Debt Consolidation - Student Loan Scandal

This post was on Financing-Usa.com today, regarding the on-going student loan scandal in the United States – predatory lending and loan brokerage schemes.

Included is a video outlining the student loan problem. Basically, illegal kick-backs are being given to financial aid officers from unscrupulous lenders. Seriously nasty business.  

This is a superb piece on the student loan debacle going this year. The bit was written by Jeanne Sahadi, who is a senior writer for CnnMoney. (link at bottom of article)

The unscrupulous lenders in the student loan market are getting the rocks lifted from above their heads, and they’re scattering like the greasy bugs they are.

Unfortunately, this looks bad for the reputable student loan lenders. In the article below, you can learn about the “legitimate student loan lenders”

Story Here….

Deciding whether to consolidate federal student loans is never easy. Here's what you need to know.

It's a good thing you got that college education. You can put it to good use navigating the complex maze that is the student loan industry as you consider whether to consolidate your federal student loans.

For those who have never done it, it's a question that comes up every year in anticipation of the rate change on July 1 of the variable federal student loans.

But this year, there's a twist. News of student lenders offering perks and kickbacks to colleges and alumni associations to include them on preferred lender lists have, understandably, made consumers wary.

But that actually may be one good thing to come out of the scandal. The advice about deciding whether and with whom to consolidate hasn't changed. It's just become even more relevant.

"The current scandal reinforces the need to be a savvy consumer and examine carefully any offer you receive no matter where it comes from," said Lauren Asher, associate director of Project Student Debt and the Institute for College Access and Success.

Indeed, said Mark Kantrowitz, publisher of FinAid.org, "even when a school's preferred lender list is unbiased, you still have to identify which loans are best for you."

The question of whether to consolidate your federal loans depends on the type of loans you have, their rate (variable or fixed) and your goal: Do you want to reduce the interest you pay long-term? Lower your monthly payment? Pay just one bill instead of several? Get better discounts?

It also depends on whether you've already consolidated the loans in question before. By law, you may not consolidate the same loans twice.

Here's what to consider if you have:

Stafford loans
If your Stafford loans were issued before July 1, 2006 they are variable-rate loans.

What determines the change in the variable rate every July is the yield on the 3-month Treasury bill during the last T-bill auction in May. This year that yield was only .076 percentage points above where it was during the same auction in 2006. So payments on your Stafford loans are not likely to go up much at all after July 1, and the rate for consolidation won't change at all.

So there's little reason to consolidate if your sole goal is to lock in a lower rate this year.

But there is one exception: if you're still in your so-called grace period, defined as up to six months after your graduation. That's because you still are enjoying the "in-school" rate, which is about 0.6 percentage points less than it will be when your grace period ends and you go into repayment. Consolidating before your grace period ends lets you to lock in that lower rate. Technically, you may lose out on some of your grace period because you will need to begin repayment within 60 days of consolidating. But if you apply for consolidation before July 1, a lot of lenders can set it up so that the clock on that 60 days doesn't start until close to the last two months of your grace period, Kantrowitz said.

There's also little reason to consolidate if you want to lock in a lower rate and you got your Stafford loan after July 1, 2006. That's because those loans are fixed rate loans at 6.8 percent and won't change.

Whether you have variable or fixed rate Staffords, however, you might consider consolidating if you want to reduce your monthly payments. You can do so by combining your loans into one loan and extending the repayment term. But by doing so you greatly increase the amount of interest you'll pay. By changing your repayment term from 10 years to 20, you'll cut your monthly payment by a third, but you'll double the amount of interest you pay long-term, Kantrowitz said.

A 30-year term is even more expensive. Say you have $20,000 in fixed-rate Stafford loans. Asher notes that you'll pay $7,619 in interest on them over 10 years. But if you consolidate and extend the repayment term to 30 years, you'll lower your monthly payment by $100 but you'll end up paying $26,935 in interest.

Besides rates and monthly payments, weigh discount incentives when considering consolidation. Many lenders offer breaks if, say, you direct debit your payments or pay on-time for 36 consecutive months. Compare not only consolidation discounts offered by different lenders, compare them to the discounts you're currently enjoying. Sometimes, Kantrowitz said, "discounts for consolidated loans are inferior to those on unconsolidated loans."

