credit rating – Flight 93 http://flight93.org/ Thu, 17 Mar 2022 22:34:30 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://flight93.org/wp-content/uploads/2021/07/icon-5-150x150.png credit rating – Flight 93 http://flight93.org/ 32 32 Some Russian creditors received payment for bonds in dollars – sources https://flight93.org/some-russian-creditors-received-payment-for-bonds-in-dollars-sources/ Thu, 17 Mar 2022 21:26:00 +0000 https://flight93.org/some-russian-creditors-received-payment-for-bonds-in-dollars-sources/ Russia had to pay $117 million by Wednesday’s deadline Creditors see this week’s deadline as a test for Moscow Russia says it has money, any ‘artificial’ flaws LONDON, March 17 (Reuters) – Some creditors have received payment, in dollars, of Russian bond coupons that matured this week, two market sources said on Thursday, meaning Russia […]]]>
  • Russia had to pay $117 million by Wednesday’s deadline
  • Creditors see this week’s deadline as a test for Moscow
  • Russia says it has money, any ‘artificial’ flaws

LONDON, March 17 (Reuters) – Some creditors have received payment, in dollars, of Russian bond coupons that matured this week, two market sources said on Thursday, meaning Russia may have avoided this for now. which would have been its first external bond default. In a century.

Russia’s Finance Ministry said earlier it had sent funds to cover $117 million in coupon payments on two dollar-denominated sovereign bonds.

The payments, due March 16 but with a 30-day grace period, are seen as the first test of whether Moscow will honor its international debt obligations after Western sanctions hampered its financial transactions.

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“The coupon was paid, against my expectations, and in dollars,” one person said. Another person said the money was received by a customer who was a bondholder.

Some other creditors said they had yet to receive their funds but were optimistic they were on the way, noting they had received payments on hard currency bonds from a range of companies public and private Russians in recent days.

Earlier, another source told Reuters that JPMorgan, Russia’s correspondent bank, processed the money sent by the government and credited it to the paying agent, Citigroup. It would be checked and then distributed to various bondholders, the source said. Read more

Citi declined to comment.

External sovereign bond payments were the first to fall due since sanctions imposed following Russia’s invasion of Ukraine and Moscow’s tit-for-tat measures, and bondholders feared that the transaction is frustrated. Read more

Russia had planned to send the equivalent amount of the interest payment in rubles if the dollar payments did not reach foreign bondholders, which credit rating agency Fitch said would constitute a sovereign default s was not corrected within a 30-day grace period. Read more

Washington imposed severe sanctions on the Russian central bank in late February, preventing Americans from engaging in any transactions involving it.

In early March, however, the U.S. Office of Foreign Assets Control (OFAC) cleared transactions for U.S. persons for “the receipt of interest, dividends, or payments when due in connection with debt or shares” issued by Russia’s finance ministry, central bank or wealth fund – an exemption that expires on May 25.

Russia has also established tough new rules for foreigners seeking permits to buy and sell Russian assets ranging from securities to real estate, a Citigroup client note showed, raising new concerns that Western investors could face significant write-downs. Read more

AFFLICTED

The March 16 coupons are the first of several, with another $615 million maturing during the rest of the month. The first principal payment is due on April 4 when a $2 billion bond matures.

“Even if this week’s payment is made, investors will then need to monitor future upcoming payments as they may be treated differently,” said Jonny Goulden, head of local emerging markets and sovereign debt strategy at JPMorgan. , in a footnote.

He noted that the upcoming payments are either cleared through the Russian NSD settlement mechanism or because they have the option to make the ruble payment embedded in the bond contract.

After the May 25 sanctions deadline and through the end of the year, Russia is expected to pay nearly $2 billion more on its external sovereign obligations.

The bonds themselves were issued with a mixture of terms and deeds. Bonds sold after Russia was sanctioned for its 2014 annexation of Crimea contain a provision for payments in alternative currencies. For bonds listed after 2018, the ruble is listed as an alternative currency option.

Russian bonds are hovering at deeply distressed levels in highly illiquid trading, with most issues trading less than a handful of times per day, according to Refinitiv data.

The premium demanded by investors to hold Russian hard-currency bonds over US Treasuries, as calculated by the JPMorgan EMBI Global Diversified Index, nonetheless tightened to 3,737 basis points on Thursday – the lowest level lowest since early March.

This premium had been just over 200 basis points until mid-February, when a Russian default seemed unthinkable. (.JPMEGDRUSR)

Russian companies are also being watched for their ability and willingness to pay. They have nearly $100 billion of hard currency bonds outstanding, of which about a fifth are held by international investors.

The country’s second-largest state lender, VTB (VTBR.MM), also the target of Western sanctions, said on Thursday it would hand over management of foreign securities to other Russian financial firms, the news agency reported. of State TASS.

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Reuters reporting; Written by Karin Strohecker; Editing by Catherine Evans and Alistair Bell

Our standards: The Thomson Reuters Trust Principles.

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What happens if you fail to repay a loan? https://flight93.org/what-happens-if-you-fail-to-repay-a-loan/ Thu, 03 Feb 2022 18:08:51 +0000 https://flight93.org/what-happens-if-you-fail-to-repay-a-loan/ Editorial independence We want to help you make more informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information, see How we make money. If you’re behind on paying off your debts or are in financial […]]]>

We want to help you make more informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and allow us to earn a referral commission. For more information, see How we make money.

If you’re behind on paying off your debts or are in financial difficulty, a default can be a frightening possibility on the horizon.

The consumer loan default rate reached record highs in 2020 and 2021, despite the widespread economic downturn. This counterintuitive phenomenon was partly due to the government’s COVID-19 relief initiatives, such as stimulus payments and improved unemployment benefits.

But, as those initiatives wind down, banks are seeing borrower defaults slowly rebound from pandemic lows. For example, Wells Fargo has started to see “very, very small increases in delinquencies,” CEO Charles Scharf said at the Goldman Sachs US Financial Services Conference in December 2021..

Defaulting on a loan can have a serious negative impact on your financial life, from dropping your credit score to losing your home or car, to lawsuits and even garnishment. of salary. But if you take steps now to reach an agreement with your lender, you may be able to get your debt under control and avoid the worst consequences of default.

Here’s what you need to know.

What does it mean to default on a loan?

A default means that you have not made payments according to your loan agreement and the lender believes that you have no intention of making further payments. Unlike a default, which can occur after a single late or missed payment, a default is much more serious and fundamentally changes the nature of your loan.

Most lenders will start reporting missing payments to credit bureaus after 30 days, says Amy Lins, vice president of corporate learning at Money Management International, a nonprofit credit counseling agency based in Sugar Land. , in Texas. If you continue to miss payments, your lender will consider the loan delinquent. For private loans like personal loans or private student loans, it’s up to the creditor to determine how long it can take before the loan is considered past due or in default, Lins says.

Failure to pay can have serious consequences on your credit score and finances. For this reason, if you are currently in default or cannot repay a loan, it is best to contact your lender to discuss other options instead of leaving your loan in default.

