A guy on another forum was complaining about the loan he was being offered. I thought I would share what I know about the subject. Here goes:

Banks use what is called "Risk Based Pricing" when providing a loan. In short, "How risky is it lending money to this person". They will look at credit history and income to assess the borrower's ability to pay back the loan. Banks need to earn a return on every dollar they lend out. A good credit risk gets a lower interest rate because he will be very likely to pay the loan back. History has proven that those with a poor credit history or first time borrowers with no established history yet are less likely to pay back so everyone in that category pay more to support those loans that default.
As for the down payment question: A bank will also determine the maximum loan a borrower can pay back. Sort of like the credit limit on a credit card. The difference with a bike is if you do not pay back the loan the bank takes the bike.
One last thing: Credit Unions by definition are "Not For Profit" whereas banks are "For Profit". That does not mean a credit union is reckless. To the contrary they tend to more difficult to get a loan from but those with a good credit rating will enjoy lower rates.

A little trivia: Your Credit Rating (FICO Score) is one of the things insurance companies look at when determining your premium. They believe a person who is responsible with their finances are also responsible drivers/riders.

For those of you who did not fall asleep, I hope this helps.

 

Obviously pay back what you borrow. I was browsing facebook the other day and someone my age (26) was complaining that their tax return was being garnished for school loans.

You borrow money, expect to pay it back. If not well.....

 

They use the FICO score to rate how well a driver drives - This to me is a joke, I fell on Hard times back in 2009 - 2010 and it took me three years to catch back up, though my score is slowly recovering I haven't been involved in a reported accident for 14 years, not to mention zero tickets in over 16 years. So I guess actual driving ability has nothing to do with driving - though a person with a score in the 700 with a few moving violations and a accident or two Drives better and could possibly pay a lower rate than I.

If that is the case then they should link driving history to the FICO score as well..

 

Here is a good place to get a free look at your credit score before going for that loan.

www.creditkarma.com

Also a place to get your credit reports free once a year.

https://www.annualcreditreport.com/index.action


On insurance, they will knock you down for your credit score but do nothing if you text and drive? Wow.

 

Well... they go off the information that is available to them. There's no database of who texts and drives.

 

If the logic is that your credit score is x then you are more likely to have an accident. They could use the same logic to say that if you own a cell phone that is text capable and fall into age group y you are more likely to text and drive.

Also they could pull the drivers phone records at each accident to see if they were texting right before it and make them pay a larger penalty.

Something has to stop these idiots. I narrowly avoided being hit yesterday by a young blonde lady who ran the light becasue she was too busy reading a text.

Sorry for the thread hi-jack.

 

There needs to be one. Every person caught texting while driving needs to be in a database so law enforcement has that tool.

 

Credit score is only a number, but to those making loans it is everything. In other words, in some cases, one may be a good credit risk when a credit report number reflects otherwise. I was once denied a loan because I had too many credit cards with high credit limits. Even though the actual balances owed were low, and my credit was near perfrect, I was determined to be a high credit risk.

 

Seems like this would be unlawful search and seizure. Accidents happen. They happened before cell phones. An accident in and of itself should not be probable cause to assume someone was texting and driving. Now if someone saw them doing it? Well then, pull the records for use as evidence against them in court.

 

It's one of the MANY things that SOME insurance companies will look at.