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Borrower beware with payday loans | Globalnews.ca

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REGINA – It’s a quick way to get cash when you’re short before a payday. However, the Saskatchewan government wants people to think twice before borrowing money from a payday loan lender.

In Saskatchewan, lenders can charge up to $23.00 in interest and fees for every one-hundred dollars borrowed. On a four-hundred dollar loan, that adds up to $92.00.

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The loan, plus interest and fees, is due on your next payday and is withdrawn automatically from your bank account. If a loan is defaulted, the lender can charge up to a maximum of 30 per cent per annum on the loan principle and up to $50.00 for a NSF cheque or if a pre-authorized debit is dishonoured.

IN DEPTH: Chequed out: Inside the payday loan cycle

“Sometimes people don’t have a lot of options when it comes to borrowing money,” says Cory Peters, the consumer credit division director for the Financial and Consumer Affairs Authority of Saskatchewan.

“We want to make sure that people are aware of the fees and re-payment timeframes that are associated with payday loans.”

A Global News analysis by Patrick Cain has found a striking correlation between payday lenders and low-income, high-social-assistance areas.

Payday loan stores and welfare rates »

Payday loan stores and welfare rates

Payday loan stores and income »

Payday loan stores and income

The Saskatchewan government has six tips for those using payday loans:

  1. Use a licensed Saskatchewan lender;
  2. Know the costs – frequent use adds up over time;
  3. Loans are due on your next regular payday;
  4. Don’t take out a second payday loan to pay for the first one;
  5. Read the fine print;
  6. If you change your mind, you have until the end of the next business day to return the money and cancel the loan.

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Indian Bank offers combo loan schemes

Indian Bank has launched special home and auto loan schemes to cash in on the festive fervor

Under the special combo scheme, customer availing home loan will be charged base rate and will also be offered vehicle loan and consumer durable loan at the discounted rate of 10.20%, Indian Bank Chairman and Managing Director T M Bhasin said in a statement.

To boost demand for retail credit, the bank has also decided to waive processing charges for all retail loans, he said.

This offer is for a limited period, he added.

Yesterday, the government had decided to provide additional funds to the PSU banks to enable them extend more credit to auto and consumer durables sectors to stimulate demand and combat slowdown.

The decision to increase the quantum of capital infusion was taken at a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram.

‘This amount (Rs14,000 crore provided for capital infusion in Budget) will be enhanced sufficiently. The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two-wheeler, consumer durables, etc at lower rates in order to stimulate demand,’ a finance ministry statement had said.

On Friday (October 04, 2013, Indian Bank closed at Rs70.65, up by 0.36%, with a volume of 0.45 lakh shares on the BSE.

[…]

Exercise caution with payday loans – Brown and Seelye

Some Washington residents may lament the horrible experiences they’ve had at the hands of payday loan lenders: Interest rates can be in the triple digits, and some companies do a poor job keeping customers’ financial information secure. There are many financial challenges that may lead to a consumer to believe a payday loan is a viable solution, such as overdue rent and bills.

It is important for Washington readers to understand that while payday loans are legal, they are somewhat limited: Borrowers can take loans for up to $700 or 30 percent of their monthly gross income, whichever amount is less. If the principal can’t be repaid on time, the consumer may ask for an installment plan, which is to be given without additional charge. There is a limit of eight payday loans per year, and payday loans can’t be taken if the consumer is on an installment plan for a prior loan. All payday loan companies must be registered in the state of Washington.

However, payday loans are illegal in many states, and consumers are discovering that the contract isn’t enforceable. In the case of Washington, if the lender isn’t licensed to do business by the state, they can’t collect the loan, nor can they harass the consumer or act to recover the loan in the state legal system. The lender may continue to call and try to collect the debt, but in reality if the loan was illegal, they don’t have legal standing to collect it.

Tough financial times often lead individuals to take out loans with less-than-desirable terms. If the amount owed to creditors is overwhelming, it may be helpful to allow a bankruptcy attorney to review the case. The attorney may be able to restructure unsecured debt in a manageable fashion through a payment plan overseen by the court.

Source: Washington State Department of Financial Institutions, “Payday Loans,” 2012

Source: Consumer Affairs, “Consumers turning tables on payday lenders“, Mark Huffman, June 07, 2013

[…]

Fertiliser companies likely to get Rs 5,000-cr loan


Fertiliser companies likely to get Rs 5,000-cr loan

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chemicals fertiliser
government policy

New Delhi, Jan 24:

Facing acute cash crunch, the Fertiliser Ministry will arrange for Rs 5,000 crore bank loan for fertiliser companies who have not been paid full subsidy for about six months. While loan would be taken by the companies, the government will bear most of the interest they would have to pay for such borrowing, sources said.

They added that the banking arrangement would be similar to the one offered in 2008—09, when the Ministry had faced a similar situation of lack of funds to pay for subsidy. This will help urea and other fertiliser manufacturing units to tied over immediate cash flow problems that have arisen because of non-payment of full subsidy.

As per exact policy, fertiliser firms get subsidy from the government for selling their produce to farmers at rates which are way below their cost of production.

