Author: approvalnetworks

How to pay your next loan payment when you are short on funds

You have an installment loan, and your next payment is coming up, but you are short on cash to pay the payment. This can be a stressful situation. But before calling it quits and allowing the loan to default, consider these options:

Get a temporary extra income 

Lots of temporary or “do it on your own time” jobs are available with the expansion of the share economy. If you have a car, you can join Uber or Lyft and drive for several nights. If you have extra space at your place, or able to leave your place for a few days, you can rent out your place nightly through Airbnb or Flipkey. There are also small temporary jobs available on Craigslist in the “Gigs” category which you can apply for.

Borrow friend or family

It might not be the easiest request, but it is better than having bad credit. It is important that whoever will be lending you the money feels trustful that you will return the money ASAP. Perhaps offer a collateral and let the know that their money will be returned right after you make your upcoming loan payment.

Get a payday loan

If you don’t have a friend or family that will lend you money for the short period you need to pay your loan, consider a payday loan. Though payday loans have high interest rates, if you take it just for one period (not constant over a year), the fees are proportional to the payday loan and certainly less expensive than not paying your installment loan.

Refinance your loan

If you feel part of the reason you are not able to keep up with your loan payments is because the payments are too high, there is a strong possibility your current loan’s interest rate is too high. Refinancing it with a lower rate before your next payment is due will not only help save you money on the next payment, but also save you money from then on out. Make sure to clarify with your current lender if there is an early payoff penalty.

Strict budgeting 

You have daily expenses, from gas to food to anything else that arises. A way to make sure you have enough money for your upcoming loan payment is to make some sacrifices on other expenses so that you can save money to allocate for the loan. This is not an easy task, but learning to be disciplined with money and payments will allow you to increase your skills in budgeting for the future.

How real estate financing allows you to have the biggest return on your money in real estate

Making your wealth grow in real estate is not as simple as buying and flipping, even if the market your investing in is red hot. This is because there are certain strategies to go about which can help maximize the return on your investment. 

This involves creative use of real estate financing and approaching it correctly. Strategic real estate financing helps:

Boost the return of your cash

Both in appreciation and the rental yield. The less you put down on a property, the higher the return on your cash if the property value goes up and you are positive cash flow. For example, if you put only $20k down on a $200k property and the value of that property goes up $20k, your equity has increased 100%. If you rent that property, if you cash flow $2k at the end of the year, your return is a 10% annual yield. In comparison, if you invested $100k and that same property increased $20k and cash flows $5k a year, the equity increase is only 20% with a rental yield of 5%. Of course this is important that you purchase a property with an expectation that it cash flows and has a strong potential to increase in value. That is where prudent investing is involved.

Leaves extra cash for renovation

Paying a loan is predictable: there is a set monthly installment plan and the rates don’t fluctuate much, if at all. Construction, on the other, can be highly unpredictable. Expensive surprises from foundation to plumbing issues are common and involve readily available cash to take care of the problem to proceed efficiently with the project. It is better to have cash on hand for construction/renovation than to have it tied up to the real estate.  

Further investments 

The purpose of growing your real estate portfolio is to keep buying strong performing properties. Financing allows you to disperse your cash over several real estate investments and not just one. The appreciation increases by several properties than just one, as well as the diversification helps minimize the risk if one project goes south. 

Buy-and-Hold

Financing is great for having a passive approach to real estate. If you are consistent with buying properties that cash flow and in a growing area, payments for the loan become a routine and after thought. After years of collecting rent and paying the mortgage, the cash flow grows and the loan amount gets reduced. Although you might not make much in the beginning, years down the line your investment will yield higher than stocks and bonds and you still only invested the down payment in the beginning. 

Overview

Overall, financing plays an integral part of real estate investing. But you must understand that loans are still a liability, and the deals you are involved are the ones that will prove if financing helped or added headache. This is also why getting the best financing that is right for your deals is just as important as the deal itself. Reviewing various products amongst several lenders helps you decide how to best close on the financing part of the deal. 

What is the biggest reason your business needs financing?

Have you heard the old saying that you have to first spend some money to gain more money in return? Increasing your business profit requires investment. 

In running a business, the availability of finance to develop and improve is a must-have necessity. In can be tricky and often considered as too risky but in order to grow, you must also have to budget for cost of loans to allow growth. When growth exceeds the cost of the funding (interest rate), then you did the right thing.

Moreover, most business owners commonly underestimate unexpected expenses and thus, lack a finance to cover surprise costs. 

And so, this list is made for your guidelines on your way to access business loans and on why you should consider applying for one:

For business opportunities that are worth the debts

From time to time in your business journey, opportunities will knock on your door that is just too good to let go. Rethink and carefully reassess the possibilities and downfalls of the opportunity. And if the risk is worth it, then, it is time to apply for a business loan. Always weigh your cost for the loan to determine your return on investment on the given opportunity. The the investment should yield higher return than the interest rate of your loan to justify the new funding. 

For inventory

Business loans help improve the size and the quality of your inventory. The ability to sustain growth allows you to get the trust and approval of your customers. 

For expansion

Business loans can help you in gaining further rental/real estate space or conquer new geographic territories. 

For marketing and advertising

Media advertisements on television, radio or online banners on the internet can be very effective but require cost. Also, putting financing money in marketing allows to analyze best if having the loan proved worthwhile. This is because the added revenue from advertising is clearly quantifiable. 

With these in mind,  business owners are getting business loans without the worrisome that business loans are a high risk liability, but instead a vehicle of growth for years to come.

How third party banking apps allow you to get approved for a loan

Third-party service providers are financial organizations that help you to comply with your bank’s banking regulations. Some of the functions of third-party service providers are payment processing services, support on credit decisions, and retention of records.

In general, third party service providers have applications that help connect bank institutions to their consumers.

But these third party apps are becoming more and more service oriented for consumers as mobile and online banking becomes more common.

How does it work?

With the rapid increase of banking online services, lending companies seek further support from third-party service providers. Third party service providers typically have a better user friendly interface and functions that better manage your delicate and confidential information including personal identification.

New laws are changing

With ongoing technology, banking is speeding up its development to get in tune in our current time. For example in Europe, the Revised Payment Service Directive or the “PSD2” is now being implemented. This law gives stronger security requirements and enables you to manage your finances not just directly with bank, but any third party apps you choose. 

How third party service providers help you get approved for loans?

Simply put, by managing your finances through apps that provide pro-active services to help you budget, you would be able to improve your credit much easier than dealing directly with your bank. 

By improving your credit, your ability to score a loan with better terms becomes easier over time. Also, if you are looking for a loan at the very moment, third party apps use creative guidelines criteria on top of your traditional banking requirements to approve you for a loan.