6 Most Influential Loans Of The 21st Century

When you’re really big, they call you a bailout. It seems that the largest loans go to countries in crises and the companies that move them. Check out the graphic below to learn about some of most influential loans in the 21st century.

6 Most Influential Loans Of The 21st Century

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Top 7 Free Loan Calculators and Tools

Unless you’re a financial planner, it can be difficult to figure out loan terms and amounts. Just how much will you actually pay monthly? What is the end total with interest? Is it really worth it to get a loan? Just how much can you afford to pay right now?

There are so many factors to consider when planning for a loan that you will want to have all the information available that you can. This means working out the details before you apply for a loan so you know exactly when you can pay it back and what the interest will look like. Many people are surprised when they realize how much extra the interest or fees add to their basic loan when a little planning could have eliminated the surprise.

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Calculating loan payments can be tedious unless you use a loan calculator. Fortunately, it’s not difficult to find exactly what you need online. Test out different scenarios with varied interest rates, more or less payments, etc.

1. Bankrate™ offers several useful loan calculators, depending on the type of loan you plan to take out. Their basic calculator lets you enter the loan amount, the loan term, and the interest rate, as well as the monthly amount and start date of the loan. All sections can be changed to test out new ideas. Unlike other calculators, Bankrate™ also allows you to figure out what happens if you add in extra payments. Choose from monthly extras, a yearly payment, or just a one-time extra payment to find out exactly how your loan payments will change.

2. Balloon loans can be very difficult to calculate without help because of their unique payment structure. These loans start out small and grow so that you are paying more each year. This may be useful in cases where you know your income will increase in coming years, but to figure out just how much you will owe over time, this calculator is particularly useful and will break everything down by the year for you, providing a helpful chart so you can see at a glance what you will owe in 5, 10, or 17 years from now.

3. Refinance loans may or may not be worth it, depending on a variety of factors, including interest rates and your home. Bank of America™ lets you check the rates for refinancing. While they do tend to be bank specific, this can give you a good general idea as to whether or not refinancing your home is really worth it.

4. Suncorp Bank™ makes it easy for anyone to figure out how much they can borrow with a simple calculator that looks at your current income and helps you determine just what a reasonable monthly payment would be. While this is designed to help those looking to purchase a house, it can help you decide on a loan amount for any type of loan, big or small. Not only will you not borrow beyond your means, you will know ahead of time whether or not a lender is likely to take you on as a risk.

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5. Investors Banks mortgage calculator may seem complicated at first glance, but it is also very detailed . . . ideal for the nitpicker. If you want to know exactly how a loan will affect every area of your life, this calculator will help you do that by looking at everything from credit card payments to mortgage insurance.

6. Simple loan calculators can let you calculate pretty much any type of basic loan. This one from Butler Consultants lets you figure out payments quickly and easily. For those who want to avoid all the extra bells and whistles, it’s just right. Plug in the amount of the loan and the length of the payment term to find out how much you’ll pay each month. That’s pretty much all the info you’ll get from this simplistic calculator, but there are others available on this list if it’s details you want.

7. ZimpleMoney™ has a simple tracking tool that allows you to stay on top of loan payments. It will even remind you of when a loan payment is due, so if you tend to forget these things, it can serve as a virtual financial alarm clock. This can also be particularly helpful if you have more than 1 loan at once. The calculator works for both lenders and borrowers. It’s not a calculator, but is insanely useful anyway.

For anyone considering a loan of any type, these tools can make it easier to decide whether or not you should actually be applying for a loan. Whether you need to know how much your monthly payments will be or what the maximum loan you can afford is, there’s a free online tool to help you figure it out.

5 Reasons to Get a Loan

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Buying a car or a home may be your first thought when thinking of loans, but there are other reasons to get a loan. No matter what stage of life you are in, a loan may help you achieve your dream of starting a new business, helping a child pay for college, or help cover other unexpected large expenses.

The following are 5 popular reasons for needing a loan:

  1. to pay for college
  2. to start or expand a business
  3. to consolidate debts
  4. to renovate or buy a vacation home
  5. to pay for unexpected medical costs

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1. Student Loans

The College Board reports that 28 percent of students are at colleges where tuition is $36,000 or more. In 2011-2012, public four-year colleges charged an average of $8,244 in tuition and fees, with out-of-state students paying $12,526 on average. While higher-education institutions can offer students financial help, many students need a student loan to be able to attend. If the college your child is accepted to does not award a scholarship or grant, consider a federal student loan.

Parents of students applying for a loan should complete the Free Application for Federal Student Aid, or FAFSA, found at www.fafsa.gov. Through the FAFSA, you can apply for different types of financial aid, such as grants, work studies, and loans. You will need to refer to the following documents as you prepare to file for federal aid:

  • income tax returns and W-2s for the parent and the student
  • pay stubs or other records of income
  • identification cards (Social Security cards and driver’s licenses)

Students applying to colleges can complete the FAFSA starting January 1 of the year they are applying to college. High school guidance counselors should also be consulted as you apply for federal student aid.

