Life insurance is a major component of most any overall financial plan – regardless of one’s age or employment status. That is because loved ones could be faced with massive debts to pay – including the cost of a funeral and other financial expenses – if the unexpected should occur.
The proceeds that are received from life insurance policies are income tax-free, so loved ones can use the entire amount of the funds for their needs. This can help them to avoid a financial hardship, at an already difficult time in their lives.
When you are in the process of seeking life insurance coverage, several key factors are essential to keep in mind before making a long-term commitment to a policy. These should include obtaining the proper type and amount of insurance coverage, as well as making sure that the insurance company that you are purchasing the policy through is secure and stable financially and that it has a good, solid reputation for paying out its claims to policy holders and beneficiaries. One company that meets these criteria is Geico Insurance Company.
The History of Geico Insurance Company
Geico has been in business since 1938. Over the past 80 years, the company has grown and expanded exponentially, and today the company is ranked as the second largest private passenger auto insurance company in the United States.
The name Geico is an acronym for Government Employees Insurance Company, which goes back to the company’s beginnings. The founder of Geico, Leo Goodwin, initially targeted a customer base that consisted primarily of United States government employees and military personnel.
The company now insures military and government personnel, as well as private consumers. In 1996, Geico became a wholly owned subsidiary of Berkshire Hathaway, which is headed by the world’s most famous investor, Warren Buffett. For the past several years, Fortune magazine has named Berkshire Hathaway’s property casualty insurance operation as the most admired in the U.S.
Presently, Geico is made up of its primary unit, the Government Employees Insurance Company, along with several affiliates, including:
Geico General Insurance Company
Geico Indemnity Company
Geico Casualty Company
Geico Advantage Insurance Company
Geico Choice Insurance Company
Geico Secure Insurance Company
Geico is headquartered in Chevy Chase, Maryland (near Washington, DC). The company also has some regional offices that are dotted throughout the U.S., including locations in:
Buffalo, New York
Dallas, Texas
Frederickson, Virginia
Lakeland, Florida
Macon, Georgia
San Diego, California
Tucson, Arizona
Virginia Beach, Virginia
Woodbury, New York
There are also several services centers, which are in Iowa, Indiana, and Hawaii, as well as some claims centers, which can be found in Houston, Texas, as well as in Seattle, Washington, and in Marlton, New Jersey.
Geico Life Insurance Review
Today, Geico insures more than 15 million auto insurance policies – and growing – and the company has more than 24 million vehicles insured. It is one of the fastest growing major auto insurers in the country, employing more than 36,000 associates, and providing customer service 24 hours per day, seven days per week, and 365 days per year. As of year-end 2016, Geico had assets under management of more than $32 billion.
The company has also earned a long list of various awards and accolades over the years. For example, Geico was named to Ward’s 50 top group of financially high-performing insurers for the 21st consecutive year in 2011. This award recognizes that Geico achieved outstanding financial results in the areas of safety, consistency, and performance.
Also, Geico was rated as being superior by consumers in 2007, for its customer advocacy. Forrester defines this as being “the perception by customers that a firm (Geico) does what’s best for them, and not just what is best for its bottom line.”
Geico was also rated as #1 by the Kanbay Research Institute for being the most desired insurer amount consumers based on the following factors:
High regard for customer service
Focus on staff training and development
Likewise, the owner of Geico, Berkshire Hathaway, was named as being a leading company in world insurance markets. These rankings include:
#1 global insurance company by revenues in 2013, based on an analysis of companies in the Global Fortune 500.
#2 writer of private passenger auto insurance by direct premiums were written in 2013. (Before reinsurance transactions, includes state funds. Based on U.S. total, includes territories).
Geico has also been named a leader in ethical practices in the property/casualty industry, and Berkshire Hathaway was appointed as a leader in ethical practices in the financial services sector by Ethisphere Magazine.
Also, Geico achieved the highest overall score in Forrester Research’s 2014 U.S. Mobile Auto Insurance Functionality Benchmark. With perfect scores in policy information and management categories, Forrester proclaimed Geico as “The pocket auto insurer.”
Geico’s Mobile App and insurance site received a #1 ranking on Keynote’s 2015 Mobile Insurance Scorecard, competing against top insurers. Geico is also ranked first for technical quality, according to Keynote KCR (Keynote Competitive Research).
While the company has traditionally been known for its vehicle coverage options, Geico doesn’t just offer auto insurance. The insurer offers a broad range of coverage products and services, including life insurance, home owner’s insurance, and even identity theft protection.
Insurer Ratings and Better Business Bureau Grade
Due to its stable financial footing, as well as its timely payment of customers’ insurance claims, Geico has been given high ratings from the insurer rating agencies. These include the following:
AA+ from Standard and Poor’s
Aa1 from Moody’s
A++ from A.M. Best Company
Also, although Geico is not an accredited company through the Better Business Bureau (BBB), the company has been given a grade of B by the BBB. This is on an overall grade scale of A+ to F.
Throughout the past three years, Geico has closed out a total of 2,514 customer complaints – of which 158 have been closed out within the previous 12 months. Of these total 2,514 complaints, 1,655 regarded as the company’s product and/or services, while 658 were regarding billing and/or collection issues. Another 125 considered advertising and/or sales issues, 55 were concerning guarantee and/or warranty issues, and the remaining 21 complaints focused on delivery issues.
Life Insurance Products Offered Through Geico
Customers of Geico can obtain life insurance coverage via Life Quotes, Inc. The company offers term life insurance policy, which provides pure death benefit protection, without any cash value or savings build up. Because of this, the premiums for term life insurance can typically be quite affordable – especially for those who are young and in good health at the tie of policy application.
As its name implies, term life insurance is purchased for a set period – or term – such as five years, ten years, 15 years, 20 years, or even for 30 years. In most cases, the amount of the death benefit coverage, as well as the sum of the premium, will remain level throughout the term of the policy.
And, provided that the premiums are paid on time, the company that issues the term life insurance policy will not be able to cancel the coverage. Once the term of a policy reaches its end, the insured may opt just to purchase a new policy (if he or she qualifies based on their then-current health).
As with its other forms of insurance coverage, getting life insurance via Geico can be a natural process. For example, by teaming up with Life Quotes, Inc., customers can expect the following benefits:
Easy paperwork/application process
Natural customer service process
Convenient payment plans for paying the premium, which include monthly, quarterly, or annual payment options
A full range of coverage limits to meet each customer/policy holders’ needs
When applying for life insurance through Geico / Life Quotes, Inc., an applicant’s health is considered. Once approved, the life insurance policy will typically cover death due to any cause, other than that of suicide within the first two years of policy ownership.
Once an individual has been approved for life insurance coverage through Geico / Life Quotes, policy holders can access their policy directly through the Geico website. This can make it easy to check coverage, as well as to make changes to one’s account, such as address and other contact information, and the name of the policy’s beneficiary.
The Geico website also helps to prompt a policy holder with various information that may assist them in reviewing their life insurance coverage, and in deciding whether to alter their coverage limits in the future. For example, some of the reasons why someone may want to change the amount of their coverage include:
A change in household income/employment status
Marriage, divorce, or becoming widowed
The birth or adoption of a child
Retirement
New grandchild(ren)
Serious illness and disability
Caring for an aging parent
Starting a new business
Selling off one’s home and purchasing another
New Drivers under 25
Now, Geico does not offer permanent life insurance coverage – which includes whole life, universal life, indexed universal life, variable life, or variable universal life – all of which include both death benefit protection and a cash value component.
Purchasers of many of the insurance plans that are offered through Geico may qualify for a premium discount.
Other Products and Services Available
While Geico is a primary insurer of automobiles, it also provides a wide selection of other products such as life insurance and other types of coverage, such as:
Motorcycle insurance
ATV insurance
Umbrella insurance
Home owner’s insurance
Renters insurance
Condo insurance
Co-op insurance
RV (Recreational Vehicle) insurance
Boat insurance
Personal watercraft insurance
Flood insurance
Mobile Home insurance
Overseas insurance
Travel insurance
Commercial Auto insurance
Ridesharing insurance
Business insurance
Identity Protection insurance
Snowmobile insurance
Collector Car insurance
Mexico Car insurance
Pet insurance
Jewelry insurance
How to Get the Best Rates on Life Insurance From Geico Insurance Company
If you have been seeking the best rates on term life insurance from Geico – or from any insurer – it can be beneficial to work with an independent life insurance agent or broker. In doing so, you will be better able to compare side-by-side the policies and the premium prices from numerous different insurance carriers. From there, you will then be able to choose which one will be the best for you.
When you are ready to move forward with the life insurance purchase process, we can help. We are an independent life insurance brokerage, and we work with many of the top life insurance carriers in the market place today. We can assist you with obtaining all the pertinent details that you require for making a well-informed buying decision, and we can do so for you quickly, easily, and conveniently – all without you having to meet in person with an insurance agent. If you are ready to get started, then all you should do is just simply fill out our quote form.
We understand that the purchase of life insurance coverage can be somewhat overwhelming. There are many different variables to consider – and you want to be sure that you are making the best decision regarding type and amount of coverage for your specific needs. The good news is that the life insurance purchasing process can be done so much easier when you are working with an expert on your side. So, contact us today – we’re here to help.
