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Non-performing loans: how banks got rid of them

by admin

In recent years one of the main reasons for the crisis of the Italian banking system is represented by the non-performing loans also known as "impaired loans" or npe loans (non-performing exposures).

Credits deriving from financing and mortgage

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These are credits deriving from financing, mortgage or current account opening contracts which the customer is unable to repay in whole or in part to the bank; the slowness of the Italian judicial system leads to collection times that are too long and the imprudent credit policy adopted by some credit institutions makes it in some cases improbable if not impossible to recover the credit.

This situation led to the malfunction of the credit distribution mechanism: the weight of non-performing loans ("npl") affects the liquidity of the banks and negatively affects their ability to finance investments and grant loans.

Banking institutions have had to set aside reserves to face any losses and in many cases have been forced to write down their receivables; according to the data reported by the Good Finance, the impaired loans of the Italian banks amount to 349 billion USD gross of the write-downs already recorded.

Non-performing loans

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Non-performing loans ("npl"), therefore, represent a large boulder that banks must get rid of; the main instrument used for this purpose was the so-called credit securitization governed in Italy by law no. 130/1999. Thanks to this tool, lenders can get rid of bad loans.

It is a very complex process that can be explained by clarifying these three basic points:

WHAT IT MEANS TO SECURITIZE A CREDIT

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Securitizing a credit means transferring it to someone else transforming it into an obligation written on a piece of "paper", that is a title.

The protagonists of this transaction are three: the seller (originator) which resells the credit thus obtaining the liquidity it needs, the transferee (the vehicle company, better known as SPV, "Special Purpose Vehicle") which replaces the original creditor in the right to collect the credit, and investors, that is, those who physically lend the money to the special purpose vehicle.

The latter signs in favor of investors ABS (" Asset-Backed Security ") that guarantees them that they will return the money in the medium or long term; these are actual debt securities which attribute the right to receive the repayment of the nominal capital plus interest at maturity. But where does the money needed to repay investors come from? From the only person left unchanged: the initial debtor; the latter pays the installment due and in turn, the vehicle company reimburses the investors.

The originators can be not only banks but also financial institutions and public bodies. The securitization also provides for a transfer of receivables without recourse; that is, the originator is not responsible in the event of default by the debtor.

To this end, a very important role is played by the rating agencies, ie companies that express an opinion on the assigned credits; in particular, the suitability of the securitized portfolio to produce the money necessary to repay the securities is assessed ("rating" literally means evaluation).

The rating agencies assign a score that takes into account various parameters such as the quality of the credits transferred, the nature of the debtor, the type of company assigned to recover the credits. This type of intervention has a cost but provides investors with valuable assistance in the correct assessment of credit risk.

THE BENEFITS OF SECURITIZATION

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the main advantage deriving from the securitization transaction is the immediate liquidity that is poured into the bank's coffers: the loan portfolio is sold against a cash consideration necessary to grant further loans.

The main beneficiaries are private individuals but above all small and medium-sized enterprises ( SMEs ); through the reinvestment of the liquidity obtained from the securitization, the bank increases its profitability and can go back to "banking": that is, favoring consumption and investments through credit instruments.

Securitization also allows the distribution of risk from the originator to other subjects ( investors ) who are better able to manage it; in this regard, we speak of " risk transfer ", that is, a risk-sharing tool. The transfer for consideration of credits, therefore, determines the re-use of money in more profitable activities offering benefits to the economic system as a whole.

SECURITIZATION RISKS:

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every securitization involves risks for both the originator and the investors. The former will have to bear significant costs; for example the costs of issuing bonds, those deriving from the request for external guarantees, those of an administrative nature. The investor, to whom the bank's risk has been transferred, will instead have to deal with the debtor's possible insolvency.

In this regard, we speak of " moral hazard "(ie the risk of insolvency of the counterparty); thanks to the possibility of resorting later to securitization, banks tend to invest in risky assets, discharging the risk of external losses.

In fact, it has happened that banks have granted loans to unreliable subjects by reducing their controls on creditworthiness. The economic and financial crisis of recent years is a reflection of these incorrect choices and the use of securitization has favored the creation of a shadow banking system that is not subject to any supervision.

