Securities loan | High sums + low interest rates?

Securities lending

If you deal with the subject of credit or the procurement of financial resources, you will eventually come across the so-called securities loan. This is not a loan that only serves to buy securities. The name “security loan” comes from the fact that securities are deposited as collateral.

The most important information on “Securities Lending” at a glance:

  • The mortgage loan amount can be between 50 and 90 percent of the securities account
  • Not all securities are accepted by all providers
  • The security loan may be earmarked
  • Not all credit providers accept external credit accounts
  • The borrowing rate is usually lower than other loans

How the securities loan works exactly and what the debtors should urgently pay attention, you will learn in the following guide!

1. What is a securities loan?

If you want to take out a security loan, it is a basic requirement to have securities. Similar to a mortgage loan, bonds, shares, certificates, mutual funds or precious metals are deposited as collateral in a securities loan. These securities must, of course, already be in the full possession of the borrower and may not originate from an open securities loan.

The mortgage amount

The amount of the mortgage loan depends on the type of securities. Depending on the stability of the securities, the mortgage loan amount may amount to up to 90 percent of the securities account. Secured securities such as government bonds fare better than gold, stocks or certificates. This has to do with the relatively large fluctuations in value that result in a constant revaluation of the loan. It must therefore be borne in mind that if the price is reduced sharply, the whole or at least part of the loan may have to be repaid immediately. Although this scenario is usually not available, it should not be forgotten.

The purpose of usage

Depending on the financial service provider, the loan for securities can only be used for the purchase of new securities or for free use. Although it is close to using securities loans also to stockpile the securities funds, but it comes to occasionally situations in life in which an unexpected investment in washing machine, car or a new boiler is pending. Theoretically, loan debt rescheduling can also be done with a Wertpaper. Exactly then, securities do not necessarily have to be sold, but can also be deposited as collateral. There are tips in our guide on debt repayment.

The expediency

But why exactly should one now deposit his securities as collateral? Can not you just pick up such a installment loan? Of course, that’s theoretically possible. However, there are two good reasons for a loan. First, it may be that the debtor is not granted a normal installment loan without collateral. Reasons for this may be a bad credit rating or negative private credit entries. Second, it is because of the given collateral that lower interest payments occur. The securities reduce the risk of insolvency. Should there be difficulties in repayment, the securities will pass into the creditor’s possession and no economic damage will result.

In a securities loan securities are deposited as collateral. The mortgage lending amount can be up to 90 percent of the securities account. Securities loans do not necessarily have to be used to buy new securities. A security loan is available for less interest due to the collateral provided.

2. Who offers a security loan?

2. Who offers a security loan?

Of course, the first port of call for credit is the bank. With the classic house bank, almost every form of financial product can be found. So, of course, the opportunity to acquire securities, manage, sell or even to lend. Banks must have a banking license in Germany and Europe in order to be allowed to work at all. This is awarded in Germany by the BaFin and the regulations are regularly reviewed.

These regulations are also subject to the online banks. Online banks are mostly offshoots or subsidiaries of house banks. In part, they specialize in certain financial products. This can then bring the advantage that the workflows are automated and the costs are significantly lower. This in turn has a positive effect on the amount of the borrowing rate. If even a fully automated online transaction takes place, it can sometimes come to bonus payments. Nevertheless, one can be sure even with these loans, that it comes to a detailed examination of the information provided. Finally, the ownership of the securities must also be proven here.

More credit can be found at online brokers. These specialize in securities trading and most often with other tradable options. Online brokers usually grant loans on more favorable terms, but also at the same time at a higher risk. In addition, the securities loans are usually mandatory earmarked and can only be invested in other securities. Online brokers are also overseen by European regulators, but these are mostly authorities in Malta or Cyprus. However, this does not represent an increased risk. As part of the European Union, they are subject to the same strict regulations and expert support as in Germany.

A security loan is issued by various providers

The securities loan is offered by house banks, online banks and online brokers alike. All of them are subject to the regulations of the European Union and are controlled by European supervisory authorities. The conditions vary from provider to provider. However, online brokers insist on using the loan for securities.

3. What to look for before concluding the loan agreement?

3. What to look for before concluding the loan agreement?

 If you want to make a securities loan comparison on an online loan calculator, it is obvious to choose the provider with the cheapest borrowing rate, but this is often too short. The future debtors should also consider a few other things so as not to experience a rude awakening afterwards.

