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How Car Loans Really Work

So, you want to buy a car?  If you are like most people, you do not have tens of thousands of dollars just sitting around waiting to be spent. That means you need to obtain a car loan.  But, how do car loans work?  Knowing the answer to this question can make your experience obtaining a loan quick and easy and get you into your newer car much faster!

As with other types of loans, there is more than one way to obtain a car loan.  Car dealerships have several resources at their disposal, including financing arms, and third party lenders specializing in auto loans.  Or, you can utilize your own resources, such as a credit union or bank.  However, to avoid hidden fees and high interest rates, it is important to research and learn how auto loans actually work.

High Risk and Low Risk Loans

One of the most fundamental issues to understand in obtaining an auto loan is that the loaning institution makes its money from the interest you pay on the money you borrow.  Some lenders charge high interest rates, but offer shorter loans or higher risk loans.  Others charge lower interests rates, but only approve low risk loans or longer term loans.  While auto loans may be repaid between two and eight years, the standard repayment period is five years (60 months).

Factors Affecting Car Loans

Several factors affect your ability to obtain a car loan.  Many times these factors will affect not only whether you can receive a loan, but how high your interest rate will be.  One of the most relied upon factors in determining your eligibility for a car loan is your credit history and ranking. If you have a perfect or close to perfect credit score, you may even be able to receive a loan for 0% interest!  Therefore, it is extremely important to know your credit rating before you begin shopping for a car loan.

Another factor considered when shopping for a car loan is your ability to repay the loan.  One of the factors in determining this ability is the length of the loan.  Typically, people who opt for a shorter loan period will receive better interest rates. This is based on the idea that you are more likely to repay the loan if it doesnt drag on for years raising the uncontrollable risks such as death or loss of job.

Vehicle Down Payment

Finally, the amount of your down payment may help you obtain a lower interest rate.  The higher the down payment, the less risk the lender takes on, which benefits you.  Typically a higher down payment also entails a shorter loan duration, which lenders prefer. To sum up how a car loan works, the interest you pay is directly related to the lenders profit.  A lender looks more favourably on those creating a low risk.  Therefore, if you have a great credit history, choose a shorter loan term, and put down a larger down payment, you will likely receive a low to no interest rate for your loan.

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Qualifying For A Construction Loan Requires The Right Information And The Right Builder

house plan

There are so many problems that could go on in building a house or doing a major renovation that it makes sense why many lending institutions stay away from them entirely. They are lending on the assumption that something will be completed. But, they are smart enough to know that there are hundreds of obstacles between having no project and having a completed project.

Thankfully, specific new home construction lenders deal with the lack of collateral. This is not to say that they lend openly and willingly in any situation. They have a list of qualifications for getting a construction loan in 2015.

The Builders History

The person receiving the loan will have a very hard time finalizing it if they are acting as their own builder. They may want to do that for obvious matters of cost. But, they have to be just as reputable as one of the most qualified builders in the city. Many remodeling loans and their providers only work with a select few craftsmen in construction. Ultimately, this is a great thing for the borrower. He or she is getting access to a leader in the industry. But, borrowers should know that getting a friend to help out or doing it themselves is not likely when navigating extensive home improvement loans. Furthermore, it isn't necessary. The lenders work with established names, and they can vouch for their quality. They also take responsibility if it does not work out. The discussions with the loan itself often go through the builder, alleviating financial responsibility from the borrower.

The Report

There will be a decription of materials completed which includes every small detail of the construction project. The lenders will want to know what material is being used, how is being used, and how long the project expects to go for, what changes are being made to the property, and any other details. The obvious reason for this is that they want to know where the money is going on this project. This avoids any kind of scam that may be involved. But, the lenders may also be legally responsible.

If they are relaxed in the loan, they may potentially be held responsible if the project is not completed. On a legal level, they can potentially be sued. This is why most established construction lenders only work with reputable builders who they have a relationship with. And on a financial level, they can lose all the money in a moment's notice.

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Rental Bond Loans Online: The Moving Out and Moving In Budget Savior

Whatever the reason may be, moving out of your current home is both physically and financially exhausting. Not only will you incur expenses with moving in -- security deposits, two months advance, repairs, and installations, if any -- you will also need to shed a few hundred or thousand dollars on moving out. If friends arent available, you would have to find and pay for movers. If damages are made around the house, you would have to pay for them, too. In other words, this next great phase of your life will eat a huge chunk off your savings. Luckily for you, however, there are now whats called bond loans online.

Basically, this is a loan specifically created to cover expenses for big changes without having to wait too long for processing and approvals. It is practically a personal loan modified to become short-term loans. In other words, you would need to pay it back within weeks or months, depending on the amount.