Payday Loans With VAT Number: The Most Interesting Solutions

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When you have an activity as a freelancer it can be difficult to get access to credit, as most lenders consider the paycheck as a reference point for solvency. This is a difficult but not impossible goal, as payday loans with VAT are available.

Loans to those who have a VAT number: what are the alternatives?

Loans to those who have a VAT number: what are the alternatives?

Those who are looking for solutions related to payday loans with VAT number can consider various types of products, among which the promised loans stand out. These loans, which do not require the presentation of an expense voucher, are characterized by the obligation to sign bills.

Bills of exchange are executive securities with a forced nature, which are characterized by the possibility of a conversion into cash. Their forced nature allows the institution that issued them to intervene by retaliating against the customer's assets in the event of insolvency.

Loans changed: what is needed to request them

Loans changed: what is needed to request them

Loans changed, excellent alternatives when it comes to payday loans with VAT, can also be requested without presenting the paycheck. However, credit institutions and financial companies ask for another type of guarantee which, in the case of freelancers, takes the form of the presentation of a life insurance policy, which must have been active for at least two years.

This is undoubtedly a comfortable solution, which however has a counter linked to the rate. The interest, in fact, is higher than that of the cash loans since the promissory notes, accessible without the need for a paycheck and also in the event of credit problems with registration with the Crif, are considered products at risk.

Loan with guarantor: a solution for those who have a VAT number

Loan with guarantor: a solution for those who have a VAT number

Payday loans with VAT number can be requested by resorting to the guarantor solution. If you have a relative or friend with a fixed paycheck willing to present yourself as guarantor, a large part of the route is already done. What matters is the attention to some rules, for example to the fact that the intervention of the guarantor is of an extraordinary nature, unlike what happens with the co-obligation.

Pawn loan: how does it work?

Pawn loan: how does it work?

The last solution that we take into consideration regarding payday loans with VAT number is the credit on pledge. In this case the only guarantee is the good that the customer decides to commit and that is evaluated by an expert. On the basis of his opinion, the requested amount is then disbursed.

Once the payment of the installments has been completed, the customer has the opportunity to redeem the asset, upon presentation of a bearer policy which is delivered at the time of signing the loan contract.

The lien on credit, which is made available by entities such as Unicredit, also provides for the payment of custodial costs.

Works credit: assess your borrowing capacity

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Transform the garage into a studio for the older child, redo the kitchen, add a bathroom for the children ... The evolution of the family or a new financial ease allow us to consider a work credit for the house. However, this loan works, like any credit, must be repaid. Hence the importance of assessing your borrowing capacity before borrowing $ 5,000.

Evaluate your borrowing capacity for a construction loan, why?

Evaluate your borrowing capacity for a construction loan, why?

Requirements for a construction-to-permanent loan include a down payment of at least 20 percent of the estimated mortgage. While the home is being built, a homeowner only pays the interest on the outstanding balance. Private lenders may offer construction loans to qualified borrowers with a 5 to 10 percent down payment requirement. Government-backed loans are available with as little as zero down.  Construction loans are very short term, generally with a lifespan of one year or less.

Borrowing $ 1,000, or even going as far as borrowing $ 10,000, requires being able to assume the repayment of this loan every month. Especially that a work credit often turns out to be substantial. The lending institution will therefore help the borrower to assess its monthly repayment capacity based on its income and expenses. It is these monthly payments, as well as the desired loan duration, which will determine the amount of credit. The calculation of the borrowing capacity for this works credit is the starting point of the project.

How to calculate your borrowing capacity?

How to calculate your borrowing capacity?

Without being legally regulated, the limit on the debt ratio accepted by financial institutions is 33%. The debt ratio is calculated by making a ratio between the income of the borrower of the loan and the charges or other loans that he must assume. For a person who receives an income of $ 3,000 monthly and who repays a mortgage up to $ 650, the debt ratio is (650/3000) x 100 = 21.67%. He then has a borrowing capacity of 33 - 21.67 = 11.3% of his income, or $ 339. This amount is the key element in assessing the amount allocated to the work.

