Bad Credit Loans and Lender Questions & Answers

Q: What is a private investor and how do they differ from a hard money lender or a subprime lender?

A: A private investor is an individual who lends out their own funds to borrowers who are unable to obtain a loan from a traditional lender such as a bank. It is also possible for private investors to pool their money into a fund that lends out money on a larger scale. Private investors are often wealthy or retired individuals who want a better return on their investments than they could expect to make in the stock market or other investment vehicles.

A private investor is essentially the same thing as a hard money lender. A private lender differs from a subprime lender in that the latter still funds loan through a lending institution such as a bank, although the interest rate is higher than a traditional conforming loan.

Q: Why would a bad credit lender fund my loan when traditional banks would not?

A: Hard money lenders, sub prime and bad credit lenders are often referred to as “high risk lenders.” These lenders have a unique understanding of specific types of real estate situations and markets. As long as the lending situation fits into the lenders comfort zone, they will usually make the loan. It isn’t that a bad credit lender gravitates towards overly risky loans or situations. Rather, there are additional safeguards in place for a bad credit lender. Namely, a borrower must have a 20% or higher equity stake in a property to qualify for a bad credit loan — the loan is therefore secured by a larger property ownership portion than many traditional loans.

In addition, the bad credit lender receives a higher rate of return than a bank would with a traditional conforming loan. The greater the risk for the lender, the higher the interest rate for the borrower. If one or more traditional lending institutions deny a borrower’s loan because of credit problems or a small level of liquid assets to use as collateral, a borrower will need to apply with a subprime, hard money or bad credit lender.

Q: If I qualify for a hard money loan, is there a way to eventually work into a normal loan?

A: Of course. A bad credit loan should be a short term loan – anywhere from several months to 2 years. After a borrower has spent a year or 18 months paying off their private loan, our mortgage team will try to transition you into a subprime or alt A loan. Hopefully, this is enough time to rebuild your credit and get on a more stable footing financially.

Q: What kind of financial documentation does a borrower have to show to qualify for a bad credit loan?

A: While the type of documentation needed to secure a loan will vary from lender to lender, most require either bank statements or income tax returns. The lender will usually need to see an appraisal of the property, as well as the title to make sure that the borrower is indeed the owner and to see if there are any existing liens or legal issues with the property in question. Each bad credit lender will analyze the necessary documents and then decide whether to provide the loan.

Q: What if I have damaged or bad credit as well as a low FICO score?

A: The majority of bad credit borrowers apply for a bad credit loan due to damaged credit along with a lower than normal FICO score The whole point of hard money or private loans is to provide a loan to an individual with past, recent, or current credit issues so they can rebuild their credit and eventually refinance to a more traditional type loan.

Q: What is my FICO score and how can I find out what mine is?

A: A FICO score is a basic credit score that estimates the creditworthiness of a borrower and is used by financial institutions to determine credit limits and interest rates. FICO scores are held by the three major U.S. credit agencies (Equifax, Experian and Trans Union) and all vary slightly depending on the formula used to generate the score.

FICO scores range from about 300 to 850. A score above 720 is considered to be “good credit,” while a score below 600 is considered to be fair to poor. Conforming lenders want to see a credit score of usually 640 and higher. High risk lenders will look at credit scores as low as 500, as long as the borrower has 25% or higher equity in a property for collateral.

Q: How do I Apply for a Bad Credit Loan?

A: Do a search on the internet for “bad credit loans” or “bad credit lenders” and will find different bad credit lenders that offer bad credit loans in various states. Then either call them and explain your situation to them or fill out their short online application to be considered for a hard money loan. Be sure to read the language of the loan documentation carefully to protect your self from predatory lending.

What Is the Value of Art Work in the Custom Apparel Industry and Should I Charge for It?

How valuable of a resource is custom artwork in the printing industry and are you being compensated for your time? With the advent of online printing companies, and the cascading decline to the smaller markets, more companies are cutting costs and consumer responsibilities when it comes to art and design. The message being sent to the consumer is two fold. Fiscally, customers are expecting to not have to pay for premium custom design services. Secondly, we as an industry are losing the ability to capitalize on quality design as an asset to increase profit and marketability.

