Despite the fact that banks and other lending institutions seem to be coming back to engage the bad credit customer, there may be speculations that it will be an easy way out to obtain car loans. Certainly not! Banks do not want to make the mistake they did prior to the pre-credit crunch period.
Although things seem brighter for the borrower, it may not be as easy bridge to cross. With statistics showing that lending for customers with bad credit has increased, it may not automatically indicate that every other person with bad score rating will be approved of car loans. For the car buyers, they will need to take control of their credit score in order to get the best deals and interest in their car loans.
As one way to remain informed of the interest rates available in the market, car buyers with bad credit should examine the average rates offered in the market. There are different sites where such information may be obtained from including myFICO.com car loan chart. This chart provides reliable information on interest rates which are offered to consumers on different spectrums of FICO score.
The charts also show the payment amounts for different car loan terms such as 60, 48, and 30 months period based on the interest rates provide in each range of FICO score. It is particularly important for you to estimate where your FICO score falls and the rates offered. This gives you an insight on what you expect to get from the market. It is also important to keep watch of your credit score and analyse it to ensure it does not reflect errors.
It is not enough to rely on the credit score rating which you get for free from the major credit bureau. You can purchase your current credit score report from myFICO.com website or from the credit bureaus before you go to seek for car loan deals. Assumptions don’t always work when trying to strike deals for car loans. You need to really have confidence with your credit score. You may be surprised that you are able to get a car loan more easily than a person with a higher score than yours.
You should not assume that because your score does not meet the loan requirement, you cannot get a loan. The problem is that, even if you get a car loan, you will most probably pay more in interest rates. For buyers with lowest credit score falling below 550 points, they are likely to get higher rates on their loans.
Saving is a good option if you want to get a good deal on a car loan. With low score, you need to make a bigger down payment that will enable you lower the interest rates or term of repaying the loan. It is advisable to have at least 25 percent of the price of the vehicle before you go on the negotiation table to present your deal. If you are in bad credit, you may need to consider a used car that has covered fewer mileages.
Used cars are cheaper and this means that you may easily get a car loan that can enable you purchase the vehicle easily. However, the interest rates for used cars may be higher than those for new cars but you do not have to borrow heavily to buy a used vehicle like the case of a new car, and this is something important for a consumer ailing with bad credit score. Always have the car checked by a qualified mechanic to ensure that it is in good operating condition.
Tuesday, November 19, 2013
A Bad Credit Will Not Just Affect Your Credit Rating ...But a Myriad of Life Aspects
If there is one thing that troubles consumers in their life is bad credit score. It seems like credit rating is a lifeline for many people because it determines how they live their day-to-day lives. Credit score determines the premium rates you pay for your insurance and the approval as well as interest rates on your personal loans. Before you lease an apartment, the landlords will scrutinize your credit score. Cell phone companies also checking your score rating to determine your reliability in payments.
Employment may be denied to you when you have bad credit rating. Essentially when your credit worthiness is bad as may be reflected by your FICO rating, it affects an array of aspects that determine the kind of life you lead. Your credit score can impact on other facets of your life. Considering that people are now rushing to secure credit cards owning to the increasing trend in offering reward perks to consumer, it is certain that consumers need to think again.
A bad credit that is below 550 points could signal a serious financial downfall. High interest rates on your credit cards and loans will be the order of the day if you do not manage your credit rating. Creditors and lenders consider bad credit applicants to have a high risk and they make you pay for this risk by attaching high interest rates to credit facilities they grant you.
A bad credit score could deny you employment because employers require you to have some good credit history especially in jobs pertaining to the upper management or the finance sector. High debt, outstanding bills or bankruptcy could deprive you a job in these high profile employment opportunities. Under the Fair Credit Reporting Act, it is within the jurisdiction for an employer to scrutinize your credit report and use the findings reasonably to award you or deprive you a job.
However, the employer should seek your permission to do that. If your credit score is bad, it may prompt the employer to closely question you and this could be a disadvantage in a highly competitive position. Credit rating is also affecting marriage relations meaning that if you contemplate having a permanent spousal relationship, you may need to examine each other’s credit score.
Personal money management as reflected by a credit rating may show how a person will manage finances when two parties decide to tie vows. Some divorce cases are resulting from inability to manage personal finances and provide for the family. If you cannot manage your finances when you are not in a relationship, it means that you may continue to face the same problem even after marrying.
