Debt

Guide for Various Type of Loans Against Property

Guide for Various Type of Loans Against Property

A loan against property is exactly what the name implies a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property’s market value. However, loan against property is where you collect the money from the bank by mortgaging your property. Your property acts as a security deposit for the money that is rendered by the bank. And until the repayment of the loan money, the borrower’s original loan documents of the property will be under the banks’ custody. In case if the people fail to pay the monthly installments, banks will move legal procedure to own the loan property.

The loan will be approved by banks only up to 40% -60% of the property value, some banks might even approval loan up to 70% of the property value. Just like any personal loan, there is no restriction on using the proceeds of a loan against property.

How to choose between the two?

  • Processing time: Whenever we opt for this type of a loan, which is obtained by mortgaging the borrower’s property then the lender needs to verify the documents before disbursing the loan. In addition to this, you will be asked to submit documents supporting your income to judge your loan repayment capacity.
  • Interest rates: Being a secured loan, the interest rates of commercial mortgage lender options is usually lower than that of other loans. This can be anywhere between 11% and 16%. In comparison, interest rates of any personal loan can be as high as 24%. The main factor determining the interest rates in personal loans is the borrower’s credit score.
  • Tenure of the loan: The loan tenure can be as high as 15 years whereas the upper limit of personal loan is usually around 5 years. The more tenure of repayment of the loan brings down the EMI payouts, thereby increasing its affordability of the big-ticket loans. However, the flip side is that the longer tenure would also result in higher interest payout.
  • Loan amount: In the case of personal loans, your loan amount will primarily depend on your monthly income and your ability to service the loan. However, whenever you opt for a loan that is against your property, the loan amount will depend on both the market value of your property and your income. Generally, the loan amount in this type of loan ranges between 40–70% of the market value of the property and the maximum loan amount can go up to several crores. In the case of personal loans, the upper limit is usually around Rs.15–20 lakhs.
  • Although taking a loan against your property is a better option than a personal loan in terms of interest rate, loan tenure and loan amount, it falls short in terms of processing time. Therefore, for people requiring funds at short notice, a personal loan will be the only option. Also, the biggest risk associated with this type of loan is that the lender can confiscate your property in the event of your default in paying your dues. Therefore, make sure to self-evaluate your repayment capacity before opting for a loan against property. There are different commercial mortgage lender options which you can opt for.

Before Getting A Business Loan, Make Sure You Can Afford It

Before Getting A Business Loan, Make Sure You Can Afford It

If you’re running a small business that’s showing promise for growth and expansion (but you lack the needed funding to move it forward), a business loan may be what you were looking for.

Before deciding on applying for one, though, you will need to determine whether or not you can afford the costs involved.

Knowing the extra costs they usually involve and understanding how repayment commitments could impact your finances is what you need to get rid of whatever apprehensive or dreadful feelings that sometimes come with borrowing money.

If you want to know everything (cost related) beforehand, a business loan calculator can help you big time.

A business loan calculator is as easy as first grade math

A business loan calculator is a simple online device that will provide you information regarding the calculated costs of a loan, the amount of your monthly payments and other critical data.

The steps are simple to follow:

  1. Enter the amount of the loan you’re planning to take.
  2. Enter the number of monthly payments you prefer, choosing from a range of 24-60 months.
  3. Enter the interest rate.
  4. Click CALCULATE. The results from this business loan calculator will show you how much you need to pay monthly and the total cost of the loan (this covers total interest cost you shall have paid at the end of the loan term) with possible some minor documentation fees.

Should the numbers shown by the tool not align to what you have in mind (or should they tell you that you can’t afford the loan), simply click RESET CALCULATOR then put in new, revised entries (perhaps entering a longer term or lowering the loan amount) and repeat the process.

You can revisit your entries as many times as you need until it reflects the numbers you’ll be comfortable with, clearly letting you know you can afford the loan.

Knowing how interest charges work is essential

Interest is the price you pay for using a loan provider’s money. All loans come with it, more popularly referred to as APR (Annual Percentage Rate). Essentially, a lending institution takes the balance of your loan and multiplies it by your APR to calculate the interest cost for each monthly  payment.

