Banking & Finance

The used car market is open to all segments of buyers of late. From families looking to buy their first car to entrepreneurs buying second-hand swanky luxury cars like AUDI and Mercedes, the used car market is versatile in India, pegging right next to the new car sales. The promising forecast of a CAGR of nearly 8% for the Indian used car financing market between FY 2022 and 2027 confirms the same.

Taking out a loan for buying a used car is a sensible idea. Buyers can stretch their budget and, in most cases, can opt for a higher variant than what they could afford for a new car. The budget-friendly monthly installments that used car loans offer to add to the ease of buying your dream vehicle.

Borrowers can take a used car loan from Muthoot Capital to get the best interest rates and payment terms on their car loan. Read on to know about things one needs to check before applying for a used car loan.

5 Things to Check Before Applying for a Used Car Loan

1: Used car loan Interest Rate

The rate of interest the lenders charge on used car loans is usually higher than the interest charged on new cars. This makes it necessary to check the used car loan interest rate before applying for it. The rate of interest depends on multiple factors like the credit history of the borrower, his income level, type of vehicle, etc. Lenders also charge a one-time processing fee on used car loans. Lenders like Muthoot Capital offer used car loans starting at 8.5% p.a. under different schemes.

2: The loan Amount

Financial institutions offer different Loan To Value (LTV) on used car loans. Usually, it ranges between 80-90% of the on-road price of the car, but with Muthoot Capital, borrowers can get up to 95% of the car’s value as the sanctioned loan amount. A higher loan amount means a lesser burden on the borrower’s pocket when taking the delivery.

3: Ease of Approval

Buyers can pick their dream vehicle from authorized second-hand car dealers. These dealers offer several authentic options to buyers, and the cars they endorse come with an assurance of quality, clean paperwork, and genuine pricing.  Getting a loan on such second-hand cars is easier. The right lenders keep their customers first and offer quick loan approvals with minimum paperwork. Lenders like Muthoot Capital even offer used car loans to people with no income base.  

4: Easy Documentation

• Before going ahead with the loan application process, the borrower can check and complete the list of documents needed for the car purchase and loan. These documents include:
• Get the RC or Registration Certificate of the car transferred in the name of the buyer. The RC holds information about the chassis number, place and date of registration, engine number, etc.
• A No Objection Certificate on the car and the re-registration of the car by the RTO.
• The Pollution Under Control Certificate.
• Valid Identity proof, Address proof, and Income proof of the loan applicant.
• Asset proof.
• Photo proof in form of the latest passport size photograph.

5: Low Down payment

The buyer has to pay a part of the value of the car at the time of making the purchase. The lender finances a major portion of the car’s value, but the borrower needs to make a down payment on the car. Since the down payment puts an instant strain on the buyer’s pocket, he can look for a lender requiring a low down payment. Take a used car loan from Muthoot Capital for a low down payment and flexible EMI options.

Why Opt for a Used Car Loan?

• Used car loans start from Rs. 50,000 and go up to Rs. 10 lakhs, adding to the buyer’s paying capacity and confidence while picking up a car.
• The application and documentation process of a used car loan is easy and can be completed online in a few easy steps.
• Keep savings intact for emergencies with the high LTV offered by lenders like Muthoot Capital.
• User car loans come with flexible tenures, and borrowers can decide on the repayment period ranging between 12 to 60 months.
• In the case of prepayment of the loan, the borrower has to pay only a nominal fee that does not magnify the loan’s cost.

Buy your car from an authentic seller, like a registered dealer or a known car owner. Make sure the car’s papers are up to date and there are no dues or challans. A loan application for such a second-hand car has a higher chance of approval. Used car loan financing is a no-sweat deal with trusted names like Muthoot Capital.

Ayesha Saeed

Ayesha completed her Doctor of Philosophy in Biochemistry and started her career as a College Lecturer in 2013. Today, she’s a happy mom of 2 Kids in the field of digital marketing. She loves reading books, spending time with her family, and making delicious food for her husband.

Buying a home is a significant chapter in anyone’s life. The whole process can bring both excitement and stress, even to service members and their families. But members of the military may face unique challenges that can make securing a mortgage loan difficult. Luckily, this feature will explore various options for veterans.

Primarily, VA loans were made for veterans, servicemen, and surviving spouses. But there are other loans such as FHA, USDA, and conventional loans for retired soldiers to check out for their property financing needs. They’re included here as alternatives in case VA mortgage loans don’t fit into the situation of one service personnel applicant. You can inquire at reputable lenders similar to SecurityAmericaMortgage.com for more information and to see what type of home loan’s a perfect fit for your situation.

Mortgage Loans Available For Veterans

Are you a United States (U.S.) service personnel? Or do you happen to be a partner of a loved one that’s currently serving in the military? Continue reading below to learn more about the possible mortgage options that are available for veterans.

