What are Bad Credit Interest Rates?
The Bad Credit Interest Rates can vary considerably both from Lender to Lender, and also product to product. We can usually have a good idea of your interest rate within a 5-minute phone call. See below examples of how bad credit interest rates are assessed by various lenders; and an insight into our approach to obtaining the most competitive loan product possible. All the work is in obtaining factual information on your credit file, mortgage history, and conduct on your credit accounts.
- Firstly, assess the loan required; which would include all lender set up fees.
- Then work out the LVR of the final loan via a property value assessment – this is will include a postcode assessment as not all lenders will accept properties for security in all locations.
- Also, obtain information on all credit accounts – This includes any accounts conducted well, along with accounts that are in default.
- Finally, what income can be used for servicing the new loan?
Each lender has a different way of assessing:
- Their interest rates.
- The risk for the home loan going into arrears.
- The risk of foreclosure.
How does the lender assess risk and therefore the Bad Credit Interest Rates?
- LVR (property value vs loan required as a percentage) – if your loan is at 90% of the property value it would only take a small downturn in the property market for the lender to lose money if they sold your home. Hence you may obtain a better bad credit interest rate if you have a lower LVR.
- Credit History – if you have bad credit, the lender will assess:
- When the credit defaults were listed.
- When were the defaults paid?
- Plus, if they are unpaid.
The longer the credit issues have passed, the better the chances that the problems won’t re-occur.
- Mortgage and Loan History – the mortgage arrears and your loan history can give the lender an insight into loan behavior and how the new loan may be conducted.
- Story – everyone wants to pay their debts, but life sometimes happens, and choices made to stop paying or re-direct funds to other purposes. Lenders put quite an amount of weight on the story in approving assessing loans for approval. The story does not usually have a bearing on the bad credit interest rates.
Bad Credit Interest Rates vary from lender to lender, and product to product, hence Loan Saver Network follows a systemised assessment of every client to enable the best possible bad credit interest rates available. Bad Credit Interest Rates are part of the Loan Saver assessment process, but they do not convey all the information for the benefit achievable through a Debt Consolidation Home Loan. An indicative assessment of your potential repayment savings can be achieved via our Debt Consolidation Calculator.
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