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Reasons Why Your Business Loan Was Declined

As a business entity, we are aware that proper planning when getting a business loan is important. Without proper planning, the business loan singapore taken may either be mismanaged where it will end up as a debt that causes more problems rather than a solution to the needs of the business.

Proper planning is critical to getting any loans such as personal loan, small business loan,  even salary loan or payday loan. It is never wise to take on a loan without planning how to use and manage the loan amount. Planning starts in making sure that you get the loan you need. And one good way to make sure you get the personal loan singapore is through understanding why licensed moneylenders in Singapore reject applications. Here are some of the major reasons but not limited to them.

  1. Bad or No Credit History

Image result for bad credit scoreLenders often want to have a basis to trust a borrower that they will repay the borrowed amount together with interest payments. The best way for a borrower to prove that they are disciplined debtors who pay are proven by a good credit standing. Credit standing are records that show the debtors character when it comes to debts. They pay on time and maintain good relationships with their creditors.

  1. Insufficient Collateral

When a financial institution or a bank needs to ensure that the personal loan is secured, a collateral is needed. A collateral is a form of asset that is endorsed by the borrower to the lender. The lender puts a lien over the asset and gives them the right to sell the asset to recover the loss in case of borrower’s default on loan payments. The point where the collateral is sold depends on the loan agreement. When the requirement for a collateral is not met, most probably, the lender will not grant the loan on this ground. Lenders would always want to secure their cash.

  1. Low income and cash liquidity

Image result for Low income and cash liquidityFast cash loan lenders will require a borrower to show sufficient data that the business is earning and enough cash flow is coming in. They need to ensure that borrowers have sufficient cash every due date to ensure repayment of the loan is being made. If business lenders see that more money is flowing out rather than flowing in, then it is highly possible that the loan will not be granted.

Lack of preparation and not knowing these reasons may cause your application to be rejected. It is very important, as personal loan lenders, to ensure that reasons like these are prepared for. It will also give you, as a business owner, an idea on where your business is and what actions to take.

Refinancing a Mortgage

There are times when a mortgage loan becomes hard to pay. Because of all the expenses that burden us, payments for the mortgage may be missed. In these cases, refinancing your mortgage loan may prove to be the best option. When we choose to refinance, we must first understand how it works and how it can help us keeping our property.

There are two major refinancing types for mortgage:

  • Fixed Interest RateImage result for Fixed Interest Rate mortgage

This type of refinancing grants the borrower a loan with a fixed rate. The interest applied to the loan will be fixed during the entire term of the loan and will not change. This helps the borrowers to gain comfort in knowing the interest will not change during the loan period.

  • Adjustable Interest RateImage result for Adjustable Interest Rate mortgage

The advantage of having an adjustable interest rates allow the borrower to enjoy low interest rates that the market dictates. It can possibly provide lower loan payments compared to borrowers who applied through fixed interest rates.

  • Interest Only LoanImage result for Interest Only Loan mortgage

A borrower can avail of a refinancing loan where only the interest will be paid for a specified period. This allows the borrower to recover from the financial downturn. Once the period granted for the interest only payments are done, then regular payments will continue.

  • Rate and Term FinancingImage result for Rate and Term Financing mortgage

This type of loan allows the borrower to take on a new loan with a lower interest and a longer term to refinance the existing mortgage debt. A careful review of this type of loan is needed as there may be a chance that higher payment might be made compared to continuing the original mortgage loan.

  • Cash RefinancingRelated image

A refinancing method that allows a borrower to loan an amount higher than the current mortgage loan. The excess amount will be received in cash which you can use to pay off any existing debt. This method can help you lower and eliminate your debt which can help ease your monthly spending.

Refinancing your mortgage may be a good way to help you cope up with your expenditures especially if your income has been compromised. But you need to make sure that refinancing your mortgage proves to be more beneficial as you may end up paying more than the original loan.

Personal Loan vs. Credit Card Cash Advance Loan

A credit card allows the cardholder an ability to withdraw cash through an ATM and request for an “on demand” loan from the credit card issuer. A metrobankdirect personal loan on the other hand is a loan applied for by a borrower that may take a few days for approval where approval is dependent on certain criteria.

When is taking a cash advance loan more beneficial than a personal loan and vice versa? Below is a list of points that can be taken into consideration in deciding which between the two is more beneficial.

  • Approval Time

Image result for Approval Time Personal Loan vs. Credit CardLittle or no approval is required when making a cash advance loan from a credit card as long as the credit limit or cash advance limit has not been maximized by the cardholder. A personal loan on the other hand takes a few days to process before the loan is granted to the borrower.

