Over the last couple of decades payday loans have gained prominence because of the fact that so many consumers are using them to get fast cash in a pinch and also, unfortunately, because of the fact that, when all is said and done, it’s usually the consumer gets severely pinched.

Now along comes away for lenders to take advantage of American consumers even more; title loans.

Every year in the United States approximately 2.5 million people generate nearly $3 billion in revenues for title loan lenders. That’s according to a new report by The Pew Charitable Trusts, who say that, in comparison to the $9 billion generated every year by payday loans, title loans might seem small in comparison. The problem is that, as far as consumers who use them are concerned, the potential they have to damage their finances is much worse.

The reason is the way that they work. In most cases a borrower who is in desperate need of cash will use their car as a collateral to get a short-term loan in exchange for their title. These loans are typically 30 days and depend on a number of things, most importantly the value of the car. This value is determined by the lender, usually when the consumer is on-site at their store and, on average, are $1000. In most cases they are paid back either in installments or one lump sum called a “balloon payment”.

The way that title loan lenders make their money is by charging all sorts of extra fees (much the same as payday lenders). For example, most title loans have an upfront fee of $250. Also, if the person who borrowed the money can’t pay it back within 30 days, they either have to give their car to the title loan lender or pay another $250 in order to extend their loan.

What that does, in many cases, is set up a vicious cycle where the borrower ends up paying an awful lot more for their loan than they thought they would. In fact, it averages $1200 in extra fees, turning a $1000 loan into $2200 instead.

One of the bigger risks of title loans is also that they are easy to qualify for and, at $1000 or more, are typically 50% more than the borrower’s monthly income. In other words, they’re extremely difficult to pay back.

Many title loan lenders have started outfitting cars with GPS tracking devices as well, which gives them the ability to not only locate the vehicle if the owner misses a payment, but also to remotely lock the car so that they can’t drive it. Also, after only one missed payment a title loan lender could technically repossess a person’s car but, in most cases, they don’t because it’s much more lucrative to simply advance the borrower’s loan.

As with payday loans, title loans have their (very high) share of predatory lenders who take advantage of consumers any way that they can. In many cases these borrowers end up paying hundreds, if not thousands, of dollars more than they thought they would.

One bit of good news is that, just like payday loans, the government is stepping in to change the laws about title loans. For example, in New York state, payday loans have been capped at 25% and, because of that, are almost completely extinct now. It’s hoped that the same thing will soon happen to title loans.

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How to Avoid Skyrocketing Student Debt

by Justin Weinger on April 14, 2015

A lot of students today want to know how to avoid skyrocketing student debt, but not many of them find an answer. If you are one of those students, you should be aware that there are ways to stop this debt from accumulating. If you follow the right steps, you can avoid a financial breakdown. Student debt continues to skyrocket as the number of people who are going to college has increased and tuition is rising more quickly than inflation. More than forty million people in the United States have a student loan that exceeds an average unpaid balance of $25,000.

The most important things to do for avoiding negative consequences can be to plan carefully, save in advance, look for scholarships and grants, or work part-time during the college years. Another thing students can do is use the accounts of their parents for placing their college money. Financial advisers are saying that many people don’t save for college and this is one of the most important issues. The student debt in the United States has exceeded one trillion dollars in June 2014. Lenders are trying to keep up with the requirements of students and with their payments.

Many parents think that it is their responsibility to pay the education of their children, but experts say students should contribute as well, by working and saving money. Working part-time doesn’t affect studies, according to experts. In order to save enough money for their children, parents should begin to save early. It is true that couples who don’t have a high income may not be able to do this easily, but it is possible to do this properly if you start early.

The account holder’s name must belong to one of the parents. In this way, it can be easy to transfer the funds to another child when this is required. Parents can cash out the funds themselves, with the condition to pay the involved fees and penalties. There is another reason to choose the name of the parents: the calculated percentage of student assets for aid eligibility is higher than the one of parents. The amount of assets of a student who wants financial aid should be as small as possible.

Parents should do some research about all the costs, grants, tuition and work study-funds that are involved for each college. Private colleges should be considered too, because many times their costs are lower than the costs of a state school. Some colleges may be involved in federal aid programs. You could use the calculators that are available online for these schools and get an estimate of their costs. Parents can look for grants and aid from schools and the government.

When you fill an application form, make sure you don’t mention assets that don’t have to be included, such as the life insurance value in cash, small family businesses, or the value of a retirement plan. Experts say that everybody must apply for financial aid, regardless of their income. Many parents make the mistake of not applying. Try every option that you have at your disposal, as this could be very helpful to avoid any debt increase for a student.

Read more on this subject at http://easyscholarshipsnow.com which offers lists of scholarships by category like weird scholarships or scholarship sweepstakes.

