Understanding Personal Loan Options

It’s a common misconception that personal loans with good rates are only available to people with prime credit scores. However, in an era of fierce competition, the market has paved the way for some surprisingly good offers. In fact, you could be one of the many people taking out a small personal loan with no credit check, if you perform due diligence on the lenders offering this.

The Run-Down on Banks as Lending Institutions

When it comes to a personal loan, a bank may be your first thought – given their size and reach. Places such as Capital One, US Bank and Bank of America are well-known for their range of financial services; whether you need an unsecured loan via credit cards, or a mortgage loan for your new property.

The potential problem, however, is that banks often won’t take a second glance at a prospective borrower with a credit score below 660. This, of course, varies a bit, but you should take this as a general guideline of the kind of credit you need in order to qualify.

Benefits of Online Lenders

There are online lenders who specifically target people with bad credit. These consistently go below credit scores of 600 to find a program of payment at the prescribed interest rate that will work for their customer. Oftentimes, the lowered rate is provided as an incentive to consolidate debt – but it can be used for an initial personal loan, too.

There are other benefits to consolidating debt, if that’s the reason you’re in need of a personal loan. The primary one is the new classification of your consolidated debt as a so-called “installment debt,” which actually elevates your credit score. For historical reasons, installment debts are not treated the same way as other types of debt, and so they don’t hurt your FICO score in any way.

How do you obtain an installment debt? The most important thing is your income; then, the amount of debt you actually have. Combining these numbers to obtain your debt-to-income ratio is the money ball, effectively; it is the number that determines whether you’re eligible for the installment debt or not. If you can’t qualify for it on your own, then a cosigner with great credit can help you. The overall benefits are :

  • You are generally eligible for larger loan amounts
  • Your rates tend to be lower
  • Interest savings

No Credit Check Loans

As mentioned above, these are generally online lenders who specialize in loaning money to people who have problems with their credit history. The terms are competitive; but this is of course contingent on you getting a reputable lender. The no credit check option does tend to come with a higher interest rate to cover the risk, but this is often negotiable and represents a breath of fresh air for people who cannot otherwise get a personal loan.
If all else fails and you can’t get an unsecured loan, then you might want to consider going the route of the secured loan. This will require collateral on your part; which can be anything valuable such as a boat, car, family heirloom, house – the higher the loan you want, the more valuable the collateral will have to be. Generally-speaking, however, an unsecured personal loan is the better option. If you pay your current bills on time, you can see a credit score increase in a few months – after which you should try again for an unsecured personal loan at a better interest rate.

Are There Good Auto Loans With Bad Credit

There are a wide variety of reasons why someone can have bad credit, and there are a lot more people in the same situation than you might think. Society has built up this taboo around the subject, and that can be seen in the way lenders treat those who have fallen on hard times. When applying for a loan, interest rates can reach 10% above the national average, making monthly payments skyrocket and paying on time a real challenge.

What is someone in this situation supposed to do other than go along with what the big banks have to offer? Well, there are actually a few ways to secure low rates on a reasonable loan, regardless of how your credit looks. Follow these steps, and you will be able to find that auto loan with bad credit and guaranteed approval no matter how impossible it may seem to be.

?Staying On Top?

Getting your credit back on track takes time, but there’s no better way to stay on top of it than to use a credit monitoring tool. Sites like creditkarma.com will help you monitor your score for free, allowing you to track your progress. This will also help you when it comes time to refinance, as you’ll be able to use your improved score as a bargaining chip for even better rates.

?Knowing Where to Look?

With the internet thriving in today’s modern age, there is a wealth of information available to you with just a little bit of research. Find a site that compares lenders side by side while showing you the rates they offer, and what their pros and cons are. Most of these sites will also point out the reputable lenders who work with individuals that have lower credit scores.

Always double check a lender’s track record with state and federal sites, or how they stand with the Better Business Bureau. This will help you avoid any loan sharks looking to take advantage of your situation. If you are unsure of where to get started, these two companies are a great place to start.

?Capital One?

You might only know them from their commercials, like the ones with Samuel L. Jackson, as a credit card company, but did you know that they are one of the top names in lenders who work with bad credit? They have helped thousands finance both new and used cars, and offer online tools such as loan calculators and FAQs to help buyers during the process. They even have a tool called Auto Navigator that will allow you to compare payments on specific vehicles.

