carcreditblog.co.uk

So with the banks being as unfriendly since I can remember, just how easy is it to get a loan at present and what is the difference between unsecured and secured loans? Well, in answer to the first question; very difficult! As things stand, even those with a good credit history can find it difficult to be successful in a loan application. Those with a poor or bad credit history are extremely unlikely to get a sizeable loan amount but even those of a smaller value are more likely to be at extortionate rates APR wise. In the banks eyes it is all about the risk. Maybe then they should have thought about this before they were lending extortionate amounts of funds to virtually any applicant over the last few years. Maybe then the financial economy wouldn’t be in such of a state. Anyway, moving on….. The difference between an unsecured loan and a secured loan is that one means having a person’s property written into the contract whereby if the repayments are not kept up to date, the owners’ property is at risk of being repossessed. Banks love these types of loans because they know that should things not go to plan for the loaner, they could find themselves having access to a property, which as we all know is a very good long term investment. In summary, if you have a good credit score then the chances are that whilst a loan may still be quite hard to come by, the chances are there will be something available to you. Those with bad credit though will find things much harder to come by. This is until things pick up in the economy (hopefully).

Yesterday I managed to speak with someone within the finance industry who is pretty clued up when it comes to cars, finance and the stock markets. He was saying that the although the amount of finance and credit currently being available from the lenders is less than it was six months ago, he said that the people qualifying for loans etc are those that are less of a risk and that their criteria should have been the basis for all applications many years ago. Instead, he said that the companies were so keen to offer credit to customers that even though there were huge elements of risk involved with such applicants, the higher rate of APR and interest they would gain would deem it beneficial. However, currently, those with a bad credit score are struggling to find a financial institute that will loan them the monies for a car, general purpose loans and credit card bills etc. He said that things should be how they were in past time where vigorous checks were carried out and very specific criteria needed to be met in order for a car dealership to issue car credit for example. The problem therefore lies with those that instigated this changed of criteria and therefore contributed to their own downfall in that those people who qualified under the new rules appear to now be the ones that are not making the repayments regularly.

Depending upon the credit score of car buyer, there are two categories that they will fall into. These are prime or sub-prime. Prime customers, have a better chance of receiving credit as these types of people have a good or above average credit score. Those who fall into the sub-prime category however, it means that they will find obtaining car credit a little bit more difficult as it means that they will have a poor credit rating. They can still obtain finance though, albeit at an increased rate of APR. The reason for this is due to the fact that the lender is taking more of a risk in providing a loan to someone who has a history of bad credit. Often, these types of deals are referred to as being a bad credit car loan. Most car dealerships offer finance to their customers and it is seen as a double bubble if they buy the car and take out a finance option with them given the amount of profit both generate. It is possible though that certain companies will only take on prime customers and so if you wish to buy the vehicle, finance needs to be given from somewhere else. There are many people online that offer sub-prime finance options so it won’t be too much trouble. Just a bit of research is needed.