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ETF Investors: Focus on Innovation, Not Noise

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Exchange traded fund investors who are looking for growth opportunities should consider what it means to invest in innovation and how those investments will be impacted by changes in policy.

In the recent webcast, Election Reaction: The Innovation Economy, Brian Levitt, Global Market Strategist, Invesco, helped outline what to expect from the markets that are trying to digest the Election Day results. The U.S. economy has been running at or below trend for over a decade. Meanwhile, the coronavirus pandemic and shutdown have dragged the economy down below trend. The economic disappointment has led to political volatility as the electorate consistently voted for change.

Levitt noted that contested election results may trigger market volatility but it is unlikely to affect the long-term trajectory of the economy and financial markets. While we may draw similarities to previous election years, the economic environment is vastly differently. We are currently in the midst of a new business cycle as the economy recovers, with copious amounts of both fiscal and monetary stimulus measures to support growth.

Investors should also keep in mind that markets have performed well under both parties in the Oval Office. Levitt pointed out that the S&P 500 Index delivered an average annual return of approximately 11% over the past 75 years, through both Democratic and Republican administrations, and the U.S. economy also expanded around 3.0% during that period.

“Neither party can lay claim to superior economic or financial market performance,” Levitt said.

For example, when comparing the years under Ronald Reagan with those of Barack Obama, we find that both of their starting points were similar and cumulative price returns in the S&P 500 were also comparable. They both became presidents in recessions. Equities were historically cheap. Federal Reserve policy was designed to restore health to economy. They were also both the beneficiaries of favorable demographic trends.

“The best-performing portfolio over the past 120 years was one that stayed fully invested through both Democratic and Republican administrations,” Levitt said.

We may find ourselves with a Democratic president and a divided Congress, but this does not necessarily mean anything for markets. Stock markets have historically performed best with a divided government, but it is not statistically significant based on historical data since stock markets have generated outsized returns under single-party governments as well.

Instead, investors should focus more on the accommodative policies, which should drive further market returns.

“For all the focus put on the executive branch, we would argue that it is monetary policy that matters more. The old adage holds true: Don’t fight the Fed,” Levitt said.

“Currently, the Fed is providing policy support but does not intend to cut rates meaningfully. As a result, we would expect the current environment to remain relatively benign for stocks and the yield curve to keep steepening modestly,” he added.

Investors should also keep in mind that investing purely on politics has not historically proven to be a good play. For instance, many market strategists viewed Donald Trump’s election victory in 2016 as favoring the financials and energy sectors. While these sectors led the market in the month after the election, they trailed significantly in the subsequent four years. Meanwhile, renewable energy outperformed traditional energy under the Trump administration.

As Joe Biden comes to office, many fear an inevitable tax hike. However, Levitt argued that tax increases historically have not derailed markets. U.S. equity markets, as represented by the S&P 500 Index, performed well in the fifteen months that included the year before the signings of both the Tax Reform Act of 1986 and American Taxpayer Relief Act of 2012 through the three months after the signing.

The U.S. also has more room to expand fiscal stimulus as the U.S. Federal government is not a bad credit risk, despite its $25 trillion in liabilities. Levitt noted that the U.S. has far more assets than is commonly realized. If all the land, buildings and natural resources of the U.S. economy were combined, the country would have more than $200 trillion in assets

Looking ahead, private sector ingenuity continues unabated and will drive future growth.

“Investors should be less interested in politics and far more interested in the business leaders who are going to harness the powers of artificial intelligence and robotics, create the next generation of life sciences that will cure our most debilitating diseases, address the COVID crisis, continue to evolve the nation’s energy sources, and develop new technologies and new industries that aren’t even yet on our radar,” Levitt said.

For example, John Feyerer, Sr. Director of Equity, ETF Product Strategy, Invesco, pointed out that 64 companies in the Nasdaq-100 filed at least 1 patent relating to 3D Graphics in the 12-month period ended May 2020 and collectively filed 49.0% of all such patents. Other patents include innovation and R&D in areas like natural language processing, cloud computing, virtual reality, big data, cyber security, deep learning, robotics, mobile payments, and more. About 38 companies in the Nasdaq Next-Gen 100 filed at least 1 patent relating to 26 sub-themes identified as Disruptive Technologies. For Nanorobotics, the trailing 12 months of patent activity comprised 10% of all patents filed for this technology by all companies in the Nasdaq Global Index.

