Loans – Basic Terms You Need To Know

Loans – Basic Terms You Need To Know

Loans could be used for various reasons, such as for medical treatments, education, home renovations, working capital, business expansion, business requirement, work requirement, and much more.

Accreditloan.com, for instance, could provide you the loan you require to meet your financing needs. Moreover, they have created cutting-edge digital solutions for the process of applying for a loan to be less complicated. With the unmatched accessibility that they offer, you can now apply for a loan online without trouble. Moreover, with their quick approval process, you could get approved and receive your loan on the very same day you have applied for the loan.

When applying for a loan online with accreditloan.com, you are sure that all your personal information is safe as their system is encrypted making it safe and secure. Moreover, since it is a licensed money lender, not only will all the transactions be legal but the fees that you have to pay are within the bounds of the law.

Basic Loan Terms

Although there a lot of licensed money lender or credit company out there that could provide you the loan you need, only consider taking a personal loan for urgencies, not for you to splurge on unnecessary things.

Personal loans are excellent financial tools; however, you have to make certain that you have the means and are responsible enough to pay it off. Otherwise, you may end up being buried in debt or lose your collateral. To keep your debts under control and even before taking out a loan, it is imperative to understand what loans are, how they are structured and how they work. In doing so, you will be able to make better and sounder decisions and save on money.

For basic knowledge, below are some key terms associated to any type of loan there is.

  • PRINCIPAL/PRINCIPAL LOAN. This is the original or initial loan amount that you are to borrow from a money lender, credit company or financial institution which you will agree to repay.
  • LOAN TERM. This is the span of time (timeframe) the loan lasts. Within this set timeframe, you have to be able to repay the loan. Every kind of loan have diverse terms. For instance, credit cards are regarded as revolving loans. This means that you could borrow and settle the amount multiple times without the need to apply for a new loan.
  • INTEREST RATE. This is the amount charged by the lender for the loan you agreed to borrow which is typically a percentage of the principal amount. It is based on the amount charged to the bank by the Federal Reserves for it to borrow funds overnight. Known as federal funds rate, this is where banks base their interest.

Costs and Fees Connected with Loans

When you have an understating of the costs that is linked to a loan, it will help you determine which loans is right for you and if you will be able to pay it off with the given term.

  • INTEREST RATE. Apart from the principal amount, you also have to pay the interest rate which is typically distributed over the loan term. Although you could obtain similar principal amount form various lenders, their interest rates may vary. Hence, shop around before making any commitment.
  • APPLICATION FEE. This is the charge for loan approval.
  • PROCESSING FEE. This covers the fees needed to process or administer the loan.
  • ORIGINATION FEE. Usual to mortgages, this is payment for securing or getting a loan.
  • ANNUAL FEE. Common to credit cards, this is a flat amount you have to pay the lender every year.
  • LATE FEE. As the term implies, this is an amount you have to pay for any let fee.
  • PREPAYMENT FEE. Usual to car and home loans, this is the amount you pay for completely settling your loan early. This is to compensate lenders for not receiving every interest income they could’ve gotten if you hadn’t repaid it, since when you pay off your loan early, they actually lose the amount of income/revenue for the quantity of years you won’t be paying.

How To Get Business Loans For Small Start-Up Business

There are a lot of loan options available for small businesses today. The easiest type of loan to secure is unsecured business loans. This is not really a loan. It’s more like a business credit card. So if you do have good credit or good credit partner or a guarantor, you can get five times the amount of money from whatever your highest credit limit account is now.

Business Loans for Small Company

Look at your credit report. Whatever is the highest limit you have on a credit card is, you could typically get unsecured financing fives times that amount of money. You can get approved regardless of your company size. Also, the rate starts at 0% so this is perfect to start a business because you can get a zero percent rate for generally six to eighteen months. After which, your rate will follow a normal credit card rate.

You can also get approved without your financials. If you are not a start up and you need a no-doc type of loan, unsecured financing is the best way to go.

Asset-Based Loans

This is another type of small business financing. You can get this regardless of your company size. These loans use assets as the main factor for approval. Rates are usually five percent or less or even as low as one percent regardless of your credit score. You can get approved if you have 401k or stocks, inventory, equipment, real estate, or book of business including purchase orders or account receivables. So regardless if you are a small business, you could still get approved for this type of financing. Depending on the value of your assets as collateral, you can get large amounts of money.

Business Credit

Business credit is another great option because any company, regardless of size can get business credit even if you are just opening your business. There’s no personal credit check required. So if you have consumer credit issues, this can be a great option for you. It takes about 6 months total time to get approved for business credit cards with limits of $10,000 or higher. These are visa-mastercard type of cards. Amongst that 6 months, you are also getting approved for vendor credit and store credit.

Bottom line

There’s a lot of funding options available for large and small businesses but they all need cash flows of $10,000 or higher monthly cashflows to qualify. This is includes cash advances, private money, conventional loans, SBA alternative loans. All these become available to you when you have revenue in tax returns. So even if you are a small business if you have tax returns and bank statements to show deposits of $10,000 a month or more, even proof of small amounts of profit and gross revenue, then this opens up a lot of other funding options.