A Beginner's Guide to Asset-Based Lending

Asset-based lending (ABL) is a type of loan that uses the value of a borrower's assets as collateral. This type of loan can be quickly accessible for borrowers who have poor credit or who lack the financial qualifications for traditional loans. 

In this beginner's guide, we will explain asset-based lending in terms of how it works, its advantages, and disadvantages, among other perimeters. But first, let's take a look at how asset-based lending works.

How Asset-Based Lending Works

When a borrower makes an application for an ABL, the lender will start by analyzing the value of their assets. Once the valuation is done, the lender will use this value as collateral to fund the loan. 

Usually, lenders will be willing to loan borrowers up to about 90% of the value of their collateral. The terms and conditions of these loans, however, do vary based on the value and type of the security. 

In most cases, lenders will prefer high liquid assets that can easily be converted into cash in case of a default. These assets include accounts receivable, inventory, real estate, equipment, and machinery.

The Advantages of Asset-Based Lending

You may be wondering if this type of loan is right for you. There are several advantages to using asset-based lending to consider in regard to your current situation.

Faster Approval Times

Asset-based lending is quicker and easier to process than a traditional loan. This is because the borrower's assets are used as security to fund the loan. So, there is no need for a third-party guarantor for the loans. 

Therefore, the process of approving such loans will take less time compared to traditional loans. This also makes it a practical option for those in urgent need of cash.

Suitable for Bad Credit Borrowers

Since asset-based transactions are covered by security, lenders will be less concerned about how good a borrower's credit history is.

Relatively Low Interest

The other advantage of ABL is that they charge lower interest rates than other types of loans. This is because lenders are not concerned about the creditworthiness of their customers. 

Whether you need staff agency business financing, want a loan for expansion, or for any other reasons, the ABL will offer the best financing rates. It can be particularly helpful for business financing if you need a quick cash boost to get your business up and running.

The Disadvantages of Asset-Based Lending

While asset-based lending has its strengths, like all financial decisions, it has its risks and drawbacks as well. Here are a few to watch out for.

Asset Seizure

One of the main disadvantages of asset-based lending is asset seizure. As we already discussed, ABL is secured by collateral. Therefore, if the borrower defaults on the loan, the lender can seize the collateral to cover a default.

Not All Assets Qualify For ABL

It is important to note that not every asset qualifies to be used as collateral. Most lenders do focus on high-value assets, and this can be limiting for some borrowers.

Final Thoughts

Asset-based lending is a good loan option for borrowers who need urgent cash and those with bad credit history. So long as you are willing to respect the terms and conditions, you will easily manage the demerits of this type of loan. 

As a beginner, we hope this post has given you enough information and insight about ABL to make more of an informed decision.

Why You Need a Thorough Understanding of Your Healthcare Coverage

Healthcare is a very confusing space. There is so much jargon and acronyms flying around that it can be difficult to know what you need or how you fit into the system.

If you have recently signed up for healthcare or are planning on doing so soon, there are some important things you need to understand before signing up with a plan. 

To ensure you understand what type of coverage you need and how it will impact your life moving forward, let's review some key components of any healthcare plan.

What Type of Coverage Is Right for You?

When researching different healthcare plans, you'll find that each one has a different type of coverage. The type of coverage is important because it can determine your out-of-pocket costs and the level of access to healthcare services. 

Generally, there are two main types of plans that you'll find are offered. Some plans offer a certain number of doctor’s visits and other healthcare needs for a monthly or yearly premium. 

These plans usually have a deductible that you must meet before the plan kicks in. Other plans cover only specific health needs, such as hospitalization.

Your Deductible

If you have a typical health insurance plan, the deductible is the amount you will need to pay out-of-pocket before your insurance plan kicks in. 

You can think of your deductible as the amount of money you will need to pay out of pocket to receive services—the higher your deductible, the lower the premium of your monthly payment. 

However, if you don’t often need healthcare, this higher deductible may mean that you end up paying for a health insurance plan you never benefit from because you don’t meet your deductible.

Co-payments

Co-payments are what you will need to pay for each service that you receive after meeting your deductible. Co-payments differ from deductibles in that they can vary depending on the type of service that you receive. 

It's important to know that the more you receive services, the higher your co-payment may be. If you have an expensive ailment and need many services, your co-payment will be higher. If you have a low co-payment, it's important to be mindful of not overusing the system.

Why Is Healthcare So Complicated?

Healthcare, as it is currently structured, is complicated. Many factors determine a healthcare plan's price and each service's cost. 

To understand how these factors impact your costs, you need someone who can break things down. For example, America's Healthcare Advocate brings together various experts, healthcare providers, and business and industry leaders who try to break down health insurance and make it easier for everyone to understand. 

