Pool Loan Calculator: See Your Monthly Payments

Once you have a solid cost estimate for your new pool and you’ve decided to finance it with a loan, the next step is to figure out your monthly payments so you can budget for them.

Enter a loan amount, repayment term, and estimated APR to see how much you might pay each month and the total interest.

How much does it cost to build a pool?

An above-ground pool costs $2,500 on average, according to HomeAdvisor, while an inground pool can run you $50,000 or more. The price can vary based on the size of the pool and materials you use.

When you finance with a personal loan, your annual percentage rate can be anywhere from 6% to 36%, and some lenders will finance up to $100,000 over a two- to 12-year repayment term.

Your credit score is an important factor lenders consider when they decide your loan amount and rate. On average, NerdWallet members with excellent credit (720 or higher FICO) received pre-qualified loan offers with rates between 10.7% and 12.5% in 2020, according to marketplace data. Lenders also consider factors like your income and existing debt.

A $50,000 loan with a six-year repayment term and a 11% APR would require monthly payments of $952. That loan would cost $68,544 in total, and $18,544 of that would be interest.

How to compare pool loans

Here are a few features to consider as you compare offers.

Annual percentage rates: APRs are the best apples-to-apples comparison for personal loans because they include the interest rate and other fees a lender charges. You can use this rate to compare offers between loans or to compare a loan with other financing options like a home equity loan.

Repayment terms: Most personal loan terms span from about two to seven years, but some lenders offer extended repayment terms on home improvement loans. For example, online lender Lightstream lets borrowers choose a repayment term up to 12 years. Your repayment term determines your monthly payment and the loan’s total interest — the longer your repayment term, the more you pay in interest.

Funding time: Some online lenders say they can fund a loan the day your application is approved or the following day. Banks and credit unions, however, can take a few days. Most personal loans can be funded within a week, though.

Ability to pre-qualify: Many online lenders let you pre-qualify to see your potential rate, loan amount and repayment term without affecting your credit score. You can pre-qualify with multiple lenders at once on NerdWallet to nail down another estimate of your monthly pool loan payments.

Source: nerdwallet.com

Popular 2021 Home Upgrades — and How to Pay for Them

Staying at home during the pandemic has changed the way homeowners renovate, but not always in ways you might expect.

You could assume, for example, that homeowners are desperate for privacy and therefore adding more walls.

But interior designer Max Humphrey says rumors of the open floor plan’s death, which bubble up every year, are exaggerated.

“I think middle America still loves their open floor plans,” says Humphrey, who is based in Portland, Oregon. “Designers are talking about how open floor plans are over, but believe me, they’re not.”

Instead, homeowners are creating spaces they’d want to visit if they didn’t live there. Home kitchens have replaced restaurants, and your favorite outdoor bar is now your patio.

Many homeowners paid for their upgrades with savings last year, according to NerdWallet’s 2020 Home Improvement Report. Indeed, if the economic impact of the pandemic hasn’t hit your own finances, cash is the cheapest way to cover home renovations.

But there are also affordable financing options, including cash-out refinancing and personal loans, for those who don’t have or want to use savings.

Here are projects interior designers expect to see more of as the pandemic stretches into 2021, plus financing options to make them a reality.

Whole house renovations

Stephanie Sullivan is busier now than at any time since she became a full-time interior designer in 2014.

Her clients are seeing again the things in their homes they wanted to change when they bought the house but stayed busy enough over the years to ignore.

“It’s amazing how we don’t notice stuff until we’re stuck at home going, ‘hmm, really,’” she says. “So they’ve been walking past it for years, and now everybody’s home and they’re going, ‘Wait, I can’t do this.’”

A homeowner asking her to redesign the entire house is common these days, says Sullivan, who is based in Austin, Texas.

She says multiple clients in the last year have said, “I just need you to start at the front door.”

Fully remodeling most or all of the rooms in your house is likely an expensive endeavor.

If your project is $50,000 or more, certified financial planner Sarah Ponder recommends a cash-out refinance, which involves replacing your existing mortgage with a larger one and using the extra money to renovate.

Cash-out refinance is a good option only if you have enough home equity to match the project cost and if you get a low interest rate — a real possibility given today’s low mortgage rates, says Ponder, whose company, Real Estate Wealth Planning, is based near Austin.

It’ll take patience, too. The refinance process used to take about a month, Ponder says, but lately, it can take two or three months.

Room conversions

Another common request Sullivan says she receives from homeowners: Turn a master bathroom into an at-home spa.

“Since they can’t go to the spa, they’re creating spa retreats in their bathrooms,” she says.

They’re redoing their kitchens as places to connect with family, she says, but they also want their own getaway, even if it’s just upstairs.

Homeowners are also transforming basements and spare rooms into home offices and study rooms, or gyms and playrooms, Humphrey says.

He says his clients are looking for ways to sprawl out.

For midsized projects like one- or two-room renovations, refinancing your mortgage may not be worth the time and effort.

San Antonio-based CFP Tess Downing says a personal loan could work for projects around $20,000. These loans don’t use your home as collateral, and qualifying is based on your creditworthiness and finances. Good credit and little existing debt are must-haves to get a low rate.

Consumers who qualified for a personal loan in 2020 with excellent credit (720 or higher FICO) typically were approved for rates between 10.7% and 12.5%, according to NerdWallet marketplace data.

