Loan Pirates Preying on Innocent Clients

Predatory loan industries have been preying on innocent clients for years now, forcing them to be buried in debt by paying their current liabilities with new loans. This cycle has been prevalent in the industry until 2010 when the state of Illinois stepped in to fix the problem.

The lenders have been charging up to 340% in interests that lasted in short intervals thus started the undying debt of clients. In a yearly basis the rate’s ratio reached 403% for a two week due of $100.  Cities and towns that have several pawnshops, clubs, and shops that sell liquors and other financial intermediaries are prey for these kinds of loan deals.

However, there are communities that have seen the problem and officials remedied the situation by limiting their loan dealers. One of these towns is Chicago which according to experts is quite interesting since they had a large population of 28,000. The community’s mayor is trying to further cut the number until only one remained- in order to do this, their local officials are just waiting for the licenses of the five loan shops to expire so that only one will exist in the city.

Illinois is trying to follow the footsteps of Chicago Heights, and take control of these loan pirates in order to regain hold of their city; however there have only been little improvements. These loan sharks are preying on frail customers, which included retired senior citizens who only had stable pensions and are unable to work.

Though these establishments are a bit better than the underground businesses such as the Mafia, because they do not hurt or kill their clients when they fail to pay, citizens pay for their decision to loan and go into deep debt because of their schemes.

Their strategy is to invite individuals who cannot get a loan from banks and credit unions. However, right now, the economy is starting to regain its balance and lend to poor and less fortunate clients with not-so-good credit records.

Fair Credit May Not Qualify for a Loan

The cloud of economic crisis that hovers above the United States which has been forcing the country to struggle is starting to lift. However, as credit card offers are starting to get back to normal, there are still several credit companies who are hesitant to offer full-fledged credit cards to consumers.

Before the recession that the country suffered in 2008, the country’s financial intermediaries that offered loans to people with poor credit were of abundance and even intermediaries who focused on clients with high scored credits were lowering their standards to fit more customers. This is according to Ben Woolsey the marketing director of Creditcards.com.

Currently though, the trend is not the same, this leaves people who have average score stuck in the middle of the industry. This makes it a little more difficult for these clients to get the loans they need compared to people with bad credit and people with perfect credit.

Though the financial intermediaries have gone back to giving to people with less than superb credit standing, they are not investing their resources for those with fair credit.

Credit companies share their hesitance in giving loans to average scored customers; this is due to the fact that their willingness to pay is doubtful. The past experience during the recession with these borrowers has led to the decision of the lenders not to entertain them anymore.

The lending business is not much of a competition among banks or financial intermediaries, more and more lenders are quitting the fair credit market. Each company have their own definitions of fair scored consumers.

Some consider getting a FICO score of 620 to 659 fair while for others the range is between 620 to 720. When the market is this strict in recovering from loses and securing that they gain from their transactions, indeed it is going to be the consumer who will have to prove their capacity or their willingness to pay their loans.

Credit Card Firm Security Breach Puts Canadians at Risk

A warning is given by Better Business Bureau that Canadian consumers might be affected by a security breach in United States.

According to Global Payments, a payment card processing company located in United States, its system has been hacked last Friday. As a result, both Visa and MasterCard are examining operations from the month of January to February.

Avivah Litan, a security analyst, said that the hackers could have possibly taken roughly ten million or more worth of cards.

According to Mark Fernandes, spokesperson of Better Business Bureau, B.C. consumers, especially those who shopped in the United States just this year, must check their financial statements during the last two months for any doubtful changes. If there is something you cannot recall doing, then it is highly possible that it is a false transaction.

Moreover, Fernandes said that it is still likely that the Canadians are in danger despite the fact that Global Payments is located in United States. This is because these types of firms are multinational and handle millions of payment transactions.

According to Andrea Woroch from Verizon Business, people must get in touch with their card issuers as soon as possible if they see something doubtful on their statements.

