Do you know what a secured loan is? A secured loan is a loan in which the person wishing to borrow has to give some sort of security, characteristically their property. A loan against a building that is owned outright is called a first charge, whereas a loan secured on a property that already has a mortgage is called a second charge.
The amount you can borrow usually ranges from 3.000 pounds to 50.000 pounds, even though you can borrow sums up to 100.000 pounds, over a period of between 3 and 25 years. A penalty may be charged for early repayment of the loan, a fact you should check during the application process.
You may even be able to borrow up to 80 per cent of your property’s value, although since the credit crunch, this is now unlikely.
What are the advantages of a secured loan? It’s usually easier to acquire a secured loan than other forms of credit, largely because your borrowing is protected by the equity in your property. Secured loans are a way of borrowing large amounts that would usually be impossible by way of unsecured loans and offer the option of paying back smaller amounts over a longer time.
They are a costly choice but, if other channels of credit have dried up, and you need a large amount of cash over a long repayment period, or you have a poor credit rating, then one of these may suit you. There are still some good secured rates available on the market, providing you have a fairly good credit score.
What are the disadvantages? If your credit score is good, then you would be much better off opting for less risky credit, from avenues such as unsecured loans, credit cards offering balance transfer, remortgaging or looking for an extra advance on your existing mortgage. These options all tend to be cheaper.
For people with poor credit history, secured loans can provide an option. A borrower can ask for a 20.000 pound loan protected against a building worth 250.000 pounds over a period of eight years, with a poor credit history, and still get loans from a variety of providers, but the interest rates would be relatively high.
Debt specialists have long said that secured loans are stretched over unnecessarily long periods and are expensive. This makes it longer for the borrower to escape their debt and they could be at risk of losing their home throughout this period.
If I want a secured loan how do I apply? The options for secured loan clients have reduced over the last year: there are now only seven top providers left in the loans market, this has dropped from eighteen providers in twelve months.
Bad press has hit these companies hard – secured loans are quite often seen as a risky enterprise – and a falling property market, has made lenders more cautious about securing loans against property. You can go to a bank to apply for a secured loan, apply over the phone or visit a website. By using the internet you are able to source lots of options.
Although the first part of your application is quick, you have to be given a seven day consideration time to ensure you fully understand the loan agreement Your credit history, the amount of equity you have in your property and your ability to repay the loan will determine the rate you have to pay for a loan.
Will I have any kind of protection? Yes, you will be covered by the Consumer Credit Act 2006, a revised version of the previous 1974 act which only covered consumers up to 25.000 pounds. This revised act means that secured loans clients taking out bigger amounts have been covered since the 6th of April 2008. All loan providers are assessed on their conduct by the Office of Fair Trading. The Office of Fair Trading has the right to fine businesses for unethical conduct and can contest individual consumers’ cases.
When there is a huge population suffering with poor financial rating, there should be certain measures that rivet remedies for it. Well, there are. Now you can easily grab some monetary assistance those allow you to take cash whenever you are in need, in need of some bucks, even if you are with poor rating. The talk is of bad credit personal loans.
These are the finances for the personal needs. Here the available cash allows you to get the bucks for a number of requirements. Apart form the regular needs like business needs, home improvement, car buying or holiday trips; you can also get the money for debt consolidation. Here you can mush up all your debts through a single loan paid to be with single interest rates.
Anyway, the funding is for all here, for everyone. You may have the collateral or not, the money is for you. You can go for both the secured as well as unsecured options. Security pledged in secured options allows you to have the bucks at much cheap rates because of assurance of the return of the money associated with it. And, the unsecured options let you have the money without pledging any collateral or in simpler terms, there is no risk or headache involved here in these options. Only, in case of the unsecured loans, the interest rate charged will be slightly higher than the normal rates.
There is, again, the online processing available for the bad credit personal loans and this is preferable. Online is the best way to apply simply because you can apply through an easy and small application form and applying is totally free of cost here. Also, there is no paper work or faxing involved online. And, the service is available round the clock. Loans are only clicks away here. Everything has been put in these loans only to make easy the move of bad credit holders.
Categories: Uncategorized Tags: application form, car buying, credit personal, debt consolidation, home improvement, loans easy, personal loans, poor financial, security pledged, single loan, unsecured loans, unsecured options
MADISON, Wis.–(BUSINESS WIRE)–Credit union members continue to show signs of economic health and
confidence in the latest Credit Union Trends Report1
from CUNA Mutual Group, the leading provider of lending,
insurance and wealth management products for credit unions.
