MOST COMMON LOAN CATEGORIES

Despite our quest to become debt-free, almost all Americans will take out a loan at least once in their lifetime. Here are some common loans that we may end up taking. Many homes have one or two but others have a combination of all of them.

Car Loans –
Cars are almost an absolute necessity for Americans but this is not entirely so in the rest of the world where people delight in walking and using public transportation (although economic difficulty is also a reason why not many people own cars). It is always advisable to purchase a car in cash but many people do not have that kind of money saved up so applying for a car loan becomes a more viable option. Before embarking on the quest for a car loan, one has to figure out what kind of car they want and what is their projected long-term budget. It is good to shop around because most dealers hike the prices of cars by 15%. This means that if you negotiate wisely with the dealer you can get a reduction on the vehicle up to 15%

Credit Cards –
When shopping for a credit card, avoid cards that have exorbitant interest-rates and fees. Some even charge huge upfront fees especially if you have bad credit and you

College Loans –
Always consider investigating student loans before committing your self to a personal loan agreement. You may be qualified for a student grant from the government if you take the time to research the opportunities.

BUILDING CREDIT-WORTHINESS

In the last decade, “credit-worthiness” has gained notoriety as more and more businesses use credit to determine the risk level of a person or a business. This is termed “credit-worthiness” and is a person or business’s ability or risk of inability to pay a debt. It is therefore imperative that one learn the tips and tricks on how to maintain credit-worthiness and bid for loans with the lowest interest rates and the best. The difference between good credit and bad credit can be thousands of dollars a year in overpayment of debt and interest! It’s a smart move therefore, to be “credit-savvy”. Being credit savvy involves learning the ropes of today’s credit climate and smart ways to pay bills.

Go Automated
In previous decades, a man’s word was his bond and businesses entered into a business contract based solely on word-of-mouth. Nowadays, that is not good enough and businesses have due dates and late fees and will report late and erratic payments to one or all three of the major credit bureaus. Negative reporting can cause an adverse credit rating resulting in denial of loans of can become burdened by high interest ones. Because of today’s busy schedules, many well-intentioned people simply forget to pay their bills on time. This results in unnecessary late fees. Can you imagine what happens when one forgets, say, a court-date appearance? Not only can one be subject to arrest, but one has to pay exorbitant court fees for failure to appear!

The best way to avoid paying bills late is to go automated. This means you can either arrange with your employer or bank to pay your bills from your bank account automatically whenever they become due. New high-tech tools provided by banks, such as online bill pay, can perform this task exceptionally well.

Contact your bank therefore and set up online banking with automatic bill pay. Software such as Microsoft Money and Quicken can be configured to pay bills directly from your computer and maintain excellent records for you.

Failure to pay your bills on time causes many creditors to assume that you are unable to pay the debt. They may then initiate collection activity and report you negatively to the credit bureaus.

Stay In Touch With Your Creditors
In the event that you are unable to pay your bill either on time or do not have the money to make a full payment, one of the best options is to contact your creditor and inform them. In most cases the creditor will be willing to make “payment arrangements” and in the case of credit cards may even re-negotiate a lower interest rate. Contacting your creditor also builds trust and reveals your good-will.