Loan Approval
Innovative Credit Consultants defines the may types of loans and what they are used for. If you need to boost your credit for loan approval or for a better rate on your loan, contact us. Credit repair is possible--with the right information! Take a look at the following information: could your score be improved? When you apply you will have confidence in your loan choice. Credit Repair can help you get approval for the loans you need!
Private Loans
Private loans generally refers to educational loans through a bank or other private lender, instead of through the U.S. Department of Education. The interest rates are usually higher than for available Federal loan programs. Interest rates will be determined by the credit score of the applicant. Because students do not have a strong credit history, a lower interest rate can be obtained if there is a co-signer, such as a parent.
Federal Loans
Federal loans generally refers to one of the educational loans obtained through the U.S. Department of Education. There are a number of different types available such as Federal Perkins, Subsidized Stafford, Unsubsidized Stafford and PLUS loans. Interest rates are usually better than what can be obtained through private lenders, but are still determined by the applicants' credit score. The federal goverment does not provide direct loans for housing, but offers several programs to guarantee loans made by banks, resulting in lower interest rates. Some of these programs are for veterans, home energy improvements and for buying homes in disaster areas.
Auto Loans
There are a number of loan options available for buying a car. Car loans are secured loans, meaning that the car is used as collateral, and will be repossessed in the event of non-payment. Most banks have automobile loans available, and they can also work with a dealer directly instead of the consumer. Credit unions, similar to banks, will also have car loans available, and often at better interest rates. Some car companies also have an in-house financing branch that can make loans for purchases from their dealerships. These companies can offer such incentives to buy such as 0% financing. For all car loans, the interest rate will be determined primarily by the credit score. To qualify for 0% interest offers, a consumer will need to have a credit score in the top-tier.
Mortgages/Home Loans
Mortgages are loans used for purchase of a house. Home equity loans mean that the house is used as collateral, but can be used for anything. Both are secured, meaning that the bank can take possession of the property in the event of non-payment. These loans are available at most banks and through some credit unions and other direct lenders. Some of the factors in determining the size of the loan available and interest rate are the value of the property, the income of the applicant(s), credit scores and the repayment term. For every $100,000 borrowed over a 30 year loan, a 1% reduction in interest rate will save you about $25,000.
Personal Loans
Personal loans are loans from a financial institution for any purpose, and are not secured by any collateral. They will have higher interest rates than home equity loans or other secured loans. The credit score is the main factor in determining the interest rate.
Lending Laws
There are a number of laws designed to protect the consumer from unfair lending practices. The Truth In Lending Act requires lenders to have a clear disclosure of all terms associated with the loan, including all fees and the interest rate. The interest rate and fees must be specified as an Annual Percentage Rate (APR), even if the loan is for a shorter period, such as for payday loans. Many states also have predatory lending laws, which are designed to prevent private lenders from taking advantage of borrowers with such things as unjustifiably high fees. These practices are usually targeted at lower income consumers, who may have no other options at the time.
- Understanding Credit:
