General questions about loans.. Please help.

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Im trying to get a loan for $4,000. Below are some questions i need answered ASAP..

1. Im 18 years old. Iv been working fulll time since I was 15. I have a steady stream of income.. But no credit as of yet. Is it possible to get a loan ?

2. If it is possible to get a loan. Should I go to a bank or online place? Where? and why?

3. I did the math, and i can handle 30% interest without any problems. I do understand this is crazy high. but honestly this is what im expecting with no credit. what do you guys think seems reasonable? And Why?

Thanks for all of the answers!!
#general #loans #questions
  • 30% is obscene.

    At 18 with no credit ( have you seen your credit score/report yet?) you'd be lucky to score $500.

    You want want to start a plan B.
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  • Profile picture of the author David Keith
    what sort of collateral will be used to secure the loan.

    By that i mean, if its for a car, it may be possible. Essentially the bank will lend you money using the car to secure the loan in case you don't pay. Then if you don't pay, they come and get the car.

    If you are just looking to get a cash loan for 4k with no credit, that is very unlikely to happen no matter the interest rate you are willing to pay.
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    • Profile picture of the author Dan Curtis
      It is very hard in our modern society to find reliable information about money.

      Money as a subject has been twisted and perverted and hidden with one purpose in mind: to confuse the public and thereby take advantage of them.

      There is no area where this is more true than with credit and lending.

      You hear over and over -- repeated like a mantra -- that you need to borrow to build up good credit. And then when you do have good credit, you can buy things, like cars, and boats and houses. You can get large screen TVs and cell phones and furniture and monogrammed doilies.

      For most people credit and borrowing is the black hole of finance. It is a trap for the unwary.

      Look around your town. If there are any 30 story office buildings, they are banks. It's like Las Vegas. Where does the money come from? From suckers.

      If you never had any credit in your entire life, if you never took one loan, and if you diligently saved for everything that you need, buying only what you really need, not what you merely want or imagine that you need, at the end of your life you would probably be quite wealthy, and almost undoubtedly much better off than you would be otherwise.

      Take car companies for example. Do you know what their primary business is? It is not the manufacturing of cars. It is finance. The cars are just a way for you to commit your future to them.

      If they weren't making cars they would be making something else. It doesn't matter what. And they would still be trying to get you to sign over your future.

      Beware of all the places you pay interest and stop it. This includes car insurance payments and anything else where there is an extra fee for the monthly payment. That interest you are paying belongs in one place, and that is your own pocket.

      This includes a mortgage payment if you have one. If you have a mortgage pay it off. You should be able to do it in 5-7 years with discipline. If you don't have one then don't get one. Save your money and pay cash.

      The poor spend their money on necessities.

      The middle class by things they don't need on credit and live their entire lives like slaves to the moneylenders and never know what it means to be free.

      The rich invest their money where it will return value to them.

      If you operate like the rich -- no matter what your current income level -- and invest your money where it will return value, in time you will become rich, whatever your current income.

      Moral of the story: Never borrow money.
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  • Profile picture of the author RedShifted
    Yes absolutely DO NOT take a loan and DO NOT borrow money at your age that is one of the unwisest decisions you can make.

    Plus there are much better ways to get $4,000 than putting yourself in debt and hating yourself later for it. The only loans I ever took out were government loans for college and the interest rates on them are extremely low. Still, I'm not even using my degrees and although I learned a lot, they are not what makes me money now.

    I was just raised by a mother & father who are very wise with their spending, and always told me to stay away from loans as much as possible. Even till this day I don't have a credit card and I don't give a crap about my credit. I bought my own home, paid it in full, and thats what my parents raised me to do. If I don't have the money, I don't deserve to have something, simple as that.

    The minute you start living outside your means is the minute your life becomes hell. I will also NEVER ask people for money, I hate people who ask me. I would rather be "independent" living on the streets than dependent on someone else for my own wellbeing. It just creates stress, ruins relationships, and I ever get in a tough situation, I will be the only one responsible for fixing that problem. Nobody else.

