Author: Amanda Hash
When you want to finance the acquisition of a motor vehicle the question that always rises is whether it is better to finance a motor vehicle purchase by using a specially tailored loan, another kind of loan or just resort to leasing. Each option has advantages and disadvantages and there is no straightforward answer to this issue. It all depends on your needs and your credit and financial situation.
Thus, before deciding which option is best for you, you need to understand the particularities of each alternative and compare them to your budget’s possibilities and your needs. Only then, you will be able to decide whether you should lease the vehicle or purchase it right away either with a motor vehicle loan or with another kind of loan.
Credit And Income Requirements
Loans imply harsher credit and income requirements mainly because the monthly payments on loans are higher than on lease contracts. In order to obtain a motor vehicle loan you need to show proof that you have a steady income fit to afford the monthly payments without having to make sacrifices and though the same goes to leasing, the amounts you will need to show you can cope with are smaller.
Leasing has less requirements because the motor vehicle remains property of the financial institution and if anything happens with the vehicle the insurance for which you will pay a monthly premium will cover for the loses. Thus, there is little risk for the financial institution which allows them to provide you with the motor vehicle without many requirements.
Leasing Explained
When leasing a motor vehicle, the financial institution purchases the vehicle which remains its property. The motor vehicle is handed over to the applicant who can use it in exchange for a monthly fee. After a period of time, the applicant has the option to put money down and obtain ownership of the vehicle. If so, the monthly payments are computed as part of the payment. Otherwise, they work just like a rent monthly fee.
Leasing provides a lot of flexibility: the applicant can use the vehicle just like if he owned it and the financial institution takes little risk because he retains the title of the vehicle and any damage is covered by the insurance for which the applicant has to pay a fee usually included in the monthly payments of the leasing contract.
Loan Or Lease?
Motor Vehicle loans and home equity loans can both provide you with the financing you need to purchase a motor vehicle. The latter is the best option if you are a homeowner as it provides inexpensive financing and the best loan terms. But if you can not afford such high monthly payments or you prefer to be able to exchange the vehicle for a new one in the near future, you should go for a leasing contract that provides more flexibility and more options for you if you change your mind about the vehicle. In any case, you should ponder the costs of each transaction prior to applying to see which one best suits your needs.
Amanda Hash, expert financial consultant, specializes in Car Loans for Bad Credit and Government Grants. Visit her at http://www.yourloanservices.com/
2008/05/10
Motor Vehicles Dilemma: Loan or Lease?
2008/02/10
Myths About Credit Scores - Don't Make These Mistakes
While providing a loan to any customer, a variety of factors are taken into consideration by lenders. Some of these include the income of the applicant, employment history, fixed and liquid assets, and credit limits. Apart from these, another prominent factor that determines the decision of a lender is the credit score of an individual.
A credit score determines the repayment capacity and the credit history of the customer. Hence, it is very important to have good credit scores. However, there are certain myths that many people carry in their minds regarding credit scores.
Myth 1: Credit counseling hurts credit scores
As per the revised calculation of FICO scores, credit counseling does not have any relation to credit scores. This is because, not everyone having a credit counseling session defaults with their loan repayments. In fact, a credit counseling session is an effective debt management strategy. A credit counselor does have reasonable solutions to help bail you out if you face any financial problems. However, many lenders do not like the idea of financial counseling. They consider it to be equivalent to Chapter 13 bankruptcy. Hence, a good credit customer should always keep away from a credit counseling session so as to ensure a mortgage loan with better terms and conditions. Credit counseling can affect credit scores in an indirect way. If the credit counselor does not send the payments on time, then the loan is reported to have carried late payments, a factor that has a major influence on credit scores.