VA Loans

If there’s a mortgage option specifically for those in the military service, it’s VA loans. It’s one of the benefits of serving in the military. VA loans are both available for veterans and active military service personnel if they qualify and meet a number of requirements set by the loan. Surviving spouses and national security employees can also apply for the VA loan.

VA loans are available through a program established by the U.S. Department of Veterans Affairs. VA loans allow veterans to buy homes with little down payment or none and a competitive interest rate. They can do so without any private mortgage insurance too.

There are different types of VA loans:

Cash-Out Refinance Loans

Cash-out refinances loan is a type of VA loan that allows applicants to borrow against equity. They can use the money to improve homes, pay off debt, and fund education. It opens a new mortgage for a more significant amount and converts home equity into cash.

Home Purchase Loans

This loan assists a veteran in purchasing a home with a lower interest rate. It doesn’t require mortgage insurance or a down payment.

Interest Rate Reduction Refinance Loan

Known also as a VA streamline refinance loan, it offers a lower interest rate through refinancing an existing loan with a fixed-rate term. Holders can also turn a formerly adjustable-rate mortgage loan interest into a fixed-rate agreement.

Native American Direct Loan

A loan applicable to eligible Native American veterans allows them access to funding for the construction, purchase, or to make home improvements in homes sitting on federal trust land.

While VA loans are designed for veterans, there are other types of mortgage loans available to them if they decide to look for alternatives. The following are other mortgage loans that veterans can turn to.

FHA Mortgage Loan

Another reason to choose FHA loans over other options is that they are similar to VA mortgages supported by the government (particularly the Federal Housing Administration) and have lower interest rates. And like VA loans, they don’t allow penalties even if you could pay off the loan earlier.

FHA Streamline Refinance

This type of mortgage loan includes the FHA Streamline Refinance alternative. It works by helping qualified borrowers pay monthly mortgage payments by lowering the interest rates. It’s a quick and simplified process that sometimes allows borrowers to skip appraisal before closing.

If you want to apply for FHA Streamline Refinance, here are the advantages you can expect from this loan:

• It’s a chance to refinance despite owing more than the value of your home, which is also known as an underwater mortgage. The amount you receive is based on the outstanding balance, so you can still use streamline refinance even if your home value has declined.
  • You can lower your monthly payment. FHA has strict guidelines that borrowers must follow to secure a loan. One of them is that you can’t extend the loan to 12 years. The interest rate must also be reduced when extending the loan to lower payment. But one exception to the rule is if your mortgage is originally an adjustable-rate mortgage.
  • You can avoid a home appraisal. While an assessment is a way to determine the fair market value, FHA Streamline Refinance doesn’t need it because the loan amount is determined by what you own and not the current home value.
  • Credit checking and paperwork are limited. There are two types of Streamline Refinances. The first is credit qualifying – which requires you to submit income documentation for the lender to check. The second is non-credit qualifying, where the lender checks your credit score.

USDA Loans

If you prefer a loan type that doesn’t require you to put down money first, you can opt to apply for a USDA mortgage loan instead. Like VA, it’s also backed by the US government via the Department of Agriculture and has lower interest rates. The following are some basic rules that apply to government mortgages:

• The loan shouldn’t be used to purchase investment property;
• Occupancy is required; and
• It’s required to have a demonstration of need.

Nevertheless, USDA isn’t for everybody.

The loan type has limitations on household earnings and income caps. The property for purchase must also be in an approved rural location. You’d be happy to know that areas approved by the USDA can be found in most places across the country.

To see if a property is in an eligible area, you can head to the official USDA website and click on the program links. Choose the Property Eligibility Program link. Selecting the Rural Development Program will direct you to the property eligibility screen for your preferred Rural Development program.

Understand that the maximum loan amount might be lower than the loan limits of the VA mortgage though. Yet USDA loans are still a worthwhile option you should look into.

Conventional Loans

There’s a conventional loan type that is similar to VA mortgages. It’s a mortgage loan that isn’t known to many veterans but one they can turn to for property purchases.

While it’s not officially a part of the VA loan program, it’s meant to function similarly to a VA loan. An excellent example of this home loan is a military members’ credit union home loan. You don’t have to put up a down payment with this loan. It has a fixed interest rate, and the lender pays private mortgage insurance.

The state doesn’t get involved with the Navy Federal Loan even if the features are available through the VA mortgage loan. A veteran applicant doesn’t use the VA mortgage entitlement. They can still apply for a loan with similar features and terms to the VA loan.

Conclusion

Veterans have a few alternatives to VA loans that they can explore. Different people have different needs and situations, making these options ideal for them. Those who want to apply for a mortgage must understand each loan type before proceeding. It’ll help them choose the best option for them while saving time and money.

Jason Obrien

Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.

Indians are so much attached to the sentiment of gold for quite some time now. Irrespective of the occasion, as and when the gold prices plummet, you find them congregating near the gold stores. Even the volume of gold imports was exorbitantly high in 2021. According to a source, India imported gold worth $55 billion in the same year – double the last year. The precipitous demand for gold surged during the pandemic because of the plummeting prices and overdue weddings.

