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Can I transfer my car loan to someone else?

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While you probably weren’t planning on selling your car before the end of your loan term, a lot can change over the course of a few years. This can make you wonder if you can transfer your car loan to another person.

If it is possible to sell your car while it is still under financing, it is unlikely that your credit agency will allow you to transfer your loan to someone else.

The reason is quite simple. Banks and other lenders are required to comply with ASIC’s Responsible Lending Conduct Obligations, which state that credit license holders should not enter into a credit agreement with a consumer if it is not appropriate. to the consumer.

Before a lender approves a loan application, they will determine whether the loan amount, interest rate, repayment fees, loan term, and other factors are appropriate for personal financial circumstances. of the borrower.

If the lender allowed you to simply transfer your car loan on behalf of someone else, they would be in breach of their obligation to carefully assess the person’s financial situation and determine if the loan is right for them.

After all, the loan product that is best for your financial situation won’t necessarily be right for someone else.

Fortunately, there are other options.

How do I sell my car before paying off my loan?

If you need to sell your financed car before the end of its loan term, you will usually have the following two options:

  1. Use your savings to pay off the balance owing, then sell the car to recover the costs, or;
  2. Put the car up for sale and ask the buyer to pay off the loan balance upon the transfer of ownership.

If you are able to tap into your savings and pay off your loan before you put your car up for sale, you may find it easier to attract serious buyers because it will no longer be crowded. This option can also make the sales transaction easier, as the buyer can simply make payment to you directly.

If you are unable to repay the loan before you sell your car, you can use the money you earn from the sale to pay it off. Just make sure you are transparent with potential buyers when selling an underfunded car.

Many credit providers will allow you to process the transaction at a branch, so that the buyer can be present to witness the repayment of the loan before ownership is transferred to their name.

If you sell the car for more than what is owed on the loan, you can expect to receive the balance after the costs are covered. On the other hand, if you sell the car for less, you will have to pay the gap.

And if the buyer is considering using an auto loan to purchase the car, their credit provider should be able to contact your credit provider directly to go through the transaction process.

Whichever option you choose, keep in mind that you may be charged prepayment and exit fees if you pay off your loan before the end of its term.


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Get a Debt Consolidation Loan With Bad Credit

Obtain a debt consolidation loan If you have bad credit, you may need to shop around, but there are options including loans from credit unions and online lenders.

Some lenders cater to borrowers with bad credit (a credit score below 630 FICO) and consider factors other than the score, such as education, income, and work history.

A debt consolidation loan should have an interest rate lower than the combined rate of your current debts and allow you to pay off the debt faster. Here is how to get a debt consolidation loan with bad credit.

Check your credit report

Are errors on your credit report the reason your score is low? Check for errors such as bad accounts, incorrectly reported payments, or inaccurate credit limits.

Until April 2022, you can check your credit report weekly for free at each of the three major credit bureaus – Experian, Equifax, and TransUnion – using AnnualCreditReport.com.

Even a small bump in your credit score can increase your chances of qualifying for a debt consolidation loan. Going from a bad credit score to a fair one (a FICO score of 630 to 689) could also lead to a more affordable loan with a lower interest rate.

Improve your debt ratio

If you don’t need to consolidate your debt right away, consider ways to increase your income and pay off small debts. It improves your debt to income ratio, which lenders use to assess your ability to repay a loan. The lower the DTI ratio, the more likely a lender is to approve your loan application.

Add a co-signer

Some lenders allow co-signers, which can help you qualify for a loan and get a lower rate. As a general rule, the credit score of the co-signer must meet or exceed the minimum requirements of the lender.

Compare the prices

Compare the interest rates and terms of several lenders to get a loan with repayments that match your budget. You can prequalified with most online lenders and see the estimated rates. It involves a smooth credit check, which doesn’t hurt your credit score.

Buy user-friendly features like direct payment to creditors, which means the lender sends the loan funds to your creditors, simplifying the process and eliminating any temptation to use the money for something else.

Where To Get A Debt Consolidation Loan For Bad Credit

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Credit unions

Credit unions are nonprofit financial organizations that can offer more flexible terms and lower rates than online lenders.

Federal credit unions cap annual percentage rates on personal loans at 18%.

Credit unions generally do not allow you to pre-qualify for a loan; the application requires a serious credit check, which can temporarily hurt your credit score and make shopping more difficult.

You also need to become a member of the credit union to apply for a loan, which can mean living or working nearby and paying a small membership fee.

Online lenders

Online lenders provide fast financing, as you can often complete the entire loan process online and get financing within days.

Online lenders can charge higher rates for bad credit borrowers than credit unions. In 2020, borrowers with bad credit (less than 630 FICO) qualified for an estimated average APR of 28.7%, according to a NerdWallet survey.

Online lenders can also charge assembly costs that cover the costs of processing your loan. The fees are usually deducted from the loan proceeds, so you may need to apply for a larger loan in order to get the full amount you need.