Many people want to buy investment properties because of the fantastic returns they can provide. However, many people do not have the 20 percent down payment (or more) that most banks require. There are ways to buy an investment property with little money down. The easiest way to buy an investment property with less than 20 percent down is to buy as an owner-occupant and later rent out the house, but there are many other options for investors as well. Using a line of credit, refinancing your home, house hacking, the BRRRR method, or even credit cards can provide ways to buy investment properties for less money. Seller financing is a great way to put less money down on a rental property if you can find sellers who are willing. A more advanced technique is to use hard-money financing that you can refinance into a conventional loan. Whatever way you choose to buy a rental property, research the method to make sure that it is legal in your state, your lender approves it, and that you are not stretching your finances too thin.
How much money down do most banks require?
An investor will have to put down at least 20 percent to buy a property from a typical bank. If you own more than four properties, that figure can increase to 25 percent down, providing that they are even willing to finance more than four properties. On top of the down payment, an investor will have to pay closing costs, which can range from two to four percent of the loan amount. It is very expensive to buy an investment property using financing from a typical bank. I have found a great portfolio lender who will finance as many properties as I want with 20 percent down, but they are not easy to find. Once you factor in repairs, carrying costs, down payment, and closing costs it can cost as much as $30,000 to buy a $100,000 rental property.
The video below goes over ways to buy with little money down as well:
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How to buy as an owner-occupant
The easiest way to buy an investment property with little money down is to buy as an owner-occupant, satisfy your loan requirements, rent out the property, and keep it as an investment. Most owner-occupant loans require the buyer to occupy the home for at least a year. Once that year is up, you can rent out the house and turn it into an investment property. There are many owner-occupied loans available, with down payments ranging from 0 to 5 percent down. You can put as much money down as you want if you want to put 20 percent down or even 50 percent down. USDA and VA have great no-money-down programs and little to no mortgage insurance, which will save an investor a lot of money each month. You will have more costs with little money down loans because mortgage insurance is required. Mortgage insurance can add hundreds of dollars to your house payment and eat away at your cash flow. The process of buying as an owner-occupant and then turning the house into an investment property is as follows:
1. Buy a house as an owner occupant, which will cash flow when you rent it out.
2. Move into the house and live there for at least a year.
After the year is up, find another house that will cash flow and purchase that home as an owner-occupant.
4. Move out of the first house and keep it as a rental. Move into the new house and repeat the process every year!
Eventually, you will be building up equity and extra cash flow, which will enable you to buy properties with a 20 percent down payment. Repeating this process 10 times would be an excellent way to get started, but no one wants to move ten times in ten years. It can also be tough to convince your family to live in a home that would be a great rental.
Low down payment owner occupant loans
If you are going the owner-occupant route there are many loans available that have from very little to nothing down required.
FHA loan
FHA loans are government-insured loans that can be obtained with as little as 3.5 percent down. You can only have one FHA loan at a time unless you have extenuating circumstances like a job relocation. You do have to pay mortgage insurance on FHA loans, which I will discuss later in this article. There are limits to the amount an FHA mortgage can be, which varies by state and even city.
USDA loan
USDA is a loan that can be used in rural areas and small towns. The loan can’t be used in medium-sized towns or large towns/metro areas. The loan is a fantastic loan for those that qualify and want to buy a home in the designated areas. USDA loans can be had with no money down, but do have mortgage insurance as well.
VA loans
VA loans are run through the United States Veterans Administration. You have to be a veteran to qualify for the loan, but they also can be had with no money down and no mortgage insurance! VA is a great option for those that qualify because the costs are so much less without mortgage insurance.
Down payment assistance programs
Many states have down payment assistance programs. In Colorado, we have a program called CHFA. The program helps buyers get into owner-occupied homes with very little money down. CHFA actually uses an FHA loan but allows for less than a 3.5 percent down payment. Check with lenders on your state to see if you have any programs that help with down payment assistance.
Conventional mortgages
Even conventional mortgages have low down payment loans available for owner-occupants. For owner-occupants, conventional loans have down payments as low as 3 percent. You will most certainly have to pay mortgage insurance with any conventional loan that has less than 20 percent down. Unlike some of the other loan options available, you can have as many conventional mortgages in your name as you want as an owner occupant.
FHA 203K Rehab loan
An FHA 203K rehab loan allows the borrower to finance the house they are buying and repairs they would like to complete after closing. This is a great loan for homes that need work, but the buyer has limited funds to repair a home. There are more costs associated with this loan upfront because two appraisals are needed and lenders have higher fees for 203K loans.
NACA Loans
NACA is a non-profit program with:
No down payment
No closing costs
No points or fees
No credit score consideration
Below market 30-year and 15-year fixed-rate loans
This sounds like it is too good to be true, and it is a great program. However, you do not simply apply for the loan and hope the lender approves you. You must take classes, and even host classes when in the loan program.
More details are on the NACA site.
What loan costs does a buyer need to consider besides the down payment?
On almost any loan you will have more costs than just the down payment. The lender will charge an origination fee, appraisal fee, prepaid interest, prepaid insurance and possibly prepaid mortgage insurance. Plus you may have more costs the title company charges like a closing fee, recording fees, and possibly title insurance. In most cases, the seller pays for title insurance, but with HUD and VA foreclosures the buyer has to pay for title insurance. These costs can add up to another 3.5 percent of the mortgage amount or sometimes more. When you talk to a lender they can give you an estimate of exactly how much these costs will be before you get your loan.
Can you ask the seller to pay closing costs?
Even though the lenders and title company will charge you more fees than just the down payment, that does not mean you have to pay that upfront. You can ask the seller to pay closing costs for you. If you can get the seller to pay your closing costs for you, loans like VA and USDA may be obtained with no out-of-pocket cash. You may still have to put down an earnest money deposit, but that can be refunded at closing in some cases. When you ask the seller to pay closing costs, it reduces the amount of money they are getting from the sale so you might actually be paying more for the home than if you didn’t ask for closing costs. But in my mind paying a little more for the house and financing those costs to save cash is better than paying more money out-of-pocket for a little cheaper home.
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House Hacking
House hacking is when you buy as an owner-occupant but you buy a multifamily property instead of a house. By purchasing a multifamily property you can live in one unit while you rent out the other units. This strategy allows you to rent the property faster, which may mean the bank will be more willing to give you a new loan as soon as you are ready to move out. You will also have help from the other tenants to pay your mortgage. In some cases, you may be able to live for free while you own the house because the other rent covers your costs.
Virtual real estate
Yes, you can now buy virtual real estate! This is land in the metaverse that only exists digitally. Some pieces of virtual real estate have sold for millions of dollars and others can be bought for almost nothing. Here is some more information on getting started!
BRRRR Method
BRRRR stands for buy, repair, rent, refinance, and repeat. It is a great way to get into rentals with less money down. You will need to get an awesome deal to make this strategy work, but you may be able to get all of your money back. You buy a house that is an amazing deal, fix it up, rent the property, and then refinance it. Once the refinance is done you repeat over and over! The key to making this strategy work is getting an awesome deal with plenty of equity. You also need to be prepared if things do not go perfectly. Appraisals can come in low, the banks may not want to finance you, you may not get the property rented or repaired as fast as hoped, etc.
Hard money loans
Using hard money can save you a ton of cash in the short-term, but it is more expensive in the end. Fannie Mae lending guidelines, allow you to refinance a home with no seasoning period, which means you do not have to wait six months or a year after you purchase a home, to refinance at a higher value than what you bought it for. Fannie Mae guidelines base the refinance amount on a new appraisal, and they will allow a 75 percent loan-to-value ratio. Fannie Mae guidelines do not allow a cash-out refinance, but they do allow the refinance to pay off any existing loans. Many hard money lenders will allow a buyer to borrow up to 100 percent of the purchase price and to finance repairs as well.
Since Fannie Mae guidelines allow a 75 percent loan-to-value refinance, theoretically an investor could buy a home for $100,000 and get a loan with a hard money lender for $100,000 plus $30,000 in repairs for a total loan amount of $130,000. The investor could refinance the home for as much as 75 percent of a new appraisal. If the appraisal came in at $180,000, then 75 percent loan-to-value would allow a refinance of $135,000. Fannie will not allow a cash-out refinance, but the investor could refinance the full $130,000 loan amount. This strategy can be costly due to hard money fees, but it allows the investor to refinance the entire purchase price and repairs!
This strategy can also be very risky because you are depending on a high appraisal to get your money out. Most hard money loans are only one year and you must pay off the loan after that year. Refinance appraisals are not always as high as we would like them to be. Make sure you have an exit strategy if the appraisal comes in lower than you expect.
Private money loans
One legitimate way to buy real estate with no money down is to use private money. Private money is from a private investor, friend, or family member. The private investor will give you money at a certain interest rate to buy a flip or rental property. Private money rates can vary from very cheap to very expensive depending on the relationship, investment, and terms of the loan. I use private money from my sister for my fix and flips. She charges me six percent interest. It is a great way to reduce the amount of cash I have into the properties.
I have used private money to buy commercial rentals and then refinance into a long-term loan with a local bank.
Can being a real estate agent help?
There are many advantages to having your real estate license, but the biggest benefit is you can keep your commission on almost every house you buy. On a $100,000 house, your commission could be $3,000 dollars or more. Here is an article that details why it is an advantage to become a real estate agent if you are an investor. Being a real estate agent also gives me an advantage in finding and purchasing great deals. I detail how hard it is to get your real estate license here. I saved more than $270,000 a year on commissions by being a real estate agent. That does not include the money I made on deals that I got because I was an agent.
Turnkey rentals
A new trend in the US is buying turnkey rental properties that are purchased, repaired, rented, and managed by a turnkey provider. Turnkey properties are a great opportunity for investors to buy rental properties out-of-state when homes are too expensive in their area. There are turnkey providers who offer as little as 5 percent down for investors, but they tend to have very high-interest rates. Here is a great article about turnkey providers or send me a request here for turnkey providers I know of. I bought a turnkey rental in Cleveland a few years ago.
