Futuristic outlook on Credit Financiers

Tight Rules made Headline News

It is a wake-up calling for professional banking institutions when the collapsed of Lehman Brothers put a global statis trap on the minds of consumers and manufacturers. Did you remember how many jobs were loss overnight? How about the sheer numbers of businesses closing down? What about people being driven out of their houses due to massive wave of foreclosures when banks are hot on pursuits to claim back the variance in negative outstanding equity. Once the announcement came, every newspapers made the headlines on berserk withdrawal of profitable avenues to cover crazy losses incurred from speculative plays. It is known as one of the worst bulge bracket crashes ever in past histories that no financial institutions ever made it crashed so hard and swift.

Core banking arms forced to Credit Remedy

An alarming situation has hit the ground, filled with unwanted debris, credit bureaus and reference agencies are forced into dire assistance in performing structural reforms an undergo immediate transformation. Under the legistative matter, the US Federal Reserve chief Janet Yellen was too pressured to sustain America's economic infrastructure by implementing new policies, namely BASEL III requirements for banking sectors, as well as introducing government stimulus by tapping on to current reserves. The deployment of cash surpluses generated from previous gains during booming times had to curb the current low inflationary environment and bail out those who are facing bankruptcies in due time. It is not an easy task to perform since many companies especially global corporations are knocking hard on government doors for instant bailouts. Not only are banks required to observe new stringent regulations, but also faced new competitors from various non-banking industries to compete in an unhealthy manner.

Non-financing Creditors promote Entry

Here comes some of the most scariest entrants in the non-finance sectors. Global firms, who bypassed the Recession easily, are pulling out of profitable segments and penetrating the lending sectors for higher profit margins. Since companies are facing dire crisis, these lenders have higher bargaining powers to command more authorities in negotiations when it comes to borrowing cash. The common term for it is known as "Shadow Banking", whereby non-finance firms bypass the financial legislations and loan out huge sums of money undertable to the needy corporations who are way behind the queue yet requiring immediate assistance. No one can fault them for jumping queue albeit taking up more risks in remunerating the (unlicensed) lenders with higher interests or through stock options. The government is slow to react as the shock has inevitably hit taxes and reserves are insufficient to provide adequate coverage as more firms go bust while staying loyal in queues.

Who will Emerge victorious?

At the end of the day, this vicious cycle repeats itself again and again. An infamous old adage by the saying, "One can count on human's greed for the next Recession to occur", this seems to a statistical fact. Core banking segments remain one of the most lucrative industry even in an event of economic downturn as established firms demand more cash to generate productivity or bail out from current troubles. It is the non-finance teams that profitted the most due to the fact that they possessed authoritative commands in leading the hurt out of the mess. The regulatory bodies don't have the luxury of time to clam down such shadow activities as they ought to contribute to the settlement of emergency bailouts which left the other competitors to savor for savage. Who is to be blame?

Long Term Credit Financing Rates

International Financial Systems

After several market crashes, have anyone wonder who is behind the scenes and how did the regulatory bodies failed to set adequate (quality) safety measures in the International Financial Systems? The financial crisises; dot com bubble, asian financial crisis, malaysia clob shares,12-11 911 world trade centres, ancient (too big to fail) lehman brothers, just to name a few popular ones, are not coincidental to the global economy. In addition, these frantic mess in the tumultuous markets offers a distinctive understanding between quality equities and junk bonds, demonstrating ample knowledge about the witfulness of human beings - intuitive & intellectual mindset. Who is to blame anyone for the upheaval in the fiat currency society.

Short haul Credit financing schemes

In most carry trades, being leverage from industry traders in the field of namely Forex & Hedge Funds, short haul credit financing is not an uncommon sight. As senior (expert) traders desired to generate massive amount of profits, without the necessary capital, it is imperative to leverage on in-house banking credit schemes to churn out wider profit margins. For the leading hedge fund managers, they tend to source for sponsors from wide range of institutional investors, high networth individuals or even joint ventures with other hedge funds - pooled together resources in a coherent manner. Both parties often review their current accounts, where a positive result is needed upon discounting current liabilities from current assets, to examine their liquidity positions and ensure that they are fully geared up to increase leverage at any point in time. The short term financing seems easy to repay due to the overwhelming influx of new revenues from trading sources, making them even more yield-hungry and wanted more to satisfy their greedy nature.

