Categories

A sample text widget

Etiam pulvinar consectetur dolor sed malesuada. Ut convallis euismod dolor nec pretium. Nunc ut tristique massa.

Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan. Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem, suscipit in posuere in, interdum non magna.

Refinancing your mortgage to pay down a pricey business loan

Dear Your Business Credit,
We have a business loan that was taken out when our business was doing well. With the new economy, our business is doing about a fourth of what it was. The loan is at $40,000 and a high interest rate. We have refinanced our home at a much lower interest rate and have taken out cash to clear our business debt and credit cards. Since our bank has made a lot of dollars on our business loan, I would like to know how to reduce what we pay every month with a cash payout. Is this a possibility? Thanks. — Jim

Dear Jim,
It’s smart to do your homework in a situation like this.

When I ran your question past Jeffrey M. Stibel, chairman and CEO of Dun & Bradstreet Credibility, which issues credit scores for businesses, he said that if you made a personal guarantee on the loan, then using your home equity line to pay down the business line could make sense. “Home equity lines are relatively affordable, lower risk since there is no personal guarantee, and — in this particular case — may be a good way to subsidize the business while it gets back on solid footing,” he said.

It could also help you avert the damage to your personal credit that you could potentially suffer if you can’t pay the business loan. “Business credit that is backed personally risks a personal bankruptcy,” he says.

Nat Wasserstein, a crisis manager with Lindenwood Associates in Upper Nyack, NewYork, and New York City, also agreed that refinancing your debt using your home equity line of credit could give you some breathing room. However, he says there’s a downside to tapping your home equity: “You’ll encumber personal assets for business,” he says. What happens if your business fails? You may end up with no way to bring in income and find yourself falling behind on your mortgage, which puts your house at risk.

I assume that when you say your business is doing a fourth of what it was, you are referring to sales. If that’s the case, you may have what Wasserstein calls an “upside down” balance sheet. You could have too much debt relative to the sales you’re taking in. That’s because you took out the loan at a time when you had four times more revenue.

In a scenario like this, Wasserstein recommends that entrepreneurs look for ways to get rid of the debt entirely and not just stretch it out. In an ideal scenario, you’d figure out a way to bring in a lot more money, so you could retire the loan by paying it off. That might mean coming up with a new product or service more profitable than what you are selling now — something you may need to do, anyway, if sales are a quarter of what they once were. Many businesses have had to reinvent themselves in a more digital and global economy, and brainstorming with your business advisors and mentors or a few fellow entrepreneurs that you trust could pay off. Taking a second job for a while may also help you build momentum in paying down the loan.

If those full-payback options are not possible, it’s worth considering another option: a “workout” or restructuring of the debt with your bank. Essentially, you need to alert the bank that you no longer have enough revenue to support the loan payments. This may enable you to negotiate an arrangement in which the bank forgives part of the debt so you can improve the balance sheet of your business.

Why would a bank do this? A lender would rather that you keep the business open so you can pay back some of the debt than see you go out of business, he explains. If you close your doors, the bank will likely have to liquidate the business, and will probably walk away with less money than if you keep working and make loan payments. “It’s a risk management issue for the bank,” Wasserstein says.

However, this is not easy to orchestrate if it looks like you have some other means to pay the debt. “A bank workout when a business is doing that poorly is unlikely if the individual can afford to pay the loan as is,” says Stibel. Given that the loan is for $40,000 and not, say, $1 million, the bank may not buy an argument that you can’t come up with the money somehow.

Anyone looking to do a workout would need a turnaround professional to make a strong financial case to the bank that you cannot generate the necessary sales to pay down the loan, Wasserstein says. Once the bank has that information, it is under an obligation to write down the loan, he says. “They have no choice,” he says. “They can’t lie to bank regulators when evidence is being presented to them that a loan is no good.” Once a bank writes down the loan, it is a lot easier to forgive, he says.

If you want to go this route, don’t just walk into your bank and try to negotiate the terms yourself. This is a complex negotiation, and you need a financial professional with experience in restructuring a business on your side, says Wasserstein.

