Wells Fargo Pulls Back from Subprime Auto Lending

For years now, Wells Fargo has been one of the largest providers of subprime auto loans. It appears, however, that the financial giant is trying to distance itself from the very market that brought it so much business over the years. This move is sending shockwaves that are being felt all throughout the entire auto lending industry.

Wells Fargo, with headquarters in San Francisco, is known for its distinctive stagecoach logo and consistently pulling in big profits. They have also been on the forefront of the boom in offering loans to people who have less-than-perfect credit scores. As they have been doing this, Wall Street has been bundling and selling these types of loans as securities to their investors. This has allowed Wall Street to pull in huge profits. All the while, millions of financially strapped people have been given an opportunity to purchase cars.dv1509055

Now, however, it looks like the subprime auto lending market is getting a bit too hot to handle. Wells Fargo has, for the first time, put a cap in place on the amount of money that it will lend to subprime borrowers. The banks has restricted their lending volume to subprime auto originations to just 10 percent of the total auto loans that they provided. This amounted to a total of nearly $30 billion just last year.

A recent series of interviews with the top executives from Wells Fargo helped to provide more information on this topic. The lender, along with other big auto lenders, has helped to initiate what has to be a sobering moment for the still-popular subprime auto lending industry. It is almost certain that other big lenders will follow Wells Fargo’s lead in the near future. The lender was able to avoid many of the problems associated with recent mortgage losses during the financial crisis. This proves that they know what to do when the going gets tough, and their competitors may very well copy their penchant for making the right moves at the right time to manage financial risk.

Auto loans made to subprime borrowers – people with credit scores of 640 or less – have doubled since the beginning of the most recent financial crisis. In fact, one in four of new auto loans provided have been going to subprime borrowers. Back in the second quarter of 2014, the total number of auto loans were at the highest level ever since prior to the financial crisis. During that quarter, lenders originated over $20 billion in bad credit auto loans. That is nearly twice as much as during the same quarter back in 2010.

There are two main factors that contributed to this surge: Larger banks were experiencing a slow down with other types of loans, so they increased their auto lending market share. Investors were also searching to get higher returns, so they are now buying billions of dollars in investments that happen to be backed by subprime loans as security. This growth has caused Wells Fargo to be concerned that there is too much competition and longer repayment terms, in addition to increased auto loan balances.

With all of this in mind, however, we have to remember that this is America. If the big lenders fail to provide car loans for people with low credit scores, the smaller lending companies will surely rise to the occasion. For better or worse, this is a country filled with people who depend on owning cars. If the big lenders won’t help people to get the cars they need, alternative lending companies may very well experience a huge surge in the very near future.

Bill to Fix Payday Lending Glitch Rejected by Lawmakers

A Hinds County Democrat, Representative Adrienne Wooten, led an unsuccessful bid, once again, to repair a glitch in a payday lending law in Mississippi. This law was slated to give borrowers a longer repayment term of 30 days to repay loans that exceeded $250. As it now stands, borrowers have two weeks to repay loans before new fees are added, instead of the proposed 30 days.

As part of a provision made to Mississippi’s 2012 Check Cash Cashing Act, two tiers of loans were put into place. The first tier applied to loans that were for $250 or less, and gave borrowers a two week repayment term. The second tier was for loans with combined fees that do not exceed $500. These types of loans were supposed to feature a 30 day repayment period.broken-piggy-bank-loose-change-mdn

To get around this law, some short term lenders issued two or more loans with two week repayment terms, with each loan charging fees of between $23 and $100. This allows lenders to take in as much money from a two week loan that totals more than $400 than for a single loan for the same amount.

When the 2012 Check Cash Cashing Act was created, an act that gave permanent authorization to payday lending in Mississippi, state legislators put a cap on loans that range from $400 to $500. The exchange for this allowance was that borrowers were going to get 30 days to repay their loans that exceeded $250.

No one is sure if the loophole was created intentionally, but it ensured that lenders would not make loans for more than two weeks at a time. Some lenders complained that the 30 day loan repayment terms would severely limit their cash flow, forcing lenders to limit loans or to even shut down their businesses in some cases.

Representative Wooten expressed that she expected the payday lending loophole to get stopped by the House Banking Committee, as it has for the previous three years. Wooten said, “It’s not going to come out,” referring to House Bill 790 a few days before the deadline for bills to get out of committee. “It’s not something the majority wants to take place.”

If the bill had been successful, it would have limited payday lending companies into issuing borrowers a single check for all loans that exceeded $100.

