Logbook loan companies that allow borrowers to secure a loan against a car are more worrying than payday lenders, according to the Financial Conduct Authority's consumer champion.
Sue Lewis said the lenders take "advantage of desperate people" who might "not understand the consequences" of their borrowing. While payday lenders such as Wonga conduct credit checks, customers taking out logbook loans simply hand over their car logbook as collateral instead.
Applications can be made online and cash transferred in less than 24 hours. If the borrower falls behind on repayments with interest rates of 400 per cent, their car is repossessed.
Unlike payday lenders who advertise on television, the loan companies advertise near pawnbrokers, in cheque cashing centres and in newspapers, according to Andrew Leakey, a lawyer and consumer litigation specialist.
He recalled one customer who secured loans against four vintage cars. After he defaulted on his repayments, a logbook loan company seized the cars and also took three others. Leakey said: "I wouldn't even go to them as a last resort."
Kerry McCarthy, Labour MP for Bristol East, said: "The deals are structured in such a way that they are designed to fail – it's about the lenders getting their hands on the cars, rather than getting interest on loans. Interest rates on these loans are so high that people inevitably default, and the agreements allow them to seize the cars after only one default."
Home loans can be very beneficial for property buyers, as they not only help you buy your dream home, but also help you save on taxes. But you must remember to choose the right home loan if you do not want to face the hassles in the process. Here are a few quick tips that you could keep in mind while applying for a home loan. These tips could help ease the complicated procedure a little bit and at the same time help you save some money.
Some of the tips that are recommended are mentioned below:
Research well - These days loan are made quite attractive for the buyers with low interest rates and additional schemes. Therefore it is better to educate yourself about the terms and conditions of each loan agreement so that you are prepared beforehand. Clarify all your doubts regarding the loan scheme before you finalize anything and don't hesitate to ask questions to the sales person even if you have the smallest difficulty understanding a particular clause.
Take a look at the EMI - Calculate the EMI that you will be able to afford beforehand. Remember that you know your money more than anyone else so keeping in mind your current job and income you can make an approximate calculation about the amount of EMI you can pay. Don't make hasty decisions on this one because paying penalties due to non payment of EMI on time can prove to be more troublesome. If you have a temporary job, there are other things to take into consideration so make a wise decision taking care of all the parameters.
Negotiate on the interest rate - Even though banks and financial institutions swear that interest rates are non-negotiable, they could still make a few adjustments if you list a few honest issues with the high rates. This can be done only if you have finalized the property you would like to buy and you need it as soon as possible. Also, if it is the end of the month, it could prove to be beneficial for you. Sales persons have an aggregate number of sales that they need to complete every month; so in order to complete their target; they are bound to give you certain benefits.
Loan eligibility - Carry documents which include information like your credit history when you make purchase of a loan. You should have paid all your credit cards and car loans on time in order to move a step higher on the eligibility while applying for a loan. If you have a clean record in your credit history for payments done on time, then you can use it as an advantage when applying for the loan. Also, try to focus on the tenure of your loan. If you opt for a long tenure loan then you will be paying more overall as the interest paid would be very high.
Additional charges to be kept in mind - When you are applying for a home loan, you need to be educated about the various other charges that the lenders add to the current schemes. They will add administrative and service charges or processing fees. These additional fess fall under the amount that is sanctioned in your name and not under the amount that you take home. So before you finalize any deal, you should make note of such additional charges that the lenders put into the scheme.
Read the fine print of the agreement carefully - Even if the home loan agreement with your bank is a bulky document, make sure you read it thoroughly. Sometimes, lenders may nod to certain points but in the end whatever is present on the paper will only be taken into consideration. So it is best if you could just spend some extra time reading the document carefully rather than getting stuck in complications related to the same later on. Never sign on a blank loan paper even if the sales person asks you to sign. Ask questions if you still have some doubts because at the end it is very important to be aware of every term and condition mentioned in the loan.
Home Loan Servicing Solutions, Ltd. Schedules Conference Call 3rd Quarter 2013 Results.
Home Loan Servicing Solutions, Ltd.TM ("HLSS" or the "Company") (HLSS)
will hold its conference call on Thursday, October 17, 2013 at 11:00
a.m. (ET) to review the Company's operating results. This event will
follow Home Loan Servicing Solutions' 3rd Quarter 2013 earnings release.
The press release will also be available on the HLSS Shareholder
website at www.hlss.com.
A live audio webcast and slide presentation for the call will be available over the internet at www.hlss.com
(through a link on the Shareholders page). Those who want to listen to
the call should go to the website at least fifteen minutes prior to the
call to register, download and install any necessary audio software.
The conference call will be available for replay via telephone
beginning at 12:01 p.m. (ET) on Thursday, October 17, 2013 through
Friday, October 25, 2013. To listen to a replay of the conference call
by telephone dial 1-402-998-1711. For more information on prior releases
and SEC Filings, please refer to the "Shareholders" section of our
website at www.hlss.com.
Home Loan Servicing Solutions is an internally managed owner of high
quality mortgage servicing assets, predominantly mortgage servicing
advances and non-agency mortgage servicing rights, which are highly
overcollateralized with historically stable net asset values. HLSS'
primary investment objective is to generate stable, recurring fee based
earnings and dividends throughout the economic cycle. For more
information, visit www.hlss.com.