Long term interest Financing rates

For the more conservative folks, investors or borrowers, it is prudent to adopt longer term credit financing for pricey purchases as it lowers down the monthly installments and brought comfort to the lendees. Albeit incurring higher interest expenses, most retail borrowers like to extend loan tenors to reduce monthly payments as it is less taxing on the income receivables. Prolong zero-inflation from the Federal Reserve chief's announcement has made long term financing more lucrative and irresistable for many working adults; upgrading of lifestyle or financing new flashy cars. Since there is no inflationary costs to increase interests, material goods are much cheaper than before and society demands upgrade to boost economy as well as to denote one's social. However, there are severe consequences behind the herd's mentality and evident from the repetitive cycles in financial crisises.

Which financing mode is more Attractive?

A common question is to ask whether long term or short term credit scheme to take up when financing new home mortgages or big ticket expenditures like car loans and luxury holidays. The key to answering falls on an individual's credit limits and the degree of comfort as to adopting such credit schemes. In an event of interest rate hikes, will one be able to tank the increments without rolling over debts till unfathomable levels? If yes, then proceed for short term tenors and remunerate lesser in the short run. If the purchase is unavoidable, but requires to take up credit, go for the long term one and service it in a timely fashion. Both ways are doable but it depends on what kinds of purchases and the level of comfort without needing to stash more interests at the end of the day.

Why Are Credit Cards So Popular

Credit Card limits for retail spenders

Are you short of cash but desired to buy an item? Here comes the power of leverage whereby an individual can pick up/swipe a credit card to pay for it first before remunerating the bank(s) after a 30-day grace period. Based on historical records, most banks under unsecured loans segment, offer credit limit range of 2-4 times of monthly income. For those who fall under the lower tier category, the credit card limits will be lesser as compared to the higher tiers or high network individuals. It is unsurprising as the banks need to cater to different market needs - lower tier has more difficulty in raising cash flow hence the lower limits being imposed. At times, it is possible to temporary increase credit limits through calling to the hotline. It is totally based on the bank's discretion on the final outcome of increments.

Ease of Obtaining any Credit cards

One of the most easiest skill to pick up is signing on the dotted lines and magically, the credit cards get approved after meeting certain criteria and mailed to the respective home address. Some banks even offer instant banking credit cards within an hour of application! An unsurprising fact is that many credit card holders possessed more than 5 cards in their wallet and the approximate range is about 7-9 cards. This is a boatload of plastics with magnetic stripes to splurge freely. Most banks allow various cards to be used on the condition that they are pegged to one credit limit. In an event a card has reached its limit, the other cards will trigger stoppage and not being able to use. This is to prevent stacking of credits and being unable to pay up in a timely fashion.

Incentives & Perks for using credit Card

In addition to the ease of gaining hold of credit cards, banking corporations have a marketing arm specialized in attracting new & existing clients in taking up multiple cards to increase market share in the credit pie. In this credit booming industry, it is evident that many credit card firms are doing tie-ups with restaurants & cafeterias, together with travel accommodations in hospitality sector, offering wide range of incentives from priority bookings to food discounts. Some even come to the extent of providing signing up vouchers upon new registrations. It is seemingly too irresistable for anyone not to enjoy hot deals in this modern society. Benefits from credit cards are common in casual restaurants and staff often asked whether customers do possess such facilities to enjoy preference rates when dining in the house.

Alternative credit facilities Available

Is credit card merely for swiping only? Well, in this powerful credit spree, cards have advanced till an individual can perform cash advancements from automated teller machines. There is a term for it and is called Overdraft function. It enables the customer of a bank to take up direct cash under the unsecured loan segment and repay within a short period of time. One thing to note is the extraordinary interests being charged upfront. Another good alternative is the credit line function. When a client comes up to take a personal loan, it is being tagged on the credit limits of all cards and the money is being encashed. There are other minor functions such as rebates from online shopping or perks in dining as well. That's the beauty of having credit cards on hand, ability to use in an event of impromptu purchases or big ticket items first.

Credit financing for Corporate segment

Cash advancements for Commercials

The beauty of funding is that it can happen anytime as long as corporations have something to pledge out to secure a collateral loan. Cash advancements can be really easy as opposed to many who thought of this matter being complex and require deep level of understanding. In fact, it could be completed within 3 steps after several attempts. Firstly, the lender has to assess the liquidity position of the firm and state the credit limits. Once the company successfully negotiated under commercial rates, both parties may sign a Memoradum of Understanding and Non-disclosure agreements to keep the deal private. Lastly, the firm receives the corporate loan, utilize in a skilful manner, and make monthly repayments to the creditor. It can forge good relationship for future purposes.