Line of credit
I have had many lines of credit in my career. I have had lines of credit against my personal house (the house I live in) and my investment properties. It is much easier to get a line of credit against your personal house and some banks will not even offer lines of credit on investment properties. A line of credit is basically a loan against a home, but you do not have to use the money all the time. If you do not need the money you can pay it back to the bank and not be charged interest on it. When you need the money again, you can borrow it very quickly as long as the line is open.
Off-market properties
Off-market properties are purchased through direct marketing or by word of mouth. Buying off-market usually means less expensive properties and in some cases, owners with flexible terms such as owner financing. Many investors wholesale off-market properties, which you can purchase with no down payment. Wholesaling is a process of buying and selling properties very quickly. The properties must be very good deals and are usually found by direct marketing for properties. Many investors make a great living by only wholesaling properties to other investors.
Seller financing
Some sellers may be willing to finance the house they are selling or finance a second loan on a home that allows a buyer to put less than 20 percent down. If your bank is willing to offer 80 percent loan-to-value, the seller may offer to loan the other 20 percent, which would amount to no money down for the buyer. The seller may also offer a number of other loan-to-value percentages to help a buyer get into a home for less than 20 percent down.
Finding seller-financed properties is the tricky part. Most sellers are not looking to finance a loan when they sell. To find seller financed listings, look for homes that have no loans against them or an MLS listing description that say seller financing is available. The seller’s terms can vary greatly depending on how desperate they are to sell and what exactly they are looking to get out of the deal. Do not expect to pay four percent interest on a seller-financed loan; they will want a premium on any money they lend. It is also harder to find great deals with seller financing, which is key to my strategy.
There are many new restrictions on financing thanks to the recent Dodd-Frank Act.
Refinance
In most areas of the country, home values are rising and interest rates are at record lows. You may be able to refinance your home and get enough money to buy an investment property. Once you are able to buy an investment property, you can refinance it in one year (sometimes less with the right bank). With rates as low as they are, if you bought the home below market value, you should be able to take out as much as you put into the house and still cash flow. I use this refinance technique all the time. Getting lenders to do a refinance is tricky when you own multiple investment properties. I use a portfolio lender who has allowed me to use a cash-out refinance on as many properties as I want.
Below is a property I refinanced:
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Move in ready Houses
A move-in ready property means all the repairs are completed and it is ready to rent as soon as you buy the home. There can be many advantages to buying a nice home. The biggest advantage is you do not have to pay for repairs. You also do not have to spend time waiting for repairs to be done, which saves money on mortgage payments, utilities, and other carrying costs. The downside of a move-in ready property is that it is usually more expensive and provides less cash flow than a home that needs work.
Credit cards
A few other ways to get quick cash can be very expensive and are usually reserved for people looking to do a quick flip. If you have a killer deal you cannot pass up, you may want to consider these options, but I do not recommend using them unless it is necessary. The easiest way to get quick cash is with credit cards. You can get a cash advance or pay for repairs using your credit card. If you use a credit card to finance your down payment or repairs and cannot pay it off right away, do not pay the 17 percent interest rate. Do your best to get another card that will allow a balance transfer. Many times, you can transfer all of your balance and pay little to no interest for up to a year. That may give you enough time to pay off the card and not to be stuck with a high-interest rate eating all of your profits. I also suggest using a rewards card for repairs on your investment properties. If you pay the balance off every month, this is a great way to make a little extra money.
Self-directed IRA
If you have money invested in an IRA, you are not limited to investing in stocks or mutual funds. There are special self-directed IRAs that you can use to purchase an investment property. You can use your IRA for down payments and repairs and then collect rent in the IRA.
401K
Some 401ks allow an investor to take out a loan against them. You usually have to pay back the loan relatively quickly and pay interest on the loan. You have to be very careful when borrowing from a 401k because the money you borrow is no longer earning interest or growing in your retirement fund. If you lose your job, you also may be required to pay back the loan within 60 days or pay a 10 percent penalty and income tax on the loan.
Subject to loans
With a subject to loan, you buy a house without paying off the previous owner’s mortgage. This is another tricky situation; investors must be very careful with it. Most bank mortgages are not assumable; when the homeowner sells the house, they have to pay the loan in full. The bank most likely will have a due-on-sale clause that says the loans must be paid in full, once the property transfers ownership. With subject to loans the new investor buys a house subject to an old mortgage and does not pay off the loan. There is a chance that the bank will require the loan to be paid off if they find out that the home has been sold.
Investors buy homes subject to a mortgage so that they do not have to get a new loan. It may be hard for the investor to qualify for a mortgage or they may be maxed out on being able to get new loans. If you buy a home for $80,000 that has a $75,000 mortgage in place, the investor would only need $5,000 to buy the house instead of the normal 20 percent or more.
Fannie Mae Homepath program
The Fannie Mae Homepath program on their REO properties allows investors to put only 10 percent down and allows up to 20 financed loans in one person’s name, which is also a huge bonus. It is very difficult for many investors to get loans on more than four properties.
This program has been discontinued.
Conclusion
Rental properties can be expensive, but there are ways to purchase them with less than 20 percent down. If you are short on cash, buying properties with little money down can accelerate the purchasing schedule and increase your returns. However, you will most likely make less money on each property, because borrowing that last 20 percent can be much more expensive than the first 80 percent.
My book Build a Rental Property Empire, goes over how to buy investment properties with little money down. It also covers how to find deals, finance rentals, manage them, and much more! It is available as a paperback and ebook on Amazon or as an audiobook on Audible.
Protecting the people and the things that are important to you is an indispensable part of your overall financial planning. One way to lock in financial protection for those who you are about is through life insurance.
The funds from life insurance are received income tax free by beneficiaries, and the funds can be used for mostly any need that the individual(s) sees fit, such as the payoff of massive debts (including a mortgage balance), the payment of everyday living expenses, and/or to ensure that a child or a grandchild will have the money they need for their future college education.
Before committing to purchase life insurance, it is vital to make sure you are going with the right type and amount of protection. It is also essential to review the insurance company that you are planning to purchase the coverage through so that you can ensure that it is secure and steady from a financial standpoint and that it has a good, positive name for paying out its policy holders’ claims. One of the insurance companies that meets these criteria is Esurance – an Allstate company.
The History of Esurance Life Insurance
Esurance was initially founded in 1999 – and it is one of the very first companies to offer insurance policies to consumers via the Internet, rather than requiring in person meetings or phone calls with an insurance agent.
Over time, the company has been acquired more than once – first by Folksamerica Holding Company (a subsidiary of While Mountains Insurance Group) in 2000, and then again in 2011 by Allstate.
Esurance is owned by Allstate Insurance Company – which is the oldest publicly held personal lines insurance carrier in the United States. Allstate has more than 80 years of experience in working with policy holders to protect assets, wealth, and other things of importance. Allstate is a Fortune 100 company, and it holds assets that exceed $130 billion. (Allstate is headquartered in Northbrook, Illinois).
While Esurance is part of a large company, this entity of Allstate can offer more of a small company feel – which includes more personalized customer service. Esurance also offers reliable insurance products that are combined with smart, cutting edge tools that can help its policy holders with managing their insurance whenever, wherever, and how ever they wish. The company’s primary headquarters is in San Francisco, California.
Esurance Life Insurance Review
Today, Esurance has more than 3,000 associates across the United States, with 17 offices around the country. The company offers its products in 43 of the 50 U.S. states – and to date, the company has more than 5.2 million vehicles insured.
The company participates in a vast amount of consumer advertising, as well as in the sponsorship of sporting and other events. For example, its tagline is “Insurance for the Modern World,” with its primary target being families and professionals who are in the 25 to 49 age group. Just some of the sports teams and events where Esurance can be found as a sponsor include the U.S. Open tennis tournament, as well as with the San Francisco Giants, and the Golden State Warriors. In the spring of 2015, Esurance also announced a multi-year sponsorship with Major League Baseball, where Esurance will be the exclusive auto insurance partner for the MLB.
Esurance prides itself on its customer service – which includes the timely payment of its policy holder claims. The company offers 24 / seven claims service from dedicated reps, and in most cases, it takes ten days or less to settle vehicle damage claims.
Over the years, the company has earned numerous awards and accolades, including:
PR Daily’s Video Awards in 2015
Bay Area’s Healthiest Employers in 2015
2015 InformationWeek Elite 100
NJBIZ Best Places to Work in New Jersey (in 2015)
J.D. Power award for Highest Customer Satisfaction Among Auto Insurers in California
Insurer Ratings and Better Business Bureau Grade
Due to the company’s financial strength and its ability to pay out claims, Esurance has earned high ratings from the insurer rating agencies. This includes the receipt of an A+ from A.M. Best Company.
Allstate, the parent company of Esurance, is rated as an AA- from Standard & Poor’s (which is the fourth highest rating out of a total of 22 categories), as an A+ by A.M. Best Company (which is the second largest out of 16 total categories) and as an Aa3 from Moody’s Investor Services (which is the fourth highest rating out of a total of 21 possible types).
Also, while Esurance is not an accredited business through the Better Business Bureau (BBB), the BBB has provided Esurance with a grade of A+ – which is on an overall grade scale of A+ to F. In the previous three years, Esurance has wrapped up a total of 362 customer complaints – of which 33 were closed out within the last 12 months.
Of the over-all 362 customer complaints, 197 had to do with problems with the company’s products/services. 69 were related to billing/collection issues, 61 regarding advertising/sales issues, 26 were about delivery issues, and regarded guarantee/warranty issues.