Overall, Indians purchased Rs 3.40 lakh crore worth of gold in 2021 alone. You can use this popular asset for many purposes, like applying for a loan against gold, using it as an asset to building wealth, etc. Since March 2020, loans against gold skyrocketed by a ginormous 82 percent, states RBI reports. However, people are often left wondering if using this precious yellow metal to get a loan is a good idea or not. Let’s try to know more about a loan against gold, and find the answer to this question.

Why is a Gold Loan better?

Taking a loan against gold in India has become a common practice. As gold is highly liquid, pledging this asset can instantly get quick cash from any financial institution. You can use the loan amount for any purpose like buying a car, planning a wedding, going on a family trip, etc. While there are many types of loans like unsecured personal loans, vehicle loans, home loans issued for specific purposes, gold loans don’t have any restrictions.

After paying your last loan installment, you can collect the gold jewelry you kept with the lender as collateral security. In case, if you miss paying your gold loan amount, the lender can convert your furnished gold jewelry into cash and reclaim the loan value.

Benefits of Taking a Loan against Gold

Most people choose gold over other investment avenues because of its ever-increasing demand and high liquidity. Yes, a loan against your gold jewelry is a good option. There are so many benefits of taking a loan against gold.

1. No credit score: Generally, lenders ask borrowers to furnish a pile of proofs and documents before sanctioning the loan, and credit score information is one of them. Fortunately, a gold loan doesn’t require a credit score report. With a lender like Muthoot FinCorp, you can submit only the basic KYC documents and get your loan.

2. No fee for prepayment: It’s the borrower’s responsibility to repay the loan as per the predetermined EMI installment period. Failing to pay will levy a penalty, leading to a spike in the total loan amount. On the other hand, at companies like Muthoot FinCorp, borrowers won’t be levied with any additional charges for prepaying the foreclosure charges after 3 months of taking the loan.

3. Maximum loan amount: Borrowers get the gold loan based on the worth of the gold jewelry they submit to the financial institution. Lending houses like Muthoot FinCorp offer a gold loan of up to 75% of the total gold presented. Here, you can get a maximum gold loan of Rs. 50 lakhs.

4. Instant disbursal: Generally it takes 7-10 working days to get a loan sanctioned and disbursed when it comes to loans like personal loans or housing loans. When it comes to a loan against gold, once your information gets verified and approved, your gold loan amount gets sanctioned and disbursed instantly. With Muthoot FinCorp, you can get a gold loan amount in 10 minutes. What’s more, there are easy and same-day top-up options available on your existing gold loan with Muthoot FinCorp, making it easier for you to get an additional loan amount.

5. Flexibility in repayment: Sometimes, managing monthly finances can be difficult, especially when you are paying loans. So, when it comes to a loan against gold, it’s important to look for repayment flexibility. At Muthoot FinCorp, you have the leeway to pay the principal and interest in the initial stage or at the end of maturity. If things are going south with your finances, you can always opt for a monthly or quarterly EMI facility that saves you from shelling huge amounts.

Wrap-up

If there’s any refinancing investment avenue as good as any, it’s a gold loan. Not only do Indians buy gold in huge quantities, but they also use them to get loans from banks and other financial corporations. This asset-backed security doesn’t require a credit score or detailed documentation for getting approved. Before availing of a gold loan, check the tenure, ability to repay, gold purity, etc.

Ayesha Saeed

Ayesha completed her Doctor of Philosophy in Biochemistry and started her career as a College Lecturer in 2013. Today, she’s a happy mom of 2 Kids in the field of digital marketing. She loves reading books, spending time with her family, and making delicious food for her husband.

Living with debt is a reality that too many Americans face. It can be hard to go on and live your life when debt collectors are constantly calling you and you never have any money left in your bank account after payday.

According to recent studies, 79 million Americans are living with some degree of debt. It affects every aspect of your life and can be mentally draining. Stress, depression, and anxiety can begin to consume you if you’re living with a debt that you’re unsure how to pay off.

There are ways you can tackle your debt and get your life back. Not every option is going to be the right one for you, but here are 5 ways you can deal with your debt and get your life back.

Ask A Professional

Debt is a serious problem that can lead to serious consequences. Living with a high amount of unpaid debt can lower your credit score and make it hard to get a loan or even rent an apartment!

If you’re dealing with a lot of debt and don’t know how to go about tackling it then your best bet is to talk to a professional. Set a meeting with a debt or financial counselor. They’ll go over all of your debt with you and provide you with options for tackling it based on your unique situation.

A professional can refer you to other resources that could help lower some of your debt. They can also help you figure out where you can cut costs in your day-to-day life to start repaying your debts. They are seasoned professionals who will help you determine a plan to improve your financial future.

Avoid It

Obviously, this won’t be much help to you if you already have debt, but the best way to deal with debt is to avoid it. Don’t take out loans that you can’t repay. Don’t buy that $1,000 cell phone just because you’re positive you can afford the $50 monthly payments.

One medical or personal emergency, unemployment, or a number of other unexpected factors could leave you unable to afford that monthly payment. Never buy something unless you could afford the pay the full amount, right then and there, in cash and still be financially comfortable.

Avoid falling into a debt trap by paying all of your bills in full and on time when possible. Never use your credit card to withdraw cash at an atm. When you do find yourself in debt you need to be proactive. Don’t wait too long to take care of the problem because it will only become exponentially worse.

File Bankruptcy

Sometimes we get ourselves into a situation that we can’t get out of. When that happens, it’s time to take a step back and try something different. You could spend the rest of your life chipping away at insurmountable debt, only for it to be shifted to your spouse or family members after you pass.

There are different types of bankruptcy you can file for so you’d need to speak with a professional to determine which is right for your situation. Bankruptcy should be a last resort, but it can be so worth it.

Filing for bankruptcy, “will give you a fresh start and allow you to take back control of your life,” says Karl S. Pearson, founder of Pearson Law, PLC, and one of the bankruptcy lawyers in Scottsdale AZ. Some forms of bankruptcy even allow you to retain your assets, including your car and home.

Payment Plans

Staring down thousands of dollars of debt is an overwhelming and depressing feeling. It can be hard to imagine ever coming out from under this burden, but it is possible. Most companies understand the financial burden that debt can place on a person and are willing to work with you if you communicate with them.

Call whoever is in charge of your debt and discuss your options with them. Most companies are more than willing to schedule set payments with you on a specific payment plan. Remember, these companies simply want to see progress against the debt. They don’t expect you to pay it all off at once.

Make your minimum payments on time every month to ensure that a late fee isn’t added to your debt. If you ever can’t make your scheduled payment then you need to call the company immediately and inform them. Oftentimes, they’ll be more understanding than you think and give you an extension.

Take A Class

Many people find themselves victim to debt because of bad financial choices and lack of knowledge about how their finances or credit works. The best way to start working toward becoming debt free is to grow your knowledge about how finances and credit work, and how they should work for you.

You can take classes online or even at a local community college if one is offered in your area. It’ll give you the chance to learn the ins and outs of what debt is, how it happens, and ways you can avoid it in the future.

Tristan D. Porter

I am Tristan who loves to ride and spend time with my jenny (horse) and my love Mark. After completing my graduation, I have been working as an accountant in a private firm in Cologne.

Older individuals are more susceptible to chronic diseases and require extensive treatment to recover. After their retirement, meeting such treatment costs becomes quite challenging for them with a limited source of income. Keeping this in mind, investing in a senior citizen health insurance policy should be an integral part of one’s retirement planning.

However, before availing, individuals must be aware of its intricacies and how to choose the most suited option.

Key benefits of Health Insurance Plans for Senior Citizens

As mentioned earlier, after retirement, handling the medical expenses and treatment costs of critical illnesses become difficult for elderly persons. This is mainly because they barely have a proper source of income after that stage of their lives. Considering that, it is essential to avail of a health insurance plan that is dedicated to this group of individuals.

Following is a list of advantages policyholders possessing a senior citizen health insurance plan will be getting:

Cashless claim facility

With such policies, individuals get the convenience of cashless claim features at the network hospitals of that particular insurer. In case of medical emergencies, the family members do not have to arrange funds to finance the hospital expenses. Once the patient is admitted to one of those network hospitals, they will be able to avail of a cashless claim, and the insurer will be covering the entire costs.

Lifetime renewability

Unlike traditional health insurance plans, such policies applicable to senior citizens usually offer a lifetime renewability feature. With this facility, the policyholders can avoid the complications that come with policy renewal at an older age.

Less waiting period

The waiting period is the time limit during which policyholders are not able to claim health insurance benefits. This period is comparatively lesser for health insurance policies for senior citizens than the traditional policies. Since chances of developing critical ailments get increased after a certain age, the scope for urgent medical emergencies also increases with that.

Because of this particular feature, individuals do not have to wait for years to claim the treatment cost.

Tax benefits

The availability of income tax benefits is another major reason why health care insurance policy can be a part of one’s retirement armory. Here is an explanation of the tax deduction available on such policies –

• Individual and parents below 60 years of age: Up to Rs.50,000
• Individuals and family members below 60 but parents above 60: Up toRs.75,000
• Everyone in a family is above 60: Up to Rs.1,00,000

Apart from these, no claim bonus, hospitalization expense cover, and pre-medical screenings are additional advantages that one gets from such policies. However, individuals must keep certain aspects in mind before availing them to make the most of these benefits.

Points to consider before choosing senior citizens’ Health Insurance Policies

Efficacy of Medical Insurance claims

Before investing in such a policy, individuals must check both the claim settlement ratio and the time the insurers generally take to settle the claim. It is advisable to pick an insurer offering high CSR.

