Banks grant car loan despite poor creditworthiness.

A negative entry can appear very quickly in the Credit Bureau. Since the payment of the invoice overlapped with a reminder, the mobile phone bill was completely forgotten, as well as the installment payment at the mail order company. But not only the negative entries in the Credit Bureau signal a bad credit rating. Income could also be a hurdle that the loan seeker has to overcome if it is too low and does not meet the conditions of the bank. Many will now say, why does a car loan have to be taken out despite bad credit?

Meet the conditions

Meet the conditions

The car has long ceased to be a luxury item, and many employees have no way of getting to work if there is no car. The transport links, especially in the rural sector, are to be viewed differently than well. The same applies to the train connections. A car is then the subject of the loan request.

However, banks require the customer to be able to meet their conditions before accepting a loan. That is a sufficiently high income, the impeccable Credit Bureau, which is free of negative entries and the permanent employment. If the customer then only has to pay a few liabilities, he is the ideal bank customer. But many customers cannot meet at least some of the conditions and the car loan remains for them despite their poor credit rating. The credit opportunities are better with a car loan despite poor creditworthiness than a normal installment loan with bad creditworthiness.

The question arises for the customer if he buys a new car or a used one. However, a used car can also be expensive and cost a few thousand euros, which then requires a car loan despite poor creditworthiness. The customer has two options for financing the car. He can ask the dealer or a bank.

Traders work with partner banks that can offer a good loan offer. If the customer wants to finance his car through the dealer, the bad awakening will come. Because partner banks also require sufficient income and / or good credit, dealer banks are also bound by their regulations and reject the car loan despite their poor credit rating.

However, the customer does not need to despair if his loan request to the retailer bank has been rejected. If you are a good customer at a branch bank, you should first contact your house bank. A negative entry is not always the reason for a loan refusal. If it is only an easier negative entry, this entry could be explained in a personal conversation with the bank employee.

The terms and the credit protection

The terms and the credit protection

If the customer otherwise has regular income and there are no other payment problems, a car loan could be approved by the house bank despite the poor credit rating. The customer’s period of employment with his employer is also important. If he has been working in the same company for many years, this is rated as positive. If it is still a civil servant or a public employee, the customer need not worry, then the loan approval will be easier.

There is no threat of job loss with subsequent unemployment, so that the car loan could be approved despite poor creditworthiness. If several credit inquiries have already been made, all of which have been rejected, you should not look further. Here you should make a self-assessment with the Credit Bureau, in order to have older entries deleted. The creditworthiness will then be positive again.

If the entries are rightly noted in the Credit Bureau, the credit chances could be increased with a second borrower or a guarantor. These people could come from the customer’s immediate vicinity. But conditions are also imposed on these people. You absolutely have to be solvent, ie have a sufficient income, a positive Credit Bureau and a permanent position.

Likewise, the liabilities to be paid should be limited. These people must be able, if the borrower defaults, that the installments can be paid without any problems. This constellation is evident in a second borrower as well as in a guarantor. Both are liable for the loan if the borrower can no longer pay.

Of course, a car loan can also be approved despite poor creditworthiness if the customer can provide other property security. Think of a property, a life insurance that can be lendable or other valuable things. These things remain the property of the bank until the loan is paid off.

Basically, a car loan can be approved despite the bad creditworthiness, negative entries or insufficient income if the loan is secured. In addition, the loan can be granted for a specific purpose, ie the car or the vehicle letter will then be deposited with the bank as security. The customer cannot sell the car during the term of the loan.

If you can meet some of these credit rating increases, you should look for a cheap loan. To do this, he should use a credit comparison that he can find free of charge on the Internet. The loan amount, the term and the desired rate must then be entered. Then the customer is shown a current list of the best lenders.

The customer then not only sees the interest rate level of the loan, but can also read the terms and conditions of the provider. If a provider is found, the loan application can be made directly via the comparison. With the information to be provided in the form provided, the collateral to be presented can then be named, which will increase the credit chances.

However, the customer should be prepared that he will not receive a quick express credit or lightning credit because this type of credit requires a perfect credit rating. If there is a bad Credit Bureau or the income is insufficient, the loan is rejected. Banks use an automated check procedure for a fast loan, the customer with a poor credit rating will then fall out of the grid of the banks.

The car loan is then checked in individual cases despite poor creditworthiness and, as a result, takes a little longer.

The Credit Bureau free credit

The Credit Bureaufree credit

However, if banks reject the loan application, the customer can look around for the Credit Bureau-free loans. Here, a credit broker is a good starting point, because he knows banks that also grant a loan with poor creditworthiness. He also has contacts with foreign banks where Credit Bureau is not the decisive factor. For this, however, the income must be right and there must be a permanent job.