How Default Works

Although default and delinquency are sometimes used interchangeably, the two terms mean different things. As soon as you miss or are late on a payment, your loan is considered delinquent, says April Lewis-Parks, director of corporate communications at national nonprofit credit counseling organization Consolidated Credit. Depending on the terms of your loan agreement, failure to pay may result in late fees or other penalties, but it generally won’t affect your credit score as long as you’re no more than 30 days past due. a payment.

Pro tip

If you are behind on loan repayments due to financial hardship, contact your lender directly as soon as possible to try to work out a deal before your loans go into default.

Once you have been in arrears for a period of time, your loan will be in default and your lender will begin to take action to recover that money. It’s ultimately up to the creditor how they handle their bad debt, Lins says. They may try to contact you through their own internal collections team or work with a third-party collection agency. As a last resort, they can sell it at a discount to a debt collection agency, who would then own the debt and can try to collect it from you.

Depending on the specific type of loan, the lender may also take other actions after a loan has gone into default. Here are some examples :

Car credits: Auto loans are secured by your vehicle, which means that if you don’t make payments, your lender will repossess your car and try to sell it to recoup their losses. If the resale value of the car doesn’t cover the outstanding amount, lenders also have the option of taking legal action and obtaining judgment against you for the difference, Lins says. For example, if you owed $17,000 on a delinquent car loan and the lender was only able to sell the car for $15,000, they could sue to get the remaining $2,000 from you.

Mortgages: Since your mortgage is secured by your home, which serves as collateral, failure to pay your loan will result in your property being seized by the lender through a process known as foreclosure. The exact foreclosure process will vary depending on the laws in your state. Some states require a court foreclosure, which requires the lender to seek judgment from the courts, while other states allow non-court foreclosures, which does not require the lender to go to court and can therefore proceed much faster .

Student loans: When private student loans are in default, they are generally treated the same as personal loans and credit cards. But federal student loans follow a different process. Once 30 days have passed since your last payment, a federal loan is considered past due. When it reaches the 270 day mark, it is considered defaulted. Student loans are unique in that the federal government can garnish your wages without needing a court order if you are in default, while most other types of debt require a creditor to bring you first. in justice.

What are the penalties or consequences of non-payment?

Depending on the type of loan you default on, you could face serious consequences ranging from a damaged credit rating to seizure of assets to possible legal action. Here are some of the most common consequences of defaulting on payment:

  • Damaged credit score: No matter what type of loan you default on, you will almost certainly see a serious and lasting negative impact on your credit score. Your payment history makes up 35% of your credit score, and a default can stay on your credit report for up to seven years. This could make it harder to get new credit in the future.
  • Seizure of assets: If you default on a secured loan – a loan secured by collateral – the lender can seize the asset you used as collateral and sell it to recoup the cost. Common secured loans include mortgages, which use your home as collateral, and car loans, which use your vehicle as collateral. Home equity loans and HELOCs are also secured loans secured by your home. Some personal loans may also be secured, with the exact collateral required varying by lender. Losing your home or car can turn your life upside down, so it’s especially important to avoid leaving secured loans in default if you can.
  • A legal action: If you are in default, your creditor could sue you to recover the amount owed. The exact process depends on your state’s laws, but if your creditor can get a court order, they may be able to recover your personal assets or garnish your wages.
  • Payday entry : While most types of debt require a creditor to obtain a court order before they can garnish your wages, federal student loans are different. If you fail to repay a federal student loan, the federal government can seize up to 15% of your disposable income to pay your debt without taking you to court. The government can also do cash compensation, Lins says, where it takes money from your tax refund or Social Security benefits to pay your debt.

How to get out of the fault

1. Contact your lender

If you anticipate not being able to meet your loan repayments, contact your lender as soon as possible. Explain your situation and see if you can negotiate a payment plan to get you back on track. Most lenders prefer to work with you to find a solution before you go into default, rather than going through the expense and hassle of collections.

Especially in today’s environment, “lenders are really willing to work with people,” says Lewis-Parks. “So [consumers] shouldn’t be afraid to reach out. It will never make the situation worse. »

If you’re behind on your mortgage, talk to your lender about options to avoid foreclosure. You may be able to enter into a forbearance agreement, in which the lender allows you to reduce or suspend payments for a period of time. Or, you could work out a loan modification, where the lender adjusts the terms of the loan to lower your monthly payment.

2. Rehabilitate or consolidate your federal student loans

There are two main ways to get out of federal student loan default: rehabilitation and consolidation.

As part of the rehab, you will work out a new repayment plan with your loan provider based on your discretionary income. After nine one-time monthly payments under a rehabilitation agreement, your loan will no longer be in default and the default record will be removed from your credit file.

Loan consolidation allows you to consolidate your defaulted federal loans into a new direct consolidation loan and repay the new loan under an income-driven repayment plan.

A third, less common option is to pay off your defaulted loan in full. This probably won’t be feasible for most borrowers, but it could be an option if you’ve already defaulted on your loan, but have since received a sudden windfall and now have the funds to pay it off completely.

3. Ask for help if you need it

If you feel overwhelmed with debt or don’t know where to start, consider seeking help from a nonprofit housing or credit counseling agency. A professional counselor can advise you on your options, help you strategically prioritize your debt, and help you negotiate with your creditors or develop a debt management plan.

“One of the things we really do is help [consumers] break that cycle of inaction, understand what their choices are, help them come up with a plan and move forward,” Lins says.

Some credit counseling agencies may charge a small fee for their services, but these can usually be waived if you are in financial difficulty.

A housing counseling agency offers advice specifically related to housing – including mortgage default and foreclosure – while a credit counseling agency can offer help with several types of debt, from credit cards personal loans to student loans.

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Investing Tools for Retail Investors to Create Streams of Fixed Income in 2022 https://flight93.org/investing-tools-for-retail-investors-to-create-streams-of-fixed-income-in-2022/ Thu, 27 Jan 2022 07:02:34 +0000 https://flight93.org/investing-tools-for-retail-investors-to-create-streams-of-fixed-income-in-2022/ Fixed income securities are sought after as the ideal investment path that offers portfolio diversification, flexibility and higher interest rates. With the massive rally in stock markets since March 2020 and high stock valuations, investors are looking for more investment opportunities. Fixed income securities are sought after as the ideal investment path that offers portfolio […]]]>

Fixed income securities are sought after as the ideal investment path that offers portfolio diversification, flexibility and higher interest rates.

With the massive rally in stock markets since March 2020 and high stock valuations, investors are looking for more investment opportunities.

Fixed income securities are sought after as the ideal investment path that offers portfolio diversification, flexibility and higher interest rates.

Investment tools beyond traditional fixed deposits;

Exchange Traded Funds (ETFs) track underlying asset classes such as stocks, fixed income, commodities, etc. By now, everyone is quite familiar with equity-linked ETFs that track the respective index or basket of stocks.

ETFs that invest in bonds and are traded on exchanges are relatively new to the investing community. Since bond ETFs are passive funds, they offer the combined benefits of liquidity, transparency and profitability. They track the underlying bond indices – PSUs, government or corporate bonds.