DIY projects

There are also affordable ways to get a fresh look in your home on a budget.

Replacing light fixtures can make a big difference, says Humphrey, and first-timers can get help from YouTube.

“It’s things that you notice every day, you know, that’s the light in your house,” he says. “Even as a renter, I would swap light fixtures.”

Homeowners can also add a roll of stick-on wallpaper, he says, or a fresh coat of paint. Even new towels, lightbulbs and bedsheets can change the look of a room.

If the cost of your project is below $10,000, a zero-interest credit could be a good pick, Ponder says. If you can pay the balance during the card’s promotional period (often 12 to 18 months) you’ll finish your project interest-free.

More traditional credit cards and store rewards cards can also help you cover purchases on these projects, especially if you have a card with a hardware or furniture store. Be sure you can pay the balance in full each month to avoid interest.

Resale considerations

It’s probably not worth your time and money to go all-out renovating a home you’re going to sell in a couple of years because you won’t make that money back, Humphrey says.

He cautions his clients against overpersonalizing a home they don’t plan to stay in long-term.

“I don’t love to think about resale when I’m designing for somebody, but the pandemic isn’t going to be forever,” he says. “So I do encourage people to think a little bit about resale.”

But for as long as home remains a restaurant, spa, gym, school and office, go ahead and make some changes you can afford just because they make you happy.

Source: nerdwallet.com

Dollar Connect Personal Loans Alternatives

When you need some quick cash to see you through until your next paycheck, personal loans are the best choice. Fast personal loans, like the ones that Dollar Connect used to offer, are a quick way to borrow money in a financial emergency. And if you have bad credit, most lenders can still cater to you.

There are various lenders that have personal loans, and in recent times, Dollar Connect used to be a marketplace for connecting people to such lenders. With the platform shutting down, many people in search of lenders for poor credit and personal loans in an emergency might face inconvenience. At The Simple Dollar, we have rounded up the four best alternatives to Dollar Connect, based on the interest rates, loan amounts, customer satisfaction and support and fees using the SimpleScore methodology.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

Refreshing data.

We found results in California.

In this article

The best alternatives to Dollar Connect personal loans

Compare the best alternatives to Dollar Connect

Lender APR Terms Loan Amount
OneMain Financial 18%–35.99% 24–60 months $1,500–$20,000
RISE Credit 50%–299% 4–26 months $500–$5,000
LendingPoint 9.99%–35.99% 24–48 months $2,000–$25,000
Avant 9.95%–35.99% 24–60 months $2,000–$35,000

Best for joint applications – OneMain Financial

Not all personal loans allow co-signers but OneMain Financial has you covered with its quick and easy loans.

APR Range

18%–35.99%

Loan Amount

$1,500–$20K

Term

2–5 years

SimpleScore

3.3 / 5.0

SimpleScore OneMain Financial 3.3

Loan Size 3

Customer Satisfaction N/A

As one of the largest personal lenders in the country, OneMain Financial stands apart from other companies by focusing on customers with poor credit. Headquartered in Indiana, OneMain Financial has offices in 1600 locations across the country, and you do not require a minimum credit score to be able to qualify. The rates are fixed, there are no prepayment fees, and the loan can be repaid in easy monthly payments. Applications can be filed online and loans are usually funded in one business day. The best part? You get to add a second borrower and file a joint application.

All the perks aside, OneMain Financial tends to charge steep interest rates for personal loans. There’s a seven-day grace period but the longer you take, the more expensive the loan becomes. For larger loans, you may also require a collateral, and you must visit the lender’s office to be able to close a loan.

secured personal loan option against your car, letting you borrow up to $35,000 with next-day funding. Started in 2012, this online platform charges rates on a par with other bad credit personal loans, and the minimum credit score required is 550. You have the option to change the payment date, get a soft credit check with pre-qualification, and for people with fair credit, a secured loan can have interest rates as low as 9.95%. Additionally, Avan’ts mobile app makes it easy to manage your loan on the go.

However, you cannot add a co-signer or have your debts paid off directly to the creditors in case of debt consolidation. Avant also charges an origination fee of 4.75%.

Personal loans are a good way to get some quick cash for emergencies, such as:

Medical expenses

If you or a family member takes ill and requires immediate treatment or hospitalization, it can lead to unforeseen expenses. Even if you have insurance, it might not cover everything. Personal loans are usually funded in less than a day but also come with exorbitant interest rates, which might be more expensive than the cost you are trying to cover. As an alternative, borrowing money from a friend or relative or using your credit card are easier and more flexible ways to get urgent money.

[Read: The Common Types of Personal Loans, Explained]

Emergency repairs

A leaking roof, a burst pipe or a broken car call for emergency repairs. Your insurance might reimburse you later, but when it’s an urgent need, you have to pay out of your pocket. Personal loans are often used for covering such expenses, but the interest rates might leave you with expensive repayments over the next several months. If you have a credit card, you can use it for emergency funding at a much lower interest rate and more flexible terms. You can also borrow money against fixed deposits or sell assets like jewelry or art for quick cash.

Supplementing income after job loss

In uncertain times, being laid-off from work can make it harder to pay for emergency expenses. It isn’t difficult to get personal loans even if you have bad or no credit with no income, but you will be saddled with steep repayments for many months, which can be almost impossible without a job or another source of income. If you’re still taking out a personal loan, it is best to have a collateral and make it a secured loan.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

Personal loan FAQs

According to the Federal Reserve, the average rate for a two-year personal loan is 9.65%, though this can vary based on where you live, your credit score and income.

