Sometimes, the loan provided by the bank for the purpose of getting commercial real estates is not enough. The reason behind this is that the production value of such projects is extremely high; perhaps in millions of dollars. The burden of commercial Real Estate Loan acquisition from the bank can be troublesome. It isn’t rocket science to know that this should not prevent him/her from getting a beneficial or adverse credit. To purchase a real estate, the loan may not be beneficial. Let us consider a case in which the person has been given a home loan. The value of the house has not been paid off and the credit will expire twenty years from now. In that case, the borrower needs to make sure that he/she has an income greater than the home loan. He/she may have to cut down other expenditures just to repay this loan.
First of all, such situations are not the bank’s fault. It is simply rare to find a form of credit which can be aligned well with the ratio of daily consumption and the loan repayment from the perspective of the recorder. The creditor is not under any sort ofburden since he definitely gets his money back, multiplied, in fact. The bank is never at a loss.
More the credit facilities, more is the back pay lost. Say that a particular loan is greater than the ten-year repayment installment and if you choose twenty years, the amount to be paid each month is halved. But now, the interest rates have been doubled for the same time period. If someone decides to buy a house and a loan is needed for that,they should be aware of the fact that they will have to spend a long time period trying to repay the loan.
Financial experts say that bad credit is not exactly a term that is good to hear. After all, the definition itself is contradicting its purpose, because, of course it is not bad credit – but beneficial.
The credit required by someone may turn out to be a disadvantage in the form of a loss. A new modern TV which is bought on credit is only getting “older” every day because of the rate at which technology is growing therefore, the TV is not worth much a year later, but we anyway have to pay back a large amount of money.
If money is borrowed to generate income, that is, for employment, there is a fair chance of multiplying the earnings such that we have made a productive investment. This is an advantage as not only the amount to be repaid is collected, but there is also a personal profit. Similar is the case in which a real estate loan is taken to start, suppose, a greenhouse production. If the profits are large, the problem of repayment is solved and it may even turn out to be a short-term loan. But in case of small businesses such as machine shops, the loan would obviously multiply in size with time as profits may not be too big.
Credit has become an essential part of living for everyone. This is true for both businesses as well as individuals. People hope to save up enough credit to be capable of buying themselves luxury in future. To get that house, TV and definitely four square meals a day, a price has to be paid apart from the running costs.
How can you get bad credit?
For a start, let us not believe the literal meaning of bad credit. It very well is good credit, depending on what you are planning to use it for, of course. If I want, say, a new car, but I do not have a previous record with loans that sounds too good, I make myself appear better in detail and get briefly bound by the contract so that I have to pay less too. Those with a solid economic background are in no less need of credit; the credit can be used to their advantage in numerous ways. But those who just want a simple house or to borrow some money to work, whatever floats their boat, the loan can prove to be detrimental.
James Somerhalder is a writer and passionate blogger who loves to write for finance related blogs .He is well qualified with master degree in finance that helps him to make his financial planning properly. Apart from blogging he loves music, gardening and writing.