Money Management

Before you get a personal loan from an online lender, make sure you know about the pros and cons. 

Getting a personal loan used to be a more complicated process. Applicants had to look up lenders, visit their offices in person with the required documents, and fill out a paper application. Nowadays, it has gotten much simpler thanks to online personal loan lenders. You can go through the entire process at home, from applying to receiving your loan.

But any time you’re borrowing money, it’s important to do your research so you can be sure you’re making the best decision. Online lenders have their advantages, but they also have some potential drawbacks. Here are their pros and cons so you can decide if this is the right option for you.

1. It’s easy to compare rates

With online personal loans, rate shopping is a breeze. Most lenders let you check rates on their websites by entering some basic information, and without affecting your credit score. This means you can easily shop around with all the top personal loan lenders in an afternoon, to see both the interest rates and loan amounts each one offers you.

2. You have more options

There are lots of online lenders out there, including many that excel in specific areas. For example, if your credit score is on the low side, you can stick to lenders that offer personal loans for bad credit. Planning to get a loan to pay off debt? You can check out personal loans for debt consolidation.

On the other hand, if you want a loan from a brick-and-mortar lender, you’re limited to whatever’s available within driving distance. That could mean choosing from a much smaller selection of lenders and possibly paying a higher interest rate.

3. It’s fast and convenient

In terms of speed and convenience, online personal loans are as good as it gets. These lenders typically offer a streamlined application process that you can get through quickly, especially if you already have an understanding of how to apply for a personal loan. You’ll need to upload some documents, such as income, identity, and address verification, but you can do it all online.

Many online lenders also offer a speedy funding process. The exact time frame depends on the lender, with the norm ranging from one day to two weeks. If you want to get your loan ASAP, check with the lender to see how long funding takes or look specifically for quick and easy online loans.

4. You might get a better deal from your own bank or credit union

The biggest downside of online lenders is that there’s no opportunity to build a face-to-face relationship. Lenders only see the information you provide and your credit file.

If you use a bank or credit union in your area, loan officers there will likely be more familiar with your financial situation. They could possibly offer you a better deal or a larger loan amount based on your existing banking relationship. And if you don’t have the best credit score, it could help to go with your own financial institution, where they know more about you than what’s on your credit report.

5. There’s no in-person customer service

Since online lenders don’t have physical locations you can visit, you can’t sit down with someone if you have any problems. You’ll need to use the contact methods your lender offers, which is usually some combination of phone service, email, and live chat.

This isn’t necessarily a huge issue, since most consumers are used to calling and emailing companies. But poor customer service makes resolving issues a nightmare. Even though customer service is rarely the first factor people look for in an online lender, it’s a good idea to pick a lender that does well in this area.

For the typical consumer, online personal loans are a great option. They’re convenient, it’s easy to rate shop, and you’ll have plenty of options. However, some people prefer a lender they can visit. In that case, a local financial institution is a better choice.

Our picks for the best personal loans

Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Here’s why it could be a good idea. 

People often purchase life insurance in the hopes they’ll never need it. But in some cases, life insurance becomes necessary. And if tragedy has struck your family, you may be on the receiving end of a large sum of money from a life insurance company.

The question is: What should you do with that cash? You could stick it into your savings account, where it can earn some interest. Or, you could consider investing it.

The latter option may seem risky. But here’s why it actually makes sense.

You might as well put that money to work

Most people are advised to get enough life insurance to replace their salary 10 times over at a minimum. So, let’s say you just tragically lost a spouse who was your family’s sole breadwinner and brought home $100,000 a year. You may now be sitting on a $1 million life insurance payout.

But chances are, you don’t need all of that money at once. Even if you have to pay off some medical bills and cover the expense of a funeral, you might only make a small dent in that $1 million payout initially. And so it pays to invest a portion of your payout — any money you don’t expect to need within five years or so. That way, you can grow that money into a larger sum, which should, in turn, give you more options for covering expenses as needed.

Get help investing your life insurance payout

If you’ve never so much as picked a stock or opened a brokerage account, then investing a large sum of money is something you probably don’t want to do on your own. A better bet may be to enlist the help of a financial advisor — ideally, one who charges a fee that’s a percentage of your assets under management.

A financial advisor can sit down with you and help you map out an investment strategy based on your needs and goals. Maybe you’re willing to return to the workforce now that you’re the sole surviving parent in your household, but you only want to work part-time so you can continue to be there for your kids. An advisor can take that into account when choosing your investments, as well as factors such as your existing debts (like the mortgage on your house) and long-term goals, like being able to give your kids some money to pay for college.

To be clear, it’s never a good idea to invest funds you think you might need within a few years. Investing every dollar of your life insurance payout may not be the best way to go unless you have enough savings to cover several years’ worth of bills.

