Online Financial Tips

Archive for June, 2010

The higher the total debt amount the higher the total monthly savings, has anyone ever asked themselves if this is true would it not be the same just to send this money to the creditors? Technically this would work just the same, but the promises told by debt settlement companies are to sweet to forget. I have heard so many things it makes me sick to my stomach.

If someone is in debt they want to hear what eases their minds and settlement companies are experts at telling people exactly what their troubled minds want to hear. It is true debt settlement is a great tool but it has been corrupted by individuals who want to cash in on people

Much has been said and written about the “horrors” of in house dealer financing of automobile loans. Actually determining the best way to go about financing your next car is a bit more involved. In some circumstances, in house financing auto loans are a very good deal, primarily for those with good, very good or excellent credit. Both the auto dealers and the new car manufacturers know that the limited amount of good and excellent credit available for auto loan financing is very limited and they want as much of it as they can get. So for those with very good credit, they bend over backwards to make sure their auto loan financing is as competitive as possible.

As one moves down the credit spectrum into good to poor to bad, the story begins to change. The average auto finance firm expects most of its business to be poor credit but good enough to pay the loan and not require the car be reprocessed. For an auto finance company this is a great business model. It allows them to charge high interest rates with only a reasonable amount of risk. At high rates they do not even have to finance a lot of cars to have a very viable business. It is in this “gray area” that many of today’s auto buyers find themselves.

For those credit challenged with bad credit, normally the last option and lowest place on the totem pole is “buy here pay here“. In this circumstance the seller actually counts on having to reprocess the car. They realize the credit starved buyer has little or no options so they start by inflating the price of the car. For example a car that may sell on the used car lot of a franchised dealer for $10,000 will easily be $15,000 at a buy here pay here. Often they also require the buyer to put money down and, at the same time, charge the highest interest rates that are legal. Caught up in this set of variables, the buy here pay here dealer does not expect the buyer to pay on the car for too long. They reprocess the car and just sell it again in the same scenario.

If you are one of the millions of Americans who have to look at auto loans for bad credit, the place to start is not even at the auto finance company and certainly not at the buy here pay here dealer. By far the best place to start is the internet. In the privacy of your home you can compare the rates and offers of multiple outlets without ever leaving home. You will be able to determine what your credit will be able to finance and can often get your financing approved over the phone. This way, you are in control and understand what you are getting into.

An average citizen has to deal with a lender or a bank to get an auto loan. Financial institutions offer a wide range of loan products trying to satisfy each consumer’s needs, whether it is personal financing or an auto loan. Lenders prefer to finance people with good credit history, but due to the fact that competition is increasing every day, they are ready to assist customers with bad credit records as well. Bankruptcy auto financing is one of the loan products offered by many lenders.

If you decide to buy an auto after bankruptcy, you may consider applying for bankruptcy auto financing. Purchasing an auto is the best way to re-establish your credit status after such economic failure.

Bankruptcy is usually seen as a trouble case by the lending companies, as there is high risk involved in giving money to customers with poor credit. The loan arrangement is very much depended on your repayment ability and your monthly income as well. You have to ensure that you are able to pay monthly repayments with your income. With the help of bankruptcy auto financing, your insolvency can not stop you from purchasing a car.

Following these guidelines mentioned bellow will answer your questions connected with bankruptcy auto financing:

Study the Lenders – To get the best auto loan rate, after bankruptcy, survey the financing institutions offering such loans. Compare several of them, and then choose the best one. Some of them may offer free auto insurance policy in addition to financing your auto. So don’t forget to shop around for the best options offered.

Settle Terms and Conditions – To get the best bankruptcy auto-financing contract you need to settle the interest rate and duration of the loan. Short loans offer low rates, but high monthly payments. Review your monthly budget and decide which type of auto loan is appropriate to your financial situation.

Raise your Down Payment – Increased down payment will save you a big amount of money. If you put down 25%-30%, you will be eligible for lower charges, even though you have bad credit.

Keep in mind to buy an auto that is reasonably priced in opposition to a more expensive model that may be you dream car. You can wait for example one year or even more if you aren’t in a hurry and then refinance or promote to another auto. During this period your interest rate will be back down significantly.

If you follow these steps mentioned above, you can buy a car of your dreams at a reasonable price. With bankruptcy auto financing you can achieve the most via your money.

