Business Loans

Benefits of taking out an Unsecured Business Loan

While some people are still hesitant to take out an unsecured loan, it can actually be a great borrowing option depending on your situation. These days more and more businesses have started taking out unsecured loans for start up capital or to keep themselves afloat during tough times. You will definitely want to make a point of learning all you can about these loans so that you can make the right overall decision. Many businesses can benefit from an unsecured loan, and chances are you can too.

No Collateral Required

Perhaps the best thing about an unsecured short term loan is that you won’t have to put up any collateral to get one. This means that you won’t have to risk losing your home or other valuable property if you are not able to pay back the loan for whatever reason. This is an extremely flexible way for you to establish good credit without losing any of your own property.

Credit is a reusable resource

A vast majority of unsecured business loans can be structured just like a credit card. This means that the borrower is given a set limit, and provided they are able to pay it, the credit can be reused however you need it. While it’s true that the limits are smaller than with secured loans to reduce the risk, it can be negotiated if the borrower is willing to meet the additional terms of set forth by the lender. This option cuts out a lot of the big hang-ups with traditional loan and cash advances because businesses don’t need to keep re-applying for the funding they require.

The loan is open-ended

Unsecured loans typically do not run a set term or have a pre-determined end date like secured loans do. You will, however, have to meet certain guidelines and criteria to be approved for one of these loans. The good news is that if you honor the terms of the loan, you will have access to your funds when you need them.

A lot of borrowers make the fatal mistake of thinking that default penalties do not apply to unsecured business loans. While these loans do not require any collateral, lenders have every right to recoup their debt. If you do not pay the loan back on time, they can take you to court to get the money you owe. You can avoid all of this legal trouble by simply paying your loan back on time and without any issues.

Financing is Restricted

Those who give out unsecured funds leave the spending responsibilities to the business owner, provided the money is used exclusively for business purposes. While it may be true that unsecured loans come with their fair share of risk, there are also a lot of benefits to consider. You will be able to spend the money you receive from the lender however you see fit, as long as you use it for business purposes only.

Things to Consider

There are going to be some very important things that you will need to keep in mind when it comes to getting a secured loan, such as the lender you choose to borrow from. There are many different lenders that you can get funds for your business from, but you do not want to select just any of them. The more time you spend researching your lender options, the better off you are going to be. Those who rush into this particular decision usually end up regretting it later on.

You will also need to be careful about how much you borrow. Just because you are allowed to borrow a certain amount of money doesn’t mean that you should necessarily do it. It’s never a good idea to borrow more than you need, because you are only increasing your risk of defaulting on the loan. Also, take the time to crunch the numbers so you can determine whether or not you will actually be able to pay back the loan on time. If you are even a little bit hesitant about this, you should probably not apply at all or apply for a smaller amount. You will definitely be glad you took all of these things into consideration.

Hire Purchase

Is Hire Purchase a Good Way to Buy?

Hire purchase is term that we do not really hear much anymore as it seems rather old fashioned. It used to usually be used to buy televisions where you would pay monthly for it and then after a period of time it would become yours. These days the name is not used in the way that it used to be, but there are still places that offer similar deals.

Many of these are catalogues or some shops where you can buy items and then spread the payment across a certain period of time so that you do not have to pay the whole amount of money all at once. The advantage of this for the customer is that they do not have to wait and save up for the item but they can have it right away but pay for it slowly so that it is more affordable for them. There are some pitfalls with this method though.

Firstly you will find that the tem is more expensive. You may find that it is advertised as interest free credit. This implies that there is no extra cost but you will probably find that the price of the item is dearer than you can buy it elsewhere. If it is exclusive to that shop, then they will have added in the cost of the loan into it. This means that you will be likely to find the product or a similar one cheaper elsewhere. Sometimes you can either buy the product outright for a certain price or pay in instalments at a dearer overall price. In both cases it is worth calculating the total price of the product so that you can work out whether you still think that the items offers good value for money. If the price for paying in instalments is dearer consider whether you would still buy the item at that price. See if you can find it cheaper elsewhere and consider whether it will be cheaper to save up for it or get a cheaper loan to pay for it in instalments.

