Archive | May 2016

What the Consumer Needs to Know About Hard Money Lenders

download (88)Hard money lenders have always existed in our society, but these alternative loans have seen an influx of business recently. The spike in these alternative loans can best be attributed to the economic crisis of 2009. Traditional avenues like banks became keenly aware of the amount of risk they were taking after the economic collapse. This made it harder for people with poor or no credit to obtain money from these traditional sources. Let’s go over everything that the consumer needs to know about these alternative sources of credit.

Shorter Period, Higher Interest Rates, and Fast Cash

These deals are fabulous as short-term options. If you need cash and you need it now, this is your best option. A banking institution will not be able to provide you with the financing quickly. They will take their time and review your credit history and perhaps your background. However, interest rates on cash from a bank are a lot lower, and the terms of the deal are generally set for a longer period of time. If you are looking for a long-term situation, you probably do not want to choose a hard money lender. The terms of the deal will include high interest rates, so over a longer period of time, they are not worth it.

Little to No Credit is OK

You can secure one of these deals without very much or any credit at all. Hard money lenders will use your assets and properties as collateral for your debt, so credit history means little to them. This business practice puts a large amount of risk on their shoulders, and this is why the interest rates on these deals are so high. If you’ve got solid assets to back yourself with and you know your financial needs are only temporary, these are great loans to get.

More Business-Oriented Than Banking Institutions

With hard money lenders, you may find yourself getting better terms or more money based on what purposes you have in mind for the cash. These private lenders are not bound by the same stringent rules as bankers. If you have a good idea or solid investment plans for the loan you are receiving, you may find yourself getting more cash than you can back with assets. Small business owners may find that it is easier to get off the ground with these business-minded people rather than with traditional bank loans. The important thing to remember is that there are a lot of opportunities out there, and it would be wise to completely weigh all of your options before you lock yourself into a loan agreement of any kind.

There is more inherent risk involved with hard money lenders, but they provide many more chances for opportunity as well. Taking the safest route isn’t always the right way to go about things. This country was founded by people who took chances. The key is to ensure that you are making educated decisions about how much risk you take on.

Three Reminders On Taking A Personal Loan

download (86)Getting a personal loan is not really a sign of inability to manage finances. Sometimes, financial drawbacks can happen and it is not really because you are a spendthrift. Factors such as economic setbacks, delayed salaries, medical emergencies, or other emergencies, can affect one’s daily or weekly spending power. Such situation may force one to take on credit to augment the cash on hand. There is no shortage of banks where one can apply for a loan from but a few reminders might be wise to take, especially for first-timers in the loan department.

1. Always do your research.

It is not advisable to take the first offer you are given such as a pre-approved credit card. You might end up being charged with very high interest rates. It is the same thing when it comes to personal loans. If you are not well-informed of a lender’s underwriting guidelines, you might end up taking the wrong offer. The good thing is, almost all banks have websites these days that you can check out to read about their offers. You do not even have to personally visit your lender’s office; you can just check out their website and do your research online.

2. Find out the amount of loan you can actually pay for.

Now that you are armed with your research, try figuring out how much you can actually pay. Consider the interest rate and the length of time you will take to pay for the loan. If you take a payment option that is longer, you will be paying for higher interest rates. A shorter payment option might be a better choice provided you can pay for the given amount at a given time. That is, although a shorter payment period means less interest to pay for, it will also mean a higher amount to pay for each month or week, whatever your arrangement may be.

3. Know what type of interest you are taking.

Any good bank will inform you about the interest for the loan you are applying for. There are generally two types of interest rates, namely, fixed interest rate and variable interest rate. It is a fixed interest rate if it is higher compared with the actual loan you take, only that the amount you pay every month is still the same. If it is a variable interest rate, it is lower compared to the actual amount of the loan only that as the interest rate varies the loan payments adjust with it.

 

This entry was posted on May 12, 2016.

Useful Facts About Personal Loans and Online Transactions

download (87)Personal loans are becoming increasingly easier to avail these days, thanks in great measure to the ease of verification and processing that is done prior to loans being sanctioned. Personal loans fall into two broad categories – secured and unsecured.

Secured loans are usually for higher amounts such as buying a second home, property or vehicle purchase or even educational loans taken against a mortgage that is generally guaranteed against default through ‘secured’ property such as a house etc.