Imagine this scenario: A terrorist sets off a bomb, blowing up a dam near your home. A chunk of concrete falls on your house, tearing a hole in the roof. A few minutes later, water from the burst dam rushes down the street and floods your home, ruining your carpet, furniture, and personal possessions. Frightened by the rising water, your dog attempts to scratch its way through your door, shredding the surface. In the midst of the chaos, an earthquake hits, cracking the concrete slab under your home and dislodging the sewer line. Dazed, you wander outside just before a meteorite falls from the heavens and demolishes what remains of your home. Having recently read your homeowner’s insurance policy, you think, “Thank goodness for that meteorite!”

Many homeowners believe that virtually any damage to their home is covered by their homeowner’s insurance. In fact, many kinds of property loss are excluded from a standard homeowners insurance policy. In the doomsday scenario above, for example, only damage caused by the meteorite would be covered under standard homeowners insurance. Some of the other disasters could be covered by separate insurance policies, or by additions to the policy known as riders or endorsements. Some things are simply uninsurable. Let’s examine the disaster scenario, point by point:

Hostile attacks. The damaged caused to your roof by the flying piece of concrete would not be covered by homeowner’s insurance, because it was the result of a terrorist act. The result would be the same if the dam were blown up by an incoming missile from a hostile state. Acts of terrorism and war are excluded from homeowner’s insurance because the damage could be so widespread that insurance companies could not pay all the claims without going broke.

Floods. As residents of New Orleans learned when a levee broke as a result of Hurricane Katrina, flooding is not covered by homeowners insurance, even when the flooding is caused by the failure of a man-made flood control system. Floods are excluded from homeowner’s insurance for the same reason that war is: the damage can be too widespread. Since private insurer’s will not cover flood damage, the U.S. Congress passed the National Flood Insurance Act of 1968, which created the National Flood Insurance Program (NFIP). Funded by premiums from homeowners and supplemented with income tax dollars, the government program is the only flood insurance available.

Animals. According to the American Pet Products Manufacturers Association’s 2007-2008 National Pet Owner’s Survey, nearly two thirds (63 percent) of American households own a pet of some kind, including more than 43 million homes that own dogs. Pets of all kinds can cause damage to the home. Because of the widespread risk posed by pets, insurance companies exclude pet damage from home owners insurance coverage. The pets themselves are not covered either. According to a survey by the National Association of Insurance Commissioners, 22 percent of respondents mistakenly believed that their homeowners insurance covered injured or stolen pets. Damage caused by infestations of rats, bats, termites, ants, or any other wild creatures is also excluded from coverage.

Earthquakes. Since 1900, earthquakes have occurred in 39 states and caused damage in all 50. Earthquake damage can be massive. According to the Federal Emergency Management Agency (FEMA), earthquakes are responsible for $4.4 billion in property losses per year. Because of the cost and frequency of earthquakes, standard homeowner insurance policies exclude property losses dues to the shaking of earthquakes. Cracked walls, broken foundations, ruptured sewer lines, even the collapse of a home caused by shaking is not covered. However, if an earthquake causes secondary damage, such as a fire, the secondary damage would be covered by homeowners insurance. Separate earthquake insurance policies are available in many states. After the 1994 earthquake in Northridge, many insurance companies stopped offering earthquake insurance in California, however. Pressured by fearful homeowners, the state legislature passed a law requiring property insurance companies to offer California residents earthquake insurance through participation in the California Earthquake Authority (CEA). To limit the cost of claims, the CEA-backed policies cover living spaces only, not swimming pools or other nonessential structures.

Other types of damage may be excluded from your homeowners insurance policy, including damage caused by your own children. The home is the largest asset most people own. To be sure its value is protected, consult with your insurance agent to make sure you have separate policies, riders, or endorsements for your greatest insurable risks.

Beginners in investing should begin with some basic objectives and to fully understand them before putting in your first investing portfolio. The followings are some key pointers to guide beginners.

A] Income generation objectives

This is more concern about current income then capital appreciation overtime. Trading is an aspect to income generation where the time horizon is much shorter.

B] Growth objectives

Investors are concern about capital appreciation and ready to take on a longer term objective. An example will be today market situation is a good time to take on equities or funds position as extreme price bargain is available now.

C] Capital Preservation objectives

It is a concern on the risk involved especially when one reached near to retirement age. There is a need to diversify their portfolio into allocation of stocks, bonds and cash to minimize the risk. If one is near retirement age, he should not allocate more then 25% of his total funds on equities.

D] There are various types of investment instruments.

They are savings accounts, fixed deposit, Bonds, Stocks, Commodities, Mutual Funds, Derivatives like Options, Contract for Differences and Real Estate.