Also assess your borrowing capacity through a simulation for your cheap work credit.

Credit despite bad credit history or payment

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If the credit rating is poor, this makes it extremely difficult to borrow. Because then you can't just go there and take out any loan on excellent terms. Even if this is exactly what the advertising suggests. If you have a bad credit rating, you are not creditworthy and therefore very quickly stands in front of the closed doors of the banks. Because banks and savings banks only want solvent consumers as customers. No matter whether it is taking out a loan or opening an account.

Now it happens again and again that despite bad creditworthiness, a loan is absolutely necessary. Perhaps this was supposed to eliminate the debts that led to the bad credit rating. Or it should be invested in the future, so that with a better income the bad credit rating can be a thing of the past at some point.

It will not be easy

It will not be easy

However, since banks are not enthusiastic about lending a loan despite their poor credit rating, borrowers find it difficult to find good deals. There are various offers that advertise a loan despite poor creditworthiness. But usually you can assume that these are not serious and in the end only lead to the debt trap. Because mostly windy business people are behind it who only want to sell their insurance to the man or the woman and ultimately don't offer any loans at all.

It is therefore advisable not to consider such offers in the first place and much rather to ensure that a second borrower accompanies the taking up of a loan despite poor creditworthiness. This can ensure that taking out the loan is still possible at a regular bank at worthwhile conditions.

Creditworthiness that the banks want

Creditworthiness that the banks want

In the best case, the second borrower brings with it exactly the creditworthiness that the banks want for a loan. So you are always on the safe side and can choose the best loan from a pool of loan offers. Despite all of this, you should never forget that your credit rating is not good and that there are reasons for it. The loan should therefore only be taken out in spite of poor creditworthiness if it is really needed and if you can also afford the loan.

Financing a relaxing holiday with a loan is not a good plan. Summarizing debts and eliminating them in this way is a very good plan. Because it helps to take a decent path again and to have a better life in the long term. And this should always be the goal if you want to take out a loan that shouldn't actually come about due to the poor credit rating.

13,000 dollars for self-employed – from just 113 dollars

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If you want to start your own business, you have to expect costs. Offices may have to be rented. Maybe IT equipment is needed. A homepage may also have to be created. You have to advertise your new offer or company. If you have no savings, a loan is inevitable. A 13,000 dollar loan for self-employed can help. But what conditions do you have to expect?

Loan for the self-employed 13,000 USD: that's what the banks understand by that

Loan for the self-employed 13,000 USD: that

When you apply for a 13000 dollar loan for the self-employed, you need to know one thing. Banks understand this to be a special purpose loan. A loan for self-employed persons of EUR 13,000 is a commercial loan. Accordingly, you must prove that you are actually spending the money as requested. In return, however, you also get better interest rates than a free-use loan.

13,000 USD loan for self-employed: You have to expect this interest

13,000 USD loan for self-employed: You have to expect this interest

The interest on a loan for self-employed persons of 13,000 USD is very good. The best APR comes from the Bank of Scotland. It is 1.95 percent. You will receive it for all terms from 24 months (2 years) to 84 months (7 years). For twelve months (1 year) you have to expect 1.99 percent effective interest. The offer comes from Loan plus Bank.

At best, you pay 2.48 percent effectively to Salader for 96 months (8 years). For 108 months (9 years) to 144 months (12 years) term, the best annual percentage rate is 3.95 percent. It comes from extra credit.

You can see from the values ‚Äč‚Äčthat there is a great advantage in shorter terms: overall, interest rates are lower. In return, you have to live with higher rates.

Loan for self-employed 13,000 USD: Some examples of monthly payments

Loan for self-employed 13,000 USD: Some examples of monthly payments

One question should still burn under your nails. What do the above explanations about the 13,000 dollar loan actually mean for self-employed persons? What monthly installments can be expected? What should you shoulder for what duration?

At best, you would have to pay back 1094.94 USD for 12 months. You only get the best interest if you have a strong credit rating. If your credit repayment ability is weak, it can increase significantly. The rate burden drops significantly for 24 months. At best, you pay after 552.64 USD.

