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Things to Look Out for When Getting a Loan

Taking out a loan for various purposes can be tricky task, but getting a personal loan from an unsecured source can be a rather difficult endeavor if not just risky. As speedy loans are becoming more and more common, so is threat of people falling into a circle of endless debt. Below are listed some of the common traps that unsuspecting people often land into. Look out for these things so that your loan does not cost you more than it’s worth.

cash with speedy payday loans

  1. A small one: When you go for a loan and there is an easy availability of it, you end asking for a sum that is greater than what you first thought you wanted. Many a time people lending these sums convince for larger sums and tell that you can pay the interest in small installments over a long period of time. Do not go for it. While paying in small amount over long term might look relaxing to you, it is just their scheme to make more money out of you. Remember that the longer you take to pay back, the larger sum you pay. So, keep your loans as well as your payback time as short as possible.
  2. Fixed rate: Whenever you are out there to get yourself a personal loan, make sure to check out that the rate of interest is fixed. Although, it is usually fixed but there are also places the rate may vary. So make sure you check that out.
  3. Compare the TAR: TAR or the total amount repayable is the sum including the principle sum, interest and any other charges that may be included. This will give an effective idea of how much extra are you paying. People often look for annual percentage rate or APR but that can be easily manipulated by your lender so don’t rely on APR.
  4. T&C matters: While taking out a loan just the sum or low interest is not enough. In case of personal loans, the good thing is that you may find some places where they let you away with any extra charges if you can pay back the loan early. While these terms may not be available at every place, it’s no harm to look out for them. So next time you sign that T&C paper, do make sure you read what it has written.
  5. Check the origination fee: Apart from the TAR, there is often the origination fee that you are supposed to pay along with the interest. Quite often people don’t know about it or forget to take into account. Before getting a loan, make sure to take this into account as well.
  6. Exhaust alternatives: Although the best thing when you want to buy something is by saving up the money first and then spend it, if the situation really calls for a personal loan, look out for any alternatives you might have against getting a personal loan. For example, credit cards for instance, can offer you small loans for a short time. Do not just buy one credit card after another and pile up your debt. Doing so will most certainly land you up in a big problem later on.
  7. Privacy policy: Make sure to read the privacy policy. There could a good chance that your lender might share your personal information with a 3rd party for a good commission.
  8. Check out other banks: Do not just blindly trust your own bank for cheapest loans. While your bank might do many things right, it is quite possible that it does not offer you the cheapest rates for interest or there might be other banks or sources that can offer you a much better price. Look for website which compare such schemes online and then make an informed decision.
  9. Read the ‘add on’ terms: Many a times there are added terms in case you default on an installment. The ‘add on’ terms makes that part of your agreement clear. SO, make sure to read that as well.

Lastly not matter how enticing the speedy loans might look enticing at first, be sure you know the background of things to make a good and informed decision that you not come to regret later on.

SECURED CLAIMS IN BANKRUPTCY: ON THE ENFORCEMENT OF PARTIAL PRIORITY 2

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Circumvention Through Alternative Forms of Financing

The Severity of the General Problem

As symposium participants and others have pointed out, there are many arrangements that accomplish a result similar to a secured loan but which would receive more favorable treatment in bankruptcy under a formal partial priority rule. Borrowers and creditors facing a rule of partial priority may seek to avoid its effects by using such arrangements. Although there are many ways to accomplish a result similar to a secured loan, all of the arrangements have one thing in common: they put the ownership in the assets that would have served as collateral for a secured loan in the hands of another (perhaps related) party, in an attempt to make those assets unavailable to the borrower’s unsecured creditors in bankruptcy.
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SECURED CLAIMS IN BANKRUPTCY: ON THE ENFORCEMENT OF PARTIAL PRIORITY

This Part addresses the circumvention objection that has been raised against our partial priority rules—that borrowers and creditors could easily avoid the effect of partial priority in bankruptcy. Two circumvention strategies have been considered. The first is that, regardless of how we implement partial priority, creditors could structure their transactions in a way that would be economically equivalent or similar to a secured loan, but formally would not fall under the partial priority rule. The second is that secured creditors seizing their collateral outside of, or prior to, the debtor’s bankruptcy filing can circumvent a partial priority rule implemented only in bankruptcy. The analysis of this Part suggests that neither one of these circumvention strategies is likely to materially undermine the effectiveness of a partial priority rule in bankruptcy. Before elaborating however, it is worth pointing out that there is a tension between the argument that creditors can easily circumvent a rule of partial priority and the argument that a rule of partial priority would substantially reduce the financing of good projects.
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SECURED CLAIMS IN BANKRUPTCY: The Financing of Good and Bad Projects 4

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Even so, there are some general reasons to think that partial priority is not as likely to prevent the financing of value-increasing projects as it is likely to prevent the financing of value-decreasing projects. When an efficient activity would otherwise not take place under partial priority because it would confer too great a benefit on nonadjusting creditors, those creditors may find it in their interest to modify their contractual rights to reduce the size of the positive externality, and permit the activity to take place. That is, when nonadjusting creditors would gain from certain activities that will not be financed under partial priority because the equityholders would capture too little of the activities’ benefit, the nonadjusting creditors might agree to reduce their claims (by, for example, forgiving part of their loans) in order to induce the equityholders to undertake the project. The nonadjusting creditors will be better off receiving full payment on their reduced claims than receiving little or no payment on their full claims. Indeed, lenders in workouts commonly agree to reduce the size of their claims, presumably in order to increase the likelihood of eventually receiving payment on the remainder of their claims.
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SECURED CLAIMS IN BANKRUPTCY: The Financing of Good and Bad Projects 3