A Banking Committee Chairman, Hank Zuber III, along with his colleague at the Senate, Gary Jackson, stated in official interviews that the payday lending glitch should be fixed. However, neither of these gentlemen took action to get it resolved. They said that they were going to wait to see what the CFPB announces as its official rules for payday lending. By way of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, payday lending is subject to the CFPB.

Jackson expects that the CFPB will, as he said on record, “… take a fairly strong stance in the future.” Jackson predicted that this type of official action would come back in November, but it has not happened so far. Zuber clarified his stance by saying that he would wait “to see what they do.”

Zuber had discussed the fix for the check cashing law with Chairman Jackson, and even considered introducing a bill that is similar to HB 790. He did not comment on whether or not he would actually back HB 790.

Experts do anticipate that payday loans will be subject to new restrictions very soon, but completely banning these types of loans is not likely at all. Payday loans, as much as some people do not like them, are often the only option that lower income people have when they need to access fast money to pay bills or take care of other expenses.

How Do You Know if Your Credit Score is Wrong?

No matter how hard we may try to avoid it, our credit scores are always going to follow us around. Taking into consideration the impact that your credit score has on your life, it is a good idea to know what your scores is, and to take action to bring it up if it is on the lower side of the credit score spectrum. It seems almost like one minor financial mistake can have repercussions that could haunt you for years. It is usually easy enough to get back on course after most financial mistakes. But how do you go about finding out if your credit score is correct or not?

Here is a step-by-step guide to help you find out if your credit score is correct…

Step One – Get Your Credit Report

You cannot find out if your score is right if you don’t know what your score is. To get all the details you need, it is important to pull a copy of your credit report. The major credit bureaus are required by law to provide consumers with at least one copy of their full credit report each year. If you have pulled your report within the last 12 months, you can pay a small fee to get a fresh copy. Remember, though, that each of the major credit bureaus uses different information and calculations to determine your score. But if you do find something that is inaccurate on one of your reports, you will know that your current credit score is not correct. You should get copies of all three of the major credit bureau reports to make a proper determination.

Step Two – Check Everything

Once you get your credit report it is important to take a methodical approach to checking all the entries in your report. The entries will break down information about loans and lines of credit that you have. If you spot a loan that you never applied for, you will know immediately that something is wrong. Make note of these types of occurrences. You should also look for any notes of late payments and make sure they are correct. You can contact the lenders to get these types of mistakes resolved, and that brings us to the next step.

Step Three – Contact Creditors

Before you officially file a credit report dispute with the credit bureau, contact the creditor. Many times these types of mistakes can be ironed out with a few phone calls and a bit of persistence. However, there are times when the creditors will not be easy to work with, and that’s when it is time to move on to step number four.

Step Four – File a Claim of Dispute

The three major credit bureaus (Experian, Equifax and TransUnion) allow you to use their websites to file disputes. It is usually better to make a phone call to these bureaus to discuss your issue. Take notes of who you spoke with, the information they gave you and be sure to use certified mail for any hard copy correspondence between you and the bureau. Credit bureaus have 30 days to determine the validity of any disputes that are filed. If your error does not get omitted from your credit report, you may need to make another phone call to the bureau. If another call does not provide the results you hoped for, you may want to discuss your options with an attorney who specializes in these types of matters.

Taking care of errors on your credit report is not always easy, but being as your credit score is so important, it is good to take as much action as necessary to get errors off of your credit report when you are able to.

Payday Loans Really Do Provide Much Needed Help to Millions of People

Even though the United States economy has been on the rebound for some time, and unemployment rates are finally beginning to level out a bit, there are still about 1/3 of the households in the U.S. that earn less than $35,000 a year. Add to that the fact that almost 20 percent of United States consumers have large amounts of unpaid medical bills, and it is easy to see why so many people are still struggling financially.

We also have to consider that U.S. credit card data ranked in at about $882 billion this year, and that is up just about 4 percent from last year; roughly $15,608 per household in this country. When we take all of these financial statistics into consideration, despite the fact that the economy is recovering, we find that about two out of every five American consumers (40 percent) are essentially living from one paycheck to another. Compare that with the stats from 2012 and we see that the number then was just 31 percent.

It’s time for some cold, hard economic facts – and this is not something that is popular to say right now – but payday lending companies provide a very much needed financial service to the people in this country right now. The fees for payday loans are considerably cheaper than overdraft protection fees for small dollar amounts. It is no wonder, then, that so many people turn to payday lenders when they are seriously strapped for cash and their next payday is still a long way off.

