Connect with us

Bad Credit

Who is to blame for Lebanon’s crisis? | Lebanon

Published

on

Inside a Beirut bank, a security guard wearing a face shield slipped a wooden plank in between the handles of a heavy glass door as a swarm of customers waited outside. “Close the curtains,” a teller ordered him from behind the counter. “We are closed!”

It was barely noon and I was one of the lucky ones to have made it inside after waiting in the parking lot all morning among the throngs of impatient depositors. Two bank employees wearing masks handed out withdrawal forms and had them signed on car hoods. They were heckled by some in the crowd who shouted and shoved, elbowing each other to squeeze through the front doors.

The scene I witnessed was mild compared to those that have unfolded in recent days and months: fistfights and jump kicks worthy of a WWE wrestling match. ATMs have been defaced and destroyed, and during the recent riots, some bank branches were attacked with firebombs, burned and gutted overnight.

It seems the coronavirus pandemic and social distancing have taken a backseat to the worst financial crisis Lebanon has ever seen, and this tiny Mediterranean country has seen many.

The street violence came as Lebanon’s currency had been falling like a rock, losing value every day, experiencing an over 50 percent drop in its purchasing power against the US dollar since last October, when an uprising began, drawing hundreds of thousands into the streets.

The protesters called for the downfall of the government and an end to corruption and demanded living wages, better healthcare, electricity and other essential services they have been denied. Instead, they, and the rest of the population who did not protest, saw their salaries slashed, bank deposits evaporate and the price of basic foodstuffs double.

Almost half of Lebanon’s citizens are projected to sink below the poverty level this year and the government estimates 75 percent of the population will require assistance. The Lebanese economy is now one of the weakest in the world, ranking only above Venezuela, according to a list produced by The Economist. All of this in a matter of months. How?

There always seems to be a simple answer, but it depends on who you ask.

Lebanon’s new prime minister, Hassan Diab, who came to power amid the protests that brought down the previous government, has blamed his predecessors, especially the Central Bank Governor Riad Salameh, an incumbent of 26 years, for the crisis. Diab accuses Salameh of pursuing unsound and untransparent fiscal policies.

The currency devaluation can be partly blamed on the country’s plummeting credit scores, which have been downgraded repeatedly in recent months, due to political turmoil and fears over the government’s ability to repay its mounting public debt, one of the highest in the world.

Diab also claimed that some $5.7bn was taken out of Lebanese banks in January and February of this year, despite capital controls, encouraging a widespread suspicion of foul play and preferential treatment for big investors.

But Governor Salameh rejected the claim, saying that $3.7bn was used for loan payments and $2.2bn was withdrawn mostly in local currency, so it could not have left the country. 

He claimed that the banks should be credited, not faulted for bailing out the state repeatedly over the last three decades and that the government has only itself to blame for its overspending and bankruptcy. This was compounded, he added, by Diab’s decision to default on a debt payment for the first time in March, which only sent more jitters into the market.

Indeed, it is difficult to imagine any financial system that could withstand such pressures: nearly every customer clamouring to liquidate their accounts as fast as possible. On the other hand, bank profits have soared on Salame’s watch, amounting to some $22bn since 1993, while wages and public services have stagnated or gone down.

The protesters, fed up with inequality and worsening living conditions, have blamed both Salameh and Diab and the entire political system of Lebanon, including nearly every politician and political party the country has ever known. That is quite a wide net in a political landscape that ranges from the far right to far left, pro-American to pro-Iranian: capitalists, communists, leftists, Islamists, fascists, neoliberals, post-colonial feudalists, militiamen, billionaires and bankers.

What all these actors have in common according to those in the streets is one simple word: corruption. It is a powerful, although intangible term. Its mere utterance evokes a certain catharsis with little need to elaborate. “Kelun Yani Kelun! [All means all!]” is the main protest slogan shouted at rallies and marches for more than six months now. Everyone must go. “A pack of thieves!” is the constant refrain.

This sentiment is echoed, albeit in more polite tones, in the dozens of articles and reports about Lebanon’s malaise published over recent months by Western media outlets and think-tanks. The culprit behind “endemic corruption”, they often report, is similarly singular and simplistic: the political class, the ruling elite or some variation thereof.

