Personal Loans: The Swiss Army Knife of Personal Finance
It’s easy to plan and save for some expenses, but unexpected costs are inevitable. For expenses that come up out of nowhere, you need to borrow, and a great way to borrow is with a personal loan. Consider these uses for a personal loan. If you have one of these events coming up, you may want to consider a personal loan to finance it.
When the time is right to get married, it will be tough to see the difference that a few more months of saving would make. Timing is everything! If you or your child is dedicated to hosting a spring wedding, your Christmas bonus may not be enough.
The average wedding costs just over $30,000, which makes it too much for a single credit card, and the interest you’d pay would make it much more expensive. Even single vendor costs, like event space or catering, may require separate financing. A personal loan will get you a better interest rate and a payment plan that’s easier to manage.
You may even be able to bring the price of those transactions down. Rather than putting a deposit down with a credit card, you can offer to pay more of the total cost up front in exchange for a reduced bill. Caterers, tailors and other small business owners are likely to appreciate the simplification of their cash flow. They can pay their employees and purchase supplies without going into debt themselves. They may be willing to pass those savings on to you.
If you’re considering adoption, you probably already know how expensive it can be due to screenings and fees that stand between you and your child. Realistically, costs could be as high as $50,000 to adopt a child in the U.S., and even more to adopt an infant from overseas.
Obtaining financing for this process can be a challenge. Unlike traditional big expenses, there’s no collateral. No one can repossess your child if you fall behind on your loans.
Traditional sources of financing are out the window.
Fortunately, a personal loan can make this process a reality. Because the terms tend to be short, you can have your loan paid off long before you start thinking about college costs for your new addition!
3.) Short-term house sales
The success of shows like “Love It or List It” have inspired a new generation of people to pick up properties, fix them up, and sell them for a profit. For those who are handy and love remodeling, it can be a dream hobby. It can even turn into a full-time job! There’s just one problem: capital.
When you buy a house to sell again, it’s likely that you’re borrowing as much as you can to pay for the property. That doesn’t leave much left over for new fixtures, paint or repairs. Some of that can be done cheaply enough, but much of it will require capital. Since you don’t have much equity in the property, borrowing against it isn’t a real possibility.
A personal loan can be the answer. With affordable rates and flexible repayment terms, a personal loan can help you finance those value-boosting improvements. Best of all, when you sell the house, you can repay the personal loan early without a penalty!
4.) Launching a small business
They say all you need to make it is a great idea. That’s about half right. What you really need is a great idea and enough money to get it off the ground. Even the thriftiest of business owners will still face start-up costs in materials, license fees and equipment purchases. While these costs may not be much, it will be a while before your business turns enough profit to recoup these expenses.
A personal loan can broaden your timeline to profitability. Rather than being pressured to start turning a profit immediately, you can take your time and develop the business.
Since your debt servicing is a fixed cost throughout the course of the loan, it’s easy to plan for repayment. You can give your business the boost it needs to get firmly established, setting you up for future prosperity.
5.) Extra education expenses
Depending on your personal financial situation, your student loans may be insufficient to cover the actual whole cost of your education. Sure, you can get loans to cover tuition, but what about books or a computer to handle schoolwork? If you’re going back to school later in life, many traditional funding opportunities may not be open to you.
In these instances, taking out a personal loan to cover the extra costs of your education can be a life-saver. Instead of paying for those costs out of pocket or with a credit card, you can pay for them up front with a loan you can budget for going forward. Many parts of life as a student are unpredictable; it’s nice to have one constant month-to-month.
Handling a Financial Setback
Financial setbacks come in all shapes and sizes. It can be an expensive household repair or major car trouble. It may be increases in your insurance plus a rent hike taking effect at the same time. Or, it can be something more extreme, like getting a pay cut at work—or even being given a pink slip. It may be a medical emergency that isn’t covered by insurance, or some good news that will cost you a bundle, like a wedding or the birth of a baby.
It’s impossible to plan for every financial hit you will take in your lifetime.
The question is: What can you do about it?