You may find the best offer of term and interest rate for 84 months. The best rate is 165.59 USD. Then the interest rates rise, which affects the monthly installments. For example, at best, you would pay 113.06 USD for 144 months. With the 13,000 dollar loan for self-employed, you hardly save compared to 84 months per month, but you pay significantly more interest.

Debt restructuring without Credit bureau information

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Debt restructuring without Credit bureau information, through a reputable foreign bank, can accompany the return to financial normality. The article provides more information on debt restructuring via a foreign loan without Credit bureau.

Debt restructuring without Credit bureau information - Credit bureau-free Swiss loan

Debt restructuring without Credit bureau information - Credit bureau-free Swiss loan

The arm of the Credit bureau extends very far in Germany. Almost every bank draws up information from Credit bureau when lending. Credit bureau is therefore almost “almighty” for determining creditworthiness. There is also no commercial loan provider, apart from the pawnshop, which does not report an approved loan to Credit bureau. Debt restructuring without Credit bureau information is therefore dependent on a foreign loan. This loan option is advertised primarily as a Swiss loan without Credit bureau.

Until 2009, the name actually corresponded to the country of origin of this type of loan. At that time, several direct providers were based in Switzerland. The “end” for these providers came in April 2009. The decision of the Federal Administrative Court prohibited the largest provider of Credit bureau-free loans from operating in Germany. All providers at that time lacked the banking license for cross-border lending. Only in advertising has everything stayed the same.

In 2013, Swiss credit is advertised by credit brokerage companies practically without exception. The advertising still conveys the image of different loan providers vying for customers. That is not entirely correct. As far as is known, only a single bank from Liechtenstein may legally grant Credit bureau-free loans to Germans. It is Cream bank, which was founded in 2010 especially for this purpose. The application for a debt rescheduling without Credit bureau information can be made directly at the credit bank or through an intermediary.

Borrower's requirements for debt rescheduling

Borrower

The requirements for applying for a loan and the processing times are the same for everyone. It makes no difference whether an urgent loan from a credit broker or a loan is applied for on the bank's homepage. The application via the credit intermediary is only a little more convenient, but it is also more expensive. Only dependently employed applicants have a credit opportunity. The loan is secured only through labor income. Guaranteeing or pledging a real asset does not improve credit opportunities.

Emphasis is placed on an employment contract that is unlimited, not terminated and has also been in place for at least 12 months. (Special regulation for time soldiers). The attachable portion of the monthly income is used to secure loans. He is to be ceded. The net income must therefore clearly exceed the garnishment exemption limit. There must also be no seizure of wages or existing assignment of salary. If the income is too low or is not fully transferred to the borrower's bank account, the credit request is rejected.

The credit check does not only include a look at the income situation. The public debt register is also viewed. An entry in the public debtor register also results in the loan being rejected. Interested parties who meet the above requirements can apply for one of two loan amounts for debt rescheduling.

Loan conditions for a debt-free debt rescheduling loan

Loan conditions for a debt-free debt rescheduling loan

A debt rescheduling without Credit bureau information can be requested in the amount of 3,500 USD or 5,000 USD. For the loan model with 3,500 USD Credit bureau-free credit, 11.62 percent effective annual interest is calculated. A single person without any maintenance obligations can qualify for the loan with a net income of at least 1,130 USD. The repayment is made in 40 equal monthly installments of USD 105.95 each.

If 5,000 USD are to be rescheduled debt-free, then the Spin bank charges 11.61 percent APR. The minimum income to qualify for the loan, again using the example of a single person, must be 1,600 USD net. Repayment can only be made in 40 constant monthly installments. For the rescheduling of 5,000 USD, the monthly installment is 151.35 USD.

Debt restructuring in two phases

Debt restructuring in two phases

If larger amounts are to be rescheduled, a loan without Credit bureau is usually not enough. Only one loan per applicant can be granted. The combination of both loan models is unfortunately also excluded. Nevertheless, a Liechtenstein loan proves to be a valuable start-up aid for a comprehensive debt restructuring. Due to the debt rescheduling without Credit bureau information, it is often possible to mark the active Credit bureau entry with the note "done".