Let’s say you take out a loan for $100,000. If your interest rate is 4.01%, it means you will be paying $4.01 per year for every $100 you owe.

However, because your balance decreases over the course of the year, you won’t be paying 4.01% of $100,000 but a slightly lower amount because interest is charged based on the principal’s balance each month.

There’s the yearly interest rate, but how to calculate it per month?

You’d like to know your interest rate per month?

Using the above example, simply divide 4.01% by 12. You’ll then have a monthly interest rate of 0.0033416 or, $334.16 on the $100,000 loan. If your monthly payment is $500, the $334.16 goes towards interest payment and the $165.84 goes to paying the principal.

As the principal balance goes down, so will your monthly interest payments.

What does all this mean? It means that if you can work out a lower interest rate on your loan, you’d be ahead of the game.

3 easy tips to get a lower interest rate

  1. Work towards getting a good credit rating by paying your other debts promptly.
  2. Make extra payments on your loan.
  3. If your credit rating is good, it’ll be smart to negotiate a lower interest rate with the lending outfit. They tend to look favorably on borrowers with high credit scores.

Getting a business loan could well be one of the toughest decisions you’ll have to make as a business owner, but if you do your math (and of course with the help of the business loan calculator), you should be able to determine if, in fact, you can or cannot afford a loan. 

So, why wait? Start planning how to grow your business.


How to Actually Decide if Debt Consolidation is Right For You (and When It Isn’t)

Sometimes when you’re swimming in debt, taking control of your circumstances once and for all seems like an unbearable burden.

You have most likely considered a few different paths you could take to pay off your debt, but decision paralysis is a real thing, my friends. Just remember, you’re not alone.

Credit card debt is America is growing at near lightening speed. In fact, the average American household carries over $15,700 in credit card debt. With average interest rates being nearly 14%, American families are paying more than $2,000 of interest if they choose to only make the minimum monthly payment.

That’s crazy!

It probably won’t surprise you then that debt consolidation is a hot topic among those working to get out of debt and achieve financial freedom.

Not only can a debt consolidation loan help achieve this goal, but it already has for many thousands of Americans living with debt.

But that still doesn’t make it the right choice for everyone.

In case you’re unfamiliar or foggy brained on what it means, debt consolidation is essentially the process of gathering up all of your eligible debt, combining them into one lump sum, and taking out a new loan with new terms and conditions to create a single monthly payment. Once the process is in motion, you make a single monthly payment and the firm you are working with distributes the funds to the appropriate debtor until the debt is completely paid off.

So, what’s the catch?

This is where the “not right for everyone” advice comes in.

While combining debt into one payment may be a promising option, it’s good to understand what you’re getting yourself into before diving straight in.

To Consolidate or Not Consolidate, That is the Question

First, it’s critical to understand which debts can be combined and which cannot.

Debt generally falls into one of two categories: Unsecured debt and secured debt.

Unsecured debt is debt that has no underlying asset backing it up, like credit card debt, medical bills, utility bills, and other types of loans or credit you may have.

Secured debt is debt that is backed by an asset, meaning if you fail to make payments, your creditors have the legal ability to take away the asset. Examples of secured debt are things like auto loans and mortgages.

The vast majority of debt consolidation companies only work with clients who have unsecured debt, so if you are hoping to make this work with a car loan or mortgage payments, it’s time to go back to the drawing board.

Benefits Anyone Can Appreciate

When researching debt consolidation, it’s easy to find all the black and white reasons why you should or shouldn’t sign-up with a consolidation firm, but here are few areas where we can all meet middle ground about whether it’s good or not.

Payments become easier. Instead of worrying about meeting due dates on multiple credit cards and various other debts, you will only need to worry about making one payment, on time, each month.

Lower interest rates. If you’re able to secure a consolidation loan with a lower APR than you are currently paying against, the savings in interest could potentially take years off of your debt repayment, which is huge!