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Don’t Forget to Include these 5 Items in your Budget

by Justin Weinger on April 12, 2015

So you’ve finally put together a budget. Excellent, that’s a great step forward in creating a stable financial life and, one day, becoming financially independent.

Now, while you’re busy patting yourself on the back, you may want to make sure that you’ve included a number of items or categories into your budget that many consumers forget.

The fact is, a lot of people base their budget only on the monthly bills they pay and, sometimes, throw in the cost of groceries or couple of other expenses. It’s great that you created a budget, no doubt, but if you forget to include these next 5 items you’ll still find yourself short on money come month’s end. Enjoy.

Item #1: Daily, habitual spending on small items

Unless you work from home and have everything you need at hand, you probably spend more money than you think every day on snacks, coffee, newspapers, magazines, soda and other things. This money, even though it’s only a few dollars a day, can end up being quite a bit more than you think at the end of the month, and it definitely needs to be included into your budget. For example, even if you only spend $5 a day (and many people spend a good bit more than that) that’s $100 that you’ve spent by the end of every month, and $1200 a year.

Item #2: Going to Restaurants

Food is, obviously, an essential item, and groceries should definitely be on your budget. Most people forget to include eating out at restaurants however and, if you do this on a regular basis, it absolutely should be included into your budget. Even lunch for one person is $10-$15 at a decent restaurant and, if you do that twice a week, that’s $120 a month.

Item #3: Entertainment

These days a night out at the movies for two people can easily cost $25. A couple who drink two mixed drinks each at a bar can easily spend $40. Including an entertainment category in your budget, especially if you’re young and like going out, is definitely a necessity if you want to make sure that you stick to your budget every month. It will also help you keep track, frankly, of overspending in this category.

Item #4: Big annual payments

Paying bills monthly is easy to remember, but those bills that you only have to pay once a year, like home taxes, car registration, car taxes and so forth, can really take a chunk out of your budget when the time comes to pay them, especially if you haven’t included them into your budget to begin with.

Item #5: Clothing

No matter where you shop for clothing, whether it’s a high-end department store or the local thrift shop, adding in a clothing expense to your budget is a good idea. If you spend a lot of money on new clothes for work, or simply because you like having new clothes, this is definitely vital.

As we said, it’s awesome that you’ve put together a budget and we wish you a lot of luck sticking to it. Just make sure that the 5 items above, and any other categories that you wish to add, are included in your budget so that you know exactly what money is coming in and going out every month.

That information will go a long way towards helping you become financially independent.

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Top Tips for Using Credit Cards Wisely

by Justin Weinger on April 6, 2015

Many consumers curse the day that they got their first credit card because they quickly found themselves in debt up to their eyeballs.

The fact is however that it’s not the credit card that gets a person in trouble, it’s their habits and misconceptions about using credit that’s the problem. Indeed, using credit cards the correct way can be an excellent way to build credit and, when the time comes, get much better rates on things like car loans, home mortgages and so forth.

Below are some excellent tips for using credit cards wisely. Read them, learn from them and, as always, enjoy.

Tip #1: Save all of your Receipts

Unfortunately there are many scammers out there who will add money to your bill after you’ve paid and left their establishment. Many times these changes are extremely small and, if you don’t save your receipts and compare them to your statements every month, there’s a good chance that you’ll miss them.

Tip #2: Remember that your credit card is not free money

Simply put, credit is debt. If you use your credit card you immediately have debt that needs to be paid off. If you have $15,000 in credit and you use all of it, you will be $15,000 in debt and facing big financial problems.

Tip #3: Don’t just use any credit card

Credit cards come with annual fees, interest rates and other fees that can really add up. Your best bet is to shop around for the best deal on a credit card before you decide to get it and start using it. The better your credit is to begin with, the more options you will have, and vice versa.

Tip #4: Pay your entire balance at the end of every month

Two things happen when you use a credit card; you gain debt and also affect your credit score. The more credit that you use at any given time, the lower your debt to credit ratio is, something that’s not good. To avoid going into deeper debt and damaging your credit score, pay off as much as you can every single month and, if possible, your entire credit card bill every month.

Tip #5: Avoid cash advances like the plague

One of the most expensive ways to borrow money is to take a cash advance on your credit card because the interest rates are incredibly high. A much better choice would be to get a credit line from your bank or a personal loan.

Tip #6: Scan and print out both sides of every credit card you own

Once you do, put those printed copies somewhere extremely safe so that, if your credit cards are ever stolen, you can use the information and phone numbers to call your credit card companies and make sure that your credit, and your financial life, aren’t ruined.

Tip #7: Stay away from store credit cards

The fact is, credit cards from most department stores are some of the most expensive out there. Yes, you might get an excellent promotion by applying for one when you’re at the store but, unless you pay that credit card bill off in full every month, you’re going to lose any money that you got in discounts because of the extra money that you’ll be paying in interest.

 

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