Finance company loans are now mainstream bank products. What was once a product of HFC and Beneficial Finance is now a product of Wells Fargo. Even in the middle of a subprime crisis Wells Fargo is soliciting existing customers with interest-only loans. One product offers $10,000 for as little as $79.17 per month for a home equity line of credit. HSBCs HFC loans were amortized over 30 years but must be paid back in eleven years. Unless the borrower paid more than the monthly payment they would rarely pay down the interest. HFC loans of this type were often marketed through duplicity when Household International owned HFC. They were often described as predatory. Now they are mainstream, and people wonder whats wrong with the mortgage market.
Wells Fargo probably does a better job explaining the contract. The offer assumes perfect credit, and has a variable APR subject to change on a daily basis. You get a 0.25 percent discount for automatic payments. Im certain that Wells Fargo can actually apply a payment correctly. By contrast Household International received a cease and desist order from the SEC because they were rolling over $1 billion (USD) of bad loans every month. (see SEC order) This is a product that many lenders chose to use today. The difference is that Wells Fargo requires perfect credit. Household International did not. HSBC bought Household International in 2003.