7 Personal Loan Tips and Tricks

Whether you are looking for some cash to leverage your investment, to pay off some heavy debts or to launch your business, here are seven smart tips for requesting a personal loan!

 

#1. Don’t ask for more money than you need!

A few years ago, when requesting a loan, it was common for the bank to offer you an amount greater than what you asked for. In this way, if the initial reason for requesting it was to change your house’s kitchen, you finally ended up also reforming the bathroom or buying new furniture. Nowadays, this trend has changed a lot, both on the part of banks and customers. The former no longer grant loans so lightly and the latter request only the money they need to cover a specific purpose. Are you looking for a personal business loan in Melbourne? Call Kingsley Finance! They can help you obtain your personal business loan at affordable rates!

 

When you ask for a loan, you will have to return the money they have lent you, along with interest, commissions, etc., making the total amount owed considerably higher than what they loaned you. Therefore, when requesting a loan, it is best to adjust the amount you want to ask as much as possible and avoid paying more interest.

 

#2. Return it as soon as possible

When the entity with which you contract a loan asks you how long you want to return it, try to make it as short as possible. You must take into account your income and make sure that you can periodically assume the fee. After that, do calculations and try to adjust the repayment term as much as you can since the longer it takes to return it, the less security the bank will have and the higher the interest will be. This is one of the factors that makes the price of loans more expensive. On the contrary, if you pay instalments of a higher amount, you will repay the loan earlier in a shorter period, and it will be cheaper.

 

#3. Don’t be late for payments!

When you take out a loan, you must pay the instalments within the term you have set with the entity, without delaying a single day. If you comply with the payment later than what is contemplated in the contract, the entity may penalize you by applying default interest, which is usually much higher than common interest. If this situation repeats itself or you stop paying a monthly payment, your debt will not disappear but will increase, and your assets or bank fees could be seized. Therefore, before requesting a loan, make sure that you can pay for it and, above all, comply with the payments on time.

 

#4. Justify the expense

When you ask for a loan, most entities will ask you what you intend to invest that money in, since it is information that provides them with certain security. It is not the same that you want a loan to pay off previous debts than to buy a car. For this reason, most entities offer specific loans to finance a particular purpose; for example, the purchase of a vehicle, home renovations, studies, etc. These products have very specific conditions and advantages. However, for the bank to grant you these benefits, you must prove that the loan’s purpose is the one you have indicated with the corresponding documents.

 

#5. Do not resort to “fast money” and without guarantees

When you apply for a loan, entities usually take a few days to confirm that you can lend you money. To do this, they will ask you to provide guarantees that show that you can return it. If you are an employed person, the most common thing is that they request your payroll, which must be of sufficient income, and your employment contract may require that it be indefinite. If you are self-employed, you will also have to demonstrate financial solvency through invoices, bank statements or other types of documents.

 

However, some entities offer “fast money” and without the need to provide payment guarantees. You must be careful with this type of loan, as they could charge you higher interest or commissions than other entities.

 

#6. Look at the APR

When hiring a loan, you not only have to look at the interest that you are going to be charged, but other conditions can make your loan more expensive. Thus, when you ask for a credit or a loan, many entities may require you to hire certain products such as insurance or cards or charge you certain commissions that can make the product cost much more expensive than it seemed if you only took into account the interest. Therefore, when you are going to hire a loan, look at the APR (Annual Equivalent Rate), which is the one that includes the total cost of the loan, including commissions, interest, expenses and commissions.

 

#7. Compare different personal loans

Without a doubt, the best option to get the most suitable loan for each person is to compare the different products on the market and offered by various entities. 

 

 

What Are the Types of Commercial Loans Available to Businesses?

What Is a Commercial Loan?

A commercial loan, also known as a business loan or industrial loan, is an arrangement between a financial institution and a business. Financial institutions, such as commercial banks and mortgage companies, offer this type of debt-based funding to companies across a wide array of industry sectors for a wide range of business purposes, such as:

  • For the funding of major capital expenditures
  • For inventory financing
  • To cover operational costs that the company is having trouble to afford
  • For investments in equipment

Types of Commercial Business Loans

There are several sorts of commercial business loans available to businessmen. These include accounts receivable loans, real estate loans, vehicle loans, lines of credit and construction loans. All these different types of commercial business loans can be split into two major categories: short-term loans and long-term loans. We’ll start by looking at the short-term ones first as there are fewer loans in that category.

1. Short-Term Loans:

A short-term loan is a type of credit that is obtained to support a temporary business capital. Just as with any other loan, the borrowed capital and the accrued interests have to be paid back within a certain amount of time (typically within a year).

1.1. Lines of Credit

A line of credit resembles using a business credit card. It allows you to draw money as you need but has a limit – just like a credit card has a credit limit.

1.2. Merchant Cash Advances

Merchant cash advances are also a type of loan. However, the payment for this loan is a bit different: the lender gets a percentage from every sale the borrower makes.

1.3. Accounts Receivable Loan

This type of loan comes in handy when your customers have not yet made their payments. Borrowers are typically eligible for this type of loan if they have creditworthy customers.

2. Long-Term Loans:

Funded all at once, long-term loans are perfect for providing a set amount of capital for specific needs. Unlike short-term loans, long-term loans are paid off over an extended time frame. This time frame generally exceeds one year in duration and entails making smaller monthly payments with higher interest rates. Moreover, long-term loans can be secured and unsecured. Cash, inventory, and equipment can be used to secure the loan.

2.1. Equipment and Vehicle Loans

Equipment and vehicle loans are commonly taken by companies for financing the purchase of equipment and vehicles. The equipment may include computers, printers, air conditioning systems, and other heavy equipment. The vehicles, on the other hand, can range from new to used and include cars, vans, trucks or other machinery. In the case of this type of loan, the repayment terms will vary depending on the type and age of collateral.

2.2. Real Estate Loans

Compared to a home loan, the real estate loan is a commercial real estate loan is a mortgage secured by a lien on a commercial property rather than on a residential property. The loan is interim or permanent financing taken for the purchase, refinancing, or construction of commercial buildings, such as apartments, office buildings, retail buildings, industrial buildings, medical/dental offices, and warehouses.

2.3. Construction Loan

A construction loan, also known as a “self-build loan”, is a short-term or interim loan. This type of loan is used to help pay for construction costs, such as materials and labor, until the retail, commercial, or residential development project can be refinanced. In simple terms, it covers the costs of the project until the owner or developer can obtain long-term funding.

2.4. Land and Subdivision Development

The Land and Subdivision Development loan is a type of loan that allows the borrower to do two things: 1) purchase a lot to build something on it or, 2) buy a piece of land to be subdivided. While subdivision loans usually allow up to 18 months to subdivide, develop and begin selling off the lots, lot loans usually allow up to five years for building.

2.5. Commercial Fishing Loan

As you can deduce from the name, this type of commercial loan is mostly concerned with vessels and all types of fishing and processing gear. Commercial fishing loans are structured to fit the seasonal nature of the business and, essentially, cover or finance for the purchase of Individual Fishing Quotas.

2.6. Letters of Credit

Letters of credit, also known documentary and standby letters of credit, are arrangements most often used by:
• import/export businesses
• contractors
• travel agencies
A letter of credit is meant to serve as an assurance of payment and are usually for less than six months (although it can be renewed annually). Once your application for a letter of credit is approved, your lender will send an official letter of credit to the vendor. The letter will guarantee a specific dollar amount.