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Monthly Archives: July 2018

Tips to Get Great Auto Loan Interest Rates

The loans offered can be classified into two types depending upon the interest rate, namely, fixed interest rate and the variable interest rate. A fixed interest rate is the one that does not change throughout the span of the loan which is more convenient and safer, if it is does not contain any hidden fees.

On the other hand, a variable interest rate is the one that fluctuates over the span of the loan. This would be convenient for those who would be in a position to fluctuate or better the monthly payments so that the loan can be cleared off faster. This can be decided by the borrower or the lender.

The most common mentality of the borrowers who are in an urge to own a vehicle is to brush aside or just ignore with least regard, the interest rates which will be charged on the loan. This may be due to ignorance or the difficulty in understanding the implications of the interest rates that would be charged and the overall effect it would have on the payments, even if the rates differ marginally.

Hence, it is wise to compare the various interest rates offered by the lenders considering into account every possible fee and charge that would be included into the loan. The other factors that influence the interest rates of auto loan are the period of repayment of the loan -the longer the period of repayment, the higher will be the interest rate.

Also, the fact that the loan is secured or unsecured plays an important role in determining the interest rate. Certainly, unsecured auto loan carries a heavy interest as compared to the secured loan. The credit history of the borrower also influences the interest rate. So, it is better to set right the credit score before applying for an auto loan, to get the minimum interest possible. A credit score that is above 750 is considered to be good.

Another hidden fact is that the interest rates for auto loans tend to be low towards the end of the month because lenders would like to increase the sales towards the end of the month. In addition, if the borrower can afford to make a considerable amount of down payment, it increases the chances of getting a lower interest rate since down payment is an indication of the repaying capacity of the borrower and the lender would be convinced to demand a lower interest rate.

So, a lender should be smart enough to put down his cards that are in his favor one by one to strike the best deal while opting for an auto loan.

 

What Is An Interest Only Home Loan?

This type of loan is a sub-group belonging to the mortgage loan group. But it has a major difference that makes it unique. When applying for this type of loan, the borrower will only pay the interest of the property for a specified period of time (usually lasting 5 to 10 years). In other words, during the first 5 to 10 years of the loan, the borrower will only be paying the interest rate on the loan and the principal will remain untouched. If the consumer wants, he will also be able to pay more than just interests, but it is up to each borrower. Another available option is for the borrower to pay interest only for the first years and then repay the loan in full when this period is due.

Here is an example: in a interest only loan of $100,000 at 7% lasting 30 years, the borrower would be able to pay $583 each month for the first 5 to 10 years. This payment consists only of interest. A borrower with the same deal on a regular mortgage would be making a monthly payment of $860.

Who Would Benefit From This Type Of Loan?

It is plain to see that this type for loan is not for everyone. The initial lower monthly payments might be attractive, but the true nature of interest only home loans goes beyond that. You should beware of lenders trying to force this type of loan on you because chances are, they are just trying to make a sale. Following is a list of the types of borrowers who might benefit from this very interesting option.

Case # 1: you have a job which pays wells, but this income is in the form of irregular commissions and infrequent bonuses.

Case # 2: if you are a consummated investor who is planning on investing the savings obtained during the first five years of the loan.

Case # 3: you have a decent income but you are sure you will be earning more in the years to come.

As you can see, this type of loan is not for everybody. If your objective is to purchase a property to live in, and you have a fairly good salary which would allow you to pay both the interest and the principal, chances are you will benefit more from a traditional mortgage loan.

 

Home Loan Qualification Factors

1) Credit history – One of the first steps in approving a loan is pulling the potential borrower’s credit record. This history shows not only the bad things (such as foreclosures or bankruptcies), but also the good (such as attempts of repaying debt). Using this record, loan processors try to determine how reliable you’ll be for paying back the loan that you’re asking for.

2) Liquid assets – Loan processors also want to see how much money you have sitting in checking and savings accounts. They’re not looking specifically for large sums, but rather they want to see that you generally keep enough money in your account to cover unexpected emergencies. If you’re literally living off what you make each month, lenders may assume that it’s only a matter of time before you miss a payment due to inadequate funds.

3) Debt to income – Lenders look at the ratio of money you owe to the money that you make. They generally calculate in the costs you’ll incur from the current loan that you’re requesting. So, putting in this requested home loan with previous loans (from credit cards, school, car, etc.), they’ll establish a debt to income ratio. The lower this ratio, the better.