Likewise, Allstate has been given the grade of A- from the Better Business Bureau, and this company has closed out a total of 1,519 customer complaints within the past three years (with 138 being closed out within the previous 12 months).
Of these 1,519 complaints, 900 had to do with problems with the company’s products and/or services, 320 were related to billing and/or collection issues, 144 were related to delivery issues, 137 had to do with advertising and/or sales issues, and 18 were referred to guarantee / warranty issues.
Life Insurance Coverage Offered Through Esurance
While Esurance is primarily known for offering auto and other types of vehicle insurance coverage, including some of the best insurance for young drivers, the company also provides the ability for consumers to purchase life insurance. Esurance offers quotes on term life insurance coverage – which provides death benefit only protection, with no cash value or savings build up. Because term life insurance is the purest, a basic form of life insurance coverage can often be quite affordable – especially if the insured is young and in relatively good health at the time of policy application.
With term insurance, as its name suggests, coverage can be purchased for a set time – or term – which can typically be anywhere between one and 30 years (depending on the plan). In most cases, the amount of the term life insurance coverage – as well as the sum of the premium that is due – will remain level during the allotted time frame.
In some cases, a term life insurance policy that is purchased via Esurance can be converted over to a permanent form of life insurance coverage. This can allow the insured to obtain life insurance for the remainder of his or her lifetime (provided that the premiums are paid). It can also provide the ability to build up cash value in the cash component of the insurance policy.
With permanent life insurance, the cash value can grow and compound over time on a tax deferred basis. This means that there is no tax due on the increase in the contract until the money is withdrawn. Funds that are in a permanent life insurance policy’s cash value can be either borrowed or removed by the policy holder for any purpose, such as supplementing retirement income, paying off debt (typically higher interest debt such as credit card balances), purchasing a new vehicle, paying for a child or grandchild’s college education, or for going on a long-awaited vacation.
While the funds that are borrowed from a permanent life insurance policy do not typically have to be repaid, if they are not, the shortfall – plus interest – will be charged against the amount of the death benefit that is ultimately paid out to the policy’s beneficiary. (If the policy is canceled before the insured’s death, then the amount of the un-repaid cash value can be considered as a taxable distribution, and then taxed accordingly by the IRS).
Esurance offers its life insurance quotes directly online, which can be very convenient for consumers. The company provides these quotes via Efinancial. The life insurance coverage is not underwritten directly by Esurance, but rather by other insurance carriers in the market place, such as:
Prudential
AIG
Transamerica
Fidelity Life
Protective
Legal & General of America / Banner William Penn
North American Company
Because the life insurance that is offered through Esurance is done so by various insurance carriers, the products, rates, and the time that is required to purchase a policy (such as underwriting procedures) can vary from one company to another.
To obtain renters insurance quote, or any quote for that matter, a consumer must provide the following information via the Esurance website:
Name
Date of Birth
Gender
Height
Weight
Zip Code
Primary Phone Number
Email Address
The answer to whether they have been treated for any significant medical conditions (and if yes, provide additional details)
The answer to whether they have used tobacco products within the past 12 months (and if yes, provide further details)
If a consumer finds a policy that they are interested in pursuing, then it is possible to apply directly for this policy on the Esurance website.
Other Products and Services Available
In addition to life insurance coverage, Esurance offers an extensive list of other products and services, including the following:
Health Insurance
Pet Insurance
Cell Phone Insurance
Home Owners Insurance
Renters Insurance
Condo Insurance
Flood Insurance
Umbrella Insurance
Car Insurance
Motorcycle Insurance
Boat Insurance
PWC (Power Water Craft) Insurance
RV (Recreational Vehicle) Insurance
Travel Trailer Insurance
Snowmobile Insurance
Classic Vehicle Insurance
Commercial Auto Insurance
Scooter Insurance
Segway Insurance
Golf Cart Insurance
How to Get the Best Life Insurance Premium Rates on Coverage with Esurance
If you are seeking the best life insurance premium rates on coverage through Esurance – or any other provider of life insurance – then it may be to your advantage to work with an independent life insurance agency or brokerage. That way, you can compare, side-by-side, life insurance policies and prices, and from there you can determine which one may be the best for you.
When you are ready to see which life insurance plan(s) you may qualify for – as well as the premium rates – we can help. We are an independent life insurance brokerage, and we work with many of the top life insurance carriers in the industry today. We can offer you this information swiftly, simply, and expediently – all directly from your home computer. We also have experts available who can answer any of the additional questions or concerns regarding life insurance that you may have. If you are ready to proceed, then all you should do is just simply fill out our quote form.
We know that the purchase of life insurance may seem a bit overwhelming. There are many variables that you need to consider. However, this process can be made so much easier when you are working with an ally on your side. So, contact us today – we’re here to help.
Apparently you can now use your tax refund to automatically buy I-series bonds from the U.S. government.
As recently as three years ago, I was a huge fan of tax refunds. Despite the arguments against them, I liked getting a tax refund because it was the only way I’d found to save. I’m able to save on my own now, so I no longer aim to get a tax refund every year, but I certainly don’t fault anyone else for doing so. If that’s what you need to save, then do it!
If you’re truly trying to save with the money, the U.S. government has a new option for you starting this year: Now you can buy U.S. Series I savings bonds with your tax refund. Instead of getting a cash refund, you can designate up to $5,000 of your refund to be delivered in actual paper bonds issued in your name.
I Bonds are savings bonds that are indexed for inflation. The earnings rate on an I Bond has two components:
The first is a fixed rate that remains the same for the life of the bond. (It’s currently 0.30%.)
The second is the variable “semi-annual inflation” rate. Twice each year (on May 1st and November 1st), this rate adjusts based on the current inflation rate. At the moment, it’s 1.52%.
The fixed rate and the variable rate are combined to get a composite rate, which is currently 3.36%. I know this is a lot of gibberish. All you really need to know is that I Bonds are a safe place to put your money so you don’t have to worry about it losing value to inflation.
Because of this, I Bonds are an attractive alternative to high-yield savings accounts, especially now. They offer higher rates of return, and I Bonds are state and local income-tax exempt. (Federal income tax on I Bonds can be deferred until the bonds are cashed in or stop earning interest after 30 years.)
One drawback? I Bonds aren’t as liquid as a savings account. You can cash them out whenever you want, but if you do so before five years, the bond is subject to a 3-month earnings penalty. (This is sort of like breaking a certificate of deposit early.)
If you’re going to use your tax refund to save, why not actually save, all while getting a great rate of return on your money?
Upstart is one of the newer peer-to-peer (P2P) lending platforms available on the Internet. But the platform is coming up quickly, drawing interest from both borrowers and investors. Despite the fact that the service is barely two years old, Upstart could be one of the better P2P platforms to use, whether you are a borrower or an investor.
About Upstart
Based in Palo Alto, California, Upstart is a peer-to-peer lending platform that began operations in 2014. Despite Upstart’s tender age, the platform has already arranged more than $300 million in loans. The company was “founded by ex-Googlers” (former Google employees) to provide personal loans using very different lending criteria than is common even for P2P lenders, to say nothing of banks.
All loans made through Upstart are made by Cross River Bank, which is an FDIC insured commercial bank that is chartered in New Jersey, but funded through independent investors.
Upstart Borrowing Review
In most respects, borrowing through Upstart is similar to the process on other P2P lending sites, like Lending Club and Prosper. The application is completed entirely online, your loan request – if you qualify – is graded and priced, then the loan is funded.
But what makes Upstart different is the way they underwrite your loan. They check your credit score, your years of credit, and your job history, just like every other lender does. But those aren’t the only criteria that Upstart uses in determining whether or not to make a loan to you. They also consider your education and your area of study.
The idea is that “you are more than your credit score”. Upstart also considers your future potential, which they believe is demonstrated through your education experience. They will take into consideration the college that you graduated from, your grade point average, and your major – obviously certain major fields of study are considered to be an advantage from a lending standpoint. The Upstart system seeks to identify and make loans to what it refers to as “future prime” borrowers.
The Upstart target borrower. Because of the consideration of a borrower’s education, Upstart is well suited to new and recent college graduates. The company is less concerned with how deep your credit history is, or even your employment history. Your potential for future income becomes an essential consideration.
Traditional loan requirements. Upstart does require that you have a minimum credit score of 640, however there is no minimum credit history requirement. You must also not have any bankruptcies or other negative public records on your credit report.
There is also no required minimum income level, nor is there a maximum debt-to-income ratio (DTI). That could be a major advantage if a bank turned you down for a loan due to insufficient income.
Minimum/maximum loan amounts.The minimum loan amount on Upstart is $3,000, and the maximum is $35,000.
Loan term. There are two loan terms available with Upstart, 36 months or 60 months.
Loan purpose. Upstarts loans are generally classified as personal loans, but you can use them for just about any purpose you can imagine. For example you can use the proceeds to pay off credit cards, consolidate debt, refinance student loans, take a course for boot camp, pay for college or graduate school, make a large purchase, relocate, pay medical bills, start or expand the business, buy a car or anything else that you like.
Loan qualifications. In order to qualify for a loan with Upstart, you must be a US citizen or permanent resident alien, be at least 18, not live in West Virginia, have a valid email account, be able to verify your name, date of birth, and Social Security number, have a full-time job or a full-time job offer starting within six months, or a steady part-time job or other source of regular income, and have a US bank account.
Application process. The application is online, and requests information about your academic credentials, work experience and the purpose of the loan. All information provided on the application must prove to be correct. You can complete the application in as little as two minutes.