Attractive credit Financing schemes

As the industry is facing competitive booms, just like a plankton boom, licensed moneylenders have to fasten up by introducing irresistable financing schemes without compromising revenue in the long term. Some non-finance firms offer a loss leadership marketing strategy to entice retail & corporate borrowers to take up loans from them instead from strictly regulated banks. Credit financing works in a respectable manner; the longer the tenor, the lower the monthly installments yet yielding more revenues for lenders. As the federal reserve announced tighter regulations in the financial sector, simply known as Basel III requirements, bankers are steadily losing out to other competitors from various segments across non-banking lines. Credit financing is so lucrative that market share can easily override by anyone once a firm gets comfortable and complacent.

Rollover period for Interests

When it comes to performing repayment schemes, squeezing every bit of finance juices out from debtors, financiers can really be generous in extending deadlines for borrowers to repay, some to the point of providing continuous grace periods. Firstly, this will attract lendees to loan from them. The next factor is to retain current clientele while prolonging the loans for more profits - Win-Win situation. Rollover of interests is common as corporations can put the funds to better uses and repay more back to creditors. At times, credit is farther increased on top of current loan to help firms expand out to overseas regions and hopefully, profitting more from them. In the end, it is all about helping one another and covering the weaknesses to prevent bigger players from pulling away market share from your team. Who would you choose to be?

Restructuring of Credit payments

This comes to a point in time when the company is unable to manage its resources after several attempts of prudent approaches. It is unfair to put all blames in an event of insolvency as the firm's debtors might not be able to tide through for a long period of time, dragging the company into mess too. When the firm announces restructuring process, creditors have to be patient in debt repayment progression as it can be rather lengthy. There is no shortcut to success and being a lender has its own risks to handle. It is wise for the lender to diversify credit borrowing as some might default along the way while the others helped to cover the gap. Should restructuring be a failure, it calls the end of the loan. Choose your lenders wisely or Manage your borrowers prudently.

Inflationary pressure on Credit finance

Credit financing Stress test

Ever since many financial crisises occurred, mild or strong, regulatory bodies are commanding serious presence in the realm of credit organizations. This is a precautionary measure as "human-greed" nature cannot be contained within the lenders, at times beyond control till an outbreak happens and detrimental to the economy as a whole. In the end, strict enforcements come into sight to mitigate such instances from occurring, many banking institutions demanded leniency as the tight rules resulted in lower profit margins in certain banking aspects. One of the popular stress tests is Basel III requirements. Another commonly known regulation is high reserve ratio requirement. Both policies imposed significant market forces to stop the outflow of capital in terms of borrowings. The verdict is definitely an unpleasant one for all.

Origin of Inflation

In the early days of economic boom, inflation exists to increase the costs that brings more productivity in the long run to keep up of monetary values. The main focus of inflation is to stimulate the economy by boosting more work efficiency and get more jobs to lower down core unemployment in the nation. The key problem arise from inflations is that the economy has to keep up with the progressive flows and many nations struggled to stay abreast due to the slow production gains in various industries across the globe. It is said to be inter-related to one another but some areas cannot fit the bill when cyclical trends hit the roof. Such industries are bio-technology, manufacturing segment and ship-building establishments. The level of difficulty might result in the gap of enhancements and matching inflations.

How does Inflation affects Credit financing

The pertinent question to ask is on the rate of inflation that will significantly affect credit financing programs from respective banking authorities. Inflation, relies on the power of interest rate, builds up the momentum to enforce higher margins hence banks will follow the lead to increase interests in order to enhance balance sheet. On the other hand, when government regulations kicked in, Federal Reserve chief commanded lower interest rates to stimulate the economy, inflation slows down to boost the productive margins. Financial banking institutions follow suit again to observe low interest and attract investors or borrowers to take up more loans to cover the loss in increments. In fact, in any two ways, the banks tend to generate profits from credit financing programs. It is just the newly enforced requirements that degraded the overall lending segment as a whole.

Strategies to overcome Credit Inflation

Under common circumstances, where credit inflation has its purpose, the delivery of Credit Risk analysts is needed to assess some aspects. By doing so, spending a little more money, the risk of credit financing can reduce significantly and solutions to issues are rightfully addressed. Once credit inflation meets the standardize rate, the banks have to adjust accordingly and widely known as inflation-adjusted returns. There is a certain strategic alignment in matching credit finances with inflation. The beauty of little costs being spent is going to aid everyone in the long run, retail or corporate segments.

