What To Do When You’re About To Default On A Loan

When we think of loans, we very rarely think about what we’re going to do if things go wrong. That is, until they actually do. The truth is that it’s common for borrowers to come across hard times, and when loans are involved, they may go unpaid. If things are getting tough for you financially, and you’re worried about defaulting on your debts, consider the following.

Call Your Lender

When times are getting tough, the last thing you may want to do is talk to your lender. After all, this is the same company that you’re worried about being able to pay. However, these calls are not quite as painful as you think they may be.

At the end of the day, your lender knows that some of their borrowers are going to default, and a smart lender is going to want to do whatever they can to help you avoid that potential outcome. In fact, some big lenders like Chase, Bank of America, Citigroup, Discover, and more offer financial hardship programs that are designed to help reduce payments and avoid penalties for consumers with financial concerns. At the end of the day, the worst thing that can happen is that your lender will not be able to help. The situation will never get worse by the borrower taking proactive steps when times get tough.

Consider Your Options

After speaking with your lender, take a bit of time to explore other options as well. The two most common forms of debt relief that aren’t offered by the lenders directly are debt consolidation and debt settlement. Take a bit of time to research these options. Once you have, consider the option provided by your lender, as well as debt consolidation and debt settlement and how these programs may fit into your unique financial position. Nine times out of ten, after doing your research, you’ll find the program that’s best!

What If I Can’t Pay Anything At All?

The truth of the matter is that not everyone will be able to pay their debts back. Sometimes, financial hardships can be so much to deal with that paying anything towards debts can feel impossible. If this is the case, while times will get stressful, you’re not going to go to jail, nor is it OK for you to be harassed. Believe it or not, debt collectors have rules to follow too. So, if these are some of your concerns, rest assured that none of this will happen. Nonetheless, if this is the case, here’s what you can expect to happen next.

  • Your Lender Will Attempt To Collect – First and foremost, your lender is going to try and get the money that is owed. They will send statements, late payment notices, and will likely even call you to try and get a payment. However, they must follow the rules set forth in the Fair Debt Collection Practices Act when collecting debts. If these rules are broken, you may have legal recourse.
  • Your Lender Will Sell Your Debt – In most cases, once a lender determines that they cannot collect on your debt, they will perform a charge off. That means that they will sell your debt to a debt collector either at pennies on the dollar or in a deal where the collector gets a percentage of the amount of money collected. From there, the debt collector will be in charge of collecting on your debt.
  • You May Be Taken To Court – If a debt collector deems that they will not be paid on a debt, and the debt is worth enough to that collector to sue over it, you may be taken to court. This process generally takes quite a bit of time, but once a judgement is placed, the holder of the debt has further legal recourse when it comes to collecting. Therefore, before letting debts go too far, bankruptcy is an option. However, it should always be a last option.

Do I Have To Deal With Harassment?

NO! The Fair Debt Collection Practices Act (information linked to above), protects you from harassment by lenders. This is done by providing a borrower a way to opt out of phone calls, requiring lenders to only call during certain hours of the day, and limiting the vocabulary these lenders can use to ensure that no threats are made. Debt Consolidation’s informative guide on debt collectors harassments, elaborates what to do if things escalate. For example, if you feel as though you have been harassed by a collector, send a certified letter letting them know that they may no longer contact you. If further contact takes place, call the attorney general of your state and consider hiring a lawyer. You have rights, and debt collectors cannot forget about those rights without legal repercussions.

Final Thoughts

Debt can be overwhelming. However, it may not be as bad as you think it is. The truth of the matter is that while lenders do have some ways to collect, and debt is best if dealt with proactively, you’re not going to go to jail and if you are being harassed, you don’t have to stand by and deal with it. The best thing you can do is take any steps you can do to solve the problem and do your research to know your rights!

 

7 Tips On Maximizing A Title Loan

Whether you need a fast loan to launch a new business, cover some unexpected expenses or any other reason, finding a quick lender is no walk in the park. The process can take weeks or months and cause a ton of stress and work. You have a lot on your plate already that worrying about getting a loan approval quickly should not be the big hassle that it typically is.

To help alleviate some of this stress and get a fast loan, you could look at getting a title loan, instead of a more traditional personal loan.

What Is A Title Loan?

A title loan is a secure lending opportunity where the borrower uses their car title as collateral. In other words, the borrower temporarily gives the ownership of their car to the lender. Once the loan is paid, the title moves back to the borrower’s hands. The upside to car title loans is that they are often easier and faster be approved for, even if you have bad credit.

Naturally, there are some downsides to car title loans as well. You need to really understand how to maximize your title loan and what sort of lender to look for to have the best borrowing experience possible. These 7 tips will help you get the right title loan from the best car title lender in your area and still drive your car.

1: Research the lender and check for borrower complaints

Before you sign or initial any papers (really before you even bother calling or visiting a lending office), you want to be absolutely certain that you’re dealing with a reputable lender. Luckily, a quick Google search can tell you everything you want to know about a lender’s reputation; you’ll even find complaints from past borrowers. The last thing you want is to be roped in with a lender that has a history of issues with customers.

Researching the lender ahead of time will give you all the information you need for a great title loan process.

2: Check your vehicle against the lender’s approved list

Every title loan lender has different parameters on the types of cars they’ll accept. These parameters include things like mileage (some lenders will only accept cars with under 100,000 miles), model year (many lenders will only take new vehicles made in the last ten to fifteen years) and even the make/model of the car.

3: Determine your payment schedule

As with any loan, you should have a clear idea of how long the loan will take you to payback and how much interest you’ll accumulate during your borrowing time. Ideally, you want to pay the loan back as quickly as possible, as you’ll have to pay less interest, but a shorter loan period means bigger monthly payments. You have to find the right balance between a comfortable monthly payment and a short payment period. This will help you pay less on your car title loan.

4: Ask if there are any repayment penalties

While you want to pay the least amount of money on your car title loan, the lender would like to have the opposite happen. Some loan providers have stipulations in place that prevent you from repaying your loan in a short period of time. This helps ensure that you pay them ample interest. They’ll actually penalize you for paying early!

5: Check that your lender can operate in your area

If you’re going the route of an online lender, you want to be absolutely certain that they have the right license to operate in your state. Each state has its own guidelines and regulations regarding title loans, particularly when dealing with online lenders. Getting involved with a lender that doesn’t have the right license(s) for your state could create legal penalties and terrible issues for you and your money.

6: Ensure that you can still drive your vehicle during the loan period

This is the most make-or-break issue when it comes to title loans. Every title loan lender handles this aspect differently. Some lenders will impound your car for the lifespan of the loan. Others will require a tracker be placed in the vehicle to measure mileage and location. If you need the vehicle for work and transportation, then you need a title lender like www.TFCTitleLoans.com that won’t ask you to give up your vehicle during the loan.

7: Ask about refinancing options

Even if you feel 100% certain that you won’t have to refinance your title loan, it’s still a smart idea to ask before about refinancing options before you sign on the dotted line. You never know what the future holds and your financial situation and stability could change dramatically overnight. Some title loans allow for refinancing to occur, others will lock you into your initially agreed upon payment schedule.

Conclusions

A car title loan is a great choice for anyone that needs money quickly, especially individuals with poor credit. To make the most out of your title loan, you’ll want to follow the 7 steps in this guide.

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.