In addition, many colleges and universities use FAFSA to award state- and college-specific aid. Colleges and universities may refer to federal student loans as Stafford Loans, Direct Loans, or Perkins Loans.

Only when students graduate from college or “stop attending school at least half-time,” must they pay back the federal student loan. The good news is that the interest rate on federal loans is always lower compared to private loans. Also, a credit report is not needed when applying for a student loan.

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2. Small Business Loans

While a job provides security through salary, benefits, and a 401(k) for some, others want to strike out on their own. By starting a business, you can apply your skill set and reap the rewards of owning your own business.

Applying for a small business loan or grant may be an option for you. The U.S. Small Business Administration (SBA) is a go-to site for learning how to finance a small business through loans, grants, or venture capital. The following are loans offered by the SBA to start or expand a business:

  • Basic 7(a) Loan Program – Borrowers apply for this loan through a participating lender. [5]
  • Certified Development Company (CDC) 504 Loan Program – Provides borrowers with “long-term, fixed-rate financing for major fixed assets, such as land and buildings.”
  • Microloan Program – All loans given are small. The SBA provides funds to “nonprofit community based lenders” to give loans to “eligible borrowers in amounts up to a maximum of $35,000.”

In the case of catastrophic events, the SBA provides disaster-assistance loans to those in a declared disaster area and economic injury loans to assist “small businesses, small agricultural cooperatives and non profit organizations.”

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3. Consolidate Debts

With the national debt close to $14 trillion, the federal government must borrow money to cover the deficit, not unlike ordinary U.S. citizens. Consumers with credit card or loan debt often consolidate all debts in a single loan. If you have several credit cards with high interest rates, using a consolidation loan will save you money.

SmartMoney.com suggests calculating your debt using the following formula:

  • List the balance on all loans, including monthly payment and number of months left on the loan
  • List all credit card balances with interest rates
  • Add all loan balances and credit card balances
  • Calculate current interest rate for all loan and credit card debts
  • Calculate current minimum payment for all debts

Once you have summarized your debt, research loan rates from banks offering consolidation loans. When you find the lowest rate and consolidate all debts into one loan, you will only have one monthly payment and a plan for the number of months it will take you to pay off the loan.

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4. Home Loans

If you love vacationing in one spot for weeks at a time, buying a vacation home may be a good idea. For those who want to invest in property, purchasing a second home is a sound financial option. SmartMoney.com, however, cautions that lenders scrutinize applications for a loan for a second home more than for a primary home.

Homeowners who want to renovate or build an addition onto their home will want to look at home equity lines of credit. With a home equity line of credit, your home acts as collateral for this form of “revolving credit.” Homeowners can also use a home equity loan to pay for education or medical expenses.

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5. Medical Emergencies

They’re unexpected, and we’re rarely prepared to pay for them, but medical expenses are major financial situations that often require getting funds fast. While some hospitals and doctor’s offices can bill you for services, others require payment before you can be seen by a physician.

Giving birth, having emergency surgery, and life-threatening illnesses can all cut into your household’s finances, so having a plan to access cash quickly is a smart move. It is possible to borrow money from your Individual Retirement Account, if you have money saved, although depending on the type of medical expense, you may have to pay a penalty fee for taking the money out of your IRA.

Guidelines for Taking Out a Loan

While not everyone will need a small business loan, this advice from the Small Business Administration is relevant for consumers: Lending institutions expect consumers to know why they want to apply for a loan. The guidelines for determining why you need a loan provided by the SBA apply across the board, for instance:

  • Why do you need a loan?
  • How will you use the “loan proceeds”?
  • What is your debt?
  • What is your credit history?

Paying for items and services out of pocket is always wisest, but in situations where you do not have enough cash to cover the expense, and it’s necessary, consider taking out a loan.

The Cost of Personal Loans: Pitfalls of Borrowing from Friends and Family

Times are tough, and a lot of people have run into financial situations that have led them to consider borrowing money. Sometimes bills are due, accidents happen, or a medical emergency comes up, and the money just isn’t there. Many individuals immediately turn to their family members for support, but this might not necessarily be a great option.

Even if it’s not the best, it is a common occurrence: NPR reported that more than ½ of the long-term unemployed and under-employed have borrowed money from friends and family to pay bills. If it happens so often, why could it be a bad thing?

Making Things Tense

Borrowing money from the bank might be hard, but borrowing money from a family member or friend might be even more awkward and uncomfortable. A lot of the time, there’s tension that arises because the other person is worried you won’t be able to pay him or her back. Why? CBS News said that, according to the authors of Isn’t It Their Turn To Pick Up The Check, 43% of the largest loans lent out to family or friends weren’t fully repaid.

