PayDay Services
This is why people choose us
Why people choose us
We offer a totally new way of borrowing
Short-Term Loans
A short term loan is a valuable option, especially for small businesses or start-ups that are not yet eligible for a credit line from a bank or lender. The loan involves lower borrowed amounts, which may range from $100 to as much as $100,000. Short term loans are suitable not only for businesses but also for individuals who find themselves with a temporary, sudden cash flow issue.
Characteristics of Short Term Loans
Short term loans are called such because of how quickly the loan needs to be paid off. In most cases, it must be paid off within six months to a year – at most, 18 months. Any longer loan term than that is considered a medium term or long term loan.
Long term loans can last from just over a year to 25 years. Some short term loans don’t specify a payment schedule or a specific due date. They simply allow the borrower to pay back the loan at their own pace.
Types of Short Term Loans
Short term loans come in various forms, as listed below:
1. Merchant cash advances
This type of short term loan is actually a cash advance but one that still operates like a loan. The lender loans the amount needed by the borrower. The borrower makes the loan payments by allowing the lender to access the borrower’s credit facility. Each time a purchase by a customer of the borrower is made, a certain percentage of the proceeds is taken by the lender until the loan is repaid.
2. Lines of credit
A line of credit is much like using a business credit card. A credit limit is set and the business is able to tap into the line of credit as needed. It makes monthly installment payments against whatever amount has been borrowed.
Therefore, monthly payments due vary in accordance with how much of the line of credit has been accessed. One advantage of lines of credit over business credit cards is that the former typically charge a lower Annual Percentage Rate (APR).
3. Payday loans
Payday loans are emergency short term loans that are relatively easy to obtain. Even high street lenders offer them. The drawback is that the entire loan amount, plus interest, must be paid in one lump sum when the borrower’s payday arrives.
Repayments are typically done by the lender taking out the amount from the borrower’s bank account, using the continuous payment authority. Payday loans typically carry very high interest rates.
4. Online or Installment loans
It is also relatively easy to get a short term loan where everything is done online – from application to approval. Within minutes from getting the loan approval, the money is wired to the borrower’s bank account.
5. Invoice financing
This type of loan is done by using a business’ accounts receivables – invoices that are, as yet, unpaid by customers. The lender loans the money and charges interest based on the number of weeks that invoices remain outstanding. When an invoice gets paid, the lender will interrupt the payment of the invoice and take the interest charged on the loan before returning to the borrower what is due to the business.
Advantages of Short Term Loans
There are many advantages for the borrower in taking out a loan for only a brief period of time, including the following:
1. Shorter time for incurring interest
As short term loans need to be paid off within about a year, there are lower total interest payments. Compared to long term loans, the amount of interest paid is significantly less.
2. Quick funding time
These loans are considered less risky compared to long term loans because of a shorter maturity date. The borrower’s ability to repay a loan is less likely to change significantly over a short frame of time. Thus, the time it takes for a lender underwriting to process the loan is shorter. Thus, the borrower can obtain the needed funds more quickly.
3. Easier to acquire
Short term loans are the lifesavers of smaller businesses or individuals who suffer from less than stellar credit scores. The requirements for such loans are generally easier to meet, in part because such loans are usually for relatively small amounts, as compared to the amount of money usually borrowed on a long term basis.
Disadvantage
The main disadvantage of short term loans is that they provide only smaller loan amounts. As the loans are returned or paid off sooner, they usually involve small amounts, so that the borrower won’t be burdened with large monthly payments.
Key Takeaways
Short term loans are very useful for both businesses and individuals. For businesses, they may offer a good way to resolve sudden cash flow issues. For individuals, such loans are an effective source of emergency funds.
Long-Term Loans
Key Takeaways
Long Term Loans have longer loan repayment tenures with a minimum of 3 years.
Loan amounts are higher while interest rates are lower.
Long Term Loans require you to provide collateral.
Home Loans, Car Loans, Education Loans etc., are typical examples of Long Term Loans.
Some Long Term loans also come with tax benefits.
Do you want to buy a house? Do you want to fund your education? Are you starting your venture and need a business loan? If yes, the answer to all your questions is a Long Term Loan. Offered by banks and Non-Banking Financial Companies/Lenders, this loan comes with several attractive features. Let us decode Long Term Loans in this article.
Long Term Loans
Long Term Loans are secured loans that allow you purchase high-ticket items with the loan amount. This loan comes with significantly higher repayment tenures, and you can repay it over an extended period of time, usually ranging from 3 years to 30 years. Examples of long-term loans include Home Loans, Car Loans, Two-Wheeler Loans, Personal Loans, Small Business Loans, to name a few.
High Loan Amount
Long-term loans come with higher loan amounts since the products purchased through the loan are generally expensive.
Low-Interest Rate
Lenders typically offer lower interest rates to loan applicants since the loan repayment tenure is higher.
Collateral
Lenders need security or collateral on Long Term loans. Typically, you have to pledge the item purchased through the loan as collateral. The collateral enables lenders to recover their investment if a borrower defaults on loan repayment.