Improved credit score. Debt consolidation won’t do your credit score any favors in the short term, but once debts are paid off, many people see a significant improvement on their credit scores in a relatively short time. As you know, this is incredibly important when bouncing back from a serious amount of debt.

Still sound good?

Let’s move on to discussing the not so glamorous side of consolidation: The risks.

Risks to Consider

As you have probably guessed, there are risks involved when it comes to choosing and working with a firm for help with your debt. After all, debt is big business. But being aware of the risks involved is key to avoiding a bad situation.

Before signing up with a firm, consider how you got into your current situation in the first place. Was there a major life event that essentially forced you into a large amount of debt, or maybe you just aren’t sure how to create and stick to a budget. Whatever the reason is, try to identify it.

Second, once your debt is paid off and you can spend freely again, how confident are you that you won’t end up in the same situation later down the road. Many people swear they will never fall back into an overwhelming amount of debt, but without the knowledge and discipline to spend and save wisely, it can happen easier than you might realize.

The Bottom Line

Consolidation can be a great tool to systematically pull yourself out of debt, but as with most things in life, there are risks and rewards to consider. If you are ready to commit to the process and ask for assistance when you need it – both before and after debt – it may help you get out of debt sooner than you realize.

Author’s Bio:

christineChristine Yaged is a co-founding partner and Chief Product Officer of FinanceBuzz. Christine launches and scales brands. She is passionate about technology, digital marketing, and people.


American students to collectively owe $2 trillion by 2021 – What is Trump planning?

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As per a recent analysis, it has been seen that the student loan debt in the US is gradually moving towards a new milestone and it will witness a 30% rise in the approaching 36 months. The Federal Reserve Bank of New York says that as the debt climbs higher in order to reach a record high level, up from $1.55 trillion, the ROI for fresh college graduates is shrinking pretty fast. As the student loan debt costs is growing by $30 billion in every quarter and hence it is soon racing towards $2 trillion by 2021. As there were hosts of protests regarding the crossing of $1 trillion in 2012 and now it is even going to cross that level too.

What are the experts saying?

As the overall population of the nation grows and as college tuition costs keep rising, the US student loan debts will also continue to soar like never before. The CEO of an online lending platform has seen a noteworthy rise in the total number of student loans being taken out from community banks and credit unions.

Since the year 2010, there has been an increase in the number of federal loans that are being made available to the students. Students are also taking up second jobs in order to pursue passive income so that they could pay off the $20,000 in the form of student loans. Whenever you make free flow of credit with access to credit, this inflates the asset class. If you take a glance at the Great Recession, mortgages were made available and then you remember what had happened.

The constant rise in student loan debt

It was just in the last decade that student loan debt had surged by around 60% and if you take a look at the recent forecast, this will only speak about the financial pain. Millions are joining the latest cadre of 45 million American education loan borrowers and it is seen that an average undergrad in 2017 has owed $40,200. There are couple of people who owe $200,000 and this is a rather scary amount.

How is Donald Trump planning to solve this debt dilemma?

Donald Trump is also alarmed at the burgeoning student loan debt level. Here are few things to watch out for.

  • PSLF can be stopped for new borrowers

As the Congress passed a measure to boost the amount of funds available for PSF by $350 million, Donald Trump has chosen to stop this program. PSF is a federal program which forgives federal loans of the borrower who work in the public or non-profit sector.

  • Federal loan repayment options can be changed

Presently there are 8 different categories of loan repayment programs under the federal government loans. The Trump administration simplifies the choices of the borrowers by creating a repayment plan which is income-driven. Under the repayment plan, monthly payments will be capped at 12.5% of the discretionary income of the borrower.

  • Changes in discharging debt during bankruptcy

The Department of Education issued a request for comment on evaluating undue hardship claims, which is the standard used to check if a debt is discharged through bankruptcy.

Therefore, with the current state of student loan debt that is grasping the entire nation, it is vital to repay your student loan debt as soon as possible in order to avoid a bad impact on your credit score.


