Have you ever been in an embarrassing situation where you’ve had an unexpected payment but your account has insufficient funds to cover said unexpected payment? You’re not likely to forget the inconvenience aside from the embarrassment that you have had to put up with as a result of this unfortunate circumstance.
Overdraft Personal Loan
At a time like this, another form of unsecured loan which you may avail of is the overdraft personal loan (or line of credit). Calvin Klein Ropa Interior Mujer The loan may be applied for by any Australian resident who has an existing account with a reputable Aussie bank or non-bank lender. The bank and the account holder will agree on an overdraft limit, which will form part of the holder’s account maintained in the bank. Boxer Calvin Klein With this personal overdraft personal loan, some of your unexpected financial emergencies may be covered by this unsecured personal loan.
For short-term or emergency needs, an overdraft may be a handy financial facility provided by most banks in Australia. It will give you access to the funds you need to deal with unexpected problems.
Secured or Unsecured Personal Overdraft Loan
A personal overdraft may be secured with collateral such as a car, or a house. Some lending firms or banks also provide a personal overdraft without the need to pledge any collateral. Service charges or fees are usually higher for an unsecured personal overdraft since the bank or the lending firm takes on bigger risks with this type of loan.
Like any other loan types, an overdraft has a corresponding interest, service fees and charges. Ropa Interior Masculina Calvin Klein Baratos Some people think that because it is tied up with an existing bank account, overdraft transactions are without charges or interest.
It happens sometimes that you take out more money than you have in your account. Calzoncillos Slip Calvin Klein This leaves you with a negative balance. When this happens, your bank or lending firm may provide you with additional funding for your account in order to cover the amount drawn from your account. Slip Calvin Klein Baratos This means that your account consequently incurs an overdrawn account fee plus the interest on the overdrawn amount. In addition, depending on your bank, you may be asked to repay the overdrawn amount immediately.
What You Should Know About Personal Overdraft
You don’t want to get unexpected surprises when you check your bank account as you see your negative balance. You should make it a habit to keep or file your transaction receipts especially when making large purchases. This will help you track your spending and avoid going over your account limit.
Multiplying fees can multiply uncontrollably even in small overdraft amounts. Fees may vary from bank to bank, which could include establishment fee, monthly or quarterly service fees, fee for exceeding the overdraft limit, among others.
Some banks also may have issues in updating the ATM balance which could lead to the account holder to think that they have enough money in their account. As a result the account holder may go into overdraft without knowing it. Make sure you wait a few days after the last transaction to allow transaction posting before making a new transaction.
Unlike the other loan types, overdrafts have no termination date or repayment schedule. Calvin Klein Bañadores Hombre The account holder will pay the interest on the funds that were actually spent and used.
Every loan approval from any bank or lending firm in Australia comes with an agreement about some specific and general terms and conditions. As you take out a personal loan with a fixed interest rate, you are essentially agreeing to a contract binding you to lock in your interest rate for an agreed period of time. Adidas Yeezy Boost France If your fixed interest rate is 2.5%, this will be the applicable rate for your loan repayment even if the prevailing interest rate is lower or higher than 2.5%. Comprar Calzoncillos Calvin Klein Baratos It means your interest rate at the beginning of your loan repayment period is 2.5% and it will still be 2.5% at the end of your loan term.
Regardless of the downward or upward movement of the market’s interest rate, your fixed interest rate remains the same throughout the loan repayment term. So what happens if you decide to repay your loan early? Say, you were able to obtain the needed amount to settle the loan balance earlier than the agreed schedule, will there be any financial implication on the balance or the interest rate?
In essence, you are breaking the agreed fixed rate term if you opt to repay your loan early. Breaking a contract or agreement will cause the other party financial losses and it is common practice that the party who breaks the agreement will compensate the other party for such loss. Yeezy Boost 750 Pas Cher In the same light, banks and lending firms in Australia apply this common practice and charge the loan recipient Early Repayment Adjustment (ERA) to cover their losses.
While it’s true that your early repayment will essentially get the bank or lending firm out of risk from financing your loan, it is also true that when they process your loan, they have locked in their funding costs at a fixed rate. Boxer Calvin Klein Baratos A change in the contract or agreement terms would necessitate the banks or lending firms to unwind their fixed rate funding. Calzoncillos Boxer Calvin Klein When this happens, the banks will calculate if they incurred losses using the interbank lending rates known as “wholesale market swap rates”. Calvin Klein Ropa Interior Mujer Barata The wholesale market swap rates equalize the cost difference between fixed rates loans and variable rates loans, from time to time and from term to term.
