Connect with us

Bad Credit

5 steps to getting a low-interest personal loan

Published

on

With the number of expenses that we need to lead in our lives today, the last thing anyone wants to do is to keep throwing money away at unprofitable things like the interest on a loan. If anything, interests don’t give us any value in return for the money we spend on them, other than extending the duration of our loan term. So, if there’s any chance that one can do to reduce them to the barest minimum, why wouldn’t anyone want to take it?

To that end, here is how you can get your hands on those rare low-interest personal loans.

Step 1) Ensure your home is in order – that is, check your credit report and history

Would you believe if I told you that at least 2 in every 5 credit reports have errors and bad statements on them? Well, strange as that may sound, it is the basic truth. But what makes this even more disturbing is the fact that most credit owners, with errors in their reports, don’t even know. And many of them proceed to request loans from lenders, and as expected, they get turned down or offered a loan at astronomical interest rates.

The report on your credit history goes a long way to determine how potential creditors will deal with you. And if there’s any report on your history to suggest that you’ve defaulted on a payment in the past, used schemes such as IVA debt help to get bailiff help, or made a late payment, a potential lender might decide to charge you high interest.

So before you apply for any loan, check out your credit report, and if there are any errors or bad statements, write a letter of goodwill to your former creditor asking them to pardon your default or past late payment and remove the statement from your report. But be sure to make the letter convincing.

Step 2) Get a cosigner

Another wonderful tactic being used by many low-interest loans seeking applicants is to get a cosigner to agree to take shared legal responsibility for the loan.

Usually, the act of using a cosigner to cosign a loan is often reserved for borrowers with bad credit scores, so as to safeguard the interest of the lender in case the borrower decides to do what their credit report says they did in the past.

However, when you have a good-to-decent credit score and still approach a lender with a reputable cosigner – perhaps someone of a great reputation in the society – the chances are that the lender will be more lenient in terms of the interest charged on your loan.

Step 3) Shop around for lenders

Now that you’ve gotten your former creditor to erase the bad record on your credit report and spoken with that reputable man in your society to cosign with you, the next thing for you to do is to shop around among different personal loan lenders.

Logically, you might be tempted to want to settle for the first lender that you approach. But you’d be surprised to know that there are a lot of variations out there when it comes to personal loans. And the number of lenders you’re able to access will determine the kind of terms you find in the end.

So, you should speak with many potential lenders – such as peer-to-peer lenders, banks, credit unions, and online – and get different quotes from them.

Step 4) Look into getting a secured loan

After making a final decision on the lender to use, you can then approach them with interest in secured loans. Secured loans are loans that are backed with collaterals. Usually, these types of loans tend to carry less risk for the lender, and as such, are offered at reduced interest rates.

Imagine that you’re able to find a consigner, have a decent credit score, shop around for a lenient lender, and still opt for a secured loan, how reduced do you think the interest to be charged on your loan would be?

Step 5) Go for short-term loans

Short- term loans tend to attract low interests because lenders aren’t tying up the money for as long, and there’s less time for something to go wrong that leads to default.

If you can agree to pay back a loan within the shortest time possible, most potential lenders will be willing to have a deal with you at a much-reduced interest rate. However, if you’re scared that you may not be able to fulfill the payments within the short period you’ve agreed, remember that you can always use schemes like an IVA to renegotiate and extend the payment duration.

This content was provided by one of Daily Hive’s client partners. Daily Hive was not involved in the creation of the content.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Bad Credit

Can You Return a Financed Car Back to the Dealer?

Published

on

Returning a vehicle to a dealership isn’t as simple as returning a shirt that didn’t fit right. If you’re in a position where you need to return a car, you may have a few options, but your loan balance plays a key role in what you can do.

Returning a Car to a Dealer

Can You Return a Financed Car Back to the Dealer?The hard truth is that most auto dealers aren’t going to let you return a vehicle that you’re financing. Some dealerships have a return policy – sometimes around a seven-day guarantee when you’re financing a car sight-unseen without a test drive – but most don’t offer one. It won’t hurt to give your dealer a call and ask, but most franchised dealerships don’t have return policies.