One of the best parts about this company is their acceptance of used cars. Buyers can take out a loan on a vehicle up to 10 years old, as long as it is not from a private seller and has less than 125,000 miles.

?Auto Credit Express?

Even those who have filed for bankruptcy will find help from this company. They have made it their mission to provide anyone with bad credit loan options, and the best rates available. You will not be restricted from applying based on a vehicle’s age and mileage, or the amount of money you need to borrow.

How good are they? They happen to hold an A+ rating with the Better Business Bureau!

?Great Loans?

Don’t allow bad credit to hold you back from securing low rates on a reasonable auto loan. With a little time and research, you’ll be able to avoid the common pitfalls that come with a low score and get your credit back on track in no time.

What To Know About Title Loans in 2017

For consumers in need of immediate financial assistance, title loans have long been one of the most common solutions. In June 2016, the Consumer Financial Protection Bureau (CFPB) proposed several new regulations to make it less likely that consumers would end up trapped in a continually worsening cycle of debt. If you’re considering a title loan, here’s what you need to know about them and what’s new about them as of 2017:

Title Loans: How They Work

The title loan process is simple and quick, which are two of the main reasons these types of loans are so attractive to consumers facing financial hardships. To obtain a title loan, you bring your car to the title loan company’s location, where the lender inspects it. After determining the current market value of your car, the lender can issue you a loan based on that amount (usually anywhere from 30 to 50 percent of your car’s trade-in value). You provide the lender with your car title to obtain the loan.

Many title loan companies offer an online application process where you enter a few basic pieces of information and get preapproval for a title loan. Since the lender needs to examine your car before issuing you the loan, you still need to go in to a title loan company’s office. However, some online applications can provide you with an estimate of how much you could get with a title loan, based on the vehicle information that you provide.

Each title loan has a repayment period specified in the contract. You keep your car throughout the repayment period, and you get your title back when you repay the balance on your loan. Title loans have interest charges and sometimes fees, and if you’re unable to repay the loan in the designated time period, it rolls over and incurs further interest charges and fees. If you default on the loan, the lender can repossess your car.

Title loans don’t require a credit check, making them a popular option among consumers with bad credit. When you repay your title loan on time, you can improve your credit score.

New Regulations

The CFPB’s new regulations impose several restrictions on the title loan industry and the payday loan industry, as both types of loans tend to have high interest rates that can leave consumers facing more and more debt.

Title loan companies must now check whether the borrower has sufficient income to repay the loan within the designated time frame, while also having enough for any other bills and living expenses. One issue for many consumers that are unable to pay is that the title loan company debits their account, and then they get stuck with overdraft fees, in addition to their outstanding title loan debts. Lenders now have to provide consumers with written notice prior to debiting their bank accounts. If the payment fails on two separate occasions, the lender needs the borrower’s written authorization to charge the account again.

The regulations also put a cap on how many short-term loans, including title loans, that borrowers can have. Lenders can’t issue title loans to consumers who already have another short-term loan with an outstanding balance, and they can’t issue title loans to consumers who have spent more than 90 days over the last 12 months in debt for a short-term loan.

Title loans have their supporters and their detractors. The former point out that title loans provide a form of financial assistance for borrowers who are unable to get other types of loans. The latter criticize title loan companies for the high interest rates and fees they charge. Whether or not to apply for a title loan depends entirely on your own financial situation. While interest rates won’t be as low as they would for a bank loan, they’re much easier to get, and can be an excellent option when you need cash right away.

What You Should Know About Reverse Mortgages

canstockphoto7870503Have you been thinking about paying off your mortgage and you’re over the age of 62? Consider getting a reverse mortgage. Reverse mortgages are a way to pay off your current mortgage plus a few added benefits such as supplementing your income or paying for healthcare expenses. This type of mortgage will allow you to convert a portion of the equity in your home into cash without giving up your home.

If a reverse mortgage sounds right for you need to know that there are several types of reverse mortgages available. Below is an explanation of each one to help you decide which type is best for you.

Single-purpose reverse mortgages– These types of mortgages are the cheapest option. They are usually offered by state and local government agencies however not all states have this type of mortgage. Nonprofit organizations also have these mortgages but again they are not available everywhere. A single purpose mortgage can be used for just one purpose which the lender usually specifies. Let’s say a lender states the loan can be used home improvements or repairs or even property taxes. Homeowners that have moderate to low incomes will qualify for this loan.

