Help With Payday Loan Consolidation -Mampalucia.Com

Credit with a car as security is one of the most common forms of financing. A real security that always offers a security advantage for the bank and thus easier lending. The article provides more on loans where the vehicle serves as security.

The car loan as security.

The loan with car as security is primarily offered by the vehicle manufacturer banks. With every financing, the vehicle serves as a loan security. If the buyer does not pay, the vehicle is recycled. The loss in value of the vehicle is usually compensated for by the down payment and the installments that have already flowed. So the car banks hardly take any risks.

The car loan is often used in the form of a balloon loan for new vehicles. These vehicle loans offered for sales promotion are characterized by particularly low interest rates at low rates. In some special campaigns, the manufacturer banks even completely forego the interest. The “big end” of a balloon loan is always the closing rate. While the current rates are small, the completion rate usually corresponds to the current value of the vehicle. If it continues to be financed, then the provider should be switched from the vehicle manufacturer bank to a direct bank. The interest rates offered by direct banks are often significantly cheaper than those from the car bank when it comes to further financing.

The vehicle letter as security for the installment loan.

Not only the purchase of the vehicle can be secured with the vehicle-Brief. A motor vehicle is always of great value. Once the vehicle has been paid off and the letter is available, it can also be used to secure other payment obligations. The loan with car as security is just as welcome with the local providers as with online banks. The additional property security can have a positive impact on credit decisions in the event of creditworthiness problems.

The vehicle is not rated as high as from a car bank. The car bank has a dealer network in the background. This makes it easier for them to sell the vehicle again. Other credit providers have to reckon with additional costs for marketing vehicles. But to close a credit gap, credit with a car as collateral is a very suitable means.

Virtually everyone in Germany can have a rather poor credit rating. If you have only forgotten to pay your installments or bills once, this will directly affect your credit rating and pose major problems when you have to apply for a new loan. In this case, however, there is a certain type of credit or loan: the instant loan without a credit check.

What is an instant loan without a credit check?

Basically, all the peculiarities and advantages of this loan are already mentioned in the general term. Because if you decide on such a loan without a credit check, the lender does not check the creditworthiness of the borrower. Because information is normally obtained from Credit Bureau for every loan application; in the event of negative information, the loan is in most cases denied directly. This means that people with a credit without a credit check have the chance to receive the money they need or want, even with a negative credit rating.

What are the basic conditions of this loan?

Basically, the fact that Credit Bureau refrains from asking is the only special feature that the instant loan has without a credit check. Otherwise, as with the other loans, you have free choice in terms of term, amount and repayment. Most providers also have no nasty surprises when it comes to interest rates. Of course, these are a little higher than for a loan with a credit check, but mostly only slightly.

Where can you get an instant loan without a credit check?

More and more credit institutions and providers have specialized in this special type of loan. So today you can find various offers, with different terms and conditions, especially on the Internet from numerous reputable providers. Incidentally, a detailed comparison is worthwhile, especially on the Internet, through which you not only get a lot of trouble, but also a lot of money in the first place.

Mistake # 1: choose the wrong funding

Cash payment:

There are four ways to buy a new vehicle:

The cash payment puts the buyer in a much better negotiating position. This is because the car dealer usually makes concessions on financing from the associated credit company. However, this is less relevant in times of low interest rates. Discounts can often be obtained here.

Special equipment, in particular, is often much cheaper due to cash payments. The reason for this is that many financing offers from the car dealer are often linked to specific equipment.

That is why the cash payment can also be worthwhile if a loan has to be taken out from the house bank. The bargaining room increases when buying cash and loan conditions can improve if you compare several offers.

Vehicle credit:

Conventional vehicle financing usually requires a down payment, but is then paid off using monthly installments. This ensures that spending remains calculable over a longer period of time and that car buyers only have problems with repayment if their financial situation deteriorates radically.

Balloon Financing:

For balloon financing, a down payment is made first. This is followed by relatively low monthly rates. After the installment payment has expired, the remaining amount is due in one go. Many consumers underestimate the final rate, which can be up to half of the vehicle’s value, quite considerably.

If you cannot pay the last installment, you must either return the vehicle or choose follow-up financing, which usually does not offer particularly good conditions.

Leasing:

Leasing is particularly interesting for companies due to the tax advantages. Individuals can also benefit if they value the latest models. Depending on the down payment, the monthly leasing rate is often lower than the repayment rates for a loan.

However, here too a down payment is due at the beginning, which can amount to up to a third of the vehicle value. Leasing contracts also make it possible to purchase the car at the end of the contract, which means that the leasing is more like balloon financing.