If you borrow from a family member, be aware that there might be some awkwardness until you pay the loan back, and even more if you can’t pay the loan back (even if you manage to pay some back but you can’t return it all). Financial situations always heighten the level of tension, so think about what it is you’re getting yourself into when you set out to ask for some cash.

Creating a Conflict

Sometimes just asking for the loan can lead to family problems. This happens more often when a son or daughter asks parents for a loan. According to an article on bankrate.com, in some situations, a sibling might think parents are favoring their other child if they give him or her a large loan. Other times, the parents have already given the loan to one child and can’t afford to do it again for the other.

In other situations, the article says brothers and sisters might hear about a sibling asking for money and grow annoyed because they see it as a drain on the inheritance. Basically, there are other problems that can arise that aren’t even specific to the borrowed money itself, and these might not be so obvious on the surface.

Accidental Consequences

Sometimes, if you ask family members for help, they can’t find the courage to say no. They might have the philosophy that you help out family members no matter what, but that might put them in a really bad situation. What if your cousin, mom, sibling, or other family member is under financial strain without you realizing it? It’s possible that by loaning you money, they’re going to be even worse off in terms of their own household finances, which will just create more problems within the family overall.

Many websites and news sources, including CNN Money, advise people lending not to lend money if they can’t afford to give it away, just in case it can’t be paid back. If this type of advice is out there, it’s probably because some people just have a hard time saying no. Be very careful about this sort of scenario – if the potential lender in your family is having money problems as well, you’d just be passing on the problem to someone else.

Conclusion

If you find yourself financially strained, think about exactly how much money you need and the best way to acquire it. Even if borrowing from family and friends seems like a good option, the interest you pay for the loan might be in the form of a lost relationship. Consider all of your options and contemplate the pros and cons before making such an important financial decision.

Responsible Lending: How to Properly Manage and Repay a Loan

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Not to sound like a public service announcement, but: Balance your budget! Spend less! Save more! We hear over and over again that times are tough. In today’s difficult economic climate, being fiscally responsible is not optional. Gone are the days of wanton spending. Extravagant vacations have been replaced by weekend road trips. McMansions are foreclosing left and right. Taking out another loan is an option. But is it the right choice for you and your family? And how do you successfully manage and repay loans? Is staying in the black an option?

Stay on Top of Your Credit

Staying debt free doesn’t happen overnight. Until you are out of debt, you will need to stay on top of your credit history. On a regular basis, you should do an inventory of your credit history. The Fair Credit Reporting Act (FCRA) requires consumer reporting companies to provide a free credit-history report upon request. Free reports are provided by the leading credit reporting companies, Equifax, Experian, and TransUnion.

Consumers may request a free report once a year. The free credit report will include the following: “information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy.”  To order a report, go to annualcreditreport.com, call 1-877-322-8228, or mail the Annual Credit Report Request Form to Credit Report Request Service.

By checking your credit history, you can analyze how your credit is affected by such issues as debt load. With a myriad of bank accounts and loans, it’s important to know how debt influences your credit rating. Staying on top of bank loans might allow you to negotiate a lower rate.

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Track Your Loans

Whether you have student loans or a mortgage, keep track of your loans. The government’s Your Federal Student Loans site suggests setting up a folder for each loan and keeping it in easy reach. [3] Keep the following items in each loan folder:

  • loan amount
  • promissory notes
  • details of the lending organization, name, address, website, and account number for loan
  • monthly payment records for the life of the loan
  • payment schedule
  • loan disclosure documents
  • loan counseling materials
  • financial aid award letters

The government maintains a centralized database of student loan data known as the National Student Loan Data System. For more information on managing your student loans, visit Federal Student Aid.

Deadlines, Late Payments, and Deferments

Accurate record keeping and thorough research go hand in hand with paying on time. In the loan industry, paying on time keeps interest rates from going up and late fees from accruing.  Delays in payments will lead to rate increases. In addition to strict adherence to deadlines, you should alert the lender immediately if you are unable to repay the loan in a timely fashion.

The Projecton Student Debt recommends that, in case of “unemployment, health problems, or other unexpected health challenges,” there are options. Federal loan payments can “temporarily postpone…loan payments” through “deferments and forbearance.”  Recommendations from the Project on Student Debt apply as easily to mortgage and other loans as to student loans.

Pay More if You Can

Paying a loan on time is one way to strengthen your credit history.  Paying more than you owe each month is another strategy for completing your loan early. By paying more money each month, you will lower the principal, that is, the “amount of interest you have to pay over the life of the loan.”

Conclusion

Repaying a loan early is one facet of a strong, strategic financial plan. Successfully managing and repaying loans is another step on the road to becoming debt free. For more help, visit CNN Money for a debt-reduction planner that calculates the length of time it will take to become debt free.