The Basics of Personal Loans

In case you need money on the spot and you cannot simply find urgent cash anywhere, you might think of getting a personal loan. These are one of the most widely chosen options and people do not hesitate to get involved with an online lender or a bank in order for their money to enter their bank account fast and easily. What most people do not know, however, is that personal loans must be taken seriously and with much responsibility. Here are the basics of this type of loan that every potential borrower should know before getting one.

What Are Personal Loans?

Personal loans are credits given to each borrower who needs money quick for a personal event, such as weddings, holidays, anniversaries or other personal expenses. Because they are usually unsecured, they are based on the borrower’s ability to pay and integrity.

Regarding the interest rates of this type of loans, you must know that they come in many shapes, according to the borrower’s needs. They can be offered at a fixed rate, floating rate or flat rate. These are based on your credit repayment ability and history and can be anywhere between 14% and 25%.

Unlike long-term loans, these can be repaid in up to 5 years and therefore, you can negotiate the monthly fee you are able to offer each month, depending on your income. This is one of the advantages of personal loans and this is the reason so many people find it convenient.

Who Is Eligible for a Personal Loan?

Depending on the lender you choose to borrow this sum from, you should know that you must meet the eligibility criteria set by that specific institution. Usually, nearly all banks will accept salaried individuals, self-employed individuals, and self-employed professionals and will provide the right offer, depending on the monthly income and the ability to repay the sum. Nevertheless, there are some other factors that will make your application successful:

  • Age
  • Residence
  • Work experience
  • Repayment capacity
  • Past obligation
  • Credit history
  • Place of work

This means that you must provide the right documentation in order for the process to go as smoothly as possible. From your personal documents to your bank statements, you need to be prepared to prove that you are responsible enough to get the sum you need in order to solve your problems.

These are the basic information you need to know before applying for a personal loan. Whether you choose to do it online, on sites like www.micropaydayloans.com, or at your local bank, you should know that this type of loan is a responsibility you need to take seriously, as it may turn into a financial struggle later and destabilize your financial situation even more.

If all the things above are considered and you opt for this type of loan, you must know that this is a rather simple solution to obtain money easily and without waiting too much in order for your application to be successful.


Women hold a major share of student loan debt in the US – Any reasons behind this?

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As per a recent report, women are carrying around 2/3rds of the outstanding student loan debt of the nation. This alarming statistic has been given by a new report offered by the American Association of University Women which is an education advocacy group. In order to be sure about the statistics, 58% of the college students are women and hence it can be easily concluded why so many women are carrying student loan debt. Student loans are gradually becoming a burden as too many of them are pursuing their higher education.

At present, 7 among 10 students take resort to loans so that they could obtain their degree. The average student leaves school with $30,000 in debt and nearly 25% of them owe more than $100,000. Majority of the Americans are extremely burdened with educational loans and these loan amounts are way more than what they owe on car loans and credit cards.

Implications of student loan debt on the economy of the nation

As long as the conversation on student loan debt is concerned, this starts with definite demographics which are harder and tougher than others. Even though you might compare apples to apples, still women are carrying more debt individually. As per recent statistics, in the year 2016, the average woman left undergraduate education owed $22,620 as against $18,650 for men. Hence there is a huge difference between the two amounts. In fact, black women are taking on disproportionate debt amount and they’ve racked up $25,000 in the form of student loans to obtain bachelor’s degree.

Besides, women are more likely than men to have household responsibilities to balance their coursework and hence they might take too long to graduate. As they spent more time in school, this can lead to more and more loans.
Is there a wide wage gap too?



The fact that as compared to men, more women are borrowing in bigger amounts is troubling the women. It is also true that women earn 28% less as compared against their male counterparts outside school. This clearly implies that women will take longer than men to pay back their student loans and hence they can dig deeper into debt.

What do the personal finance experts have to say?

While the men are seen to pay back 14% of their debt annually, women can just pay off 10% of their debt, as per a recent study. 3 years post graduation, women have been seen to pay back less than a third of their debt and during the same time period, men has successfully paid back 40% of the entire amount. These numbers can clearly indicate the irony of education and the system that prevails in the country.