If you accept your loan no later than 5:00 pm (Eastern Time), your loan proceeds will generally be available on the next business day. Otherwise they should arrive after two business days. However, if the loan is being used for education purposes, there is a three day waiting period between when you accept your loan, and when the funds arrive. In any event, the loan proceeds will be wired to your bank account.
Documentation requirements. Upstart will run your credit report, and you will need to upload documents that support your income. If you are a full-time employee you’ll need to provide your most recent pay stub. If you will be qualifying using bonus or commission income, you will need an offer letter from the employer spelling out the terms and expected income. If you have multiple jobs, you will need the latest pay stub for each.
Rental income will require a copy of a lease on the rented property. And if you are self-employed, they will need the most recent year’s income tax return, as well as copies of current year’s invoices.
And since your college background is an important part of the loan evaluation process, you may also need to furnish a copy of your college transcript. A college transcript will be required if you graduated within four years of your application date.
One more point on income, and it’s a big one. Since the loan that you will be applying for on Upstart is a personal loan, you cannot include other household income on your application. That includes your spouse’s income, if you’re married. Your qualification is based on your income only.
What if you lose your job and can’t make the payments? Upstart doesn’t provide specific information on this point, but they do make the following claim on the website:
“If you are experiencing hardship and cannot pay, please contact us immediately. If you are unable to pay, we may be able to work on an alternative payment plan that will avoid additional fees or penalties.”
You also have the option to change your monthly payment date to better suit your schedule. However, the new payment date needs to be set before your actual due date, otherwise you will accrue additional interest.
Collateral. There’s more good news here; Upstart doesn’t require collateral on any of its loans.
Interest rate and fees. Your interest rate is generated by the model and is based on your application and a “soft pull” of your credit report. Rates range from 4.66% APR to 29.99% APR for a 36 month loan, and between 6.00% APR and 27.32% for 60 month loans.
Like many other P2P lenders, Upstart does charge an origination fee. That fee is equal to between 1% and 6% of the loan amount (putting it squarely in line with Prosper and the other lenders). However, there is no prepayment penalty should you choose to payoff your loan early.
Upstart Investing Review
Upstart is all about lending money to borrowers, but it’s equally accommodating if you want to join the platform as an investor.
Here are the highlights:
Minimum investment. You need just $100 to open an account and invest with Upstart.
Loan quality. Upstart claims that about 98% of their loans are either current or are paid in full. Only about 1.1% of their loans are more than 30 days late, and just 1.2% are listed as charged off.
Borrower quality. The good experience that Upstart has on its loans has to do with the profile of the typical Upstart borrower. Here are some statistics:
Average FICO score: 691
Average income: $105,842
College graduates: 90.9%
Refinancing credit cards: 76.2%
Refinancing credit cards needs some explanation as to why it is seen as a positive factor as a borrower profile. Loans generally perform better when they represent some form of refinance of existing debt. If the borrower has successfully managed that debt in the past, there is a credit track record, and a better chance that the new financing will be similarly well-managed.
In a borrower is using a new loan from Upstart to replace high-interest revolving credit card debt, with a fixed rate installment loan, the borrower’s financial situation improves immediately, particularly if the new monthly payment is lower than what the total payments were on the credit cards that were refinanced.
Expected Returns. As you’ll see below, you can expect to earn rates of interest on your Upstart loan portfolio that are well above what are available through banks and brokerage firms.
Here are the modeled returns listed on the site, based on loan grade:
AAA – 3 year loans 3.79%; 5 year loans 5.67%
AA – 3 year loans 4.50%; 5 year loans 6.18%
A – 3 year loans 5.60%; 5 year loans 7.14%
B – 3 year loans 6.88%; 5 year loans 9.13%
C – 3 year loans 7.93%; 5 year loans 11.92%
D – 3 year loans 9.01%; 5 year loans 13.67%
E – 3 year loans 10.57%; 5 year loans 15.57%
Modeled returns for each grade and loan term are net of the annual loss rate, which is different for each grade and term. For example, on AAA loans the annual loss rate is less than 0.1% on three year loans, and less than 1% on five year loans. At the opposite end of the spectrum, there is a 13.60% annual loss rate on three year loan grade E loans, and 11.19% on five year loan grade E loans.
Income tax reporting. Upstart will report taxable interest income earned on your account with the filing of Form 1099-INT with the IRS. Naturally, you will receive a copy of the document, which must be sent to you no later than January 31, following the year in which the interest income was earned.
Income taxes may be withheld from your interest income for a number of reasons. If you did not complete lRS Form W-9 when you opened your account with Upstart, then withholding will be required. It may also be necessary in the event that the name, Social Security number or taxpayer identification number that you provided to Upstart doesn’t match IRS records. In addition, withholding will take place if Upstart is notified by the IRS that it is required for any purpose.
Withdrawing funds from Upstart. You can have cash balances in your Upstart investment account transferred to your bank account at any time you choose. There can be a delay of up to seven business days with the transfer, depending upon your bank.
IRA accounts are available with Upstart. You can set up a self-directed IRA account with Upstart that allows you to invest in loans through the platform. Given that interest rates are so low at banks and brokerage firms, the higher interest income that an Upstart account can provide could make an excellent place to hold your fixed income IRA allocation.
Fees. There’s really good news here – Upstart charges no fees to investors. What’s more, Upstart doesn’t earn fees on loans that default. Even better, if the loan defaults, Upstart turns the fees that were collected when the loan was originated over to investors in the loan. This is where that origination fee of between 1% and 5% of the loan amount could loom large.
No FDIC or SIPC insurance coverage! There is one caveat in regard to investing with Upstart. In the event that Upstart goes out of business, there is no federally sponsored insurance agency or fund that will cover your investment with the platform. However, this is another factor that is common with P2P platforms.
Upstart claims that they have a backup servicer and administrator in place so that the loans held for the platform will continue to be serviced, and you will get paid as an investor in those loans.
Upstart Review Summary
If you are a borrower, Upstart uses innovative methods in approving loans. This is an excellent loan source if you are recently out of college, and have not fully established yourself financially, or if your bank thinks your income is insufficient to support a loan. The platform will accept a very short employment history, or even a written promise of employment. It gives you an opportunity to be approved for a loan, even though banks may decline your application.
From an investor standpoint, Upstart’s loan quality is providing solid returns. The emphasis on “future prime” borrowers may be allowing Upstart to tap into a market that other lenders are ignoring. That assures more good investment opportunities in the future.
Whether you’re looking to borrow or to invest, check out Upstart as one of the P2P possibilities.
Capital One is a well-known financial institution that made its name in the credit card business. In fact, its most popular credit cards – Capital One Quicksilver Cash Rewards Credit Card and Capital One Venture Rewards Credit Card – routinely make our lists of the best cash back credit cards and best travel rewards credit cards, respectively.
Capital One 360, one of its major divisions, offers a related, if less sexy, suite of products: FDIC-insured online banking and personal lending services. If you’re not satisfied with the brick-and-mortar banking options in your area, then Capital One 360 should be on your radar.
Capital One 360’s standout product is the 360 Performance Savings Account, or Performance Savings for short. It boasts one of the best interest rates of any high-yield savings account, super low fees, and a slew of user-friendly features and capabilities. Read on to learn why it stands out from the competition.
Key Features of the Capital One 360 Performance Savings Account
The Capital One 360 performance Savings Account isn’t revolutionary by any means. But it has some notable features that set it apart from competing accounts at other popular online banks.
Account Yield
This account offers a variable yield. At 3.50% APY, it’s very competitive with other online savings products.
This yield applies to all eligible balances, regardless of relationship status.
Minimum Balances
This account requires no minimum opening deposit and doesn’t have an ongoing balance requirement.
Monthly Maintenance Fees
360 Performance Savings does not charge monthly maintenance fees. You’ll never pay a fee to keep money on deposit here.
Multiple Accounts Under the Same Ownership
You can open multiple 360 Savings accounts at once, making it a lot easier to separate and manage goal-oriented stockpiles. The process for opening your second account (and beyond) is the same as for the first, minus the initial identity verification steps.
Link to Your Capital One 360 Checking Account
You can link your 360 Savings account with your 360 Checking account if you have one. This is convenient if you use Capital One 360 as your primary bank and need to raid your savings account on occasion to make big purchases — or, preferably, to top up your savings account whenever you get paid.
Transfers between your Capital One checking and savings accounts occur instantaneously, even outside regular business hours.
Kids’ Savings Account
Capital One 360 also offers Kids Savings accounts for youngsters under age 18. They’re basically the same as 360 Performance Savings accounts, except they can be configured as custodial accounts – a valuable tool for teaching the next generation how to spend and save wisely.
360 Performance Savings — IRA Options
You can structure your Performance Savings Account as a traditional or Roth IRA. When you do, your account earns tax-free interest — boosting your return over time thanks to the magic of compound interest.
There’s not much daylight between standard taxable and IRA savings accounts at Capital One. Yields are the same, the FDIC insurance limit is the same, and all the same digital features and capabilities apply.
Just be aware that if you haven’t yet hit the age threshold to begin taking required minimum distributions (RMDs), you can’t withdraw from your IRA savings account without triggering a tax penalty. This penalty depends on the type of account; if you have a traditional IRA, you’ll also need to pay income tax on withdrawals.
Savings Goals and Automatic Savings Transfers
Capital One makes it easy to organize and track your disparate savings goals without leaving the Capital One 360 ecosystem. Use the user-friendly system to designate individual goals, automatically set aside money on a weekly or monthly basis using the Automatic Savings tool, track your progress toward the goal, and celebrate when you’re done.
