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Loans Bad Credit Online – Loans Bad Credit Online – Bad Credit Credit Cards – The State of American Debt Slaves: Q4 2020. Consumer Borrowing in Weirdest Economy Ever | Fintech Zoom | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Bad Credit Online – Bad Credit Credit Cards – The State of American Debt Slaves: Q4 2020. Consumer Borrowing in Weirdest Economy Ever | Fintech Zoom | Fintech Zoom

Loans Bad Credit Online – Bad Credit Credit Cards – The State of American Debt Slaves: Q4 2020. Consumer Borrowing in Weirdest Economy Ever | Fintech Zoom

Bad Credit Credit Cards – The State of American Debt Slaves: Q4 2020. Consumer Borrowing in Weirdest Economy Ever

Amid enormous shifts and distortions in consumption and trillions of dollars handed out by the government and the Fed.

By Wolf Richter for WOLF STREET.

American consumers – those hundreds of millions of mythical creatures whose sole job is to consume more than they make – have paid down their credit cards again. In December, the crucial month for overspending with borrowed money, credit card balances and other revolving credit ticked down 0.3% from the prior month, to $976 billion, seasonally adjusted (green line in the chart below), according to the Federal Reserve Friday afternoon. This was down 10.8% year-over-year, the steepest year-over-year decline ever.

On a not seasonally adjusted basis (red line), credit card balances normally spike in December during the holiday shopping melee. But last December they didn’t spike nearly enough and fell 10.8% from the prior year, also the steepest year-over-year percentage drop, to $976 billion, a balance first reached in the good old days of September 2007.

The seasonally adjusted balances are pegged to the not-seasonally adjusted December balances. That is why in the chart above, the green line (seasonally adjusted) is always way higher than the red line (not seasonally adjusted) except in December when they match. The idea of those big seasonal adjustments is to iron out the big seasonal volatility of credit-card usage.

The 10.8% year-over-year decline beat the prior record decline of October 2020 (-10.3%) and the prior steepest declines ever (-9.9%) in January and February 2010 during the Financial Crisis.

The $600 stimulus payments that started going out at the very end of December are likely not yet reflected in the data but will show up in the January data. And then there will be the next stimulus payments now being worked on in Congress. So the decline in credit card balances is likely not over yet:

Until the Financial Crisis, there had never been a year-over-year decline in revolving credit balances. That was a new phenomenon, after decades during which Americans had amassed ever more credit card debt, buying things they couldn’t afford and paying breath-taking interest rates for the privilege. And so they did their job and consumed and cranked up the consumer economy.

That scheme blew up during the Financial Crisis, when masses of credit card borrowers defaulted and let banks eat the losses, along with the losses from their defaulted mortgages.

Now we have the second period of year-over-year declines, and it’s the steepest ever, but it’s not caused by defaults, but on one hand by huge amounts of government stimulus money in various forms, and on the other hand, by limits to consumption: Many services – restaurants, bars, sports venues, concerts, hotels, cruises, flights to exotic destinations, etc. – have become partially or totally unavailable.

Some of this money that would have been spent on these services was spent on goods, and the amounts of money spent on durable goods in 2020 spiked to records:

And some of the money that would have been spent on services and would have been added to credit card balances, was saved and a portion of these savings were used to pay down credit card debt. This has all become part of the Weirdest Economy Ever.

Auto loans.

The thing that happened with driving-obsessed Americans in 2020 was a 15% plunge in new vehicle sales, in terms of the number of vehicles sold: Only 14.46 million new vehicles were sold (red column) which took sales back to where they’d been in the 1970s:

And used vehicle retail sales fell 6.25% in 2020, to 19.5 million vehicles, according to estimates by Cox Automotive.

But even as total new and used vehicle volume dropped sharply in 2020, prices spiked by 15% year-over-year in used vehicles during the summer and fall. And consumers with money – the beneficiaries of working from home and the Fed’s money printing – shifted to more expensive new vehicles, particularly trucks. All combined, they bought fewer new and used vehicles, but they paid a lot more for them, and they therefore financed (including leasing) more in aggregate.

So balances of auto loans and leases – despite the decline in unit sales – rose to a record of $1.23 trillion at the end of 2020, up 3.5% from a year earlier:

Student loans.

The thing that happened with student loans in 2020 is automatic forbearance for federal student loans, the vast majority of student loans. No one has to make payments on those loans. Forbearance has been extended through September 2021. So the normal loan principal payments, which had already slowed to a trickle in prior years due to the many deferral programs, further slowed.