Maybe it is because payday loans are more economical than the alternatives offered by mainstream banks that payday lending started getting targeted by Operation Choke Point. If you are unfamiliar with this initiative, Operation Choke Point is an ongoing initiative that was put into action by the Department of Justice, along with the FDIC, back in 2013. Investigators involved with this operation have been investigating the banks and the businesses those banks do business with – payday lenders, ammunition retailers, payment processors and others. The brains behind Operation Choke Point believe that these types of industries are more susceptible to fraud, money laundering and other financial misdeeds, and have taken it upon themselves to drive these types of companies out of business.

Essentially, Operation Choke Point has put pressure on the banks to cut off financial services to these types of businesses. The payday lending companies have been hit very hard, as many members of the FDIC allegedly have personal axes to grind with this industry, and they have made it their mission to put payday lenders out of business once and for all.

The net effect of the pressure that has been put on banks to cut off services to payday lenders has actually resulted in some short term lending companies going out of business. Without access to payment processing and other crucial services, many of these companies can no longer afford to stay in business. And this all completes a vicious cycle where once again the unbanked people of this country are unable to get small dollar loans to cover those times when they are without cash but still need money to take care of expenses.

Some members of Congress have recently taken action to hold Operation Choke Point accountable for its heavy handed approach that has been used to ‘protect’ lower income consumers from the very financial services – payday loans – that they so desperately need to keep their heads above water between pay checks. The bottom line is that people in lower income brackets deserve to have access to short term, smaller dollar loans, and as of right now payday lenders are really the only lenders that provide those kinds of services to low income households.

What is a Cash Advance?

questioning-nerdWe all have those times in life; times when we need to get some cash fast, but the credit cards are maxed out and payday is a long, long way off. Say that the car needs a repair, a trip to the ER results in a medical bill that has to be paid, or the fridge is empty and needs to get filled with food ASAP. These are the types of situations that people find themselves in when they take out a cash advance loan.

Many people, however, are just not sure on what payday loans are, and need to know if these types of short term loans are right for them. Is a cash advance loan the best option, or should you choose to get money some other way?

To help you answer these types of questions, we have put together some information to help you understand payday advance loans a bit more. Contrary to what you might read on the internet or hear on the local news broadcast, it is not at all difficult to get a cash advance loans and – if you are smart – you won’t have to pay sky-high fees to get your fast cash loan.

Payday loans are known for being convenient and affordable. Here is some more information that should help you to sort out whether or not these types of short term loans are right for your current financial situation…

Cash Advance Loans Explained

In the simplest terms cash advances are ultra short term loans that borrowers can take out, with the agreement to pay back their loans and any associated fees on their next payday. Unlike using a credit card to get fast access to funds, though, a payday loan provides you with cold, hard cash or funds directly deposited into your checking account. Most borrowers opt to take out online payday loans these days. Once the direct deposit is made to their checking accounts they can get their money via the ATM, withdraw the cash from their bank or even go out and make debit card purchases/payments. It’s hard to get that kind of flexibility from a traditional credit card or bank loan.

There are some cash advance lenders that allow people to take out loans against their credit cards. This is generally not advisable, as it is very easy to mount up ever-growing credit card debt over time. Generally speaking, it is better to use a checking account and to pay off the payday loan when your next pay day arrives. This will prevent you from falling into a common cycle of debt that plagues so many people these days.

Convenient Cash without Excessive Costs

With so many payday lenders doing business online these days it has never been easier to simply go online with a computer or smart phone to get nearly instant access to cash. However, many people make rookie mistakes when they take out cash advance loans that can be quite expensive over the long haul. The number one mistake that people make is extending their payday loans. Failure to pay payday cash advance back on time results in additional loan fees that must be paid, which means that the borrower ends up paying much higher loan fees than they should have to. Borrowers are strongly encouraged to always budget properly to ensure that they pay back their payday loans on time, and to avoid additional loan fees getting tacked onto their existing loans.

Payday loans, like any other type of financial transaction, must be used the right way. People need to do their homework, borrow from reputable lenders and make every effort to pay back their cash advance loans on time to avoid future financial complications.

Crucial Information About Online Cash Loan Services

cash advance onlineEven though the country is on the road to recovery after the most recent recession, there are still plenty of people out there going through lean financial times. Paying the bills and taking care of the bare necessities is often difficult, if not impossible, with many people living from one paycheck to the next. But what do these folks do when an additional expense comes up, and there is not enough money in the checking account to take care of it?

