House and Senate Nearing an Agreement on Student Loan Debt

According to the advisers of President Barack Obama and the Congress, both parties are heading toward an agreement on how to pay the measure’s $6 billion price tag, which is the cause of the argument.

The objective is to move the legislation forward through Congress in the subsequent week so that the existing 3.4 percent interest rate on Stafford loans can be sustained for an additional year. While a 2007 regulation decreased the interest rates on the loans, it was required to increase to 6.8 percent this July 1 in a cost-saving strategy.

In addition, the two parties are closing in on a deal to fix federal transportation programs, said to the House and Senate advisers from the two parties. Discussions are anticipated to go on during the weekend, with votes projected next week on either a transportation bill or an expansion of existing programs.

President Barack Obama said during his weekly radio and Internet address last Saturday that they only have seven days left before thousands of American employees walk out of their jobs because a transportation bill has not yet been passed by the Congress. Moreover, they only have eight days left before approximately seven and one half million students witness their loan rates increase twice as much because Congress has not done something to end it.

Based on data from the Education Department, 7.4 million students are anticipated to receive new Stafford loans in the current year starting July 1, with each having an average debt of $4,226. Increasing the interest rates to twice as much would add more or less $1,000 to average loan costs, which are paid off by students for 10 years or longer.

In the previous month, the Federal Reserve Bank of New York said that student loan debt increased this 2012 to a total of $904 billion, although other types of loans are going down.

Effects of Banks Downgrades

Last Thursday, the credit ratings of 15 of the largest banks in the world were downgraded. While the deposits are completely protected, the downgrades could negatively affect people in other ways, for instance, an increase in the fees charged by the banks and more difficulty in getting a loan. Consequently, mortgages, credit cards and the job market can be affected as well.

According to Jim Nadler, chief operating officer at Kroll Bond Ratings Agency, it is common that people are anxious about their money’s safety before anything else. However, the actual costs might be concealed.

Unfortunately, the downgrades come to banks currently in a fragile situation. Several of the fees that are charged on credit cards and checking accounts have been removed because of the most recent rules adopted after the financial crisis. Moreover, banks are excluded from making profitable bets in the stock and bond market, which eliminates a lot of money in the form of trading income.

Together with the downgrades, current fees might increase even further and new ones could emerge.

The three top rating agencies, Moody’s, Standard & Poor’s, and Fitch, give ratings on a scale that corresponds to the ability of a company and state or local government to pay off their debt.

In addition, the downgrades will direct money into reserves and decrease the amount of capital that banks have to loan.

Americans applying for home mortgages, auto loans, and credit cards will experience the effects. Banks have been very selective regarding lending money, approving only those that have stellar credit or a steady employment history. Also, since people with bad credit are not given cards, the numbers of credit cards issued by banks have decreased significantly.

The effects of the downgrades will be felt even more by small and medium-sized businesses. They provide jobs for people within the country but recently, there are lesser jobs to offer. These businesses are finding it hard to get bank loans as well.

Looking Better After 23 Years – Auto Loan Delinquencies Reached It’s Lowest

TransUnion’s report shows that in the first three months of 2012, after 23 years auto loan delinquencies have reached their lowest ratio to date.

Now, more than ever, seems like the best time to buy a car for those with problems with their credit statuses.

Auto Credit Express has been active in helping out credit-challenged clients with their problems in getting a car loan. They have been dedicated in finding automobile dealers who would sell to low credit customers, this program is called “bad credit car”, and their website also includes child support revenue and many other issues.

The conclusions of the data of TransUnion came from the records of about 27 million consumers that have been randomly chosen. The number of samples is a fair indication that the survey is quite accurate.

According to the survey, the number of the nation’s auto delinquency rate, those borrowers who failed to pay their loans for more than 59 days past their due dates have fallen to 0.36 percent in the first quarter of 2012 from this is 0.10 percent lower than the last survey in 2011.

According to Peter Turek, the vice president of TransUnion’s financial services business unit, the number of automobile loan delinquencies have fallen because if the increase in the demand for cars whether they are used or not.

Furthermore, this means that there are more chances for clients who apply for subprime auto lenders to have their loans approved. So if you are someone who would want to find a high-risk car loaner, here are some things you need to put in mind:

First, you should know your FICO score and all other vital information in your credit reports; second, you should have a plan to pay at least 10% of your commodities in cash; third, you should keep your loan terms short and finally, find a vehicle that is dense and do not consider replacing it unless you have reestablished your credit.

401 (k) Too Expensive to Pay Off Current Debts

If you are 27 years old, married,and an expecting mother; you may have encountered a situation where you have a credit card debt of let’s say $20,000 that has a high interest rate, 9.5%. The amount is killing you and you would like to pay it off with your sitting 401 (k) deposit in the bank, but the question is should you withdraw all or a few amount of your 401 (k) savings to pay off the liability?

Well, the answer is “no”, here are the reasons why you should not touch your money in the 401 (k) to pay off your debts: first, there is an instant cost involved you pay income tax and a penalty of 10% if you withdraw an amount from your 401 (k) savings. So for example you have a $10,000 savings in your account, it could decrease your balance by 25% from $10,000 you might only have $7,500 dollars left, or less.

Another reason is, withdrawing from this account will affect you dearly in the future. If you withdraw the money, there is a chance that you might not be able to get the long-term growth of your 401 (k) amount. Your $10,000 is going to grow 6% every year for 35 years, and by the end of those years, your money would have grown into $76,861. If you withdraw $1,000 from your account, you will be losing $7,686 in the future.

So what should you do to pay off your excruciating debt? The best remedy is to sit it out with your partner. You and your husband must work out a plan and promise each other to handle your family’s finances more wisely and create a budget and think of ways to make your future financial problems manageable. Paying off all your credit card liabilities is just one of the many stages you must go through in this plan.

A Little Loan Can Change the Tide

The Community Micro Lending Society based in Victoria is the place where individuals with bad credit, who find it very difficult to get loans from banks and other financial institutions. One of its clients is Rachael Brown, she is a physical therapist who used to own her spa in Gulf Island, she has moved to Victoria in hopes to find a new job and recover from her financial fiasco.

The founder of the institution, and now also a counselor, Lisa Helps, visited Ms. Brown back in 2010 herself in the women shelter she stayed in. the Community Micro Lending has allowed Brown to loan an amount of $5,000 and currently she owns her own spa and Soul Therapies business.

To get a loan, the applicant is going to be featured on the web through communitymicrolending.ca., the identity of those who lend their money  is kept hidden, but according to Helps, three or four people would be financing the loan. The minimum amount that a person can donate is $500.

The owner of Kenmar Flower Farms, Marian Fonter is one of over 20 mentors in the Community Micro Lending, she believes the agency withholds a sense of community in the agency.

The United Ways has been a very effective partner in keeping the agency open. It has been financing one third of the total expenses of the organization.

Helps aims to have 100 partners in their business as part of the “community supported economy” she has been planning for. The business partners would donate about $100 every month to the organization, for now only five companies has signed in with them. One of these businesses is The Cooperators.

The company also has a program for young adults which they call “Launch!” those ages 18 to 30 can be a part of the workshops that talks about developing business ideas. One of the effective scholars of the 10 week program is Sheena Graham, now 29; she was able to start her own Photography business.