When you finance a vehicle with an auto lender, the car’s title has a lien on it, which names the lender as the lienholder. This gives them ownership rights, and prevents you from transferring ownership of the vehicle until the loan is paid off.

Once the loan is complete, the lien is removed and the car is yours. If you need to get out of the auto loan before your loan term is over, you can sell the vehicle privately and pay off the car loan. Selling the vehicle to a private party may get you enough money to remove the lien and relinquish yourself from the auto loan pretty easily. You wouldn’t be returning the car to the dealer, but you can get out of the auto loan this way.

If you try to sell it back to the dealership, they may not offer you enough money to cover your loan balance. Trade-in values are typically less than the actual cash value (ACV) of the vehicle.

If you find yourself in a negative equity position where you owe more on the car loan than the vehicle is worth, you may have a more difficult time selling the car early to repay your loan. However, if you’re in this position, you still may have a way to get out of the loan and get into another vehicle.

Rolling Over Your Auto Loan

Some auto lenders offer loan rollovers. Put simply, you add the remaining balance of your current car loan onto your next one.

It works like this:

You have an auto loan with a balance of $15,000, and you want another vehicle that’s selling for $16,000. You sell your car back to the dealer because it’s not the right fit for you, but the dealership only offers you $10,000 for it. That $5,000 still needs to be paid, so it’s added to your next auto loan balance of $16,000, turning the balance into a grand total of $21,000.

While you got to sell your vehicle and get into something else, you’re starting out a loan with a lot of negative equity. If you need to sell this next car for something else, it means you may have to roll over negative equity again … and maybe again. This is called the trade-in treadmill, and once you get running on it, it’s hard to get off.

Rolling over negative equity onto your next auto loan should be considered one of the last resorts if you really need to sell your vehicle. However, there is one actual last resort if you want out of your car loan.

The Actual Last Resort: Giving the Vehicle Back

If you can’t sell the vehicle to a private party, a dealer won’t buy it, and you don’t have the option to roll over your auto loan, then you may have to consider voluntarily surrendering the car to the dealership.

This is commonly called a voluntary repossession. Voluntary or not, it’s classified as a repossession on your credit reports. Once you return the vehicle, it’s considered a default because you’re no longer making payments. The car is then prepped to be sold at auction, and the proceeds from that are applied to your remaining loan balance. If the loan isn’t completely paid off, called the deficiency balance, you still owe that to the lender.

Having a repossession listed on your credit reports, and the possibility of still owing your lender money after the auction sale, is why a voluntary repo should be considered a last resort. You may be better off to continue making the payments on the vehicle, since a repo can make it difficult to get into another auto loan with most lenders for at least one year.

Refinancing Your Car Loan

If you’re thinking about returning your car to the dealer because you can’t afford the payments, but still want to keep the vehicle, then consider refinancing the auto loan after one year. Most refinancing lenders consider a car loan for refinancing after hitting that one-year mark.

Refinancing is replacing your current auto loan with another one, hopefully with better terms. Nearly everyone that refinances is looking for a more affordable monthly payment. Refinancing can give you the chance to qualify for a lower interest rate than what you initially got, and it could give you the opportunity to extend your car loan, which lowers the monthly payment as well.

To refinance, you must have had your auto loan for at least one year, and lenders typically require that you haven’t had any missed or late payments on the loan. Generally, your vehicle should have less than 100,000 miles and be less than 10 years old to qualify, too.

If you think refinancing is the right path for you, click here for more information.

Need Another Auto Loan?

It can be stressful if you want out of your current car loan, or if you simply don’t want the vehicle anymore. This circumstance can be even more frustrating if you have poor credit. It can be tough to find auto financing with a lower credit score, but we’ve made it easier here at Auto Credit Express.

We’ve cultivated a network of dealerships that spans the whole country, and we want to look for a dealer that’s signed up with bad credit lenders just for you. Get started with zero-obligation and no cost whatsoever by filling out our free car loan request form. We’ll get right to work finding a local dealership that can assist people in unique credit situations.

