Posts Tagged ‘Loan’
What if you are approached by a close friend to become their loan guarantor? Would you say yes without question or would you analyse the situation objectively before making your decision. In money matters objectivity is critical, so we would advise you to opt for the latter. Read on to know more about being a loan guarantor and why you should think twice!
Is being a loan guarantor such a big deal?
When you are a loan guarantor for an individual’s loan it means that you agree to be responsible for the repayment of another individual’s debt in case of a default. It implies you are equally responsible for paying off the loan!
So, should I never be a loan guarantor?
When you provide guarantee for another individual’s debt, it definitely comes with its risks!
A key deciding factor will be to gauge the borrower’s financial capability to pay off the loan. You also need to evaluate objectively whether the borrower can honour such a commitment and not leave you to face the lone battle of paying up their dues in case of a default.
If you are confident on both these counts, then you can opt to become a guarantor but not before you completely read and agree to the terms and conditions put forth by the bank in their agreement.
Am I being approached because the applicant has a bad credit history?
While the lack of a good credit record ( past repayment track record of previous home loan, personal loans, credit card payments etc.) could be a possible reason for a bank to ask for a loan guarantor, this may not always be the case. It could be based on other reasons such as:
- The borrower has a transferable job,
Difficulties’ pertaining with property loan is easily solved by the available option of Home loan. Borrowing a home loan helps the individual to reduce the burden from his head; it is also true that borrowing should be done with proper and right source. If you are failed to track the correct source and are not aware of the fiscal and taxation consequences in getting property loan it can soak your life and peace of your mind at every single point of time. Here are some guidelines for acquiring, taxation policy and repaying your home loan.
ยท Means, Mediums and borrowing capacity of an individual?
Banks, private money lenders, financial institutions, friends and relatives and also many others are the available means, or sources for grasping the loan, in this Banks plays major role in providing a Property loan. Banks have their own criteria for calculating the capacity of an individuals borrowing. Banks judge your borrowing capacity from the chart of the total income expenditure done by you in the given period of time. It depends upon the monthly income and expenses flow from your income. Bankers assume around 40% of monthly income can be utilized for paying into the monthly installment. Like, if your monthly income is about 50000, then the maximum installment amount can reach around 20000. Further, calculation for the final loan amount is also calculated on the period of loan & rate of interest associated. For eg, rate of interest at 9.5%, along with tenure of 20 years then loan of approx 22 lakhs can be availed. Here, your Liabilities are also taken into account by the banks. Henceforth it is recommended that overall expenses should not exceed 55 – 60% of your total monthly earnings to acquire a residential or commercial property loan.
Auto Loans – Used Car Auto Loans
Finding a Cosigner is a difficult task
Buying a car is everyone’s dream, isn’t it? But that dream comes true for people with good credit rating very easily whereas people with bad credit or no credit history have to strive hard to avail that much required loan. A no cosigner car loan is often easily available for people with good credit rating as approval of the loan does not depend on a cosigner who has to back the applicant for the loan. People with good credit history are already at an advantageous position as their history negates any chances of default whereas people with bad credit history or no credit rating are often required to find a cosigner so that in case of a default the cosigner will be contacted for repayment of the extra amount of loan. However, finding a cosigner is a very difficult task as no one is comfortable in backing a person who does not have a good credit rating as that is a risky investment.
Lenders usually expect a person with bad credit to apply for a car loan only when they have the backing of a cosigner. Most of the times people approach major lenders for auto loan, but people with a bad credit history should not make that mistake as chances of stringent standards being followed by major lenders is much more thus increasing chances of their loan getting rejected. Hence, it is always advisable that people with bad credit should approach dealers or private lenders.
No Credit Check Car Loa is secured by people
Remember it is not a wise thing to keep applying for a loan without any rhyme or reason. If your loan application gets rejected, this is also recorded in your CIBIL record. So weigh the pros and cons before you apply for a loan simultaneously to different banks. Wait till you receive an offer before you apply to another bank. This will give you a chance to rectify errors or update your credit record in case there is an issue with it before you approach another lender.