These terms are used so routinely and interchangeably, the paragraphs almost write themselves. They become bland and repetitive like any vague, overarching claim. Yet they also voice an inherently moralistic position.

The solution, analysts claim, is straightforward: admit wrong and “reform” the bad ways of the past, end the corruption, establish credibility, embrace transparency, accountability, the rule of law. Repent for your sins.

The consequences of inaction are similarly biblical: a perfect storm of wrath and rage, implosion, free fall, a big mess “teetering on the brink of economic ruin and political chaos” as the Washington Post recently put it.

But one thing these diagnoses tend to miss is detail: figures, names, a smoking gun to close the case on this alleged cesspool of depravity.

The evidence presented against “the corrupt class” even in the most reputable Western news agencies and newspapers is largely circumstantial: decrepit public services operating at a significant loss, an uncontrolled currency crisis, a lack of social welfare programmes, the high cost of living, unemployment, negative GDP growth. Are these really symptoms of bad moral behaviour from a handful of really bad men?

If corruption – or “thievery” as protesters call it – could cause this much damage, then why hasn’t it paralysed wealthier countries? In the United States, for example, it is not billions but trillions of dollars that are wasted every year, on inflated military and infrastructure contracts, corporate bailouts, failed projects and programmes, tax evasion and avoidance

There has been much criticism of Lebanon’s old patronage networks that keep power concentrated in the hands of the few. But how different are they to the unnecessary and politicised allocations of taxpayer funds by members of the US Congress to bring jobs and contracts to their local districts known as “pork barrel spending”?

Similarly, many have faulted Lebanon’s banking system as an elaborate Ponzi or pyramid scheme, in line with the stereotype of the unscrupulous Lebanese businessman. But how unique is debt risk and reshuffling in the world of business and finance?

Some Wall Street insiders have likened much of what goes in the stock market, the US Social Security Fund and even the Federal Reserve to a Ponzi scheme of sorts. Trillions of dollars evaporated from accounts during the subprime real estate crisis. Yet there was no currency collapse, no electricity shortages, no run on the banks in the US. And in terms of the much-vaunted accountability Lebanese officials are expected to face in order to save the country, rarely has a major Wall Street broker or banker ever been sent to prison.

Those now waving their fingers at Lebanon over its financial misconduct should be reminded that the architects of the country’s postwar economy came largely from prominent US financial institutions.

The late billionaire Prime Minister Rafik Hariri, who engineered massive reconstruction spending that racked up the national debt, surrounded himself with veterans of global financial institutions who spearheaded a “liberal” investment strategy to draw in foreign capital, marked by low taxes and little regulation.

Among the members of this dream team were former Finance and Prime Minister Foaud Sinora, who worked at Citibank, as well as Salameh, the Central Bank governor, who served as vice president of Merrill Lynch in Paris.

For decades, Hariri and his entourage and their policies were welcomed and praised in Western capitals. Salameh was even voted Central Bank governor of the year in 2009 by the Banker magazine, a subsidiary of the Financial Times, best central banker in the world by Euromoney in 2006, an award of honour from the French president, among other accolades. As recently as last year, he was given an “A” rating by Global Finance, outperforming his counterparts in several European countries including Switzerland and the United Kingdom.

Looking back, there is much criticism of these neoliberal policies evangelised by the global financial industry, and for good reason. They are top-down, market-driven equations that prioritise investors over workers, profits over social welfare programmes and the environment. But how can these policies explain Lebanon’s unique “mess” if supply-side or “trickle-down” economics have been implemented all over the world?

Could it be that neoliberal policies are far more damaging for small, war-torn countries that lack strong institutions, political stability, natural resources or major manufacturing industries? Such countries are already considered high risk, lack investor confidence and thus pay a high cost for borrowing.

Consider this on the individual level: how hard is it for someone to climb out of bad credit? It is easy to blame their poor decisions and upbringing. It is more difficult to examine the circumstances that led to their misfortune because this necessitates putting one’s own privileges under a microscope.

Like neoliberalism, corruption and cronyism are also not absent from most political and financial systems. But they too have a far greater impact when there is not enough money in the economy to keep people quiet.