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Credit unions added $10.2 billion in loans to their balance sheet
in June – the fastest growth in credit union history. Consumer
installment credit loan balances (auto, credit card, and other unsecured
loans) rose at the fastest pace since September 2009: 13.7%
during the 12 months ending in June, helping to pull the overall loan
growth average to 10.9% for the year.
Credit union savings balances also improved. Savings balances rose 4.4%
during the first half of 2015, compared to a 3.3% rise during the
same period in 2014.
“Although the stock market has encountered a period of heightened
volatility over the past several weeks, the fundamentals of the middle
market economy have continued to improve based on what we’re seeing from
credit union members,” said Steven Rick, Chief Economist, CUNA Mutual
Group. “Credit union performance is a key barometer of the economic
health of the hardworking American, and the strong growth in loans and
savings tells us these consumers are feeling increasingly better about
their financial outlook.”
The CUNA Mutual Group report included a number of additional key growth
points for credit unions:
Membership: Credit union
membership grew at a robust pace. Memberships rose by 440,000,
the highest monthly growth rate since July 2013 (0.43%). Total
credit union memberships are now 103 million, which is 32.5%
of the U.S. population. Memberships are up 3.3% over the past
year due to rapid job creation and strong demand for new and used auto
loans – the fastest growth rate in more than 20 years.
Auto Loans: New auto loan balances
rose 2.0% in June, the fastest monthly pace so far this year.
The full CUNA Mutual Group report can be found here.
About CUNA Mutual Group:
CUNA Mutual Group was founded in 1935 by credit union pioneers, and our
commitment to their vision continues today. We offer insurance and
protection for credit unions, employees and members; lending solutions
and marketing programs; TruStage™ – branded consumer insurance products;
and investment and retirement services to help our customers succeed.
More information is available on the company’s website at www.cunamutual.com.
CUNA Mutual Group is the marketing name for CUNA Mutual Holding
Company, a mutual insurance holding company, its subsidiaries and
affiliates. Life, accident, health and annuity insurance products are
issued by CMFG Life Insurance Company and MEMBERS Life Insurance
Company. Property and casualty insurance products are issued by CUMIS
Insurance Society, Inc. Each insurer is solely responsible for the
financial obligations under the policies and contracts it issues.
Corporate headquarters are located in Madison, Wis.
© 2015 CUNA Mutual Group, All Rights Reserved
(1) CUNA Mutual Group Credit Union Trends Report: https://www.cunamutual.com/~/media/cunamutual/about-us/credit-union-trends/public/aug_2015_cu_trends_report_media_file.pdf
What is Bankruptcy?
Bankruptcy is defined as a state of insolvency, where a person’s liabilities exceed the number of assets. In such a situation, a person can file for bankruptcy with a court. This kind of bankruptcy is often known as voluntary bankruptcy.
In such a case, the bankruptcy court appoints a trustee who sells off all the assets of the person, and repays the creditors on a pro-rata basis. Creditors can also file a petition with the court demanding bankruptcy. This kind of bankruptcy is known as an involuntary bankruptcy. The chapter 7 and chapter 13 bankruptcy are the two types of personal bankruptcies.
Rules for Personal Bankruptcy
Earlier it was possible for people to choose the type of bankruptcy that they wanted to file for. However, nowadays, a person has to qualify for either the chapter 7 or 13 bankruptcy. There are different personal bankruptcy laws for both the chapters. Some of the personal bankruptcy laws have been elaborated in the following paragraphs.
According to the personal bankruptcy laws and rules, if a person files for a chapter 7 bankruptcy, all the unsecured loans that the person has borrowed, are written off in a time period of about 90 days. The bankruptcy record and the details of all the proceedings stay on the credit report for 10 years.
The bankruptcy code of the United States permits a bankruptcy applicant to protect some of his assets which are titled as exempt assets. The trustee sells off the persons assets in order to recover money and pay off, or writes off all possible creditors.
According to the chapter 7 bankruptcy rules, all the persons liabilities are wiped off 20 days after filing for chapter 7 bankruptcy, the trustee calls for a debtor-creditor meeting. In course of the meeting, both the parties are informed about their rights and duties. The consequences of the auctions and the total process of bankruptcy are also informed to both the parties. In some cases the trustee also informs the creditors of the pro-rata allotment. In some cases the application of bankruptcy, has also been withdrawn after the debtor creditors meeting.
In accordance with the chapter 13 bankruptcy rules, a person has to chalk out a precise repayment plan of about 5 years. In case of a chapter 13 bankruptcy, the liabilities are not written off. Some of the unsecured loans are also made secure during the proceedings. According to the personal bankruptcy laws, the bankruptcy record stays on the person’s credit report for about 7 years.
