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What Is a Recourse Loan?

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In borrowing, there are two types of debts, recourse and nonrecourse. Recourse debt holds the person borrowing money personally liable for the debt. If you default on a recourse loan, the lender will have license, or recourse, to go after your personal assets if the collateral’s value doesn’t cover the remaining amount of the loan that is due. Recourse loans are often used to finance construction or invest in real estate. Here’s what you need to know about recourse loans, how they work and how they differ from other types of loans.

What Is a Recourse Loan?

A recourse loan is a type of loan that allows the lender to go after any of a borrower’s assets if that borrower defaults on the loan. The first choice of any lender is to seize the asset that is collateral for the loan. For example, if someone stops making payments on an auto loan, the lender would take back the car and sell it.

However, if someone defaults on a hard money loan, which is a type of recourse loan, the lender might seize the borrower’s home or other assets. Then, the lender would sell it to recover the balance of the principal due. Recourse loans also allow lenders to garnish wages or access bank accounts if the full debt obligation isn’t fulfilled.

Essentially, recourse loans help lenders recover their investments if borrowers fail to pay off their loans and the collateral value attached to those loans is not enough to cover the balance due.

How Recourse Loans Work

When a borrower takes out debt, he typically has several options. Most hard money loans are recourse loans. In other words, if the borrower fails to make payments, the lender can seize the borrower’s other assets such as his home or car and sell it to recover the money borrowed for the loan.

Lenders can go after a borrower’s other assets or take legal action against a borrower. Other assets that a lender can seize might include savings accounts and checking accounts. Depending on the situation, they may also be able to garnish a borrower’s wages or take further legal action.

When a lender writes a loan’s terms and conditions, what types of assets the lender can pursue if a debtor fails to make debt payments are listed. If you are at risk of defaulting on your loan, you may want to look at the language in your loan to see what your lender might pursue and what your options are.

Recourse Loans vs. Nonrecourse Loans

Bank repo signNonrecourse loans are also secured loans, but rather than being secured by all a person’s assets, nonrecourse loans are only secured by the asset involved as collateral. For example, a mortgage is typically a nonrecourse loan, because the lender will only go after the home if a borrower stops making payments. Similarly, most auto loans are nonrecourse loans, and the bank or lender will only be able to seize the car if the borrower stops making payments.

Nonrecourse loans are riskier for lenders because they will have fewer options for getting their money back. Therefore, most lenders will only offer nonrecourse loans to people with exceedingly high credit scores.

Types of Recourse Loans

There are several types of recourse loans that you should be aware of before taking on debt. Some of the most common recourse loans are:

  • Hard money loans. Even if someone uses their hard money loan, also known as hard cash loan, to buy a property, these types of loans are typically recourse loans.
  • Auto loans. Because cars depreciate, most auto loans are recourse loans to ensure the lender receive full debt payments.

Recourse Loans Pros and Cons

For borrowers, recourse loans have both pros and and at least one con. You should evaluate each before deciding to take out a recourse loan.

Pros

Although they may seem riskier upfront, recourse loans are still attractive to borrowers.

  • Easier underwriting and approval. Because a recourse loan is less risky for lenders, the underwriting and approval process is more manageable for borrowers to navigate.
  • Lower credit score. It’s easier for people with lower credit scores to get approved for a recourse loan. This is because more collateral is available to the lender if the borrower defaults on the loan.
  • Lower interest rate. Recourse loans typically have lower interest rates than nonrecourse loans.

Con

The one major disadvantage of a recourse loan is the risk involved. With a recourse loan, the borrower is held personally liable. This means that if the borrower does default, more than just the loan’s collateral could be at stake.

The Takeaway

Hard Money Loan signLoans can be divided into two types, recourse loans and nonrecourse loans. Recourse loans, such as hard money loans, allow the lender to pursue more than what is listed as collateral in the loan agreement if a borrower defaults on the loan. Be sure to check your state’s laws about determining when a loan is in default. While there are advantages to recourse loans, which are often used to finance construction, buy vehicles or invest in real estate, such as lower interest rates and a more straightforward approval process, they carry more risk than nonrecourse loans.