Even if we were to dismiss all of the above, this still leaves the favourite scapegoat for Lebanon’s woes: sectarianism.

It is loathed particularly by younger generations, who grew up after the war and are rightly puzzled by its relevance and ability to empower a handful of parties to wield so much control over the state. But here too there are parallels to partisanship, an inescapable reality even in the most successful countries.

After all, it is not really sects or political parties that take decisions at the end of the day, but groups of influential persons at their helm, largely wealthy, largely male, those who sign the big contracts and help write the legislation that guarantees them. In developing countries, it is called clientelism, whereas, in more developed nations, it is known as lobbying, political action committees and excellent legal teams.

This may explain part of the reason why rich countries rank so low on corruption indexes: the language is different.

None of this is to say bad governance and stark wealth disparities should be ignored. But some perspective could help the ways we demand and fight for better systems.

Having spent several years investigating many Lebanese government problems – wasteful public works projects, overpriced telecommunications, unreliable electricity, destructive land use and pollution – I, like many of my colleagues, struggle to identify clear-cut, prosecutable charges of corruption and culprits, ie bad guys and bogeymen.

When we dive into the abyss of public sector failures, what we usually find instead are labyrinths and layers of structural problems that have been mounting for decades. These include outdated, malfunctioning infrastructure, understaffed and underfunded facilities, a lack of maintenance and monitoring.

These problems are further compounded by defunct or non-existent oversight bodies to act as a watchdog on industry and contracts, unclear jurisdiction and conflicting views from different government agencies over who is responsible, slow, ineffective and inaccessible courts.

Of course, this convoluted environment provides many opportunities for exploitation, but more often, this is done through legal loopholes and not the glaring robberies our imaginations can conjure.

Contrary to popular opinion, these are not necessarily problems wedded to personalities that are currently in power. It is not only their annoying mannerisms and snarky smiles that should draw our attention and ire, but hundreds of local and national elected officials and bureaucrats making thousands of decisions on a daily basis, voted in by millions of citizens, many enjoying some benefit from the “ruling class” and its patronage economies.

This discussion of power relations brings us to the final and perhaps most popular argument to explain Lebanon’s financial problems: warlords. Here is another visceral term, like corruption, in which we have become accustomed to depositing our well-justified anger and angst.

But once again, we must ask ourselves how we imagine political structures around the world were established, particularly those most economically powerful and admired today. Is a state not formed through war? By tribes and clans and militias and bloody battles between them?

One difference with Lebanon is that no victor prevailed, the warlords or “the founders” have not given up, the other side has not been conquered to make way for an “indivisible” nation built on the bones of its detractors.

In many ways, Lebanon is unfinished business. It is frozen in the embryonic stage of nation-building, the militias have evolved into parties, but only in name. No system keeps them in check, there is no higher power to adjudicate conflicts and settle jurisdictions, no agreed-upon law enforcement to have a rule of law. Each side can justify its transgressions as part of the ongoing battle.

Cynics will say this void is Lebanon’s fate, destined to be a wasteland, a chessboard where major powers can manoeuvre and manipulate to settle scores without getting their hands (or countries) dirty. The decades of nearly uninterrupted war, from its founding during World War II to the itinerant street battles, air strikes and assassinations of recent years testify to that. No side could have kept up the fight without external support.

Curiously, this militarism from foreign states is rarely included in analyses of corruption in Lebanon. In particular, the billions of dollars in destroyed infrastructure, inflicted upon roads, bridges and power stations over decades of Israeli air strikes using American-made bombs, the untold losses to tourism, shipping and other industries are almost never included in tallies of corruption and economic losses. Lebanon also pays the cost of foreign-funded wars in neighbouring countries, accepting more refugees per capita than any other country in the world, putting an undeniable added strain on already-collapsing employment, services infrastructure. 

All of these factors will continue to complicate Lebanon’s options going forward. The new government, consisting largely of unknown individuals and college professors, some of them advisors to political parties, have made some ambitious proposals. On the surface, their tone is more serious than their predecessors’ and they have been more responsive to public demands, arresting business owners accused of price gouging, and demanding a full audit of the central bank’s activities.

