A new business opportunity that has recently presented itself is in used car loans. It appears to be self-explanatory, but these are loans that people take in order to purchase used cars. In the current financial climate, these loans are not always easy to get due to the fact that a lot of people are having difficulties being approved for all types of loans because of their low credit scores.
The credit bureau, Experian, has reported that 43 million Americans have credit scores below 599. All of these people will have difficulties being approved for a used car loan, because lenders like to loan money to people who have, on average, a credit score of 720 and above. These are the people who will receive the lowest interest rates. If people with credit scores below 720 are approved for a loan, they will pay for this with higher interest rates which lead to higher monthly car payments.
Furthermore, Experian also stated that 20 million Americans have credit scores ranging from 600 to 650. These people are above 599, the most difficult people to approve for a used car loan, but they are not doing as well as those with scores 720 and above. This makes the 600 to 650 group an underserved community that needs to have an alternative to the traditional lender such as a bank; these people would also be subject to higher interest rates with a bank.
People, who are looking for a used car loan with lower credit scores, do not have these low scores because they are irresponsible people. A lot of people have had a medical condition that has caused them to fall into debt. Some people did not have adequate medical insurance and even when they do, 100 percent of their bills are not always paid; they have to come up with the money to pay these bills and if they failed, their credit scores suffered in the process.
Some people have gotten into financial difficulties because of the housing industry. They have purchased properties that were to either be rentals or they had plans to sell these houses for a profit. With the crashing of the housing market, these dreams did not come true and they were stuck with several mortgage payments to make. Those who could not afford to continue these payments were forced into foreclosure, and this is a serious mark on people’s credit.
The recession has caused a lot of people to lose their jobs through no fault of their own. When this happened, they had difficulties paying their bills and made several late payments. Every time someone makes a payment late, the creditor reports it to the credit bureaus and the person’s credit score suffers as a result. They may have needed to file for bankruptcy and this damages a person’s credit.
The scenarios listed above are of good people who have fallen on hard times because of factors outside of their control. They are the people who need help in purchasing a used car with a loan and they can find this help from a non-prime lender. The non-prime lending industry is where the new business opportunity will be for people who are looking for something that will give them a better return on their investment than a low-interest savings account or the volatile stock market. These loans are considered to be a good risk, because they are for people with low credit scores and not people of low character.