Showing posts with label personal loans. Show all posts
Showing posts with label personal loans. Show all posts

Tuesday, November 26, 2013

Prepaid Debit Cards Cannot Help Rebuild Your Credit score...What Reasons are People using Prepaid Debit Card?

The need for prepaid debit cards has moved from a fringe need to a mainstream. Many consumers are finding it within their comfort and fulfilling to use prepaid cards despite the fees these cards carry. Although there are better options such as secured credit cards and low fees checking accounts, consumers never seem to go for those options. So what are the reasons why consumers are opting for prepaid debit cards yet they cannot help in improving credit score?

The answer to this question depends on preferences, consumer education, and the circumstances in which the cards are being used. Initially, prepaid debit cards were seen as good alternatives for people with bad credit who cannot get credit cards. However, this is not the case today, because there are bad credit credit cards and also secured cards that even people with bad credit can get.


Prepaid cards tend to eliminate the bottlenecks that come with credit cards such as late payment fees, and overdrawing fees on credit card balance. When you make late payment as it may happen with or without your consent, this can put you into a fine of increased interest rate of up to 15 percent in just one missed payment. Although the first and second missed payment may not attract an increase in APR, if it becomes a habit, then you will bear that cost.


Similarly, if you are tempted to use more than the credit limit, you are also subjected to hefty fines because of over-the-limit use of the credit card. These are some of the fees that you can do away with when you use prepaid cards but then again, these prepaid debit cards have their own fees. They charge ATM withdrawal fees, annual fees, monthly fees and other types of fees.


If you are not in bad credit and you do not intend to use a credit card to improve your score, then you may opt for the debit cards. They can help you manage your spending.  A study released by Pew Health Group discovered that consumers are not even wild about the prepaid debit card fees and they say they are better than checking account fees.


Some consumers even cited that they do prefer prepaid debit cards because they simply do not like banks. They argued that banks only lure you to have a sense of comfort while on the backside side they are slowly ripping from your account through fees and other charges.  When the pre paid debit cards first entered the market, they were being marketed as alternatives for people who could not qualify for a credit card. Those days are gone when consumer ailing in bad credit could not get credit cards.


The prepaid cards only offered the consumer a way of using a card like debit card without a credit limit. These cards were and even today are not solving the problem of consumers with bad debt. A prepaid debit is not a good substitute for helping in building credit score. If you have a bad and stinky credit, then be wise and save a few hundred of dollars and use that amount to acquire secured credit cards. Using a credit card can be a good way of building your credit score. You save a few bucks to enable you place a deposit against a secured credit card and be able to get a card that helps in repairing your credit history.



Tuesday, November 19, 2013

Bad Credit Personal Loans… A Solution to Consumers with Bad Credit Score

As consumers continue to struggle with poor credit score, banks are realizing that they cannot do without them. Bad credit loans can provide solutions to those ailing with bad credit. During the recession period, which began back in 2007, many consumers found themselves locked out of credit facilities because they attained poor credit scores. Before the recession, banks were more than willing to lend borrowers, a phenomenon that resulted to over-borrowing.

Consumers took more loans than they actually needed and when the economic crunch hit them, they were placed in a difficult situation. The consumers began experiencing loan delinquencies and this was worsened by the fact that many had heavily borrowed and did not anticipate that they could suffer a blow from the economic crisis. Consumers suffered from mortgage foreclosures and bankruptcy cases.

Following the effects of bad credit many banks and lenders became strict and stopped lending uphazardly. Several years after the recession, banks are now repositioning their services to cater for the underserved group of consumers. These are consumers who are facing the troubles of poor credit score. If there is one aspect consumers should be keen about is their credit report.

Poor credit score can implicate on personal financial strength for a long period. Aspects like loan delinquencies and bankruptcy can reflect on the credit report for a long period possibly up to 7 years or more even after a person has recovered from financial problems. This is why people should ensure that they pay their bills in time and borrow what they can afford to pay.

Personal financial planning is very critical in restoring and maintaining a good reputation of the credit score. Banks are now offering assistance to people with bad credit score. If you are in bad credit, you can recall the daunting moments you might have gone through in the past trying to secure loans. However, consumers can today afford a smile as banks make a comeback in lending people with bad credit.

If you have a poor credit rating, it is now possible to obtain an unsecured or secured personal loan. However, since the lending institutions are cautious, they do not want to assume that everything is okay. This means that you will pay more interest rates for the loans. Bad credit loans are meant to serve people with poor or bad credit history.