As in many areas of financial services, some professionals in this area are more reputable than others. He suggests talking to a well-respected attorney in your community who handles business bankruptcies to see if he or she can recommend a good turnaround professional. The Turnaround Management Association, a nonprofit group with more than 9,000 members, is another potential source.

Having interviewed several entrepreneurs who have gone through a workout with a bank over the years, I can tell you that it was extremely stressful for many of them. The bank may play hardball. But in some cases, it may be worth enduring if you emerge with a much lower debt burden and can save your business. Good luck — and please check back in and let me know how you’re doing.

See related: Finding a free bankruptcy lawyer for business, consumer debt, If your company fails, your credit card rate can rise, Repayment, settlement, bankruptcy: Facing debt from failed business

Refinancing your mortgage to pay down a pricey business loanNo 2-in-1 card for tax-exempt organizationsDangers of putting business expenses on a personal cardFinanceDebt […]

Cash Advance

Download Download

About Cashadvance.comCashAdvance.com has been America’s most trusted resource for cash advances since 1997, connecting millions of consumers to reliable lenders each year. While you have many other channels through which to obtain emergency cash quickly, what makes working with CashAdvance.com so much better?Free and Unlimited UseOur service is always free to the customer whether or not your request is matched with a lender. Additionally, new and returning customers are welcome to utilize our service as much as they need. We dont believe in restriction or practicing bad business tactics.In many cases, customers come to CashAdvance.com after having a bad experience with another online matching service. One of the most common complaints we hear is that another organization either tried or succeeded in making the customer pay just to use a matching service. We would never imagine charging our customers, especially in their time of need.More Lenders. More Choices.In a loan request matching service, you want as many qualified lenders as possible reviewing your information, in the shortest amount of time. CashAdvance.com has the largest network of qualified lenders, so that we can assist in helping to find you the best opportunity and rates for your Cash Advance.Unlike the time and effort made in traveling to different storefront Cash Advance locations, our customers find our online experience to be both easy and quick with more lender choices. Plus, we choose lenders that are consistent with the kind of experience we want our customers to have.Data ProtectionCashAdvance.com is certified by two entirely separate services to ensure that your personal information is secure at all times. In order to protect your information from hackers, we are tested every day, both by McAfee and Norton.We are a proud member of the Online Lenders Alliance (OLA), a national organization dedicated to promoting best practices in the online lending industry. Moreover, we abide by the Federal Trade Commission Act, the Financial Services Modernization Act, the Fair Credit Reporting Act and all other applicable federal laws, including all laws relating to privacy and data protection.Positioned for TrustThe online lending industry has many businesses seeking to take advantage of your urgent need to obtain funds quickly, charging borrowers excessive fees with unreasonably stringent terms attached. Back in the beginning, our organization made a commitment to be upfront, honest and ethical in dealing with customers. We knew that long-term relationships, even if they didnt always result in a match, were far better than pushing customers to something they didnt want.Customers refer their friends and family to CashAdvance.com because in times of need, people want to be treated with respect and work through matters quickly. Plus, we have great agents to help you with questions throughout the process.About this appThis app provides a convenient and easy way to utilize cashadvance.com’s services.It is easy to navigate and provides additional information from cashadvance.com.*This app is provided by a third party affiliate of cashadvance.com. All trademarks and copyrights belong to cashadvance.comContent rating: Everyone

Price0LicenseFreeFile Size1.32 MBVersion1.0Operating System Android System RequirementsCompatible with 2.3.3 and above. […]

Federal Regulators to Crack Down on Unaffordable Payday Loans …

Image Shawn-M.-Griffiths_avatar_1381172453-35x35.png

Feb 9, 2015

The New York Times

reported Monday

that federal regulators are expected to draft new rules to govern short-term loans, including car titles and payday loans, which to date have fallen mostly under the jurisdiction of individual state law. While many states have tried to put an end to short-term loans with exorbitant interest rates, payday lenders have found ways to get around these laws or have lobbied state legislatures to soften regulations.

“Such maneuvers by the roughly $46 billion payday loan industry, state regulators say, have frustrated their efforts to protect consumers,” the Times reports.