(function(d, s, id){ var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) {return;} js = d.createElement(s); js.id = id; js.src = "http://connect.facebook.net/en_US/sdk/debug.js"; fjs.parentNode.insertBefore(js, fjs); }(document, 'script', 'facebook-jssdk'));

Source link

Continue Reading

Bad Credit

Bill prohibiting Virginia landlords from denying tenants with bad credit sent back to lawmakers | Virginia

Published

on

(The Center Square) – Legislation prohibiting Virginia landlords from denying tenant applicants because they accrued bad credit or were evicted for the inability to pay rent during the COVID-19 pandemic has been sent back to the General Assembly with a technical amendment from Gov. Ralph Northam. 

The amendment does not change the substance of the bill, but it provides clarification. Lawmakers are expected to approve the amendment.

House Bill 5106 would apply to tenants who received bad credit or were evicted between March 12 and 30 days after the governor’s state of emergency ends. It would apply only to landlords who own more than four dwelling units or who have at least a 10% interest in more than four dwelling units.

The bill was sponsored by Del. Joshua Cole, D-Fredericksburg.

Northam also proposed an amendment to a bill last month that would require landlords to provide a payment plan before they can evict tenants. This bill has the same exemption for smaller landlords.

Source link

Continue Reading

Bad Credit

Bad Credit Mortgage Lenders | The 6 Best Lenders Of 2020

Published

on

Bad credit? These lenders might be able to help

Just because your FICO score isn’t as good as you’d like, doesn’t mean you’re stuck with a bottom-tier mortgage lender.

In fact, some of the very best lenders out there are willing to help borrowers with credit scores near or below 600.

Of course, not everyone will qualify. And your rate will be higher than a “prime” mortgage borrower.

But you can still shop around for the best interest rate, fees, and customer service, just like any other home buyer.

Here’s where we recommend starting your search.

Get matched with a mortgage lender (Nov 27th, 2020)

Company Minimum Credit Score Stands Out For 
New American Funding 580 Low credit minimum, top-rated service
Guaranteed Rate 580 Lowest rates on average
Freedom Mortgage 540 Low credit minimum
loanDepot 580 Fully-online lending
Caliber 580 Highly rated customer service
Navy Federal Credit Union* 580 but exceptions possible Flexible credit requirements for veterans

Get matched with a mortgage lender (Nov 27th, 2020)

*Navy Federal Credit Union only serves veterans, active-duty service members, and select military-affiliated personnel 

Editor’s note: The Mortgage Reports may be compensated by some of these lenders if you choose to work with them. However, that does not affect our reviews. See our full editorial disclosures here.


In this article (Skip to…)


The 6 best bad credit mortgage lenders

1. New American Funding 

We liked New American funding when we wrote its full lender review. And we still do. But what gave it our #1 slot?

To start with, New American Funding (NAF) examines each mortgage application on its own merits rather than taking a tick-box approach.

That means it can sometimes be more sympathetic to those who’ve had financial problems in the past, including credit issues.

Additionally, NAF offers:

  • Competitive mortgage rates, on average
  • Strong customer reviews and very few complaints
  • A wide range of types of mortgages, including FHA loans with a minimum credit score requirement of 580.
  • Flexible customer service: in-branch, online, by phone, or any combination
  • Fast turnaround. NAF says, “We guarantee that your loan will close in 14 business days. Period,” according to its website (this includes purchase mortgages only; not refinances)
  • A constructive approach to down payment assistance programs
  • An A+ rating with the Better Business Bureau (BBB)
  • A bilingual call center with English and Spanish

The only big drawback to New American Funding is that it’s not licensed to lend in New York state or Hawaii.

But if you live in any of the other 48 states, this lender is likely worth a look for a bad credit home loan.

2. Guaranteed Rate

Guaranteed Rate may not be quite as skewed toward borrowers with bad credit as New American Funding. But it still approves applications from people with scores as low as 580.