Myth 2: FICO score is not the only score to check
In the US, credit scores are actually reported by the three major credit bureaus that include Equifax, TransUnion and Experian. Each one of these has a different way of calculating the credit score of an individual. While Equifax presents a credit score in the form of FICO or Beacon credit score, TransUnion presents it in the form of Empirica. At Experian, the scores are calculated based on the "Experian /Fair, Isaac Risk Model". It is up to the jurisdiction of the lender to decide which credit bureau should be contacted for getting the credit scores of a customer. The credit data provided to one credit bureau is not shared with another. Hence, lenders opt for all the three credit reports and determine the credibility based on an average score. A smart customer is one who fixes errors and clears misunderstandings in all the three credit reports before shopping for a loan.
About Author: Pauline Go is an online leading expert in finance industry. She also offers top quality financial tips to investor like:
Refinance Car Loan People with Bad Credit, How To Calculate Credit Score, Methods Used To Establish Credit Limits
Article Source: http://EzineArticles.com/?expert=Pauline_Go
2007/12/02
Prospective Loan Applicants 'Should Act Now'
Britons looking to apply for a loan - and in particular those wanting a low rate of interest on their borrowing - should act as soon as possible, an industry expert has stated.
Speaking earlier this week, Esther James, personal finance analyst for Moneyfacts reported that this week's withdrawal from the personal loan market of the Hanley Economic Building Society and Eskimo Loans, which was funded by Northern Rock, could act as a blow to consumers looking to take out a UK loan. And as these two financial providers "bite the dust", the economic expert asserted that the pulling out of the market by Leeds Building Society, GE Money and LV= earlier this month means that the level of unsecured loan lenders has fallen by about ten per cent in the space of just four weeks. As a result, she suggested that consumers may develop more difficulties in finding a cheap loan.
Commenting on the findings, Ms James said: "Such a large reduction in just the last month is worrying. With no signs of rate rises slowing, it's a rather unsettled market. The credit crunch is showing its strength in the personal loan market. Anyone considering a personal loan might be advised to act sooner rather than later. With less choice, a more cautious lending strategy and the impending decision on payment protection insurance sure to shake up the market, the 2008 loan market could look very different."
As a result, prospective borrowers wishing to apply for a loan may wish to act immediately. According to the Moneyfacts analyst, there still are a "handful of competitive deals" available - which could be welcomed by those after a cheap loan. However, pointing to the financial services firm's best buy charts, Ms James indicated that loans with interest rates as high as ten per cent are becoming evermore prevalent. Consequently, those considering borrowing were urged to take the time to scour the market for the most inexpensive deal that they can find. In doing so, she claimed that it is possible consumers will be able to save "a bundle" in the long-run.
With the Christmas period - and the subsequent rise in spending that it can bring - many people could well become concerned that they may develop problems in managing their money. In turn, those looking towards a cheap loan as a means of help with money difficulties should act straight away. And in applying for a personal loan as a means of consolidating debts, borrowers are likely to discover that their financial situation takes a turn for the better. Robin Amlot, senior editor of Moneyextra, recently claimed that taking out an unsecured loan for consolidation purposes serves two main objectives.
As such borrowing carries a fixed rate of interest, he suggested consumers will always know how much money they are paying out each month. In addition, Mr Amlot reported that the loan also marks a date by which borrowers will have their debts cleared off. He added that although applying for a loan makes a "great deal of sense" in terms of providing help to get back on their financial feet, people should be careful to ensure that they are able to make repayments and avoid falling back into the red.
Abbi Rouse writes for All About Loans. Our visitors can apply online for poor credit secured loans. We also specialise in cheap loans, and the cheapest consolidation loans online. Visit today http://www.allaboutloans.co.uk/
2007/11/19
Signs That A Loan Site Is Trustworthy
Thousands of people apply online for loans every day, and the commissions loan brokers receive for successful applications mean that it's big business with plenty of money involved. Unfortunately, as in any area where there's potential profit to be made, not everyone you'll come across is totally scrupulous about how they try to make money.
Taking out a loan is a serious commitment with long term consequences, especially if you choose a secured loan deal, and so it's important that you only deal with reputable loan providers and brokers. But how can you tell if a particular site is trustworthy? While it's impossible to be 100% sure, the following pointers will give you a very good idea of whether you should proceed with an application or look elsewhere.
