Whilst obtaining credit is considerably more difficult today than it was four or five years ago, many people in the UK continue to rely on loans, credit cards and mortgages.

Considering that applications for personal loans are scrutinised very carefully by lenders, indeed, the majority of applications are rejected after credit scoring, it is perhaps worth examining the most popular reasons cited for loan applications.

Detailed statistics pertaining to personal loans are difficult to obtain, let alone accurately analyse in order to establish a correlation between the reasons cited by applicants and the number of applications accepted or rejected by lenders.

Borrowers do tend to request loans for similar reasons, however, but statistics can be misleading. It is arguably the case that many applicants simply pick the reasons that they feel will most benefit their applications for credit.

Consolidating existing debts, for example, may be one of the most popular actual reasons for applying for a loan, but many applicants would prefer to cite other reasons in the hope of increasing their chances of approval.

Although there is anecdotal evidence and sound logic to suggest that lenders do not particularly rate applicants who indirectly confess to being unable to effectively manage their existing debts, the issue is by no means conclusive.

Of course, it is important that loan applications are completed with great honesty and accuracy. Aside from constituting fraud in most cases, misleading lenders can only serve to hurt loan applicants in the long-term.

One of the most common cited reasons for a loan is to purchase a new car. However, other forms of credit are available to buyers, including hire purchase, finance deals and credit cards.

All options must be weighed carefully by the buyer, who may be aiming to spend more than £15,000 on the vehicle, but a personal loan is very often the most financially viable solution.

Not only is the search for a personal loan likely to encounter relatively low rates of interest from the leading lenders (assuming the applicant has a healthy credit rating), but the dealer may also be able to offer discounts on cash purchases.

Another popular reason for borrowing money is to make improvements around the home. Applicants who own their homes tend to cite this reason if they intend to make improvements that might add to the value of a property.

Building an extension, repairing an exterior wall or installing solar panels on the roof are just some of the most justifiable reasons for requesting a personal loan.

Some people believe that a personal loan is useful for starting a business, but many lenders have discrete mechanisms in place to handle business-related applications. Generally speaking, personal loans should not be sought for business-related expenses.

Other applicants cite moving home or going on holiday as reasons for requesting money, whilst some intend to use the cash for educational or investment purposes.

Whatever the genuine reason for a loan application, whether it is to swim clear of troubled financial waters or buy a new speedboat, the applicant must be honest at all times. The applicant should also bear in mind that the lender will expect the reason cited for a loan to reflect the sum or value of the funds requested.

The payday loan industry is big business in some states, and it just so happens that Tennessee is one of them. The bipartisan committee working on the creation of the consumer agency has representatives from both parties, Republicans and Democrats, and one of the Republicans is Bob Corker. Corker is a Republican and payday lender political contributions to his campaign fund have been significant.

The implication, of course, is that Corker is being influenced by the payday lending industry, but Democrat Christopher Dodd agreed to the exemption also. Now Dodd finds himself in a position of having to justify his support for the exemption after making so many public remarks about the need for strong regulatory control to be given to the new consumer agency.

Dodd said he agreed to the exemption because committee negotiations had broken down. In an effort to break gridlock, Dodd reluctantly agreed to significantly reducing the amount of control the new consumer agency would have over the payday lenders.

Payday lenders come under a lot of criticism from consumer advocates who believe their practices are predatory in many cases. People agree to pay exorbitant fees and interest rates on small loans secured by an expected paycheck. The consumers using these lenders are usually low income or have bad credit. Consumer advocates believe the federal government needs to regulate the industry to prevent financially desperate consumers from being trapped into a debt cycle.

Under the revised terms of control written into the legislation, the new consumer protection agency would be able to write new rules for all financial businesses and not just banks. The agency could only enforce the rules against nonbank firms though after petitioning a body of regulators yet to be established. On the other hand, as it stands now, the consumer agency could enforce rules that involved banks.