Leverage on Credit Financing schemes

Credit Financing facilities

One of the most powerful tools to increase an individual's pricey possessions is to leverage on 'cheap' credit in this low inflationary environment. Central banks from G10 currencies had resort to slowing down inflation by introducing declines in interest rates. Businesses & Investors expressed bittersweet (mixed) feelings about the sudden recovery measures. The declining nature of interest rates has demonstrated that business activities are facing slower turnovers and revenue is on its way to the slide. On the other hand, bankers are touting some of the lowest credit lines in town with incentives like 0% interest for first 6 months or no admin fees for taking up new loans. Some banking institutions even send blank checks as a form of marketing strategy to unleash new credit opportunities. The world of credit resets from the previous bubbly crisis.

Manipulation of Financial Engineering

Under the new Basel III requirements, where banks need to adhere to stated legislations, these yield-hungry bankers won't take into considerations on the protection from statutory measures. Financial engineering, a common practice throughout the banking field, depicts the lack of transparency from professional institutions and consumers. There is a fine line between personal data protection as well as serving commercial interests. After all, the bankers need to help the firm generate capital to increase upkeep for sustainable purposes. Financially sound, the banks can proceed to offer more lucrative credit schemes to the general public with much ease. It is not easy to meet regulatory bodies embeddement of high reserve ratio requirement hence banks have to ensure a certain sum specifically to cater to the regulations.

Rotating credit Functions swiftly

In this modern industrialization, based on credit bureau agencies, statistics had shown that common folks borrowed up to 24times of monthly income and this could be a massive problem in the near future. To mention about rollovers, there is a possibility of up to 52times of monthly income on the basis of undertaking loans from 13 banks. Who can fathom the insanity of more than 13 lending enterprises? Many individuals are hopeful by using credit functions to rollover debts on a monthly basis. To make matter worse, the retail borrowers tend to lend money from one bank to cover the others until the credit limits reached an all time high, having said to face the music. The issue comes to light only when lendees are unable to pay up interests from banks and finally requiring financial assistance from credit counselling services. This is not a small matter as it detriments the economy once the credit bubble bursts. The IMF (International Monetary Fund) has to come up with new policies to curb potential problems as well as curtailing of current debt enforcements.

Humongous rollover of Credit debts

The power of credit is so powerful that even professionals can face problematic scenarios such as getting into scary debts of up to 52 times. The question lies on whether these bankers had done their own due diligence in assessing borrower's credit-worthiness. In an event that one is being led to the door, there is certainly a high probability of default from him/her. This is when the rollover starts ballooning to unattainable levels that gives incredulous stares to many. In line with credit agencies, the regulatory bodies are claming down on such instances to protect the economy from facing potential credit crunches. Instead of dealing with problems that are out of scope, banks may engage Credit Risk analysts to identify those who practice debt rollovers and barred them from borrowing more. This extra step may benefit many parties by mitigating repercussions.

Methods to Increase credit Financing

Power of Credit Financing sources

The beauty of Credit is that it can make one really successful in the respective niche so much so that credit firms are readily available to offer lucrative schemes to attract potential risk-takers. In order to maximize coverage to retail & commerical borrowers, credit agents are highly trained to help lendees get the maximum available loan using various means which would be discussed here. It is not difficult to increase the lending powers of lenders but doing it the right way certainly requires some diligence to bypass relevant authorities. This is why credit financiers are always kept in the lookout for huge loopholes and manipulate to their advantage. By enhancing the credit rating of consumers, it is easier to identify big fishes and draw them to the firm's shore.

Pledging of Collateral for Credit

One of the fastest ways in raising credit limits is to pledge high-end collaterals to the creditors. By doing so, the system will change from unsecured loan to secured loans, the degree of risk significantly declines, which gives the borrower higher bargaining powers to negotiate for better deals such as increasing loan amounts, stretching loan tenors and lowering cost of borrowings, else risk the lendee going to other competitors. The reason for higher efficiency in collateral loans is due to the fact that in an event of debtor being declared insolvent, creditors have the rights to collect the pledged items and sell off to get back a considerable sum of money. As opposed to unsecured loans, where there is nothing to rely on, the creditors can only write off bad debts resulting in losses.

Source for Banker's Guarantee

An alternative to pledging collaterals is to get a Banker's Guarantee - a form of legal document from the respective financial institutions. This piece of paper worth that much and can even acquire assets without dropping a single dime on the table. If the borrower has businesses that cannot be pledged as collateral, the best method is to request a BG from bankers using the business to tank. A team of business analysts will be down to evaluate the finances and stability before arranging of issuance of BG. Once the slated amount is approved, proceed to attain desired loans from credit firms where you will be greeted with wide smiles from the faces of employees. A banker's guarantee has limitations in certain jurisdictions and it is imperative to understand the economic zones one is dealing with to prevent potential disruptions.