To point out one more thing, although lenders may not pull your credit report prior to providing you with a loan, it is most probable that with the recent NSF charges, slow payment history, and default of personal loans they may be compelled to disapprove your application. There are two types of personal loan facilities for people with bad credit and they include secured and unsecured bad credit loans.

With a secured loan, you have to provide a security for the loan that is used as the collateral. This means that if you default the loan, your asset may be repossessed. The secured bad credit persona loans may offer relatively lower interest rates than the unsecured personal loans. Knowing well that you have a bad credit report that is crippling your ability to obtain loans, you need to be careful in the way you borrow, the amount you intent to borrow, and how you are going to repay the loan.

How to Refinance Credit Card Debt with Peer to Peer Loans

In 2010, the consumer debt in America was placed at $2.4 trillion while in 2011; it was 11.38 trillion showing a significant drop by 2.95 percent. Credit cards take the largest proportion of consumer debts in US and this means that consumers need to know how they can manage these debts. Credit cards are essential financial tools but when used inappropriately, or due to unavoidable circumstance, these cards can bring a stack of debts and financial pitfalls that may be challenging to cope with.

Before you declare bankruptcy, there are a number of things you need to work around to determine credit card debt solutions. The road to eliminating the debt may not be smooth but altogether there is hope. You can get out of your credit card within a few years and be financially freed of those debts. Credit card debts are known to pile up so fast and one thing is because the interest rates charged on balances increase with great magnitudes.

For example, if you miss a payment, the interest rates may increase from the average 16 percent to about 31 percent or so. It most cases, just one late payment can attract an increase of 15 percent APR on the balance. There are people servicing credit card balances with interest rates as high as 35 percent.

However, you do not have to go through these challenges as there are different ways you can refinance your debt. Refinancing is simply acquiring another loan that has low interest rates and doing away with the older high interest loan. This can be achieved through credit card debt transfer, home equity loans, home equity line of credit, personal loans and peer to peer loans.

The peer to peer loans have lower interest rates, meaning that they can be used to refinance your existing high-interest credit card debt. However, for you to obtain these loans, you should have a good credit score. If you have a credit score of more than 660 points, you can apply for a p2p loan that attracts a rate of between 6 and 10 percent APR. Considering that credit card debt may attract interest rates of more than 25 percent, it means that when you switch it to peer to peer loan, you can be able to clear your debt comfortably.

And as InCharge Debt Solutions’ director of education and creative programs Karen Carlson points out, peer to peer lending can offer a viable alternative for borrowers who have been turned away from banks and other conventional lending institutions. InCharge Debt Solutions is a nonprofit credit counseling agency. 

Peer to peer loans are obtained online and they are offered by companies such as Lending Club and Prosper. These two companies are the pioneers of the peer to peer lending and today, they have recorded an enormous growth. Recently Lending Club reached a record high of $1 billion in loan originations or the loans issued and this shows that the market is growing strong.

You can contact a peer to peer lending partner and get a low interest rate loan to pay off your debt. Most of the p2p loans carry a term of between 12 to 30 months. In addition, you can get a loan of up to $35,000 which can allow you to settle the debt easily. Usually, when you are refinancing, you are just changing or switching your loan to a low interest credit. It means that you acquire a new loan under different terms and conditions that allows you to settle it more comfortably than the previous one.

Peer to Peer Loans vs. Bank Loans…What Is The Difference?

The changing demands in financial lending are giving birth to new lending platforms like payday loans and peer to peer lending. Peer to peer lending is pretty a new concept that eliminates the use of banking institutions to offer credit facilities to consumers. People do not need to visit a bank to acquire loans as they get them from other people. On the other hand, investors do not need to invest in stocks or bonds but rather in the community.

Although peer to peer lending also known as person to person lending or simply p2p works similar to traditional lending, it does have its benefits. Like in banks, individuals are offered loans depending on their creditworthiness. Banks interest rates are higher because these institutions factor in overhead costs like buildings, staff and other facilities.

In peer to peer lending, the borrower and investor work directly online eliminating the need for physical infrastructure like buildings. With p2p lending, you save money as an investor or borrower. Banks need to cater for high administrative costs, infrastructure and marketing costs before they make profits. It is these costs of running banking operations that partly contribute to high interest rates than p2p lending.

You can get low interest rates of about 6.5 % on personal loans with the person to person lending. This substantiates the reason why people are turning to these kinds of loans to meet their financial needs. If you have credit card balance carrying high interest rates, you can refinance that by acquiring a p2p loan at a much lower interest rate.

