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Article by Stan Prokop

Buying a Franchise – 3 Things You Must Know About Franchise Finance and Franchise Loans – Business

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Clients are always asking what extra steps or information they need to know to complete a successful acquisition a new or existing franchise. Buying a franchise, it goes to says, is clearly one of the largest decisions any entrepreneur might take. Of coruse there are a couple of different versions of the opportunity, as follows – Purchase of a new franchise – Purchase of an excising franchise that is for resale by current owner- Purchase of an additional unit in your chain when you own one alreadyAre there any special tips and critical pieces of information you need to know that will get you a leg up on a ‘ leg up ‘ in the area of franchise finance. Let’s share and discuss three critical points.1. Franchise Finance is a very specialized type of financing – financing options are available but not unlimited – you need to know what they are2. There is a chance for franchise financing failure if you do not have the proper fundamentals in place and are exploring numerous options at the same time – ‘flailing around is not good!3. You might significantly benefit by using the services of a franchise consultant in the area of business financing Lets review our point # 1 – Business financing in general has always been a challenge. Specialized financing in any area of business is a unique challenge because of limited options and a limited number of players. Players = lenders! If you accept business financing is difficult then you can imagine the severity of the challenge in the 20010 global economic crunches that we still seem to be in.So is it all negativity and bad news. Not necessarily of course if you are informed and prepared. Let’s unveil the mystery of franchise financing. How exactly are the majority of franchises financed in Canada? The options are exactly as follows:- A special Government programme called the BIL program under which the majority of franchises in Canada are financed- Owner equity – your own deposit into the deal- Equipment and asset financing- Working capital cash term loan – typically a 5 year payback- Vendor financing ( if available – more often than not it is not )- Revolving line of credit for ongoing operating needs and growth!With respect to the last point we would emphasize that while it is of course important to structure a proper financing around your franchise purchase many business owners forget to consider how they will finance the business on an ongoing basis, and more importantly, how growth options will be financed.It is critical for you to understand that it is very rare that any one option will get you the full financing you need. The reality is that it will be a select combo (and that’s the expertise you require) to fully finance your business with any number of the above options.We point out in our key point # 2 that you must be prepared. This is where many clients tell us they have failed in the past – they have not prepared a proper business plan and executive summary. We encourage you to prepare a proper business plan, understand what your opening balance sheet will look like, and most importantly, understand the cash flow needs of your business. For example, if you take the time to sit down and do all the numbers ( this is actually easier than you think ) you could find that in month one and 2 and 3 that you might be experiencing negative cash flow. If sales ramp up slowly and you have negative cash flow then clearly you will have problems which could accelerate and dampen the overall success of your business. Finally, consider using the services of an experience, credible and trusted franchise consultant that can guide you through the financing maze. Having that party properly prepare a business plan, opening cash flow, executive summary, and proper financial projections is worth a small fee you might be charged. Business financing in Canada dried up in 2008 and 2009 – franchise financing is still alive and well though. Many lenders view franchise financing even more positively than other types of businesses and industries – the reality being that there is a greater chance of success for a brand that is proven and known, and has a reliable business model of proven success.Know your franchise options, be prepared in executing on those options, and consider italicizing a franchise consultant to complete your franchise loan and overall funding. That’s a solid plan!

About the Author

Stan Prokop – founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.comOriginating business financing for Canadian companies, specializing in working capital, cash flow, asset based financing. In business 6 years – has completed in excess of 45 Million $ $ of financing for Canadian corporations.Info re: Canadian business financing & contact details:http://www.7parkavenuefinancial.com/buying_franchise_franchise_finance_franchise_loans.html