The fact of the matter is that these types of unexpected expenses are always going to happen at the most inconvenient time. However, millions of people turn to online cash loans services when they are strapped for cash and need to get money into their checking accounts as quickly as possible.

How Do Online Cash Loans Work?

The most common type of cash loan that people take out when they need fast money is the always popular payday loan. By now nearly everyone has heard about payday loans, but many people are not familiar with the process involved in taking out this type of cash loan from a qualified payday advance lender.

Payday Loans Explained

A payday loan, as the name implies, is a loan where someone borrows a relatively small amount of money (usually between $100 and $500) with the agreement to pay the loan back when they receive their next paycheck from their employer. Unlike bank loans or lines of credit from a credit card company, payday loans are for small dollar amounts and are intended to be paid back in a matter of weeks, not a matter of months or years.

Requirements to Get a Payday Cash Loan

Payday lenders don’t rake their clients over the coals or demand spotless credit scores from the people that they lend money to. Applying for a payday loan online is really quite simple. Once a potential borrower finds an online lender to request a loan from, it’s simply a matter of supplying a bit of basic information. During the loan application process, borrowers are asked to provide:

• Basic contact information – name, phone number, email address, etc…
• Checking account information – bank name/address, routing number and checking account number.
• Proof of employment.

Once an online cash loan request is submitted, along with the information listed above, it’s a matter of waiting for the lending company to approve the loan request. Borrowers are generally notified of loan approval via their email, and then they go to the lending website to confirm their loan request. Once this happens, funds are electronically deposited into the borrower’s bank account; usually within a few days. And because people can apply for these types of loans from any computer or device with Internet connectivity, they are considered among the most convenient of all loans currently available. Payday cash loans may not be the right solution for every type of financial hardship, but when people need relatively small sums of money quickly, it’s hard to find any type of loan that can provide people with the money they need in such a timely manner.

Paying Back a Payday Cash Loan

When people take out their payday loans online, they agree to pay back the loan amount plus flat loan fees when they get their next paycheck. This payment happens via an electronic clearinghouse payment, which is very much like any type of automated payment that people make to pay bills online. As long as the loan is paid back in full on the originally agreed upon date, there are no further fees to be paid, and the borrower is in the clear with no long term debt to pay.

How Social Media Can Affect Your Career

It is no secret that the younger generation loves technology and social media. They love to use technology to share everything they do with social media. We are in an age where they think that it is fine for everyone to know everything, and include pictures when they have them. What the younger generations need to realize is, that doing this can hurt your career now, or if you do not have one yet, later on down the road when you are trying to get a job.

When you apply for a job do you think that your application and resume are the only things looked at before a decision is made about whether or not to interview you? If you do, you are wrong. With social media so prevalent in everyone’s life these days, many employers turn to social media to see what you are like as a person. If they see a lot of immature and possibly illegal things, there is a very good chance that your application is going to be passed up.

You may be thinking at this point that they will not be able to see anything because of the privacy settings you have. That is fine; it could get you to an interview, and maybe even a job. However you must keep in mind what will happen after you get that job. There are some bosses who try and be friendly with their employees and friend them on social media sites. Should you decline the request it leaves your boss wonder what it is that you do not want them to see and if you accept their friend request are you going to regret what they see?

Another thing that many people forget is that if they use the company computer to get on their social media sites, the company you work for has every right to see what it is you are doing. This means if you are posting something that you would rather your boss or coworkers do not see, it can and possibly will be seen by someone, and if it is bad, you could end up in trouble.

Once you have that job you are probably working on your career and making something of yourself. What you put on your social media site can ruin that. Any work you have done to further yourself in your career could be completely undone by inappropriate things you post on your site. Should your boss find out about these things or see them for themselves you run the risk of losing your job. For example, anything negative you post about your job or boss will get you fired. Another thing that will get you fired is posting inappropriate things, or anything that could be illegal. This is something that many that belong to the younger generation do not really think about.

Social media is great; it can help you catch up with family and friends who do not live near you. Social media, however, can kill your career if you are not careful. You have to be responsible with your social media page, after all your career depends on it. If you are able to be responsible with your social media page, you will have nothing to worry about when it comes to your career, if you are not however, your career could very well be held back. So do what you need to do to keep your social media page from hurting your career.

Smartphones, New Target for Hackers

When we first started carrying cell phones we did not have to worry about people hacking into them. All they could do was call someone, then they evolved to where we could text, play some games, and even take pictures. Now, however we have smart phones and the possibilities of what we can do is endless. This unfortunately, leaves us vulnerable to hackers trying to steal our information through our smartphones.

