Loans, Insurance & credit card information

Consumers complain, and rightfully so, about credit card interest rates that average 19% per year and go up from there. Those rates are certainly higher than those charged by banks, were personal loans can often be had at half of that rate, provided that your credit is good. On the other hand, credit card interest rates are bargains when compared to those charged by payday loan companies, where interest rates can often exceed 400% per year. Consumers usually take out such loans, which require repayment in two weeks’ time, only when they have no other lending options available to them, such as when their credit card balances are full. Four hundred percent per year sounds completely insane, until you consider that there is a form of lending that is potentially even more expensive – the car title loan.

Car title loans work much like payday loans and have similar terms. Payday loans are short-term loans, usually two weeks in duration. The borrower pays a “fee”, which amounts to interest, that can average between $15 and $30 per $100 borrowed. If the loan is repaid in two weeks, the loan is retired. If the loan is not repaid, the borrower can usually renew it for another two weeks by paying the fee a second time. This is known as “rolling over” the loan. These loans have no collateral required; proof of a bank account and steady employment is usually enough to secure the loan.

Car title loans differ from payday loans in that the loan is secured by the title to the borrower’s car. The duration of the loan is typically 30 days rather than two weeks, but the loans often work the same way. At the end of the loan period, the borrower can either repay or “roll over” the loan for another month. The difference, and it is a big one, is that failure to repay a car title loan allows the lender to repossess the borrower’s car! At that time, the lender may sell the car and keep they money that they are owed. Most states require the lender to return any extra funds, but some states actually permit the lender to keep all of the money.

One would think that by requiring collateral in the form of a car title, the lenders could offer loans at a more affordable rate than those offered by payday lenders. They probably can, but in practice, the interest rates are very similar, which makes a car title loan a very risky way to borrow money. Most people need their car to get to their job; if your car is gone, so is your opportunity to repay the loan or to buy another car.

Lawmakers in various states have been trying to crack down on the growing car title loan industry, but they often meet with resistance from industry lobbyists and Republican legislators who think that the “free market” should decide how lending businesses work. Unfortunately, the “free market” is not available to most car title borrowers, who only go to such lenders after they have exhausted all other borrowing avenues, such as banks, credit cards, and even payday loans.

The bottom line is this – No matter what the interest may be, putting up the title to your only means of transportation as collateral for a $500 loan is a bad idea.

In order to calculate car loan payments, you need some important information beforehand. This is where an online loan calculator comes in handy.

Very simply, these are almost always free on most loan companies websites, and can help you quickly and easily determine how much you will be paying for a certain lease. All you have to do is input the amount of money you need for the loan, the interest rate, and when you will pay it back, and voila!

You have the final amount you will be paying per month. This is much quicker than attempting to figure this out on your own with a calculator, and is great to help you quickly and easily compare loans from many different companies.

Secured or unsecured?

Here is some quick info to help you better understand the kinds of loans available. The first is secured, which requires collateral up front.

These will generally give you a much better interest rate, because the company is able to get something out of it should you default on the loan. Companies that give you an unsecured loan, on the other hand, need to charge you more because they get nothing out of it should you default.

Therefore, the higher margins make up for the amount of people who default on them. Even if you have a good credit rating, trying to take out an unsecured loan will definitely cost you more money, but might be worth it, in order to protect your assets should you default on payment.

Keep in mind, most car loans are secured, meaning you will pay less, because should you default on payment, the car is simply repossessed. Therefore, there is much less risk to the loan company.

In addition, another benefit is that most companies give you much more flexible payment terms, and you can usually get approved much quicker, because the risk to the company is much less. Once you’ve found the best rate, then calculate your car loan payments to find the best.

All businesses will, at one point, need financial help in some way or another. Small business loans are a great way to maintain your business in a healthy financial position, but acquiring one can be a very complicated task, since the requirements for it are very extensive. Some of its most basic requirements are: Having a perfect credit score and having personal assets to use as collateral, that alone already makes it a hard to secure financial resource.

So, what’s left for the business owners with a poor credit history? The answer for that question is: look to an unsecured business cash advance. These types of cash advances are a great alternative to the traditional small business loans, some of the features that easily stand out are the fact that these types of advances don’t require any personal collateral as guarantee nor it requires that the merchant holds a perfect credit score and history. Of course there are some requirements, and the most basic ones are:

1) The merchant has to process credit cards as a form of payment and it has to have a monthly processing volume of at least $2500.

2) The merchant cannot have an open bankruptcy.

3) The merchant can’t have any tax lien (unless under a payments plan)

4) The merchant has to have at least 1 year remaining in its business location lease.

5) It has access to at least the past 4 months of credit card statements.

6) The business is 1 year old at least.