4) Income – In order to establish this debt to income ratio, the lender will need to consider your current monthly income. The lender will ask for previous pay stubs and income tax forms in order to see that you have a stable job with stable income.

5) Loan to value – This ratio is also called LTV. Lenders calculate this number by taking the loan amount you’re asking for and dividing that number by the home’s appraisal’s value. The more money that you’ll put in the down payment, the lower this loan to value ratio is (and the better off you’ll be in the loan approval process). Lenders specifically look at this ratio because statistics show that the more money you have invested in a property, the less likely you’ll default on the loan.

6) Appraisal – Your lender will require that the home is appraised before they sign a loan over to you. This step is to ensure that the home is actually worth what you’re lending to pay for it.

 

Inexpensive Unsecured Personal Loans

When it comes down to choosing a lending company to borrow from, we just don’t look one up and borrow from them, we do a little detective work first. There may be some creditors who can offer cheaper loan rates and terms, even though the first loan offer you get seems to have the best rates and terms.

So as a smart and thrifty consumer, you’re gonna have to stick with the best one you stumble upon. Here’s a little tip you could use to narrow down the search for such a service; check out the web for online lenders. The online lenders can offer the cheaper personal loans because the have lower operational expenses and the added competition for your business is more lively.

To be competitive, some lenders cut down their loan interest rates and offer more flexible loan terms. The process for getting an online loan can be one that is “cut-throat” in nature because those lending companies are willing to do almost anything to add to their client list. The other online lenders will notice that they have lowered their rates and bent their terms, so they go with the flow and do the same, so they won’t be left behind.

Lenders who operate online sometimes will not be able to satisfy all their applicant’s needs. When your loan has been approved by an online lender, the processing and approval for their services will go much faster.

One of your easiest and best ways to get a more affordable loan is to avail yourself a cheap secured personal loan. You will be placing a certain asset as collateral, and this will in turn, lower the rates and grant you a longer payback period for this loan. But default in payment, means you may lose the collateral you put up, so being sure that you’re capable of paying all back, in the first place, is absolutely important. A cheap, unsecured personal loan, which does not require any collateral, can be obtained if you are not up for taking the risk involved with a secured loan.

A couple of the biggest problems you have to face here are higher interest rates and a payback period that is shorter and much less flexible.

You can do whatever you legally are able to do with the money, when you obtain a personal loan for yourself, whether the loan is secured by some type of collateral or if it is one that is not secured.

 

Home Improvement Loans Facts

Home Improvement Loans Nature

What makes a loan a home improvement loan is the use that the money receives. This use can be a condition for the loan approval and thus there are penalties that can be applied if you do not comply with that requirement. However, those home improvement loans that are unsecured are actually personal loans and the use you give to the money is really up to you. They are just promoted as home improvement loans to attract customers but those loans are nothing but personal unsecured loans.

Home Improvement Loans And Equity

Home Improvement Loans do not necessary require equity but unsecured home improvement loans are too expensive when compared to home improvement loans based on equity. Therefore it is always advisable to obtain a home equity loan for home improvements. These loans use the available equity on your home to secure the money borrowed and since the money is used to improve the property that will be used as collateral, qualifying for these loans is a lot easier.

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These loans let you use 125% of the value of the property as guarantee of repayment. Thus, even if you do not have enough equity on your home, you can still obtain these loans. The idea is simple: the money will be used to improve the property which will in turn raise its value making more equity available and with few monthly payments, the accumulated debt (mortgage plus home equity loan) will equal 100% of the value of the property and so, both lenders will be fully protected.

Requirements For Approval On Home Improvement Loans

Home improvement loans, especially those based on equity are very easy to qualify for. The risk involved in the transaction is very little. The chances of default are greatly reduced and in the event of default, repossession assures the lender that he will recover the investment. Therefore, a moderate credit score and history will be enough; there is no need for your credit to be good or perfect. Only serious delinquencies like bankruptcies or defaults can ruin your chances. Other than that, your income needs to let you afford the payments with ease. There are no further requirements because as the loan is used for improvements, it raises the value of the property which is the asset guaranteeing repayment.

Legally Fixed Purpose On Home Improvement Loans

Do remember that on most home improvement loans the fact that the loan has to be used for making home improvements is one of the contract’s clauses. Therefore, you may be required to show proof of the improvements you are going to make like constructor’s plans, designer’s plans, etc. Any other use can result in the cancelation of the loan program and the payments becoming immediately due. Therefore, be careful and read the contract thoroughly.