The common factors that investors need to consider in choosing the various instruments are as follows:

1] Time horizon of the investment.
2] Risk tolerance and management.
3] Rate of return or yield.
4] Diversification to spread the risk.
5] Taxation concern.
6] The size of investment units. Some stocks can only be purchase with a minimum of 1000 shares per lot in certain countries.
7] The liquidity and marketability of the stocks concern.
8] The security of the principle sum invested and the needed income that one would expect.

Credit Tenant Lease (CTL) Financing is a unique commercial mortgage lending platform designed to finance the purchase, refinance and development of single tenant, triple net (NNN) leased, buildings. The buildings can be retail, office, industrial or warehouse; CTL loans can be written against any real estate as long as it’s occupied by a “credit tenant”.

For the purpose of CTL lending, a credit tenant is defined as a corporate entity that has earned an investment grade credit rating from the major rating agencies. Generally, any company rated lower than BBB- (triple B minus) by Standard & Poors or Baa3 by Moody’s, is not be considered investment grade and would not qualify for CTL financing.

CTL loans are very different than traditional commercial mortgage loans. Lenders who originate CTL financing are primarily concerned with the structure of the lease and the strength of the tenant rather than the value of the real estate or the credit of the borrower. CTL lenders count the lease and the income it generates as the main collateral backing the loan. This is a distinct difference as-compared to standard commercial real estate lending and represents a unique perspective in real estate finance.

CTL lending is possible because of the popularity of NNN leases among strong corporate tenants. When a landlord executes a true or “absolute” NNN lease with a good tenant, he has almost no management or operational responsibilities. The tenant is responsible for everything from paying the utility bills to maintaining the building, even large real estate issues, such as repaving the parking lot or replacing the HVAC system are all the responsibility of the tenant, not the land owner. Consequently a lender with a lien against a NNN leased property likewise needn’t worry much about the building; even if they have to repossess it in a foreclosure, they won’t have to actually run it. For buildings with long term NNN leases and excellent tenants, it only makes sense that lenders focus mainly on the lease.

CTL loans are originated by commercial mortgage bankers or direct CTL lenders. Bankers will issue and sell a private placement mortgage bond in-order to fund the CTL loan. Direct lenders also collateralize the lease into a bond, but often hold the debt in their own portfolios rather than sell it on the secondary market.

Because of the straight-forward nature of CTL financing loans amounts are typically larger than other institutional loans. Many CTL lenders will make no restrictions on loan-to-value or loan-to-cost and will write the maximum possible loan. The only real condition on the size of the loan is that the rent collected must cover the mortgage payment. Most CTL lenders require a minuscule debt-service-coverage (DSCR) ratio of only 1.01%-1.05%.

Speed of execution is another benefit of CTL loans. It only takes 45-60 days, from start to finish, to complete a CTL transaction. Bank loans, on-the-other-hand, are notorious for being long, drawn out bureaucratic affairs.

Borrowers who take advantage of CTL financing tend to be sophisticated commercial real estate investors who understand the business of NNN investing. They are generally seeking dependable, long term income from their real estate holdings and want permanent, fixed financing. The terms of CTL loans are “co-terminus” with the term of the underlying lease and the rates are usually fixed for the life of the loan. CTL loans are nearly always self amortizing mortgages written for 15-25 years. Developers also use CTL financing for build-to-suit construction loans.

The ultimate credit tenant is the US Government. Uncle Sam still enjoys the highest possible credit rating and leases real estate all across the country. Federal court houses, Social Security Administration buildings, Department of Homeland Security field offices, and US Post Offices are all examples of buildings that have been purchased using a CTL mortgage loan.

Investment grade corporate tenants include the drug store chains, Walgreens and CVS, as-well-as, retail giants Walmart and Target. McDonald’s is, of course, the most popular credit tenant in the food service industry. Virtually any company that can boast of a superior credit rating and leases real estate on a NNN basis, can qualify for streamlined CTL financing.

CTL is a very specialized lending platform designed to accommodate a very specific type of commercial real estate investing. It is a very fast and efficient method of funding the purchase, refinance or development of a building that is NNN leased to a high quality tenant. CTL loans are perfect for the individual investor who buys income property or the small-to-midsized developer who builds only one or two projects at a time.

In a time of continuing economic turmoil and difficult credit markets, it’s nice to know that there are still dependable sources of commercial real estate lending. If you are buying, building or need to refinance a building that’s leased to a credit tenant you can depend on CTL financing.