INTEREST
RATES
Credit Cards
What’s considered
a good APR?
Generally
speaking, low-interest-rate cards drift around 10 %. There are some cards that
offer low rates like the Simmons First Visa Platinum features an ultra-low
7.25% variable APR and Atlanta's Associated Credit Union offers its Visa
Platinum Preferred with a 9.9% APR. However both of these cards are going to
require credit scores over 680 with the Simmons requiring in some cases scores
in the high 700’s.
Bad APR?
There are cards
that carry APRs well above the 22.99% mark, with First Premier Bank being the
worst offender at 36% APR. As you might assume high-interest credit cards
target those who have credit scores less than 650. Several industry experts
recommend that once you go over the 23% range then you should consider getting
a secured card.
Secured cards necessitate
that consumers put down a sum of money that is usually equal to the available
credit line that they will offer to you. Secured card APRs can range from 8.99%
to 22.99%, which is more than reasonable considering the lack of consistent
credit integrity displayed by its applicants. Remember the secured credit cards
are stepping stones to get you back in the credit card game, if you uphold your
end of the bargain then other credit card companies will begin trusting you by
extending credit to you.
Mortgages
Remember to notate that your credit report is not the same as your credit
score. In addition to viewing credit reports from the three major reporting
bureaus, you also should obtain your FICO® score.
FICO® Scores range
from 300 to 850, with the mean value score being right at 725. In all
actuality, the most favorable credit rates are typically extended to those with
scores of 720 or above but you can expect good mortgage interest rates at the 720 to 760 level and
up.
Homebuyers who pursue an FHA Loan one of the most common loan types
for first-time purchasers, can usually secure a loan if their credit is 630 or
over.
If you are applying for a "stated income" loan, whereby you
forego providing income verification to the lender, the lender will be looking
for a minimum FICO® score of 680 or higher. Banks don't like to assume all the
risk, so your good credit history is key.
Seventy to 80 percent of mortgage lenders use FICO® as their means of determining
your interest rate and the types of loan you qualify for; as interest rates
creep up, this difference can be significant.
Conversely 15 year rate will be lower than a 30 year
fixed rate.
Auto
Loans
The higher the credit
scores the lower the interest rate. Jack Gillis, public affairs director for
the Consumer Federation of America, estimates that only 15 percent of car
buyers qualify for zero percent offers from automakers.
Banks, Credit Unions and
dealers are the primary sources that perspective car buyers obtain their loans
from. The dealer often serves as a intermediary and can still offer loans from
all of the sources mentioned above.
Car dealers borrow money
at wholesale interest rates, which they then mark up and pass on to you.
Because the dealer's rate is lower, the rate you get may be no higher than one you arranged yourself.
Credit Unions make up
the smallest percentage of auto loans nevertheless they still offer the best
rates for consumers. Typically credit unions are one to two whole points lower
than the bank rates. The rates are generally higher on both ends if you finance
a used car versus a new car. For a
further comparison of bank and credit union rates, check websites like E-Loan
or Lending Tree.
If at first you don't
succeed, please don't try again until you have properly researched why you were
declined or rejected. Many loan applications automatically trigger a credit
check, each of which can knock a few more points off your credit score,
making what might have been a bad situation even worse.
Credit unions are a
great option usually because they're more likely to examine a subprime
applicant's circumstances and make exceptions if problematic credit history
results from one-time medical expenses, unemployment or divorce.
Check
Cashing Services
Check cashing services or payday loans are new sources of
money lenders that have recently entered the market. Hopefully none of us will
ever have to use these modern day loan sharks but I understand life happens and
there may be no more plausible options available. This is why I included the
below information, so that you make a more informed decision before deciding to
deal with these companies.
There are several advertisments that make payday lenders seem friendly and easy to deal with. However we've compiled six reasons to debunk this myth.
1.
The astronomically high interest
rate. The interest rates are between 264% and 1,000%.
2.
High payments due within days of
signing the loan. If you cannot make these payments no matter how fair you deem
that they are, you may soon find yourself in a never ending cycle.
3.
Extra, illegal fees and costs are
often charged. Need I say more?
4.
Compounding interest. This
translates to renewal fees and other illegal fees that you will owe and will be
forced to pay by any means necessary. This compounding interest makes it almost
impossible to pay off a pay day loan, because this causes rates to swirl way
above 1,000%.
5.
The dreadful second payday loan. Most people
will be forced to take out a second payday loan because of varying extenuating
circumstances. This can include lawsuits, predatory collection efforts and
those payments that seem to come all too early for anyone to get back on their
feet. A lot of consumers find themselves with payday loans all over the city. Now
you are robbing Peter to pay Paul, James and John.
6.
Lenders put clauses in their loan
documents which keep you from suing them if they do something illegal. This
means the pay day lenders can almost do everything they want to make you pay
the money without concern they will be sued for illegal practices.
Make sure to check your credit score for
accuracy before applying for any loan. If you have any more questions or concerns
contact us at your earliest convenience at 1-888-824-7622 or The Credit Genius.
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