You could keep borrowing or charging to pay for daily expenses when your income is swallowed up by the surprise, but by going that route, you’ll be paying a lot more than you should for this setback because of accumulated interest. You have options and there are proactive steps you can take.
If you’re hit with hard times, keep these tips in mind:
1.) Don’t panic
Panic is the first reaction many people experience when faced with a financial setback. It won’t be easy, but do your best to keep your cool. Keeping calm will allow you to think more clearly and resolve your deficit quicker. Remember, as difficult as things seem, they’ll always look a little better after some levelheaded planning.
2.) Crunch the numbers
“I’ll disappear if you just ignore me and pretend I don’t exist” said no problem, ever. Problems won’t disappear when they’re ignored, especially not money problems. If anything, they snowball into a mountain of financial issues that will bring you even more stress. As difficult as it might be, sit down and figure out exactly how much more money you’ll need in order to cover your new expense, or to fill the gap of an income loss.
3.) Work twice as hard
When you’re dealing with a financial setback, you’re looking at less money than you need to get you through the month. The only way to stretch what you have to fit your needs is to earn more or spend less. Since tightening your budget is always stressful, try to find ways to add to your income first. If possible, put in more hours at work or seek extra projects, even if it means working nights or weekends. Consider freelancing or consulting if you can. Take a side job for some extra cash. Do whatever it takes to bring in a little more money to cover the additional expenses.
4.) Trim your spending
Evaluate your budget to see which expenses you can trim. Before cutting your budget in half, take the time to prioritize. List all the expenses you can’t go without and the ones that would be irresponsible to neglect. Don’t skip mortgage payments or neglect your insurance premiums because you’re short a few hundred dollars. Instead, take an honest look at your remaining expenses and see where you can cut back.
If you’re careful, you may be able to cut your grocery bill in half. Trim spontaneous purchases by only using cash and keep a minimal amount on you at all times. If you’re a two-car family, consider scaling back to one car for now. Push off your vacation plans until things start looking up.
5.) Contact your creditors
If you can’t make some of your minimum monthly payments, contact your creditors before they come calling on you. It’s always best to be up front about your financial situation. Most creditors will be happy to work out a reasonable payment plan with you.
6.) Reach out to family and friends
The people who care about us most are the ones who can help us get through anything. Don’t be embarrassed to tell your family and friends what’s going on. They’ll support you and encourage you until you get back on your feet, and they may even be able to help you out with employment opportunities or helpful contacts.
7.) Be proactive
Hindsight is always 20/20. Harness the urgency you feel now to get into the habit of building up an emergency fund. As soon as you’re back on your feet, start putting away money that can be pulled out in future setbacks. We recommend that you have 3-6 months’ worth of living expenses saved up in case you can’t work for any reason. Knowing you have that money to fall back on will take the stress out of these situations.
Feeling Stuck in Your Car Loan?
It Might Be Time to Shop Around
Bills are a lot like bad weather. They’re going to come anyway, so there’s no use in trying to change them, right? For some bills, that’s the case. For others, though, you can make a big difference in your monthly budget with a little legwork.
One of the bills you can change is your car payment. Refinancing your vehicle loan can lead to a lower monthly payment, a shorter term, or both! It depends on a wide range of factors, including the value of your vehicle, how much you owe on your current loan, and your credit standing.
If any of these factors have changed since you bought your car, you owe it to yourself to check out your refinancing options. Read on to learn about three scenarios where refinancing makes sense for your car or truck:
1.) Your credit has improved
One of the biggest factors in determining your auto loan status is your credit score. When your lender is building a loan package, a credit report is pulled as a central part of that process. That number helps define your interest rate, whether or not you’ll have to pay a premium for insurance, and what other fees your lender might charge.
It’s worth keeping a copy of the credit report your lender pulled. That can let you see if your credit score has improved. It can take as little as nine months of steady repayment to boost your credit score, and that could result in a cheaper loan if you refinance.