Value proposition to Credit financiers

In any cases that the borrower is unable to gain approval from credit agents, he can either seek funding from friends & relatives or to come up with value propositions to attract investors in doing business with him. It all boils down to personal preferences and the most viable way is to draft a solid proposal to raise funds. As technology advances, the borrower can request for loans through the Internet platforms like online funding & forums or use the traditional funding methods. Based on level of comfort, it is prudent to understate projections so as to avoid disappointment in investors who are yield-hungry. In the long run, remember to treat them well as the business cannot succeed without fresh funds from them.

Methods in lowering Credit Financing

Utilization of Credit resources

When the time of credit booms occur, where there is cheap credit sloshing around the economy, it seems like the best time to leverage on credit. Many ordinary working folks find it tempting to take up credit financing schemes in one way or another - to finance flashy car loans and costly mortgage installments. Based on past statistics, demonstrated by credit bureau agencies, many leverage beyond their own means without margin of safety. They have the perception that interest rates will remain low for a long time but more often than not, the opposite happens. Once the hike occurs by Federal Reserves, all of a sudden, many workers find themselves trapped in credit issues. Retail banks immediately organized revaluations in properties and the difference has to be topped up by retail borrowers using immediate cash payments. Finding themselves in credit traps, needing to be bailout, they declared bankrupt and the entire economy tanks hard.

Higher cash upfront for lower Credit

The first thing to do when adopting any kinds of loans is to pay more cash upfront. This will lower down the overall retail loans. There are several methods to go around lower financing schemes an this topic will address certain key aspects. One of the common methods is to bite the bullet by remunerating more cash. The other less glamourous mean is to use balance-transfer payment solutions offered by retail banking institutions. The former is requiring large sun of reserves and the latter paying slightly higher interest rates in exchange for lower cost of borrowings, net-net. If the individual has the means to pay up, just do so to avoid unncessary repercussions in the long run especially handling expensive mortgages. However, a short term loan can be balance-transferred from credit cards, with some of the best deals in town, and pay off at significantly lower rates as opposed to traditional credit facilities such as usual credit card interests at 24% per annum or Ready Credit at 21% annually. It seems like a good deal if one is cash-strapped albeit having a good probability is paying off in time. Which do you choose?

Borrow from close kins to avoid financing Credit

One of the highly avoided ways is to swallow up pride by requesting close kins - usually family members, spouse, bosom friends or relatives - to loan a huge sum of money to finance certain major expenditures. As long as the purchases are justifiable, typically new homes for newcomers or servicing family car, the amount is normally approved by the lender. When it comes to finance matters, the answer corresponds with the ties with borrowers. Why must an individual do such a thing that might compromise relationships unless proved uncontentious when relations turn sour? Let's say a couple is newly wedded, they don't have much money to remunerate major purchases hence it is vital to have some form of push-start recognition, be it from parental help or other sources. Furthermore, the loans from close kins are typically interest-free and without slated deadlines to meet!

Sell off Unwanted goods to finance Purchases

Finally, there comes a point to seek a more entrepreneurial spirit. There are many platforms to leverage on to increase more income to buy desired goods. A few famous means to tap on are Carousel, eBay, Paypal, Craiglist and Commission Junction. Once you get an account registered, proceed to list your unwanted goods on sale. Who knows, a rag-and-bone man might pick up at decent prices or sold for profits to wannabes. Pool together the sales proceeds to buy a necessity and the sense of achievement is beyond recognition. Try to get rid of unwanted goods by offering at lower prices or put on mega sale. It is going to be a woo-haa that might question your sanity. In an event if the proceeds is insufficient, it is going to lower down costs in financing. There are certainly more things to sell freely.

Commercial financing Credit schemes

Corporate credit Financing segment

In the realm of credit financing, corporate lending segment being the most rewarding sector, which banks or financial institutions will want to be left out of this market pie? Based on the current expansionary purpose, especially the core banking sectors, it is vital for lower interest rates to attract more commercial loans to be taken up. Professional bankers tend to loosen up when cheap credits are available as the policies won't be enforce too strictly as opposed to the norm when credit financing is tight. It is deemed one of the most profitable segment among banking quadrants and of course, it is no wonder that even non-finance competitors are chasing after such profits by using underhand tactics. Widely known as Shadow Banking, whereby firms bypass normal regulations, these hidden companies are lending out massive stashes of credit out to growing firms who are unable to secure loans from corporate banks. Who is to be answerable when they turn to non-financing teams?

