Twelve Tips for Getting Your Bank Loan Approved

Securing a bank loan to finance your small business is getting to be more difficult. Here are twelve basic steps you must take before going to the bank for a business loan.

Finding the money needed to start a new business is almost always one of the most difficult obstacles new owners face. The most likely (and easiest) sources of capital are your families, friends and own savings. However, you should not overlook institutional sources as well. Without a previous track record in business, securing a bank loan may be difficult. Banks cite risk factors and increasing costs of servicing small accounts as the primary reasons for minimizing their exposure to small businesses. Still, it can be done. Here are the steps that you should take to improve your chances of getting that much-needed bank loan:

1. Keep in mind that to stay in business banks need to make loans. Do not be afraid to ask for one. That is what the loan officer wants you to do. To increase your chances of getting a loan, look for a bank that is familiar with your industry and who has done business with companies like yours. Seek out banks that are active in small business financing. Some banks lend on a conventional basis (lending money without government support), while some banks participate in government programs (in the form of government participations involving direct government funds or loan guarantees). However, be aware that banks often demand stiff collateral requirements for start-ups.

2. As an entrepreneur, make sure that you are thoroughly prepared when you go to your banker's office to request a loan. You need to show your bankers that a loan to you is a low-risk proposition. Have on hand a completed loan application, copies of cash flow and financial statement projections covering at least three years, and your cover letter.

3. Learn to anticipate every question that he or she has. Remember, the combination of information and preparation is the most powerful negotiating tool in the world. A confident and thoroughly prepared borrower is four times more likely to have his or her loan approved than a borrower who does not know the answer to some of the basic questions a banker asks. To show the extent of your preparedness, your business plan should also include answers to your banker's questions. These questions normally are:

* How much money do you need? Be as exact as possible; although adding a little extra for contingencies will not hurt.
* How long do you need it for? Be prepared to go into detail about what the money will do for you and why your business is a good risk.
* What are you going to do for it? Businesses use loans for three things: to buy new assets, pay off old debts, or pay for operating expenses.
* When and how you will repay for it? Your cash flow projections should provide a repayment time frame. Convince the banker of the long-term profitability of your business and your ability to repay the loan by using your financial projections and business plan.
* What will you do if you do not get the loan?

4. Do not take an apologetic and negative attitude. Keep your negativity in check. Present yourself as an entrepreneur who can and will repay the loan. Boost your image by providing your loan officer with any promotional materials about your business, such as brochures, ads, articles, press releases, etc.

5. Dress in a professional manner for the interview. This is a business transaction, so treat it as such.

6. Do not stretch the truth in your loan application. Broad, unsubstantiated statements should be avoided. The lender can easily check many of the facts on your application. If you cannot support statements with solid data, then don't make them. Do your homework and spend time doing research to be able to support everything you say, including every single number in your projections. It is best to keep projections, assets lists and collateral statements on the conservative side.

7. Be sure all your documents are neat, legible and organized in a cohesive and attractive manner. Type all your loan documents. Handwritten documents look unprofessional. Don't forget to include a cover letter.

8. Do not push the loan officer for a decision. Doing so might result in a rejection. Your banker cannot make a decision until all your documentation is complete. To ensure a speedy decision, make sure that your application is complete.

9. Be confident. An attitude of confidence enhances your chance of getting the loan. Show that you can make a success out of the money that the bank will lend to you. Visualize in your mind the positive results of your bank application.

10. Keep trying one lender after another until you get your loan. To improve your position as you change bankers and banks, the best way is to ask for a referral from a successful entrepreneur. Before you decide to approach a bank directly, find an associate, friend or acquaintance that is in good standing with the bank to give you a good referral. Bankers tend to deal more favorably those who were referred to them by their best customers.

11. Failure to discuss risk in your application. You must remember one thing: there is no business without risk. If you do not discuss risk, the bankers will assume that you haven't thought about risk. Let's face it - try as we might, we cannot plan for everything, for every contingency, for every turn of events. Bankers would want to know if you have planned for the major risks and how you intend to manage it.

Then, there is also the risk of too much success. The demand for your products or service may exceed well beyond your expectations, and they would want to know how you intend to handle success.

12. Remember that the first loan is usually the hardest to get. Bankers prefer to lend money to borrowers who have borrowed at least once and have paid back at least one loan on time. They are not venture capitalists that make high-risk loans regardless of the profit prospects of your business. Bankers prefer to lend to low-risk, low profit ventures than to high risk businesses or those with no record of accomplishment.

