What is a Debt Trap and how to Prevent it?

You will fall into debt if you do not pay your bills on time and you are charged additional reminder fees and default interest. The longer you postpone billing payments, the deeper you fall into debt. The most common reasons for over-indebtedness include:

  • 26% unemployment
  • 9% illness
  • 9% divorce
  • 11% consumer purchases
  • 9% failed self-employment

Debt trap with loans, credit card, car leasing

Often people get caught in a spiral of debt due to unfavorable loans or credit card conditions. Many borrowers do not read the terms or do not take the time to understand them. In the event of an unexpected financial breakdown, it ultimately turns out that the loan agreement is not as flexible as expected. For this reason, it is always important to agree on the best loan agreement terms possible. If you fail to consider these two points when choosing a loan, sooner or later you will regret it.

Consider cheaper options

If you pay too much for your loan, it is recommender to refinance. When choosing the right credit card, consider the type of credit card, interest rates, and fees. You can also fall into a debt trap with car financing. Above all, you should make sure that you do not choose long terms for the car loan. Terms of several years result in high interest payments even if you no longer use the car.

Debt trap – insurance

We often take out an insurance policy once and then don’t touch it again. If an insured event occurs, we suddenly find out that our insurance does not cover the damage or that we have to pay a high deductible. This is not an uncommon scenario, so be well informed about the insurance conditions. Weigh up whether your insurance makes sense and under what conditions you can terminate it. If you want to optimize your expenses, insurance is definitely an area that you should look at separately. You may be able to negotiate better insurance conditions with another provider and thus lower the price.

Debt trap – house

Land tax, household expenses, and mortgages represent a significant amount of money. Gas, electricity, and water are expenses that are billed monthly or quarterly. It is important that you always have an overview of these costs. You should be aware about your consumption from energy suppliers and other costs in order to be able to plan any additional payments. This will protect you from unexpected expenses and give you time to save money for them.

Cell phone debt trap and entertainment

Young people in particular tend to spend too much money on cell phones and entertainment. You should definitely consider whether you actually need the latest mobile phone or the most powerful iPhone. Making calls can be just as expensive. The comparison of products and tariffs is crucial here. Check whether the expenses for entertaining the children can be reduced. Are subscriptions like Amazon Prime or Netflix really necessary?

How can the debt trap be avoided?

  • Make a budget. Even if this task involves a certain amount of effort, it will help you to keep a better overview of your income and expenses. It is important to update this budget regularly. Household book apps are particularly suitable for this. With the help of these applications, you can document your income and expenses on your mobile phone at any time. So you always have an overview of your finances.
  • Build up financial reserves. Nothing is more uncomfortable than when you have an unexpected expense and you have to overdraw your checking account. Overdraft facilities are one of the most expensive loans and should only be used at short notice in urgent cases. If you put some money aside each month and possibly even invest it, you can save the interest on your overdraft facility.
  • Increase your earnings. Take up a part-time job or increase the scope of your work with your current employer. If you do an excellent job, you can even request a raise, which will increase your earnings.
  • Pay your bills on time. You should always strive to pay all bills on time. If you do not do this, you may be charged additional reminder fees and default interest. This increases your overall costs. If you notice that you cannot pay the invoice on time, get in touch with the creditor, and extend the payment term or ask for a deferral. This is definitely a better strategy than constantly putting off the unpaid bill.
  • Never pay off your old loan by taking on new loan. Many people believe that when you replace an old liability with a new one, it improves their financial situation. Not correct. Debt rescheduling is only suitable if you can borrow the new capital on favorable terms. The total cost of rescheduling should be calculated separately.
  • Cancel subscriptions. Cancel subscriptions that you are not using. Often you get fitness or other memberships that you hardly use. Take a look at your bank statement and cancel subscriptions that do not bring you any added value.
  • Make a shopping list. Before you go to your preferred supermarket, you should always make a shopping list. The reason for this is that you are influenced by advertising in the supermarket and ultimately buy more than you intended. Spontaneous purchases can increase your bill by up to 20%. If you have a shopping list with you, you can orientate yourself on the products that you actually need.
  • Avoid expensive consumer goods. Of course, you should treat yourself to something from time to time. Regular shopping in luxury stores should be avoided if you want to optimize your budget. Buyers should endeavor not to borrow money to purchase consumer goods.