And it’s strong in other respects:

  • Highly competitive mortgage rates and origination costs
  • Excellent reputation for customer service and few complaints
  • A comprehensive range of mortgage products
  • Licensed to lend in all 50 states
  • A+ BBB rating
  • 300-strong branch network if you prefer to work face to face
  • Highly praised technologies deliver a good online experience

Guaranteed Rate had the second-lowest average mortgage rate among our top lenders in 2019. (The lowest of all was Navy Federal Credit Union, but it’s only available to veteran and military borrowers.)

Of course, if your credit is on the low end, your rates will likely be above average.

But when you start with a lender that’s known to offer low rates, you may have a better chance at getting a good deal.

Verify your new rate (Nov 27th, 2020)

3. Freedom Mortgage

Although Freedom Mortgage is an expert at VA loans (those for veterans and service members), it offers a good range of other mortgage products.

Freedom Mortgage may even approve FHA loans for some borrowers with scores as low as 540. Here’s what else you need to know:

  • Rates are generally competitive, though average loan fees are a bit higher than some other lenders on this list
  • Takes into account “non-traditional credit histories.” So if you have a sparse credit history, it may look at on-time payments for things like rent, utilities and so on, which don’t typically appear on credit reports
  • Praised for customer service on many online forums
  • Traditional, personalized approach, meaning you can expect more face-to-face or phone encounters. There’s not much of an online experience
  • Licensed in all states and has branches in 26

It’s definitely worth getting a personal quote from Freedom, especially if you’re a veteran or service member in the market for a VA loan.

4. loanDepot

Like many on this list, loanDepot is a fairly recent, tech-first mortgage lender.

loanDepot has only been around since 2010, but during that time it’s grown to the fourth biggest mortgage originator in the US, largely on the back of its innovative lending technologies.

Here’s the lowdown:

  • Minimum credit score of 580
  • The 5th highest score in J.D. Power’s 2020 mortgage origination satisfaction study and an A+ BBB rating
  • Typically has very fast loan processing with many parts of the lending process automated
  • Not the lowest rates or fees on our list, but generally competitive
  • Higher rate of CFPB complaints than most on our list
  • Licensed in all states with branches in 43 states
  • A wide portfolio of loan types

If you’re a big fan of technology and prefer an online application process, loanDepot may be a good option for you.

5. Caliber Home Loans

Caliber delivers a much more personalized and engaging sort of customer service than those who encourage more online interactions.

It has some slick technologies in its back office and may offer faster-than-average closing times. But you’ll be dealing with a person rather than a screen.

Here’s what to expect from Caliber Home Loans:

  • Competitive rates and costs
  • Minimum credit score of 580
  • Few customer complaints to the CFPB
  • Good customer reviews online
  • An A rating from the BBB
  • Licensed in all 50 states
  • Happy to work with down payment assistance programs
  • Great range of types of mortgages

If you prefer to work with humans rather than computers, Caliber is a shoo-in for your shortlist.

6. Navy Federal Credit Union 

Navy Federal Credit Union is a special case. To start with, it’s a credit union, and only members can get loans from it.

Navy Federal membership is restricted to veterans, service members, and others with close affiliations with the military. For that reason, it’s a specialist in VA loans.

For those who are eligible for membership, Navy Federal Credit Union offers:

  • The lowest average mortgage rates and fees on our list (though part of that can be chalked up to its focus on VA loans, which have lower interest rates)
  • No minimum credit score. Navy Federal says, “A member’s approval isn’t determined by just one number — but by several factors,” meaning it will likely consider lower scores with compensating factors and non-traditional credit histories
  • Highest J.D. Power customer satisfaction score on our list
  • But also the highest proportion of CFPB complaints
  • A+ BBB rating
  • No FHA or USDA loans. If you’re not eligible for a VA loan, you may need to look elsewhere
  • Good online services, including an app that lets you track your loan application’s status

If you’re eligible for membership and a VA loan, you’ll want Navy Federal on your shortlist.

Get matched with a lender (Nov 27th, 2020)

What’s considered ‘bad credit’ for a mortgage? 

We’re talking about bad credit mortgage lenders here. But what exactly is “bad credit”?

Many lenders follow the scoring model from FICO, the company that created the most widely used scoring technologies. It reckons that anything below 580 counts as “poor.”

