Loans

High Risk Personal Loans - The Unknown Facts That The Bankers Won't Tell You

2008-06-15T23:47:00.003-07:00

For anyone with credit issues, you know how difficult it can be to get any type of loan. The good news is that there are ways of getting high risk personal loans. Here's a closer look at what you should know and where to find these personal loans.
Many people who have bad or questionable credit histories assume that there is no way that they will qualify for a loan. Fortunately for them, there are loans that they can get: high risk personal loans. High risk personal loans got their name from the high risk that the lender takes on by loaning money to a person with bad credit.

There is any number of reasons that you might be considering taking out a personal loan. Maybe you only need a small loan to help you keep your expenses covered while you wait for your next paycheck. Maybe you want to get control of your debt, but can't keep track of a bundle of individual bills. Perhaps you want to buy a house but don't have sufficient credit. The number of reasons for needing a loan are as varied as the people applying for them.

Thanks to the downturn of the economy, many lending institutions have tightened the reins on their financial belts. Even people with perfect credit are having trouble getting approved for loans. This is one of the reasons that high risk personal loans have become so popular.

If you have been thinking of applying for a personal loan, here are some things to keep in mind:

1. These loans usually come with a much higher interest rate. This is because the lending institution wants to make sure that they recoup as much of their investment (in you) as possible. The interest rate isn't just to cover them if you default on the loan, it also helps keeps their business afloat if other people default on their loans.

2. While taking out a loan might seem like an easy temporary fix, they could have a negative impact on your FICO score (the same score that many lenders look at to see if you qualify for a loan). The reason they don't reflect favorably on your score is because the companies that offer these higher risk loans do not have the same high reputation that an accredited bank or lending institution has.

That said, if you are looking for further information, here are a few hints to help your search:

1. Look for payday and title loan companies in your local area. These companies specialize in high risk and bad credit situations and are often happy to lend you as much money as you need provided you don't mind putting your car or home title up as collateral.

2. An Internet search will yield millions of results for high risk personal loans. Look for companies that have "brick and mortar" locations as well as online offices. If a company doesn't have a phone number or a physical address (PO Boxes don't count), stay away!

People need money for different reasons and, if your credit is bad, you probably feel like there aren't that many options available to you. While these loans are certainly possible to get, you might want to try your luck with regular lenders first!

High Risk Personal Loans - The Unknown Facts That The Bankers Won't Tell You

2008-06-15T23:47:00.001-07:00

Applying for a Business Loan

2007-09-14T09:01:00.000-07:00

The process of applying for a business loan is a stringent one as compared to the standard procedures in obtaining a home mortgage loan or a personal loan. This is probably due to the fact that business loans contain a greater risk element as compared to other loans. Therefore, lenders need to exercise greater caution and emphasis when evaluating business loan applications in order to minimize their risk exposure.

With that, lenders evaluate their applicants based on the information that are provided as well as their judgment of the viability and profitability of the business being financed. Thus, business loan applicants will be required to submit a loan proposal along with their applications with the purpose of creating a positive impression upon the lender.

The first element of a loan proposal is an executive summary, providing short descriptions of the type of business and the industry, the purpose and usage of the loan, the proposed repayment conditions as well as the intended loan period. After that, the company information is provided, enriching the reader with the nature of the business, the location of the business, company history, the products or services provided, key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.

It would help if you could include your company marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Apart from that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.

The next area that needs to be showcased in the proposal would be the credentials and experience of each member of the management team. Impressive credentials will provide assurance to the lender that the company is managed by individuals who are responsible and capable. This is important as having the wrong people managing the company could be detrimental for the business.

In any loan application, historical records are essential to be used in evaluating the performance of a company. As new companies do not yet have these records, the financial records of the owners will be used as the basis of evaluation. Income tax returns forms are also required by lenders. All of these records provided should be the latest copies less than 90 days old, with the exception of the income tax returns form.

If the loan is applied for an existing company in active operations, company financial statements, including profit and loss accounts, balance sheets and the net worth reconciliation record should be included in the loan proposal. Again, all of this information should also be the latest and less than 90 days old. Additionally, a listing of accounts receivables and other short term and long term debt should be attached.

On the other hand, if the loan application is submitted for a new business, a pro-forma balance sheet and profit and loss account should be provided. Apart from that, a cash flow projection for the upcoming year is drafted to indicate the possibility of recovering the debt. This also means that projected revenue, profits, costs incurred and expenditure should be listed out with definite explanations provided as well as a list of assumptions.

