Devising Newer Ways of Repayment
How good would it have been had there been no obligation to repay the loan or mortgage? This is what most people think when required to make the monthly repayments. But try as much as they can, they are never able to change the situation.
The borrower has to cut his monthly expenses to provide for the repayment. The amount to be repaid includes the principal amount of the loan and the interest calculated based on the rate of interest prevailing in the market. This is the traditional method of repayment.
The loan amount is broken into a number of small parts for an easy repayment. The number of parts corresponds with the term of repayment. Thus, if the loan or mortgage is to be repaid in a period of five years, the number of equal parts of the loan will be 60. The repayments are to be made on a monthly or quarterly basis.
An improvement in the method above was made to reduce the burden of a borrower. The borrower is required to pay regular monthly installments as in the earlier method. After a certain number of installments the borrower can pay the remaining balance of the loan with a single balloon payment.
An alternative of the traditional method of repayment is an interest only repayment. In this type of repayment, the borrower is required to pay only the interest. At the end of the term of repayment or any particular time period desired by the borrower, the balance on the loan is repaid in full.
The monthly repayment in the interest only method is far lesser than in the former method. This is because the monthly repayment in case of the former includes both principal and interest. It is on this count that people prefer to repay through the interest only method. However, this method of repayment increases the cost of the loan.
A Repayment vehicle is created to repay the loan or mortgage at the end of the term of repayment. The borrower is required to pay a monthly figure into the repayment vehicle.
Pensions, endowment policies, and individual savings account are the most important repayment vehicles. Pensions are widely used for repayment of the loan or mortgage amount. An added advantage in case of the pension policy is that the employer pays half of the amount of pensions. Thus effectively speaking, the borrower spends only half the amount in the repayment. Being tax free, these repayment vehicles offer a cheap means of repayment.
Another method of repayment which is not very popular but can be used for short term loans is the payment of principal and interest in one installment. This is helpful for people who need funds during contingencies. They can pay off the loan when the situation improves. An advantage of this type of loan is that the interest cost is lesser.
If you find that the methods discussed above are rigid as to the amount of monthly installments and the mode of repayment, then the equal principal payments will be helpful. The interest in this method is calculated in declining balance method. Thus, it means that the repayments change every month according to the reduced balance.
Early or premature repayment of the loan or mortgage (if permitted by the lender) is another repayment method. Before signing any documents for loans and mortgages, one must see properly if the lender does not prohibit early repayment with a penalty clause. Refinancing a loan or remortgaging a mortgage can help customers get rebate for early repayment. These transfer the loan or mortgage to another lender. So the borrowers can benefit from a lower rate of interest and a rebate for early repayment.
Whatever be the method chosen, the ultimate end of it would be the repayment of the loan or mortgage in full. All forms of repayment have their respective pros and cons. A perfect match between the pros and cons of the repayment methods and the individual financial condition must be established in order to derive the best method of repayment. There is not always an easy return from a particular method of repayment. A wrong repayment method can be precarious to ones financial health.
Andrew baker has done his masters in finance from CPIT. He is engaged in providing free, professional, and independent advice to the residents of the UK.He works for the personal loan web site http://www.ukfinanceworld.co.uk for any type of uk secured and unsecured loan please visit http://www.ukfinanceworld.co.uk
Everything You Need to Know About a Secured Loan
If you're not familiar with the term, a secured loan is a loan which requires a security deposit of some kind (also known as collateral) to protect the lender against nonpayment. The secured loan is the preferred type of loan for lenders who deal with people with bad credit, but is also used when purchasing certain types of property (such as an automobile or real estate.) Interest rates tend to be lower with a secured loan than with an unsecured loan (which doesn't require collateral, but charges higher interest rates to cover the additional risk.)
Benefits of an Unsecured Loan
Listed below are some of the benefits of an unsecured loan. An unsecured loan is a loan which does not require you to have any collateral to secure the loan against.
Getting That Car Loan: Simple Interest Is The Best
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How To Apply For a Business Loan
Worried about how to apply for a business loan? Although it may seem like a daunting task at first, it can be made less so by careful preparation. When applying for a business loan, you must prepare a written loan proposal. Make your best presentation in the initial business loan proposal and application; you may not get a second opportunity.
Quickest Payday Loans - Things To Look For in a Cash Advance Company For The Fastest Loan Processing
To find the quickest payday loans, you need to look for fast loan processing. Time delays occur in the type of processes cash advance companies use, such as faxing paperwork. Companies that use technology can approve your application within minutes and wire your cash advance in hours to your checking account.
If You?re Looking For Low Cost Car Finance, Loan Companies Offer Some Great Deals
These days having a reliable and safe vehicle to drive is more important than ever. With public transport packed to the hilt and often unreliable, many people have learned to rely on their vehicles to get to college or work, pick up the kids, do the shopping and even to perform their jobs. That's why things can get really tough when you find yourself with an unsafe or unreliable car.