What is Insurance

What is it?

In simple terms, insurance allows someone who suffers a loss or accident to be compensated for the effects of their misfortune. It lets you protect yourself against everyday risks to your health, home and financial situation.
There are many different types of insurance:

You are unlikely to need every single one of these, so read around, choose carefully and remember to read the small print.

* Travel: Holidays can be dangerous occasions - especially abroad. If someone falls ill it is much more difficult than it would be at home to cope with the situation. Medical treatment is expensive. More here.
* Household contents and building insurance: Contents insurance covers the contents of a home such as furniture, carpets, clothes, television, refrigerators, jewellery and so on. In other words, what you would take with you if you moved. Buildings insurance protects against damage to the actual structure of the home and to its fixtures and fittings. Contents and buildings policies can be bought separately or together in one package. More here.
* Car insurance: Most people know something about motor insurance. This is because any vehicle driven on public roads must have a certain level of insurance. The Road Traffic Act ensures that drivers must meet liabilities they incur should they injure other people or cause damage in an accident. More here.
* Life insurance: A means of providing for your dependents should you die early, but also a way to save cash through endowment policies or similar.
* Private medical insurance: This covers the costs of private medical treatment for curable short-term illness or injury. It means that should you become ill you could be treated immediately privately rather than being put on an NHS waiting list. More here.
* Critical illness insurance: This allows you to insure your income/ health were you to become too ill to work later on in life, and protects any dependents/ loved ones from the financial consequences of such unexpected events. More here.
* Accident, sickness and unemployment cover: According to Moneyextra: "In 1999, 30,000 properties were re-possessed by mortgage lenders... Many lost their homes because they could no longer afford to pay their mortgage payments through an accident, sickness or unemployment." If you are planning on buying a house it may be sensible to think about getting some mortgage payment protection insurance.
* Pet insurance: This basically helps you foot the vet's bills if your pet gets poorly. By paying regularly into an insurance policy it means you have paid for the bill gradually rather than having to find the money for a steep bill when you can least afford it. More here.

Excess charges

Insurance policies often have hidden costs and hard-to-understand small print. Look out for excess charges, as they won't always pay the first £50 or more of an insurance claim.
What do all the words mean?

Don't know your underwriter from your write-off? Visit BBC Watchdog for a quick glossary.

How do I make an insurance claim?

* Keep any evidence: Depending on the situation either get the names and addresses of any witnesses, keep any relevant receipts, or take photographs.
* Contact the broker/ insurer: Give them a ring then follow up with a letter, keeping a copy for yourself. They should send you a claim form, which you should fill out and send back ASAP. Send 2-3 professional estimates for the repairs with the form.
* Help with your claim.

Who can I complain to?

If you aren't happy with the way your insurance company is acting you can contact the financial ombudsman service who offer a free, independent service for resolving disputes with insurance firms.

How to Get a Car Loan

Introduction

* Unless you are independently wealthy or have been scrimping and saving for the past several years, you will probably need to take out an auto loan to finance your car. Most dealerships provide financing, but they don't always provide the best possible deal on financing.
* It is best to secure financing from your bank or an online lender. If the dealership from which you buy your car can match or better your bank's terms or offers a rebate as part of their financing package, you might then consider using the dealership as your lender.
* The information presented in this guide will walk you through securing the best financing package for your new car or vehicle.

The Parts of a Loan

# If you can't afford to pay for an expensive item like a car, home or college education in full, you can apply for a loan. A loan is exactly what it sounds like—a financial institution or individual lends you the money to pay for an item or service with the expectation that they will be paid back in full plus interest. Lenders naturally prefer to lend money to borrowers who have a history of handling their finances responsibly.
# Loans are made up of a few different components:

Term

* The term of the loan is its length. Will you be paying back the bank, dealer or your parents over 36 months, 48 months or longer? Remember that the longer it takes for you to pay back the loan, the more you will pay in interest.
* BankRate.com advises that you "run like the plague" from lenders offering 72-84 month car loans and aim for a loan term of five years or less—preferably less.

Interest Rate


* The interest rate is the percentage of the loan you're charged for borrowing the money in the first place. Your interest rate will, in part, be determined by your credit history.
* The APR (Annual Percentage Rate) is the best rate to use when comparing lenders. The APR is a way of expressing the "finance charge" you owe on a yearly basis; the "finance charge" includes both the interest and any fees you owe for the arrangement of the loan.