Tips on Borrowing

  • Borrowing money from a lender is a significant commitment. Consider talking to a financial advisor before you take that step to be completely clear about how it will impact your finances. Finding a financial advisor doesn’t have to be difficult. In just a few minutes our financial advisor search tool can help you find a professional in your area to work with. If you’re ready, get started now.
  • For many people, taking out a mortgage is the biggest debt they incur. Our mortgage calculator will tell you how much your monthly payments will be, based on the principal, interest rate, type of mortgage and length of the term.

Photo credit: ©iStock.com/aee_werawan, ©iStock.com/PictureLake, ©iStock.com/designer491

The post What Is a Recourse Loan? appeared first on SmartAsset Blog.

Source: smartasset.com

Earn Extra Money by Joining Online Focus Groups

A couple years ago, I was invited to participate in a focus group. I visited in-person along with about 15 other people. For two hours, we vented all of our feelings about the ways a particular health insurance company interacts with its customer base.

At the end, we each walked out with $125. The health insurance company wanted consumer feedback on their products and customer service, and it compensated us for providing our insights.

Focus groups can be a lucrative side hustle when you break down per-hour pay. You get to be a part of a company’s market research efforts, magnifying your opinion above those of other potential consumers.

These days, you don’t have to participate in paid focus groups in person. During the pandemic and beyond, you can use online focus group platforms to earn anywhere from $20 to as much as $600 per hour.

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Online Focus Groups: a Viable Side Hustle

Focus groups can pay extremely well for the amount of time you actually “work.” They can provide surges of side hustle income all at once.

However, they’re not likely to sustain you in lieu of traditional income. Earnings can be extremely inconsistent. First of all, you won’t qualify for every survey, as each focus group has a specific demographic it’s targeting.

Often, though not always, the highest-paying surveys also have the most exclusive demographic requirements. The company may be looking to work with construction foremen who work with specific brands of equipment, for example, or with mobile app developers who use a specific type of programming.

In addition, some consumer research companies will only allow you to participate in one focus group every six months.

Just because work is sporadic doesn’t make this a bad side hustle. When the money does come in, you’re getting paid so much per hour that it’s worth setting aside 30 to 90 minutes of your time.

What You Do in a Paid Focus Group

Most focus groups require between 30 minutes and 90 minutes of work. When you’re doing a focus group remotely, you may be asked to fill out a multiple choice survey. Most of the time, though, you’ll complete a phone or Zoom interview with a live person.

Topics for focus groups are unlimited: You could find yourself answering questions about your favorite margarita recipe, how you’re coping with pandemic parenting or a survey related to your profession.

Some focus groups may require you to dedicate some time outside the interview itself. For example, you might have to give a specific product a test run or keep a journal of your experiences. This extra time is often accounted for in the compensation.

Where to Find Online Focus Group Jobs

All of the following focus group companies currently have online opportunities. In the past, many national opportunities could be completed remotely. But during the pandemic, even most of the city-specific assignments are virtual, too.

These market research companies pay well for your time and consistently update listings for more opportunities. We surveyed current listings for hourly pay and estimated average hourly pay given the jobs currently available.

Respondent

An overwhelming percentage of the focus group opportunities listed on Respondent are remote. The majority of the listings are not city-specific, allowing you to qualify regardless of where you live.

Current job listings range between $20 and $400 per hour, with the average focus group paying around $120 per hour.

WatchLAB

WatchLAB doesn’t have as many opportunities listed, but it does regularly update its inventory on its Facebook page.

Jobs are often city specific, though there is a wide variety of cities with opportunities available. Even city-specific assignments have been primarily remote through the pandemic.

Pay for WatchLAB focus groups ranges from $60 to $150 per hour, with the average focus group paying around $100 per hour.

Focusscope

Focusscope is another smaller consumer research company. It updates its users regularly about new opportunities on its Facebook page, and most studies are now completed remotely.

Focusscope pays $75 to $250 per focus group, with an average payout of $100.

FindFocusGroups.com

FindFocusGroups.com isn’t a consumer research company in and of itself. Instead, it’s a job listing board. It aggregates current opportunities available across the country, and allows consumer research companies to submit listings.