There are target-maturity bond ETFs that have maturities defined as three years, five years, or ten years. Investing in these fixed-maturity ETFs can help you achieve your medium- to long-term financial goals.

As their name suggests, MLDs are debt securities issued by legal entities whose returns are linked to the performance of the bond markets. Unlike vanilla bonds, MLDs pay no coupon before maturity. The repayment at maturity is made up of the repayment of principal and market-related returns. Gains on MLDs are taxed like equity. Long-term capital gains on securities held for more than one year are taxed at 10%.

MLDs are rated by credit rating agencies, which helps you know the creditworthiness of the borrower. Investing in highly rated debentures has the potential to generate higher returns.

MLDs are no longer an investment avenue accessible only to ultra HNIs. Your wealth manager can help you understand the nuances of MLDs, and you can invest starting with a minimum investment value as low as Rs 10,000.

  • Non-convertible debentures

NTMs are debt securities with a fixed maturity and a fixed interest rate that cannot be converted into shares. The interest payment frequency – monthly, quarterly, semi-annually or annually – is specified on issue. MNTs cannot be withdrawn prior to maturity; however, they can be sold on the secondary market.

DEMs can be secure or unsecure. The assets of the issuers secure secured NTMs and the entity is obligated to repay the amount borrowed. On the other hand, unsecured NTMs do not guarantee repayment of the principal amount in case the company goes bankrupt.

Investing in NTMs depends entirely on your risk appetite. You can opt for secured MNTs with high credit ratings if you have a low appetite for risk. It is important to note that NTMs can generate higher returns and are not risk-free or tax-exempt assets.

Corporate FDs are fixed term deposits offered by corporations and NBFCs. They offer higher interest rates compared to traditional FDs and savings accounts. Corporate FDs are rated by credit rating agencies that help you analyze their financial stability to repay lenders.

Corporate fixed deposits have the option to choose the term ranging from 12 months to 60 months. They are liquid as you can avail a loan against the FDs or get out in an emergency.

Cumulative fixed deposits have the power to accumulate as interest earned is reinvested over the term of the term. Non-cumulative DFs are a source of regular income. The interest payment frequency – monthly, quarterly or annually – can be chosen according to your income needs.

Floating Rate Indian Government Bonds

The Reserve Bank of India issues Indian government bonds when the government borrows money. They pay coupons at periodic intervals specified when issued. They can be purchased for long-term financial goals since they have a seven-year lock-in period. They are the safest for the risk averse investor as they offer capital protection and regular interest income. Since these issues fill up quickly and are available for a limited time, investors should keep an eye out for new issues.

Transition in interest rate scenario

All central banks have taken a dovish stance to help the world recover from the economic setbacks due to the outbreak of the pandemic. Lower interest rates increased market liquidity, leading to inflationary pressures. With demand picking up, central banks have started considering liquidity tightening measures in 2021.

Now that much of the population has been vaccinated and governments are better prepared to deal with the various mutations of the virus, it won’t be too far for central banks to start raising interest rates. Recent stock market volatility reflects expectations of rising interest rates. Now is a good time to diversify your fixed income portfolio to take advantage of the transition phase in 2022.

by, Anshul Gupta, co-founder of Wint Wealth

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National Loans explains how to get pre-approved for a loan https://flight93.org/national-loans-explains-how-to-get-pre-approved-for-a-loan/ Wed, 26 Jan 2022 08:05:59 +0000 https://flight93.org/national-loans-explains-how-to-get-pre-approved-for-a-loan/ MELBOURNE, AUSTRALIA, Jan. 26, 2022 /24-7PressRelease/ — According to National Loans, a leading finance broker offering all types of asset finance, including boat and caravan finance, pre-approval of A loan is when a lender agrees in principle to lend money before a purchase has been made. Pre-approved financing can speed up the process and potentially […]]]>

MELBOURNE, AUSTRALIA, Jan. 26, 2022 /24-7PressRelease/ — According to National Loans, a leading finance broker offering all types of asset finance, including boat and caravan finance, pre-approval of A loan is when a lender agrees in principle to lend money before a purchase has been made. Pre-approved financing can speed up the process and potentially save the buyer money.

As National Loans explains, pre-approval is conditional approval based on information provided to the lender. Unconditional approval is then provided once all documentation has been received by the lender and a final credit assessment has been completed.

During the pre-approval process, a lender will assess an individual’s financial situation and borrowing capacity before giving conditional approval with estimated terms such as interest rate and maximum amount that can be borrowed. According to National Loans, borrowers can then use this information to buy with confidence and negotiate the price of the asset with the dealer.

One of the biggest benefits of pre-approval, according to National Loans, is that it gives the borrower peace of mind and confidence when shopping because they know what their budget is. Being aware of their budget helps borrowers avoid hard selling tactics and also strengthens their negotiating position.

It should be noted that each time a borrower applies for pre-approval, a credit check is performed. If a borrower requests pre-approvals from multiple lenders, it may affect their credit rating. It’s important that borrowers work with an experienced loan broker, like National Loans, who will connect them with the right lender the first time, saving them time, money and potential impacts on their credit score. . Plus, a pre-approved loan is only valid for a limited time, so it pays to start shopping around early.

By providing loan pre-approval in just one hour, National Loans simplifies the funding process. For more information or to request pre-approval on asset finance, including boat loan or motorcycle finance, contact National Loans today.


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Why bank loans look attractive in today’s market https://flight93.org/why-bank-loans-look-attractive-in-todays-market/ Sun, 09 Jan 2022 05:33:00 +0000 https://flight93.org/why-bank-loans-look-attractive-in-todays-market/ KanawatTH / iStock via Getty Images By Reema Agarwal, CFA, Director, Floating Rate Debt, Franklin Templeton Fixed Income The technical and fundamental situation appears favorable for bank lending for a number of reasons, according to Reema Agarwal, director of floating rate debt at Franklin Templeton Fixed Income. She says current spreads look attractive in what […]]]>


KanawatTH / iStock via Getty Images

By Reema Agarwal, CFA, Director, Floating Rate Debt, Franklin Templeton Fixed Income

The technical and fundamental situation appears favorable for bank lending for a number of reasons, according to Reema Agarwal, director of floating rate debt at Franklin Templeton Fixed Income. She says current spreads look attractive in what is likely to be a period of tight monetary policy during the year, and periods of volatility should be seen as buying opportunities.

Note: The video below was recorded in December 2021. References to “next year” therefore refer to 2022.

