Lately, I have received some exciting feedback from a lot of people seeking to get a Stock Loan . A single of the recurring objections that keeps coming to light from prospective clients is that the plan is so straightforward. In other words, “What is the catch?”
These of you familiar with the economic services industry have an understanding of that several things are not so easy. Stocks, bonds, ETFs, ADRs, choices, collars, interest prices, and so on. On the other hand, this system is what it is at its face value. This is a secured loan with liquid assets as collateral. The lender is protected and can seize the pledged assets if the borrower defaults on the loan, nothing at all a lot more. So what’s the catch? I guess that is it.
Individuals have credit cards with limits, of $five,000, $ten,000, $50,000 and a lot of AMEX card holders have no credit limit. Credit cards are a NON secured way of getting income to use. If the borrower defaults, the credit card companies can only negatively affect their credit. Really couple of credit card businesses will pursue litigation to get their funds back if the borrower doesn’t pay because of the legal expenses involved. Most credit card holders that default never spend since they do not have the cash to spend and the credit card corporations know that. So why litigate when in most situations that effort will be frivolous? Our lenders won’t litigate either. They will seek recourse with regard to the pledged portfolio and that will be spelled out in the loan contract. This simplicity is a single of the main added benefits of the PAL plan.
We advise that all brokers as nicely as possible clients go to the FAQ’s section of our web-site and evaluation the page cautiously. Most of the “behind the scenes” (if you want to call it that) language is there, how the interest price and LTV is determined, and so forth. The bottom line is that higher high quality securities get the greatest loan terms. Probably that is the catch?
Why doesn’t a main investment bank lend to as higher an LTV as our lenders are able? The answer is private income. Most of the major investment banks use conservative business regular suggestions as to which securities are marginable (lendable if you will) and which ones are not. Our private cash lenders have the flexibility to establish on a case by case basis how much income they are willing to lend on any provided security, no matter whether those securities are regarded “marginable” by significant investment banks or not. Most of the bigger investment banks do not have the flexibility our private lenders have in most circumstances.
This is a niche item. There is a void out there in the industry spot for very simple but but aggressive securities primarily based lending. In order to achieve your client’s trust, advise them to walk just before they run. In other words, try performing smaller loans at initial. Our minimum loan quantity is $one hundred,000. Enable your clientele to see the method involved. Permit them to develop into comfortable with all the things. After they’ve gone by means of the course of action, we are certain that a strong foundation will be set to make upon for future, bigger loans.
Guntis Lambergs has over 30 years of productive international company expertise. He is a Managing Companion of Planet Portfolio Loans, an international company that is a division of Mortgage Captain, LLC, a mortgage brokerage firm established in 2004, with offices in Massachusetts and Florida. Planet Portfolio Loans gives their “PALs” plan internationally.