Down Payment

* Your down payment is what you can afford to pay today. The larger the down payment you can make, the smaller the loan you have to take out. That large down payment may even secure you a more favorable interest rate.
* While there are many financing deals for cars that don't require a down payment, it is in your best interest to pay for as much of the car as you can up-front. BankRate.com recommends paying at least 20% of the car's purchase price as a down payment.

Example

* Here's an example of how the math on your auto loan is done:
* If you take out a $15,000 auto loan from your credit union with a 7.5% APR to be repaid over four years, you will owe $362.69 every month. Over a year, those payments would total $4,352,28. Over the life of the loan, you'll end up paying $17,409.12. That's $2,409.12 in interest over the life of the loan.
* Don't want to do the math yourself? Check out The Motley Fool's Monthly Payment calculator.

What is Online Loan?

Online Loan is Simple Loan Just As Normal Loan. A person takes a loan through online Thus You should have a computer.Huh....

Refinance a Car Loan: Things To Know

If you need to consolidate debt or free up some extra money each month, you need to know how to refinance a car loan. Essentially, this process involves the trading in of one loan for another, usually for a more favorable interest rate. By doing this you will lower the monthly payment you make on your car loan and you will save money in the long run in interest charges. There are some things to know about car refinance that will help you make a more informed decision about this valuable service. It may or may not be for you, but you owe it to yourself regardless. Keep in mind:

Car refinance can work for either new or used cars, but if the car is used, it has to be less than five years old. Other conditions that may apply have to do with your current loan. You have to owe at least $7,500 and not be upside down on the loan. Being upside down means you owe more on the car than it is worth. There may also be mileage limitations on the car to be eligible for refinancing.

Auto loans become troublesome because of high interest rates. When you first purchased your car, you may have received a high interest rate, perhaps because you were a first time buyer or because your credit rating was not very good. This high interest rate translates into a high monthly payment, and that increases the amount of interest you will pay over the life of the loan. By refinancing, you pay off the first loan with a second loan that has a lower interest rate, sometimes drastically lower. Not only does this reduce your monthly payment, but it can save you hundreds if not thousands of dollars over the long haul.

When you are wondering how to refinance, reading this already puts you half way there. Search for car refinance online and you will find any number of lenders willing to process your car refinance loan application. One of the benefits of applying online is that you receive several quotes from third party refinance specialists. Unlike banks or credit unions who give you their quote only, a third party lender will offer several to choose from, giving you the ability to pick the best one for your situation. In addition, there are no obligations to continue once you receive these quotes. If you decide the time is not right, you do not have to commit.

There are several things to know when you refinance a car loan. It can be a confusing process mainly because of the many unfamiliar terms. It behooves you, however, to familiarize yourself with them and to carefully read through every term and condition that comes with your refinance package so you are not taken by surprise. If you do that, you will find that car refinance has much to offer by way of savings, both monthly and long term. You can consolidate debt by taking out a refinance loan with a lower interest rate. Even if your credit rating is not the best, car refinance is still within your reach. In fact, it may even help to improve your credit, saving you money at the same time.

What Is Car Loan Refinance?

Car loan refinance is essentially trading in one car loan for another with a more favorable interest rate. When you finance a car, you are taking out a loan to pay off the amount not covered by your down payment. This is usually all of the car's price. Depending on many factors including credit score, down payment and other pertinent financial information, you'll receive an interest rate on the loan you take out, which is a percentage of the loan calculated annually. It is also known as the APR or annual percentage rate. This rate itself is broken down into even tinier fractions and accrues on a daily basis. Interest rates are some of the least understood elements of finance, and probably for good reason, because they are a source of profits for whoever is lending you the money.

Car loan refinance can help mitigate some of the monthly cost by getting you a new loan with a lower interest rate, saving you money over time. A car loan calculator will tell you how much interest you will pay over the life of your loan. With this information, you will get a better idea of the money that is tacked on to the price that is advertised. Interest is how lenders make their money, but refinancing lenders can ease the pressure somewhat by lowering the rate.

Take an example: Say you buy a car for $15,000 with zero down. So you have to borrow the entire amount. Maybe your credit rating is not great, so you receive a 12% APR over 60 months. Based on this, your monthly payment will be $334 and you will pay over $5,000 in interest over the 5 years. Thus, the real price of the car is over $20,000.

