My Kid's Drowning in Credit Card Debt! What Do I Do?

If you trusted your son or daughter to keep track of their finances, and they slipped up, what in the world are you supposed to do?

Let's say they've racked up a big, nasty credit card debt -- to the tune of thousands of dollars. Should you pay off their debts to help keep their credit score above water? Or is it better to let them learn from their mistakes and suffer the consequences? Though each individual situation is different, here are your options, what's at stake, and a few pointers to help you plot your course of action.  



A Personal Loan, With a Contract

If you have the means, think about whether or not you want to loan your daughter the money. Sometimes her debt is manageable enough that you can pay it off in the form of a personal loan to your daughter. You can charge her interest as well, so she learns just how much a high APR can cost her.

But you have to examine the situation from a lender's perspective, rather than simply write a check and expect she'll make payments. What is her employment situation? Will she be able to make payments to you without the security blanket of your relationship making her complacent? Has she typically been a responsible spender in the past, or does she impulsively purchase on a grand scale regularly? If you do decide to help protect her credit history, it's a smart idea to sign a contract with your daughter to make your agreement more official and binding.

If You Co-Signed, You're on the Hook

If you co-signed on your son's account, you're responsible for his credit card debt. Because of regulations passed in the CARD Act of 2009, it's more difficult for young adults to qualify for credit cards, so more and more parents are co-signing on accounts and acting as guarantors for their children. If you've already taken that step, you should hopefully have realized that your son's purchases will affect your credit, regardless of your involvement.



 In this case, it may be more prudent to pay off the debt if you can, cancel his account, and work together to come up with a payment plan to rectify the situation and make sure it never happens again. If you haven't co-signed yet, sit down for a serious conversation with your son on your values and financial responsibility.

Lessons to Be Learned?

Bad credit now will impact her financial future later, but so will bad habits. If your daughter doesn't learn from her mistakes now, there could be bigger and more damaging mistakes ahead. Will bailing your daughter out of her financial mess with creditors make her realize the gravity of her mistake? Or will you just end up fostering her sense of dependence on you? You won't always be there, wallet in hand to save her, so if she can manage to take the credit hit, perhaps it's best to let her learn her lesson this time, and give her some tough love.

Communication Is Key

Loaning money to someone you love is always, always messy. While your son should intellectually know that your love is unconditional (which is why your help comes so willingly), for him, it's emotionally very difficult to face your parents when you owe them money. Plenty of relationships have been ruined by debts of personal loans, both from neglected payments and feelings of shame. Be sure that if you choose to help your son, you commit to maintaining an open dialogue and doing your best to keep business and family separate.

Ultimately, each family and financial situation is different. But before you make a plan to tackle your son or daughter's debt, you need to examine the situation from all angles. There are many factors in play, but above all, your relationship and your child's sense of responsibility from this learning experience should be at the forefront of your mind.

source: dailyfinance.com

Top Reasons Why People Apply For A Loan

The biggest single reason people apply for a loan is to purchase a home. Mortgages, where the borrower provides the property as security against non payment, are a huge segment of lending. An estimated 60% of all domestic property has some form of mortgage loan outstanding. The total value of all property loans as disclosed by the Bank of England at the end of July 2010 was £1,239 billion pounds. This compares to lending to individuals for other purposes of just £217 billion. As customers are adapting to the harsher economic times, this amount is slowly being repaid and has fallen from £225 billion in January 2010.

Credit card debt accounts for £58 billion of this total. An amazing amount given that the rates of interest for borrowing on a credit card are extremely high compared with a personal loan. This short term borrowing is probably the most expensive form of debt individuals carry for any period of time.

Away from short term debt the principle reasons for borrowing fall into three broad areas:

Debt consolidation – This is where customers take out a new loan on better terms to pay off existing debt at high rates. For example, it may be that there is a combination of credit or store card debt at 18% interest bundled with a personal loan taken out a few years ago at 12% interest. Even in today’s tough markets it may be possible to obtain a new loan to cover this at 10% over a longer period. This can greatly ease the pressure on family finances. Many people have woken up to this option and lending for this purpose has grown considerably since debt management companies have highlighted the benefits of such an approach.

Acquiring a vehicle – This will probably be the second most expensive purchase after a home. Manufacturers and dealers are well aware that most customers cannot pay cash for a new or used vehicle. Hence, there is a huge market in personal loans and personal contract purchase plans to make obtaining a vehicle affordable for those on a budget. Be it a car, van, caravan or motorcycle there will be a point of sale option for financing the purchase. Many banks and other financial institutions also target this as a specific area of lending.

Home Improvements – Whilst the main home may be acquired on secured loan, home improvements such as double glazing, new kitchens or furniture are usually paid for by borrowing on unsecured loans. These tend to be relatively short term reflecting the smaller amounts involved when compared to property loans.

Lenders focus on the ability to repay and so there are regional variations in the amount of credit granted to individuals. The wealthier regions have more appeal than the poorer regions in the North and West of the country. Less well off areas are the domain of the subprime lenders and doorstep lenders who use different products and techniques to approach the market. Weekly payments and short term loans from places like http://www.cashwindow.co.uk at high rates will be more common in these areas as people’s credit ratings are generally lower and less appealing to mainstream lenders.

 source: everythingfinanceblog.com

Personal Loans With Bad Credit: The Advantages of Instant Access Financing

Not everyone has the kind of collateral needed to secure a loan approval quickly. Even when an applicant has a good credit history, the challenge of getting approval on an unsecured loan can be quite hard, so when seeking personal loans with bad credit, the difficulty is understandably much greater. But there are loan options available.