Because of the risks involved in lending, peer to peer lenders like Lending Club and Prosper use eligibility standards to reduce loan defaults. Although the credit score for the borrowers does not have to be perfect, the underwriting is much stricter. The credit history of borrowers is checked including current delinquencies, bankruptcies, collection accounts, open tax liens and FICO score.

You may not be approved of these loans if your credit score is below 660 but you do not have to be discouraged as there are ways in which you can improve the score and be able to get approval for the loans. Peer to peer lenders like Lending Club and Prosper have focused on providing personal loans to borrowers with high credit score at rates, which are far much less than those offered by banks and credit card issuers.

The trend in peer to peer lending is increasing with Lending Club recording a 300% growth in loan originations in the last 12 months as at the beginning of 2013. Lending Club has reached a $1 billion mark of loans issued since its inception in 2007. The concept of peer to peer lending was initiated in 2006 with the pioneer entities being Prosper and Lending Club.

With the peer to peer loans, there is high credit quality where an average borrower has 700+ FICO score and income close to $70,000. The loans attract low interest risks with an estimated lending duration of 15 to 30 months. In addition, with this p2p lending, there is low volatility, diversification, and correlation. As more institutions invest in p2p lending, the market it is going to gain more scalability and accelerated growth. There is high cash flow with principal recovery starting within the second month.


Lending Club…Brad Lansing Comments on Peer to Peer Lending Growth

Peer to peer lending is growing rapidly with Lending Club, one of the pioneer businesses in the market having recorded a growth of more than 300 percent in the last 12 months as at the beginning of 2013. Loan originations at Lending Club have hit a $1 billion mark and the prospects for growth are high. According to Robert Warren, a business professor at University of North Dakota, he noted that person to person lending is one of the emerging financial lending alternatives that meet the needs of people who are underserved, cannot use the traditional sources or they are not interested in these conventional banks at all.

Banks have been known to be very rigid in offering their services. You will most likely get into a bank to negotiate for a loan application and approval but all in vain after spending your valuable time. However, with the online person to person lending, you are able to get suitable loan that can meet your financial challenges. One of the main questions, which critics in the financial market ask is; what is driving the rapid and steady growth of the peer to peer lending?

Brad Lensing, the chief marketing officer with Prosper lending marketplace, which is a San Francisco based lender, believes that there are two things which are leading to growth of peer to peer lending. One is that this lending is an alternative to traditional bank-based lending. When consumers do not solve their problems in the banks, they have to look elsewhere and this is where they get the services they have not received from banks and other traditional institutions.

Conventional banks are not easy to deal with and most consumers find it very discouraging to deal with banks when it comes to borrowing. This is why when presented with a less rigid lending platform; consumers are willing to borrow from person to person lending companies. On the side of lending, there is more access of a credit asset class in the personal loans something that has previously not been there.

People are able to obtain their loans online and the process is easy though with strict measures. The borrowers understand that they are not taking funds from an institution but the resources of individuals pulled together. The average loan at Prosper is placed at $8,500 and this has produced good returns to the investors since the inception of the company in 2006.

With the growing consumer asset class, it means that this credit sector is stretching its arms and within a few years, peer to peer lending has become a billion dollar industry.
Peer to peer lending is a unique financial platform, which offers both the investor and borrower an opportunity to benefit from the business model. People who need quick money can get loans of up to thousands of dollars.

These loans are unsecured and they are granted to consumers provided that you meet credit requirement and other risk check parameters. On the other hand, the investors who are seeking for ways to diversify their investment portfolio find it quite convenient to invest in peer to peer lending by putting up money to fund one or more loans. This is a unique setting of lending and you cannot get it anywhere like in banks.

Peer to Peer Lending: an Effective Alternative for Personal Loans

Peer to peer lending is done online and you will not find it in banks, and other brick and mortar lending institutions. It is a platform where the borrower borrows from the investor. Although initially the investors consisted of mainly individuals, today, institutions are now dipping their hands in the business. The lending business works by meeting the investor and the borrower in one platform. If you need money for your use such as home improvement, repair your car or refinance your credit card loan, you log on to the website like Prosper or Lending Club and fill in the application form.

If the approval succeeds, the money is deposited in your account within a few days. It will depend on the customer risk profile to determine the interest rate. Most of the rates range between 6 to 10 percent but for the high risk borrower, they may be as high as 35 percent. If you are seeking for a way you can make return on your investment, you can join the community and put in your money.

