Bad Credit Loans, Auto, and Consolidation

Hello and welcome to! Here we strive to provide you with punctual information on the application process and general jargon for the various types of auto, consolidation, business, and bad credit loans as well as the many avenues for attaining them through individual or government sponsored support. Loans are a complicated math process for risk return investment strategies. Professional doctorate level accountants continually number crunch their internal systems for the optimal level of leverage for their company in line with the risk of failure, foreclosure, and defaulting that each industry faces.

It is important to understand the language of the system that any individual will eventually be involved in. From payday one-week cash loans to 30-year mortgages, every loan has a few things in common.  The first and most obvious is the amount of money the loan is taking out. In monthly payment calculations for auto, consolidation, or bad credit loans, this will be represented by the letter “L.” Generally the next figure to decide upon is the interest rate and the frequency of the payment. For simplicity the monthly interest rate is typically used in these statistics, although at times annual percentage rates (APR) are used for mortgages and auto loans.  Using those statistics, there is simple math equation which can calculate your monthly payment. The only complicating factor for this equation is if you have an adjustable rate mortgage (ARM). These rates have to be recalculated each time your rate changes, which is usually quarterly based on the prime rate reported by the Wall Street Journal plus a given error and risk adjusted amount.

Individual as well as business credit ratings play a massive role in the potential for either to borrow money. Typically, the past employment coupled with the credit rating is the primary criteria for lending from an investment bank or credit union’s decision. For an individual, their credit rating is recorded by Equifax, TransUnion, and Experian which offer their information on you to any loan application from small to large, after you sign a waiver permitting said business from doing so. For corporations, they have a little bit more leeway. There is a private rating system for businesses, although generally investment banks will requires an experienced loan officer to audit businesses for their potential line of liquidity, as opposed to a flat rate loan. The liquidity line, for comparative purposes, is dramatically larger, but in principle similar, to an individual’s credit card. Based on the size of the organization, revenue, and credit rating, they are given a maximum amount of access to liquidity and are penalized for paying late and going over their limit. However, unlike personal credit cards, the industrial credit card has a drastically reduced interest rate. Auto, consolidation, and bad credit loans are usually determined solely on the credit rating, with obvious exceptions for the last category.

Collateral is the next consideration for the loan process, on both the supply and the demand side. For small businesses and bad credit loans, this is probably the most important criteria. Since the credit rating that you might have is damaged or simply nonexistence, you have to rely on what you own to provide a risk mitigating amount for the investor, bank, or credit union. Bad credit loans rely on auto titles, mortgages, and employment history to validate their, relatively, small loan with high risk and correspondingly high interest rates. Usury ties into the conversation here, as the illegal exploitation of borrowers with exorbitant and exceedingly high interest rates. As per Supreme Court opinions, states have retained the right to develop and legislate their specific usury rates. For that reason, pro business states such as Utah, Colorado, and Illinois have high usury rates. These rates permit payday loan institutions to charge rate that, when annualized, can quite often be over 2000 percent. Auto collateral assists in mitigating the interest rate, or price, of bad credit loans.

As shown, there are a plethora of considerations to take into account when developing a plan and model for auto, consolidation, or simply bad credit loans. The jargon is dense, but we decipher it into colloquial language, while disseminating the information in the easiest possible medium: the internet. Please browse our site and see what we’ve brought to bear.


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