Foundations of Credit lenders

The foundation of credit lenders is build on trust and strategic planning. It is utmost important for credit firms to be intact as the power of leverage extends even to the global economy and just one wrong step in managing finances, the world might get into depressionary state with the inability to repay outstanding debts. There are core values that many creditors adhere to; Integrity, Professionalism, Leadership, Loyalty and Strategic Alignment. Firstly, firms providing credit to others need to possess Integrity, likewise for borrowers who leverage, as this will minimize both parties from potential conflicts of interests. Moreover, creditors should demonstrate professionalism even if debtors are unable to remunerate installments on a timely manner. Being in the role of the dominant, it is crucial to be a Leader in updating debtors on certain statistics and make arrangements in delivering some aspects. Some credit lenders prefer borrowers to sign non-disclosure agreements to protect the integrity of both parties as debtors might be from various competitive channels which might affect reputation and prestige.

Bargaining powers in Credit Financing

An unsurprising fact in Bargaining Powers is that credit financiers uphold strong values when it comes to negotiating terms & conditions. It is seemingly higher than borrowers as they call the shots in such agreements. In comparison with negotiators, creditors can actually make good in diplomatic relations due to frequent liaising and settlement of loans. Credit financing is not a bad deal and it requires a good amount of due diligence to get things done. Although higher interest is evident, some firms do give the leniency of lowering down costs of borrowings with respect to maintain professional image. When debtors are unable to compensate appropriately, these lenders may adopt softer approaches instead of bashing their way - significantly cutting down interest rates & reducing overall sum to original principle.

Nature of Risk under Commercial loans

As loans possess a risky nature, especially Commercial segment, there is always a probability of defaults from corporate firms. When it comes to debt repayment schemes, not all firms would complete furnishing loans in a fashionable manner. Being in the lucrative industry, ignoring other competitors out of finance industry, corporate segment is one that no one will want to turn a blind eye away. There are risks in certain associations but can be mitigated under thorough reviews from the audit teams & compliance sector. The rest of commercial departments offer attractive schemes in order to pursue higher market share. Yes, risk is inevitable, be it in active or passive, therefore it's important to understand the market well and identify potential high-risk defaulters beforehand. Once the hassle are taken care of, let the rest flow naturally while constantly keeping track of records and perform remedy whenever available.

Early redemption in Credit Financing schemes

Interests charged on Credit Financing

Come to think about the (potential) interests incurred, similar to credit card schemes & individual loans, there are bound to be some forms of extra interest charges when leveraging on credit financing programs. How much exactly is the addition? While the norm for credit card debts is approximately 18%-24% per annum, various financial institution differ from each other as some creditors have bundle promotions or simply cherish their clients by offering lower financing costs. Based on statistics, interests charged on debtors, who leverage heavily on credit, is about 20-30% per month! It is not any small scale!! Those who yearn to achieve high-end lavish lifestyles should really think twice on using credit financier's lucrative cash upfront schemes whereby the requirements are relatively relax as opposed to stringent regulations from professional banking corporations.

Credit financier Modes of Repayment

Under the common regulatory body, association of credit financier, there are several modes of channeling interests back to the relevant creditors. One of the fastest way is through internet banking or known as iBanking. Debtors can simply login their online banking platforms and within a few clicks, transfer the slated amounts to creditors - all in mere minutes & seconds. An alternative to iBanking is automated process namely DDA or GIRO. As debtors need to work overtime, more is better, they might not have the luxury of time with them to perform manual payments. Hence, Direct Debit Authorization (DDA) method is commonly used to allow banks to credit their accounts on behalf to the creditors. The last method available is to send a proxy to repay bills. If the debtor is looking to manually compensate creditors, he/she needs to send a proxy, usually someone whom he/she trusts, to help repay the outstanding loans using cash.

Macroeconomic Incentives & Perks

In this low inflationary environment, according to law of macroeconomy, professional institutions are trying to attract clients to increase the level of borrowings by touting lower repayment schemes as compared to the normal core inflationary standards. When the Federal Reserve calls for low interests rate, almost everyone begins to leverage on cheap credits, and professional workers can no longer resist the temptations to act fast and join the credit financing herd to either upgrade their lifestyles or to improve their financial well-being. The first thing that most workers will do is to buy flashy sports cars and indulge in extravagant expenditures. A lower rate of interests help to pass down savings in credit terms to retail borrowers hence being called as Cheap Credits sloshing around. When retail banks seen the increase in clienteles, being in a competitive market, these corporations will adopt from Central Banks more credit financing schemes, and promote to a broader range of market audiences to capture market share. The vicious cycle continues until someday.. Credit Bubble bursts!

