I am already having 2 mortgages on my house. Each month my paycheck is just sufficient to cover my expenses and financial commitments. I just want a bit of security by getting a $10k personal loan, and don’t want to get ripped off. Any suggestions?



Yes, there is such a thing as $10k personal loan that you can get. Many personal loan lenders advertise online. Some operate online through the internet, while some have storefront lending offices in local communities. You may want to check out this one:
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==> http://www.klikks.com/unsecured_personal_loan

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Can you resist the temptation?

Although you are living paycheck to paycheck each month, you do not mention that you are in cash deficit. You want the $10k personal loan just as a standby security — just in case you need some cash.
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My concern is: can you really resist the temptation of not utilizing the personal loan unnecessarily? Once you utilize the loan, you will be unable to repay it, given your monthly breakeven financial position. You will be in trouble.

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Secured or unsecured personal loan?

If you must have the personal loan, then consider whether you want a secured or unsecured one.

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[tag]Secured personal loan[/tag]

If the $10k personal loan can be secured against your house (assuming it has enough equity), you will be able to get a lower interest rate and better loan terms vis-a-vis an unsecured personal loan, because the lender perceives that his risk is greatly reduced by your collateral (ie your house).

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[tag]Unsecured personal loan[/tag]

If you opt for an unsecured personal loan, your [tag]credit score[/tag] and history are the only guarantees of repayment for the lender. In other words, your repayment is only based on your personal characteristics. Thus, the loan terms and requirements for approval will vary according to what your credit report shows.
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You may have read some lenders’ personal loan ads that say something like this: ….up to $x no [tag]home ownership[/tag] required…. above $x home ownership required.
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What does this mean? This means home ownership influences the outcome of your personal loan application. Since you own a house, you have an advantage in applying for an unsecured personal loan.
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Home ownership is generally a guarantee for the lender because it implies solvency (the ability to meet financial obligations on time) in many ways. For starters, maintaining a property is not cheap, and thus it shows the lender that you have been able to manage your finances properly. But it also implies that in case you cannot afford the monthly payments and the lender has to resort to legal means to recover his money, there are more probabilities he will be able to get enough money from your assets to recover the amount owed and any legal fees he might incur.
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—– Sidebar —–

Just because your $10k personal loan is not secured does not mean you are not risking your house. If you default on your loan repayment, the lender can take you to court to recover his money. In the worst case scenario this can lead to your house being repossessed or sold to repay the debt. Of course, in practice, you will not allow a mere $10k personal loan to cause you to lose your house!
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The best way to avoid this is by being very certain about your ability to repay the loan, and keeping in contact with the lender should problems arise. Many lenders would rather resolve disputes without resorting to legal action.

—– End of sidebar —–

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Home ownership also helps you get higher loan amounts either with secured personal loans or unsecured personal loans.

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Advantage of unsecured personal loan

Unsecured personal loans can be arranged more speedily than a secured personal loan where you may have to wait to have your collateral approved.

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Variable or fixed interest rate

Personal loans come either with a [tag]variable interest rate[/tag] or a [tag]fixed interest rate[/tag]. If you opt for a variable interest rate personal loan you can get significantly lower rates. However, you need to bear in mind that variable rates can increase suddenly due to the money market conditions and you might end up paying more than what you would have paid if you selected a fixed interest rate personal loan.
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Therefore a fixed interest rate personal loan may be better for you.

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Fixed monthly repayment

Unlike credit cards or lines of credit, your personal loan monthly repayment installments are fixed. While this helps your repayment discipline and cash flows budgeting, it also means that you must be able to make your repayment punctually without fail every month — unlike credit card debts for which you can pay only the minimum payments if you have insufficient money.
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Therefore I have to stress again that you must be very certain that you will be able to repay the personal loan throughout the loan period, since you are financially tight.

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Don’t get ripped off

(1) Shop around

You should never go with the first interest rate quote you find. Instead, seek out a few lenders and compare their offers. You may want to start here to get some free quotes and ideas.
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Naturally, you want to find the lowest interest rate, but that should not be your only deciding factor. If the lenders you have sought out offer similar interest rates, you need to read the fine print of the offers to see what other features are offered with these loans. When you do this, you may discover some unacceptable terms in some of the offers.

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(2) Beware of hidden costs

As you dig deeper, read the fine prints and ask questions, you may find out that some lenders include extra fees or misleading terms in their offers. They may include [tag]arrangement fees[/tag] and [tag]early repayment fees[/tag] (which I loathe and never accept) in their loan agreement. These fees should be reflected in their [tag]APR[/tag] ([tag]annual percentage rate[/tag]).
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APR measures the lenders’ real profit. Their real profit is your real cost. Put simply, APR includes the lenders’ interest charges and all other charges and fees they add to your loan.
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Ask them to reveal the fees and costs they include in their APR calculation. The more charges they levy on you, the higher their APR. Ask them to drop the fees you do not accept. In short, you want a low APR.

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(3) There’s no free lunch

If you successfully negotiate with the lender to gain an advantage, do not hastily think that you have won and got a good deal. Lenders have their profit objectives. Your lender may appear to give you a concession, but he may modify the loan structure or the terms of the agreement to gain back an advantage so as to preserve his profit objective. Therefore, again, study the revised terms and the final loan agreement carefully.

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(4) Know your credit score

It is advisable that you obtain your [tag]credit report[/tag] before you apply for your personal loan. Knowing your credit score can give you the confidence to negotiate a lower interest rate. Obtaining the credit report also gives you the ability to correct any misinformation before applying for your personal financing.

