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Racial inequality runs deep. Companies are laying plans to address it.

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From big banks to Starbucks, American corporations are rolling out initiatives to address racial inequality. JPMorgan Chase has a new $30 billion five-year plan to fund things like affordable housing. IBM has announced a quantum computing outreach to historically Black colleges and universities.

Advocates for greater equity welcome the attention, while waiting to see the results. One telltale sign, they say, is how companies address the racial gaps when it comes to their own workforce and contracting. One study finds Black and Latino Americans together hold only 7% of mid-level management positions in the financial industry, even though they make up 13% and 18% of the population, respectively. 

The stakes are high for the whole economy. Citibank calculates that if the U.S. could somehow close the racial economic gaps, the U.S. economy would add $5 trillion of economic activity.

“I was ecstatic when I saw the announcement from Chase,” says Gary Cunningham, who heads Prosperity Now, a nonprofit aiming to build wealth for low-income people. But he adds that government helped build the middle class, especially the white middle class, with programs like home loan guarantees and the GI Bill. “There has to be both a public and private approach,” he says.

The online announcement had the usual lineup. Mayors and educators spoke about the importance of career readiness grants for Black and Latino residents in their cities. What was unusual about Tuesday’s event was the host, which wasn’t a foundation or the federal government.

It was JPMorgan Chase, America’s largest bank.

For several minutes on-screen, CEO Jamie Dimon talked about the need to address the nation’s long-term racial inequality through better career-prep in schools. The bank’s philanthropic arm is committing $35 million to a five-city, five-year effort to improve career readiness in underserved communities, part of a much larger corporate effort to tackle racial inequality. “To fix the problem, you’ve got to acknowledge it,” said Mr. Dimon, who is one of the many white Fortune 500 CEOs deploring America’s persistent racism.

Ever since May, when the death of George Floyd drew national attention to violence by police, corporate America has been talking about narrowing racial inequality. Now, spurred also perhaps by evidence that the pandemic has hit Black and Latino Americans especially hard, they’re doing something about it.

In the past two months alone:

•JPMorgan Chase announced a wide-ranging $30 billion five-year plan that spans from building affordable housing and improving access to loans to funding community development groups. Rival Bank of America has issued a $2 billion “equality progress sustainability bond” – the first of its kind – aimed at advancing racial equality, economic opportunity, and environmental sustainability. Citi has announced its own $1 billion investment to combat racial inequality. 

•Coffee chain Starbucks announced steps – including a mentorship program for senior executives – aimed at achieving 30% people of color at all corporate levels by 2025.

•IBM announced a research initiative to create a diverse workforce in quantum computing by offering access to its superfast computers to Howard University and a dozen other historically Black colleges and universities.

Even the Federal Reserve has launched a series of online events this month on structural racism and inequality. In the wake of Fed research showing that few Black homeowners had refinanced their mortgages to lower rates, the Fed has resolved it needs to get the word out to all communities. 

Citibank calculates that if the U.S. could somehow close the racial gaps in wages, housing, higher education access, and business investment, the economy would add $5 trillion of economic activity and a third of a percentage point to annual growth over the next five years.

While it’s far too early to assess whether these initiatives can achieve that, their size and the fact that corporate chieftains are saying, sometimes for the first time, that racism in America is systemic are seen by many as a step forward. 

“I was ecstatic when I saw the announcement from Chase,” says Gary Cunningham, president and CEO of Prosperity Now, a nonprofit aiming to build wealth for low-income people that received funding from Chase. 

But big efforts that helped build the middle class, especially the white middle class, such as federal guaranteed home loans during the Great Depression and the GI Bill after World War II, were government efforts, he points out. “There has to be both a public and private approach.”

What will success look like?

JPMorgan Chase “stands out to me in being a little ahead of the game,” compared with other firms, says Dedrick Asante-Muhammad, chief of race, wealth, and community at the National Community Reinvestment Coalition in Washington. But the proof will come when corporations begin to reflect the nation’s diversity in their own workforces and contracts to minority-owned firms. 

“It would be a serious step forward if major corporations start having procurement contracts with Black businesses – getting away from [a token] 1%, 2% to 10%” of business to outside contractors, Mr. Asante-Muhammad says.

Best Buy has committed to find and nurture Black- and minority-owned manufacturers of products that it would sell. In June, General Motors CEO Mary Barra created a financial inclusion board of company officials and outsiders with the goal, she said, of “making GM the most inclusive company in the world.” 

Another encouraging sign is that many of these companies are building on diversity initiatives already underway. In June, AT&T announced it was nearly 90% toward its commitment to spend $3 billion with U.S. Black-owned suppliers by the end of this year. 

