Smart Borrower Blog

Archive for December, 2010

Auto Lending Taking Top Priority for Banks

Toronto-Dominion Bank (TD) has agreed to buy car loan company Chrysler Financial Corp. for $6.3 billion in cash as of Tuesday. Why is this pertinent information? Because it signals just how important auto lending has become to bank portfolios these days. Auto loans make up roughly 30 percent of all consumer debt, according to TD. Only mortgage loans and credit card loans have larger market shares, but car loans tend to be much safer than the other two, making them very attractive to banks right now. For example, according to credit bureau TransUnion, auto loans in the third quarter had... more »

For Profit College Student Loan Defaults Projected to Approach Fifty Percent

New data released by the Education Department this week shockingly shows projected student loan defaults from for profit colleges is approaching 50%. 46.3% of federal loans that were taken out by students attending for profit colleges and universities in 2008 are expected to go into default. This number is well above the national average of all colleges which is 15.8% for loans originating in 2008. Some are now paralleling this crisis to that of the mortgage market. Just as home loan lenders lured home buyers into risky mortgages they could not afford, higher educational institutions have been doing the same... more »

More Seniors Start the Golden Years in the Red

Most people probably think of retirement as a period of life when the financial obligations hanging over your head fall away. Unfortunately, that is not a very accurate picture for many seniors today. According to a new survey by nonprofit CESI Debt Solutions, many seniors (54 percent) start their retirement with debt and 96 percent of those with debt at retirement age refused to delay their exodus from the work place. And now, not only are more than half of seniors retiring with outstanding debts, but more and more are getting into so much debt during retirement that they won’t... more »

Home Prices near You: Are They Rising or Falling?

Home prices in most of the United States have declined steeply over the past few years, with an estimated loss of $6 trillion. However, it’s not doom and gloom everywhere. In some parts of the country, median home prices have actually increased. So where have home prices improved? Our friends at Quicken Loans put together this Home Prices Infographic that compares median home prices today to prices in 2007 and shows the top 5 winners and losers. Source: Home Mortgage – Quicken Loans ... more »

Wells Fargo Changes Student Loan Forgiveness Policy

Wells Fargo announced this week that effective this Friday, student loans will be forgiven at the time of the student-borrower’s death or if they are declared permanently disabled. Up until now if a student became permanently disabled or passed away, their student loan debt became the responsibility of the loan’s co-signer, which is most often a family member. When asked if this new policy was in light of legislation currently in the Senate that would require banks to explicitly detail the responsibilities of the co-signer if the borrower died or was permanently disabled, Wells Fargo was quick to say no.... more »

More Help on the Way for Small Businesses

According to an article on CNNMoney.com today, the Small Business Administration has just announced two new loan programs designed to make cash available for small businesses quickly. “Many entrepreneurs and small business owners across the country have enormous potential to drive economic growth and create good-paying jobs in their local communities, but too often they face barriers in fulfilling that potential,” said Catherine Hughes, chairperson of the SBA’s new Advisory Council on Underserved Communities. The first program is call the Small Loan Advantage allows small business owners to apply for loans up to $250,000 with a much shorter application of... more »

HUD Launches Investigations Into Whether Or Not Lenders Discriminated Against Potential Borrowers

The US Department of Housing & Urban Development, otherwise known as HUD, has launched multiple investigations into whether or not accusations are true that mortgage lenders illegally denied loans to qualified African Americans and Latinos. This comes after the National Community Reinvestment Coalition or the NCRC filed complaints that included 22 different lenders. The lenders allegedly refused loans to FHA loan candidates whose credit scores were as high as 640, unfairly signaling out those of Latino and African American decent. Lenders who offer FHA loans are given standards to follow when processing such loans. Current criteria allows those looking for... more »

Auto Lending Market Starting to Thaw Out

The lastest statistics suggest that the ice is melting on the car loan credit, especially for borrowers with less than perfect credit. A report released yesterday from credit reporting agency Experian showed that the 12.7 percent of all new car sales went to non-prime and subprime buyers in the third quarter, a 13 percent increase from the previous year. That rate has not increased since 2007. The percentage of used car loans to subprime borrowers grew by 3 percent. Now 63 percent of all car loans are going to prime credit buyers (those with scores above 680). Last year 66... more »

Undergraduates Borrowing More Than Ever Before

According to a new study that was released last month by the Pew Research Center, undergraduates are borrowing money at higher rates than ever before, leaving them with large student loan debt to deal with once they graduate. The study looked at student loans issued in 1996 and then again in 2008. Astonishingly, when an adjustment was made for inflation undergraduate students in 2008 on average borrowed 50% more money than those in 1996. Even more disturbing, the study showed that those borrowing for an associate’s degree borrowed twice as much in 2008 compared to students in 1996. The study... more »

Credit Card Usage Down by 8 Million Consumers

During the past year, over 8 million American consumers have stopped using credit cards for their purchases, according to credit bureau TransUnion. Gerri Detweiler of Credit.com was quoted in a CNN Money blog as saying it is “unprecedented” for consumers to “abandon” their credit cards. “I’ve been covering this since 1987 and I don’t recall numbers like that ever going down,” she said. “They’ve always gone up.” What can account for this dramatic drop in credit card use? There are basically two things at play here. First, many consumers with good credit are taking fewer financial risks and just paying... more »