In addition, a closing rate is usually due, which depends on the condition of the vehicle. Leasing can therefore pose a financial risk if dealers assess the residual value based on signs of use far below the originally agreed amount.

What financing for the vehicle?

Basically, cash is the best option, since loans should only be taken out when it is really necessary. The majority of consumers still use vehicle loans. In order not to pay too much for a vehicle loan, future borrowers should in any case compare different offers and not just rely on the dealer.

Calculate in advance which monthly amount is available for the payment and choose financing that is as regular as possible! If you expect to be able to redeem the loan before the term, negotiate favorable terms. This protects you from suddenly having to raise a large amount, as is necessary with balloon financing.

So-called “short-term loans” are being advertised with increasing intensity. The central selling point: the loan is paid out in a very short time. Are there any Swiss loans with same-day payments? This article compares Swiss loan and short-term loan with all differences and similarities – and shows when which loan is the right choice.

What exactly is a short-term loan?

Loans with relatively small amounts and short terms are advertised under the generic term short-term loan (depending on the provider, also referred to as micro-credit or short-term loan). Depending on the provider, the maximum loan amount reaches between $ 3,000 and $ 5,000, but is significantly lower, especially for new customers. Loans in the lower three-digit range are the norm.

The loans are related to British Payday Loans: In Great Britain, small loans are advertised that are taken up, for example, a few days before the monthly salary to cover important expenses. The repayment is made immediately after receipt of the salary, including the accrued interest.

In Germany, terms of up to 30 days are common, and with corresponding additional agreements up to six months. Here, too, the loans serve to bridge financial bottlenecks in the short term. Typically, the providers advertise with a very quick processing and payment. In this way, the loan amount can be credited to the applicant’s account on the same day.

From a legal point of view, many of the short-term loan providers in Germany are intermediaries who mostly act on behalf of foreign banks.

Why are short-term loans now being advertised so strongly?

In Great Britain and also in Scandinavian countries, the principle of small, short-term loans has long been part of the credit market. Last but not least, it was British brokers who also offered the loans on the German market. A major reason for the expansion is, on the one hand, the lower costs for fully automated credit checks, and on the other hand, the generally greater acceptance of such offers.

Conditions: Differences between short-term credit and Swiss credit

The target groups of short-term loans and Swiss loans partially overlap. However, there are big differences between the two loan options.

A Swiss loan is an ordinary installment loan. Net loan amounts of up to approx. $ 7,500 with a 40-month term and effective interest rates of 10-11% are common. The lending presupposes a monthly net income from approx. 1100 $. In addition, there must be no hard negative features. This includes, for example, bankruptcies or affidavits.

Short-term loans are also only given to people with sufficient credit ratings. Proof of income and reasonable Credit Bureau information are typically required. However, borrowers with low income (e.g. from a 450 $ job) and relatively low Credit Bureau credit rating classes (e.g. class F) are also allowed.

The effective interest rates of short-term loans are in the range of 10-15%. Interest is by no means the main source of income for providers. The absolute interest amounts are low due to the manageable loan amounts and short terms; for $ 500 net loan amount and 30 days term, not even six USD are due at 14% interest.

Instead, providers earn money through additional services that the borrower makes use of when requested. For an express transfer with credit to the current account on the same day, depending on the provider, 30-60 $ will be charged. The same costs are due for the use of an installment payment. This enables the loan amount to be repaid in two installments. Mathematically, this can result in very high effective interest rates.

When is a short-term loan worthwhile?

Critics of short-term loans see their target group in consumers in precarious financial situations. The rapidly available liquidity does not solve fundamental financial problems, but only delays their escalation. Proponents of the offers see this as an opportunity to quickly obtain liquidity even for those who, despite a reasonable credit rating, have not been granted a credit line or an increase in it from their bank.

In addition, it should be noted that the alternative to a short-term loan is in many cases entering late payment. If rent, electricity bills or insurance premiums are not paid on time, on the one hand there are additional costs due to reminder fees, return debit fees, etc. In addition, the contract may be terminated with all the resulting consequences, such as homelessness or the end of energy supply.

With a short-term loan, however, no damage to personal creditworthiness that has already occurred can be averted. Credit Bureau will delete new entries for claims up to $ 2,000 if they are fully paid within six weeks. The shortened storage periods do not help in connection with short-term loans, however, because the existing Credit Bureau entries prevent borrowing.

On the other hand, it is quite possible to compensate for an overdrafted current account before the termination and to avert a negative characteristic associated with it, if the impending termination has not yet been reflected too strongly in the Credit Bureau scores.