Terms for personal loans can differ from one lender to another, but the typical term is anywhere between 24 and 60 months.

A secured loan, where you borrow money against an asset, is the easiest personal loan to be approved for and much quicker than an unsecured loan. Typical assets you can borrow against include vehicles, jewelry, expensive art and collectibles.

Lenders that offer personal loans of all types are available all over the country. You should choose the lender according to your credit history and if you aren’t sure, it is best to select a bad credit lender. Approval and finding usually take less than a day, and since these are short term lending, they often come without the complicated processes of a traditional loan.

Dollar Connect was not a lender; it was an online marketplace that matched borrowers with lenders. The platform is no longer in business.

We welcome your feedback on this article and would love to hear about your experience with the lenders we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

How to Take Advantage of Low-Interest Loans During the COVID-19 Health Crisis

December 2, 2020 &• 5 min read by Credit.com Comments 0 Comments

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Disclaimer

The following is a guest post from Dr. David L Tuyo II, president and CEO of University Credit Union.

While there is rampant fear and caution against a global economic downturn due to COVID-19, this does not mean that every individual will be hit as hard as the next.

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Certainly, there has been and will be even more severe impact across some key industries, but this shouldn’t be a cause for panic, particularly if you aren’t financially tied directly to any of the hardest-hit industries.

In fact, overly cautious decisions right now could equate to missed opportunities for personal financial growth. What many people don’t realize is that now is the time to take advantage of low-interest loans.

Interest rates are bottoming out at historic lows, which means that it is more affordable than ever to borrow money from financial institutions. There is even some speculation that interest rates could become negative—meaning that financial institutions would actually pay people to take out loans. Although unlikely, this has been seen before in places like Switzerland, Denmark, and Japan.

This means that there is a fantastic opportunity to borrow money in order to ease the financial burden of your debt, increase the cash flow that you have on a monthly basis, and potentially provide some peace of mind during these unprecedented times.

So how can you take advantage of low-interest rates to get ahead financially?

In this article, we will explore three financial strategies that can be implemented now.

When interest rates are low, refinancing your mortgage should be on the top of every prudent homeowner’s list.

If you are not familiar with refinancing, it is essentially the process of replacing an existing mortgage with a new loan. This is primarily done to allow the borrower to obtain a better interest rate than the one that is currently held on the existing mortgage. The old loan is paid off and a new one is created at a better interest rate.

There are plenty of examples of people who are refinancing their mortgages right now during the COVID-19 outbreak and finding significant financial relief, which is an important lesson for anyone who might be struggling to keep up with their payments.

Even with some of the social distancing restrictions in place, accommodations can be made for safe appraisals, so don’t assume that it’s not possible to take advantage of low-interest rates through refinancing right now.

Similar to mortgages, it is even easier to refinance a loan on your automobile to acquire a better rate or a new term.

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This can be advantageous if a borrower needs to free up some cash or reduce their monthly payments and with incredibly low rates available—it’s an easy choice to make.

Refinancing your car loan is also much simpler than refinancing your mortgage as it can be completed entirely online, so no physical contact with other people is actually required. This can make it a less complicated financial decision and very quick to process in most cases.

By reducing your monthly payments through refinancing, you will have better cash flow and it will be more feasible to fit your payments into a budget that may be contracting due to the economic downturn.

If you have been considering purchasing a home or investing in property, this is an ideal time to make a purchase if you want to take advantage of the very low interest rates that are available.

Right now, it is possible to lock in low interest rates if you take out a mortgage before interest rates climb back up, which means that you can enjoy years of cost savings as a result of a fixed-rate mortgage.

Of course, you need to carefully consider your financial position before taking out any loan, but if you hold any confidence in your cash flow and assets, then it’s a very appealing time to take out a mortgage.

That said, there is potential that housing prices could come down further, but if buying activity is encouraged by low interest rates, then it might not dip that far depending on where you live. If you are considering entering the housing market, then you should keep a careful eye on price movement—and if you see a deal, be ready to jump on it.

Markets and the economy are always going up and down. Sometimes it goes in one direction more than the other, but ultimately, it’s not the state of the economy that matters the most. The most important financial decisions are the ones that you make in response to economic trends.

Believe it or not, it is very possible to make money during economic turmoil. If you take careful consideration of your position and your options, then you can find a way to get ahead despite all of the existing challenges.

Granted, we haven’t seen economic problems like this since the Great Depression, but it’s important to understand that the context and root causes that affect us today are very different than back then.

This is a time to be cautious, but not afraid. Cautious investors make smart decisions. Financial decisions driven by fear are rarely the right choice.

Think carefully, but don’t be afraid to act now in order to take advantage of low-interest loans.

Dr. David L Tuyo II, DBA, MBA serves as the President and CEO of University Credit Union. He is a veteran of the financial services industry where he has served financial institutions in a multitude of roles including COO, CFO, and Chief Investment Officer. His career in the financial services industry spans over 20 years, with the majority dedicated to serving credit unions.


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Source: credit.com

Should You Help a Family Member in Debt?

Should You Help a Family Member in Debt? – SmartAsset

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your financial details.