According to the report, the Consumer Financial Protection Bureau (CFPB) will soon take the first step by federal regulators to reduce the number of unaffordable loans lenders can make. The CFPB, created after the 2008 financial crisis, is an independent agency tasked with protecting consumers in the financial sector. Along with banks and credit unions, payday lenders fall within the agency’s jurisdiction.

In March 2014, the CFPB released a startling report on the realities of payday loans and the effect they have on low-income households and borrowers, the demographic payday lenders target most. The people lenders seek out are in desperate financial situations, and therefore do not thoroughly consider all the facts before signing up for these loans, the fees of which may end up being more than the initial principal.

The initial loan is typically a 14-day loan of no more than $500, though some can exceed this amount. According to the CFPB, these loans carry fees between $10 to $20 for every $100 borrowed.

“A $15 fee, for example, would carry an effective APR of nearly 400% for a 14-day loan,” CNN Money reports.

The CFPB found that over 60 percent of all payday loans are made to individuals who take out 7 or more loans in a row, meaning the accumulated fees end up being more than the initial amount taken out.

“60% of all payday loans are made to individuals who take out 7 or more loans in a row.”@ cfpb

“The bureau found that during a 12-month period, borrowers took out a median of 10 loans,” the Times reports. “Borrowers paid median fees of $458. The median amount borrowed was $350.”

People may recall the Montel Williams commercials for Money Mutual where he makes it sound like short-term loans are the most convenient solution for people who are having money problems and live paycheck to paycheck. Yet, according to the CFPB, these loans are only convenient for people who can pay them back immediately or after no more than one renewal.

For those who can’t, the challenge becomes getting out from under the debt.

“[O]ne Pennsylvania woman who took out a total of $800 in payday loans to help pay for rent after losing her job told the CFPB that she meant for the loan to be only short-term,” the CNN Money article says. “But after rolling over her first loan and eventually taking out another one to help pay for it, she has already paid more than $1,400 towards the debt and still owes more.”

There are currently 35 states that do not have laws regulating short-term lenders. However, even among the states that have made these types of payday loans illegal or have limits in place, lenders have found ways to get around the laws by reclassifying their stores as car-title lenders or using other similar tactics. New rules by the CFPB could make it harder for these companies to get around state regulations and could protect consumers in states that do not currently have these laws.

More articles in Economy

New Report: Exploding World Debt Will Cause Global Financial Meltdown

How Quantitative Easing Is A Step Toward a Monetary Revolution

How America’s Tax Rates Compare With Other Countries

Independent Look at Obama’s Budget: More Spending, More Revenue, Less Deficit

Photo Credit: Lori Martin / shutterstock.com

About the Author


Shawn M. Griffiths

Shawn is located in the Dallas-Fort Worth area in Texas and has been actively involved in grassroots efforts in the state since 2005. His political philosophy is founded on the principles of individual liberty, limited government, and fiscal responsibility. He is not affiliated with any political party, and has great appreciation for intellectual independence and objective truth.

Read More by Shawn M. Griffiths

Read More On:

Join the discussion Please be relevant and respectful.

The IVN Etiquette: No Partisan Attacks, No Self-Promotion, Substantiate Claims, No Personal Attacks.

The Independent Voter Network is dedicated to providing political analysis, unfiltered news, and rational commentary in an effort to elevate the level of our public discourse.

Learn More About IVN

[…]

Pros and Cons of Reverse Mortgages

Over the last decade, reverse mortgages have been marketed as an easy way for seniors to cash in their home equity to pay for living expenses. However, many have learned that improper use of the product – such as pulling all their cash out at one time to pay bills – has led to significant financial problems later, including foreclosure.

In actuality, there are some cases where reverse mortgages can be helpful to borrowers. However, it is imperative to do extensive research on these products before you sign.

Reverse mortgages are special kinds of home loans that let borrowers convert some of their home equity into cash. They come in three varieties: single-purpose reverse mortgages, Home Equity Conversion Mortgages (HECMs) and proprietary reverse mortgages.

Who can apply? Homeowners can apply for a reverse mortgage if they are at least 62 years old, own their home outright or have a low mortgage balance that can be paid off with the proceeds of the reverse loan. Qualifying homeowners also must have no delinquent federal debt, the financial resources to pay for upkeep, taxes and insurance and live in the home during the life of the loan.

