loans

Loans: Definition of Terms and Other Financial Jargon

The financial world, in a nutshell is just like any other ethnic group, gang or social group. It has its own language. Words, terms, statements that to everyday people think they have a solid grasp of but in truth actually confuses them. Types of loans, commissions, types of interest rates, bankruptcy terms; the list goes on and though hard to understand at times, as regular everyday people we have to try to understand the bare essence of the financial world language, since majority of regular everyday people will never ever steer clear of these terms since everyone encounter financial problems on an everyday basis. To begin with there are the type of loans which regular citizens, entrepreneurs or even corporations patronize.

Image result for secured and unsecured type of loansThese types of loans are:

  • Secured Loans – These are asset based loans, in which collateral is offered until the borrower has paid off his loan. A mortgage loan is one type of secured loan another is an auto or car loan. It is a type of loan that the lender (bank or any other financial lender) takes control of the papers of the items purchased with the loan until the borrower makes good or pays off the loan. In the event that the borrower cannot pay off the loan the lender will sell of the contract and item to make good off the loan in question.
  • Unsecured Loans – As the word unsecured implies, the loan is not tied with any of the borrower’s assets. Usually with a slightly higher interest rate since in the event that the borrower will not be able to make good on their payment obligations, the financial institutions act of recourse is very much limited. Usually these unsecured loans come in the form of credit cards, personal loans even peer to peer loans.
    • credit card are credit lines usually attached to financial institutions that gives the borrower power of purchase by lending it name via card to the borrower in which the borrower can make payments in installment or in full with or without overcharge depending on the terms and conditions of credit.
    • Personal Loans are loans that are taken from banks in the form of lump sum that has a specific rate and loan duration in which the borrower has to make good on. These are usually loans that charge premiums on over-payments and underpayments.
    • Peer to peer are the type of loans that exchange hands either from one individual to another, or a corporation to another corporation in which loan rates depends specifically on the contract signed by the lender and the borrower.Image result for secured and unsecured type of loans

In truth there are a lot more financial words to define and statements to breakdown in order to at least get a grasp of how the financial world communicates in written, verbally and also legally. An overview just to be able to understand the bare essence the types of loans we encounter on a daily basis in a short period of time we cannot force ourselves to understand the financial world overnight, to understand It will always take time as if learning a second language.

brokers

Brokers, Heaven Sent or Hell Bent?

Image result for brokersBrokers the word itself, coming from the root word “broke”, pretty much sums up the idea that these people are out to take you for everything you got. There are insurance brokers, credit card brokers, and real estate brokers. Are they just people who are out to sell a contract or are they something more. True, finding a loan through a broker especially a mortgage loan will probably yield a higher interest rate rather than doing your own legwork and finding the best loan and lending company for yourself. But what you are actually paying for when using a broker is the convenience of having someone with the expertise, experience and knowledge to a specific loan. From the papers needed to the small legal matters that surround and encompass the loan you are applying for (i.e. mortgage loan).

A broker is basically a person who has access to a number of different financial institutions, for a single type of loan of which he can offer the borrower with a choice of different options, as well as rates for the borrower to choose from. Educated with each institution’s requirements also all legal representation; papers, documents, taxations and other requirements that would come with every loan, especially a mortgage loan which ownership is 9/10ths of the law. Property loan contracts could take the longest time to pay and thus is surrounded by plenty legalities and loopholes in its contracts. Sort of a lawyer and more than a sales person earns their wages on a commission basis, different types of commissions in fact depending on how a loan contract would be executed. The good thing about this for the borrower is that because of this, to a certain extent, the borrower can haggle the rates with the broker, and how much the broker is willing to give up to sell the contract.

Image result for bad brokersThere actually brokers out there take advantage of their position and knowledge to take advantage of the borrower’s position, but a few rotten apples but that should not mean that these few would ruin the rest of the apples in the barrel. One way to find a good broker is by means of recommendation. Ask around your circle of friends, chances are there is already a broker in your group.

A broker could spell success or disaster for a loan, especially for someone who is not well versed or gets easily confused with the terms or rates of mortgage loans, home loans, personal loans and the like. Unlike bankers who represent certain banks and whose rates are fixed, a broker has a little bit more flexibility when it comes to finalizing loan contracts and when it boils down to it, having a good broker could end up getting a better deal than doing everything on your own. Not to mention a faster way of acquiring a loan from a broker is already educated in all the requirements needed, all legalities and loopholes covered plus a number of lenders, financial institutions and banks that a borrower can take advantage of.

employee-vs-entrepreneur

Steady Income Employment Versus Start Up Business

Image result for employment vs entrepreneurYou cannot get rich being employed and that is a universal truth, unless during the duration of your employment you have the smarts to make the right investments that accumulate over time and by the time of your retirement your investments have generated enough for a person to live in luxury in her golden years.

If your goal is to get rich fast, then you are out of luck because like everything else in life getting rich requires elbow grease and a whole lot of hard work. Starting a business could be the ticket. But how? When your funds are barely enough to tie you over.

How about business loans? A business loan could start you on the road to riches. Thus begins the struggle between employment and starting up a business.

Being employed isn’t really that bad, a monthly salary and a small part of it goes into a government mandated retirement fund, the advantage of being an employee is that there is a routine. There are people that enjoy their daily life knowing what to do next. As it is in employment, there is a certain flow to everything that happens as the day progresses, as an employee handles this progression at the end of the day he or she is free to do as the person chooses with no ties with the work he or she does. Only to remember it the next day. As for someone who has a startup business as it becomes a 24-hour affair, some sort of mini relationship. Thinking about business loan payments, running a business and pretty much everything about it since it is basically an investment for the future.

