Payday loan: fixed rate or variable rate?

The conditions of consumer credit can vary from one credit to another, whether it is a bank loan or a loan between individuals. The greatest attention to the rate of the loan is required for signing a payday loan: it is he who largely determines the cost of credit. Two proposals are then available to the borrower: the fixed rate and the variable rate. an elucidation on http://www.dawncities.com/can-i-refinance-a-car-loan-with-bad-credit-get-an-easy-car-loan-for-bad-credit/

PAYDAY LOAN AT FIXED RATE: THE MOST STABLE

PERSONAL LOAN AT FIXED RATE: THE MOST STABLE

The fixed-rate is by definition invariable, it has many advantages for those who prefer stability:

  • the rate that appears on the credit contract at the time of signing remains the same throughout the duration of the payday loan;
  • the fixed rate makes it possible to repay equivalent maturities each month;
  • the fixed rate provides significant repayment stability for a long-term payday loan;
  • the overall cost of consumer credit is known upon signature;
  • the fixed rate makes it possible to block a lower rate in the event of fear of increasing interest rates later.

In return, in the event of a fall in interest rates on the markets, the borrower who has chosen a fixed rate for his consumer loan cannot benefit from this reduction.

THE VARIABLE RATE: THE MOST FLEXIBLE

THE VARIABLE RATE: THE MOST FLEXIBLE

 

The variable rate differs from the fixed-rate since it follows market fluctuations. The rate is indexed to indicators that can modulate it upwards or downwards. The flexibility that has its advantages:

  • in the event of a fall in interest rates, the borrower thus pays lower monthly payments than what was initially planned;
  • The cost of borrowing can be very attractive in the case of a short-term loan at a time when rates are falling.

Conversely, however, if rates rise, so do the monthly payments, and the cost of the loan can be very high. The borrower can then, if he wishes, make an early repayment to avoid continuing to suffer the increases.

The last possibility is offered to the borrower, it is the capped variable rate. The rate then remains variable, but within a predefined range. For example, a rate capped at one point cannot fall or increase by more than 1%.

The new zero-interest loan: the solution for first-time buyers

He had already mentioned participation up to 40% of a real estate project, as well as raising the eligibility ceilings. An extension of the deferral of monthly payments was also on the agenda, as well as the scope of the system for old dwellings located in all rural municipalities, instead of a shortlist of 6000 municipalities today. On the other hand the vagueness persisted as for the application of the PTZ + in the old one on all France. The veil is definitively lifted, yes first-time buyers will be able to use this lever to become the owner of a built dwelling, regardless of the geographic area.

What the 2016 zero rate loan will change for first-time buyers

What the 2016 zero rate loan will change for first-time buyers

Significant help to buy your first main residence

The measure of widening the PTZ + to the former throughout France is welcomed by real estate professionals. But it is above all the increase in the participation to 40% of the cost of the project which arouses the general applause of the whole chain of the profession.

Head of bank relations at Astro Finance explains it: “ the share of first-time buyers has dropped by 20 points since 2011, going from 58% of borrowers to only 38% in 2015. The zero-rate loan as ” it exists today in the old did not allow to bring back this type of borrowers: we had almost no demand for credit with a loan at zero rate in rural areas this year, because the current device is both too geographically limited, too complicated and with limited amounts in zone C ”.

State aid twice as large

Currently the amount of a PTZ + for residents of zone C cannot exceed 18% of the cost of the operation. Which cost is capped at $ 230,000 for a couple with 3 children, which allows them a maximum of $ 41,400 in interest-free financing. In zone A, participation amounts to 26%, while the ceiling is raised to $ 345,000. This leaves a couple with 3 children the possibility of borrowing $ 89,700 via a PTZ +.

But from January 1, 2016 they will be able to get more. In zone C with a 40% stake, their PTZ will reach $ 92,000, more than double. In zone A they can withdraw $ 138,000 to be reimbursed without interest. Note, however, that this calculation is based on the fact that the maximum cost ceiling will be maintained for next year.

