Recovering From a Bad Debt Situation

There are times individuals will find themselves neck deep in debt. The result of this is losing his credibility and will be considered to be bad risk by any  licensed money lender and probably be blacklisted by them. However, individuals can still redeem themselves from this so here are ways by which an individual can restore his BORROWING power with various financial institutions.


Understanding the Policies of Lending Companies


Lending institutions will look several items when assessing your loan application. These include your credit score or credit standing, income and history of employment and most important of your entire debt ratio. Find your problem areas in these three things and once found you need to correct them immediately. If you have been tagged as a bad credit risk because of over borrowing, the only way to turn this around is by paying and zeroing out your entire or at least a majority of your existing debts.  This may pose as a big financial problem but you must find the resources to cover these debts. If you can zero out all or majority of your debt, then your credit score will again start to rise and your Total Debt Servicing Ratio will go in your favor. In all probability banks and other lending companies will start to see you as a good credit risk.


Getting the Bank’s Confidence on your Side


Another good way to get the bank’s confidence to be in your favor is to find other means of financial sources. This may be in the form of another job or starting a small business that will augment your main source of income. This will make them realize that you are now earning more than what you earn before and therefore incurring more than enough money to cover your current expenses. To test your credit standing, apply for a very small loan from an approachable lending company. If you’re still considered a bad credit risk, then even a small loan won’t be granted to you but if approved, then you know you that you are again in the good graces of the lending community.

Ways to Pay for Consolidated Credit Liabilities

The initial step in consolidating your payables is to sum up the totality of your debts. The next step is to establish how much money you make each month and see whether the income is more than enough to pay the amortization of the debts. You then list down in one sheet of paper all of your credit card balances and other personal loan and on a separate sheet, all the sources of your income. Once you’re done, you can now analyze your current financial situation by simply looking at these two sheets of paper. You can now make a decision on whether there is a need for you to manage your debt better by consolidating all your existing payables into one single debt. If you find there is a need for consolidation, here are some debt relief options that you can use.


Transfer Credit Card Option


For those with small or medium amount of debt, one solution is to transfer the high interest credit card balance into a 0% interest card. Most credit card companies offer this to their old but reliable credit card clienteles. However there could be a transfer fee involved and the repayment terms are usually not more than 18 months. Your loan can be interest free if you can get this option allowing you a more manageable debt situation.


Consolidation Loan


You can apply for these in banks or from a money lender. However, this loan is unsecured so the interest may be in the range of 7 to 20% depending on your credit rating, amount of loan and repayment terms. There may also be an origination fee that may be charge for this kind of a loan.




Home Equity Loan


You can usually get this from banks or from your credit union by using your home or other properties as collateral. The interest rates for this loan is lower than those charged by credit card companies or from a personal loan provider. However Equity loans are quite risky considering that if you default from the loan a foreclosure on your home is imminent.

Debt Consolidation; Alternative Method in Paying off your Credit Liabilities

One good way to pay off all your debt is to consolidate all your payables into a single debt. This is called debt consolidation wherein paying your CREDIT liabilities will be more manageable. This is done through the reduction of the interest paid on the total debt. Once consolidated, the borrower will only have to remit single payment per month for all the credit liabilities. The general principle for debt consolidation is to get a new loan from any legitimate MONEY LENDER to cover all of your existing debts thereby leaving you with a single loan to manage. By doing this, you actually reduce the interest cost of your liabilities. This is because the amount of interest for a single loan is a lot smaller than the combined rates of your previous debts.


How to Consolidate your Debt


You can consolidate your debt by shopping around for banks and other financial institutions that offers low interest loans. The setback here is if your consolidated debt is big, you might need to secure your loan with any of your hard assets. Another way is to ask for assistance from debt relief companies. Here, credit counselors will enroll you in debt management programs suited to your financial problems. The counselors will then work with your creditors to find out ways on how to at least lower the interest rates of your debts. They are quite effective on this matter. Statistics shows that they can reduce the interest on the debt by as much as 6 to 9%. Once an agreement has been reached between your creditors and your debt management company, you will remit to the latter single payment each month for the consolidated debt. In turn, your payment will be distributed by the debt management people to the various creditors that you owe money to. Of course you would also have to pay a certain fee (which is quite reasonable) to the management company for their services. The use of Debt management companies is highly recommended because of their 70% success rate in assisting borrowers to manage their financial debts.

Increasing your Borrowing Power

When BORROWING a sizable amount of money from any financial institution, there are few things that you should be aware of to at least even up the odds when you apply with these lending establishments. First, you have to know the factors that banks and other Money Lending institutions use to decide on how much to lend a loan applicant. Second is to find ways and means to increase your borrowing power and last is to look for people who can help increase your chances of getting your payday loan approved.


Deciding on how much to lend you


MONEY LENDERS have various ways of assessing how much cash to lend you and the first thing they look at is how much and how long you can afford to pay the loan. Next is your existing credit liabilities, consistency of your income and most important your CREDIT rating. In order for you to maximize or at least increase the amount you need to borrow, you have to lessen or minimize anything that might be considered to be red flag on your credit standing. Finally, make sure that your finances are in the best possible situation.


Raising your Borrowing Power


There are several ways to increase your borrowing power and these are to pay off debt; close all unnecessary credit liabilities and accounts; improve your credit rating; organize your account; if possible ask for a salary increase if you are a wage earner; spend less; and the last is to shop around for the best loan package that you can get.


Use the help Other People to Increase Your Chances of Getting a Loan


Ask for help from people you know to help boost your chances of landing a loan. There are a variety of ways by which you can do this. First, try to get a guarantor or a co signatory for the loan. However, this will lengthen the loan processes because aside from checking you out, they’ll have to check the credit standing of the guarantor too. Second is to ask somebody for a joint mortgage. Finding somebody to agree on a joint mortgage will up your borrowing power because both of your income will now be taken into consideration.

Understanding Short Term Loans for Small Businesses

Small growing businesses will sooner or later need to secure additional funds to cover the growth and this is because of the increasing expansion expenses. However, it is not just a matter of immediately BORROWING money but to seriously plan what the loan is to be used for. This will help the borrower and the MONEY LENDER agree on the most ideal way to finance the loan. For small businesses, a short term loan may well suffice. Short term loans are ideal lending options for businesses that experience erratic income ups and downs, or to cover increasing expenses due to sudden expansion. One feature of short term loan is that it’s very easy to manage considering that repayment term are usually less than a year.


Short Term Loans are very Manageable


Short term loan for small and medium scale businesses are normally tied to the businesses immediate sales. They are easily done as long the business has a consistent and positive income flow. These types of loans are normally unsecured with any type of asset thereby making them a very high risk investment. Because of this the loan becomes quite costly, specifically in terms of interest rates, finance charges, fees and Annual Percentage Rate or APR. Other than this, short term  loan in Singapore are tailored fitted for businesses that will need extra or more capital for their short term inventory purchases and expansion. Short term loan are also a big help in controlling and managing erratic movements of business incomes.


Shorter Repayment Options


It must be understood that short term loans have more frequent repayment schemes than long term financing.  The usual repayment terms for the loan are often taken from the company’s daily sales. In other short term loan agreement, repayment is required to be finished within 30 to 90 days. Unlike long term loan, the amortization amounts to be paid on short term loan are usually not fixed. Today, there are actually a variety of short terms financing model that businesses can opt for and they are Business Line of Credit; Merchant Cash Advances; and Accounts Receivable Financing.