Many people just look at the fact that the product is in manageable repayments and buy it without thinking about how they will manage to afford those repayments. They may look fairly cheap, but if you have to pay over a long term then you will have to find that money each month or week. You could find that in the future you get some extra expenses or that you income reduces and you struggle to pay the money. You may then regret your decision to pay for it this way or even to buy the item at all. You could find yourself going without essentials to pay for it and really struggling.

Often the types of products that these deals are on are luxury items. It is worth taking time to think about whether you really want these items and whether they are worth the money that you are spending. Think about the essentials that you could buy with the money or consider saving up for it so that you do not have to pay extra or worry about making repayments.

If the interest is free and you cannot find the items anywhere else or cheaper alternatives that are the same quality then it can be worth considering doing this. However, you need to make sure that you are really sure that you will be able to make the repayments when necessary. If you miss one then you will find that you will have fees and the cost of borrowing could increase significantly. This could cause you even more debt problems and a lot of stress. Therefore you need to consider the risk and whether you are prepared to take it. Sometimes it is just worth waiting a while and giving yourself time to think about whether you really want the item and whether you think that it is worth the risk of using hire purchase to buy it. You may find that after a while you decide that you do not want it anyway and that the item is not so great as you thought it would be when you first saw it.

Credit Cards

Is it Wise to Avoid Getting a Credit Card?

Many people have credit cards and more than half of credit card holders pay no fees for their credit cards at all. This means that they are getting that interest free period for absolutely nothing and taking advantage of the benefits that you can get form a credit card, such as more secure payments, not having to carry cash, insurance on purchases, cashback or anything else that their specific credit card offers. It will differ from card to card. There are some people though that refuse to have a credit card and think that they are really bad things and never want to have them because of the debt and costs of them. Whether you have one could be a very personal decision.

Whether a card is a good idea for you could very much depend on how responsible you think that you will be with it. Credit cards can be very expensive and the debt that you can accumulate can last for a very long time. It can all very much depend on how you choose to use the card.

Some people choose to take advantage of all that the cards have to offer but make sure that by paying them back before any interest is added they will never have to pay for the privilege. To do this they normally set up a direct debit so that their card is paid off in full each month when it is due. It is important to make sure that there will be enough money in the account to pay for the card and that the spending on the card has not been over excessive. Then you will know that there will be enough money to cover the cost and you will not have to worry about it. Asking for the direct debit to go out just after payday can be a great way to ensure that there is enough money to cover the payment.

However, some people are not so careful with a credit card. Some feel that the money is there for them to spend and so spend it as soon as they can, right up to their credit limit. They then only pay back the minimum each month, which often just cover the interest payments. They do not realise that every month that the debt is outstanding they are paying a high amount of interest on it. As the interest is paid in the minimum payment, it is hard to see how much you are actually being charged and easy to forget about it and how much you are actually paying for the privilege of having this loan. If you like to spend money like this then it is wise not to get a credit card particularly if you know that you will only be likely to pay back the minimum required each month.

It is also wise to consider whether you will have enough money each month to pay back what you spend. Consider how secure your job is, for example as you will need that salary to be able to have the means of paying it back. You will also need to make sure that your other bills do not go up so much that you will struggle to pay them. It is hard to predict whether this will happen but bear in mind that bills will always increase over the years and make sure that you are confident that your income will increase over those years as well. Of course, you can cancel your credit card at any time or just cut it up and so you may decide to do that if you feel that your spending is getting out of control. You have to be aware that there is a problem though and sometimes this is difficult to notice, particularly in yourself.

Whether a credit card is a good idea for you is really a very personal thing. Only you know whether you will have the self-discipline to use it wisely and make sure that you do not get into debt. You know whether you have a secure income and some savings behind you so that you can be confident that you will always be able to pay off the outstanding balance each month.