But they are being sharply criticised, particularly their bid to ask for billions of dollars in assistance from the IMF and their failure to call for immediate elections and rid the country of corruption more rapidly.

Indeed, the government’s every action should be scrutinised. Renewed demand for accountability and investigations is one positive aspect of the uprising culture the protests have helped inspire.

But analyses that fail to contextualise the daunting, historical, structural and geopolitical challenges even the best possible Lebanese government would face, are telling only part of the story.

Fear, like corruption, stability and creditworthiness are intangible indicators often assessed and determined by those in far more privileged and powerful positions than any politician or bureaucrat in Lebanon. Global institutions help determine the country’s fate but do not share its national interests.

As always, Lebanon will continue to face an uphill battle in attracting foreign capital, perhaps now greater than ever before. Not only are there the concerns about security – a stigma stretching back over 40 years – but also about the solvency of the country’s financial system, which has never faced a challenge of this magnitude even during the height of civil war shelling.

How realistic is it to expect Lebanon to build a competitive industry from an already weakened position with no natural resources, strong central government or significant technical know-how to call upon?

Aside from a few light industries, such as food, jewellery and paper, Lebanon simply does not make much, nor does it have the basic infrastructure to do so in major quantities. Tapping into the country’s abundance of nature and historic sites is also beset again by “confidence” concerns, travel warnings from the world’s most powerful nations and deep-set negative perceptions that have kept wondrous ancient and natural sites largely empty. US sanctions, and a ban on direct flights since the civil war, have not helped either.

There is some hope that potential oil production and renewed interest in cannabis growing (long banned under US pressure) could come to the rescue. Neither is anywhere near certain as the fact that new loans will bring renewed borrowing costs, new political strings attached with increasingly difficult and potentially dangerous conditions to meet.

All of these future developments and financial transactions should be followed closely. But in doing so, we should resist the lure of reductive conclusions to create neat paragraphs and easily digestible analyses and tired moralistic stereotypes that appeal to international audiences and publishers. Pointing the finger at localised bad behaviour avoids a more serious conversation about the injustices of global finance.

There are no easy answers to explain the story of Lebanon – it is essentially the story of many countries and peoples and circumstances that reflect our interconnected political and economic realities, shared vulnerabilities and darkest fears. Be wary of fairy tale narratives about villains and heroes and missed opportunities for happy endings.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance. 



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Bad Credit

What is a Credit Builder Loan and Where Do I Get One?

Published

on

Your credit score plays an important role in your financial life. If you have good credit you can qualify for loans and borrow money at lower interest rates. If you don’t have a credit score or have poor credit, it can be hard to get loans and you’ll be forced to pay higher rates when you do qualify.

Building credit can be like a chicken and egg problem. If you have no credit or bad credit, you’ll have trouble getting a loan. At the same time, you need to get a loan so you have an opportunity to build credit.

 

What Is a Credit Builder Loan?

A credit builder loan is a special type of loan designed to help people who have poor or no credit improve their credit score.

In many ways, credit builder loans are less like loans and more like forced savings plans. When you get a credit builder loan, the lender places the money in a bank account that you can’t access. You then start receiving a monthly bill for the loan. As you make those payments, the lender reports that information to the credit bureaus, helping you build up a payment history. This improves your credit score.

Once you finish the payment plan, the lender will release the bank account to you and stop sending bills.

In the end, you’ll wind up with slightly less money than you paid overall, due to fees and interest charges. For example, let’s say you get a credit builder loan for $1,000, the lender may make you make a monthly payment of $90 each month for a year. After the year ends, you’ll get the $1,000 from the lender, but may pay $1,080 overall.

Why Get a Credit Builder Loan?

The main reason to get a credit builder loan is right in the name: They help you build your credit. If you don’t have any credit history or if you’ve damaged your credit by missing payments, it’s much easier to qualify for a credit builder loan than a traditional loan from a lender.

The companies offering credit builder loans take on almost no risk because they don’t give you the money until you’ve finished paying the loan, so they’re willing to approve people who have severely damaged credit.

Credit builder loans will help you build your credit history if you make your monthly payments, but you do have to pay fees and interest to do so. There are other ways to build credit that don’t require paying any money. For example, if you get a fee-free credit card and pay your balance in full each month, you’ll build credit without paying any interest or fees.