The companies are always on the lookout of investors to expand their resource base. As the popularity of these peer to peer lending increases, it is expected that more investors will join the platform. With as little as $25, you can be part of the funding team of the customers’ loans thus gaining a share of this rapidly growing lending business. According to Mitchel Harad, who is the Lending Club’s vice president of marketing and advertising, these loan facilities are not easy and don’t just go to anyone.

Since these are unsecured loans, the lending has strict regulations that help minimize the risks involved in lending. Consumers can get unsecured loans of up to $35,000 and this clientele group consists mainly of the good to excellent credit only. One thing with the p2p lending is that it may not be helpful for the bad credit consumer. However, the lending can be used to refinance credit card debts.

Close to 70 percent of Lending Club’s customers use the loans to pay off their high interest credit card debts. The interest and payments to investors at Lending Club is done on pro rata basis and the company takes one percent fee. In a period of 3 years, Lending Club has surpassed the $ billion mark in loans issued and the prospects for growth are high. There is also the possibility that the company is set for an IPO listing.

In a similar trend, as of October 2012, Prosper, another player in the p2p lending was sitting at $425 million loan originations since its inception and $15 million in loans originations in the month of October. If you need a loan to remodel your home, repair your car, refinance your high interest rate credit card balance, then the peer to peer loans may be a good option.

In the same way, if you want to invest and gain some good returns from your dollars, you can pull your resources together at Prosper and Lending Club p2p lending companies. As the consumers and investors gain confidence, the market is expected to even growth further.


Lending Club $1 Billion Dollar Mark...What Does It Mean for Peer to Peer Lending?

In 2012, Lending Club, one of the pioneers of peer to peer lending investment recorded a historical growth by reaching a $1 billion mark in loans issued. Since the start of the lending platform in 2007, there have been ups and downs but amidst these challenges, Lending Club has managed to grow strongly. Its growth had reached as high as 300 percent for the past 12 months as at the beginning of 2013. Such growth shows that there is plenty of cash available to lend and that investors are seeking for ways in which they can put in their cash for returns.

The model of investment put forward by Prosper and Lending Club seems to have succeeded and now it is only a matter of time before this lending business becomes a mainstream activity in the nation. The growth seems to suggest that this might only be the initial steps for a longer journey of the decentralization of the country’s financial sector. Similar models which began in the same way are such as PayPal and today, this online money transfer has changed the lives of many people in the world.

Peer to peer lending is expected to grow to be global financial solutions. In 2013, person to person loans by Lending Club are expected to hit a %1.7 billion. From the firm’s commendable growth of more than 90,000 loans totaling to more than $1 billion, it was a good indication that this form of lending is now a mature technical development that can be duplicated for nation’s growth.

Lending Club has managed to alleviate some of the stumbles and over excitements which were witnessed from the word go when the business was launched in 2007. Passing through an expensive and cost-consuming scrutiny process by the securities and exchange commission-SEC, the company has stood against all odds and has demonstrated that the business model can work.

According to the CEO and co-found of Lending Club, Renaud Laplanche, an influencing personality in the financial world today, the company is putting in place many proprietary factors that help judge an applicant’s creditworthiness before the loans can be granted and this is coupled with FICO score rating check. Lending Club could be signalling a paradigm shift on how the consumer perceives lending because it seems that the consumer is walking away from the financial institutions and wishing to borrow from fellow consumer who is an investor.

The Lending Club business may be signalling the same change in consumer behaviour which was witnessed when the once obscure YouTube was introduced in the internet. YouTube has changed the way in which online video is done and the same could happen to peer to peer lending with Lending Club.

The one problem facing peer to peer lending is that lenders do not have the resources and motivation to be able to draw borrowers with enticing offers like 0 percent intro rates and cashback perks as found in many credit cards. This is because the model of the business is still young and the consumer is being evaluated to determine the investment sustainability.

The business should be designed so that it does not appear as a last resort for consumers. As it aims reaching the $2 billion growth mark, Lending Club will ensure that it deals with the consumer intuitively to win his or her confidence.

Personal loans: the Growth of Peer to Peer Lending

It has not been simple, but peer-to-peer lending has grown beyond all odds to be one of the fastest expanding lending investment in the financial market today. As demonstrated by two key players in the business, Lending Club and Prosper, person-to-person lending also known as p2p lending has shown a remarkable growth since 2007. Despite going through a time consuming scrutiny by the Securities and Exchange Commission- SEC back in 2008, these two companies have clearly shown that there is great potential in the peer-to-peer lending.