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Stan Prokop

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Article by Art Penz

Tips To Getting A Secured Loan For Personal Financing – Finance – Loans

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You could find yourself in a situation where you are unable to keep up with your monthly bills, and you need to find a way meet your financial requirements. There are times when you are unable to keep up with your credit card debts, or you may need financing for your college going son. You may also need money to pay off your mortgage installments in order o avoid foreclosure. Personal loan is a convenient way to finance your immediate needs, till you have been able to put your expense back on its track again.Personal loans are a good way to get over your present financial crisis, and could be availed as unsecured or secured loans. The quickest way to finance your requirement is to avail a secured personal loan, where a collateral security would ensure the immediate disbursement of the loan. A secured loan would mean that you could negotiate a much lower interest rate on financing your immediate expenditures, and you may get an opportunity for a longer pay-back period.As for unsecured loan, you may have to pay a higher interest rate, and may have to go through credit checks and other verifications before the loan is made available to you. You may surprisingly find that the interest rate charged is higher than the interest rate you are already paying for the debt that you have. In order to qualify for personal financing, at the very first instance you have to be employed at the same place for at least six months. Your pay stubs may be required when you apply for a unsecured personal loan for verification of your income and residential address. More-over, the loan amount would depend on how much your earnings are.When you take out a secured personal loan to finance your immediate expenses, it is generally secured against your asset, such as your property. This acts as a security to the lender, where the money loaned to you is secured against the value of the property, which is generally your home. This type of personal financing, where you keep your property as security with the lender, is often termed as house owner’s loan. If you are looking for large personal financing, which you may require for some renovations done to your home, secured loans are ideal personal financing schemes for such large loan amounts. Secured loans are also a solution for home owners where unsecured personal financing has been refused.Personal finance, secured against the assets of the borrower, carry a much lower interest rate than unsecured loan. Further, the interest rate could be negotiated, with low monthly re-payments. The amount of loan given would depend on the lender, but would essentially be determined against the value of your property. The lender may decide to have your property valued before deciding on the loan amount.With secured personal loan, you will find the lenders are patient with you if you should default on your payments. The collateral security against the loan provides the lenders with the confidence that the money is very much secured against your assets. In case you cannot pay back the loan, your lenders will have the right to sell your property and recover the amount.When taking out personal loan to finance your needs, you need to pay special attention to the annual percentage rate (APR) that is being charged for the loan. This is one of the important of all the other components in taking out a personal loan. You would need to negotiate and get as much advantage as you can, simply because you are providing a guarantee of payment in form of the collateral security that you are providing. The other point is that, sign over your collateral when you sign the loan documents, and make sure that everything appears in the document an nothing remains verbal.

About the Author

Cashunclaimed.com offers more information about unclaimed money at http://www.cashunclaimed.com. This missing money site offers a Free Search for unclaimed cash, just enter you name and locate your missing money today!

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Article by Arfan Ul Haq

Sources of Business Finance – Business – Human Resources

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Sources of business finance can be studied under the following heads:

(1) Short Term Finance:

Short-term finance is needed to fulfill the current needs of business. The current needs may include payment of taxes, salaries or wages, repair expenses, payment to creditor etc. The need for short term finance arises because sales revenues and purchase payments are not perfectly same at all the time. Sometimes sales can be low as compared to purchases. Further sales may be on credit while purchases are on cash. So short term finance is needed to match these disequilibrium. Sources of short term finance are as follows:

(i) Bank Overdraft: Bank overdraft is very widely used source of business finance. Under this client can draw certain sum of money over and above his original account balance. Thus it is easier for the businessman to meet short term unexpected expenses.

(ii) Bill Discounting: Bills of exchange can be discounted at the banks. This provides cash to the holder of the bill which can be used to finance immediate needs.

(iii) Advances from Customers: Advances are primarily demanded and received for the confirmation of orders However, these are also used as source of financing the operations necessary to execute the job order.

(iv) Installment Purchases: Purchasing on installment gives more time to make payments. The deferred payments are used as a source of financing small expenses which are to be paid immediately.

(v) Bill of Lading: Bill of lading and other export and import documents are used as a guarantee to take loan from banks and that loan amount can be used as finance for a short time period.

(vi) Financial Institutions: Different financial institutions also help businessmen to get out of financial difficulties by providing short-term loans. Certain co-operative societies can arrange short term financial assistance for businessmen.

(vii) Trade Credit: It is the usual practice of the businessmen to buy raw material, store and spares on credit. Such transactions result in increasing accounts payable of the business which are to be paid after a certain time period. Goods are sold on cash and payment is made after 30, 60, or 90 days. This allows some freedom to businessmen in meeting financial difficulties.

(2) Medium Term Finance:

This finance is required to meet the medium term (1-5 years) requirements of the business. Such finances are basically required for the balancing, modernization and replacement of machinery and plant. These are also needed for re-engineering of the organization. They aid the management in completing medium term capital projects within planned time. Following are the sources of medium term finance:

(i) Commercial Banks: Commercial banks are the major source of medium term finance. They provide loans for different time-period against appropriate securities. At the termination of terms the loan can be re-negotiated, if required.

