To understand what a subprime loan is, it is first important to understand the details of a prime loan. A prime loan, also known as a conventional loan, is offered by lending institutions to borrowers they see as ideal, less risky candidates. These preferred borrowers are typically in good financial standing and have good credit. Essentially, lenders like to make deals with these people because they believe them to be more capable of eventually paying back the loan.
You don't have to be a linguist to know that "sub" means under, below, or in some cases, less than. Thus, a subprime loan is a tier below a prime loan. In the case of auto ...
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Consumer Debt On Pace to Hit $4 Trillion by December 31st
Here’s an unsettling number as you gear up for holiday shopping: consumer debt is on pace to hit $4 trillion by the end of 2018. In fact, in just the past five years, consumer debt has gone up by $1 trillion.
Taking a closer look at the breakdown for borrowers: $1.04 trillion is revolving or credit card debt, which has jumped 22% since 2013, and $2.9 trillion in non-revolving debt, which includes student and auto loans, jumping 30% in the past five years. (Mortgage debt is not included in this number.
Based on the rate of holiday spending reported in these past few weeks alone, LendingTree analysts expect credit card balances to grow by at ...
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Four Dangers of Debt Consolidation
Debt consolidation can be a great way to lower your monthly payments, reduce your interest cost, and simplify the process of paying back what you owe. But, consolidation isn't always the right choice -- and it isn't necessarily a risk-free process.
To make sure debt consolidation doesn't make your situation worse, it's important to understand the dangers so you can make an informed choice about whether consolidating your outstanding debt makes sense for you. Here are four major risks associated with the process that you'll want to mitigate if you plan to take this approach.
1. Going deeper into debt
One of the biggest risks of ...
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Student Loan Crises Must Be Addressed Before It Gets Much Worse
While Wall Street and U.S. President Donald Trump tout news of a booming stock market and low unemployment, college students may be quick to roll their eyes. The improved economy has yet to mean higher wages for graduates already struggling to pay down massive debt, let alone ease the minds of students staring down the barrel of six-digit loan obligations yet to come.
Federal student loans are the only consumer debt segment with continuous cumulative growth since the Great Recession. As the cost of tuition and borrowing continue to rise, the result is a widening default crisis that even Fed Chairman Jerome Powell labeled as a cause for ...
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Do You Think You Are In the Middle Class? – Think Again
The definition of "middle class" can vary wildly depending on who you ask. For some, middle-class is defined by certain attributes: If you're hardworking, thrifty and humble, for example, you're middle-class. For others, it means earning a substantial salary but not so much that you'd be considered rich.
Northwestern Mutual's 2018 Planning & Progress Study found that 68 percent of Americans consider themselves middle-class, down 2 percent from last year. However, because of the fuzziness of the definition, far more Americans consider themselves middle-class than technically qualify based on income. Please note however that this is a ...
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Parents Are Wising Up About Student Loan Debt
Parents are wising up when it comes to taking on debt to pay for their children's college education. According to a survey by T Rowe Price, parents are less willing to take on more than $75,000 in Student loan debt towards their children's education this year.
At the same time, more parents are willing to take on college debt that is less than $25,000 - a much more manageable figure. Those changing attitudes come alongside other good news for parents: They are losing less sleep over college costs.
The survey found that only 14 percent of parents are willing to take out more than $75,000 in debt to pay for their children's college this ...
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Start Off Right – 12 Financial Tips That Can Last A Lifetime
When you enter your 20s, you try to figure out life and (hopefully) learn from your mistakes. For many, it’s the first time they’re faced with dealing with finances completely on their own.
You may be taking out student loans or trying to pay them off. You’re learning to manage credit cards and pay your bills, and you’re entering the workforce. What you do with your money in your 20s -- your saving and spending habits, and the debt you incur -- will stay with you into your 30s and beyond.
Penny-pinching and living within a budget aren't fun, but it’s a whole lot better than finding yourself swimming in debt and stressed about money. If ...
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Five Bad Financial Habits That Are Signs of Trouble
Good financial habits don't just happen. Like washboard abs, most people have to work to develop them.
Racking up monthly charges on your credit cards without paying off the balance is a common bad financial habit. Not reviewing credit card statements is another.
But other, more subtle behaviors can be tipoffs to a disorganized financial life.
Getting caught with a late fee because you lost or forgot about a bill points to a too-loose approach to finances. Avoiding financial decisions because you don't know enough is another warning bell.
Sometimes an otherwise good financial decision – such as making extra mortgage payments – ...
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Delinquent Credit Card Debt – One Cycle Is All It Takes To Begin the Spiral
Delinquent credit card debt is like having mold in your house. As time passes, they both silently get worse and become more difficult to fix.
When you make a payment after the due date on your credit card statement, you have a delinquent credit card account on your hands. You might think that one missed payment doesn't matter. In fact, many people seem to believe this.
According to the National Foundation for Credit Counseling 2018 Consumer Financial Literacy Survey, 25 percent of Americans said they didn't pay their bills on time. While it's heartening to know that 75 percent do pay their bills on time, the 25 percent who don't are on ...
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Millennials Share Everything With Their Spouses – Except Their Finances
Millennials share everything on social media, but when it comes to their spouses, they are doing a poor job of discussing their finances, which is creating stress and strain in their relationships.
This is just one of the findings from Fidelity Investments' Couples & Money study, which found that, while the majority of survey respondents said they are communicating about finances, one-third don't even know how much the other half of the couple makes, while one-seventh aren't even sure if their spouse is employed.
Life is busy, and millennial newlyweds have to juggle their careers, their marriage and debt. That may be one of the ...
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