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Collateralized Loans

Mar 8

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     e697a0e6a087e9a298Lending terms have been thrown around very loosely and cause confusion for the borrower. Many personal finance matters aren’t adequately addressed in high school, and sometimes not addressed at all, this can lead to bad credit and driving someone to look for loan sharks online. How credit works or different types of loans are unfortunately learned through word of mouth or trial and error. It’s important to understand what these terms mean and how these things work to save yourself from very costly mistakes.

     This brings to mind a story about a 21-year-old male who had recently had a problem with the check he had written. He had never been exposed to concepts or ideas around personal finance or banking and had only used the bank to deposit his part-time job paychecks and withdraw spending money. He had to write a check to give to his mother for money he had owed her. He had never written a check before and it only ever had experience with his part-time job paychecks which he used to sign the backs of in order to cash them. Without looking at the check his mother deposited it into your bank account and received a call a few days later saying he couldn’t cash the check should receive from her son. Upon further inquiry she found out he had signed the back of the check and not on the appropriate line in front. This obviously rendered the check cashable until he signed in the appropriate area and subsequently resolved the matter. This is an extreme example to illustrate the point that it’s important to have a general idea of how things work in banking and personal finance.

     Collateralized loan is a lending product requires collateral to be secured. The word collateralized is more commonly seen in lending products in the business world however any loan that requires collateral is collateralized. Collateral is used to mitigate risk to the lender by giving them the opportunity to liquidate collateral on defaulted loans in order to recoup the outstanding balance. Understanding the different types of collateral will help when applying for a secured loan as not all collateral is created equal. Read the rest of this entry »

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SBA Loan

Feb 28

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     Many of our start up business clients at Ethos360.com come to us with basic questions on how to get financing from the SBA. There are a few things to have in your back pocket (and on the tip of your tongue) before going to them in order to increase your chances of getting approved.

     1. Know your business inside and out.

     You will need a business plan that not only covers all of the details of your business idea, but is also devoid of unnecessary embellishment and hyper extended financial projections. The SBA wants to know what you’re doing and how you’re going to do it. Also, they want to see evidence that you are qualified and capable of executing the tasks outlined in your business plan. The Management Summary of your business plan should detail your experience or at least the experience of the people you’ll have on hand to make up for any lack of qualifications you’ll have.

     2. Show that you have invested in yourself and your business.

     This seems like an obvious requirement, but a surprising number of people come up against a wall when faced with this. The SBA is not a zero percent down financing solution. You will have to show that you have invested a good sum of your own money, time and effort into the business in order to get the SBA to put up the loan. The SBA will not underwrite 100% of the venture so this means that you will have to not only have collateral for the loan, but will be providing evidence of having previously invested at least 25% to 50% of the asking amount in the business. Read the rest of this entry »

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Home Equity Loan Tips

Feb 28

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     Which is better: HELOC or HEL? This is a problem that confronts most people who desire to borrow against their home equity. The choice of home equity debt depends on the following factors:

     Purpose
     People are generally confused about the kind of home equity debt that should be sought, since both HELOC and HEL are home equity debts. The choice of a home equity debt depends on the purpose for which we intend to use it. When the money is required all at once for major one-time expenses, like buying a car or consolidating debts, a home equity loan is preferred. In case of recurring expenses like home repairs, medical bills and education, a HELOC is a better option.

     Making Payments
     A home equity loan is a lump sum payment made to the borrower. The borrower in turn is expected to pay interest and principal payments on a monthly basis. The interest payments may be tax deductible. In case of a HELOC, during the ‘interest only’ period a person is required to pay an interest on the amount of money he uses from the loan that is sanctioned. In other words, a HELOC is like a credit card that allows you to withdraw an amount as and when required. If you are confident about the time and the amount of financial commitments, a home equity loan would be a better option.

     Rate of Interest Read the rest of this entry »

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Terms Used in Real Estate

Feb 28

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     Among the most common methods to attain one’s very own property is through getting a loan also known as loan financing. This process means that the funds the prospective property customer will pay via an institution like a bank or a financial company. The company or the bank will be referred to as the lender. Any quantity given by the institution to assist in purchasing real estate will then be given back in a length of time agreed upon between the lender and the buyer who will then be referred to as the borrower.

