Finance differences

What is the difference between , mid-prime and sub-prime lenders?

Gill ??

 

[Ian J]

Sub prime is the less credit worthy for whatever reason. People with CCJ, defaults or new companies.

Mid prime is a term that I haven't come across and I don't think is in common useage. I'd guess that it's a term used by one company to try and indicate that their business is positioned above sub prime.

I hope that it doesn't catch on otherwise we will end up with lower mid prime and prime plus and as many other permutations as the marketing bods can come up with

 

[Gillie]

See Chris, I never moved my lips!!

Sub prime lenders are as Ian says, those with bad credit that actually are a challenge to people like me .... those with ccjs and a really bad credit rating. Mid prime, are those categorised with perhaps one default ever, that tend to run close to the edge some of the time, as opposed to those who pay everything on time, and have excellent credit rating.

 

It jut that I was told I was no longer sub-prime and I was now classed as mid-prime. As my credit rating has apparently improved and my debts are now minimal I can see how this has arisen.

 

[Robert Bone]

There are some mortgage lenders that use Equifax (not Experian) for credit referencing and ignore smaller CCJs and defaults. This can lead to one lender (ie Nationwide) declining a person, but another lender (ie Chelsea) passing you with a high credit score!

There is no real true 'credit rating', as each lender has there own lending criteria.

The lender in question may be saying you are mid-prime to offer you a better rate than your existing deal, but subtley hinting that you aren't completely in the clear so don't bother shopping around with other lenders just yet.

 

Fair comment. My stumbling block is the finance for a car, ther are loads of companies who will give you car finance but most of them are either rip off merchants or charge extreme interest rates.
I have found one who classed me as mid prime which makes me wonder if I should try approaching a normal lender.

 

[Robert Bone]

Try it. As a mortgage adviser I often came across clients that did not want me to check a new lender incase it affected their credit score. Although having credit scores done can potentially lower your rating, if you've got a low score and someone like Halifax or Abbey will turn you down, your score was bad so you didn't lose anything. If they say yes then you get a better deal. This will also improve your score as it is with a non-subprime lender. What have you got to lose? Nothing but a little time!

Some high-street lenders will automatically decline people if their mortgage is with a subprime lender, so it may be an idea try someone like Chelsea, they score on Equifax.

 

Looking at the credit reports from Equifax and Experian, the Equifax one seems to be mild with the Experian one being a more in depth one.

 

Are you talking about Chelsea Building Society?

 

[10Yetis]

Chelsea is a great company, I used to work for them . They were the first high street lender to offer sub prime mortgages.

I would recommend not going direct to the lender, but instead go via a broker. If you have had past troubles if you go direct to a lender they have set criteria for dealing with this and will not be flexible, but a mortgage broker on the other hand will find you the best deal that is not always available on the high street.

For sub to medium prime there are other lenders with competitive rates such as Pink (part of Skipton BS), Kensington and Rooftop... There is also a new mortgage lender calle Eudius or something which has been formed by a breakaway group of the mortgage industries leading Exec's and they are causing quite a storm in this area... as I say though, the deals that can be found from companies like this are most commonly sourced by a mortgage broker.

 

Thanks for the help all. It is not my mortgage thats a problem though. I was looking at car finance which seems to be a bit more of a minefield.

 

[10Yetis]

oh right... well, Chelsea does not do unsecured loans. You could add the amount to your mortgage and go to them via a remortage for the amount of the car.

I think the only building Societies that do unsecured loans are Skipton, Coventry and maybe Portman and Nationwide?

 

[An Oasis]

Hedgehog

Why bother with finance? Buy second hand, it will save you bucket loads. All you need to do is find is a good local mechanic and bingo. I'd never even think of buying brand new, when you can pick up virtually new vehicles for peanuts.

If you are worried about reliability go Jap, the Jap car are incredible in all respects. Want to look flash find a Mazda MX6 for £600 - £800 lovely car, look classy, cost nothing. Try mx6.com the folks over there are the best.

 

You ask a lot of questions about cars on here.

 

[Robert Bone]

Yes, I was talking about Chelsea Building Society. They are a good lender and as you pointed out, the Equiifax credit reference can be more forgiving than the Experian one. ofcourse, Chelsea isn't the only lender, but they use Equifax and are more likely to turn a blind eye to some negatives if some good positives are also being bought to the table.

Using a broker is a good way to go. Under FSA regulations a lender can only offer their range and you must choose yourself which is best. Ofcourse, the nice man in the Halifax isn't going to tell you that the Abbey has a better fixed rate, etc.

Whilst discussing mortgages, credit, etc (and I know this is going a little from the initial subject but still relevent), always ensure that you look at the fees payable, aswell as the rate. You don't want to pay a £500 arrangement fee if the interest rate will only save you £200 over the term. Many people are blinkered into finding the best rate, which isn't normally the best deal.

A broker should be able to do all this for you, and many you don't need to pay for this service, as the lender will pay them the broker fee for intriducing the business to them in the first place.

 

[Ian J]

My stumbling block is the finance for a car, ther are loads of companies who will give you car finance but most of them are either rip off merchants or charge extreme interest rates.

Have you checked out the Auotrader car finance pages which give you a comparison of rates. Depending on how much you want to borrow the difference per month between the cheapest and the mid price rates aren't very much per month.

Be careful about not approaching too many people as every time you do, they will run a search on you and all of these searches are recorded on your file

 

[Gillie]

Chris it very much depends on how you want to finance this car of yours. As Ian says if you are having a lot of searches done at you at present, it wont sit well with lenders. Make sure if you use these car loan people that they understand you want all the information from them first before they do a credit check on you as they have to inform you they are doing one.

You might want to get an unsecured loan, pcp, lease either private or commercial or just simply remortgage as said and use excess funds, however this final route to me is not the best solution, however it would all depend on your circumstances and what is best for you etc ... if you want to chat some more about it, feel free to email me a phone number and I will talk some more with you on this one.

 

[10Yetis]

eek... i should point out I am not a qualified financial advisor so take what I say with a pinch of salt and stick with reliable people like Gill.

(most of my "advice" is based on heresay (the band) and gossip)