Student loans -- public or private?

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Student loans -- public or private? May 19th 2013, 17:00 (MoneyWatch) Need to borrow to finance college? You've got plenty of company. Roughly two-thirds of students do. However, it's important to understand that there are two distinct student loan types: Federal loans, offered through the U.S. government, have dozens of protections that you don't get with private loans. Private loans are offered through lenders, such as banks, credit unions, and companies, such as Sallie Mae, as well as through schools. And, while private loans can still seem like a bargain because of their low "teaser" rates, they often cost thousands of dollars more over the life of the loan and leave borrowers with few options when it comes time to repay. How do the loans compare? Interest rates Federal loans The interest rate is fixed and is the same for every borrower. Private loans The interest rate "floats" based on an index rate, plus a "margin." So, for instance, if the rate was based on prime, plus 9 percentage points, it would currently be 3.25 (prime) plus 9 for a total rate of 12.25 percent. The margin, however, will vary from borrower to borrower based on the credit history of the borrower and, where applicable, the co-signer. Interest build-up Federal loans Students generally do not need to make payments on student debt while they are in school, are unemployed or in the 6-month "grace period" following graduation. With "subsidized" federal loans - the type given to students who are deemed to have sufficient financial need -- the government pays whatever interest accrues during those periods. That means the borrower's loan balance does not rise while they are in school. "Unsubsidized" federal loans accrue interest at a set fixed rate while the student is in school and the loan is in deferment. Thus, the loan balance at graduation is likely to be higher than it was originally. It is fairly simple for borrowers to know how much they will owe, by using a web calculator such as BankRate.com's Simple Savings calculator. If you were borrowing $5,000 at 6.8%, and figured the loan would be outstanding for four years while you were in school, for instance, you'd plug those numbers into the form and find that you'd owe $6,558 at graduation. Private loans Like unsubsidized federal loans, interest accrues on private loans from the day they are funded. However, because the interest rate is variable, it's impossible to know exactly how much you'll owe at graduation. To avoid graduation loan-shock, some lenders encourage or require borrowers to pay at least the amount of interest accruing while they are still in school. Borrower protections Federal loans All federal student loans come with terms that protect the borrower from economic devastation if they lose their job, go back to school or have some other economic hardship. For instance, repayment of federal student loans can be "deferred"  or placed on hold for up to three years, if you lose your job, join the Peace Corps or are called to military service. Repayment of federal loans is also deferred when you go back to school. During periods of deferment, interest will accrue on unsubsidized federal loans, but not subsidized federal loans. In addition, if you don't qualify for deferment, federal loans have additional check, called "forbearance," which can place repayment on hiatus because you are ill, or meet other requirements. Here's a handy guide to see if you qualify for student loan forbearance. Private loans Private loans don't necessarily allow borrowers to put their payments on hiatus for any reason. If you have a hardship, you can appeal to the lender for a deferment or forbearance. But whatever your reason, the lender may not agree. And if it does, it may levy a fee (in addition to accruing interest) to provide the deferment. Repayment options Federal loans Federal loans now offer seven different repayment options, including "standard" repayment, which pays off the debt in 10 years, and extremely flexible "pay as you earn" plans, that allow you to base your payments on how much you earn. (See "New and improved ways to pay student loans"). Private loans Typically provide two repayment options - standard and extended. You generally do not have the right to vary your payment based on your income. If you don't earn enough to repay the loan, you are likely to accrue additional penalties and interest. Discharge of debt Federal loans If you are disabled or go into public service or teach in some low-income areas, all or a portion of your federal loans can be forgiven or discharged - wiped away. The Department of Education has a long chart on the discharge options here. However, federal student loans are generally not dischargeable in bankruptcy. Private loans Private student loans are generally not dischargeable in bankruptcy and the federal programs that allow you to discharge the debt when you go into public service or social work do not apply to private student debt.

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Congress Votes to End Fixed Interest for Student Loans