Reached is one of the best lenders online for bad credit loan. It accepts applications from borrowers with bad credit, and if you use the loan to pay off credit card debt, Upstart will send the funds directly to your credit card issuers.

To improve also considers bad credit applicants. If you get a debt consolidation loan and Upgrade sends the funds directly to creditors, you may qualify for an additional rate reduction (ranging from 1% to 3%).

Alternatives to debt consolidation loan

If debt consolidation loans don’t work for you, here are some possible alternatives.

Debt Snowball Method

The debt snowball method uses early earnings to keep you on track to free yourself from debt. In this method, debts are classified from the smallest balance to the largest. Then you prioritize paying off the smaller debts, even if other debts have higher interest rates.

Once the smaller debt is paid off, put the monthly payment for that debt on your next smaller balance until it is paid off. Continue to defer payments on each debt until you are debt free.

Debt management plan

A debt management plan from a nonprofit credit counseling agency can help you lower your interest rate and pay off your debt faster. This is an option if you have credit card debt and can stick to a payment plan for several years without using credit cards.

Bankruptcy

Paying off your debts in bankruptcy may be an option if you are overwhelmed with debt and it will take you five years or more to pay it off through consolidation. Bankruptcy wipes out most types of unsecured debt, including credit cards and medical bills.

While your credit score may initially suffer, it should start to recover within months of filing for bankruptcy.

Frequently Asked Questions

Some ways for borrowers with bad credit to get a debt consolidation loan include correcting mistakes on your credit and finding lenders who take into account factors other than your credit score, such as education and creditors. employment history.


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Difference between secured loan and unsecured loan – Forbes Advisor INDIA

Borrowers are often offered different types of loans, such as personal loans, cash loans, payday loans, business loans, etc. In general, all loans are distinguished as secured and unsecured. Here is what you need to know about the difference between these loans and the ones you should go for.

What is a secured loan?

As the name suggests, a secured loan is secured by something that can replace payment in the event of default by the borrower. This substitute is called “collateral”. The collateral can be your house, car or other things that are dear to you, the amount of which can cover the loan you have borrowed. Banks usually ask for collateral when the loan is too large. Since borrowers inevitably default, banks use collateral to cover the loan amount.

For example, if a house is used as collateral and the borrower is unable to repay the loan, the bank has the right to seize the property and sell it. Once foreclosure begins, the borrower must relinquish their ownership interest in the property.

Benefits of a secured loan

  1. Approval of secured loan application

The first advantage of applying for a secured loan is the secured approval. Who wouldn’t want a loan application with quick approvals? Banks and other lending institutions tend to approve borrowers if they can present collateral for the amount of the loan sought. If you have a property like a house or a car and you need the cash right away, you can easily get what you need by pledging your property. If you intend to repay the loan regularly, you don’t have to worry about foreclosing on your collateral. So, remember to pay your loans on time periodically.

  1. No need for a guarantor

Since the collateral serves as a backup, you don’t need to present a guarantor or co-borrower in most cases. Banks and credit institutions accept guarantees as the only safeguard as long as they meet the criteria they have defined.

  1. You will be encouraged to repay your loan in full

Finally, with a secured loan, you will be encouraged to repay your loan in full. Your property is pledged and there is a risk that the lender will seize it if you do not pay. That’s enough encouragement to get you to pay on time if you don’t want your assets to be wasted.

Disadvantages of a secured loan

  1. You must abandon your property in the event of default

While a secured loan offers some benefits, it also comes with a risk. The first risk you need to take is the idea that you might have to give up your property in case you can’t pay the loan anymore. This is the very reason why loans have collateral. If the borrower can no longer pay, the lenders will use the collateral to pay off the loan. It is a big risk for borrowers.

  1. The fair value of your collateral must be greater than the amount of your loan.

Another downside is the fact that your collateral must meet the standards set by banks and credit institutions. The fair value of your collateral is essential in this type of loan.

In most cases, lenders determine fair value based on market prices. They do the assessment as part of the process. If your property does not meet the criteria or standards, you may need to provide another property to pledge. Otherwise, your request will be rejected.

  1. If you have no property to pledge, your loan application will be rejected.

If you don’t have a property to secure as collateral when you apply for a secured loan, then this loan is not the right one for you.

What is an unsecured loan?

An unsecured loan is the type of loan that does not need collateral. As the name suggests, it is unsecured, meaning that the bank or lender has no property to seize if the borrower defaults. Unsecured loans are useful for people who do not own properties or do not want to pledge their assets. It is also a good option for those who need cash immediately.

Benefits of unsecured loans

  1. It is not necessary to involve your assets

The first reason why unsecured loans are good alternatives for borrowers is the fact that no assets are needed to get a loan. This means that whether or not you own a home, you can apply for loans as long as you qualify and have all the necessary documents.

  1. High credit scores and good credit records are often enough

Unsecured loans are also favorable to those with high credit scores and good credit records. Most often, the credit scores are enough to qualify you for unsecured loans. For example, if you are applying for a cash loan, you don’t need to provide a lot of documents if you have a high credit score. It’s easy to get approval if your records are good.

