Why Are Interest Rates Higher on Auto Loans With Bad Credit?

Why Are Interest Rates Higher on Auto Loans With Bad Credit?

by Jon Reyes

Are you trying to get a car loan and you keep getting denied? Well, they might be a lot of reason why you are being denied. One of the obvious reason you are not getting that loan for that car you so much desire could be due to your credit report. When you bring your application to a loan company, the first thing they look at is your credit report. When your score on your credit report is low, most company will find it difficult giving you a loan. Your best option will be to turn to sub prime lenders.

Sub prime lenders are lenders who give loans to people who have low credit score. These people are often referred to as high risk borrowers. One of the things that you will notice with sub prime lenders is the interest rate which they will charge on the loan. The loan rate might differ just a little bit from the traditional lenders or might be very high depending on the credit risk of the borrower. The ability for a borrower to repay determines the amount of interest rate a lender will charge.

Here are some of the few things sub prime lenders consider when giving out loans to people with poor credit.

Risk Of Loss: Many of the sub primes lenders have huge default rate. This huge default rate is caused by the inability for the borrowers to pay back. You would wonder with such a huge default rate, why these lenders will continue to give out loans. Well, that is why they charge higher interest rate because it helps offset any losses incurred by a borrower. Moreover, the car will also be used as collateral.

Despite these huge losses, they still make money. If they give out loans with the traditional interest rate regularly charged, they will be out of business in no time.

Higher Collection Cost: Since a lot of borrowers default on their loans, collection cost for repossession, fees that include default charges, title and employee expenses will definitely increase. All these add up to why the lenders charge a higher interest rate.

verification: Getting a loan from a sub prime lender is much more strict when it comes to verification of the information you provided when applying for the loan. Most traditional lenders will be satisfied with just checking your information on your report and your place of employment. Sub prime lenders will have to do an extra check on your information since they are take a much more higher risk in giving you a loan.

As long as there are people with poor credit that need loans and sub prime lenders are willing to lend, they will have to keep charging higher interest rate to offset their other cost.

Why Foreclosed Homes Are Cheaper Than Public Auctions

Why Foreclosed Homes Are Cheaper Than Public Auctions

by Jeffrey Reeves

You might have heard about the real estate or bank foreclosures. These are a special type of property and no one can sell foreclosure homes in auction. These can only be sold by the bank having ownership rights at a much lower price than the real value.

The main reason behind the lower prices of foreclosure homes is that the bank only wants to recover the loans that are defaulted. The buyer is assured that he will get this type of property at lower cost from the bank. This can be a real source for improving the profits by buying and selling such properties.

The buyers continuously search for the bank owned foreclosure properties in the market. Those properties are hot among the buyers that have not been sold for a longer period of time. The buyers try to negotiate with the banks and the banks agree to sale such properties at a much cheaper rate.

Location of the property matters a lot to the buyer. The buyer can easily afford a higher maintenance cost if the property is located in some rich and highly urbanized area.

The fast rise in prices of the real estate property due to the economic development is the controlling factor and the buyer is aware of this fact. The buyers buy these properties to resell again for profit.

The homes in better vicinity are considered to be the best as compare to the houses in the vicinity of a higher number of bank owned homes.

The grants and assistance presented by the government can be easily qualified. The HUD has launched a website to inform about various assistance and grants. You can know how to qualify for grants by visiting this website.

In order to sale the foreclosures, the banks offer some additional services like pest certification and the title insurance. These services are offered to sale these properties in time to maintain their financial matters running under some good profit.

Is Credit Card Debt Causing You Financial Trouble?

Is Credit Card Debt Causing You Financial Trouble?

by Claris Livingston

People file for bankruptcy when they need severe financial help. They have large debts and no money in which to make the payments. Due to the recession and the poor economy, many people have found their bank accounts quickly depleted and struggle just to make ends meet. If you find yourself buried in debt, with no way out, then you may need to file bankruptcy.

There are several debt settlement companies which you can find through a debt relief network. A debt relief network will make sure you are finding a legitimate, legal company. Bankruptcy has now become too easy to file due to these problems.

The first thing you need to do is gather all your debts. You can do this from your credit report, or from the letters and bills sent to you from your creditors. Once you have all your debts together, you can hire an attorney. Another option is a settlement company that can help you get out of debt.

The first step into rebuilding your credit is to create a budget. You need to figure out where you went wrong if you ever want to make it right again. A budget consists of all your monthly expenses and your monthly income. If your expenses are greater than your income, some things are going to have to change. You may need to cut out going to restaurants weekly, to only going month or bi-monthly. If you are spending too much on groceries, it might be time to evaluate what you buy and how you can get it for less. It may mean no more name brands for a while

Many people get a credit card for emergency purposes only, but then end up using it for things that aren't really emergencies, but rather things they want right now. A better way to deal with this is by having an emergency savings account. Each month, put a certain amount in your savings account. That way when a true emergency does come up, you have the means to pay for it without interest.