5 Mistakes to Avoid While Raising Cash Quickly
Surviving the challenges in today's economy can lead to making quick financial decisions especially when emergency situations arise. The temptation to turn to quick sources of cash can be both alluring and financially devastating. But buyers beware! These sources of raising quick cash often cost consumers more than they bargained for. Here are sources of cash to avoid.
1) PREDATORY LENDING
These lenders make it easy to use their services but in the end it's the consumer who ends up paying. In cases like these, fake appraisals are used to generate higher than normal mortgage loans. There are also instances where consumers pay extra points because they are led to believe that the loan company is the only loan company who will approve their home loan. Worse yet, there can also be unexpected hidden charges leading to higher closing costs.
The U.S. Department of Housing
and Urban Development (http://www.hud.gov/offices/
2) PAWN SHOPS
High interest collateralized loans mark the business plan of pawn shops. These places provide quick money services that are easy to use since no credit check is required and no legal consequences are taken if the loans are not repaid. Tempting, but the truth is that loans are highly overpriced with respect to the value of the collateral being surrendered. Simply put, consumers are getting less money for the value of their collateral. Typically, the loan given is approximately 50% of the resale value. Should the loan be repaid, expect to see storage or insurance charges along with a hefty interest rate.
Shop around and see what your collateral is really worth. Check out websites such as eBay (http://www.ebay.com), Craig's list (http://www.craigslist.org) and even local newspaper classifieds to determine an item's resale value.
3) UNSECURED LOANS
Payday loans lead the pack with exorbitant interest rates. While these loans are typically small, a $300 dollar loan can easily translate to a $450 repayment which does have legal consequences if no payment is made. These loans are easy to acquire since many lenders don't require any information other than the amount of monthly income made but be wary. Consumers are paying more money for a loan than they ought to.
For more information about
payday loan regulation, visit PayDay Loan Consumer Information (http://www.paydayloaninfo.
4) OPENING TOO MANY CREDIT CARDS
The problem with opening too many credit card accounts is that the potential for debt increases. First, there's the temptation to spend money that's not available. The money that gets spent often incurs a double digit interest rate which multiplies a debt even faster. Let's not forget the late charges or over-the-limit fees that may incur in emergency situations. Credit bureaus also don't look favorably upon consumers seeking multiple sources of new credit or open lines of credit even if they are not used. The impact of credit bureau ratings may not immediately be seen but should a consumer find that they need a bank loan, these dings will arise.
The U.S. Department of Justice
(http://www.usdoj.gov/ust/eo/
5) GET RICH QUICK SCHEMES
The lure of quick money by doing little to no work plagues both the offline and online internet community. Unfortunately, these claims are often false but consumers won't know it until their money is long gone. "$10,000 in one day" often comes with disclaimers for respectable scammers but more often than not, these claims just prey on lack of knowledge and greed. The reality is that there are no get rich quick schemes. There are however lucrative deals which require knowledge and work to accomplish.
Consider the source. Greed and hype often precede a scam and there are hundreds of scams surfacing. If the deal sounds too good to be true, it probably is, but here's where consumers can verify that information. Internet Scam Busters (http://www.scambusters.org/) provides comprehensive scam information that is thorough and up to date. They also provide a resource list for reporting scams to the proper authorities.
Consumers should know what they are getting themselves into before they make any financial commitments. The effects of a poor decision could impact a family's budget far beyond the immediate need at hand.