This makes credit builder loans best for people who have tried and failed to qualify for other loans and credit cards.

There is also some value in the forced savings provided by credit builder loans, but the interest and fees eat away at that savings. If saving is your goal, it’s best to use a different strategy to help you save, but if you want to save and build credit at the same time, a credit builder loan might be worth using.

Where to Find Credit Builder Loans?

There are many companies that offer credit builder loans. Each lender offers different loan terms, fees, and interest rates.

One of the top credit builder loan providers is Self. The company offers credit builder loans with payment plans as low as $25 per month, making it easy for almost anyone to afford a credit builder loan.

With Self, you can also qualify for a Visa credit card after you’ve made at least 3 payments on your credit builder loan and made $100 of progress toward paying off the loan. You can set your own credit limit, up toward the total amount of progress you’ve made on the loan.

The card doesn’t have any additional upfront costs and can help you gain experience with using a credit card. It can also help you build your credit by giving you another account to make payments on, providing you with more opportunities to build a good payment history.

Visit Self or read the full Self Review

What to Look for?

When you’re looking for credit builder loans, there are a few factors to consider.

The first thing to think about is the monthly payment. The point of a credit builder loan is to show the credit bureaus that you can make regular payments on your debts, which will help build your credit score. If a lender’s minimum payment is more than you can afford each month, you won’t be able to build your credit with that lender’s credit builder loan.

It’s also important to think about the cost of the loan. Credit builder loans often come with stiff fees and you also have to pay interest on the money you’ve borrowed, even if you don’t get access to it until you pay the loan off.

The fewer fees and the less interest you have to pay, the better. You should look very carefully at each lender’s fee structure to choose the best deal.

Finally, take some time to see how easy it is to qualify. While credit builder loans are targeted at people with bad credit, some lenders will still check your credit history and might deny your application.

If you have very bad credit, you might want to look for a lender that advertises credit builder loans with no credit check.

Alternatives to a Credit Builder Loan

Credit builder loans can be a good way to build credit for some people, but they come with interest charges and fees. There are other ways you can build credit worth considering. Some of them won’t cost any money, which may make them a better choice than a credit builder loan.

Secured Credit Cards

A secured credit card is a special type of credit card that is much easier to qualify for than a typical card.

With a secured card, you have to provide a security deposit when you open the account. The credit limit of your card will usually be equal to the deposit you provide. For example, if you want a $200 credit limit, you’ll have to give the card issuer $200 as collateral.

Because you give the lender cash to secure the card, it’s much easier to qualify for a secured credit card. The lender assumes almost no risk. Once you get the card, it works like any other credit card. You can use it to spend up to your credit limit and you’ll get a bill each month. If you pay the bill on time, you can build credit.

Many secured cards charge high interest rates and have hefty fees, but there are some fee-free options available. One great secured card is the Discover it Secured Credit Card, which has no annual fee and offers cash back rewards.

Become an Authorized User

Most credit card issuers let cardholders add other people as authorized users on their accounts. Authorized users get their own cards and can use them to spend money just like the main cardholder.

Some issuers will report account information to the credit reports of both the main cardholder and any authorized users. If you know someone that is willing to make you an authorized user on their credit card account, this may help you build your credit so you can qualify for a card of your own.

Not every issuer will report information to authorized users’ credit reports. It’s also worth keeping in mind that if you become an authorized user on a card and the cardholder stops making payments or racks up a huge balance, that will show up on your report as well, damaging your credit further. That can make this strategy risky.

Personal Loans with a Cosigner

Personal loans are highly flexible loans that you can use for almost any reason. If you need to borrow money, you can try to find someone who is willing to cosign on the loan. Having a cosigner can make it easier to qualify, even if you have poor credit, giving you a chance to build your credit score.

When someone cosigns on a loan, they’re promising to take responsibility for your debt if you stop making payments. Lenders will look at both your credit and your cosigner’s credit when you apply, so having a cosigner with strong credit can help you get the loan or reduce the interest rate of the loan.

Keep in mind that your cosigner is putting themselves at risk by cosigning on a loan. It’s even more important that you make your payments every month. If you don’t, your cosigner will have to pick up the slack.