Admit debt and weigh options

Sooner or later you will have to deal with your debts. This is important in order to evaluate the situation and to be able to take improvement measures. First of all, try to weight in payments and expenses. Talk to your credit company and ask them to postpone your payments. This can give you some time to save money without going into debt. If you have lost track of your debts, it is advisable to get in touch with the creditors to find out about your outstanding debts. Anyone who has financial problems and is in debt should seek debt advice in their area. This helps the debtors to take measures to avoid falling further into the debt trap. If you receive mail from debt collection companies, you should definitely have it checked by the debt counselor and not sign any documents. Always keep track of your finances, save money, invest your capital and plan ahead. To find out more, follow this site.

Student Financial Goals For 2021

Being a student is perhaps one of the most financially pressing times in your life, but that doesn’t mean that things have to be all doom and gloom. Before beginning your educational journey, it is important to take some time to plan out your finances and ensure that once your time at university is over, you are not left in so much debt that your newfound career is simply a way of paying this back. If you want to learn how to get a lower interest rate on student loans, you should check out Purefy and consider all your options carefully.

In this article, we are going to share some handy tips for staying on top of your finances during your time as a student and how using tools such as can be of huge benefit.

Stay On Top Of  Your Credit Score

We have all been guilty, at one time or another of letting our credit score get away from us, but this can prove very detrimental to your finances. By staying aware of your credit score and everything on your credit report, no matter how bad it may be, you can work towards maintaining or improving it. If you bury your head in the sand when it comes to your credit rating, you will never be able to better it.

There are plenty of useful tools and even mobile phone apps for the student of 2021 meaning that monitoring your credit score has never been easier. All it takes is checking your report once a month and implementing any changes, you will soon see your score skyrocket and this will put you in an advantageous place once your studies are over.

Set A Monthly Budget

Most people are familiar with the image of the student eating noodles out of a tub with plastic cutlery because they don’t have enough money for a decent meal-but this certainly does not have to be the case. The problem is that a lot of students, who are just starting out in the adult world, find it difficult to manage their money and make it last. The addition of a simple budget can put you in full control of your money and give you the peace of mind that you will have enough to last each month.

Think about what things are essential for each month-food, utility bills, clothing, etc and make these a priority. It is wise to pay for these at the start of each month so that you know they are dealt with. Whatever money you have left can then be split and a certain amount allocated for each week to be spent on ‘luxuries’ such as nights out, cinema trips, etc.

Keep Track Of Your Spending

One great way of staying in a superior financial position is to keep track of EVERYTHING that you are spending, and this couldn’t be more important than in 2021. With easy access to internet shopping and the use of the contactless card, it is easier than ever to overspend without realising. This is why keeping a record of every penny you spend can help you to stay out of debt and in control.

You can use a system as simple as a notebook and pen, and write down, to the penny, what you have spent each day. This is not only great for avoiding overspending but is also excellent in helping you to assess what unnecessary items you are purchasing.

Save For A Rainy Day

In the case of most students, there isn’t a lot of room for huge savings but as the saying goes ‘every little bit of help.’ Putting away even the smallest amount of money each month can prove extremely useful if you ever find yourself in an emergency.

There are two great options for saving, you could put away a set amount each month and tie this in with your monthly budget, or you might simply put away your spare change. It may not sound a lot but over time, pocket change can build up into a substantial sum. The most important thing is to be disciplined and keep your savings somewhere that you do not have easy access to either a bank account for which you do not have the card for or a locked safe for which you do not have the key or code. Consolidate Debts

It’s not uncommon for students to find themselves in debt, besides student loans there might be credit cards, car finance, and payday loans. If you are struggling with a large number of outgoings each month, why not consider getting a loan to consolidate all your debts into one? You can find guaranteed loans, which are a great option for students, especially those with bad credit, over on the NowLoan website. This super handy tool can assist you in comparing loans to find the best option for your personal needs, putting you in a much healthier financial position, not to mention helping boost your credit rating.

Set A Long Term Financial Goal

At this moment in time, you are likely focusing on your education and enjoying your life, however, the future will come around sooner than you think. Coupled in with saving, a long term financial goal can give you a clearer idea of what you are aiming for. It doesn’t need to be over-ambitious like owning your own home with no mortgage (although there’s no reason not to reach for the stars) but it could be something as simple as “I will boost my credit score by 100 points in the next 12 months.) This will give you something to aim for and will motivate you to stick to your more short term goals.