Availability of Free Look Period

The free look period is the time during which policyholders have the freedom to have a free look at the insurance plan. With this particular feature, you get to understand its clauses properly and cancel them in case the terms do not match your requirements.

Furthermore, one should also check if an insurance provider has access to a wide network of affiliated hospitals, pre-existing illnesses cover, etc., before availing senior citizens of health insurance policies.

Ayesha Saeed

Ayesha completed her Doctor of Philosophy in Biochemistry and started her career as a College Lecturer in 2013. Today, she’s a happy mom of 2 Kids in the field of digital marketing. She loves reading books, spending time with her family, and making delicious food for her husband.

Merchant banks are different from retail and investment banks and target a customer base between the two. While retail banks cater to the needs of the general public and investment banks work with big sharks and the government sometimes, merchant banks facilitate medium to large-sized businesses. Now, if you wonder what a merchant bank is and what it does, here’s everything you need to know.

What are Merchant Banks?

Merchant banks are financial institutions that help big businesses with loans and funds along with giving financial advice. You may call them a combination of consultancy service and banking. They facilitate the growth of companies that do not receive loans or investments from other financial institutions. Merchant banks offer portfolio management, underwriting, loan syndication, and financial advice. Some such banks also provide financial assistance on an equity basis.

Merchant banking helps businesses in multiple ways:

• They help modernize the business.
• Merchant banks help boost businesses by raising funds.
• You may take merchant banking services to revive your dead business through their strategies.
• They facilitate buying and selling of stocks in the stock market.

Functions of Merchant Banking

Besides the few mentioned above, merchant banks perform numerous functions for their client organizations:

Portfolio Management

Merchant banks help their clients manage their portfolios and buy securities on their behalf. Merchant banks offer consultancy services and improve the value of underlying investments. They assist their clients in making deals and purchases and enable the sale of securities. By managing their portfolios, these banks facilitate businesses with making decisions for safe investment. Simply, they buy and sell shares alongside managing fund investment for companies. They also make fundraising possible for their clients.

Project Management

As merchant banks are counseling institutes besides offering financial assistance, they help their clients regarding different aspects of a project. From researching the project’s success possibility to assisting you in making a decision and managing the project, they are there throughout. Project counseling or management covers all aspects of the project, including idea generation, research, budgeting, designing plans for financing the project, and advising about possible increments and concessions.

If you ask your bank for further help, they also extend their expert advice on the location of the plant, feasibility reports, policy benefits, and sources of support. Having a merchant bank on board with you on a project means that you do not have to worry about anything and relax while taking care of investments and solutions to associated problems.

Credit Syndication

One of the major reasons businesses approach merchant banks is their credit syndication services. If you have not been able to get a loan from any of the big names that might help your business reach heights, a merchant bank can always help you.

Merchant bankers are qualified and experienced in the domain and know how to get money from a specific institution. They understand the matters in-depth, making it comparatively easy to get credit from another company or financial institution. They provide loan syndication services to their clients to smoothen and speed up project planning and loan applications to get short-term and long-term loans.

Merchant banks do so by estimating the costs and creating a professionally correct financial plan not to miss any important, relevant details. They also help select the right institution for you to request credit and comply with all the terms on the application with the investors.

Merchant banks provide multiple services collectively known as credit syndication. These include

• Estimating the overall cost of the project
• Designing a financial plan that covers all loans and investments you need while putting down all important information
• Suggesting ideal financial institutions for short-term and long-term loans
• Helping the clients with the loan application, complying with the financing company’s terms, and monitoring the progress
• Taking care of legal documentation formalities of the investing companies

Apart from all this, the counseling feature of merchant banking helps you estimate the capital requirements and help negotiate.

Facilitate Small Businesses

While merchant banks are primarily considered good friends of medium-sized to big companies, they also offer entrepreneurs and small companies services. They usually counsel small businesses about bigger opportunities, incentives, concessions, and government policies to boost their business. By taking advantage of these policies and incentives, they can grow and become an eminent name in the market.

Revive Dead Units

Experts at merchant banks are not only adept at helping businesses get loans from companies or project management, but they are also good at reviving and restructuring units or dead businesses. Merchant bankers connect with long-term financial institutions and assure them about the potential in your business. It requires proper documentation, negotiation, and taking care of the legal needs of the investor.

Stock Market Brokerage

Merchant banks are also an excellent choice for stock market brokerage to buy and sell stocks on your behalf. To make sure that they make the right choice for you, merchant banks carry surveys and suggest to you about which shares to purchase, for how long, and at what rate. Having a merchant banker to do all this for you lets you know that your money is in safe hands with experienced people. Merchant bankers also counsel their clients about when to buy the shares and sell them for the best profits.

Manage Public Issue

For companies that are not aware of the public issue of their business, merchant banks help them with the timing of the issue, form, and enable them to be specific to customers.

