You know, I’ve heard about personal loan offers and promotions but never looked into one. This week I wondered, what’s the difference between a personal loan, a cash loan and a plain ‘ole credit card (apart from the fact that you don’t want a cash advance at 18 percent compounding interest on your Visa thank-you-very-much). And, when should I use a personal loan over a cash loan or credit?
Well, the first thing I found out is personal loans have lower interest rates than cash loans and credit cards (win!). But banks do expect you to have a superb credit rating to lend you the money (dang). Banks are less fussy about a bad credit rating if you’re applying for a credit card, but it doesn’t give you as many spending options.
On small amounts and if you need cash urgently, it shouldn’t be too hard to jig around your cash and expense on your credit card – but watch out. It turns out you spend 12 percent more when you swipe.
Cash loans now are essentially payday loans now. The interest is exorbitant, but you don’t feel it as much over a 24 hour or 48 hour period which is basically what they’re for. If you need the money that badly, I say ask your boss to pay you a day early and offer him the $50 interest. It’ll cost you less and he’ll hardly shoot you down.
The other difference between a loan and credit is that personal loans are split into two categories: secured andunsecured. All it means is your lender will want to prop your borrowing against an asset, like a car or your house. In the case of a secured loan (if you qualify with a slick credithistory!), you’re bound to benefit from low interest rates. Unsecured loans will charge slightly higher interest.
Borrowers beware: Pay your bills on time or face stiff late charges and penalties. Personal loans are more strict when it comes to repayments.
What’s interesting is the fact that more Americans are taking out personal loans according to a report on Digital News as people look for low interest alternatives for borrowing. Tight credit and poor economic conditions has increased the demand for personal loans.
HSBC recently announced unsecured personal loan rates starting at 6.99 percent. Not bad. SunTrust did better with 3.99 percent and Nationwide Bank came out with a 6.45 percent rate. The loans are being used for refinancing vehicles for homeowners mainly.
Personal loans have become increasingly popular since the financial crisis. American banking newsreports:
“Lending Club, a peer-to-peer lending company, has now originated more than $255 million in loans to consumers. The news comes just three months after the company announced that it had surpassed $200 million in loan originations. As of April 16th, Lending Club’s statistics page showed that $255,003,975 had been setup by the company.”
Infographic source : CreditSesame
Okay, so when should I use a loan and when should I use credit?
Essentially: If you need a lump-sum loan with fixed payments over a period of time, go for a personal loan. If all you need is a line of credit you can tap from time to time, a credit card or line of credit is your answer.
You’re going to need a good credit rating and an asset to secure your loan against and get a good rate in the case of a personal loan. It’s better for large sums (such as refinancing your home loan or car loan).
A line of credit is more flexible, and you sure have to be responsible not to get into trouble with it (and you know what I mean), but the interest rates are higher, so look for a good deal before you sign up.
Have you used a personal loan, and was it better than credit or harder to manage? Share your experience with us below!
Want more info on loans and credit cards? Check out EconomyWatch Loans and Credit Cards for the raw deal and more!
GOLD continues to move to the upside as debt woes continue in both the US and Europe. Recent data confirms that bullish bets on Gold are rising in the hedge fund space and as much as this is a positive it could show that a temporary top is in sight. Gold has moved higher form the US close this morning and we briefly touched on $1,598 before easing back slightly. Gold is currently trading higher by 0.40% at $1,597 in early trade.
We would be cautious getting too bullish in the ST as our ST objective has nearly been reached at $1,600. As investors are now getting increasingly bullish on Gold it would not surprise us to see a temporary pullback towards $1,550/60 before the next leg higher. In the MT we remain firmly bullish and target $1,750 by the end of Q3. We look to sell out of ST longs today on the approach to $1,600 and await a pullback.
|3rd Support||2nd Support||1st Support||SPOT||1st Resistance||2nd Resistance||3rd Resistance|
S&P/ASX 200 finished US trade flat to marginally weaker in offshore trade on Friday even as commodities gained and US equities posted gains on the back of positive corporate earnings in the tech sector. The ASX 200 finished US trade weaker by 2 points at 4,471. We expect a quick turnaround in the ASX 200 this morning as commodities remain firmly bid with Gold nearly reaching a record $1,600 this morning. Oil moved higher along with Silver and other metals which should add support to the miners.
However, the banking sector may come under some pressure as performances in the US were not all that encouraging. The banking sector will need to outperform for our market to see gains today. We remain bullish in the MT but remain neutral in the ST as consolidation persists. Stops remain below 4,445 and we buy on a break of 4,500
NEW YORK–(BUSINESS WIRE)–CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has renewed its $1 billion committed U.S. Vendor Finance conduit facility, significantly reducing costs, increasing the advance rate and lengthening the term. The private facility supports CIT’s lending to small business and middle market companies and will allow CIT Vendor Finance to fund both existing assets and new originations.
“This transaction highlights our progress in securing stable and low cost funding to support the small business and middle market sectors, which remain vital to the ongoing recovery of the U.S. economy”
“This transaction highlights our progress in securing stable and low cost funding to support the small business and middle market sectors, which remain vital to the ongoing recovery of the U.S. economy,” said John A. Thain, Chairman and Chief Executive Officer.
The committed revolving period of the facility now expires in March 2013 and the facility has a final maturity in 2020. Barclays Bank PLC continues to serve as Administrative Agent with three additional banks as committed lenders.
Individuals interested in receiving future updates on CIT via e-mail can register at http://newsalerts.cit.com.
Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $35 billion in finance and leasing assets. It provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. www.cit.com
CIT MEDIA RELATIONS:
C. Curtis Ritter, 973-740-5390
Director of External and Internal
Communications & Media Relations
CIT INVESTOR RELATIONS:
Ken Brause, 212-771-9650
Executive Vice President
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