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Scrambling for a Student Loan? Get It at the Last Minute

Friday, February 11th, 2011

As problems with student loan availability arise, many undergraduates are starting to wonder if they can still get a student loan for the next semester. Difficulties emerge when students are having trouble finding a student loan because of strict criteria, or because their federal provider backed out. At this economy, students shouldn’t be overly confident that they can get a student loan. There might still be a chance that they can’t.

If you’re a student who’s facing the possibility of not being able to enter college next semester, here are a few solutions you can find – at the last minute.

  1. Head to your college’s financial aid office and ask them about the availability of federal student loans. One loan you can consider is the Stafford student loan. Stafford loans offer a low interest rate of 4.5%, and you can have up to $20,500, depending on your degree status and number of years in school. Requirements include being a US Citizen or permanent resident, you must have a financial need, and you must be enrolled to the school. The best thing about Stafford loans is that they don’t have a credit requirement.
  2. Ask if your school participates in the program that allows students to get a direct Stafford loan. If they have it in their program, ask if you’re eligible. Having a direct loan offers better repayment options for students.
  3. Sometimes your Stafford loan amount isn’t enough to cover your existing need. If this is the case, you can ask your college if they offer Perkins loans as well. Interest rates for Perkins loans is at 5%. Perkins loans will also need to assess if the student has a financial need.
  4. PLUS loans are also available if in case you don’t qualify for a Perkins loan. The advantage of PLUS loans is that they have a higher limit than Stafford loans, allowing coverage for most, if not all, of the needs for the semester. The downside is, PLUS loans are put in the parent’s name, not in the student. If parents are not eager to have a big amount of debt in their name, students can opt to split repayment costs and have it put in writing.
  5. When parent’s credit isn’t good enough to qualify for a PLUS loan, your college aid administrator just might be able to grant you an additional Stafford loan to cover the amount you lack.

Finally, if you’ve followed all the steps enumerated above but you still can’t seem to make ends meet, it’s time to recheck your college plan. Try to see where you can cut expenses and if you can work more hours to gain extra cash. Save with the small stuff and you might just be able to pull through.

How To Get The Best CD Rates? Use A Calculator

Tuesday, February 8th, 2011

Certificates of deposits are a good place to park your money in between investments. In a short amount of time, certificates of deposit will allow you to keep continuous growth of your money through a set rate of interest within a predetermined amount of time. Maturities of CD’s can range from weeks to years, with the interest rate directly proportional to the amount of time the money is tied up. Many banks and other financial institutions offer this kind of investment, the problem is, which CD do you choose?

Nowadays there is a plethora of certificates of deposit offered by numerous banks and investment firms. Not all of them are alike, so it can be confusing to figure out which one out of all the CD’s will give you the best rates. So how do you find out which one is best without having to break your neck looking over the numbers?

The answer – use a certificate of deposit calculator.

When looking over a certificate of deposit, there are a number of factors to consider. You have to take into account the initial deposit, total of months required, interest rates, number of times the interest will be compounded, plus the fees and penalties in case of an early withdrawal. Using a certificate of deposit calculator, you will be able to find out how much total interest you can earn with a particular CD.

The calculator will show you the amount of annual interest, plus your compounded interest, giving you your annual percentage yield or APY. Getting the annual percentage yield will enable you to compare one CD from the next. The higher the annual percentage yield, the better the CD.

Using the certificate of deposit calculator will help you arrive to a conclusion on which CD gives you the best return for your money. When investing, it’s always smarter to look over all your options before committing to only one. Remember, certificates of deposit may be a great way to grow your money in a short span of time. But you will still need to check which provider offers the best CD rates, and with the least fees and penalties.

In this day and age, getting a loan is as normal as buying a refrigerator for your kitchen. Everybody has one.

Loans have become a necessity. Without them, we won’t be able to buy our dream house, get that ideal car, or move in to that bigger apartment. We try to keep our credit record clean so we can get a lower interest rate for our mortgage. And when we see an offer that says “interest-only” or “no down payment required” it’s as if we’ve died and gone to heaven. But are these mortgages really as good as they sound? Or are we in for a financial ride?

An interest-only mortgage is a way to borrow money, and pay less on a monthly basis. It may sound like a good deal, pay only the interest now (resulting in a lower monthly payment) then pay the rest of the balance later when your financial situation improves. The problem is, you may be taking on a loan that is more than your bank account can bear, and you might find yourself in a rough spot in the future.

So what happens with an interest-only mortgage? First, interest-only is not the loan itself, but it is an option that can be attached to a home mortgage. Here, a borrower only pays the interest on the principal for a set period of time. When you’re paying only for the interest, your initial monthly amortization may appear to be quite low. However, since you have not contributed any amount to your principle, the borrower is not building any equity.

Interest-only loans can be dangerous for people who cannot really afford an increase in monthly payments. Although it may sound promising to start a loan on low monthly amortizations, the balance will eventually increase as time passes. The people who are expecting an increase in salary in the future may feel confident at present, but when things don’t go as planned, this mortgage may turn from being a dream to a nightmare.

Interest-only mortgages although dangerous for the average person, are still good for savvy investors who clearly know what they are up against. People who plan to flip their homes or refinance before the interest-only period is over, may also benefit from this kind of option to a loan.

When considering loan types, interest rates, and mortgages, it is best to do a thorough review on what the mortgage really means for you now, and in the future. This will allow you to save thousands of dollars, and it won’t leave you with a loan that’s too much for your checking account.

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When you’re in your 20’s, it feels like the world is at your feet. You’re single, you have a regular job (and sometimes even high paying, if you’re smart), and you have a lot of cash to burn. It only seems natural to go ahead and get that car loan, rent a classier apartment, spend your dollars on shopping or vacations, and live a financially carefree life.

You tend to think, “I’m still young, I have loads of time to start saving”. But before you know it, you’re at your 40’s or even 50’s, with a never-ending house loan, and kid’s college to think about. You look at your account and sweat starts pouring down your forehead. With only 10 more years to start saving for retirement, the future is starting to look bleak.

Before you find yourself in this tight situation, it’s time to use that brain of yours and realize the importance of saving for retirement now. Do you know that the best time to start saving is when you’re at your 20’s? And if you only could, you should’ve even started saving when you were 10!

And this isn’t only because of the length of years you have until you turn 60, but this is because of the power of compounded interest. If you haven’t heard of the term before, compounded interest happens when interest is added to the principal, and as time wears on, the interest gained will also earn interest.

To illustrate this concept, let’s say you put $1,000 in the bank with 20% annual interest. By the end of year one, your money would have earned $200, for a total of $1,200. By the end of year two, your money (which is now $1,200), will earn another 20%, earning you a total of $1,440.

If you’ve made the connection, the more number of years you keep your money where it earns a steady percentage of interest, the more money you get!

Let me drive home this point. If you started saving that $1,000 at age 50, by age 60, you would get $6,191.73. But if you started saving that $1,000 at age 40, by age 60 you would have.. (drum roll please).. $38,337.43. Shocking difference? Try calculating if you saved that $1,000 at age 20. You would probably faint.

When people advise you to start saving when you’re young, it’s not for naught. And aside from saving young, you also have to know where to put your money to get the best interest rates. Whatever happens, don’t put off saving for your retirement. Or else there will be nothing left for you but regret.

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Categories : Personal Finance
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