If you are becoming a student in 2021, it is so important to enter into this phase of your life with a healthy attitude towards your finances. There are plenty of financial goals that you can set as a way of ensuring you keep on top of your cash-flow and stay out of debt. Whilst these short term goals such as the use of Nowloan to help with making an informed decision on the right loan or you or saving can be very beneficial, it is also important to think about your long term goals as well.

How To Exchange Cryptocurrency For USD

So, you became part of this whole cryptocurrency adventure in order to earn as much as possible and now that you’ve got some money, you would like to be able to cash in? Why not?! There are ways. However, as much as we want cryptocurrencies to prevail over fiat currencies, we’re still far from that, as gaining legitimacy is still not approved unlike US dollars or euros, which the government accepted as a legitimate means of payment. In order to take a piece of their paper profit, many people are interested in how to turn crypto money into fiat money. Regardless of the fact that many companies today accept cryptocurrencies as a regular payment method, that’s not enough for people and they don’t want thousands or millions to remain trapped in the form of digital money.

This guide will explain how you can convert your coins to USD. In search of ideas, wander into the following lines and we’ll try to meet your expectations and help you get closer to your profit.

1. Cryptocurrency exchange

This is one of the most popular and easiest ways to convert to USD. In addition to being a fast way, a big advantage is reflected in the fact that they can be easily linked to a bank account or Paypal account and thus enable easy withdrawal of USD.

The conversion method is quite simple. The process begins by transferring a certain amount of coins to the wallet of the selected stock exchange first. Once it’s in the form of a banknote of the selected stock exchange, we go to the Buy / Sell option where we can sell our bitcoin or some other cryptocurrency in USD. The dollars you earn will be sent to your bank account or Paypal.

What users point out as the disadvantage of this method is the verification of identity, which includes leaving personal data. Cryptocurrency traders are generally against it because they want to remain anonymous.

2. Peer to peer method

Thus, identity verification can lead to the exclusion of a large number of users who don’t agree with the sharing of personal data. However, these people have come up with some more ways to cash in on their digital earnings.

The peer to peer service doesn’t involve an exchange process but allows one user to sell their coins directly to another. Until the transaction is confirmed, the money remains deposited in one place, for example on LocalBitcoins. LocalBitcoins offers many more ways to convert bitcoin to USD.

Trading is most often done by cash mail, cash deposit, or Western Union. The good news is that you don’t have to sell them only for USD, you can also sell them for a code or a gift card. But also for selling a smaller currency for a larger currency, for example some altcoin for bitcoin.

3. Converting via Bitcoin ATM

As the name suggests, it’s assumed that you’re a bitcoin user so that you can use this method, as only with the help of these coins can you withdraw cash from an ATM. Another condition that determines whether you will be able to exchange virtual coins for USD in this way is that you must have a bitcoin ATM in the place where you live – the easiest way to get this information is online.

First, go to the ATM and press the option to start the process. The next step is to enter the amount you want to sell. When selling a large amount, the ATM may ask for an identity check. The ATM will then give you the address to which you need to send and to which the transaction should be performed. After confirmation, the ‘cash’ option should be marked.

This type of transfer is not ideal. Sometimes the process will be very slow and the fees are very high. In case of slow loading and long waiting, you will receive a code with the help of which you can come back later and check if the transfer has been completed.

4. Loan

This method can be compared to taking a loan from a bank. The loan doesn’t involve long-term conversion and storage of dollars, but only for a short time, after which the borrowed funds are returned.

You guarantee and secure your loan with your cryptocurrency by getting a smart or executive contract, where it’s kept behind computer code. You get USD to your bank account. After the expiration of the agreed term, you return the borrowed money and get back the one you guaranteed.

Since capital gains and cryptocurrency sales are taxed, this is an ideal way to avoid paying taxes and get what you want for a while.

Another positive side is that during the duration of the loan, the value of your cryptocurrency may increase. With the current purchase, that cannot be achieved.

5. Debit cards

Just as there are regular debit cards, so we can find some alternatives in the cryptocurrency market as well. This is another perfect way to convert coins to USD.