According to Lisa J.B. Peterson of Lantern Financial, (a Boston financial planning group), you need to sit down and look at each other’s credit report as this is an important step if you plan to get married. One aspect that has been noted in credit score discussions before marriage is that people do not take these issues seriously before they tie their vows.
People wait too long before they discuss the personal credit score issues and probably this takes place after the marriage has been concealed. This is something that adds up to the stake of the marriage’s assets especially in divorce settlement and this is according to a New York City Matrimonial Lawyer Sheila Riesel. Bad credit rating has a long standing effect on other aspect like insurance premiums, security deposits on utilities, getting a cell phone contract, buying a car as well as starting your own business.
Employment may be denied to you when you have bad credit rating. Essentially when your credit worthiness is bad as may be reflected by your FICO rating, it affects an array of aspects that determine the kind of life you lead. Your credit score can impact on other facets of your life. Considering that people are now rushing to secure credit cards owning to the increasing trend in offering reward perks to consumer, it is certain that consumers need to think again.
A bad credit that is below 550 points could signal a serious financial downfall. High interest rates on your credit cards and loans will be the order of the day if you do not manage your credit rating. Creditors and lenders consider bad credit applicants to have a high risk and they make you pay for this risk by attaching high interest rates to credit facilities they grant you.
A bad credit score could deny you employment because employers require you to have some good credit history especially in jobs pertaining to the upper management or the finance sector. High debt, outstanding bills or bankruptcy could deprive you a job in these high profile employment opportunities. Under the Fair Credit Reporting Act, it is within the jurisdiction for an employer to scrutinize your credit report and use the findings reasonably to award you or deprive you a job.
However, the employer should seek your permission to do that. If your credit score is bad, it may prompt the employer to closely question you and this could be a disadvantage in a highly competitive position. Credit rating is also affecting marriage relations meaning that if you contemplate having a permanent spousal relationship, you may need to examine each other’s credit score.
Personal money management as reflected by a credit rating may show how a person will manage finances when two parties decide to tie vows. Some divorce cases are resulting from inability to manage personal finances and provide for the family. If you cannot manage your finances when you are not in a relationship, it means that you may continue to face the same problem even after marrying.
According to Lisa J.B. Peterson of Lantern Financial, (a Boston financial planning group), you need to sit down and look at each other’s credit report as this is an important step if you plan to get married. One aspect that has been noted in credit score discussions before marriage is that people do not take these issues seriously before they tie their vows.
People wait too long before they discuss the personal credit score issues and probably this takes place after the marriage has been concealed. This is something that adds up to the stake of the marriage’s assets especially in divorce settlement and this is according to a New York City Matrimonial Lawyer Sheila Riesel. Bad credit rating has a long standing effect on other aspect like insurance premiums, security deposits on utilities, getting a cell phone contract, buying a car as well as starting your own business.
Financial Institutions Make A Comeback in Lending Car Loans to Consumers Ailing with Bad Credit
If you are shopping for a new car and you are not in excellent credit rating, you may face a challenge in obtaining a car loan. It is not easy to save for your car considering the increase regular expenses you have to pay in your home expenses like food, electricity, insurance, and telephone bills. During the recession that hit many parts of world from 2007, the granting of loans was affected. Initially before the economic crunch, banks and financial lenders were willing to lend consumers money but when the crisis began, they became reluctant in lending.
Before the crisis, many borrowers had borrowed money and when they were faced with economic challenges many defaulted the payments of the loans. For car buyers who needed funding, they had to get through tough times as the average credit score was skewed to a level high of 776 as in early 2010. This meant that car buyers with credit rating lower than 776 were limited in obtaining car loans.
However in a credit analysis that was released by Experian Automotive in the recent times, it has shown than car buyers are now getting approval for credit facilities even with poor score. According to the analysis, as in the first quarter of 2012, the average score for car buyers to obtain vehicle loans had gone down to about 760. The director of automotive credit at Experian Automotive, Melinda Zabritski noted that a few years ago, it was very difficult for a car buyer to get a loan when in bad credit.