Proprietary reverse mortgages-These loans are backed by the same companies that develop them. If your home has a high market value you may be able to get a bigger loan advance with this type of mortgage. So if your home has been appraised at a higher value and your mortgage is small, you may be able to qualify for more funds.

Home Equity Conversion Mortgages-These loans are also known as HECMs and are federally insured reverse mortgages which are backed by HUD or the US. Department of Housing and Urban Development. These loans can be used for a variety of purposes.

Both proprietary reverse mortgages and HECMs tend to be more expensive than other traditional home loans plus the costs upfront tend to be high. This is important to consider especially if you are planning on staying in your home for a certain amount of time or are planning to borrow a small amount. There are several factors to consider that determine exactly how much you can borrow with a proprietary reverse mortgage or HECM:

  • the age of the borrower
  • the type of reverse mortgage that is chosen
  • the appraisal value of the home
  • what the current interest rates are
  • a financial assessment that determines the borrower’s ability to pay homeowners insurance and property taxes.

HECMs do not have specific income requirements. However, all lenders will conduct financial assessments which will determine whether to approve or deny your loan. A financial assessment determines your willingness and your ability to meet your financial obligations in addition to the mortgage requirements. The results are what lenders look to decide whether funds should be set aside from the loan proceeds to pay items such as property taxes, flood insurance or homeowners insurance. If the lender does not require money to be set aside you can agree that the lender will pay all items.

Is there such a thing as Guaranteed Car Finance?

If you have a poor credit record and have repeatedly been turned down for loans, credit cards or a mortgage, then you might think that you aren’t going to be able to get finance for a new or second-hand car.

Yet getting car finance, even when you have an impaired credit record, is not as difficult as you might think. If you have lived in your house for more than 12 months, have a job with a regular income or a pension and are making efforts to correct the mistakes you may have made in the past, then having a bad credit record should not prevent you from driving a new car.

There are now a large number of lenders who are willing to offer car finance to people with poor or even bad credit records. Even people who have already been turned down for a personal loan at the bank or declined finance by a car dealership should be able to find a lender who has a finance package tailored to their particular circumstances.

To qualify for credit through one of these sub prime financial organisations, a borrower will need to be able to prove his or her identity and that means be able to provide a copy of their passport or driving license. They will also need to be able show their income and many lenders will ask to see three pay slips before considering them.

When it comes to choice of car, the market for sub prime car finance is now so large that a borrower will not be restricted to a few low-spec models: he or she will be able to choose a car separately from the finance package and then find the finance to suit their needs.

If you do suffer from a poor credit record and are looking to buy or finance a car in some way then it’s very important that you shop around. There are many hundreds of car finance packages on the market and so the rates of interest charged can differ widely. People with slightly impaired credit ratings may find finance packages with APRs of less than 10% while those with a history of late payments or defaults may have to pay significantly higher rates – sometimes up to 25%. Even those with CCJs will probably be able to find a lender willing to finance a new vehicle.

If you are concerned you have a poor credit record, you should find out exactly what is making you unattractive to lenders before starting to look for a car. Apply to the three main reference agencies – Experian, CallCredit or Equifax – for a copy of your record or sign up for one of their online subscription services that allow you to see an updated copy of the report every month. When you’ve got your credit record, you will be able to see where the black marks are, how many there are and then apply to the lenders who cater for your particular circumstances.

Because car finance is for shorter periods than some personal loans or secured borrowing, some lenders view it as a lower risk and offer lower interest rates to sub prime borrowers than with other forms of credit.

There are three main types of car finance:

Personal Contract Purchase (PCP)

With PCP, you make a down payment on a car followed by a series of mostly repayments over a set period – two, three, four or, sometimes, five years. Before you have to make the final payment, you can decide whether you want to keep the car – in which case you have to make a larger final payment – or to hand the keys back and use any value that is left in the vehicle as a deposit for a new car.

PCP is popular with people who want to be able to tailor their finance package to their particular needs. It allows you to make a bigger deposit in order to keep the monthly payments down or to make a smaller one and to make up the difference with larger repayments each month.

One thing to watch out for with PCP is that these packages usually enforce annual mileage limits that are agreed up front. The lowest mileage is usually 10,000 a year but these can be tailored according to your needs. Should you exceed the mileage limit during the life of the agreement, you will be charged a penalty for every mile that you go over it so it’s very important that you agree a limit that is realistic before signing the agreement.