As in the case when we handle regular cards, all the funds we earn are deposited and remain on it. Only here are bitcoins and other currencies in the role of funds, instead of dollars. The moment we want to make a purchase, an ATM or store will automatically convert the currency into USD.

This method also requires ID card verification but is convenient, which is why there are a lot of users.

6. Friends, acquaintances, and family

This method is one of the simplest. It’s similar to the peer to peer way, only you don’t have to deal with strangers, but with people you know. And who will be more willing to help you than they are?

You simply don’t have to look for a buyer through a service such as LocalBitcoin, but you can sell it to an interested friend, relative, or acquaintance in exchange for a dollar.

With this process, you will minimize all possible complications and you can finally enjoy your earned money without worries. However, bitcoinpro advises you not to spend beyond your means and more than you can earn. So don’t relax too much and get back into the game quickly.

The methods mentioned above are some of the most reliable ways you can convert. If you thought that was impossible, we tried to make you happy and reassured, so feel free to try any of them at your earliest convenience!

Calculate Your Debt-To-Income Ratio

Your debt-to-income (DTI) ratio is one of many things that lenders will consider when you’re applying for your home equity loan. It is a personal finance measure that takes all your monthly debt payments and divides them by your gross monthly income (the amount of money you have earned before your taxes and other deductions are taken out). This calculation represents a key indicator of a person’s overall financial health. It is used to compare what you earned to the total debt amount you’ll have after being approved. More specifically, your debt-to-income ratio will help a lender to estimate the amount that you’ll be able to pay on loan after making your existing payments. Applicants that have kept their debt to a minimum relative to the earnings will more likely get the loan they applied for, along with many other favorable terms. In case you’re not one of them, some lenders, like Skydan Equity Partners, can help you reduce your DTI ratio by using a part of your home equity loan to pay off the existing debts.

Which factors make up a DTI ratio?


There are two components that are mortgage lenders using for a debt to income ratio, and here is a closer look at how both of them are calculated:

  • Front-end ratio – This one is also known as the housing ratio. It shows the percentage of your monthly gross income that goes toward your housing expenses, including your property taxes, mortgage monthly payment, homeowners association, and homeowners’ insurance.
  • Back-end ratio – This ratio shows the portion of your income needed to cover all of the monthly debt obligations that you have, as well as your housing expenses and mortgage payments. Including your credit card bills, child support, student loans, car loans, or any other revolving debt on your credit report.

What is your Debt-to-Income ratio, and what does it tell you?


As you start to shop for a home equity loan, it’s essential to know your DTI ratio. Here’s how you can do that – add up the total post-approval debt and make sure to include your:

  • Credit card debt
  • Home payments
  • Car loans
  • Student loans
  • The estimated monthly payment on your potential home equity loan

Divide your total sum into monthly pretax income, and you will get your DTI ratio. The result will yield a decimal, so you’ll have to multiply it by 100 to achieve your debt-to-income ratio percentage.

A low DTI ratio represents the right balance between your income and debt. If your DTI ratio is, for example, 15%, that means that 15% of your monthly gross income will go to the debt payment every month.

Conversely, a higher ratio usually signals that a person has too much debt for the income that is earned each month.

Borrowers that have low DTI ratios are generally managing their monthly debt payments more efficiently. As a result of that, financial credit providers and banks want to see lower debt-to-income rates before issuing a loan to the potential borrower. This preference for lower ratios makes sense because lenders need to make sure that the borrower is not overextended, which means that he has too many debt payments relative to the income.

Assessing the numbers


As evidence from studies of mortgage loans suggests, borrowers with a higher debt-to-income ratio are more likely to run into problems trying to make their monthly payments. As a general guideline, the highest DTI ratio that a borrower is allowed to have to get still qualified for a mortgage is 43 percent. They set this minimum to be sure that you won’t accidentally overextend yourself, as you pursue your lifestyle and financial goals. The ideal DTI ratio that lenders prefer is 36 percent, with no more than 28% of that debt going toward servicing a rent payment or a mortgage.

In case your ratio exceeds this 43 %, you should consider reducing it before applying for a home equity loan. You can start by paying down your existing debt like credit cards in order to reduce your total debt and drive down your debt to income. After that, you will be able to take advantage of all the benefits that a home equity loan offers to you while maintaining healthy financial habits.