Consider the following pros and cons as a starting point for trying or bypassing this loan choice. Even though HECM loans require a discussion with a loan counselor, you should bring in your own financial, tax or estate advisor to help you decide whether you have a safe and appropriate use for this product.

Pros of reverse mortgages:

They’re a source of cash. Borrowers can select that the amount of the loan be payable in a lump sum or regular payments. Proceeds are generally tax-free. Final tax treatment may rely on a variety of personal factors, so check with a tax professional. Generally, they don’t impact Social Security or Medicare payments. Again, important to check personal circumstances. You won’t owe more than the home is worth. Most reverse mortgages have a “nonrecourse” clause, which prevents you or your estate from owing more than the value of your home when the loan becomes due and the home is sold. Reverse mortgages may be a smarter borrowing option for some downsizing seniors. With proper advice, some borrowers use them to buy new homes.

Cons of reverse mortgages:

You may outlive your equity. Reverse mortgages are viewed as a “last-resort” loan option and certainly not a singular solution to spending problems. You and your heirs won’t get to keep your house unless you repay the loan. If your children hope to inherit your home outright, try to find some other funding solution (family loans, other conventional loan products) first. Fees can be more expensive than conventional loans. Reverse mortgage lenders typically charge an origination fee and higher closing costs than conventional loans. This adds up to several percentage points of your home’s value. Many reverse mortgages are adjustable rate products. Adjustable rates affect the cost of the loan over time. If you have to move out for any reason, your loan becomes due. If you have to suddenly move into a nursing home or assisted-living facility, the loan becomes due after you’ve left your home for a continuous year.

Bottom line: Reverse mortgages have become a popular, if controversial, loan option for senior homeowners. For some, they may be a good fit, but all applicants should get qualified financial advice before they apply.


Jason Alderman directs Visa’s financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney.

[…]

Tight For Cash? Avoid Payday Loans With These 4 Alternatives

View photo. As the New Year is underway, personal financial security once more comes to the forefront of financial consciousness. Holiday spending often leaves many in uncomfortable positions, especially if nickel-and-dime budgeting is not a personal forte. While adequate planning is ideal, January often rushes in and meets the well-intended with an emaciated pocketbook ledger. It is important in these situations to prudently remember that quick fixes can lead to debt traps that could quicksand tight budgeting practices. Instead of letting anxiety run rampant and potentially ruin volatile financial situations, take time to consider all available options. Related Link: Spend Too Much On Gifts? Here’s How To Recover From A Broken Holiday Budget

1. Avoid Payday Loans

Often advertising too-good-to-be-true promises, payday advance loan companies feed upon the desperate and those in search of a momentary (vs. permanent) fix. Recently, these companies have come under severe scrutiny from the Better Business Bureau , various Centers for Lending Responsibility and federal agencies — calling them out for exorbitant fees and interest rates.

According to the federal agency Consumer Financial Protection Bureau, 62 percent of payday loans, “are made to people who extend the loans so many times they end up paying more in fees than the original amount they borrowed.” The report continued by stating that more than 80 percent of all loans go unpaid by the next pay-period.

Because of this spiraling trend, 22 states have limited or completely banned payday advance loan practices. Unfortunately, that still leaves the practice fairly accessible to vulnerable individuals. Before considering payday loans, consider looking into other, more reliable and permanent solutions.

2. Credit Union Loans

While most other small loan options will require a credit check, the fees and interest rates are inevitably lower than payday loans. Additionally, because of the checks involved in the practice, promptly repaying federal credit union loans can boost credit scores. Receiving a small line of credit or a STS (Short-Term Small) loan from a credit union is an attractive alternative for decreasing momentary financial right spots.

Each credit union functions differently, but there are federal regulations that all federal credit unions must follow, such as the maximum allowable APR percentage, set caps and a minimum enrollment period with the credit union. These stipulations are in place to protect the credit unions and the individuals looking to borrow. According to the federal credit unions’ government-run website, these practices are in place to provide “consumers with an alternative to borrowing from potentially predatory payday lenders.”

