What would be the most risky loans in the market? What variables are used when considering a higher risk loan than another? Are they all the same or are there similarities between them? This is what we are going to talk about today in our company. If we have it clear, being what we are going to deal with next.
What do we mean when we talk about higher risk loans?
We are talking about those loans that, due to the financing in question, have a higher rate of defaults.
However the risk can not only be assessed by the probability of default, we must also take into account things like the consequences in case of default something that not all assume in the signing of loans.
It is in this section where more than one is going to be surprised because what many believe are loans with less risk for them in case of default (personal loans) in the end this always turns against them. We will demonstrate from our financial giving also know examples that we know well happened in the market.
Risky loans from highest to lowest
1) Microloans: We have to consider this financing if or if it is a risky loan, despite being aware of its enormous utility in the market given that it is the loan with the highest rate of delinquency of all existing loans.
If you analyze the articles written by our company we see how we have always defended the correct suso of these quick loans, the problem comes when there are people who process them using them for situations in which they were not provided. The fact of being easy loans in the end what causes is that almost all people have access to them.
And then it happens that there are people who do not make a responsible processing of this financing ending the loan in default. That’s why we have to include these quick credits as one of the most risky.
Some people say that the short period of repayment also contributes in all this, also being right, but it is necessary to bear in mind that these are very small amounts of money. You can not expect to put a term of months or years to loans less than € 300 in most cases. Also if that were the case and as a client you would need a longer term, our recommendation would be simple, process any of the other online loans that offer you a longer term to repay the loan or even a credit card.
Through the credit card you can end up signing a loan of small amount without having to return the amount in a single month.
2) Mortgages also called subprime mortgage mortgages: Recently on this website we wrote an article talking about subprime mortgages which you can see clicking on this link, well, just that is one of the highest risk.
In our opinion it should even be above the previous credit what happens is that by delinquency rates we have to put it that way. Here the unpaid factor is not the only one, the consequences in case of default are what make us consider this mortgage loan as the worst of all. It is the banks that end up signing these subprime mortgages in the same way they signed before the beginning of the crisis. Banks again grant mortgages at a high percentage of the appraised value, requiring, as before, second guarantees.
Having second guarantees this means that in case of default the financial is almost certainly that the high amount granted not only will not cover the loan amount with the first guarantee but also execute the second guarantee. That is why private mortgages are always considered as the best option, because in case of default it is unlikely that the financial institution will continue to claim anything.
Banks, on the other hand, when they sign these mortgages as they do at a high appraisal value at default, the value of the mortgaged property is usually not enough. In the end the client who has signed one of these mortgages not only loses the first property but also the second. In many cases even the bank after having stayed the property continue to claim debts personally. (This was one of the reasons why people demanded payment in the beginning of the crisis)
3) Personal loans of medium and high value without endorsement: Do you really think that they are a very good financing option? It can be as long as the unpaid loan does not end. In case you can not pay the loan tell you that despite being a personal loan and not one with an endorsement (mortgage, commitment) to have signed a personal loan you are endorsing all your present and future assets.
As if there were few default interests in case of default are double and triple that of mortgage loans. That is the surprise that many customers take when, because of one of these credits, they end up with foreclosures on properties. They believe that this is not possible because they have signed a loan without an endorsement and that does not work as they think. It will not be because from our company we have not explained it times, it always comes out more in case of having an endorsement to sign a loan with an endorsement that one without endorsement, not only is cheaper but also in case of default the consequences are worse in personal credits.
The one that you signed with endorsement or is not indifferent, if you have signed a personal loan you are endorsing with all your assets today and tomorrow. The same thing does not happen in the majority of loans with endorsement that we see in the financial system. There are many other quick credits that meet these characteristics however these three in our opinion are the main ones.