But you may want to consider investing half of your life insurance payout, or one-third. Doing so could help ensure you’re left with even more income all-in — and that your family is further protected, financially speaking, in the wake of an unspeakable loss.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Skimping on life insurance is a decision many people come to regret.   

When buying life insurance, it’s important to make sure the death benefit is large enough to provide for the needs of loved ones. In fact, it’s usually best to err on the side of buying a little more coverage than a person might think they need, rather than buying a little less.

There’s two important reasons why buying a sufficient amount of life insurance is crucial — and why not getting a large enough death benefit could be a decision policyholders come to majorly regret.

A policy that’s too small means financial hardship for loved ones during a difficult time

The most important reason to buy a sufficient amount of life insurance is to make sure surviving family members don’t face financial worries during a time that’s already difficult.

A life insurance policy pays out after a death. Grieving family members don’t need to be worried about how to pay for a funeral or where mortgage payments are going to come from or how kids will be able to go to school at the same time as they are trying to cope with the pain of losing a loved one.

Many people also find their income goes up as they age — and their chances of death also go up too. When buying life insurance at, say, age 20, it’s important to think ahead about what income the policyholder is likely to have at age 40 or 50, when they are more likely to pass away. Chances are, they’ll have a life — and obligations — built around that amount of income, so the death benefit needs to be big enough to replace it.

Correcting the mistake of buying too little coverage might be impossible

Unfortunately, another huge reason why buying too little life insurance could turn into a disaster is because it may be impossible to correct.

Say, for example, a policyholder realizes in their 30s or 40s that the death benefit is not going to be enough to really provide for their spouse or children if they pass away. They may not necessarily be able to just go and get more coverage at that point in time. They might have developed pre-existing conditions that make it impossible to get approved for a policy. Or they might find the premiums are prohibitively expensive because they are older.

In an even worst-case scenario, a policyholder may not realize they have too little coverage and then they might pass away without proper protection. Obviously, surviving family members would only receive the death benefit on the existing policy — they can’t retroactively go back and buy more coverage on someone who has already passed. So, they could find themselves making hard financial choices.

No one wants these outcomes to be their fate, so it’s important to get the right amount of coverage at as young of an age as possible. Term life insurance is usually pretty affordable, even with a good-sized death benefit, and investing in a policy that provides a sufficiently large death benefit to care for loved ones is well worth the cost.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Is your company on the verge of downsizing? Here are some key warning signs to look out for. 

We’re starting off 2023 with the U.S. economy in a pretty strong place. The jobless rate is low, and despite a string of tech layoffs during the latter part of 2022, companies still seem to be hiring.

But things could change in the course of 2023, especially if a recession ends up striking. And so it’s important to recognize the warning signs of layoffs coming to your company. Here are four to look out for.

1. Your employer is clawing back benefits

It’s common for companies to offer different perks, from health insurance to paid time off to retirement plan contributions. But if you’ve noticed that your benefits seem to be getting stingier, or if some — like free coffee and snacks — are disappearing completely, it could be because your company is desperate to save money. And if it’s reached that point, layoffs could be next.

2. Your employer won’t approve business travel

If you normally travel for work once a quarter and your company doesn’t seem to want to approve your next scheduled trip, it could be a sign that layoffs are on the way. Often, cutting back on spending is an indication that a company is struggling financially.

3. Your company is implementing a hiring freeze

A hiring freeze is not the same thing as a round of layoffs. In the latter scenario, existing employees are let go. In the former scenario, new employees simply aren’t brought on board for a period of time. But still, if your company normally hires regularly and it suddenly puts the brakes on that practice, it could be a sign that money has gotten tight. And in that case, your employer might seek to further cut costs by trimming its existing headcount.

4. Your boss won’t approve new projects

If you’re used to taking on new initiatives at work and you’re suddenly barred from doing so, it could be a sign of trouble. After all, why would your manager want to approve a new project if they know that half of the people working on it may not have a job in a month or two?

Take action, but don’t panic

If you have reason to believe your company might soon implement layoffs, try not to stress about it too much. After all, these signs aren’t guaranteed to translate to layoffs. And even if your company decides to downsize its staff, that doesn’t mean you’ll end up on the chopping block.

At the same time, it’s a good idea to act on the signs above. First, boost your savings account balance. That way, if you lose your job, you’ll have more cash reserves to fall back on while you seek out a new role.

Next, update your resume and start networking. You don’t have to start applying for jobs if you’re happy where you are. But it wouldn’t hurt to make yourself more visible and establish more relationships within your industry in case you end up needing to call in a favor.

Finally, assess your job skills and try to boost the ones that could use a lift. Being great at what you do won’t automatically prevent you from being laid off if your company needs to cut costs. But your employer might have a much harder time cutting ties once it sees how much value you bring to the table.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More