Watching loved ones struggle with their personal finances is never fun, especially when you’re doing relatively well yourself. But before you rush to the aid of your mother, your brother or your favorite cousin, it’s a good idea to consider how that might impact your own financial situation. Check out some of the pros and cons of loaning money to a family member in debt.

Check out our personal loans calculator.

The Pros

Being able to support a family member who’s facing a financial difficulty can make you feel good about yourself. You’ll have the opportunity to work together to implement good financial strategies and in the process, you might learn something that can help you manage your own money more effectively. And since you can never be completely sure about your own financial future, helping your relative get back on track might provide you with a safety net that you can rely on if you need help from that same relative later down the line.

It’s important to take the time to sit down with your relative and discuss what has worked well for you financially in the past. You can help him or her create a tighter budget (with loan repayments to you built in) and connect him or her with a professional financial advisor or credit counselor if need be. The more comfortable your family member is with talking about money, the better the experience is likely to be.

The Cons

When it comes down to it, helping family members out of debt is a big deal financially speaking. Before you make that move, it’s best to think about how it could affect your relationship. You run the risk of turning your personal relationship into a business transaction, and you might feel like money is all you talk about. Eventually, it might create tension or lead a serious disagreement.

You could also make yourself financially vulnerable by lending a family member a portion of your wealth. If you choose to let someone borrow your money, keep in mind that you don’t want to lend any amount that could get you into trouble.

Related Article: 5 Tips for Lending Money to Friends or Family

Important Questions to Ask Yourself

As you weigh the advantages and disadvantages of lending money to a relative, there are several things you’ll need to clear up. Will this be a temporary situation or an ongoing arrangement? A gift or a loan? Can they afford to pay you back at some point? What will you do if they can’t?

You’ll also have to consider whether providing someone with a loan is a good use of your money. Instead of relying on you, could your family member turn to debt management, debt settlement or bankruptcy? Are there other ways you can help?

Related Article: 4 Signs It’s Time to File Bankruptcy

Final Word

Deciding how to assist a family member in need isn’t easy. As an alternative to becoming your relative’s sole source of financial support, (or turning down his or her request) you can always offer to fund part of the debt repayments. Managing your expectations and finding a happy medium that won’t jeopardize your chances of achieving financial success are key.

Photo credit: ©iStock.com/Ocskaymark, ©iStock.com/Christopher Futcher, ©iStock.com/SoumenNath

Liz Smith Liz Smith is a graduate of New York University and has been passionate about helping people make better financial decisions since her college days. Liz has been writing for SmartAsset for more than four years. Her areas of expertise include retirement, credit cards and savings. She also focuses on all money issues for millennials. Liz’s articles have been featured across the web, including on AOL Finance, Business Insider and WNBC. The biggest personal finance mistake she sees people making: not contributing to retirement early in their careers.
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3 Things Startups Should Know About Using P2P Loans

3 Things Startups Should Know About Using P2P Loans – SmartAsset

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Starting a new business requires a certain level of commitment. You’ll also need to have access to plenty of money. Startups often have a hard time qualifying for business loans. But peer-to-peer (P2P) lending could be a financing option worth considering if you can’t get funding elsewhere. Here’s what you need to know about using P2P loans to kickstart a business.

Check out our personal loan calculator.

1. You May Have to Apply for a Personal Loan

Getting a personal loan to support a business isn’t the same thing as getting a business loan. That’s something to keep in mind since borrowing limits for personal P2P loans may not be as high as they are for business loans.

Lending Club, for example, lets you borrow up to $40,000 for a personal loan. But the maximum borrowing limit for business loans is $300,000. If you want a business loan, your company needs to be at least two years old and you need to have at least $75,000 in annual sales.

If you can’t qualify for a business loan, you may need to take out more than one personal loan. But by taking on more debt, it may take longer for your business to become profitable.

2. Lenders Will Look at Your Personal Credit History

When you’re trying to get a personal loan through a P2P lender, your odds of being approved hinge solely on your personal credit history. Every P2P lender has its own credit rating system for borrowers. Finding someone who’s willing to loan you money may be difficult if you have bad credit.

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Before you start shopping around for a loan, it’s best to learn about the credit requirements that different P2P lenders have. Then you can check your credit reports and scores to see how you measure up. If your score is lower than you expected it to be, you might want to put off launching your business. The higher your credit score, the more appealing you’ll be to P2P loan investors (and you’ll probably have access to better loan terms).

3. You’ll Be Personally Responsible for What You Borrow

Getting a personal loan to fund your new business will be one challenge. Another will be paying back what you borrow. If your business doesn’t do as well as you’d hoped, that won’t change your responsibility to the P2P lender or the investors who funded your loan.

If you default on the loan, your lender may sue you. And your personal assets could be seized (depending on the way your business is structured). Before you commit to a P2P loan, you’ll need to know exactly what you’ll be risking if things don’t work out.

Related Article: How to Get a Personal Loan

Final Word

As you’re comparing P2P lenders, it’s important to pay attention to interest rates and fees. Compared to banks, peer-to-peer loans often come with higher rates, which increase the cost of borrowing. If you want the best deal on a loan for your new business, it’s best to shop around.

