Understanding Your Credit Score

The terms bad credit and good credit are thrown around a lot in today’s society, with not much explanation as to what qualifies a person to have good credit or bad credit, so here at AAR Financial we’ll make it as simple for you as possible!

 

Establishing Credit

There are many ways you begin establishing credit, whether it be taking out a car loan, getting a credit card, taking out a loan, or financing a retail purchase such as furniture, you are beginning to build a credit history and are on your way to establishing a credit score!

 

Credit Score Determining Factors:

  1. History of payments: making your payments on time without any NSF’s or late payments will boost your credit score.
  2. Debt: any balances on credit cards that are above 50% of your limit will harm your credit. Make sure to keep your balances on your credit cards under 30% of your limit to remain in good standing and not harm your credit score.
  3. History of credit: showing that you have previous credit history gives lenders more likely to borrow to you as they can see that you have borrowed in the past and how your payments were made.
  4. Inquiries: anytime a business does a credit check on you, this is considered an inquiry. Receiving multiple credit checks in a short amount of time can harm your file.

 

Credit Reports

Credit reports are a full report showing a detailed history of your borrowing history – whether your payments were made on time or not, which are sent to Canadian Credit Bureaus which then are compiled into a document which is your credit report. You are able to obtain your credit report from Equifax or Transunion, although there is a cost. Credit reports let us know whether you are able to make your payments in a timely fashion, and also what other commitments you have made and how you dealt with them. Credit reports also show information regarding your history, such as bankruptcy.

 

300 – 559

Poor

560 – 659

Fair

660 – 724

Good

725 – 759

Very Good

760 +

Excellent

Canadian Population (%)

4%

10%

15%

14%

57%

 

The truth about payday loans

Does it seem like payday loan shops are everywhere these days? From your local strip mall, to ads popping up everywhere on webpages you visit often. But what really is a payday loan? And is it such a band thing like most people say? Were going to give you the real answers on payday loans here at AAR Financial.

What is a payday loan?

The truth about payday loans is that they can be very costly. People who tend to gravitate to these kinds of loans should exercise extreme cautious and make sure they pay the amount back as soon as possible. These loans tend to be priced at a fixed dollar fee, which represents the finance charge to the borrower. These loans have very short terms, and because of this the cost of borrowing money is quite high. The lender usually requests a pre-dated check or debit authorization from the borrower in return for the loan.

How do payday loans work?

Here’s an example that will explain payday loans very simply. For example, say your car breaks down and you decide to borrow 500$ for the repairs from a payday loans lender. You will write a check to the lender for $580 which is the amount plus a finance fee.

When applying for a payday loan online you would usually type this information online. The lender will usually advance you the amount requested ($500) for a set period, usually 14 days. When that 14 day period is up, you are expected to pay the lender back $580 in cash, let them deposit the postdated check. If you do not pay the debt in full at the end of the term, you will be charged additional fees and finance charges.

Who uses these kinds of loans?

Anyone with a steady income or a checking account can obtain a payday loan easily. Although, borrowers who are unable to obtain a savings account or have access to credit cards generally use payday loans. Since payday loans do not require a credit check, people with credit problems or no credit to begin with.

What are the benefits?

The benefits of a payday loan would be that it’s a convenient tool for borrowing quickly and easily during an emergency if no other option is available to you. If in case you have an emergency medial bill, car repair or other one time expense, a payday loan may be what you are looking for. Also beneficial for those who aren’t able to gain access to credit cards or savings.

What are the negatives?

One of the most important things to remember if you do take out a payday loan is to pay back the loan as soon as possible. Many people who are unable to payback the loan as soon as possible find themselves facing expensive additional fees putting them into more debt. Many borrowers find themselves stuck in what is called the payday loan cycle for a long time, which ends up being very costly and leads to larger financial troubles. Payday loans tend to be much more expensive than other conventional methods of borrowing money. In most cases, the APR which is the annual percentage rate on a payday loan averages about 400%. But the APR can often go up as high as 5,000%. A standard credit card from a traditional bank has an APR of 12% and a standard loan APR is around 7%. In the event of an emergency, it is generally better to use a credit card or tap into your savings during this situation.

Should I apply for a payday loan?

