Pierre Money Mart Blog

You’ve just opened your credit card bill and attached to your statement you find a “convenience check” included. It may already be filled out with a dollar amount such as $300, $500, or even $1,000. Your mind fills with ideas of what you could buy with this “instant” money. A new summer wardrobe, a nice dinner and tickets to a concert, a weekend getaway.

But before you go off on a shopping spree, you should be aware that your “convenience check” is nothing more than a cash advance on your credit card. Cash advances on credit cards carry many extra fees, often overlooked or misunderstood by consumers.

Here’s a quick look at the types of fees most card issuers charge for a cash advance:

1) Upfront fee of 2-4% of the amount advanced. On a $1,000 cash advance your fee will range from $20-$40 in addition to the interest charges.

2) Higher interest rate than on purchases. Many credit card companies charge 18% or more on cash advances. In addition, most companies apply only a small percentage of your monthly minimum payment toward the cash advance.

Some require that you pay down the balance on your purchases first before applying payments to the higher-interest advance. In other words, you’ll be paying fees and interest on your cash advance for a long time, especially if you only pay the minimum payment.

3) Cash advances normally carry no grace period. This means interest charges accrue as soon as you withdraw money or cash the convenience check.

By law your credit card company must disclose any fees associated with a cash advance. The easiest way to find out what fees are charged is to carefully read your credit card statement or to call your credit issuer’s toll-free customer service number and ask questions.

Credit card companies charge these fees for two main reasons. One, to cover the costs to process this transaction which are often higher than a regular credit card purchase. And secondly because of the percentage of defaults among credit advance users. These costs are then passed along to you the consumer in the fees and interest rates associated with a cash advance.

The next time you are tempted to cash that convenience check or withdraw money from an ATM using your credit card, be sure you understand the fees and long term effects of using a credit card cash advance.

HOW DO YOU TALK WITH YOUR CREDITOR OR LESSOR WHEN THEY REPOSSESS YOUR CAR?

It’s easier to try to prevent vehicle repossession from taking place than to dispute it afterward. Contact your creditor or lessor when you realize you will be late with a payment. Many creditors or lessors will work with you if they believe you will be able to pay soon, even if slightly late. Sometimes you may be able to negotiate a delay in your payment or a revised schedule of payments. If you reach an agreement to modify your original contract, get it in writing to avoid questions later.

Still, your creditor or lessor may refuse to accept late payments or make other changes in your contract and may demand that you return the car. By voluntarily agreeing to repossession, you may reduce your creditor or lessor’s expenses, which you would be responsible for paying. Remember that even if you return the car voluntarily, you are responsible for paying any deficiency on your credit or lease contract, and your creditor or lessor still may enter the late payments and/or repossession on your credit report.

If you need help in dealing with your credit or lease contract, consider using a credit counseling service. There are nonprofit organizations in every state that advise consumers on debt management. Counselors often try to arrange a repayment plan that is acceptable to you and your creditors. They also can help you set up a realistic budget and plan expenditures. These counseling services are offered at little or no cost to consumers. Check your telephone directory for the office nearest you.In addition, universities, military bases, credit unions, and housing authorities often operate nonprofit counseling programs. They also are likely to charge little or nothing for their assistance. Or check with your local bank or consumer protection office to see if it has a list of reputable, low-cost financial counseling services.

COMMON PROBLEMS FACED BY CAR LOAN CUSTOMERS ALONG WITH THE WAYS TO AVOID THEM

• Delay in disbursement beyond promised date. Just budget for at least a weeks delay in disbursement even after you have handed over all papers.
• Non disbursement despite approval. Solution – Just move your loan to another bank
• Delay in handing over cheque disbursement to the dealer (which means delay in obtaining delivery of the car) even though interest meter starts from date of cheque rather than the date on which the cheque is handed over to the dealer. There is no real solution to this problem except that you could check with the dealer if he has an account with the concerned bank in which case this delay will not happen.

SHOULD YOU CONSOLIDATE DEBT BY YOURSELF?

In short, debt consolidation programs undertaken by you are by far the cheapest form of working this useful debt management program. But, self-regulated debt consolidation programs do require a certain level of discipline. They do require you to arrange for one or two creditors to accept to take over your existing smaller debts.

They also require you to make payment to this creditor in a timely manner. In other words, there is no financial overlord looking over your spending and making sure you stick to a workable financial diet. For this reason many of us who consolidate our debt believe we have just been given a new lease of life and go out and spend, spend, spend. The net result of this is not only do we now have new debt to repay, but we also have the large consolidated debt to repay. As such, self-regulated debt consolidation may not be the most effective debt management tool.

WHAT IS A CREDIT REPORT?

Your credit report contains important information about you. It generally includes facts about your identity, where you work, live, your bill-paying habits, and public record information. Credit grantors use credit reports to determine whether or not you will be extended credit. Identity information includes your name, address, marital status, Social Security number, date of birth, number of dependents, and previous addresses. Employment data includes your present position, length of employment, income, and previous jobs. Factual information about your credit history consists of your credit experiences with specific credit granters. Public record information includes civil suits and judgments, bankruptcy records or other legal proceedings recorded by a court. A credit report does not contain information on arrest records, specific purchases, or medical records.