Photo credit: ©iStock.com/alvarez, ©iStock.com/danielfela, ©iStock.com/PeopleImages

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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Guide to Bar Loans: Pros, Cons, and More

  • Personal Loans

It can take several months to prepare for the bar exam, and they are some of the most important months in an aspiring lawyer’s life. In that time, many students take preparation courses or devote all their time to studying and preparing, increasing their chances of passing the exam and taking that important step.

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Bar loans are a type of financial aid offered to students going through this difficult time. A bar loan can provide them with essential living costs, while covering the cost of academic materials and preparation fees. That way, they can focus on what’s important, and don’t have to worry about getting a part-time job and spending time away from their studies.

What is a Bar Loan?

Also known as a bar study loan, a bar loan is a type of private loan offered by private lenders. Unlike federal student loans, they are not backed by the Department of Education and, as a result, are subject to the same standards and criteria as personal loans.

You have two main options for taking out a bar loan. The first is to simply borrow more money than you need during your last year of school, covering you for all costs during that final year and running over into the bar loan afterward. 

Alternatively, you can submit a separate application and acquire your loan via one of the bar loan lenders we have listed below. To determine how much you need, simply calculate your living expenses and other costs and contact a lender.

Pros of a Bar Study Loan

  • Provide you with the freedom to study without worrying about how you’ll afford everything.
  • You can apply even after you have graduated.
  • You can borrow more money than you need, which isn’t always possible with student loans.
  • Move you one step closer to achieving your goal

Cons of a Bar Study Loan

  • Charge higher interest rates than most other student loans
  • You’re not covered or protected like you are with student loans
  • Need good credit to apply

The Best Bar Loans

You can get bar study loans from many major banks, credit unions, and lenders. We have shortlisted a few of our favorites below to help you:

Discover Student Loans

Discover is best known for its credit cards, including the Discover It, which we have highlighted many times on this website. But it also offers a host of additional banking services, including private loans and bar loans.

You can get a loan of between $1,000 and $16,000 for up to 20 years, with both fixed-rates and variable rates available, typically between 7% and 13%. There are no fees for applying, missing payments or pre-paying.

To apply, you must either be in your final year or have graduated within the last 6 months.

Sallie Mae

A trusted lender that has been in the student loan business for decades, Sallie Mae offers up to $15,000 for 15 years, with interest rates as low as 4.5% and as high as 11.56%. You can apply up to 12 months after graduation and there are no loan fees. What’s more, you won’t be asked to make any loan payments while you’re still in school.

Wells Fargo

Wells Fargo options are a little more restrictive, as you can only borrow a maximum of $12,000 over a maximum of 7 years. What’s more, you need to be enrolled in an eligible school or have graduated within 30 days, so if you graduated more than a month ago then you’ll need to look at one of the two listed above.

Do You Need A Bar Loan?

You need money to get through this period as you likely won’t have time to work and study, and if you try and force it your studies may suffer. If you’re still living at home, as many students are, your parents may cover most of your living costs. Assuming they can also cover your additional expenses, you won’t need a bar loan.

However, if they can’t afford to pay your fees or rent, you’ll need to consider one of the following options:

Side Hustle

While a traditional part-time job can be overly taxing during this busy period, you may have some time to freelance. It is easier than ever to earn a little extra cash by writing, designing, coding, and even doing some simple consulting work.

You’re a lawyer, not a writer, but if you’ve made it this far it means you’ve completed countless essays and assignments and have a good grasp of the English language. You likely can’t compete with professional writers getting the big bucks, but you can certainly compete with those at the bottom end of the scale and earn upwards of $20 an hour for your time.

If the idea of writing doesn’t appeal to you, think about consulting work. Many smaller companies and individuals can’t afford to spend hundreds of dollars an hour on legal fees, not when they just need a little legal advice concerning their property or business. Instead, they turn to students who have the knowledge but don’t demand the same high fee.

Ask Your Employer

If you have a job lined up after graduation, your employer may cover some or all of your fees. However, you will need to make a commitment, agreeing to work with them for at least a few years after you have graduated.

Personal Loan

A bar loan is a specialized personal loan and may charge higher fees then you can get with a traditional personal loan. If you have a good credit score, you should consider applying for a traditional loan, comparing this to the bar study loan to see which one offers the best fees.

Bottom Line: A Life-Changing Loan

A bar loan can hurt your credit score and give you even more debt to worry about, but at the same time, it means you won’t have to worry about money while you study and focus on your future.

Ultimately, that’s the main goal here, because as damaging as that extra debt could be in the short term, if you eventually get the job of your dreams then you’ll have more than enough money to clear the balance and focus on your future.

Source: pocketyourdollars.com

How to Start Investing in Peer-to-Peer Loans

How to Start Investing in Peer-to-Peer Loans – SmartAsset

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Back in the day, if you needed a personal loan to start a business or finance a wedding you had to go through a bank. But in recent years, a new option has appeared and transformed the lending industry. Peer-to-peer lending makes it easy for consumers to secure financing and gives investors another type of asset to add to their portfolios. If you’re interested in investing in something other than stocks, bonds or real estate, check out our guide to becoming an investor in peer-to-peer loans.

Check out our personal loan calculator.

What Is Peer-to-Peer Lending?

Peer-to-peer lending is the borrowing and lending of money through a platform without the help of a bank or another financial institution. Typically, an online company brings together borrowers who need funding and investors who put up cash for loans in exchange for interest payments.