If you didn’t have much experience with credit when you purchased your vehicle, refinancing can do you a world of good. Interest rates as high as 18% are common for borrowers who have little to no credit history. Having even a few months of solid payments on your side can cut that rate in half or more.
2.) You didn’t shop around before you borrowed
Many people feel railroaded throughout the car-buying process. They pick a car they like, then they are told what the price is, what the monthly payment is and everything else. It may seem like the choice of lenders for your car loan is predetermined.
Dealers tend to have a smaller range of lenders with whom they work exclusively. Those lenders know they have limited exposure to competition, so they can charge slightly higher fees and interest rates. By doing your own comparison shopping, you can save quite a bit on your loan and insurance. Dealer rates tend to be 1 to 1.5% higher than those offered at smaller lenders, like credit unions.
If you’ve never shopped around for a car loan, it’s definitely worth doing. By getting multiple offers, you can ensure you’re getting the best price available for your loan. Try to do your shopping within a two week period of time. Otherwise, the multiple checks on your credit could negatively impact your credit score.
3.) You need to change your monthly payment
You may be in a much better financial situation now than when you bought your car. You may have a better job or more security. You may have paid off a credit card or another debt. All of these things free up how much you can pay per month.
Most people don’t go into the refinancing process looking to increase their monthly payment, but you can save yourself money in the long term by committing to a faster repayment plan. If you can afford to pay more per month now, you can pay off the balance on your car faster. Shorter term loans usually also have lower interest rates, since the lender assumes less risk in making the loan. Once the car is paid off, you’ll have all that money to devote to other saving or spending priorities.
On the other hand, if money is tight, it might be a good idea to refinance into a longer term. While you might end up paying more in interest, you can reduce your monthly payment and save the money you need right now.
Four Ways to Bring Your Dream Kitchen to Life
The kitchen is the heart of your home. It’s where we spend hours whipping up delectable dishes to please every palate. It’s where we catch a quick morning chat over coffee and linger over dinners with the ones we love in the early evening.
The kitchen is where it’s at.
It’s also the area of the home that sees the heaviest usage. All that food prep, and all of that eating, leaves on a mark on your table, floors, counters, and appliances pulling full-time duty for hours every week. Give your kitchen a makeover and you’ll almost feel like you’ve got a brand-new home.
Wondering how to make that happen? We’ve got you covered! Whether you still have an avocado-green fridge, circa 1978, or your kitchen just needs a quick touch-up, we’ll show you how to give it a facelift on a budget.
Here’s four ways to bring your dream kitchen to life:
1.) Know your budget
Before picking out your new countertops and appliances, sit down and crunch the numbers. You might have to scrimp and save, dip into savings, or take out a loan to cover the costs of your renovations. A complete kitchen remodel can run you as much as $40,000, but there’s lots you can do on a smaller budget. When you’ve figured out how much you can spend, here’s what you’re looking at:
With $5,000, you can give your kitchen a quick touch-up that can pack a big punch. You’ll be able to spring for a fresh coat of paint, replace the faucets, pick up a new light fixture, reupholster or change the fabric on your chairs and windows, or spruce up the area with some modern accessories.
With $15,000, you can do all that and more! You’ll be able to buy a new appliance or two, replace your countertops, and even install new budget-friendly cabinets.
If you’re planning on spending more, you might be able to remodel your entire kitchen.
When determining how much to spend, remember that kitchen upgrades can pay for themselves. Recently remodeled kitchens usually return between 80 and 105 percent of their cost when a home is sold.
And until you decide to sell, you’ll be the one enjoying your updated kitchen!
2.) Choose your cabinets
Cabinets can monopolize the visual wall space in a kitchen, making them an obvious choice for an upgrade. Here’s what you need to know about your cabinet options:
- Cabinets with wood or plywood panels and solid wood frames are sturdy, budget-friendly, and fashionable.
- Porcelain-tile cabinets are a fantastic new option that look almost exactly like wood for half the price.
- Laminate is your cheapest option for cabinets. It’s durable, easy to clean, and comes in a variety of colors and patterns.