The flip side is that, for all the recent commitments, racial inequities in corporate hiring have been deep and persistent. The National Community Reinvestment Coalition and Beneficial State Foundation found that Black and Latino people together hold only 7% of mid-level management positions in the financial industry, even though they make up 13% and 18% of the population, respectively. At senior level positions, they hold only 3% and 4%, respectively.

Microsoft CEO Satya Nadella talks during a company event in New York on Oct. 2, 2019. Mr. Nadella said in June 2020 that the tech company would double the number of Black managers, senior individual contributors, and senior leaders by 2025.

In some areas, representation for employees of color has actually gone down. In the hotel and lodging industry, for example, white workers held 71% of the top management positions in 2007, according to an NAACP report last year. By 2015, that share had risen to 81%.

That was before the pandemic, which decimated the industry and has hit Black and Latino Americans particularly hard. Besides a COVID-19 fatality rate that’s twice as high for Black Americans as for white Americans, the economic downturn has shut down thousands of small businesses and caused unemployment to soar. In February, the Black unemployment rate stood less than 3 percentage points above the rate for white Americans; by September, the gap had grown to 5 percentage points. 

The quest for effective solutions 

The challenge is multifaceted in part because racial disparity is spread across the economic spectrum: from unemployment and wealth to housing and even venture capital. A report from Crunchbase this month found that Black- and Latino-owned firms got only 2.4% of venture funding even though they make up 32% of the population.

Not everyone is optimistic that the current rush of corporate activity will end well. 

“There are a number of corporations as well as philanthropic entities that are facing enormous pressure to mobilize their resources” on behalf of Black Americans, says Ian Rowe, resident fellow at the American Enterprise Institute and cofounder of Vertex Partnership Academies, which will be opening new charter schools in the largely Black and Hispanic south Bronx in 2022. 

Like many Black Americans, he says that racism does still create disadvantages for some people of color, even as many have made enormous progress by embracing the ideals of family, faith, hard work, and entrepreneurship. But as society tries to address those disadvantages, he says a vital step is to nurture the personal agency of Black Americans themselves through a success sequence that starts with education and job skills.

If corporations send a signal that there’s nothing a Black individual can do to improve his or her lot, they will undercut racial dignity and contradict the companies’ own values, such as merit-based success, Mr. Rowe says. He deplores as a double standard the way one small bicycle company briefly offered Black customers a discount that wasn’t available to other customers. (The firm is currently rethinking its approach to its “reparations” program.) By contrast, he applauds companies like Netflix, which is shifting as much as $100 million of its cash to Black-owned banks and community lending organizations, because those lenders will evaluate entrepreneurs on the strength of their business plan rather than the color of their skin

Corporate initiatives will work “only if it’s in line with their core values,” Mr. Rowe says. “Otherwise, they won’t endure.”

Indeed, efforts to help entrepreneurs of color hint at the complexity of solutions. 

“Banks today generally want to make loans of $1 million or more and they generally want to lend to entrepreneurs that have three years of audited financials,” says Michael Schlein, president and CEO of Accion, a nonprofit that lends to small businesses in developing nations as well as in the United States. “Most small businesses don’t have three years of audited financials and don’t need $1 million. They need $40,000.” 

He applauds businesses that are putting money into minority-owned banks and community-based lenders who specialize in these small loans. Yet many times these loans aren’t profitable, Mr. Schlein adds. 

Whereas Accion can lend sustainably to entrepreneurs with no credit scores in other nations, its U.S. arm struggles because potential clients walk in with bad credit scores, which muddies the outlook on the viability of their business.

“We work weeks or months to help entrepreneurs to separate personal and business” debt, he adds, which raises costs. He’s hopeful that by scaling up the business and using the latest financial technologies, Accion can eventually make such U.S. lending not only profitable but also attractive to commercial lenders.

Looking at the broader array of corporate efforts, Mr. Dimon of Chase is also upbeat: “You have 200 of the biggest companies in America pretty much devoted to this issue. … [Then] if you get the local civic society, the community colleges, the governor, the mayor working together, we will win.”

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Loans for Bad Credit: Alternatives to High-Interest Loans

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In the face of unexpected events, most Americans don’t have enough cash to cover their needs. Statistics estimate that more than half of all Americans have less than $1,000 in a savings account.

It’s challenging to get through everyday life without expecting anything to go wrong. Any emergency — be it a car accident, a hospital visit, or even a broken refrigerator — will put Americans in trouble.

To add insult to injury, poor credit can make an emergency even more challenging. That’s where installment loans come in.