Payday fast cash lending generates billions in revenue each year and employs as many as 77,000 people. A crackdown on their practices would negatively impact their revenue and that is why the industry has diligently lobbied against new regulatory control. But consumer advocates say that if the new consumer protection agency is not able to enforce new rules then business will be “as usual”.

The payday lending industry has been quite vocal about the fact that banks are resisting new regulation while payday lenders are attacked. Yet it was risky behavior on the part of banks that caused the collapse of the global economy. Payday lenders do not want to be singled out just so the federal policymakers can claim they are protecting consumers while banks are spared tighter regulation.

Of course, consumer advocates say the people who are being forgotten are the very ones who need the increased regulation. Payday lenders serve consumers who often lack financial savvy and frequently do not understand the terms of the agreements they are signing. The committee is continuing negotiations even as the lobbyists continue putting pressure on the committee to reduce the ability of the consumer protection agency to enforce rules.

Virginia’s state legislature decided to address the issue and has been working on a new bill that will set lending limits on car title loans. The Virginia Senate passed a measure in February and now the state House has followed suit in March. It is expected the Governor will sign the bill into law.

Virginia’s bill accomplishes two things: it creates an interest rate cap and limits loan terms. The new law creates a tiered interest rate schedule. For example, a 22 percent interest rate per month would be the maximum rate on a loan that is smaller than $700. For a loan greater than $1,400 the cap is 15 percent per month. In between $700 and $1,400 there is a tiered schedule of interest rates allowed to be applied based on the loan amount.

Other provisions of the bill include limiting the loan to one year and restricting eligible borrowers. The loan amount must be less than half of the car’s value. The law also prohibits interest from accruing on a loan once the car has been repossessed.

It is interesting to note that the interest rate limits still allow a lender to charge a triple digit interest rate over a period of a year. Some Virginia legislators do not believe the law goes far enough in establishing limits and see the new law as continuing to allow predatory lending though on a scaled back basis.

The final legislation represents a compromise between consumer advocates, lenders, and industry groups. Of course, not everyone is happy with the bill because some say it still allows high interest rates. Individual provisions in the bill strike a sour note with many. But like most laws, the legislation represents a compromise.

This legislation is reminiscent of restrictions placed on payday loans almost two years ago. There have been previous failed efforts to limit car title loan terms, but all previous proposals have failed. This bill is historic in that it not only limits loan terms but places a cap on interest rates.

Car title loans are often sought by the financially illiterate or people desperate for money who also have bad credit or no assets other than an auto. Many people do not understand the terms they are agreeing to when they take out a loan using their car as collateral. Once the loan becomes delinquent, the auto can be repossessed leaving the person with no transportation and a debt they are unable to pay. Though the new legislation still allows what some see as usury interest rates, it is hailed by Virginia consumer advocates and legitimate lenders as important legislation that addresses predatory lending practices.

What consumers did realize though is that requesting a mortgage modification, even if not in foreclosure, could negatively impact credit ratings. This has angered consumers trying to do the right thing and discovering they are penalized anyway for years to come. People in foreclosure are not surprised to find their credit rating lowered due to late payments. But even consumers who have not made any late payments are finding their credit scores lowered by asking for modifications to their current mortgages.

According to the logic of lenders and credit rating agencies, anyone asking for a modification is indicating they are having financial problems. The credit score can drop by as much as 100 points when a temporary mortgage modification agreement takes effect. It does not drop again when the temporary agreement becomes permanent. But consumers who apply for the loan modification program and are not approved will see more than 100 points drop off their credit score.

The drop in the credit score affects the ability to get credit for years. Housing counselors agree with consumers that the negative credit scoring is not fair. Homeowners were not told their credit ratings would be impacted before applying for the modifications. Consumer advocates believe consumers are being punished even though they are acting responsibly and trying to stave off mortgage defaults.

Lenders like to point out that the loss of credit points is much less under the modification program than it would be due to foreclosures. A foreclosure can cost 150 points or more, but that is really little consolation. Already feeling victimized by the banks, consumers now feel victimized by their own government.