With the exception of a brief hiatus around the discovery of the Omicron COVID-19 variant, credit spreads have continued to tighten steadily, especially since mid-September, when expectations regarding the narrowing of the US Federal Reserve and rate hikes began to escalate, which provided favorable winds to the floating rate bank lending industry. Technical conditions remain sound: record guaranteed loan bond (CLO) issuance and retail demand have supported loan prices. While there may be a lull in loan market activity in early 2022, as market participants absorb the implications of the transition from the London Interbank Offered Rate (LIBOR) to the guaranteed overnight rate. On the day (SOFR), we believe that CLOs will continue to be an attractive option for investors, which supports loan valuations and provides a floor on loan prices. Overall, retail flows have been consistently positive in 2021, driven by expectations of higher interest rates.1 We believe current credit spreads are attractive and technical conditions remain in favor of a tightening path. We also believe that expectations about when an interest rate takeoff will be a key determinant of credit market sentiment.

As expected, the path to a full recovery has been uneven across sectors and issuers as economies fully reopen, based on trends in office versus remote work, security restrictions on indoor and outdoor capacity. in various sectors and the final demand for activities and services that have been reopened. Office supply companies were slow to recover, as were some aerospace and recreation emitters such as gymnasiums and movie theaters. Supply chain disruptions and inflation in labor and input costs have also been headwinds in some cases. Demand for chemicals, packaging and building materials was strong, but margins were negatively affected by higher resin and other input costs and / or higher container rates. Many issuers have been able to impose price increases to offset some or all of the higher costs, but with a lag. Issuers of consumer, retail and food products have also faced higher input costs and labor inflation, with varying capacities to pass price increases.

On the other hand, some issuers take advantage of it. Commodity issuers are clearly profiting from inflation, and loan prices increased the most in these sectors in 2021, although it should be noted that these sectors only represent 5% of the loan market. We are aware of the cyclical recoveries that could run out of steam for some sectors that had thrived during the pandemic. At the same time, we are looking for loan issuers whose business models are likely to benefit the most from the permanent changes in consumption patterns / behaviors and work habits in a post-COVID-19 world.

If we observe volatility due to supply chain issues and cost inflation, changing expectations about the timing of rate hikes, or potential macroeconomic challenges posed by the Omicron variant, on a selective basis we would consider these periods as buying opportunities, because we believe that business fundamentals are still healthy.

In general, we favor loans rated B, especially those with LIBOR floors. As the probability of an increase in prices and interest rates is higher than it has been in recent years, we maintain our opinion that industries whose fundamentals are questioned could be more affected. than others, especially those with a struggling supply chain. Amid the idiosyncratic risk of issuers, careful stock selection remains paramount, in our view.

Despite the potential headwinds that persistent inflationary pressures could bring, we continue to believe that supply chain disruptions and inflation can delay, but not derail, the full recovery. We also don’t expect a high probability of large-scale fundamental weakness in the lending market over the next year, particularly to such a degree that it overshadows important technical tailwinds for fixed income assets. variable. We maintain our positive outlook for the bank lending sector: over the next 12 months, technical conditions should remain strong and fundamentals broadly positive with moderate default rates, against a backdrop of rising interest rates.

What are the risks ?

All investments involve risk, including possible loss of capital. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of the bonds in an investment portfolio adjust to an increase in interest rates, the value of the portfolio may fall. Investments in lower rated bonds carry a higher risk of default and loss of principal. There are special risks associated with foreign investments, including currency fluctuations, economic instability and political developments. Investing in emerging markets involves increased risks associated with the same factors, in addition to those associated with the smaller size and less liquidity of these markets. Floating rate loans and debt securities tend to be rated below the investment grade. Investing in higher yielding variable rate loans and debt securities involves a higher risk of default, which could result in a loss of capital, a risk that may be heightened in a slowing economy. The interest received on variable rate loans varies according to the evolution of the interest rates in force. Therefore, although variable rate loans provide higher interest income when interest rates rise, they will also generate less income when interest rates fall. Changes in the financial strength of a bond issuer or in the credit rating of a bond can affect its value.

1. Sources: Franklin Templeton Fixed Income Research, JP Morgan. As of October 2021. There can be no assurance that an estimate, forecast or projection will materialize.

Original message

Editor’s Note: The bullet points for this article were chosen by the editors of Seeking Alpha.


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Best age to apply for a loan: Can I be refused a loan because of my age? https://flight93.org/best-age-to-apply-for-a-loan-can-i-be-refused-a-loan-because-of-my-age/ Mon, 27 Dec 2021 05:45:17 +0000 https://flight93.org/best-age-to-apply-for-a-loan-can-i-be-refused-a-loan-because-of-my-age/ Best age to apply for a loan: Can I be refused a loan because of my age? Image used for illustration purposes only. Image Credit: Gulf News Archives Dubai: Financial contingencies can arise at any time, and to arrange finance quickly and quickly, people often resort to loans. With the increased progress made by banks […]]]>


Best age to apply for a loan: Can I be refused a loan because of my age? Image used for illustration purposes only.
Image Credit: Gulf News Archives

Dubai: Financial contingencies can arise at any time, and to arrange finance quickly and quickly, people often resort to loans.

With the increased progress made by banks in the loan application and approval processes, the loan amount usually only takes 2-7 days to reach you. However, you must meet certain eligibility standards to be eligible for the loan.

Some important factors that determine your eligibility for a personal loan are your credit rating, your monthly income, job stability, age and finally, the age limit required for the loan you are applying for.

How does age affect your loan eligibility?

It can be said that there is an inverse relationship between the age limit of a loan and loan eligibility. The younger you are, the more likely you are to go through the loan approval process smoothly.

To lend

How does age affect your loan eligibility?

However, this may not always be true. Let’s look at three aspects of a personal loan where the age of the applicant plays an important role.

• Relationship between age and loan duration

For short-term loans, the term typically varies from a minimum year to a maximum of 5 years, or even more. A younger candidate is considered to have more employment and income opportunities compared to an older candidate.

Therefore, if you are in your twenties, you are more eligible for a longer term loan than someone in your fifties. Likewise, the loan term can also be extended in the case of a younger applicant.

• Relationship between age and loan amount

Just like seniority, the loan amount approved is also based on the age factor. A younger candidate with a similar profile may get a higher loan amount than an older candidate.

• Relationship between age and interest rate

The age of the applicant has an indirect impact on the interest rate offered by the lender. The interest rate offered depends on a few essential factors like credit score, income etc.

A very young candidate may not have a good income as he or she may be new to a job or may not have a good credit rating due to a lack of credit history which can have a negative impact on the interest rate offered.

Loan default

Let’s look at three aspects of a personal loan where the age of the applicant plays an important role.

On the flip side, those with 5-10 years of professional experience are known to have well-established credit histories which can work in their favor when negotiating interest rates.

Time to check your loan eligibility?

It is important to choose a loan at a reasonable rate of interest. However, it should also be ensured that you fully meet all the eligibility criteria of the respective financial institutions in order to avoid untoward inconvenience afterwards. So, before you embark on a loan, check all the eligibility conditions.

What age is best to apply for a loan?

When it comes to buying a home or a car, most people don’t really have the luxury of owning a home or vehicle with a full down payment.

The loan must be repaid over a period of time; usually within 5 years for a car loan and within 20 years for a house (or more, depending on the lender), in which you have to pay monthly payments. As such, it is a good idea to go for the loan when you are employed.