Related Link:3 Reasons Why You Shouldn’t Overlook Checkbook Balancing

3. Unsecured Personal Loans

These small loans are typically available to those with high credit scores and do not use property as collateral. The benefit of these loans is the extended amount of time granted to repay the amount borrows and a fixed payment schedule. The interest for unsecured personal loans is higher than HELOC loans. As with credit union loans, each institution functions uniquely; therefore, looking into more than one bank and comparing terms and interest rates is recommended.

4. Personal Lines Of Credit

While the downfalls of holding credit cards are widely publicized, one attractive benefit of opening a personal line of credit is that the interest rates only apply to the amount borrowed. Unlike personal loans (either through a credit union or bank), borrowing the credit limit is possible without applying for a new loan. In other words, if a line of credit has a $5,000 cap, the borrower can perpetually borrow $5,000 as long as the previously borrowed amount is repaid.Used wisely, personal lines of credit can help individuals get out temporary tight spots.

Whatever method is chosen to ease minor financial discomfort, take the time to explore all options and compare the long-term implications before prematurely digging yourself deeper into unnecessary, near-impossible-to-repay debt. Momentary financial issues do not need to be death sentences for your financial health. Invest in yourself and research all available options before acting impulsively.

See more from Benzinga

3 Tips For A Year-End Tax CheckupSpent Too Much On Gifts? Here’s How To Recover From A Broken Holiday Budget5 Holiday Gift Ideas That Will Help, Not Hinder, Family Budgeting

FinanceLoansPayday LoansUnsecured Personal Loans […]

Tight For Cash? Avoid Payday Loans With These 3 Alternatives

Thumbnail

View photo. As the New Year is underway, personal financial security once more comes to the forefront of financial consciousness. Holiday spending often leaves many in uncomfortable positions, especially if nickel-and-dime budgeting is not a personal forte. While adequate planning is ideal, January often rushes in and meets the well-intended with an emaciated pocketbook ledger. It is important in these situations to prudently remember that quick fixes can lead to debt traps that could quicksand tight budgeting practices. Instead of letting anxiety run rampant and potentially ruin volatile financial situations, take time to consider all available options. Related Link: Spend Too Much On Gifts? Here’s How To Recover From A Broken Holiday Budget

Avoid Payday Loans

Often advertising too-good-to-be-true promises, payday advance loan companies feed upon the desperate and those in search of a momentary (vs. permanent) fix. Recently, these companies have come under severe scrutiny from the Better Business Bureau , various Centers for Lending Responsibility and federal agencies — calling them out for exorbitant fees and interest rates.

According to the federal agency Consumer Financial Protection Bureau, 62 percent of payday loans, “are made to people who extend the loans so many times they end up paying more in fees than the original amount they borrowed.” The report continued by stating that more than 80 percent of all loans go unpaid by the next pay-period.

Because of this spiraling trend, 22 states have limited or completely banned payday advance loan practices. Unfortunately, that still leaves the practice fairly accessible to vulnerable individuals. Before considering payday loans, consider looking into other, more reliable and permanent solutions.

1. Credit Union Loans

While most other small loan options will require a credit check, the fees and interest rates are inevitably lower than payday loans. Additionally, because of the checks involved in the practice, promptly repaying federal credit union loans can boost credit scores. Receiving a small line of credit or a STS (Short-Term Small) loan from a credit union is an attractive alternative for decreasing momentary financial right spots.

Each credit union functions differently, but there are federal regulations that all federal credit unions must follow, such as the maximum allowable APR percentage, set caps and a minimum enrollment period with the credit union. These stipulations are in place to protect the credit unions and the individuals looking to borrow. According to the federal credit unions’ government-run website, these practices are in place to provide “consumers with an alternative to borrowing from potentially predatory payday lenders.”

Related Link:3 Reasons Why You Shouldn’t Overlook Checkbook Balancing

2. Unsecured Personal Loans

These small loans are typically available to those with high credit scores and do not use property as collateral. The benefit of these loans is the extended amount of time granted to repay the amount borrows and a fixed payment schedule. The interest for unsecured personal loans is higher than HELOC loans. As with credit union loans, each institution functions uniquely; therefore, looking into more than one bank and comparing terms and interest rates is recommended.