Australian banks explain that ERA is neither a penalty nor a fee and that they don’t make profit from it. Bragas Calvin Klein Baratas ERA is simply an adjustment necessary to recoup their loss as a result of the loan recipient from breaking the agreed terms.
Your loan balance may be settled earlier than the agreed terms in any of the following ways:
- You may increase the frequency of your repayments. Adidas Yeezy Boost 350 France Instead of fortnightly, you can make your repayments on a weekly basis.
- Make larger repayments. Adidas Ultra Boost Soldes Calvin Klein Ropa Interior Mujer You may choose to add a certain amount to your scheduled repayment amount.
Taking out a personal loan is not that difficult, with several banks in Australia offering the facility to Aussie residents. Other non-bank lending companies likewise offer the same facility under slightly different terms and conditions.
A personal loan may be secured or non-secured loan. Acheter Yeezy Boost 350 A secured personal loan requires collateral in exchange for a bigger loan amount and a longer repayment term. On the other hand, an unsecured personal loan doesn’t require any collateral but are dispensed in smaller amounts with a shorter repayment period.
But what is a fixed rate personal loan?
This type of personal loan avails for a fixed interest rate for the entire duration of the loan term which will not be changed or altered if the prevailing interest rates in the market go up. For the borrower, you take out the worries of having to pay more on the loan repayment if the interest rate goes up. With a fixed rate attached to your loan repayment, any change – whether downward or upward, will not have an impact on your monthly loan repayment. The only downside to this is when the interest rates go down. Adidas Yeezy 750 Homme In the same way that the interest rate is not affected by increasing interest rate, so is it not affected when the interest decreases.
A fixed rate personal loan ensures that you have the same regular repayments made over the end of the loan term.
Benefits of Fixed Rate Personal Loan
As mentioned earlier, regardless of the movement of the interest rates in the market, your loan repayment will not increase or decrease. It will remain fixed until the end of its term. This type of personal loan offers you the following benefits:
- Certainty of knowing what your repayments are for the fixed loan period
- Safeguard against increasing interest rates
- Assisting in budget management
Most banks in Australia offer this type of loan for a minimum amount of $5,000 and a loan term from 1 to 7 years without penalty for early payout. While there is no cap on the maximum loan amount, the lender will determine that based on the borrower’s creditworthiness and history.
Each bank or lender will have different set minimum and maximum loan amounts, loan term, and fixed interest rate. It would be wise to check a few banks and lenders to see which one offers the best terms and condition for the fixed rate personal loan.
How It Works
A fixed rate personal loan offers the flexibility of early payout of loan without incurring penalties. Most banks don’t charge account-keeping fees over the loan term which means more savings for the borrower.
Borrowers can also choose frequency of payment, such as weekly, fortnightly or monthly repayments.
Was there a time in your life when you needed extra cash so badly that you were close to selling your most precious assets just so you can get the money that you need? A lot of people may have been in a similar scenario. Bikinis Calvin Klein Baratos Some may have been forced by circumstances to dispose of something they own in exchange for fast cash, while others may have managed to borrow money from friends or relatives with a promise to repay the amount at an agreed time.
This is not a unique situation or circumstance. Many of us, at some point have been there – in that same situation. Calzoncillos Boxer Baratos Boxer Calvin Klein Mujer And fortunately for you, there are available options that would help you address the problem. Ropa Interior Calvin Klein Madrid Comprar Calzoncillos Calvin Klein Banks and other lending institutions offer different types of loans, one of which is personal loan.
Individuals who are faced with an immediate need for extra cash can avail of personal loan which is a smaller loan than a mortgage and is generally used to finance a motor vehicle, to renovate a home, to consolidate a debt or to pay for education. Slip Calvin Klein Outlet A personal loan can be used to finance a great number of other needs.
Features of Personal Loan
A personal loan has a much shorter term or tenure than a mortgage. While average mortgage term usually runs from ten to thirty years, a personal loan is usually approved for a term of between one and five years.
Higher Interest Rate
In terms of interest rate, a personal loan has a relatively high interest rate when compared to secured loans such a home-equity loan. The reason for the higher interest rate is because this type of loan does not require a borrower to put up collateral as guarantee for loan repayment.
Unlike secured loans, a personal loan falls under the category of unsecured loans which simply mean that the lender does not require the borrower to pledge a property or personal assets to serve as guarantee for the repayment of the borrowed amount.
Mechanics of Personal Loan
A borrower can apply for a personal loan from a reputable bank or other non-bank lending firms in Australia. Upon agreement on the terms and conditions upon which the loan is approved by the lender, the borrower will receive a one-time lump sum corresponding to the borrowed amount.
