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Factors to Consider When Borrowing Money

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Factors to Consider When Borrowing Money

 

Loans and credit have now become the bedrock of everyone’s finances. This is not a new trend but the matter of people borrowing money, be it from another person or institution, has been going on for centuries now. Reasons for borrowing may vary, may it be that a newly married couple wishes to build a new house, or a mother running out of cash for children’s tuition fee or even just to save face from family and friends this coming family or senior high reunion.

 

All these borrowing mechanisms may sound so easy but like all other things, there are factors you need to seriously consider so you won’t get into the trap of being buried alive with debts.

 

One factor you need to know is that when you decide to borrow money, make sure you have a stable job to finance repayment with the additional over a period of time. No moneylender, in his right mind, will lend you money if you do not have the capacity to give back what you owe. You then need to have a steady income that is enforceable at the end of each month in order for you to qualify for either short term borrowing or money advances.

 

The second thing that you need to think about is knowing the importance of borrowing for the right reasons. Right reasons can be scenarios which are complete and total emergency or a matter of life and death. Try to avoid borrowing money just to impress or buy luxurious things you cannot afford. Also, it is best that you go to reputable credit institution rather than asking for help from families and friends.

 

Third and the last thing to contemplate is knowing the impact of borrowing money. This can strongly affect not only your personal finances but also your personal life and health. Studies show the correlation between stress, health and money issues. You can lessen the pressure by creating a specific plan for borrowing money and making sure you have the means to pay it back on time.

 

Thus, understanding and bearing in mind all these factors will make your life easier in dealing with your financial shortcomings.

Making A Business Loan Work

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Making A Business Loan Work

 

Sooner or later, you may want to set up a business or have an existing business that brings you challenges which might require funding. If you are starting a small business, one of the solutions you can have to address raising a fund is by availing of a business loans. Now business loans can be very helpful and can definitely help you find solutions to certain problems of running your business. But without proper use of the funds, you can end up wasting the proceeds from the loan and end up with a bigger problem of liquidating the outstanding debt.

Here are a few things you may need to remember to ensure that your business loan is working:

  1. Know Why You Need a Loan

Like any other loan, you need to have a goal for the business loan you are availing of. It could be for raising capital to start up a business, increase inventory, expand territory, or even consolidate existing loans. Having a broad idea and a specific goal of what you need the business loan is for will keep you in track of addressing your need for the business loan. Knowing your need for the money will help you focus on this need and help you avoid spending your money on something other than your business’ goals and needs.

  1. Create a Plan

With every strategy or approach that you take action on, a plan needs to be in place. A proper plan will allow you to anticipate problems and have a ready solution for them if they do happen. It will also help you know what steps you need to take to ensure that you deal with your business loan properly. Your plan will also be your guideline that will help you find solutions if you encounter problems that were not expected.

  1. Manage Your Loan

Once your business loan has been granted, there will be certain terms and conditions you need to fulfill during the term of the loan. Being able to manage it will help you keep yourself updated about the status of your loan and have the ability to close it off soon as possible while addressing the needs that have been established.

Learning About Mortgages

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Learning About Mortgages

 

Acquiring properties may not be as difficult as it used to be. Nowadays, you can acquire properties even without the full cash payment at hand. Just by having a sufficient source of income, any bank or lending institution can help you acquire a property through a mortgage.

A mortgage is an agreement between a bank or other financial institution lending the borrower money for the purchase of a property. The money is paid by the borrower with interest. The lender takes hold of the property title until the debt has been fully paid. Mortgage has been the easiest financing method to acquire a property.

Types of Mortgage

There are two types of mortgage loans, a fixed rate mortgage and an adjustable rate mortgage. A fixed rate mortgage loan is a type of loan that earns interest through a fixed rate. If the borrower wants a predictability of a steady monthly payment, having a fixed rate mortgage is the type of mortgage the borrower must apply. Fixed rate mortgage protects the borrower from sudden fluctuation of the interest rate available in the market.

On the other hand, if the borrower intends to live in the house for 3 to 5 years and intends to sell it, an adjustable rate mortgage would be best. An adjustable rate mortgage often has a fixed rate for the first five years which is much lower compared to a fixed rate mortgage. After the fifth year, that is the time when the rate starts to change which will then be shouldered by the new owner of the house.

Mortgage Lenders

Mortgage lenders range from banks to other financial institutions who have legally acquired the right to grant mortgage loans. If you plan on getting a mortgage, I would highly recommend that you compare different banks and list of licensed moneylenders. It is quite important to have a checklist and a compare sheet. This will allow you to get a good idea what your mortgage lender can offer you.

Learning About Payday Loans

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Learning About Payday Loans

  Payday loans have been dominating the market and are one of the fastest growing business in the financing industry. These types of loans are relatively small in amount that accumulates a high rate of interest. It is often expected to be repaid within the next 20 days or next payday period. These payday loans are often availed to cover shortage on cash for paying monthly dues and expenses. Here are some points we need to understand about payday loans to give us a better understanding of what the loan can offer:

  1. How Much Loan Can Be Availed?

Payday loans, unlike other loans, are often used to pay for recurring monthly expense or unexpected expenses such as small medical expenses, minor car or home repairs, or even small purchases that cover basic needs. A payday loan is often granted between 10% to as high as 60% of your monthly salary. This means that a big portion of your next month’s salary will already be reserved for the payment of the loan you availed.

  1. Who Offers Payday Loans?

With payday loans becoming one of the most lucrative businesses in the finance industry, you can find payday loans being offered by lenders from big finance institutions to online financing websites. It is very important that you review and scrutinize the payday lender you will be availing the loan from. This will help you make sure that you avoid payday lenders who scam their borrowers into paying more than what is required by law.

  1. How Much Interest Do I have to Pay?

Payday loans are known to apply the highest interest rates in the market. Despite the regulation being set by governing institutions and financing companies, the interest rates are often subjected to abuse by some lenders. Some lenders often apply high interest rates as they know that the borrowers who come to them often need the money desperately. Interest for payday loans can have an Annual Percentage Rate (APR) of 300% and can go up to as high as 750%. Getting a payday loan can often lead to more debt especially when the habit of rolling the debt over every month occurs.

Learning About Personal Loans

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Learning About Personal Loans

 

There comes a time when we need cash where funds are not available. The fastest way to create that fund is through a personal loan that is offered by banks and other financial institutions. Personal loans are loans which can be used by the borrower freely and does not require any specific use for the money being borrowed. Personal loans are often availed for the use of emergency expenses such as medical expenses, car and/or household repair, or large purchases. As the name implies, this allows the borrower to use proceeds for any personal expenses that they need to cover.

Personal Loan Process

Personal loans can be secured or unsecured. Secured personal loans are loans which the lender will require a collateral which they can place a lien on. If the borrower fails to pay the loan, the lender will sell the collateral and apply the proceeds of the sale to the outstanding balance of the loan. An unsecured loan on the other hand is a loan without a collateral. In these cases, the interest rate is often higher to cover the risk of non-payment.

The term of the loan ranges from 12 to 36 months depending on the offer that is given by the lender.

Getting a Personal Loan

As mentioned earlier, personal loans are used for emergency expenses like medical expenses. It can also be used for repairs or any other expenses that a borrower needs to cover. When you get a personal loan, this can affect your credit score as well. Good payment and management of your loan can lead to a higher credit rating.

It is important that upon getting a personal loan, finances are currently properly managed as this may affect one’s financial status and stability. Personal loans should be reviewed properly to ensure that getting one would not further bring the borrower deeper into debt.