People in debt have traditionally been unable to easily consolidate it all. In the past, the best tactic has been to focus on one type of debt at a time (usually starting with the debt accruing the most interest) to clear it.
About 20 years ago, a new product became available called a personal loan. These unsecured loans were designed to help people manage multiple debt sources and repair their credit score. As with most types of unsecured debt, applicants are typically expected to provide a guarantor. Such a loan can be anything from £1,000 to £50,000 with a fixed interest rate payable over a fixed term, typically 4-5 years or more. Applicants use these instant guarantor loans as they realise just how much money they can save when used in certain circumstances.
No matter the interest rate on existing debt, personal loans are lower
One reason most people take out a personal loan is to consolidate different debts of varying and disparate interest rates. If you have £5,000 on a credit card (typical APR 29.9%), £1,000 overdraft (typical APR 15-20%), £1,000 of debt on a store card (typical APR an eye-watering 39.9%) among others, that’s a lot of interest you’re paying every month needlessly.
When taking out a personal loan, you’ll notice that the APRs are much lower. The average rate is 8% when borrowing under £10,000 and 5% when borrowing over this amount. Pay off the outstanding balances with the new instant guarantor loan and you will stop accruing all that interest, clearing the balance instead.
Personal loans put a deadline on repayment
People, couples and families with a lot of debt spread over multiple areas often feel there is no end in sight for the debt. This is especially the case for those types of debt with no deadline such as an overdraft, and credit and store cards.
The ability to consolidate all this debt into one personal loan automatically creates a deadline. Sometimes you may choose this; sometimes the provider will specify when it will be. Not only will you know the rate of interest that will accrue on top of the debt, you will also know how long you have left to pay off that debt. The stress and anxiety of accruing more and more is alleviated and you can prepare for having more liquid cash once your personal loan comes to its natural end.
Early payment option will save more
With lower rates of interest than most common types of borrowing, personal loans help you save money as a matter of course. When you are able and willing to pay back the debt faster than anticipated, this will save you even more money.
Not all personal loans allow you to settle early, for example pay off the last six months of payments in a lump sum while the term remains, but most will. You may be required to pay an early settlement penalty or premium such as one-or-two-months interest. If there is an early repayment option, carefully check the agreement’s wording. Even with a penalty on top, it could still be less than the interest you would have paid if you had let the loan run its course.
Personal loans improve your credit score
Customers who use unsecured guarantor personal loans use them to consolidate and manage debt as well as reducing their interest burden. So long as you stick to the terms of the agreement and have enough money each month to make the payment, your credit score will begin its improvement process.
What does this have to do with saving money? It’s a long-term strategy. Most credit cards and loans are not open to people with a bad credit score, however, there are ways you could potentially be able to get a loan with a bad credit score. Unfortunately, those loans that are not open are usually those products and services with the best interest rates and the most attractive rewards. With an improved credit score, you can apply for credit products with lower interest rates, better payment terms, and even earn a little something in the process such as cashback or air miles.
Cheaper than finance agreements
Most of the items in our list concern people looking to improve their credit rating and those with borrowing spread across multiple accounts. If you’re in the market for a new or nearly new vehicle, the seller will offer financing terms. They tend to offer a single product with a single finance provider; in short, it’s a take it or leave it choice. This is not always the cheapest way to buy a new car, but it is convenient which is why most people accept the terms that the motor trader offers.
Before singing that finance agreement, consider a personal loan. Interest rates are lower on average than motor finance. When the vehicle’s price tag is over £10,000, that interest rate drops considerably, sometimes as much as half of the annual interest rate.
Making Money With Short Term Rentals
Investors love investing in real estate as it usually outperforms other investment types like shares and managed funds. There are many ways to make a profit for your business with real estate too including ‘flipping’. This term refers to purchasing a revenue-generating asset and then shortly thereafter selling it again for a profit. In the US, the two asset classes mostly used for flipping are initial public offerings and real estate.
The longer-term real estate investing strategy that’s prevalent is buying homes to rent out on long term tenancies. It’s not just businesses that invest in rental properties, as a retirement strategy workers also look to have one or two investment properties in their portfolio for the weekly income and the long term capital gain on resale.
What’s also caught the attention of businesses and workers alike is the option to make money from short term rentals. Generating more income with short term rentals and by listing these properties on Airbnb is disrupting the accommodation sector and anyone with a home can do it. AirBnB is a disrupter and it has changed the way we travel. Staying in a spare room for a night or two, rather than a hotel is now accepted as the norm among all types of holidaymakers.
If you want to know how you can earn money with short term rentals, here is a quick guide.
What Is Airbnb?
Airbnb is an online marketplace for lodging around the world. It is popular among travelers who want to save money on accommodation. Because hotel rates are getting expensive, solo and group travelers are looking for more affordable options. Property rental listings on Airbnb can be a whole apartment, one room, or villas. Users can input the location and dates of arrival and departure to look for available properties.
The company started in 2008, and since then, it has reached worldwide popularity. Not only travelers are using this app, but also business-minded individuals take advantage of Airbnb’s technology to generate more money.
In the United States, there was a 45 percent increase in year-to-year bookings. Airbnb attracts millions of users worldwide, which comprises of frequent travelers and individuals who travel for work. About 700,000 companies are now using Airbnb for work-related purposes.
Earning Money with Short Term Rentals
You do not need to buy a property to list it on Airbnb. You can go for short term rentals to gain a more significant profit from daily or weekly rentals. Some people are already doing this strategy for years now, and you can also do the same if you find a property in a prime location.
Because this venture requires capital in the form of deposits, you need to be ready. Some property owners require bigger deposits, especially if the unit or apartment has appliances and furniture. Ensure that you have enough money to cover for deposits to get the business rolling. Once the apartment is ready for occupancy, you need to create an Airbnb account and list the property.