Based on an interview from the previous year, Woroch said that consumers often neglect little charges on their bills. Unfortunately, this is how others repeatedly take advantage of them.

Credit card scams are approximately just as profitable as the drug trade, warns the Canadian Anti-Fraud Centre. To avoid these scams, only give your card numbers through phone or Internet to trusted firms and always watch over your pin. Also, be cautious of emails that require account information.

Additionally, experts warn that the hacking of the Global Payments’ system could followed by another scam. Fernandes said that any emails allegedly from Global Payments concerning the breach might be a phishing attempt. On Monday, it is anticipated that Global Payments will give more information on the level and extent of the security breach.

Zions Bancorp, a regional bank in New York, said that it gained profit in the third quarter of this year because it allocated a lesser budget for bad loans.

For three consecutive months ending in the 30th of September, the total revenue of the company was $65.2 million. This amounts to 35 cents per share. During the same time in the previous year, the company was incurring losses amounting to $80.5 million or 47 cents for every share.

Not including one-time items, the company shared that it earned around 40 cents for every share. With the same measure, analysts on estimates had predicted earnings of about 33 cents per share said FactSet.
Zions shares closed up to about $1 or 6 percent at $17.98.

The increase in Zion’s income is primarily a result of the quality of credit of the improving portfolio of Zions’ loan. The budget allocated for loan losses in the 3rd quarter amounted to $14.6 million. This is an increase from their $1.3 million provision in the 2nd quarter. But, this is also a marked decrease from its $184.7 million budget in the past year.

Despite the improvements in credit trends, the company said that it made the decision to raise its budget for loan loss compared to the last quarter due to the weaker data of the economy and the fiscal ambiguity in Europe. In the meantime, the company shared that its net income from interests for the third quarter became better as it reached $470.6 million. This is higher than the $451.9 million it earned in the past year as its expenses for interests decreased.

The net margin of interest, a measure of the distribution of earnings between the funds a bank lends and the money a bank borrows, increased to reach 3.99 percent. This is a slight rise from the 3.84 percent of the past year and the 3.62 percent in quarter two. The total noninterest profit reached $121 million from $110.2 million.

Zions Bancorp is based in Salt Lake City. It has around 500 offices in different states including California, Colorado, Idaho, New Mexico, Nevada, Texas, Oregon, Washington and Utah.

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Business Aspects to Consider in a Financial Review

If you are a business owner, your company is as important as your health. Because of this, it is also essential that you conduct a regular review with a reliable banker of your company’s financial situation as religiously as you visit the doctor for medical consultation.

Reviews of your business’ finances are important for your company especially with the constant changes and developments in a business. This will ensure that your business has the right services and products for your customers. It will also help you making the decision to take a new loan or credit line for expansion. It is also beneficial before making repairs or buying new equipment. Business improvements are a great way to keep attracting both new and old customers.

But, what are some of the aspects that you must look at when conducting a financial review? Here are the main ones:

1. Loans and Credit Lines
Regardless if your business needs a new loan or not, it is still best to ask the bank of the different loan types and credit lines they can offer. Find out if there are loans specifically for purchasing equipment, real estate, leases or construction. Also, if you own a small business, you may want to find out if it provides Small Business Association loans because this can free up cash flow if you are eligible. Establishing a credit line is also a good business practice.

2. Convenience Banking
Determine if the bank has an online banking system that is easy to use, safe and convenient. Also, find out if the bank’s system can meet your business’ daily banking transactions. Familiarize yourself with the website to know the types of programs they provide.

3. Managing Treasury
You must review financial statements with your banker to know the possible improvements that you can do with your business and to find out where you can save money. You may also want to check the kinds of treasury management services the bank provides like remote deposit, check imaging, fraud prevention or lock box.

4. Business Relationship with Bank
Finally, evaluate your relationship with the bank. Ask yourself if the bank knows your goals and understands your business. Think about the type of relationship you have with the bank if you can consider it as a good one. Assess if you can trust them with your business. Choose a banker that gives time to know your business and understand it thoroughly.

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