Available Loan Products During a Credit Crunch
Fred Vanhoosen
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Article Title:
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Available Loan Products During a Credit Crunch
Article Description:
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As we turn on the news each day or pick up our local newspaper,
we are inundated with the bad news about the effects of the
credit crunch on the larger economy. With so much bad news about
the economy, it is easy to believe that the credit crunch is deep
running and affecting every sector of the economy. But the truth
of the matter is that the credit crunch is pretty much regional
in nature and it is only affecting certain types of lending.
Continue reading this article as we explain this assertion.
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1273 Words; formatted to 65 Characters per Line
Distribution Date and Time: 2008-12-10 11:00:00
Written By: Fred Vanhoosen
Copyright: 2008
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Available Loan Products During a Credit Crunch
Copyright (c) 2008 Fred Vanhoosen
Fast Cash 4 All Net
http://www.fastcash4all.net/
Businesses across the country are being forced to close their
doors, due to the credit crunch that is preventing those
companies from getting the credit lines that they require to
maintain operating costs. Other businesses like the auto giants
are suffering from lackluster sales, not because they produced a
bad product, but because banks tightened the reigns on consumer
auto loans, preventing consumers from buying those high-dollar
products.
As we turn on the news each day or pick up our local newspaper,
we are inundated with the bad news about the effects of the
credit crunch on the larger economy. With so much bad news about
the economy, it is easy to believe that the credit crunch is deep
running and affecting every sector of the economy. But the truth
of the matter is that the credit crunch is pretty much regional
in nature and it is only affecting certain types of lending.
Strong Regional Economies
According to an April 2008 story by Forbes Magazine, "America's
Recession-Proof Cities", some cities have shrinking
unemployment, low foreclosure rates, and a growing economic base.
The top ten cities were:
1. Oklahoma City, Oklahoma;
2. San Antonia, Texas;
3. Austin, Texas;
4. Houston, Texas;
5. Charlotte, N.C.;
6. Dallas, Texas;
7. San Jose, California;
8. Raleigh, N.C.;
9. Salt Lake City, Utah; and
10. Seattle, Washington.
In these strong regional economic centers, banks, savings and
loans, and credit unions are still loaning money for cars and
homes. I should know... I live near one of these top ten cities
and we are able to go to our local credit union to get loans for
anything we desire.
Strong Lenders
Banks are closing credit lines for some of America's largest
corporations, and in many locations, banks are withholding money
for car loans and home loans. In locations where home
foreclosures and car repossessions are high, lending is light.
Banks that need to shore up their finances are withholding loans,
even to top-rated borrowers. Other banks in a local area might be
strong financially, but that strength is offset by an
overabundance of caution in a weak economy.
The lenders who have traditionally been large and strong are now
weak, and the lenders who have traditionally been smaller and
more conservative are tending to be much stronger financially.
The smaller finance companies that tend to loan smaller amounts
of money are also strong. Since those companies typically do not
loan money on the big-ticket items such as cars and homes, they
have managed to retain a stronger financial position in the
marketplace.
Even payday loan and cash advance loan companies remain strong in
an economy where big loans are hard to find.
Finding The Right Loan Product
When you are looking for a loan, it is never recommended to
figure out where you can get the money first. Instead, one should
figure out exactly how much money is needed, for what purpose,
and what terms are acceptable to acquire the money.
For example, if one needs money to buy a car, a payday loan
company will very likely be unable to loan the amount of money
needed to actually buy that car. If you are buying a used car for
under $3000 or $1500, you might be able to find a payday loan
company to give you the money, but you have to honestly ask
yourself if you could definitely have the money available to pay
that loan back within two weeks. Since payday loans are loan
products for people who need emergency cash for two weeks, one
should use a regular finance company, bank or credit union to
acquire the loan that you need months to pay back.
You might think that the easier-to-get payday loan might be your
solution for a used car loan, but once you roll that loan over a
few times, the cost of that money starts to become very
expensive. In states like Oklahoma, you would not even be
permitted to roll that payday loan over, by state law.
When you are borrowing money for two weeks or one month, a payday
loan is usually a pretty affordable option for getting that
emergency cash, but once you start rolling that payday loan over
several times, then the cost of the money becomes such that it
will easily exceed the cost of money from a finance company or
credit union.
As this example shows, more important than finding a loan is
finding a loan that has payment terms that are acceptable and
affordable for the borrower. Any loan that cannot be paid back on
schedule is a loan that should not be taken.
Responsible Borrowing
You owe it to yourself and your family to be responsible with
your personal finances. Even when you are looking to borrow
money, you should take the extra effort to make sure that the
decision you are getting ready to make is one that will not hurt
your and your families' financial future.
This means that you should never borrow any amount of money you
cannot afford to pay back on schedule. And while it might be nice
to drive a new car, one of those used cars might make better
financial sense to buy.
This is the reason so many families lost homes to foreclosure.
People bought more house than they could afford to maintain, and
they borrowed so much money that they could barely afford the
monthly payments. Their homes suffered because they could not
afford to keep up with repairs, and when an emergency expense
came up, they found that they could not make all of their bills
in that month. Once someone gets behind on payments, it is hard
to get caught back up, so the homeowners' finances continued to
get worse and worse.
Eventually, homeowners found themselves so far behind that the
bank was threatening foreclosure, and the homeowner was so far
behind that foreclosure seemed the best option to them.
Foreclosed homeowners lost all of the equity that they had
managed to build up in their homes, and after struggling for
years to keep their homes, they found themselves renting an
apartment or a house once again, and their credit ruined.
Sadly, most foreclosed homeowners could have prevented the loss
of their homes, had they only made better decisions when they
bought the home. If only they had purchased smaller homes, with
smaller monthly payments, they could have prevented the problem,
before it became a problem.
Only borrow what you can afford to pay back, and when you are
looking for a loan, make sure that you can live with the terms of
that loan.
In Conclusion...
With this having been said, there are loans out there available
to the consumer. So if you need money for a purchase, there is a
chance that you will be able to find the money you need.
But, you should be careful to only borrow money you can afford to
pay back in a timely manner, with terms you are comfortable
accepting.
As the last several years have proven, the only person out there
that is going to look out for your best interests is you. So
don't let yourself down. Take the time to understand what you
need, what you can afford, and the loan terms that are acceptable
to you, and then make a responsible decision about what you can
and cannot do.
Invest the effort to look out for your own best interests, and at
the end of this current recession, you will find yourself in a
better financial position than your neighbors who did not look
out for their own best interests.
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Fred Vanhoosen writes about the payday loan / cash advance
industry for http://www.fastcash4all.net/ To learn more
about these loan products, we recommend reading the following:
http://www.fastcash4all.net/advantages-payday-loans.php
http://www.fastcash4all.net/cash-advance.php
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