Payday loans are quite similar to personal loans. In fact those that have a steady income irrespective of their credit scores or credit reports usually qualify for the payday loans. You don’t even need a co signer for the loans. Those that have credit issues or don’t have credit issues take payday loans. It’s a loan taken to cover the expenses till the next paycheck or salary. If you need money for just a few weeks, you can apply for payday loans. These are short-term loan advances. You can qualify for payday loans up to $2500.
There are a number of specialized lenders both online and offline that offer the payday loans. All that you need to do is prove that you have a steady source of income and have residency in US. Your utility and credit card bills can prove the same.
You can apply online for payday wizard. All you need to do is fill the online form and get approval within minute. Within a few hours your bank account will be credited with the loan amount. You can use this payday loan amount for meeting your various cash flow issues. The loan interest rates typically range between 15-30% for a 2-week period. This actually translates to rates that range between 390-780% APR. This is quite a steep price to pay for taking these short-term loans.
Before taking the loan, the borrower will write a post-dated cheque for the entire amount plus the interest charges. On the date of maturity, the cheque is automatically debited from the borrower’s checking account. States differ on the legislation for payday loans. Check the legislation in your state before taking the payday loan.
Home equity loans
Home equity loans are easily available and are also known as second mortgages. With the mortgage loan rates extremely low, it makes sense to take home equity loans and pay off the mortgage loans that have a higher interest rate. Home equity loans are given against a collateral. A collateral is a property that you pledge with the guarantee that the lender has the right to take away the property in case the loan isn’t paid back.
The collateral for the home equity loans is the home itself. Usually when you take a mortgage loan, you would make a down payment. The down payment and the subsequent mortgage payments that you have made increase the equity in your home. Home equity loans can be used to pay back credit card loans, make renovations to home and can also be used for funding college tuition fees and other such expenses.
Home equity loans are usually paid back in a shorter time period than the first mortgage loans. It also makes sense to have the property appraised when taking home equity loans. If the value of your home has increased, then you would get a higher home equity loan. But in the meantime, if the value of your home has decreased, then it makes no sense to take a home equity loan. Home equity loans have a shorter time frame for payment as compared to first mortgages. While first mortgage loans can last as long as 30 years. Home equity loans last for usually 15 years or less.
Another option is the HELOC or the home equity line of credit. The HELOC operates just like the credit card. You may choose to utilize the entire credit or a portion of the credit.
The HELOC loans differ from a home equity loan. HELOC stands simply for “home equity line”. This means that you can receive a line of credit up to a particular line of set credit by lender. For example if you have a HELOC for $10,000 for 10 years. It means that you can borrow $10,000 or portions of it during a 10-year period. You would have to pay the interest and the amount back. You can draw on this line of credit by using a check, a credit card or in other ways.
Usually HELOC are used as second mortgages, but that’s changing. But you can also use it for your first mortgage. Since the balance for HELOC may change everyday, interest rates are levied on a daily basis rather than on a monthly basis. This means for a 6% HELOc loan, the rate will be calculated as .06 divided by 365.
The draw period for the HELOC is 5-10 years and the repayment period is 10-20 years during which the payment has to be made for the principal amount. One of the major disadvantages of the HELOC is its exposure to the interest rate risk. The interest rate on the HELOC is variable based on the index such as the prime rate. This means that the interest rate will change over time. While home equity loans have a fixed interest rate or ARMs that have a band. This means that the interest rate won’t fall below a certain rate or rise above a certain rate.