And new student borrowing was added to the top of this pile, which in Q4 grew by 3.7% from a year ago to a record $1.7 trillion, not seasonally adjusted, according to the Federal Reserve Friday afternoon. Nevertheless, it was the smallest year-over-year growth in the data going back to 2006, likely due to drastically reduced spending on room and board as many colleges and universities switched to remote classes, with many students living at home:

Total non-housing consumer debt.

Given the year-over-year plunge of credit card balances and the increase in auto loans and student loans – but not including housing-related debts, such as mortgages and HELOCs – total consumer credit at the end of 2020 edged up 0.2% from a year earlier, to $4.16 trillion, but was a hair below the record of Q1 2020:

And this borrowing — or failure to borrow enough, as it were — is taking place in an economy with enormous shifts and distortions amid trillions of dollars handed out by the government and the Fed, where some people have hugely benefited, and others have gotten crushed, as at least 10 million more people are still unemployed than were a year ago:

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Bad Credit Credit Cards – The State of American Debt Slaves: Q4 2020. Consumer Borrowing in Weirdest Economy Ever

Loans Bad Credit Online – Bad Credit Credit Cards – The State of American Debt Slaves: Q4 2020. Consumer Borrowing in Weirdest Economy Ever | Fintech Zoom

Loans Bad Credit Online – Loans Bad Credit Online – Bad Credit Credit Cards – The State of American Debt Slaves: Q4 2020. Consumer Borrowing in Weirdest Economy Ever | Fintech Zoom | Fintech Zoom

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Do Personal Loans Have Penalty APRs?

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Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

When you make your credit card payment late, you’re often subject to late fees and a penalty APR, which is a temporary spike in your interest rate.

The Blue Cash Preferred® Card from American Express, for instance, has a 13.99% to 23.99% variable APR, but the penalty APR is a variable 29.99% (see rates and fees). Penalty APRs usually last for at least six months, but card issuers often reserve the right to extend them — especially when you continue making late payments. A look at the terms for the Citi® Double Cash Card show us that the “penalty APR may apply indefinitely.”

Penalty APRs are certainly not a trap you want to fall into, but it’s not something you usually have to worry about if you have a personal loan. Personal loan lenders can, however, charge late fees upwards of $39 per late payment. Whether your loan charges late fees all depends on how good of a loan you qualify for, and that comes down to your credit score, borrowing history and ability to make your payments.

Personal loans also tend to charge lower interest rates than credit cards, too. The average personal loan interest rate for two-year loans is currently 9.46% according to Q1 2021 data from the Federal Reserve, compared to 15.91% for credit cards.

Typically, interest rates for personal loans range between roughly 2.49% and 24%, but personal loans for applicants with bad credit can come with even higher APR — so do your research before applying.

Other common personal loan fees include:

  1. Interest: The monthly charge you pay to borrow money
  2. Origination fee: A one-time upfront charge that your lender subtracts from your loan to pay for administration and processing costs
  3. Late fee: A one-time fee charged for each payment that you fail to make by the due date or within your grace period
  4. Early payoff penalty: A fee incurred when you pay off your balance faster than planned (because the lender misses out on months of expected interest payments)

As you can see, personal loans can be costly, even without a penalty APR. It’s obviously best to avoid paying extra fees whenever possible. That’s easier to do when you have a good to excellent credit score, since you’ll qualify for better loan options.

Select has a free tool to help match you with personal loan offers without damaging your credit score.

None of the loans on our best personal loan list charge origination fees or early payoff penalties, but some may charge late fees.

Our top picks for best personal loans

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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Early Termination of a Car Lease

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If you’re leasing a vehicle in order to save money, but are thinking of terminating your lease contract early, you may want to think twice. Leases aren’t always as easy or as affordable to get out of as auto loans.

Can You Terminate Your Car Lease Early?

In most cases, you can get out of an auto lease early, but you may not be able to do it cheaply.

Leasing typically comes with fees both at the beginning and end of your term. However, if you need to get out of your lease early, there may be early termination fees (ETF), making the cost more than you bargained for.

Additionally, lessors often require you to pay all your remaining lease payments in one lump sum before releasing the contract early. Costs involved with getting out of your car lease early may also include:Early Termination of an Auto Lease

  • Excess mileage charges
  • Wear and tear fees
  • Any taxes not yet collected
  • Any negative equity
  • Storage and transport fees
  • Pay the cost of sale preparation

Check your lease contract to see if your lessor has any charges for terminating your lease early, or if there are stipulations that prevent you from getting out of the contract before a certain time. Even if there are extra fees imposed on you for returning your leased vehicle early, it might be easier to terminate a lease nowadays than it’s been in the past.

Since the pandemic, many dealerships and lenders have pushed into the digital realm to get business done. This includes video conferences to meet with dealers that typically needed to be done in person in the past. Of course, your vehicle still needs to be turned into a franchised dealership to be inspected and processed before a leasing company allows you to terminate your lease contract early.

