| Shopping for a subprime loan |
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After you've shopped your options, don't be afraid
to get some third-party advice. "If you've already identified
a counseling service, that's a source," says Garcia. That way,
someone can give you feedback on which loan might best suit your
situation.
And do more than a little research on your lender.
Put the name in an Internet search engine and see what pops up.
Contact your state consumer's office and see if they've had complaints.
Ditto the state where the institution is based. Check message boards
to learn what customers are saying. And you can also contact consumer
groups that specialize in housing issues and find out what they
are hearing about the company.
Consumer advocates advise going with names and institutions you
recognize. But even brand names can have problems, so you want to
read every clause and understand every aspect of your loan agreement.
Every loan will come with a disclosure form that should
spell out the loan amount, interest rate, fees and other charges.
Some lenders with rush you through the process.
"Lenders will tell people 'this is just something
to get your money processed, so sign here,'" says Manning.
"They tell people it's not important. They're supposed to go
through it step by step."
If you're in the subprime category and are borrowing money, you
want a lender who is reporting to the credit bureaus. Building that
positive payment history is what will take you from subprime to
prime. So "you need to make sure that the lender is going to
file the satisfaction of the loan," says Manning.
You can do that several ways: Ask the lender, and
then check the reporting policy on the lender's Web site. And if
you have prior loans there, check your credit report.
"The best protection for the consumer is to become more knowledgeable
about what they qualify for and what they don't," says Taylor.
And the best way to avoid problems "is by being an informed
consumer."
Dana Dratch is a freelance writer
based in Atlanta.
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