Personal Contract Hire (PCH)

With PCH, you’re actually renting a car over the long term. While it is, to all intents and purposes, your vehicle, you don’t own it at any point. The finance company always retains ownership – you are paying it a monthly amount to continue to be able to use it over the life of the agreement.

When the agreement comes to an end, you don’t get the option of making a final larger payment and taking ownership but simply hand the keys back. This means that the monthly repayments with PCH are usually lower than with PCP or a loan and so you might be able to afford to drive a higher spec car than with these options.

PCH packages will often include the costs of maintenance, servicing, road tax, tyres and, in many cases, insurance.

Loans

You arrange a personal loan separately from the purchase of a car and so will be able to drive a better bargain with the garage or car dealership because you are, in effect, a cash buyer.

Those suffering poor credit records will find it harder to arrange a loan than those who have excellent ratings. Nonetheless there are plenty of lenders offering bad credit loans to finance car purchases and these fall into three main groups:

Unsecured loans which have higher interest rates and larger monthly payments than either PCP or PCH but mean that the borrower owns the car from the start and is not restricted by mileage limits or having to have it maintained by a particular garage.

Secured or homeowner loans come with lower interest rates than unsecured loans. The borrower puts their house up as security that means that should he or she get behind with repayments, the lender might take action to repossess the property.

Guarantor loans are a popular way of financing a new car because they allow borrowers to use the credit record of a third party – the guarantor – to secure finance and so benefit from lower interest rates and bigger lump sums.

Article provided by Mike James, an independent content writer working together with technology-led finance broker Solution Loans; a company with many years experience in advising clients of their most suitable types of credit.

Seven steps to get your guarantor loan

apple-589640_640You may have slipped up with your finances in the past and are now struggling to get a loan because your credit record is impaired. Or perhaps you are new to borrowing and you having difficulty demonstrating a history of responsible financial management. Either way, you could be left facing rejection after rejection when applying for a loan.

This could be because many lenders, and especially those who specialise in personal loans which are not backed by any kind of security, view you as a greater risk than somebody with a good record of managing credit. But don’t despair, there are other options – particularly guarantor loans – which could help you to still make that big purchase, redecorate your house, take a holiday, finance a car or consolidate your existing debts into one.

Guarantor loans make up the fastest growing sector in the UK credit market currently and provide a good way for those who have made financial mistakes to get back onto the credit ladder and repair their records. If you have been turned down for a loan by your bank or one of the other mainstream lenders, guarantor loans could offer you a way to avoid the particularly tight credit scoring systems used by the big banks to exclude people who may only have a few relatively minor slip ups on their records.

A guarantor loans works by using the good record of a third party to act as security for a borrower when he or she takes out a new loan. While the term ‘security’ infers some degree of risk, it’s important to note that this does not mean the guarantor having to put up their home to back the borrowing. It simply means that this person guarantees that the loan will continue to be repaid in the event that the borrower gets into trouble and is unable to make repayments.

This is not a new form of credit, even though the name may be unfamiliar and despite its recent surge in popularity. Until the liberalisation of the UK’s consumer credit market in the early 1990s, it was standard practice for a lender to ask for a third part to guarantee the borrowing of a new applicant, particularly where that person did not have a long record of borrowing money. Guarantor loans work on exactly the same principle, and often come with lower interest rates, larger amounts and longer to repay than other forms of credit including personal and payday loans.

 

But how to do you go about getting a guarantor loan?