First there is the mortgage lending amount. As mentioned above, this can be up to 90 percent of the securities account. But be careful here. If you look at the matter, you can also roughly estimate which fluctuations your own papers are subject to. It is very important to consider the conditions and consequences, if the value of the depot suddenly sinks. Therefore, not only the generosity of the lenders, but also the actual performance must be respected.

Add to that the question of what type of securities you have and what kind of securities can be used by the securities lending provider. For example, financial futures or dividend-right certificates can be excluded from the loan. This decision is made by every financial service provider, so that no general statements can be made.

Another point is the level of borrowing rates compared to economic benefits. So it makes no sense to take out a loan for securities, if the expected profit is lower than the interest payable. On the other hand, the loan may have lower interest rates than other lending alternatives, so it may be more appropriate for new purchases to take out a loan of securities instead of an installment loan.

But all these considerations are null and void if it is not possible to use the securities accounts of other financial service providers for a loan. If this is not possible, the comparison with such service providers is obsolete. After all, it makes no sense to open a depot before lending it directly. In addition, the opening of a deposit is also made on grounds other than the loan. Sometimes it can be worthwhile to go to a direct negotiation with your own financial institution.

The decision criterion in the search for the appropriate security

If no external securities accounts are accepted, the provider can be sorted out

The search for the right provider of securities loans also includes the question of the right mortgages and the consequences of depreciation. In addition, the nature of the usable securities should also play a role. Also, the question of the economic benefits of the securities loan or whether external custody accounts can be used as collateral is of crucial importance.

4. Conclusion: Securities loans have their own decision criteria

4. Conclusion: Securities loans have their own decision criteria

A securities loan is offered by branch banks, online banks or online brokers. This is a loan secured by an existing securities account. Interested parties can find favorable conditions through a bank loan comparison 2019. The credit providers decide which type of securities is accepted, how high the lending sums are and whether the intended use is freely selectable or not. In this respect, a securities loan settlement is only too short on the basis of interest rates. Certainly, these criteria play an important role in terms of the economic benefits of a securities loan, but they can not be used as sole decision-making criteria.

Self-employed in the loan application and opportunities!

moneyor for the self-employed as an alternative to the bank

moneyor for the self-employed as an alternative to the bank

Traditional banks and online credit intermediaries are still disadvantaged by self-employment, entrepreneurs and small businesses in lending. Since the cost of evaluating the creditworthiness of the self-employed is significantly higher than that of consumer loans (for people with a salary certificate), lending business is of no interest to banks, especially for small loan amounts. Whenever a loan is granted, the formal credit requirements generally have to be met rigorously.

Good that there are credit alternatives: Unlike banks, the self-employed in the online platform moneyor have the opportunity to present their loan application and justify. The latter proves to be a big advantage compared to the bank. Individuals or private investors as investors then choose whether the self-employed person seems to them to be sufficiently credible and with which loan sums they want to support the project.

With moneyor a genuine exchange takes place between loan seekers and private investors, which is particularly crucial for professionally self-employed and founders with projects that often need to be explained. This makes it easier to finance new and forward-looking projects via moneyor than through conventional bank loans. In times of investment crisis (ECB zero interest rate policy) moneyor is also considered an interesting investment opportunity for private investors.

Procedure for self-employed in the loan application

Procedure for self-employed in the loan application

First, the credit project is created: describing your own situation and the plan or goals that you are pursuing. Key questions help fill in the fields on the portal. The loan amount, the term and the interest rate of the loan you want, you determine yourself. After the loan project is published, investors can bid on it.

The credit project description can be optimized until the first bid has been received. The credit project will initially be on the moneyor credit marketplace for 14 days and may be extended if necessary. If a loan is financed by investors, moneyor-Partner bank  transfers the loan amount to the borrower’s account. The procedure takes about 4 weeks. Upon receipt of the loan, the agreed installments will be collected by the Bank, which in turn will forward them to investors together with the interest. imp

The functionality of moneyor is similar to that of an auction platform : moneyor allows people to privately lend money to other people or to get a personal loan from other people. The borrower benefits from lower interest rates compared to the bank.