If your score is in the 580-669 range, it’s actually considered “fair.” If it’s between 670 and 739, it’s “good” — and anything above that is “exceptional.”

  • Below 580 — Bad credit
  • 580-669 — Fair credit
  • 670-739 — Good credit
  • Above 740 — Excellent credit

However, it’s important to understand that the definition of “bad credit” can vary, because lenders are free to define their own score ranges how they like.

That means what one lender considers a bad credit score could be perfectly acceptable to another lender.

Just because your score is in the poor range, that doesn’t mean you can’t get approved for a mortgage. But you’ll likely need a sizable down payment and a good story that explains your low score and shows that its cause is in your past.

You’re also likely to have to seek out a sympathetic lender. And that’s where our list of the best bad credit mortgage lenders can come in handy.

Verify your mortgage eligibility (Nov 27th, 2020)

How a low credit score affects your mortgage 

Even if you’re approved for a loan, a low score means you’re going to pay a higher mortgage rate than someone with a better score. That part is unavoidable.

How much higher? FICO has a calculator that could give you an idea. It actually doesn’t go below 620, but it can give you a feel for the difference a credit score makes.

Here’s how the numbers looked for a $250,000 mortgage (though keep in mind that these will vary as mortgage rates change daily):

Credit score range Estimated APR* Monthly payment Total interest paid over 30 years
680-699 2.757% $1,020 $118,000
660-679 2.971% $1,050 $128,000
640-659 3.401% $1,100 $149,000
620-639 3.947% $1,200 $177,000

*Interest rates and payments were sampled in November 2020 and may not reflect current market rates

The monthly differences may look small. But you can see that even paying just $30 more per month, your total interest costs go up by $10,000.

As credit scores go lower, the difference in interest rates and payments grows.

Verify your new rate (Nov 27th, 2020)

Bad credit mortgage loan options 

Of course, you’re not just seeking out the best lenders for people with bad credit. You need a type of mortgage that can accommodate your needs. Here are the main ones:

  1. FHA loans — FHA loans, backed by the Federal Housing Administration, are the most popular option for borrowers with bad credit. Most borrowers need a minimum credit score of 580 and a 3.5% down payment to qualify. But if you can make a 10% down payment, you may be approved for an FHA mortgage with a credit score of 500-579
  2. VA loans — VA loans have no formal minimum credit score. But most lenders want at least 620. Some go as low as 580. And a few, such as Navy Federal Credit Union, don’t specify a score and may be sympathetic if yours is low for a good reason. We excluded Veterans United from our list because it wants a 660 credit score or better
  3. USDA loans — USDA loans typically require a credit score of at least 640 — so they may not be the best for low-credit borrowers. But if your score is high enough, you can use a USDA loan to purchase a home with no down payment
  4. Non-conforming loans — These loan programs, for which banks and lenders set their own rules, may allow credit scores below 600

Conventional mortgages — loans that conform to standards set by Fannie Mae and Freddie Mac — require a minimum score of 620 and a 3% down payment. That’s why FHA loans are more popular among those with lower credit scores.

Non-conforming loans do not meet the standards set by Fannie Mae and Freddie Mac, meaning they’re not eligible for backing from those agencies.

As a result, non-conforming loans typically have higher interest rates — but they may be available to borrowers with low credit scores.

Pick the type of loan that suits you best. If you’re eligible for a VA loan, it’s likely to be one of those.

Find the right home loan for you (Nov 27th, 2020)

Credit score vs. credit report

It’s easy to fixate on your credit score — the single number that represents your reliability as a borrower.

But mortgage lenders don’t just look at this number. They also do a thorough review of your credit report.

Your credit report shows your full history as a borrower.

If you have a low score because of a past event — like a foreclosure — but you’ve been a reliable borrower since then, lenders might be more forgiving.

On your credit report, lenders want to see:

  • A history of on-time payments
  • Reasonable credit usage (below 30% of your full credit limit is best)
  • No new credit lines opened near the time you’re applying for a mortgage

Refinancing with a low credit score 

How easy it is to refinance with bad credit will depend on your current loan type, and what you want your refinance to achieve.