By refinancing, you can alleviate this to a certain degree. By paying your monthly payments regularly and on time, even with bad credit, it will improve over time. Say that you have paid off the loan down to $10,000. You decide to refinance, and after the application is approved, you receive a new rate of 7% for 60 months. Your new monthly payment will be $198, and the amount of interest paid over the life will be less than $2,000. Of course, you can refinance for a shorter amount of time, paying more per month but less interest. There are many combinations that can work for car refinance. You have to find what is right for you.

Refinancing your car loan is a great way to save money each month and consolidate some of your debt. All parties are left happy because your original lender gets paid off, your new lender is earning a little interest from your loan, and you are paying less each month. Car refinance is a win-win-win situation. If the time is right and you meet the conditions, it is never too late to apply.

What is Car Loan?

Find the Car Loan That is Right for You

A car loan continues to be the most popular way to finance vehicles. With a car loan, buyers normally make a down payment and then monthly payments thereafter. After people complete the payments on a car loan, they own their vehicles free–and–clear, unlike leases.

You have to make several decisions when considering your options on car loans. The first is how much you can afford. The monthly payments should fit comfortably within your budget. Be sure to account for any increase or decrease in car insurance costs associated with your new car. You also have to figure out how much of a down payment you’d like to put down. The amount of your monthly payment on car loans can be decreased with a higher down payment. Remember there are traditional car loans as well as unsecured car loans.

Also figuring into car loan payments is the interest charged on the sum you borrow. The interest on car loans will vary depending on your credit and whether any specials are offered by the manufacturer. You can use a CarsDirect car loan calculator to determine how changing a factor can affect your payments.

It is beneficial to review your credit report before taking out a new car loan. This will give you the opportunity to remove any incorrect information, which could unfairly lower your credit score and ultimately make it difficult to secure a new car loan. You can order a copy of your credit report, and sign up for credit management products through our partner, Experian. You can check out your credit report for free at AnnualCreditReport.com. The data on the site comes from all three national credit reporting agencies. Taking precautionary measures, such as checking your credit report, will make it more likely that you'll get a new car loan.

Bad Credit Car Loans
• If you have bad credit like more than 30% of Americans than we recommend you follow a few simple steps outlined on our bad credit car loan section before applying.

• When applying for bad credit car loans it is important to avoid unscrupulous car title loans. Many people lose their cars because of unfair terms.

Online Car Loans
People are turning more and more to the Internet to get an online car loan because of the several advantages it provides. You can get multiple offers from multiple companies with a minimal amount of paperwork. This allows you to find a loan that best fits your needs. Best of all, you can get an online car loan from the comfort of your home.

CarsDirect Financing Services
When you buy a vehicle through CarsDirect, you not only get a great price and superior customer service, but the opportunity for excellent terms on a car loan. A Vehicle Specialist will help you compare offers on a car loan from leading financial institutions and manufacturers. The service is quick, free of charge, and no obligation is required. In many cases, we can arrange financing in a matter of minutes. Start the process of financing through CarsDirect by going to our new car prices webpage.

What is an Unsecured Loan

An unsecured loan is a loan obtained without collateral. A person obtaining an unsecured loan agrees to pay back the loan within a set term and signs documents attesting to such. This type of loan can also be called a signature loan.

The simplest unsecured loan is a personal loan from a friend or family member, with an I.O.U. as signature of agreement to pay back the loan. This type of unsecured loan should be well considered whether one is the lender or borrower. Large amounts that remain unpaid can be detrimental to relationships with family or friends. Either the lender or borrower may be dissatisfied with the rate at which the loan is being paid, and there is little recourse but small claims court if the loan remains unpaid.

Another common type of unsecured loan is a purchase made on a credit card. Each time a person makes a credit card purchase, he or she signs a form which authorizes the payment and stands as an agreement to pay the money borrowed. When the person has obtained the credit card, the terms and size of the loan are predetermined.

Use of the card represents agreement to any terms the credit card company may set. The money is not loaned on the basis of collateral, such as home or property ownership. The credit card company merely has the borrower’s agreement to pay any funds borrowed. If the loan is not paid in appropriate time, additional fees may be assessed, the account may be sent to collections, and legal proceedings can be taken against the borrower.

Should the borrower be unable to pay back the loan because of a significant reduction in financial well being, claiming bankruptcy may stop collection. The credit card company cannot, in most cases, demand that the borrower sell any assets he or she owns to pay the loan once bankruptcy has been claimed. However, claiming bankruptcy can seriously damage credit ratings and make banks less willing to offer a person an unsecured loan in the future.