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Congress Votes to End Fixed Interest for Student Loans Jul 31st 2013, 15:23 The U.S. Congress gave final approval to legislation that would peg the interest rates on government-sponsored student loans to a market-based rate, ensuring that almost 9 million undergraduates will pay 3.86 percent interest on their next loan. The Republican-run House voted 392-31 under streamlined procedures requiring a two-thirds supermajority -- to accept changes made by the Democratic-controlled Senate to legislation it initially passed in May. That clears the bill, H.R. 1911, for President Barack Obama, who backs the compromise. In his budget proposal this year, Obama called for linking interest rates on Stafford and PLUS loans to the government's borrowing costs. Enactment of the legislation will provide certainty to students who rely on government loans and to private lenders such as SLM Corp. (SLM), popularly known as Sallie Mae, and Wells Fargo & Co. (WFC) "Sallie and other private lenders can know where federal loan rates are going to be and therefore plan accordingly," said Michael Tarkan, who follows private lenders for Washington-based Compass Point Research and Trading. "The competition from the private side will go up against the federal PLUS Loan market." Borrowing Costs The new rates, pegged to the yield on the 10-year Treasury note, will be retroactive to July 1 -- the day that the interest rate for subsidized Stafford loans doubled from 3.4 percent to 6.8 percent, matching the rate for unsubsidized loans. The government pays the interest on subsidized loans while students are in school. Those loans are disbursed based on financial need, while unsubsidized loans have no income requirement. Students take out new loans for each academic year. Senate Democrats had resisted proposals by both House Republicans and Obama to tie rates to fluctuations in the 10-year Treasury yield. The legislative impasse prevented Congress from averting the previously scheduled July 1 doubling of the interest rate for about 7 million low-income students who take out subsidized Stafford loans. Republicans had highlighted the division between Obama and Senate Democrats, with House leaders repeatedly calling on the Senate to pass legislation meeting the president's requirement that interest rates reflect government borrowing costs. Bipartisan Breakthrough The breakthrough came on July 18, when a bipartisan group of eight senators agreed to a compromise that the Senate passed, 81-18, on July 24. Republican negotiators led by Tennessee Senator Lamar Alexander, a former U.S. education secretary, agreed to a demand by Democrats that rates for undergraduate loans be capped at 8.25 percent. Loans to about 1.5 million graduate students who take out Stafford loans will be capped at 9.5 percent. The rate cap for PLUS loans to more than 1 million graduate students and parents of undergraduates is 10.5 percent. Stafford loans limit the amount that can be borrowed, while PLUS loans have no restrictions. The Senate's approval of the bipartisan compromise was praised by House Speaker John Boehner, an Ohio Republican, who called the revised legislation "a victory for students and parents" that is "consistent with the House Republican bill passed in May." House Minority LeaderNancy Pelosi, a California Democrat, called the Senate vote "a concrete step toward restoring the economic security, educational opportunities, and peace of mind of America's students." Variable Rates A leading Democratic opponent of variable rates, Rhode Island Senator Jack Reed, argued during Senate debate that the legislation marked a "fundamental shift" in how Congress dealt with student loans. Under the bill, he said, students in college now will benefit from lower interest financed by higher borrowing costs for students who won't start college for four or five years. Variable rates pegged to the 91-day Treasury bill were used to determine subsidized Stafford loans when the direct student loan program began operation in 1992. A decade later, legislation was enacted to begin a four-year transition to a fixed rate of 6.8 percent for Stafford loans starting July 1, 2006. In 2007, Congress incrementally reduced the interest rate to 3.4 percent for subsidized Stafford loans. That rate was to expire on July 1, 2012, and jump to 6.8 percent. Responding to Obama's election-year call to keep borrowing costs low for financially needy students -- an appeal endorsed by Obama's Republican opponent in the presidential campaign, Mitt Romney -- Congress extended the 3.4 percent rate for another year. Pressure on Lawmakers The July 1 doubling of that rate meant that all Stafford loans, subsidized and unsubsidized, were set at a fixed rate of 6.8 percent. The increase put pressure on lawmakers to act before Congress begins its five-week summer recess at the end of this week so that students returning to college next month will not have to pay the higher rates. House Republicans today took credit for taking timely action and blamed Senate Democrats for the delay. "The House acted early, long before the deadline," Majority Whip Kevin McCarthy of California told reporters. "The Senate went through a lot of different movements," he said. Congress should "never have to go past that deadline." Under the legislation passed today, the interest rate for all undergraduate Stafford borrowers will be 2.05 percentage points higher than the yield on the 10-year Treasury note at the last auction before June 1. That yield was 1.81 percent at the May 15 auction, the last one the Treasury Department conducted before June 1. That puts the rate for undergraduate Stafford loans for the 2013-2014 academic year at 3.86 percent. Other Rates Graduate Stafford loans will be set at 3.6 percentage points more than the 10-year Treasury yield, or 5.41 percent for the coming school year. PLUS loans will be marked up 4.6 percentage points above the 10-year Treasury yield, for an interest rate of 6.41 percent in the coming year. Unlike the original House measure, students can lock in an interest rate each year that they borrow money. The House plan would have required students to pay a varying interest rate on the rolling total of what they borrow to finance higher education, with an 8.5 percent cap. "Like the 30-year mortgage, once you take out the loan, you know what your rate is going to be so you can plan on it," House Minority Whip Steny Hoyer, a Maryland Democrat, told reporters yesterday. He called measure "a compromise ''to the extent it reflects market rates'' sought by Republicans and Obama. To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net To contact the editor responsible for this story: Katherine Rizzo at krizzo5@bloomberg.net Enlarge image U.S. House Votes to Roll Back Doubled Student-Loan Interest Rate Manuel Balce Ceneta/AP Photo Rep. Cathy McMorris Rodgers, R-Wa., center, with Reps. Virginia Foxx, R-N.C., front left, Luke Messer, R-Ind., behind Foxx, and John Kline, R-Minn., left of McMorris Rodgers, talks about student loans on Capitol Hill in Washington, on July 31, 2013. Rep. Cathy McMorris Rodgers, R-Wa., center, with Reps. Virginia Foxx, R-N.C., front left, Luke Messer, R-Ind., behind Foxx, and John Kline, R-Minn., left of McMorris Rodgers, talks about student loans on Capitol Hill in Washington, on July 31, 2013. Photographer: Manuel Balce Ceneta/AP Photo 0:19 July 24 (Bloomberg) -- The U.S. Senate voted 81-18 today to replace fixed interest rates on federal loans with variable rates that will rise or fall annually according to the yield on 10-year Treasury notes. Senator Richard Blumenthal, a Democrat from Connecticut, reads the results of the vote. (Excerpt. Source: Bloomberg)

