Category Archives: Loans

Construction loans are better options to borrow money for building homes

Podcast: Play in new window | Download | Embed

Subscribe: Apple Podcasts | RSS

Building a new home poses a big problem to those who do not have sufficient money and does not know whom to approach in order to get loan. They may have a piece of land with them but just because they lack sufficient funds they have to wait to build their home. But that is no longer the case now as people can now opt for loans to construct their homes and pay it off once the construction is completed. There is a vast difference between a construction loan and a home loan. In a home loan, the borrower borrows money from the lender and pledges to pay it in equal monthly installments. Ideally, the time horizon is 30 years to repay the loan but some can even take the loan with a 15 years, 20 years or 25 years’ time horizon. However, as far as the construction loans are concerned you are required to pay the entire loan amount as soon as the construction for the home is completed which means you need to pay it off on an average of 12 months period.

Construction loans are more like credit cards where you borrow money for the purpose of constructing your home and once it is done you need to pay the entire amount. You also have a draw request that is submitted by the builder. You are only required to pay the interest on the “draw request” amount and once the work is done, you need to pay the entire amount at one go. Once the house is ready and it is time to repay the lender, you can mortgage the home to the same lender or to some other lender and payoff the initial loan. Please remember, the construction loan is very different from the mortgage loan that we all know about and hence the initial loan amount was called construction loan but once the house is built and you take another loan to pay-off the initial one, you go for a mortgage loan.

The interest rate of a construction loan is also different than your auto loan or for that matter your home loan. Here you have the ability to negotiate the interest rates with the lender and they can increase or decrease the interest rates based on several factors like the equity of the project, your credit rating, your income and your financial history. So in case you manage to have a good credit rating and are earning reasonably, you have a very good chance to negotiate the interest rates with the lender.

The best part about construction loan is that it provides you with the freedom to move on to some other lender who is ready to offer you mortgage loan at a much reasonable interest rate and by not charging a bomb on the closing costs and other expenses. This means that you need not stick to the same lender who has offered you the construction loan. It is just that you need to pay them off and get along with another lender.

Buy Now on eBay [ebayfeedsforwordpress feed=”” items=”2″]

Don’t blindly trust any financial institution to take a loan on heavy equipment

Getting loans has become so simple that for any reason, financial institutions are ready to offer you loans. Be it buying a house or a car or for that matter buying furniture for your home, all you have to do is approach a financial institution and show them your good credit rating. They would be more than happy to offer you loans. If you need a higher amount, then they may also ask for your income and expense statements and other relevant documents that show the amount you earn in a month. On that basis, they evaluate and offer loan to you. This all sounds good when you have a descent income every month and a stable job with job security. However, things turn sour when it comes to individuals who want to start a business and are in search of institutions who can lend them money. Things go awry when the loan is for purchasing heavy equipment. Heavy equipment are expensive items and most banks do not want to finance it wholly. They would want the person to invest a portion of his money and the rest can be arranged by way of loan. That is also a valid point but for guys who are experience a severe financial crunch, they may find it hard to pay the initial portion.

For such individuals, there are institutions who will offer them easy financing but at an exorbitant rate. You may get tempted to take money from them and you may not read their terms and conditions and will sign on the dotted line but that will be just the beginning of your misery. You will be required to pay a very high rate of interest and probably very high service charge as well. It is prudent to first understand why they are offering you a loan when other recognized banks are not. They may have certain conditions that may not be favorable to you.

In order to stay away from such financial loan offering companies, you first recognize them. The first question you should be asking is why they are ready to give you loan when other companies have clearly defined their conditions. What happens if you are unable to pay the loan in a timely manner? Do they have the authority to take away the heavy equipment? On what terms are they offering the loan to you? These are few questions for which you need to find an answer. Check their websites and see if there is something that they are trying to hide from you. Look for complaints and grievances from other customers. You can also set up a forum where you can ask people about their views on such institutions. You will get plenty of answers on which you can make a sound decision.

Take loans to finance purchase of heavy equipment

Podcast: Play in new window | Download | Embed

Subscribe: Apple Podcasts | RSS

It was never easy to start a new business and in today’s time, it has become more difficult to give a head start to a business given the sort of competition one has to face on a daily basis. A person has to sacrifice a lot to keep his business floating. On top of it, he has to juggle well between his personal and professional life. Under all these circumstances, when one is struggling to keep his business moving, it becomes difficult to incorporate something expensive in the business. Well, business in a construction industry is all about that. You have to be ready to bring in new equipment if the business needs it. You can’t let the offer go just because you can’t afford to buy the machine. Most of the time, a person also gets business after being evaluated on the kind of machines he possesses. Therefore, he needs to have the machines that are a part of his business requirements.

For small construction companies, it may not be so simple to buy brand new equipment. They have experienced serious financial crunch during the beginning of their professional career. They may not want to invest all that they have in buying equipment and then struggle for finances to meet overhead expenses. These overhead expenses cost dearly too many companies who are not financially sound. This has also become the reason why many start-up companies are forced to shut their businesses and look for something else. Construction segment is undoubtedly the most rewarding sector; however it rewards people who have managed to stay in this sector for years and have stood firm during turbulent times.

