MonthAugust 2019

Can I ask for a payday loan to go on vacation?

Request a loan to go on vacation

Request a loan to go on vacation

The payday loans that are requested to go on vacation are consumer loans. These types of credits can be requested from both the bank and private equity companies. As for example Private Credit. Through this type of financing we can not only pay for the stay, but the whims that we want to give ourselves at our destination. From comparing a beautiful memory to sharing unforgettable excursions with our children.

But before applying for these types of loans it is important that we consider certain factors. For example:

  • The amount of money we will need. Will we have enough with some money to supplement our savings or will we need a higher figure? It is not the same to pay for the escape of a person than of a family of four.
  • The speed of response. Do we need the money immediately or do we still have some time to get it? If the answer is speed, it is best to go to a private equity company. In Private Credit you can enjoy the money you need in less than 72 hours. If you go to your bank for a lifetime it is likely that due to paperwork the delivery times will be extended several weeks.
  • Have enough money to be able to reimburse it. Remember that applying for loans implies accepting that we must pay some commissions for the money. We have to be sure that we have enough capital to comfortably pay the monthly payments. It is not too much to keep in mind the return period. If it is little money we can qualify for fast 60-day return credits. If it is a considerable amount (for example, about € 6,000-7,000), we will have to look for solutions that offer us broader repayment terms.

Types of loans to go on vacation

Types of loans to go on vacation

Once we have solved all these doubts we will know what type of loan we should select. We should probably opt for one of these two products.

  • Mini fast loans. If we need little capital, fast mini loans may be the solution we are looking for. We can get up to approximately € 1,000. These companies usually operate through the internet and offer capital in very short periods of time. In just 15 minutes you can already have the money. The normal thing is to have between 30 and 60 days for its return. Perhaps the most negative part is interest, which is usually 1.1% daily. However, there are companies that offer a first interest-free loan.
  • Consumer loans If you need more money, you should use consumer loans with a higher amount. You can request them both in private equity companies and in your bank. Remember that the waiting time to get the money will always be faster through private equity companies. In addition the requirements of these are much less demanding. For example if you are in Asnef with Private Credit you can get a loan to go on vacation. However, your bank will deny it.

Changes in the mortgage market and its importance – Quick Loan

The market for quick loans, what now?

The market for mortgage loans has come under pressure after the government, in May this year, introduced a 48-hour report period. Many Danes otherwise considered the fast payment as one of the benefits of quick loans.

The market for mortgage loans has otherwise been developing rapidly over the past few years.

The market for mortgage loans has otherwise been developing rapidly over the past few years.

Since 2010, the number of quick loans has exploded. In 2010, 20,384 loans were issued. In 2015, the number of loans had increased to 172,485.

However, there are many who default on their quick loans. According to the Consumer Ombudsman, as many as 12.1% of all mortgage loans were defaulted in 2015. Those who had the most difficulty in meeting the payment period were in the 25-29 age group, with 13% defaulting on their mortgage loans.

The report time of 48 hours is introduced as many consumers are in financial difficulties. According to a survey conducted by the Competition and Consumer Agency, more than 40% of consumers who took out a quick loan in 2014 subsequently regretted.

The same survey also shows that almost 40% of consumers responded that the loan was more expensive than expected. More than half of the respondents did not consider other alternatives until they took the quick loan.

The reporting period deals with short-term consumer loans ie. consumer loans with a maximum maturity of three months. However, this does not apply to credit agreements concluded with a bank.

In May 2015, the Competition and Consumer Agency published a report on the market for mortgage loans, in which they had a recommendation for a period of 48 hours. The reporting period should make consumers think better before finally taking out a quick loan. The proposed bill means that a compulsory 48-hour break can be introduced before the loan can be finally approved.

Fewer have to take out a quick loan

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But what do these legislative changes mean for the mortgage market and these loan providers? The purpose of this bill is to hope that fewer consumers choose to take out quick loans.

In the infographic below we can see that the period from 2010 – 2015 the total loan amount has increased by DKK 490 million. At the same time, the number of loans issued has increased by 746%. In addition, the average loan amount has also increased by DKK 1,255. We can therefore see that the Danes borrow more and more often. The hope of this 48-hour report period, which will be introduced on January 1, 2017, is that the Danes will consider other alternatives before taking out a quick loan.

An alternative to Gowls loans could be consumer loans.