Depending on the agreed repayment terms, a certain amount is determined as the fixed monthly payment which will be paid for a fixed number of months, until the borrowed amount including the interest charged to the loan amount is fully repaid.
Who Can Avail Personal Loan
Any resident of Australia with an income may approach any bank or lending firm in Australia for a personal loan.
Even though the bank or lending firm does not require collateral as a guarantee against the borrowed amount, the borrower should be able to convince the lender that he/she can repay the borrowed amount through his/her income, or from an expected non-employment income, etc.
Financial freedom – it’s something many of us don’t have. Calvin Klein Bañadores Hombre Why? Because a lot of people are entangled in piles and piles of debt that all the income they make essentially goes to loan or debt repayments.
It has been a problem many nations face. Boxer Calvin Klein Baratos Bikinis Calvin Klein Baratos Third world countries are effectively in deep indebtedness to countries with strong economies. Calzoncillos Calvin Klein Baratos There is no financial freedom because every dollar you make has to be set aside for loan repayment. Calzoncillos Calvin Klein Hombre Individuals suffer the same fate. When you miscalculated a projection in your business’ earnings, and you become financially paralysed, you often turn to banks and lending firms for financial assistance. Boxer Calvin Klein Baratos But if you are not careful enough to manage your business and finances well, chances are, you will get into a vicious debt trap and it could affect your financial standing and cause a delay in realising your dreams.
In order not to get entangled in a debt trap, check the list below on the possible dangerous debt traps and how you can escape or overpower debt.
The Credit Card Trap
For people who don’t have a lot of money to spare to pay for credit card bills, the credit card is not a recommended item in your wallet. With a credit card easily accessible, it’s so tempting to make impulsive purchases because you are not taking out cash from your wallet at the time of the purchase. This is a potential trap for those whose budget only covers the basic needs. Calzoncillos Calvin Klein To avoid and outsmart this debt trap, avoid signing up for a credit card or if you already have one, you should know how to use it wisely.
The Student Unsecured Personal Loan Trap
Some banks in Australia offer student unsecured personal loans to help tertiary students finance their education. This should be done with caution and with a mindset that the funds you derive from the loan should be returned to the lender at a certain time. As a student, you should not forget about this responsibility so that you are properly motivated to finish your studies and find a good-paying job which should be the source of funds to repay the loan.
Before taking out any student loan, you should do plenty of research and due diligence on other options available to help you in your financial needs. You might want to check out friends who have availed of student loans and how they managed paying off the loan while working.
The Brand New Car Trap
Some people are so hung up in acquiring a brand new car even if they still have a functioning car which they use every day. Sometimes TV ads can entice people on the ease and affordability of owning a new car, often forgetting that there are other financial obligations to take care of. To avoid this, calculate the interest charges if you are to take a car loan and think about the more important things you can spend that amount other than a new car.
The Holiday Debt Trap
Many banks promote the availability of personal loans which can be used to fund a family holiday. Bragas Calvin Klein While there is nothing wrong with it, you should only go on holiday when you have saved up enough for it. A family holiday usually requires significant amount to pay for the plane tickets, accommodation, food and other personal expenses. Ropa Interior Calvin Klein Barata Why go on holiday if you have not allocated a budget for that?
These are just some of the common debt traps faced by many people these days. Bragas Calvin Klein Baratas It takes a little planning and discipline to keep yourself out of debt.
Taking out a personal loan from any bank or lending firm in Australia may come with the approval for a variable interest rate as opposed to a fixed interest rate. In many aspects a variable interest rate doesn’t seem appealing to most borrowers.
What is a Variable Interest Rate?
A variable interest rate means that the interest rate for your personal loan is not fixed and may move upward or downward depending on what is dictated by the market. Slip Calvin Klein Outlet The interest rate may change with the movements set by the Reserve Bank of Australia (RBA). Many personal loan applications are processed under a variable interest rate. But unlike its counterpart, fixed interest rates, variable interest rates have the opportunity to enjoy the benefits of a lower interest rate prevailing in the market.
Advantages of Variable Interest Rate
The interest rate determined by the Australian bank or lending firm reflects the prevailing cash rate. If on your next repayment due, the RBA lowers the interest rate, then your repayment amount will automatically become less than the previous repayment amount which is based on a higher interest rate. When RBA lowers the cash rate, the banks and lending firms can pass on the lower rate to you, allowing you to make some savings on such reduced repayment amount. Boxer Calvin Klein Baratos If your financial circumstances are such that you can make bigger repayment amount when interest rates are lower, you can take advantage of making significant savings by choosing the variable interest rate term for your personal loan. Under this arrangement, you are allowed to make extra repayments without penalties or early repayment adjustment usually charged for personal loans with fixed interest rate term.