Taking a loan to finance heavy equipment may sound like a good option but it also has its limitations. One needs to be very sure that he will be able to pay the loan in time. This will help him to keep his credit score in place and will also keep his business moving. There are many financial institutions that are ready to finance people looking for loans on heavy equipment. It would be prudent to first check the interest rates of the institution before you take the loan. Many financial institutions offer lower rate of interest but they have certain service charges that are very high. It may make no sense to you to pay that high service charge to the company just to buy low interest rate. If you look closely, you will definitely find someone who is charging the service charge defined by their governing body and the interest rates as stated in the norms. That sort of company should be the one you should be looking at. Simultaneously, also understand the terms and conditions well. For instance, the term of the loan is crucial to understand. Also, the plan should have a provision to make early or part payment whenever you have excess money without charging anything extra for that. Ideally, the heavy equipment manufacturing company will arrange financial institutions for you. But if you want to use the services of any other organization, you are free to do so.

Don’t Let Your Dreams Die Due To Scarcity Of Funds

Podcast: Play in new window | Download | Embed

Subscribe: Apple Podcasts | RSS

We all have dreams in our life to become rich, to pursue the career we always wanted to, and to live a lavish life having all its luxuries. Well these were just about the dreams we all have but in order to fulfill them we have to work real hard. At times, simply working hard is not sufficient to get what you want; you need to do a bit more than that. For instance, a person working in a particular sector now wants to start a business of his own in that sector. However, due to lack of funds, he is not able to. Though he knows that if he is given the opportunity and the money to kick start a business he intends to do, there is no looking back for him but just because he doesn’t have sufficient amount with him, he can’t take the leap forward.

There are many individuals who are capable of starting up a business of their own but just because of scarcity of funds; they stick to what they are doing rather than taking any risks in their lives. What is perhaps suitable for them is to approach a bank and check if they can give him a loan to meet his financial requirements as far as his business is concerned.

There are few things that are very important to do before you approach a bank for loan. We would be discussing them and understand their importance respectively.

How well do you know your work?:-  Before you start up a business of your own, it is important that you analyze how well you know this business. You should never see yourself in a situation where people are taking you on a royal ride and you can’t do much about it just because you don’t know much about the business. This kind of situation can be very harmful to you and therefore it is very important that you take some time to first learn your work and then think of setting up a business of your own.

Availability of businesses from clients:-  Availability of clients plays a significant role in shaping up your business. Your business entirely depends upon the sort of network you have and through that network, how many clients you can get for your business. You may have just started up your business and have no goodwill in the market. It is probably the network thing that can earn you few businesses for the mean time and then once you have established goodwill, you can cash it on by acquiring more clients.

Research on which bank offers loan at low rate of interest:-  Different financial institutions charges different rate of interest to their customers. It is prudent that you first understand the amount you want to borrow and then do some research on the banks which provide loans at lower rate of interest. You will definitely get hold of something that you never knew about.

Availing loans can secure your dreams. It’s just that you got to be a bit careful while you select the financial institution from whom you’d be borrowing the money.

Heavy Loans Can Ruin Your Dream To Set Up Your Construction Company

Podcast: Play in new window | Download | Embed

Subscribe: Apple Podcasts | RSS

It is very evident that in order to set a business in the construction sector, one requires lot of money to take care of various financial responsibilities. There are various institutions that can readily provide you with the money you need to start up your business but that is not it. You also have to keep in mind to repay every penny you have borrowed with interest failing which will have serious repercussions on your business. Therefore, it becomes instrumental to understand how much money you should borrow from any financial institution and how much you can invest from your end. There are few dos and don’ts which one needs to stringently follow if they want to make their mark in this domain. We would be talking in particular about what one should be doing and what should be left from doing as far as borrowing loans are concerned to set up a business in the construction sector.

Understanding the business:- You do not jump into something that you do not know. Construction business can earn huge profits for you but that doesn’t mean that it is everybody’s cup of tea. Just because a person dream of becoming rich enters the business makes no sense and he will ultimately end up incurring losses and might also have to wind up his business. Before you decide to set your foot in this sector, it is prudent to know a bit about this industry and how it works. What are the risks involved, how to work things out, who are your friends and who are your competitors, which area do you want to focus and start working there. All these questions need to be answered by you before you finally take up the journey.

Understand your financial position:-  In order to set up a new business, it requires huge funds. However, you can’t approach a bank to provide you with the entire amount you need to set that business. You need to invest an “X” amount of money out of your savings and can approach the bank for the remainder. Also understand that the banks charges exorbitant interest rate which implies that you should try and clear off the loan as soon as possible. Just because the bank allows you some time to pay off the sum, you shouldn’t take your sweet time to clear off the dues. So, before you even think of approaching the bank, sit with your financial advisor or people from your family who are diligent enough to give you right advices and talk to them about this. Share your financial position with them and chalk out a plan which allows you to take minimum loan from the bank.

Heavy loans are disastrous:-  Take a mighty loan which you are not sure if you can pay it off in time can have huge repercussions on your business. If you don’t get big projects, you depend on smaller ones which may not fetch big money. With that money, you won’t be able to survive after paying installments to your bank.