Early buyout in Financing programs

In an event of early redemption from a debtor, who is usually responsible for his personal finances, the bank(s) tend to charge extra interests based on the contributions being pre-paid in advance. The increment is to compensate under-due interests being charged on a longer tenor which the bank(s) suffered from opportunity costs. While some financiers tend to waive off the bills, many are unwilling due to incurring higher expenses over the long run. In fact, banks borrowed heavily from Central Banks and shifted the financial burdens to consumers. If the debtor paid up early, the banks might incur heavy losses instead! No doubt that early repayments are deemed unprofitable, in early stages, but at later stages where the banks had overall profited, it is possible to make redemption towards the end of service. High-end credit financing programs such as costly mortgages and debt-financing loans are encouraged to payoff early due to the risks bankers undertake. These types of loans are supposedly risky in nature hence incentives would be given for early redemption. As it is obvious, different credit financing schemes yield different profit margins & margin of safety.

Composite credit financing for Retail borrowers

Retail lenders under Credit Financing schemes

In the world of credit, many common folks undergo financing through various means; Long or Short term tenors. Retail borrowers often indulge in unhealthy loans to service extravagant mortgage payments and high-end branded goods. The credit continues to snowball into huge sums of interests and leaving the debtor saddled with piles of bills. Once things get out of hand, creditors will demand immediate payments and forced debtors into a mess. Lawyer letters are common ways of threatening and worse case scenario, driven out of luxury home through legal confiscation. However, nowadays, credit financing is getting more affordable with cash sloshing around in the economy. Professional financial institutions often promote lucrative schemes to entice borrowers in taking up higher loans and longer tenors.

Short term personal Loans

This segment was once the lowest generating revenue for corporate financing departments but as of current modernization, it seems that it is going to be one of the fastest increasing industry. Short term loans are usually for direct purchases. A common personal loan is for self-indulgence in leading a lavish lifestyle. High-end splurging in branded goods and expensive holiday trips are ways of spending credit in a swift manner. Without fail, European cars are part of credit financing when borrowers take up costly loans. It might have a chance to convert into longer term loans. Retail spending is part and parcel of consumer spending habits or widely known as Retail Therapy.

Long term loan tenor

Being one of the most lucrative segment, where non-finance competitors are looking to gain entry, financial institutions are ever-ready to lend massive amounts of cash upfront upon signing on the dotted lines. Mainly in the commercial banking, banks stacked up huge piles of reserves, regulations are extremely strict. When it comes to long-term retail loans, the banks need to have designated reserve ratio requirements before being legalized to distribute credit. Retail loans are catered mainly to mortgages for fulfilling housing needs. It is seemingly insane to see increments in bank loans over the years as retailers are looking to upgrade their lifestyles and finance using unearned cash. Putting 'face' value in front of costs, the repercussions could be deadly once sudden implications kicked in.

Power in Cost of Borrowings

An old adage goes with the saying of, "Don't underestimate the power in Cost of Borrowings". As an infamous scientist by the name of Thomas Edison, a renowned statement mentioned, "Compounding is the eighth wonder on this earth". The rest should be self-explanatory and evident. Based on past statistics, many borrowers - be it retail or commercial - defaulted on loans due to inability of financing interests payments and not principle. The key issue lies in the rolling credit interests after debtors are unable to remunerate monthly installments. The power of leverage can either build up wealth on a prudent basis or completely annihilate personal savings within a short period of time. In fact, the need to repay loans is draining up much resources and definitely detrimental to one's financial health in the long run. Terminate credit facilities if there is no need for usage.

Financing purchases using Credit facilities

Means of Credit Financing

Where would an individual turn to if he is looking to buy pricey items without sufficient cash? The answer, for an average income buyer, is to go on a credit scheme to complete the procurement process. Nowadays, it is as easy as ABC to get successful loans from approved financial institutions - personal loans from Retail banks or micro-loans from Credit agents. The purpose of credit financing is to achieve unearned objects within the shortest period yet understanding the ability to payback the assumed amounts. In reality, it certain differs in payments as debtors overestimated their financial capabilities and worse of all, without any contingency planning to fall back on and (forcing) to declare bankruptcy most of the time.

Financing mortgage Loans using Credit

In search of ready credit to finance current costly mortgages, many common folks took up long-term loans in order to lower the cost of borrowings yet it is seemingly never-ending in terms of repaying excessive interests. The problem is that average commoners often overstretched themselves by moving into private apartments or townhouses that are way more expensive than they could ever afford. This in turn led to massive piles of credit which ordinary monthly wages cannot sustain, not to mention if there is any potential loss of job during the credit term. When the debtor is unable to service the tenor anymore, he might be driven out of the property together with his family, being homeless from now onwards. It is indeed an unsightly scene when such cases occurred.

