Signature loans and small purchase loans with collateral:
This type of credit is increasingly common among savvy firearm retailers. These types of loans are very similar to car loans, albeit on a smaller scale. The buyer usually pays a deposit for the item and the remaining balance is paid in monthly installments to a small loan company. This type of purchase combines elements of credit and lay away. The customer chooses an item and pays a deposit (usually around 20%) at the gun shop and applies for a small loan in the amount of the remaining balance. A loan company evaluates the loan and usually requires that the items to be purchased act as collateral for the loan, being that if the borrower does not pay, the loan company will take possession of the item and the borrower loses all equity. The buyer usually takes possession of the item after a suitable deposit is paid and the loan is approved for the remainder of the total purchase amount. The loan is usually repaid in a series of scheduled payments and interest is usually compounded and computed at the beginning of the loan although this practice is giving way to a credit card style computation system where the "rule of 78s" system of payment and interest computation is outlawed. Loan repayment periods are usually one year or sometimes two years, rarely longer. Usually, if the borrower falls delinquent in payments and forfeits the collateral, the loan company will sell the item back to the dealer for the remaining balance of the loan, or the fair used value of the item (whichever is higher). A high initial deposit for the item assures that it will never be worth less than the amount that is owed on it and the dealer will be willing to buy it back from the loan company if they repossess it. The buyer may also voluntarily forfeit the item to the dealer and the dealer will repay the remaining balance of the loan to the loan company and keep the returned item for sale to another customer. This type of credit plan is most common with mid-size established firearm retailers who do not offer revolving credit plans but can get the cooperation of small loan companies. Regular banks rarely underwrite these types of loans.
This type of purchase is good for establishing credit and is slightly more difficult for "Big Brother" to trace than purchases made with credit cards. The details of the purchase will be retained by the loan company, but only rudimentary information about the purchase will be available to outside parties. Most loan companies do not want to bother with loan amounts under $200 so this type of arrangement is usually only available to people buying guns worth over $500. Loan companies are also hesitant to make loans for a purchase of several less costly items than they are for a single more costly item. An example would be a $1,000.00 loan to purchase a MAKE-90 and a .380 Beretta and a Maverick 12g shotgun (worth a total of $1,200) may not be approved while a $1,200.00 loan for a H&K 91 (worth a total of $1,400.00) probably would be approved. The loan company will see their chances of recovering any losses from the repossession of the H&K 91 as better than attempting to conduct the sale or auction of three separate items if the loan falls into default.
Signature loans for a specific purchase are repaid about like the small collateral loan but they do not require collateral. Interest rates are usually very high (the legal maximum of 21%) as a reward to the lender for risking the principal. Loan amounts are generally between $500.00 and $2,000.00 and payments are over one to three years (usually one year). This type of loan has traditionally been a way of establishing credit but is becoming less common. Banks prefer to issue secured credit cards as a credit building tool. Signature loans seem to be more commonly available through credit unions than banks and loan companies. They are sometimes a slightly better deal for one-time big ticket item purchases than credit cards. There is no surcharge charged to the seller like there is with a credit card, the bank never needs to know exactly what you are using the money for (and you can keep them from finding out) or where you are spending it, and there is less of a temptation to run the balance back up than there is with a credit card. The monthly payments on a signature loan are set ahead of time and can be budgeted more easily than credit card payments, which can vary. Signature loan payments are usually considerably higher than credit card minimum payments but are structured to ensure that the loan is paid off sooner and less interest is paid in the long run.
Five Reasons to Check Your Credit Report Regularly
In much the same way that a resume displays your work experience to a prospective employer, a credit report provides prospective creditors (and in some cases employers and insurers too) with a detailed picture of your credit history. And like a resume, your credit report can influence whether you will receive what you are applying for.
Ideally, your credit report is an accurate, up-to-date reflection of your credit history. However, since we don't live in an ideal world, there are many reasons that your credit report could contain inaccuracies that might prevent you from receiving the credit you deserve. The good news is you can take action to keep your report accurate. Here are the top five reasons why you should make a practice of regularly reviewing your credit report:Inaccuracies & Mixed Credit Files
Many inaccuracies on a credit report can be the result of simple human error, and are therefore are not difficult to dispute. Of course, if you don't order your credit report, you might never know about it. Whether the inaccuracies relate to payments not credited, late payments, or data mixed in from the credit file of someone else with a name similar to yours, you will want to contact the credit bureau to dispute inaccurate information promptly. If you would like to get a free copy of your credit report right now, click here.Tracking Payments
One of the most important elements of credit is a demonstrated history of on time payments. Once you send the check though, anything can happen--a delay in the payment being received can kick you over to a 30-day delinquency. If you call your creditor and explain the situation, they might adjust the information. Of course, if you don't read your credit report, you won't necessarily know which payments are being received and reported properly. If you would like to get a free copy of your credit report right now,click here.Identity Theft
This issue alone is reason to order your credit report immediately. Identity theft is an insidious crime, involving a thief who assumes your name to open new accounts, divert your card statements to another address, and run up all sorts of bad debt without you ever knowing about it until collectors come calling. Over time, identity theft could jeopardize your ability to obtain further credit. The best way to catch a thief who is using your name is by getting a copy of your credit report, which will show you if there are accounts listed you know you haven't opened. For example, if a thief has intercepted a pre-approved credit card offer in your name and sent it in with a change of address, your credit report will include the account. If you would like to get a free copy of your credit report right now, click here.Inquiries
If you're shopping around for a loan or more credit, you should know that when creditors check your credit, it places an inquiry on your credit report. Inquiries can add up, which is often interpreted as a negative by creditors. For this reason, too many inquiries can actually make getting credit more difficult. Moreover, if you didn't authorize someone to look at your credit report and they did, they may have broken the law. If you would like to see who's been looking at your credit, click here to get a free copy of your credit report right now.Credit Fraud--Unauthorized Charges
Credit fraud involves the theft of your credit card or account number to make unauthorized charges to your account. Though consumers are protected financially from this abuse, other creditors may take note of all this activity and decide to raise your interest rates or refuse to grant you a loan. Ordering your credit report will help you catch new activity on accounts that you haven't been using, or may have closed. If you would like to get a free copy of your credit report right now,click here.
When it comes to managing your credit worthiness, your credit report is your best resource. Ordering your credit report gives you the opportunity to manage your credit wisely today, while planning your credit strategy for achieving future goals--a credit-savvy move every consumer should make! click here to get your credit report right now, for free!