The popularly watched Invesco QQQ Trust (NASDAQ: QQQ), which tracks the Nasdaq-100, 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market, has been the go-to play to access some of the largest innovative companies in the U.S. markets.

Short-term investors who prioritize liquidity could still find the attributes of QQQ most appropriate; however, longer-term “buy-and-hold” investors may be more focused on cost-savings and prefer the Invesco NASDAQ 100 ETF (QQQM), which costs 5 basis points less than QQQ.

Additionally, both longer- and shorter-term investors looking for exposure to the next generation of innovative companies to be listed on the Nasdaq may opt for the Invesco NASDAQ Next Gen 100 ETF (QQQJ). QQQJ extends this concept further by offering access to the “next 100” non-financial companies listed on the Nasdaq, outside of the NASDAQ-100 Index, offering a mid-cap alternative to the NASDAQ-100.

The combined QQQ-related offerings are part of Invesco’s new Innovation Suite. By providing different investment structures and different exposures, the Invesco QQQ Innovation Suite acts as a “one stop shop” for the NASDAQ-100 companies, plus exposure to the next 100 up-and-coming innovators. This expansion will ultimately enable investors to tilt their investment exposure towards the attributes – including varying investment time horizons, share price, or liquidity needs – they most value for their investment goals.

Financial advisors who are interested in learning more about innovative market opportunities can watch the webcast here on demand.

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How Can I Prequalify for a Personal Loan? A Guide

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When you are in need of money quickly, you very likely don’t want to sit around pondering a bunch of different options. You want to find the option that works best for you and utilise it. Unfortunately for so many people around the country, it can be difficult to get their hands on the money they need due to them having a bad credit score, or even no credit score at all.

How Can I Prequalify for a Personal Loan?

Photo, Varun Gaba.

Your credit score is thought of as being pretty important, as it shows your financial trustworthiness to financial institutions like banks, credit card companies, lenders, and more. Your credit score is one thing that will usually be considered by just about any company you apply for a loan through, so keeping a close eye on your credit score is imperative for your financial life.

No matter what your credit score looks like, knowing how you can prequalify for a personal loan can be a comforting feeling when you are in need of quick cash. After all, when you are eligible for personal loan prequalification, you feel a little better going into the loan process knowing you won’t have to wait around for a loan decision.

How is Pre-qualification Decided? Prequalifying for a personal loan can depend on several different factors that you will have to keep in mind, and it will vary greatly depending on the lender you are applying through. Here are two of the things you will need to keep in mind when it comes to your loan that could affect whether or not you prequalify for the loan.

— Your credit score; Yes, this is always going to be something you are going to need to think about. Depending on the financial institution or lender you are going through, you can bet that your credit history and score will play a huge part in whether or not you prequalify.

— The amount of your loan; How much money you plan on borrowing from the lender or bank is also going to play a part in deciding whether or not you prequalify.

To get the most out of your search for a lender that you could prequalify with, think about applying with more than just one lender. This way, you might get several pre-qualification offers, and this will allow you to sort through the lenders and decide which one works best for you.

How Can I Prequalify for a Personal Loan?

Photo, Christina @ wocintechchat.com.

The Pre-qualification Process: No matter where you are trying to prequalify for your loan through, you will find the process to be pretty simple and largely similar across most lending platforms. You will need to provide some information to the lender that will help them decide whether or not to prequalify you.

How Can I Prequalify for a Personal Loan?

Photo, Windows.

Some of the information you will need to provide includes:

— Your full name; You will want to make sure you provide your full legal name so you can make the process simple for yourself and the lender. Depending on the lender, you might also be asked to provide images of your government issued ID or driver’s license to validate your identity.

— Your income and information on your job; Your income and employment status are often considered over your credit score when it comes to pre-qualification for loans, especially if you are applying for a personal loan through a lender who deals with customers with bad credit or no credit.

