by admin | Consumer Proposal, Credit Counseling, Credit Repair
Let’s face it – money can be a devil at times and a savior at others. We all are told to acknowledge the importance of adequate money management throughout our lives to avoid the problems a lack of finance brings. That’s very crucial, without a doubt. However, some people might face a time they are in dire need of money, despite the sufficient money management they thought they were conducting.
There are plenty of loans available in the market to help you take care of your financial needs. However, almost all of them only allow borrowing a large amount and also have high-interest rates. What about when you need only a little amount of money? Well, that’s where payday loans come in.
A payday loan is basically a small loan that is short-term. You can acquire a payday loan to pay your urgent bills or whatever, and then you will be required to pay back the money. The name ‘payday’ is to suggest that you are supposed to return the money as soon as you get the paycheck on your next payday.
The payday loan industry has seen significant growth in recent years, but it has also received some serious criticism for various reasons. Nevertheless, payday loans are becoming more popular and they have their pros and cons. Let’s take a look at them.
Pros
Payday loans can be really useful.
When you need urgent financial assistance, you may find payday loans as the most suitable option. You can use the amount from payday loans to pay for due bills or any other expenditure that needs to be incurred urgently. You can return that small amount soon enough with your next salary. No matter how good you are at money management, some unforeseen circumstances in life may leave you with no other choice.
They are very easy to get.
The popularity of payday loans also has to do with their convenience. Almost anyone with a steady income, state ID, and a checking account can qualify for payday loans. You can expect to receive the amount within an hour or few hours of application and that can be considered as a huge plus. Some online companies also offer payday loans.
Even people with poor credit scores can get payday loans.
All the conventional loans require you to have a good credit score. That’s one thing that restricts people in times of an urgent need when their money management turns out not so effective. With payday loans, that’s not a problem as the lenders do not generally check the credit score of the applicant.
Cons
The terms of payday loans favor lenders.
Anyone who fails to comprehend the terms and agreement of payday loans can find themselves at a major disadvantage if something goes wrong and they are not able to pay back in time.
People often fail to meet the repayment terms.
The APR (Annual Percentage Rate) of interest on credit card loans is usually under 20 percent. In the case of payday loans, the interest averages to 300 percent when evaluated as APR. This means that payday loans are not a long-term solution and you must strictly avoid borrowing a bigger amount than what is absolutely needed.
It all comes down to personal preference. People who are confident of their money management and can easily meet the repayment terms can benefit from payday loans. Otherwise, other options should be explored.
by Ajay Oberoi | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair
We all know that payday loans are meant to help us cover all of the unexpected and sudden costs. While they are readily available loans, the main concern for many people is to get rid of this liability in a best possible manner. However, not many people are able to repay the loan. Besides, they end up fixing debt problems and creating more difficulties for themselves than the actual benefit sought out of it.
The basics of a payday loan
Not many of us fully realize the importance of returning such payday loans in time. That is because not all of us do the required planning for repayment of the loan before we actually take a loan. For you to plan a payday loan you must be aware of the basic terms of it as follows;
- A person can cancel a payday loan two days after signing an agreement
- You must return the complete amount of loan except for the borrowing cost
- A person is not required to pay any money unless the loan comes due
- A person may repay the loan before the due date without paying any excess charges to the lender
Once you know these above-mentioned basics (and others), only then you will be able to plan a loan in a way that would not leave you worse off in the end or creating more debt problems for you than proving to be any good. Hence, you must always deal with a payday loan with some sound strategy.
Dealing with a payday loan
There are several strategies to deal with a payday loan and get out of this vicious cycle, however, whichever strategy you choose to apply totally depends on your current financial situation. Let us have a look at some of the steps that might help you in getting rid of the payday loan.
- Don’t Panic – While payday loans are advertised to settle uncertain expenses, the majority of people use it for essentials like food or petrol. Therefore, stop panicking as you are not alone in this. Also, this would allow you to use other credit options wisely
- Stop borrowing more – Usually, people make the mistake of borrowing more loans in the hope of repaying the previous one. This cycle, however, needs to be stopped to avoid falling deep into the debts.
- Free up some funds in the budget – In order to repay a payday loan you must cut down on your expenses by reviewing your monthly budget. For this, you may need to cut expenses such as shopping, travel or dining etc
- Discuss with other lenders – No matter if you choose to consult a credit counselor or repay a payday loan on your own, another option is that you may seek the help of an alternative lender.