You can search these focus group listings by state. For example, the pay range for current listings in Pennsylvania is $65 to $160 per hour. The average focus group pays around $100 per hour.

User Interviews

If you’re looking for online or over-the-phone focus group opportunities, User Interviews’ listings are plentiful. However, compared to the other companies on this list, more of these focus group opportunities are in-person. Use filters while you search to ensure you’re only being shown the remote opportunities.

A portion of the listings on User Interviews are medical studies rather than focus groups.

Participating in medical trials can be another lucrative way to hustle together some extra cash.

Listings on User Interviews pay between $25 and $600 per hour — though very few studies get close to the $600 mark. The average focus group pays $60 per hour.

Brynne Conroy is a contributor to The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

Does Paying the Minimum Hurt Your Credit Score

Credit card bills can be confusing. If everything was straightforward and clear, credit card debt wouldn’t be such a big issue. But it’s not clear, and debt is a massive issue for millions of consumers. 

One of the most confusing aspects is the minimum payment, with few consumers understanding how this works, how much damage (if any) it does to their credit score, and why it’s important to pay more than the minimum.

We’ll address all of those things and more in this guide, looking at how minimum credit card payments can impact your FICO score and your credit report.

What is a Credit Card Minimum Payment?

The minimum payment is the lowest amount you need to pay during any given month. It’s often fixed as a fraction of your total balance and includes fees and interest.  

If you fail to make this minimum payment, you may be hit with late fees and if you still haven’t paid after 30 days, your creditor will report your activity to the major credit bureaus and your credit score will take a hit.

When this happens, you could lose up to 100 points and gain a derogatory mark that remains on your credit report for up to 7 years. Making minimum payments will not result in a derogatory mark, but it can indirectly affect your credit score and we’ll discuss that a little later.

Firstly, it’s important to understand why you’re being asked to pay a minimum amount and how you can avoid it.

How Much is a Minimum Credit Card Payment?

Prior to 2004, monthly payments could be as low as 2% of the balance. This caused all kinds of problems as most of your monthly payment is interest and will, therefore, inflate every month so that every time you reduce the balance it grows back. 

Regulators forced a change when they realized that some users were being locked into a cycle of credit card debt, one that could see them repaying thousands more than the balance and taking many years to repay in full.

These days, a minimum payment must be at least 1% of the balance plus all interest and fees that have accumulated during that month, ensuring the balance decreases by at least 1% if only the minimum payment is met.

Do I Need to Make the Minimum Payment?

If you have a rolling balance, you need to make the minimum monthly payment to avoid derogatory marks. If you fail to do so and keep missing those payments, your account will eventually default and cause all kinds of issues.

However, you can avoid the minimum payment by clearing your balance in full.

Let’s assume that you have a brand-new credit card and you spend $2,000 in the first billing cycle. In the next cycle, you will be required to pay this balance in full. However, you will also be offered a minimum payment, which will likely be anywhere from $30 to $100. If this is all that you pay, the issuer will start charging you interest on your balance and your problems will begin.

If you spend $2,000 in the next billing cycle, you have just doubled your debt (minus whatever principal the minimum payment cleared) and your problems.

This is a cycle that many consumers get locked into. They do what they can to pay off their balance in full, but then they have a difficult month and that minimum payment begins to look very tempting. They convince themselves that one month won’t hurt and they’ll repay the balance in full next month, but by that point they’ve spent more, it has grown more, and they just don’t have the funds.

To avoid falling into this trap, try the following tips:

  • Only Spend What You Have: A credit card should be used to spend money you have now or will have in the future. Don’t spend in the hope you’ll somehow come into some money before the billing period ends and the credit card balance rolls over.
  • Get an Introductory Interest Rate: Many credit card issuers offer a 0% intro APR for a fixed period of time, allowing you to accumulate debt without interest. This can help if you need to make some essential purchases, but it’s important not to abuse this as you’ll still need to clear the full balance before the intro period ends.
  • Use a Balance Transfer: If you’re in too deep and the intro rate is coming to an end, consider a balance transfer credit card. These cards allow you to move your full balance from one card (or cards) to another, taking advantage of yet another 0% APR and essentially extending the one you have.
  • Pay the Minimum: If you can’t pay the balance in full, make sure you at least pay the minimum. A missed payment or late payment can incur fees and may hurt your credit score. 