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We may risk that these loans disappear completely. Consumers may want to think better before taking out a Kvik loan, so it is no longer 40% of consumers who regret having taken out a Kvik loan. Consumers may want to consider other alternatives so that one can think carefully about whether one can actually afford to take out a quick loan. But at present, no one knows what is going to happen. We can only guess what the impact the bill will have on the mortgage loan market.

Nordea’s consumer economist Ann Lehmann Erichsen has stated to Jinkolske ” If you are one of those who take out quick loans in the evening and night hours, then it makes good sense with a” think-about-clause “, because then it could very well be that this loan will not be completed the next morning, once your common sense is restored “.

 

 

Is a commercial loan the most suitable for your company?

The beginnings are always hard, and if you own a small business, you know that better than anyone. Getting funds for your business seems another added complication. But it is convenient to do a thorough investigation and analysis to determine if you need a loan and if that loan is the most suitable for you.

According to a survey conducted by the Electronic Transaction Association (ETA), small businesses ask for an average of three loans over five years. 54% of small business owners interviewed said they used the loan to buy work equipment, while 51% used it to buy inventory. But the truth is that there may be many other reasons why you might need a commercial loan and similarly, there are different types of loans that can be adapted to your needs.

You can get loans in various entities: government, banks, credit unions and something that is increasingly popular for its efficiency: online lenders.

There are different types of commercial loans, but in this article we will consider only the ones we believe are most relevant for a small business:

Types of loans

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Loan delivery

A delivery loan consists of a contract signed by the lender and the borrower, where the borrower receives an amount of money and pays each month until the established deadline. Interest is calculated from the date the money is received until the day the loan ends. If the loan is paid before the deadline, the interest is reduced.

The duration of this type of loan can vary from one to seven years, depending on the amount required and the time established between the lender and the borrower.

Credit line loan

This type of loan can be processed in banks. It is perfect for emergencies and when cash flow is needed. A credit line loan can be similar to a credit card: it is money that you have available at the time you need it. It has a low interest rate, interest is paid every month, and the principal payment is made at your convenience. But each bank has its own requirements, so it is better to check which one suits you best.

Short term loan

It is similar to the delivery loan. The amount and the payment deadline are agreed between the lender and the borrower. The difference is that this loan is paid in full by the deadline: no monthly payment is required. It can be very useful when you are waiting for money from a customer but first you have to buy materials. Once your client pays you, you can pay the loan, plus the interest rate included.

Commercial loans online

This type of commercial loan is increasingly popular. Although they basically work like delivery loans, there are several key differences. The application process is usually shorter and simpler than in a traditional bank, with less time and paperwork. A great advantage is that the funds may be available in a very short time. However, make sure that you are satisfied with all the terms and with the interest rates when you sign the loan contract, since the interests may be higher than those offered by a bank. Ferlies Financial specializes in small business loans. To help you have a clear picture of the terms of a loan and interest, they put at your disposal a very easy to use commercial loan calculator. You can see here how their commercial loans work and what are the best options for you.

 

With this information you may already have some type of loan in mind, or perhaps you are still trying to decide. Whatever your option, be sure to consider the following points before signing a contract. You could end up getting a loan that you don’t really need, or that can harm you instead of growing your business:

Things you should take into account

Things you should take into account

The reason for the loan

Identifying the reason why you need a commercial loan is key. Knowing it, in addition, will help you realize how much money you need and under what conditions. Like anything else, getting a loan is something you should plan carefully, taking into account the financial situation of your business and the planned growth. In the early stages of the business, a loan can be very useful, but it is not the best time to ask because your company is still in a delicate situation and a loan could make things worse.

Time and money

These two factors go hand in hand. After defining the reason for your commercial loan, you should also consider the time. In time we refer to the following: when do you need the loan? It is urgent? Knowing when exactly you need the money can help you decide what type of business loan you need and what type of lender. Remember that everyone has different processes and requires different types of documentation: some may take longer than you have planned. Online lenders are a popular option because they are fast and loans are accessible.

Eligibility of your business

All lenders have different requirements for a commercial loan. The most common is your personal credit history and that of your business. It is important that you know the difference between them. Your lender needs this information to make sure that in the past you have paid all your debts without any problem. They will also want to know how long your business has been active: many times, when the business is very new, it is very difficult to get a loan. If your company has been running for at least two years, getting a loan is easier. A third requirement that lenders are going to pay attention to is the amount of business income, since they need to know if your business can pay the debt.