For consumers that have a bad credit score (below 630), installment loans can be the best option to get quick money. Installment loan funds are distributed all at once. Afterward, the repayment of the installment loan follows either a fixed monthly payment.

Online installment loans are ideal for emergencies as access to fast cash. Here’s everything you need to know before taking out an installment loan.

Online Installment Loan Basics

Installment loans are actually a broad category that includes many different kinds of loans, such as mortgage loans, car loans, and other personal loans. They tend to be long-term loans that require credit checks.

Payday loans are another type of installment loan. However, its structure is different. They must be repaid over a shorter period, have higher interest rates, but require no credit checks.

Installment Loans

As stated above:

  • Installment loans deliver quick cash in one lump sum

  • Installment loans require a credit check

  • Installment loans describe many different loan types

Furthermore, installment loan terms depend on the type of loan and can range from 3 years for car loans to 30 years for mortgage loans. In contrast, a personal installment loan lasts for approximately 12 months.

To get approval for any of the above loans, the individual will be subject to a credit check (more to know on that here: https://www.wisegeek.com/what-is-a-credit-check.htm ) and a fairly long application process.

Installment loans offer an APR of 36% or below, and user payments can be made online, over the phone, or by check.

Another advantage of installment loans is that they help borrowers improve their credit rating — as long as they pay on-time. It provides immediate access to cash, while at the same time, it’s a means to an end toward recovering a bad credit score.

How well individuals can do often depends on the terms of the installment loan that they receive. Keep reading to get more advice on how to choose an installment loan that is right for you.

Choosing an Online Lender

Like any other loan, picking a lender requires a fair amount of research and work. It’s not going to be a simple task, and there are several factors that individuals need to look out for when picking the right loans.

Below are the most important features that individuals need to keep in mind when choosing an online installment loan.

Compare Rates

All the different installment loan options out there are going to offer different percentage rates. These range from 6% to 36%, and you should sift through all possible options to get the most favorable rates.

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Ideally, individuals should opt for the lowest rates to ensure that the monthly payments are as low as possible.

Online lenders can offer potential borrowers their interest rates ahead of time. This usually requires a soft credit check, which does not impact a borrower’s credit score.

However, applicants need to be careful, as different vendors have different requirements. Understanding these requirements will help avoid any mishaps.

Understand All Fees

Every vendor has different fees, these fees might have different names like an “organization fee” or a “service fee,” but they generally range from 1% to 6%.

In contrast, other vendors might charge a prepayment fee for early repayment. Under no circumstances should a borrower agree to a loan deal before the lender discloses all fees.

It’s up to the individual to be as vigilant as possible because certain vendors will keep some fees to themselves, and may not disclose them until the last minute.

To avoid any excess costs in the future, make sure to go over the contract in its entirety.

Choosing Manageable Terms

Installment loans offer a lot of advantages for needy consumers:

But, one thing to remember is this: the longer the loan term, the higher the interest individuals will pay. Taking longer terms might give borrowers more time to pay, but it also means that borrowers will have to pay more interest.

In contrast, shorter terms are harder to manage, but it means paying a lower interest rate. When choosing the right installment loan, individuals should calculate the monthly payment based on the term length.

Many online vendors offer software that automatically calculates the amount. Everyone should employ a strategy to assess different term lengths to see what monthly payments are the most manageable.

Vendor Perks

Not all vendors are the same, and it’s already established that they offer different rates for different prices. However, while already offering different rates, vendors also offer different perks — specific features tailored to the individual.

If the individual is consolidating debt, certain lenders will send loan money to creditors on behalf of the loanee. Other vendors offer the ability to change due dates or provide hardship plans if the borrower encounters any financial difficulties.

It’s crucial to consider all these factors before taking out an installment loan. It’s best to have everything working to your advantage with an already poor credit history before taking out an installment loan.

Our Top Picks for Online Installment Loans

There are hundreds of online installment loan options out there, and looking through all of them can be a hassle. Furthermore, those new to the industry won’t be able to identify scams or loans meant to exploit.

Upgrade

Upgrade is one of the best installment loan vendors for those with a bad credit score. They accept a minimum score of 600 and will provide potential applicants with an offer in minutes. Their APR rates range from 7.99-35.97% depending on the amount, duration, and purpose of the loan. Users can easily apply for loans and get ideas on rates using the company’s website.

Simple Fast Loans

Simple Fast Loans is also among the best installment loan vendors for individuals that have a bad credit score. They offer loans ranging from $200-$3,000. These loans have terms up to 5 years.There’s no prepayment penalty, and applicants will also get next day funding. To get an idea of the rates, users can easily apply using their website.

