Bad credit finance companies have grown at an exponential rate in recent times, due to the wide reaching and major credit crunch felt by the credit industry the world over, many people are finding it increasingly difficult to gain access to credit. Credit limits have been slashed, new applicants are finding it nearly impossible to gain access to loans and credit cards unless they have a perfect credit rating, and so those who are deemed high risk by the credit institutions are facing an uphill struggle. Bad credit finance companies have allowed those on the fringes of the credit world to actually gain access to a legitimate, dependable and secure source of credit where they would otherwise struggle to gain, at least on just and equitable grounds.
Those with poor credit rating had a rather unenviable position, either they would be refused point blank in their application for a loan or some other form of credit, or in the unlikely event they were successful, they would suffer an increased interest rate which would mean more money to pay in the long run. Bad credit finance has helped to even the playing field somewhat considerably, and given the current status of the credit industry, may end up being the trend setter for the current recession.
Bad credit finance is something of an umbrella term that encompasses a number of different terms and policies for those with poor credit ratings, one of the most drastic being the debt consolidation loans. Such loans are a measure of last resort, and only a step above total bankruptcy, whilst very effective, they are not a soft option, and require full, proactive participation from the consumer.
The way these loans operate is very simple, all existing debts are paid off (or at the very minimum a proportion of them are paid off) by a lender who pays off the debts of the consumer and the consumer in return will then repay the loan owed to the debt consolidation company. Such loans tend to come with much more generous terms allowing for the cost to spread more evenly and thus reducing the financial burden on the consumer.
Bad credit finance loans are also common, these are simply loans for the consumer who has a less then unsullied credit record, and whilst these attract a higher rate of interest due to the increased risk associated with the consumer, these too have more generous and flexible repayment schedules. The repayment schedules are placed at a deliberately lower tempo so as to ensure that the consumer is able to meet the repayment of the loan in a more manageable form.
Bad credit finance ratings are almost inevitable nowadays, and can result for the most petty of things. Whilst the most obvious and worst will be the likes of bankruptcy, tardiness in the repayment of a debt, missing a loan payment or installment to even erroneous transactions can also have a negative and cumulative effect. You may think that when assessing a bad credit finance record, the lenders would rank the different negatives in order to determine those that pose the biggest threat, but given the current tense climate, many lenders are operating a scorched earth policy. This means those with bad credit finance are simply being turned down, no questions asked.
By: Deb Median
Posts Tagged ‘Credit Crunch’
Raising Small Business Finance
April 5th, 2010
Raising small business finance isn’t an easy process, particularly in light of the recent credit crunch and the liquidity problems experienced across global financial markets. Of course, that’s now filtering down to small business loans, which are much less easy to come by, particularly at start-up stage. Yet, ironically, getting any business off the ground requires money and a bit of faith from those with the resources to spare.
The Banks
Raising small business finance from a bank is still most likely the path of least resistance to raising funds. Your alternatives are to find a private investor or investors, who will almost certainly be looking for an equity stake in return for their input, and will be far more discerning that the bank in choosing to whom they give their financial backing. This second route is immensely difficult, unless you have a rich family member willing to step in and foot the bill on favourable terms.
Business Plan
If you do intend to raise your small business finance from your bank, you should initially prepare a business plan documenting the fundamentals of your idea, how your business will be run, and how much money you think it will make in the form of cash flow projections, profit and loss statements and other accounting documentation.
Assume Ignorance
Take care to explain every aspect of your business in your plan, and make sure to include conservative estimates on your figures. After all, chances are you’ll start as a small business, and the banks will realise this if you project over ambitious or unrealistic figures. Likewise in covering the details of your business, don’t presume knowledge – the bank manager / investor might not necessarily understand why there’s a need for your particular idea / piece of technology or why it’s any different to what’s currently on the market.
Utilise Your Personal Funds
It is advisable where possible that you make use of any savings or personal funds you may have available. This is not only good to give your business the funding it needs, but also as a sign to potential lenders and investors that you are fully committed to making your idea into a success, given the extent of your personal liability. What’s more, you might also find you already have much of your essential start-up capital available in overdrafts, savings accounts and credit cards. While a risky tactic, it can pay off big time if you’re looking to attract serious financial help for your business.
Private Investors
Finding a private investor is difficult for any small business, and if you’re committed about raising money this way, you’re going to have to do some serious leg work and be prepared to surrender a large slice of your potential business profits. It’s also important to make sure both you and your potential investor know on what terms the partnership between you may come to an end, so the investor can realise his investment and you can continue running your business. Thus it takes planning and hard work, not to mention a great, relevant pitch, if you’re looking to secure funding for your small business from a private investor.
By: Nazir Daud
The Current Lending Attitude For Development Finance
October 29th, 2009
Banks and lenders in the UK and other parts of Europe are said to have been changing their attitude to lending. Development finance experts have noted the change due to credit crunch. Some lenders do not allow speculative development lending anymore contrary to more liberated lending practices in the mid-2007. Others are only offering development finance UK to more experienced developers at the right location. Most of the lenders became more stringent in their conditions to lending. Generally, they have become more cautious and diligent compared last year.
These notable changes may be evident in this year’s lending for residential or commercial development finance. Others may find it hard to get 100% development finance because of stiff conditions from lenders. However, it shouldn’t alarm developers at all. The credit crunch is worth the note but not the worry. The property market is changing and has been volatile than ever. Nevertheless, it shouldn’t stop developers to continue to meet the high demand for property development. If there are demands then by all means there is potential for feasibility and high returns. Appropriate location, feasibility and right project planning and projection are still the key to successful property development. And this has always been the key even during liberated times on development finance UK.
In other words, banks and lenders are just responding to the change in environment of the property development. Once the environment changes, everything involved in the industry changes and that includes the lending attitudes. Frank Maertens, EMEA Managing Director Debt Advisory, CB Richard Ellis do not even attribute the shift entirely on the credit crunch. He said that banks were cautious ever since; only that the credit crunch has triggered it to be more cautious. Besides, there are various responses of lenders in different locations. What developers have to do is simply deal with individual lenders and ensure that their projects are feasible and worth the time and effort for development finance UK.
By: Cherry Lynn Bonachita