Other considerations you need to know:
- Property Maintenance
- Property Rating
Studying the market and how the business works can help you optimize the trade. Create a checklist to go through the essentials every time before a guest checks in. Besides, you can also connect with other people who do this business in different areas.
Technology opened up more profit opportunities for people. In hospitality, even you, who do not have much experience in property rentals, can earn money. Listing your extra room in the apartment can be a good start, but you can always experiment with making more profit. By short term rental, you can get access to excellent properties that can be listed on Airbnb.
Continue exploring the real estate market and make sure to learn new knowledge from experienced individuals. Who knows, you might gain financial freedom by being successful with this Airbnb venture. Check how other hosts present the properties, so you can have an idea of how to operate yours.
Home Appraisal Tips for a Successful Refinancing
The appraisal value for your home significantly impacts a refinancing application. New paint, upgraded flooring, renewed fixtures, and proper sanitation also contribute towards a satisfactory appraisal. Refinancing a home requires several necessary measures. However, the appraisal of the estate is perhaps the most significant.
If a real estate appraiser provides an assessment on the equity in your home, it can make – or break – the chance to refinance mortgage. You need the value to suit your refinancing targets, and what better way to achieve that than to improve your home?
What is a Home Appraisal?
An appraisal is a qualified and accredited professional assessment on the value of a property given by a third party. The appraiser will get paid by appraising your home with no incurred risk on whether you can refinance a mortgage or not because of the value they provide.
In a refinancing deal, an appraisal safeguards the lender by guaranteeing that it does not loan the applicant more than the value of the property. If the estate is subsequently foreclosed for any cause, the borrower will want to resell it and get their money back.
Tips to get a high-end appraisal:
The cost that the appraiser assigns your property mainly relies on the latest selling values of similar houses. However, you can definitely make sure that your property is appraised to its maximum value.
Having your house appraised is like meeting a potential partner. Although you do not know what the person likes and how they will judge you, dressing well improves your chances. Your estate must be clean and organized, tidy, and comfortable to examine. Pets should be kept in place, and the scent blocked. You will not want to rush the appraiser before inspecting everything.
Appraisers are especially particular about:
- External and internal condition
- Overall room number
- Features, including layout design and functionality
- Kitchen and bathroom upgrades, walls, roofing, and home systems (air conditioning, plumbing, and electrical) throughout the past 15 years that have made the house updated, usable and livable for current standards
- State and condition of the house’s structures
- External facilities, including garages, stairs, and balconies location
It’s also wise to emphasize characteristics that might not be readily noticeable, which might contribute to the value of the property. If there are any upgrades that are not seen, it would be good to let the appraiser know.
After securing a reasonable appraisal, you have achieved a significant step toward refinancing your loan. You can now proceed to the next steps with your mortgage lender. If you have received a good value, use a resource such as the Consumer Financial Protection Bureau’s Mortgage Calculator to check interest rates on refinanced loans with the same pricing for your house. Coming equipped with these statistics will provide you more negotiating power once you face your lender. It will also help you feel confident in asking for the rate that you deserve.
Knowing how appraisals work will provide you with the strongest shot of getting an appraiser to award the maximum value for your estate. Appraisals may not always arrive with the ideals that applicants aim for, and they are a subjective method with room for human error. You can appeal if you have a low rating, but you will only survive with reliable information to back you up.
Commercial Loans: Options and Benefits for Start-ups
Running a business requires working capital to hire staff, buy equipment, and cover for utility bills.
For start-up firms, having a huge capital is not always guaranteed, and commercial loans provide funding to get the business rolling. The problem is, not a lot of business owners are confident and educated enough to borrow money from lenders.
In case you are wondering how the commercial loan works, here is a guide to help you understand how the process, options, and why your business needs it.
What are Commercial Loans?
A commercial loan is a type of financial assistance that helps businesses address everyday costs and begin the next stage in their business journey. Most of these loans have fixed rates and monthly payments but require collateral that should be equal or greater than the loan amount.
The most common types of financing options are:
Small Business Administration Loans
SBA loans are similar to traditional loans but with longer terms and lower interest rates. The only downside is, borrowers need to wait for long to get the funding. Loan terms can be a minimum of 5 to a maximum of 15 or 30 years.
Business Line of Credit
This type of commercial loan gives a borrower more flexibility in borrowing money. The lender will provide a pool of funding that you can draw from whenever you need it. You will only pay the interest of the money you take out.
Traditional Term Loans
Traditional term loans are the most basic of all, wherein a business owner borrows a specific amount and payback with interest. Lenders charge rates depending on the creditworthiness of a business.
Benefits of Commercial Loans
Easy access to funds can help you focus on improving your services and gaining more clients. Loans provide a breathing space for you to focus on your business and not think about money. As you work on expanding your reach, hiring talented people, and boosting marketing, you can expect growth.
Commercial loans provide credits up to $25 million and help you increase working capital and create more jobs. Also, long-term loans are easier to pay back while you are still building your business.
If you are planning to apply for a large-scale loan in the future, starting with short-term loans can help you build a business credit card. Start-ups usually don’t qualify for larger loans because of the risks involved and lack of credit history. Try going low first to build up your report and increase the loan amount eventually.
Go After a Business Opportunity
Got a new idea to grow your business but lacks funding? Consult a financial advisor to know your options and get a low-interest commercial loan. Weigh your options carefully and go directly to a reliable lender for secure loans.
Taking risks is part of running a business. If you believe in what you are selling or providing to customers, then consider commercial loans to take your business to a new level. Contact North Avenue Capital to learn your options for business and industry loan programs.
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