Tag: loan

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BALLOON PAYMENT CAN COST YOU MORE THAN YOU BARGAINED FOR

balloon payments, balloon payment, loan, car payment, mortgage, personal loan, debt, ira smith trustee

A balloon payment is one example of financial lingo that can be very confusing. Often we get involved in situations that we don’t really understand. We’re going to be delving into financial terms that not only cause confusion, but can cost you more than you bargained for. Balloon payments are a perfect case in point.

What is a balloon payment?

A balloon payment is a lump sum payment that’s attached to a loan which could be in the form of a mortgage, car payment or personal loan. It has a much higher value than your regular repayment charges and is typically applied at the end of the loan period.

What is the advantage of a balloon payment?

A balloon payment allows you to defer a predetermined amount or percentage of the total amount of your loan to a lump sum at the end of your finance period. This allows you to make much lower repayments than you would if the entire amount owing was spread out during your finance term.

What is the disadvantage of a balloon payment?

The disadvantage of a balloon payment is that at the end of the term you have to come up with what can be a HUGE lump sum payment to pay off the remaining balance of the loan in full. Unless you’ve been very diligent about budgeting and squirreling away the money for being able to make that special payment, chances are you’ll be left in financial hot water.

Is a balloon payment right for me?

If you are VERY sure of what your financial situation will be by the end of the loan term and you know with certainty that you’ll be able to make your balloon payment, then it may be right for you. However, for the majority of consumers, this type of financing may pose too big a risk. At the end of the loan term if you don’t have the money for the larger repayment amount and if refinancing isn’t an option you could lose your car or house (or whatever you’ve financed).

Are you heading into financial trouble due to an upcoming balloon payment?

Are you in financial hot water as result of an upcoming large loan repayment? Are you struggling with debt? Contact the Ira Smith Team. We’ve got the solutions to your debt problems. Book a free consultation today and Starting Over, Starting Now you can rid yourself from an unmanageable debt load. Watch for future blogs when we’ll be discussing other confusing terms that can impact you financially.

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Brandon Blog Post

WANT TO IMPROVE YOUR CREDIT SCORING? THEN CHOOSE YOUR FACEBOOK FRIENDS WISELY

credit score, credit scoring, Facebook, Facebook credit score patent, Facebook friends, loan, social media, credit ratings, social network, credit score, loan applications, financial danger zone, trustee, debt, social media, starting over starting nowWhat does credit scoring have to do with your Facebook Friends?

To improve your credit scoring, you are going to have to choose your Facebook Friends more wisely. Many people believe that when it comes to social media, it’s a numbers game and whoever has the most, wins. As a result they will “friend” anyone who asks. They don’t care who they are or why they want to be Facebook friends; the only thing that matters is that their number of friends keeps going up. That may now be a very dangerous game to play. Those Facebook friends that you’ve been amassing may be a liability if you apply for a loan.

It’s well known that Facebook mines data from its users for the purposes of pushing targeted advertising. However, Facebook now has a patent for authorizing and authenticating a user based on their social network on Facebook. Although this patent can be used for several benign functions like helping with search queries, it also states very clearly that it could be used to approve a loan based on a user’s social connections. In other words, the new Facebook algorithm can be used by lenders in determining your credit scoring when applying for a loan or mortgage.

The Facebook credit rating patent

“When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes,” the patent reads. “If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.” So your Facebook Friends credit scoring, affects yours too!

Lenders are already using social media when considering your loan application

In case you find this shocking and futuristic, social media strategist and University of Sydney academic Laurel Papworth says that lenders in 36 countries are now using Facebook data as part of their tools for approving or rejecting loan applications. This puts a lot of power in the hands of your Facebook friends, especially when you consider that according to CNN there are 83 million fake profiles.

So do you really know your entire list of Facebook friends well and better yet, their financial situation and credit scoring? It’s time to take a serious look at your Facebook friends and start trimming the fat. Who you don’t actually know, and who you do know with poor credit scoring, can hurt you.

If you have been rejected for a loan – take action now!

If you have been rejected for a loan application because of a poor credit scoring, chances are that you are in a financial danger zone. The best thing you can do is contact a professional trustee as soon as possible. The Ira Smith team is here to help you conquer debt and live a financially healthy life Starting Over, Starting Now.

 

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Brandon Blog Post

ALTERNATIVE LENDING INDUSTRY GROWS DUE TO A VACUUM OF FUNDING SOURCES

smith inc., alternative lending industry, consumer proposals, consumer proposal, bankruptcy alternatives, receivership in bankruptcy, bankruptcy, receivership, small businessUnfortunately there is a growing alternative lending industry that preys upon small businesses in need. Small businesses that need loans may be refused by traditional lenders who consider them too risky. Although they do provide loans, the alternative lending industry uses loan brokers which can double the cost of an already expensive loan.

According to Bloomberg Businessweek, a business borrowing $50,000 over six months in the alternative lending industry could repay $65,500, with more than half the effective interest going to the broker. The commission of 17% far outstrips the 1% or 2% brokers earn on loans backed by the Small Business Administration.

Small businesses are getting loans through alternative lenders, but many they can’t afford them. Marc Glazer, CEO of Business Financial Services, an alternative lender based in Coral Springs, Florida estimates that the alternative lending industry provided roughly $3 billion to small businesses last year. The industry has just a few players in Canada so far, but it is expanding rapidly in countries such as the United States, China and Britain.

Demand from the alternative lending industry is increasing as the number of borrowers trying to bypass the banks increases. In addition there are an increasing number of investors who see these loans as an alternative investment. Google Inc. invested in two online lending platforms – $125 million USD in Lending Club and another $17 million USD in On Deck Capital.

In Canada, Zillidy and FinanceIt have seen extraordinary growth in the Canadian alternative lending industry. FinanceIt co-founder and CEO Michael Garrity says the company has grown by about 25% month-over-month since it started in January, 2011, with more than 2,500 merchants signed on to date. At Zillidy, Mr. Steven Uster says loan volumes have grown by about 600% each month since the business was launched in November, with loans averaging about $12,000 each. In many cases, Mr. Uster says the borrowers are people with money, but they lack liquidity. “What we found is that wealth doesn’t always equate to cash, you may be wealthy, but you may not have liquidity”.

Small businesses are looking for alternatives beyond the traditional banks. Are small businesses in need of a loan easy prey for high priced loans? The alternative lending industry isn’t the long-term answer. If your business is experiencing liquidity issues, talk to a trustee.

Ira Smith Trustee & Receiver Inc. is a full service insolvency and financial restructuring practice serving companies and individuals throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. We can provide Restructuring & Turnarounds, Review & Monitoring, Receivership & Bankruptcy, Corporate Bankruptcy, and advice to creditors considering launching a Bankruptcy Application. Contact us today.

Call a Trustee Now!