However, there are some exceptions to this 43% rule. For instance, if you are lending money from a small creditor, they must consider your debt-to-income ratio but are allowed to offer you a Qualified Mortgage with a debt-to-income ratio higher than 43%. A lender is considered to be a small creditor if they had under 2 billion dollars in assets in the last year and they made no more than 500 mortgages in the previous year. Also, large landers may still land you the money for your mortgage if your DTI ratio exceeds 43%, even if this prevents it from being a Qualified Mortgage. This means that they will have to make an extra effort following the CFPB rules to determine if you have the ability to repay the loan.

The maximum debt-to-income ratio varies from lender to lender. Anyway, the lower the ratio, the better the chances you have to be approved, or at least considered for the credit application.

Debt-to-income ratio and credit score


Your DTI ratio doesn’t directly affect your credit score because credit agencies don’t have the information on how much money you earn to be able to make the calculation. They do, however, look at your credit utilization ratio or debt-to-credit ratio. This ratio compares all your credit card account balances to the total amount of credit (the sum of all the credit limits on your cards) you have available. The more you owe relative to your credit limit, the lower your credit score will be. You can fix a poor debt-to-credit ratio by creating a budget, paying off your debts, and making a smart saving plan.

How to lower the DTI ratio?


There are two ways to lower the DTI ratio:

  • Reduce your monthly recurring debt
  • Increase your gross monthly income

You can also use the combination of the two. Reducing debt is easier said than done. Your best chance is to make an effort to avoid going further into debt by considering needs versus wants. Needs are those things that are necessary to survive, such as food, shelter, clothing, healthcare, and transportation. Wants are things you wish to have but are not necessary for your survival. Once your needs have been met each month, you might have a portion of income to spend on wants. It makes financial sense not to spend too much money on the things you don’t need. You could also create a budget that includes paying the debt you already have. You could also try to increase your income by:

  • Finding a second job or work as a freelancer in spare time.
  • Work more hours or overtime at your main job.
  • Ask for a pay increase.
  • Completing coursework or licensing that will increase your skills, and obtain a new job with a higher salary.

Buying Your First House – 5 Tips To Know

Wow, it seems like it was only yesterday when you were packing your things from the room where you spent your childhood, and now…here you are thinking of planting your roots somewhere and planning to buy your first home. Congratulations! This is a big milestone, so allow us to help you out.

In this article, we are going to talk about the different things that you need to know before buying your first house. Let’s get started!

1. Looking for Your Ideal Home Starts With Your Personal Goals

It’s always best to think long term when buying a house, especially when deciding on its location. What are your goals? Do you want it to be near a business district? Is it within a school district? How about a hospital? Is it in a place where you can imagine your family thriving in and you, growing old in? And most of all, is it safe?

Once you’ve narrowed down the neighborhoods, it’s time to start hunting for the actual property. There are three ways to do this: you can either search for it online on your own, hire a real estate agent, or both! We prefer doing both since it increases your chances of finding the most ideal place for you.

Don’t forget your personal wishlist as well. We all have those non-compromisable items such as a room that can serve as a home office that gets a lot of natural lighting, a swimming pool, a basement that can serve as a Dungeons & Dragons man cave…everyone has one. What’s yours?

2. You Need to Settle All Your Finances

Buying a house is not a simple purchase and applying for a mortgage is quite a complicated process. According to Loanstart, if you’re pretty strapped on expenses, then you consider getting personal loans with fair credit. A fair credit score is anything between 620 and 680. If your credit score is in this range, it may be caused by your short credit history. Among possible reasons can also be your late payments of the bills in the past. Also, having a lot of debt can drive down your score.

You should also take your savings into consideration. What most budding homeowners fail to realize is the fact that owning a home can be much more expensive than renting due to the upkeep costs. Hence, in order to avoid debt, it’s always a good idea to set-up an emergency fund equivalent to at least six months of your salary. To protect yourself from yourself, don’t store your down payment money in your ordinary bank account. Try an account with separate savings or a money market account instead.

And finally, you should settle (and actually STICK to) a price range that you can realistically pay-off. Try to compute a rough estimation of how much your down payment will cost. In this way, you can already start saving up for it during your house search. While we’re already in the subject, let’s move on to the exciting part!