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California City Readies Controversial Loan-Seizure Program

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California City Readies Controversial Loan-Seizure Program Jul 31st 2013, 08:41 By Nick Timiraos and Al Yoon City leaders in Richmond, Calif., said Tuesday that they would take the first steps towards potentially seizing underwater mortgages, becoming the first city to pilot an unorthodox use of eminent domain to tackle blight left by the housing bust. Working with the investment firm Mortgage Resolution Partners, the city said it had begun sending letters to 32 lenders and other firms known as mortgage "servicers" that process loan payments on behalf of mortgage investors. The letters offer to buy some 624 mortgages at what MRP has concluded is the market price for those loans. At issue are loans that were pooled together and sold to investors as mortgage-backed securities. These so-called "private-label" securities were issued by Wall Street firms and don't have any government backing. Tax and legal rules governing those securities make it difficult—downright impossible, say some investors—to sell individual loans out of the trusts. Of the loans that Richmond wants to buy more than two thirds, or 444, are current on their payments, while 180 are delinquent. If banks and financial institutions refuse to sell the loans at prices offered by the city, then officials will consider using eminent domain. "It's the responsibility of banks to fix this, and they haven't, so we're taking it into our hands," said Richmond Mayor Gayle McLaughlin in a conference call with reporters on Tuesday. Eminent domain allows a government to forcibly acquire property that is then reused in a way considered good for the public—new housing, roads, shopping centers and the like. Owners of the properties are entitled to compensation, often determined by a court. Instead of acquiring houses, Richmond and other cities would buy the mortgages from investors at a price below the property's current market value. They could cut the loan principal to around 97.75% of the property's market value and then refinance the loan into a government-backed mortgage. The proposal is backed by community activists that say it would help residents shed high debt loads and avoid foreclosures that are hurting property values and eroding the tax base. MRP, which would collect a fee for each loan, says it is focusing on loans on the private-label securities because these loans have generally been the most at risk of foreclosure. Loans backed by federally-supported entities could also be harder to condemn. The eminent-domain approach is extremely unpopular with mortgage investors that hold those loans, and a court challenge is likely. Investors worry that cities will offer too low a price for loans, especially those where borrowers are current on their payments. They also say that seizing loans would upend their expectations of loan performance that is used to determine how much they pay for those bonds. The upshot is that, going forward, investors say they would require significant down payments or higher rates in communities where the threat of loan-seizures exists—much the way a sovereign-debt default can raise borrowing costs for a country. So how big is the market for this? Richmond, a working-class city of around 100,000 on the east side of San Francisco Bay, has around 18,700 owner occupied households. Analysts at RBS Securities reviewed data from monthly investor reports compiled by CoreLogic that provides greater detail on loans in private-label securities. Here's what they found: At the end of June, there were 1,099 loans on owner-occupied homes in private-label securities that were current on their payments. Of these around 42%, or 463 loans, had been modified. Roughly half of those modifications included some form or principal forgiveness or principal forbearance, where borrowers don't have to make payments on a portion of the loan (even though it hasn't been wiped out). On average, around 35% of the loan balances had been deferred or forgiven, representing $137,000 per loan. These modifications reduced average monthly payments by 37%, to $1,137, from $1,794. Other modifications included some kind of interest rate reduction or term extension, resulting in an average interest rate of 2.93%, from 6.12%, and average monthly payments that fell by one third, to $1,409 from $2,092. That leaves around 636 current loans that have not been modified. Of those, two thirds have never missed a payment over the life of the loan. Investors have said that the data undercut the often-repeated argument by eminent-domain proponents that loans in private-label securities are the most difficult to modify. What about loans that were current two years ago? The analysis shows that in June 2011 there were some 1,165 mortgages on owner-occupied homes. Today, some 895 of those loans, or 77%, are current and another 50, or 4%, have voluntarily paid off, often due to a refinance or sale of the home. Another 90 loans, or 8%, are one to two months delinquent, and 85, or 7%, are at least three months delinquent. Some 64 loans have been extinguished through a short sale, where the lender allows the homeowner to sell the home at a loss. The remaining 24 loans, or 2% of all loans that were current two years ago, have gone through foreclosure. What about loans that were seriously delinquent two years ago? There were 496 of those, and more than a quarter of them—137 loans—have gone through foreclosure. Nearly as many loans have gone through short sales. Of those remaining, some 116 are behind on their payments. That leaves just 107 loans—or 22%—that are now current.

