Car loan refinancing in 3 steps

A car is often the second largest loan the average Canadian has; the first being a house loan. Refinancing your car loan can save you thousands of dollars if done right according to our source, macombdaily.com. We will source the article below so you can read their entire article here for your convenience.  Before we provide you with tips about your car, you should attempt to not have a car loan. Often Canadians buy cars with making a budget which can lead to you being in car debt for four to seven years. Loan Away advise spending a maximum of 15% of your net income on transportation. This includes car insurance, car payments, gas, and maintenance like weather tires. If you are spending more than 15% you should refinance your car loan or get a car that is within your budget. With all that being said, let’s get into macombdaily.com guide to refinancing your car loan.

 

 

 

3 reasons to consider refinancing your car loan

Most people know they can refinance their mortgage, but less than half are aware that they can also refinance their auto loan, according to a study by Harris Poll for Ally Financial. It’s a simple task that could reduce your car payments by about $1,300 a year.

The following considerations can help you determine whether refinancing your auto loan is the right step for you.

• Interest rates: Can you reduce your monthly costs by lowering your rate? Compare your current interest rate to those advertised. Keep in mind that there are several aspects of your financial history that may have impacted your interest rate for a loan, including credit score and credit history. If your credit score has significantly increased since you financed your vehicle, it may be time to refinance to a lower interest rate.

• Tight monthly budgets: If you need to make some room in your budget due to changing life circumstances or simply have a desire to sock more money away into savings, refinancing your auto loan is a move that may have a substantial impact on your finances. For example, those who have refinanced their vehicles through Clearlane, Ally’s online auto financing platform, have reduced their monthly payments by an average of $112.

• Reducing the term: Another reason many choose to refinance is to reduce the number of payments they will have to make, with the goal of reducing the total amount of interest paid over the course of the loan. This may appeal to you if you can now afford a higher monthly payment than when you purchased your vehicle, thanks to a raise or new stream of income.

If you choose to refinance, be sure to review your loan agreement and terms to make sure you understand your current loan. You should also be aware of any costs that could be incurred by refinancing or changing the terms of your loan.

 

Did you find the article informational? Employees at Loan Away sure did. Three employees are keen to refinance their vehicle to better suit their budgets. Some are going to have fewer payments and pay off the loan faster, while others are extending so have more disposable income. This decision is based on your current financial situation. If you have an extra $100 each pay, you should consider using that money to pay off your debt instead of saving it in a saving account. Saving accounts often have very low interest while car loans can be more expensive. Before anyone starts saving thousands of dollars, it is recommended to pay off your debts first. Saving and investing should always come last. Here are the steps you should follow.

1. Paying off any high-interest debt ( Car loan, credit cards, etc)
2. Creating an emergency fund of 3-6 months salary
3. Pay off low-interest debt ( Student loans, mortgage, etc)
4. Investing/saving

Very simple to follow right? If you are unsure how to invest, there are several investing great books available for your needs. If you enjoyed this post, share it to help the Canadian economy become more aware and educated on their car loans.

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Credit card debt hits record high

There are two ways to interpret the title of this article. One way is “Wow, the average person has more debt than ever. This cannot be good for the economy!”. The other way is “Well with inflation, population growth, and a expensive housing market, this is expected.” To summary, did you see this coming? The financial experts at Loan Away did. We will explain how much debt the average person has and how you can avoid this fatal situation. However, debt in some cases is not bad. If you have $10,000 in personal debt, it may seem awful, but that money could’ve been spent on starting a small business which will generate thousands. That debt does not seem that bad now does it? Exploring debt maybe intimidating at first, however, you’ll be surprised when you learn everything behind the credit card in your wallet.

 

Credit card debt hits new record, raising warning sign

Americans’ outstanding credit-card debt hit a record in November, highlighting a more confident U.S. consumer but also flashing a warning signal of potential trouble down the road.

Revolving credit, mostly credit cards, increased by $11.2 billion to $1.023 trillion, the Federal Reserve said Monday. That nudged the figure past the $1.021 trillion high-water mark reached in April 2008, just before the housing and credit bubbles burst. Over the past year, revolving credit has surged by $55.1 billion, or 5.7%, according to the Fed and Contingent Macro Research.

Non-revolving credit, such as auto and student loans, rose by $16.8 billion to $2.8 trillion in November.