Why Pay More Than the Minimum?

You may have heard experts recommending that you pay more than the minimum every month, but why? If you’re locked into a cycle of credit card debt, it can seem counterproductive. After all, if you have a debt of $10,000 that’s costing you $400 a month, what’s the point of taking an extra $100 out of your budget?

Your interest and fees are covered by your minimum payment and account for a sizeable percentage of that minimum payment. By adding just 50% more, you could be doubling and even tripling the amount of the principal that you repay every month.

What’s more, your interest accumulates every single day and this interest compounds. Imagine, for instance, that you have a balance of $10,000 today and with interest, this grows to $10,040. The next day, the interest will be calculated based on that $10,040 figure, which means it could grow to $10,081, which will then become the new balance for the next day. 

This continues every single day, and the larger your balance is, the more interest will compound and the greater the amount will be due over the term. By paying more than your minimum payment when you can, you’re reducing the balance and slowing things down.

Does Paying the Minimum Hurt My Credit Score?

Paying the minimum amount every month ensures you are doing the bare minimum to avoid hurting your credit history or accumulating fees. However, it can indirectly reduce your score via your credit utilization ratio.

Your credit utilization ratio is a score that compares the credit limit of all available credit cards to the total debt on those cards. It accounts for 30% of your credit score and is, therefore, a very important aspect of the credit scoring process.

The more credit card debt you accumulate, the lower your credit utilization rate will be and the more your score will be impacted. If you only pay the minimum, this rate will become stagnant and may take years to improve. By increasing the payment amount, however, you can bring that ratio down and improve your credit score.

You can calculate your credit utilization score by adding together the total amount of credit limits and debts and then comparing the latter to the former. A combined credit limit of $10,000 and a balance of $5,000, for instance, would equate to a 50% ratio, which is on the high side.

Can Credit Card Fees Hurt My Credit Score?

As with interest charges, credit card fees will not directly reduce your score but may have an indirect effect. Cash advance fees, for instance, can be substantial, with many credit card companies (including Capital One) charging 3% with a $10 minimum charge. This means that every time you withdraw cash, you’re paying at least $10, even if you’re only withdrawing $10.

What many consumers don’t realize is that these fees are also charged every time you buy casino chips or pay for some other form of gambling, and every time you purchase money orders and other cash products. 

Along with foreign transaction fees and penalty fees, these can increase your balance and your minimum payment, making it harder to make on time payments and thus increasing the risk of a late payment.

Does Paying the Minimum Hurt Your Credit Score is a post from Pocket Your Dollars.

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Here’s How to Turn Food Pantry Staples into Delicious Meals

Pandemic-related layoffs and income loss have driven many people to community food pantries for the first time in their lives.

According to Feeding America, about four out of every 10 people who visited a food bank from March through June of last year were first-time visitors. As the winter holidays approached, more than 80% of food pantries were serving more people than the year prior.

Economic concerns have caused countless others to become more conscious of their spending — resorting to cheap staples rather than more expensive options at the grocery store.

Getting groceries from a food pantry and reducing food spending can be great on the wallet, but you may also need to adjust to cooking and preparing meals differently. We spoke to registered dietitian and nutritionist Wendy Wesley for advice on how to make nutritious, tasty meals using ingredients from food pantries.

How to Turn Cheap Pantry Staples Into Delicious Meals

Canned goods should not be overlooked when it comes to creating great meals, Wesley said.

“I keep an arsenal of canned beans in my pantry at all times,” she said.

The key to making satisfying dishes from cheap ingredients is to incorporate kitchen staples like onion, garlic, peppers, spices, dried herbs, butter and eggs.

“You get rice and beans from a food pantry and then you doctor that up with your onion, your green pepper and your garlic and you use chili powder, garlic powder [and] onion powder,” Wesley said.

One of her favorite cheap meals to make is black bean soup, using a can of black beans along with onion, garlic and green pepper.