Mobile Check Deposit
Capital One has a handy mobile check deposit feature that facilitates check deposits anytime, anywhere — as long as you have your mobile phone on you. If you’re planning to save your entire deposit, you can deposit it directly into the savings account and save yourself the trouble of transferring the funds.
ATM Access
Capital One’s fee-free ATM network has about 40,000 machines, larger than many brick-and-mortar banks’ networks. Third-party ATMs may charge fees, however.
Customer Support
Capital One’s automated banking support hotline is available 24/7. If you need to talk to a human being, support agents are available 7 days a week from 8am to 11pm Eastern.
Advantages of Capital One 360 Performance Savings
Capital One 360 Performance Savings has a lot going for it. Top advantages include no fees or minimums, the ability to open multiple goal-oriented accounts, and some handy automation features.
No Opening or Ongoing Balance Requirements. 360 Performance Savings doesn’t have opening or ongoing balance requirements. You can open an account with virtually nothing, and you’re never required to maintain a balance to keep your account open and avoid fees.
No Maintenance Fees. This account doesn’t charge a monthly maintenance fee — ever. In a world where brick-and-mortar banks routinely charge monthly fees on regular checking accounts, this is a big deal.
Seamless Mobile Check Deposit. Given the sheer mobile-unfriendliness of many of Capital One 360’s smaller competitors, Capital One’s breezy mobile check deposit is a breath of fresh air. It’s easy to deposit paper checks on the go here.
Easy Savings Automation and Transfers. 360 Performance Savings comes with some novel features that encourage and reward regular saving, including goal-setting and savings automation that pads your account every time you get paid. And because it’s so easy to link your Capital One checking and savings accounts, you never have to worry about funds getting lost in the shuffle.
Custodial Accounts for Kids. Capital One’s Kids Savings account is a close cousin of 360 Performance Savings — the main difference being it’s a custodial account for parents and minor kids. There’s no better way to teach your kid the value of a dollar or convey the miracle of compound interest.
Tax-Advantaged Savings IRAs. You can structure your Performance Savings account as a traditional or Roth IRA and reap the tax advantages thereof. Just mid the withdrawal restrictions.
About 40,000 Fee-Free ATMs. All told, Capital One has about 40,000 ATMs in its nationwide network, all of which offer fee-free withdrawals, deposits, and balance checks. International ATMs may charge fees, however.
Disadvantages of Capital One 360 Performance Savings
No Money Market Account. Capital One doesn’t have a money market account to complement its savings account. This is a downside if you want check-writing privileges or a debit card alongside a savings-like yield.
Other Online Banks Have Better Yields. Though they’re subject to change, Capital One 360 Performance Savings doesn’t quite pay industry-leading interest rates. You’ll do better here than at most traditional banks though.
No 24/7 Phone Support. Capital One 360 has a pretty robust customer care infrastructure that includes an impressive “knowledge database” of help topics and FAQs. However, many banking customers still like to talk to a live person about potential problems, and the bank is less steady on this front. Unlike some online competitors, which have 24-hour phone banks, 360’s call center is only open from 8am to 11pm Eastern. That’s not great news for night owls.
How Capital One 360 Performance Savings Stacks Up
Capital One 360 Performance Savings is a popular online savings account with a solid yield, virtually no fees, no minimums, and a host of other benefits.
Why would you need any other savings account?
Well, because some savings accounts are just as good — if not better. Let’s see how one popular competitor stacks up: the Ally Bank online savings account.
Capital One 360
Ally Bank
Monthly Fees
$0
$0
Interest Rate (Yield)
3.50%
3.60%
24/7 Support?
No
Yes
Minimum to Open
$0
$0
Final Word
Capital One 360 is a full-service online bank that offers checking, savings, investment, and business products. It’s far from perfect — while it does place a clear emphasis on financial education and ease of use, it lacks many of the user-friendly features that older online banks, such as Ally Bank, have honed over the years.
But one Capital One 360 account really does stand out: 360 Performance Savings. If you’re in the market for a new high-yield savings account, you could do much worse. In fact, if you can open only one account with Capital One, there’s a strong argument to be made that Performance Savings should be it.
Our rating
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
The answer is yes – sort of. Unlike a fully taxable custodial brokerage account, which lets you invest on behalf of a minor, you can not open and fund a Roth IRA for your child. The key word being fund.
For example, with a taxable brokerage account, your newborn child’s grandma can set up an account in your child’s name and purchase any amount of stock she so chooses. But when it comes to a Roth IRA, your child needs to generate taxable earned income before you can help them set up an account, and most newborns don’t come with taxable income!
However, assuming your child does have taxable earned income, you can open a Custodial Roth IRA on his or her behalf.
No Roth IRA Age Limit
Most people fail to realize that no age restrictions exist when it comes to funding a Roth IRA.
Anyone, regardless of age, can contribute to a Roth IRA as long as they generate taxable earned income that falls within the Roth IRA income limits. To illustrate, let’s look at some extreme examples.
Let’s say you have a six-month old baby earning $10,000 per year modeling baby clothes for a national retailer. As long as you file an income tax return on behalf of your baby, your baby can make the maximum Roth IRA contribution of $5,000.
On the other end of spectrum, let’s say you’re 100 years old with a passion for power tools. You work part-time at Home Depot as a hobby and earn $14,000. You can make a $6,000 Roth IRA contribution, because anyone over 50 years old is allowed to make a $1,000 catch-up contribution.
Those are two extreme examples, but they drive home a key point – Roth IRA eligibility has nothing to do with age and everything to do with your ability to generate taxable earned income.
Earned Income
So, if you want to establish a Roth IRA for your child, they must have earned income. And their annual Roth IRA contributions can not exceed the amount of earned income they generate in any given year.
According to the IRS, earned income includes wages from a job, sales commissions, tips, and/or bonuses. Earned income does not include your child’s weekly allowance, gifts from grandparents, or investment income from a trust.
For example, let’s say your teenage son works part-time as a lifeguard. Over the course of the summmer, he generates $6,000 in after-tax income. Your son is eligible to make the maximum $5,000 contribution to his Roth IRA, but if he only earns $3,000, the maximum contribution he can make is $3,000.
Custodial Roth IRAs
With a Custodial Roth IRA, you oversee the management of your child’s Roth IRA until he or she reaches the age of majority (anywhere between ages 18 and 21 depending on the state in which you live). This means you have the power to determine how your child’s money is invested. You can initiate buy and sell orders for stocks, mutual funds, ETFs, etc. You can do anything on their behalf that you can do with your own Roth IRA, except – withdraw money.
Unlike your own Roth IRA (which allows you to withdraw your original contributions tax-free and penalty-free at anytime and for any reason), the Roth IRA withdrawal rules state that money can not be withdrawn from a Custodial Roth IRA under any circumstance until the owner (your child) reaches the age of majority. And that leads us to the next factor you need to consider…
They Own It, Not You!
While a Custodial Roth IRA gives your child an enormous head start in saving for retirement, it comes with a potential drawback. Your child owns it outright. And just like a taxable custodial brokerage account, once your child reaches the age of majority, they take over control of the account. At that point, they can withdraw every last penny if they choose, and this opens the door to the possibility they might squander their head start on retirement.
After all, thousands of dollars can be quite tempting to a young adult, especially if they haven’t fully matured. But keep in mind, this isn’t necessarily a bad thing. Your child can learn a valuable lesson from blowing a small fortune, and the earlier in life they learn this lesson, the better it will serve them in the long-run.
Giving Your Child A Head Start
Ask most people in their 40’s and 50’s which financial decision they most regret, and the overwhelming majority will tell you, “Not saving for retirement earlier in life.”
After all, it’s so much easier to save what you need for retirement if you start the process earlier. Why? The power of compound interest. And when it comes to compound interest, time is literally money.
To illustrate, let’s pretend two people are both saving $10,000 a year for retirement with a goal of retiring at age 65. Both manage to earn a 10% annual return, but Saver #1 starts at age 25 while Saver #2 starts at age 35.
At age 65, Saver #1 has $4,878,518.11, while Saver #2 has $1,819,434.25. That’s a $3,059,083.86 difference! Just to equal Saver #1’s retirement nest egg, Saver #2 needs to save an extra $18,596.93 per year – just because he started ten years later.
Now, pop open your Roth IRA calculator and imagine the possibilities if your child starts contributing to retirement at age 15. Your child will have an enormous head start financially, and they’ll have you to thank for encouraging them to save early!
This is an article from Britt at Your Roth IRA, the Web’s #1 resource for Roth IRA information.
When you look at Peerform reviews you first need to understand the difference between conventional loans and peer to peer loans. While traditional loans come from a bank and can take months to get done, P2P loans are done through a platform that connects investors and borrowers.
Peer-to-Peer lending sites are rapidly becoming preferred destinations for both borrowers and investors. Peerform is a newer member of the P2P Market and it provides opportunities for both borrowers and investors to get better rates than what they can get from banks or other traditional loan and investment sources.
About Peerform
Peerform was founded in 2010 by Wall Street executives with backgrounds in finance and technology. They started the platform because they realized that traditional lenders like banks seemed unwilling to provide loans for individual and small business owners.
The solution was to create a peer-to-peer lending platform that would bring both borrowers and loan investors together. This would also give investors an opportunity to earn much higher interest rates on their investments than what they could get through traditional bank investments like savings accounts, money market accounts, and certificates of deposit.
The platform is able to offer lower rates to borrowers, and higher rates to investors, because it lacks the physical infrastructure and employment base that banks have. The reduction in operating costs from running a technology driven online lending platform could be passed on both borrowers and investors.