3. Personal Lines Of Credit

While the downfalls of holding credit cards are widely publicized, one attractive benefit of opening a personal line of credit is that the interest rates only apply to the amount borrowed. Unlike personal loans (either through a credit union or bank), borrowing the credit limit is possible without applying for a new loan. In other words, if a line of credit has a $5,000 cap, the borrower can perpetually borrow $5,000 as long as the previously borrowed amount is repaid.Used wisely, personal lines of credit can help individuals get out temporary tight spots.

Whatever method is chosen to ease minor financial discomfort, take the time to explore all options and compare the long-term implications before prematurely digging yourself deeper into unnecessary, near-impossible-to-repay debt. Momentary financial issues do not need to be death sentences for your financial health. Invest in yourself and research all available options before acting impulsively.

See more from Benzinga

3 Tips For A Year-End Tax CheckupSpent Too Much On Gifts? Here’s How To Recover From A Broken Holiday Budget5 Holiday Gift Ideas That Will Help, Not Hinder, Family Budgeting

FinanceLoansPayday LoansUnsecured Personal Loans […]

Student overdoses after payday loan

Thumbnail

8 December 2014 Last updated at 15:06

Share this page

Delicious Digg Facebook reddit StumbleUpon Email Print Mitch Lewis alerted his friends on Facebook after taking the pills

Related Stories

PM to look at slimming pill warning Family seek ban on toxic slimmer aid Teen pills death parents ‘shocked’

A student struggling for cash overdosed on slimming pills after taking out a payday loan which saw a £100 debt shoot up to £800 in just three months, an inquest has heard.

Physics undergraduate Courtney Mitchell Lewis, 21, from Aberdare, Rhondda Cynon Taf, took 17 tablets.

He alerted friends on Facebook but died in hospital, the Swansea hearing heard.

The coroner said Mr Lewis made “a cry for help” and recorded a verdict of misadventure.

Mr Lewis, known as Mitch, had been working as a barman while studying at Swansea University.

But he decided to use a payday loan company to borrow £100.

However, the loan debt rapidly increased to £800 within three months.

The company offering the payday loan was not identified at the inquest but it is understood it was investigated by police and found to be operating legally.

In May last year, following a night out with friends, Mr Lewis took Dinitrophenol (DNP), which he had bought to lose weight, at his flat in Swansea.

He later posted a message to friends on Facebook saying: “I don’t want to die, I think it is too late.”

His friends called the emergency services and he was taken to A&E, but later died.

‘Friendliness’

DNP is deemed as unfit for human consumption and illegal for use in food but are used by bodybuilders and people trying to lose weight.

Colin Phillips, acting senior Swansea coroner, said: “Mitch was a loving and caring individual who was facing a number of personal problems.”

He added: “Mitch took 17 tablets as a cry for help, but despite alerting friends who took him to hospital he died of DNP toxicity.”

Mr Lewis was described as “the man who always smiled” by his friends.

Former students’ union president Luke James said: “His friendliness made it a better place to be every day.”

[…]

New Payday Loan Service Charges Zero. Too Good to Be True?

Here at Money Talks News, we’re not big fans of payday loans.

In fact, they suck. They may be worse than you thought. And they most definitely top our list of the dumbest ways to borrow money.

So why are we devoting a whole article to the latest payday lender? Because it works under a slightly different model, one that theoretically doesn’t suck. That’s because it doesn’t require you to pay anything in exchange for receiving an advance on your paycheck.

Money Talks News finance expert Stacy Johnson talked to Ram Palaniappan, CEO for Activehours, to find out more. Watch the clip to see what Stacy thought about the service and then keep reading to decide whether the website will work for you.

Watch the video of ‘New Payday Loan Service Charges Zero. Too Good to Be True?’ on MoneyTalksNews.com.

The basics of Activehours

At its core, Activehours works on the same principle as a payday lender. Cash-strapped individuals can get a short-term loan to tide them over until their next paycheck arrives.