(ii) Hire Purchase: Hire purchase means buying on installments. It allows the business house to have the required goods with payments to be made in future in agreed installment. Needless to say that some interest is always charged on outstanding amount.

(iii) Financial Institutions: Several financial institutions such as SME Bank, Industrial Development Bank, etc., also provide medium and long-term finances. Besides providing finance they also provide technical and managerial assistance on different matters.

(iv) Debentures and TFCs: Debentures and TFCs (Terms Finance Certificates) are also used as a source of medium term finances. Debentures is an acknowledgement of loan from the company. It can be of any duration as agreed among the parties. The debenture holder enjoys return at a fixed rate of interest. Under Islamic mode of financing debentures has been replaced by TFCs.

(v) Insurance Companies: Insurance companies have a large pool of funds contributed by their policy holders. Insurance companies grant loans and make investments out of this pool. Such loans are the source of medium term financing for various businesses.

(3) Long Term Finance:

Long term finances are those that are required on permanent basis or for more than five years tenure. They are basically desired to meet structural changes in business or for heavy modernization expenses. These are also needed to initiate a new business plan or for a long term developmental projects. Following are its sources:

(i) Equity Shares: This method is most widely used all over the world to raise long term finance. Equity shares are subscribed by public to generate the capital base of a large scale business. The equity share holders shares the profit and loss of the business. This method is safe and secured, in a sense that amount once received is only paid back at the time of wounding up of the company.

(ii) Retained Earnings: Retained earnings are the reserves which are generated from the excess profits. In times of need they can be used to finance the business project. This is also called ploughing back of profits.

(iii) Leasing: Leasing is also a source of long term finance. With the help of leasing, new equipment can be acquired without any heavy outflow of cash.

(iv) Financial Institutions: Different financial institutions such as former PICIC also provide long term loans to business houses.

(v) Debentures: Debentures and Participation Term Certificates are also used as a source of long term financing.

Conclusion:

These are various sources of finance. In fact there is no hard and fast rule to differentiate among short and medium term sources or medium and long term sources. A source for example commercial bank can provide both a short term or a long term loan according to the needs of client. However, all these sources are frequently used in the modern business world for raising finances.

About the Author

<p style=”margin-top: 0; margin-bottom: 0″><font face=”Arial” size=”2″>Arfan Ul Haq is an Asian author. He writes articles about online economics course, principles of macro economics and characteristics of developing countries. </font>

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Article by Madison Finance

Documents required for availing car finance in Australia. – Finance – Loans

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The boom in the car sales is taken to be an indicator of the increasing riches of the people. Besides the increasing economic prosperity of the people, the other most important reason for the increase in the sale of cars is due to the easy availability of the car finance in very affordable monthly instalment. Even the down payment amounts may not be required or it might be quite less. The people, therefore, prefer taking the car loan rather than making the full payment in one go.

You are only required to carry some documents in support of your incomes and the identity and some amounts to make the down payment while taking the car loan. Every car manufacturer nowadays has arrangement with the car finance companies and banks to provide the loans to the prospective customers with ease.

The list of documents required for getting the loan are the following:

1. Income proof: It is quite natural to expect the car lease companies to ask for your income proof since they would like to know whether they will be able to pay the monthly instalment or not. This income proof can be furnished in the form of some salary slips, bank statements or the financial statements of the company.

2. Address Proof: The car lease company would like to know where it car is being taken or where the owner of the car resides. For that purpose some address proof is required as well. The driving license or the passport copy can be given as a proof of the address to the company.

3. Property ownership proof: This is required to be given only by those people who own a property of their own.

4. Insurance copy: The car finance company would be giving the car only if it is duly and comprehensively insured.

5. Roadworthiness certificate: This certificate tells whether the cars are fit for being on the roads on not.

6. Photographs of the vehicle with the number plate and vehicle body.

7. Proof of the bank account details of the seller.

If you are an employed person, you can take the novated car lease wherein your instalment gets reduced from the salary that you are taking. On changing the employment, the person must check whether the new employer can provide the novated lease facility or not. Similarly, there are a few other types of car leases.