“There is something magical about black beans,” Wesley said. “For maybe a dollar or two in ingredients, you have this meal that is very hearty, very filling, full of fiber and is going to stay with you for a long time.”

Tomatoes, canned black beans, black bean soup and a portrait of the cook are photographed in this quad of images to illustrate cheap meals to make.

Another of her inexpensive meal ideas: Crack some eggs you pick up from your neighborhood food bank into a pan with onions, peppers and maybe tomatoes and mushrooms. You can make a big scramble for less than a dollar.

Pro Tip

Think food pantries only give out non-perishable canned foods? Think again. Many also distribute a good share of perishable ingredients like eggs, dairy products, bread, fresh produce and more.

When it comes to keeping your kitchen stocked with those supplementary meal-enhancing ingredients, Wesley recommends picking up a few items here and there when you grocery shop.

“If you went to the store and tried to buy it all in one day or one shopping trip it would be quite expensive,” she said.

Spices, in particular, can be pretty pricey, so look for less expensive brands.

Pro Tip

Wesley saves money by buying Badia brand spices. You can also try your store’s generic option or shop at an ethnic grocery store.

“We don’t need very expensive ingredients to have delightful and tasty meals at home,” she said.

How to Stretch Your Ingredients and Your Dollars

Whether you’ve got a family to feed or you’re just trying to make food last longer for yourself, making your ingredients stretch means more bang for your buck.

Add beans and veggies to stretch meat dishes.

“I’ll bulk up taco meat with onions and green peppers and tomatoes, so it’s a little bit of meat and a lot of vegetables,” Wesley said, as an example. “Or I’ll bulk it up with beans, so it’s a little bit of meat and a lot of beans.”

Those extra ingredients also add fiber — something every American needs more of, she said.

Adding a grain — like rice, quinoa or barley — to a meal can also help make a dish stretch. Wesley likes cooking a bunch of one grain over the weekend so she has it ready to add to meals throughout the week.

Preparing servings in advance can also save you time on busy weekdays — and saving time can be so valuable. No more grabbing fast food on those days when you have no energy to cook. The food is already ready.

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Nicole Dow is a senior writer at The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

By: L Maea

I did a payday loan for almost $4,000 and with the interest and fees it totaled almost $6,000. I could not repay after so long due to my spouse loosing his job. Tried to work with them and do some kind of payment plan. Efforts of that failed because she was a difficult person. The owner would call and text me at random times and threaten me and call me names. Finally I received a letter stating I owe $5000. 30 days later I received a letter stating I now owe $10,000. 30 days after that I received a judgement that my wages are going to be garnished for total amount of $10,600. What can I do to go after this loan company.

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How Much Does It Cost to File for Bankruptcy? – Lexington Law

How much does it cost to file for bankruptcy? It depends on many factors, including which chapter you’re filing. Find out more in this guide.

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How Much Should You Spend on Christmas? 13 Spending Statistics

How much should you spend on Christmas? Protect yourself from the financial stress that often comes with the holidays by creating a budget ahead of time.

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Increasing Your Savings on a Low-Income Salary

A low-income salary can create challenges when it comes to reaching your financial goals. You may want to take a vacation, buy a new car, or just put some cash away for a rainy day, but how can you do that with a limited income? Although you may struggle to add to your savings, there […]

The post Increasing Your Savings on a Low-Income Salary appeared first on Credit Absolute.

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Latest Chase Freedom Unlimited, Freedom Flex sign-up offer – The Points Guy

Update: Some offers mentioned below are no longer available. View the current offers here – Chase Freedom Unlimited, Chase Freedom Flex Grocery spending may have reached its peak early on in the pandemic, but it remains an important category for U.S. consumers in 2021. Many popular cards have offered limited-time bonuses on groceries as spending …

Source: thepointsguy.com

17 ways to use the Amex Platinum’s monthly $30 PayPal credit

As 2020 came to a close, cardholders mourned the end of several temporary perks implemented during the coronavirus pandemic. For example, cardmembers of The Platinum Card® from American Express were disappointed when temporary streaming and mobile statement credits ended as scheduled on Dec. 31, 2020. But, at the start of January 2021, American Express quietly …

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