- Refinish the outside of your cabinets instead of replacing them for a new look that doesn’t bust your budget.
- Install wall-mounted shelves to add storage space to your kitchen without splurging on new cabinets.
3.) Make a splash
Don’t forget your sink when upgrading your kitchen. Replacing the faucets, bowl or hardware can modernize your kitchen without costing much.
When changing your faucets, make sure you know the ins and outs of your options. Want to go with the flow? Brushed nickel is the most popular choice for faucets, largely due to its durability. If you hate scrubbing those fingerprints and water spots, you’ll be happy to hear that nickel conveniently hides dirt and grime.
Short on cash? The least expensive faucet finish is chrome. For a long-lasting material that won’t cost a pretty penny, go with brass instead.
If you’re looking to change your sink’s bowl, there are three main styles to consider:
- Farmhouse bowls are large, deep, and the perfect choice for people with numerous dishes to wash on a daily basis. On the flip side, their large size means they might require a customized base cabinet for installation.
- Top-mount bowls have a “drop-in” rim that keeps the sink in place on the countertop. This makes installation simple, but creates a prime place for dirt and grime to accumulate.
- Undermount sinks are trendy and look sleek, but can take double the time and work to be installed.
4.) Choose your countertops
This is where you chop, dice, measure, and mix your ingredients. Your counters need to be durable and easy to clean. Your counters also finish off your kitchen’s upgrade. The trending countertop choices are granite, quartz, and stone. These materials are beautiful, easy to maintain, and they can last for years.
If these options aren’t in your budget, consider engineered stone instead. It will give you a similar look for a cheaper price. For something more budget-friendly, you might want to go with ceramic tile. It’s durable, comes in almost any color you can think of, and it’s a fraction of the price of stone.
Another great option that is just as inexpensive is laminate. It’s easy to install and it comes in a large variety of patterns and colors. Lastly, consider going with solid wood. You can have it sanded and treated to give it an extra-long life, and it will give your kitchen a warm, hearty finish.
Longing for an upgrade and short on savings or cashflow? You can still have your dream kitchen. Call, click, or stop by TAPCO today to learn about our Personal Loans, Home Equity Loans and Home Equity Lines of Credit.
We’ll help turn your dream into reality!
Free Up Some Cash This Summer with a Break from Your Loan Payment
We hear it every year:
“Summer always puts a big strain on my budget. There are so many extra expenses! I’ve been looking for a way to get through these months without racking up a huge credit card bill.”
Summertime brings new expenses that can bust any budget. There are family trips, costly camp fees for the kids, and dozens of other expenses that may not always be part of your usual financial planning.
Many people wonder how they’ll get through these months. TAPCO Skip-A-Pay offers a break from your loan payments during this costly time of year. Now that sounds like a dream vacation!
Skip-A-Pay is a program that allows our members to skip a monthly loan or credit card payment during a tight financial season. Most credit unions offer this program during the holiday season, and maybe again during the summer months. At TAPCO, Skip-A-Pay is available all year long, and members can choose to skip a loan payment twice a year.
If you are considering skipping a loan payment this season, speak to a TAPCO member service representative for full details. Here are some important points to consider before you decide to skip a payment:
1.) Breathing room
The greatest benefit of choosing to skip a payment is the extra cash flow you’ll see in your budget. During an expensive time of year, you might not make it through the month without resorting to swiping your credit card and paying high interest on every purchase you make. By opting to skip a large payment on a loan or credit card, you’ll free up cash for your daily expenses so you don’t finish the month in the red. Summertime is so much sweeter when you’re not sweating about your bills!
2.) Longer loan term
It’s important to remember that by skipping a payment, you’re lengthening the life of your loan. True, you’re skipping a payment now, but you’ll need to make that up one day. You’re essentially moving this month’s payment to the end of the loan.
3.) Accrued interest
Thanks to the extra cash you’ll have, you won’t be racking up credit card bills with high interest rates this month. You will be billed for interest on the skipped loan or credit card payment. You’ll need to pay that at the end of the loan term. This means you’ll end up paying a bit more in interest during the life of the loan.