When is a Swiss loan worthwhile?

A Swiss loan can be used to avert an impending termination of the account due to persistent overdraft. This applies in particular if the bank has only threatened to terminate the overdraft facility, but has not yet executed it.

The shortened storage periods of Credit Bureau can also be used with a Swiss loan. If the contracting party has sent the entry to Credit Bureau, it is not (necessarily) a hard negative feature. Borrowing is therefore possible and can be realized in good time.

However, it is important to act early here, as the persistent late payment can have further consequences even after notification to Credit Bureau. If these can be viewed in public directories, Swiss credit is no longer possible.

What happens in case of late payment?

Delayed payments have consequences for both Swiss and short-term loans. For Swiss loans, the EU rules on the bank’s right of termination apply, which are also laid down in Section 498 of the German Civil Code. The bank may always terminate loans with a term of more than three years if the borrower is in arrears with two successive installments in whole or in part and the outstanding amount amounts to at least 5% of the net loan amount. In the event of termination, the loan is due for immediate repayment. If this repayment is not made, there will also be a negative Credit Bureau entry and / or entries in public directories for Swiss loans.

The providers of short-term loans mostly sell their demands for an internal dunning procedure to external collection agencies. There is also a negative Credit Bureau entry.

Conclusion for comparison with the short-term loan

Short-term loans are the German variant of the Payday Loans: The loans are mostly repaid in one sum after 30 days. The providers, who often come from abroad, earn their money mainly with the fees for additional services such as same-day credit or installment payment options. New customers rarely receive more than $ 500, but do not have to earn too much and are also served with below-average Credit Bureau scores. The latter are irrelevant to Swiss loans: only public directories and the applicant’s self-disclosure are checked. Loan amounts of up to approx. $ 7,500 are possible at approx. 10-11% interest. The repayment is made in installments over several years.

Many car buyers are not even aware of the risk of debt. Dealers lure with seemingly attractive offers, where the car can be paid off over several years. Many cars are therefore pumped up regardless of their own financial situation and paid off over a long period of time in monthly installments.

Car finance on a pump – a dangerous model

When buying a car, the first question is whether it should be a new car or a used model. If you do not attach great importance to the car as a status symbol or do not drive a lot with it anyway, you can save a lot of money when buying a used one, because the loss in value is immense, especially in the first three to five years.

However, if you absolutely want to buy a specific vehicle model with a precisely defined special equipment, you often cannot avoid ordering a new car. And that can be expensive! There are hardly any models available at a price of 10,000 USD, the average new car in Germany even costs around 25,000 USD.

After the decision for a certain vehicle type has been made, financing is the central aspect when buying a car. Those who have the necessary change and can pay the car in cash not only avoid taking out a loan, but also have good cards with the dealer when negotiating discounts.

The majority of car buyers prefer to take out an installment loan and repay it at a monthly rate over a certain period of time. At this point, most car buyers make mistakes and misjudge their financial situation. Rational considerations are often pushed into the background when the new car is within reach. With some loan models, repayment does not start until months after the purchase, which is why the customer does not have to worry about the monthly charge when buying.

The different types of funding are listed below:

• Cash payment: The customer has the necessary change and can pay for the car directly. So there is no fear of debt and attractive discounts can still be negotiated with the dealer.
• The installment loan: The classic financing model is the installment loan, in which the customer pays a monthly installment over a certain period of time. The financing period is usually between one and six years.
• The three-way financing: With the so-called three-way financing, the contract usually runs between one and four years. After this period, the customer can decide whether to pay off the loan in one fell swoop, continue to finance the car at a monthly rate or return the car to the dealer.
• Leasing: Leasing is a rental model in which the customer pays monthly installments and returns the car after a certain period of time.
• The house bank: Of course, the customer does not have to accept the merchant’s credit model, but can also take out a classic loan with his house bank. Whether this is the better alternative has to be decided on a case-by-case basis.

When buying a car, the customer should not only think about the purchase price. The operating costs must also be taken into account, since they make up a not inconsiderable part of the total costs.

The running cost of a car

The car is so dangerous as a debt trap because the running costs are underestimated. Above all, these include:

• Taxes
• insurance
• fuel costs
• inspection
• tires
• spare Parts

In addition, the depreciation of the car must also be taken into account. This is included in the purchase price, but should also be considered when calculating the running costs.

The car debt trap can be circumvented relatively easily by not letting the user be tempted by the desire for an expensive car, but thinking rationally and making a decision on this basis. In any case, the expected costs should be calculated realistically in advance. If the financial framework is right, the risk of debt can be reduced to a minimum.