If you possess assets that you wish to use as collateral for your loan, details for this should be provided to the lender as well. It is often common for lenders to request for dual sources of repayment in the event that one source is defaulted. This means that if the business owner defaults on his repayments, the collateral can be sold in order to recover debt.

Finally, other documents normally required for a loan application would be items like the article of incorporation, lease agreements, partnership agreements, license, references, etc. As the list of required documentation, information and attachments differs between lenders, it is best to check with the individual lender on their specific information and documents required to be attached with the loan proposal.

The Most Popular Uses For A Personal Loan

2007-07-28T02:24:00.000-07:00

The number of people taking out personal loans has risen dramatically over the last ten or fifteen years, but what are the reasons for this? In this article we'll look at the main uses of the loans that we take out.

Debt Consolidation

This is possibly the biggest single reason people take out a personal loan, with billions being lent to help people sort out their finances. The basic idea is to take out one single loan that you use to pay off all your other debts, leaving you with just one repayment to make. Not only does this make your financial life simpler and more easily managed, but if done properly the result should be that your debt is costing you less overall to service each month.

New Car

Although there are many different kinds of auto finance available, from basic car loans to vehicle plus finance packages, many of these deals work out to be quite expensive, and are often suited to people with poorer credit ratings. A normal personal loan, with a lower interest rate and less restrictions, can be a better option for funding a vehicle purchase for many people. The key benefit is that you're free to spend the loan amount on any car from any dealer, or even buy privately - an option not usually open to users of dedicated auto finance packages.

Home Improvements

The extreme rise in property prices over the last decade or so has left many people with large amounts of equity in their home. This means that their house is worth far more than the mortgage still owed on it. For some homeowners it can make good sense to 'cash in' some of this equity in the form of a loan, using the money to reinvest in their property by improving it. This can mean extra building works, improvements to faciilities such as bathrooms and kitchens, landscape gardening, or any other costly exercise that will ultimately increase the value of a property even further in the coming years.

Vacation or Travel

Also given the large amounts of equity many people have, a popular option is to free up some of this cash to finance a once in a lifetime vacation, cruise, or other kind of expensive travel. It's not generally recommended that you use your home as collateral for this kind of loan spending, as you'll be risking the future of your home with little to show for it once the vacation is over. An unsecured personal loan, however, is an ideal way of spreading the cost of an unforgettable experience over a year or two.

Wedding

One final popular reason for taking out a personal loan is to pay for a wedding, either your own or a child's. Weddings these days can be incredibly expensive, usually running well into four or even five figures, and not many people have this kind of money in reserve. Naturally, a wedding day should be a day to remember always, and so many people feel it's well worth the cost of taking out a loan in order to make the day as perfect as possible. The funds will also be useful in paying for a great honeymoon, and even providing a few household essentials when moving into a first home.

Personal Loans : Is Early Repayment a Good Use for Spare Cash?

2007-07-28T02:20:00.000-07:00

Reducing your overall debt level as much as possible is always a good idea, and is usually recommended as part of a budgeting plan. If you have some spare funds available, you might be tempted to clear your personal loan, as nearly all loan plans allow for full repayment before the term is over. However, there are a few things to bear in mind before deciding whether paying off your loan is the best use of your spare cash.

Firstly, loan providers make their profits by charging interest, and if you clear your loan early then you won't be paying the lender as much interest as you would if your loan went to its full term. Obviously, this means they will make less profit out of you, and so many lenders will write an early repayment penalty into the loan agreement to make sure that the arrangement is still profitable for them if you repay early.

This repayment penalty, also known as a redemption charge or a settlement fee, will often calculated as a percentage of the outstanding balance at the time you clear your loan, and depending on how early on in the repayment schedule you are, this could work out at quite a substantial amount. Check your credit agreement small print to see how much you could be charged, and see if this makes the prospect of early repayment quite as attractive.

If the fee is substantial, you could be better off by putting your spare funds to another more cost-effective use.

Most credit cards and other kinds of debt will charge a higher rate of interest than a personal loan, and so concentrating on reducing these first may be a better use for your money. By clearing your higher-interest debts first, your spare cash will be having the most beneficial effect.

Even if you don't have another debt to clear, you may find that there's a better way to use surplus cash than paying off a loan that features a high settlement fee. Investing in a high interest savings account or bond over the remaining term of your loan may earn you more in interest than the cost of a redemption charge, but when calculating this be sure to take account any taxes you'll have to pay on your investment return.

