Guarantor Loans and Increasing Confidence in Financial Markets
Guarantor Loans and Increasing Confidence in Financial Markets
Guarantor Loans are fast becoming the norm in the unsecured personal loans sector. There are a number of reasons for this, the main and most obvious is the credit crunch and the proceeding tightening of criteria and lack of lending from financial companies.
The reason behind this is to reduce the risk these companies are exposed to while they try and restore their capital to pre-credit crunch days! Obviously if a customer applies for a loan by themselves, then there is only one person who can pay back the debt, whereas if a loan is signed by both the applicant and a guarantor, then there is an additional person who is able to repay the loan if the applicant comes into difficult circumstances – therefore maintaining security for the finance company.
As well as maintaining security for the company, this also provides security and peace of mind for the applicant, knowing that their loan will be repaid even in dire circumstances.
As the number of these loans being completed is increasing day by day, the public awareness of these products will gradually increase and I anticipate that they will slowly become a much more normal way of taking out a loan. If you look at guarantor loans available now, you will see that the APRs are dropping and acceptance rates are increasing, due to both competition in the market and confidence being slowly restored after the credit crunch of previous years.
A guarantor loan is normally available to those looking for up to £3000 and over terms of between 1 and 3 years typically. If you compare the products to other available options such as payday loans then you will notice that the cost of a guarantor loan is far more competitive than they first may seem.
If you do not believe me, take a look yourself at the products!
Kerry Miller is a keen traveller who has stayed in many North Norfolk hotels including many Norfolk luxury hotels
Question by eagle: I own my home and have a lot of equity about 160,000 even in this housing market will my bank give me a loan?
I am up to date on my mortgage but do have bad credit and would like to pay off bills.Wouldn’t they give it to me with my home as collarterol? Or any bank with not too high in interest?I wanted to get between 20,000 and 30,000 dollars.
Best answer:
Answer by leysarob
I had some credit issues due to my ex-husband, but wanted to take out some of the equity and do remodeling of my home. It was a long process and my interest rate is a bit high, but I was able to secure a loan. However, I had to refinance the entire house in order to get the equity out.
You may have to do the same. Rather than add another bill to your ledger, you may be better off refinancing and taking out some of the equity to pay off bills.
I just contacted Lending Tree.
Give your answer to this question below!
Categories: Loan Market Tags: Confidence, financial, Guarantor, Increasing, Loans, Markets
Financial Management and Its Basic Aspects for Business
Financial Management and Its Basic Aspects for Business
Article by Gitesh Sinha
“Financial management comprises of forecasting, planning, organizing, directing, co-ordinating and controlling of all activities relating to acquisition and application of the financial resources of an undertaking while keeping in view its financial objective.”
“Financial Management is concerned with managerial decisions that result in the acquisition and financing of short-term and long-term credits for the firm.”
“Financial management deals with procurement of funds and their effective utilization in the business.”
Financial management entails planning for the future of a person or a business enterprise to ensure a positive cash flow. It includes the administration and maintenance of financial assets. Besides, financial management covers the process of identifying and managing risks.
The primary concern of financial management is the assessment rather than the techniques of financial quantification. A financial manager looks at the available data to judge the performance of enterprises. Managerial finance is an interdisciplinary approach that borrows from both managerial accounting and corporate finance.
Some experts refer to financial management as the science of money management. The primary usage of this term is in the world of financing business activities. However, financial management is important at all levels of human existence because every entity needs to look after its finances.
Financial Management: Levels
Broadly speaking, the process of financial management takes place at two levels. At the individual level, financial management involves tailoring expenses according to the financial resources of an individual. Individuals with surplus cash or access to funding invest their money to make up for the impact of taxation and inflation. Else, they spend it on discretionary items. They need to be able to take the financial decisions that are intended to benefit them in the long run and help them achieve their financial goals.
“The management of all the processes associated with the efficient acquisition and deployment of both short and long-term financial resources.”
Basic Aspects of Financial Management There are two basic aspects of financial management viz., procurement of funds and effective use of these funds to achieve business objectives.