If all Credit bureau entries have been declared done, the loan offers expand again noticeably. Although a "normal" loan cannot be used for three years, the offers can still be used despite Credit bureau. 

Social micro-credit – where to obtain?

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Social microcredit, also called personal microcredit, is thought to improve the living conditions of individuals who cannot access the traditional bank loan. What principles is it based on? Who can claim it? Which address? Younited Credit, a pioneer in the online personal credit market in the country, tells you all about this device.

Social microcredit: decoding

Social microcredit: decoding

Social microcredit is a form of personal loan. Partially guaranteed by the State and the lender, its interest rate is reduced. This credit is reserved for people excluded from the traditional banking circuit due to a fragile professional situation or modest income. Indeed, in the event of financial difficulties, a request for bank credit is very often the subject of a refusal. The absence of a guarantor is an additional reason for exclusion.

Personal microcredit can for example concern:

  • people on fixed-term or temporary contracts;
  • people in seasonal or part-time employment;
  • unemployed people;
  • withdraw;
  • people receiving minimum social benefits;
  • people victims of a life accident (disaster, illness, etc.);
  • persons registered in the Personal Credit Repayment Incident File (FICP), who cannot take out a new bank loan;
  • persons registered with the FCC (Central Check File).

The repayment of such a loan can be made over a period of 6 months to 4 years, or even 5 years in certain situations. In all cases, the repayment capacity must be sufficient for the loan dossier to be accepted.

A microcredit, for what rate and for what maximum amount?

A microcredit, for what rate and for what maximum amount?

Social microcredit is a small loan. The latter is adapted to the borrower's situation. It is generally between 300 and 5,000 $. However, in certain cases, the bank can grant a microcredit for a higher amount. As for the borrowing rate, it is most often of the order of 1.5 to 4%.

Note: what other fees for a microcredit?
Apart from the borrowing rate, personal microcredit comes with no fees. There are no administration fees, insurance costs or even compensation in the event of early repayment.

What project can I finance with social microcredit?

What project can I finance with social microcredit?What project can I finance with social microcredit?

Social microcredit cannot be used to finance any type of project. The objective of this system is to promote banking inclusion, but also and above all to encourage social integration, professional integration, and to improve family life. To be eligible for microcredit, the applicant must have a personal project related to this.

Among other things, this credit could be used:

  • for mobility purposes for the maintenance, return or access to employment (purchase or repair of vehicles, financing of driving licenses, in particular);
  • to finance basic necessities (washing machine, furniture, etc.);
  • to cover funeral expenses;
  • to finance poorly reimbursed health costs (dental prostheses, hearing aids, eyeglasses ...);
  • to finance studies;
  • to finance vocational training.

Good to know: what is the difference with professional microcredit?

Professional microcredit is not intended for individuals. It is intended to finance a business creation or takeover project.

However, the repayment of other loans and the repurchase of debts are among the exclusions.

Instant online loan: the best answer to an urgent need for money?

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Who has never faced an unexpected expense? The problem is that you don't always have the money to deal with it. In this case, we naturally tend to study loan offers.

The online instant loan seems to be a real boost for the borrowers. This form of consumer credit makes it possible to borrow a small amount of money in record time. Is this a good solution, however? Good Credit answers you straight away.

The instant loan or mini loan is a type of personal loan

The instant loan or mini loan is a type of personal loan

It, therefore, falls into the category of consumer loans. The principle on which it is based is simple: the customer applies for credit via an online platform offering this service, then he (almost) immediately obtains the money in his bank account. He can also choose to receive the money later. As soon as the funds are transferred, the customer can make a payment at once, or on the contrary several times.

When using an instant loan service online, the customer can usually borrow an amount between 100 and 1000 dollars, rarely more. As with conventional personal loans, the borrower does not have to provide proof of use. However, unlike a personal loan, the only documents to provide are the bank account statement and a copy of the identity document.