Interest rate

As we have already seen, all loans include interest, which can be paid during or at the end of the loan deadline. You need to know exactly how much you are going to pay in interest and if that fits your business. Make the total sum of the price of your loan with interest. For example, if you get a loan of $ 15,000 and by the end of the loan you have to pay $ 17,300, this means that the cost of the loan is $ 2,300. Depending on the size and profits of your business, you can decide if that figure suits you.

Lender History

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Just as lenders can be demanding when establishing requirements for a loan, you should also be careful and make sure you choose the right lender. Getting a commercial loan is a very sensitive matter and should be treated with caution. Gather information about the lenders you are considering, for example, if they support the type of company you have, or if they meet your needs. You can also talk to recent clients or review their reviews and ratings. All that will help you determine if the lender is the most suitable for your business.

Now that you have this information, you can take stock of the advantages and disadvantages of a commercial loan and come to a conclusion that benefits your business.

To get inspired, read here the advantages that a commercial loan has for your business.

In Ferlies Financial we are here to help you. If you are ready to apply for a commercial loan, ask for a fee to find out the cost of your loan. Or just get in touch with us. We want to hear from you!

How to choose a commercial loan: compare interest rates

If you are looking for and comparing different commercial loans, interest rates are one of the most important factors to consider. It’s hard to know what interest rate is favorable if you don’t have other references to compare.

The average interest rate on commercial loans is no longer what it was ten years ago, when banks were less strict and approved most applications. Nowadays traditional lenders have more stringent requirements, and companies often seek financing from other sources.

It is vital to know the interest rates you can expect when applying for a commercial loan

Here we inform you of the average rates in commercial loans, organized according to type of loan and type of lender. At Ferdies Financial, our goal is to help you make the best decision once you understand how interest rates work on a commercial loan and what rate best suits your needs.

Commercial loan interest rates according to the type of loan

money loan

The first way to break down interest rates on commercial loans is to organize them according to the type of loan.

These are the equivalent annual rates (APR) (also called APR or Annual Percentage Rate ) depending on the types of commercial financing available:

  • Traditional bank loans: 4% to 13% APR
  • SBA loans: 7.5% to 10%
  • Medium term loans: 7% to 30% APR
  • Equipment financing: 8% to 30% APR
  • Credit lines: 7% to 36% APR.
  • Factoring: 13% to 60% APR
  • Short-term loans: 8.5% to 80% APR
  • Cash advances from the merchant: 40% to 150% APR

You will wonder why there is such a difference in the range of interest rates. This is the reason:

Lenders with the lowest rates often require a solid credit score, guarantees, and that your business has been running for several years. While SBA loans (government loans) have the most favorable interest rates, these loans are also the most difficult to obtain. The application process can take several weeks, and applicants must submit abundant documentation to prove they are solvent.

Bank loans have a rigorous qualification process, similar to SBA loans, but the advantage is that they offer longer financing terms compared to commercial credit lines, online loans or cash advances.

The higher range of interest rates offers some benefits, such as much faster financing and access to cards, advantages that traditional loans do not normally offer. In addition, the requirements for applying for short and medium term loans are less strict: even companies with bad credit can receive financing.

Commercial loan interest rates according to the type of lender

money loan

The interest rates on commercial loans also vary according to the type of lender. Below we show you the average interest rates according to different types of banks and lenders:

  • Large national banks: 2.55% -10.00%
  • Small national and regional banks: 2.48% -13.00%
  • Online and alternative lenders : 13.00% -71.00%

When you compare the rates of the main national banks with those of the online lenders, you will see a big difference. Higher interest rates are associated with a shorter loan repayment period. In addition, online commercial loans are much easier to obtain. The requirements (such as how long the company has been running, annual income and credit score) are much less strict.

In short, before making a final decision, it is important that you understand the interest rates of each lender or each type of loan, and that you assess whether the interest rates offered to you are fair. You can determine if your interest rate is fair when it allows you to generate a positive return on your investment.

How is the interest rate of a commercial loan determined?

money loan

The average rates we have provided are illustrative only, since the final rate you receive will be determined by your lender, who will consider different factors. Your credit score is not the only factor you will consider, as many lenders analyze your complete business profile.