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Obtaining Personal Loans for Bad Credit Is Now Cheaper, Easier and Faster

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Obtaining Personal Loans for Bad Credit Is Now Cheaper, Easier and Faster Jul 31st 2013, 11:31 New York, NY -- (SBWIRE) -- 07/31/2013 -- These personal loans for bad credit will greatly help the beneficiaries in tackling their financial problems in time where this will even take a couple of minutes in some cases. Allowing people to submit their inquiries online will greatly enhance convenience since this can now be done immediately a financial situation occurs. On average, getting quotes from the lenders will take less than five minutes. The online application process will also come with a lot of privacy where consumers can now give out their personal details without feeling embarrassed. There will be high confidentiality in handling the information that the borrowers will provide and this is well guaranteed since nowpersonalloans.com is currently dealing with highly trustworthy lenders. Every applicant should therefore feel safe in going for this deal. On pledging collateral, there are instances where this will be necessary especially if the required cash amount is huge. This should not be a reason for one to shy away from these personal loans for bad credit since it's only a safety measure that the loan providers will be taking. For approval, the involved persons will be expected to have attained the age of 18 years. A checking account will also be necessary. These loans can really assist a poor credit loan applicant to get a better rating and the loan providers have even taken measures to ensure that this happens with ease. The repayment plans on offer will make it real easy for people to honor their debts ensuring that this is done swiftly. To even assist in choosing among various offers, nowpersonalloans.com has provided a personal loans calculator. Anna Martins, a regular borrower with the company, could not hide her joy after learning about this offer and this was pretty evident from this statement that she made, "I have been looking for ways of getting increased cash amounts even with my low credit rating and this offer on personal loans for bad credit will definitely work great for me. I do believe that these loans will suit most of us." About nowpersonalloans.com This is a company that has grown within a very short time to be among the best providers of online financing. To reach a huge number of loan applicants, nowpersonalloans.com even has loan programs for the credit challenged where approvals are done depending on one's ability to handle repayments. To be considered for the new offer on personal loans for bad credit or get to know more, visit http://www.nowpersonalloans.com

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Doha Bank offers The Best Car Loan Solutions this Ramadan - Al-Bawaba