Almost 2 times less monthly payments

Take the example of a family of 3 children, whose household income does not exceed $ 35,000 per year. In practice, they are therefore considered as a household with modest incomes. Today, however, they have the possibility of carrying out a building project in the old one for a value of $ 200,000. The State grants them a PTZ + of 18%, or $ 36,000.

Based on $ 16,000 in purchase costs, which includes the fees for the notarial study, transfer rights as well as file guarantee costs, there will therefore remain $ 180,000 to borrow. Given their financial situation, they can now obtain a 3% mortgage over 25 years.

However, their situation does not allow them to obtain a deferred reimbursement from the PTZ. Their monthly payments will therefore be 1041.6 $.

From January 1, 2016, if the basis for calculating the PTZ + is 40%, their interest-free loan will be $ 80,000. The purchase costs do not change, but they only have $ 136,000 left to borrow. The bank grants them a line of credit at 3% over 25 years, which with a postponement of the PTZ maturities of at least 5 years, gives them monthly payments of at least $ 645 for the first 5 years.

A real estate project achievable thanks to the deferral of monthly payments

A real estate project achievable thanks to the deferral of monthly payments

One of the strengths of the zero-rate loan version 2015, is the postponement of monthly payments to 5.10 or 15 years, or even 20 years depending on the case. In the example above during the first 5 years the couple’s debt ratio drops to 22%. Without the postponement of the PTZ + deadlines, it showed at 35% which would tend to cool most banks.

President and founder of Astro Finance, is delighted with this measure: “This new version of the PTZ should allow a return of first-time buyers in 2016, both in the old and in the new, and thus give dynamism to the estate market. In a context of low rates and relative price stability, the widening of the PTZ is the missing element to allow the market to restart in 2016 ”.

Will the zero-rate loan replace personal contribution?

Will the zero-rate loan replace personal contribution?

All banks consider the PTZ + as a personal contribution, which does not prevent them from asking their borrowers to pay the purchase costs from their own pocket. The latter must therefore have a capital of 8 to 10% of the price of the coveted property, in order to pay the notary’s fees, transfer tax, warranty fees and others.

In practice, banks prefer not to have to finance the entire value of the property. This is where the zero rate loan comes in, as it is considered to contribute to the value of the property. Thus it already allows households with capital only the cost value, to obtain a loan to buy their main residence.

But the longer deferral of monthly payments will help them more. Those of them who will be eligible for a 15-year deferral will further reassure the banks. Households with modest incomes will therefore particularly benefit from this measure.

In addition, a real estate project in the old at 200,000 $, implies the purchase of real estate at 175,000 $. The PTZ + is eligible under the old condition of carrying out work amount to 25% of the total cost of the operation. Thus, the necessary contribution will only concern the value of the property, i.e. a maximum of $ 17,500 in this case. The bank notes thanks to quotes signed by professionals, that it will therefore have to lend $ 157,500 for real estate which will be worth $ 200,000 at the end of the work.

Credit for driving license without Credit bureau.

A driver’s license is often more than just a license to drive. It also means holding an additional qualification in your hands. A qualification that opens up new career paths and can mean higher career opportunities. Obtaining a driver’s license is therefore a good reason even if you do not have your own financial resources to finance it. Even with a negative entry in the Credit bureau, there are opportunities for a loan.

A loan without Credit bureau is not unconditional

A loan without Credit bureau is not unconditional

The credit for the driver’s license without Credit bureau is not available from every provider and just as little without other framework conditions that provide security for the financier. For all banks in Germany, negative Credit bureau information is enough to keep the loan from being denied. However, providers from the surrounding countries, such as Switzerland, provide loan offers in which the Credit bureau entry is irrelevant. Nevertheless, these providers also want certain collateral so that it can be assumed that monthly installments will be paid on time. For this purpose, borrowers should above all have a regular and unlimited income.

If these conditions are met, the credit for a driver’s license without a Credit bureau is often no longer a problem. Alternatively, many financing providers also offer to pay the necessary money directly to the respective driving school. In this way, the funds always end up in the designated place. On the one hand, this brings advantages, but the disadvantages should also be examined. This is because the borrower takes the risk of not receiving a driver’s license or money back if the driving school suddenly reports bankruptcy, for example. The latter variant as a loan for a driver’s license without a Credit bureau therefore represents a very high risk in comparison.