Conclusion: With moneyor, self-employed people have a real chance of getting a loan, even if they were rejected by banks. For the self-employed, founders, entrepreneurs and freelancers, moneyor has established itself as an alternative financing option in recent years.

moneyor loan without bank for self-employed & small companies:

  • Lending privately to self-employed, young entrepreneurs & small businesses: High bank margins eliminated!
  • Unlike the bank: Applicant can present and justify his personal loan project!
  • Absolutely discreet: your employer and your house bank learns nothing
  • often lower interest rates than online credit banks!

Guide tips for the self-employed…

  1. Our advice: First study the credit requirements, and then submit the application! This saves unnecessary frustration and false hopes.
  2. SME Finance Tip: With a single online request, SMEs and self-employed can now choose the best offer from 220 financing service providers and 1,700 subsidies from EU and Germany, free of charge and without obligation! More at: SME tip: With one request access to 220 financial partners and 1,700 funding!
  3. Short Loan for Companies: The “Digital Employment Credit” offered by Inancingent in cooperation with solarisBank fulfills exactly the requirements for fast lending to bridge financing bottlenecks. This allows customers to receive a loan commitment of more than € 100,000 within only 24 hours, with a maximum of € 750,000 within 48 hours. Also under: Inancingent also for fast credit solutions within 24 hours!
  4. Find the best loan instead of search: With the credit formula can save up to 40% interest!
  5. Often forgotten: A financially strong guarantor always increases the chances of getting a loan (including cheaper credit terms).
  6. A credit insurance can be helpful as additional security!
  7. In addition to a guarantee or credit insurance, there are other securities that increase the chances of a loan.
  8. In addition to moneyor, we also recommend smava as another crowdlending platform in Germany!

All further find loan seekers in our practice guide loan for the self-employed.

Motorcycle loan conditions

motorcycle financing

When spring and early summer provide for dry roads and beautiful weather, the motorcycle season begins – and at the same time, an intensive promotion of manufacturers to potential buyers. The incentive to fulfill the wishful dream on two wheels is great, but also associated with considerable costs. Often a high-quality motorcycle costs several thousand euros, and not every proud owner can pay the amount in cash. Therefore, in addition to the appearance and the technology, the motorcycle financing plays an important role in the purchase. But what financing options are available when buying a motorcycle?

1. Cash payment when buying a motorcycle

1. Cash payment when buying a motorcycle

Those who have the means to pay for the motorcycle of their dreams in cash will save themselves an interest-bearing loan. Despite the currently low interest rates, this is still the cheapest solution. In this way you are immediately owner of the brand new motorcycle. The fact that the cash payment gives the customer a discount, but is a mistake, because the traders usually calculate income from their financing models in the prices, as well as the car loan. Therefore, it is worth a calculation and a comparison of suppliers, even if you have the purchase price at hand.

However, the cost of larger machines of the most famous brands is considerable, and so the customer has to dig deep into his pocket. There are also expenses for insurance and equipment. Anyone who wants to pay everything in cash may have completely consumed his liquid capital with acquisition and has no reserves for surprising cases. And anyone who thinks about liquidating a worthwhile investment to pay for the motorcycle in cash should offset the profits it spends with the cost of financing. A credit is in many cases a reasonable solution to realize the dream of owning a motorcycle with comparatively low risk and affordable rates.

Motorcycle finance – the models available

  • dealer financing
  • Motorcycle finance through a classic installment loan
  • Assigned (auto) credit
  • balloon financing
  • 3-way financing
  • leasing

2. What is a motorcycle loan?

2. What is a motorcycle loan?

When banks offer a “motorbike loan”, this is usually a classic installment loan that is subject to a purpose limitation – just like a car loan. Also in this case, the vehicle serves as security. “The” real “motorcycle loan does not exist. Alternatively, a installment loan can be chosen without earmarking, the motorcycle financing through the dealer and alternatively the balloon financing or the so-called 3-way financing. The individual options will be presented here.

2.1 The same conditions for new and used machines

Usually motorcycles are easily financed via the so-called car loan of a bank. Most banks are set on this type of loan and offer good interest thanks to the given security. The details depend on the habits of each lender.