Some things you should consider before applying for a payday loan, should be to take a step back and consider your other options if available. Ask yourself if what you need the money for is really an emergency. In the case the situation is an emergency, it is a good idea although only as a last resort, otherwise payday loans are not usually recommended for expenses that are unnecessary. Think about other ways to borrow money:

Payday Loan Alternatives:

  • Borrow from AAR Financial!
  • Negotiate with a creditor for a payment plan
  • Use your credit card
  • Request an advance from your employer
  • Obtain a line of credit from an approved lender
  • Dig into your savings account
  • Borrow money from a relative
  • Request more time to pay a bill from your creditor
  • Use a cash advance on your credit card

If in case, the final result is that you still would like to apply for an emergency payday loan, please make sure to understand all the costs and terms before you apply.

Tips:

  • Shop around at different payday lenders and choose one that offers the lowest rates and fees
  • Be sure to only borrow as much as you can pay back with your next paycheck in order to avoid paying excess fees
  • When you get paid, make it your first priority to pay back the loan What are some things I can do to prepare for financial emergencies?
  • Prioritize your expenses
  • Keep an emergency fund
  • Inquire about insurance which can help protect against financial emergencies
  • Open a checking account at a credit union or community bank
  • A generally strong financial position will leave you much more prepared if an emergency arises

How to improve your credit score

  • Always pay your bills on time. Although the payment of your utility bills, such as phone, cable and electricity, is not recorded in your credit report, some cell phone companies may report late payments to the credit-reporting agencies, which could affect your score.
  • Try to pay your bills in full by the due date. If you aren’t able to do this, pay at least the required minimum amount shown on your monthly credit card statement.
  • Try to pay your debts as quickly as possible.
  • Don’t go over the credit limit on your credit card. Try to keep your balance well below the limit. The higher your balance, the more impact it has on your credit score.
  • Reduce the number of credit applications you make. If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score. However, your score does not change when you ask for information about your own credit report.
  • Make sure you have a credit history. You may have a low score because you do not have a record of owing money and paying it back. You can build a credit history by using a credit card.

Loan Referral

AAR Finical will reward you for every Loan Referral, do you know someone looking for bad credit loan, have credit card debt, business loan, personal loan or payday loan. We here at AAR Financial will reward you for every referral you made. All you need is download attached form, print in your name and address, then give this to someone who you think could use our services. If they present this card and complete a loan transaction, AAR Financial will cut you a cheque for $50. Its that simple.

Download AAR Financial Referral Rewards

Halloween Savings

It’s October! Which means it’s time for fall and the holidays that come with it – Halloween and Thanksgiving, concentrating on what your children are going to dress up as, and how much that is going to cost you! Before letting your bank account spook you, check out these tips and tricks and remember Halloween doesn’t necessarily need to cost you so much even if you plan on purchasing costumes for your kids. Check out these seven ways that you can cut costs on your children’s costumes this Halloween.

  1. Reuse last year’s costume – If the costume you bought last year for your child still fits, don’t let that go to waste and reuse it! Assuming you bought it big and your child is younger, they most likely won’t mind wearing the same costume again and won’t have much say in what they dress up as! Even for older kids, last year’s costume could be salvageable and parts of it can be used again and be repurposed into a different costume for this year. Be creative and play around with the different parts and pieces, and if you have multiple kids bits and pieces can we switched around and used across the board!
  2. Checkout what you have in your child’s closet – With a little imagination, it is easy to put together costumes from the clothing that your child currently has in their closet. With the simplest clothing and the right accessories and makeup, costumes can be created from nothing and there are many ideas online to help you think of something! Use platforms such as Pinterest and Google as a resource to find creative ideas, and don’t forget to check your closet too for any additions that can add to your child’s outfit!
  3. Find a costume that can be used all year long – If you’re looking to buy your child a new Halloween costume, consider clothing that can be worn all year round and double as everyday clothing and a Halloween costume. Articles of clothing such as many kid pajamas with a few accessories and makeup can be turned into a creative Halloween costume. Skeleton or superman pajamas are always a safe bet and can be worn all year long, making the purchase well worth your money.
  4. Shop Late! – Be a smart shopper and search for your child’s Halloween costume late! Most costume retailers wait until the end of the month, closest to Halloween to offer the most generous deals on costumes. Many stores offer great deals on their remaining Halloween inventory as the days closer to Halloween approach and they try to clear out their shelves. If you are not picky about what costume your child wears, holding off on buying a costume closer to Halloween is always an option to consider!
  5. Sharing is Caring! – If your little ones aren’t able to switch costumes with each other, consider swapping some costumes with friends! Host a little play date or swap party and get together with some of your friends and share costumes which will help you save! Kids can enjoy trying on each other’s costumes and see what can be swapped for what.
  6. Second Hand Costumes – There are many thrift stores and garage sales out there that carry a vast inventory of Halloween costumes. Some costumes that may not be available in the market anymore! These can be great resources for finding cheap Halloween costumes for your little ones and won’t put a huge dent in your bank account!
  7. Homemade costumes – If you’re crafty and creative, making a homemade costume may just be your calling! There are tons of patterns online