Bond loans online are often offered at 600$ until 2,000$. Interest rates and timeframes will all depend on how much money you will loan. The upside of this is that after submitting your online application, the money will be deposited within 24 to 48 hours. This, of course, will depend on your immediate credit history. It doesnt have to be specifically spent on paying for rental bonds as well. If you need an expense covered up immediately, feel free to use this loan for it.

Companies offering this financial service will primarily need your bank account and a valid ID. If you dont have either one of the two, however, then you wont be able to secure a loan.

You may think, however, that several hidden charges will surprise you upon settling the loan. Understand that small loans companies will never do that. First off, they need accreditation from the Australian Securities and Investments Commission before they can lend you money. Once they do accomplish and receive these necessary legal requirements, they are bound to a responsibility of upholding fairness and transparency among all their clients. You will be aware of everything you need to pay for even before they process your loan application. Only when you agree to these terms and obligations will you and the company come to an accord.

Since these are still financial institutions, they will have to conduct a background check. This, of course, is not a detailed scrutiny of every aspect of your life. It is but a mere general check on your credit history.

Of course, not everyone had maintained a good record. However, this doesnt make them automatically ineligible to receive a loan. Most companies will offer really flexible loans where the debtor can manage to pay it back without being put under too much financial pressure. Bond loans online, after all, are friendly ways to help people overcome monetary hurdles.

These companies are not loan sharks whose main motive with lending money is to milk the person until he runs dry. Small loans institutions operate under the state of law. Therefore, should a transaction contain unfair or unjust terms against the consumers, the law and the government will be on their side.

In conclusion, if there is anything you need paid for as soon as possible, these bond loans online might just be the answer. Its fast, convenient, safe, and most importantly, fair.

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Have You Claimed Back PPI Yet? If Not Read This

Millions of people in the UK are entitled to a refund for their mis-sold payment protection insurance but it is estimated that as many as half still haven't made a claim. One of the reasons for this is because many people didn't even know they had PPI in the first place. Yes, unbelievably this is more common than you would think. Another reason is that our memories aren't always that good and loans and credit taken out years ago have usually long been forgotten about. It is however worth finding out if you did have PPI as it could be worth a small fortune.

So what is PPI anyway and what makes it 'mis-sold'?

PPI is an insurance that was supposed to cover your debt repayment if you couldn't work. However it turns out that it is a very poor value product that often wont even cover you when you need it most. For example if you were self-employed, unemployed, in temporary employment, on a fixed term contract or even retired you might not be able to claim on the insurance. Also if you have a pre-existing medical condition such as a bad back this may also stop you claiming if you're unable to work. So if these points weren't made clear to you when you bought the policy chances are you were mis-sold it.

So what should you do if you think you've been mis-sold PPI?

Well making a complaint is easier than you might think. Most banks and creditors have pages online with information about how to make a claim. Just go to Google and search for the name of your bank followed by "ppi claim form" and the page you're looking for will usually be at the top. Then follow the instructions on that page to download the 'questionnaire' form, fill it in and send it back by post or email.

Where can I get more information?

Many websites online can help you with your PPI claim and they usually fall into two types. These are claims company web sites that will charge you in return for handling your claim and free information sites that will enable you to 'Do It Yourself'. Martin Lewis operates Money Saving Expert that has lots of great info but can be overwhelming. PPI Guru is also a good resource and has a good basic guide to get you going with the claiming process.

So as you can see it's understandable why so many haven't claimed yet but with the high probability that you could get a nice payout wouldn't it be worth spending a bit of time going over old statements to see if you did actually have PPI. Just think you could pay off some debts or maybe go on that well deserved holiday!

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Everything You Need To Know About Taking Out Home Mortgages

A lot of people out there believe that they know enough about home mortgages to obtain a loan without seeking outside advice. Well, they're usually the individuals who end up either being declined for every loan or end up having to pay mountains of interest. Before you go loan shopping, make sure you know what you're doing.

Get pre-approved for a mortgage to get an idea of how much your monthly payments will cost you. This will help you determine a price range you can afford. Once you have this information, you will have a better understanding of the expenses involved.

If you are considering quitting your job or accepting employment with a different company, delay the change until after the mortgage process has closed. Your mortgage loan has been approved based on the information originally submitted in your application. Any alteration can force a delay in closing or may even force your lender to overturn the decision to approve your loan.

Work with your bank to become pre-approved. Pre-approval helps give you an understanding of how much home you can really afford. It'll keep you from wasting time looking at houses that are simply outside of your range. It'll also protect you from overspending and putting yourself in a position where foreclosure could be in your future.