The all-time-high for credit-card debt doesn’t pose the risks to the economy that existed in 2008 because incomes are higher, UBS Credit Strategist Stephen Caprio says. The ratio of credit-card debt to U.S. gross domestic product is about 5%, compared with 6.5% in 2008, he says.

“It’s a potential early warning sign but not a financial stability issue” for the broader economy, Caprio says.

Still, Caprio notes that credit-card delinquencies have increased to about 7.5% from 7% a year ago, underscoring growing stresses for low-income households in particular. While that’s still below the 15% delinquency rate reached during the financial crisis and the 9% historical average, he says the increase over the past year raises some concerns. With jobs and income growing, the rise isn’t creating significant problems now but it could if the economy and labor market take a downward turn.

“People should make 2018 the year they focus on knocking down their credit-card debt,” says Matt Schulz, senior industry analyst for CreditCards.com. With the Federal Reserve continuing to raise interest rates, “that credit-card debt is going to grow faster and faster,” siphoning off money Americans should be putting aside for retirement,” Schulz says.

thumbnail courtesy of usatoday.com

 

At loan away, we provide loans with lower interest rates than the average credit card. Providing loans for people who need a loan cheaper than credit card and loans for people with bad credit. Our goal is to provide loans to all Canadians in need of a loan. Once again, how does this make you feel about the economy? Are you worried for the outcome or you think more people spending money can on benefit it? We will you, the reader, be the judge of that. For more information how credit cards will affect both Canadian and American economy, Loan Away will be posting a new article daily on everything you’ll need to know. Liked this article? A share can not only helps someone gain more knowledge, but it helps Loan Away.

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Payday Lender versus Government

Payday Lenders thrive on providing short-term loans to people for over %200. This is already criminal offense according to financial experts, however, Charles M. Hallinan, may have to pay just under 500 million due to racketeering.  If you are unfamiliar with the term racketeering, here is a definition of the term. This is just one the examples of what is happening with the money payday earn. Supporting crime and illegal activity and getting a loan for over %200 is the last thing you should be doing. Mr. Hanllinan takes advantage of the poor and uses that money to support localized crime in America, which is never good for the economy or community. Even though Mr. Hallinan may be going to prison for a decade, this does not mean that other payday lenders are not participating in Racketeering. Each payday company should be investigated to ensure the safety of the community. For more information, the article is attached below.

 

Payday Lender May Have to Forfeit $491 Million

How much should a racketeering conviction cost a man who for years flouted Pennsylvania laws and preyed upon cash-strapped Americans to build one of the nation’s largest illegal payday-lending empires?

More than $491 million, if the government has its way.

That’s the sum federal prosecutors in Philadelphia hope to recoup next month from Charles M. Hallinan, the so-called godfather of payday lending, in one of the region’s largest criminal forfeiture proceedings.

In addition to cash from 18 bank accounts — including more than $484,000 from Hallinan’s personal coffers — the government has laid out a staggering wish list of additional items to forfeit.

Among them: Hallinan’s $2.75 million lakefront condo in Boca Raton, Fla.; his family’s $1.8 million, 8,000-square-foot home in Villanova; and a small fleet of luxury vehicles including a $142,000 Bentley Flying Spur.

But a month after a federal jury convicted the 76-year-old former investment banker and Wharton School graduate on 17 counts including conspiracy, international money laundering and fraud, Hallinan’s lawyer says it is the prosecutors who now are driven by greed.

Defense attorney Edwin Jacobs is expected to argue at forfeiture proceedings before U.S. District Judge Eduardo Robreno that a more appropriate figure, taking into account Hallinan’s business expenses, would be closer to $9.5 million,

“A forfeiture judgment which exceeds $450 million would be … grossly disproportionate to the offense committed,” Jacobs wrote in court filings in December.

Federal law requires prosecutors to seek forfeiture in racketeering cases like Hallinan’s to financially penalize wrongdoers and to lessen the economic power of organized crime. The Racketeer Influenced and Corrupt Organizations Act forfeiture statutes allow the government to seize any money or property derived directly or indirectly from a criminal enterprise.

Usually, those laws have been used to strike back at the financial clout of the Mafia or large drug-trafficking organizations.