With increasing sales of cars, there have been problems of urbanization like jams, pollution in almost all the major cities of the world. Some people have mooted the rise in the government taxes and insurance rates to make the car finance dearer and to maintain the sales of the cars at sustainable levels. Some others are even calling for a putting a limit on the total car production and starting of a quota system of production for the cars. These suggestions have been discounted for one reason or the other, and the car loan companies have been doing brisk business.

About the Author

<hr>This article is written by Madison Finance, Australia?s best Car Loan provider. Whether you’re planning to buy your first car, or are looking to car lease, that?s where we can help.

For more information visit us at: Madison Finance for best Car Lease Service.

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Employing a wider array of business finance resources has become an increasingly prudent tactic for business owners as a result of of recent complications in obtaining working capital help. It will be a daunting task to search out the most helpful and effective resources for industrial financing. To locate the foremost acceptable operating capital sites spoken in this text, business borrowers can merely use one in all the leading internet search engines. All of the noted resources are free and available online. This overview will describe some of the tiny business financing resources that ought to be reviewed by business owners as half of their successful method for obtaining operating capital and tiny business loans.

An initial suggested resource can be found by using “commercial mortgages and commercial loans guide” as an exploration phrase. Practical and candid advice regarding avoiding issues with industrial mortgages and small business financing is included on this site. Conjointly included are some particularly relevant articles. A special report describing what a business borrower can do if a bank declines their commercial property loan request could be a primary example.

A second key business funding resource will be reached by looking for “business money advance and working capital guide”. As you might expect, this specific web site primarily addresses problems connected to working capital strategies. A little business money management government outline at this site will be of special value to some. A listing of ten key issues to avoid with merchant loans is included within the outline report.

Tiny business house owners will find a third resource of general interest by looking for “operating capital journal” or “working capital facilitate”. This includes a discussion of predatory lenders that ought to be avoided. A thorough overview of many changes for business financing programs is also offered.

For added insights about little business loan reports accessible through internet sources, we tend to advocate together with terms like “avoiding problems” together with different descriptions such as “business mortgage loans” and “working capital”. For instance, by searching for “avoiding issues with small business financing”, industrial borrowers ought to obtain useful insights about difficulties to be avoided in their own business finance efforts.

With this suggestion for researching business loan problems, there are also some practical precautions. First, there’s extremely no substitute for individualized discussions between a industrial borrower and a knowledgeable business finance advisor as a result of of the complex nature of business loan underwriting. Second, though written sources will determine general industrial loan issues for business house owners to anticipate, there will sometimes be specific complexities that require additional detail than can be provided in a very generic article.

Business homeowners will obtain a wide range of insights regarding changes which are dominating the commercial finance news by reviewing sites created by the search phrases suggested. Although there are substantial and new business loan issues which industrial borrowers must currently confront, such difficulties can frequently be overcome successfully.

Article by Macro Business

Businesses gets significant options of business financing loan to overcome and secure business Funds – Finance – Loans

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Owning a business and its smooth functioning to be carried consistently is absolutely essential. From the beginning itself the most important requirement is to make things stable with all the aspect of the business whether its sales, repayment, purchasing and so on. Every time the money to manage all these things is not necessary to be available in bulk as the flow of money comes and goes fitfully or on the other hand it is required to introduce new advancement into the business as a medium of business development project, it becomes essential to acquire loan that can very well support the idea to excel it financially to achieve new success in the outcome. And also for a business after acquiring a business financing loan the most essential demand is to keep a constant position of the credit ratings high and intact which sometimes becomes a challenge.

In business you never know what challenge may come on a given day to struggle seeking a financial support on an immediate basis. Then it turns the attention to various financial consultants to hire and get a professional assistance with a blend of prevalent advices and mutual discussion in managing the finances and improving the credit score of the company and ensuring a secure path to get a business financing loan without much hassle in future.

Even a newly started business can have some substantial alternatives to re-invest the lent money that is offered by various financial companies to attain a quick and strong growth in future. With easy repayment systems and affordable interest rates and especially all those confusing papers works are least important to be arranged and submit just a few necessary steps to be followed once an intellectual loan advisor is hired and the login process gets on the way in no time, and as a result the approval letter arrives the next day.

Getting back to those businesses which are going through a phase of bad credit ratings and suffering badly to obtain their credibility among the clients and financial institutions, now have an upper hand to file a suitable unsecured business credit loan to regain and rearrange their flow of fund generation with simplified programs and loan products. Not only that, financial companies hired for the credit improvement look for a healthy and sound business relationship with their client to assist and support them financially for a longer period. For the business owner life becomes extremely easy and functioning of the business gets a smooth track and there is no turning back then.