This can be a great way to get more information and better understand how health insurance works, what you’re paying for, and how to save money.

Healthcare is complicated because it can be difficult to understand what types of plans are available and what services are covered. It's also a very expensive industry attempting to provide a valuable service while making a profit. 

With all these factors at play, it's not surprising that healthcare is so complicated. However, once you understand the various components of healthcare and the coverage available, it can be a lot easier to navigate the system and ensure you are prepared for what lies ahead.

Methods of Making Sure You Can Afford Your Health Insurance

Insurance protects from the things that can go wrong in life. One of the most important forms of insurance you can hold is health insurance. 

Health insurance could end up saving your life one day without forcing you to go into financial ruin to do so. Like many things, health insurance isn’t always cheap. If you’re worried about whether not you can afford it, below are some strategies to deploy.

Obtain State Provided Health Insurance

Quite often, the most cost-effective plans are “state health insurance.” Investigate what your state offers. These plans often work in conjunction with Medicaid and the Health Insurance Marketplace to provide the cheapest possible health insurance to those that qualify. 

For certain low-income individuals, this insurance may be provided virtually cost-free. Investigate your state’s healthcare website to see if you qualify and what the enrollment process consists of.

Use a Health Savings Account

Another choice you can use to help you save on health insurance expenses is an HSA, short for Health Savings Account. This is a special kind of savings account. 

Funds placed in the account are not subject to US income tax. They can then be used to pay for your deductible. If you have high deductibles with your insurance plan, this is one way to help slash some costs when paying off your yearly deductible.

Get Insurance Through an Individual Health Insurance Plan

Don’t be afraid to look for individual health insurance outside of other options like an employer or the Health Insurance Marketplace. 

Today, there is a lot more competition than ever before in the insurance market, and other factors are helping to bring costs down for the insured. 

Make sure to speak to an insurance agent, like someone at American Eagle Health Insurance, and discuss the different possibilities of obtaining insurance for yourself and for your family. 

You may be able to obtain significant discounts versus other options. Adding more family members to your plan could bring down costs even more.

Utilize the Children's Health Insurance Plan

Another option you should consider if you have children is CHIP, the Children’s Health Insurance Plan. This is a plan for children of low-income families that is supported by a collaboration between the US Department of Health and Human Services and different states. 

It is designed specifically for families with modest incomes with too much income to be approved for Medicaid. It can provide low-cost coverage for families with qualified children, thanks to the matching funds provided by the federal government.

Obtain Coverage Through an Employer

One of the best ways to obtain affordable health insurance is through your employer or your spouse's employer. Under such plans, the employer often pays for part of your premium. 

The insurance company is also incentivized to provide cheaper rates because they insure an entire group of people. While certain employees may get sick, not all of them will. This brings down costs.

While healthcare can be expensive, it doesn’t have to be necessary. Investigate the options above for bringing the cost of your coverage down. You don’t have a choice, really. Health insurance is necessary in today’s world that your family cannot go without.

Tips for Preparing to Purchase a Second Home

Buying a second home can be a great way to invest in your family and get tax benefits simultaneously. However, it's not always easy to find out what will make you the best option for maximizing returns on your investment.

Here are some tips that may help you prepare for purchasing a second home.

Budget

First things first – make sure that you have a budget in place. A good rule of thumb is spending 25% more than you would for a primary home. 

And while that may seem like a lot of money, there are many tax benefits and other perks of buying a second home that can offset the higher cost of ownership.

Finances

Your current financial situation needs to be taken into account when it comes to buying a second home. For example, if you are in between jobs, and cannot afford all of the payments on your current mortgage, see if you can get a loan modification from your lender or homeowners association (HOA). 

According to the HSH.com Mortgage Provider Directory, a loan modification is an agreement between the borrower and lender that modifies the terms of a loan, such as interest rate, length of terms, and payment amounts. 

If you are already getting help from your lender to manage your current mortgage payment, ask them if they will also assist you with a loan modification on your second home.

Mortgage Company

A mortgage company is there to help you find a loan when you are purchasing a second home. There are many things to consider when getting a loan. 

You need to decide how long you want your mortgage term, whether you will put your home or second home in someone else's name or if it will be in your name, and how much money you want the loan for.

Home Inspection

When you're purchasing a home, get a professional home inspection. A house can have many hidden issues that are not immediately obvious. 

For example, there could be problems with the roof, foundation, or appliances that will leave you paying for work on your house or second home for years. Get things like inspections and repairs to be done when you get your mortgage to cover these costs.