“Finance Ministry has approved fertiliser ministry’s proposal of special banking arrangement of Rs 5,000 crore for fertiliser manufacturers,” sources said adding the proposal in this regard will be moved to the Cabinet Committee on Economic Affairs (CCEA).

The amount approved by the Department of Expenditure is much lower than the Fertiliser Ministry’s proposal for a “special banking arrangement” of Rs 25,000 crore. Fertiliser subsidy is estimated to touch Rs 1,04,000 crore in this fiscal, which also includes arrears.

According to industry body Fertiliser Association of India (FAI), “the budget allocation of Rs 60,974 crore for fertiliser subsidy as approved by Parliament has already been exhausted. An estimated amount of Rs 19,000 crore subsidy payment is outstanding for the period till October, 2012.”

Fertiliser Ministry has not paid the subsidy bills for phosphatic and potassic (P&K) fertilisers like muriate of potash (MoP) and di-ammonium phosphate (DAP) since July and for urea since August.

“After the CCEA approval, Fertiliser Ministry will divide this amount among fertiliser firms and the interest on the bank loan, to be provided by the public sector banks, will be largely borne by the ministry,” an official said.

The ministry would bear up to 8.5 per cent interest rate and over and above this will be paid by the companies, the official added.

The total loan would be paid to the banks by the ministry once it has been allocated funds for the next fiscal.

On an average, India consumes about 30 million tonnes of urea and around 25—26 million tonnes of DAP, MoP and complex fertilisers annually.

Keywords: Fertiliser Ministry, Cabinet Committee on Economic Affairs, bank loans to fertilisser companies

[…]

3 options to refinance into a VA home loan

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Want to refi into a VA loan? Here are 3 scenarios

Veterans Affairs mortgages, or VA loans, have become lifesavers for homeowners struggling to refinance with conventional loans.

Low mortgage rates and tighter underwriting standards have led to a huge demand for VA loans from refinancers, says Michael Frueh, loan guaranty director for the Department of Veterans Affairs.

The biggest advantage of refinancing with a VA home loan is that homeowners can refinance up to 100 percent of the home’s value, and they don’t have to pay for mortgage insurance. A non-VA home loan normally requires some equity in the house.

“As values in the market continue to stabilize, veterans can take advantage of lowering their interest rates to today’s unprecedented lows,” says Deborah Ames Naylor, executive vice president of mortgages at PenFed, the Pentagon’s credit union.

If you are a member of the military on active duty, a veteran, a reservist or a member of the National Guard, here are some refinancing options you may consider when it comes to a VA home loan.

Reducing the interest rate on a VA home loan

Homeowners who already have a VA home loan can reduce their monthly payments or shorten the term of their loans through a streamline refinance program known as the interest rate reduction refinancing loan, or IRRRL.

One of the biggest advantages of refinancing through this program is that the process requires minimum documentation. The VA does not require a credit check or appraisal for refinances under IRRRL. Some lenders will still require these, as they have their own internal rules.

“An IRRRL loan typically offers a more streamlined approval and underwriting process,” says Nicole Alley, a spokeswoman for USAA, a financial-services provider for military families. “An appraisal may be required based on the lender or loan’s current servicer.”

Borrowers refinancing an existing VA home loan through this streamline program pay a lower funding fee than they would pay under other VA loan options. The fee generally is 0.5 percent of the total loan amount and can be added to the loan balance. The program allows refinances up to 100 percent of the home’s value.

The refinance cannot be used to pay off a second mortgage, Naylor says. Borrowers who have a second mortgage would need approval from the second lender to have the loan subordinated.

VA cash-out refinancing

The VA offers a cash-out refinancing program for veterans who have equity and who have an existing VA home loan.

Cash-out refinancing is an option for homeowners who have two mortgages and want to refinance them into one loan. Unlike the IRRRL program, this refinance allows the borrower to pay off first and second loans with the new loan, Naylor says.

Homeowners who have equity in their homes may get cash back when refinancing, according to the VA rules. Some lenders may not allow cash-out refinances because of their internal rules. Most lenders allow the homeowner to refinance up to 100 percent of the home’s value to pay off the old mortgages.

Refinancing a conventional loan into a VA home loan

If you don’t have a VA home loan but would be eligible for one, you may refinance your conventional mortgage into a VA loan.

Generally, most members of the military, veterans, reservists and National Guard members are eligible to apply for a VA home loan. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply.

“If they apply to refinance a non-VA loan into a VA loan program, it is considered to be a cash-out refinance by the VA,” Naylor says. “This means that the veteran would need to be eligible, and they would be assessed the appropriate VA funding fee based upon eligibility.”

Active-duty members normally pay a funding fee of 2.15 percent of the total loan amount. The fee can be added to the loan balance.

It falls under the cash-out refinance program, but that doesn’t mean the borrower actually gets cash back, as many lenders won’t allow it. But generally, the homeowner can refinance up to 100 percent of the home’s value, which is a huge plus in the current lending environment.

“Clearly the biggest advantage is the availability of 100 percent financing,” Naylor says.

[…]