Personal Loans without a Cosigner

Even if you have poor credit, you may be able to qualify for a personal loan designed for people that don’t have strong credit. Just keep in mind that you’ll have to pay higher fees and interest rates to compensate for your poor credit score.

If you’re looking for a personal loan and have poor credit, shopping around for the best deal becomes even more important. You can use a loan comparison site, like Fiona, to get quotes from multiple lenders so you can find the cheapest loan.

Related: Best Emergency Loans for Bad Credit

What Is the Difference Between a Credit-Builder Loan and a Personal Loan?

A personal loan is a type of loan that you can get for almost any reason, such as consolidating debts, starting a home improvement project, paying an unexpected bill, or even going on vacation. They’re offered by many lenders and banks.

A credit builder loan is less a loan and more a forced saving plan. When you get a credit builder loan, the lender doesn’t actually give you any money. Instead, it places the amount you’re borrowing in an account you can’t access. Once you finish paying the loan, the lender releases the money in that account to you.

Credit builder loans tend to be much easier to qualify for than personal loans because the lender doesn’t have to take on much risk. They’re mostly used by people who want to build or rebuild their credit score.

On the other hand, personal loans are less popular for building credit and more useful for providing funding when borrowers need cash to cover an expense.

Related: Best Prepaid Credit Cards That Build Credit

Pros and Cons of a Credit Builder Loan

Before applying for a credit builder loan, consider these pros and cons.

Pros

  • Easy to qualify for
  • Helps you build savings
  • Payments are usually small
  • Helps you build payment history

Cons

  • Not really a loan
  • Fees and interest rates can be high
  • There are cheaper alternatives to build credit

FAQs

These are some of the most frequently asked questions about credit builder loans.

Like most loans, it is possible to repay a credit builder loan ahead of schedule, but there are a few downsides to consider. One is that many lenders add an early repayment fee to their loans, so you’ll have to pay that fee if you want to get out of the credit builder loan. The other is that repaying the loan early somewhat defeats the purpose. Each monthly payment you make toward the loan helps you build your credit. If you pay the loan off early, you’ll make fewer monthly payments, which means less improvement in your credit.

Missing a payment on a credit builder loan is like missing a payment on any loan. You’ll likely owe a late fee and it will damage your credit. This is one of the reasons it’s important to make sure you can afford the monthly payment before signing up for a credit builder loan. If you can’t make your payments, the loan will wind up damaging your credit instead of helping it.

Final Thoughts

Credit builder loans can be a good way to build or rebuild your credit, but they’re not your only option. They often involve paying fees and interest, so you should search around for the best deal or look for cheaper (or free) alternatives, such as secured credit cards.



Source link

Continue Reading

Bad Credit

How to lower your credit card interest rate and save money

Published

on

Why pay high interest on your credit cards when you can simply bargain a lower rate? These tips can help you save big money on your bill.

CHARLOTTE, N.C. — A lot of people have struggled to pay their bills during the COVID-19 pandemic and many have turned to credit cards so they can kick the can down the road. Now the time has come to pay it down and some of the bills are eye-popping. 

Did you know you can bargain that interest rate down and save quite a bit of money?

You could ask for a lower rate, but according to a new study, you can bargain down 10 percentage points. So, if your interest rate is 24%, it could mean paying 14% instead. That’s still high but it’s a lot better than 24% interest. 

These numbers are staggering and can be a bit overwhelming. Americans have an average credit card balance of $5,300, totaling $807 billion across 506 million credit card accounts. Why are these numbers important? Because they want to keep you spending, which means you have leverage to bargain.

“It is absolutely possible to negotiate your rate down. In fact, your chances of doing so are better than you think they are. Close to 80% surveyed said they did just that,” Matt Schultz, an industry expert with LendingTree, said. “You can save serious money, especially if your balance is bigger.”

Click here to sign up for the daily Wake Up Charlotte newsletter

You have to try, and you have to keep trying, even if the lender says no. Take it higher to a manager and keep pushing. Drops of 10% are possible and that could save you hundreds, or maybe even thousands, of dollars. 

RELATED: VERIFY: Can your stimulus check be seized by banks or private debt collectors?