(Here's a good table for comparing specific discounts at FinAid.org. For a more general look at which discounts are more valuable than others, see this table from the Project on Student Debt.)

Once you have loan consolidation offers in hand, you can see which offers the better deal by using FinAid.org's loan consolidation calculator.

Perkins Student Loans
These are fixed-rate federal loans at 5 percent. Student loan experts caution against consolidating them because doing so makes you ineligible for loan forgiveness programs. (Here's more information on the types of loan forgiveness programs available.)

Private Student Loans
Private student loans are much costlier loans than those guaranteed by the federal government and borrowers don't enjoy the same protections as with federal student loans.

If you're among the minority of borrowers who have taken out private loans, and lenders send you offers to refinance your private loans, Asher's best advice: "Be even more careful (than you'd be with federal loan consolidation offers)." That's in part because the rates on these loans are based on your credit and can be as volatile as credit card rates.

Here are good questions to ask before taking out or re financing private student loans.

And for both federal and private student-loan related questions, Kantrowitz's FinAid.org student loan page is an excellent resource.

[Source – CNNMoney.com]

Related Video – College Loans Hearing

 

Why New Boats Loans Are Easier To Get Approved

New boat loans as apposed to used boat loans article. Originally posted @ Loanspoke.

New boat loans are much easier to secure than a used boat loan. The banks are more inclined to invest in a new boat due to the depreciation factor. Finance companies have done their homework on this matter and they have added up the beans too. The bean counters have concluded that banks make more money in the long run if they provide financing on brand new marine products. They lower their interest rates for new boat loans and in the same breath encourage borrowers to buy brand new. I don't think it takes alot of convincing to move some towards a new boat instead.

What I have done in my research of new boat loans is three fold. I've used the internet to search for information. I've used the phone to contact different banks and enquire about their practices. I also take every opportunity to pick the brains of bank staff regarding their policies and procedures. Sounds a little "out there" ...I know. It's not fanatical or anything. I just keep my eyes and ears open. When developing an article regarding new boat loans I wanted to make sure I was educated somewhat before I started spilling out my words on the internet.

New boat loans vary as far as interest rates are concerned but there is a rule of thumb you can follow. New boat loan interest rate are approximately 1 point higher than new car financing. That is about as simple as I can put it. At the time of this writing boat loan rates were averaged at 4.5%. Now there are many factors that come in to play here. The amount your down payment is, the length of your financing term, your credit rating and of course your collateral. Many advertisements online and off will claim low interest rates even with bad credit but it all varies depending on the above factors.

Video of My Favorite Boat Leaving Harbor

Rv Loans For Bad Credit Tourists

Bad credit rv loans......now I'm repeating myself. When it comes to rv loans you can follow the same guide lines I use in any of the other bad credit articles found on this site. Basically all the same rule apply for rv loans as for auto loans, motorcycle loans, and boat loans. Your best bet is to use my recommended web site for an online loans broker. If you click through to my rv loans web site you will find a banner for bad credit loans. Which ever merchant is giving the lowest fees and interest rates on bad credit rv loans will have the banner spot on my page. As soon as they start charging more than their competition they will be replaced on a daily basis.

I new a fine gentleman who enjoyed touring so much that he sold his house and bought an Rv. This is extreme no doubt, but it's what he wanted obviously. He had very bad credit so he got a home equity loan to finance his new rv. That's one way to get a bad credit rv loans. I would suggest it but for him it worked. His wife loved traveling in the RV so much that she had no problem with this arrangement. He got himself a digital satellite tv and pulled around a small Chevy Chevette so they always had a car to get around at what ever destination they were staying.

Bad credit rv loans are becoming common place in America since the big scare of September 11, 2002. Many people have chosen to quit flying and start driving. I'm one who loves diving long distances so I would be looking for a bad credit rv loan long before the average guy. (yes...I have had bad credit problems in the past hence the large amount information regarding it bad credit) A bad credit rv loan would also be very difficult to handle if you can't lay down a large down payment. If you are lucky enough to have enough money put away for a down payment on a bad credit rv loan this is the way to go. You don't need to have to deal with large monthly payments when you are out on a tour right.