But Hallinan’s case is one of a few brought by the Justice Department in recent years to apply the same thinking to large-scale payday lending operations. Prosecutors have successfully argued that there is little difference between the exorbitant fees charged by money-lending mobsters and the annual interest rates approaching 800 percent that are standard across much of the payday lending industry.

“When crimes are motivated by a desire to make money, the criminal committing those crimes should be deprived of the proceeds of his or her crimes,” Assistant U.S. Attorneys Sarah L. Grieb and Maria M. Carrillo wrote in court papers.

In Hallinan’s case, jurors concluded in November that he made millions of dollars by illegally offering low-dollar, high-interest loans to financially desperate borrowers with limited access to more traditional lines of credit. Interest rates on many of the loans he issued ran far in excess of rate caps instituted by the states in which borrowers lived, like Pennsylvania, which imposes a 6 percent annual limit.

Hallinan entered the industry in the 1990s with $120 million after selling a landfill company, offering payday loans by phone and fax. He quickly built an empire of dozens of companies offering quick cash under names like “Tele-Ca$h,” “Instant Cash USA” and “Your Fast Payday,” and originated many of the strategies to dodge regulations that were widely copied across the industry.

As lawmakers in dozens of states sought to crack down on exorbitant fees charged by payday lenders, Hallinan instituted sham partnerships with licensed banks and Native American tribes to be fronts for his businesses.

In all, prosecutors concluded, Hallinan’s lending empire brought in more than $491 million between 2008 and 2013, the period covered by his indictment.

They now say they are entitled to every penny.

Hallinan “collect(ed) hundreds of millions of dollars in unlawful debt … knowing that these businesses were unlawful, and all the while devising schemes to evade the law,” Grieb and Carrillo wrote.

But Jacobs maintains that the government has willfully misinterpreted how Hallinan’s business and racketeering forfeiture laws work. Although he does not dispute the gross revenue brought in by his client’s companies, the lawyer argues that the vast majority of that total was Hallinan’s own money paid back to him after it had been lent.

Forfeiture laws, he argued in a recent court filing, allow prosecutors to seize only the financial gains a convicted racketeer made through criminal acts — a figure, which in Hallinan’s case, Jacobs puts at just under $69 million.

When legitimate business expenses like advertising, promotion, and lead generation are taken into account, Hallinan’s profit was closer to $9.5 million, Jacobs wrote. What’s more, he argued, the government has not considered that many of the loans Hallinan issued were entirely legitimate and issued to borrowers in states without the usury laws that prosecutors used to convict him.

“The central issue before the court is whether direct expenses are properly deductible for the purposes of calculating (criminal) proceeds,” Jacobs wrote, “or whether the court should adopt the government’s figure … without taking into consideration any expenses whatsoever.”

Still, the $491 million the government wants to collect from Hallinan is not even close to the largest sum Justice Department lawyers are seeking to forfeit in other cases against payday lenders. That distinction belongs to the $2 billion that prosecutors in New York hope to get from Scott Tucker, a professional race car driver and former business partner of Hallinan’s who was convicted in October on a similar racketeering indictment.

Others convicted in payday lending cases face substantial potential penalties. Jenkintown lender Adrian Rubin, a former Hallinan partner who pleaded guilty to racketeering charges in Philadelphia in 2015, faces potential forfeiture of $7.5 million. Prosecutors hope to take $161 million from Richard Moseley Sr., a lender convicted in Manhattan.

And Hallinan’s longtime lawyer, Wheeler K. Neff — who was tried alongside him and convicted of devising many of the faulty legal strategies that allowed Hallinan’s businesses to continue to rake in profits — faces a potential forfeiture bill of more than $360,000.

Like Hallinan, Neff and the other lenders could be ordered to pay additional penalties in the form of fines and court-ordered restitution to victims.

Hallinan faces a possible decade in prison or more at a sentencing hearing scheduled for April.

thumbnail courtesy of hamodia.com

 

Do you think 10 years and 491 million is fair? I’ll let you decide what you think would be fair after what Mr. Hallinan has done. This is just one example of why payday loan companies are untrustworthy.  Loan Away’s goal is to provide fair loans to people who are considering getting a payday loan. Our loan interest will always be lower than payday loan companies because we care about clients financial situation. We also provide loans based on your needs. If you need a loan for three years or a few months, we are able to provide you with a loan. Bad credit is accepted because we believe everyone should have a chance to receive a loan.