These are the factors that lenders consider when evaluating your commercial loan application:

  • Your personal credit score. Learn here how the credit score and interest rate are related. And if you need to increase your personal credit score quickly, find ways to achieve it here.
  • Your commercial credit score. Learn here how to build your business credit quickly.
  • The value of any guarantee you can provide
  • The outstanding balance on other loans you have, or any debt you are currently paying. Here are some strategies that can help you pay off your debt quickly.
  • The total loan amount you have requested
  • The purpose you have for the loan
  • Your financial statements
  • The duration of the loan
  • The cash flows of your business

As you can see, lenders examine a variety of factors and requirements when determining your interest rate. You can see here a complete list of all the requirements to obtain a commercial loan.

When analyzing all these factors simultaneously, it is possible that, for example, you have a solid credit score, but still do not qualify for a traditional loan because your business has been running for less than 2 years. This is where online and alternative loans can be a viable option.

And always remember: if you are not happy with the interest rate they offer, there are always ways to reduce it.

Do you pay high interest on your commercial loan? Learn here how to reduce them

 

Use this tool to calculate your payments

money coins

Interest rates can be scary. But when you buy a commercial loan, interest rates are only part of the whole picture that you should consider. The amount of money you are borrowing, the time it will take to return it and any other associated fees, such as origination and processing, or the penalty for early payment also come into play.

By combining all this data, you will get a monthly payment amount. That is the key figure that will help you decide if you can afford the loan. But how to calculate that monthly payment? Do it in the easiest way possible, using a commercial loan calculator.

When you know how much your monthly payment will be, make sure it does not exceed 80% of your net income. It is always advisable to leave a space for unexpected expenses or fluctuations in your income.

It is also essential that the return you expect from your investment exceeds the total cost of your loan, including the interest rate and other fees. In other words, before making a final decision, you must calculate the profits you will get thanks to the loan and compare that figure with the total cost of the loan

If all the numbers make sense, all you have to do is apply for a commercial loan. Consider Ferdies Financial as your best option: we offer commercial loans of up to $ 400,000 to grow your business, with interest rates ranging between 1% and 2.5% per month and terms ranging from 24 to 60 months. To calculate our interest rates, we mainly take into account your personal credit and the overall cash flows of your company.

We offer more flexibility than traditional bank lenders, since you don’t need to present a guarantee. We accept applications with bad credit, and we also offer financing options for business owners only with ITIN.

All you have to do to take the first step is to submit your application online. You will be able to know immediately if you qualify for financing. In less than 24 hours, one of our business loan specialists will contact you to guide you through the loan process.

Types of Non-Bank Loans

Many small businesses find financing very difficult. The average approval percentage is only 30%. This is where alternative loans appear. As a direct response to this great need, alternative online lenders such as Lending Club, OnDeck, Funding Circle have emerged . What they do is use large data and algorithms to reduce the long process of a loan from 2-3 months to 3-4 days.

Although it seems simple, borrowers are left with questions:

  1. How does the online loan process work? What is an algorithm? What is that “big data”?
  2. Are all alternative loans the same?
  3. Does an alternative loan make sense to my business?

In the following article we will answer the three most common questions about alternative loans.

Alternative loans: questions and answers

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Question 1: What are alternative loans online?

Instead of asking for a large amount of financial information and a lot of documents, alternative lenders use technology. They obtain financial information from large data sources. These sources are commercial credit agencies, QuickBooks, and social networks (Yelp, Facebook). The potential borrower only has to complete a one page application form, and provide the account statements for the last 3 months. With this information, online lenders will be able to estimate the cash flow of a business. And before securing a loan, they are based on the volume and frequency of the account statements.

Question 2: What types of alternative loans are there and which one is best for my business?

There are many alternative capital products on the market: Ferdies Financial, for example, offers 8 products. Not all loan products are the same: they will depend on the type of company and the use of capital.

Option 1: Short term loan

The short-term loan is usually designed for small business owners who have an immediate demand for cash, and therefore need fast financing. The terms of these loans vary between 3 to 18 months, with minimum interest rates of 18% and maximum of 50% or more.

Advantages: fast cash deposit, with a relatively simple application process. Disadvantages: high interest rates and daily automatic payments.

Short-term lenders tend to be more flexible with borrowers who do not have optimal credit. For many emerging businesses or owners with FICO scores below 640, these loans may work. However, these loans have a long-term prohibitive cost.