     It is clear that, financial jargon are not the simple to understand. Because of such causes miscommunications between lenders and debtors often times happen. Here are some confusing yet common jargon which can aid in making a financial process easier for both parties.

     No Prepayment
     From the term itself, it points that making the payment for what’s due on a date prior to the set time is not allowed. For residential real estate funding this is at times allowed. However, for commercial property financing this could constitute a loss of revenue for the lender. Thus, it is not permitted and is sternly implemented. Should the client is insistent on making the payment beforehand, the only option is defeasance. This is alternating another value and payment for the ones the borrower is giving. The most common one is the treasury collateral.

     Bond Financing Read the rest of this entry »

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Car Loans After Bankruptcy

Feb 23

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     Car loans are a credit facility or rather a type of loan that consumers specifically use to buy cars. Banks and lending organizations loan out a specific amount to a consumer, as a car loan or an auto loan. In maximum cases, the amount of loan is exactly equal to the cost price of the car that the consumer wants to buy. After the consumer makes an application for the car loan, a quick background check and identity verification is performed and the loan amount is transferred to the bank account of the buyer. In some cases, the amount is directly paid to the seller.

     The best merit of car loans is that the car that is purchased is considered as a collateral, which makes the loan a secured loan. As the loan becomes a secured loan, it means that if the borrower of the loan i.e. the consumer who has taken the loan, is not able to repay the whole amount, the lender has the right to sell off the car to recover the loan. As the car loan is secured with the help of the car itself, the sanctioning process is not very lengthy and doesn’t include a very strict credit history check or require a particular credit score.

     A recorded bankruptcy does not have a negative impact on the sanctioning process of a car loan. The time period, after bankruptcy, before you can apply for a car loan differs from case to case and region to region, as the laws of the court in some cases, prohibit a person from borrowing for a span of time. In some cases, you can apply for the loan immediately after all the creditors’ accounts have been closed down. For more specified details, you need to either get in touch with the court of law, where you have filed for bankruptcy, or your lawyer.

     Buying a Car after Bankruptcy Read the rest of this entry »

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Overnight Payday Loans

Feb 22

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     Have you ever wondered how you can receive some fast and easy money without any difficulties? Overnight payday loans are your best option in times of great financial emergencies that just can’t be delayed any longer. There are many local payday lenders that can provide you with such a loan but if you use the internet, then the whole process is almost instantly completed.

     A payday loan, also known as a payday advance, is good for handling your day-to-day financial activities. This is because these loans are short-term in nature and are usually given between $100 - $1500. Normal everyday financial activities can include paying utility bills, children’s school fees, or small overdue credit card payments. It will not be wise for you to use them for dealing with big financial commitments such as buying a car or going on a very expensive holiday. You might get in a risk of repayment traps which can further complicate matters.

     There are many easy quick payday loan lenders out there. However, the best option for you would be to use one of the many online lenders available at the comfort of your home. The online application process is very straightforward and fast. All you need to do is decide upon a particular lender and then go to their designated website. Read the rest of this entry »

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Commercial Loan Options to Purchase a Business

Feb 22

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     Individuals will often want to consider alternative employment and develop new income sources in a troubled economy such as we are currently experiencing. A business opportunity is one of the investment choices which should be analyzed. The purchase of existing businesses with established cash flow is the focus of this article, but this often refers to a variety of business structures.

     Purchasing a business opportunity involves several potential commercial financing obstacles (even with current cash flow) because commercial property is not included as collateral for the lender. When faced with this realization, borrowers should be prepared to seek commercial loan and working capital help to buy a business or refinance a business without commercial property.

     A commercial borrower might not always need commercial finance assistance because they are using cash to purchase a business, but there are still special challenges to anticipate. A few of the other critical issues include working capital for operating the business, likely timing for a future sale of the business and business valuation.

     It might be feasible to purchase commercial property along with the business in some instances. This alternative financing approach should be evaluated thoroughly because investment property financing options are often more flexible than a business opportunity loan without real estate as collateral. Read the rest of this entry »

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Instant Loan Approval Online

Feb 22

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     There are many events in our lives that are totally unexpected. The spiritual guides and personality gurus call these events “test by life and destiny”. But to be honest, it a conspiracy by fate, to empty out our already-light pockets. Well jokes apart, there are some events such as medical emergencies or sudden house repairs that occur in our lives, due to which, we may require some or the other kind of financial help. Some people will of course suggest you to apply for online personal loans. Online approval, application and sanctioning process, is bound to help you to have fast cash in your pocket. Before we proceed to the concept of online loan application, let us have a look at what is known as an instant loan approval.