LendingPoint

For users that have a credit score below 600, a great option to choose is LendingPoint. They accept a minimum credit score of 585 and offer loans for $2,000-$25,000. The APR rates for these loans are on the higher side ranging from 9.99-35.99%. Money becomes available to the applicant the next day, and there’s no prepayment penalty on the loan.

Avant

Another installment loan vendor for users that don’t have a good credit score is Avant. They require a minimum credit score of 580 and offer loans for $2,000-$35,000. The APR rate is between 9.95-35.99%, and they offer the ability to change payment dates. However, applicants will have to pay a loan origination fee, and there’s no option to include a co-signer on the loan.

Online Financing Options to Avoid

Online installment loans are a great option for individuals with bad credit scores, and, if used correctly, are a way to improve credit scores.

However, the same can’t be said for all online financing options, and certain ones are important to avoid.

Payday Loans

Payday loans function similarly to installment loans. In addition, they have recently been rebranded as short-term installment loans.

The loans are usually under $1,000 and are due on the next payday. With payday loans, an individual will have to either submit a post-dated check or provide access to the bank account.

It might sound relatively okay, but the issue with payday loans is that it’s nearly impossible to pay them back. Lenders will let individuals roll over the loans with more interest to pay the next day. Interest rates are typically 400% APR on these loans, and individuals get caught in the payday loan debt cycle.

No Credit Check Loans

These loans might seem like a good idea for those with bad credit scores, but they’re essentially just a debt cycle. The combination of high-interest rates, short terms, and lump sum repayment means that borrowers are stuck in a cycle of ever-increasing debt. It’s best to find loans that offer some sort of credit check and security to get the best terms.

Upfront fees

While certain loans might require a small percentage to process the application, some can be a complete red flag. There are plenty of up-front loan scams, and there are several signs that borrowers need to address. If a vendor asks for money upfront, then there’s a good chance it’s a scam.

Additionally, these issues tend to arise the most with vendors that don’t offer credit checks. Lastly, do enough research to recognize an offer that seems too good to be true.

Conclusion

Keeping all these things in mind, online installment loans are the best option for borrowers with a bad credit score. They are a useful resource and, if managed correctly, are a path to recovering a good credit score.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes



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Build Mastercard Credit Card Review

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When you have bad credit, it can be extremely hard to build it back up. To rebuild your credit, you need to open a new credit account, pay your bills on-time and keep it in good standing. But when your credit is bad, there are very few companies that are willing to approve you for a new credit card account. However, the Build Mastercard is specifically designed for people with bad credit. Let’s take a look at this card and see how it works.

How the Build Mastercard Works

This card is designed for people who have had serious credit problems, and it charges setup and maintenance fees to offset that risk. It is marketed as an affordable alternative to payday loans for customers who are trying to establish, strengthen or rebuild their credit history. It promises customers clear upfront pricing, no hidden fees, and tools that help them use and build credit wisely.

To open a new account, you will have to pay a one-time account setup fee of $53 and a membership fee of $72 annually. These set-up and maintenance fees will be charged to your account before you begin using your card, and will reduce the amount of credit that will be initially available. For example, if you receive a $500 line of credit, then your initial available credit will be $375, which is $500 minus the $72 membership fee and the $53 account setup fee.

Top Features:

Reports to major credit bureaus; initial credit limit of $400; fast application process with results in seconds

The late payment and returned payment fees are each $35, but thankfully, there are no over-the-limit fees or foreign transaction fees imposed on charges processed outside of the United States.

Another important aspect of the Build Mastercard is that it has no grace period. With most credit cards, you can avoid interest charges by paying your monthly statement balance in full. The period between the statement closing date and the payment due date is known as the card’s grace period. Since the Build Mastercard has no grace period, it will begin charging interest on purchases and cash advances on the date of the transaction. The standard interest rate for purchases and cash advances is 29.9% APR, which is a variable interest rate that can rise or fall with the Prime Rate.

As a Mastercard, this card is accepted worldwide at millions of merchants in nearly every country. Mastercard also offers a Zero Liability Protection policy. This means that even though the Fair Credit Billing Act allows card issuers to hold customers liable for a maximum of $50 in the event of fraud, you’ll never be responsible for any amount in the event of an unauthorized transaction. To utilize this policy, just take reasonable care to protect your card from loss or theft and promptly report any loss, theft or unauthorized charges to your card issuer.

Build Mastercard Advantages

This card is designed for applicants with bad credit. If you’ve had credit problems, then you will be far more likely to be approved for this card than you would for a card that wasn’t meant for those with bad credit. Unlike secured cards, the Build Mastercard doesn’t require that you pay a deposit and it will start off most accounts with a $500 line of credit (which will be reduced to $375 until you’ve paid the $72 membership fee and the $53 account setup fee).