Banks also can offer an unsecured loan to a borrower. Usually, both banks and credit card companies assess the creditworthiness of the borrower before handing over cash without collateral. Those who have lower credit scores tend to have less luck obtaining an unsecured loan, and if they can get one, they may be assessed high interest rates, since the lender is taking more of a risk.

Usually, an unsecured loan is for a small amount, perhaps for a one time medical fee or a vacation. When one’s credit is good, shopping around for the best interest rates for an unsecured loan is advisable. Frequently, the best rates for an unsecured loan are offered through credit unions. If one has an existing account with the credit union, obtaining an unsecured loan should not be problematic.

What is Mobile Loan?

Are you hearing for the first time? No it is a simple once a user balance is finished he takes a loan from the company that he or she is using a sim.

What are Student Loans

Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually carry a lower interest rate than other loans and are usually issued by the government. Often they are supplemented by student grants which do not have to be repaid.

Home Equity

The current market value of a home minus the outstanding mortgage balance. Home equity is essentially the amount of ownership that has been built up by the holder of the mortgage through payments and appreciation. Typically, residential property is bought through a mortgage, which is then paid off over a number of years, often 15 or 30. After the mortgage has been fully repaid, the property then belongs to the mortgagor, namely the buyer. In the interim, however, the buyer simply builds up equity in the home. This is what a home equity loan borrows against. Although that equity cannot be sold, banks will lend money against it. Home equity loans offer significant tax savings due to the fact that the interest paid on a home equity loan is tax-deductible. Home equity loans are often used to consolidate other debt with high interest rates (like credit card debt), to finance large expenses (such as college or a wedding), or to purchase other costly items. There are two main types of home equity loans. The first type is the traditional home equity loan, also known as the second mortgage, which lends out a lump sum of money that must be repaid over a fixed period. The second type is the home equity line of credit, which provides the borrower with a checkbook or a credit card that is used to borrow funds against the home equity. Funds borrowed from a traditional home equity loan start accruing interest immediately after the lump sum is disbursed; funds borrowed from a home equity line of credit do not begin accruing interest until a purchase is made against the equity.

What Is Lender Loss Payee?

A loss payee is the third-party beneficiary to any insurance policies that an owner may have on a property, be it auto, home, boat or any other real property. A lender loss payee is a legal name given to the mortgage company or finance company that has a lien against the property until the owner has paid the loan in full. This lender becomes the beneficiary of insurance payouts up to the amount of the loan owed on the property.

Features

1. Lenders still own the car, home, boat and other property until the owner pays the loan used to purchase the property. Until the loan is paid, the lender has what is called a lien against the property. This means that the property cannot be disposed of without permission first from the lender. Usually the loan must be paid off completely or some settlement or agreement reached before the lender releases the lien on the property.

Significance

2. Because of its interest in the property, the lender will require the owners to carry insurance on the property, to ensure that the lender is compensated in case of a full or partial loss. This way, the loan on the property gets paid back no matter what happens. Although the owner pays in the monthly premiums, the lender is the loss payee or third-party beneficiary of the policy.

Function

3. As the lender loss payee, the lender will receive will receive any payouts on the policy in the event of damage covered by the insurance. The amount owed on the loan is deducted from the payments and any leftover funds are sent to the owner. The loan is reported as paid in full and the appropriate documents are sent to the owner.

Considerations

4. In some cases, the insurance payout does not cover the entire loan. In those cases, the owners are still responsible for paying the balance left after insurance funds are deducted from the loan amount. Any new car, home or property purchase must be negotiated or consolidated with the balance owed on the first loan. The owner is then paying for both the new property and the old.

Exceptions

5. Some owners are successful in negotiating a debt cancellation with the lender loss payee. However, this practice isn't common, and requires several things like a relationship with the lender (other than monthly payments), good credit and a plausible reason for the loan forgiveness. Although many try for loan forgiveness, few actually succeed in receiving it.

What is lenders mortgage insurance?

enders Mortgage Insurance (LMI) is insurance taken out by the lender in the event the borrower cannot meet the repayments on their loan and defaults under the loan contract. In the event that the sale of the property (security) does not cover the outstanding debt owed to the lender then the LMI will pay the lender for their loss.