Lenders believe that the credit point drop is justified because consumers asking for loan modifications are obviously in financial trouble. The lenders believe the lending market should be aware of the consumer’s true financial status. If the credit score was left unchanged, borrowers would still qualify for loans they cannot afford.

The Obama “Making Home Affordable” program has been an enormous disappointment. Meant to help a million homeowners, only 170,000 have actually found assistance as of February. Many of the applications are bogged down due to missing documentation and mortgage companies dragging the process down through delays. The Obama administration has tried to put pressure on lenders to speed up the process, but to date the efforts have been largely unsuccessful.

The discovery that credit scores can fall even when not in mortgage default was yet another blow to embattled consumers. The Treasury Department and the banks offer little advice other than to say that paying bills on time in the future will lead to higher credit scores.

The Virginia State Corporation Commission has proposed regulation changes that are intended to stop what it considers unfair or misleading practices by title lending companies. Some consider these proposals to be unnecessarily harsh and unfair.

The State Corporation Commission has proposed the following regulation changes. First, it wants businesses accepting car titles in exchange for loans to send those titles to the Department of Motor Vehicles. This is so the lien against the title can be recorded at the state level.

Second, the state wants to limit loans against car titles to one. In other words, consumers could only borrow money if there are no other credit lines secured with the auto title.

Third, the state wants loan businesses that are operating with payday loan operations to have to follow the same regulations. This refers to car title businesses and payday loan businesses that share the same space.

The reason the state wants a borrower to surrender the car title is because that makes it clear to the consumer the car title now has a lien on it. It is a physical act that clearly reminds the borrower the car can be repossessed in the event the loan is not repaid.

Not everyone is happy with these proposals. The vice president of the Community Financial Services Association of America is Tommy Moore. He said, “Such a regulation is unnecessary and unduly burdensome.”

Though the purpose of the legislation is to prevent people from obtaining loans under false pretenses, some people feel the proposed regulations are unfair and violate the intent of the payday loan law.

The payday lender laws in Virginia do not prohibit car title loans. But there is a group called the Virginians Against Payday Loans that believes there should be tighter controls placed on the auto title loans and other small loans with high interest rates.

Some people view the payday loans and the auto-title loans in the same light as they view gambling. They believe these kind of loans prey on desperate people who should not be borrowing money just like gambling attracts people who cannot afford to gamble. By eliminating loans on autos that already have loans against the title there is much less opportunity for lenders to lure people into borrowing money.

In addition, if the lien against the title is not reported, it is possible to sell the auto as if it has a clear title. When a car is purchased at a dealer, the loan company keeps the title until the loan is paid off. The state regulations would have the state performing an equivalent role when the loan is made by an auto title lender.

Opponents of the new state regulations believe that payday and auto title loans serve an important purpose. These types of loans make credit available to people who could not get loans elsewhere.

What seems particularly aggravating for American consumers and taxpayers is the fact that the government has not only been bailing out the automakers, but also the auto lenders, who arguably caused a lot of the problems now facing the United States. This is the third round of bailouts for auto lender GMAC. The bailout total for GMAC will top $25.5 billion so far.

The key difference between this bailout and the bailout of banks is that the banks appear to be stabilizing and making profits again, whereas domestic automakers are still in financial turmoil. Perhaps the best case to be made for bailing out the auto industry, though, is the fact that automakers and auto lenders provide so many jobs in the US, and allowing them to go bankrupt at a time when unemployment has nearly topped 10% would be irresponsible.

In addition, news recently broke that the federal Cash for Clunkers program managed to get just under 700,000 vehicles sold. It is estimated that taxpayers paid $24,000 per car for the program.

Apparently, only 125,000 of the total vehicles sold were ones that would not have been sold anyway, according to automotive website Edmunds.com. On the heels of news about third quarter GDP growth of 3.5%, approximately half of that GDP growth can be attributed to automotive sales, and a large percentage of those sales can be attributed to the Cash for Clunkers program.