Melinda further said that a lot of lenders who offered subprime financing did not even have the funds to lend. Following the positive economic growths being realized after the deep credit crunch, things are not turning bright for the car buyers. Buyers with lower credit scores are today getting approved for car loans and the rates fell way below 659 points as at 2012.
Moreover, lenders seem to be offering more loans to car buyers with a notable increase of loans for car buyers with non-prime to deep prime scores i.e. 679 to 550 are below. In size, buyers are getting bigger loans for both new cars and old vehicles. The Experian automotive credit analysis also found out that lenders are now offering lower monthly payments than before for used card loans and new vehicle loans.
The low interests for new vehicles and used cars coupled with longer terms of payment make the repayment of car loans affordable. The increasing trend in lending has partly been fuelled by the increased confidence among lenders. Consumers are today paying back their loans as agreed and this has increased the lenders’ confidence.
And because car loan borrowers were paying back their credit as agreed, there was notable reduction in vehicle repossession. Melinda further said that when lenders have low losses, they are able to lend more and even at better rates and all these aspects benefit the consumers. For many years, car buyers have struggled to get vehicle loans but today it seems their cry has been heard by lender owing to the favourable lending conditions.
Before the crisis, many borrowers had borrowed money and when they were faced with economic challenges many defaulted the payments of the loans. For car buyers who needed funding, they had to get through tough times as the average credit score was skewed to a level high of 776 as in early 2010. This meant that car buyers with credit rating lower than 776 were limited in obtaining car loans.
However in a credit analysis that was released by Experian Automotive in the recent times, it has shown than car buyers are now getting approval for credit facilities even with poor score. According to the analysis, as in the first quarter of 2012, the average score for car buyers to obtain vehicle loans had gone down to about 760. The director of automotive credit at Experian Automotive, Melinda Zabritski noted that a few years ago, it was very difficult for a car buyer to get a loan when in bad credit.
Melinda further said that a lot of lenders who offered subprime financing did not even have the funds to lend. Following the positive economic growths being realized after the deep credit crunch, things are not turning bright for the car buyers. Buyers with lower credit scores are today getting approved for car loans and the rates fell way below 659 points as at 2012.
Moreover, lenders seem to be offering more loans to car buyers with a notable increase of loans for car buyers with non-prime to deep prime scores i.e. 679 to 550 are below. In size, buyers are getting bigger loans for both new cars and old vehicles. The Experian automotive credit analysis also found out that lenders are now offering lower monthly payments than before for used card loans and new vehicle loans.
The low interests for new vehicles and used cars coupled with longer terms of payment make the repayment of car loans affordable. The increasing trend in lending has partly been fuelled by the increased confidence among lenders. Consumers are today paying back their loans as agreed and this has increased the lenders’ confidence.
And because car loan borrowers were paying back their credit as agreed, there was notable reduction in vehicle repossession. Melinda further said that when lenders have low losses, they are able to lend more and even at better rates and all these aspects benefit the consumers. For many years, car buyers have struggled to get vehicle loans but today it seems their cry has been heard by lender owing to the favourable lending conditions.
When Are Payday Loans a Good Option
Payday lending is a financial term that has gained more popularity in the recent years. The growth of payday lending has increased significantly and this is because lenders are finding a quick way of making money while borrowers are getting a fast and convenient way of obtaining emergency cash. Payday loans are not designed for every other borrower and this is because they come with hefty interest rates.
Instead of completely locking out consumers with bad credit score from obtaining credit facilities, lenders have studies the needs of the market and are now providing these loans to lenders who desperately need them. Although there has been a lot of criticism on the way these loans are provided, it is certain that market is not shrinking anymore. One surprising thing is that borrowers are willing to borrow at those high interest rates.
Consumers with bad credit and who cannot access credit facilities from conventional lending institutions can now have a piece of mind. On one perspective, payday loans or cash advance can help borrowers maintain a good credit by using the money to make payments for their credit cards. Although the loans are expensive, they can help you avert further damages in your credit report considering that you are in bad credit and you need to build the reputation of your credit score.
Any further damage by late payment is not called for at this time you are building your score. People use next payday check loans to protect their credit score. The cumulative interest levied on missed credit card payments can have a bad effect on a person’s finances and when this is coupled with the effects late payments can cause on a borrower’s credit history, it is viable to use the payday loans to clear the credit card balances.