Merchant banks manage the public issue by:

• Advising the price and size of public issue
• Counseling at the time of filling up
• Acting as a manager in the whole process
• Listing the shares purchased
• Allotting securities and helping in accepting applications
• Helping with the appointment of brokers

The Bottom Line

If you are a medium-sized business, you can let go of all your funding and stock-exchange-related worries by connecting to a merchant bank. They are genies that help you with all issues, from counseling to getting loans and credit for your company. Merchant banks also buy and sell stocks on your behalf and manage portfolios and the public issue.

Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

When you refinance your auto loan, you pay off your current debt with a new one. While it may sound counterintuitive, you should consider doing this if it can save you money in the long term. If the market rates for loans are more favorable or if your credit score has improved, it may be time for you to refinance your car loan.

Benefits of Refinancing your Auto Loan

To begin refinancing your car loan, start with assessing your financial status. If your credit score has improved, you can get a better interest rate on your loan by refinancing. Shop around and look for a lender that can give you maximum benefits. Here are some of the benefits you should consider when taking out another loan:

1. Lower your Interest Rate

Interest rates are affected by the market and your credit score. The market is always changing. If you find that interest rates have gone down a year after you availed of your loan, it might be a good time to refinance. It doesn’t have to be a dramatic drop, either. A reduction of 2% in interest rates can drastically improve your savings over the long term.

If you took out a car loan with bad credit, your interest rates must be higher than average. Your credit score should have improved over time as you pay your loan regularly. This should also give you better options and lower interest rates.

2. Lower your Monthly Payment

It is also a good time to refinance your auto loan if you need more affordable monthly payments. By refinancing with longer payment terms, you can reduce your monthly expenses. For example, you can extend your loan from 36 months to 48 months, which will significantly lower your monthly payment.

But do note the tradeoff: a longer payment term also means you might be paying more interest. It is not always the case, as you may find a deal with lower interest rates for the same duration of your current loan. If you opt for longer payment terms, the interest rates for the new loan might match your original one.

3. Pay off your Loan Faster

You might have gotten your original loan under tight economic circumstances. It led you to get loans with higher interest rates and longer payment terms. If your financial situation has improved, you might want to pay off your original loan faster. A way to do this is to get a new loan with a shorter payment term.

You would want to do this, especially if your car loan has payment terms of six or more years. While you can pay more than the minimum payments on your car, refinancing gives you options of more favorable terms over a shorter period.

4. Access more Cash using Equity

You have positive equity when your car’s resale value is worth more than your debt. You can use this positive equity to access cash by doing a cash-out refinance of your car loan. 

Cash-out refinancing is borrowing more than what remains in your original loan. You get a new loan to cover your current debt, and you get to pocket some additional amount based on your car’s value. Cash-out refinancing is a good option if you need some cash on hand immediately. You might use it for side projects, to pay off other debt, or if you have an emergency.

Be aware that cash-out refinancing is only a good idea if you get a lower interest rate on your new car loan. If you do not get better payment terms, all you are doing is increasing your debt. You might want to take a personal loan instead.

Things to Watch out for

Refinancing your car loan is not always a good decision. If you end up in a worse financial position than when you started, you should not pursue refinancing.

If you’ve been paying your loans for a long time now, refinancing might not be able to save you money. You might have already paid off most of your interest, so you will not be able to reap the benefits of a lower interest rate anyway.

Refinancing might be a bad idea if your car is old or has significant mileage. It would not make financial sense to pay a debt higher than your car’s value.

Look out for prepayment penalties too. Some loans have additional fees if you pay them off early. If your original loan has precomputed interest, you will have to pay the whole interest on top of the principal. Refinancing in this situation does not make sense, as it will cost you more.

The point is to make things Better

If you’re unsure whether to refinance your car loan or not, remember that the point is to make things better. Getting a new loan to pay off your original one should put you in a better financial position. Refinancing should give you a better foothold on your debt or better control over your expenses in the short term.

Ayesha Saeed

Ayesha completed her Doctor of Philosophy in Biochemistry and started her career as a College Lecturer in 2013. Today, she’s a happy mom of 2 Kids in the field of digital marketing. She loves reading books, spending time with her family, and making delicious food for her husband.

Most parents are more than happy to support their children, including lending them money and helping them with everyday life decisions. However, going guarantor on their home loan is a significant commitment to make.

Being a guarantor means accepting liability for the portion of the loan you guaranteed, which may cause problems if the worst happens and your child defaults on it. Before you agree to help your children in this way, take the time to think about the following factors.

The Professional Property Advice They Received

If you haven’t had much experience in the property purchasing field, ask your child whether they’ve received expert advice from a property investment advisor. Having someone who works in the industry advise them of their options can mean that being a guarantor won’t always be necessary.

Property advisors can review your child’s financial situation and help them work out what they can afford the repayments they can expect, and the safest options to secure a property loan. If they recommend a guarantor for home loan certainty, you can at least enjoy more confidence knowing that your child received professional advice to reach that conclusion.