Mortgage insurance premiums are usually paid by the lender if the amount borrowed is 80% (or less) of the property value. If the amount borrowed is above the 80% loan to value (LVR) the premium is paid by the borrower.

It is important to note that this type of insurance does not cover the borrower in any way. It is advised that all borrowers consider taking out income protection insurance and or life insurance to cover themselves and their families in the event of accident, trauma or death.

What is Lender ?

A lender is any institution or individual who loans a borrower money. There are a number of types of lending organizations, including educational lenders, commercial lenders, hard money lenders, lenders of last resort, and mutual organizations. The most traditional type of lender is a commercial lender. Often a commercial lender is a banking institution, though it may also be a private financial group. This type of lender makes an offer to the borrower of certain terms, including interest rate and length of loan, with the goal of maximizing their profit in relation to the borrower's risk of defaulting on the loan.

Often a loan is brokered, meaning that the borrower is evaluated by a third-party who then proposes the loan request to a number of different lenders. These lenders are chosen based on their likelihood of accepting the particular borrower, and may negotiate small changes in the terms to attract the borrower if they find her desirable.

A hard money lender specializes in short-term loans which are backed primarily with real estate as collateral. A hard money lender in general offers worse rates than a traditional banking organization, in exchange for more flexible terms and a broader range of deals they are willing to back. In some states within the US, hard money lenders are forced to operate differently than they do in the country as a whole, because of conflicts between their standard practices and those states' usury laws.

A mutual organization is a financial cooperative operating to lend money to its members. The constituents of a mutual organization put money into a collective, where it may then be disbursed to members in need of loans, at amiable rates and with good terms. By eliminating the need to turn a profit, mutual organizations are able to give higher interest rates on deposits and lower rates on loans than traditional banking organizations. Types of mutual organizations include community credit unions and friendly societies.

A lender of last resort is a special type of lender which focuses on protecting a country's national economy from collapse. A lender of last resort will lend to banking institutions on the edge of collapse, in order to protect their depositors and to stop total panic from pushing the economy quickly downhill.

The term lender of last resort has also come to refer to private institutions which give loans to people with a very low credit score or an otherwise extremely high risk of default. This type of lender offers loans at exorbitant interest rates as a way of covering losses from the high default rate they experience with their borrowers. A lender of last resort may also refer clients to a loan shark, offering loans at even higher interest rates for virtually any purpose.

What is a lender's pre qualification letter?

he simplest process is pre-qualification. All you, the potential buyer, need to do is obtain a letter from a lending institution stating that, based on the financial information you have provided regarding your monthly income and expenditure, the lender would extend a loan to you up to a particular limit to enable you to purchase a home. It is a simple, informal, and non-binding agreement that demonstrates to the seller that you are a serious buyer.
Pre-approval is a more involved process. It delves deeper into your finances, but it's work that would need to be done anyway during the lender's loan approval process. Moreover, it has the added benefit of improving your standing with the home seller during the back-and-forth negotiations that usually take place in order to reach a mutually agreeable purchase price. A pre-approval letter will also bolster your own confidence if you are unsure whether you would be able to obtain a home loan. It will spell out the maximum loan the lender is willing to make, the loan programs you are qualified for - for example, VA, FHA, first-time homebuyer, energy-efficient homebuyer and others - and the current interest rates available. Before issuing a pre-approval letter, the lender will collect information about your credit rating, your assets and liabilities, and your employment. There may be a fee for a pre-approval letter.

Lien

A legal claim against an asset which is used to secure a loan and which must be paid when the property is sold. Liens can be structured in many different ways. In some cases, the creditor will have legal claim against an asset, but not actually hold it in possession, while in other cases the creditor will actually hold on to the asset until the debt is paid off. The former is a more common arrangement when the asset is productive, since the creditor would prefer that the asset be used to produce a stream of income to pay off debt rather than just held in possession and not used. A claim can hold against an asset until all the obligations to the creditor are cleared (a general lien), or just until the obligations against that particular assets are cleared (a particular lien).

What is Collateral?

When discussing loans with a banker, the term collateral, and what you can offer for collateral is discussed. But what exactly is collateral?

Collateral is what will pledge to the bank in the event that your should have to default on your bank loan. This asset is what will guarantee the repayment of your loan. If you default, the bank has the full power and authority to seize your collateral property to attempt to make up the loss from the loan default.

What are Secured Loans?