— The loan amount you want; Of course, you will have to include the amount of money you would like to borrow. Make sure it is something reasonable, and something that you can realistically pay back on time.

What Will the Lender Do? If you are trying to prequalify through a lender who specialises in bad credit clients, then you won’t have to worry about your credit score being negatively affected by taking out your loan. However, if the lender reports to the credit bureaus, your payments could still make an impact on your credit score.

If not working with a specialised lender, you might find that the lender will do a soft inquiry on your credit when going through the pre-qualification process. No worries here, as this doesn’t put any dents in your score. If you prequalify for the loan you are looking for, you should get an alert via email from the lender of your choice.

The Money You Need: Hopefully, you will have prequalified for the loan you are looking for so you can ensure you have access to the money you need, when you need it. Whether you’re going through some unexpected circumstance in life or just need money to pay something off quickly, knowing you are prequalified for the loan you need is a comforting feeling, allowing you access to the cash you need for whatever you need it for.



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Are No Down Payment Auto Loans Bad?

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Qualifying for a zero-down car deal likely means having good credit and qualifying income. However, if you’re a bad credit borrower, you’d be hard-pressed to qualify for an auto loan without a down payment. Besides – down payments are typically a great idea for borrowers across all credit ranges!

Is Zero Down a Bad Idea?

Opting for a zero-down car loan isn’t a bad thing – but with a lower credit score, it’s not likely to happen. Most bad credit auto lenders require at least $1,000 down or that you bring at least 10% of the vehicle’s selling price to the table. Down payments are a requirement of most subprime (bad credit) lenders, and it’s often called having “skin in the game.”

Are No Down Payment Car Loans Bad?Research shows that borrowers with skin in the game are more likely to complete a car loan. To a lender, a borrower that brings a down payment to a deal is more likely to make their payments, complete the loan, and avoid default. It also means a higher likelihood of qualifying for the auto loan.

Down payments can widen your vehicle choices since they allow you to get into more expensive cars that are outside your preapproval amount. If you’re approved for a $15,000 auto loan, but can’t find anything for your situation, adding a larger down payment amount may open up more vehicle choices. In this scenario, if you have your heart set on an $18,000 vehicle, coming in with a $3,000 down payment could put it in your price range.

More Down Payment Benefits

Auto loans are typically simple interest loans, meaning you’re charged interest on the principal of your loan. If you combine a large loan amount, a high interest rate, and a long term, it can mean paying more than your vehicle is worth.

Remember this:

High loan amount + High interest rate + Long loan term = Paying more interest charges. A down payment can combat this, and help save you money.

For borrowers with poor credit, a high interest rate could mean paying more for your auto loan – but a down payment can soften the blow.

Down payments can help protect you from negative equity, too. Negative equity is when you owe more on the auto loan than what the car is valued at. Vehicles are depreciating assets, meaning they lose value over time, and that never stops.

Negative equity causes problems for borrowers when it’s time to sell the vehicle. If you owe thousands more on the loan than what you can sell the car for, you may not be able to sell the car. You must pay off the loan before you can transfer vehicle ownership.

If you finance a vehicle for $10,000, that car may not be worth $10,000 in a year. Most used vehicles lose around 10% to 15% of their value each year. Brand new vehicles can see around a 20% drop in value within the first 12 months of ownership! Having a down payment can help keep your auto loan in an equity position, which means you’re likely to have fewer issues selling the car if you need to.

How Much Should Save for a Down Payment?

Your down payment requirement largely depends on your credit score and the size of the loan you’re applying for. Like we mentioned, saving at least $1,000 is probably a good starting point if your credit score is less than perfect. But if the vehicle you want is expensive, it could mean having to shell out more cash than that to qualify for the loan.

How much you need to save can also depend on your monthly budget. If you want a specific vehicle but the monthly payments are too high, you can put more cash down to lower your payment and make the loan work for your situation. You can use our auto loan calculator to estimate how much you may need to put down to get your car payment where you want.

