Debt – Song Haizeng http://songhaizeng.com/ Thu, 26 May 2022 01:46:09 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://songhaizeng.com/wp-content/uploads/2021/05/default-138x136.png Debt – Song Haizeng http://songhaizeng.com/ 32 32 6 Genuine Ways to Get a Great Personal Loan https://songhaizeng.com/6-genuine-ways-to-get-a-great-personal-loan/ Thu, 26 May 2022 01:46:09 +0000 https://songhaizeng.com/6-genuine-ways-to-get-a-great-personal-loan/ 6 Genuine Ways to Get a Great Personal Loan One thing you need to know about personal loans is that there are good ones and bad ones. What distinguishes a good loan from a bad one is the interest rate and the level of difficulty in repaying the loan. Bad loans like payday loans and […]]]>

6 Genuine Ways to Get a Great Personal Loan

One thing you need to know about personal loans is that there are good ones and bad ones.

What distinguishes a good loan from a bad one is the interest rate and the level of difficulty in repaying the loan. Bad loans like payday loans and cash advances, while helpful for now, can be financially devastating in the long run. The interest rate for payday loans usually ranges from 200% to 500%, an outrageous amount. While the interest rate for cash advances is 400%, so if you’re short on cash, don’t settle for just any loan.

Nevertheless, the right loan for you may simply be out of reach, but today we’ll give you the top 10 ways to get a great personal loan.

1. Make yourself a desirable borrower

Credit history, credit history, credit history. In terms of getting a personal loan, having good credit is probably the most valuable way to ensure you get the loan you need. So, before considering any loans, good or bad, make sure your credit history is in order. A FICO score of 579 or lower is generally considered bad credit and most lenders will be hesitant to offer you a loan. Whereas, according to Experian, even a higher score of 580-669 will put you in a tough spot with getting a loan.

However, there are ways to increase your score:

  • Pay your bills on time
  • Catch up on your overdue balances
  • Dispute anything that doesn’t appear on your credit report
  • Write a goodwill letter

2. Improve your debt to income ratio

The DTI or debt-to-income ratio is a percentage that indicates the amount of a potential borrower’s income that is allocated to his or her debts. Lenders use this percentage to determine your ability to make monthly payments for the money you plan to borrow.

You can easily calculate this ratio by adding up your monthly debt. This can include bills, such as heating and electricity, as well as subscription services. Once you have calculated your debt, divide it by your gross salary or the amount you earn before taxes. For example, if you pay $900 for rent and $200 a month for heat, hydro, and internet, your monthly debt is $1,100. Now divide that by your gross monthly income, $2,500, and your DTI ratio is 44%.

Most qualified borrowers have DTI ratios below 43%, so it’s important to explore different avenues to reduce your monthly debt, such as reducing unnecessary recreational activities or finding more affordable alternatives to subscription services. monthly.

3. Eliminate high-interest credit card debt

Speaking of ways to reduce your debt-to-income ratio, eliminating any debt associated with a 20% interest rate (APR), such as high-interest credit cards, should be your first thing to do when reducing your DTI ratio.

Best ways to get rid of this type of debt:

  • Transfer your debt to a 0% APR introductory credit card.
  • Apply your “play money” to your balance to reduce interest rates.
  • Double your payments to pay off your debt faster and avoid having to pay interest.

4. Increase your income

What many lenders do not disclose to borrowers is their income requirements. Lenders have these requirements to ensure that certain people can afford to repay their debt. Income requirements vary with each lending institution; however, on average, a good income is considered to be $15,000 to $20,000 for the lowest loan amount.

If you’re trying to increase your income quickly, consider applying for jobs that offer tips (on average, servers earn $190 in tips per day) and jobs that have flexible hours, so you can easily take time off. time for your two employers.

Once you’ve found another job and earned a significant amount of money, gather the necessary documents to prove your income, such as monthly bank statements, tax returns, and pay stubs.

However, it’s also important to note that if you’re not making at least $15,000 a year, getting a personal loan can do you more harm than good, as you have to pay off monthly APR balances.

5. Consider putting guarantees in place

It’s not anyone’s first choice to put up a personal item for a personal loan, but if you don’t meet the other requirements, pledging valuables may be the best way to get a loan. , in particular a secured personal loan (collateral-backed loans). Therefore, if you fail to make the payments, your lender may repossess such items as your investment account, collectibles, and other valuables.

6. Consider alternatives

If you find yourself unable to obtain a personal loan through the usual route, consider other types of personal loans. For one thing, a personal loan isn’t a one-size-fits-all type of loan, so you’re not the only one going this route. Other types of personal loans to consider include:

Peer-to-peer lending: P2P loans are personal loans; however, these types of loans are guaranteed by individuals rather than loan companies and they offer more leniency than these companies.

Payday advance: A payday advance is a loan that borrowers get from their employer. Borrowers of this type of loan essentially withdraw funds from their future paychecks, without having to request funds from traditional lenders.

Financial support from family or friends: If you value your independence, it can be uncomfortable to ask others for help. But you must remember that your friends and family are there to support you and you will regain your independence.


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SBI offers real-time Xpress credit loans on YONO https://songhaizeng.com/sbi-offers-real-time-xpress-credit-loans-on-yono/ Tue, 24 May 2022 00:42:52 +0000 https://songhaizeng.com/sbi-offers-real-time-xpress-credit-loans-on-yono/ The State Bank of India (SBI) has announced that its personal loan product for salaried customers, called Real-Time Xpress Credit (RTXC), will be available through its YONO banking app, an IBS Intelligence report said on Monday (23 May). . Customers will be able to access RTXC from anywhere, according to the report. The service will […]]]>

The State Bank of India (SBI) has announced that its personal loan product for salaried customers, called Real-Time Xpress Credit (RTXC), will be available through its YONO banking app, an IBS Intelligence report said on Monday (23 May). .

Customers will be able to access RTXC from anywhere, according to the report.

The service will be 100% paperless and digital, the statement said. He added that by using RTXC, central government and state and defense salaried customers will not have to visit a branch to obtain a loan, and everything from credit checks, eligibility , sanction and documentation, will be digital.

“We are delighted to introduce the Real Time Xpress Credit (RTXC) loan facility for our eligible salaried customers on YONO,” said Shri Dinesh Khara, President of SBI. “The Xpress Credit product will allow our customers to experience a digital, hassle-free and paperless lending process.”

