Typical Interest Rates on Bad Credit

by Mrs Money

Bad credit loans are becoming more and more popular. People of every ethnicity, age, socio-economic status, and gender are finding themselves battling low credit ratings. Fact is, it’s pretty tough to keep your credit score up in an economy that is far less than perfect. However, one way that people who are struggling help themselves, and their credit, is by utilizing bad credit loans.

What Are Bad Credit Loans?

Typically, when a person goes to apply for a loan through a bank, their income and credit rating is used to determine whether or not they are eligible. Banks have very strict guidelines for this, and it doesn’t matter what events surround the accumulation of bad credit. You were laid-off after an impeccable payment history? It doesn’t matter. A breadwinner in your home passed away? It doesn’t matter. What does matter is that you are floundering, need a financial break, and can’t seem to get one. Bad credit loans provide that break but often at a steep price.

There are some lenders that specialize in quick no credit check loans. If you go with a lender like this the interest rates may be slightly higher. This is due to the fact the lender is taking on a larger risk by not checking your credit history.

Bad Credit Loan and Interest Rates

Interest rates greatly affect the overall amount that you pay on a loan. The downside to bad credit loans is that they often have very high interest rates to help protect the lender against bad credit risks, which are the borrowers with low credit ratings. For instance, a person with excellent credit may be able to get a regular new auto loan anywhere between 2.99% and 3.04%. This is a very reasonable rate. However, while those with bad credit may be able to attain a loan, they’re going to pay much more for it. A typical auto loan interest rate with a bad credit loan on a new vehicle can be as much as 4.56%, and on a used car, as high as 9.01%.

Other unsecured loans can be even higher. For instance, it isn’t uncommon for an unsecured personal loan to carry an interest rate higher than many credit cards at 19 to 20%. Payday loans have extremely high interest rates because of their short duration, often shooting up above 150% of the overall loan.

Although these high interest rates may seem like a bad deal for borrowers on the surface, they may be their best ticket for improving their credit. After all, your credit can’t get higher if you don’t exercise it.

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Getting the Itch to Upgrade

by Mrs Money

houseLately I’ve had the feeling that I would like to move to a bigger house with more acreage.  Our house is just the perfect size for us right now, but we wish we had a garage and more property.  Not to mention, if we end up expanding our family it would be nice to have an extra bedroom to put our office and guest room in.  We have a three bedroom house right now, and it works because we’ve got the master, Penny’s room, and then the third bedroom is the guest room and office.

I feel conflicted because I am a huge fan of minimalism, I don’t like clutter, and I have always felt like a smaller house is better. Smaller houses cost less in upkeep, property taxes, heating and cooling, etc.  I have to say I kind of hit a plateau with decluttering and I feel like we are doing pretty well with the amount of stuff that we have and bring in.  I do continuously go through things and as Penny outgrows clothing, I keep a lot of the nice stuff but the stuff that’s not my favorite I usually pass on.

Moving would also cost us a lot of money, so that’s something I’m trying to take into consideration as well.  We’d have to pay closing costs, the moving trucks, etc.  If we stayed put, we’d end up saving money because we wouldn’t have all those expenses.

My parents bought their house right after they got married, moved in, and stayed there ever since.  The house was a small “starter home” and they added on as they had kids, but the house isn’t huge and I feel like my mother would have preferred a larger home while she was raising kids.  I know for a fact that she would have liked a bigger kitchen!  She still complains about that to this day.

One of my biggest fears about moving and looking for a new house is that we’d find a house that needed a ton of work, like new floors.  I don’t want to install flooring again!  I don’t mind a house that needs paint because that’s not a huge deal and I actually like painting walls.  I just don’t want a fixer-upper that we’d have to spend a ton of time fixing up.

I guess a good plan of action would be to just stay where we are for right now and see what the future brings.  I’ll still keep looking at the real estate listings to see if there was something we’d HAVE to have, but as of right now it just makes the most sense for us to stay in our current house.  Over the past seven and a half years, we’ve really worked at making this house our home and we’ve done a lot of work to beautify our house and I’m really proud of it!

Do you ever get the itch to upgrade?  Have you lived in your current place for awhile?

 

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