The right time to buy the house or a car actually depends on the individual buyer; when it is comfortable with supporting the expenses of the loan.

contract-945619_1920 auto loan contract

Why do your chances of getting a loan decrease with age?

Generally, it is best to go for the long term loan when you are in your mid-twenties or early thirties, as this is the time when you are well employed and able to pay monthly installments from. of your monthly income.

Plus, you are able to complete your loan repayment before quarantine, and you can think about buying a second property, car, or investing in retirement, if you want.

That being said, you can also take out a loan later in life, when you feel you have saved enough to make a larger down payment and pay lower interest rates. Lenders usually set different age limits for loans; from age 24 until borrowers in their fifties.

Why do your chances of getting a loan decrease with age?

However, data from UAE banks showed that around 50 percent of its borrowers are in the 30-40 age bracket, nearly 30 percent are in the 40-50 group, and nearly 20 percent are in the 40-50 age group. one hundred are over 50 years old.

These figures suggest that there is a certain market for older borrowers in the UAE, but younger loan seekers are often favored over older ones when it comes to loan terms and risk to the lender.

For example, a mortgage is a long term loan that often extends up to 25 years. Unlike shorter loans with terms such as three or five years, a mortgage taken out later in life may have a real chance of continuing past retirement and a regular salary – an increased risk for the lending institution.

Mortgage specialist

Why do your chances of getting a loan decrease with age?

Previously, the UAE Central Bank imposed an age limit for the last repayment: 65 years for employees of a company and 70 years for the self-employed. However, the cap no longer applies since 2018 in the United Arab Emirates.

That meant any employee looking for a 25-year mortgage had until their fortieth birthday to get the financing. Getting a mortgage after 40 years meant considering shorter-term loans, increasing the cost of each monthly repayment, and having a significant impact on any affordability controls.

Why is age an important eligibility criterion for obtaining a loan?

Although the loan repayment tenure differs, an applicant who is at his young age has the option to select the repayment term, but things are not the same with the older applicant since banks or lenders become mindful of the repayment terms. applicants who are in their advanced years.

In such situations, the only possible option left is to increase their monthly payments (EMI). However, an increase in IMEs can be difficult to manage, especially when you have a fixed source of income or when you have many responsibilities.

A younger applicant will have more time to repay their loan while an older applicant will have less time to repay the funding. The reason behind this is very simple and straightforward.

A borrower in their twenties or thirties has enough time to earn more than a borrower in their fifties. In addition, lenders tend to believe that the income of the young candidate will continue to increase in the years to come, and therefore are ready to grant a young candidate an extension of his financial tenure.

Stock market dirhams

Why is age an important eligibility criterion for obtaining a loan?

Although the former applicant may not get an extension of the repayment term of his finances, as he is approaching his retirement age and the chances of increasing his income are very low (in the case of salaried persons) .

Also, the loan amount of a younger applicant is usually not high. That said, they might want to borrow money to finance a trip abroad, make a down payment for their vehicle, take it for a medical emergency, or to buy something expensive.

However, the priority of older applicants changes, they take it for their children’s marriage, setting up a new business, or making a down payment on their home loan, etc. This is why the lenders become very careful with the older applicant as the risks are high with the older applicants.

Key points to remember

1. Age is one of the most important factors in taking out consumer credit in UAE as lenders take this factor into account when checking your repayment capacity.

2. If the repayment period of a loan or bank facility extends to retirement age, in accordance with the standards of the UAE Central Bank, banks and financial companies must reschedule reducing these loans or financing facilities so as to allow a deduction of only 30 per cent from post-retirement income or retirement salary.

3. Now, when you finally decide to opt for the loan, do not focus only on the interest rate of the loan but also check that your age is in your favor or if it is a hindrance to your loan application. .


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December 24, 2021 — Rate declining – Forbes Advisor https://flight93.org/december-24-2021-rate-declining-forbes-advisor/ Fri, 24 Dec 2021 13:08:18 +0000 https://flight93.org/december-24-2021-rate-declining-forbes-advisor/ Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors. Refinancing rates have gone down today. If you’re looking to save on your monthly payments or refinance with a shorter loan, you still have the option of getting a great rate. To […]]]>


Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

Refinancing rates have gone down today. If you’re looking to save on your monthly payments or refinance with a shorter loan, you still have the option of getting a great rate.

To date, the average rate on a 30-year fixed mortgage is 3.19% with an APR of 3.29%, according to Bankrate.com. The 15-year fixed mortgage has an average rate of 2.46% with an APR of 2.61%. The 20-year refinancing rate is 3.01%. The average rate on a 5/1 ARM is 2.86% with an APR of 4.15%.

Related: Compare current mortgage refinancing rates

30-year refinancing rate

Today, the average 30-year fixed-rate mortgage refinance rate has fallen to 3.19%. At the same time last week, the 30-year fixed rate was 3.23%. The 52 week low is 2.37%.

The 30-year fixed mortgage refi APR is 3.29%. At the same date last week, it was 3.31%. The APR is the overall cost of your loan.

According to the Forbes Advisor mortgage calculator, borrowers with a 30-year fixed rate mortgage of $ 100,000 will pay $ 432 per month in principal and interest (excluding taxes and fees) at the current interest rate. 3.19%. You would pay approximately $ 55,491 in total interest over the life of the loan.

20-year refinancing rate

The average interest rate on the 20-year fixed refinance mortgage is 3.01%. Last week, the 20-year fixed rate mortgage was at 3.09%.

The APR on a 20-year fixed rate is 3.10%. Last week it was 3.16%.

A 20 year fixed rate mortgage refinance of $ 100,000 with a current interest rate of 3.01% will cost $ 555 per month in principal and interest. Taxes and fees are not included. Over the life of the loan, you would pay approximately $ 33,224 in total interest.

15-year fixed-rate mortgage refinancing rate

The average interest rate on the 15-year fixed refinance mortgage remained at 2.46%. Last week, the 15-year fixed rate mortgage was at 2.49%. Today’s rate is higher than the 52-week low of 2.39%.

On a 15-year fixed refinancing, the APR is 2.61%. Last week it was 2.63%.
At the current interest rate of 2.46%, a 15-year fixed rate mortgage would cost about $ 665 per month in principal and interest per $ 100,000. You would pay approximately $ 19,683 in total interest over the life of the loan.

Giant refinancing rate over 30 years

The average interest rate on a 30-year fixed rate jumbo mortgage refinance is 3.19%. A week ago, the average rate was 3.22%. The 30-year fixed rate on a jumbo mortgage is higher than the 52-week low of 2.37%.

Borrowers with a 30-year fixed rate jumbo mortgage refinance with a current interest rate of 3.19% will pay $ 3,239 per month in principal and interest per $ 100,000. This means that on a $ 750,000 loan, the monthly principal and interest payment would be approximately $ 3,239, and you would pay approximately $ 416,184 in total interest over the life of the loan.

Giant 15-year mortgage refinancing rate

The average interest rate on a 15 year fixed rate jumbo mortgage refinance is 2.44%. Last week, the average rate was 2.48%. The 15-year fixed rate on a jumbo mortgage is higher than the 52-week low of 2.37%.