A diverse and effective medium of obtaining a financial support with cheap and affordable innovative loan programs was always on a complex and difficult levels of achieving an on demand financial assistance. But as time has changed the basics and ethics of running a business has changed too , and as the nation has already well recovered from the night mare of financial melt down it is now a time for business to prosper and stay care free when it comes to manage finances.

About the Author

To get unsecured business credit from MBC, you have to do is, fill a simple online form and the other formalities will be over. Money is also granted sooner in the online loan system. For quicker credit business loan visit us at https://www.macrobusinesscapital.com/

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Macro Business

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Article by Maria Jones

Share Your Knowledge and Experience With a Personal Finance Blog – Finance – PersonalFinance

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In this article we will talk about personal finance and how public manage their money. Personal finance is somewhat that most people still do not experience educated adequate about or able to know. This can cause a lot of troubles when people locate themselves not capable to manage their finances and unconscious of just what assists is accessible. Money is absolutely not the most imperative thing in life. But, it is vital enough that we have to pay notice to our legal responsibility by removing those liabilities in order to be successful in our personal investments.

Finance what an enormous and valuable topic that gets enclosed in seven letters. This seven letter word is what is enthralling the whole world. There are several study and analysis going on in this region. And so also it is a library of terminology words. But, these are not for ordinary man. But of course, a blog is, particularly a personal finance blog. Numerous get crooked away by the word economics itself, but when put in effortless and a very down to earth manner, most of the people recognize and get advantage from it.

Personal finance advice out there on how to treat with and achieve something in your own finance. Just like your objectives in physical health and other regions of your life, you have to have aim in order to be successful in your personal finance. Success in personal finance means different things for different people.

Personal finance tips for you contain twenty-four themes covering a collection of areas. It is significant to know as much as you can about organizing your personal finances in these financial times. Most of the regions enclosed are credit card traps, handling your checkbook, keeping on path to pay your bills, identity theft, the price of gas, catching up on retirement planning, what to do if you obtain a lay off notice from your job, inspecting your credit statement and talking about assets if you are preparing to get married. This can cause a lot of troubles when people locate themselves not capable to manage their finances and unconscious of just what assists is accessible. Money is absolutely not the most imperative thing in life. But, it is vital enough that we have to pay notice to our legal responsibility by removing those liabilities in order to be successful in our personal investments.Finance what an enormous and valuable topic that gets enclosed in seven letters. This seven letter word is what is enthralling the whole world. There are several study and analysis going on in this region. And so also it is a library of terminology words. But, these are not for ordinary man.

About the Author

Personal finance advice out there on how to treat with and achieve something in your own finance.Personal finance tips for you contain twenty-four themes covering a collection of areas. For more information visit us at: http://www.themoneytrack.com/

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Maria Jones

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People always need extra help when it comes to their finances and if you are going to be doing that then you need to make sure only to use it in an important and large purchase. One situation which people take loans out for every single day is when you need to buy a car. If you need to go ahead and purchase a brand new vehicle then you will first off need to make sure that you are applying in all of the right places to get the best possible loan. There are many places that you can get a loan, but not all of them are going to suit you. If you are one of the many people who don’t have a whole lot of extra time then it would probably be a smart idea to go ahead and apply for fast personal auto finance. This will be the best option for people who need a loan fast or have credit problems in the past.

The reason that these lenders help people who have bad credit scores is because they are special financing lenders who make sure that they can get exactly what they need.

If you plan to apply through one of these lenders then you are not going to be let down. They make sure that no matter what type of credit score you have that you will still be able to get the best possible deal. All that they are going to require of you is that you take the time to just fill out the quick and simple application that will be available on their website to anyone who is in need of a loan.

It takes a few minutes to fill out your application and as soon as you send it in it will be ready to be reviewed. It can take 24-48 hours until one of our lenders will be able to go over it but as soon as they have you will be contacted letting you know if you have been approved. As long as you have been approved you can head right out to the dealership that is in your area and on their network. There is a very extensive and massive network so don’t worry about there not being options of dealerships around you.

If you’re stuck in a financial rut, here’s a bit of good news for you: You can get out of it sooner than you think. But wait, here comes the bad news: You can get stuck there forever if you’re not doing the right things.