Even if you are underwater with your mortgage, the new HARP regulations can help you get a new loan. Prior to the new program rules, homeowners would apply and get denied for a new mortgage. Look into it and see how it can benefit your situation, by leading to lower mortgage payments and a better credit position.

Know your credit score and keep unsavory mortgage lenders at bay. Some unscrupulous lenders will lie to you about your credit score, claiming it is lower than it actually is. They use this lie to justify charging you a higher interest rate on your mortgage. Knowing your credit score is protection from this fraud.

What do you do if the appraisal does not reflect the sales price? There are limited options; however, don't give up hope. You can dispute the appraisal and ask for a second opinion; however, you will need to pay for the appraisal out of your pocket at the time of the appraisal.

A fixed-interest mortgage loan is almost always the best choice for new homeowners. Although most of your payments during the first few years will be heavily applied to the interest, your mortgage payment will remain the same for the life of the loan. Once you have earned equity, you may be able to refinance your loan at a lower interest rate.

Try going with a short-term loan. Since interest rates have been around rock bottom lately, short-term loans tend to be more affordable for many borrowers. Anyone with a 30-year mortgage that has a 6% interest rate or higher could possibly refinance into a 15-year or 20-year loan while still keeping their the monthly payments near around what they're already paying. This is an option to consider even if you have slightly higher monthly payments. It can help you pay off the mortgage quicker.

You won't have to take classes on bank loans to understand enough about home mortgages. All you need is some simple and practical advice, like the tips you have read in the above text. If you can approach the subject with enough knowledge, you should be able to obtain a great mortgage loan.

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Maintaining a long-term view during turnarounds

Any leader who’s been through a turnaround knows that driving one requires an intense focus on delivering near-term results. Some moves make obvious sense. Building value-creation metrics into a long-term vision and implementing aggressive cash-management practices, for example, can help fund restructuring while avoiding existential crises down the road.1
Other moves are riskier. The short-term pressure is so intense that many managers succumb to myopic decision making that can hurt a company’s long-term health or even sow the seeds of irreversible failure. Examples abound of companies that survived a financial crisis by shutting off all discretionary spending, only to fail later when their operations became unreliable or required considerable new investment. The damage in these cases can exceed the impact of the initial financial hit. Depriving an organization of continuous investment in sustaining capital—whether in maintenance, growth and innovation, or people—can result in dozens of other incidents, each individually small and correctable but together adding up to create an unreliable operation that hurts the customer, the business, and its reputation.

The most successful turnarounds are those in which managers balance the short and long term in business decisions, both financially and organizationally. Financially, many investments that do not pay back their costs quickly (in less than two years) still create value and are important for the viability and health of the company. There are rarely clear answers to such investment decisions, but in our experience, a few techniques can help ensure that you make the best decisions with the information you have.

Avoid sweeping decrees

When faced with financial troubles, many companies respond by ordering a freeze on all spending, from capital spending to hiring, travel, and other discretionary expenses. Such moves can certainly be necessary in times of distress. In most cases, however, it’s better to take a more nuanced approach.

Managers should always discuss a company’s largest investments individually, giving time and attention to both the short-term and long-term implications of delaying investment. Letting such decisions fall under a broad spending directive can have a devastating impact. One global manufacturing company whose operations relied on substantial electrical power decided to delay a scheduled transformer rebuild by a year to save cash. Five months into the year, the transformer failed catastrophically, taking 20 percent of production off line while the company built and installed a replacement. Elsewhere, a transportation company that delayed the scheduled replacement of key logistical equipment suffered a setback when the equipment failed, resulting in collateral damage to the physical plant and equipment.

For smaller investments, it’s better to organize spending into categories in which the implications for long-term health can better be discussed and understood. There is an important distinction, for example, between repainting the hallways and refurbishing an electrical transformer that a broad proscription of spending on maintenance would not recognize. Similarly, a hiring freeze on executive assistants results in different risks from a freeze on vehicle operators or sales managers.

During one turnaround, executives at a consumer-products company found that plant managers historically had little discipline in spending—they invested in projects without considering hurdle rates or returns on the investment—and more than 350 projects would be affected by a spending freeze. During the turnaround process, executives worked alongside plant managers to weigh the trade-offs between what was necessary to serve customers and deliver products and what could be delayed to reduce costs. Together, they determined that nearly half of the planned projects could be postponed. They then implemented an aggressive program for working-capital management to simplify inventory management, approving spending that would help the business grow in the short and medium term while instituting strict internal controls on areas that were less critical, such as overtime, excessive travel, and some maintenance.2
Prioritize investments

Managers under pressure in turnaround situations have little time to evaluate thoughtfully which activities and investments to support and which to cut. Often, decisions rest on which department head has the most organizational clout, has the strongest personality, or argues the loudest to protect his own programs and people—an understandable but not particularly effective way of making cuts.