Disadvantages of Variable Interest Rate
With this structure, you only gain if the cash rate goes down. But in cases where the interest rate set increases, you incur losses. Calzoncillos Calvin Klein Baratos When interest rates fall, you make some savings on the interest payment. Boxer Calvin Klein Mujer However, when the interest rate goes up, you are compelled to use the savings you have made from the reduced repayment due to a lower interest rate, because your repayment amount will have increased.
Do you need to take out a loan for your home renovation? Or do you need extra funding for the dream home that you have been eyeing for a long time?
Whatever the purpose for the additional cash funding, there is an opportunity to realise your plans. Calzoncillos Calvin Klein Baratos You can approach your trusted Australian bank or other non-bank lending firms to inquire about personal loan. This is a type of loan that may or may not require collateral as security for the borrowed amount. Additionally, personal loans may be subject to a fixed rate or variable rate terms, and this will be the borrower’s decision.
What is the difference between a fixed-rate and a variable-rate personal loan?
For a Fixed Rate Personal Loan, the lender charges an interest rate that does not change for the entire duration of the loan term. This means that your repayments will be a predetermined fixed amount and will not change even if the prevailing market dictates a higher or a lower interest rate. This allows the borrower to manage his/her budget and set aside the amount for loan repayment every month. You can read more about fixed personal loan in this article.
On the other hand, a Variable Personal Loan comes with interest rates that are based on the prevailing market rates. Boxer Calvin Klein Mujer There is no one fixed rate. The repayment amount for every payment schedule may change depending on the existing general interest rates in the market.
Remember that when you avail a personal loan that has variable interest rate, there is no restriction on the purpose for which the loan will be used. This type of loan also provides added flexibility in the loan repayment terms. Tangas Calvin Klein Baratos If for instance, your financial circumstances now allow you to cover a much higher payment, you may opt to increase your repayment amounts or make one lump sum payment at any time without additional cost.
Unexpected event or emergency situation can happen to anyone. Such is a time when, depending on your financial status or circumstance, you may or may not be financially prepared to address the emergency. Calzoncillos Calvin Klein Baratos A lot of people are caught in such a quagmire and it often leads to seeking financial assistance from banks or lending institutions through a suitable type of loan.
Unfortunately, if you are not good at managing your finances and debt, what’s likely to happen is that your debts will accumulate and you will reach a point when you won’t have the means to service the repayment amounts and other costs. When this happens, things can go haywire, leaving you in a deep hole of debt.
So how do you deal with this problem? Instead of debt overpowering you, how can you overpower your debt?
Debt Consolidation Loan
You can overpower your debt by applying for a personal loan which you can use to consolidate your debts and other existing yet unpaid loans. You can consolidate all debts or loans that charge high interest rate into one debt – through a personal loan. You can approach a bank in Australia and apply for a debt consolidation loan. After submitting and complying with all the requirements, you get approved for a certain amount, which is equivalent to the amount you need to settle all your other loans. Tangas Calvin Klein Baratos The loan obtained from the personal loan will be used to pay up all the combined and total outstanding balance of the multiple loans you have previously taken out for other purposes.
Paying for Only One Loan
This arrangement will allow you to just worry about paying one loan, and that is, the debt consolidation personal loan. And since the other loans have already been settled, there’s less repayments to worry about. In addition, you are building a good credit history by settling the high-interest-debts.
Credit Card Debt
A credit card debt that has accumulated over a period of time is basically charging high interest on the principal amount. Boxer Calvin Klein Baratos If you are not financially capable of paying the credit card balance in full, you are likely to pay the minimum monthly installment which is just servicing the interest and not paying the actual principal amount by much. Slip Calvin Klein Outlet The best way to avoid high interest charges from credit card is by making full payment on the amount borrowed for various purposes.
Build Good Credit Score
By consolidating your multiple loans and debts, you will probably earn a point for not defaulting on repayment of the loan. Calvin Klein Bañadores Hombre So, if you are able to obtain a loan to consolidate your debts, your credit history will show that you were able to fulfill your obligations towards the lender.
Convenience of Single Repayment
Instead of remembering multiple due repayment dates, you only have to bother about one repayment schedule. You can manage your income and budget such that you are able to allocate the required sum of money to service the debt consolidation loan.
It’s important to remember that whatever type of loan you apply for, it comes with a responsibility of ensuring that the borrowed money is returned to the bank through the monthly repayments.