Payday loans can enable you get through a rough financial spot such as paying for damages of your car so that you can commute to work conveniently. However, these loans should not be taken lightly for any financial need. They should be obtained for very critical financial needs such medical bills, college fees, and payment of credit card debt to avert late payments.
There are other alternatives, which could be used by people with bad credit and they include peer to peer loans, which offer low interest rates but then again there are restrictions as to who can be granted such loans. One peculiar thing with payday loans is that they favor those people with very bad credit score and who cannot be considered for a credit facility by other lenders.
Despite the fact the traditional lending institutions are now offering some form of short term loans similarly to payday at much cheaper costs, they still cannot meet the needs of the market. In addition, the kind of customer being served is extremely in poor credit score. The main pitfall is that the payday credit facilities will not help you solve the real problem of bad credit. You are likely to get into a borrowing circle where you borrow, repay and borrow again. This is because you are using the money you could have reserved for other financial needs to meet the fees and interest rates charged against the payday loans.
Instead of completely locking out consumers with bad credit score from obtaining credit facilities, lenders have studies the needs of the market and are now providing these loans to lenders who desperately need them. Although there has been a lot of criticism on the way these loans are provided, it is certain that market is not shrinking anymore. One surprising thing is that borrowers are willing to borrow at those high interest rates.
Consumers with bad credit and who cannot access credit facilities from conventional lending institutions can now have a piece of mind. On one perspective, payday loans or cash advance can help borrowers maintain a good credit by using the money to make payments for their credit cards. Although the loans are expensive, they can help you avert further damages in your credit report considering that you are in bad credit and you need to build the reputation of your credit score.
Any further damage by late payment is not called for at this time you are building your score. People use next payday check loans to protect their credit score. The cumulative interest levied on missed credit card payments can have a bad effect on a person’s finances and when this is coupled with the effects late payments can cause on a borrower’s credit history, it is viable to use the payday loans to clear the credit card balances.
Payday loans can enable you get through a rough financial spot such as paying for damages of your car so that you can commute to work conveniently. However, these loans should not be taken lightly for any financial need. They should be obtained for very critical financial needs such medical bills, college fees, and payment of credit card debt to avert late payments.
There are other alternatives, which could be used by people with bad credit and they include peer to peer loans, which offer low interest rates but then again there are restrictions as to who can be granted such loans. One peculiar thing with payday loans is that they favor those people with very bad credit score and who cannot be considered for a credit facility by other lenders.
Despite the fact the traditional lending institutions are now offering some form of short term loans similarly to payday at much cheaper costs, they still cannot meet the needs of the market. In addition, the kind of customer being served is extremely in poor credit score. The main pitfall is that the payday credit facilities will not help you solve the real problem of bad credit. You are likely to get into a borrowing circle where you borrow, repay and borrow again. This is because you are using the money you could have reserved for other financial needs to meet the fees and interest rates charged against the payday loans.
Bad Credit Personal Loans… A Solution to Consumers with Bad Credit Score
As consumers continue to struggle with poor credit score, banks are realizing that they cannot do without them. Bad credit loans can provide solutions to those ailing with bad credit. During the recession period, which began back in 2007, many consumers found themselves locked out of credit facilities because they attained poor credit scores. Before the recession, banks were more than willing to lend borrowers, a phenomenon that resulted to over-borrowing.
Consumers took more loans than they actually needed and when the economic crunch hit them, they were placed in a difficult situation. The consumers began experiencing loan delinquencies and this was worsened by the fact that many had heavily borrowed and did not anticipate that they could suffer a blow from the economic crisis. Consumers suffered from mortgage foreclosures and bankruptcy cases.
Following the effects of bad credit many banks and lenders became strict and stopped lending uphazardly. Several years after the recession, banks are now repositioning their services to cater for the underserved group of consumers. These are consumers who are facing the troubles of poor credit score. If there is one aspect consumers should be keen about is their credit report.
Poor credit score can implicate on personal financial strength for a long period. Aspects like loan delinquencies and bankruptcy can reflect on the credit report for a long period possibly up to 7 years or more even after a person has recovered from financial problems. This is why people should ensure that they pay their bills in time and borrow what they can afford to pay.