See also: India’s latest SBI bank to ban payments to crypto exchanges

Last year, SBI halted payments made with its Unified Payments Infrastructure to crypto exchanges, PYMNTS wrote, with several Indian banks doing the same at that time.

In September last year, SBI bank customers were unable to transfer funds through UPI to buy crypto, including big names like Bitcoin.

The decision could have made other banks less willing to accept crypto merchants for integration on their UPI platforms, but the National Payments Corporation of India (NPCI) said it would not block corporate payments. of crypto using UPI.

Instead, the NPCI said banks should make their own decisions about how to handle the problem.

As with many crypto regulations, businesses and crypto advocates have opposed each other. Wazirx, one of the largest crypto exchanges in the country, spoke out against the decision, saying the company was trying to meet with SBI and talk about alternatives, adding that it would affect “millions” of people.

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NEW PYMNTS DATA: THE TRUTH ABOUT BNPL AND STORED CARDS – APRIL 2022

On: Shoppers who have store cards use them for 87% of all eligible purchases – but that doesn’t mean retailers should start buy now, pay later (BNPL) options at checkout. The Truth About BNPL and Store Cards, a collaboration between PYMNTS and PayPal, surveys 2,161 consumers to find out why providing both BNPL and Store Cards is key to helping merchants maximize conversion.

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3 serious consequences of not repaying loans on time https://songhaizeng.com/3-serious-consequences-of-not-repaying-loans-on-time/ Sun, 22 May 2022 02:15:19 +0000 https://songhaizeng.com/3-serious-consequences-of-not-repaying-loans-on-time/ – Advertisement – Personal loan: how does it work? A personal loan is also known as a consumer loan, where a consumer borrows a sum of money at a usually fixed annual interest rate. Consumers can borrow from banks and licensed lenders in Singapore. These loans generally include an annual fee and must be repaid […]]]>

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Personal loan: how does it work?

A personal loan is also known as a consumer loan, where a consumer borrows a sum of money at a usually fixed annual interest rate. Consumers can borrow from banks and licensed lenders in Singapore. These loans generally include an annual fee and must be repaid in monthly installments, over a few months or a few years.

What happens if you can’t repay your personal loan?

As the name suggests, personal loans are to be repaid as they are borrowed and do not receive money. But what if you are suddenly faced with financial difficulties such as an emergency and you are unable to repay the personal loan you have taken out? Most lenders consider a 30-90 day non-payment period to be default. Failure to repay a loan could have serious consequences for the strength of your financial, emotional, and physical well-being.

Now let’s look at some of these possible ramifications.

1. Seized money and collateral

A secured loan is a loan that is backed by collateral that borrowers must put in place for lenders. If you have taken out a secured loan, it pays to ensure that you will be able to repay the loan. Since they are backed by collateral, which can be a property or a car, secured loans generally pose less financial risk to lenders, leading them to offer lower interest rates or borrowing costs. . The danger lies in non-repayment, where lenders could seize ownership of your collateral, causing you to lose it.

If your approved lender is a bank, they may also have access to your bank accounts. It is possible that money in your bank accounts could be seized from you, if the funds in your bank account could be used to pay off personal loan debts that you owe the bank.

2. Legal action brought against you

Failure to repay a personal loan is considered a debt, which means that you, as the borrower, are legally obligated to repay it.

If you are unable to repay your loan due to emergencies or financial difficulties, lenders may be willing to offer other alternatives and options such as loan restructuring or even debt forgiveness.

However, if lenders discover that you deliberately avoided your loan obligations, such as having money in your bank account but not repaying your loan, criminal charges for loan default could be brought against you. Even if the debt is eventually canceled due to extended periods of no contact, legal action can still be taken as a contract has been signed by the lenders and borrowers for the personal loan.

3. Bad credit report

For every loan you default on, it becomes debt and leaves a mark on your credit scores. Are there credit reports in Singapore? Are they really used by financial institutions and employers? The answer is yes, and yes.

A credit report is a record of an individual’s credit payment history gathered from different providers and financial institutions. Credit payment history refers to a list of various factors and records, including credit account history, application activity, and overdue account data.

Overdue account data includes records of delinquencies, which will be posted to your credit report on the date it was uploaded to the system, and will not be removed after 12 month or 3 year periods. , which is the case for credit card refunds. and closed credit accounts respectively).

Having a bad credit score on your credit report is definitely undesirable. But what could happen? Below are some of the unsavory circumstances you could find yourself in with a bad credit rating.

4. Disqualification for large loans and financial resources in the future

If you have not repaid your personal loans, it will be more difficult for you to apply for credit in the future. If in the future you need to take out home, school or car loans, the chances of your application being successful are reduced due to your default. This is because most lenders would ask the credit bureau to check your credit report to verify your creditworthiness before making a decision on whether to lend you.

Having a bad credit rating due to the presence of a default would cause banks and future lenders to consider you insolvent, depriving you of future opportunities like enrolling in college or buying a car or house. .

5. Disadvantage during job search

Besides lenders asking to see your credit report, prospective employers, especially those in the financial sector, may also ask to know your creditworthiness. If you have a low credit score and a history of defaulting on payments, it goes without saying that many employers may have the wrong impression about your financial management and decisions, causing you to face difficulties in finding a job. employment in your industry and your preferred functions. in the future.

Are you looking for a loan to finance milestones?

The dire consequences you could face if you fail to repay a personal loan are mostly long term. Choosing a lender and a flexible personal loan with good repayment terms is absolutely crucial. Therefore, it is best not to take loans that we may not be able to repay, as many of these ramifications may be long term and could affect your future.

Do you have financial opportunities in your alley and are looking for a loan to finance them? Finding the personal loan with the best payment terms and, of course, the best interest rates on the market can be overwhelming. To avoid all that hassle, check out our curated list of the best personal loans from banks and approved lenders in Singapore. The average personal loan interest rate in Singapore stands at 13%, while our neatly curated list has a much more affordable average of 8.75%.

1. HSBC Personal Loan

HSBC Personal Loan has one of the best personal loan interest rates in Singapore as it is one of the market leaders in terms of Effective Interest Rate (EIR), starting at 6%. Another advantage of the HSBC personal loan is its loan term of up to 7 years, which is the longest term available in Singapore.

