Shocking hidden fee-banks refuse to reveal-bad debts
It is common that higher rate of interest is charged during financial crunch. But, you may have to realize that you owe to pay few thousands of dollars for the same type of car, than the person with good credit is liable to pay. Why is it that the same car costs more for you and less for the person with good credit? The banks or finance companies knew everything that you are penalized heavily with a higher rate of interest and paying few thousand dollars more than your friend for the same type of car. Here, credit history and credit rating play a vital role and customers with bad credit are always targeted and they are always put in loss.
Answer for this is on the name of ‘discount’ or ‘bank fee’ which are charged by banks or finance companies as additional fee just for lending their money to you. The fee can be around 1000 to3 or 4 thousand dollars depending on the severity of the credit. Banks use this kind of fee in future for a rainy day to balance deal with credit problems in case of a high risk customer. True to the fact that it is a risky affair for banks to deal with bad credit customers than with good credit customers. Customers with bad credit history may not pay at all or may not pay in time which involves collections and risk factor for the banks. So, to be on safe side, banks charge a fee for just offering a loan to the customers.
When bank sends approval to finance manager, it clearly states the specific discount amount or fee for loan. Some banks prefer to have percentage and some others a flat dollar amount. Dealers will hold all fee and proceeds as and when loan is sanctioned by the bank, as per the contract. It is a tacit agreement between banks and dealers not to reveal ‘disclosure discount’.
Bank fee put the dealership in a fix. Based on the price of a car, banks need to offer discount on the sanctioned loan. This in turn will cause losing money and not meant for making much of profit. It may be that dealership may extract bank share of profit to few thousands of dollars. To quote an example, if the bank fee is $800, unfortunately that amount is added to selling price of the car and you are liable to pay more that what your will be paying for the same type of car.
It is shocking to know more about hidden costs of banks on the bad debts credit cards in addition to silent agreement with dealers to rob the customers by offering loan as well as y charging a loan for sanctioning. Hope this article would certainly help customers to understand the pros and cons of bank loans before entering into the contract.
More information and facts on the subject of no fee credit cards plus apr credit card
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