Firstly, you should never be asked to pay a fee up front, merely for making an application. These kind of loan sites are often scams, promising more than they can deliver, and you may well find that you pay the fee and get either nothing in return, or an offer of a loan that's so expensive that it's pointless taking it out. You might however be charged an arrangement fee once your loan has been agreed and you've signed on the dotted line - this is perfectly okay and normal, especially where there's an element of bad credit or self certification involved.
You should also avoid dealing with sites who insist on you telephoning a premium rate number as part of the application process. In these cases, it's very likely that you'll be kept hanging around listening to pointless but official sounding messages, all the while racking up a hefty bill. If you need to phone the loan arranger, it should ideally be on a freephone number, or at least a standard rate one.
Most of us find it easier and quicker to apply for finance online, and there are countless numbers of sites that allow this. However, not all of them feature a secure application form. It's not just credit card details that need to be protected online - the personal details asked for on the average loan application form would also be very useful to criminals engaged in identity theft, and so you should only offer information to a site with proper security and a valid certificate to prove it.
On a related note, you should check whether the site is registered under the Data Protection Act, which reassures you that the information you're parting with will be used correctly and ethically.
Finally, are the loan providers or brokers licensed credit brokers? It is a condition of providing credit or advising on it that the agent holds a valid consumer credit license issued by the Office of Fair Trading. This license can be withdrawn if the holder is found to be acting improperly, such as providing loans under false pretenses, or giving misleading information or advice. Thus, holders of a credit license are likely to be more trustworthy than some anonymous site that is unregulated and may not even be based in the same country as you.
Even if you follow all this advice, you could still come up against a lender who is more interested in their own profit than conducting business fairly. Remember though that you should never be under any pressure to take out the loan, and you can cancel the whole process without charge at any point up to signing the loan agreement.
Martin writes for ADM Online who supply personal bad credit loans for debt consolidation or any other personal use.
2007/11/18
The Right Moment to Refinance
You've heard that interest rates are at an "all time low" and you figure that's a good indication that you should refinance your existing mortgage. You may be right, but there are some things you need to consider before you decide to start the refinance process.
The first thing you need to know is the interest rate on your existing mortgage. Then, make a comparison between that rate and the one you might be offered in case you should opt to refinance. If the current interest on your mortgage is not at least one and a half or two percentage points higher than the present market rate, then, refinancing won't be an excellent opportunity for you. Besides, in a refinance you'll face closing costs that might include an appraisal and fees meant to pay off your existent loan in advance. In case your new interest rate should be hardly better, a long time will pass before you
had paid the amount of your new loan.
Another thing to consider before you decide that it's time to refinance is your future plans. If you are considering to move house in less than two years, a new loan is not worth the
costs. If, for example, you expect your job to require a move or you plan to sell your house soon for the equity you've accrued, you won't likely recoup the cost of closing a new loan.
Does this mean that there's never a time when refinancing is a good option? Not at all. In fact, there are some times when a refinance loan is an excellent financial move. Maybe you took out your original loan when your credit score was low and the only way you could get a loan was to accept a high interest rate. That's sometimes the case with first time buyers, but you might have increased your credit score if you've made regular payments for a couple of years. In that case, it could very well be time to refinance. You could take advantage of low interest rates and be increasing equity in a shorter time than with your existing mortgage.
It can also be that you had requested a loan at a time when credit and market conditions were adverse, and now it is a burden for your financial position. If you are currently financed at a variable interest rate, you may simply want the security of knowing the exact amount your mortgage payments will be each month. In these last cases refinancing could certainly be advisable.
Debbie Groves is the owner of Mortgage Refinancing People mortgage refinancing which is a premier resource for refinancing information. For more information, please visit http://www.mortgagerefinancingpeople.com
Article Source: http://www.eArticlesOnline.com
2007/08/04
Homeowner Loans: Take advantage of rising house prices
By: Sky Maid
The UK Market has seen house prices continue to rise through 2007. Consumer debt is also continuing to rise with the amount being borrowed on credit cards and loans hitting new highs.