HSBC Personal Loan has one of the best personal loan interest rates in Singapore as it is one of the market leaders in terms of Effective Interest Rate (EIR), starting at 6%. Another advantage of the HSBC personal loan is its loan term of up to 7 years, which is the longest term available in Singapore.

2. CashOne Standard Charter Personal Loan

Standard Chartered’s CashOne personal loan is an attractive personal loan for low-income borrowers. It offers a fairly competitive interest rate, with an EIR of 6.95% and a low minimum loan amount of S$1,000. The promotions that come with this personal loan are also numerous, and it is a good choice for taking out smaller loans.

Standard Chartered’s CashOne personal loan is an attractive personal loan for low-income borrowers. It offers a fairly competitive interest rate, with an EIR of 6.95% and a low minimum loan amount of S$1,000. The promotions that come with this personal loan are also numerous, and it is a good choice for taking out smaller loans.

3. Lendela Personal Loan

The Lendela personal loan is excellent for those who may have difficulty getting a loan from banks, don’t worry because there is also Lendela to the rescue. We reviewed Lendela and found it to be a useful platform for comparing the best approved lenders and personal loans in Singapore. Lendela offers many benefits, including flexible funding amounts, fast cash disbursement, and low minimum income requirement.

The Lendela personal loan is excellent for those who may have difficulty getting a loan from banks, don’t worry because there is also Lendela to the rescue. We reviewed Lendela and found it to be a useful platform for comparing the best approved lenders and personal loans in Singapore. Lendela offers many benefits, including flexible funding amounts, fast cash disbursement, and low minimum income requirement.

Conclusion

Are you making a major purchase soon? Make the most of your financial opportunities by taking out a personal loan now. One thing to note though – don’t forget to pay them back on time!

Article 3 Serious Consequences of Not Making Loan Repayments on Time originally appeared on ValueChampion.

ValueChampion helps you find the most relevant information to optimize your personal finances. Like us on our Facebook page to stay up to date with our latest news and articles.

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What is a mortgage loan officer? | Mortgages and advice https://songhaizeng.com/what-is-a-mortgage-loan-officer-mortgages-and-advice/ Thu, 19 May 2022 17:59:10 +0000 https://songhaizeng.com/what-is-a-mortgage-loan-officer-mortgages-and-advice/ Getting a mortgage loan is not a simple task. Whether you’re buying or refinancing a home, the mortgage process involves navigating a path lined with paperwork and rules, and it can be confusing. Enter mortgage officers. A mortgage loan officer is a professional whose sole purpose is to help consumers in the housing market obtain […]]]>

Getting a mortgage loan is not a simple task. Whether you’re buying or refinancing a home, the mortgage process involves navigating a path lined with paperwork and rules, and it can be confusing.

Enter mortgage officers. A mortgage loan officer is a professional whose sole purpose is to help consumers in the housing market obtain financing for their homes, says Carolyn Morganbesser, assistant vice president of mortgage originations at Affinity Federal Credit Union. Here’s everything you need to know about what mortgage loan officers do and how you can find one to help you.

What is a mortgage loan officer?

Mortgage loan officers work for financial institutions such as banks and credit unions. They know the different loan products, industry regulations, and what’s needed to get a particular loan, says Durriya Pierce, certified financial planner and financial advice expert at Albert, the personal finance app.

A loan officer can help you figure out what kind of credit or loan you need and can get, then coordinate with your realtor and lender through the application process, says James Call, loan officer. senior credit at Guild Mortgage Co.

You can work with a mortgage loan officer if you are applying for a new mortgage or trying to refinance an existing mortgage.

“Mortgage loan officers must be licensed or registered depending on the type of lender they work for,” says Call.

Mortgage loan officers may receive a fixed salary or a commission based on a percentage of the loan amount, Pierce explains. Their salary cannot be based on the terms of the loan, according to federal regulations.

What does a mortgage loan officer do?

You can generally expect a loan officer to help you with most of the key steps in getting a mortgage. “The loan officer takes or initiates the initial loan application, determines the options available to the borrower, or advises the borrower on necessary corrective action if credit is not available,” Call explains.

You can also expect a loan officer to be in constant contact with you, updating you on demand and how it’s progressing, says Morganbesser. The loan officer will also help gather the necessary loan documents and work with the title company or escrow service to complete the sale of the home, Call says.

What is the difference between a mortgage broker and a loan officer?

Mortgage brokers and loan officers can be mortgage originators, which means both can help you through the mortgage process, according to Rocket Mortgage.

But they are not the same. “The main difference is that a mortgage broker doesn’t work for just one lending institution,” says Gregory Harmon, assistant professor of banking and finance at Case Western Reserve University’s Weatherhead School of Management. “A broker works for a mortgage brokerage and is able to offer loans from several lenders, just as an insurance broker can offer products from several insurers.”

Mortgage brokers may be able to access more competitive rates than mortgage loan officers because they’re not tied to any particular institution, Pierce says. But in practice, this is not always the case.

“The broker can find the best lender for the applicant based on the borrower’s specific situation — at least in theory,” Call says. “In reality, some brokers may only work with a few lenders, and loan officers may ‘negotiate’ loans that their lender can handle.”

How to Find a Mortgage Agent

One way to find a mortgage loan officer is through your primary banking institution. As an existing customer, you might even qualify for rate or fee reductions if you use your bank to take out a mortgage. The website or local branch of your bank or credit union can provide information about mortgage loan officers in your area.

“Many mortgage agents are found through referrals from a real estate agent, friend or family member, or through an Internet search for mortgage companies,” says Dan Holtz, Founder and CEO of mortgage company Sovereign Lending Group.

You can also get a good recommendation from a title company. Closers know which lenders and loan officers are closing transactions on time and which are the least stressful to work with, Call says. He recommends researching the lender or mortgage company you want to use, then finding loan officers who work for that company.

“The best advice is to shop around with multiple lenders and don’t be afraid to ask for a discount,” says Harmon. “Make them earn your business.”

Just be aware that there are good and bad loan officers in every business, Call says. So be sure to speak with the loan officer before agreeing to use the services.

You can also verify a mortgage loan officer’s credentials by entering their license number on NMLS Consumer Access.

“A home loan is a major investment,” says Holtz. “It’s important that you find a loan officer you can trust.”