The Risks

Though you would likely do anything to give your child the best chance of success in life, it’s helpful to be aware of the risks of going guarantor on a home loan.

It’s essential to understand that if they can’t cover their monthly repayments, you may be liable for the money they owe. This might occur if the home is sold to cover the mortgage, but the bank sells the property for less than the total owed. In such cases, the guarantor is generally required to cover the difference.

The Alternatives

If you meet with property experts and financial advisors, you can learn all about the different ways to fund a home. Having a family member act as a guarantor is one of them, but there are other ways you may be able to help your child without taking on such a significant responsibility.

You may, for example, decide to provide them with a one-off gift. Just allow for gift tax if you choose this route. Otherwise, you might help them save by allowing them to move in with you rent-free while they earn the money they will put towards their deposit.

Some parents decide to purchase the property themselves, while others pay for their child to see a property advisor. You can do many things to help your child move into their first home without exposing yourself to risks that could damage your own financial situation.  

Independent Advice

Your child probably sought professional advice when deciding to purchase a home, so there’s no reason why you can’t also seek advice before becoming a guarantor. Find a financial expert who can answer any questions you may have about how it works and if there is anything you can do to minimize the associated risks.

Set Clear Expectations

If you decide to go ahead with being a guarantor for your child, make sure your expectations are clear. Set a financial limit, such as 10-20% of the property price, and discuss when your financial involvement in their mortgage ends. Generally, this is when there is enough equity for them to remove you as guarantor.

Most parents would go to the ends of the earth for their children, but anything involving your financial future requires careful consideration. Weigh up the pros and cons before you decide to help your child fulfill their dreams of becoming a homeowner.

Tristan D. Porter

I am Tristan who loves to ride and spend time with my jenny (horse) and my love Mark. After completing my graduation, I have been working as an accountant in a private firm in Cologne.

If you believe that banks only work to provide a space to keep your money safe or offer loans to individuals, there’s a lot more to that. The banking sector is divided into two types; corporate and retail banking. While corporate banks work with companies to provide them with money management solutions on a mass scale like checking accounts, retail banks cater to the need of individual customers by providing savings accounts, credit cards, debit cards, certificates, mortgages, car loans, etc. Banks operate both ways, but if you visit a bank to deposit a check in an individual capacity, you interact with a retail banking service.

What is Retail Banking?

In simple words, retail banking is the face of banking for the general public. When someone visits a bank to deposit money or withdraw, they benefit from retail banking services. There are three main objectives of retail banking:

Objectives of Retail Banking

Deposit

Banks are most commonly used to deposit money and keep it safe. People prefer saving their money in bank accounts to keeping it safe at home because of the increment in that amount over time. While your money will not multiply in your home safe, most banks offer a good annual profit on the money you deposit. Deposits are made in accounts, by certificates, and other financial products.

Credit

Another typical utilization of retail banking is credit. Do you need to buy a new car but do not have enough money? Get a loan from the bank. If you are looking to get a house but are low on finances, your bank will get you one mortgage. Besides providing money solutions to items, you can also take money from the bank through credit cards and pay later. The card limit usually depends on your usual transactions and credit history.

Managing Transactions

With everything becoming digital, you wouldn’t want to carry coins and bills everywhere. Most transactions worldwide are made online nowadays, and banks facilitate them. You can also get cash by swiping your card at an ATM anywhere in the world. Retail banking offers you all merits of selling and buying at the comfort of your home through online transactions.

How is Retail Banking different from Commercial Banking?

Now you might be wondering that all banks give loans and deposit money, so what makes retail banks different from commercial banks?

Retail banking provides individual-level loans to their customers, usually to get a house or a car, but commercial banking gives loans to companies and allows them to grow and hire more people. They commonly cater to small to medium-sized businesses with revenue in millions. However, do not confuse commercial banking with investment banking as they are two different categories.

Functions of Retail Banking

Provide a safe Deposit Space

One of the core retail banking functions is keeping your money at home is susceptible to robberies and loss, and you can avoid this risk by depositing the money in the bank. Banks take your money, keep it safe, and offer you yearly profits. Many people choose savings accounts because of the high return value on the money.

Online Banking

Retail banking services allow you to make online transactions which are the core need in today’s time. You can send money to anyone across the globe if you have a bank account. Many banks do not charge their customers to use the online banking facility, making their lives easy without a cost. Most banks operate worldwide, providing the ease of buying from any part of the world and not worrying about the payment.

Reduces the Chances of Default Loans

Banks are financial institutions that keep enough money for the clients to provide them when they need a loan. These loans are in federally-mandated reserve ratios that ensure that the bank always has a minimum cash amount. This amount is calculated depending on the total deposits to make sure the customer does not suffer in any way.

Offering Competitive Interest Rates

It is common in retail banking to offer competitive interest rates to keep the economy in good health. During economic blooms, retail banks increase the profits by elevating the interest on loans. However, they are again adjusted if needed to accelerate spending by the customer and stimulate economic growth.