What is an Auto Loan?
An Auto loan is basically another name for a car loan. An auto loan is an agreement between a lender and a borrower in which the lender gives the borrower money and the borrower promised to pay back the amount of the loan and the interest. Auto loans are only offered for the purpose of purchasing a vehicle.
The Best Way to a Farm Loan Success
The most important and difficult part in farm mortgage shopping is to compare the farm loans of different lenders. To understand better you have to know that the farm mortgage contains more than interest rates like quoted rate, points and closing costs. Now you have to understand each part, so the points equals the percents of the farm loan amount. These percents are used to make a higher rate of the farm loan. You will notice that you are able to choose a large mass of points and rates for only one loan product. So, the best solution when comparing different lenders is to compare the associate points. The final amount of the farm loan consists almost everything, title, farm loan related fees, escrow fees.
Bad Credit Business Loans ? to Exchange Bad Credit for Monetary Benefaction
You want to raise a business on your own or you want to expand it further. You have a plan and the vigour to make your mark in this field. The company that produces refrigerators to the one that produces anti wrinkle cream; every company no matter how small it is ? requires money, hard core moolah to take it to great heights. You dream of the same every night. But isn't there a nightmare that invariably spoils your dream every time you plan your business. It is bad credit. So, how to end this chain of unpleasant circumstances? Bad credit business loans have furthered the cause of preventing financial mishaps for people who want to make it on their own.
Understanding Secured Loans
A secured loan is any loan that is secured on your home or property. Secured loans are more easily accessible to those with a poor credit record. This means that persons who are self-employed, or who have recently changed jobs, or who have adverse credit (ccjs, arrears, defaults, etc.) can take out a secured loan.
No Hotel Loan for You!
Meeting the requirements to get a decent hotel loan from your local lender can be difficult but not impossible. Let's face it, what lender wants to put money up for a roach infested dump in downtown Detroit? You'd have to get a separate loan just for the insurance.
Finding the Loan UK that Meets Your Needs
For those in the market for a loan UK , it can sometimes seem like nothing is going your way and all of the offers that you've received come with some sort of catch.
What is Bad Credit UK?
Bad credit UK is a term that many people don't fully understand. After all, credit itself can sometimes be difficult to understand? adding the description of "bad" to it can make it that much more confusing.
Fast Cash Advance Payday Loans - Convenient to Use Online
Online cash advance companies offer a convenient and speedy application process. Within 24 hours you can have your cash advance loan deposited into your checking account allowing you to pay those unexpected bills.
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Living in a rented apartment since long. Ever thought of the disadvantages of staying as a tenant. Besides losing your freedom to the whims and fancy of the landlord, your hard earned money is going down the drains. Of course, to nourish the landlord's finances; such that he is planning to buy a new home.
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A fast cash loan should be an option used as a last resort to avoid a financial emergency. With its interest rates, a cash loan should not be used to purchase the latest gadget or fashion item.
Is a Microloan Right for You?
If you've been tossing around an idea for a small business, but wondering where you'll find the money you need to get started, perhaps you should consider a microloan. Microloans are ideal for getting a new business off the ground. A microloan can also provide an infusion of cash to help an existing small business grow.
What is a Homeowner Loan?
A Homeowner Loan is a way of using the equity tied up in your property to raise money. Equity is the difference between the value of your home and your outstanding mortgage. Many lenders are willing to convert this equity into cash in the form a secured homeowner loan, which means that the loan is guaranteed by your property.
Finding A Thin Credit Or No Credit Motorcycle Loan
It is no secret that thin or no credit can hurt just like bad credit when shopping for motorcycle loans. The main reason for this is that lenders all have a variety of strategies on how to approach motorcycle loans in their loan portfolios. Some lenders see motorcycles loans as a risky but feasible business investment, while other lenders label motorcycles loans as a high risk money losing investment. Overall, the general perception of most lenders is that a motorcycle is a "toy" and therefore motorcycle loans are much more risky than other types of loans. This "toy" labeled perception from lenders is a critical component which makes shopping for a motorcycle loan much more difficult for motorcycle buyers with thin or no credit.
Bad is the Opposite of Good... Is It? Not with Bad Debt Personal Loans
'Bad' means 'bad' no matter where you go! It is cumbersome and heavy, a threat and negative. So, you are taking this burden of bad debt every time you make a loan application for personal loans. It can't be translated into something good and certainly not the 'most wanted thing' especially when you apply for a loan. Let us rethink this 'can't'. Can we translate bad debt into something good. Yes, it is possible. It is very much feasible in face of current developments in the loan industry. Bad debt personal loans are so easily available in UK that it is like bad debt is not a concern.
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