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What happened to Upstart’s $400 million stock buyback program? https://songhaizeng.com/what-happened-to-upstarts-400-million-stock-buyback-program/ Sun, 15 May 2022 11:16:00 +0000 https://songhaizeng.com/what-happened-to-upstarts-400-million-stock-buyback-program/ Earlier this year, the artificial intelligence lender Reached (UPST 16.32%) announced a $400 million share buyback program. But in the first quarter of the year, which ended March 31, Upstart did not buy back any shares. Additionally, management made no mention of the program in its recent first-quarter earnings call. So what happened to this […]]]>

Earlier this year, the artificial intelligence lender Reached (UPST 16.32%) announced a $400 million share buyback program. But in the first quarter of the year, which ended March 31, Upstart did not buy back any shares. Additionally, management made no mention of the program in its recent first-quarter earnings call. So what happened to this stock buyback program? Is Upstart still planning to buy back shares? We’ll take a look.

So what’s the problem ?

Upstart officially announced the share buyback program along with its fourth quarter and full year earnings report for 2021 on February 18 this year. It’s a bit unusual for a fast-growing company like Upstart to conduct a share buyback program so soon, but CFO Sanjay Datta attributed the situation to two things: the company’s profitability and “opportunism economic” in the sense that management thought the stock was undervalued.

At that time, Upstart was trading around $130 per share. Towards the end of March, there were times when the stock traded below $100, and very briefly below $90, so there were opportunities to buy back shares.

Image source: Getty Images.

But we do know that during the quarter, Upstart also faced several other issues that kept it busy. Upstart wants to be a technology company that helps investors, banks and credit unions better assess the credit quality of borrowers so they can initiate loans and see lower loss rates. However, Upstart doesn’t really want to be a bank. He wants to see as many loans as possible created with his software because he collects a fee for each set-up.

Upstart does not intend to keep loans on its long-term balance sheet as it is not capital efficient and would slow growth. But in the first quarter, loans on its balance sheet fell from about $252 million to about $598 million. Some of this is intentional, as Upstart recently started offering auto loans, which the company previously said they were keeping on their balance sheet until further testing.

But a small portion of the personal loans that would normally have been sold to investors have also been taken to the balance sheet. As interest rates rose in the first quarter and the economic environment became more uncertain, some investors who normally purchase and fund loans had to take a step back to consider how they should assess risk, which resulted in a funding hiatus. Upstart decided to book these loans to “fill in” the gap. This was one of the main reasons why the shares sold off intensely after the earnings.

Not only does this indicate that capital markets could dry up for Upstart loans, but Upstart is also now responsible for that credit risk should something go wrong. In addition, interest rates have steadily increased since the end of the first quarter, so the situation on the financial markets may have deteriorated. Upstart can retain capital at this time in case there are loan losses or the situation escalates and Upstart has to step in again. Given the market reaction, I imagine Upstart will want to get these loans off its balance sheet as soon as possible.

Will Upstart repurchase shares in the future?

Upstart’s share buyback program is still active, so the company could, in theory, repurchase shares at any time. He could have bought back shares since the beginning of April. From a value perspective, there would be no better time to buy back shares than now, with stocks trading about as low as they have ever been.

But I would be surprised to see Upstart buy back stocks with so much market turbulence. I also never thought it was a good idea, to begin with. On the one hand, Upstart may want to invest more in its product. Although management has invested, she said part of the reason for the pause in capital markets funding is that the process of adjusting loan yield thresholds by institutional investors is still mostly manual, while that Upstart’s banking and credit union partners can adjust their performance. thresholds in a much more autonomous way. Management said it plans to further automate this and make the capital markets system similar to that of partner banks.

But the thing is, it looks like there’s a lot to invest in, so I’m not sure the company would send the right message to the market by buying back shares. I think they should focus on getting the business back on track.

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Should you buy prepaid maintenance? https://songhaizeng.com/should-you-buy-prepaid-maintenance/ Fri, 13 May 2022 21:53:49 +0000 https://songhaizeng.com/should-you-buy-prepaid-maintenance/ Prepaid maintenance plans can be big savings if your regular maintenance is expensive. This may be especially true in today’s automotive market, where larger vehicles that rely on synthetic oil can command higher prices. But should you opt for prepaid maintenance, or is it an additional service worth skipping? How does prepaid maintenance work? Prepaid […]]]>

Prepaid maintenance plans can be big savings if your regular maintenance is expensive. This may be especially true in today’s automotive market, where larger vehicles that rely on synthetic oil can command higher prices. But should you opt for prepaid maintenance, or is it an additional service worth skipping?

How does prepaid maintenance work?

Prepaid maintenance plans are a dealer added service that includes the cost of regular trips to the service center. Programs like this and other services like GAP insurance and extended warranties are usually offered to you by the finance and insurance manager, towards the end of your loan process, before you sign the documents. final.

These programs offer regular maintenance, such as oil changes and tire rotations, on a prepaid basis. Your maintenance will then be included in the cost of your loan, and you won’t have to worry about paying for services out of pocket when you do them at the dealership you purchased from.

When prepaid maintenance services are built into the cost of your loan and you have them on a pay-as-you-go basis. For example, if your service includes an oil change every six months and you don’t go, you’re paying for a service you didn’t get. Or, if you’re not in the area of ​​your authorized service center when you need an oil change, you might have to pay someone else to do it anyway.

Of course, plans and coverage differ depending on who supports them. Plans offered by your dealer tend to be more rigid, only allowing service at a specific dealer or group of dealers. Plans offered by the manufacturer can be more versatile, allowing you to get serviced at any franchised dealership across the country.

A disadvantage of prepaid maintenance is that the cost is built into your loan, which means it increases your monthly payment amount and increases your overall loan amount. That could add up to a lot more than you bargained for in interest charges, especially if you’re a bad credit borrower who qualifies for higher interest rates.

Is prepaid maintenance a good idea?

Prepaid servicing may be a good idea for some borrowers. If you’re not one to remember what to do with your car or you’re not one to keep a good schedule, having scheduled service built into your loan could help. to remind you to have your car serviced regularly.

On the other hand, the price of prepaid plans can get steep when you factor in the extra interest charges you pay. In this case, paying out-of-pocket for your maintenance as needed makes more sense, especially if you have a high interest rate.

