are still making payments, the title is in possession of the lienholder. The title will list the lender as the lienholder, and you will be listed as the owner.

Salvage Title

A salvage title is issued to a car with a significant value decrease due to a substantial accident, subsequent repair, or theft. Typically, a vehicle will receive a salvage title if it loses more than 75% of its original value. A salvage title is generally issued by the car's insurance company. So long as the vehicle can pass a safety inspection, cars carrying this title are legal to drive.

Dismantled Title

A dismantled title is similar to a salvage title. It's given to cars that have been severely damaged, and repairing them would not make financial sense. Suppose the cost of repair is higher than the vehicle's value. In that case, a dismantled title is needed to sell any remaining valuable parts.

Junk Title

A junk title is issued to sell a car for parts or scrap metal if it has been sold to a junkyard.

Bonded Title

If a car has missing ownership documents, a bonded title is given along with a security bond equal to the car's value to the new owner to ensure they are protected should a future ownership claim arise. A bonded title is valid from three to five years.

Reconstructed Title

For cars that have gone through major repairs or transformation, the insurance company issues a reconstructed title. The care must be inspected and deemed safe for public roads before a reconstructed vehicle can be registered for normal use.

Rebuilt Title

Somewhat similar to a reconstructed title, but this title is for vehicles that have been significantly rebuilt. Much like the reconstructed title, it is issued by the insurance company or the place where the repair work was completed. Once the car passes a safety inspection, it is legal for use on public roads.

Water Damage Title

This title is issued to cars that have significant damage from water. As a best practice, you might consider having a car inspected for water damage, especially when buying a used car, to guarantee no surprises.

Odometer Rollback Title

It is illegal to turn back a car's odometer. If that has occurred, an odometer rollback title is given to the car.

Lemon Title

Although each state has different laws defining what makes a car a lemon, if a car has many components that don't function properly and is unsafe to drive, it may be branded as a lemon. However, before that occurs, the car has the opportunity to be repaired. If the problems persist, it will then be branded its official lemon title.

Export Title

To clear customs, an exported vehicle needs documentation. A clear title will not be possible if a vehicle is not declared at the exit point. To avoid port storage fees from accumulating, start the title process early.

Import Title

An imported vehicle to the U.S. must have a legal title to clear customs. Suppose your vehicle was not manufactured for the U.S. market. In that case, you'd need to meet certain requirements to certify that the vehicle is legal to operate in the United States.

The Environmental Protection Agency (EPA), Department of Transportation (DOT), National Highway Transportation Safety Administration (NHTSA), and other agencies need to verify that your vehicle meets standards for emissions, safety, and other guidelines before entering the states.

Electronic Title

Paperless or electronic titles are available from certain state title systems. You can request to obtain a title document for getting a loan or a transfer.

Look Out for Car Title Laundering or Washing

If you're buying a car that was last registered in another state, look out for title washing. Any attempt to hide or change a vehicle's designated title is against the law. This is designed to discourage car sellers from selling damaged cars for more than they are currently worth. States classify titles differently, which means if you purchase a vehicle in another state, it may not transfer. Research your state's title classifications to verify that a vehicle from another state has a valid title. It's always a good idea to have the car inspected by your mechanic and get a vehicle history report online.

Research Title Types in Your State

If you're ready to buy a car, it's best to be in the know about car titles. Check out your state's title classifications with these links.

Alabama Vehicle Title Information

Alaska Vehicle Title Information

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