Don’t forget that Halloween should be a fun time for your kids and shouldn’t break the bank! You can generally find the best deals on Halloween costumes and candy on the final few days before Halloween so plan ahead! And Happy Halloween from AAR Financial!

Wants vs. Needs

Common Source of Financial Problems

Wants vs. Needs

In school, one of the basic concepts of economics that we learn about is the difference between a want versus a need. But what are they exactly? A need is simply something you have to have, or something you cannot do without. A good example of a need is food, everyone needs food and if you don’t provide that for yourself, you will not survive for long. Many people try to go days without eating food, but then end up binging and eating a lot of food. It is not necessary that you eat a lot of food, but it is necessary that you at least do eat making food a need.

Comparatively, a want is something you would like to have and is not completely necessary. It would be a nice thing to have, and would make you happy but it is not imperative. An example of something you want would be music. Some people would argue that music is in fact a need if they are extremely passionate about music, and may say that they cannot live without it. But in order to survive, you don’t need music but you do need food.

Nowadays, many of us are living beyond our means. Having seen someone else owning a certain item, or doing something we would like to do, naturally as humans we are inclined to want or want to do the same thing. We have to be cautious in this situation, as we all know we have to work hard for our wants and needs, but the big but is to not spend beyond our means. There are many outlets in the world such as us at AAR Financial, where we will provide you a loan and credits (which we love to do!) but you must be smart in managing those credits. It is important to watch our spending and allocate our budget on what we need and what we want and not go overboard with our extensive wants list.

Below we have found a website that will provide you with 10 downloadable worksheets that can offer some help with preparing your own personalized financial plan. You can download them and print them off, or fill them in on your computer to help you keep track of your finances!

To help you get back on track, give us a call or send us a message for more information. At AAR Financial, we are here to lend a helping hand.

http://www.moneysense.ca/planning/the-moneysense-complete-financial-plan-kit

AAR Financial’s Best Mobile Finance Apps

At AAR Financial we have decided to put together a list of our favorite Mobile Finance Apps to help you keep track of your personal finances!

Managing your financing and keeping on track with them can be a daunting task to take care of on top of the many other things you need to accomplish in a day, but today there are many personal mobile finance apps that can help you stay on track! You may need help remembering when to pay your bills so they are on time, budgeting across different groups and better investing your money in the appropriate places. Personal finance apps for your mobile devises are handy and can help you manage all those different matters, anytime, anyplace. We have created a list of our top 3 favourite personal finance apps to share with you and hopefully they can help you in organizing your financial needs and better reach your financial goals!
Firstly, you might want to set some personal financial goals to get you going in the right direction, may that be getting out of credit card debt, saving up for a car or buying a new home. This will help you in setting realistic goals and also give you a strong motivation to not spend money unnecessarily and in the wrong places!

