The risky loans did not disappear after the financial collapse. Frightening mortgage loans, car loans and payday loans are still valid. Here are some tips to secure a loan.
Risky loans, agreements that can ruin financial lives, did not disappear with the recession. Dilapidated vehicle loans, mortgage loans, payday loans and loan scams are still valid. The economic crisis, fueled by risky loans, should have convinced us to be careful. But the memories are short. Therefore, here are six warning signs that should tell you to go back and four tips to get a safer
Anyone considering a loan should examine it carefully. This in case of being a mortgage loan, for car or any type of personal loan.
“Consumers should make sure to thoroughly review the terms of any loan before signing on the dotted line. They should also consider alternative options and ask questions about anything they don’t understand. ”
Here are three alerts of a risky deal:
Ads that promise “Without credit? No problem “,” We never said ‘No’ and things like that are tempting when you have no money and are leaving the credit basement.
But think about it: legitimate lenders risk lending money. To make sure you pay, they deepen your credit history. They also ask that you fill out an application that lists your assets, debts, expenses and sources of income and that verifies each of your claims. They will also get your permission to get your credit score.
So when a lender is not interested in all that, he is seeing problems, possibly a scam.
A loan that begins with a period of months or years in which you pay only interest may seem like a nice deal because the payments during this period are smaller.
And the problem is that, after all the payments you made in the interest-only period, you will still have the entire loan to pay. You are no longer closer to owning your car or home than before and still waiting for the loan.
Adjustable rate mortgages (ARMs) were a bad word when ARMs with risk characteristics led millions of homeowners to default in the period prior to the Great Recession.
The owners took ARM assuming they could refinance or sell when their interest rates went up. But millions were stuck when they could not refinance because they lost their jobs or the value of their home fell below the value of mortgages.
As a result, the United States saw almost 6 million foreclosures between 2007 and 2015.
There are good uses for adjustable rate mortgages. Sophisticated borrowers can, for example, use them in the short term when they have better uses for their own money. But that is risky unless you have cash ready to pay your ARM at the time the rate begins to rise.