 

For more information about us, please visit our website. If you enjoyed this article, what are you waiting for? Share it with a friend! It could make their day even better.

 

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Canadian Money Management Advice

Everyone can improve on managing money. Even if you think you are doing a perfect job managing your money because you have read books, have a financial adviser, or follow financial experts you can still improve. The Globe and Mail have asked several experts this exact question: “If I could change one thing about how Canadians manage money, it would be to”. The answers they got were informational and unique. I advise everyone to look over the advice given because it is rare to have several experts give an answer to a very asked question. A question that has been asked already answered is “Should I consolidate my loans if I have bad credit?”. The answer is almost always yes. Managing money can be complex and difficult without any resources and that is why Loan Away has gathered the best sources to answer “If I could change one thing about how Canadians manage money, it would be to”.

 

Canada’s advisers reveal their best suggestions for managing your money in 2018

The people who have seen you naked, financially speaking, have some ideas about how you can better manage your money in 2018.

Financial planners and investment advisers in my LinkedIn network were asked a few weeks ago to complete this thought: “If I could change one thing about how Canadians manage money, it would be to…” Here are some highlights from 199 comments covering a great range of topics, starting off with overspending and undersaving.

Note the sense of urgency in many of these comments. Taken together, they suggest a genuine sense of worry about excessive spending and not enough saving and investing. Cynics will say advisers are just prospecting for more money to invest with their suggestions, but that’s an evasion. Given the record household-debt levels in this country, all ideas for improving our finances deserve a hearing.

Here’s how the planners and advisers answered the question:

“Have them save 10 per cent of their T4 income first, and enjoy spending the rest.” (note: The T4 is a tax slip documenting how much gross income you were paid by an employer)
-Barry Rebuck, adviser

“Have them learn to live on 80 per cent of their after-tax income and save the rest for retirement.”
-Brenda Antonyshyn, chartered financial analyst (CFA)

“Have them live below their means. Simplify their financial lives and stop trying to keep up with the Joneses. The Joneses are in debt.”
-Cheryl Campbell, certified financial planner (CFP)

“To have them ensure their cost of living never exceed their actual revenues.”
-Mathieu Joubert, certified public accountant

“Understand that FOMO – fear of missing out – is driving many of your money decisions.”
-Meghan Chomut, CFP

“Don’t fall into the trap of using your home equity line of credit as your personal ATM. Budgeting instead of borrowing. Understand the real cost of ‘buy now, pay later.’”
-Karen Sage, CFP

“Stop spending money you don’t have to buy crap you don’t need to impress people you don’t know.”
-Robert Gignac, financial industry speaker and author

“Plan for the unexpected. Life will throw you a curve ball – new roof, sickness, disability, etc.”
-Angel Georgijev-Low, CFP

“Understand that paying off debt is the only guaranteed positive rate of return.”
-John Harvey, manager of public investments at Nunavut Trust

“If I could change one thing about how Canadians manage money, it would be invest in themselves before investing in a portfolio. The greatest return is an investment in your skills and your greatest earning power comes from those skills. Invest in yourself first and allow the dividends from that investment to fund your portfolio.”
-Lampros Parousis, private client wealth adviser

On the role of housing in your investment planning:

“Understand that an investment in real estate is NOT guaranteed to go up.”
-Amandeep Sangha, CFA

On investing:

“Realize that Canada is only 3.2 per cent of world capital markets and a very poorly diversified index. [It] lacks health care and technology exposure, two huge growth sectors for decades to come.”
-Larry Berman, chief investment officer, ETF Capital Management

“To not be overweighted in Canadian bank stocks.”
-Connie Brown, chartered market technician (CMT)

“Understand that investing is a marathon, not a sprint. Do not allow irrational and impulsive emotions to alter your long-term plan.”
-Aleem Israel, CFA

“Understand the compounding effect fees have on your long-term returns. For most people, they can save hundreds and thousands of dollars by moving to lower fee products.”
-Steve Bridge, money coach

On retirement:

“To have a better understanding of how much you really need to save in order to retire comfortably. Find an adviser who asks you what your goals and values are and who doesn’t just focus on performance and fees.”
-Julie Reimer, CFP

“To plan on living (and working) a lot longer than your parents’ generation.”
-Marc Vincelli, statistical consultant