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Doha Bank offers The Best Car Loan Solutions this Ramadan - Al-Bawaba Jul 30th 2013, 09:53 Doha Bank Car Loan Doha Bank, the leading private commercial bank in Qatar, is offering customers seeking car loans, enhanced benefits including the most competitive loan rates with leading car dealers, and up to 3 months grace periods for loan repayment, in addition to a number of other benefits. The offer is applicable to all customers receiving loan approval during the Holy Month of Ramadan. Commenting on the announcement of the campaign, Dr. R. Seetharaman, Group CEO, Doha Bank, said: "Doha Bank's Car Loans are tailored to meet the needs of our customers. For eligible customers, the overall package is unbeatable as they are able to secure vehicle finance at the most competitive rates. In addition, for a limited period, the Bank is also providing car loan applicants the option of also securing a personal loan against their overall financial position, which is useful for those seeking to consolidate or refinance their financial position." The Bank is offering car loan applicants this Ramadan the additional benefit of free Titanium HP window film, 50 per cent discounts on extra Titanium protection products, and free roadside assistance for one year. Doha Bank has one of the most well recognized car loan portfolios in Qatar and the Bank's success over the years has been in the unique ability to not just tailor financial packages but to also leverage strategic partnerships for the benefit of customers. For example, through the Bank's independently regulated affiliate Doha Bank Assurance Company, customers can also secure vehicle insurance at the most competitive rates, making the overall process of purchasing a vehicle as easy as possible. Doha Bank's Head of Retail Banking Mr. Suresh Bajpai added: "This Ramadan, Doha Bank will fast-track all car loan applications in order to help customers secure their vehicles as fast as possible. With the combination of a holistic financial solution and the availability of auto insurance through Doha Bank Assurance Company, as well as essentials such as complimentary window tinting through our partners, Doha Bank is geared to deliver the best car purchase experience to our customers this Ramadan." Customers can visit any Doha Bank branch or Car Loan Unit and complete applications with the help of the Bank's staff who will advise each customer of their loan eligibility and recommended repayment periods to maximize the effectiveness of their financial packages. They can also SMS the word "CAR" to 92610 for a customer service officer to call them back for an appointment. Existing Doha bank customers with salaried accounts need only present the vehicle purchase quotation from the dealer and copies of their Qatari ID to fast-track the application process. New customers must produce a salary transfer letter from their employers to open a salaried account and simultaneously complete the loan application process. In the case of customers having outstanding liabilities such as credit cards or loans with other Banks, Doha Bank's branch staff will be able to advise each customer on their specific options including the choice of consolidating all outstanding liabilities with Doha Bank, and the customer's resulting eligibility for a vehicle loan. New car loan customers can also secure a pre-approved credit card. All products and services are subject to the terms and conditions of the Bank.

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Actionable Insights Spur Credit Union and Loan Strategy - Business 2 Community

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Actionable Insights Spur Credit Union and Loan Strategy - Business 2 Community Jul 31st 2013, 13:12 Popular Today in Business: All Popular Articles As competition for borrowers grows fiercer, lending institutions must strive to attract customers with benefits beyond low interest rates. We've already explored the use of ForSight's social media analysis to inform a bank's competitive positioning, and our analysis of the online conversation about credit unions points to the growing appeal of attentive customer service and contributing to a community as reasons consumers switch to credit unions. To demonstrate the breadth of possible insights from social media analysis, as well as its relevance to a wide range of business units, today's findings are product-focused. In this post, we'll use online conversations to discover how credit unions in particular can leverage auto loans to attract borrowers and improve business performance. To uncover actionable insight from social media analysis, it is often helpful to start by studying a broader conversation, such as the conversation about auto loans. An opinion analysis allows us to quantify the relative importance of consumers' concerns as they pursue financing for their vehicle purchases: Nearly half of the conversation about car loans involves financial burden (47%), with authors seemingly concerned about balancing this new debt with other obligations such as student loans (13%). Only 17% is specifically about seeking low interest rates. While these two topics are interrelated, as securing a low interest rate makes payments less daunting, the relative proportions underline a key finding: today's consumers are overwhelmed with debt, and they express anxiety even when taking out a relatively small, often low-interest auto loan. With further research about auto loans from credit unions, we find that credit unions are uniquely positioned to attract and serve such customers. Over an 18-month period, more than 90% of the conversation about credit unions and auto loans occurs in longer-form venues such as blogs and forums. The purpose of the majority of posts was to seek or offer advice. Thus the conversation was made up of a number of nuanced opinions towards credit union car loans that are particularly likely to be influential: Very few opinions towards financing at credit unions were negative (10%), and criticism was driven by an inability to secure financing, which is expected to some extent. More useful insights lie on the positive side, where three themes emerged: Customers perceive credit unions to offer better interest rates than dealers, who are often associated with pushing "bad deals" to earn commission (20%). The loan approval process is seemingly faster and simpler through credit unions (13%). Consumers value, and publicly applaud, the longer-term financial benefits of building a relationship with a credit union (14%). This niche of consumers discussing their financial choices online demonstrate an appreciation for exactly what auto loan customers seek: help with their broader financial conditions, and a relationship beyond the closing of the loan. Credit unions, already known to offer superior customer service, can blur the boundary between loan officer and trusted advisor. The insight that consumers view direct auto loans as beneficial not only for immediate needs but towards future financial goals can infiltrate loan officer training, product marketing, and brand campaigns. Given the relative proportions identified in the general auto loan conversation mentioned above, such messaging may be even more appealing to today's borrowers than promoting the lowest rates. In a matter of hours, Crimson Hexagon's ForSight platform helped us understand consumer opinions towards direct auto loans (as represented by over 50,000 social media posts), identifying a unique opportunity for credit unions to use a common and inexpensive product to cultivate loyal customers who turn to them for additional financial needs in the future. Check out our financial study, Profiling the Unbanked and Underbanked. This article originally appeared on Crimson Hexagon » Blog and has been republished with permission. Find out how to syndicate your content with Business 2 Community.