Many people fall out of the habit of making their monthly payments when they choose to skip just one payment. Payment history influences credit scores most, putting you at significant risk of hurting your score if you skip a payment without your lender’s permission. Remember: this is a one-month-only deal! Be sure to get back on track and make your payment next month. Skipped payments are a unique benefit offered almost exclusively by credit unions, with very few banks still offering them.
If you feel like you could use skip-a-payment every month, you may be in financial trouble. Speak to a one of our Certified Credit Union Financial Counselors here at TAPCO for advice on money management, debt counseling, and budgeting tips. We’re always here to help!
Take a break from you loans and hit the road this summer without worrying about your payment this month. Learn about our Skip-A-Pay.
All You Need to Know About Buying a Used Car
Buying a used vehicle can be a great way to save big on one of your most valuable possessions.
If you’re shopping for an amazing deal on wheels during the fall car-shopping season, you want to be the buyer who cruises home thrilled with their new car.
Follow the nine steps below for a smoother ride!
1. Work out a budget
How are you paying for your new set of wheels?
If you’re paying with cash, your purchase will be fairly simple. You already have your spending cap and you know what you can afford. Make sure not to spend it all on the car or you won’t be able to cover your vehicle’s insurance, registration, repairs and future maintenance.
If you’re taking out an auto loan, your lender will help you determine how much you can afford. Research a few lenders before making a decision and only take the car dealer’s financing if it beats any other offers you have (but be sure to read any fine print). You may be pushed into taking out larger loan, but be careful not to let your total monthly auto expenses top 20% of your take-home pay.
It’s also a good idea to get pre-approved for an auto loan before stepping foot in the dealer’s lot or visiting their website.
2. Create a target list
What make and model vehicle do you want to buy? Car? Truck? SUV? Hybrid? There are many choices and options. Narrow down your choices to three or four model cars.
With just a few keystrokes, you can get a good amount of information on your vehicles of choice. Visit Cars.com or TrueCar.com to get started. You can also find used cars for sale in any of these locations:
- The used-car section of new-car dealerships
- Rental car agencies, like Enterprise
- Used-car retailers like CarMax.com
- Websites, like Craigslist.com or AutoTrader.com, where car owners list their vehicles for sale
Of the four choices, private-party sellers will likely offer the lowest price. However, these cars are not backed by dealerships, so you’re taking a bigger risk with the purchase.
When researching available cars, be sure to consider the vehicle’s year, make, model and mileage. It’s also a good idea to find out what the average asking price is for the car you want to buy.
4. Get the vehicle history report
Once you’ve narrowed down your search, learn all you can about each vehicle. What kind of repairs or maintenance did it undergo? Was it ever involved in a collision? Find out with a vehicle history report.
You can get a detailed vehicle report on Carfax.com. Ask the dealer if they have one available for review. Policies vary, but many will gladly show it to your or email you a copy.
If obtaining one on your own, you’ll be asked for the vehicle identification number (VIN) or for the license plate number.
5. Call the seller
Contact the seller to verify the information you’ve learned about the car. If you’re using a private-party seller, ask the owner why they’re selling the car and inquire about any possible mechanical issues. If you’re working with a dealership, a phone call or an email is a quick way to make sure the car is still available. You can also ask for any basic information about the car that you weren’t able to find out on your own.
If everything checks out, set up an appointment to take the car for a test drive.
6. The test drive
Pay attention to these details as you try out your potential new car:
- Is there sufficient legroom and headroom?
- Is the ride smooth?
- How is the acceleration and power?
- Are the seats comfortable and adjustable?
- Is the “check engine” light illuminated after initial startup?
- Do you have full visibility?
- Are the brakes working well and working quietly?
- Do all the lights (headlights, brake lights, turning signals, internal lights) work?
- Do the automatic window mechanisms and lock-door buttons work?
If your car has passed the test drive, ask to see the vehicle’s service records to determine if the car is current with its scheduled maintenance check-ups.