Companies called credit reporting agencies or credit bureaus compile and sell your credit report to businesses, which use it to evaluate your applications for credit, insurance, employment, and other purposes allowed by federal law. Therefore, it is important that your credit report contain complete and accurate information. It is advisable that you review your credit report every three or four years to check for inaccuracies or omissions. You also may want to check your report sooner if you are considering a major purchase, such as buying a home.

HOW CAN I OBTAIN A CREDIT REPORT?

If you have been denied credit, insurance, or employment because of information that was supplied by a credit reporting agency, the Fair Credit Reporting Act requires the report recipient to give you the name and address of the credit reporting agency that supplied the information within 30 day s after the credit was denied. If you contact that agency within 60 days of receiving the denial notice, you can receive a free copy of your credit report. If you simply want a copy of your report, call the credit reporting agencies listed in the Yellow Pages under “credit” or “credit rating and reporting.” Call each credit report agency listed since more than one agency may have a file on you, some with different information. You may have to pay a reasonable charge for each report.

Credit Repair with High Risk Loans

What are high risk loans? Credit repair with high risk loans can certainly be achieved if done properly. A high risk loan is when the lender faces the significant risk that the money won?t be paid back. Typically, if the borrower has a horrendous credit or heavy debt load, any loan granted would be considered high risk.

In almost all cases, high risk loans translate into a higher interest rate because of the uncertain nature of the loan. High risk loan lenders understand how people can get behind and get into trouble, and most are more than willing to give you a second chance. However, because your credit may be severely damaged (see credit repair), they do need to protect themselves in case you default.

Lenders granting high risk loan

Our high risk loan lenders are pre-screened as reputable organizations willing to give you a second chance at a fair rate. While the interest rate on the high risk loan will be determined by the lenders after reviewing the severity of credit problems, collateral, down payments, and the degree of credit risk, you can be assured of finding a program to meet your situation.

To attempt credit repair with high risk loans you first need to have a plan. In most cases, the funds of high risk loan are used to pay off remaining debts so that you only have one monthly payment. In other cases, high risk loans are used to purposely build credit through on time payments and an early pay off. Regardless of your situation, a high risk loan can give you a chance to obtain benefits only available to those with good credit.

High Risk Loans Eligibility

Quite obviously, if your loan applications are being repeatedly turned down then there is certainly something wrong with your credit score. Those who are most eligible for high risk loans include people with a tainted financial report, a bankruptcy filing, or a string of late payments and charged off accounts.

Whether your credit is poor or absolutely downright awful, certain high risk loan lenders will provide all kinds of different high risk loan programs. While the interest is higher, such high risk loans can provide a great start for borrowers with little or no credit, as well as those trying to re-establish their credit history.

You?ll want to check with the high risk loan lender to see if there are any limitations as to what the money can be used for. Whether you want to pay off other debts, make home improvements, avoid foreclosure, or pay for unexpected expenses, a high risk loan may be the answer you seek. .

You should be aware of the fact that car loans are extremely common, about 70% of all new cars are financed. A number of used cars are financed as well. There are a large number of options for auto financing these days. For instance, you can obtain your loan from a bank, finance company, credit union, or even a professional organization that you happen to have membership in. It is also possible to obtain financing through the auto dealership. You may also decide to finance your car through a home equity loan, which can provide you with an exceptional interest rate.

Interest Rate Know-How
You should know at the outset that your interest rate may vary depending on whether your car is used or new. The interest rates for new vehicles tend to be lower than those for pre-owned vehicles. Also, loan terms tend to be more generous for new cars and trucks than for used models.

Lengthy Loans
If you have a particularly lengthy loan term, it will cost you more money in the long run. There is actually a trend nowadays for longer loans, some run as long as 84 months. This is because many people make the mistake of thinking that they can afford a more expensive car if the payments are spread out over a longer period of time. However, if you truly believe that it would take you seven years to pay off a car loan, you might be better off, financially speaking, opting for a less expensive vehicle. This may be particularly true, given the fact that a lengthy loan may require an incredibly high interest rate.

Tempting Incentives
There are some car dealers who claim that they will pay off the balance of your car loan, no matter what the amount of money left on it. However, if you agree to such a deal, you will simply be transferring your remaining balance onto your new car loan. This means that, if you’re interested in purchasing a $19,000 car, but you still have $3,500 left on your current car loan, you’ll be taking out a $22,500 loan in order to cover your expenses.

Such a program is not attractive in the long run. You would be much better off if you simply waited to pay off your outstanding balance before purchasing a new vehicle. If you simply cannot wait to buy another car, consider one that is more affordable. Otherwise, you could find yourself falling even farther down the economic ladder.

With some smart strategic planning, you can obtain an auto loan that will leave you in a good financial position in the years ahead. Considering the fact that cars tend to lose their market value quickly, a cost-efficient car loan may be one of the best financial decisions you’ll ever make.