“To retire when you have practised living on your retirement budget. I have seen people fairly adamant that their grocery budget for two adults would be $300 a month. Perhaps I need to take some shopping lessons from them!”
-Margaret Clarke, personal financial planner (PFP)

On working with an adviser:

“Ask questions and be engaged – financial/retirement planning is a team sport.”
-Derrick Lindsay, financial adviser

thumbnail courtesy of theglobeandmail.com

 

Informational to say the least right? The advice that Loan Away commends the most is the advice by Brenda Antonyshyn. She said “Have them learn to live on 80 per cent of their after-tax income and save the rest for retirement”. Imagine if you had 20% of your net income invested over a lifetime? You would probably retire with over 1 million dollars if everything was invested and had an average rate of 7%. The possibilities are endless if you followed Brenda’s advice. I know this may not be possible if you are currently living a certain lifestyle, but if you make the necessary changes like downsizing your home or ride your bike to work, you will be able to accomplish your financial goals quickly.

If you enjoyed this article, share it with a friend or two. They might enjoy it even more than you. For more information about bettering yourself financial, visit our website Loan Away’s website for everything you’ll need.

 

 

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The best financial books of 2018

Reading is what separates the average person from the successful person in a career according to Huffington post.ss We recommend reading for at least 30 minutes each day. The book doesn’t even have to be business related, it can be a fiction book for pleasure. The end goal is to use that 30 minutes reading instead of watching television or doing something unproductive. Loan Away, a financial institution in Mississauga, Canada wants you to create better habits for a better career and life. This is why we have sourced this great list of business/entrepreneur/financial books to increase your net worth in 2018. The financial advisors of CNBC have chosen eight books that can help you become financially literate in no time. Before you read the list, do some research about the book and the author. You want to make sure the book you purchase will help you personally. Buying a book about being a better CEO won’t help you if you don’t even have a business right? Now, onto the list of best books to help you financially in 2018!

 

8 books to help you become wealthier in 2018

Boosting your financial I.Q. is a worthwhile resolution for 2018.

CNBC.com asked financial advisors what books they recommend to increase your understanding of how you should manage and invest your money.

Here are their top picks.

“I Will Teach You To Be Rich”

This book by Ramit Sethi provides a six-week program aimed at young adults ages 20 to 35.

Financial advisor Michael Kitces recommends the book because it not only teaches good habits, it also emphasizes the value of reinvesting in yourself.

“I find most personal finance books skip this oh-so-important aspect of trying to improve your financial situation by focusing on your earning power, rather than just your expenses or your portfolio investments,” Kitces said. “That’s what puts his book high on my list.”

“The Ultimate Financial Plan: Balancing Your Money and Life”

This financial planning book by Jim Stovall and Tim Maurer covers your overall financial situation, including your cash flow, insurance coverage and estate plan.

“This book is good for the DIY-ers who want take tackle and have the time to manage their own financial household,” said advisor Rianka Dorsainvil, founder and president of Your Greatest Contribution.

The book can also help you if you are already working with a financial advisor or planner.

“You will be able to bring ideas and thoughts to the table so it can feel like more of a partnership,” Dorsainvil said.

“The Millionaire Next Door”

Written by Thomas J. Stanley and William D. Danko, this book examineshow truly wealthy Americans often live frugal lifestyles and rarely show off their wealth with flashy spending.

“It lays the foundation, and shows the impact of how living within your means and spending less than you earn can give you the financial freedom at an early age,” Dorsainvil said.

Reading the book should give you an understanding of how all decisions – from buying a home to a car – impacts your long-term wealth, according to Dorsainvil.

“Think and Grow Rich”

Napolean Hill’s book was first published in 1937 and draws lessons from rich men of that era, including Andrew Carnegie, Thomas Edison and Henry Ford, among others.

The book teaches you the “mindset one needs to become wealthy,” according to financial advisor Ivory Johnson, founder of Delancey Wealth Management in Washington, D.C.

“Our mind is incredibly powerful and thoughts turn into reality,” Johnson said.

“The Rational Optimist: How Prosperity Evolves”

Author Matt Ridley makes the case in his book for increased prosperity this century, in spite of what pessimists say.