A choice many people are currently taking is to use the equity in their property to help consolidate their existing unsecured credit into one homeowner loan – often called a secured loan.
These loans can range from £3,000 to £250,000 and don’t have to be used for debt consolidation. Homeowner loans can also be used for home improvements, holiday, cars, weddings or a combination of purposes. Unsecured loans are often over a maximum of 7 years. A homeowner loan can be taken up to 30 years so, although in the long term you will pay more, you should reduce your monthly outgoings.
Credit cards can take years to clear if you are only making the minimum payments. Credit cards with a balance of £2,000 – making a minimum balance payment of 2% - would mean it would take over 30 years to clear that card. If you continue to use the card then it would take even longer.
A homeowner loan can consolidate credit cards, loans, store cards, catalogue payments, CCJs, defaults and even utility bills. Chances are the lender will clear these for you as well – saving you the hassle.
If you want to carry out home improvements then chances are the improvements you carry out will actually increase the value of your property – it could be an extremely sound investment.
Many people worry that they are tied into a secured loan – this simply isn’t the case. You can clear your loan at any time – there may be an early repayment charge – but if you can clear your loan it will be in your best interests to do so. Some lenders will even allow you to move your loan across the property that you move to.
There are many secured loan and homeowner loan brokers in the market. www.loan-machine.co.uk submits your loan application to brokers who will fight hard to find you the cheapest APR for you. They will tailor make a loan that fits your own circumstances and credit rating and will make sure you are comfortable with the monthly repayments.
Homeowner Loans can use available equity in your house to help you clear existing credit cards and loans.
Find secured loans for homeowners and tenants including debt consolidation and poor credit history at www.Loan-Machine.co.uk
Article Source: http://www.eArticlesOnline.com
2007/08/02
Are Interest Only Mortgages A Good Idea?
If you are looking for a home but you know that paying a mortgage will be a severe drain on your finances, then perhaps you should look at getting an interest only mortgage. If you are unsure about what an interest only mortgage is and how it can help you, then this article can provide you with some useful tips on getting an interest only mortgage.
What is an interest only mortgage?
An interest only mortgage is a mortgage where you only pay back the interest on the loan, and none of the capital debt is repaid directly. Once you get to the end of the mortgage term, you will pay back the capital payment in full.
How do you pay back the capital?
Although you don't pay the capital back directly through your monthly mortgage payments, you indirectly pay for the capital. You pay for the capital through an investment fund or other lump sum. So, instead of repaying your mortgage capital each month through mortgage payments, you may monthly payments into an investment fund. Apart from investment funds, the other main ways to pay off the capital are:
Savings
Switching to a repayment mortgage
Another lump sum such as inheritance
What is the advantage of this?
Although you are still making monthly payments into an investment fund, these payments are likely to be a lot lower than the monthly mortgage payments you would pay on a normal repayment mortgage. Your interest only payments will be low each month and so if you cannot afford to pay a lot each month at the moment, an interest only mortgage might be a good idea. Also, the idea is that the money you put into the investment fund will mature and leave you with enough money to pay off the capital at the end of the mortgage term as well as leaving you with some extra money.
Are there risks?
Of course, there are a number of potential risks of getting an interest only mortgage. The first problem is that if you are hoping to pay off the capital by switching to a repayment mortgage later on, you will be paying back a lot more money than if you started on a repayment mortgage. Although you may find it hard right now, getting a repayment mortgage to start with might be a better option. However, the main risk involved with interest only mortgages is that the investment fund you set up will not be enough to pay back the capital at the end of the mortgage term. If you cannot pay back the capital then you could end up losing your home at a time in your life that it will hit you hardest, such as at retirement age.
If you are going to take out an interest only mortgage, make sure that the funding method you use is safe, and that you have contingency plans if the fund is insufficient to pay back the capital. If you do this, then getting an interest only mortgage can be a great way of keeping your payments low whilst you improve your income.
About the author:
Peter Kenny is a writer for The Thrifty Scot, please visit us at Remortgages and Home Improvement Loan Visit http://www.thriftyscot.co.uk
