Where should consumers look to when trying to borrow money for the 2013 holidays

It is without a doubt that we could also use some extra cash during the holidays. With Thanksgiving, Black Friday, Christmas and New Year’s Day upon us, we know that during this time, it’s necessary to have some extra bucks to go holiday shopping and buy gifts for family and friends. Nonetheless, if you are in need of some extra money and can’t find ways to get it, here are some few suggestions of sources of where you can borrow money from for the holidays.

One of the first things you could do is to look into applying for a credit card through a major department store or retailer. This is an excellent option especially if you are looking to get great discounts on clothing, electronics and other items during the holidays. Shop around for the right card that has a great interest rate as well as the best incentives and rewards.

Another option to consider if you have fairly good credit and a great relationship with your bank is applying for a short-term personal loan. These can be used for anything. Usually, banks do not give out personal loans for more than $5,000, however that amount of money should suffice for holiday shopping.

If your credit isn’t too stellar and you are looking for some short-term help, the other plausible option would be to look into a payday loan. These types of loans carry higher interest rates compared to other loans, but can provide quick access to cash especially during the holidays.

Another option for short-term help during the holidays is to look into a title loan. Many finance companies will allow you to borrow against the value of your automobile. This is a good option for those who again do not have good credit and need access to immediate cash. However, one of the major drawbacks about title loans is that if you end up going into default, the lender has the right to repossess your vehicle.

In the end, there are a variety of options you can explore to get the money you need for 2013 holiday shopping. However, just do your due diligence and make sure you thoroughly understand the borrowing terms you agree to when you take out a loan. Keep in mind, the bills you take on in 2013 will ultimately have to be paid back in 2014, and good decisions this year can save you hundreds or potentially thousands of dollars next year. Although you may find it easy to get access to money for the holidays, do not borrow more than what you can reasonably pay back. The last thing you want to do is borrow a large sum of money that you will find incredibly difficult to payback over time.

How Costly Are Short Term Loans Comparing Banks Versus Online Lenders

Recently, there is a lot of talk about payday loans and although many people may not know exactly what these loans are, it is understandably that consumers are seeking for short term loans whether payday, cash advance or fast loans. It seems that it is not only the victimized and accused payday lenders who are offering high-cost loans to consumers but big lending institutions or banks seem to be offering the same products. This means that the consumer is highly subjected to costly lending services.

As the Federal cracks whip on the Native American tribal lands payday lenders, on the other side of the coin, things are not working on well as desired. Banks are actually offering these types of loans and they are branded in different names such as direct deposit advance, checking account advance, ready advance, early access, fast loans, and easy advance. The Center for Responsible Lending (CRL) produced a report analyzing the big banks’ payday loans.

The report was released in July 2011 and it analyzed data obtained for the previous year 2010. From the findings, it was revealed that payday loans offered by banks under different names attracted higher interest rates similar to those of traditional payday lenders. The report showed that bank-based payday loans carried triple-digit interest rates and also trapped consumers in circles of long term debts.

From the findings, it was estimated that bank-based payday loans carried annual percentage rates of approximately 225 to 300 percent compared to the average traditional payday loans APRs of about 400 percent. What this means is that the federal has to examine the nature in which banks are offering these kinds of loans and whether they should be put to an end or not. There has been scrutiny on payday lenders but from this report, it is certain that it is not only the traditional payday lenders who are exploiting the underserved consumer but also big banks have joined the market.

One of the benefits of payday loans is that they can help consumers meet emergency financial needs such as repair of cars, paying of college fees, and meeting medical expenses. However, these loans are not designed for repetitive borrowing but based on the kind of consumer who takes these loans, it is certain that they are indirectly long term loans.

Repeated payday loans result to total annual fees of close to $3.5 billion. This is money which is taken from the already financially entangled consumer who is trying to make ends meet. However, because there are no other options, the consumers are willing to part with these fees. One thing that has been noted is that payday loan borrowers are likely to become repeat customers. They will borrow numerous cash advance loans in one year and this means that they end up in circles of borrowing, which results to long term payday lending trend.

The best way to address the aspect of short term lending is to educate consumers on the way in which they can manage their finances and save for emergency financial needs. Most of the consumers are compelled to take cash advance because they have no savings to cater for financial emergences