Breaking Down ‘Subprime Auto Loan
Subprime auto loans have become big business after the monetary expansion of 2001-2004, as well as subprime mortgages and other subprime loans. Financial institutions were so careful with money that they were looking for higher profits that could be charged from higher interest rates for subprime borrowers.
With the plus side, subprime borrowers cannot have another way to buy a car, so they are often willing to pay higher fees and rates associated with these types of loans.
Is It Possible To Get A Car Loan Without Certificates And Guarantors?
Many borrowers, spoiled by the fact that banks began issuing consumer loans under more simplified schemes, began to demand the same conditions for more massive investments. Therefore, increasingly, people who want to buy a car on credit, are looking for such financial institutions, where it can be done as quickly as possible. To outrun competitors in this field, some banks began to introduce sub-standard programs, not only for consumer loans but auto loans. However, like any medal, there is also a flip side here.
The primary document borrower interested in the bank, there is a certificate of income, which allows you to judge the solvency of the applicant. Voluntary refusal of its provision pushes the lender for serious risk, therefore, when offering car loans in advertisements without certificates and guarantors, some financial organizations are ready to risk only partially. Without requiring this document in its official form, they ask applicants to fill out an arbitrary certificate on their bank sample. Its content will be similar in many ways to the content of the form 2-NFL. Verify this paper will not print the company, but a phone call, which will come from the bank to the employer of the borrower. However, this option, although not much, but simplifies the receipt of credit, especially for people with “gray” income. Meanwhile, there are banks,
Negative Aspects Of A “Light” Auto Loan
Making a loan on a car without additional certificates, of course, has its positive aspects for the borrower, but you need to be prepared for the fact that the bank is sure to be insured against possible non-return of funds. So, some financial organizations provide “light” auto loans only to their current customers who have deposits here or participate in the salary program. When considering an application, the borrower’s age, his registration and the status of the credit history are given particular attention. All these three items must fully comply with the requirements of the bank. Also, the conditions for issuing a loan are toughened. For example, the initial installment is mandatory, which, under the standard car loan scheme, may not be introduced at all. Moreover, the size of the contribution will significantly influence which the interest rate for a car loan will be set for each specific borrower. So, with a minimum 20% contribution, the annual rate can reach 20%. If the size of the prepayment is 40% or higher, the loan value can be 10-12% per year. At the same time, the amount of the loan itself may be less than what is needed to pay the full cost of the car. The term of repayment of debt can also be reduced, and makeup only two years, instead of 5-7 years, with standard car loans.