If you’re looking for extra peace of mind, know that a prepaid maintenance plan is not the same as an extended warranty that might fix unexpected issues. Prepaid maintenance is only for basic services such as oil changes, fluid fills and tire rotations. All things that are normally done at the same time, and don’t cover anything extra you might need.

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The Fed just gave bad news to people in debt https://songhaizeng.com/the-fed-just-gave-bad-news-to-people-in-debt/ Wed, 04 May 2022 20:34:50 +0000 https://songhaizeng.com/the-fed-just-gave-bad-news-to-people-in-debt/ Image source: Getty Images Rising rates could affect your current debt costs and your ability to refinance. Key points The Federal Reserve announced a rate hike of half a percentage point on Wednesday, May 4, 2022. The benchmark rate went from nearly 0% during the pandemic to between 0.75% and 1.00%. If you owe money, […]]]>

Image source: Getty Images

Rising rates could affect your current debt costs and your ability to refinance.


Key points

  • The Federal Reserve announced a rate hike of half a percentage point on Wednesday, May 4, 2022.
  • The benchmark rate went from nearly 0% during the pandemic to between 0.75% and 1.00%.
  • If you owe money, that’s bad news since you can expect borrowing costs to increase.

On Wednesday, May 4, 2022, the Federal Reserve announced the second increase in its benchmark interest rate since 2018.

The Fed first raised rates in mid-March 2022, in an effort to address soaring inflation, but rates only rose 25 basis points. Now a much larger rate increase has been announced – the largest since 2000. Rates have risen by 50 basis points, leading to a half-percentage increase and bringing the benchmark rate down to between 0.75% and 1.00%.

Since rates were close to 0% during the pandemic, this is a huge rate increase. And if you’re currently in debt, that could be really bad news for several key reasons.

Credit card interest rates will increase

If you have a balance on your credit cards, you must pay interest on the amount you owe. Interest rates are usually variable on credit cards. This means that you are not guaranteed to be able to continue paying the same rate over time. Instead, your rate is linked to a financial index which is affected by the federal funds rate.

A large increase in this rate, such as the one that occurred today, causes your card issuer to increase the rate they charge you. You’ll see a higher rate go into effect within a billing cycle or two, which will drive up your borrowing costs.

If you can pay off your card balance in full, you can avoid being hit with additional interest charges once your rates go up. If this is not within your financial reach, a balance transfer could help if you qualify.

Balance transfer cards charge you a small fee – usually around 3% – to move an existing balance from one or more credit cards. The transferred balance is subject to a 0% interest rate for a fixed period of 12 to 15 months. Therefore, paying an affordable upfront fee could keep your interest rate down to 0% for a long time, so you won’t have to worry about your rate going up in the short term.

Adjustable-rate mortgages could become more expensive

If you have a fixed rate mortgage, the Fed rate hike will not affect you. But if you have an adjustable rate loan, that’s another story.

You see, ARMs allow you to lock in your starting rate for a period of time – usually three, five or seven years depending on whether you have a 3/1 ARM, 5/1 ARM or 7/1 ARM. After the expiry of this initial period, your rate evolves with a financial index. And therefore, rising interest rates will likely drive up your mortgage costs.

When your rate increases, your monthly payment may also increase in order to repay your loan on time. And your total borrowing costs over the life of a loan will be higher since you send more money to your lender.

Unfortunately, there’s not much you can do if you have an ARM. Your rate will almost certainly go up if it is already in the adjusting phase or if it will be soon. You may want to consider refinancing a fixed rate mortgage so that you have more certainty in the future about how much you will pay.

The big downside is that refinance rates have already risen significantly from last year and are expected to rise further with the Fed announcement. Still, it may be worth refinancing as soon as possible to lock in today’s current rates, as the central bank has signaled that more rate hikes are coming.

Refinancing Debt May Not Be Worth It Anymore

As mentioned above, refinancing a mortgage has already become significantly more expensive compared to last year, and refinancing rates are likely to rise further thanks to the Federal Reserve’s efforts to fight inflation.

It’s not just mortgage refinances that could be affected either. If you were hoping to get a personal loan to refinance an existing debt, the rates will likely be higher as well. You’ll need to shop around carefully and compare what you’re currently paying to the rate you’re being offered to decide if refinancing still makes sense for you.

As you can see, this rate increase is not good news if you owe money. But if you’re aware that your rates may go up, you can be proactive in coming up with a plan to try to pay off the debt or minimize the damage in other ways, such as transferring your credit card balance. It’s worth it, especially since interest rates are expected to continue to rise throughout this year.

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Can you change mortgage lenders before closing? | Mortgages and advice https://songhaizeng.com/can-you-change-mortgage-lenders-before-closing-mortgages-and-advice/ Fri, 29 Apr 2022 13:54:00 +0000 https://songhaizeng.com/can-you-change-mortgage-lenders-before-closing-mortgages-and-advice/ If you have a bad experience with a mortgage lender, you may be tempted to switch before you take out the loan. While it’s possible to change, it’s important to keep the potential consequences in mind, including higher costs, delayed closing, and another credit check. Depending on the situation, however, getting out of a bad […]]]>

If you have a bad experience with a mortgage lender, you may be tempted to switch before you take out the loan. While it’s possible to change, it’s important to keep the potential consequences in mind, including higher costs, delayed closing, and another credit check.

Depending on the situation, however, getting out of a bad experience can be worth it and the inconvenience can be manageable. If you’re considering switching mortgage lenders before closing, here’s what you need to know.

Can you change mortgage companies?

As a borrower, you have the right to change mortgage lenders at any time before signing the loan agreement. Still, it’s best to do your due diligence upfront, before you start the closing process.

“Homebuyers should arm themselves with as much information as possible,” says Robert Heck, vice president of mortgages at Morty, the digital mortgage marketplace. “You can also save yourself unnecessary stress and money by preparing the ground up front and researching different lenders and rates before closing.”

Despite your research, you could still find yourself stuck with a lender you no longer want to work with. There are many reasons to consider switching mortgage lenders, including:

  • Closing date delays, which can impact both you and the seller.
  • Poor customer service, unresponsiveness or disorganization.
  • Unexpected changes in loan fees, terms or conditions.
  • Constant changes with whom you work.
  • A lower interest rate or lower closing costs with another lender.
  • Requirements that exceed the standard qualification guidelines for the loan program, referred to as an overlay.