Personal financial planning is very critical in restoring and maintaining a good reputation of the credit score. Banks are now offering assistance to people with bad credit score. If you are in bad credit, you can recall the daunting moments you might have gone through in the past trying to secure loans. However, consumers can today afford a smile as banks make a comeback in lending people with bad credit.
If you have a poor credit rating, it is now possible to obtain an unsecured or secured personal loan. However, since the lending institutions are cautious, they do not want to assume that everything is okay. This means that you will pay more interest rates for the loans. Bad credit loans are meant to serve people with poor or bad credit history.
To point out one more thing, although lenders may not pull your credit report prior to providing you with a loan, it is most probable that with the recent NSF charges, slow payment history, and default of personal loans they may be compelled to disapprove your application. There are two types of personal loan facilities for people with bad credit and they include secured and unsecured bad credit loans.
With a secured loan, you have to provide a security for the loan that is used as the collateral. This means that if you default the loan, your asset may be repossessed. The secured bad credit persona loans may offer relatively lower interest rates than the unsecured personal loans. Knowing well that you have a bad credit report that is crippling your ability to obtain loans, you need to be careful in the way you borrow, the amount you intent to borrow, and how you are going to repay the loan.
Consumers took more loans than they actually needed and when the economic crunch hit them, they were placed in a difficult situation. The consumers began experiencing loan delinquencies and this was worsened by the fact that many had heavily borrowed and did not anticipate that they could suffer a blow from the economic crisis. Consumers suffered from mortgage foreclosures and bankruptcy cases.
Following the effects of bad credit many banks and lenders became strict and stopped lending uphazardly. Several years after the recession, banks are now repositioning their services to cater for the underserved group of consumers. These are consumers who are facing the troubles of poor credit score. If there is one aspect consumers should be keen about is their credit report.
Poor credit score can implicate on personal financial strength for a long period. Aspects like loan delinquencies and bankruptcy can reflect on the credit report for a long period possibly up to 7 years or more even after a person has recovered from financial problems. This is why people should ensure that they pay their bills in time and borrow what they can afford to pay.
Personal financial planning is very critical in restoring and maintaining a good reputation of the credit score. Banks are now offering assistance to people with bad credit score. If you are in bad credit, you can recall the daunting moments you might have gone through in the past trying to secure loans. However, consumers can today afford a smile as banks make a comeback in lending people with bad credit.
If you have a poor credit rating, it is now possible to obtain an unsecured or secured personal loan. However, since the lending institutions are cautious, they do not want to assume that everything is okay. This means that you will pay more interest rates for the loans. Bad credit loans are meant to serve people with poor or bad credit history.
To point out one more thing, although lenders may not pull your credit report prior to providing you with a loan, it is most probable that with the recent NSF charges, slow payment history, and default of personal loans they may be compelled to disapprove your application. There are two types of personal loan facilities for people with bad credit and they include secured and unsecured bad credit loans.
With a secured loan, you have to provide a security for the loan that is used as the collateral. This means that if you default the loan, your asset may be repossessed. The secured bad credit persona loans may offer relatively lower interest rates than the unsecured personal loans. Knowing well that you have a bad credit report that is crippling your ability to obtain loans, you need to be careful in the way you borrow, the amount you intent to borrow, and how you are going to repay the loan.
How to Refinance Credit Card Debt with Peer to Peer Loans
In 2010, the consumer debt in America was placed at $2.4 trillion while in 2011; it was 11.38 trillion showing a significant drop by 2.95 percent. Credit cards take the largest proportion of consumer debts in US and this means that consumers need to know how they can manage these debts. Credit cards are essential financial tools but when used inappropriately, or due to unavoidable circumstance, these cards can bring a stack of debts and financial pitfalls that may be challenging to cope with.
Before you declare bankruptcy, there are a number of things you need to work around to determine credit card debt solutions. The road to eliminating the debt may not be smooth but altogether there is hope. You can get out of your credit card within a few years and be financially freed of those debts. Credit card debts are known to pile up so fast and one thing is because the interest rates charged on balances increase with great magnitudes.
For example, if you miss a payment, the interest rates may increase from the average 16 percent to about 31 percent or so. It most cases, just one late payment can attract an increase of 15 percent APR on the balance. There are people servicing credit card balances with interest rates as high as 35 percent.