  1. Find your guarantor. This is not as difficult as it might sound. You need to find somebody who trusts you and who you are happy to disclose your financial affairs to. That person will also need to have a good credit record because the lender will not be worrying so much about your financial history but will be interested in that of the guarantor. The loan company will want to see that he or she has a good credit history, has paid their bills on time regularly and does not have anything adverse registered against them like defaults or county court judgements (CCJs).
  1. Make sure you aren’t in an existing financial relationship. The lender won’t care whether your chosen guarantor is a friend, a family member or even somebody you work with. But it will be concerned about any financial links between you. The guarantor cannot be somebody you have hold a joint financial product with (like a bank account or mortgage) and they cannot be your partner.
  1. Make sure the guarantor is happy. The guarantor is putting their record of sound financial management on the line so that you can get access to the credit you need. That means that they are going to want to be satisfied that you can afford the loan and that you are committed to keeping up with the repayment schedule. Where family is involved, financial problems can wreak havoc with relationships so while it is only natural for a parent to want to help out a son or daughter in difficulty, the guarantor should still satisfy themselves that the borrower is committed to being open about their finances. If the borrower cannot keep up with repayments, then this will pretty quickly impact upon the guarantor. He or she will have to act rapidly to make good any shortfall to avoid finding their credit record suffering. In cases where the guarantor does not step in and the borrower makes no attempt to put matters right, then the lender will be able to chase the guarantor for money. As a last resort, this might include ordering the guarantor to repay the entire loan and any interest due on it.
  1. Make sure you have an agreement with the guarantor. This is not an arrangement to enter into lightly so it makes sense to set out what is expected of each party in the relationship. Some lenders advise that the applicant and guarantor draw up a written agreement which lays out exactly what is expected of each. A guarantor might want the applicant some to make some form of full financial disclosure which shows a complete breakdown of income and expenditure before they sign the agreement. The guarantor may also need a commitment from the borrower to provide updated financial information for as long as the loan’s lifetime so that he or she gets early warning that a repayment might get missed.
  1. Make sure you are up to date with everything else. While the lender may not be so concerned with your credit record, as a borrower it makes sense to ensure your other loans and credit cards are up to date so that there is not a last-minute hitch with your application. There is a small possibility that the lender will look at your credit record and you may encounter problems if you have a particularly poor history of CCJs and defaults.
  2. Do your homework. While it’s not that different to any other loan, it’s worth doing thorough research to find the loan that you want, offering the amount you need, at an interest rate you can afford and with a repayment schedule that suits you. Making sure you shop around before applying will help prevent problems later on.
  1. Apply! When you’ve settled on the right loan, make the application and you’ll know – in most cases – whether you’ve been accepted within hours.

Article provided by Mike James, an independent content writer working together with Solution Loans, a technology-led finance broker with many years’ experience in advising clients of their most suitable types of credit.

The Difference between Installment Loans and Revolving Credit Loans

canstockphoto9993217The two major types of credits are installment credits and revolving credits. While these two types of loans do account for almost any type of loan there is, they are not one and the same. In a general sense, installment credits are unique in that they have a structure and periodic payment system. This makes them a popular choice for people looking to finance substantial purchases like a car or wedding. Installments provide a gradual reduction of principal upon each payment, eventually ending the contract.

In contrast, revolving credits are more loosely structured, and when funds are repaid they can simply be borrowed again if desired. A credit card is the most popular example used today.

When considering what type of loan is best for you, learning a few more details about each type can be helpful. That is why we’ve provided a description of both here to get you started:

The Installment loan

The most important feature of an installment loan is its structure. These loans have a start and end date that is contractually binding, which explains the popular name ‘term loan’. For the average loan amount, the contract can last several years. However, some loans can total as much as 100,000 dollars and can have a payment schedule that lasts a decade or more. The contract will bind you to an agreed amortization schedule, in which the total amount that you borrow will eventually be paid off through a series of monthly payments.

Some good examples of loans with this structure are car loans, a student loan for college, and a mortgage for your home. These loans work in such a way that you already know the amount that you will pay, and for how many years you will be in debt. Each new loan will require a unique application, regardless of how many installment loans you have taken in the past. A good resource to learn more about installment loans is InstallmentLoans.org.

Revolving Credit

Two of the most popular forms of revolving credit are the beloved credit card, and lines of credit. The limit on your credit does not actually change when you payback revolving debt. These types of loan provide people the power to keep borrowing more and more money, so long as they do not break the credit ceiling set out in the contract.

It may all sound great, but exercise caution. A revolving line of credit is more financially dangerous than an installment loan is. This is because it temps borrowers into overspending. This is well-worth noting because 30% of your credit score consists of what is called your “utilization rate”. This rate is a measurement used to gauge how responsibly you are managing your revolving credit. Remember that if you carry a high balance, this will hurt your credit score.

Paying off credit card debt might just be the easiest way to improve your credit score. It is quite telling that many people actually get an installment loan just to pay off their credit card debt, it really is that important. Not to mention, revolving lines of credit tend to have much higher rates of interest.

The decision should ultimately come down to your financial health and goals. If you have no major purchases worthy of a large loan, perhaps you should cautiously choose a credit card.