There is certainly nothing wrong with a lease to own vehicle if a borrower’s credit is really bad and they have no other alternative. On the other hand, if they can qualify for a subprime loan, the advantages include newer vehicles with lower miles, vehicle warranties that often cover the entire loan term and the chance to reestablish their credit and improve their credit scores.
In addition to credit scores, ability, stability and willingness to pay are taken into account when determining interest rates for borrowers with tarnished credit. Since each lender weighs these factors differently, determining the exact interest rate a particular applicant will qualify for usually can’t be done.
It’s absolutely critical that borrowers, especially those with tarnished credit, understand the information contained in their credit reports and know at least one of their credit scores. So, while one credit report from each CRA per year is free, it’s also reassuring to know that lenders such as Hyundai Motor Finance and Kia Motors Finance are beginning to furnish the all-important FICO score to their customers at no charge.
The new definition of consumer credit, as it relates to the Military Lending Act, recently proposed by the Department of Defense could go a long way toward protecting members of the U.S. military from predatory lending practices.
The latest credit trends are a mixed bag for problem credit borrowers. On one hand, lenders continue to work with credit-challenged borrowers.
To say that the loans issued by American Web Loan are predatory is putting it mildly – the interest charged by most payday lenders pales in comparison. The mere fact that tribal lenders can ignore the majority of federal and state lending laws should be a wakeup call to anyone considering this type of loan.
The latest report from the NCUA shows that credit unions continue to increase their share of vehicle lending. The issue that buyers with damaged credit face is that credit unions, as a rule, don’t buy as deeply as subprime lenders. But having said that, it never hurts to give your local credit union a first shot for a car loan.