Tag Archives: borrow money

Do not pay more to the lender for buying heavy equipment

We always have to be cautious when we are looking for a loan from a lender. The lenders usually have some hidden charges attached on the loan which eventually has to be paid by the borrower. This means the borrower ends up paying much more for the item than he should have. It is therefore crucial that the borrower reads the terms and conditions minutely and understand what they mean and how it will impact him. If he does not understand something, he can always get back to the lender for it.

Never take important decisions in haste as there are higher chances that you may end up in a mess. For business owners who borrow money for business purpose needs to be more aware of what they need to pay back to the lender. Just because you are in dire need for the money, t certainly does not mean that the lender gets the right to fool you and extract more money out of you.

For construction business owners, they depend heavily on heavy equipment and in order to buy them they fall prey to lenders who are in hunt of people who will borrow money from them without reading all the clauses in detail. Heavy equipment is a much needed requirement of the construction industry but you got to be wiser when you approach a lender to borrower money to buy those machines. If the lender charges you exorbitantly and in an inappropriate manner then you may end up losing your machine and the money that you have already paid to the lender.

So the most important thing is to verify the credentials of the lender before you approach them for money. Check their reviews on internet by which you should be able to hunch what kind of lender are they. If you see anything dicey, you better not step into it. At times you do not get much information about a particular lender from internet. This is when you got to be smart enough to judge the lender after a couple of meetings with their representative.

They trick you because you allow them to do so:-

One of the most important things that you need to know is that the lenders can trick you only if you allow them to do so. However, not all lenders follow such malpractice. There are many banks and financial institutions that do business legitimately and do not think of conning the customers. This is where you got to take a call and you can do that only after you have done fair degree of research on your part. Talk to people who have borrowed money from banks at lesser interest rate and without much cost. You can also approach the bank where you keep your money. They will not take the risk of tricking you.

 Maintain a good credit score:-

You are forced to knock the door of untrustworthy lenders only if you do not have a good credit rating. Remember, good lenders do not offer loans to people with poor scores and these guys eventually fall in the trap of non-traditional financial institution for money. Hence, you need to ensure that you do not mess up your credit rating

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Construction loans are better options to borrow money for building homes

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.

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