     Instant Loan Approval
     After a person has submitted an application for the loan, the process of sanctioning the loan and actual encashing of the amount is known as a process of approval. The speed at the rate of which the approval of the loan takes place, depends on two major factors. The first factor that is considered by the lenders is the borrower’s ability to repay the loan. This capability is measured with the help of credit rating, credit score and credit history. These figures are used to estimate that, in how much time would the borrower be able to repay the loan. Thus, higher the credit rating and score, the higher is the speed of approval of an online loan. A good credit rating means that the borrower has never defaulted any loan and has maintained a good record of payment of installments. Hence, the better the credit rating, the faster is the approval.

     Instant loans on the other hand are different in nature, as their terms and conditions are tailored in such a manner, that their approval process in itself is a very quick affair. The principal amount of such loans is conventionally small. Due to this, there is no specific credit rating that is required in order to qualify for the loan. The lenders in most of the cases, sanction these loans to people who are employed and also have less debts to pay off. Thus, due to the less stringent qualifying terms and conditions, the loan approval process is quite swift and gets over within a short period of time. In most of the cases, it takes a few hours to get the instant loan approval. Online process of course requires an even shorter time period.

     Instant Loans with Online Approval Read the rest of this entry »

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Voluntary Vehicle Repossession

Feb 22

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     Consumers may buy a car by availing an auto loan or they may choose to lease the car. People, generally, lease if they feel that the advantages of leasing outweigh the benefits accrued by buying a car. The article on “Leasing vs. Buying a Car” examines this issue in great detail. Regardless, of whether people lease or avail an auto loan, they have certain obligations pertaining to the discharge of lease or loan payments, as the case may be. In case they are unable to repay their creditors, or their lessors on time, the vehicle can be repossessed by the creditor or the lessor as per the agreement outlined in the contract drawn in conformity with the state vehicle repossession laws. Some states also allow the vehicle to be repossessed in case the lessee / debtor does not have adequate auto insurance. Moreover, the creditor or the lessor need not get a writ from the court in order to repossess the vehicle or forewarn the debtor. The creditor may also have the right to sell the car to a third party, commonly known as the assignee, who can repossess the vehicle, failing timely payments. One should try contacting the creditor or the lessor and express the inability to make regular payments. Negotiating the terms of the payments and preparing a fresh schedule of payments may help averting a possible vehicle repossession.

     Voluntary Vehicle Repossession

     Sometime, people may voluntarily call up the lender or the lessor and hand over the car on account of the inability to make regular payments. In this case, the repossession is referred to as voluntary vehicle repossession.

     Eliminates Repossession Fee: Agreeing to voluntary repossession results in reducing additional expenses, for the lessor or the creditor, since he / she does not have to hire the services of a repossessor. Any fee, that is paid by the lender for the purpose of repossession, is passed on to the defaulter in the form of repossession fee. Voluntary repossession saves the defaulter the burden of paying the repossession fee; a small omission that may be appreciated by the consumer / defaulter whose inability to keep up with regular payments could be the result of strained finances. Read the rest of this entry »

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Small Business Loans for Women with Bad Credit

Feb 22

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     In the phrase, small business loans for women with bad credit, the term ‘bad credit’ implies the fact that these kind of loans are granted to businesswomen who have a very low credit rating. A credit rating and credit score are two units that are used by lenders, to estimate the credit worthiness of a particular person. Credit rating agencies, supply the lenders with a person’s credit related records and credit history. The credit rating is a alphabetical cum numeric figure, that is derived from the total of all credit related activities of a person. These ratings are derived from prescribed formulas, which are regularly governed by concerned government agencies. Thus the rating is influenced by late installments and defaults. Credit card debts, loans, and for that matter any activity that is related to credit, is included in the credit rating. The credit score is a variant of credit rating. A credit score, also depicts a time period within which the borrower of the loan will be to repay the loan, depending upon the loan and income of borrower.

     In case of a small business loans, for women with bad credit there is no specific prescribed credit rating or score that qualifies the businesswomen for the loan. The loan is meant for borrowers who have a bad credit.

     Effect of Bad Credit Read the rest of this entry »

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