Thanks to peer-to-peer lending, individuals who need extra money can get access to personal loans in a matter of days (or within hours in some cases). Even if they have bad credit scores, they may qualify for interest rates that are lower than what traditional banks might offer them. In the meantime, investors can earn decent returns without having to actively manage their investments.

Who Can Invest in Peer-to-Peer Loans

You don’t necessarily have to be a millionaire or an heiress to start investing in peer-to-peer loans. In some cases, you’ll need to have an annual gross salary of at least $70,000 or a net worth of at least $250,000. But the rules differ depending on where you live and the site you choose to invest through.

For example, if you’re investing through the website Prosper, you can’t invest at all if you reside in Arizona or New Jersey. In total, only people in 30 states can invest through Prosper and only folks in 45 states can invest through its competitor, Lending Club.

Certain sites, like Upstart and Funding Circle, are only open to accredited investors. To be an accredited investor, the SEC says you need to have a net worth above $1 million or an annual salary above $200,000 (unless you’re a company director, an executive officer or you’re part of a general partnership). Other websites that work with personal loan investors include SoFi, Peerform and CircleBack Lending.

Keep in mind that there may be limitations regarding the degree to which you can invest. According to Prosper’s site, if you live in California and you’re spending $2,500 (or less) on Prosper notes, that investment cannot be more than 10% of your net worth. Lending Club has the same restrictions, except that the 10% cap applies to all states.

Choose your risk profile.

Becoming an Investor

If you meet the requirements set by the website you want to invest through (along with any other state or local guidelines), setting up your online profile is a piece of cake. You can invest through a traditional account or an account for your retirement savings, if the site you’re visiting gives you that option.

After you create your account, you’ll be able to fill your investment portfolio with different kinds of notes. These notes are parts of loans that you’ll have to buy to begin investing. The loans themselves may be whole loans or fractional loans (portions of loans). As borrowers pay off their personal loans, investors get paid a certain amount of money each month.

If you don’t want to manually choose notes, you can set up your account so that it automatically picks them for you based on the risk level you’re most comfortable with. Note that there will likely be a minimum threshold that you’ll have to meet. With Lending Club and Prosper, you can invest with just $25. With a site like Upstart, you have to be willing to spend at least $100 on a note.

Should I Invest in Peer-to-Peer Loans?

Investing in personal loans may seem like a foreign concept. If you’re eligible to become an investor, however, it might be worth trying.

For one, investing in personal loans isn’t that difficult. Online lenders screen potential borrowers and ensure that the loans on their sites abide by their rules. Investors can browse through notes and purchase them.

Thanks to the automatic investing feature that many sites offer, you can sit back and let an online platform manage your investment account for you. That can be a plus if you don’t have a lot of free time. Also, by investing through a retirement account, you can prepare for the future and enjoy the tax advantages that come with putting your money into a traditional or Roth IRA.

As investments, personal loans are less risky than stocks. The stock market dips from time to time and there’s no guarantee that you’ll see a return on your investments. By investing in a peer-to-peer loan, you won’t have to deal with so much volatility and you’re more likely to see a positive return. Lending Club investors, for example, have historically had returns between 5.26% and 8.69%.

Related Article: Is Using a Personal Loan to Invest a Smart Move?

But investing in peer-to-peer loans isn’t for everyone. The online company you’re investing through might go bankrupt. The folks who take out the loans you invest in might make late payments or stop paying altogether.

All of that means you could lose money. And since these loans are unsecured, you can’t repossess anything or do much to recoup your losses.

You can lower your investment risk by investing in different loans. That way, if someone defaults, you can still profit from the loan payments that the other borrowers make. But if you don’t have enough loans in your portfolio you’re putting yourself in a riskier predicament.

Final Word

If you’re looking for a way to add some diversity to your portfolio, investing in peer-to-peer loans might be something to think about. There are plenty of benefits that you can reap with this kind of investment. Before setting up an account, however, it’s important to be aware of the risks you’ll be taking on.

Photo credit: ©iStock.com/bymuratdeniz, ©iStock.com/M_a_y_a, ©iStock.com/sirius_r

Amanda Dixon Amanda Dixon is a personal finance writer and editor with an expertise in taxes and banking. She studied journalism and sociology at the University of Georgia. Her work has been featured in Business Insider, AOL, Bankrate, The Huffington Post, Fox Business News, Mashable and CBS News. Born and raised in metro Atlanta, Amanda currently lives in Brooklyn.
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What is a Payday Loan?

  • Personal Loans

A payday loan is a short-term loan with a high annual percentage rate. Also known as cash advance and check advance loans, payday loans are designed to cover you until payday and there are very few issues if you repay the loan in full before the payment date. Fail to do so, however, and you could be hit with severe penalties.

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Lenders may ask the borrower to write a postdated check for the date of their next paycheck, only to hit them with rollover fees if that check bounces or they request an extension. It’s this rollover that causes so many issues for borrowers and it’s the reason there have been some huge changes in this industry over the last decade or so. 

How Do Payday Loans Work?

Payday lending seems like a simple, easy, and problem free process, but that’s what the payday lender relies on. 

The idea is quite simple. Imagine, for instance, that your car suddenly breaks down, payday is 10 days away, and you don’t have a single cent to your name. The mechanic quotes you $300 for the fix, and because you’re already drowning in debt and have already sold everything valuable, your only option is payday lending.