  1. Easy application process

Since unsecured loans don’t need collateral, you don’t have to go through the appraisal process and wait for the lender to determine the fair value of your property. For borrowers, this means an easier application process. All you need to do is submit your documents and wait for approval.

  1. Immediate cash for qualified borrowers

Unsecured loans are also intended for those who need immediate cash. You no longer have to look for collateral if you are qualified. Prepare your documents, show your credit scores to your potential lender, and get your loan approved quickly. For those who are looking for short term loans, unsecured loans are ideal.

Disadvantages of unsecured loans

  1. High interest rates

Since the loan is unsecured, banks and lending institutions impose high fees and penalties on those who violate the terms and conditions. Although you can get the loan right away, you will have to pay high interest rates later on. Some borrowers can tolerate this inconvenience, but it is costly.

  1. Bad credit records if you default

If you don’t pay on time or if you default, the lender will have to report it, which means your credit records may be affected. Plus, bad credit will affect your future loan applications. So if you want to avoid this, you need to plan your payment timely and wisely.

  1. Strict loan conditions

Finally, banks and other lenders are strict about enforcement. If you do not meet one or two conditions, your application will be immediately rejected. That is why it is essential to submit your complete documents on time. Although the bank will follow the necessary details in an incomplete document submitted, they may put your request on hold for review at a later stage.

How to choose between secured and unsecured loans?

The answer depends on what you are looking for and the purpose of the money you want to borrow.

For borrowers with a large loan amount

Secured loans are best for long term borrowers and those who need a large amount of money. If you are borrowing to pay for your children’s school fees, renovating your home, buying another property, or other expensive things, secured loans are suitable. This type of loan has a low rate of interest. Even if your payment plan takes a year or more, you won’t be paying big on the interest.

For short-term borrowers

For borrowers who will be using the money for monthly expenses, medical bills, or other short-term expenses, unsecured loans are preferable. However, remember that you have to pay high interest rates. This is the risk that you have to take when you borrow unsecured loans. If you also don’t have any properties to put as collateral, unsecured loans will be your only choice.

Final result

The type of loan that you can get will depend on many factors. You should also consider the requirements. If you think that you are not qualified for secured loans, try to apply for unsecured loans. If you need the cash right away and want secured approval, then secured loans might be a better choice.


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How to get away with the best car loan

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Buying a car is one of the most important purchases of your life, after your home. But, unless you have a lot of cash to spare, you will likely need to borrow money to buy a new or used car.

This is what you need to know.

What is the price of a car now?

The cost depends on the make, make and model of the car, as well as any additional features such as additional trims, in-car infotainment, and parking sensors.

For reference, you’ll likely pay between £ 12,000 and £ 17,000 for a small car like a VW Polo or Ford Fiesta, while a larger Ford Focus can cost anywhere from £ 22,000 to £ 36,000 – and You’ll pay more for a premium SUV or sports car.

However, as soon as you leave in a shiny new car, its value begins to drop. Buying a used car from a dealership or private seller is a more profitable option.

Compare personal loans from the best lenders

Check your eligibility for a range of loans without affecting your credit score.

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How can I raise money?

There are different financing options when you have just bought a car. If you are buying from a dealership, chances are you will be bombarded with options ranging from hire purchase (HP) to personal contract purchase (PCP).

But if you need to borrow money, one of the easiest and most popular options is a personal loan. It can also be an inexpensive way to borrow over a period of time, depending on your credit history and provided your repayments are manageable.

What is a personal loan?

A personal loan is in the form of an unsecured loan, which means that the money you borrow is not secured by an asset. Thus, the lender will not take possession of your car or your house, for example, if you do not meet the repayments.

When taking out a personal loan, you borrow money and repay it over a fixed period with fixed monthly payments. You repay the loan along with the interest, but receive the money up front.

Beware that if you fall behind on repayments or fail to pay off debt, you will face penalties, a tarnished credit history, and may be sued by a debt collector.

How much can I borrow?

You can usually borrow between £ 1,000 and £ 50,000 as a personal loan with terms ranging from one to 10 years. You can reduce your monthly payments by choosing a longer period. But remember, the longer you take to pay off the debt, the more interest you’ll end up paying.

How much will I pay in interest?

The interest rate you are offered will depend on your personal financial history or credit history, and how long and how much you borrow. Keep in mind that the ‘representative’ annual rate (APR) is generally only offered to 51% of loan applicants. Before deciding on a lender’s rate and offers, the lender performs an eligibility check of your financial history.

Right now, the cheapest loan rates at around 2.8% are available if you borrow between £ 7,500 and £ 25,000, provided you have an impeccable credit history, reaching 12.3% on loans under £ 3,000.

How to get a personal loan?

Check out a comparison service to find a range of potential offers from various lenders. Just enter your basic personal information, as well as how much you want to borrow, for what reason, and for how long.