In some cases, a buyer may need to switch lenders out of necessity, says Ray Rodriguez, regional mortgage sales manager for New York at TD Bank.
“If you discover during the process that you are not eligible for the product you requested or the property does not meet the lender’s guidelines,” he says, “a buyer may have no other choice than to apply elsewhere”.

What to consider before switching to another lender

While there are plenty of good reasons to consider switching, there are also potential downsides that may make you think twice about making your decision. In some cases, these inconveniences may be worth it, but in others, it may be better to stay with your current lender.

Closing times

It can take between 30 and 45 days on average to complete a mortgage, and if you change lenders, you will have to go through the whole process again. If the seller wishes to close before this date, it could have an impact on your transaction.

You may even have to pay a daily fee to the seller to make up for the delay, and in extreme cases it could cause the sale to fail. In this case, the seller could keep your deposit because you broke the contract.

In some cases, lenders may offer faster than average closing times. Before making the switch, contact the lender and ask if they can meet your closing deadline.

New credit check

You will need to submit a new application and undergo another credit check with the new lender.

If you’re still early in the process, further investigation may not impact your credit score – FICO combines inquiries from mortgage lenders into one for scoring purposes if they occurred during a period of 14 days for older scoring models and a period of 45 days. duration for the most recent.

Additionally, if your credit score has dropped since you applied for your current loan, this could impact your chances of approval – although it could also affect your ability to close with your current lender.

Potentially higher interest rate

If you’re changing because interest rates have fallen, you don’t have to worry about it. But in other scenarios, if you’ve locked in a rate with your current lender, the new lender isn’t bound by that agreement, which could result in a higher interest rate.

Before moving to a new lender because they offer a lower rate, check with your current lender to see if they are willing to match the rate or if they have a floating option to lower your locked-in rate.

Repeated costs

Depending on how far along the mortgage process is, you may need to repeat some of the costs you’ve already paid.

In most cases, for example, assessments aren’t transferable from one lender to another, unless you apply for a loan from the Federal Housing Administration, which allows for portability. “If a new appraisal is required, there is a risk that the value of the home will fall back below the original appraisal,” says Rodriguez, “which could negatively impact price, product and other factors. “.

Plus, you’ll likely also have to pay a new credit report fee when the lender does a credit check. Consider how these recurring charges can affect your budget and cash reserves.

Also keep in mind that the new lender may charge higher closing costs than your current lender. Be sure to request a loan estimate with interest rate and cost information before making your decision.

Added stress

The home buying process can be a stressful experience, Rodriguez says, so it’s important to consider the emotional impact of prolonging it. “Changing lenders can add to a buyer’s stress level,” he adds, “so you have to decide if it’s worth it.”

How to change mortgage companies

The process of switching to another mortgage lender is no different than what you had to do when you applied with your current lender.

If you already have a lender in mind, you will need to submit an application and provide all the necessary documents again. It’s important to note, however, that if you switch loans because another lender offers a lower interest rate, that rate may change based on a credit check and review.

If you don’t have another lender in mind yet, you’ll need to shop around and get pre-approved from multiple lenders so you can compare their offers. This process can take several days, so it’s important to get started right away, especially if you’re under contract for a home and have a deadline.

“As online platforms continue to reinvent real estate transactions, there are plenty of ways to compare mortgage options to ensure you get the most competitive deal,” Heck says.

Once you find the right lender, you will lock in a rate and proceed with the underwriting process. If you can’t find a lender who can offer enough of an offer to make the switch worthwhile, you can stick with your current lender after all. If you don’t like your current lender, you may have the option of refinancing the loan later.

Be sure to keep your real estate agent and seller informed of your decision to switch mortgage lenders, as they may need to set a new closing deadline. Consult your agent before making the decision to switch lenders for advice from your agent on how this might affect you.

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The average credit score for personal loans https://songhaizeng.com/the-average-credit-score-for-personal-loans/ Tue, 26 Apr 2022 21:13:07 +0000 https://songhaizeng.com/the-average-credit-score-for-personal-loans/ The average FICO credit score in the United States is currently 716. This average has trended upward since the onset of the COVID 19 pandemic and has continued to rise as the economy recovers from the pandemic. With many Americans making fewer purchases at the start of the pandemic, credit card use declined and credit […]]]>

The average FICO credit score in the United States is currently 716. This average has trended upward since the onset of the COVID 19 pandemic and has continued to rise as the economy recovers from the pandemic. With many Americans making fewer purchases at the start of the pandemic, credit card use declined and credit scores rose. Now that Americans are recovering from the financial effects of COVID, credit ratings continue to rise.

To qualify for a personal loan, borrowers generally need a minimum credit score of 610 to 640. However, your chances of getting a low interest loan are much higher if you have a credit score of “good” or “excellent” credit of 690. and above. The current average credit score of an approved personal loan applicant is 741.

Key statistics

  • the national debt balance on personal loans Pink from $72 billion in 2015 to $143 billion early 2021.
  • The average personal loan the interest rate is currently 10.50.
  • 19.1 million people in the United States had unsecured personal loans in 2021.
  • Personal loans represent only 1% of consumer debt globally.
  • The average debt per personal loan borrower is $8,402.
  • Personal loan delinquency rates are more than twice as high than delinquency rates for car loans and mortgages.

What is a personal loan?

A personal loan is an unsecured sum of money that you borrow from a bank, credit union, or online lender.

Once you receive the loan funds, you begin making monthly loan payments, plus interest, over a set repayment period. Personal loans can be used for any purpose, but they are most often used to consolidate debts and refinance credit cards.

Using a personal loan to consolidate debt allows you to combine multiple outstanding debts into one loan. This means you only have to pay a monthly fee with a constant interest rate, instead of dealing with multiple lenders at the same time.

Debt consolidation can help borrowers get their monthly payments under control. It can save you money in the long run by combining all your debts under one interest rate. Debt consolidation can also improve your credit score, especially when you consolidate unpaid credit card debt. Consolidating your credit card debt with a personal loan allows you to lower your credit utilization rate, which improves your credit overall.

While debt consolidation and credit card refinancing are the most common uses for a personal loan, other potential uses include home renovations, major purchases, medical bills, wedding expenses, and more.