In a price driven market, the custom screen printing industry has become its own worst enemy. In any business, you are only as profitable as you price your self to be. Of course there are mitigating circumstances such as: operating cost (overhead, labor, materials, etc) and elasticity of the market. However, in an effort to obtain and maintain business, we have hurt our own bottom line. Margins are down and it’s not an unwillingness on the part of the consumer to pay. It’s the institution’s willingness to drop its collective pants to take business from one another. In stead of setting a firm price across the board (or at least a consistent and respectful range), many companies are satisfied with a minimum profit (often less than 3%). As a result, we have neglected to charge for services that where traditionally expected of the consumer to be charged. In order to show a more pristine price, we have essentially eliminated design and art as a line item and grouped it in with the assumed labor.

Unfortunately by striking it from the bill, we have lost our leverage as companies to utilize art and design as ” a deal” in anyway. For instance, I had a customer not to long ago who hounded a sales man over pennies within a rather large job. When the sales man in question attempted to show the customer that he was actually not being charged for a number of consultation hours (2-3 man hours in the design process and changes), the customer just assumed that was arbitrary and wasn’t really worth all of that much. Under that same idea, if as a salesman I come into a job say $1 more per shirt then my competitor. Traditionally, that customer is going to come back to me and leverage the difference in order to get me to either drop my price lower or equal to my competitor. Now let’s say that the customer wants to create a multitude of custom touches to the garment in question (maybe a custom font.) If the customer is willing to pay for the advanced specialty of my company vs my competitor’s, I should be able to leverage that artwork consultation and the inevitable edits into justifying my slightly higher costs. This is not the case.

Design is not a commodity that should be lumped in with production. At the very least it should be considered by the consumer as an added cost and a bonus if a company is willing to forgo the additional cost of custom artwork. As an industry, we should be pushing to enable ourselves to make fare and obtainable margins no matter what the size of your company.

Custom Apparel Equals Thousands of Walking Billboards

Custom apparel or screen printed apparel is a very effective and cheap means of advertising or showcasing a business, product or ideal. In fact, it is one of the most popular and desirable promotional products available.

Although one of the most commonly customized articles of clothing is the good old t-shirt, your custom promotional apparel options are certainly not limited to it. Many companies offer custom screen printing, embroidery and monogramming of baseball caps, shorts, polos, robes, jackets and more.

For years, custom apparel has been a very popular and sought after giveaway product for any and every business. The companies that are really good at creating product awareness even have people paying to advertise their product or company for them.

If you’re selecting custom apparel for a promotional giveaway product at a trade show or other event, here are a few things you can do to maximize the effectiveness of your marketing strategy:

1) Know who you are marketing to. Do whatever market research is necessary, because this is the most important ingredient to a successful marketing campaign of any type.

2) Choose the perfect custom clothing item to fit your market, brand and trade show or other event.

3) Develop a means to deliver your message or sales pitch to your target audience or collect market data during the distribution of your promotional products.

4) Remember to follow-up on the leads that you get. If you don’t, you might as well be donating these tshirts or sweatshirts to charity.

Here are a couple of suggestions for buying customized clothing for the newbie:

1) If you’re looking to utilize customized clothing to uniform your employees, be sure to choose comfortable, quality products which fit your business image and level of professionalism.

2) Consider buying in bulk to save money. Many custom clothing and screen printing companies will charge a set up fee but offer considerable discounts for bulk orders. The savings for ordering in bulk can be quite substantial.

3) If you’re looking to be as cost effective as possible, be flexible about the style and color of the apparel you’re having customized. You may be able to save quite a bit of money by going with a simple white tshirt rather than a colored one. You might also consider a poly/cotton blend tshirt if cost is a big issue. Using a 50/50 cotton blend tshirt vs a 100% cotton product will dramatically reduce the price per unit.

4) Remember that large size apparel usually costs more. If your market is solely made of of individuals who wear a size XL there may not be much you can do, but if your market can be reached with children’s sizes this might save you some cash.

5) If you’re designing your own custom t shirts or the like, keep in mind that generally, the more colors you use and the more places on the garment that you choose to embroider, screen print, or otherwise customize, the more it adds to your bottom line.

6) Before committing to a design of your own custom apparel or custom shirts, seek the advice of a professional company which specializes in customizing and screen printing clothing and other promotional items. They can help you with every step, to be sure that the final product, be it an employee uniform or a promotional t-shirt, will be a professional looking design of quality craftsmanship.