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Granite Bay investment adviser sentenced for fraudulent tax claims ... - Sacramento Business Journal

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Granite Bay investment adviser sentenced for fraudulent tax claims ... - Sacramento Business Journal Aug 1st 2013, 01:31 Enlarge Alan Crosthwaite A Granite Bay investment adviser who attempted to defrauded the California Board of Equalization of more than $4.5 million was sentenced to 16 months in jail. Mark Anderson Staff Writer- Sacramento Business Journal Email  | Twitter  | LinkedIn  | Google+ A Granite Bay investment adviser who attempted to defrauded the California Board of Equalization of more than $4.5 million was sentenced Tuesday to 16 months in jail. Larry Harmon, 48, was sentenced Tuesday in Sacramento Superior Court to 16 months in the county jail. He was the owner of Larry Harmon & Associates, and was found to have submitted fraudulent claims for tax returns on defaulted car loans to the BOE. Harmon was caught after an auditor with the agency noticed many suspicious claims. He was arrested in January on 10 felony counts of forgery and false claims. "Defrauding state government is equivalent to stealing taxpayer dollars," Attorney General Kamala Harris said in a news release. Harmon had formerly been an investment adviser for some NBA players, including Carmelo Anthony of the New York Knicks. Mark Anderson covers technology, banking and finance, medtech and biotech, venture capital, energy, mining, hotels, restaurants and tourism for the Sacramento Business Journal. Related links: Granite Bay, Crime, Automotive Industries: Legal Services, Banking & Financial Services

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Some Facts about Car Repossession - Auto Credit Express (blog)

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Some Facts about Car Repossession - Auto Credit Express (blog) Jul 31st 2013, 19:08 Car owners with rough credit that are currently behind on a car loan and facing possible repossession can look to the Federal Trade Commission to explain their rights while also providing tips on prevention What we know It's been well documented that consumers with questionable credit that have taken out an auto loan are at a higher risk for vehicle repossession. Here at Auto Credit Express we know this is true because for the past two decades we've been helping car buyers with bad credit that are searching for online auto loans find those dealers that can offer them the highest probabilities for auto loan approvals. Car repossession But at the same time, according to information from Experian Automotive, consumers financing a vehicle from a high-risk lender are roughly twice as likely to have that loan end in repossession versus buyers financing with a conventional vehicle loan. With that in mind, we thought it would be a good idea to share some information from the Federal Trade Commission while keeping in mind that we don't presume to give anyone specific legal advice. Here, then, is part one of that article (the second part will follow shortly): Talking with Your Creditor It's easier to try to prevent a vehicle repossession from taking place than to dispute it after the fact. Contact your creditor as soon as you realize you will be late with a payment. Many creditors work with consumers they believe will be able to pay soon, even if slightly late. You may be able to negotiate a delay in your payment or a revised schedule of payments. If you can reach an agreement to change your original contract, get it in writing to avoid questions later. However, your creditor or lessor may refuse to accept late payments or make other changes in your contract — and may demand that you return the car. If you agree to a "voluntary repossession," you may reduce your creditor's expenses, which you would be responsible for paying. But even if you return the car voluntarily, you still are responsible for paying any deficiency on your contract, and your creditor still may enter the late payments or repossession on your credit report. Seizing a vehicle In many states, your creditor can seize your vehicle as soon as you default on your loan or lease. Your contract should state what constitutes a default, but failure to make a payment on time is a typical example. However, if your creditor agrees to change your payment date, the terms of your original contract may not apply any longer. If your creditor agrees to such a change, make sure you have it in writing. Oral agreements are difficult to prove. Once you are in default, the laws of most states permit the creditor to repossess your car at any time, without notice, and to come onto your property to do so. But when seizing the vehicle, your creditor may not commit a "breach of the peace." In some states, that means using physical force, threats of force, or even removing your car from a closed garage without your permission. Should there be a breach of the peace in seizing your car, your creditor may be required to pay a penalty or to compensate you if any harm is done to you or your property. A breach of peace also may give you a legal defense if your creditor sues you to collect a "deficiency judgment" — that is, the difference between what you owe on the contract (plus repossession and sale expenses) and what your creditor gets from the resale of your vehicle. For More Information To learn more about your rights and specific repossession requirements in your state, contact your state Attorney General (www.naag.org) or local consumer protection agency (www.consumeraction.gov). As we see it We agree with the FTC's assessment that it's far easier and much less expensive to deal with repossession before it occurs rather than after it happens. So if you are currently having difficulty making your car payments, contact your lender as soon as you realize this might be a possibility. Secondly, if the lender does agree to a loan modification, be sure you get the terms of the proposed agreement in writing. One more thing to keep in mind: Auto Credit Express specializes in matching applicants with auto credit issues to dealers that can offer them their best chances for getting approved auto loans. So if you're ready to begin that process, you can start it now by filling out our online auto loan application. Tags: Bad Credit, car repossession This entry was posted and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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Congress Votes to End Fixed Interest for Student Loans