Borrowers on a 15-year fixed rate jumbo mortgage refinance with a current interest rate of 2.44% will pay $ 664 per month in principal and interest per $ 100,000. This means that on a $ 750,000 loan, the monthly principal and interest payment would be approximately $ 4,980, and you would pay approximately $ 146,357 in total interest over the life of the loan.

5/1 ARM refinancing rate

On a 5/1 ARM, the average rate remained at 2.86%. The average rate was 2.86% last week. Today’s rate is currently the 52 week high.

Borrowers with an ARM 5/1 of $ 100,000 with a current interest rate of 2.86% will pay $ 414 per month in principal and interest.

Know when to refinance your home

There are a number of reasons why you should refinance your home, but many homeowners consider refinancing when they can lower their interest rate, lower their monthly payments, or pay off their home loan sooner. Refinancing can also help you gain equity in your home or eliminate private mortgage insurance (PMI).

A home loan refinance can make sense, especially if you plan to stay in your home for a while. Even if you get a lower interest rate, you have to factor in the costs of the loan. Calculate the break-even point where your savings from a lower interest rate exceed your closing costs by dividing your closing costs by the monthly savings from your new payment.

Our mortgage refinance calculator can help you determine if refinancing is right for you.

Just like when shopping for a mortgage when buying your home, here’s how you can find the lowest refinance rate when you refinance:

  • Maintain a good credit rating
  • Consider a shorter term loan
  • Reduce your debt ratio
  • Monitor mortgage rates

A strong credit rating doesn’t guarantee that your refinance will be approved or that you’ll get the lowest rate, but it might make it easier for you. Lenders are also more likely to approve you if you don’t have excessive monthly debt. You should also keep an eye on the mortgage rates for the different loan terms. They fluctuate frequently, and loans that need to be repaid sooner tend to charge lower interest rates.


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Poll: Lending Money Personally Goes Bad Almost Half the Time | https://flight93.org/poll-lending-money-personally-goes-bad-almost-half-the-time/ Tue, 21 Dec 2021 02:04:00 +0000 https://flight93.org/poll-lending-money-personally-goes-bad-almost-half-the-time/ We’ve all been there: a friend or family member asks you to foot the bill, find him money, or co-sign a loan and swears he’ll close the deal. You have a sinking feeling but say yes anyway. Nearly 7 in 10 American adults (69%) say they have loaned money to friends or family, according to […]]]>


We’ve all been there: a friend or family member asks you to foot the bill, find him money, or co-sign a loan and swears he’ll close the deal. You have a sinking feeling but say yes anyway.

Nearly 7 in 10 American adults (69%) say they have loaned money to friends or family, according to a new Bankrate survey. And acting as a bank for your loved ones has a good chance of ending badly, according to the survey of 2,225 American adults in November 2021.

But that doesn’t stop many of us from securing a loan, paying down money, or handing over our credit card. Here are the ways people said they helped a friend or family member financially:

– Loaned money with the idea that it would be repaid (54%)

—Paid a group bill hoping to be reimbursed (24%)

—Cosigned on a loan or other financial product (21%)

—Lend someone their credit card (19 percent)

The survey found that almost half (44%) of people who offered financial help to a friend or family member had something serious because of it. The survey data confirms a well-known financial rule: It’s best to avoid mixing up friends, family and money, according to Bankrate industry analyst Ted Rossman.

“If you really want to offer help, don’t lend more than you can afford to lose and consider treating the money as a gift to limit the potential for grudge,” says Rossman.

Lending a Financial Hand: What Could Go Wrong?

In an ideal scenario, you would give your loved one a loan and they would pay you back immediately. You might then feel good to help them get out of a traffic jam without financial inconvenience.

In real life, giving financial assistance to a loved one can often turn sour. The survey found that those who helped friends and family financially suffered these negative consequences:

—Loss of money (38 percent)

—Damage in the relationship (23%)

—Damaging their credit score (14%)

—Enter physical combat (7%)

It’s a lesson Brian Davis, real estate investor and founder of real estate investment site SparkRental.com, learned the hard way. He loaned $ 12,000 to a friend who needed the money to keep his business afloat.

Davis charged interest, wrote a legal note, notarized it, and took the keys to his friend’s restored 1950s Porsche as collateral. The payment deadlines passed and Davis went to his friend’s house and threatened to take the car. The loan was eventually repaid, but the problems strained the friendship and caused Davis much concern.

“Looking back, I probably should have taken possession of the car, not just the keys,” Davis says. “Better yet, I shouldn’t have loaned him any money at all.”

Millennials and men most likely to burn themselves

So who opens their wallet and who gets courted? Turns out, millennials and men are the groups most likely to see a loan for a loved one go awry.

The likelihood of lending money to a friend or family member increases with age, with baby boomers (57-75) the most likely (61%) to lend money, followed Gen X (41 to 56) at 53 percent, Millennials 25 to 40) at 48 percent, and Gen Z (18 to 24) at 47 percent. The Baby Boomers (28 percent) and the Quiet Generation (30 percent) were the most likely to have co-signed a financial product for someone else.

But millennials were the generation most likely to turn against generosity. More than half (62%) of millennials who have helped a friend or family member financially reported negative consequences. Compare that with less than half (47%) of Gen Z and only about a third of Gen X (36%) and Baby Boomers (34%). Men were also more likely (48%) than women (40%) to report the negative consequences of a financial bailout from a friend or relative.

Lending money was the act of generosity most likely to result in a loss of money: 38% of cash lenders lost money compared to 33% of those who paid a group bill, 21 % who have co-signed and 21% who have loaned their credit card.

But co-signing is perhaps the riskiest decision of all: one in five (21%) co-signers have experienced a downgrade in their credit rating and the same percentage have lost money. Co-signing is especially problematic because you might not even know the person is late or defaulted until your credit runs out, says Brad Klontz, financial psychologist and associate professor of practice at Heider College of Business. from Creighton University.

“The risk is multiplied by 100 if you co-sign a loan” compared to lending cash, he says. “You are putting your financial well-being at risk in a profound way. “

From money lender to debt collector

Acting as an unofficial bank for your son, first cousin, or college roommate can become more stressful when they aren’t proactively paying you back.

The survey found that of the 80 percent of people who said they would lend $ 100 to a friend or family member, only half would try to collect the debt while the rest would drop the deal.

It’s no surprise that collecting money from a loved one, friend, neighbor or coworker is difficult, says Diana Simpson, who works with personal finance site Finance + Freedom. She loaned $ 80 to a friend she met at (yes, really) a debt collection job. “She paid her bill, and when payday came up, she paid me back,” Simpson says.

The next month, the coworker asked to borrow $ 120. Payday came and went, and eventually Simpson tried to collect. The borrower got angry and “ran away”. Simpson eventually got her money back, but she lost a friend.

“Collecting money from people you know and love is a lot trickier and more difficult than calling strangers who owe money on their old utility bills,” she says.