But what has made peer to peer lending a popular investment in today’s highly volatile lending industry? The ability to earn double digit returns from lending is one reason why low interest rates investors are seeking for alternative lending in p2p investment. With returns ranging from 6 to 10 percent or even higher, investors are making good returns in their investment.


After skepticism on the way in which person-to-person lending could thrive amidst the risk associated with the lending, institutional investors are now joining the community and they are channeling in money in both Prosper and Lending Club, the two pioneers of p2p lending.


It is estimated that there is over $100 million of investment by institutions at Lending Club and the amount is expected to increase in 2013. This gives borrowers and investors more confidence in lending practices. Another reason which may have led to fast growth of these kinds of loan facilities is that consumers want to get out of credit card debt. Credit card debt continues to be a burden for many people and with the financial institutions being reluctant to offer credit facilities to people with bad credit, peer-to-peer lending remains a viable option for borrower.


One of the most common types of borrowing in both Prosper and Lending Club is debt consolidation. After experiencing high penalties in form of interest rates on credit card balances owing to late payments, cardholders are not finding it more convenient to consolidate their loans for a cheaper low interest loan in peer-to-peer lending.


Considering that credit card debt may attract interest rates to the highs of 35 percent APR, consumers can get a refinancing option with person-to-person lending. A borrower could get a 3 years peer-to-peer loan with an interest rate of about 10 percent and be able to pay off the high interest credit card loans within a relatively short period of time.


Banks are still tight in their lending and this has locked many borrowers out of borrowing from these institutions. Individuals and small businesses are finding it difficult to obtain loans from conventional banks and this gives then an option to go for the peer-to-peer lending. The credibility of person-to-person lending has grown substantially meaning that consumers and investors are gaining confidence with this form of lending.


This is further substantiated by the rapid growth that has seen the lending business hit a record high of $1 billion in 2012. If you are struggling with a credit card debt, you may consider p2p lending as a viable way of consolidating your debt.


Why Low Credit Score will Not Prevent Consumers from getting online Personal Loans

In the past, it has been difficult for consumers with bad credit or low credit score to obtain personal loans but this trend is changing as we notice more lending for these consumers. Both formal and non formal lending institutions are discovering that they cannot do without the bad credit consumer. Today, the online personal loans have become popular. These loans are offered by banks and other non-traditional lending institutions.

Good examples are cash advance, payday loans or next pay-check loans and peer to peer loans. Before the economic crisis which hit many parts of the globe in 2007, the lending industry was thriving well. Many consumers borrowed more than they could handle to repay back. Because of the low interest rates on loan facilities, people were willing to borrow more and the lenders had the capital to dish out to consumers.

However, when the credit crunch hit the economy, things turned around and consumers were not willing to borrow because they did not have the money to repay. Banks and financial lenders held with them a lot of money and they had to device ways to entice the consumers. What happened is that they made the interest rates very low and consumers were more attracted.

There was over borrowing and multiple borrowing and this resulted to aspects like loan delinquencies, foreclosures, bankruptcies, loan defaults and other financial challenges. Many consumers found themselves on the receiving end as their credit score dropped to record low levels. Some of the credit score effects they suffered during the pre-economic crisis and post economic crunch are still reflecting in their credit reports.

In the recent years, consumers who have remained locked out of borrowing by traditional financial institutions have seen some limelight. The lenders who had abandoned the consumers with bad credit are today making a comeback. In addition, there are trends of fast short term cash advances, which are designed by payday lenders.

Consumers still struggling with the bad credit report can gain access to short term loans like payday and peer to peer loans. Banks are offering salary advance loans or cash advance loans which are basically secured by a person’s salary. One of the things which are making consumers to develop more interest in the short term loans is because of the loan approval flexibility.

These loans are easy to obtain and considering that previously, one of the impediments consumers have faced is the complexity of acquiring a loan approval. Getting a loan has been very cumbersome and frustrating and this is why consumers are even willing to go for the high interest rate payday loans offered online. There are no credit credits for you to obtain these short term online loans like payday.

The loans are approved within a few hours or less than 24 hours and the funds are released to the consumer’s account in less than a day or two. Because consumers still in bad credit are unable to save for emergencies, this means that when pressing financial needs arise, they do not have money at their disposal to meet these needs. The only place they can turn to is the fast cash online personal loan facilities.