Once you complete the application process, the money will be sent to your bank, so that you can pay off the car directly and start paying off the loan. It can take anywhere from a few hours to several days for a loan to be approved.

Compare personal loans from the best lenders

Check your eligibility for a range of loans without affecting your credit score.

Compare loans

What are the advantages of a personal loan?

  • Once you use the loan to pay off the car, you will become full owner of the car. Some other forms of financing are more like a lease and require you to return the car.
  • Whether you have a good or an excellent credit rating, personal loans are generally less expensive than financing packages offered by car dealerships.
  • You can choose to buy a car privately or through a dealership with a personal loan – so you potentially have the widest choice of cars.
  • This is an easy way to borrow a large amount of money, provided you meet the lender’s eligibility criteria.
  • The loans are flexible, as they are offered over a variety of periods, from one to 10 years. However, the longer the term, the more interest you will pay overall.

What are the disadvantages of a personal loan?

  • The impact of the global pandemic has prompted lenders to tighten the criteria for accepting loans, so there is a chance that you will not be accepted for a loan. Check with a personal loan comparison service to find out which lenders can accept you.
  • Your payments may be higher than some forms of financing, such as leasing agreements where you actually lease the car over a few years.
  • You will be responsible for maintaining and making all repairs to the car as the owner after you use the loan to pay it off.
  • If you change your car frequently, you will need to sell it and buy a new one when the time comes. Other forms of funding may be more appropriate in this scenario.

What are the other options?

There is a huge range of financing offers available when buying a new car. Here are other ways to raise money:

0% credit card

You pay no interest, but you may struggle to get a credit limit high enough to buy the car, depending on what you want.

Personal Purchasing Contract (PCP)

You take out a loan but you won’t pay off the full value of the car or own the car at the end of the transaction. Either you keep the car by paying a lump sum remaining at the end of the transaction, or you return it or partially exchange it for another car.

Rent Purchase (HP)

You make a deposit and pay the cost of the car in monthly installments. However, you will not own the car until you make the final payment.

Car leasing (also known as personal contract leasing)

Similar to leasing, and potentially a cheap option, but you will never own the car. You pay a monthly fee and return the car after a few years.

When buying a car, be sure to compare the options available to you before deciding which one is the most appropriate – and make sure you understand the financial responsibilities and implications involved in any transaction.

Peer-to-peer loans

Another way to raise the funds needed to pay for a car is to opt for a peer-to-peer loan (P2P). Less traditional than relying on a bank or a mortgage company, this form of loan is carried out via specialized online P2P platforms that connect lenders directly with borrowers.

Interest rates can be competitive for potential borrowers with a decent credit record, but less when the record is uneven. There will be an arrangement fee to pay and the level of consumer protection in place will depend on the loan being taken out and who is lending it.

Compare personal loans from the best lenders

Check your eligibility for a range of loans without affecting your credit score.

Compare loans

Frequently Asked Questions

How to limit reimbursements as much as possible?

Either choosing a cheaper car or borrowing the least that you actually need for a car are the best ways to reduce your loan repayments. Extending your loan for a longer period will reduce your monthly payments, but you will end up paying more overall.

Can I repay my loan early?

Yes, but there may be financial consequences depending on the company granting the loan. Some lenders allow you to prepay a loan without imposing a penalty. However, other providers may charge you between one and two months of interest for the privilege. Check with the lender before taking out the loan.

What happens if I miss a payment?

At first, the lender will contact you to see why this was the case. If missed payments become a recurring event, you will be recorded as “in default”. This will show up on your credit report and hinder any future attempts you make to obtain new financing. Let the problem continue unresolved and you could face legal action or even a visit from bailiffs.

If you’re having trouble, the sooner you tell the lender, the better. They may be able to suggest another payment plan.

Can I Get Auto Credit With Bad Credit?

Yes, but your options may be somewhat limited. Some lenders specialize in this area, such as those who offer “guarantee” loans when a family member or close friend promises to repay the remainder of a loan if the borrower defaults. Expect to pay a much higher interest rate in this situation to reflect your riskier financial situation.

Do I have protection when buying a used car with a loan?

If you buy a car that has a defect or goes badly, your rights and options largely depend on who you bought the car from and how it was described. Expect less legal protection from a private sale or car auction, compared to buying from a dealership.

With the latter, you have statutory rights under the Consumer Rights Act 2015 which states that a car must be “of satisfactory quality”, “fit for purpose” and “as described”.


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Can I extend the term of my auto loan?

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Buying a car is one of the most important financial commitments the average Australian will make, this is where vehicle financing comes in. duration of the auto loan.

The main reason you might want to extend the term of a car loan is usually to reduce your regular repayments. A short-term car loan typically lasts between 1 and 3 years, and a longer-term car loan is 3 to 5 years, with some car loans extending up to 7 years and more.