  1. Our first favorite app we would like to share with you is Mint from Mint.com which is free for Canada and the U.S. only at this time. This app is available for iOS and Android which offers you an in-depth look at your balances which is constantly updated as long as you are connected to the internet. This app categorizes your transactions and lets you know when you are about to go over your budget that you have manually set for yourself. With Mint you are also able to program in that the app will notify you when your bills are due. With the speed and reliability of this app, you really can’t go wrong and it is extremely user friendly which makes it very appealing to those who are trying to track their accounts on the go. Coupled with the web based app Mint.com which adds more functionality in addition the app including the ability to move money between accounts and much more!
  2. Our second app we would like to share with you is called BillGuard which helps you go over your credit card statements in depth and lets you report any purchases that are questionable or unwanted. Available for the Android and the iPhone, this free app has a great security feature and shows you merchants that frequently charge customers for their products or services without the client knowing or purchases that were never requested in the first place. As some of us are the target of gray charges, this app clears up all the questionable charges and provides solutions to this problem that some people have. This app does what it says it’s going to do, and also does it very well.
  3. Our third app that we are sharing with you is called Check which is available for Android, iPhone, Windows phone, the web and is free! This app Check which was formerly known as Pageonce is a great app that helps you stay on top of your bills and also make your payments directly from the app. The mobile payment features that are offered through this app include major service providers as well as small businesses and individual businesses. This app does online bill payments as well, if not better than any other which can help you avoid paying those annoying late fees.

AAR Financial Now Does Business Loans

At AAR Financial. we now do business loans! Are you a new business owner or operator ready to begin your new journey? In today’s market, business loans are hard to come by for most small businesses or newcomers to the field. Banks aren’t interested in supporting them and businesses cannot grow effectively without this type of capital. AAR Financial has now expanded into the business loans realm to fill this gap. We want to see small businesses grow!

Whether yours is a new business or an existing and established enterprise, AAR Financial would like to hear from you to see how we can help. If you have an immediate need, a short-term goal or an ambitious project in the pipeline, we can help you move forward with the right business loan. With options of loans up to $50,000 with term up to 7 years. Interest rates range from 19.9% to 39.9% depending on the underwriting details. Larger loans, understandably, are usually in the lower range.

Give us a call at (204) 667-2200 or visit us in person at 1590 St. Mary’s to discuss your options.

How’s Your Credit Score?

Many Canadians have adversely affected their credit scores because of incorrect borrowing decisions, sluggishness on making payments or immaturity at a young age. Although it’s very easy to bring down your credit score, it takes time and a lot of effort to bring it back up. Always remember to learn from your mistakes. When getting a credit card, always make sure that you can comfortably afford to make more than just your minimum payments.

Be aware though that when banks and credit card companies see that you are making your payments, they will want to lend you more (as much as possible while ensuring that you can make minimum payments). Know your limit. When it comes to loans, most lenders carry out more stringent underwriting to ensure that the loan will stay in good standing. Some lenders, however, have a quota to meet and will approve your loan even though it’s not in your best interest. Be aware of this also.

AAR Financial provides personal loans of up to $5,000 for up to 3 years. By keeping the term capped at 3 years, you can rest assured that you won’t be stuck in a cycle of near-interest-only payments for the first few years of your loan. In fact, by that point, you will probably have already paid off your loan. AAR Financial prides itself on lending responsibly and enjoying long term relationships with its clients.

Consumer Debt at a Record $1.4 Trillion

Overall consumer debt in Canada has hit a new record this month, increasing 4.5% from the third quarter of 2013. In the last year, credit card debt has increased 5.9% while installment loan debt (like personal loans with AAR Financial or car loans) has increased 11%. Installment loans are the preferred method of borrowing due to the fact that there is a time limit applied to the loan. It doesn’t last forever. In contrast, credit card debt has a tendency of never going away and credit card companies (supported by the major banks) are very aggressive in growing their portfolio size without any care of how it is ruining the lives of Canadians by getting them stuck in debt that doesn’t go away while making minimum payments.

When the need arises to borrow money, always look towards personal loans. AAR Financial provides personal loans in Winnipeg and surrounding areas with terms of no more than 3 years. By getting a loan with AAR Financial, you’re not stuck paying only interest on your debt and you can rest assured knowing that you will pay off this debt within 3 years.

Say No To Credit Card Debt!

Credit Free Friday

It’s Friday, are you pulling out your credit card to pay for that lunch, dinner or movie today? Make it a credit free friday and keep in mind that the average Canadian owes more than $27,000 in unsecured debt that is just not going away. Say no to credit cards and use your debit card for purchases instead. And for larger purchases, stick with loans that have a guaranteed end date.

AAR Financial provides personal loans to Winnipeggers looking for cash at flexible rates. Whether you have great credit, bad credit or something in-between, we can help.

And remember to check out this wonderful website: http://www.creditfreefriday.ca/index.html