When you apply for a loan, banks judge your ability to repay the loan on various counts including your age, income, job stability and primarily based on your credit report – which is a reflection of your true credit worth. Here are some reasons you need to watch out for and guard yourself against to obtain a loan without any hassles.
#1 Your residential address is on the defaulter list!
If you live under the same roof as someone who has slipped up on a loan payment or credit card dues and hence been reported to CIBIL, then the probability of your loan application to be rejected is likely to be high. The reason being your residential address will find a match with the one on the defaulters list.
#2 Poor track record of credit card or loan repayments
You have been accumulating credit card dues over the years resulting in a huge pending payment, which is well past the due date. Or it could be that you have slipped up on a few EMIs. In these instances, your name would have been reported to CIBIL. When a bank looks up your credit card or loan repayment track record – it would have a strong reason to reject your loan. Also, telephone bills and insurance premiums are likely to join this list, so do keep a strict vigil on all your bill and credit repayments.
When there is an increase in the Prime Lending Rate (PLR), the interest rate on your loan will also go up, and your repayment would be higher. However, in most cases, financial institutions would allow you to pay the fixed amount of monthly repayment (EMI) throughout the loan tenure and would make any adjustment caused by the variation in interest rate by increasing or shortening the loan tenure, as the case maybe. Also, do note that the PLR will soon be replaced by the Base Rate (BR) from July 2010 onwards.
Owning a piece of land, a house or a property is a lifetime dream for every individual. Maslow’s law of hierarchy indicates such a dream as well. Taking a home loan nowadays has become much simpler. Each year the budget regulations seem to lean towards the housing sector and construction sector in terms of generosity!
There are many home loan providers in the market to make your dream come true. However, before you opt to take a home loan, you need to consider certain factors related to the property that you are interested in buying and also understand the features offered by a home loan provider.
Choosing Your Financial Institution
When you shop for a home loan its good to research your financial institution well before opting to go with them. Remember that when you take up a housing loan, you will be dealing with the lending institution you choose on a regular basis for a long period of time.
Therefore, you should also consider factors other than just interest rates. Some of these are:
How professional is the financial institution in dealing with customers? Does it offer quality service in terms of efficiency and reliability? What are the available loan packages and which package suits you best? What are the various charges involved?
Assessing your loan repayment capacity
You should ensure that your monthly loan instalment repayment (EMI) should not be more than around 40-50% of your gross monthly household income. If you have savings or fixed deposits, they can be used to support your loan application as financial institutions may take them into account in evaluating your eligibility. Different financial institutions have different criteria in calculating the repayment capacity. In the case of a floating rate loan, you should also note that your loan tenure or (if you so choose) your monthly repayment may increase substantially when interest rates go up.
When there is an increase in the Prime Lending Rate (PLR), the interest rate on your loan will also go up, and your repayment would be higher. However, in most cases, financial institutions would allow you to pay the fixed amount of monthly repayment (EMI) throughout the loan tenure and would make any adjustment caused by the variation in interest rate by increasing or shortening the loan tenure, as the case maybe. Also, do note that the PLR will soon be replaced by the Base Rate (BR) from July 2010 onwards.
Margin of finance
It is assessed on factors such as:
One way to fix up your house is with a renovation loan. You can compare renovation loan rates as well as the terms of the loan when you go to an online site that will list all of the banks that can offer you this type of loan for your home. If you want a quick loan, you can use the equity that you have in your house in order to get the cash that you need to fix it up. Many people today are realizing that they can get a better deal when they go to an off shore bank in order to compare renovation loan costs as well as get the best cash loan for their money.
The principal is the amount that you borrow when you are looking for a renovation loan for your property. You will pay interest when you are receiving a renovation loan on your property so that you can get the money that you need. You want to get a low interest cash loan when you are seeking out a renovation loan as this is the one that will cost you the least amount of money. You can do better when you get a renovation loan right online rather than try to obtain one from an off line bank in the area.
In some cases, you can get a low interest cash loan for your property when you go to an offshore bank such as one in Singapore. Even those who do not live in Singapore can do banking in this country and obtain a good rate on a renovation loan for their home.