How to Deal with Students Loans After You Graduate

Student Finance

After graduating from college, your mind will shift to the next phase- that is, finding a job. But besides that, there is another crucial thing that is paying your student loans. Paying student loans have become a challenge for most students. According to the College Board, about 60% of college students graduate while they still owe college loans. Therefore, you are not the only one.

Also, I am a beneficiary of the college loans, and I used to ask myself whether the loans were worth it, but yes, they are. So, avoid procrastinating and start paying the loans right away. Therefore, I have come up with our guide that will help you sort your financial messes.

Top 7 Steps for Managing Your Student Loans

Student Finance

1. Know the type of loan you’re getting

Before applying for any loan, you as a student should keep track of your loans. Check the lender and repayment status of your loans. If you are not sure about these, then a visit to your lender of StudentLoans.gov will help. Log in to your account and check the loan details for your account. The site has a list of your federal loans, including the amount, lender, and repayment status. For non-private loans, visit your lender.

2. Ask about Interest and APR

It’s always vital to know about the interest and APR of the loan you’re borrowing. The interest is the principal and the cost of borrowing it. APR refers to other costs that come with borrowing money. The Federal Lending act dictates that every lender must indicate the APR and nominal interest before issuing the loan to a student. Check this with your employer.

3. Let your lender know if you have a change of circumstances

After checking your options, you should now set the first date for paying your loan. After graduating, there is usually a grace period you are allowed before you first pay the loan. If the time is not enough, then you can defer or forbear time until when you’re ready. Now, pay right away when you are comfortable to do so.

4. Know your grace periods

Each loan has a grace period and depending on the type of loan. You will get a rest period before you start paying the mortgage. During this period, don’t ignore the debt or indulge in unnecessary luxuries. Instead, take your time to understand the loan and come up with a game plan that includes paying the loan in small amounts. That way, if you start paying earlier, then you will hardly delay your loan payment, which could affect your credit score.

5. Make sure you cover repayments on time

During your grace period, you were sending your resume, CV? Right? And you probably have been at internships too. A job will enable you to repay your loans on time and is, therefore, important to get one. Well, let’s hope that you made a good impression on a particular employer and they have decided to hire you. Its good news, right? Yes, you will be so anxious to get a salary. But also notify the employer to deduct some money from your pay for settling the loan.

6. Choose the best debt repayment plan

Also, apart from your student loans, another common loan that accrues is that of your credit card. Never ignore it as it too can accrue interest of up to thousands of dollars. So while you are dealing with the loans, come up with the best strategy of paying them.

7. Stick to a Budget

The moment you earn the first salary, you should draft a monthly budget plan and adhere to it. Your first budget is going to be simple, and its, therefore, best not to include any unnecessary items. At this time, you should prioritize the saving of money for paying your student debts.

Usually, the general thumb rule is to bring home about 30% of the salary to pay debts. Besides, it does not hurt to be left with decent pay and live an average college student.

Student loans are beneficial to most students in their college studies, but once they graduate, then paying them off can be tough. Coupled with the harsh economic crisis and fewer jobs in the market, it’s common for students to default on loans. However, with our guide, you can prepare well to deal with student loans once you are out of school.

What Are The Pros and Cons of Payday Loans?

Payday Loans

Even if you don’t qualify for a personal or traditional loan, you can still get the financial relief that you need when faced with an emergency that raises the need for cash. In such cases, your best bet is to consider payday loans as they are easily accessible.

What are payday loans?

A payday loan is a kind of loan that is meant to be cleared in under one month or when the borrower gets their next paycheck. Generally, the idea of a payday loan is to act as an advance on a borrower’s paycheck. The borrower will then use their next paycheck to pay off their loan.

Payday loans are not meant to be used for huge expenses such as houses or cars – most borrowers get payday loans to cover minor expenses such as rent, medical bills, utility bills, etc. The size of the loan that you can qualify for is typically determined by the size of your paycheck.

How does a payday loan work?

Payday Loans Pros and Cons

It’s highly recommended that you try to understand how any kind of loan works before applying, to avoid making the wrong decision. As mentioned earlier, a payday loan is basically an advance on your next salary.

The lender offers you an amount that is typically lower than your paycheck size so that you can pay the loan in its entirety when you receive your next paycheck. If you fail to pay the loan in its entirety by the repayment date, you become subject to additional deals or costs.

The pros and cons of payday loans

Even though it’s no one’s wish to apply for a loan at any one time, there are times when the inevitable happens and you just have to get some financial assistance. At such a point, you have to familiarize yourself with the pros and cons of the loan to help you make the final decision.

Pros of payday loans 

The following are some of the reasons why you may not want to despise applying for a payday loan:

1. Quick cash

If you literally need a loan in less than 5 minutes, then you should opt to get a payday loan. These loans, unlike traditional loans, don’t have lengthy processes. Most of the time, all you need to access the loan is a driver’s license, a monthly salary, and access to a savings or checking account. This can be a very good thing if you’re in a tight situation and you need to make a quick payment.

2. You won’t need a good credit score 

When applying for a payday loan, your credit history is usually not verified most of the time. What this means is that you can qualify for a loan even if your debt service ratio or credit score is not the best.

3. No need for collateral security

Even though payday loans typically attract higher interest rates, they don’t place you at risk of losing your car, house, or any other valuable assets; that’s not the case with traditional loans. 