3. More “Affordable” Properties Sometimes Come With a Heavier Price

There are a lot of things that you should consider a property other than its selling price. Here are some red flags that you should avoid:

  • Apparent damage to the structure of the property. Do the exteriors and foundations have any cracks? Are they tilted to a certain angle? These small details, when overlooked, can sometimes lead to the demolition and rebuilding of the entire property.
  • Water damage, such as mold formations, is a serious health and safety risk. Black molds create air impurities that are terribly unhealthy to inhale and at the same time, they can also weaken a property’s foundations.
  • Beware of noise and smell “masks”. Noise and weird smells can significantly affect your quality of life, so if every room has a burning candle and some music playing, then chances are your seller or agent is probably masking something out.

In the end, you just have to be very vigilant. It’s you and your family’s life we’re talking about here and so much money potentially at stake. Anyway, once you’ve found the house, you know what’s next!

4. The Entire House Buying Process is a Long And Tedious Affair

Expect to have long nights ahead, from determining the right type of mortgage and loan up to the closing process. Just make sure to perform all the necessary research and don’t be afraid to ask your agent or your lawyer if there are any terms that you can’t quite grasp before you sign anything.

There are several reasons why it’s extremely important that when you’re buying a house that you hire an agent. Since a buyers agent is looking out for a buyers best interest, they’ll help ensure the buyer gets the best deal possible. An agent will also provide expert help to avoid potential problems such as border disputes, tax issues, etc.

A lawyer will help you in preparing purchase documents and will support you through different laws related to real estate. So, you can avoid legal problems concerning your purchase.

5. Consider The Future of Everyone Who’s Going to Live Within Those Doors

Finally, when buying a house should not just consider your future in that house, but the future of all your household with whom you are going to live. Here are a few more questions that you can ask yourself before signing any binding document:

  • Is this place going to accommodate the path I want to take my career to?
  • How are the community and culture of this location?
  • Will there be enough space for future expansions according to the size of the family we’re planning?
  • Will I be able to increase the value of this property just in case our family needs to move again in the future?

No one can predict what will happen tomorrow, but by keeping these tips in mind, we are confident that you and your family are already a step closer to the home that you’ve always dreamed of.

Good luck!

Understanding How Lines of Credit Works

Life is unpredictable and full of surprises—whether good or bad. As such, it won’t hurt to be prepared when welcoming unexpected news of joy, and indeed, it would be better if you are ready for some unwelcoming news.

One of the unpredictable occurrences is the need to put money on the table. Expenses like car repairs, home maintenance, or hospital/medical bills are one of life’s events that can surely put a hole in your wallet.

So, if you are looking for a wise way to help during these times of unexpected needs, then there’s this one option that you can go to aside from credit cards and payday loans, which comes at a high price. It is called a line of credit.

First, What is a Line of Credit?

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Abbreviated LOC, according to Forbes is a type of bank loan wherein you can withdraw a certain amount which was agreed by both parties. This type of loan is offered by many banks and lenders for a specific purpose. An example of this is home equity lines of credit, which is primarily used for home renovations.

Now, if you are running a business or is self-employed who have problems with cash-flow, then you may want to consider a line of credit to help you out and give the leverage that you need.

Difference between LOC and Traditional Loan

Wondering about the difference between a line of credit from a traditional loan? Then here’s what you need to know.

The primary difference is how and what you should pay. This type of loan only requires payment for the interest and fees of the fund that you borrowed, whereas the traditional loan gives you an influx of cash, which you need to pay immediately.

How Does it Work?

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So, how does a line of credit work? This type of bank loan is slightly similar to how we deal with bank cards wherein you have the choice to use the funds that you know would suit you best. However, the advantage of LOC from a bank card is that the interest rate of the LOC is considerably lower.

In addition, the credit card’s limit spending is much lower than a line of credit, which comes with a higher account limit. Also, you will receive a monthly statement that shows your balance (your minimum payment, fees, and summary of interest).

If you have questions or you want to have an in-depth explanation regarding a line of credit, then you should go to a banking institute or lenders like the Mulligan Funding to help you sort out your LOC.

What are the Different Types of LOC?

Since the reason for applying for a line of credit differs from person to person, there are different types of LOC to help bridge the financial gap. Here are the following types with its use:

Secured and Unsecured LOC

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The secured LOC is primarily backed by collateral. Examples are houses, vehicles, or other valuable assets that you own. The secured line of credit usually has a much lower interest rate since the risk is less for the lender.