Streamline refinancing

If you currently have a government-backed loan, you may be in luck.

FHA, VA, and USDA all offer Streamline Refinance programs that do not require credit score approval. However some lenders check credit anyway, so you’ll have to search for one that doesn’t.

To use a Streamline Refinance, your new loan must be the same type as your current one — for instance, refinancing a VA loan to a VA loan, or FHA to FHA.

Conventional loan refinance

Conventional refinances, like conventional home purchase loans, require a credit score of at least 620.

If your current mortgage is a conventional loan and your credit score has fallen, you may be eligible for an FHA refinance. However, FHA loans require expensive mortgage insurance. This could eat up enough of your savings that refinancing isn’t worth it.

Cash-out refinancing

If you want a cash-out refinance, you’re likely to need a higher credit score.

FHA cash-out refinancing typically requires a credit score of 600 or higher. And a VA cash-out refinance will often require at least 620.

If you currently have a conventional loan but your credit score isn’t high enough for a conventional cash-out refinance, an FHA cash-out refinance might help you access your home equity.

Verify your cash-out refi eligibility (Nov 27th, 2020)

What to do if your credit score is too low for a home loan

The obvious way to get a mortgage with bad credit is to improve your score. You may be surprised how quickly you can make a material difference.

For tips on how to raise your credit score fast, read our Guide to improving your credit score.

There are other ways to qualify for a mortgage with bad credit, too.

  1. Pay down as much existing debt as you can — If you’re a more attractive borrower in other respects, lenders may be more forgiving about your score. Paying down existing debts, like credit cards and auto loans, improves your debt-to-income ratio. This has a big impact on your home loan eligibility
  2. Build up your savings — Making a bigger down payment can also help your case, as it reduces your risk to the mortgage lender. Borrowers with a cushion against financial problems are less likely to default. If you’re able to make a 20% down payment, a low credit score might not matter as much
  3. Qualify on a friend’s or relative’s good credit — If you can get someone with good or great credit to co-sign your mortgage application, your problems may be over. But it’s a huge ask because your loved one could lose a lot of money and creditworthiness if your loan goes bad

We wouldn’t recommend asking for a co-signer in any but the most exceptional circumstances, because this can be a huge risk to the person helping you out. If your loan defaults, they’re on the line for the money.

Instead, we recommend steadily building up your credit score.

Even if you can’t pay off big debts in full, making on-time payments and keeping your credit usage under 30% can go a long way toward improving your score and boosting your mortgage eligibility.

How to find the best mortgage rate with bad credit 

Some lenders specialize in “top-tier” borrowers, who have excellent credit scores, bulletproof finances, and large down payments.

But other lenders, including the six on our list, are perfectly comfortable helping those with damaged credit.

So shop around to see who can offer you the best deal. And if one lender turns you down, don’t assume they all will — because that’s not how mortgage lending works.

Each lender’s business priorities can change from day to day. And different lenders offer different deals.

So putting some effort into comparison shopping could find you the loan you want at the best rate you can get.

Verify your new rate (Nov 27th, 2020)

Review methodology

To find the best bad credit mortgage lenders of 2020, we started by looking the 25 top lenders on a 2019 market share report from federal regulator the Consumer Financial Protection Bureau (CFPB). We also looked at a few major online lenders, as these companies are growing in popularity.

We whittled that down to our six best by filtering out lenders that required credit scores over 580; charged higher mortgage rates than the average among all top lenders; or didn’t offer FHA loans, because many home buyers with poor credit rely on those.

And we took other factors into consideration. Did a lender have a disproportionate number of customer complaints filed with the CFPB? Did it get too many negative customer reviews on online forums? Did it receive a bad rating from the Better Business Bureau? Did it do well in the J.D. Power 2020 U.S. Primary Mortgage Origination Satisfaction Study?

We didn’t automatically exclude lenders based on those last four. But you’ll find the details as you read the following reviews of each of our finalists.

Verify your new rate (Nov 27th, 2020)

Source link

Continue Reading

Trending