Peerform is headquartered in New York City and has been featured in major media outlets, such as Time and The Street. Peerform is currently eligible to make loans to residents in the 36 following states: Alaska, Alabama, Arkansas, Arizona, California, Delaware, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Vermont, Washington, and Wisconsin.
Loans made on Peerform are underwritten by Cross River Bank, a federally insured New Jersey chartered bank and FDIC member.
Borrowing Through Peerform
The Peerform borrowing process is quick and simple, and you can use the loan proceeds for just about any purpose, including for business related needs.
Here are the highlights of the Peerform lending process:
Loan purpose. Peerform makes personal loans that can be used for a wide variety of purposes, including debt consolidation, credit card refinancing, home improvement, major purchases, car financing, business purposes, medical expenses, moving and relocation, wedding expenses, vacation, home buying, or other needs.
They also have a category referred to as a “green loan”. That’s where you take a personal loan and use it to purchase alternative energy equipment for your home. This typically can be something like solar panels for heat and hot water, or even the generation of electricity.
Loan amounts. Peerform will make loans that range in size $1,000 and $25,000.
Loan terms. All loans made through Peerform are for a term of 36 months. All loans are also fixed rate, installment loans that will be fully paid off at the end of the term. Peerform does not offer any other loan terms at this time.
Minimum borrower qualifications. In order to qualify for a loan with Peerform, you must have:
A minimum credit score of 600
No delinquencies, bankruptcies, tax liens, judgments, or non-medical related collections in the past 12 months
A minimum of one revolving account ever opened
A maximum debt-to-income ratio (DTI) of not more than 40% (not including mortgage debt)
A minimum of one open bank account
Although you don’t need to be employed, you do need to have an income which can be documented and verified. Also in regard to income, if you’re married, your spouse’s income cannot be used to qualify for the loan. Peerform provides personal loans, so you cannot include a cosigner for qualification purposes, nor make joint applications.
The loan application process. Peerform’s loan application uses a five step process:
Registration – This is an online registration that you can complete within a few minutes
Personal loan selection – After completing the online registration, the platform will review your information, and offer loan terms or alternatives.
Personal loan listing – After you have selected the loan terms that you want, your loan request is listed on the platform so that it can be evaluated by potential investors.
Verification – You will be asked to submit documentation that supports the information that you supplied in your registration form, or that will be needed to verify your identity.
The loan registration process will ask you to provide basic information, such as the loan amount you are requesting, the purpose of the loan, your credit score range, your full name, address, phone number, date of birth, email address, and annual salary and wages. You will then be asked to create a password.
Once you complete the registration form, you will be informed immediately if you qualify for a loan, and what the rate for that loan will be. Again, all loans are for a term of 36 months.
If you accept the offer, your loan request will be placed on the platform for investors to review and consider if they want to invest in it. You will also be taken through a step-by-step process to complete your application. Making application does not have any impact on your credit score.
Identity verification will involve you uploading copies of one of the following: your drivers license, military ID with photo, passport with photo, or US federal or state government ID. You will also be asked to verify your income. This will include two recent pay stubs, but they may also request recent tax returns and/or a copy of your bank statements.
Loan funding. In a best case scenario, your loan funds will be available shortly after the loan is put on the personal loan listing platform. However, all listed loans can remain on the platform for up to two weeks, which is known as the two-week listing period. You can track investor interest in your loan during the process.
But it is possible that your loan will not be fully funded within the two-week listing period. If it isn’t, you can either accept a lower loan amount (up to the amount funded), or you may need to reapply.
Interest rates and fees. Just like Lending club loans, interest rates with Peerfrom range between 7.12% APR and 29.99% APR. Rates are based on your Peerform Grade, and broken down into four alphabetic groups, each with its own rate range:
AAA, AA+, AA, A+ and A: 7.12% APR to 13.94% APR (credit score range: 700+)
BBB, BB+, BB, B+ and B: 14.86% APR to 19.44% APR (credit score range: 680 – 699)
CCC, CC+, CC, C+ and C: 20.87% APR to 26.92% APR (credit score range: 600 – 679)
DDD and DD+: 28.33% APR and 29..99% APR (credit score range: not indicated)
There are no application fees. There are however origination fees, typically 5.00% of the loan amount on all loans grades, except Peerform Grade loans AAA (1.00%), AA+ (2.00%) and AA (3.00%). The origination fee is deducted from your loan proceeds. For example, if your loan is $10,000, and the origination fee is 5.00%, you will receive net loan proceeds $9,500. The origination fee is payable only if the loan is issued.
The preferred loan repayment method by Peerform is by direct debits from your bank account. But you do have an option to pay by paper check. If you do, there is a $15 check processing fee for each check.
Late payments are assessed a fee of 5% of the monthly payment, subject to a $15 minimum per occurrence. There is also an unsuccessful payment fee in the event that your payment is refused. That fee is $15 per unsuccessful attempt, or a lesser amount as determined by state law.
There are no prepayment penalties in the event that you want to make a partial or full early payment on your loan.
Loan payments. You can repay your loan either by automatic draft from your bank account, or by mailing in monthly checks. However, Peerform does charge a fee of $15 per payment if you pay by check. There is no charge if you pay by automatic bank draft.
Site security. Peerform follows bank level security protocols, which includes encrypting and storing sensitive data in dedicated 24 hour maintain servers, which are protected with firewalls and housed in a secure facility. Servers are equipped with Secure Socket Layer (SSL) certificate technology to ensure encryption.
You also don’t need to concern yourself with the fact that investors will have access to your personal information. They will get only the information needed for investment purposes, but will not have access to any information that personally identifies you. In that way, you can apply for a loan anonymously, and not concern yourself that the information is available to someone who is either unintended or inconvenient, and certainly not for general public consumption.
Investing Through Peerform
If Peerform is a great place to get a loan, it’s also a rich source of investment opportunities.
Here is how investing through Peerform works:
Investor qualifications. In order to invest on Peerform, you must be an accredited investor. That’s an investor who is either high income or high net worth, or both, and who is generally recognized as a sophisticated investor who understands risk, knows how to invest into it, and is prepared to lose all of his or her investment (the temperament factor).
According to the US Securities and Exchange Commission, an accredited investor is defined as anyone who…
earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
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Investments offered. Peerform offers two types of investment products, whole loans and fractional loans. Whole loans are just what the name implies – you’re buying an entire loan. These investments are typically offered to institutions. Fractional loans are portions of loans, that are offered to individual investors.
These are not unlike investments on other P2P sites in which you can either invest in an entire loan, or in small pieces of many loans, commonly called notes.
All loans available for investment on Peerform are subject to analysis by the Peerform Loan Analyzer. The tool uses a highly advanced and dynamic algorithm for pricing loans. It uses empirical methods rather than filters (which are used on most P2P platforms) in order to better calculate consumer credit risk.
Custom portfolio. The portfolio enables you to diversify by customizing your investments to meet your needs. You can set investment goals, and the customization tool will outline how to invest your capital in order to reach your investment goals in the most concise way.
Fraud protection. Loan fraud is not uncommon and increases loan defaults, so Peerform takes extra steps to weed it out. In addition to requiring documentation to verify the borrower’s identity and income on the loan registration form, Peerform also uses both proprietary methods and commercially available licensed technologies and solutions to both detect and prevent fraud.
This includes third-party services such as Lexis Nexis for user identification, TransUnion for credit checks, and OFAC compliance.
Peerform also verifies that there is a variation of no more than 10% in the income stated by the borrower on the registration form, and that which is proven by the income documentation. If needed, IRS Form 4506T will be completed and sent to the IRS to verify the borrower’s income tax records. A small debit is taken from the borrower’s bank accounts, and verified by the borrower to make sure that the bank account is valid. The borrower’s phone number and email IP location are also verified.
Investment returns. Peerform offers rates of between 6.44% and 28.33% (net of origination fees). This rate range refers to returns before deducting for loan defaults, so your actual returns will be something less. .
Summary
Peerform is one of a growing number of P2P lending sites that also offers investment opportunities. The platform is using cutting edge technology to set the most accurate loan rates, which will also reduce the number of defaults that lowers the investment return on so many P2P lending sites.
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If you receive Social Security Disability Insurance (SSDI) payments, you might be wondering if you can supplement them with some money from your retirement accounts, such as a 401(k). While withdrawing from your retirement funds won’t usually impact your disability insurance, increasing your income can have tax implications. Here are the biggest considerations when withdrawing from a 401(k) while on SSDI.
If you want professional help navigating financial issues, consider enlisting the help of a financial advisor.
SSDI Basics
If you qualify for SSDI, the Social Security Administration will pay you a set amount per month. To qualify for SSDI, you need to have a disability that doesn’t allow you to work or engage in “substantial gainful activity.”
A disability isn’t all you need to qualify for SSDI: The Social Security Administration also determines your SSDI eligibility and payment amounts based on your employment. Like other Social Security programs, you must meet certain standards for workplace participation, including having worked long enough and recently enough to qualify.
While SSDI is a safety net for many disabled workers, the payments aren’t large. The average monthly Social Security benefit payment for disabled workers in January 2023 was $1,483, according to the Social Security Administration’s 2023 COLA Fact Sheet.
How Do Retirement Withdrawals Affect SSDI?
According to the Social Security Administration, there are only two things that would cause your SSDI payments to stop: you are able to go back to work at a level they consider “substantial,” or your condition improves and they determine you no longer have a disability. SSDI is not impacted by unearned income — that is, money that doesn’t come from you working a job — so withdrawals from a 401(k) plan will not affect your benefits.