 

Use cheap loan interest rates for debt restructuring now.

The current low interest rates in the European Union are bringing golden times to borrowers and consumers who would soon like to take out a loan from the bank: Not only banks can currently borrow money from the Cream Banks as cheaply as never before – the institutes have recently been giving the best conditions also to their customers: Since the beginning of the year, numerous Infra Banks have significantly reduced their interest rates on consumer loans.

High savings potential through debt rescheduling

High savings potential through debt rescheduling

If you are currently planning a major purchase, you can now finance it at particularly low interest rates even without saving. But even consumers who took out a loan from a bank a long time ago are currently benefiting from the low interest rates: If you now pay a loan at a higher rate at your bank, you can save a lot of money by rescheduling a loan with a lower interest rate.

In order to calculate the savings potential that can now be achieved through a debt rescheduling, consumers should simply use a credit comparison to determine what interest rate level banks would currently charge for a loan in the amount of the remaining liability – afterwards, the interest costs associated with the existing, expensive loan would still be due during the remaining term, compared with the new, accruing interest costs of the cheaper debt rescheduling loan – the difference corresponds to the potential savings from debt rescheduling.

Easy debt rescheduling thanks to credit comparison

Easy debt rescheduling thanks to credit comparison

However, the savings in rescheduling are reduced at some banks by an additional fee: the so-called prepayment penalty. Some financial institutions charge this fee because they lose interest payments if the loan is repaid early. Although the prepayment penalty is between one and 0.5 percent of the outstanding loan amount, depending on the remaining term, in most cases the savings from rescheduling exceed this fee.

Contrary to what many consumers think, rescheduling an existing loan takes about the same amount of time as changing accounts: the consumer can use a loan comparison to conveniently apply for the desired loan from the sofa – the only important thing here is that the purpose of the rescheduling is direct is stated in the loan application. After the submission of the credit documents, a successful credit check and the payment of the loan amount, the new bank replaces the loan with the old bank using the borrower’s proxy.

What is the relationship between inflation and loans.

In recent years, the main Cream Banks have emphasized the need to create inflation in order to reduce the burden of debt. To do this, they have put into circulation huge amounts of liquidity that more or less have achieved the desired effect, creating inflation.

But what is the relationship between inflation and debt or loans? Although many people do not notice it, there is much more relationship than a priori seems.

Debt Burdens Go Down

Debt Burdens Go Down

Inflation is nothing more than a general increase in the general price level of a given country. In other words, inflation represents the reduction in the purchasing power or value of a currency since with the same amount of money we can acquire fewer goods or services.

When it comes to loans, inflation means a reduction in the burden of debt. In effect, since the debts represent the same amount over time and the value of the currency is less, the creditor will receive a lesser amount in real terms, that is, he will be able to acquire fewer goods or services when the borrower returns the loan.

For the debtor, on the other hand, inflation represents a reduction in debt burdens. If your salary is linked to inflation, you will have a higher disposable income for the same level of debt. In other words, you can allocate a higher income to pay your debts, which in the end is nothing more than a de facto reduction in the burden of this debt.

Inflation and loans: case study

Inflation and loans: case study

For example, if we have a debt whose total amount (including capital and interest) is 12,000 USD over ten years and our salary of 1,000 USD per month, we will allocate 100 USD a month to pay this debt, that is, 10% of our salary.

If inflation is 2% and our salary is linked to inflation, next year our salary will increase 20 USD per month, that is, our income will be 1,020 USD per month. If we allocate the same amount of money to pay this debt in percentage terms, we will pay 102 USD of monthly installment for the same debt, 10,000 USD in ten years.

In other words, instead of using ten years to pay our debt, we will finish paying the last installment at 9 years and 9 months, reducing the total time by 3 months. The higher the inflation, the lower the debt burden.

In reality, calculating the incidence of inflation on loans is much easier, since it is only necessary to subtract the interest on the loan from the level of inflation. If the interest is 5% and inflation is 2%, the real debt burden measured by the real interest that the debtor will pay is 3% (5% -2%).

Summarizing

Summarizing

The higher the inflation, the lower the debt burdens will be. This has a contrary impact on savings or the amount borrowed by the lender. Inflation reduces the real savings of families and companies in the same proportion.

This is the fundamental reason why countries and Cream Banks seek reasonable levels to avoid an increase in the real burden of debts that makes it difficult to repay them.