Depending on your interest rate and your costs, the shorter your auto loan, the higher your current repayments, but the less interest you will pay over the term of the loan, and vice versa for longer-term auto loans. . And if you’re having financial difficulty, it can become difficult to keep paying off the same higher repayment amounts on a short-term car loan. This is where extending the term of your car loan can be helpful.

For example, a $ 20,000 car loan with a 6% interest rate has very different monthly payments and total interest when you compare a loan term of 2 years and 5 years. While a 2 year car loan may charge less interest overall, the monthly repayments are more than double what is charged on a 5 year car loan.

Repayments on various auto loan terms – $ 20,000 loan at 6% interest rate

Auto loan term Monthly repayments Total interest charged Total cost of the loan
1 year $ 1,721 $ 656 $ 20,656
2 years $ 886 $ 1,274 $ 21,274
3 years $ 608 $ 1,904 $ 21,904
4 years $ 470 $ 2,546 $ 22,546
5 years $ 387 $ 3,199 $ 23,199

Source: RateCity.com.au. Note: Hypothetical repayments based on a $ 20,000 loan at 6% interest rate. Does not take into account fees or rate changes.

Your auto lender may allow you to extend the term of your auto loan by refinancing your loan. Let’s explore how car loan refinancing works and the potential benefits and negative effects of extending your car loan term.

How to refinance a car loan?

If you need to extend the term of your car loan, you may want to consider refinancing your car loan. Usually, auto loan refinancing involves switching from one loan to another, but most often with a new lender.

If you want to stick with your current lender, you may want to speak with a customer service representative to see if internal refinancing is available to you based on your financial situation. But if you want to extend your loan term and switch lenders, you will need to do your research.

There are a few simple steps you can take to help you find a shortlist of competitive car loan options:

  • Jump online and compare – Use comparison tools, such as charts and rating systems, to filter and compare car loan options. Comparison charts can help you compare apples to apples better, as you can see the pros and cons of different car loan options side by side. Comparing interest rates, fees, and features can help you get a complete picture of which new loan is best for your finances.
  • Do your math – You’ve narrowed down a shortlist of potential auto loans. Now is the time to see how these loans can fit your budget. If you are extending the term of your car loan for financial reasons, this step can be vital. RateCity Auto loan calculator allows you to enter loan amount, loan term, and interest rate to find out the estimated repayments for the new loan.
  • Financial health check – The last step to consider before refinancing your car loan is to assess your personal finances through a financial health check. This is essential to help reduce the risk of your application being rejected for not meeting a lender’s eligibility criteria. Just because you’ve been approved for a car loan once, doesn’t guarantee instant approval the next time.

    Review your personal financesincluding your credit report and credit score, and look for mistakes, debts that need to be paid off, and areas that can be improved. For example, if you are extending the term of a car loan for budgetary reasons because you recently lost income or your job, it may mean that you are not eligible for refinancing. You may need to meet certain minimum income to be approved for refinancing a car loan. Or, if you’ve racked up a lot of debt with multiple credit cards while paying off your car loan, it can put your application at a disadvantage until those balances are paid off.

What are the advantages and disadvantages of extending the term of your auto loan?

Making the decision to extend the term of your car loan is a personal decision, not a decision to be taken lightly. It is important that you weigh the pros and cons of extending the term of your car loan before proceeding.

Benefits of extending the term of an auto loan:

  • Fewer refunds in progress – As illustrated above, the longer the term of your car loan, the lower your current repayments.
  • Reduced interest rates and fees – If you choose to refinance with a new lender, you may be able to get a lower interest rate or lower fees with your new car loan.

Disadvantages of extending an auto loan:

  • No more interest charged – Again, as illustrated above, extending the term of your car loan means that you will be extending the period during which interest will be charged on your loan amount. This means that you could potentially pay more for a car loan than if you had kept a shorter loan term.
  • Change fee – Some lenders may charge a variety of fees to refinance a car loan, including an exit fee from your current lender and upfront and ongoing fees from the new lender.


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22 accused of stealing $ 11 million in business loans to buy luxury cars and jewelry

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The US Department of Justice announcement On Thursday, he indicted a total of 22 people over a scheme in which they set up more than a dozen bogus companies to seek and steal $ 11.1 million from the Payment Protection Program, which gave companies aid financial support to help them get through the economic disruption of the coronavirus pandemic.

Highlights

Federal prosecutors have charged 22 people from five states, Michigan, Georgia, South Carolina, Florida and Illinois, with crimes such as wire fraud, bank fraud and money laundering.

According to court documents, the group applied for PPP loans on behalf of 14 bogus companies and requested assistance of around $ 800,000 for each.

In order to get loans, the group reported that each company had around 60 employees and had to pay $ 300,000 per month in salary expenses, and they submitted a bogus IRS form to report payroll taxes.

Six of the 22, including the mastermind of the operation, Darrell Thomas of Duluth, Ga., Have already pleaded guilty for their role in the fraud scheme, one, Khalil Gibran Green of Cleveland, having previously been sentenced to more than three years in prison. jail.