“So, a lot of people have bad credit, some are thankful to have it at all. Is it possible for them too? Yes, absolutely it’s possible,” Schultz said. “Credit card companies are willing to talk with you because they want to keep your business. It benefits them to lower your rate to keep their card in your wallet.”

Paying down debt is liberating. Less debt is more buying power but you must advocate for yourself. If you don’t, the card companies are just as happy to take your money at the higher rate. 


LendingTree offers these suggestions if you plan to ask for a lower rate: 

How to ask for a lower APR

Before you make the call, come armed with ammunition in the form of other offers you’ve seen at a site like LendingTree.com or that you may have received in your snail mail. Take that offer and use it to frame the conversation: 

“I’ve been a good customer of yours for a long time and I like my card. However, the APR is 25% and I’ve just been offered one with a 19% APR. Would you be able to match it?” 

As survey data shows, they’ll likely be willing to work with you, at least to some degree.

RELATED: ‘ I was very grateful’ | WCNC Charlotte breaks through red tape to help woman get money she was owed

How to ask for a waived annual fee

Before you make the call, think about what you will accept. If you ask for a fee to be waived altogether and they only offer to reduce it, is that good enough? What if they offer you extra rewards points or miles or make some other counteroffer instead of a reduced fee? And perhaps most important, what if they say no? 

As with many negotiations, you have more leverage if you’re willing to walk away, so that could be an option. However, you shouldn’t make that threat unless you’re willing to follow through with it, and you shouldn’t follow through with it unless you’ve thought about what that would mean for your credit.

How to ask for a waived late fee

Just pick up the phone and be polite. If you’re a long-time customer with good credit and this is your first offense, the odds are in your favor. In fact, some card issuers will even waive a first late fee as a matter of policy. If you’ve been late multiple times in the recent past, however, your chances probably aren’t as good. Even so, it never hurts to ask.

How to ask for a higher credit limit

Start with a number in mind based on your current limit. The average increase reported in our survey was about $1,500, but your situation will vary. If your current limit is $500, a $1,500 bump might be asking too much. However, if your current limit is $5,000, that request might be just fine. 

Think about why you’re asking for the increase — for some extra spending power or to help your credit score — and then decide what to ask for. Just remember that it’s always better to start a negotiation by asking for a little too much. That way, when you negotiate, you can give a little bit and still get what you want.


Source link

Continue Reading

Bad Credit

Can A Moving Loan Help Your Relocation? Find Out Here – Forbes Advisor

Published

on

Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

Whether you’re relocating to another city or state, moving can be expensive. You might need money to pay for a moving van or movers, new furniture or your security deposit. If you don’t have money on hand to cover those expenses, a moving loan can help you fill in the gap.

Before you take out a relocation loan, learn what they are and how to compare your options to understand if it’s a good choice for your situation.

What Is a Moving Loan?

A moving loan—also referred to as a relocation loan—is an unsecured personal loan you can use to help cover your moving expenses. Unsecured loans don’t require you to use a personal asset to secure the loan. Because the loan is unsecured, lenders base your eligibility on factors like your credit score, income and debt-to-income (DTI) ratio. Like with other types of personal loans, you’ll have to repay your loan through fixed monthly installments.

When Should You Get a Moving Loan?

Although the answer varies based on your financial circumstances, it may make sense to get a moving loan if you can secure a good interest rate and can afford to repay the loan as promised. However, if you believe it might be hard for you to repay the loan, then it’s probably a good idea to avoid taking one out. Falling behind on payments can damage your credit score, making it harder for you to qualify for future loans.