Serious foreign loans without Credit bureau

Serious foreign loans without Credit bureau

There are good reasons for a loan for a driver’s license even without a Credit bureau. Because investing in a driving license can also mean more income in the future. In spite of everything, every borrower should be sure of the risks of a loan and therefore carefully consider how securely the loan can be covered and what the burden is.

Small loan despite bad Credit bureau.

With a bad Credit bureau, the dream of credit bursts very quickly. For the banks, an entry that is not so serious is sufficient to answer a loan request with a clear no. For those affected, this does not mean that they cannot get a small loan. It just doesn’t work through a bank, but through credit intermediaries. They have business relationships with other banks, so that a small loan is feasible despite poor credit.

Where do these loans come from?

Where do these loans come from?

In most cases, those affected get a small loan despite bad credit from Swiss banks or banks located in Germany, which have a good connection to the credit intermediaries. These banks do not see a negative Credit bureau entry as problematically as conventional banks. However, there is also an end here with attachments or affidavits.

An inquiry with such a financial service provider is free of charge. A commission for the credit broker only arises if the credit brokerage is successful. Corresponding financial service providers can be found on the search engines on the Internet.

Credit from private

Credit from private

A small loan despite poor Credit bureau can also be realized via the Centiloan portal. The applicant’s Credit bureau is checked, but the donors are private individuals who like to turn a blind eye. In contrast to the banks, the borrowers determine the interest rate. Those who have a bad Credit bureau usually offer a higher interest rate.

This interest rate is the profit margin for the investors and if the entries in the Credit bureau are not too negative, a loan is a lucrative business for them. If there should ever be a failure, a fund jumps in, into which every investor pays. Not only employed workers are welcome here, but also freelancers and the self-employed whose income is not always the same.

Borrowing money to invest in real estate: what solutions?

With the drop in rates and still the concern to lower taxes and prepare for retirement, more and more households will come to rental property. It is not necessary to have a significant contribution, it is also possible to carry out your project without personal capital. Banks willingly lend for investment in stone, whether it is furnished housing in a residential complex, empty apartments intended for main residence or SCPI shares. A quick tour of these solutions that are available to households, and how to finance them.

Furnished accommodation included in a service residence

Furnished accommodation included in a service residence

The investor buys a house or an apartment, fully furnished and equipped. Accommodation is included in a service residence, offering reception, breakfast, maintenance and laundry. It does not take over the rental, it signs a contract with a professional operator. The latter himself manages the catering, maintenance and reservations. He pays a monthly or quarterly rent to the investor, which can be revised upwards annually.

Tourism, business, nursing homes and senior residences

Tourism, business, nursing homes and senior residences

The service residence can be intended to accommodate residents on a short or long term. The long term particularly concerns senior residences as well as nursing homes. The shortest durations are for tourist and business residences. Specialized promoters offer new and old programs, including the sales contract and commercial exploitation.

How to borrow to invest?

How to borrow to invest?

Banks like to finance rental investment in furnished residences, especially when the developer / operator is a major player in the sector. Specialists who can find a long history of default-free rent payments generally find their way into bank branches.

Once verified the ability to repay and the sustainability of investors’ income, the lender wants to be assured that the operator will pay the rent to the investor. The rates are relatively attractive because the risk is minimized by the return on investment, and sometimes you can borrow without contribution.

The Censi-Bouvard tax exemption law and the ability to recover VAT make it possible to reduce the investors’ budget, which represents an additional argument for the lender.

Apartment or house intended for the main residence

Apartment or house intended for the main residence

The investor buys a house or an apartment, generally equipped with a kitchen and a bathroom. Furnishings, dishes and linen are the responsibility of the tenant. The targeted accommodation is mainly studios and 2-room apartments, or even 3-room apartments for young families. Houses are rented less well, generally being the target of first-time buyers.