Mortgage Rates

These days, mortgage rates are meager, but there is always a risk associated with them. Also, you may not be able to get the best loan or the lowest rate if you have bad credit or poor credit history. 

In addition, the interest rate of your second home may be higher than what you can afford while still paying off your first home. Some states require homeowners to pay only a portion of their monthly mortgage payments toward the principal balance. 

This lowers your interest payment and helps increase the money you can borrow on your second home.

Buying a second home is a significant investment; you must be prepared to ensure that you get everything right the first time. With such a large purchase, it's essential to know where you stand financially and your financial priorities.

Basics Of Medicare You Should Know About

The national health insurance program is geared primarily toward seniors and those who are permanently disabled. Medicare is an extremely important part of many people's lives since it is often their only insurance option.

But like most other government programs, gaining a good understanding of Medicare's basics can be difficult, especially since various rules and regulations change almost every year. 

If you are preparing to enroll in Medicare or have a family member who needs to understand it in more detail, here are some Medicare basics, you should know about from day one.

Medicare is Not Medicaid

Remember, Medicare and Medicaid are not the same programs. If you are eligible for Medicare, your assets and income play no part in determining your eligibility for the program. Being a federal program, Medicare procedures do not vary much if state to state.

Parts A and B

The two major coverage components of Medicare are known as Parts A and B. Part A will cover your inpatient hospital care, inpatient care in a skilled nursing facility, such as a nursing home, hospice care, and home health care services. 

Part B will cover visits to a doctor's office, various types of outpatient care, the most durable medical equipment, and other related services.

A and B Don't Pay Your Total Cost

One of the biggest mistakes many new to Medicare make is assuming Parts A and B will cover 100 percent of their medical costs, which is not the case. 

A and B only cover 80 percent of your costs, meaning you will still need to pay some on your own. To offset these costs, you may consider adding a Medicare Advantage plan to your coverage. 

Often known as managed care plans, Medicare Advantage will require you to pay premiums but will offset what may be very expensive medical costs.

You Don't Have to be Retired

Finally, you need to realize that you do not have to be retired from your job to be eligible for Medicare. Even if you do not plan to retire at age 65, you can still sign up for Medicare. 

To do so, you will enroll online during your Initial Enrollment Period, which will be three months before turning 65 or the first three months after you turn 65.

By knowing what is involved with Medicare coverage, you can make informed decisions to ensure you have the best possible health care in the years ahead.

Need to Buy a New Car? Tips for Qualifying for an Auto Loan

Owning a vehicle is essential for many reasons, such as having transportation to work and ensuring your children have access to school and extracurricular activities, health appointments, and other commitments.

However, when it comes to purchasing a new car, there are some steps you have to overcome, especially if you are not paying with cash and seeking a loan. 

Lenders will consider different factors when approving loan applications, so knowing as much as possible about qualifying is essential.

Maintain Regular Employment

The number of months or years of employment to qualify for an auto loan varies, depending on the lender. In some cases, a few months of a stable income is acceptable, whereas other financial institutions might require at least one full year. 

In addition to current employment, most lenders ask for verification of stable work history, with no excessive gaps between jobs. It would be best to have regular employment before applying for a loan; however, other factors, such as good credit, could increase your odds even with minimal employment history.

Satisfactory Credit

Car loans are approved for all types of credit, from excellent to good, fair, bad, and no history. The score necessary will depend on the vehicle’s cost and the lender’s requirements. 

Your application will likely be approved if you have a satisfactory credit history. However, a bad credit score often shows that you aren’t as reliable with past credit approval, and the uncertainty from a lender may lead to a denial. 

The financial institution could grant your loan, but with stipulations, such as higher interest rates and other fees.

Have a Down Payment

Having a ten or twenty percent down payment could lead to lower borrowing amounts and more equity in the beginning. You could also encounter less interest and lower monthly payments. 

Trading in another vehicle could also increase your odds of approval. To determine the best options, it would be essential to speak with the dealership’s representatives beforehand. 

Professionals like those at On-Trac Auto Sales can help to make your application process as simple, straightforward, and stress-free as possible.

Identification

You should never apply for a loan without a driver’s license, passport, or state-issued identification card. These documents are necessary to verify your identity. 

It is also best to apply for loans in your state. Some lenders may allow out-of-state applicants, especially those who have just moved to the state or co-applicants trying to boost the odds of a loved one’s application. 

Most lenders require a utility bill, home loan, lease, or rental document for proof of address.

Regardless of your credit history, do not assume you’re ineligible to buy a new car. These are helpful tips to increase your odds of qualifying for an auto loan and receiving the transportation you need for personal and professional commitments.