Thomas, who admitted to defrauding, agreed to hand over items purchased with the stolen funds, including luxury cars like the Acura NSX and a Range Rover and jewelry including a gold Rolex.

Key context

The group is the latest to be accused of attempting to defraud the government with P3 funds. Earlier this month, a Californian was stopped for stealing $ 3.6 million in PPP loans and economic disaster loans. He has submitted at least 27 PPP loan applications under bogus companies and on behalf of others. He was charged with electronic and bank fraud. In June, a Florida man pleaded guilty to steal $ 24 million in PPP loans using bogus companies. He has pleaded guilty to conspiring to commit bank fraud and could spend up to 30 years in federal prison.

Large number

800 billion dollars. This is the amount of money available to the US Small Business Association provided to businesses across the country. However, he has yet to disclose how much has been spent on fraudulent claims. In May, the Justice Department charged 474 people with fraud in an attempt to steal Covid-19 relief money.

Further reading

The Federal P3 Loan Fraud Fees are there to remind you that these loans are not “free money” (Forbes)

Nearly 500 people accused of Covid “fraud programs”, according to the Justice Department (Forbes)


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Is repaying a car loan in advance a good idea? The pros and cons

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Paying off your car loan early might be a good idea, but it might not be.

The truth is that in some cases auto loan debt clearing can be a wise option and can improve your financial situation. However, in others it can have the opposite effect and impact your ability to pay things or pay off other forms of debt.

Basically, it all depends on you and your financial situation.

So what is the right choice for you? This is where our list of pros and cons comes in handy! Read on as we weigh the pros and cons of paying off a car loan in advance …

Repay your car loan in advance: Advantages

Repaying your car loan in advance has many advantages, here are some of them:

  • Debt cleared: Ultimately, wiping off any kind of debt is a good thing, because it means you don’t owe any money to a bank or lender. By paying off what you owe, you can turn to your savings or even borrow for something else, like taking out a home loan.
  • Improves Your Credit Score: Paying off your debt in advance can look good on your credit report because it lowers your debt-to-income ratio. By improving your credit, you not only increase your chances of being approved for future loans, but you can also benefit from lower interest rates through risk-based pricing.
  • The vehicle is no longer under warranty: Since most auto loans are secured personal loans, the car you bought with the loan is likely being used as collateral. By prepaying your car loan, you no longer owe your lender any money, so they no longer need to hold your asset (the car) against the loan as collateral.

Repaying your car loan in advance: the disadvantages

The truth is, there are also a few downsides to paying off your auto loan debt early, including:

  • Prepayment charges: Some auto lenders charge hefty exit and prepayment penalties to borrowers who pay off their debt before the end of their loan term. In some cases, these types of fees can cost hundreds of dollars.
  • Impact on your budget: While paying off debt is an important part of financial health, it’s also important to remember that paying off a loan shouldn’t come at the expense of your budget. Determine if you can actually afford to prepay your loan, this could be delaying the prepayment or even just sticking to your regular repayment plan and making extra contributions occasionally.
  • Other debts can cost you more: By prioritizing prepayment on your car loan, you actually risk being charged interest on other high-interest products that you haven’t paid off, like a credit card. It’s important to look at all of your financial products and prioritize which debts to settle first by determining which ones will cost you the most.

So what are the take home messages for finding the right auto loan in the first place?

1. Choose flexible repayments: Look for a loan with the option of making weekly, bi-monthly, or monthly repayments, as well as the option of making additional repayments. A reprint feature can also come in handy in case you need to tap into your additional contributions later.

2. Avoid prepayment penalties: As mentioned, lenders may charge a prepayment fee, so try to find an option that doesn’t come with these fees in case you write off your debt up front.

3. Get a low interest rate: The lower the interest rate, the better, as it can lower the cost of your loan overall (because you pay less interest). By getting a lower rate, you can also pay off your debt faster, as more of your repayment is spent on the amount you borrowed rather than what you owe the lender in interest.

4. Choose a short term loan if you can: If prepaying your loan doesn’t seem like an option for you, choosing a shorter loan term will pay off the loan faster than opting for a longer term. This way your regular repayments would be higher, but it would mean that you would pay less interest because you are paying interest over a shorter period.

Ready to start comparing auto loans? Check out these killer options below or head to our auto loan comparison page for even more!

Mozo provides general product information. We do not consider your personal goals, your financial situation or your needs and we do not recommend any particular product to you. You should make your own decision after reading the PDS or offering literature, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we do not cover all products on the market. If you decide to request a product through our website, you will be dealing directly with the supplier of that product and not with Mozo.


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APRA urged to consider business loans in bank review

The small business ombudsman argued that APRA needs to better support new entrants into the banking industry, in order to stimulate competition in business lending.

In a recent submission to the Special Senate Committee on Australia as a Technology and Financial Center, Bruce Billson, Australia’s ombudsman for small and family businesses, reflected on the business lending market.

He noted that the Reserve Bank of Australia has recognized that small businesses have struggled to access finance for years, those that often do to get loans against residential properties.