1. Procurement Of Fundso Funds can be obtained from different sourceso The sources may be;? Equity share capital ? Preference share capital? Long-term loans ? Debentureso Funds may be procured by way of Commercial paper, Deep Discount Bonds, Foreign Direct Investment (FDI), Foreign Institutional Investors (FII), American Depository Receipts (ADR), Global Depository Receipts (GDR) etc.o Different sources have different characteristics.o Procurement involves two different segments:i. Identification of the source of fund &ii. Selecting the finance mix.o Before selecting/choosing the finance mix, finance manager has to consider the characteristics of the source of funds.o The characteristics of source of funds are;? Risk, ? Cost &? Control o The cost of funds should be at the minimum level, for which a proper balancing of risk and control factors must be carried out.
2. Effective Utilization of Funds• All the funds are procured at a certain cost and after entailing a certain amount of risk.
• Since the procurement itself involves cost, it should be used properly & profitably.
• The finance manager is also responsible for effective utilization of funds.
• The funds once procured cannot be left to remain idle.
• Situations where the funds are being kept idle or where proper use of funds is not being made should be identified.
• If these funds are not utilized in the manner that they generate an income higher than the cost of procuring them, there is no point in running the business.
• The funds are to be invested in such a way that the business yields maximum return along with maintaining its solvency.
• Thus, financial implications of each decision to invest in fixed assets are to be properly analyzed.
• For this, the finance manager would be required to possess sound knowledge of techniques of capital budgeting.
• He must also keep in view the need for adequate working capital and ensure that while the firms enjoy an optimum level of working capital, they do not keep too much funds blocked in inventories, book debts and cash, etc.He must also keep in view the need for adequate working capital and ensure that while the firms enjoy an optimum level of working capital, they do not keep too much funds blocked in inventories, book debts and cash, etc.
Characteristics of Source of Funds (Nov.’2003, May ’2006)Type of fund1. Own funds (Equity)
a. RiskLow risk: 1. No question of repayment of capital except when the company is under liquidation. 2. Hence, best from the view point of risk.
b. CostHigh cost: 1. Most expensive2. Dividend expectations of shareholders are higher than interest rates. 3. Also, dividends are not tax-deductible.
c. Control
Dilution of controlSince the capital base might be expanded and new shareholders / public are involved.
2. Loan Funds
High risk:
1. Principal amount should be repaid as per agreement. 2. Interest should be paid irrespective of performance or profits.Low Cost:1. Comparatively cheaper. 2. Interest rates are considered only after tax impact.No dilution of controlThere is no voting power for loan fund holders except in special situations.
Evolution of Financial Management1. Traditional PhaseDuring this phase, financial management was considered necessary only during occasional events such as takeovers, mergers, expansion, liquidation, etc. Also, when taking financial decisions in the organization, the needs of outsiders (investment bankers, people who lend money to the business and other such people) to the business was kept in mind.
2. Transitional Phase During this phase, the day-to-day problems that financial managers faced were given importance. The general problems relating to funds analysis, planning and control were given more attention in this phase. 3. Modern Phase Currently business environment is going through Modern phase. The scope of financial management has greatly increased now. It is important to carry out financial analysis for a company. This analysis helps in decision making. During this phase, many theories have been developed regarding efficient markets, capital budgeting, option pricing, valuation models and also in several other important fields in financial management.Objectives of Financial Management (Nov 2002, May 2003)There are two basic objectives of Financial Management.Profit Maximization • The intention behind starting a business is to earn profit.• This implies that the finance manager has to make his decisions in a manner so that the profits of the concern are maximized. • Each alternative has to be analyzed to find out whether it yields maximum profit or not. • It is the main objective of business because:o profit acts as a measure of efficiencyo It serves as a protection against risk• Future is uncertain. A firm should earn more and more profit to meet the future contingencies.• Profit maximization is justified on the grounds of rationality as profits act as a measure of efficiency and economic prosperity.Arguments against Profit Maximization (Nov 2007)• However, profit maximization cannot be the sole objective of a company.• It is at best a limited objective.• It leads to exploitation of workers and consumers.• It ignores the risk factor associated with profit.• Profit in itself is a vague concept and means differently to different people.• It is a narrow concept at the cost of social and moral obligations.• If profit is given undue importance, many problems can arise.