The Build Mastercard is also a full fledged credit card, which will make it easier to rent a car or check into a hotel room. In contrast, those who have debit or prepaid cards can have difficulties when traveling and may have to submit a cash deposit to rent a car or check into a hotel.

Top Features:

Reports to major credit bureaus; initial credit limit of $400; fast application process with results in seconds

And although this card has numerous fees to open an account, it has no foreign transaction fees. Most credit cards, and even some premium reward cards, still charge a 3% foreign transaction fee on all charges processed outside of the United States. So whether you are making a quick trip across the border, or taking a vacation overseas, you can use this card anywhere without being assessed an additional fee for each transaction.

Finally, the Zero Liability policy is one of the best protections offered by a credit card. This allows you to use your card with the confidence that you won’t have to pay any of the cost of fraudulent transactions.

Build Mastercard Disadvantages

The $72 membership fee and the $53 account setup fee are expensive, and some applicants may want to consider a secured card instead. There are plenty of good secured cards listed here. While you may have to pay an even higher deposit to open a secured card account, that money is refundable when you close your account in good standing. The 29.9% APR interest rate is high, but not out of line for a card marketed to those with bad credit. Finally, the lack of a grace period means you will always have to pay some interest on your charges, even when you pay your statement balance in full.

Bottom Line

The Build Mastercard is specially designed for people with bad credit, and it has its own distinct advantages and drawbacks. By carefully understanding how this card works, you can decide if it is right for your needs.

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Are There Mileage Limits on Rent to Own Cars?

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Rent to own cars, also called lease to own vehicles, don’t come with mileage restrictions. They can be a good option for bad credit borrowers who need a car fast. We cover how these agreements work, and how they’re different from other vehicle buying options.

Rent to Own Cars and Mileage Limits

Are There Mileage Limits on Rent to Own Cars?Traditional leased cars come with mileage limits, but rent to own vehicles don’t come with this restriction. Traditional leasing companies place mileage limits on their cars to preserve their value, typically so that they can be sold at a later date as pre-owned vehicles.

Many people think that leasing and rent to own cars are similar, but the truth is that they’re very different. Leasing involves making payments on a vehicle for around two to three years, and then returning it at the end of the lease. With rent to own cars, the main goal once you make all the payments is ownership.

Another large difference between leasing and rent to own vehicles is that leased cars are almost always brand-new vehicles. Rent to own cars are always used.

How Rent to Own Vehicles Work

To get into a rent to own vehicle, you need to find a dealership that offers in-house financing, also called buy here pay here (BHPH) used car lots. These dealers are also lenders, so they don’t rely on third-party lenders for financing. This also means that you usually get to skip the credit check.

Since there typically isn’t a credit pull, borrowers with poor credit may have a better chance of qualifying for a rent to own vehicle than a traditional auto loan or lease. The biggest factor that determines your eligibility for these agreements is your income. Some rent to own cars don’t require a down payment, but the payments are likely to be higher than an auto loan in the long run.

You also don’t have to worry about interest charges because rent to own agreements aren’t loans. You’re not borrowing an amount from a lender to pay for a vehicle – you’re making payments on the car to the dealership until you’ve paid what you owe.

Bad Credit Auto Loans vs. Rent to Own Cars

A big downside to rent to own vehicles is that there sometimes isn’t a chance for credit repair. If the dealer didn’t check your credit reports to determine your eligibility for the car, then they may not report your on-time payments. Anything that isn’t reported on your credit reports doesn’t impact your credit score, so it doesn’t help improve it.

Bad credit auto loans from subprime lenders, however, are always reported. These lenders do check your credit reports, but they consider more than that. Sometimes, credit reports can’t tell the whole story, so subprime lenders use other facets of your situation to determine your ability to repay a car loan. They examine your income and residence history, require a down payment, ask for personal references, and more.

Subprime auto loans are crafted for bad credit borrowers who want to get on the road to credit repair. While rent to own vehicles are a good short-term solution, it doesn’t usually solve the bigger issue: bad credit.

Repair the Root of the Problem With a Car Loan

When you’re struggling with poor credit, it’s tempting to go for a quick solution like a rent to own car. But if you want to repair your bad credit, consider subprime financing. These lenders are signed up with special finance dealerships, and we can help you find one in your local area.

Here at Auto Credit Express, we have a network of special finance dealers all over the country. Get matched to one near you by filling out our auto loan request form. There’s never an obligation, and we’ll get right to work!

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