On the other hand,  the unsecured LOC, which is the opposite of the secured LOC doesn’t need collaterals, but it is more difficult to apply for and has a higher interest rate.

Personal LOC

This one is attached to private property of yours, putting it under the secured loan category wherein the interest and fees are lower. However, if it is not backed by collateral, then it is an unsecured loan that comes with a higher interest rate.

With this account, you can use the money however you want, but if you have collateral assets, then the financing institution may seize it if you cannot pay the balance in time.

Home Equity LOC

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This type of credit line helps with your home improvement projects or any emergency repairs. It is usually backed by the value of your house and is considered as a secured line of credit.

Business LOC

If you want to start a business or you are planning to take your business to the next level, then this is a wise option. This kind of loan is designed to fund short-term financial needs such as buying new equipment or purchasing inventory and creating a more consistent cash-flow. You can also check other sources  for additional short-term financial options.


Now that you have learned the things that you need to know about the line of credits, you can now apply for it with ease and confidence. If you have questions or other concerns regarding a line of credit, then it is probably best that someone knowledgeable explains it to you well or have a financing institution explain it more thoroughly for you.

Factors To Consider Before Applying For A Loan

A loan is a formal and binding arrangement that includes financial and legal responsibilities. You’re going to be paying money for a significant, if not extremely long (mortgages), amount of time and defaulting on payments will have an adverse effect, not only on your finances but also on your overall credit score and your personal life as well.

As such, you need to think very carefully and consider all relevant factors before you apply for a loan and sign the dotted line. This brief guide will tell you what you need to look out for and what steps you need to take before applying to a lender for a loan.

Check Your Credit History

Your credit history is one of the most important factors when lenders are considering your application. In fact, this little number says a lot about you as a potential borrower. In other words, it is an indicator of how good you are at making payments, how many accounts you have and the financial health of those accounts, and how many loans you currently have on your plate.

A bad credit score can have a negative impact on your application if it isn’t outright rejected in the first place. You won’t be able to borrow large sums of money and the interest rates are going to be higher than those offered to someone with a better credit score. So before you apply, make sure your credit score is good and work on improving it if it’s not.

Assess Your Budget

Getting the loan is just one part of the entire exercise. You also need to figure out how you’re going to pay your lender back for the foreseeable future. Sit down and assess your budget to make sure you can afford to make the payments. If affordability is an issue, then you’ll be late on your payments or missing them altogether. This could result in a range of issues, including penalties and even legal action. Therefore, the crucial thing while assessing your budget is to be realistic. Think carefully about your incomes and outcomes.

Don’t compromise your savings for a loan but do make sure you do have a cushion in your savings account. It could be you can easily afford the payments but have fallen on tough times and having a cushion in your savings will help out immensely.

Calculate How Much You Need And Research Different Types Of Loans

Don’t get greedy when you’re borrowing. You should only apply for a loan for the amount of money you NEED and not WANT. Make sure you’re getting a loan for the right reasons. It often happens that people get carried away during this calculating. However, even though borrowing a big amount of money seems attractive, don’t forget to think about the consequences of your potential actions. Also, remember – information is power. It might be a good idea to check what the Internet has to offer when it comes to information about this topic.

Therefore, make sure to research different types of loans to see which one suits your needs best. For instance, different loans will have varying features such as different interest rates or maximum thresholds. After you have completed your online research, you should consider talking to somebody whom you trust, for example – call one of your good friends and ask if they have had experience with applying for a loan in the past. You might be surprised by the number of people who actually have experience with this kind of thing. In this way, not only will you get information, but you will also hear about stuff you should be careful about. Furthermore, you can even hear suggestions, recommendations, and advice, or you can learn from somebody else’s mistakes.

Talk To More Than One Lender

You should first approach your bank for a loan because they already know your credit history and have an existing relationship with you. Chances are your loan will be approved. Check what interest rates are being offered and what the overall deal is and make notes of everything. You can then talk to different lenders and see what deals they have on offer to compare. Despite the fact that you should come to the meeting prepared, and do the research yourself, there isn’t anything wrong with asking all the questions you have, without worrying about coming off stupid. When it comes to exploring your options, there is no such thing as “too much information”.

