Tag Archives: value

Introducing High LTV Auto Dealer Financing Using Enterprise Value

June 3, 2020   Auto Loans

This product is ideal for those dealers who are looking to rapidly expand their business by allowing them to obtain loans in excess of 100% of their real estate value. Unlike conventional lenders, Auto Dealers Capital is able to provide financing against a dealership’s goodwill or reputation, also referred to as the Enterprise Value, allowing borrowers to benefit from higher loan amounts which are typically unattainable with traditional financing venues.

Why is the High LTV program unique?

  • Enterprise Value takes into consideration a dealership’s market penetration, profitability, franchise strength, and future performance to allow loans to be underwritten up to 150% of the real estate value.
  • Ability to generate proceeds in excess of that provided by traditional lenders and/or captive finance companies, who typically will not lend above 85% LTV, even for larger dealers.
  • Individually customized loans for the dealer’s specific needs work to unlock the long-term value of their investment without exposure to unreasonable risk. Usually, full personal guarantees are only required for the loan amount portion in excess of the real estate value.

What are the benefits of the program?

High LTV (Loan To Value) Auto Dealer Financing is essential for dealers looking to gain working capital to take advantage of any of the following expansion opportunities:

  • Acquire other dealerships to increase market share, maximize brand awareness and increase profitability along with satisfying other future capital needs as they occur over time.
  • Create Employee Stock Ownership Plan (ESOP) for tax benefit advantages and increased personal liquidity while maintaining operating control.
  • Reduce financial risk by refinancing short-term debt with variable interest rates to long-term debt with fixed interest rates.
  • Eliminate needing or adding partners or to gain control by buying out existing partners.
  • Increase customer satisfaction by improving facilities and providing new services and technologies or even for the purchase of the underlying dealership real estate.
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Secured Loans Are Based On Equity In Your Home

May 7, 2020   Auto Loans

In financial jargon, the word Equity means the difference between the market value of your home and the debts raised against it. In other words, it is the unencumbered value of your home that is known as equity. The concept of equity is important for a homeowner since a loan can be raised against the equity in your home. Many lenders offer a loan to value ratio of eighty per cent only. It means that if your home has a value of £150,000, you can take a loan up to £120,000.

The credit rating that you have at the time of taking loan is very important. A good credit rating implies that your past conduct in the financial transactions was trustworthy and, therefore, lenders are likely to offer you a low rate of interest. By releasing the equity in your home, you can borrow up to £250,000. People usually take loan against equity only when they have large monetary requirements.

How borrowers are advantageously placed when taking secured loans?

In the past few years, the value of an average home in the UK has increased manifold. This reflects in the prevailing home prices; an average home costing more than £200,000 in the UK. The higher the price, the higher will be the equity in your home. Thus, the homeowners who want to borrow money are obviously better situated than those who are living on rent. In normal course, lenders give 80 per cent of equity in your home as a loan but this is not a fixed criterion and you may get more or less depending upon individual financial circumstances.

Bad credit loans and credit reference agencies

Secured loans are also available to those people who are having a bad credit rating. The credit rating is a numerical figure that is attributed to every borrower on the basis of his past conduct in the loan market. There are several credit reference agencies in the UK that gather information from various sources like the electoral roll, county court judgments and financial institutions. On the basis of the information collected, these agencies give a credit rating to every borrower. Lenders check credit rating to their satisfaction before sanctioning any loan to the borrowers.

Bad credit loans are available in two ways – by providing a security or without it. However, lenders prefer to give bad credit loans only to those borrowers who can provide a security. This is usually done to cover the risk involved in giving loans to people who have dubious credit record.

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