Finally, don't underestimate the importance of having a little money in reserve. If clearing your loan would leave you with very little spare cash, then an unexpected expense could push you back into the red. If this would mean you had to take out a new loan, then a new deal may work out to be more expensive than keeping your current loan to its original term.

To sum it up, paying off your loan is a commendable aim and to be recommended, but before you do so make sure that any settlement fee doesn't make early repayment uneconomical, that you couldn't better use the money to reduce more expensive debts, and that by clearing your personal loan you won't be leaving yourself too short of money and in danger of going back into the red.

Comparing Payday Loans To Personal Loans

2007-07-28T02:08:00.000-07:00

Payday loans have, in many people's eyes, a reputation as being an expensive form of credit. It's certainly true that the imposition of a flat fee of 10% to 25% of the loan amount works out to be a very high APR when you take into account the short term nature of the loan, and although taking out a payday loan may actually work out to be cheaper than some other forms of finance such as long term credit card debt, the interest rate will still be much, much higher than that of a personal loan. So why do people take out payday loans if they're so costly?

The first reason is simply speed. Many people resort to a wage advance when they literally don't have any money left at the end of the month, and yet have bills to pay and food to buy. A payday loan can be arranged on the same day you apply, with the cash in your account the next day. A personal loan simply can't compare to this - there will be complex forms to fill in, credit agreements to sign and return, credit checks to be carried out... the list goes on. When you need quick cash, a payday loan might well be the only answer.

Another advantage of these loans is the fact that you can borrow only a small amount if that is what you want, just enough to see you through your current cash flow problem. Most personal loans have a much higher minimum amount you need to borrow, and if you don't need that much then you're saddling yourself with unnecessary and unwanted debt.

A related point is that the repayment term of a payday loan is, by its very nature, a lot shorter. While the APR rate on a personal loan might appear to be much lower, by spreading the repayments over a longer term you may well end up paying more in interest overall. The combination of having to borrow a larger amount over a longer period is certain to cost more in the long run than taking out an advance of just the amount you need over as short a time frame as possible.

The final reason is that because of the way payday loans work, they're very easy to be approved for. People with all kinds of credit ratings are likely to have their applications accepted, which is certainly not the case with other forms of finance.

No personal finance expert would recommend taking out a payday loan lightly, especially if you get into the situation of having to renew the loan every month, but taking the above advantages into consideration it's easy to see why sometimes payday advances can actually be a perfectly prudent way of bridging a temporary financial gap.

Home Loans Made Easy

2007-07-28T01:13:00.000-07:00

Tips for Getting a Home Loan

Buying a home and getting a home loan can be a real scary process. I've worked with buyers for years and would like to share with you some tips to make the loan process work for you.

Four Typical Buyer Questions

1. How do I qualify for a loan?

Start by meeting with a lender. The lender will help you explore options for financing a home.

2. How do I select a lender?

Call two or three different lender, conduct a short telephone interview and then make an appointment with the one that makes you feel most comfortable.

3. How does the lender determine my loan qualifications?

A general guide, you can purchase a home valued at two to three times your annual income. The lender will also consider your savings and debts.

2. There are programs for buyers with credit issues.

3. Ask the lender what is best for you.

4. When should I call a Realtor?

Meet with a lender first to determine your loan qualifications.

1. Get a pre-qualify letter.

2. Conduct a brief telephone interview with two or three Realtors.

3. Select the Realtor that makes you feel most comfortable.

4. Make an appointment.

5. You may be asked to sign a buyer agency agreement. It's fine to sign a short term agreement.

6. Before you sign a long term agreement, be sure you're comfortable with the Realtor.Your first meeting with the RealtorBe open minded. Make a list of features you'd like in your home:

1. How many bedrooms?

2. Do you need a garage?

3. How far do you drive to work?

4. Do you have animals?

5. ... and so forth.

If you give the Realtor definite parameters; they can find a house for you. Your first meeting with a lender

Your lender needs to know everything about your finances. The following is a list of information you'll need to take with you. Salary and bonuses. Employment verification. Two years of tax returns or W-2 forms. Military history. Amount of dividends and interest income. Other regular income such as alimony, child support etc. Current bank statements both checking and savings. Market value of stocks, bonds or Certificates of Deposit. Face amount and cash value of life insurance policies. Value of personal property and automobiles. Balances and account numbers for loans, credit card balances and personal loans.