However, the details are a little different from what you might see from a traditional payday lender. Here’s a rundown:

Activehours is available only to hourly workers who have direct deposit and online or computerized time sheets. Uber and Lyft drivers are also eligible.The service verifies time sheets, calculates a “take home” hourly rate and makes advances available based upon hours that have not yet been paid out.Individuals can cash out their available hours as needed. Not all hours will be available initially, and workers may be able to request larger advances once they become established users of Activehours.Money is direct deposited into a bank account. Repayments are automatically withdrawn from the same account.Activehours does not charge any interest or fees. Instead, it asks users to provide a tip, in the amount of their choosing, for the service.

Tipping could get costly

That last point is what really sets Activehours apart from the competition. And the ability to choose if and how much to pay for the service could make it seem as though this payday loan is a bargain.

However, that may not always be the case. As Stacy points out in the video, a $10 tip for a $100 loan over a two-week period could end up being the equivalent of paying 260 percent interest. Still, it beats paying a $35 overdraft fee.

If you think you’re going to need to dip into a source of emergency cash on a regular basis, you may be better off finding a low-interest credit card or one with low cash-advance fees (assuming you pay it off as soon as you’re paid). But even that isn’t ideal. And that brings us to our final point.

Time to stop living beyond your means

The real problem with Activehours isn’t that you might give too big of a tip and end up paying what could translate into an outrageous interest rate.

No, the real problem with Activehours is that it serves as a crutch to let you live beyond your means. And that’s not something unique to Activehours. You could say the same about other payday lenders, as well as any credit card upon which you regularly carry a balance.

They all give you a bandage to place over the symptom of a much larger problem. That problem is usually that you either earn too little or you spend too much.

In a perfect world, you’d have money in the bank to cover life’s little emergencies, and you wouldn’t have to scramble to find someone to give you cash today. However, when you spend too much or earn too little, it may feel impossible to ever get money to stay in the bank. You need to do some serious soul-searching to decide how best to tackle the problem.

We have plenty of advice for you here at Money Talks News. If you want to save money, start by reading these articles:

“9 Easy Ways to Save $100 or More a Month.”“7 Extreme Ways to Save Money.”“10 Ways to Save Money When You’re Making Minimum Wage.”“7 Money-Saving Tips People Often Forget About.”

On the other hand, if you want to make more money, try these articles:

“22 Odd and Unusual Ways to Make Extra Money.”“Can Ride-Sharing Provide an ‘Uber-Lyft’ to Your Income?““17 Great Jobs That Don’t Require a 4-Year College Degree.”“The 10 College Majors with the Best Starting Salaries.”

As for Activehours, if you need a payday loan, it may be your best bet right now. Just be careful about the amount you tip. To learn more about using Activehours or other personal loan services, visit this page of our Solutions Center.

However, we hope you’ll take stock of your financial situation, create a budget that works and walk away from payday loans forever.

This article was originally published on MoneyTalksNews.com as ‘New Payday Loan Service Charges Zero. Too Good to Be True?’.

More from Money Talks News

Could Your High Interest Rate Be Illegal?Big Banks Are Dropping Their Payday-Type Loans5 Ways Your Bank May Be Ripping You OffFinanceBanking & BudgetingMoney Talkspayday loans […]

8 Quick-Cash Alternatives To Credit Card Advances

Thumbnail

A credit card cash advance is a cash loan from your credit card issuer. Like a credit card purchase, the cash advance will appear as a transaction on your statement and interest will accrue until it is paid off. There is usually no grace period for cash advances; interest accrues from the day of the transaction. Also, the interest rate is usually somewhat higher for cash advances than for everyday purchases.

Before choosing to take a cash advance,be sure you fully understand its cost and limitations – and have investigated alternatives.

Cash Advance Costs and Limitations

Details about cash advance fees and terms can be found on the Schumer box for the credit card. Here’s an example from the Chase Sapphire Preferred (November 3, 2014). It shows that the APR for a cash advance is 19.24%, compared to 15.99% for purchases. The fee is $10 or 5 percent, whichever is greater.

Another important detail: When a credit card has different types of balances, payments are applied in the manner disclosed by the credit card issuer, not necessarily to the balance the cardholder wants to pay off first. For Sapphire account holders, for example, Chase applies the minimum payment to the balance with the highest APR. Any payment above the minimum is applied “in any way we choose.”