Related Video…..Don’t let your kids grow up to be Rv Killers

Small Business Loan When You Have Bad Credit

We found this article for bad credit small business loans at Sir Loan Allot. It’s a super resource on credit scores, small business funding ideas, and sites. I found it to be a very good read. There’s also a video at the end.

Your credit score has become your "SAT score" when it comes to financing. If you have a high score, you'll have a pretty easy time getting credit offers from a wide variety of funding sources. If your score is low or nonexistent, however, you won't.

But a low score isn't something you can run away from, and even if you avoid it, it won't go away. The trick is to fund your business in ways that actually get your score back on track so when you're ready to move your business to the next stage, your score will start opening doors rather than getting them slammed in your face.

Here are some ideas for entrepreneurs with low scores who are faced with funding challenges:

I. Investigate microlenders and web-based lenders. There are several nonbank lenders on the internet that now offer microloans to entrepreneurs. These loans are typically in the $5,000 to $25,000 range. Some of these sites are excellent sources of capital for those with poor credit and will also report your payments to credit bureaus which can help raise your credit score if you make timely payments. Be sure to shop around and compare rates since each site offers a twist on how they price loans and spread risk to their lenders/investors. These sites include:

www.accion.com
www.prosper.com
www.zopa.com
www.count-me-in.org (for women business owners)
www.americaonefunding.com

For borrowers who don't have strong credit scores, the interest rates on loans from these sources will tend to be high. For a comparison, the average rate on business loans from relatives and friends is currently at 7.6 percent, according to CircleLending's Business Private Loan Index, whereas the rate was more than 12 percent at Accion and more than 20 percent at Prosper for individuals with poor credit.

If you're accustomed to credit-card-level interest rates, these rates may seem affordable, but remember this: You can make partial payments on credit card debt whereas installment loan agreements may restrict you from making partial payments.

There may be subsidized microlenders in your state that offer more flexible terms; since they're small, they may not have a website or web-based loan application form, however, and may be hard to find. Check www.microenterpriseworks.org to search for nonprofit organizations in your community that have programs for business owners with poor credit. Most states now have at least one microlender. For some business owners, flexibility of repayment is more important than getting a slightly lower rate.

II. Don't overlook gifts and grants. If you need to avoid making debt payments, focus on getting "free" money in the form of gifts and grants. Your search will be long and hard--despite what you read on the internet, there is no silver bullet here. Be wary of services that promise to locate government grant programs for you. You'll need to do your homework to locate programs that are available for your type of business. Health-care businesses, technology companies, and retail businesses in low-income areas tend to qualify for grant money. Other forms of "free" money include gifts from relatives, free office space from former employers, and free services from friends or business associates. If you're creative, you can reduce your startup costs by brainstorming a list of people who would be willing to provide you with gifts and subsidized loans.

III. Look beyond credit cards and bank loans for financing. Studies show that credit card and bank financing account for just 25 percent of the total funding needs of early-stage entrepreneurs. This statistic should provide you some comfort, because it implies that 75 percent of the money you need can come from other sources that rely less on your credit rating.

While there are credit cards and lending programs designed for individuals with poor credit, these options will typically charge a higher interest rate to compensate for the credit risk posed by a sub-prime borrower. One bank option for those with poor credit scores is a home equity line of credit, though I'd be wary of putting your home on the line to finance a risky early-stage venture.

IV. Seek loans from your relatives and friends. Everyone likes the idea of entrepreneurship, which may be why, at some point, more than 50 percent of all business owners get financing help from friends and relatives. Chances are, your relatives and friends want to see you succeed and may be able to help make your business dream a reality. They also may not dwell on your poor credit score because they trust you, or they believe your business concept to be sound. (Banks used to evaluate your character and business conditions the way family and friends still do, but credit scoring models have made lending decisions more automated, resulting in the critical power your credit score holds over you.)

If you follow the advice I have shared in previous columns on identifying private lenders and understanding their risk profile, you should be able to get access to cheap, quick and patient business capital. Also, you can now use private loans from relatives, friends and business associates to rebuild your credit score if you use a loan management company to service the loan and report payments to credit bureaus.