The Effect of Partial Priority on the Financing of Bad Projects

Next, consider the circumstances under which partial priority would prevent the financing of bad projects that full priority would facilitate.163 Suppose that, under a rule of partial priority, borrower F is considering financing a project with a loan from creditor Cl. Suppose that the project would be value-decreasing, and that borrower F and creditor Cl would not transfer enough bankruptcy value from nonadjusting creditors to make it worthwhile for them to pursue the project. Specifically, suppose that the project would generate a loss of 100 and would make borrower F and creditor Cl worse off by 20.
Full priority would facilitate such a project if the additional transfer of expected bankruptcy value is at least 20. Suppose that the additional transfer of expected bankruptcy is 30. In that case, the project would make nonadjusting creditors worse off by 110, leaving 10 available to be shared between borrower F and creditor Cl. As a result, the two will have an incentive to pursue the project.
More generally, full priority will facilitate the financing of value-decreasing projects that would not go forward under partial priority whenever both of the following conditions occur: (1) under partial priority, the value-reducing project will not transfer sufficient value from nonadjusting creditors to make it worthwhile and (2) under full priority, sufficient value is transferred from nonadjusting creditors so that it makes the project worthwhile.
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SECURED CLAIMS IN BANKRUPTCY: The Financing of Good and Bad Projects 2

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The Effect of Partial Priority on the Financing of Good Projects

Let us now consider the circumstances under which partial priority would prevent the financing of good projects that full priority would facilitate. Suppose that, under a rule of partial priority, borrower F is considering financing a project with a loan from creditor Cl. Suppose that the project would be value-increasing, but that borrower F and creditor Cl cannot capture enough of the gain under partial priority to make it worthwhile for them to pursue the project. Specifically, suppose that the project would generate a surplus of 100 but would confer a positive externality on nonadjusting creditors of 120 (and the nonadjusting creditors are unwilling to reduce the size of their claims in order to reduce the size of the externality). Thus, the project would make borrower F and creditor Cl worse off by 20 even though it would produce a net surplus of 100.
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SECURED CLAIMS IN BANKRUPTCY: The Financing of Good and Bad Projects

However, if the total cost of credit is higher under partial priority than under full priority, it is only because involuntary creditors receive more in bankruptcy under partial priority. Presumably, we would prefer that tort and government claims are paid more in bankruptcy, even if this raises the total cost of credit. Put differently, few would argue that we should attempt to reduce the total cost of credit by making it more difficult for tort and government claims to be paid in bankruptcy.
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SECURED CLAIMS IN BANKRUPTCY: Some Preliminary Points 3

To begin, let us assume that partial priority has no direct effect on borrowers other than on the distribution of the borrower’s assets in bankruptcy, which, in turn, affects the cost of both secured and unsecured credit. To the extent that a partial priority rule reduces the expected value of secured creditors’ share of bankruptcy value, secured creditors will charge more under such a rule than under a rule of lull priority. However, voluntary unsecured creditors, in aggregate, should be willing to charge less interest under a partial priority rule than under full priority. In a world where (1) the priority rule’s only effect is to change the distribution of assets in bankruptcy and (2) all of the unsecured creditors are voluntary and set their interest rates to reflect their risk of loss, the total cost of credit should remain unchanged. further

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SECURED CLAIMS IN BANKRUPTCY: Some Preliminary Points 2

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Suppose that the reason that certain lenders will not lend without a security interest is that security interests afford the lender priority in bankruptcy over the claims of unsecured creditors. Currently, secured claims do not get full priority in bankruptcy. Thus, these lenders clearly do not require full priority, and are satisfied with partial priority. The question, then, is how much priority is necessary to induce these lenders to lend? 90%? 80%? And how much priority would a secured lender require if it also obtained a guarantee from the borrower’s owners?
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SECURED CLAIMS IN BANKRUPTCY: Some Preliminary Points

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The Availability of Secured Credit Under Partial Priority

One argument against partial priority is that certain lenders will not lend at any interest rate unless they have full priority in the collateral that is subject to the security interest. The evidence adduced in support of this claim is that currently there are lenders that will not lend unless they receive a security interest. Supporters of full priority argue that under partial priority these lenders simply will not lend money to borrowers at any interest rate and, therefore, that partial priority will reduce the amount of credit these lenders extend. (Presumably, those who make this argument would also claim that under partial priority, unsecured creditors would not be more willing to supply credit, so that the total supply of credit would be reduced.)
Let us assume, arguendo, that currently, certain lenders will not lend without getting a security interest. Even if this assertion were true, it certainly does not prove that these lenders will not lend under a rule of partial priority. After all, these lenders are currently operating under a system of de facto partial priority. The assertion proves only that under the current rule of partial priority, certain lenders require a security interest. http://cash-loans-for-you.com/
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