    Good luck!

    -Red
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  • Profile picture of the author DubDubDubDot
    What exactly do you need the $4,000 for?
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  • Profile picture of the author seasoned
    Originally Posted by Michael Fied View Post

    Im trying to get a loan for $4,000. Below are some questions i need answered ASAP..

    1. Im 18 years old. Iv been working fulll time since I was 15. I have a steady stream of income.. But no credit as of yet. Is it possible to get a loan ?
    Possible, but difficult to do at a decent price.

    2. If it is possible to get a loan. Should I go to a bank or online place? Where? and why?
    Your options are limited.

    3. I did the math, and i can handle 30% interest without any problems. I do understand this is crazy high. but honestly this is what im expecting with no credit. what do you guys think seems reasonable? And Why?
    OBVIOUSLY, you DIDN'T do the math! There are new ways of calculating, etc.... If you can just pay 30%. save for 3-4 months, and you have your money! A "payday loan", at 30% on $4000 non amortized would cost you about $18,400 IN YOUR FIRST YEAR! Of course, they usually ARE amortized, but that would STILL be over $9,000. And it could be higher than $18K. Let's say you paid $1200 a month, and paid the principle at the end of the year, it would cost you JUST over $18,400 amortized. CAN you afford that? If not, READ THE FINE PRINT CAREFULLY!!!!!!!!!!!! Places charging "14%" or MORE, PER MONTH, are now ALL OVER THE PLACE! That was once called USARY and was illegal. Apparently, in the US, it is no longer illegal.

    BTW this is NOT a joke! It sounds like one, but it isn't. These places are typically not banks and look at this as a service of last resort. As a VERY YOUNG person wanting THOUSANDS quickly, YOU are one of their target prospects!

    Steve
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  • Profile picture of the author seasoned
    BTW the magic number is 30%! As the minimum payments to pay down your loan cause you to go to 30% of your income, borrowing will become harder.

    Steve
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  • Profile picture of the author hardraysnight
    it is a good idea to start to establish a credit record at 18, if you can sustain it, but getting a loan at 18 may not be easy without guarantors

    good luck
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    • Profile picture of the author AprilCT
      At 18 you should be saving money and not borrowing it. Establish credit with a checking account and bank savings account. Look for a bank that gives free checking...some will do so for students and other reasons like keeping a minimum balance. NEVER bounce a check or bounce your account if it comes with a bank card that takes cash out of your account. Most places will let you view your account online so you can keep tabs on it.

      Get a credit card and charge a few SMALL items on it, paying off half one month and half the next. Then in another month or so, do it again. You don't get any points for paying off your balances in full every time. Never get a credit card where they charge you a fee for getting one. NEVER use the cash option and shred the checks they send you or ask if they can quit sending them, and NEVER go up to your limit. Just use it to establish a good creditor history.

      Some larger stores might extend you credit. Pick one and do the same as with your credit card to establish a history for yourself. Buy a few small items that don't run up your balance very high and pay it off in two months, half on the first bill and the rest on the next one.

      Just don't let yourself get in the habit of financing your life with credit, but you do need to establish a rating, so use some, but go easy on what you charge.

      Once you get decent cash in your bank account, put a bunch of it in a CD and see if the bank will let you borrow against that for a few percentage points over what the CD is earning--which, unfortunately, is basically nothing at this point in time.

      The whole idea is to establish yourself as a good risk.

      30% interest - absolutely DO NOT do that. It's beyond crazy and quite a ripoff -- and it truly is NOT necessary.
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  • At 18 I got a credit card I used to pay for gas in my car and whatever small purchases I made throughout the month then paid it off in full every month. It's a great way to build credit. Later on in life when I wanted a car loans and a mortgage, it was a lot easier to get them because I had established credit.

    I'm guessing since you "need" $4k and are 18 it's for a car. Do yourself a favor, hold off. Just wait until you can afford something and then keep saving if you want something better. If you can avoid debt now, it'll make your life much better later on down the road.
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