An important issue regarding fresh start loans is the lack of knowledge about this loan type that most financial retailers have. Since this loan category is not fully settled in the market, there are many unscrupulous vendors offering these loans and when customers inquire about the loan type they present only cash advance loans with fixed repayment programs. Thus, many people think that this loan type lacks flexibility; but is that entirely true?
Cash Advance Loans Do Lack Flexibility
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The fact that cash advance loans lack flexibility is what produces mix ups when brokers promote these loans as fresh start loans. Cash advance or payday loans are designed to address critical situations when there is no time for long credit verification or income verification processes and the funds are needed right away. Therefore, small amounts are provided for fairly short periods of time (most loans of this type need to be repaid by the next payday or at least the interests need to be cancelled).
In the best scenario, someone could obtain a two month repayment schedule but not far more than that. This of course means that someone seeking litheness in terms of repayment will not find within cash advance, the solution to his or her needs. Yet, as stated above, fresh start loans are different and the repayment timetable can be modified up to some extent to suit the needs of the borrower.
Fresh Start Loans Repayment Schedules
As explained above, these loans are not cash advances and thus do offer longer repayment schedules that can be adjusted to your needs. How stretchy they are really depends on the loan type you select. Not all loan types have long repayment programs. There are short term fresh start loans which are unsecured and there are also long term loans which are most commonly secured loans based on home equity.
If you are considering a short term loan of up to 5 years you can get the funds you need either with an unsecured personal loan or with a short term home equity loan. But if you need a longer schedule, only secured loans can provide you with 10 or 20 years terms. Therefore, you probably will need to be a homeowner in order to obtain repayment schedules longer than 5 years on this loan type.
Which Terms Are Advisable?
The longer you take to repay your loan, the higher the amount of overall interests you will have to disburse. Therefore it is advisable to select the shorter program possible. However, there is another issue that you should address. The monthly installments should be low enough for you to afford them if for any reason your income gets reduced.
Sometimes, unexpected circumstances can increase your expenses and reduce your available income. In such situations it is important that you can still afford your loan payments to avoid defaulting and ruining your credit again. Therefore, you need to find a balance between affordability and quick repayment. Get the shorter repayment program possible without neglecting keeping the loan payments within your means.
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