You also don’t need cold, hard cash to meet a down payment requirement. Trade-ins with equity can completely satisfy a down payment requirement if there’s enough value, or you can use a combination of cash and your trade-in. If you have a car you’d like to trade in, research its estimated value on sites such as NADAguides and Kelley Blue Book so you can see what a dealer may offer.

The bottom line with down payments is you should save as much as you comfortably can afford. Even if you qualify for a zero-down car loan, putting cash down on your next auto loan is only going to bring you benefits in the long run.

Where Can I Find Bad Credit Car Loans?

If your income or credit score isn’t quite up to snuff, then you can expect to need some cash down to qualify for vehicle financing. You may also need to work with the right auto lender to get the vehicle financing you need.

With a lower credit score, not only are you faced with a down payment requirement but also the struggle of having to find an auto lender that can work with poor credit. Most traditional auto lenders prefer borrowers with good credit. If your credit score is rough around the edges, then applying for vehicle financing through a special finance dealership could be the way to go.

Special finance dealerships are signed up with subprime lenders. These lenders specialize in assisting borrowers with credit challenges and look at more than your credit reports and score. They do require a down payment, but they can often work around tough credit circumstances.

At Auto Credit Express, we’ve amassed a nationwide network of special finance dealerships and we want to help you find one in your local area. To get matched to a dealer near you that has bad credit lending options, fill out our free auto loan request form.

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19 Auto Loans For Bad Credit Drivers (2021)

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Bad credit auto loans with reasonable interest rates can be difficult to find. While it may be hard to secure an auto loan with poor credit, it’s not impossible. Many auto lenders specialize in providing auto loans for bad credit drivers.

In this review, we’ll list several auto loan providers that offer loans for drivers with low credit, no credit, and bankruptcies. We’ll also provide tips for how to apply for a loan when you have bad credit and how to improve your credit score. While the lowest rates with the best auto loan providers may not be available to those with poor credit, a low credit score doesn’t mean a reasonable car loan is impossible to find. 

You can see bad credit auto loan offers from multiple lenders using AutoCreditExpress.com.

 

In this article:

Can You Get A Car Loan With Horrible Credit?

Yes. Even with horrible credit, it is possible to get a car loan. It usually helps if you have a steady income and/or have someone with good credit cosign your loan.

It may be difficult to find a bad credit car loan with a low interest rate if your credit score is under 600. When you look for auto financing, seek out lenders that offer prequalification. Prequalification allows you to see interest rate offers without the loan company performing a hard credit check. A hard credit check can further hurt your credit score.

Be prepared to face higher interest rates if you have poor credit. However, you can reduce the amount of interest you will pay on a bad credit auto loan if you place a bigger down payment or request a shorter loan payoff period.

 


 

19 Auto Loans For Bad Credit Drivers

The list below names 19 auto loan providers that offer loans to drivers with bankruptcies and/or poor FICO credit scores. Several of the companies listed below even specialize in bad credit auto loans. Which lender will work best for you depends on your specific circumstances, but this list is a good place to begin your search.

Don’t hesitate to submit loan applications to companies that allow you to prequalify without a hard credit check. You should only agree to a hard credit check once you plan to accept the loan offer (and after comparing prequalification offers).

Auto Loan Provider

Minimum Credit Score Required

Minimum Annual Income Required

Clearlane580$21,600
Auto Approve580$18,000
myAutoloan.com575$21,000
RateGenius550Not specified
Tresl500Not specified
Prestige FinancialNo minimum credit$27,000
VroomNo minimum credit$21,600
Auto Credit ExpressNo minimum credit$18,000
Capital OneNo minimum credit$18,000
CarvanaNo minimum credit$4,00
New RoadsNo minimum creditNot specified
Credit Acceptance CorpNo minimum creditNot specified
DrivetimeNo minimum creditNot specified
AutopayNo minimum creditNot specified
LightstreamNo minimum creditNot specified
CarmaxNo minimum creditNot specified
CarZingNo minimum creditNot specified
ByriderNo minimum creditNot specified
RoadLoansNo minimum creditNot specified
 

 


 

Applying For A Bad Credit Auto Loan

Applying for auto financing used to take place primarily in banks or at the car dealership. Today, most companies have online applications, making it easy to request and compare several auto loans at a time. You can also use a service like AutoCreditExpress.com, which lets you see personalized loan offers from multiple lenders at once. However, it’s still a good idea to apply for your auto loan at your local bank or credit union in addition to searching online.