But there are tax implications that come along with 401(k) disbursements. If you were previously living off of only SSDI, you likely didn’t owe taxes as your income would fall below $25,000. If 401(k) withdrawals or any other form of unearned income put you above the limit, you’ll need to pay income tax.
One note: While there’s usually a 10% penalty for withdrawing from your 401(k) before the age of 59 ½, you can withdraw early if you have a qualifying disability. However, the IRS defines disability differently than the Social Security Administration does. The Social Security Administration defines a disability primarily as a medical condition that prevents you from working. On the other hand, for the IRS to allow you to withdraw from your 401(k) plan early, the disability must be “total and permanent.”
Another interesting note: Once you reach the age of 65, your SSDI benefits will cease and automatically convert to retirement benefits.
How SSDI Taxes Work
While SSDI on its own won’t trigger taxes, there is a relatively low threshold at which your benefits may be taxable. Let’s take a look at how that works.
The IRS determines whether you have to pay taxes on your benefits based on a base amount. The base amount is determined by adding up one half of your Social Security benefits and 100% of all of your other income. In 2023, the base amount at which taxes kick in is $25,000 if you’re single, head of household, qualifying surviving spouse or married filing separately and having lived apart from your spouse for the whole tax year. It’s $32,000 if you’re married filing jointly with your spouse. And if you’re married filing separately but have lived with your spouse at any point during the tax year, the limit is $0.
As an example, let’s say you’re a taxpayer filing your taxes as a single person. You receive an SSDI payment of $1,400 each month and withdraw about $1,400 from your 401(k) plan each month using the IRS’ disability exception. You have no other income outside of these two sources. Half of your annual Social Security benefits would be $8,400. If you add that to the $16,800 you’re withdrawing from your 401(k) for the year, you’re taxable income comes to $25,200—just over the IRS limit—so you’ll need to pay taxes. On the other hand, if you were living solely on your SSDI income, you wouldn’t owe taxes.
There’s another way in which getting retirement income can affect your Social Security payments. If you receive a pension from a government job but did not pay Social Security taxes while you had the job, your Social Security spouse, widow, or widower benefits will be reduced by two-thirds of the amount of your government pension. This offset is known as the government pension offset.
The Bottom Line
Drawing on your retirement savings, such as a 401(k), won’t impact your SSDI payments. However, if your yearly income, of which 401(k) money can be a part, is more than a set threshold, you may owe taxes on part or all of that income.
Retirement Tips
For help navigating retirement planning or tax issues, consider working with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Social Security benefits depend on your work and income history. Estimate your payments with our Social Security calculator.
Until a few years ago, small businesses were limited to obtaining business loans from banks and other traditional sources. But in the last few years, another source has opened up, and that’s peer-to-peer (P2P) business loans.
These are loans tailored specifically for small businesses, and they provide greater credit options than what small business owners can find at banks.
P2P Lenders Have Become Important Sources of Business Loans
It’s fortunate for small businesses that P2P platforms that make business loans are coming into the market. Banks – the most traditional source of loans of all types – are not particularly interested or generous when it comes to making loans for business purposes.
If you are a business owner and have attempted to get business financing, you’re likely well acquainted with the difficulties of the process.
This is especially true in the small business space. Banks make loans to businesses, but those are primarily well-established businesses. More typically, they represent medium- to large businesses.
Banks see these as lower risk lending niches since companies have strong track records, as well as large revenue streams and asset bases to secure the loans. That kind of stability is usually not as obvious with small businesses, and banks make getting a loan particularly difficult.
Complicating the process is that banks often don’t make business loans for less than $100,000. They usually see smaller loans as not worth their time and effort, based on the profitability of the loan. That means that if a small business only needs $50,000, they may not even be able to find a bank willing to talk to them.
But P2P lending is opening up for small businesses. Here are five of the most prominent P2P lenders in the sector:
Lending Club
You always have the ability to use personal loans for business purposes with Lending Club, but Lending Club has been gradually segmenting its loan types, which includes dedicated business loans and business lines of credit.
The personal loans are still available, which will enable you to get an unsecured loan for up to $40,000 to use for your business. But the business loan programs will enable you to borrow much larger amounts.
In fact, you can borrow an amount of up to $300,000. Business loans are installment loans with terms that run from one to five years They are fixed rate, with fixed monthly payments, and will be paid in full at the end of the term.
Business credit lines, on the other hand, are revolving credit arrangements, that function like credit cards or home equity lines of credit.
Lending Club does not require business plans or projections, nor do they generally ask for appraisals or title insurance. No collateral is required for loans for less than $100,000, and when collateral is required for higher amounts, it’s usually a general lien on the business and personal guarantees from the owners of the business. What’s more, loan proceeds can be used nearly any purpose.
In order to qualify for a Lending Club business loan or business line of credit, you must be in business for at least 24 months and have at least $75,000 in annual sales.
You must also own at least 20% of the business and have at least fair or better personal credit. This generally requires a credit score of at least 660, with no recent bankruptcies or tax liens.
APR runs between 6.95% and 35.89%, and there is an origination fee equal to between 0.99% and 6.99%. But there are no application fees and no prepayment penalty.
Funding Circle
Where Lending Club and other P2P lenders offer business loans as part of their loan mix, Funding Circle is expressly set up to provide business loans specifically.
Funding Circle provides business loans for a minimum of $25,000 up to a maximum of $500,000. Like Lending Club, business loan terms can range from one year to five years, and you can use the proceeds to just about any purpose – refinancing existing debt, hiring more employees, buying inventory or equipment, or moving or expanding your business operation.
In order to qualify for a business loan with Funding Circle, you must have a minimum credit score 640, and not have any bankruptcies or judgments within the past seven years, nor any outstanding tax liens or unsatisfied judgments.
You must be in business for 24 months and showing a profit in at least one of the last two years. You must also have a minimum annual revenue of $150,000 in each of the two most recent calendar years.
Business loans will not require any specific physical collateral, but you will have to execute a Form UCC-1 filing as well as provide personal guarantees by each owner of the business.
Interest rates can run between 5.49% and 27.79%, and there is an origination fee that ranges between 1.49% and 4.99% of the loan amount.
Learn More About Funding Circle
Prosper
Unlike Lending Club and Funding Circle, Prosper doesn’t have a dedicated business loan program available. However, you can take an unsecured personal loan of between $2,000 and $35,000 and use it for business purposes.
In order to qualify for a loan with Prosper, you must have a minimum credit score of 640 with Experian (that’s the credit bureau that they base your credit score on). You will need to furnish a copy of your recent income tax return if you are self-employed.
Interest rates run between 5.99%, to a maximum of 35.97%. Prosper also charges an origination fee equal to between 1% and 5% of your loan. There is no application fee and no prepayment penalty.
Upstart
Like Prosper, Upstart doesn’t have a specific loan program for business loans but does allow you to take a personal loan which can be used for just about any business need that you have.
Upstart is a little bit different from other P2P lenders in that they look beyond traditional credit criteria, but they also consider your education. This includes your major, your grade point average, and even the college or university you attended. They consider that certain major fields of study have advantages over others, and it figures into the underwriting mix.
You can borrow from a minimum of $3,000 to a maximum of $35,000. They have two loan terms, 36 months and 60 months. Though they are not specifically business loans, they have a major advantage in that they require no collateral for the loan.
As a self-employed person, you will need to provide the most recent year’s income tax return, as well as copies of current year invoices for your business. They will also likely require a copy of your college transcript if you graduated within four years of applying for a loan. You must have a minimum credit score 640, and not have any bankruptcies or other negative public records on your credit report.
Interest rates run between 4.66% and 29.99% for a 36-month loan, and between 6.00% and 27.32% for a 60-month loan. It’s likely that they also charge an origination fee since that is the practice with P2P lenders, but it is not disclosed on their website. Assume that will be in line with other P2P lenders origination fees.
PeerForm
PeerForm follows the same path as Prosper and Upstart in that they don’t have a specific business loan program, but they do have personal loans that you can use for just about any business purpose you choose.
Loan amounts range between $1,000, and $25,000, and all are for a term of 36 months. These are installment loans that come with fixed rates and fixed monthly payments and will be paid in full at the end of the loan term.
Interest rates range from 7.12%, up to 29.99%. There are no application fees and no prepayment penalties. However, PeerForm does have an origination fee between 1.00% and 5.00% of the loan.
In order to qualify for a PeerForm loan, you must have a minimum credit score 600, which is lower than any other P2P lender on this list. However, your credit report must also reveal no delinquencies, bankruptcies, tax liens, judgments, or non-medical related collections within the past 12 months.
You can have a maximum debt-to-income ratio of 40%, but this does not include mortgage debt on your personal residence. Your credit report must also show a minimum of one revolving account, you must also have at least one open bank account in order to qualify for a loan.
The P2P Business Loan Advantage
That’s five major P2P lending platforms that have business loans available in one form or another. If you are in need of a smaller loan amount – less than $35,000 – and you are looking for a simple unsecured loan that you can use for business purposes, then Prosper, Upstart and PeerForm should be able to provide you what you’re looking for.
But if you need a larger amount, like several hundred thousand dollars, and your business is a little bit better established as far as the length of time in business and cash flow, then you will want to go with either Lending Club or with Funding Circle.
Whatever you choose, the upshot is that you are no longer limited to getting business loans strictly from banks. You can now take advantage of P2P platforms, and likely have a greater chance of getting the financing you need for your small business.
And you likely have every reason to believe that you will also get your loan a lot faster and with fewer questions and less documentation.