4. The loan is limited by income 

One of the main risks associated with the acquisition of loans is the fact that most people often end up in irrational borrowing. That could be a bad thing, as it can lead to bankruptcy. The good thing with payday loans is that the size of the loan that you qualify for is limited by the size of your income. This prevents you from borrowing more than you can afford. 

5. Convenient

If you are in need of a payday loan, you won’t have to go to a brick and mortar store. You can enjoy the benefit of completing all the formalities online, in addition to getting to choose how you want to receive the cash. You can opt for a check, or get a direct transfer to your bank account. 

Cons of payday loans

Cons Of Payday Loans

The following are the main reasons why you want to avoid a payday loan:

1. They’re expensive 

Just because payday loans are small is not an assurance that their interest rates are also low. Payday loans will typically attract higher interest rates to cover for the default risk that the lender faces if borrowers fail to pay. If you default on a payday loan, you shouldn’t be surprised if the interest rate suddenly shifts to double.

2. Won’t help you solve big financial issues

Payday loans are only useful if you want to take care of small financial needs. Beyond that, your best bet is to opt for a traditional loan. A payday loan will simply not be a solution for your debt riddles or big financial crisis.

3. You must have a steady income

When applying for a payday loan, you will have to provide proof of a checking account as well as a reliable salary. Without these, the majority, if not all lenders won’t be willing to give you a loan.

4. Less customer protection and transparency

One of the worst risks associated with payday loans is the lack of enough laws that can protect customer interests. Most companies will set their terms and conditions, which means that the borrower has to stick to the conditions, whether or not they are fair. The rates of lending are not regulated in the majority of jurisdictions. On top of that, most of the lenders are difficult to track since they are either ghost companies or brokers. As such, a double-dealing case is hard to solve.

In summary,

Payday loans are useful in the majority of cases when you’re pinched for cash. However, you should not always be excited to take the leap due to the ease of application. That’s in consideration that the easiest way is not always the best – you may end up getting stuck with paying the loan for years. Before applying for a payday loan, you should always take some time to consider other options so that you won’t be inconvenienced.  

What is the Best Way to Manage and Use Store Credit?

Store Credit Usage

Store credit can achieve many things. Besides being a payment option, it can attract new customers and inspire loyalty among your present ones. Besides, with a store credit, you will increase spending and even grow the store’s revenue provided you manage it deliberately and innovatively. This is the reason most successful retailers have incorporated store credit in a way or the other.

Nowadays, stores offer credits in different forms. In our post, we will discuss all you need to know about store credits as well as how you can use them to increase the success of your brand.

What is a customer store credit?

How to deal with store credit

Store owners can offer credit to their customers for any purchase they make. The store credit system enables a customer to check his current balance and the balance of their gift cards. This credit belongs to a particular customer and doesn’t expire like promotions and other sales. Also, the credit belongs to only one store, and it is impossible to transfer it to other online retailers as they use different credit systems in crediting their customers. As a customer, you can also use your gift card balance to get your store credit.

Types of store credits

  • 1. Store credit cards and financings
    This type of store credit is issued when a retailer allows a customer to pay later for products.
  • 2. Returns and Exchanges
    When a customer wants to return or exchange an item, then the store gives her a store credit as an alternative to a full refund or on top of it.
  • 3. Gift Cards
    When you buy a gift card for someone, then it means purchasing a credit store for someone else. Gift cards hold store credit from different rewards and loyalties.
  • 4. Loyalty reward
    A customer can get store credit if they intend to purchase a product at a later date.

Five Best Ways of Managing the Store Credits

Types of store credit

1. Do your homework before signing up for a store credit card or account

The best way of managing your store credits is by researching your store credit. Check your credit limit and the repayment terms and period. When on vacation, you will always be tempted to spend extravagantly and especially on credit. But before using your store credit, ask yourself whether you will pay it before the end of the credit period. This is because if you fail to pay in time, then interest on each item until you find the cost of each too expensive.

Though everyone loves credit, it’s wise to think of the lower credit card score; you will get if you fail to pay your dimes before the end of the month.

2. Try to pay off your balance before interest kicks in

If you have some pending bills in your credit card, then it’s essential to pay them before their due date. If you delay the payments, then you could incur interests and other fees that will end up hurting your pocket more. Besides, you will hurt the credit score, and since lenders use the score to assess your limit, you will find yourself getting small loans or even rejections in loan applications.

3. Use them as a short term loan alternative

Well, you should also follow a good rule when applying for store credits: Don’t apply many. Applying too many could signal that you are in a financial crisis. Therefore, avoid bidding for credits you need. Besides, applying for too many credits at a time will reduce your credit score.

4. Never get close to your credit limit

Another good rule of thumb with store credits is never to approach your limit. Most stores offer small credit limits, and it’s possible to approach the limit on one shopping. But I’ll advise you against using more than 70% of your credit limit as it can lower your credit limit.

5. Plan ahead and never miss payments

Finally, if you have an emergency or anything else that will hinder you from completing your store credits payments in time, then I’d suggest contacting the crediting store explaining to them in detail. They may have mechanisms in place to keep your credit score intact during such moments.

Credits can be your financial savior and downfalls too. It all goes down to how you plan to use them. If you misuse them, then you will find yourself sinking into debt, but if you follow our guide, then managing an using your credit wisely will be easier.