The payday lender offers you the $300 for a small fee. They remind you that if you repay this small short-term cash sum on payday, you won’t incur many fees or any real issues. But a lot can happen in 10 days. 

More bills can land in your mailbox, more expenses can arrive out of nowhere, and before you know it, all of your paycheck has been allocated for other expenses. The payday lender offers to rollover your loan for another month (another “payday”) and because you don’t have much choice, you agree.

But in doing so, you’ve just been hit with more high fees, more compounding interest, and a sum that just seems to keep on growing. By the time your next payday arrives, you’re only able to afford a small repayment, and from that moment on you’re locked into a debt that doesn’t seem to go anywhere.

Predatory Practices

Payday loans have been criticized for being predatory and it’s easy to see why. Banks and credit unions profit more from high-income individuals as they borrow and invest more money. A single high-income consumer can be worth more than a dozen consumers straddling the poverty line.

Payday lenders, however, target their services at low-income individuals. They offer small-dollar loans and seem to profit the most when payment dates are missed and interest rates compound, something that is infinitely more probable with low-income consumers.

Low-income consumers are also more likely to need a small cash boost every now and then and less likely to have the collateral needed for a low-interest title loan. According to official statistics, during the heyday of payday loans, most lenders were divorced renters struggling to make ends meet.

Nearly a tenth of consumers earning less than $15.000 have used payday loans, compared to fewer than 1% for those earning more than $100,000. Close to 70% of all payday loans are used for recurring expenses, such as utility bills and other debts, while 16% are used for emergency purchases.

Pros and Cons of Taking Out a Payday Loan

Regardless of what the lender or the commercial tells you, all forms of credit carry risk, and payday loans are no exception. In fact, it is one of the riskiest forms of credit available, dragging you into a cycle of debt that you may struggle to escape from. Issues aside, however, there are some benefits to these loans, and we need to look at the cons as well as the pros.

Pros: You Don’t Need Good Credit

Payday loans don’t require impeccable credit scores and many lenders won’t even check an applicant’s credit report. They can afford to do this because they charge high interest and fees, and this allows them to offset many of the costs associated with the increased liability and risk.

If you’re struggling to cover your bills and have just been hit with an unexpected expense, this can be a godsend—it’s a last resort option that could buy you some time until payday.

Pros: It’s Quick

Payday loans give you money when you need it, something that many other loans and credit offers simply can’t provide. If you need money right now, a payday lender can help; whereas another lender may require a few days to transfer that money or provide you with a suitable line of credit.

Some lenders provide 24/7 access to money, with online applications offering instant decisions and promising a money transfer within 24 hours.

Pro: They Require Very Little

A payday loan lender has a very short list of criteria for its applicants to meet. A traditional lender may request your Social Security Number, proof of ID, and a credit check, but the average payday lender will ask for none of these things.

Generally, you will be asked to prove that you are in employment, have a bank account, and are at least 18 years old—that’s it. You may also be required to submit proof that you are a US citizen.

Cons: High Risk of Defaulting

A study by the Center for Responsible Lending found that nearly half of all payday loans go into default within just 2 years. That’s a staggering statistic when you consider that the average default rate for personal loans and credit cards is between 1% and 4%.

It proves the point that many payday lender critics have been making for years: Payday loans are predatory and high-risk. The average credit or loan account is only provided after the applicant has undergone a strict underwriting process. The lender takes its time to check that the applicant is suitable, looking at their credit history, credit score, and more, and only giving them the credit/loan when they are confident it will be repaid.

This may seem like an unnecessary and frustrating process, but as the above statistics prove, it’s not just for the benefit of the lender as it also protects the consumer from a disastrous default.

Con: High Fees

High interest rates aren’t the only reason payday lenders are considered predatory. Like all lenders, they charge fees for late payments. But unlike other lenders, these fees are astronomical and if you’re late by several weeks or months, those fees can be worth more than the initial balance.

A few years ago, a survey on payday lending discovered that the average borrower had accumulated $458 worth of fees, even though the median loan was nearly half that amount.

Cons: There are Better Options

If you have a respectable credit history or any kind of collateral, there are better options available. A bank or credit union can provide you with small short-term loans you can repay over many months without accumulating astronomical sums of interest. 

The interest rates are much lower, the fees are more manageable, and unless your credit score is really poor, you should be offered more favorable terms than what you can get from a payday lender.

Even a credit card can offer you better terms. Generally speaking, a credit card has some of the highest interest rates of any unsecured debt, but it can’t compare to a payday loan. It also has very little impact on your credit score and many credit card providers offer 0% on purchases for the first-few months.

What’s more, if things go wrong with a credit card, you have more options than you have with a payday loan, including a balance transfer credit card or a debt settlement program.

Why Do Payday Loans Charge So Much Interest?

If we were to take a cynical view, we could say that payday loans charge a lot simply because the lender can get away with charging a lot. After all, a payday loan lender targets the lowest-income individuals, the ones who need money the most and find themselves in desperate situations.

However, this doesn’t paint a complete picture. In actual fact, it all comes down to risk and reward. A lender increases its interest rate when an applicant is at a greater risk of default. 

The reason you can get low rates when you have a great credit score and high rates when you don’t, is because the former group is more likely to pay on time and in full, whereas the latter group is more likely to default.

