4 Ways To Take Back Control Of Debt

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Like the title implies, today’s topic is all about debt. But more then that, I’ll be delivering 4 options for those of you with a debt dilemma.

I’ll be using Wells Fargo for our case study today because I like them. Let’s start by understanding the options you have for debt relief. Wells Fargo offers 4 options for personal use. The chart below is from Wells Fargo’s website.

Personal Loan Personal Line of Credit Time Account  (CD)/Savings Secured Loan Time Account  (CD)/Savings Secured Line of Credit
Uses Debt consolidation, immediate expenses Cash flow, unexpected expenses Debt consolidation, immediate expenses Cash flow, unexpected expenses
Loan Amount $3,000 to $100,000 $3,000 to $100,000 $3,000 to $250,000 $5,000 to $250,000
Fixed Interest Rate
Yes
Yes
Quick access to funds
Yes
Yes
Yes
Yes
Reduced Annual Percentage Rate (APR) with collateral

Yes

Yes

Fees $0 $25 annual fee $75 origination fee $25 annual fee

So after reviewing the chart above, does a particular option just out at you? Alright, so next we’ll look at what Lenders look for when applying. Whether it’s in person or online.

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Five C’s of Credit

  1. Capacity: Lenders want to know that you can afford your payments. They’ll like to know your income and employment history, as these are good indicators of your ability to repay the loan. Your debt-to-income ratio will be looked at.
  2. Collateral (when applying for secured loans): The lines of credit, or credit cards you apply for may be secured or unsecured. If you are applying for an unsecured loans you won’t need to put up any collateral. With a secured loan such as an auto or home equity loan, you pledge something you own as collateral. The value of your collateral will be evaluated and the remaining equity will play a factor in the lending decision.
  3. Capital: While your household income is expected to be the primary source of repayment, capital represents the savings, investments, and other assets that can help repay the loan. This can be helpful if you lose your job or experience other setbacks.
  4. Conditions: Lenders may want to know how you plan to use the money and will consider the loan’s purpose, such as whether the loan will be used to purchase a vehicle or other property. Other factors, such as environmental and economic conditions, may also be considered.

There you have it, a breakdown of the types of loans available to you through most banks. Hope this was helpful in your debt relief decision making.

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