How do personal loans affect credit score?

Taking out any loan will have a small immediate negative impact on your credit score as you take on more debt. However, if you use a personal loan to consolidate debt or refinance, you will likely be able to significantly improve your credit score over time. Plus, making regular, on-time payments on your loan will help improve your credit score over time.

Advantages and disadvantages: personal loans affect credit

Advantages The inconvenients
Build a payment history: Paying off your loan on time establishes a positive payment history that will improve your credit score. Get into debt : Every time you take out a loan, you take on additional debt. While using personal loans to consolidate debt can be a good idea, consider your financial habits and situation before taking on more debt.
Improve your credit mix: Having multiple types of credit helps improve your credit score. If you already have a line of credit or a credit card, an installment loan will improve your credit mix and likely boost your credit score. Additional costs: Personal lenders may charge a variety of fees. Specific fees and additional charges vary by lender. Some examples include late fees, prepayment penalties, and set-up fees.
Reduce your credit utilization rate: Your credit utilization rate is the measure of your available revolving credit and how much of it you are using. The higher this ratio, the lower your credit rating will be. Since a personal loan is an installment loan, using it to pay off or consolidate revolving debt could improve your credit utilization score. Creating a credit application: When you apply for a loan, the lender must perform a thorough credit check on your credit report, which has an initial negative impact on your credit score. This drop in your score only lasts for a few months, applying for multiple loans can hurt your credit. If you’re filing with multiple lenders, do it all in a week or two to minimize damage to your credit.
Lower interest rates: Personal loans generally have lower interest rates than credit cards, especially if you already have good credit. This makes it easier to make monthly payments on time and keep your credit score intact. High interest rates for bad credit: Although personal loan interest rates are lower than credit card interest rates on average, personal loans often have high rate caps. Borrowers with less than excellent credit may face high interest rates, making it more difficult to pay.

What credit score is needed to get a personal loan?

Your credit score is extremely important when it comes to qualifying for a personal loan as well as the interest rate you receive.

When lenders assess your loan application, they want to see if you have already paid off your debt. Since your credit score is the primary indicator of your debt and repayment history, it’s a key factor in determining whether you’ll qualify for a loan and how much interest you’ll have to pay.

The most commonly used credit score system is FICO, with scores ranging from 300 to 850. Your FICO credit score is determined based on your payment history, total outstanding debt, length of your credit history, your credit composition and any new debt you have. have taken. Payment history is most important in determining your credit score, as well as your total outstanding debt.

Generally, borrowers need a credit score of at least 610 to 640 to even qualify for a personal loan. To qualify for a lender’s lowest interest rate, borrowers generally need a score of at least 690.

FICO Credit Score and What It Means for Personal Loans

Poor It is difficult to qualify for personal loans with a bad credit rating. If you find a lender you qualify with, your interest rate will be high and you will likely have tighter borrowing limits.
Just (580 – 669) Borrowers with fair credit are more likely to qualify for lower interest rates, but may still qualify for low loan amounts.
Good (670 -739) Borrowers with good credit are likely to benefit from a lender’s lower interest rates and qualify for higher loan amounts.
Very good (740 -799) Borrowers with very good credit will qualify for a lender’s lowest interest rates and even higher loan amounts.
Outstanding (800+) Borrowers with exceptional credit will qualify for the lowest interest rates and highest loan amounts from a lender.

Personal loans for bad credit

The minimum credit score required for a personal loan depends on the individual lender, so assess each lender’s requirements before applying. If you are struggling with your credit and are looking for a personal loan, there are bad credit personal loans available. These loans tend to have more flexible requirements, and lenders assess a borrower’s overall financial history with less focus on credit scores.

If you’re looking to take out a personal loan with less than stellar credit, there’s a lot to consider. The lower your credit score, the higher the interest rate on your loan is likely to be. Because a lower credit score means more risk for the lender, your loan terms are likely to be less flexible than a borrower with a higher credit score.

Make sure that the loan terms you qualify for suit you and that you will be able to comfortably repay the loan. Borrowers should also watch out for predatory lending by checking lender credentials before applying.

Credit Considerations When Getting a Personal Loan

When applying for a personal loan, start by checking your credit score and credit reports. Knowing exactly where you stand will help you better determine the rates you will qualify for with a given lender.

Before choosing a lender, research the best personal loan rates available. You should also read the fine print for individual lenders to make sure you know exactly what you’re signing up for and whether you’ll have to pay any additional fees. Be sure to calculate your monthly payment amount before committing to a loan.

Which age group takes out the biggest personal loan?

The bottom line

Before taking out a personal loan, make sure you know your credit score and have a clear understanding of your financial situation. Consider the interest rate you’re likely to qualify for, compare lender requirements and terms, and calculate your monthly payment amounts. To minimize damage to your credit score, apply to multiple lenders within the same time frame. Carefully review the terms of the loan before formally taking out the loan.

Although the average credit score of a successful loan application is quite high at 741, you can usually qualify for a loan with a score of 610 or higher. For best results, you should work on building your credit before taking on more debt.

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Looking to take out a crypto loan? Here’s what you need to know https://songhaizeng.com/looking-to-take-out-a-crypto-loan-heres-what-you-need-to-know/ Sun, 24 Apr 2022 13:09:00 +0000 https://songhaizeng.com/looking-to-take-out-a-crypto-loan-heres-what-you-need-to-know/ Cryptocurrency-based lending has become a mainstay in the decentralized finance (DeFi) universe since smart contract-based lending/borrowing platforms started offering the service to crypto users. The Ethereum network, the first blockchain that scaled smart contract functionality, sees most of the total value locked (TVL) on DeFi protocols dominated by cryptocurrency lending platforms. According to data from […]]]>

Cryptocurrency-based lending has become a mainstay in the decentralized finance (DeFi) universe since smart contract-based lending/borrowing platforms started offering the service to crypto users. The Ethereum network, the first blockchain that scaled smart contract functionality, sees most of the total value locked (TVL) on DeFi protocols dominated by cryptocurrency lending platforms.

According to data from DeFi Pulse, the top 4 out of 10 DeFi protocols are lending protocols which account for $37.04 billion in TVL, or just 49% of the TVL of the entire DeFi market on the Ethereum blockchain. Ethereum leads as the most widely used blockchain for the DeFi market and TVL on the network. Maker and Aave are the biggest players here, with a TVL of $14.52 billion and $11.19 billion, respectively.