Look for companies that offer a preapproval process that does not require a hard credit check. What this means is that you will self-report your FICO score and income information to the lender. You will then be made a provisional auto loan offer. This is not an official offer, and your terms may not be finalized until after a hard credit check. Do not submit to a hard credit check unless you are fairly confident you will accept the loan offer. You want to limit the number of hard credit checks as much as possible.

While applying, you will likely need to supply potential lenders with information such as:

  • Personal details like your name, address, age, and Social Security number
  • Gross annual income information
  • Vehicle information like model, age, mileage, and vehicle identification number (VIN)

Before you finalize your auto loan, you may also be required to supply copies of your:

  • Driver’s license
  • Recent pay stubs
  • Personal references

Your credit score is the most important factor that determines your auto loan interest rate. The tables below show the average auto loan rates by credit score for new and used car purchases, according to a 2020 Experian State of the Auto Finance Market report.

Average Auto Loan Rates For New Car Purchases
Credit ScoreAverage Auto Loan Rate
300 – 50013.97%
501 – 60011.33%
601 – 6607.14%
661 – 7804.21%
781 – 8503.24%
 
Average Auto Loan Rates For Used Car Purchases
Credit ScoreAverage Auto Loan Rate
300 – 50020.67%
501 – 60017.78%
601 – 66011.41%
661 – 7806.05%
781 – 8504.08%
 

As you can see from the tables above, auto loan interest rates increase steeply for borrowers with credit scores of 660 and below. You will also notice that interest rates for new car purchases tend to be lower than those for used car purchases. However, if money is tight, you may still save more by purchasing a used car, though you will pay a higher interest rate.

The best way to get a lower interest rate if you have poor credit is to add a cosigner with good credit to your loan. A cosigner is someone who accepts responsibility for the loan and will be on the hook with collections if you miss any payments.

While it may not lower your interest rate, placing a larger down payment or opting for a higher monthly payment can help you save money on a bad credit auto loan. A shorter loan term may also reduce overall costs. The more quickly you pay off your auto loan, the less interest you will ultimately accumulate.

 


 

Tips For Improving Your Credit Score

A good credit score is vital to saving money and has benefits beyond a low interest rate on your auto loan. In several states, your credit history may also be used to determine your auto insurance premium. If you have bad credit, you should work to improve it as soon as possible. However, raising your credit score cannot be accomplished overnight.

Some ways to improve your credit score include:

  • Open a credit card: Don’t let your credit balance get too high, and pay off your bill in full each month. This shows lenders that you are dependable and can be trusted to make your loan payments.
  • Increase your credit limits: The amount of credit you’re using affects your score. For example, if you had a credit card with a limit of $1,000 and had a balance of $500, you’d be using 50 percent of your credit. However, if you asked your bank to increase your limit to $2,000, you’d only be using 25 percent of your credit. This can raise your score.
  • Debt consolidation: Try to consolidate your debts into one place with the lowest interest rates possible.
  • Pay down existing debt: This will save you money in the long run and help your credit score.
  • Wait: Certain negative factors will fall off your report after a number of years. Hard credit checks stop affecting your score after two years. Late payments, collections, and bankruptcies fall off your report after seven years.
  • Credit monitoring: Many of the major credit bureaus, such as Experian, Transunion, and Equifax, offer credit monitoring and tools for improving your credit. Take advantage of these programs.
  • Check your report: Request a copy of your own credit report and look for errors or outstanding debts you may have forgotten about.

If you initially take out a bad credit auto loan but later improve your credit score, be sure to consider auto loan refinancing. This involves taking a new loan with better interest rates to pay off the existing loan. You may want to refinance your auto loan after your credit score moves above 660 and 780.

To start comparing auto loans for bad credit from multiple lenders, visit AutoCreditExpress.com.

 

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