Category Archive : Loans to help consolidate debt

Will ‘installment loans’ be the new payday loans?

For payday lenders, installment loans could soon become the new norm, due to proposed government regulations that would break the whip on payday debt debts. Under the existing model, a credit check is not required and the lender simply confirms that you have a fixed source of income before you approve your credit application. Extension date extensions are available for an additional fee. (See for more How termJoe Gargeryening works .)

As part of efforts to end costly payday loan payouts, the Consumer Protection Agency (CFPB) proposed a rule in June that would tighten the qualification criteria and minimize the costs incurred by borrowers. The CFPB says: “The proposed rule would require lenders to determine whether borrowers can afford to repay their loans. The proposed rule would also complete repeated debit attempts that increase fees and make it harder for consumers to get out of debt “In essence, these new safeguards would radically change the way payday providers do business and pose a serious threat to their business results.

Why the shift to installment loan?

money, installment loan

In early August, the Wall Street Journal reported a 78% increase from 2014 to 2015 in the amount of money borrowed as installment loans to borrowers with credit scores of 660 or less. Amounted to no less than $ 24.2 billion in 2015 – almost three times the amount borrowed in 2012, the article adds. Why the steep rise?

Simply put, payday lenders hope to avoid threats caused by the new CFPB rules by replacing traditional payday loans with installment loans. Their defense is that installment loans minimize the need to submit an extension because the borrower can repay the loan over time. However, this does not necessarily mean that payday credits are a more affordable option for consumers.

Is the payment model safer?

payday loan

It is possible that the CFPB has good intentions with this new proposed protection, but that borrowers may experience even more problems with the new model. “The prospect of harmful loans would continue to exist because the proposed rule would allow lenders to charge any rate and set almost any term as long as they make a” reasonable determination “that the borrower can repay the loan,” says the Pew Charitable Trusts. And the higher the interest, the longer the principal remains untouched.

According to the CFPB, payday loans are on average accompanied by an interest rate of more than 300%. To make matters worse, the borrower should also focus on lending and refinancing loans, which is around 10% of the loan amount, notes the Wall Street Journal. In addition, borrowers can get the luxury of a cheaper monthly payment, but the total amount that is waived to meet the loan will be Joe Gargeryijk because of the longer repayment period. To eradicate the problem, the Pew Charitable Trusts recommends that it CFPB changes proposed regulations to “include pro-consumer product safety standards, such as limiting loan payments to 5% of a borrower’s salary.”

The bottom line

The bottom line

Despite the efforts of the CFP to curb abusive practices in payday payments by proposing stricter screening requirements, money-borrower borrowers can run even greater risks. Although an installment loan requires more time to extend the repayment period, it is also more expensive because payday borrowers are still free to assess astronomical interest rates and would extend over a longer period. (For more, see The best alternatives to payday loans and Beware of guaranteed websites with payday loans .)

What type of real estate insurance to choose?

During a bank loan, the client must provide a solid guarantee to the organization to accept the request. This guarantee results in a good value asset or borrower insurance.

What to choose between group insurance or individual insurance?

These two types of home loan insurance each have their qualities and flaws. We talk about group loan insurance when it is offered by a subsidiary of the bank. A partner group is responsible for offering the guarantees sought by the lender in return for a contribution. In the past, the client was forced to choose group loan insurance to receive financial assistance from the creditor. Fortunately, this practice is over and the borrower is now free to choose his mortgage insurance provider. This product is characterized by its practical side since it is no longer necessary to look elsewhere. Its only drawback lies in its cost. The mortgage insurance offered by an insurer linked to the bank does not take into account the profile of each client.

The individual insurance is none other than an insurance of real estate credit subscribed outside the bank. The client is insured by an insurer that has no affiliation with the lending institution. Credit insurance is distinguished by a flexible rate that varies according to the needs and profile of the borrower. The contract is also very popular today thanks to this feature. The only downside is at the level of guarantee equivalence. Indeed, the bank has the right not to validate credit insurance when it does not provide the same guarantees as its group insurance. In addition, the presence of a multitude of offers available on the market can disorient the borrower when selecting an appropriate contract.

What is a borrower insurance broker?

There are two ways to make no mistake about the selection of the mortgage loan currently. The first solution is the use of a comparator identical to borrower . The site compares the existing offers and groups the information obtained from the user’s profile.

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The second option is to hire a mortgage insurance broker . The profession of the specialist is to assist his client in the selection phase of a borrower insurance. In fact, the professional’s network of contacts provides him with all the information concerning the most affordable credit insurance of the moment. However, it is better to use the comparator on borrower.io because the tool is offered free of charge while the broker will claim a fee for its services.

Optimize your real estate debt consolidation on buy-back.