In such cases, the total amount of debt cannot exceed $336,900 for secured debts, and $1,010,650 for unsecured debts. At times the court also orders the debtor to undergo a credit counseling session that may extend up to a period of about 180 days before the actual filing.
It must be noted that these rules often differ from jurisdiction to jurisdiction or case to case. The person is able to keep all his assets, if he manages to pay off the debts by the end of the 5 years. People with high educational qualifications, good jobs and a steady income are entitled to file for such a bankruptcy. It must be also noted that the debtor’s credit score is drastically affected, and can come down by almost 400 points.
There are separate personal bankruptcy rules regarding student loans and permanent disability loans. Courts sometimes discharge liabilities of student loans and disability loans. In accordance with the personal bankruptcy laws, liabilities regarding child support and tax bills or tax debts are never discharged. Lastly, there are separate corporate bankruptcy rules in order to deal with the bankruptcies of corporations and businesses.
Peer-to-peer lending may be defined as one convenient option to borrow a sum from a known entity. The roots of this system are old; they are recently launched, sophisticated reminders of the good-old barter days, when trading goods for goods was the norm. However, the goods-for-goods rule gradually converted itself to the goods-for-money rule. The relaunch of this system proves advantageous, for the borrower approaches an individual he is fairly acquainted with and not a financial institution. Thus, instead of a bank, you would borrow the required sum from an individual.
In P2P lending as it is popularly known, you drop the component termed Bank from the plot. Peer-to-peer lending does not necessarily mean lending money to, and borrowing money from people, who are personally known to you. It, certainly, is a plus, if you are well aware of the person and his status quo with regard to financial matters and creditworthiness. However, it is possible that the transaction may involve a lender, who is unknown to you.
Growth of P2P Lending Services
A poor credit rating is a deterrent to availing loans at a reasonable rate of interest. The most common reason for the difficulty experienced in borrowing can be attributed to the lack of creditworthiness on the part of the consumer. Sometimes, consumers would like to borrow small sums of money to meet ongoing expenses. The problem with traditional lenders is, they do not lend sums less than $3000 or so, even if the borrower does not have any collateral to offer. However, borrowing without a collateral at a favorable rate of interest is possible, only if the consumer has good credit scores and credit history. Hence, this mode of lending for customers with a bad credit report assumes a great deal of significance.
Some of these issues gave rise to peer-to-peer lending. ► Prior to the sub-prime crisis, people were able to borrow money by using their built-up home equity as collateral. The fall in the price of real property left most consumers with negative home equity. Thus, home equity loans and home equity lines of credit were no longer feasible. The consumer had to start relying heavily on other secured and unsecured loans. Secured loans required a collateral that most consumers did not possess, while unsecured loans were disbursed on the basis of the credit worthiness of the consumer. With bad credit no longer being a deterrent to availing small loans, consumers started flocking to the lenders (P2P) for the same. ◄
How Does P2P Lending Work?
Peer-to-peer lending services work by bringing together lenders and borrowers. The lender is expected to set up an online account and deposit funds via ACH (Automated Clearing House), wire, check, or PayPal. A borrower, who is interested in availing loans, is expected to apply online, and post his/her requirements, viz. loan amount, the reason for the loan, the credit scores, the existing level of debt, and other relevant information. Although the borrower’s credit score is taken into consideration, the lenders tend to diversify their risk by lending small amounts to a large number of borrowers. Lenders can lend as little as $50 to the applicants. Even if a few bad-credit consumers do default, the chances of the lender recovering the principal and the interest on other loans is a distinct possibility. The lenders stand to gain in the form of interest and principal on the money that is lent. Moreover, they are not charged an account-maintenance fee.
The borrower has the opportunity to avail loans at a reasonable rate of interest, since lenders are allowed to bid on loans of their choice. Since the loan is sanctioned by the lowest bidder, the auction process has the effect of bringing down the rate of interest on the amount that is lent. The borrower is also given the opportunity to state his/her case, and try to convince the potential lender of the prudence of sanctioning a loan to the former. The application process is free, and this provides a small measure of comfort to the cash-strapped borrower.
In addition to providing a platform for the borrowers and the lenders, peer-to-peer lending services are responsible for verifying the authenticity of the information supplied by the consumers and complying with the regulatory requirements. Lending services also deduct the amount of interest and/or principal from the bank account of the borrowers and dispatch the same to the lenders. The lending services make money by levying a fee, on the borrowers and the lenders, for servicing the loan. Finally, person-to-person lending can help people with poor credit build their credit scores and credit history, since these lending services communicate the account information to the credit bureaus.