The motivation for selling cars under the Cash for Clunkers program was to get up to $4,500 in rebates to trade in a less fuel-efficient “clunker” for a new vehicle that met certain fuel economy standards. This was intended both as a way to jumpstart the sagging automotive sector and to improve vehicle emissions across the country.

Based on Edmunds.com and its analysis, even though the rebate was only $4,000 on average, the fact that most of the sales would have taken place anyway undermines the success of the federal program. Had the Cash for Clunkers program not occurred, Edmunds.com posits that October sales would have been higher than they currently reported.

Naturally, there are multiple ways to look at both the bailout of the automotive industry and the outcome of the Cash for Clunkers program. The ultimate goal of both programs was to stabilize an economy that has been crippled by a housing crisis, high unemployment, a credit crunch, and the financial struggles of large institutions. Whether these programs have succeeded or not is hard to say, but the real question that should be on Americans’ minds is: Are these programs temporary fixes, or have they truly helped us to put the worst of this recession behind us?

Either way, news has looked up recently. With GDP growth the highest it’s been in the past several quarters and a stock market rally, times do seem to be looking up. Whether the growth is a fluke caused by government stimulus or a foundation from which the economy may continue to recover, only time will tell.

For example, before the recession many people were sold mortgages with variable interest rates they believed were backed by the federal government. Others bought houses with mortgages that had affordable payments the first few years and then the payments skyrocketed at some point. Still other consumers took on loans that had them paying only interest payments and when housing prices fell they were sitting there with an overvalued home and no equity.

What has come out of the near collapse of the mortgage industry and the selling of toxic assets is the fact many consumers did not fully understand their mortgage agreements. You might be telling yourself this the fault of the consumer, but at a mortgage closing, pages and pages of fine print documents are presented that are all written in legal language. Unscrupulous lenders would conveniently leave out important information in their verbal explanations too.

The new rules that are in affect now make it necessary for lenders to be more forthright in their loan explanations. They also forbid twisting the truth by not telling the full story. For example, lenders can no longer say a loan has a fixed interest rate if the rate will actually change at any point during the life of the loan.

Another new rule requires all fees and charges attached to the mortgage to be clearly stated in an understandable format. It is amazing how much critical information is literally buried in fine print. The lender will have consumers initial each page of the agreement and that’s how they were getting away with adding all these charges without the consumer even knowing.

The rules also address loan advertising. Advertisements for mortgages can no longer use misleading language to give false impressions to consumers as to eligibility or as to how the loan is structured. If there are special loan conditions those conditions must be clearly stated. In addition, when different types of loans are compared to calculate various payments, the comparisons must be done fairly, accurately and honestly.

Even more important is the fact that lenders are no longer allowed to extend credit until the consumer’s ability to repay the loan is fairly assessed. This addresses the fact that many people in foreclosure today have loans they should have never qualified for based on their income and assets.

So what is predatory lending? Predatory lending can take many different forms, but the bottom line is that it is when a company uses false information to qualify people for loans. The false information could be false appraisals or false income statements or creating false expectations or presenting false facts.

Predatory lending is also when a loan is approved that should never be approved if reasonable standards are applied. For example, the figures are manipulated to make consumers loan eligible or second mortgages are approved that over commit the property.

Many of the “under water” homes that exist today have multiple liens against them such as a first mortgage and an equity loan. When housing prices dropped and wage earners lost their incomes due to unemployment, many of the equity loans had been fully accessed leaving the owners with payments they could not afford and unable to sell the house for enough money to pay off the loans.

Predatory lending also involves convincing people to refinance property when it is not in their best interests.

These are not all of the predatory lending tactics used by debt suppliers, but it gives you a good idea. The US Congress is determined to prevent the mortgage bubble that collapsed from ever forming again. Before signing any dotted line it is important to clearly understand the debt you are assuming. The new predatory lending laws should make that much easier to accomplish from this point forward.

