Friday, August 21, 2009

Low Interest Car Loans for Money Saving Car Purchase

The world is increasingly becoming a busier place with the passing of each day. Time is money, and people are very conscious of the need for saving time and reaching their destination via faster and cheaper transport. What is more convenient than getting a car which is always at your disposal 24 hours a day and ready to take you to where you want to go in a jiffy with no questions asked? But cars are costly and cash is hard to come by these days. Here is where car loans come in handy, provided you are able to locate a proper one.
First of all, let us look into the initial steps we need to take for getting a car loan. The lenders will require a guarantee that they will be able to recover the loan amount from you. This could be your home, land or any other property that can adequately cover the lenders equity. The more sufficient the equity the lesser will be the interest, saving you substantial amount on interest rates by the time you come around to paying the last installment. If the loan amount is lesser than the value of the guaranteed asset, then you can expect even lower interest. However, those with bad credit rates need not despair too much. There are car loans specially tailored for such people, albeit with higher interest.
The next step is to look for other ways to save on interest and make your loan cheaper. You can achieve this aim either though choosing a package that minimizes the cost on interest or opting for a minimum monthly repayment schedule. Choosing the repayment duration is very important. Usually, lenders are happy and lower the interest if you choose repayment duration of three years and a down payment of about 20 or 25%. The higher the down payment you make, the lower will be the interest rate.
However, if you are short of cash and unable to shorten the repayment duration then it is better to try and lower the monthly repayment amount as much as possible while choosing a longer repayment duration of six or seven years. This will enable you to spread your loan burden to as many years as possible while limiting your monthly outflow to the minimum as dictated by your income. Choose favorable scheme that provide the lowest interest rate with desirable time duration. There are many such packages available, and it is fairly easy to locate one if you look enough.
Interest rates on car loans are available in variable and fixed options. Most people prefer a low fixed rate interest because they are assured of a non-variable low rate until the duration of the loan regardless of any hike in interest rates in future as is often the case in the loan market. This convenience is unavailable with variable interest rates as it can go up or down according to market conditions, and is totally depended on market flexibility.
Doing a thorough research of the car loan market and doing price comparison will make your task of buying a car easy with a substantial amount of money in saving. There are a number of online price comparison sites and sellers who can provide you instant access to the information you are looking for. You can also get in touch with other car loan users to get a first hand account of their experience. Buying a car is a costly affair, whether it is new or second hand, and knowing well about the market will enable you make the right decision and save precious cash.
It is also important to decide on the type of car you want to buy or whether you want a car at all. You need to consider the cost of running and maintaining a car. If you think that a car is a necessity for you and your family then opt for a car that gives good mileage and of a size suitable for your family. Utility and durability should be the criteria if you are purchasing a car for the first time. Sometimes, a second hand car can be as good as a new one but much cheaper.
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Thursday, August 20, 2009

Risks, Benefits and Procedures of No-Equity Loans

Home equity loan is a type of loan in which the borrower uses the equity in their home as collateral. But, there could be occasions when the home does not have any equity, especially if home values have decreased considerably or it has a second mortgage. In such cases it is often difficult to get a loan. Still, there are some ways to get a loan on the home, popularly known as no-equity loans provided you are able to meet certain terms and conditions.

The terms and conditions are mainly associated with your credit score and history depending on the requirement and policy of each lender. The lenders will want to see your credit report. So you need to check everything is in order before applying as you may get declined and this will affect your credit score even more. It will also help to determine the loan amount you can get, the lending schedule and the repayment schedule.

Some lenders require that you spend a certain amount of time living in that home prior to granting the loan. This period of time is not fixed and depends on your credit score and on the lender; some of them do not require it at all. But normally two months residing in the property is the minimum period of time required.

Additionally, you will have to pay significantly higher interest on these types of no-equity loans. In many cases, the interest can be up to 6% higher than a conventional equity loan.. Moreover, the closing costs and other fees will be higher. The amount you will have to pay depends on the policy of each lender, your credit history, income, financial position and so on.

If you get a Home Equity Loan without any equity in your house, you will have to pay private mortgage insurance. The amount varies, depending on your lender, your homes value and other circumstances. Also, because of the risky nature of these types of loans, you may have to do without any tax deduction on the amount.

However, if you try to borrow after you have built up some equity, you can expect to get lower interest rates and other financial concessions. You further reduce the costs by searching around for the best loan rate before signing any loan contract. Many financial companies are now offering no-equity loans, so it is fairly easy to lender both online and offline.

Compare closing costs is as important as rates, since this can be a hidden expense. By looking at the APR, which calculates both closing costs and interest, you can find who has the cheapest loan overall. The duration of the loan also impact the rates. It is advisable to opt for a shorter term period, if possible, because the interest rates will be much less than longer term loans.

Be careful of unscrupulous lenders in the no-equity loan market because they can manipulate your situation to their advantage. If a homeowner defaults on the mortgage, these lenders will quickly foreclose on the property. Additionally, if the amount owed is more than the value of the home, the homeowners are required to pay the difference.

Hence, it is very important that before engaging with a lender, you should be aware of the benefits and the risks as well as the procedures of taking the loan. Research enough information about the practice so that you can have a clear idea on what you are about to go through. If such a loan is your last resort, you must consult with your licensed expert before taking the plunge.

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