by admin | Nov 18, 2014 | Bond application, Debt management, Featured Articles, Short term loans
An alternative to Bond finance geared at small business owners. Small to medium business owners are finding it more and more difficult to qualify for bonds from South African banks who are desperately afraid of the high failure rate of new businesses in South Africa.
Banks are risk averse these days that if you are self employed, in a sales position without a fixed salary or any other employment where you have no guaranteed fixed amount of income, getting a bond is becoming almost impossible, even with large deposits and security, Crazy as it may seem, this is the reality of the home loan market.
Of course entrepreneurs like ourselves see opportunity where there is adversity and some have entered this market, offering self employed individuals the opportunity to purchase a home. Essentially you are offered creative finance from private equity companies who charge a fee and a slight premium on the money they loan to you. The idea is to make use of the bond alternative for 3-5 years at a slight premium, create a good payment track record and on the basis of that record, hand you back to the banks as a low risk customer.
In reality what the alternative to home mortgages are, are lease agreements where you lease the property for a period on a lease to own basis and once the loan is paid up, you take transfer of property. By doing this the finance company does not need to go through any expensive legal processes to repossess the property should you not make the required payments like a bank has to. They can simply cancel the lease and use the deposit to charge a cancellation fee.
Owning a home for a small business or self employed individual should not cost a premium. We are after all those that are creating jobs and stimulating the economy but alas, our government and banking institutions make it difficult for us. We chose this life because we get up and make things happen, so use those that make things happen, make it happen for you.
by admin | Oct 9, 2014 | Debt management, Featured Articles, Short term loans
If you are labouring under numerous different debt repayments that are high interest short term loans like clothing accounts, short term loans, vehicle finance or just owe someone you know money that you would really like to pay back as soon as possible then consolidating your debt using the equity in your home could be the right choice for you.
When you have many small accounts, each of them has a service fee/monthly fee (not interest), maybe a card fee and of course interest at a rate that is probably higher than prime plus 10 or 12%. When you add up all the fees and interest you will be shocked at what it actually costs to borrow such small amounts or how much it costs to buy on credit from stores. You may have a child on the way or inflation has just got the better of you, you may have a family member that needs help or a medical issue that is costing a lot more than anticipated.
It is at times like these where we fear that we are not going to be able to service all the short term debt that we have which may end up with us being listed with a credit bureau, that we need to consider debt consolidation using our bonds.
What you are effectively doing when consolidating your debt, is taking all of the small amounts that you owe and paying them off with the money available to you in your home loan. Your home loan is a much lower interest bearing loan than any credit facility or short term loan and can very effectively reduce your repayments by as much as half or even more. What you do need to be aware of, is that you are now paying off a short term debt over a much longer period when you consolidate your debt using your home loan.
Debt consolidation is meant to get you over the hump, avoid getting a negative credit report and allow you to breathe while you plan your way forward. Once you are over the hump you are able to make additional payments into your bond without any penalties for early settlement and effectively free up capital again in case you need it.
by admin | Oct 3, 2014 | Featured Articles, Short term loans
Low interest personal loans are almost unheard of these days although if we consider the interest rate history in the last 20 years, any personal loan would seem like low interest in 2000 – 2001 where interest rates were around 20-23% and that was bond rates. Can you imagine what the credit card and personal loan interest rates were (around 35%).
This of course is of little concern to those needing short term loans to deal with an issue right now, I just wanted to put it into perspective and illustrate that interest rates move constantly.
Low Interest personal loan
The best way to get a personal loan at a lower interest rate is to reduce the banks risk of getting repaid and how you do this is by offering some for of security for the loan. This could be in the for of a cession of a Life Insurance that has a cash value or something of value that the bank could easily convert to cash in the event of a default on your part. Kruger Rands, Gold coins or other similar investments would be an excellent way to insure that the interest rate you got on your personal loan was as low as possible.
What a lot of people neglect to do is to negotiate the rates. If you do not ask for a better interest rate the bank will not give you one, so ask for a better rate on the basis that their risk is reduced or almost nil if you secure it.
Banks and other financial institutions will not necessarily offer short term loans in that it is not their business. The banks and major financial institutions want to lend money over longer periods of time and the way they would likely approach a short term loan is to increase your overdraft for a period which reduces monthly.
Unsecured personal loan
An unsecured personal loan is best taken up with specialist short term lenders that offer loans ranging from a few hundred Rand to less than R10 000. If you wanted a R7000 loan over 6 months to settle something that is very important, then a specialist lender would offer you an unsecured personal loan for a few weeks/months but at a much higher interest rate.
These unsecured lenders all have websites where you can make your short term loan application online and get a very quick answer. Always remember to read the small print when entering into any loan agreement.