Unsecured loans are personal loans that are given for smaller amounts like payment of medical bills, credit card outstanding or other exigencies that require immediate cash. If you have a good credit rating it is quite easy to acquire a personal loan without any guarantees; the amount of loan depends on take-home salaries and assets that you may possess. Unsecured loans can be processed even online if all requirements are met; the repayment is done in pre-fixed, equated monthly installments with provision for foreclosure depending on the finance company that is sanctioning the loan. The advantage of a personal loan is that unlike credit card payments which are compounded interest and keeps accruing if you do not pay the installments on time, a personal loan is based on low interest rates and can be paid out quite easily. In the event of unforeseen circumstances like a job loss or personal injury resulting in loss of income, you can re-work the outstanding amount and reach a settlement in consultation with your finance company without having to wipe out your entire savings.

Although it is quite convenient to use the Internet for loan processing and installment payouts, you should be careful not to divulge too many personal details. There are many unverified and unethical finance agencies operating online that promise ‘quick loans without verification’ to those who have huge borrowings on credit cards etc. Remember that there is no guarantee that these services are authentic, safe and follow regulatory procedures and if you are not cautious, the resulting experience or loss can prove quite costly.

The first thing that many do when losing money online during a transaction is to blame the bank or financial agency. However, the technology driving the online transactions is more often to blame.

When one loses money during a transaction, one is often quick to blame her/his bank. But most such cases relate to the use of technology in banking. While technology has undoubtedly made life easier, it could prove costly if one isn’t cautious. It is advisable to check and re-check all details while conducting an online transaction because banks are not responsible if you enter wrong data entry or incorrect details. Most banks only use personal account numbers of beneficiaries while transferring funds, not the beneficiary’s name and hence it becomes a valid transaction. At the most, in the event of a wrong transaction, the bank can put you in touch with the ‘unintended beneficiary’. However, banks are quite helpful in helping customers file a complaint with the police and legal authorities and provide assistance in recovering the amount.

Do’s for safe financial transactions

• Do not disclose Debit or Credit Card PIN numbers to anyone

• Do not let others operate Debit Card on your behalf

• While settling bills with Debit Card, ensure that you go to the counter and oversee the entire transaction

• Do not post personal financial details in response to email queries or on public platforms online unless you are convinced that they are authentic and secure

 

This entry was posted on May 7, 2016 and tagged .

Personal or Unsecured Loans

download (85)Personal loans, or ‘unsecured loans’ involve taking a loan or borrowing without any upfront collateral. They usually involve less paperwork compared to secured loans like mortgages but the period of loan is shorter and loan amounts smaller. Because there is no collateral put up or any repossession on default of loan payment, personal loans pose considerable risks for lenders due to the risks involved. Hence, the rates may sometimes be higher.

For people with bad credit ratings or scores, it can be quite difficult to obtain a personal loan and the interest rates can be high; however some lenders do arrange a deal if the loan applier has a co-signer to stand guarantee.

These loans can be utilized for almost any purpose from college tuition fees, settling medical bills or to take a vacation. Basically, it provides access to funds for an immediate need. Some of the other uses of a personal loan can be:

• To buy a vehicle,
• For wedding expenses,
• For home refurbishment or improvement,
• To make a down payment on property purchase,
• To meet business expenses, and so on.

Advantages of a personal loan

There are many advantages a personal loan can provide.

• These loans are available to those with good credit scores at low interest rates.
• They offer fixed repayment periods and interest rates
• Consolidating high interest rate credit card payments with low-interest rate personal loans can help save a lot of money. Unlike credit cards, fixed rate loans do not have a ‘default’ clause and penalty payment.
• It is a faster and easier process and can be done even online; the availability of funds can be done in just a few days’ time.

Applying for a unsecured loan

Since this kind of loan is not backed by any collateral, the applicant’s credit history is of prime importance. On completion of necessary application, the applicant has to authorize a credit check and give sufficient documentation to prove that the loan repayment can be made. The lending company or bank completes the underwriting formalities through automated systems or through human verification process and the loan can be approved or declined. If the loan is approved, the money is transferred to the applicant’s bank account or a bank instrument sent to the applicant’s address. Direct bank transfers usually follow an online personal loan application request.

Caution

The single most important requirement for an unsecured or personal loan is good credit; sometimes lenders are willing to provide personal loans to applications with bad credit rating depending on the situation and if guarantee can be provided by a co-signer.

However, there are several instances when people have been duped by shady firms and agencies working on the Internet; they lure people with bad credit by advertising these types of loans without credit checks. They may request the applicant to provide processing fees or even make a couple of monthly installment payments to provide good reference. The money is as good as gone and there will be no evident sign of any loan forthcoming.

This entry was posted on May 2, 2016.