Education certainly plays the role of an equalizer within the nation and in case the rising tuition costs are setting an impact on few people, few more than others, this is now demotivating them to take any step. Hence, as long as you wish to pay off your student loan debts, make sure you are proactive about them.


Lending Options When You Have Bad Credit

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If you have bad credit, then you may think that a loan is out of your reach. However, it is possible to get a loan without having a good credit score. There are many lending options that you have.

Home Equity Line of Credit

If you are a homeowner and the home has built equity, then you can get a home equity line of credit. This is a risky type of loan because you are using your home as collateral. However, it is one of the best options if you have bad credit.

You will be able to use your funds in whatever way that you want. A home equity line of credit typically has a lower interest rate than credit cards.

Secured Loans

Lenders feel more comfortable lending to people with bad credit if they have something that they can use as collateral. The item that you use as collateral can be repossessed if you do not pay the loan back. There are several things that you can use as collateral.

You can use your vehicle as collateral. A loan that is secured by a car is also known as a vehicle title loan. You can also use investments that you have as collateral. Additionally, some lenders will allow you to use your future paychecks as collateral.

Payday Loans

Payday loans are a popular option for people who have bad credit. It is relatively simple to get a payday loan. If you have proof of income and a bank account, then you will likely be able to get approved for a payday loan. However, there are downsides that come along with getting a payday loan.

Payday loans typically have high interest rates. Even though no credit check is required, your credit score will be affected if you do not pay back the loan.

Unsecured Loan

Contrary to popular belief, it is still possible for you to get an unsecured loan with bad credit. However, your lender will likely require that you apply with a co-signer. The co–signer must have good credit and a stable employment history. If you cannot pay back the loan, then the co-signer will be responsible.

You and your co-signer’s credit will take a hit if the loan is not paid back. However, there are benefits that you can reap from applying with a co-signer. You may be able to get a loan with a lower interest rate. A cosigner also allows you to get a loan without having to risk your possessions by using them as collateral.



Credit Union Loans

If you trouble getting a loan from a bank, then you should consider going to a credit union. It is easier to get approved for a credit union loan because the standards are more relaxed. They also offer loans for a lower interest rate because they work on a non-profit basis. Additionally, there are fewer fees and penalties.

Keep in mind that your credit score will still determine how much you will be able to borrow.

 


More college dropouts fail to repay their student loans – What are the reasons?

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The researchers have delved into the best predictors of whether or not students are able to repay their student loans – college completion. Although there are several factors which influence the education loan repayment rates, yet whether or not a student has a credential post attending college is said to be the strongest predictors of whether or not the student will repay the loan. 5 years post entering the cycle of student loan repayment, 70% of the borrowers who passed out college with a certificate and a degree have made some kind of progress while paying down the principal amount on the loan. However, for the borrowers who couldn’t complete college, the rate of repayment is also 45%.

The link or the relation between repayment of loans and completion of college has become established and you must be wondering as to why and how it exists. Read on the remaining concerns of this article to know more on the mutually exclusive explanations which establish the link between the two.

#1: Graduates of colleges usually make more money

The income made by 4 year college graduates surpass by around 50% than those people who have earned college experience but who don’t hold any degree. People who earn a big amout are more capable of meeting monetary obligations like making repayments towards their student loans. Although it is true that college graduates accumulate more debt than the dropouts, they are also able to handle their payments in a better way.

#2: College dropouts usually have less urge to pay off their loans

There’s noone who will love to pay off their student loans and it is especially more grating and saddling for those who think that they’ve not received any benefit from their education. Due to the fact that a dropout doesn’t own any credential which he can use for advancement in his career, the benefit that he got from his college education will certainly be minimum. Although several dropouts will afford such payments, who will wish to pay for anything that is just not worth it? The immediate consequence of inability to pay student loans is not serious enough. Being delinquent on you rent payments will mean eviction but not being able to pay your student loan won’t repossess your college degree. As the upshot is lenient enough, this is one more reason for defaulting.