By following these tips, you can help yourself in repaying the payday loan in the quickest and most reasonable manner. That is, without taking more loans; however, planning ahead of time or before taking a loan is a factor that should not be ignored at any cost.
by Ajay Oberoi | Consumer Proposal, Credit Counseling, Credit Repair, Debt Management
While many people think that a credit score is just a buzz these days, the credit score, however, holds a significant value for many reasons.
A credit score tells a lot about a person to the most important individuals and institutions like;
- Insurance companies
- Banks
- Potential Employers
- Retailers and credit lenders
Hence, this simple score has the power to either make or break your credit reliability.
The power of a credit score
Many of us, if not all, must have had shared our credit scores with at least one of the above-mentioned parties. A credit score has the power to determine if you may or not get;
- Approved for mortgage
- A job offer
- Approved for a car loan
- Competitive rates of insurance
- A cell phone contract
- Line of credit, bank loan or a credit card
That’s right; a credit score tells interested people, how dependable you are in terms of finance. That is, a credit score is basically a true reflection of how properly you manage your finances and if you pay your bills in a timely manner or not. Therefore, these three digits from 300 to 900 may determine the options that you hold for the items, most valuable to your everyday life.
Good habits bring good credit score
The most important factor to make a good credit score is the repayment habits. Simply think where do you fall on the 1-9 scale when it comes to your debt repayments? The answer to this question will tell a lot about your current credit score.
It is important to review your credit score at least annually to know your financial standings. Moreover, do consider the power that your credit score has for the major events of life such as your child’s education, buying a car etc
Credit score comes with a number
No matter what kind of credit you have, the thing that matters is the number attached to that. This number, however, tells the people, who review your credit report, about your timely repayment structure. Mostly lenders rate an account by using number scale to know if you are paying to items as agreed to. This may include, repossession, collections, bad debt, payment made regularly via restructured plan of repayment and others.
How to calculate a credit score?
No matter what type of credit you have there is no exact formula to calculate it. There is no exact criteria that would determine accurately how much your score may increase or reduce, depending on your actions. However, with some general budgeting, money management, and debt repayment habits, you may help yourself to get a good credit score.
Following that, a credit score is important to build your trustworthiness and to open credit options for you in the future. A person with a bad credit score not only suffers from the current financial positioning but also closes the options for future as no lender would like to invest in doubtful circumstances. Therefore, follow the above-discussed steps to maintain a good credit score and to build more reliability amongst lenders.
by Ajay oberoi | Credit Counseling, Debt Management
The RESP is no doubt a great strategy to start saving for the future of your child. We all agree that the cost of secondary education is on a rise and there is a major need to start saving from today. In case you are not aware; there is free money available for the education of your child that you might not be taking advantage of yet.
Are you utilizing the benefits of RESP?
A registered education savings plan is an account that is registered with the Canadian government. This is however, available even if you contribute no funds into the account. Moreover, the federal government may also add to your account with education grants. Also, these savings increases tax-deferred until withdrawn.
The benefits of an RESP can be obtained easily as the average income families receive CESG sooner. That is almost 40% each year with the contribution on first $500. However, the maximum grant of CESG and ACESG (combined) is of $7,200 per child.
How to withdraw money from RESP?
A person can withdraw money from the RESP account only once the child is graduated from high school. The benefits of RESP can be received once the beneficiary is enrolled in a full-time or part-time educational program (post-secondary). Only then can money be withdrawn on his or her behalf and that is to pay off their studies expense using the RESP account.
How much amount can be withdrawn each year?
For this, it is recommended to consult a professional tax advisor. Also, while withdrawing the amount from the RESP account, it is important to always direct the financial institution as to how much funds should be withdrawn from the contributions (PSE). Similarly, how much funds should be withdrawn from the EAP – non-contribution fund.
How much amount can be contributed to RESP?
As much amount as you contribute, the government of Canada will give 20% of that amount. This amount will be up to a grant of $500 (maximum) per year for an individual child. That is, the beneficiary of the RESP may receive the maximum of $500 grant per annum and for that, a person would need to contribute up to $2,500 each year, to your RESP.
What happens to the unused money?
In the case, the money remains unused or the RESP closes or expires, the money from the Canada Learning Bond will eventually return to the Canadian government. Moreover, all the other money of the account will then return to the original depositors of the money.
Remember that an RESP account remains open for up to 36 years, therefore, in the case your child does not seek further studies after the high school, there will still be time for you to take advantage of this money as there will still be a time period for which money will be available in the account.
In bottom line
While this account might not be as user-friendly as any other bank accounts, a person should always take advantage of it as there are various plans available to save your child’s further education.