The repayment of such a credit is made over a short period (most of the time, 3 to 4 months, at most). The money is taken directly from the customer's bank card. As for insurance, it remains optional, as is the case for any other form of credit.

Note: eligibility assessment
Some personal information is still collected to ensure that the customer is eligible for an online instant credit offer. If necessary, the platform defines the maximum amount that it can borrow.

An online instant credit offer can be offered by different players. For example, it could be a broker specializing in consumer or real estate credit, or even a large group specializing in banking or insurance products.

What are the limits of the instant loan?

What are the limits of the instant loan?

The instant online loan surprises with its speed and ease of obtaining. The use of this type of credit must nevertheless be occasional, if only in view of the high rates and additional costs that may be added. The interest rate depends on the chosen formula (immediate or deferred transfer), but also on the amount borrowed.

As with a conventional bank, they vary enormously. If a group or broker can offer a “reasonable” rate of 3% and dust, another can go up to 16%, or even more, not including insurance: a credit which is therefore very expensive in the end!

Second, the amount of money that can be borrowed is, as we have seen, often limited. If the customer needs a larger amount, he will not be able to use this service and will have to find another solution to meet his payment obligations. Also remember that as with any credit, the consumer must act responsibly: before committing, it is essential that he ensures that he has sufficient repayment capacity.

Good Credit, an alternative with an instant online loan!

Good Credit, an alternative with an instant online loan!

Need a helping hand to ensure payment of an unexpected invoice (urgent repair on your vehicle, replacement of household appliances that have just given up the ghost…), or even to finance a project that is close to your heart? Trust Good Credit, a platform specializing in personal online loans and mini loans! If the instant loan is not part of our offer, our service is no less rapid.

How? 'Or' What? Thanks to our reactivity to any test, but also to the fact that the funds are transferred directly from investor to borrower, without banking intermediary. This allows us, moreover, to offer very competitive and even unbeatable rates up to 3,000 dollars.

With us, you can borrow a sum of money ranging from 1,000 to 50,000 dollars. We exclusively issue personal loans that are repayable at a fixed rate. Each month, the amount debited from your bank account is constant, but also transparent: no hidden fees are introduced into our offer. You keep control of your budget! As a bonus, prepayment fees are offered, regardless of the amount of your credit: a significant advantage!

Interesting facts from the cash loans market

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The cash loan market is highly diversified. In the industry, you deal with retail banks, Lite Lenders, and even private investors, brokers, and the social loans sector. In the article you will learn some industry curiosities. Development and prospects for cash loans in the non-banking sector.

In Poland, short-term loans have entered a strong upward trend. For several years, there has been an increase in interest in cash loans on the Internet, mainly for amounts up to 1000 - 2000 USD. Money is most often used during the holidays, during minor renovations, during specialist treatment, for current needs.

The structure of Lite Lender customers is also changing

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Short-term loan (payday loan) is not only the domain of the poorest sections of the society, but a product dedicated to medium-wealthy clients with a stable professional situation. Such clients obtain payday loans in Lite Lenders not only because of reduced formalities, but because of the convenience and ability to build loyalty in a particular loan institution.

In Lite Lenders, the overall credit history is not that important. A loan company allows you to set up your own borrower's account, e.g. on a website. If you pay your liabilities on time, you get more and more favorable conditions for access to short-term and medium-term loans.

The need to reduce borrower servicing costs in Lite Lenders

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A bank tax was imposed on Lite Lenders. The largest entities in the industry are dealing with additional costs. Added to this is the competition of payday loans for the poorest with new social programs. The Ministry of Justice also recognized the problem of usury loans as an important issue.

According to the latest reports, the Anti-usury Act aims to significantly reduce non-interest costs in contracts with Lite Lenders. Cash loans are eagerly used by generation Y, brought up practically on the Internet, a global village where information exchange is key to eliminating dishonest lenders.

The cash loan is strongly coming into the minds of customers by increasing advertising expenditure by Lite Lenders. Consolidation in the industry is inevitable by the emphasis on long-term cost reduction. When you need a loan, check the offers on this portal.