 

In the case of the Swiss credit

If you need money at short notice, you can borrow money quickly and easily over the Internet today. Thanks to electronic applications and largely automated credit check processes, many credit providers are now able to pay installment credit within 24 hours. More and more consumers are turning to the possibility of bridging short-term financial bottlenecks with online instant loans. Especially in a low-interest phase, it makes sense to take better a cheap installment loan instead of saving a long time on his purchase.

But not everyone who applies for an installment loan, gets one granted. Banks in Germany base their lending on relatively strict criteria. Thus, certain professional groups such as self-employed and freelancers are much harder to get a loan from the bank than other customer groups such as permanent employees or civil servants. For people who have a negative Schufa, the likelihood of a loan commitment even tends to zero – at least in the German credit market. So a negative Schufa entry can quickly make a dash through the bill. Once an invoice is not paid – missed the opposition period – and then you have caught a negative trait in the Schufa. Unfortunately nobody asks afterwards how it happened and who was the culprit. Not infrequently, companies accidentally put a wrong bill. Those who do not become active as invoice recipients within the period of objection risk a negative Schufa, and that often comes at the expense of those affected. Regardless of whether you are looking for a flat or applying for a loan – a negative Schufa entry can often make life difficult for victims. For most landlords and banks in Germany look for new customers especially on a clean Schufa.Even if the bill, which was the reason for the negative entry, has long been paid, the entry remains a total of three full years in the Schufa file ,

So what to do if the bank says no? Unlike banks in Germany, Swiss banks are not soliciting information from the Schufa. Negative Schufa entries thus go unnoticed and thus can not influence the credit decision. If the applicant meets all the relevant requirements, there is nothing in the way of disbursement of the so-called Swiss loan. The sticking point: Compared to the credit check with banks in Germany, an important source of information is missing here to realistically assess the payment behavior and creditworthiness of the applicant. The Swiss bank therefore takes a higher risk than a German bank, which can make a good picture of the applicant on the basis of the Schufa score and the entries noted. This increased risk is compensated for by the Swiss loan on the one hand by relatively strict lending criteria and on the other hand by a higher interest rate .

Strict lending criteria for Swiss credit

Strict lending criteria for Swiss credit

Due to the increased risk that a debt free loan inevitably entails, the Swiss bank wants to protect itself as much as possible against a loan default based on a whole range of criteria. For example, a Swiss loan can only be given to civil servants or permanent employees with a certain minimum length of service with the same employer. Finally, it must be ensured that the borrower is in secure employment and has a regular monthly income. Again, this may not fall below a certain minimum amount. For example, in the case of a Swiss loan with a principal amount of € 3,500, the borrower must be employed by the same employer for at least 12 months and receive a monthly net income of at least € 1,210. If the claimant has one or more dependents in the household, these values increase even more. For the Swiss loan of € 7,500, the borrower must have been employed by the same company for 4 years, and his net monthly income must be at least € 1,860, depending on the number of dependents. In addition, the Swiss bank wants to ensure that the customer has paid off the Swiss loan with a high probability before the end of his life. Therefore, the applicant may not exceed a maximum age of 62 years.

Clearly defined conditions for the Swiss loan

Clearly defined conditions for the Swiss loan

Like the requirements for borrowers, the terms and conditions of the Swiss loan are clearly defined. The maximum amount that can be paid out on the Swiss loan is € 7,500 per person. Alternatively, a Swiss loan of € 3,500 or € 5,000 can be requested. For existing Swiss loans, an increase to a maximum of € 7,500 is possible. The interest rate is uniform for all borrowers and across all loan amounts 11.11% eff. APR. The repayment is made in constant monthly installments, the duration is uniformly 40 months. From the 6th month, the possibility of early repayment is granted. Unlike banks in Germany handle this, the paid-out Swiss credit is not reported to the Schufa and therefore does not appear in the Schufa file.

Conclusion

Conclusion

As the facts show, the Swiss loan places relatively high demands on the borrower. Only persons with a secure employment relationship and good creditworthiness have the chance of a Swiss loan. A negative Schufa does not play a role in the credit decision. Crucial for the Swiss bank is that the borrower is financially able to pay off his monthly loan installments on schedule. For many credit seekers in Germany, which were rejected at your house bank due to Schufaproblemen despite otherwise good credit rating, the Swiss loan can thus be the key from a seemingly hopeless situation.

Although the double-digit interest rate on Swiss credit is well above the interest rate level of many loan offers from online direct banks. But against the background that the financing bank assumes a comparatively higher risk with the Swiss credit – since no Schufa information is obtained, which represents for banks an important indication for the payment morality and creditworthiness of an applicant – the interest premium with the Swiss credit is quite justified ,