Option 2: Intermediate term loans

Intermediate loans are intended for established companies, with at least 2 years in operation and with positive cash flow. These loans are used for medium to long-term investments in the business (for example, purchase of equipment, or expansion of the premises). The terms of these loans vary between 6 months to 5 years. Payments are made bimonthly and interest rates are between 8 and 25%.

Alternative lenders process these loans faster than traditional banks. They lend up to $ 500,000, and there are no penalties for repaying the credit early. Intermediate loans are an excellent alternative for established companies that want to expand. Normally the credit quality standards for these loans are similar to those of a bank loan. So if a potential borrower has time (2-3 months), it is advisable to check first with a bank.

Option 3: Credit Line

Credit lines are similar to a credit card. It is a credit available to business owners. It is used to pay daily or monthly capital requirements at work. The big difference with a credit card is in the structure of the money back. Once the cash is withdrawn from the credit account, the principal and interest payments are automatically returned, daily and for a predetermined period of time. Twice a month you must pay interest of 5%, and APRs of 30% or more.

While APRs are high, these open lines of credit are very accessible to business owners. Even if your credit history is not optimal. What counts is the frequency and size of transactions in a company’s bank account. Another benefit is the high credit balance available to business owners ($ 100,000). This is different compared to traditional lines of credit and credit cards.

Option 4: Market cash advances

Market cash advances (“MCAs”) are the most flexible option. But it is also the most expensive financing alternative in the market. MCAs are not loans. They are cash advances that are returned with what is received on credit cards in a company. The MCA provider keeps a percentage of sales charged with debit or credit cards, until the amount agreed at the beginning is paid in full.

There are restrictions on the use of earnings without requiring a personal guarantee. A key advantage is the simplicity of the application process and the return of the money, which is paid on the fly. This is ideal for seasonal business.

MCAs can be a good source of capital for short-term investments and with the possibility of large profits. But a very expensive and risky option. APRs exceed 50%. In addition, there is a possibility that business owners will be left with negative income.

Other asset-based alternatives

There are many alternative ways of accessing capital, usually using collateral some type of goods. These types of loans vary in their structure and payment schedule, but are a reasonable alternative for a business. Especially for those with limited cash flow or a credit history that is not optimal.

Question 3: Is an alternative source of capital a good idea for my business?

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Disadvantages of a traditional bank loan

Major banks are increasingly reluctant to make loans under $ 150,000. This is due to the high costs of associated services and the low collateral value of small businesses. On the other hand, small business owners find the process of a traditional loan difficult. They need high credit standards, and there is a lot of paperwork. In addition you have to wait a long time to receive the money, up to 2 and 3 months. A lender from a traditional bank wants potential candidates with a capital need of at least $ 150,000. The ideal candidate must also have a personal credit score of at least 680.

This is where alternative lenders appear.

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This is where alternative lenders arise, with a valuable proposal that can mitigate these inconveniences. Alternative lenders use a formula-based approach to pre-qualify loans in just a few minutes. During the approval process, paperwork is reduced. In addition, cash flow is considered more than the personal credit score of the business owner.

But the most worrying thing about these alternative loan options is the high percentage of interest per year, which ranges from 8% to 60% or more. With these prices, these types of loans can be prohibitive for small businesses. Especially if we compare them with GFA loans, which are priced between 6 and 8%. Therefore, alternative financing does not work for everyone.

However, alternative financing does work for many of these companies. In fact, unbanked lenders lent $ 9 billion in 2015 (source: Liberum). The reality is that there are many drawbacks in the traditional process of a loan, and that is why this is an attractive option.

In Ferdies Financial, we find many businesses that have capital limitations. Many times their cash is already invested in the business, which prevents them from investing in the growth and maintenance of the company. And what is worse, most of these small businesses use their credit cards or informal lenders with high interest rates. Much higher than alternative capital options. We also see many companies with a solid cash flow, but whose owners have low credit scores. This is due to several reasons, such as having sold a property during a mortgage crisis. Or we find solid companies that need capital immediately to buy a large inventory order to meet their high demand. The examples are innumerable and the nature of the needs varies. In summary, the extra amount spent with an alternative loan compensates for what is being lost by not obtaining it.

So before you reject alternative ways of financing for your small business because they seem very expensive, consider everything your small business can get in return, without the traditional obstacles and inconveniences.

Do you want to know more about alternative loans? Read on 6 Data on alternative loans.