Related Video…”The Little Guy”

Artricle on Bankruptcy Auto Loans

Little ditty on bankruptcy and auto loans. Some decent points on the ordeal of getting a loan. 

Auto financing after bankruptcy can be a nasty proposition and the founders of this site have invested alot of time, money and energy researching the options left for people in this situation. The normal channels used for getting an automobile are not going to work. When it comes to auto finance after you go bankrupt your best bet is to find a good online financial broker. Someone who will get finance companies bidding on your business. This will ensure you get the lowest interest rate possible.

Without a qualified outfit hunting down the best interest rate possible you will be seeing some very ugly numbers thrown your way. Luckily in the last few years there has been a large . Bankruptcy statistics have proven most people pay back their loans and don't default if they have gone bankrupt. The financing companies really win because they have an excuse to crank up the interest rate and at the same time get loyal and solid borrowers. For the few clients that fail to make payments the vast majority make up for it.

As long as these new trends continue for borrowers who have been through a bankruptcy, the automobile dealerships will be busy moving vehicles off their lots. Great for the economy. Great the bank, the borrower and the dealerships. My only advice to the visitors looking for auto loans is to keep the payments low by any means necessary. Use this new opportunity to built your credit back AND drive your new car. A true win win situation if you play your cards right. I know from personal experience how difficult it can be to rebuild good credit. When you get a new chance to start over it's worth making every move to secure it.

Used Boats Financed From Los Angeles to New Orleans

Used boat financing in America is responsible for hundreds of thousands of boats sold every year. The popularity of all outdoor water sporting has never waned and the fact is it's grown. The standard banks and the online lenders all compete in the used boat financing industry. From L.A. to New Orleans to New York people flock to the lakes and and oceans with brand new boats and used boats alike. The passion of people who enjoy boating is still growing in leaps and bounds as the baby boomers invest in water toys. And some of the boats are spectacular friends.

Used boat financing is a challenge to secure if the bank can't see value in the used boat you want to buy. They will likely look at the year of the boat and it's condition and approach approval with straight mathematics. This is unfortunate because there some special boats out there that have been cared for to perfection and are very rare. The owners selling them know their value and so do the buyers. This is not a black and white case. There is some room for flexibility with some loan providers and these outfits will take a chance on used boat financing.

It is much easier to secure financing on a new boat than a used one. The majority of people tend to go for the new boat. The bank is easier to deal with and the new owner gets a brand spanking' new boat. Used boat financing will cost more in interest and it is only a worthy endeavor if the used boat is in really good shape and holds it's value. All pretty basic stuff right. Well it really is. If you did not want to read my simple minded ramblings and just came here to secure used boat financing just click the blue navigation button at the top of the screen or the link at the bottom of the page.

Motorcycle Loan Article Picture With Flair

This came from Lazerloan.com. Interesting choice of picture for an article on financing motorcycles.

Consumers are always looking for the best deal when they are planning to purchase a brand new motorcycle or even a used motorcycle. They will spend hours figuring out which dealer has the best deal for them with the features and extras they can negotiate into the deal when they are purchasing their new motorcycle. Many consumers do not spend nearly as much time on the loan they will need to pay the dealer for the motorcycle. When you purchase something as significant as a motorcycle, you are actually negotiating two deals. One is obviously for the motorcycle that you are buying ant the other is the motorcycle loan that you will negotiate with the dealer or a lender that you have chosen. In both cases, consumers can save a lot of money!

Most people consider personal loans as being pretty straightforward, however there are ways to manage your costs and save interest over the life of the motorcycle loan. This article will deal with the process of finding the best deal for your motorcycle loan. The dealer, were you are purchasing your motorcycle, scooter or moped may have arranged financing to assist purchasers in finding financing and completing the sale of the motorcycle. Sometimes these motorcycle loans can be quite attractive while other times they are not.

One way to find out is to go to other lenders and compare the rates and terms for the loan you will need to purchase your motorcycle. The variables that you will need to review include the interest rate, the length of the loan, the monthly payment and the total cost of the loan in terms of interest you will pay and any fees that may be included. Your objective is to compare all of these and keep the total interest and fee’s as low as possible for your motorcycle loan. The lower all these costs are, the more money that will be in your pocket.