However, you do not have to go through these challenges as there are different ways you can refinance your debt. Refinancing is simply acquiring another loan that has low interest rates and doing away with the older high interest loan. This can be achieved through credit card debt transfer, home equity loans, home equity line of credit, personal loans and peer to peer loans.
The peer to peer loans have lower interest rates, meaning that they can be used to refinance your existing high-interest credit card debt. However, for you to obtain these loans, you should have a good credit score. If you have a credit score of more than 660 points, you can apply for a p2p loan that attracts a rate of between 6 and 10 percent APR. Considering that credit card debt may attract interest rates of more than 25 percent, it means that when you switch it to peer to peer loan, you can be able to clear your debt comfortably.
And as InCharge Debt Solutions’ director of education and creative programs Karen Carlson points out, peer to peer lending can offer a viable alternative for borrowers who have been turned away from banks and other conventional lending institutions. InCharge Debt Solutions is a nonprofit credit counseling agency.
Peer to peer loans are obtained online and they are offered by companies such as Lending Club and Prosper. These two companies are the pioneers of the peer to peer lending and today, they have recorded an enormous growth. Recently Lending Club reached a record high of $1 billion in loan originations or the loans issued and this shows that the market is growing strong.
You can contact a peer to peer lending partner and get a low interest rate loan to pay off your debt. Most of the p2p loans carry a term of between 12 to 30 months. In addition, you can get a loan of up to $35,000 which can allow you to settle the debt easily. Usually, when you are refinancing, you are just changing or switching your loan to a low interest credit. It means that you acquire a new loan under different terms and conditions that allows you to settle it more comfortably than the previous one.
Before you declare bankruptcy, there are a number of things you need to work around to determine credit card debt solutions. The road to eliminating the debt may not be smooth but altogether there is hope. You can get out of your credit card within a few years and be financially freed of those debts. Credit card debts are known to pile up so fast and one thing is because the interest rates charged on balances increase with great magnitudes.
For example, if you miss a payment, the interest rates may increase from the average 16 percent to about 31 percent or so. It most cases, just one late payment can attract an increase of 15 percent APR on the balance. There are people servicing credit card balances with interest rates as high as 35 percent.
However, you do not have to go through these challenges as there are different ways you can refinance your debt. Refinancing is simply acquiring another loan that has low interest rates and doing away with the older high interest loan. This can be achieved through credit card debt transfer, home equity loans, home equity line of credit, personal loans and peer to peer loans.
The peer to peer loans have lower interest rates, meaning that they can be used to refinance your existing high-interest credit card debt. However, for you to obtain these loans, you should have a good credit score. If you have a credit score of more than 660 points, you can apply for a p2p loan that attracts a rate of between 6 and 10 percent APR. Considering that credit card debt may attract interest rates of more than 25 percent, it means that when you switch it to peer to peer loan, you can be able to clear your debt comfortably.
And as InCharge Debt Solutions’ director of education and creative programs Karen Carlson points out, peer to peer lending can offer a viable alternative for borrowers who have been turned away from banks and other conventional lending institutions. InCharge Debt Solutions is a nonprofit credit counseling agency.
Peer to peer loans are obtained online and they are offered by companies such as Lending Club and Prosper. These two companies are the pioneers of the peer to peer lending and today, they have recorded an enormous growth. Recently Lending Club reached a record high of $1 billion in loan originations or the loans issued and this shows that the market is growing strong.
You can contact a peer to peer lending partner and get a low interest rate loan to pay off your debt. Most of the p2p loans carry a term of between 12 to 30 months. In addition, you can get a loan of up to $35,000 which can allow you to settle the debt easily. Usually, when you are refinancing, you are just changing or switching your loan to a low interest credit. It means that you acquire a new loan under different terms and conditions that allows you to settle it more comfortably than the previous one.
Peer to Peer Loans vs. Bank Loans…What Is The Difference?
The changing demands in financial lending are giving birth to new lending platforms like payday loans and peer to peer lending. Peer to peer lending is pretty a new concept that eliminates the use of banking institutions to offer credit facilities to consumers. People do not need to visit a bank to acquire loans as they get them from other people. On the other hand, investors do not need to invest in stocks or bonds but rather in the community.
