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Stock Loans FAQs, Asset Based Loan, Securities Loan (Page 1 of 3)

December 31, 2019   Fast Loan

F.A.Q. Stock Loans and Asset Based Loans

What is a Stock Loan?

Non-Recourse Stock Loans by definition is a loan against the value of a stock or portfolio of stocks whereby the shareholder (OWNER) can borrow up to 80% of the stock value (in some cases higher) of the portfolios market value “without selling the shares”. Like a home equity loan for stocks but much better. You borrow against the appraised value of the portfolio and pay a below prime interest rate for the term of the loan. And then at term end you either pay off the loan and receive your stock back with any stock appreciation, refinance the loan, or if the stock price has fallen below the LTV amount, forfeit the shares without paying back the loan (non-recourse) with no liability or effect on your credit rating.

What stocks are eligible for a Stock Loan?

Any publicly traded security are eligible. Stocks, bonds, mutual funds, ETF’s (exchange-traded fund), ADR’s (American Depositary Receipt), Penny Stocks (stocks on the pink sheets or bulletin board stock), Foreign Stocks and Bonds are ALL eligible. Typically, we look for a minimum $50,000 daily trading volume for each publicly traded stock.

Am I personally liable for this loan?” or “Can the company come after me on this loan if I do not make payments?

NO, this is a “non-recourse” loan; the lender cannot come after you personally. There is NO personal liability associated with the stock loan. The only security for the loan is the stock and the only recourse the lender has is against the stock. You have NO personal liability exposure.

Is the loan reported to the credit bureaus or reporting services?

NO, the Securities loan is not reported to the credit bureaus and there is NO public record of this loan. Even if you elect to walk away from the loan and default because, for example, you have more money then the stock is worth, it is NOT reported.

Are non-U.S. securities allowed to be used as collateral in stock loan transactions?

Yes. Some non-U.S. securities are allowed to be put up as collateral. Some of the other countries include Canada, UK, European countries, Japan, Israel, Australia, India, and Korea, to name just a few.

What are the Loan to Value (LTV) percentages for the loans?

The LTV’s vary depending on the quality of the securities being collateralized. With high quality large cap stocks you can expect LTVs up to 80% (sometimes higher) while with small cap or pink sheet (penny stocks) securities the LTV’s will be more conservative and lower. This means it can be as high as 80% LTV but can be Lower. It depends upon the quality and type of security owned. Each loan is evaluated on a case-by-case basis. The highest LTVs are offered to high quality securities such as Blue Chip stocks.

How are the stocks evaluated?

Stability, trading volume and share price are factors in determining the interest rate, term and Loan to Value. Good stocks, like good investments, always get the best terms. Typically, we look for a minimum $50,000 daily trading volume for each publicly traded stock. The most attractive interest rates and terms and conditions are available to those stocks with good strong and steady volume and price, and low volatility. Prices over $5/share typically get best prices as long as volatility is low and volume is strong and steady. Strong and steady volume is highly prized as it allows some predictability. The leading indicators when determining the eligibility of a stock as collateral are going to be exchange, volatility, share price, liquidity, trends, filings, short term trading volume and long term trading volume.

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Student Credit Cards – An Introduction (Page 1 of 2)

September 11, 2019   Home Mortgage

Just as the term itself suggests, student credit cards are credit cards meant exclusively for students, many of whom are yet to earn a documented income with employment. Credit card issuers are mindful of students and their credit challenges so they make accommodations for students when building student credit card offers specifically. Typically, the only constraint when applying for a student credit card is the age of the student, and as mandated by the law of the country, which is typically 18 years old and above at the time of application. In many ways, a student credit card is very similar to traditional, run-of-the-mill credit cards. But the major difference, is the standard APR, or interest rate, levied for card purchases, which is relatively higher than a traditional credit card APR.

Credit Card Use & Credit Score

Student credit cards provide more financial flexibility for young students. But, while it may come in handy when paying the rent, paying tuition, purchasing books, and other necessary items like food and clothing, unbridled card swiping can sometimes lead to financial trouble, especially in the form of poor credit scores and damaged credit histories. To a certain extent, this can be blamed on a lack of education or awareness as young people, often times, will not think too much about the concept of credit scoring or the idea of building a good credit history. As a result of this lack of awareness, they will typically not restrain themselves from using the credit card freely either.

The danger of poor credit scores will not become readily apparent, but will certainly become apparent when the student approaches a bank for credit at a later point in time. Credit profiling or credit scores, as determined by any of the three credit bureaus, represent an individual’s credit life history, and black marks on credit histories, however they are acquired, will make it difficult, at worst, and more expensive, at best, to secure the lowest possible interest rate on the loan or financing. So, consequently, even if one manages to get the home loan or car loan, for instance, the interest rate, in order to accommodate the increased credit risk perceived by the bank, will be higher than normal, and in turn, much more expensive for the borrower. The bottom line is that student credit cards represent a potential risk to future economic standing if the cards are not used judiciously.

Using Student Credit Cards

As previously mentioned, it is clear that uncontrolled use of a student credit card can easily damage an individuals budding credit scoring and credit history profile. But on the flip side, intelligent spending and timely payback can go a long way toward building a solid credit history and credit score. Using the card for necessary purchases that are well within his/her payback capabilities and making the payments well within the due date can improve ones credit rating tremendously.

Credit Bureau Reporting

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