Check with your local bank, visit several lenders on the Internet that offer online applications and quotes and compare rates that may be available. One way to make the job of comparing motorcycle loan quotes easier is to keep as many of the variables the same for all quotes. Consumers looking for a motorcycle loan can maintain the total amount of money that will be borrowed the same for each application. Also keep the term of the loan the same as well. The only other major variables are the interest rate and any admin or other fees that may apply. Assess the total interest that you will pay and you will be able to decide who is giving the best motorcycle loan deal. You can even use this information to negotiate a better deal with your local bank or the motorcycle dealer who is trying to sell you a motorcycle loan in addition to the motorcycle that you are buying. Sometimes you can save more money on your motorcycle loan than you can on your motorcycle deal, just be negotiating a lower interest rate!

Bad Credit - Zero Down - Sub-Prime Loans

Carry Reeder wrote this piece on subprime/bad credit loans. She hits on a few good point regarding zero down loans.

This kind of lending is a bad idea, unless you have a serious and viable plan for repayment, and house-hold income.

Sub-prime lenders now offer financing packages with zero down. Interest rates are higher on these types of loans, but they make purchasing a house easier. And unlike a conventional loan, there is no private mortgage insurance required. There are two types of zero-down mortgage packages, each with their own requirements.

Types Of Zero-Down Loans

100% financing, as it names implies, offers complete financing of your property. The other option, 80/20, finances your mortgage with two loans. Both loans may be carried by your lender, but sometimes the seller or a second lender is required to carry the 20% mortgage.

100% financing is easier to deal with, but not all lenders will offer this type of home loan. 80/20 financing is more common, but takes some negotiation if the seller is involved.

Qualifications For Zero-Down

Each lender has their own criteria for determining who will qualify for a zero-down loan. Most sub-prime lenders require any bankruptcies or foreclosures to have been at least twelve months ago. A conventional loan requires these to be discharged two to four years ago.

While a credit score of 600 or higher is best, large cash reserves can also qualify you. Six to twelve month’s worth of cash reserves in the form of savings, money market, or other liquid assets are considered ideal.

If you choose 80/20 financing with the seller carrying the second mortgage, you can qualify with sub-prime lenders with a score of 560.

Zero-Down Sub-prime Lenders

You can find zero-down sub-prime mortgages with both conventional and niche sub-prime lenders. Make sure that you request quotes from as many mortgage lenders has possible to be sure you find the lowest rate and best terms.

You will also want to decide what type of mortgage you want. An ARM is easier to qualify for and has lower rates. A fixed rate mortgage offers the security of a constant interest rate over the life of your loan.

Typically an ARM will be a better deal if you plan to refinance within a couple of years. After you have improved your credit history, you can refinance for a conventional mortgage with low interest rates.

To view our list of recommended subprime mortgage lenders online, visit this page: Recommended Bad Credit Mortgage Lenders Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans. Related Video…

Oregon Payday Loan Bills Pass Wednesday

More good news in the Payday loan world, as two more bills are passed. These bills were in Oregon.

Story…

A Senate committee Wednesday afternoon approved two bills to prevent payday cash advance and car title lenders from charging triple-digit interest rates.

The bills, already approved by the House, were sent for a vote on the Senate floor with minor amendments.

They expand a bill passed by the Legislature last year, though it does not go into effect until July 1. That bill limited payday lenders to charging a one-time fee of $10 per $100 loaned and no more than 36 percent annual interest on loans that are renewed or rolled-over. Payday cash loan lenders are limited to two rollovers. Oregon’s 360 payday lending stores make loans averaging about $300 for two weeks and charge an average 528 percent annual interest.

 One of the bills passed by the Senate Commerce Committee, House Bill 2204, would extend the 36 percent cap approved last year to car title lenders, which use a car title rather than an upcoming paycheck as collateral in making small, short-term loans. Car title lenders also charge triple-digit interest rates.

A second bill approved Wednesday, House Bill 2203, would make out-of-state online payday loan and car title lenders subject to the 36 percent cap for loans made in Oregon. It also gives the state authority to create an electronic tracking system that would enable lenders to see if a person seeking money had loans outstanding with other lenders.