But “many business owners may not be in a good position to provide enough home equity to secure a suitable loan,” the RBA said.

According to the ombudsman, the challenge for small businesses is further exacerbated by the tight competition in the lending industry.

“Historically high barriers to entry into the banking industry have limited competition. Small businesses and family businesses often find it difficult to access adequate finance to grow their businesses, especially without offering their family home as collateral, ”Mr. Billson wrote in another submission, to a recent review of the APRA.

“It facilitated a traditional banking business model focused on home loans rather than small business loans. “

Judo Bank Co-Founder and CEO Joseph Healy made a similar observation when comparing business loans to mortgages recently, during his appearance before a parliamentary committee.

“In the SME economy, there is a lack of competition. It’s a complicated segment of the economy to bank, it requires a very different skill set… so I would ask what kind of competition [are we looking for]? ”Mr. Healy told the House of Representatives Standing Committee on Economics.

“How many banks are disrupting, or are capable of disrupting, the status quo? I think that’s where the focus should be, rather than the quantum.

In March, APRA said he was considering imposing stricter requirements for banking licenses, according to Xinja exit and the sale of 86,400. The review also included an industry consultation.

Mr Billson’s submission had listed suggestions for boosting small business lending, including revisiting how APRA’s limits for Restricted Authorized Depository Institutions (RADIs) “maintain a single pattern” and could be more nuanced.

“To generate effective competition in the banking industry and support small businesses’ access to finance, the tiered licensing approach must accommodate a variety of product offerings,” Mr. Billson wrote.

“We encourage APRA to take a flexible approach to minimum cash holding thresholds, derived from the entity’s size, business model and exit strategy. “

The mediator also criticized the two-year limit of the RADI license, during which banks can carry out a limited range of activities while building their capacities and resources.

If a license holder is unable to comply with APRA’s full prudential framework and start large-scale banking business within the two-year time frame, they must exit the industry.

Timing is a “concern,” Billson said, with APRA required to authorize RADI license extensions in the event that there is an unforeseeable delay in a bank’s progress to full ADI status. .

“The strict deadline described would deter potential investors if the new entrant nears the end of the two-year period, thereby limiting access to capital and ultimately causing an exit from the licensing process,” he wrote.

“Setting a two-year limit also creates challenges for these new entrants to raise capital quickly, build a reputation (while only accepting deposits from staff, family and friends), access wholesale funding market and forecast accurately. “

In addition, he noted that RADIs were limited to offering their deposit products to certain customers, staff, family and friends.

“Deposit limits and restrictions on customer types are influencing new entrants towards business models offering consumer-driven retail products, creating new challenges for small businesses with limited ADI lender options,” Mr Billson wrote.

“APRA’s oversight and capital requirements should be sufficient to ensure the return of deposits should it become necessary, not limited to staff, friends and family. “

If APRA wishes to exercise caution, he added, the regulator could consider restricting products to retail and corporate clients who are financially aware of the risks associated with new banks.

The mediator also requested additional guidance for new entrants regarding APRA’s oversight approach.

Recently, Alex Bank became one of two restricted ADIs in Australia, APRA granting him a license at the beginning of the month.

He followed APRA extension of the RADI license of the challenger bank In1bank in June, due to the circumstances of COVID-19 being “beyond its control”.

Previously, the neobank Volt was the first to receive a RADI license, in 2018, but has now obtained a full banking license.

[Related: NSW releases COVID-19 support for SMEs and individuals]

APRA urged to consider business loans in bank review



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Last updated: July 16, 2021

Posted: July 16, 2021

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Sarah simpkins

Sarah simpkins

Sarah Simpkins is the managing editor of Mortgage Business and The Adviser.

Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.

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Paying 60% car loan for MPs will trigger mass industrial action – Dr Thomas Buabeng warns government

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The government has been asked to reverse its plan to absorb a 60% car loan for 275 deputies and 31 members of the Council of State.

According to a senior policy analyst at the Business School of the University of Ghana, Dr Thomas Buabeng, any attempt by the government to implement the current arrangement will trigger mass industrial union action in the country.

“I am not a prophet but, if the government makes a mistake in implementing the current arrangements, we will see what will happen. It will trigger mass industrial action, everyone will be angry, ”Dr Thomas Buabeng told Akua Boakyewaa Yiadom, host of the Adom FM news program Burning Issues.

“If you ask other union workers to maintain their concerns, then the government must also maintain the payments of this loan for the deputies”, he justified his call.

The speaker, however, proposed that MPs from Accra and surrounding areas receive loans for salon cars, while those in other regions should receive SUV vehicles.

“The timing is bad; it is very bad; looking at the effects of COVID-19 on our economy, ”said Dr Buabeng warning the government to reconsider the facility following the public outcry.

Dr Thomas Buabeng therefore urged the government to show restraint in approving the $ 28 million loan facility currently before Parliament for consideration.