Image result for business loanThere is a certain satisfaction in working for yourself, the certain achievement that you got your business through another month. Dealing with all overhead expenditures, managing your business loans sg as you start to make a tidy little profit for yourself, the stress in dealing with a small business becomes tolerable, a little bit enjoyable in fact. Whereas an employee knows when and where exactly the money for next month’s rent is coming from. A regular employee has government mandated benefits and is entitled to overtime pay whenever the hours of work are extended. In other words, the life of an employee is basically the easier life granted, he or she is the type of person who can get along well with almost everyone but limits his or her success to their chosen profession. Whereas even as a small scale business person holds his own time. Although a little more stressful they are in control of how their income flows and how to manage that income, including on what portion of that income should be used for daily personal expenses.

All in all, the choice between the life of an employee and an entrepreneur depends on the lifestyle preference of an individual. It is a personal choice of how you would want to earn your living. Either to be working for someone with regular income or to be working for yourself, with business loans and the like in tow, but as an individual you are in control of your income.

loan shopping

Shopping for a Loan

best personal loansThere are always times that cash flow will not be enough, in buying a car, house or even just to spend on yourself. One way of dealing with this problem is by applying for a loan, depending on what you are going to use it for, there are different types of loans to choose from, different types of lenders, different loan structures and most of all different rates. How to get the best loan rates,how to get the best deal, how to get the best personal loans period. Here are some essential questions you would need to ask yourself before taking out a loan to assure yourself the loan that you are taking out is the right loan for you.

  1. Know what you can afford to pay

As everyone’s income bracket differs, how your allotted budget to pay for your loan will largely effect on how long you will have to pay to close it out. “How to get the best loan rates?” should be a highly regarded question to maximize the paying power of the budget you have allotted in paying for the loan. The more of the principal amount you are paying for the better.

  1. Which Financial institution?

Credit Unions, Banks, or brokers are a few examples of financial institutions that cater to borrowers, especially brokers who usually cater to real estate shoppers. Credit unions usually have the best rates and service, but credit unions specialize in only certain kinds of loans. Brokers usually carry the highest rates even against banks but their advantage is that they have access to a number of lenders and loans with different terms and rates.

  1. Shop Around –Compare loans and Lenders.

If you feel that you prefer to pay a little bit more and use a broker for faster processing, by all means. But on how to get the best rates possible, it is better to do your own legwork. The amount of interest you save by scouting a loan on your own could have a bigger impact in the long run rather than putting it all on a broker.

  1. Understand Loan Prices

Image result for understand loan pricesEducate yourself on how the rates affect the loan amount. Interest rates may vary depending on the terms and conditions of the loan. As under and over-payments may be charged with premiums the amount you pay would affect the duration of the loan itself, i.e. would you be willing to close out your loan and shell out more money by over-payment premiums rather than letting the whole contract run its course?

Knowing the risks and benefits of a certain loan, would always be an advantage to the borrower, how to get the best loan rates is easy, by means of research and haggling. But in truth, it is more than just about the rates, it understands them, it is about how comfortable you and your pockets will be once you have taken out a certain loan. More so, how that loan will affect your day to day financial life. Going to shop for a loan does not necessarily mean spending, rather than educating oneself on what you as a borrower would need.

credit

Are you a Target?

Do you feel that you are being watched? Being stalked? Or simply being prepped for credit? Could you be a target for pre-approved credit? There could be a chance, especially, if you have long standing good credit. Personal loans whether it may be credit cards, installment loans or payday loans are actually target market loans specifically tailor made for a certain market. Although everyone may avail of these kinds of loans, terms for every group of people differ as what these people can afford, terms and rates are not the same for everyone. This type of credit line falls under the consumer credit as the word implies, this credit line is for commercial use.

Image result for personal loansPeople are separated into brackets. As the loans specify different limits and rates for each economy class. Regular credit cards, gold cards, platinum cards, as long as you are working you are entitled to apply for these types of credit. It depends on your credit history, whether a financial institution will grant you a higher credit limit depending on your credit history the better credit history the higher credit line you are given. Same goes for installment loans as you are a better payee almost every time you are given a better rates, higher credit, and longer payment terms. This type of unsecured loan is solely based on how good your credit history is. And can be used for a wide array of consumer products and services provided it falls within the credit line granted by the credit institution or lender.
Every individual is targeted, specially working individuals with a steady income. Even a payday loan sg is a type of personal loan in which the loan is made in a single payment as the borrower in essence pawns in their salary for an early payday in which the interest could be charged in advance or over your payment. Private legal money lending singapore institutions, banks or other financial institutions usually have your credit history before you are approved or given a credit line, as this is the actual basis for the credit.

Image result for long standing good creditPersonal loans or consumer credits these types of loans are for the borrower’s discretion to use. There is no need for collateral even if the item purchased by the credit is a car, as said the credit company would not inquest the car’s papers like a secured loan. The security to personal loan is an individual’s credit history in which if it actually that good, could actually buy a firsthand sedan. As time passes people with credit lines either improve their credit image or depreciate it depending on how they handle their monthly payments and by this credit line other types of loans are denied and approved. A personal loan is exactly what it is, personal. It reflects an individual’s credit persona as to whether he or she is a good investment to a credit institution, bank, or any financial institution for that matter that would grant a loan or a credit line to those people they feel worth it, remembering that a credit line is lending a financial institutions name to an individual to boost their buying power by means of non-cash transactions.