#3: Dropouts and graduates differ in different ways

The factors which cause the gap in repayment rate between dropouts and graduates actually start existing whenever the students set their foot on the campus. Researchers can usually account for the factors like financial resources, family background, and income post-college and few observable differences always exist between all those who complete college and those who don’t.



All the three explanations usually play a vital role in deciding the repayment gap between the dropouts and the college goers. However, the decision about which one is the most important point is still a topic of debate among the policymakers.


Financial Options Compared: Which Is Better, Debt Settlement or Debt Consolidation?

debt

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As you’re looking for reliable methods to eliminate your debt, you’ll come across two terms: debt settlement and debt consolidation. How are they different? Which one is right for you?

The answer will differ based no your unique needs, but both exist to provide relief in situations where your debt is simply too much for you to handle alone. Here’s an overview on the difference, and what each entails.

Debt Settlement

Debt settlement is where a company enters negotiations with the companies you owe money to. In some cases, the savings can be incredible. Let’s assume you owe $4,000 on a credit card. Debt settlement can see you paying this debt off for a one-time lump sum payment of $2,500.

Now, if you have a large enough amount of cash to do this, it can be great. Getting rid of a debt in one large payment, with a balance reduction of 30-50%, is amazing. But there are a few drawbacks to choosing settlement.

The first is that it can take time. Some sources report that finalizing their debt settlement took a few years. During this time, you’re discouraged from making payments, which means your balance climbs in penalties and interest. Which, as we know, is bad for your credit score.

This can be exacerbated by the fact that you won’t be settling all of your debts at once. The company you choose – and you should be very discriminating when choosing – will have to negotiate each debt separately, meaning there could be mixed results overall.

Debt Consolidation

Debt consolidation is an option for people who have a flood of statements coming in, and are looking to seriously reform their spending habits. While there are a few different kinds of debt consolidation, they usually involve rolling all of your debts into one and getting the best loan to pay it all off.

What this means is that from here on out, you are making one payment. The loan has covered your debt, and now you’re paying it back.

Therefore, like debt settlement, this can take a few years to accomplish. The biggest problem is that once you consolidate, you have to avoid creating more debt while you’re paying off your consolidation loan.

Remember that with consolidation, you aren’t paying a reduced amount; you’re just taking care of your debt with one payment at a time. If there’s any reduction in what you end up paying, it should be thanks to the single, agreeable interest rate you have, as opposed to multiple interest rates across your balances.

So, before you sign up for debt consolidation, do a complete breakdown of what you would pay to eliminate your debt as it stands now, interest included. If consolidation somehow ends up costing the same or more, try another company.



Financial experts typically regard debt consolidation as a more practical option, reserving settlement for extreme cases only. And if you choose a reputable company to walk you through it, it can even end up improving your score. Any way you look at it, both are options worth exploring before you consider bankruptcy.

 


What You Need To Know About Getting A Home Loan

When you’re thinking about getting a home loan, it can be incredibly exciting. Because deciding to buy a house is something that feels incredibly grown up and momentous. But at the same time, it’s also a very serious thing too. So you often have to know exactly what it takes to get the home loan. So if you’re just starting out and you want to know what to do, here’s three points to be aware of.

The Downpayment

So, of course, you’re going to need to make a downpayment. And you have to save up the money for the downpayment. So make sure that you’re working out what kind of house you want to buy, and how much it’s going to cost. That way, you can then give yourself a goal of what you need to save, which is usually 10% of that.


The Terms

You should also then take a look into mortgage terms that are offered. Understand what kind of rates there are available, how long you’ll need to make the repayments for, and any other terms that come with the loan.

The Requirements

But that’s not all. Because alongside knowing everything that you really do need to know about your home loan, you also need to be aware of what you need to bring to the table. To get your home loan, you may find that you need a certain credit score. So take a look at some of the scores in the infographic below, and then work on building your credit before you look to get the loan.


Infographic Design By mortgage credit score rules


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