Four types of loans:

1. Fixed Rate - the interest rate stays the same over the life of the loan.

2. Adjustable/Variable Rate - the interest rate can change during the life of the loan.

3. Government Loans - VA and FHA.

4. Bridge/Swing Loans - Short term loans that are paid off quickly. Which one is right for me?

Many factors enter into the selection of a loan:

Your financial circumstance. Expectation of future financial changes. How long you intend to hold the property. How comfortable you are with the monthly payment. How comfortable you are with the payment amount changing from time to time?

Discuss your preferences with the lender and the Realtor. What does my loan payment include?

P includes payment on principle amount I includes payment on the interest

T may include payments into an escrow account to pay taxes

I may include payments into an escrow account to pay insurance

How much do I need for a down payment?

Down payments vary. They can be anywhere from zero to twenty percent of the homes value. Veterans and active military may obtain a loan with zero down.

What does the lender need to know about my credit?If you have had credit problems, discuss them with your lender. Bring written explanations of credit issues.

If problems have been corrected and credit reestablished, you'll probably be fine. Credit problems no longer mean you're unable to get a loan.

How long will it take?

Your lender needs to verify all information. The process may take from one to six weeks. Within three business days after application the lender must provide you with a "Good Faith Estimate", which is the amount of closing costs you'll be expected to pay and an estimated monthly payment. Stay in touch with your Realtor and Lender. Do not be afraid to ask questions. Home buying can be unnerving; ask the professionals what to expect.

TERMINOLOGY FHA Loans - Federal Housing Administration loans are government insured loans. They allow you to buy with a small down payment.

VA Loans - Veterans Administration loans are available to veterans and active military. A VA loan may require no down payment.

Balloon Payment - A payment that calls the entire loan due in a short period although the loan may be amortized over a longer period of time.

APR - The actual cost of a loan as a yearly rate.

Appraisal - An estimate of the value of the home, made by a professional appraiser. The maximum amount of the mortgage is generally based on the appraisal.

Interest - The sum paid for borrowing money.

Origination Fee - The fee charged by the lender to prepare all the documents.

Points - Prepaid interest on the loan, charged at the time of closing. Each point is one percent of the loan amount.

PMI - Private Mortgage Insurance is an insurance policy the borrower buys to protect the lender from non-payment of the loan.

Title Insurance - An insurance policy which insures you against errors in the title search, guaranteeing you and the lender your financial interest in the property.

Hopefully this will help take the confusion out of the home buying loan process.

How To Get The Best Home Loan Deal

2007-07-28T01:03:00.000-07:00

With booming real estate markets, greater lending competition and high consumer confidence, there has never been a better time to purchase your dream home and, by doing your homework before taking on a mortgage, you can get a better value investment for your dollar.

There are a few secrets and simple tips buyers should know before shopping for a home loan mortgage. The first, and most important of these, is to do your homework. Home loans vary greatly and it's important you find the one that best suits your situation.

With the rapid growth of online private investors, even people who the banks and major mortgage lenders won't deal with can usually qualify for a home loan.

Potential purchasers should study their local real estate market to get a feel for what suburbs offer the best value and investment return potential, they type of property you are seeking, and how long you plan to live there for.

Once you have a good idea of the property you are seeking and its price, work out your budget, list all your assets, and decide how much you can afford in repayments.

If you qualify for a loan from a bank or major mortgage lender, it is usually best to approach them for a loan, and don't be afraid to negotiate on their establishment fees and interest rate. After all, there is plenty of competition and they want your business!

If you don't fit into this category, you can still apply for a loan from an online private investment group who will lend on the basis of no credit checks, no income or employment verification, no tax returns, and no prepayment penalty.

The difference between the major lenders and these investor groups is that the former lend not only against the value of the property, but who is acquiring it based on income etc., whereas the latter are only interested in the value of the property.

You need to check the fees for private investor loans as they are usually slightly higher than conventional loans, but they give people the opportunity to buy their own home when otherwise they would be stuck in the rental cycle.

There are some type of homes, such as mobile homes, homes on stilts, or other unusual structures which may be rejected because their value may be an unknown quantity should the borrower default and the property has to be sold.

Lenders are more willing to provide money for home loans than any other type of loan because they know purchasers will always meet their mortgage repayments ahead of other payments, to protect their asset and keep a secure roof over their family's head.

This makes it easy for almost anyone to get a home loan, but always remember the repayments have to be met, so don't borrow more than you can handle. It's a good idea to always keep your payments one or two months ahead so if anything does go wrong you have some breathing space.

So, by doing a little extra homework at the beginning, you should end up with your dream home and a reasonable mortgage that let's you sleep easily at night!