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.