 

  • Interest Rates

Image result for Interest Rates Personal Loan vs. Credit CardA credit card has a higher yielding interest rates which can reach up to double the rate of a personal loan. The reason for this the high risk of granting the loan to a cardholder. Unlike a personal loan, the borrower is reviewed of their credit standing prior to being approved of the loan.

 

  • Loan Amount

Image result for Loan Amount Personal Loan vs. Credit CardLoan amount granted by a cash advance loan is dependent on the credit card limit (or a portion of the credit limit). Some factors may affect the loan like the limit an ATM can dispense as there are some banks that limit the transaction amount. This is especially applicable to other countries. A personal loan on the other hand is dependent on the credit score or standing a borrower may have based on the lender’s review of the application. Credit score and standing may even prevent the borrower from being granted a loan.

Based on the information that has been provided, there are cases where a cash advance loan is more beneficial. These are cases where money is required immediately and cannot wait for processing times. But for cases where time is not a factor, getting a personal loan can be advantageous as it yields a much less interest rate.

Refinancing 101

There are cases when your debt goes beyond what you can manage and will need help in liquidating the money owned. There is one process that you can go through called refinancing. Refinancing is a process where an existing debt or loan is paid off by a new loan which has better terms than the original one. Some borrowers resort to this type of action as it has become difficult for them to pay off the original loan. Here are a few tips that may help when you consider refinancing:

  1. Evaluate your loans and focus on a strategy.Image result for leverage the new loan

You need to leverage the new loan that you will be getting to ensure the maximum benefit you can get for refinancing your existing debt. Knowing the terms of your existing loans will help you determine your leverage on requesting for better terms. This may help the lender consider why you will be requesting for a low interest rate with better terms.

  1. Coordinate with different lenders.Image result for different kinds of lenders

One great strategy that you can do is to talk to different kinds of lenders and financial institutions. Try to find the best deals they can offer and which of them can help you benefit most when trying to refinance your existing debt. Some may offer a short loan with a low interest rate or some can provide more flexibility in payment. Try to understand what each one offers and plan well on getting the loan that an maximize your refinancing option.

  1. Keep your relationships with existing lenders.Related image

The least you would want to do is avoiding your existing creditor when you fall out of your payment terms. Keeping in touch with your debtors will prove to be very useful. Lenders will always try to make sure that they are able to collect the loan amount. If a lender is able to see that you are already unable to pay the amount due, they are always willing to work with the borrower to ensure collection. This includes in lowering the interest and shortening the term.

Refinancing is a good way to help you pay off a debt that can no longer be managed. But for every refinancing that you take, this also affects your credit standing. This is why you need to consider careful planning before taking refinancing.

Payday Loan Alternatives

Payday lenders have been known to take advantage of the borrower’s situation. Borrowers who need a short-term fix on cash often get deeper into long term debt when they go for a payday loan.

These payday loans are generally rolled over and accumulate more debt that cause the borrower to lose control of their debt. Payday loans, due to the short-term repayment, often gets the borrower into more financial trouble in the future just to satisfy the short-term needs. Currently, some countries are trying to implement policies to improve payday lending and prevent borrowers from going deeper into debt.

One of the policies being reviewed for implementation is to allow a check if a borrower can pay the full amount without sacrificing other payment obligations and without having the need to make a new loan. The loan cycle becomes endless creating higher debt repayment.

While payday loans are one of the most controversial ways of acquiring finances, it is highly recommended to check alternatives prior to applying for a payday loan.

1. Apply a small personal loan from a credit union or company
Image result for Family and Friends loanThere are cases where the union or the company provides loan benefits to its members and employees. Considering a loan from them may be more lenient on repayment as long as you are a member or employed in the organization. Interests may be minimal and affordable where the term that is provided will help you manage your debts and eliminate them through a better way.

2. Family and Friends
Related imageFamily and friends often help as long as getting yourself deep in debt is not a habit. It is an alternative that you can check before considering to get a payday loan from a lender who would charge high interest rates and slowly bring you into more debt. Relatives and friends often don’t ask for interest payments but would be wise to offer them such upon repaying the loan.

3. Talk to your creditors
Image result for negotiate to your creditorInstead of quickly applying for a payday loan to pay for your current debts which are immediately due, try talking to your creditors to give you an extension. They may charge you additional fees or interest rates but will gladly help by extending the payment date. This will be beneficial as they can help give you more time to create a budget and find alternative sources of income.