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Question by jessy mate: What is the different between financial management & Management Accounting?
My next semester, i am planning to intake one of accounting course which are “Financial management” or “Mangement Accounting” can anybody explain career scope & study are of those two subject therefore, i can make my mind to choose one of it.
Best answer:
Answer by Astrella Lopez
Managerial accounting is used primarily by those within a company or organization. Reports can be generated for any period of time such as daily, weekly or monthly. Reports are considered to be “future looking” and have forecasting value to those within the company.
Financial accounting is used primarily by those outside of a company or organization. Financial reports are usually created for a set period of time, such as a fiscal year or period. Financial reports are historically factual and have predictive value to those who wish to make financial decisions or investments in a company. Management Accounting is the branch of Accounting that deals primarily with confidential financial reports for the exclusive use of top management within an organization. These reports are prepared utilizing scientific and statistical methods to arrive at certain monetary values which are then used for decision making. Such reports may include:
* Sales Forecasting reports
* Budget analysis and comparative analysis
* Feasibility studies
* Merger and consolidation reports
Financial Accounting, on the other hand, concentrates on the production of financial reports, including the basic reporting requirements of profitability, liquidity, solvency and stability. Reports of this nature can be accessed by internal and external users such as the shareholders, the banks and the creditors.
What do you think? Answer below!
Categories: Financial Management Tags: Aspects, Basic, Business, financial, Management
Financial crisis and the loan market in Denmark
Financial crisis and the loan market in Denmark
Article by Jesper
Loan is in short a temporary provision of e.g. money. A loan entails the redistribution of money or financial assets over time between a lender and a borrower. The borrower receive an amount of money from the lender, which is defined before the loan is signed up by the borrower. Before the borrower gets the money it is defined how he must pay back and during what conditions. That is, the interest on the loan must be defined as well as the loan period. The borrower usually pay back the money in regular installments.
There is in short two kinds of loans. Housing loan is a loan which you can take out when finance the purchase of a house or an apartment. Consumer loan can be raised if you have incidental expenses or if you just want to make life sweeter. In some cases you must put up some asset as collateral for the loan. If you for instance want to finance a car, the loan might be secured by the car, just as a housing loan is secured by housing. If you defaults on paying back the loan, the lender would have the legal right to repossess what you have put up as collateral and sell it, to recover sums owing to it.
When financial crisis occur it might be caused by internal as well as external circumstances. It might be caused by the management, debt or a decrease in the global economy. A financial crisis might give rise to unemployment. If so, the house prices will come down and the expenditure will go down.
If you want to learn more about financing or the loan market I Denmark you should visit the site http://www.l?n.ws. The site introduces financial terms and explains how the loan market works in Denmark.
http://www.lån.ws is a danish website that offers financial services like lån and boliglån
Question by Anna: Can you pay too much for a house in this market? Is the bank’s appraisal of house for the loan protecting you
I just want to clarify this point. That when the bank appraises the house, and if it’s only worth 500K when you agreed to pay 550, they won’t let you borrow the loan and the seller will have to renegotiate to 500k to make the loan go thru. Then really you can’t over pay for a home unless it is a bad market like several years ago.
Best answer:
Answer by Brandon H
Banks typically have properties appraised before they list them for sale. As a Realtor, we usually have to do a Broker’s Price Opinion prior to listing the property. Usually, the banks will list the property at the appraised value no matter what the Broker’s price opinion says and the property usually sells around the bpo price. If there is alot of competition for a single property, I have seen them sell for more than the appraised value, and in these cases if the buyer is borrowing the money, they will have to cover the difference on the loan to value ratio. Hope this helps.
Know better? Leave your own answer in the comments!