He also hinted that the Ghana University Teachers Association (UTAG), along with other groups, will soon rally for their share of the national pie. “You cannot give an entire university professor an electricity allowance of just Ghc 15 cedis for a whole month,” he said.

On July 6, 2021, a Deputy Minister of Finance, Abena Osei Asare, on behalf of the sector minister, tabled two different loan agreements in Parliament for this purpose.

Government seeks parliamentary approval to secure a $ 28 million loan facility from the National Investment Bank for the initiative, an additional $ 3.5 million loan agreement with NIB to purchase vehicles for the 31-member state council was concluded.

According to the arrangements, the government will pay 60% of the loan facility deposited with Parliament for the purchase of vehicles for members of the 8th Parliament and members of the Council of State.

The state will bear 60% of the principal and all the interest that will come from the loan, while the deputies and members of the Council of State will also pay the remaining 40% of the loan facility.

According to the arrangement, the state will absorb $ 373,333.33 representing 60% while an amount of $ 248,888.89 representing 40% will be paid by the deputies.

According to the agreement, if approved by Parliament, each of the 275 deputies and each of the 31 members of the Council of States will receive approximately $ 100,000 towards the purchase of a vehicle.

The $ 28 million facility is to be paid within 45 months by MPs, while the $ 3.5 million loan facility is to be paid within 42 months by the Council of Member States.

The documents are currently being submitted to Parliament’s finance committee for review and report for House approval.


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Step by step guide to getting a debt consolidation loan

Debt can be overwhelming, especially when it’s spread across multiple accounts and you’re juggling multiple monthly payments. Debt consolidation loans can make your debt more manageable by combining all of your balances into one personal loan with just one monthly payment.

If you are considering getting a debt consolidation loan, this step-by-step guide will walk you through the process.

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1. Check your credit

You will want to know your credit score before you start applying for credit. This will help you get an idea of ​​the types of debt consolidation loans you are eligible for.

There are many ways to get your credit score for free. For example, your credit card may offer free credit scores. And Experian offers a free basic subscription that includes your credit score.

2. Pull your credit report

It is also wise to research credit report errors before applying for credit. Pulling your credit report is different from checking your credit score, so you will need to do it separately. You can get a free credit report from the three major credit bureaus at AnnualCreditReport.com.

Comb all three to make sure everything in your credit history is correct. If you find a mistake, dispute it and make sure it is removed before applying for a debt consolidation loan. Removing negative credit scores that are not accurate should give your credit score a big boost, which will help you qualify for the best personal loans.

3. Make a list of your debts and your monthly payments

Next, you’ll want to go through all of your accounts and list the total balance, monthly payments, and interest rate for each. This should include all of your:

You will need this information for the next step, which will help you determine if a debt consolidation loan will actually be financially beneficial for your situation.

4. Consider your loan options

Once you know your credit score, you should have an idea of ​​the debt consolidation loans that you are eligible for. Just be sure to consider all of your options, such as:

And in particular, pay attention to the following characteristics:

You’ll want to get the lowest APR possible to keep the loan affordable, but you also want to get a loan that’s big enough to pay off all of your debt.

You’ll need a loan term that’s long enough to keep your monthly payments manageable, but not so long that you’ll end up spending more interest than you need to.

Finally, be sure to pay attention to any other fees associated with the loan, such as origination fees or prepayment charges. Look for loans with little or no fees.

5. Use a debt consolidation calculator

With all of your account information listed and an idea of ​​your loan options, you can use a debt consolidation calculator to estimate your monthly payments and your debt repayment schedule. Look at how long it will take you to pay off a debt consolidation loan, what your monthly payments will be, and how much you will end up spending on interest.

From there, you can decide if a debt consolidation loan is right for you. Ideally, you want a loan that allows you to pay less interest than what you are currently paying. However, if you need to reduce your monthly payment, this might not be possible. Making sure you can pay your monthly payments and that you don’t fall behind should be your first priority – after that, look to minimize the fees you pay.

6. Apply for debt consolidation loans

Once you’ve narrowed down your options to a list of lenders who offer what you need for a debt consolidation loan, start applying. You can apply to multiple lenders to compare the best rates, but you’ll want to do it in a short period of time.

Several short-term loan applications are usually consolidated into one application on your credit report, which will minimize the potentially negative impact on your credit.

If you are not eligible for any debt consolidation loan, you may also want to consider getting a personal loan with a co-signer. This can help you qualify if your co-signer has good credit, but they’ll also be responsible if you don’t pay off your loan.

7. Close the loan and set up automatic monthly payments

When you are approved for a debt consolidation loan, you close the loan. The lender may pay off all of your debts directly or deposit the loan amount into your account, in which case you will want to pay off all of your balances immediately. Check back later to make sure all your account balances are zero.

Setting up automatic monthly payments with your new loan is a great way to make sure you don’t miss any payments. Some lenders even offer discounts for setting up automatic payment.

Now that you understand the process, you can begin to find the right debt consolidation loan for your needs.


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