When the average person thinks about hackers they think about their computer or about company’s data base’s. Not often do we think about our smartphones. This is something, however, that we need to train ourselves to keep in the front of our minds. Why? Criminal hackers have turned their attention to smartphones and have made them a bigger target than they have been in the past.

LG Cookie Fresh GS290 Smartphone

This increase in smartphone hacking has been increasing over the past two years. Many of us have not noticed this or may not have heard of it in the news as company and bank data breaches make the news before a smartphone hack would. One of the problems is that most smartphones do not come with much malware protection or security in general, and we do not think to talk to the sales person when we buy the phone about what to do to make it safer.

There are various apps that can be downloaded to help protect your phone, and they will have a good idea of what will work for you. Ask your sales person many questions. Find out what they know about keeping your phone protected and take their advice. You can also find information on the internet, reviews of various apps on how well they protect your personal information. After all our smartphones contain practically our whole lives on them and almost all, if not all, of our information, if someone hacks into your phone they have access to almost your whole life and can do a lot of damage to you, your life, and your credit.

Hackers have found that one of the easiest ways to get into someone’s smartphone is by texting. Have you ever got a text that had a link in it, the text could claim they are your bank or some other company with some offer or another. Most people do not realize however that by clicking on that link they could be downloading a virus of some sort. We need to look at this as spam text messaging. We get spam email, and we know to go through our email and delete what we know to be spam instead of opening it and risking any potential virus. The same need to be done with text messages. If you do not have the number saved in your phone and you receive a text with a link, delete it right away, do not under any circumstances, no matter who they say they are, click on that link.

We are living in a world were cyber-aggression is increasing almost by the day. This means that we must up our attempts to keep our information ours and ours alone. Hackers do not have the right to take our information, and we have to fight to keep it safe. If you are one of those people who think it will never happen to you, you are fooling yourself. Cyber criminals are able to get to anyone whether it is on a computer or your smartphone. So when you think about cyber criminals and hacking do not just think about your computer, think about your smartphone as well, it is just as vulnerable, if not more because we tend to forget about it. Keep your information safe both on your computer and on your smartphone.

Deal With Your Credit Before You Look Into Buying a House

Buying a home is one of the great American dreams. It is something that many people strive for. It takes work to get to the point where one is ready to make that big of a purchase, you have to save up some money, qualify for a loan, and find the right home. Before you go looking at homes and signing any papers, you need to deal with your credit, making sure that it is in a good place for getting a loan and a home.

We all know that our credit is important. There are so many things in our lives that our credit affects that we may forget some of them. Do you connect your credit with buying a home? If you do not then you should, and if you do, then you may be ahead of the curve. Having a good credit score will be a huge benefit when you are trying to get a loan for a home.

If you have a low credit score it is going to be harder to get a bank to give you a loan. When or if you find one that does, the annual percentage rate that they offer you is going to be much higher than what they would offer to someone with a high credit score. Having a higher annual percentage rate is going to make your monthly payments higher and it is going to make it so you will end up paying on your house longer. No one wants that.

Another advantage to having a higher credit score is that you may qualify for a larger loan which means that you can get a nicer or larger home. Home prices vary depending on the age of the house, the area, the shape that it is in, and more. The amount that you can get loan to you will determine what options for a home that you have available to you.

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So what should you do before you go to the bank to find out what sort of loan you qualify for? Start by getting your credit report. Getting your credit report from more than one source is a good idea because they may show different things. You then need to go over your credit report meticulously looking for any possible error there could be. If there is an error in your credit report then it can cause your credit score to go down which could hurt you. If you find an error take care of it right away.

If you currently have any debt work at getting it paid off as fast as you can. If you are able to make more than the payment that is requested then you should do that, it will help to get it paid off faster. The less debt you already have when you go to apply for a home loan the better offer you can get from the bank.

Do what you can to avoid paying late fees. Keep track of all your bills to make sure that you pay everything on time. You should also avoid trying to get any sort of new line of credit. This all going to make you look bad when you apply for a home loan, so you will want to make sure to avoid it if at all possible.

It is an exciting time in a person’s life when they decide they are ready to start the process of looking for a home. However, in order to be a responsible adult, you must deal with your credit prior to going to the bank and asking for a loan. You may want to know right away the amount that you qualify for, but you have to clean up your credit first. This way you will get the best annual percentage rate you possibly can, and you can possibly get a larger loan. So remember the rule; deal with your credit before looking into buying a house.