The problem with pledging an item as collateral is that, should the loan be defaulted upon, it is lost. And when the item is a family heirloom or a piece of valuable jewelry, losing that collateral for the sake of $3,000 or so can be a bitter pill to swallow. But there are other options when hunting for guaranteed loan approval.

These are basically fast access personal loans that require the minimum time for approval. They are usually referred to as payday loans, but there are large loan options too, providing sums greater than $1,500. But these loans come at a price, and compromises must be accepted before funds can be accessed.

What Creates a Bad Credit Borrower?

Many people are categorized as bad credit borrowers, but while this once occurred as a result of poor money management and unreliable borrowing, the impact of the recent economic crisis has seen many honest borrowers slip down the credit rating table. As a result, there has been a jump in the number of people seeking personal loans with bad credit.

A low credit rating can come as a result of a county court judgment, or a bankruptcy ruling or even with a growing number of loans that have fallen into arrears. Of course, they can all affect the chances of getting guaranteed loan approval, but it is important to understand that they cannot halt the chances of getting approval itself.

The problem is that, when it comes to applying for a personal loan, a higher interest rate is charged, raising the cost of the loan and providing the opportunity for lenders to reject the application. This is where a no credit check loan with same day approval can be so valuable.

Terms To Consider Before Applying

As great as a no credit check loan might seem to someone seeking a personal loan with bad credit, there are negatives to the deal too. The fact that a low score can be ignored and have no bearing on the application process, is a boost but that convenience comes at a cost.

These loans practically offer guaranteed loan approval, but they are also considered the most expensive loans on the market. Because lenders are foregoing a credit check, they are leaving themselves vulnerable to borrowers with very bad track records in repaying loans. So, a higher interest rate is charged to cover their potential losses, sometimes as high as 30%.

What is more, the repayment term is usually very short. A typical payday loan is repaid within 30 days, while larger instant approval personal loans may require between 90 and 180 days.

Find the Best Loan

With these factors to consider, it can be hard to find a loan that is affordable. But there are lenders out there that specialize in lending to bad credit borrowers, mostly to be found on the Internet. Take your time in assessing the deals available there before making a decision on where to apply for a personal loan with bad credit.

When there is pressure to find funds, these fast access loans are definitely the best choice out there, with the much-needed cash accessed as quickly as in just a few hours. With guaranteed loan approval, this means that a lunchtime application can result in the money in the hand before 4 pm, so even financial emergencies can be dealt with very quickly through a personal loan.

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Article Source: http://EzineArticles.com/?expert=Mary_Wise

Banks’ Credit Standard Eases – BSP

MANILA, Philippines — Banks’ credit standards seemed to have eased especially for household loans in the last three months, based on the latest survey conducted by the Bangko Sentral ng Pilipinas (BSP).

In the BSP’s second quarter Senior Bank Loan Officers’ Survey, it indicated overall unchanged credit standards for loans given to businesses or enterprises but lending standards to household loans or consumer loans have eased slightly.

BSP Department of Economic Research Deputy Director Dennis Lapid noted that any slight easing is viewed as a positive. Household loans are housing loans, credit card loans, automotive loans and personal and/or salary loans.

The latest survey is a reversal of the previous one since during the first quarter, the BSP said that credit standards for business loans have been tightened slightly while household loans were unchanged and this trend was consistent for the past surveys.

“Banks have remained bullish on consumer loans while prudent on business loans,” Lapid said during Friday’s press briefing. “The demand (for loans) continues to be strong for households and enterprises based on the survey,” he added.

Credit standards for commercial real estate loans also appeared to have remained unchanged or steady. The BSP’s “special questions” on commercial real estate loans in the latest survey indicated unchanged overall credit standards for the fourth consecutive quarter.

“This can be attributed to their stable outlook on the economy and on certain industries or firms, unchanged tolerance for risk, and perceived stable asset portfolio of banks,” said the BSP report. “Similarly, respondent banks’ loan-to-value ratios were steady during the quarter.”

In terms of specific credit standards, the general consensus is that this too is unchanged specifically regarding standards on collateral requirements and credit line sizes for commercial real estate loans.

“Banks’ showed narrower loan margins, easing standards on loan covenants, longer loan maturities, and less use of interest rate floors for this type of loan,” said the BSP. Banks also reported increased demand for commercial real estate loans in the second quarter given clients’ increased working capital and accounts receivable financing needs and banks’ more attractive financing terms. “Moving forward, respondent banks’ expect a slight easing of credit standards for commercial real estate loans.”

As for lending to enterprises, the report said the credit standards have also remained unchanged for the most part but the results were mixed, which meant some banks tightened their standards while some opted for some easing to get more borrowers.

“This reflected banks’ generally steady outlook on the economy and on certain industries, their unchanged tolerance for risk, and perceived stable asset portfolio of banks,” said the BSP report.

In terms of borrower firm size, the results of the survey showed unchanged credit standards for top corporations and micro enterprises, consistent with the overall perception.

Collateral requirements except for loans to large middle-market enterprises, and loan covenants (not including loans to top corporations) were also the same during the period. There was also less use of interest rate floors which is the minimum rates for loans, and increased credit line sizes across all firm sizes. Loans with longer maturities were also provided to enterprises, except for micro enterprises, said the BSP.

source: mb.com.ph