To get yourself on track, the first thing you need to do is to debunk the personal finance myths that are bringing you down. Here are three of the most common:

1. “I’m in deep debt. I can’t afford to have any savings.”

If you have a lot of debts to pay, it’s advisable to work hard towards paying them off as soon as possible – but you shouldn’t do this at the expense of your own savings. If an emergency comes up and you have no money to cover it, you’ll end up taking out more loans, which will bring you to deeper debt.

Start with small amounts.

To make it easier, work your savings around your debt payments. A little is always better than nothing when it comes to saving up for a rainy day. It’s not enough that you’re paying your debts – you have to safeguard yourself from taking out more loans in the future too, especially ones that are avoidable.

2. “I must buy my own house, especially when interest rates are low.”

Many people buy things just because they’re discounted. That holds true for anything, from little kitschy stuff to really big-ticket items like houses. Sure, it’s great to have your own home, but if you’re going to end up burdening yourself with mortgage you can’t really afford in the several years to come, it’s better to pay rent. Renting can give you freedom that paying mortgage can’t, like you can always move to another city or country if you lose your job, or you can move to a cheaper place if your income becomes smaller. In this unpredictable economy, you have to be flexible.

Once your finances have stabilized, you can start thinking about buying your own home. But don’t buy a house just because the interest rates are low. It’s not the price that you have to consider but your capacity to pay.

3. “I have money problems. I can’t afford a financial adviser.”

If it were easy to go on a diet and lose extra pounds, then nobody would be struggling with weight problems. Although some people can get into shape on their own, many can’t. This is why nutritionists and personal trainers get hired all the time.

The same goes for money problems. If you can’t fix them on your own, you should strongly consider getting debt management advice. Getting professional help lets you save – and maybe even grow – your money in the long run; not having professional advice can mean you continue to freely slide towards financial ruin.

With so many different types of loans and financial packages available on the marketplace it can be quite confusing to decipher the difference between them and to work out the unique advantages and disadvantages of each. This article aims to explain what each of these loan agreements are for and how they can be used to your advantage, as by picking the wrong loan agreement for your needs could end up costing you a lot of money.

Secured Loan

A secured loan is a type of personal loan that is secured against your home or property. This means that if you fail to repay the loan then you could be in danger of loosing your house. Generally people tend to take a secured loan if they want to borrow a large amount of money, over many years (generally from 5 years up to 20 years). Secured loans tend to be unpopular as they are secured against your property, however for some people who have a less than rosy credit history, a secured loan may be the only option available to them.

It is generally considered that a secured loan is a lot easier to obtain then other types of loan due to it being secured against a high value asset. If you are looking to borrow a large amount of money, for example over £25,000 then a secured loan again may be the only option open to you.

Unsecured Loan

If you are looking to borrow a large amount of money, up to £25,000 with a long term repayment plan from 5 to 10 years then you will most likely want to take out an unsecured loan agreement. The main advantage to taking out an unsecured loan is that you do not need to own a property to be able to get the loan. However this means that you will need a better credit rating to take out an unsecured loan as lenders tend to run more checks on applicants for these types of loans. You should remember that if you are a homeowner and you default on an unsecured loan agreement you could still jeopardise your home as lenders can still take you to court to reclaim outstanding money. Courts may well take your assets into consideration, including your home, which may be sold to pay off your debts.

Repayment Mortgages

When you are looking to buy a house and you need to borrow money to buy it then you will most likely be looking for a repayment mortgage, although there are other types of mortgage available that you could consider (discussed below). With a repayment mortgage once the agreement has run to the end of its term then you will have completely paid off the mortgage- this is not necessarily the case with other types of mortgage. The term ‘repayment mortgage’ covers a wide range of different types of mortgages so you should do some research into the different types of mortgage that are available as each has advantages and disadvantages associated with them.

A tracker mortgage closely follows the ‘base rate’ set by the Bank of England. This means that if interest rates go down, the mortgage repayment that you have to pay are reduced. Obviously the opposite can also happen and you may end up paying more money. A capped mortgage is similar to a tracker mortgage, but the interest rates are set somewhat higher than the Bank of England Base rate. Therefore these mortgages cost more. The advantage to these mortgages is that if the interest rate goes up a lot then there is a point at which the interest repayment rate is ‘capped’. Another type of mortgage is a ‘fixed rate mortgage’. These mortgages have a pre-determined set interest rate. The advantage of a fixed rate mortgage is that you will always know what your repayments are going to be as these mortgage payments do not follow the Bank of England base rate.