Is it Worth it to Terminate Your Lease?

The first step is to look at your leasing contract and see if you even can get out of your lease early, and how much it’s going to cost you in ETFs. Then, you need to gather the following information:

  • Your monthly lease payment amount
  • How many payments you have left on your contract
  • The residual value of the vehicle

To figure out a good ballpark figure for getting out of your leased vehicle early, add together the cost of your remaining lease payments and any ETFs. To see if it’s worth it, compare this figure with the buyout price at the end of your lease, and find out what the current market value of the car is by checking sites like Kelley Blue Book and NADAguides.

Depending on how close you are to the end of your lease term, if the buyout price on the vehicle is significantly lower than the early termination price, it may be a good idea to wait it out. Then, once you buy out your lease, you can trade in the car for something else.

If you decide not to wait, how you handle getting out of your leased vehicle early could depend on the difference between the current market value of the car and the residual value of the vehicle as predetermined in your leasing contract. If the car has more value than the lessor predicted, you may be able to sell it for enough to pay your way out of your lease early.

Three Options for Terminating Your Lease Early

If you’re looking to get out of your lease early, for whatever reason, you typically have three options:

  1. Sell your leased car to a dealer – Selling your leased car to a dealer is similar to doing a trade-in, except they pay off your lease contract, including the early termination fees. It’s typically a pretty easy process, especially since used vehicles are in high demand since the pandemic. You may be able to get a little more for a car that’s coming off a lease since the turnaround time on a sale is likely to be shorter, depending on demand. If this is the case, you may even be able to walk away with some cash in hand depending on if the dealer’s willing to pay more than the lessors estimated residual value on the vehicle.
  2. Have someone else take over your lease – Lease assumption isn’t always something you can do, but in many cases, you can transfer your lease to someone else, as long as they meet all the lessor qualifications and there’s equity in the vehicle.
  3. Lease buyout – With the demand for used vehicles at affordable prices up right now, you may be able to buy out your lease then sell the car privately as long as you get enough money to make it worth your while. If you can’t come close to selling it yourself for the amount you need to pay off your lease, including ETFs, it may not be worth it to try and get out of the vehicle early. Most leasing companies allow for some form of early lease buyout, but again, it may cost you those extra fees.

If Leasing Isn’t for You

Now that you’ve figured out whether it’s worth it or not to get out of your lease early, it’s time to decide what to do next when it comes to getting a vehicle.

If you didn’t mind leasing but the car just wasn’t for you, you likely have the option to swap into another lease on a different vehicle with the same company. Many lessors contact lessees toward the end of their contracts to see if they’d be willing to get into another car lease early.

However, leasing isn’t for everyone. If you found that the restrictions that come with it such as the mileage limitations, or cost of maintenance and repairs are too much for you to handle, it may be time to consider an auto loan for your next go-round. If this is the case, Auto Credit Express wants to get you started on the path toward your next vehicle.

We’ve gathered a nationwide network of special finance dealerships that are signed up with lenders to help people with credit challenges. Whether you’re just not sure where to start or you need a little help due to bad credit, start here. By filling out our fast, free, no-obligation auto loan request form, you’re taking the first step toward finding your next car loan without all the hassle of searching. Get started right now!

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GSB focuses on social responsibility

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State-owned Government Savings Bank (GSB) has focused on providing loans to people without a record in the National Credit Bureau system or with bad credit over the last year to help those impacted by the pandemic deal with unprecedented economic hardship.

GSB president and chief executive Vitai Ratanakorn said the bank has extended loans to people with no credit history who have never borrowed from commercial banks or non-bank institutions.

He said the bank had already provided 1.5 million loans to members of this group of people.

The bank has also provided loans to 200,000 people with bad credit records.

Mr Vitai said the lending was aimed at drawing those outside the credit bureau system into the system and enabled them to get access to the loans, which was one of the main roles of state-run banks. This lending has been supported by the government.

He said this lending was not aimed at seeking profit as GSB charged a low monthly interest rate of 0.1-0.3%. For example, if the bank provided a 10,000 baht loan to a person under this scheme, it would only gain interest income of around 120 baht per year.

In addition to its objective of becoming the country’s genuine social bank, GSB’s other goal this year is to prevent loans from becoming bad debts, he said. The bank will rush to help customers in danger of accumulating bad debt to restructure before it reaches that stage.

Mr Vitai said GSB will not focus on growing its loan portfolio during the first six months of the year, but on serving the state’s policy of helping people and business operators cope with the impacts from Covid-19. Grassroots people and small and medium-sized enterprises are suffering the most from the pandemic, he said.

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