Different lenders will have different requirements as well and you might want to review your options to see which lender’s requirements you can actually meet. If you are looking for a lender, feel free to visit Everyday-Loans. On this website, you will be provided with all the necessary information. They offer good interest rates and are open to lending even if you have a less than perfect credit score. Additionally, one of the most important things to look for when considering potential lenders is reliability. In accordance with that, the above mentioned independent loan lender is concerned with “professional and responsible lending”. Therefore, you can be sure that you are collaborating with a serious and reliable lender.

To sum up, if you are thinking about applying for a loan, there are certain things you should be informed about. In that sense, being aware of certain factors that would potentially influence the whole process can do no harm. One of the best favors you can do for yourself, before engaging in the process of application, is to check your credit history and assess your budget. Furthermore, you should learn everything you can about loans and inform yourself as much as possible about different lenders. Once you have all the data in front of you, making a decision won’t be that hard. More importantly, the chances of making a mistake will be slim to none!

Qualify for a Construction Business Loan with These 5 Simple Tips

What keeps your construction business going? Many contractors would say clients and projects, while others claim it’s marketing and advertising. But acquiring more clients and projects and implementing marketing and advertising won’t be possible without working capital. Working capital is the lifeblood that pumps your entire operations – from generating clients to closing a deal. Construction business loans can inject working capital where you need it the most. Click here to know more about the most popular construction Business loan programs for your company.

Applying for Construction Business Loans

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The speed and convenience of your construction business loan application depend on two factors: (1) the type of loan and (2) the type of lender you’re working with. Many contractors seek help from loan advisors to determine which type of loan program is best for them. Keep in mind that the required documents vary depending on the said two factors. However, expect to be asked for the following documents:

  • Financial Statements
  • Business Plans
  • Personal and/or Business Documents
  • Estimate/Costs of Your Construction Project

Traditional lenders often take a few weeks to assess your loan application, especially because lenders consider commercial construction risky. While requirements vary from lender to lender, it’s best to prepare all the documents related to your construction projects like designs, engineering specs, designs, and more.

For a more lenient and convenient application process, you might want to alternative lenders. Alternative lenders can fund your business within 24 hours and the entire online application takes no more than five minutes. The only downside is that loans from alternative lenders cost more than bank loans, but the convenience and speed of funding make up for it.

5 Tips to Qualify for Construction Business Loans

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Applying for construction business loans shouldn’t be a headache. To increase your chances for approval, here are five tips you should know about.

1.   Plan It Out

Taking out a loan for your construction project is a huge decision. For this reason, it’s important to thoroughly plan for it. There are multiple factors you need to consider before getting started, such as unforeseen costs, estimated costs of the entire project, and other types of expenses you need to fund. Be sure to take these factors into consideration before applying for a loan. Lenders would want to know how you plan to use the funds. For more details about loan requirements, don’t hesitate to contact SMB Compass.

2. Transparency is Important

It’s important to be transparent with your lender. Make sure all your documents are accurate, up-to-date, and readily available for perusal. Before submitting, review your application and your documents to ensure that you’re putting your best foot forward. Furthermore, lenders prefer businesses that have their finances audited by accountants or a third-party company. If you’re going to use the loan to purchase equipment, make sure to indicate the type of machines you want to buy and explain how each machine can benefit your business.

3. Check Your Credit History

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Generally, lenders want to fund a growing business instead of helping business owners pay existing debt. For this reason, most lenders evaluate your personal and business credit when applying for a loan to ensure you have a good credit rating. If you don’t know your current credit score, make sure to get a free credit report from Experian or Equifax.

4. Ensure You Can Meet Minimum Qualifications

Applying for a loan you can’t qualify for in the first place is a total waste of time. Lenders have minimum qualifications for approving a business loan. However, most lenders only approve companies that surpass their minimum requirements. To avoid wasting time and money, only apply for loans you’re sure you can qualify for, and see if you exceed the requirement. If not, work on improving your credit profile or cash flow before applying.

5. Don’t Ask for More than What You Need

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If you ask for more than what you need, you can expect to spend more money on interest payments. Contractors need to limit their expenses in between projects to maximize profits, so the last thing you want to do is to spend money on unnecessary costs. Additionally, asking for more can lower your chances of securing a construction business loan. As mentioned, most lenders want to know what you want to do with the money. If they think you’re asking too much, lenders might lose faith in your capacity to manage your construction projects. Check out these tips from on how to effectively manage cash flow for construction projects.