Interest Only Mortgages

In contrast to a repayment mortgage, an interest only mortgage allows you to only pay off the interest on the mortgage initially. At the end of the mortgage, you then pay off in full the rest of the loan. These mortgages were also called ‘endowment mortgages’, as you would pay the mortgage interest monthly, whilst investing money in either an endowment account or pension package. Whilst these types of mortgages used to be popular as they were considered a cheaper option many people found that when they came to repay their mortgage their investments had not lived up to expectation and a short fall of money remained owing on the mortgage. For most people a standard repayment mortgage is the preferred method of borrowing money for a property.

Bridging Loan

A bridging loan is a short-term loan that is used to ‘bridge’ between selling one home and buying another. These loans are generally used because you have run into problems in selling your home and the property that you are looking to buy is in danger of falling through due to the delay. Generally these loans should be only considered as a last resort option as it means that you end up paying off two loans at the same time- the bridging loan and your existing mortgage.

Debt Consolidation Loan

A debt consolidation loan is a loan that combines multiple loans together to consolidate your multiple outgoings into one ‘easier to manage’ loan. When you have multiple debts, such as personal loans, overdrafts and outstanding credit-card bills then there is a temptation to take out a further loan for use as a debt consolidation loan. As it can be hard to manage multiple repayments which may need to be paid at different times of the month it certainly does seem easier to use a debt consolidation loan to simplify this process. However, when you take on extra debt you are likely to end up paying more money in the long run as debt consolidation loans generally run over a longer term and may have higher interest rates than your other loan agreements. Check interest rates carefully and research debt consolidation before you decide to go down this route.

Overdraft Loan

An overdraft is a loan agreement that provides you with a buffer of money you can use on your bank account. Some overdrafts are temporary, so you will have to make up the shortfall over the loan agreement, but more often than not overdrafts tend to have an unlimited run loan agreement meaning that the extra money is always available to you. Whilst it can feel good to have a safety buffer on your bank balance in case you go overdrawn, the temptation is that you constantly live in your overdraft month on month. This means you constantly pay interest on your overdraft. Although overdrafts are a fairly cheap way to borrow money (generally), individuals are better off only using an overdraft facility on your bank balance as a last resort. When considering a debt consolidation loan you should look at your overdraft interest rate carefully as most likely it will be much lower than any other loan you are likely to take out so consolidation this loan will mean you end up paying more money.

Credit Cards

A credit card is simply a loan on a piece of plastic, allowing you to buy things on ‘credit’ as and when you choose. You will need to make monthly payments against what you buy on the credit card, however you do not have to pay off the entire balance each month, so if you are looking to pay for something over a number of months, then a credit card allows you to do this. Managing your credit card spending is important because if you cannot afford to pay off your credit-card’s balance regularly then you will end up paying a lot of interest on the money you owe. Credit cards are one of the more expensive forms of loan agreement. Individuals should ideally try to save for things that they want to buy instead of putting things on credit. However having a credit-card can offer you a safety net in case things go wrong and you need to make an emergency purchase. Such as car repairs, etc.

Payday Loan

A payday loan is a type of loan that is a short term loan that gives the borrower a small cash loan until their payday cheque arrives. These loans are generally low in value and run over a very short term, therefore have a fairly high interest rate to compensate for this. These loans are useful in case of emergencies and you do not have access to funds, however they can leave you short of cash after your pay cheque as you normally have to pay the loan back in full from your next salary. This means you might run into problems after payday, which isn’t ideal.

Cash Advance

For those who run into financial difficulties and are looking for a short term loan which runs over a short period of time, but unlike a payday loan does not have to be paid back from your next salary then a cash advance loan may be the solution. Similar to a payday loan, a cash advance loan is generally low in value, under £1000 and have a fairly high interest rate to compensate for the normally short duration that the loan runs over. These loans can be helpful if you run into financial difficulties and you do not have access to other lending means, such as credit cards or overdrafts. However unlike a payday loan you will not have to pay this loan off completely from your next salary, this allows you to budget better and pay off the loan in smaller amounts over a longer period of time.