Everyone on the five-member committee, chaired by Sen. Floyd Prozanski, D-Eugene, supported the two bills except for Sen. Roger Beyer, R-Molalla, who said the bills restrict consumer choice.

The committee approved an amendment to the car title bill at the request of Rep. Tina Kotek, D-Portland, to prevent car title lenders from circumventing the 36 percent limit through sell-lease deals. Through such agreements, car title lenders buy a car from a borrower, who then leases the car and makes monthly payments to buy it back. The amendment puts such leasing agreements under the 36 percent cap that applies to cash loans, as well.

Bill supporters say the restrictions are necessary to prevent payday and car title lenders from taking advantage of vulnerable and desperate low-income Oregonians. Borrowers often roll over their personal loans repeatedly, paying high interest each time.

Lenders typically charge a total $240 for a $300 loan after three roll overs. Desperate borrowers also sometimes turn to a second lender to pay the first, and a third to pay the second, in a downward spiral of debt.

Payday and car title lenders say the regulations will put them out of business. Most borrowers like their services, they say, and those with poor credit will have nowhere to turn for money if the check cash advance lenders are forced to leave.

(more…)

[Via Payday Loan Times]

Payday Loans Video - Why Payday Loans Hurt Consumers

Short video from Mark Huffman at ConsumerAffairs.com – “Payday loans
are a bad idea for consumers”

Payday lenders can charge up to 800 percent interest, and their business model is designed to keep you in debt.

Are You A Trigger Lead?

It’s really getting stupid now with all the “information sharing” going between lending istitutions, and credit bureaus. Read this interesting piece about becoming a “trigger lead”.

Looks like America needs to clean up it’s lending and loans industry. Looks like the legislation is coming every month now, from Student loans, to Payday loans, to subprime loans, there’s new laws being made every few months. 

It's a surprise for many would-be home buyers: On Monday you sign a loan application with the mortgage broker of your choice and by Tuesday your phone is ringing off the hook with calls from other lenders offering you deals. Congratulations! You've become a "trigger lead."

When you, as a potential borrower, sign a loan application, the lender or broker pulls your credit report, often getting a report that includes information from all three major credit bureaus.

The lender's request for your credit report "triggers" an alert informing the credit bureaus that you are a "hot lead" looking to purchase a home or refinance your loan.

The credit bureaus sell these trigger leads to lenders and brokers, presenting these industry subscribers with a list of candidates who are looking for a loan and meet their ideal criteria for loan products.

Experian, for example, has a monitoring service that lenders and brokers can subscribe to called Prospect Triggers. Experian spokeswoman Susan Henson says the company can pull out all of the consumers that fit a lender's credit criteria from the consumer database.

"They could say they want consumers who have never claimed bankruptcy. They could say they want consumers that have two open credit cards and an auto loan," says Henson.

Henson says federal law limits the type of information provided to clients. Therefore, no specific information is delivered, only aggregated information such as the total number of bank cards a consumer has.

Credit bureaus also provide contact information, such as the applicant's name, address and telephone number, to their clients, says Stuart Pratt, president of the Consumer Data Industry Association, or CDIA, which lobbies for credit bureaus.

Questionable tactics
Trigger lead products have been around for more than a year and a half and are facing scrutiny in the home lending industry.

Many consumers complain it's a violation of their privacy. Some bankers and mortgage brokers also oppose the practice, claiming borrowers are blaming them for the flood of calls. In some states, lawmakers are calling for legislation to prohibit or regulate trigger leads.

Mathew Street, deputy general counsel at the American Bankers Association, says that since Jan. 1, 2007, Massachusetts, Minnesota, Connecticut, Maine, Rhode Island and Alabama have bills that "limit or prohibit the use of information about a specific loan by someone trying to compete with that loan or sell a product without acknowledging they are not affiliated with the bank that made the original loan."

New Mexico recently enacted a bill that bars solicitors from using certain loan information.

In Congress, House Financial Services Chairman Barney Frank reportedly plans to restrict the credit bureaus' ability to sell lists of prospective home buyers.

[Source Bankrate.com]