Even on other blockchain networks like Terra, Avalanche, Solana, and BNB Chain, the adoption of cryptocurrency-based lending has been one of the primary use cases for smart contracts in the world of DeFi. According to DefiLlama, there are approximately 138 protocols that provide users with services based on crypto loans, with a total TVL of $50.66 billion. Besides Aave and Maker, the other top players in this category of protocols on blockchain networks are Compound, Anchor Protocol, Venus, JustLend, BENQI, and Solend.

Johnny Lyu, CEO of crypto exchange KuCoin, spoke to Cointelegraph about choosing blockchain networks for crypto lending. He said:

“I would say that the ideal blockchain for lending and DeFi does not exist, because each has its own advantages. At the same time, Ethereum’s leadership is undeniable due to many factors.

However, he did not deny the possibility of the emergence of a truly ideal blockchain for DeFi. Kiril Nikolov, DeFi strategist at Nexo – a cryptocurrency lending platform – supported this view. He told Cointelegraph:

“The short answer is no.’ Most blockchains are compatible with crypto lending, however, some of the primary properties to look out for include liquidity and reliability, while a secondary determining factor could be network fees.

Considering that the liquidity and reliability of the Ethereum platform is currently the highest because it is the most widely used blockchain within DeFi, one could consider taking advantage of it and making it the blockchain of choice.

Top players

To get started, a borrower must choose between the major lending protocols on the network such as Maker, Aave, and Compound. Although there are a plethora of crypto lending platforms, in this article the most important ones are considered for ease of explanation and relatability.

Cryptocurrency lending basically allows users to borrow and lend digital assets in exchange for a fee or interest. Borrowers must post collateral that will instantly allow them to take out a loan and use it for their portfolio purposes. You can take loans without any collateral, called flash loans, on platforms like Aave. These loans must be repaid within the same block transaction and are primarily aimed at developers due to the technical expertise required to execute them. In addition, if the amount lent is not returned plus interest, the transaction is canceled even before being validated.

Since crypto-based loans are fully automated and simple for the average retail investor and market participants, they generally offer an easy way to earn annual percentage returns on the digital assets they host or even to access cheap lines of credit.

An important aspect of secured loans is the loan to value (LTV) ratio. The LTV ratio is the measure of the loan balance relative to the value of the collateral asset. Since cryptocurrencies are considered highly volatile assets, the ratio is usually on the lower end of the spectrum. Considering that Aave’s current LTV for Maker (MKR) is 50%, this essentially means that you can only borrow 50% of the value of a loan against the collateral posted.

This concept exists to provide leeway for the value of your collateral in the event that it declines. This results in a margin call where the user is asked to replenish the collateral. If you fail to do so and the value of the collateral falls below your loan value or another predefined value, your funds will be sold or transferred to the lender.

The scope of impact of cryptocurrency-based lending extends beyond the DeFi market as it enables access to capital for individuals or entities without credit checks. This brings a massive population of people across the world who have bad credit history or no credit history at all. Since lending and borrowing are all governed by smart contracts, there is no real age limit for the younger generation to get involved, which is traditionally not possible through a bank due to lack of credit history.

Related: What is crypto lending and how does it work?

Considerations and Risks

Given that the adoption of DeFi-based lending has now increased to such an extent that even countries like Nigeria are taking advantage of this service and El Salvador is exploring low-interest crypto lending, several considerations and risks are worth noting for investors looking to dabble in this space.

The main risk with crypto lending is smart contract risk, as there is a smart contract in play that manages capital and collateral in every DeFi protocol. One way to mitigate this risk is to implement robust testing processes by the DeFi protocols deploying these assets.

The next risk you need to consider is liquidity/liquidation risk. The liquidity threshold is a key factor here because it is defined as the percentage above which a loan is considered under-secured and therefore leads to a margin call. The difference between LTV and Liquidity Threshold is the safety cushion for borrowers on these platforms.

For lenders, there is another additional risk associated with temporary loss. This risk is inherent in the Automated Market Maker (AMM) protocol. This is the loss you incur when you provide liquidity to a lending pool and the underlying price of the deposited assets falls below the price at which they were deposited into the pool. However, this only happens when the fees generated by the pool do not compensate for this price drop.

Nikolov pointed to another risk with DeFi lending platforms. He said that “another is a bad list of guarantees which could cause disruptions to the entire platform. So, if you are not ready to take these risks, we recommend that you borrow from a platform like ours which guarantees you certain protections such as insured custody and overcollateralisation.

There have been several cases of hacking since the rise in popularity of DeFi, including Cream Finance, Badger DAO, Compound, EasyFi, Agave, and Hundred Finance.

Additionally, both cryptocurrency lending and borrowing platforms and users are subject to regulatory risk. Lyu mentioned that the regulatory framework on this issue has not been fully formed in any major jurisdiction, and everything is changing before our eyes. It is necessary to separate borrowers from each other — private borrowers and corporate borrowers.

Essentially, the risks highlighted require you to exercise extreme caution when deploying your capital in crypto loans, whether as a borrower or as a lender. Paolo Ardonio, the chief technology officer of crypto exchange Bitfinex, told Cointelegraph:

“It is important that those involved in crypto lending on DeFi platforms are aware of the risks in what is still a nascent area in the digital token economy. We have seen a number of high-profile security breaches that have put the funds of borrowers and lenders at risk. Unless funds are secured in cold storage, there will inevitably be vulnerabilities for hackers to exploit.

Recent: Beyond Collectibles: How NFTs Are Reshaping the Ticketing Industry

The future of DeFi lending

Despite the risks mentioned, cryptocurrency-based lending is one of the most mature spaces in DeFi markets and is still experiencing constant innovation and growth in technology. It is evident that the adoption of this DeFi category is the highest among the many others that are growing in the blockchain industry. The use of decentralized identity protocols could be integrated with these user verification platforms to prevent the entry of scrupulous players.

Ardonio spoke in more detail about the innovation expected in DeFi lending this year, saying, “I expect to see more innovation in crypto lending, especially in terms of the use of digital tokens and assets. as collateral in loans. We are even seeing non-fungible tokens being used as collateral in loans. This will be an emerging trend this year.