Leverage on Credit to Finance lifestyle

A common issue with those who are aspiring to lead extravagant lifestyles is to leverage on high rolling credit rates. As credit is getting cheaper, mainly due to low inflationary environments, many folks are more enticed to adopt stashes of unearned cash with the mindset of permanently repaying lower costs. However, things turned out to be untrue as the revival of economy often ends swiftly which led to substantially higher interest rates. A minor increment in percentage points may lead to few hundred dollars increased, not to think about reverting back to pivotal whereby thousands or even tens of thousands of pounds might get involved. The main objective of leverage is to temporary indulge in lavish lifestyles but not to go beyond comfort level as ultimately, the credits need to be repaid in full. There are cases of branded goods going on fire sales in order to return creditors the outstanding debts and it does not leave good impressions on the lendee.

Taking up Credit Loans to buy Car

Looking to beef up reputation and prestige, one of the fastest way is to demonstrate purchasing power by investing in a continental car. Under normal circumstances, owning a luxury car is not easy, individuals from average households don't have the financing means hence turning to credit facilities for assistance. Upon approval in credit firms, they tend to take up insanely high interest rate schemes to finance their purchases. Once the car is out of the parking lot, the driver is going to be saddled with major debts in the long run. Being an average family, the financial burden is not going to be simple and implications towards family members might take a hit resulting in conflict engagements. In addition, car maintenance such as fuel, insurance policy, semi-annually servicing and fines often put owners in distressed positions. It is a common sight to see vehicles getting towed away from houses and definitely leaving more inconvenience than initially expected. What would you choose?

Adopt proactive Approach in Credit Financing

Credit financing scheme

If a lending firm want to position itself as a global leader which caters to the targeted niche, it is likely that it has to derive with lucrative credit financing schemes that differs from the norm. Can you fathom a Head in credit system not doing any pro-active measures against competitors? It is almost undeniable that the leader will soon be overpowered by intense rivalry. Being one of the most attractive industry, in terms of generating huge sums of revenue using the right way, everyone will try to compete for market share before seeking clients to share pockets of money with them. It takes even to the extent of Loss Leadership strategy, whereby firms incurred losses due to intensity, butgained market share which is justifiable to some management. No doubt that even non-finance competitors, also known as secondary rivals, are looking for entry signals to gain a piece of delicious pizza on the table. Let the credit financiers compete in a healthy way today!

Reactive or Pro-active approach

In the first place, before adopting any strategies, creditors have to identify the feasibity of both approaches; Reactive or Proactive. Of course, it is best to have both worlds but the costs to leverage is too high to justify the expenses and not many firms would accept some losses.

Reactive measures: Let's say the management adopts a reactive approach, whereby the team only acts when something crops up, it will have to be on standby almost all the time. As the problems occur on different timings and sudden occasions, it is almost inevitable to work during wee hours and resulting in high attrition rates. The good thing is that few plannings are needed in this case as most of the stuff are on-the-go kind.

Proactive approach: This type of measure is established to identify possible flaws in the system before the real problem kicks in, leading to massive consequences. Indeed, the management is adopting a proactive attitude to find out how to help their clients to improve financial situation without implicating them to land into hardships. By doing so, the creditors can have higher chances of getting loans back while debtors benefitting from help!

Adopt an Empathetic credit attitude

Being a credit financier, one must learn to deal with distressed debtors. Listen patiently to client's lamenting and try to understand the current financial situation. It is not difficult to identify probable solutions but the challenging part is on execution. Perform empathetic listening to those on credits and they'll appreciate your financial aid as well as your deep level of understanding. After hearing them out, it comes to a certain degree that some of these hardworking debtors are being forced to engaged with heavy piles of credit while some deserves punishments in over-indulgence. For those who are combating debts, take them to higher heights by introducing new financing schemes that might potentially lower costs of borrowings while increasing operational efficiency. They have a lower chance of defaulting as the upright attitude within cannot be dabbled with money or swayed by emotions. In reality, it is difficult to manage distressed debtors but use a positive mindset to change them.

Learn the Art & Science of credit finance

Credit financing is both an art & science which makes everything wondrous. The beauty of credit financing is that the rich might not be able to pay up and the poor being responsible for payments - it is seemingly potent that creditors might get the Art right where lower income group remunerates on a timely manner but get the Science wrong when commercial departments defaulted with AAA-rating by credit referencing agencies. Such scenes are common and do happen from time to time. Almost miraculously, the power of justice is irrelevant in this context. The ability to finance is heavily dependent on the debtors's willingness to cooperate else pointless to have wealthy individuals who don't want to comply with regulations and often get into deep troubles. The variance is unexpected but statistics had begun to materialize.