Although peer to peer lending also known as person to person lending or simply p2p works similar to traditional lending, it does have its benefits. Like in banks, individuals are offered loans depending on their creditworthiness. Banks interest rates are higher because these institutions factor in overhead costs like buildings, staff and other facilities.
In peer to peer lending, the borrower and investor work directly online eliminating the need for physical infrastructure like buildings. With p2p lending, you save money as an investor or borrower. Banks need to cater for high administrative costs, infrastructure and marketing costs before they make profits. It is these costs of running banking operations that partly contribute to high interest rates than p2p lending.
You can get low interest rates of about 6.5 % on personal loans with the person to person lending. This substantiates the reason why people are turning to these kinds of loans to meet their financial needs. If you have credit card balance carrying high interest rates, you can refinance that by acquiring a p2p loan at a much lower interest rate.
Because of the risks involved in lending, peer to peer lenders like Lending Club and Prosper use eligibility standards to reduce loan defaults. Although the credit score for the borrowers does not have to be perfect, the underwriting is much stricter. The credit history of borrowers is checked including current delinquencies, bankruptcies, collection accounts, open tax liens and FICO score.
You may not be approved of these loans if your credit score is below 660 but you do not have to be discouraged as there are ways in which you can improve the score and be able to get approval for the loans. Peer to peer lenders like Lending Club and Prosper have focused on providing personal loans to borrowers with high credit score at rates, which are far much less than those offered by banks and credit card issuers.
The trend in peer to peer lending is increasing with Lending Club recording a 300% growth in loan originations in the last 12 months as at the beginning of 2013. Lending Club has reached a $1 billion mark of loans issued since its inception in 2007. The concept of peer to peer lending was initiated in 2006 with the pioneer entities being Prosper and Lending Club.
With the peer to peer loans, there is high credit quality where an average borrower has 700+ FICO score and income close to $70,000. The loans attract low interest risks with an estimated lending duration of 15 to 30 months. In addition, with this p2p lending, there is low volatility, diversification, and correlation. As more institutions invest in p2p lending, the market it is going to gain more scalability and accelerated growth. There is high cash flow with principal recovery starting within the second month.
Although peer to peer lending also known as person to person lending or simply p2p works similar to traditional lending, it does have its benefits. Like in banks, individuals are offered loans depending on their creditworthiness. Banks interest rates are higher because these institutions factor in overhead costs like buildings, staff and other facilities.
In peer to peer lending, the borrower and investor work directly online eliminating the need for physical infrastructure like buildings. With p2p lending, you save money as an investor or borrower. Banks need to cater for high administrative costs, infrastructure and marketing costs before they make profits. It is these costs of running banking operations that partly contribute to high interest rates than p2p lending.
You can get low interest rates of about 6.5 % on personal loans with the person to person lending. This substantiates the reason why people are turning to these kinds of loans to meet their financial needs. If you have credit card balance carrying high interest rates, you can refinance that by acquiring a p2p loan at a much lower interest rate.
Because of the risks involved in lending, peer to peer lenders like Lending Club and Prosper use eligibility standards to reduce loan defaults. Although the credit score for the borrowers does not have to be perfect, the underwriting is much stricter. The credit history of borrowers is checked including current delinquencies, bankruptcies, collection accounts, open tax liens and FICO score.
You may not be approved of these loans if your credit score is below 660 but you do not have to be discouraged as there are ways in which you can improve the score and be able to get approval for the loans. Peer to peer lenders like Lending Club and Prosper have focused on providing personal loans to borrowers with high credit score at rates, which are far much less than those offered by banks and credit card issuers.
The trend in peer to peer lending is increasing with Lending Club recording a 300% growth in loan originations in the last 12 months as at the beginning of 2013. Lending Club has reached a $1 billion mark of loans issued since its inception in 2007. The concept of peer to peer lending was initiated in 2006 with the pioneer entities being Prosper and Lending Club.
With the peer to peer loans, there is high credit quality where an average borrower has 700+ FICO score and income close to $70,000. The loans attract low interest risks with an estimated lending duration of 15 to 30 months. In addition, with this p2p lending, there is low volatility, diversification, and correlation. As more institutions invest in p2p lending, the market it is going to gain more scalability and accelerated growth. There is high cash flow with principal recovery starting within the second month.
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