The rental can be entrusted to a professional, or taken care of directly from individual to individual. There are unpaid rent insurances allowing to cover the defaults of tenants, as well as the possible degradations.

Where and what to buy

Where and what to buy

2 main choices are available to the investor: new and old. The first is generally more expensive than the second, but can make it easier to find tenants, thanks to the low energy consumption. In both cases, tax exemption systems exist, with the Pinel law for new real estate and the land deficit for the purchase of old with work.

It is better to target large cities, especially apartments close to shops and services. The student clientele represents significant potential, particularly in university towns. In this case the investor should prefer small areas, not necessarily close to schools but especially close to the busy city center.

The addition of a tram line does not necessarily increase prices per square meter. Some rental investment professionals advise to be concerned with yield rather than added value, the latter depending on too many factors.

Borrow to invest in the rental, not so complicated

Borrow to invest in the rental, not so complicated

Banks master the technique of rental property investment, and willingly finance it if the conditions are met. The first condition is the future debt ratio, which must not exceed 33% of borrowers’ tax revenues. But above all, the lender will comb the project. He will try to find out if the housing is not overvalued, if the neighborhood is not in distress, and if the expected rent is realistic. Households able to make a personal contribution are able to obtain an even more attractive interest rate.

Today the imbalances between demand and supply of housing suggest that the tenant is in a weak position. However the behavior of the market varies greatly from one city to another, it can be interesting to approach a professional in order to target the right apartment.

What is the Civil Society for Real Estate Investment?

What is the Civil Society for Real Estate Investment?

A SCPI is a legal structure, supervised by the Best Lender. Its purpose is to acquire a building stock, thanks to private financing. Investors receive a dividend in the form of part of the rent paid by tenants, after deduction of operating costs and reserves.

SCPI managers are more interested in professional real estate: store walls, offices and warehouses. The risk of unpaid rents is low, and above all its management is left to the responsibility of the company. The distribution of rents is done according to the principle of mutualisation, thus allowing all shareholders to absorb defaults, these being anyway relatively rare.

During this year, Pinel SCPIs should appear, investing in new real estate complexes intended for housing, and allowing each shareholder to benefit from a share of tax exemption.

Borrow to buy SCPI shares

Borrow to buy SCPI shares

Investing in one or more real estate investment companies is considered a rental investment by a bank. The latter appreciate the fact that the sector is regulated by the Best Lender, and constantly receive activity reports from managers.

Lenders therefore know the quality of the housing stock and the expected return, however the fact that there is no guaranteed capital could slow some of them.

The investor is strongly advised to approach a specialist. There are variable capital SCPIs, others with fixed capital, some have just completed their work, others have to provision to renovate. All these factors influence the yield and the price evolution of the units. Overall, the average dividend paid by the SCI has exceeded 5% for many years.

Loan for Temporary workers.

There are employees who are only needed for seasonal events. The best example is Christmas sales. The companies hire temporary help weeks in advance to cope with the rush for the Christmas business.

After that, most of these workers will be unemployed again, because companies usually do not take on temporary help. It is positive for those affected to finally have work again, but this job also has disadvantages. A temporary job has a particularly negative impact on financial matters, because there is rarely a loan for temporary workers.

Co-applicant can still be used

Co-applicant can still be used

If a loan for temporary help is refused due to the situation described above, a co-applicant can still be used. Its salary is then counted as income. But for him the risk is very big, because it is nothing more than a guarantee. If the borrower does not pay his installments, the co-applicant must step in. The situation is different if the spouse appears as a co-applicant. In this case, both partners are the borrowers anyway and must also pay for the loan together.

If the temporary job takes longer

If the temporary job takes longer

The longer a temporary job lasts, the more promising a loan request is. In addition to seasonal employment contracts, companies also hire long-term help if the order situation is good. Sometimes even two-year contracts are possible. A loan for temporary help can also be approved under these conditions. However, the Credit bureau must be positive and the loan must be paid off within this employment relationship.

Large sums of money should not be expected, but to cover a small financial shortage, a small loan for temporary help may well be possible. That varies from bank to bank. Basically, it must be mentioned here that a Lite lender loan for temporary workers is not possible in this case. The reason is simple. A Lite lender loan is rejected by the banks with a temporary employment contract.