The national driving survey polled more than 5,000 licensed U.S. drivers. The results have served as a confirmation in the eyes of many industry experts that less may really be more. The Federal Highway Administration has reported that Americans have traveled up to 112 billion miles less in the last 13 months.

The GMAC survey has shown a variety of reasons why consumers are driving less. For example, worry about the economy has accounted for 74% while effort to lower financial costs accounted for 24%. About 33% cited a desire to lower their environmental impact. There were 26% who said they wanted to drive less to help maintain the vehicle’s value. Another 11% said they planned to drive less so they could receive a discount on their car insurance.

The bottom line is that no matter the reasons, GMAC has decided to reward those drivers who are currently altering their driving habits, or who want to help the environment or economy by offering Pay-As-You-Go insurance options.

Such programs provide benefits for those drivers who have already instituted a new driving approach, the biggest of which is lower premiums for their coverage. GMAC’s survey has noted that 35%, or one in three drivers, would sign up for Pay-As-You-Go insurance if their insurer provided the option.

For those interested in GMAC Insurance’s Low-Mileage Discount, the only thing drivers have to do is opt-in and let their savings begin automatically. The discount is available to all eligible and active OnStar subscribers who are driving less than 15,000 miles a year. Depending on the miles driven, they may save up 54% for their insurance coverage

More consumers are also availing of online financing companies, which cater to potential car buyers by offering better deals even when you do have weaker credit. It is an effort to help the economy bounce back and give would-be car buyers a second chance at also improving their poor credit ratings.

Most of the time, if you follow a few guidelines you can obtain the sort of lower rates that making purchasing that new vehicle a possibility.

Other lenders make it harder to get financing to protect themselves from losses like defaults on the loans they make. They will look at a poor credit history and see the negatives. It will show them whether you are an acceptable risk to receive funds for an auto purchase.

In order to facilitate more auto purchases, a number of lenders have actually relaxed their normal regulations despite the risks involved. They wager that if they make the process easier and provide doable rates, that more buyers will have an opportunity to get a vehicle – and the more likely they will be to pay for it.

This does not change the fact that consumers with bad credit must pass some bear minimum requirements in order to receive financing. Lenders are not giving the money away after all.

For instance, the borrower must prove their credibility to repay the monthly installments.

When borrowers with bad credit browse the market for auto financing, there may only be a few lenders that offer them loans for cars. This makes the web a valuable time saving tool.

Online lenders have many subprime auto lending options available as a part of their coverage networks. This allows you to find a loan that specifically accommodates your credit type and gives you access to better interest rates.

Even though the program is has now ended and yielded approximately 700,000 sales, the critics point out that Cash for Clunkers did stimulate economic growth but rather redistributed wealth and saddled gullible consumers will new debt loads they can’t manage.

Some opponents of the program suggest that Cash for Clunks will cause more harm to American consumers that good. According to these groups, the less fortunate among them may find themselves in worse financial shape as a result of jumping on the supposed deal.

But, is this gloom and doom at all accurate?

With all the supposed reports circulating around about the program’s debilitating effects on new car owners, you may be surprised by some of the following facts about the typical Cash for Clunkers deal. What’s clear is that there is a bit of exaggeration on the part of one group.

For instance, one the most common vehicles that qualified for a trade in was the 1998 Ford Explorer. If you had one of these and traded it in for a brand new Ford Focus, you could earn a credit worth $4,500, which would lower the MSRP on the Focus to about $11,500. With a down payment and some good negotiation for an additional discount, you could see about $10,000 in financing.

That’s for a four-year loan at approximately 7.5% interest. This would mean that your monthly payment would be below $250 a month. This is a far cry from the burdensome payments that have been suggested by the critics.

The bottom line is that the Cash for Clunkers program has been a legitimate help to the U.S. economy. It has given more people the opportunity to purchase affordable, lower-emission, and higher-MPG automobiles.