A better approach we’ve seen companies take is to make a list of all actions that would create near-term cash, force ranked by the amount of damage each would do to the long-term health of the company—typically prioritizing actions with the highest net present value (NPV) at one end and those with the most negative NPV at the other. Such a list should be created and discussed very early in a turnaround, and it must assess the effect of divesting or discontinuing every activity and selling every asset, with no exceptions. It will only be complete when the last thing left to do after taking every action on the list would be to shut the doors. It’s a tough exercise to go through, but it gets all the ideas on the table for discussion.

Highest on this list will be a number of immediate actions that create little risk. Lower down will be actions that begin to affect long-term growth prospects or operational reliability. The trick is to separate sources of real long-term damage potential from threats of damage that are merely perceived. This can be accomplished by taking the time and effort to understand each investment in depth and by making sure someone is assigned to ask the tough questions.

It’s also a good idea to assign quantifiable metrics to trigger the next cut on the list when a company comes within a certain number of months of no longer having sufficient cash to pay its bills. This creates a clear contingency plan in case things turn worse. Just as important, it creates a clear understanding of the future health risk required to stabilize the business in the short term.

If Peter, the manager discussed at the beginning of this article, were to conduct this exercise, he might find many actions he could take that are higher on the list, with less long-term damage than eliminating the natural-gas conversion project. That could help him feel better about approving it. The exercise would also give him an opportunity to tighten the spending-approval interval so that he would only approve the minimal spending possible each time. This would ensure that he could retain control of future financial investments in case things were to change and he needed to take this more drastic action.

Discourage short-term actions with negative long-term consequences

In any turnaround, increased accountability and pressure on business-unit managers to hit their numbers can exacerbate short-termism—which often leads to decisions that create less value for the company. They can be tempted, for example, by any number of little ways to cheat. Some tactics may incur purely financial risk, such as conceding sales discounts to meet near-term volume and margin goals or structuring back-loaded or risky contracts. Others can be more dangerous, such as allowing lower-quality products to go to market, delaying a maintenance outage until the next accounting period, or continuing production despite safety or reliability concerns. A manager at a global commodities company, for example, hoped to catch up on production by delaying the routine maintenance of a piece of heavy equipment despite concerns identified by engineers. The equipment failed not long after, leading to a lengthy production outage. The tension between execution and innovation is worth special note. Innovation requires experimentation and failure, which can be hard to defend in an environment where every dollar counts.

The challenge is to create urgency and accountability for near-term performance targets without encouraging shortcuts that destroy value and may have insurmountable negative consequences. Some companies deal with this by protecting people and budgets for strategically important innovation, even while aggressively reducing costs in other areas of the company. Others set targets for near-term results and then outline everything managers can do to meet those targets. The most important approach is to explicitly identify and understand the impact of every step that’s part of the company’s ability to create value.

Invest in people

In our experience, the single largest attribute of a successful turnaround and a healthy company is the people who manage and run it. Yet, in many cases, investment in people is one of the first areas to go when companies struggle. Whether that means pay freezes or cuts or the elimination of benefits, training, or team-building activities, such steps are often the easiest and fastest way to save cash fast. More than one company we know of dramatically reduced hiring of entry-level leadership talent during the 2009 recession and now struggles with a gap in future leaders at the middle levels of the organization.

Our view is that almost all of these moves will affect a company’s long-term health. When a business is struggling, companies count on their employees even more than they do when it’s healthy, whether to increase productivity, come up with creative ideas, improve teamwork, or simply provide moral support. Avoiding cuts in this area for as long as possible sends a message that people are valuable and will energize staff to take part in the turnaround. To be clear, it is important to continue to make case-by-case decisions on talent, but avoiding across-the-board cuts for people and benefits should be a strong consideration.

It is also crucial to support and encourage leaders to make hard decisions for the long term, even at some risk to near-term results. This starts with an aggressive education-and-awareness campaign that provides the entire organization with the tools to understand what value creation means and how it is measured. This can include training on how to interpret financial statements and how to calculate NPV, return on invested capital, and economic profit. Incentives are obviously important—ideally, performance evaluation is tied to short-term results, with compensation linked in some ways to equity in order to reflect long-term value (particularly for senior leaders). Consistently communicating the narrative is also critical, as is role modeling by senior leaders.

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