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Congress Votes to End Fixed Interest for Student Loans Jul 31st 2013, 15:23 The U.S. Congress gave final approval to legislation that would peg the interest rates on government-sponsored student loans to a market-based rate, ensuring that almost 9 million undergraduates will pay 3.86 percent interest on their next loan. The Republican-run House voted 392-31 under streamlined procedures requiring a two-thirds supermajority -- to accept changes made by the Democratic-controlled Senate to legislation it initially passed in May. That clears the bill, H.R. 1911, for President Barack Obama, who backs the compromise. In his budget proposal this year, Obama called for linking interest rates on Stafford and PLUS loans to the government's borrowing costs. Enactment of the legislation will provide certainty to students who rely on government loans and to private lenders such as SLM Corp. (SLM), popularly known as Sallie Mae, and Wells Fargo & Co. (WFC) "Sallie and other private lenders can know where federal loan rates are going to be and therefore plan accordingly," said Michael Tarkan, who follows private lenders for Washington-based Compass Point Research and Trading. "The competition from the private side will go up against the federal PLUS Loan market." Borrowing Costs The new rates, pegged to the yield on the 10-year Treasury note, will be retroactive to July 1 -- the day that the interest rate for subsidized Stafford loans doubled from 3.4 percent to 6.8 percent, matching the rate for unsubsidized loans. The government pays the interest on subsidized loans while students are in school. Those loans are disbursed based on financial need, while unsubsidized loans have no income requirement. Students take out new loans for each academic year. Senate Democrats had resisted proposals by both House Republicans and Obama to tie rates to fluctuations in the 10-year Treasury yield. The legislative impasse prevented Congress from averting the previously scheduled July 1 doubling of the interest rate for about 7 million low-income students who take out subsidized Stafford loans. Republicans had highlighted the division between Obama and Senate Democrats, with House leaders repeatedly calling on the Senate to pass legislation meeting the president's requirement that interest rates reflect government borrowing costs. Bipartisan Breakthrough The breakthrough came on July 18, when a bipartisan group of eight senators agreed to a compromise that the Senate passed, 81-18, on July 24. Republican negotiators led by Tennessee Senator Lamar Alexander, a former U.S. education secretary, agreed to a demand by Democrats that rates for undergraduate loans be capped at 8.25 percent. Loans to about 1.5 million graduate students who take out Stafford loans will be capped at 9.5 percent. The rate cap for PLUS loans to more than 1 million graduate students and parents of undergraduates is 10.5 percent. Stafford loans limit the amount that can be borrowed, while PLUS loans have no restrictions. The Senate's approval of the bipartisan compromise was praised by House Speaker John Boehner, an Ohio Republican, who called the revised legislation "a victory for students and parents" that is "consistent with the House Republican bill passed in May." House Minority LeaderNancy Pelosi, a California Democrat, called the Senate vote "a concrete step toward restoring the economic security, educational opportunities, and peace of mind of America's students." Variable Rates A leading Democratic opponent of variable rates, Rhode Island Senator Jack Reed, argued during Senate debate that the legislation marked a "fundamental shift" in how Congress dealt with student loans. Under the bill, he said, students in college now will benefit from lower interest financed by higher borrowing costs for students who won't start college for four or five years. Variable rates pegged to the 91-day Treasury bill were used to determine subsidized Stafford loans when the direct student loan program began operation in 1992. A decade later, legislation was enacted to begin a four-year transition to a fixed rate of 6.8 percent for Stafford loans starting July 1, 2006. In 2007, Congress incrementally reduced the interest rate to 3.4 percent for subsidized Stafford loans. That rate was to expire on July 1, 2012, and jump to 6.8 percent. Responding to Obama's election-year call to keep borrowing costs low for financially needy students -- an appeal endorsed by Obama's Republican opponent in the presidential campaign, Mitt Romney -- Congress extended the 3.4 percent rate for another year. Pressure on Lawmakers The July 1 doubling of that rate meant that all Stafford loans, subsidized and unsubsidized, were set at a fixed rate of 6.8 percent. The increase put pressure on lawmakers to act before Congress begins its five-week summer recess at the end of this week so that students returning to college next month will not have to pay the higher rates. House Republicans today took credit for taking timely action and blamed Senate Democrats for the delay. "The House acted early, long before the deadline," Majority Whip Kevin McCarthy of California told reporters. "The Senate went through a lot of different movements," he said. Congress should "never have to go past that deadline." Under the legislation passed today, the interest rate for all undergraduate Stafford borrowers will be 2.05 percentage points higher than the yield on the 10-year Treasury note at the last auction before June 1. That yield was 1.81 percent at the May 15 auction, the last one the Treasury Department conducted before June 1. That puts the rate for undergraduate Stafford loans for the 2013-2014 academic year at 3.86 percent. Other Rates Graduate Stafford loans will be set at 3.6 percentage points more than the 10-year Treasury yield, or 5.41 percent for the coming school year. PLUS loans will be marked up 4.6 percentage points above the 10-year Treasury yield, for an interest rate of 6.41 percent in the coming year. Unlike the original House measure, students can lock in an interest rate each year that they borrow money. The House plan would have required students to pay a varying interest rate on the rolling total of what they borrow to finance higher education, with an 8.5 percent cap. "Like the 30-year mortgage, once you take out the loan, you know what your rate is going to be so you can plan on it," House Minority Whip Steny Hoyer, a Maryland Democrat, told reporters yesterday. He called measure "a compromise ''to the extent it reflects market rates'' sought by Republicans and Obama. To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net To contact the editor responsible for this story: Katherine Rizzo at krizzo5@bloomberg.net Enlarge image U.S. House Votes to Roll Back Doubled Student-Loan Interest Rate Manuel Balce Ceneta/AP Photo Rep. Cathy McMorris Rodgers, R-Wa., center, with Reps. Virginia Foxx, R-N.C., front left, Luke Messer, R-Ind., behind Foxx, and John Kline, R-Minn., left of McMorris Rodgers, talks about student loans on Capitol Hill in Washington, on July 31, 2013. Rep. Cathy McMorris Rodgers, R-Wa., center, with Reps. Virginia Foxx, R-N.C., front left, Luke Messer, R-Ind., behind Foxx, and John Kline, R-Minn., left of McMorris Rodgers, talks about student loans on Capitol Hill in Washington, on July 31, 2013. Photographer: Manuel Balce Ceneta/AP Photo 0:19 July 24 (Bloomberg) -- The U.S. Senate voted 81-18 today to replace fixed interest rates on federal loans with variable rates that will rise or fall annually according to the yield on 10-year Treasury notes. Senator Richard Blumenthal, a Democrat from Connecticut, reads the results of the vote. (Excerpt. Source: Bloomberg)