That message, according to financial advisor Tom West, a partner at Signature Estate & Investment Advisors in Tysons Corner, Virginia, can help investors who shy away from the market because of their fears of what could go wrong.

“Ridley does a masterful job of contextualizing the progress of modern society in an accessible way, laying the groundwork for rationally expecting the world of tomorrow to be materially better,” West said. “The book was published after the financial crash but now seems just as timely.”

“Make Your Kid a Money Genius (Even If You’re Not)”

Beth Kobliner’s book is aimed at helping parents of children from toddlers to young adults teach money management.

Financial advisor Diahann W. Lassus, president of Lassus Wherley in New Providence, New Jersey, recommends the book because it uses “language that is easy to understand without the alphabet soup we can get caught up in.”

The book addresses various financial topics including charitable giving and breaks down advice by age group.

“It is a valuable reference that will guide the parent at each stage of the child’s life,” Lassus said.

“The Elements of Investing: Easy Lessons for Every Investor”

Legendary investors Burton G. Malkiel and Charles D. Ellis provide basic advice on investing and saving in “The Elements of Investing.”

“This books distilled all of the best investment insights from each author’s classics, ‘A Random Walk Down Wall Street’ and ‘Winning The Loser’s Game,’ while also including personal finance and saving advice,” said Peter Lazaroff, co-chief investment officer at Plancorp, in St. Louis, Missouri. “This book is great for beginners looking to get a better grasp of how to invest for long term goals.”

“The Most Important Thing: Uncommon Sense for the Thoughtful Investor”

Howard Marks, co-chairman of Oaktree Capital Management, shares his investment philosophy in his book, which includes his personal recollections as well as investment advice.

Louis Abel, chief investment officer at First Foundation Advisors in Irvine, California, said it is “one of the best books on value investing and investing in general.”

The book is required reading for all of the financial advisors at Abel’s firm, he said, and it is “suitable for both sophisticated and amateur investors alike.”

thumbnail courtesy of cnbc.com

 

Have you found a book that peaks your interest? Hopefully, you did because these books are some of the best available. If you didn’t, please let us know which book you are planning to read. For people who want to start investing their money, Loan Away staff recommend Millionaire Teacher by Andrew Hallam. Excellent read if you are a novice to investing your money like a financial advisor should. Regardless, this is a great list for anyone.

If you have bought any of these books and would like to share what you have taken away, please feel free to share this article with your experience. Sharing this post might just help someone become a better investor, so give it a chance and let your friends and family know about the eight books that could make them wealthier this year.

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Improving Your Credit Score Is Simple

Options for Entrepreneurs with Bad Credit

To start a business you will need capital and lots of it at that, but what do you do if you have bad credit? Well, you came to the right article! Loan Away, a financial institution in Ontario, Canada has gathered useful resources for the entrepreneur with bad credit. Often, having bad credit can feel like you are stuck and have little to no options, however, for this to happen to someone who is starting or maintaining a small business is devastating. This is true if you are unaware of the options. Yes, there are options for you to get a business loan or personal loan in Ontario. Jared of Enterpreneur.com has written a great article about the available option you have for getting a loan. We have included as a source for our readers.

 

 

Bad Credit? Even an Entrepreneur in Your Shoes Can Score a Loan …

Most business owners struggling to overcome poor credit have a notoriously hard time qualifying for the financing they need to grow their businesses. In fact, just 10 years ago, these entrepreneurs might not have had any small business financing options on the table.

Related: 4 Steps to Establishing a Good Business Credit Score

The reason: Traditional banks have always had tight credit requirements for small business owners, and a less-than-perfect credit score generally precluded entrepreneurs from qualifying.

Thankfully, though, times have changed in the world of business lending. Alternative, non-bank lenders have entered the market, willing to work with borrowers with poor credit.

What are the best loan options for entrepreneurs with bad credit? Here are your three top options.

1. Short-term loans

If you’re looking for bad credit business loans that come with a structure you’re familiar with, short-term loans might fit the bill.

Short-term loans are structured like the traditional term loans you know well: You receive a lump sum loan that you’ll pay back with fixed payments over a predetermined amount of time. They’re almost exactly like what traditional bank lenders offer — with a few key differences.

First,, these loans are, well, short. Instead of being offered over a multi-year period, these loans have terms lasting anywhere from just three to 18 months. And because they come with such short terms, they’re most often paid back with daily or weekly repayments instead of a typical bank loan’s monthly repayments.