7. Have it professionally inspected
Private sellers and most dealerships won’t have a problem with you taking the car to a mechanic for an inspection. Having your car professionally inspected will only cost you about $100, but it can save you lots of money down the line.
Here’s where the real fun starts! If you’ve worked out your financing, you already know your spending cap. Otherwise, work it out now before you start bargaining.
When negotiating a price, don’t talk about monthly payments; talk about the price of the car. Make an opening offer based on the average price for your car and use all the information you’ve learned about your vehicle as bargaining chips. Be firm and don’t sound desperate and you will land up with a fairly priced vehicle.
9. Make it official
You’re ready to become the official new owner of your car.
If you’re working with a dealership, you’ll sign the contract in their financing office. You may be offered additional products and protection here, but make sure the price is worthwhile.
Don’t be alarmed if you see extra charges tacked onto your documentation; things like sales tax and a license fee are standard in most states. If you’re buying your car from a private-party seller, make sure the title and registration are officially transferred to you.
Finally, don’t drive off the dealer’s lot until you have insurance.
You’re all set to power up and take your new car for its first spin!
How Should I Use My Tax Refund This Year?
If you got a bigger tax refund than expected this year, you might be thinking about what to do with your small fortune instead of splurging and watching it all disappear.
When you receive an unexpected windfall, whether it’s from a tax refund, work bonus, or a cash gift, it’s always a good idea to be proactive about how you’ll spend it instead of letting it blow through your checking account.
We’ve come up with some dos and don’ts for you to consider:
Do: Pay down debt
You probably don’t want to see your entire refund go straight to your credit card bill, but you don’t have to take the all-or-nothing approach. Consider earmarking 20% of your refund toward paying down high-interest debt you may be carrying. You can adjust this number as you see fit, but you’ll be doing yourself a favor by paying off a large chunk at once. You’ll save a ton on interest and you’ll be finished with this debt a lot sooner than you’d planned.
Do: Start saving or investing
If you’ve always been waiting until you have a substantial amount of cash in hand to start a savings account or an emergency fund, you’ve just run out of excuses! Take $1,000 out of your refund and use it to start a savings account. You can set up an automatic transfer to take money out of your checking account each month to help it grow, even if you can only afford as little as $10. The head-start you’re getting now, along with the small monthly contributions, will add up quickly.
If you’re feeling super-responsible and forward-thinking, use this opportunity to start investing. Say you receive an annual refund of $2,800 and invest that money at 6% interest. If you continue investing this amount each year, you’ll find yourself with around $250,727 in 30 years’ time.
Now that’s making your refund work for you!
Don’t: Invest in a low-interest account
If you decide to put away some of your refund money, keeping that cash in a low-interest savings or checking account with little to no interest will dramatically decrease its growing power. If you’re not sure where to invest or save your refund, call, click or stop by TAPCO where a member service representative is happy to help.
Do: Invest in yourself
You are your own most precious commodity! Advance your career and increase your earning power by using your tax refund to pay for a work-related conference, additional training in your field, or for learning a new skill. Money invested in yourself is never wasted!
Do: Reward yourself
While you don’t want to blow it all, it’s okay to celebrate on one or two major purchases you’ve been eyeing throughout the year. Now’s the time to treat yourself to a night out at that expensive new restaurant in town.
Don’t: Receive your refund on a gift card
Many tax software programs offer you the opportunity to receive your refund via gift card. While direct deposit into your checking account is fine, if you’re offered your refund on a gift card, opt out. You always stand the chance of losing the card. A gift card will also limit the ways you can spend your refund money.
Do: Donate to charitable causes
For many people living paycheck-to-paycheck, donating to charity can take a back seat on their list of priorities.
This might be a great time to break that habit. The bonus cash in your pocket gives you the opportunity to give back to your community in ways you might not be able to afford throughout the year. Plus, it gives you a head start on potential deductions for next year if you plan to itemize.
However you choose to spend your refund, consider all of your options carefully before making your decision and you won’t have any regrets.