Cash advances are sometimes limited to a percentage of the cardholder’s credit limit. Each credit card issuer has its own policy and formula for setting cash advance limits. In this example, the cash limit is 20% of the credit limit:

8 Alternatives to a Cash Advance

Because of the higher cost of a cash advance, it’s worth investigating other income sources. Depending on your creditworthiness and assets, these options may be better or less good than a cash advance. Each has advantages and disadvantages.

1. Loan from friends or family. For some borrowers, the hardest thing about needing help is asking for it. Consider asking family or friends for a free or low-interest short-term loan. Use a properly executed written agreement that spells out all of the terms so both sides know exactly what to expect with regard to cost and repayment.

2. 401(k) loan. At least 87% of 401(k) administrators allow participants to borrow funds from themselves. Interest rates and fees vary by employer, but are generally competitive. The loan limit is 50% of the funds up to a maximum of $50,000 and repayment is five years or less. There is no credit check, and payments can be set up as automatic deductions from the borrower’s paychecks. See Sometimes It Pays To Borrow From Your 401(k).

3. Roth IRA. You can use this form of a retirement savings as as a source of quick cash. See How To Use Your Roth IRA As An Emergency Fund. Again, there are limitations on what you can borrow and when you might incur penalties.

4. Personal loan from bank. For a borrower with good or great credit, a personal loan from a bank may be cheaper than a credit card cash advance. Also, the payoff will be faster compared to making credit card minimum payments, further reducing the amount of overall interest paid.

5. Collateral loan. Any loan secured by real assets is a collateral loan and may have less stringent credit requirements than an unsecured loan. Home equity loans and lines of credit are secured by the home’s value. Some banks also make personal loans against the value of a trust or certificate of deposit.

6. Salary advance from employer. Many employers offer low-cost payroll advances as an alternative to more costly traditional payday loans. Fees are as low as $8.00, but beware of interest rates. They range from 10% to 165 %, which is predatory lender territory. Payments can be set up as automatic paycheck deductions.

7. Peer-to-peer loan. P2P lending, as it has come to be known, is a system in which individuals borrow money from investors, not banks. Credit requirements are less stringent and approval rates are higher. The most expensive loans top out at about 30% APR, plus a 5% loan fee.

8. Payday or title loan. A car title loan should be considered as a last resort due to its astronomical cost, except in states where title loan interest rates are capped very low. Like title loans, payday loans usually charge interest rates well in the triple digits – 300% to 500% and more. The fees on both types of loans can be so unaffordable for borrowers strapped for cash that many renew their loans several times, at an ultimate cost of several times the original loan amount. See Beware Of Payday Loans and Getting A Car Title Loan

The Bottom Line

Credit card cash advances are costly enough that they should only be considered a viable option in a true emergency. The potential for falling into a cycle of debt is quite real. The wisest course of action is to explore all of the alternatives in order to determine what types of financing you qualify for –and at what cost – before making a final short-term borrowing decision. See How A Cash Advance Works and The 4 Worst Reasons For A Cash Advance.

[…]

What's more important, cash flow or profits?

A:

Cash flow and profits are both crucial aspects of a business. Cash flow is the inflow and outflow of money from a business. It is necessary for daily operations, taxes, purchasing inventory, and paying employees and operating costs. Profit is the surplus after all expenses are deducted from revenue. Profit is the overall picture of a business, and the basis on which tax is calculated. However when determining which one is more important, it depends on the business and the circumstances.

For example, a business may see a profit every month, but its money is tied up in hard assets or accounts receivable and there is no cash to pay employees. Once a debt is paid or the business sees an influx in revenue, it starts to see positive cash flow again. In this example, cash flow is more important because it keeps the business running while still maintaining a profit. Alternately, a business may see increased revenue and cash flow, but there is a substantial amount of debt so the business does not make a profit.

The absence of a profit eventually has a declining effect on the cash flow. In this instance, a profit is more important. Another thing to remember when determining whether to focus on cash flow or profit is cash flow can be bought. A business owner can put up his or her personal assets as capital into the business or get a small business loan from a bank to keep the business running until it starts seeing cash flow again.

[…]