Tax measures on the deductibility of loan interest.

After the “fiscal package” adopted this summer, which included a whole series of measures in favor of individuals, the 2008 finance law was finally adopted. It contains important provisions such as the modification of the taxation of capital gains or the deductibility of loan interest , the flagship measure of this tax package.

What are the foundations of this new tax measure?

What are the foundations of this new tax measure?

This measure is intended for all borrowers in the context of the purchase of a principal residence in the new or the old whose authentic instrument was signed as of May 6, 2007.

What tax benefit?

What tax benefit?

The amount of the tax deduction for interest paid for the first year of repayment is doubled in the first year of the loan: 40% of the loan interest will be deductible from taxable income and 20% the following four years. The date from which the first five installments are deducted is the date on which the borrowed funds are made available for the first time.
This advantage concerns all borrowers, whether or not they are taxable on income.

The amount of this deduction will result in a tax credit capped for the first year at $ 1,500 for a single person, at $ 3,000 for a married or PACS couple, and $ 200 per dependent. In subsequent years, the tax credit will be capped at $ 750 for a single person, $ 1,500 for a married or PACS couple, and $ 100 per dependent.

How long does this tax benefit last?

How long does this tax benefit last?

The duration of this system will be spread over 5 years from the date of borrowing.

What becomes of the zero rate loan?

What becomes of the zero rate loan?

The zero rate loan (PTZ) whose objective is to facilitate the first home ownership, will not be questioned. Thus, first-time buyers can accumulate the PTZ and the deductibility of interest from other mortgage loans.

How to handle a non-purpose loan and not burn yourself?

Today we will discuss the main features of a non-purpose consumer loan. We will talk about the pitfalls of various products and how to detect them in time.

 

Basics

A non-purpose consumer loan is simply a loan. Whether you are borrowing new money or merging existing loans into one (consolidation), you are mainly interested in the following parameters:

  • interest rate
  • maturity
  • options and conditions for early repayment
  • fees and resulting APRC

 

Interest rate

Interest rate

The average interest rate on consumer credit in August 2019 was 8.46% pa The abbreviation “pa” means “per annum” or annually. So if you borrow 100,000 USD with this interest rate, we can say for the sake of simplicity that your interest will be 8,460 USD for the first year. Interest paid over time is gradually reduced.

Sometimes the offer of interest rate is conditioned by negotiation of an additional product (insurance, account etc.). If you see a term like “Bonus interest rate” and similar terms somewhere, then be sharp. This is an interest rate that only applies under certain conditions. This is usually a condition where the loan will not be repaid early and no extraordinary repayment will be made.

 

Maturity

loan money

In the Czech Republic, you can borrow money from a few days to several years. The longest maturity of a non-purpose loan may be a maximum of 10 years.

 

Possibility and conditions of early repayment

loan repayment

As of 1 December 2016, this is defined by law. The maximum early repayment fee may be 1% of the current loan balance (principal). It is worth noting that some banks offer this for free, ie without charge.

 

Fees and resulting APRC

loan fee

The APRC stands for Annual Cost Percentage Rate. It is an expression of the interest rate after including all related fees. And here you have to be very careful. If the APRC and interest rates differ significantly (in the order of a few%), this means that you have additional charges hidden in the loan. It can be a negotiation fee, insurance price or other accompanying costs. The accompanying costs must be clearly quantified in the credit agreement. I have already seen APR 130.77% pa Such a client would not have a chance to repay. Always find this information in the loan agreement.

 

Will I get a loan?

money loan?

Sometimes I see people think that for some reason the bank should not grant them credit. Very often this fear is unnecessary. If you are a working person and you have room in your monthly budget to repay the loan, it is very likely that you will find a bank that will grant you the loan. Therefore, do not take the first offer without prior competitive comparison.

If you are interested in this article, I will be happy to help you to compare offers on the market and also with the process of negotiating a loan, refinancing or consolidation. We may contact in any of the ways described below.