Provide more Credit

The loan offered by a bank to a consumer becomes a deposit in some other bank. It provides more loans and credit value to the customers and provides more credit to the shopper, and facilitates the cycle of cash. It also helps increase the number of cash providers in a community.

Better Customer Relationships

When banks interact with the customers directly, they can understand their problems and look for solutions. It builds better customer relationships and enables the banking sector to grow by offering modern solutions to existing issues. While it is not among the fundamental functions of retail banking, it helps banking grow indirectly.

The Bottom Line

Retail and corporate banking are both important sectors, yet retail banking is the most convenient for the commoner. If you make any transaction with a bank individually, you interact with retail banking. Retail banking helps improve money flow and increase customer spending by providing loans and credit considering their history. Retail banking in the face of banking for the public helps people enjoy the perks without having enough money to buy a car or mortgage a house. They allow you to keep your money safe, increase the return and get credit from the bank when needed.

Methew Harbor

Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.

When it comes to starting a family, it’s always best to keep one eye on the future ahead. Family life insurance offers financial protection to your loved ones if you die, supporting them during this difficult time. But before you purchase cover, you need to know what options are available to you.

What is Family Life Insurance?

Family life insurance is not a specific type of policy but refers to any type of cover used to protect your family. With most types of life insurance, your insurer pays out a lump sum amount to your loved ones when you die.

Who needs Family Life Insurance?

A family life insurance policy is best suited for:

• Families – Whether you have a young family or older, life insurance can protect your loved ones from any financial burdens left on them. The pay-out can help with child support as well as future expenses like university costs.
• Single parents – If you were to die, the payout can be used to provide support for your children’s future.
• Couples – If you and your partner share an income or mortgage, you may need cover. With life insurance, you can leave your partner with enough to clear the outstanding balance if you die before it has been paid off. 

Types of Family Life Insurance

There are two main types of life insurance best suited for families – whole and term life insurance. These policies have several differences in terms of cover length and cost, so how do they work?

Whole Life Insurance

Known to insurers as ‘life assurance’, whole life insurance provides coverage throughout the insured’s lifetime. This policy pays out a lump sum no matter when the policyholder dies, however, premiums tend to be more expensive than term life insurance.

The main benefit of whole life cover is that your family is guaranteed a pay-out when you die – so long as you keep paying for premiums.

There are two main types of whole life insurance cover – balanced (also known as standard) and maximum cover.

With balanced cover, your monthly premiums and pay-out value are fixed throughout the policy length. This is especially beneficial as even when you get older or develop health conditions, your policy will still cost the same as before.

The maximum cover works much differently, in which your policy is linked to an investment fund. Each month your insurer invests the money from your premiums to fund the eventual pay-out amount.

This type of cover can be risky as if the investment fails, your insurance provider can raise your premiums to cover the cost.

Term Life Insurance

Although typically cheaper than whole life cover, term life insurance doesn’t provide permanent cover. Instead, your policy lasts for a set period, e.g 20 years or so. Your policy only pays out if you die within this time, if not your policy simply expires.

Term life cover has 3 levels of cover:

• Level term – Your policy premiums and pay-out value are fixed throughout your cover term. This prevents your premiums from being raised as you get older or develop health conditions.
• Increasing term – The payout amount increases over time to protect the eventual value from inflation. Because of this, your premiums also increase as well.
• Decreasing term – Usually taken out alongside large payments like a mortgage. As you make repayments on your mortgage, the payout value of your policy decreases. This way if you die before it has been paid off, your family can use the payout to cover the cost.

Joint Life Insurance

If you and your partner share an income, you might want to consider getting joint life insurance. A joint policy protects two people under a single policy. Popular with couples, these policies can often work out cheaper and easier to manage than individual policies.

How much cover do I need?

Nobody wants their family to struggle when they die, making life cover is a great way of providing peace of mind. Life insurance can be used to help your family with future costs such as:

• Living expenses
• Household bills
• Funeral costs
• Mortgage repayments
• Debts/loans

Before you apply for cover, it’s best to assess the financial situation of your family if you were to die. That way you can choose the right amount of cover, instead of having too much or too little than your family needs.

How much is Life Insurance?

Several factors can affect the cost of your premiums for life insurance. These are things such as age or if you have pre-existing health conditions or being a smoker. When you apply for life insurance, your provider will ask you a few questions regarding:

• Your age
• Health
• Occupation
• The type of policy you want
• The amount of cover you need

To get the cheapest life insurance premiums it’s best to take out cover when you are younger, at your healthiest. That being said, even as you get older there are other forms of life cover such as over 50s life insurance.

If you are ready to protect your loved ones with family life insurance, head online to get a quote today!

Ayesha Saeed

Ayesha completed her Doctor of Philosophy in Biochemistry and started her career as a College Lecturer in 2013. Today, she’s a happy mom of 2 Kids in the field of digital marketing. She loves reading books, spending time with her family, and making delicious food for her husband.