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Summary

(1) Do you really need the $10k personal loan?
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(2) Will you be able to repay the loan?
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(3) Which suits you better, a secured personal loan or unsecured personal loan. A secured personal loan is cheaper than an unsecured personal loan, but will take longer to get approved.
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(4) Variable interest rate or fixed interest rate? It is advisable that you go for fixed interest rate.
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(5) Shop around. Compare offers.
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(6) Evaluate both interest rates and APRs. Seek a low interest rate AND a low APR.
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(7) Interest rates and APRs are not the only deciding factors. Study the loan agreement and fine print to make sure there are no unfavorable terms.
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(8) Obtain your credit report before you apply for the loan.

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Oh, one more point: your personal loan interest charges are not eligible for [tag]tax deduction[/tag].
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Why?
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The IRS says so.

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Tags: annual-percentage-rate, apr, arrangement-fees, credit-report, credit-score, early-repayment-fees, fixed-interest-rate, home-ownership, secured-personal-loan, tax-deduction, unsecured-personal-loan, variable-interest-rate

[tag]Home equity loan[/tag]

You should bear in mind that you will still be in debt: you will be in a home equity loan debt although you will be free of your credit card debt.
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If you really can’t afford the monthly payment for your $10,000 [tag]credit card debt[/tag], getting a home equity loan to replace it may be justifiable because there are some advantages:
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(a) home equity loan interest rates are lower than credit card interest rates. So you will be using a cheaper debt (home equity loan) to retire a more expensive debt (credit card debt)
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(b) home equity loan interest rates are fixed, and therefore you are free from the risk of unexpected interest rate hike. The monthly repayment instalment is also fixed, thus making it easier for you to plan your cash flows
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(c) the longer the home equity loan period, the lower the monthly repayment instalment. Therefore you can choose a loan period that gives you a low monthly repayment instalment that you are comfortable with. But the trade-off is that the longer the period, the more cumulative loan interest you will pay.
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(d) the interest you pay on the home equity loan is [tag]tax deductible[/tag], whereas your credit card interest is not.
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But do you have the cash to pay for the costs of taking out a home equity loan? You should find a trustworthy lender to determine exactly how much cash you have to cough up to cover the costs of taking out the home equity loan.

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Reducing your credit card limit

If you do replace your credit card debt with a home equity loan, don’t start spending on your credit card again without discipline to build up another beyond-your-means credit card debt. Don’t let the home equity loan make you feel rich.
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Cutting up your credit card and paying for everything by cash is the best discipline, but it may not be practical for you. If you find it difficult to muster self-discipline to curb your credit card spending, you may have your credit card limit reduced to prevent you from overspending. But the resultant drawback is that this will affect your [tag]credit score[/tag] negatively.
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The [tag]FICO[/tag] formula, created by Fair Isaac Corp., likes a nice, wide gap between any balances and the limits on your credit cards. In other words, it likes a low utilization rate on your credit card limits. Lowering your credit limit would reduce that gap and could have a negative impact on your score. (Credit scores, in case you don’t know, are three-digit numbers that lenders use to help gauge your creditworthiness. The FICO is the leading credit score system.)
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For example, if your credit card limit is $8,000 and your credit card debt is $2,000, your utilization rate is 25% (2000 � 8000 � 100% = 25%). If you reduce your credit card limit to $4,000 and your credit card debt remains at $2,000, your utilization rate rises to 50% (2000 � 4000 � 100% = 50%), ie the gap is reduced. This high ratio may be interpreted to mean that you are living closer to the edge.
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If your credit scores are good, you needn’t worry about lenders balking because you have “too much” available credit. If your scores aren’t good, you don’t want to imperil them further by shutting down or reducing your credit lines.
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You have two other possible alternatives to raise the cash you need to pay off your credit card debt, viz. life insurance loan and personal loan.

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[tag]Life insurance loan[/tag]

If you have life insurance policies, you may borrow against the accumulated cash value at relatively low interest rates. Essentially, you are borrowing from your own savings. Interest rates may be fixed or variable depending on the policy.
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Life insurance loans can be a convenient way to borrow money, especially if the interest rate is low. These loans do not have to be repaid, but keep in mind that the outstanding balance will be deducted from the death benefit the beneficiary will receive when you die. It is important that you at least pay the interest as it comes due, since interest will continue to compound on the interest owed on the loan.
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CAUTION!: If you use the cash value in your insurance policy to pay the interest on a life insurance loan, you may use up all of your cash value, which can cause your policy to lapse.

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[tag]Personal loan[/tag]

There are many different types of personal loans (or [tag]consumer loans[/tag]) that you may be able to get if you are unable to take advantage of a home equity loan or a life insurance loan discussed above. They may be secured or unsecured.
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You may consider taking an [tag]unsecured personal loan[/tag]. Since you are a home owner, in the eyes of the lender you are solvent, ie your home ownership implies that you have the ability to meet your financial obligations on time.
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Your home ownership also implies that in case you cannot afford the monthly payments and the lender has to resort to legal means to recover his money, there are more probabilities he will be able to get enough money from your assets to recover the amount owed and any legal fees he might incur.
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You will be charged a fixed interest rate on your unsecured personal loan. Your monthly repayment instalments will also be fixed. You may choose a loan period that gives you a low monthly repayment intalment that you are comfortable with. Of course the longer the loan period, the lower the monthly repayment instalment, but you will pay more interest in total.
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Personal loans are the least favorable way to borrow money, since they typically carry very high interest rates.
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The interest charges on personal loans are not tax deductible.

Tags: consumer-loans, credit-card-debt, credit-score, fico, home-equity-loan, life-insurance-loan, Personal loan, tax-deductible, unsecured-personal-loan