Lending is all about balancing the probabilities, and because a short-term loan is at serious risk of defaulting, the costs are very high.

Payday Loans and Your Credit Score

Your credit will only be affected if the lender reports to the credit bureaus. This is something that many consumers overlook, incorrectly assuming that every payment will result in a positive report and every missed payment in a negative one. 

If the lender doesn’t report to the main credit bureaus, there will be no changes to your report and the account will not even show. This is how many payday lenders operate. They rarely run credit checks, so your report won’t be hit with an inquiry, and they tend not to report on-time payments.

However, it’s a different story if you miss those payments. A lender can report missed payments and defaults and may also sell your account to a debt collector, at which point your credit score will take a hit. 

If you’re concerned about how an application will impact your credit score, speak with the lender or read the terms and conditions before applying. And remember to always meet your payments on time to avoid any negative marks on your credit report and, more importantly, to ensure you’re not hit with additional fees.

Payday Loans vs Personal Loans

A personal loan is generally a much better option than a payday loan. These loans are designed to help you cover emergency expenses, pay for home improvements, launch businesses, and, in the case of debt consolidation loans, to clear your debt. 

The interest rates are around 6% to 10% for lenders with respectable credit scores, and while they often charge an origination fee and late fees, they are generally much cheaper options. You can repay the loan at a time that suits you and tailor the payments to fit your monthly expenses, ensuring that they don’t leave you short at the end of the month.

You can get a personal loan from a bank or a credit union; whenever you need the money, just compare, apply, and then wait for it to hit your account. The money paid by these loans is generally much higher than that offered by payday loans and you can stretch it out over a few years if needed.

What is an Unsecured Loan?

Personal and payday loans are both classed as unsecured loans, as the lender doesn’t secure them against money or assets. Secured loans are typically secured against your home (mortgage, home equity loan) or your car (auto loan, title loan). They can also be secured against a cash deposit, as is the case with secured credit cards.

Although this may seem like a negative, considering a lender can repossess your asset if you fail to meet the payment terms, it actually provides many positives. For instance, a secured loan gives the lender more recourse if anything goes wrong, which means the underwriters don’t need to account for a lot of risk. As a result, the lender is more likely to offer you a low interest rate. 

Where cash advance loans and other small loans are concerned, there is generally no option for securing the loan. The lender won’t be interested, and neither should you—what’s the point of securing a $30,000 car against a $1,000 loan!?

New Payday Loan Regulations

Payday lenders are subject to very strict rules and regulations and this industry has undergone some serious changes in recent years. In some states, limits are imposed to prevent high interest rates; in others, payday lenders are banned from operating altogether. 

The golden age of payday lending has passed, there’s no doubt about that. In fact, many lenders left the US markets and took their business to countries like the UK, only for the UK authorities to impose many of the same restrictions after a few years of pandemonium. In the US, the industry thrived during the end of the 2000s and the beginning of the 2010s, but it has since been losing ground and the practice is illegal or highly restricted in many states.

Are Payday Loans Still Legal?

Payday loans are legal in 27 states, but many states have imposed strict rules and regulations governing everything from loan amounts to fees. The states where payday lenders are not allowed to operate are:

  • Arizona
  • Arkansas
  • Connecticut
  • Georgia
  • Maine
  • Maryland
  • Massachusetts
  • New Jersey
  • New York
  • North Carolina
  • Pennsylvania
  • Vermont
  • West Virginia

It is still possible to apply for personal loans and title loans in these states, but high-interest, cash advance loans are out of the question, for the time being at least.

Debt Rollover Rules for Payday Lenders

One of the things that regulations cover is something known as Debt Rollover, whereby a consumer rolls their debt over into the next billing period, accruing fees and continuing to pay interest. The more rollovers there are, the greater the risk and the higher the detriment to the borrower.

Debt rollovers are at fault for many of the issues concerning payday loans. They create a cycle of persistent debt, as the borrower is forced to acquire additional debt to repay the payday loan debt. 

In the following states, payday loans are legal but restricted to between 0 and 1 rollovers:

  • Alabama
  • California
  • Colorado
  • Florida
  • Hawaii
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Michigan
  • Minnesota
  • Mississippi
  • Montana
  • Nebraska
  • New Hampshire
  • New Mexico
  • North Dakota
  • Ohio
  • Oklahoma
  • Rhode Island
  • South Carolina
  • Tennessee
  • Texas
  • Virginia
  • Washington
  • Washington D.C.
  • Wisconsin
  • Wyoming

Other states tend to limit debt rollovers to 2, but there are some notable exceptions. In South Dakota and Delaware, as many as 4 are allowed, while the state of Missouri allows for 6. However, the borrower must reduce the principal of the loan by at least 5% during each successive rollover.

Are These Changes for the Best?

If you’re a payday lender, the aforementioned rules and regulations are definitely not a good thing. Payday lenders rely on persistent debt. They make money from the poorest percentage of the population as they are the ones most likely to get trapped in that cycle.

For responsible borrowers, however, they turn something potentially disastrous into something that could serve a purpose. Payday loans still carry a huge risk, especially if there is any chance that you won’t repay the loan in time, but the limits imposed on interest rates and rollovers reduces the astronomical costs.

In that sense, they are definitely for the best, but there are still risks and potential pitfalls, so be sure to keep these in mind before you apply for any short-term loans.

Source: pocketyourdollars.com