How to Get a Moving Loan

  1. Search for lenders: To find lenders that offer relocation loans, search for the best personal loans online. A good place to start might be a lender comparison website. While there, carefully review the terms, minimum credit score requirements, fees and annual percentage range (APR) range of each lender. In addition, you can check with your local bank or credit union to see if it offers personal loans for moving.
  2. Prequalify with multiple lenders: Once you narrow down your list of the best lenders, prequalify with each one of them (if available). This allows you to see what terms and APR you might receive if approved. Make sure the lender does a soft credit check to protect your credit score from any pitfalls.
  3. Determine the amount you need to borrow: Estimate your moving or relocation expenses to see how large of a loan you need to take out. Different lenders have different minimum loan amounts. Also, some states have rules about the minimum amount you can borrow, which may affect the size of your loan.
  4. Apply for your moving loan: After you select the lender that matches your needs, complete the application process. Prepare to provide the lender with personal information, such as your income, date of birth and Social Security number (SSN). Some lenders will require you to provide W2’s, pay stubs or bank statements to confirm your income.
  5. Wait for the lender to make a loan decision: After you apply, wait for the lender to review your application. Some lenders might approve you within seconds, while others may take longer. If a lender denies your loan, ask them for an explanation. Applying with a co-borrower or co-signer, improving your credit score, reviewing your credit report for errors or requesting a smaller amount may improve your chances of approval.
  6. Sign the loan agreement and receive funds: Once approved, the lender will send you a loan agreement to sign. After you sign the agreement, the lender will most likely deposit your funds directly into your account. The time of funding varies for different lenders—some lenders can issue the funds the same day while others may take a week or longer.
  7. Repay your loan: Finally, repay your loan as promised. Making late payments or defaulting on the loan can damage your credit score. Setting up autopay is one way to ensure you’ll never miss a payment.

Pros of Moving Loans

  • Quick access to funds: If your loan application is approved, some lenders may deposit your funds into your bank account the same day or within a week.
  • Flexible loan terms: Some lenders allow you to take out personal loans for moving with loan terms as short as 12 months and as long as 84 months. A long-term loan may have a lower minimum monthly payment, which might better suit your budget. However, the downside is that you’ll pay more in interest over the life of the loan.
  • Lower interest rates than credit cards: The average interest rates for personal loans are usually lower than those for credit cards. If you have a good credit score (at least 670) and a stable income, you may be able to secure a good interest rate—an interest rate that’s lower than the national average.
  • No collateral required: Since loans for moving typically require no collateral—an asset that secures the loan—you won’t have to worry about a lender taking your asset (at least without a court’s permission).

Cons of Moving Loans

  • Fees: Some lenders charge origination fees between 1% and 8%—these fees can be a huge drawback since the lender usually subtracts them from your loan amount. Other common personal loan fees include application fees, returned check fees, late payment fees and prepayment fees.
  • Potentially high interest rates: If you have less-than-stellar credit or minimal credit history, your lender may charge you high interest rates. Some lenders have APRs above 30%.
  • Missed payments can damage your credit score: If you miss a payment or default on the loan, it can damage your credit score. This will make it more difficult for you to qualify for future loans.

Moving Loan Alternatives

If you want to avoid the potential cons of a relocation loan, consider these alternative options to help cover your moving expenses or rent.

0% APR Credit Card

Borrowers with good to excellent credit scores (at least 670) can avoid paying interest and high fees with a 0% APR credit card. These cards come with interest-free promotion periods, which can last for up to 21 months. If you pay off your balance before the promotion period expires, you won’t have to worry about paying interest. However, providers will charge interest on unpaid balances once the introductory period ends.

Family Loan

Family loans are another way to avoid paying interest or to pay minimal interest when it comes to your relocation expenses. With this option, you can also avoid the formal loan application process. The loan agreement between you and the family member should spell out the terms and conditions of the loan. Repay the loan as promised to avoid causing damage to your relationship.

Payday Alternative Loan

If you can’t qualify for a relocation loan or have trouble finding moving loans for bad credit, consider using a payday alternative loan. Some federal credit unions offer these loans, which are designed to help you avoid the high-interest charges of payday loans. You can borrow up to $2,000; loan terms range from one to 12 months and the maximum interest rate is 28%. To use this option, you must be a member of a federal credit union or be eligible for membership.

Savings

Instead of using a personal loan for moving, it might be better to use your savings, if possible. If you know how much it will cost, then create an automatic savings plan to cover most or all of your relocation expenses.

Relocation Package

If you’re moving for a new job, ask your new employer if it will cover some of your relocation expenses. Some employers offer this to employees as an incentive to accept the job offer. Even if the employer doesn’t offer this, you can ask for a relocation bonus or try negotiating a higher salary.

Source link

Continue Reading

Trending