Tips for helping a friend or family member in need

So you know that lending a helping hand financially to a friend or family member can go wrong, but you just got a cry for help. Here are five tips on how to handle this scenario:

—Look at loan alternatives. Financial therapist and coach, Carrie Rattle of Behavioral Cents, recommends asking potential borrowers how they might otherwise get the funds. In the past, Rattle worked with a mother whose 40-year-old daughter often asked for money. One day the girl asked for money to pay a vet bill for her cat’s surgery. With a nudge from her mother, she arranged a payment plan with the vet. “It helped her develop her own skills to navigate these situations,” says Rattle.

—Only lend (or give) money that you can afford to lose. In some cases, you may want to consider making this “loan” a gift to reduce the chances of straining a relationship, Klontz says. You can also privately agree not to be reimbursed. “You have to be 100% okay with never seeing that money again,” he says.

– Be clear on the terms of the loan. State a repayment plan and timeline, including whether you will receive payments or a lump sum. A borrower may say, “Mom and dad know I’ll pay them off when I can,” says Rattle. “But does that mean after you buy a new outfit, buy a new car and go on vacation?” Or is it as soon as you have cash? “

—Avoid co-signing at all costs. If you can’t afford a car loan or mortgage payments, or suffer damage to your credit, consider helping your loved one build credit by referring them to a purpose-built credit counseling agency. non-profit. Or, you can even offer to pay for a session with a financial planner, Klontz says.

—Keep the lines of communication open. A friend or family member who feels uncomfortable about a loan may start to avoid the lender, Klontz says. Reduce the risk that the loan will create a wedge between you by talking about your concerns in advance. Please let me know if you have any problems refunding this, and we can talk.

Finally, it’s best to try and think of the loan as a business transaction, so you don’t scrutinize every spending decision and wonder if the borrower is ordering the lobster or pulling out a new iPhone for lunch. Otherwise, you might feel resentful, Klontz says.

“It’s really hard to lend money without strings attached,” he says.

———

(Visit Bankrate online at bankrate.com.)

© 2021 Bankrate.com. Distributed by Tribune Content Agency, LLC.


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How to pay off $ 150,000 in student loan debt https://flight93.org/how-to-pay-off-150000-in-student-loan-debt/ Mon, 20 Dec 2021 18:05:17 +0000 https://flight93.org/how-to-pay-off-150000-in-student-loan-debt/ Our goal here at Credible Operations, Inc., NMLS number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are ours. If you have $ 150,000 in student […]]]>


Our goal here at Credible Operations, Inc., NMLS number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are ours.

If you have $ 150,000 in student loan debt, you might be wondering how you’ll ever pay it off. Learn how to manage your student loan debt to make it less daunting. (iStock)

If you’re struggling to pay off your student loans, you’re not alone. According to the Institute for College Access and Success, more than six in ten seniors graduated with student debt in 2019. Graduates of medical or dental schools could easily have up to $ 150,000 in student debt.

Fortunately, if you are in this boat, you have a lot of options. Here are some strategies for managing $ 150,000 student debt.

Refinancing is a way to pay off student loans while saving money each month. Discover Credible to compare student loan refinance rates.

Refinance your student loans

Best for: Borrowers with high interest loans and a good credit rating

Refinancing of student loans means that a new lender pays off your original loans and gives you a new one-time loan. Ideally, you’ll get a better interest rate and better repayment terms, which will save you money over the life of your loan.

The rates and terms you qualify for depend on your income and credit rating. You can refinance federal and private student loans into a new private loan. But if you refinance a federal student loan privately, you lose access to valuable protections, such as student loan cancellation programs and income-based repayment plans.

Here’s an example of how a lower interest rate can save you money:

Initial loan

  • Student loan balance: $ 150,000
  • Interest rate: 6.8%
  • Monthly payment: $ 1,726
  • Remaining time: 10 years

Refinanced loan

  • Student loan balance: $ 150,000
  • Interest rate: 4.25%
  • Monthly payment: $ 1,537
  • Remaining time: 10 years

With the refinanced loan, you will save $ 189 per month and $ 22,680 over the life of your loan. You can also reduce your monthly payments by refinancing to a longer repayment term, although you will pay more overall interest this way.

Pay off the loan with the highest interest rate first

Best for: Borrowers with multiple student loans

A popular student debt repayment strategy known as the debt avalanche strategy, is focusing on paying off the loan with the highest interest rate first while making the minimum monthly payment on all of your other loans.

The faster you pay off that loan, the less overall you will spend on interest and the more money you will have in your budget to pay off other loans. You will continue to eliminate the loans with the highest interest rates until they are all paid off.

Add a co-signer

Best for: Borrowers with lower credit scores or little credit history

If you’re having trouble refinancing your loan because of your credit score or a lack of stable income – or if your current loan has a high interest rate – you can ask someone (like a relative) with a better credit history and greater financial stability to co-sign your loan. This way, you can access cheaper interest rates which will save you money. The co-signer must agree to make payments on the loan in the event of default, so make sure everyone involved is comfortable with this arrangement.

Use an income-based repayment plan (if you are eligible)

Best for: Federal student loan borrowers

Federal student loan borrowers have the option of purchasing a income-based repayment plan. These plans set your monthly loan payments based on your income and family size to help you pay your payments each month.

You can choose from four types of income-based repayment plans:

  • Reimbursement plan revised as you earn (REPAYE plan) – Your monthly payments are usually 10% of your discretionary income, and you have 20 to 25 years to repay your loans.
  • Pay As You Earn Reimbursement Plan (PAYE Plan) – Your monthly payments are typically 10% of your discretionary income, but never more than what you would pay under the standard repayment plan. Your repayment period is 20 years.
  • Income Based Repayment Plan (IBR Plan) – With an IBR plan, your monthly payment depends on the date on which you took out the loan. If you are a new borrower on or after July 1, 2014, your monthly payment is usually 10% of your discretionary income and your repayment term is 20 years. If you are not a new borrower on or after this date, your monthly payment is usually 15% of your discretionary income and your repayment term is 25 years.
  • Income-Based Repayment Plan (ICR Plan) – Your monthly payment is the lesser of 20% of your discretionary income or the amount you would pay on a repayment plan with a fixed 12-year repayment term.

Explore student loan forgiveness options

Best for: Federal student loan borrowers working in eligible areas

Student loan exemption programs allow borrowers to stop repaying all or part of their federal student loans after they have made a certain number of payments.

the Public service loan forgiveness program is a popular option for borrowers with direct loans. If you are employed full time by a nonprofit organization or the government, you may be eligible for public service loan forgiveness. This program waives the remaining balance of a federal direct loan after making 120 monthly payments under a qualifying repayment plan.

Monthly payments on $ 150,000 in student loan debt

Your monthly payment depends on your loan amount, the interest rate, and the repayment term. Here are some examples of what you would pay for different loan amounts with varying terms:

You can save money on your monthly student loan payments when you refinance. With Credible you can compare student loan refinance rates from various lenders within minutes.