Short-term loans also have lower limits (ranging anywhere from $2,500 to $250,000), meaning that the borrower’s payments will be proportionally less than what you’d be responsible for with a bank loan.

Fortunately, it doesn’t take much time or effort to apply for a short-term loan. They often have simple applications and a short waiting time to funding, so if you need quick cash to act on an important business decision, a short-term loan can be a great fit.

Further, short-term loans are at the top of the list for the best loans for bad credit, as these lenders typically work with borrowers with a minimum FICO score of 550. Thanks to the loan’s short-term and frequent payments, lenders can take on more risk when it comes to choosing whom to work with.

So, if you’re looking for a predictable and straightforward small business loan with your bad credit, a short-term loan could be for you.

2. A business line of credit

While traditional banks are known for their business lines of credit, alternative lenders offer smaller, shorter and more accessible lines of credit, as well.

With a line of credit, you’re approved for a pool of funds that you can tap into whenever you need them for your business. You’ll pay interest only on the funds you draw, and once you’ve repaid that laon in full, your credit line will get refilled to its original amount.

Business lines of credit are great financing tools for business owners in need of flexible financing. They’re a particularly good option for entrepreneurs who struggle with irregular cash flow: when you enter a slower month, you can draw from your line of credit to keep your cash flow from slipping into the red.

Minimum requirements typically include having at least six months of business under your belt and $50,000 in annual revenue. Plus, you can get approved in as little as one day.

3. Invoice financing

Invoice financing helps business owners free up capital when pesky unpaid invoices are slowing their cash flow. If it fits your unique funding needs, invoice financing is another top option for business owners with bad credit.

This option involves a self-collateralizing loan, meaning that the outstanding invoice itselfacts as collateral for the financing.

This is great news for bad credit borrowers. Invoice financing companies are more likely to work with borrowers with bad credit because the value of the invoice acts as a security blanket. If, in the worst-case scenario, you can’t make your repayments, the financing company can simply collect on the invoice to recoup its losses.

Lenders offering invoice financing can help you turn your invoices into immediate cash, and will often work with borrowers with credit scores in the 500s.

An alternative option: business credit cards

While you might not normally consider business credit cards when you need business financing, they’re worth adding to your list.

It’s best to use these credit cards for your monthly expenses and working capital needs, since, basically, they’re revolving lines of credit with high interest. However, there are definitely some advantages to seeing a business credit card, instead, as a kind of small business loan.

Business credit cards can be a great substitute for traditional loans when you need financing quickly, you need need flexibility in how much you borrow or you don’t have collateral to offer against the capital.

Plus, using a business credit card with a 0 percent introductory APR period is essentially like taking out a free loan: You can borrow up to your credit limit without paying interest on the balance you carry over. Just don’t forget to pay down your balance once your introductory period is up!

When it comes to financing options for bad credit borrowers, there are a handful of cardsthat work for lower credit scores.

The best part about using a credit card to handle small-scale business capital needs is the potential to build your credit score with good borrowing behavior. Paying your balance on time and in full every month will gradually build your score, helping you qualify for better business financing products in the future.

What to watch out for with bad-credit business loans

There are more financing options available to borrowers with struggling credit today than ever before. All things considered, this is to the benefit of entrepreneurs growing their businesses.

However, owners with bad credit need to know that accessible financing comes at a cost. These bad-credit business loans can be augmented by a load of interest that’s way too expensive for any small business to handle comfortably.

 

Must be a great feeling to know that you have options to get capital for your business right? Bad credit is not the end of anyone’s small business with invoice financing, a business line of credit, and short-term loans being available. Small business drives the economy, that is why these options are available. If only those who have perfect credit and a small loan of a million dollars create a business, there won’t be a lot around. Explore which option works best for you and your business. The rule of thumb is to have multiple options before making a final decision. Consider having a business analyst to look at these options and how it will affect the business short and long term.

Learned more options you have as an entrepreneur with bad credit? Great! Share this with someone who would benefit from knowing these options. The more options people are aware of, the better choice they make. Saving someone thousands of dollars can be as simple as a sending them a link. If you enjoyed reading this, please let us know. If you an opinion on how we can improve, don’t hesitate to contact at 1 (866) 689-0091.

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