There is no distinction between new and used motorcycles in the financing, only a minimum performance of 125 cc is the rule. The application and the required securities or guarantees, including the comprehensive insurance, are similar to the transactions that occur when buying a car. Also, the age of the vehicle with a limit of ten years from the first registration is similar to the car loan with the motor loan.

The situation is different when the loan is to be taken for extensive repairs and not for a purchase. In this case, there is no earmarked loan, but a conventional installment loan, where the creditworthiness is primarily determined by the financial situation, namely regular income, and overall higher interest rates are to be expected.

Through the clear website of ING (formerly ING-DiBa) everyone will find the right product

2.2 Motorcycle financing by manufacturer or dealer

As is common in car buying, dealer financing is a widespread solution when purchasing a motorcycle. This applies to new, but also used models. Many traders are able to offer the potential client a tailor-made offer in the context of a financing consultation. The existing credit balance, the desired duration and installment amount and also special requests for repayment or final installment are taken into account.

Although some manufacturers now have their own bank to handle financing, the majority of traders work with an external financial service provider, who also has his work remunerated. Especially if the dealer offers zero-percent financing models or offers particularly favorable interest rates, it is obvious that some of the costs for motorcycle financing have already been included in the price of the vehicle. Therefore, you should always make a comparison of both offers and financing options and providers.

3. Three way motorcycle financing

3. Three way motorcycle financing

The so-called 3-way financing is very popular with borrowers, because the mix of credit, purchase and leasing offers the buyer high flexibility. In this financing model, the borrower first makes a down payment. During the subsequent defined loan term, the loan amount will be deducted in fixed installments, this will end with a final payment. When this point is reached, the borrower has the choice between different options:

  • Pay the final payment with available capital and finally own the motorcycle.
  • Settle the closing rate through further funding and possibly benefit from good terms.
  • Returning the motorcycle, provided that you have opted for a lease, the latter is of course only according to the agreed mileage, after careful treatment and accident-free possible.

The decision for a 3-way financing requires an accurate and realistic calculation of one’s own financial situation – for both the down payment and final installment as well as for the monthly burden. The advantage is obvious. The buyer can, according to his possibilities, settle the balance prematurely, choose a follow-up financing or, in case of a return, buy another, newer model.

4. The balloon financing for your own motorcycle

4. The balloon financing for your own motorcycle

For a car or motorcycle purchase, balloon financing is a common model, because the monthly rates are lower in this form of motorcycle financing than with conventional installment loans. Here too, a down payment is possible, after which the loan is repaid over the term. The final installment in balloon financing financing is relatively high, so rates are lower during the term. An advantage of this type of motorcycle financing: thanks to the low rates, in addition to the repayment of the loan may even be saved new capital. The burden of the household can be reduced to a tolerable level. Particularly suitable is the balloon financing for buyers who have the maturity of a life insurance policy or a savings contract at the end of the repayment period in order to settle the final installment. As with the 3-way model, the buyer can then pay the closing rate entirely out of equity capital or alternatively opt for follow-up financing. However, not every financial service provider offers balloon financing.

5. Motorcycle finance: Leasing as an alternative

5. Motorcycle finance: Leasing as an alternative

Motorcycle financing through leasing is one way in which one does not purchase the motorcycle, but pays for its use, after a down payment in fixed monthly amounts. You will not be a proud owner, but you should not exclude leasing from the outset. With the expensive machines it can be worthwhile, all the more, if one can deduct the amount for example by a company use for tax.

The advantage of this type of financing is that the hobby cyclist drives at fixed rates a sometimes high-priced motorcycle including warranty, which is returned to the dealer at the end of its useful life.

Of course leasing also has disadvantages – damages are charged to the user, so if you can not guarantee a careful treatment of the machine, you have to reckon on repair costs, which can sometimes be very high.

Leasing can be considered if the costs and, if necessary, repair costs for operational use can be declared as operating expenses. Nice for bikers also that after the leasing period a newer model can be leased. In addition, monthly installments are often lower than a loan. Although it is often mentioned as a disadvantage that the motorcycle does not go into this type of financing in their own possession, but who wants to buy his bike after the leasing, this can still do.

6. What to look for in terms of financing: interest and conditions

The choice of financing depends not only on the borrower’s financial capabilities, but also on the purpose. For a new motorcycle of a manufacturer of the upper class you may be advised with the balloon loan or the 3-way financing best. Even dealers or manufacturers offer good conditions in individual cases. Who wants to buy a used bike, gets probably better with a motorcycle loan of a branch or on-line bank.