Secured loans are those loans that are protected by an asset or collateral of some sort. The item purchased, such as a home or a car, can be used as collateral, and a lien can be placed on such purchases. The finance company or bank will hold the deed or title until the loan has been paid in full, including interest and all applicable fees. Other items such as stocks, bonds, or personal property can be put up to secure a loan as well.

Secured loans are usually the best way to obtain large amounts of money quickly. A lender is not likely to loan a large amount without more than your word that the money will be repaid. Putting your home or other property on the line is a fairly safe guarantee that you will do everything in your power to repay the loan.

Secured loans are not just for new purchases either. Secured loans can also be home equity loans or home equity lines of credit or even second mortgages. Such loans are based on the amount of home equity, or the value of your home minus the amount still owed. Your home is used as collateral and failure to make timely payments can result in losing your home.

Other types of secured loans include debt consolidation loans where a home or personal property is used as collateral. Instead of having many --usually high interest-- payments to make each month, money is loaned to pay the original lenders off, and the borrower then only has to repay the one loan. This is not only more convenient but it will also save a lot of money over time, since interest rates for secured loans are lower. A debt consolidation loan usually offers a lower monthly payment as well.

On the other hand, unsecured loans are the opposite of secured loans and include things like credit card purchases, education loans, or bank notes, which usually demand higher interest rates than secured loans, because they are not backed by collateral. Lenders take more of a risk by making such a loan, with no property to hold onto in case of default, which is why the interest rates are considerably higher. If you have been turned down for unsecured credit, you may still be able to obtain secured loans, as long as you have something of value or if the purchase you wish to make can be used as collateral.

What is loan modification?

We hear the phrase more and more often: loan modification. What exactly is loan modification?

When borrowers get in trouble, they can't make loan payments. The bank is left with a few options that are ugly for everybody. Often, the best option is loan modification.

Loan modifications allow the bank to make loan payments more affordable for borrowers. They may change interest rates, loan terms, loan balances, or other parts of the loan agreement. For a closer look, see how loan modification works.



You have many options.

1.) You CAN attempt to contact the bank yourself. If you do this you will be basically be hanging on the hope that the bank will modify the loan for you simply because you have a hardship. My experience is the banks generally don't give an individual the time of day...and they really should. If the banks would just work with their clients and treat them like they should, a lot of this foreclosure mess would be minimized. Normally, a couple things happen:
-The bank gives you the run around until you give up or foreclose.
-The bank may say they're willing to work with you, then they set you up with a 3 month (or some other short term) low interest rate and then kick your rate back to it's original rate.
-The bank simply refuses to modify your loan at all.

The bottom line is the banks see you as however much money they can squeeze out of you, the problem is, most individuals can't squeeze back.

2.) You can use a professional loan modification specialist to help you get the job done. This is where you can start giving the banks a little pressure in return. I've outlined a very simple, easy to understand loan modification process on my http://www.loanmortgagemodification.com web page (Under the "Services" section). You can check the steps we take as a company when doing a modification to make sure the companies you're looking at are worthwhile. Things to look for:
-Many companies are trying to do modifications under the principles of real estate alone. Essentially, they're just hoping your financial hardship and the threat of your possible foreclosure will be enough to convince the bank to modify the loan. This doesn't give them much leverage in the renegotiation of your terms.
-Our company (and any company worthwhile) has a law firm that specializes in loan and mortgage modification. With a team of lawyers we can actually do an audit on the bank for your loan. We request ALL information throughout the entire history of your loan and the bank is legally obligated to give us everything within 20 days. There are so many laws governing loans that banks always make infractions somewhere (Which is wonderful!). We use these infractions as leverage in our modification. If banks aren't willing to negotiate and lower terms, we now have the option to take them to court or in some instances, where there are particularly severe infractions, we can rescind the loan. This means we can actually force the banks to give up your loan, they have to pay you back ALL of your interest paid to date and you simply have to find a new bank to take on your loan. Use your interest as a down payment on your new loan if you like!

This loan audit gives extra leverage to negotiate excellent terms for your modification. I can't stress enough to find a specialist that has a team of lawyers dedicated specifically to this task. Our company averages 5.5% fixed rates (for however long you desire 30 year, 15 year, etc.) and in many cases it's also possible to negotiate down the principal of the loan as well (like your loan has a possibility of being lowered to market value).

There are fees involved, and they can vary from loan to loan depending on loan size, the bank you have your loan with, if you have a 1st and a 2nd, and various other factors.

What is Loan

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount. The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

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