| The costs of bad credit
As with any other personal loan, the interest rate you get largely depends on your personal circumstances. However, with this particular type of loan, the single most important factor in determining the rate you get is your credit history. A poor credit rating means that the interest rate you will pay will be markedly higher than with other unsecured personal loans. As most bad credit loans are likely to be variable rate deals, you should be aware that your loan repayments will change in line with interest rates. Click here for more on fixed and variable rates. If you intend to pay your bad credit loan off early then make sure that you know what the early redemption penalties (if any) are. Remember: if you want to repair your credit rating over time then you need to make every payment on any loan you are given.
RBA Reassuring on Banks
Within a month, four of the Big Five banks will produce interim earnings while the Bank of Queensland trots out its figures in the middle of next week.The ANZ, St George, National and Westpac will all produce solid profit performances in the first half of the 2007 financial year and analysts are generally agreed that the main points to be watched will be the level of bad and doubtful debts in housing mortgages and personal, such as credit cards.And while there were fears there could be an upsurge in the level of dodgy loans and actual losses, it is now becoming clear from the APRA and Reserve Bank data, plus the RBA's financial stability statement on Monday that much of that concern was misplaced.In fact the RBA's comments on the banks and the banking system should be read by all bank shareholders: unless the RBA has made a horrible error, it's clear there are no black holes in bank balance sheets.Perhaps the most interesting area to watch is the implicit warning about the contraction of lending margins on housing mortgages because of low demand and high levels of competition.The RBA points out that there are hardly any mortgages being sold where the borrower is paying the bank headline adjustable or fixed rate, such is the intensity of competition.Banks' share prices have increased by around 14 per cent over the past six months, slightly underperforming the broader market.
Loan rates on the up
One month after financial comparison site Moneyfacts warned of the imminent demise of the sub six per cent loan, there is only one such loan left on the market, says Moneyfacts analyst Michelle Slade. It seems that lenders are becoming more cautious, with growing numbers of individual voluntary arrangements, bad debts and defaults. The Moneyfacts analysis reveals differing trends for credit cards and loans, says Ms Slade: 'As the 0 per cent credit card market continues to flourish, with deals in excess of 12 months easily found (although lending criteria has been tightened), it is the more structured lending which seems to be bearing the brunt. Eight personal loan providers increased interest rates by around one to two full percentage points, and in one instance by seven per cent.' There are many reasons why this may be happening, speculates the analyst.
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