Nevertheless one should calculate each offer well in the comparison. A favorable interest rate is not always a guarantee for the best offer. In comparison of bankers and motorbike financing by online banks, the latter often have significantly higher annual interest rates, but the borrower receives discounts for cash payments. Thus, the total cost of the loan and also the monthly installments to the dealer credit in individual cases reduced considerably.

Anyone who has an attractive loan offer from a bank can, moreover, go to the dealer of his choice and enter into bargaining as a bargaining agent – because the trader is more free in his decisions and accommodates customers in lending quite well, if the negotiation is still worthwhile in his view, The same applies to the purchase of older models – who does not necessarily have to drive a brand-new bike and can negotiate patiently, can count on discounts, which also affect the motorcycle loan.

6.1 What conditions should borrowers pay particular attention to when financing motorbikes?

  • Are the lending rates credit-dependent or independent? The credit-independent fixed rate may be more favorable in case of low creditworthiness.
  • What is the APR that is the total cost of the loan?
  • Can free installment breaks be used in case of financial constraints, and how often per year?
  • Is there a possibility of early repayment without prepayment penalty and are there any free special repayment options without upper limit?
  • Does the borrower retain the vehicle registration document or is it retained by the lender?
  • Is the borrower free to choose to take out comprehensive insurance or is he obliged to do so through the lender’s insurance partner?

7. Motorcycle Financing: The individual steps from the comparison to the disbursement

7. Motorcycle Financing: The individual steps from the comparison to the disbursement

Once the decision for a particular bike has been made and the amount of credit required and the desired conditions are calculated, borrowers proceed as described below.

7.1 Provider comparison

A first step is to compare the providers. Online banks in particular can be quickly overlooked via loan calculators on comparison portals. After entering the desired amount of credit, determining term and installment level, online tools quickly create a list of providers, often ranked according to the borrowing rate and APR. Mostly you can reach a button directly to the application page of the selected provider by clicking on a button. However, since not all providers have an online presence – if you have, for example, offers of dealer financing available – you probably will not quite without the manual comparison.

7.2 The loan application

After selecting a provider, the next step is to complete the loan application. Especially with direct banks this is very fast via an input mask. Required are personal data, information about the financial situation and the desired loan amount. If you want to get cheaper interest rates, you may want to add a second person as a borrower who lives in the same household – the higher total income makes for better conditions.

The credit comparison shows that ING can certainly convince with its offers

7.3 Credit Check

Once the employment and income situation has been established, the lender checks it. The so-called credit check also includes a Private Credit query, which, however, is neutral and has no impact on the Private Credit score of the applicant.

7.4 Quotation and request for documents

If the credit check is well passed, the lender makes an offer. Anyone who chooses to make use of them must, together with the commitment, submit the documents requested by the bank, such as job references and current bank statements. Whoever teaches complete documents shortens the processing time, which normally takes two to five working days. Also part of the procedure is the legitimacy by PostIdent, ie by the presentation of a valid ID document at the counter of a branch of Deutsche Post, in online banks by VideoIdent – here runs the legitimization process from a video call, are also required personal papers, a webcam with good Resolution and a stable internet connection.

7.5 Purchase of the motorcycle and proof of purchase

After the payment of the loan amount the motorcycle can be bought. Barzahler can bargain on top of that for a discount. If the purchase is made, the lender requires a proof of purchase, in each case the motor vehicle letter and proof of comprehensive insurance.

8. Conclusion on the financing of the motorcycle

The choice of financing when buying a motorcycle ultimately depends on your own financial situation, your personal preferences, but also the liquidity and the amount of the required sum. So before deciding on a particular motorcycle financing, careful calculation should be made. In each case, a down payment is helpful to reduce the amount of the loan, or a high final payment to lower the amount of the installments.

Of course, the cash payment of the purchase of course brings benefits, but the tailor-made loan can be quite an alternative to the current low interest rates. It is advisable to compare the providers and the respective offers of banks and manufacturers or dealers, because sometimes an annual percentage rate is not the most important criterion for the total cost of the planned loan.

Also, leasing can be considered as a financing model, because after the deadline of the purchase of the motorcycle is still an option.