If compared with a small business loan, the application and funding process is very simple and fast. Merchants can apply online or over the phone. The application is a simple 2 pages form, and the documentation needed is very small. The approval process usually takes place in as fast as 24 hours, and after the merchant has been approved, the lender wires the funds in as little as 7 days.

In contrary to a business cash advance, being funded by a bank is a very complicated funding method. You, the merchant will need to provide the lender with all the pertinent documents showing that you can qualify for their loans, some of the requirements for secured loans are:

1) The merchant has to have a perfect credit score and history. Often times a FICO score of 750 or more is required.

2) The merchant needs to provide the lender with personal assets to be used as collateral.

Besides having those requirements, the approval process for a bank loan can take up to 2 months and the actual funding can take up to 4 to 6 months.

Cash advances don’t have fixed monthly payments, nor they have interest rates, instead the lender will charge a onetime fee, that will be repaid on an open term of 6 to 9 months as a small daily percentage from credit card transactions, a cash advance goes with the flow of your business, as you only payback when you sell in credit card transactions, you will never pay a late payment fee.

A car loan after bankruptcy can be one of two things. It can be a great experience as part of a plan to help you rebuild your credit and get you back to a better financial standing, or it can be a giant problem and a way into more high interest debt. Even if you’re in a situation where you’re desperate for a vehicle, you can still try and make your experience become the first one.

Bankruptcy is supposed to be a new start. Sadly for many people after things are finalized they are left not knowing what to do next, and still in a nasty financial situation.

Before you start looking to get a car loan after bankruptcy I recommend building up your credit a bit if possible. There are two types of credit you’re going to want to have, installment and revolving. Installment payments are for things like loans, where as revolving is for things like credit cards.

Obviously in your situation getting a traditional unsecured credit card can be difficult. You do have the option, however, to get a secured credit card. You can usually find these at your current bank or credit union. You deposit a few hundred dollars into a savings account which will be used as security to secure your credit limit on your new card. After approximately a year you will be able to apply for an unsecured card. Make sure that the company you work with reports to the three major credit bureaus about your on time monthly payments so that you build positive credit history.

It is recommended that you wait six months to get a car loan after bankruptcy, not just to build up your credit a bit, but because most lenders won’t work with you before then, and the ones who will, will offer you an even higher interest rate than you’d be offered if you wait a while.

Even after six months to a year you will still be offered very high rates. This is because you are seen as a risky customer. You can try to offset this risk by offering your home, another vehicle, or high priced collectibles as collateral and you will have an easier time both finding a lender and getting a better interest rate. You can also make things easier by finding a cosigner if collateral isn’t an option for you, but you should be aware that if you fail to make your payments this person will be held responsible.

These high rates are generally considered worth the cost, not just because you need a vehicle, but because by paying these rates now and making your payments on time every month you build up a positive credit history and will be offered better rates in the future and generally have an easier time of things financially.

By being responsible and in control of your finances a car loan after bankruptcy can be part of a plan to get yourself back on track.

Why having no credit history is a drawback?

The problem with having no credit history is that the lender has no means to measure the risk involved in lending to someone with no credit history. Unless you can provide some other asset as collateral besides the car, the lender is incapable of establishing the loan amount he can grant, the interest rate he will charge and the number of installments or loan length.

What the lender wonders is why someone with no credit history never requested a loan. Was it that he never needed one before? Or was it that he already knew he wouldn’t get approved?

What can be done to solve the no credit issue?

There are many measures you can take in order to work out this problem. What you need to do is to start building yourself a healthy credit history. There are many financial products you can acquire in order to get the financial institutions start reporting to the credit agencies and thus start building a credit history.

Payday loans do not require credit checks, so you’ll be able to apply for a payday loan without worrying about not having a credit history. The problem with payday loans is that the interest rate charged for this kind of products is very high and you may not need the money, so it makes no sense to request an expensive loan just to get your payment recorded into your credit report. Besides, you’ll need a savings account and a steady income which leads us to the really first step:

If you don’t have one already, open a savings account with a bank and if possible a checking account too, this will contribute to your credit history building process. Since any transactions made with this accounts will be recorded and reported to credit agencies.

If possible ask for a credit card, use it for daily expenses you would otherwise pay in cash and pay the full balance when the credit card payment is due. This will be recorded into your credit history too and will raise your credit score significantly.

The next step would be to find a lender, the smartest thing to do is to request one first at the financial institution where you opened the accounts. However if you can’t get approved there, you may want to try applying with other lenders. There are many online car loan lenders dealing with bad credit car loans specially designed for those with bad credit, no credit or even bankruptcy.

Getting recommendation letters from your employer and from any creditor that doesn’t report to credit agencies stating that you are a good payer, will greatly improve your chances of getting approved for a loan. It may sound a idealistic thing to do but I assure you that the lender will take those letters into account too when making a decision.