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NY aims to spur $3B in private loans for Sandy aid

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NY aims to spur $3B in private loans for Sandy aid Jul 31st 2013, 12:41 NEW YORK (AP) — New York is taking actions aimed at generating more than $3 billion in private sector loans for Superstorm Sandy rebuilding, Gov. Andrew Cuomo says. The Department of Financial Services will offer incentives to private banks if they issue loans for Sandy rebuilding projects in 102 neighborhoods that are part of the publicly funded New York Rising Community Reconstruction Program. Banks with good performance records will be given priority when the state reviews their applications for new branches or for mergers and acquisitions. The New York Rising program aims to build infrastructure better suited to withstand bad weather and make energy supplies in storm-hit areas more sustainable by introducing solar panels and public charging stations. The program's also designed to help small businesses hurt by the storm get back on their feet. "Communities across New York state have been shaken by major storms in the past few years, and we must adapt to the new norm of extreme weather, said Cuomo in a statement. "State government is doing its part to bolster the storm recovery process." The governor's office said the incentive for lenders is expected to spur $3.2 billion in private investment for Sandy-hit areas. The governor is also directing state agencies to prioritize rebuilding projects and to accelerate permit applications. "This action will help spark billions of dollars in lending and private investment in communities that were hit hard by these devastating natural disasters," said Benjamin Lawsky, superintendent of Financial Services. "We'll continue to work in partnership with local stakeholders to rebuild these communities and help them better withstand future storms." Creating incentives for banks to lend was made possible through the federal Community Reinvestment Act, which encourages banks to offer services in poor and minority neighborhoods and areas affected by disaster. It comes on top of $500 million in HUD Community Development Block Grant funds previously announced for recovery plans across New York City and Long Island.

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