Other Ways to Pay Off Student Loans

Let’s take a look at some other tips and tricks for paying off your student loans so you can get out of debt faster.

Pay more than the minimum each month

The longer you take to repay your student loans, the more interest you will pay over the life of the loan. If you can invest more money in your student loans each month, beyond the minimum required payment, you will save on interest, which can make it easier to pay off your loans faster. Be sure to ask your student loan manager to make your additional payment each month on your loan principal, not the next month’s payment. The less capital you have left, the less interest you will pay.

Consolidate your student loans

If you have federal loans, you can consolidate them with a direct consolidation loan. This is similar to refinancing private student loans – you combine all of your outstanding federal student loan balances into one loan. Your interest rate will be an average of what you already pay on all of your loans (so you may or may not get a lower rate), and you’ll have a convenient monthly payment. With a direct consolidation loan, you will get up to a loan term of 30 years. Remember that while a longer repayment term will lower your monthly payment, you will also pay more total interest.

Sign up for automatic payments

The last thing you want to do is accidentally forget to make your monthly loan payment. By signing up for an automatic payment program, you’ll never miss a student loan payment (as long as you have enough funds in your account to make the payment) and can avoid late payment fees. Some private lenders offer a low interest rate to borrowers who sign up for automatic payments. If you are a federal direct loan borrower, you will save 0.25% on your interest rate if you sign up for automatic debit payments.

Make bi-weekly student loan repayments

If you make your student loan payments every two weeks instead of monthly, you’ll end up making an extra full payment every year. It might not seem like much, but you will save on interest over the years which can really add up, especially if you have a long repayment term.

Adjust your budget

If your goal is to pay off your student loans as quickly as possible, make room in your budget for additional student loan payments. To create a basic budget, combine all of your monthly expenses (including the minimum payment amounts for a student loan) and subtract that amount from the money you bring home each month.

Once you know how much money you should have left each month, you can decide how much more you want to spend on your student loan repayments. Take that amount and add it to your budget as an ongoing expense so that you get into the habit of making those extra payments each month.

If you are ready to refinance your student loans, visit Credible to compare student loan refinance rates from multiple lenders without affecting your credit.


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What is the OTS Loan Repayment and EMI program? How to apply for the OTS program online? https://flight93.org/what-is-the-ots-loan-repayment-and-emi-program-how-to-apply-for-the-ots-program-online/ Sat, 11 Dec 2021 06:54:59 +0000 https://flight93.org/what-is-the-ots-loan-repayment-and-emi-program-how-to-apply-for-the-ots-program-online/ OTS payment Customers of non-performing assets (NPAs) of a bank can avail OTS services online at a bank. If the loan is not repaid to the bank, the customer’s credit rating will also be degraded. To avoid them, OTS is a useful opportunity for NPA borrowers. The OTS amount must be paid within 6 months […]]]>


OTS payment

Customers of non-performing assets (NPAs) of a bank can avail OTS services online at a bank. If the loan is not repaid to the bank, the customer’s credit rating will also be degraded. To avoid them, OTS is a useful opportunity for NPA borrowers.

The OTS amount must be paid within 6 months from the date of approval of the OTS, with 25% upfront and the balance within 6 months without any interest. If the money is paid within one year, interest at the base rate for the 6th month to one year will need to be paid. However, in exceptional cases, the OTS payment can be extended up to 2 years with interest.

Special OTS regime: GNP

Special OTS regime: GNP

The Punjab National Bank, in July 2021, introduced a special OTS program for its clients who could not repay the loan due to the pandemic, for the NPA account of Rs. 50,000, up to 5 crore. We can get a discount of 25 to 80%. The OTS amount range for NPA from Rs. 50 lakh to Rs. 5 crore, will depend on the secure and unsecured part. The scheme will remain in effect until March 31, 2022 and will cover NPA accounts from March 31, 2021. Agriculture accounts for over Rs. 10 lakhs will also be covered. For substandard student loan accounts eligible up to Rs. 7.50 lakhs, settlement at 70% of the outstanding balance; in addition, 85% of the account balance of all other qualifying substandard accounts will be settled. All other important information relating to the PNB OTS Scheme can be found here: https://www.pnbnet.org.in/OTSCF/

Earlier, in November 2020, the SBI introduced the OTS program “Rinn Samadhan 2020-21”, for NPA borrowers who could not repay the loan amounts. The bank said: “The OTS NPA and AUCA account recovery program is launched in the current fiscal year, to increase our NPA and AUCA recovery efforts for units with outstanding amounts over Rs. 20 Lakhs and up to Rs. 50 Crore and classified as D1, D2, D3, Loss or AUCA and AUCA Reversed Accounts as of 03.31.2020. “

How to apply for the OTS program online?

How to apply for the OTS program online?

To apply for the OTS program online, the NPA customer must ensure that their mobile phone number is registered with the bank for SMS banking services. This is important because the bank will send OTP to the registered mobile number. On the bank’s website there will be a different portal for OTS applications. On this page, the NPA borrower must fill in the applicant’s name, account number, country, email id, outstanding balance, OTS offer, captcha code, etc. After completing the page, another window will open asking for the OTS Application. You can also track the status of the OTS request online on the same page.

For example, Bank of Baroda and Punjab National Bank customers can apply for the OTS program here:

https://bobacs.bankofbaroda.co.in:8443/#/settlement

https://www.pnbnet.org.in/OTSCF/custEntry

However, NPA borrowers with export / import accounts will need to physically address the bank branch. The bank will accept or reject the proposal, depending on the collection policy and the bank guidelines issued.

Importance of OTS for the MSE sector

Importance of OTS for the MSE sector

The Single Regulation (OTS), a very old program noted by the RBI, is very important to the MSE sector in India, which is one of the largest employers in the country, and forms the backbone of the economy with the Agri sector. In accordance with the priority sector guidelines issued by the RBI, only micro and small business sectors can be included in the priority sector. MSE contribution to GDP, exports are significant, however, the sector remains under pressure. The pandemic emerged as another obstacle for the sector to shut down and interrupted income generation for about a year. Many MSE owners had taken out loans earlier, which they could not repay due to massive losses. So the OTS program for them was very helpful.

The South Indian Bank said in an official note: “In the case of loans to micro and small enterprises (MSE), officials are allowed to authorize the settlement even if there is no return or even with the write-off of part of the principal amount subject to their sanctioning powers NPA accounts in the MSE sector may be closed by OTS, the bank granting the borrower certain principal / interest concessions or both, provided that the account is closed within a specified time.

“The level of sacrifice to be authorized on an account must be considered after taking into account the history of the account, the nature of the default (voluntary or not), the value of the securities available, the borrower’s resources, etc. on a case-by-case basis, ”the bank added.

The OTS program made headlines again recently after Andhra Pradesh Chief Minister YS Jagan Mohan Reddy spoke out on the program and asked his officials to publicize the benefits of the program. housing loans. Reddy said his government would forgo housing loans taken out by the poor, amounting to Rs. 10,000 crore. Registrations will also be free.


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