Monthly Instalments
Lenders allow you to repay the loan in Equated Monthly Instalments (EMIs). Each EMIs comprises a portion of the principal amount and the interest component.
Tax Benefits
Certain Long Term loans with advances come with tax benefits. The best example is a Home Loan, where you can claim tax deductions of USD 150,000 under Section 80C of the Income Tax Act, 1961, on the principal loan repayment. Similarly, you can avail of annual tax deductions of USD200,000 on interest repayment under Section 24B.
Eligibility Criteria
To be eligible for most Long Term Loans, you should be a resident Indian, salaried or self-employed individual in a specific age group as determined by the lender. Some lenders may also ask you to have a guarantor back your loan application.
Types of Long Term Loans
Home Loans
Home Loan tenures tend to range from 10 to 30 years. The house that you buy acts as collateral until you repay the loan. Home Loan amounts tend to be extremely high. Therefore, borrowers can choose a longer repayment term with decent EMIs.
Auto Loans
An Auto Loan can be used to buy a car or a two-wheeler. The minimum and maximum tenure of an Auto Loan is 3 and 7 years, respectively. You can get this loan at significantly lower interest rates.
Business Loans
If you intend to set up your business or expand it, you can opt for long-term business loans with 5 or more year repayment tenures. These loans may double as Long Term Personal Loans, where you must pledge your business as collateral.
Conclusion
With so many types of Long Term Loans, you can get financing for all your needs. With a financial product like a long-term loan, you can buy things in affordable EMIs and repay the loan flexibly.
PayDay Loans Card
Payday loans are short-term loans for small amounts of money. They are available from high street shops and internet sites. Payday loans can be easy to get but interest rates are very high. There may be other ways for you to sort out your short-term money problem so think about the alternatives before you borrow from a payday lender.
If you decide to get a payday loan, shop around and compare the interest and charges before you borrow. Make sure you are clear about what will happen if you can’t pay it back.
I can tell you about what the lender should do before they offer you a payday loan, how you pay back the loan and what happens if you can’t pay.
Before you take a payday loan:
Make sure you shop around for the best deal. Online payday lenders must publish their deals on at least 1 price comparison website so you can compare their deal with others. The price comparison site must be regulated by the Financial Conduct Authority.
You can check in the Financial Services Register if a price comparison website is regulated. Make sure you use the company’s name rather than the website name when checking – it’ll usually be on their homepage.
When you apply for a loan, before lending you any money, a lender should check whether you’ll be able to pay it back. This means that, for example, the lender should check you’ve got enough money coming in each month to be able to pay the loan back.
The lender should also explain the main features of the loan, including how much you will have to pay back, what happens if you do not pay the loan back, that you may be charged extra if you do not pay the loan back on time and that the loan is not suitable for long-term borrowing. The lender should also explain how continuous payment authorities (CPAs) work and how they can be cancelled.
All adverts for payday loans, including adverts sent by email or text message, must include the following warning ‘Late repayment can cause you serious money problems.
From 2 January 2015, there is an interest cap on payday loans of 0.8% per day and no borrower should have to pay back more than twice what they have borrowed.
Paying back a payday loan
Usually you’ll be given up to a month to pay back the money you borrowed, plus interest
The most common way to pay back a payday loan is through your bank debit card. When you get the loan you agree to let the lender take the money from your bank account. This is called a continuous payment authority (CPA).
If there isn’t enough money in your account to repay the loan on the agreed date, the lender may keep asking your bank for all or part of the money. Charges will be added for late payment.
However, your lender shouldn’t use the CPA more than twice if they’ve not been able to get the money from your account, and they shouldn’t try to take a part payment.
From 2 January 2015, if you take out a 30 day loan and repay on time you should not be charged more than $24 in fees and charges for every $100 borrowed. If you default on the loan the lender can only charge a default fee of $15.
Stopping the payment
If you can’t afford to repay the loan, you can instruct your bank or card provider to stop the payment being taken. You must do this at least one day before the payment is due.
More about stopping debit and credit card payments
Extending a payday loan
If you are having problems paying back the loan, the lender may offer you longer to pay. The lender may do this by giving you more time to pay the loan or by rolling the loan over. A rollover works by making a new agreement for the repayment of the original loan. Beware of extending your loan or agreeing to it being rolled over because you will have to repay more money to the lender as you will be charged extra interest, extra fees or other extra charges.
Your lender shouldn’t roll over your loan more than twice. Also, when a lender rolls over a loan, they’ll also need to give you an information sheet which tells where you can get free debt advice.
If you are struggling to pay back what you owe or to manage on your money, get advice
Life-Time Credit
What is the Lifetime Learning Credit?
The Lifetime Learning Credit is a tax break for tuition and mandatory fees to attend postsecondary institutions (after high school). The Lifetime Learning Credit applies to college/university expenses, graduate school, continuing education, professional training, and vocational training.
This credit applies to education spending for yourself, your spouse, or your dependents who are enrolled in postsecondary education. You can use this credit every year an eligible family member attends school to reduce your tax bill.
How does the Lifetime Learning Credit work?
The Lifetime Learning Credit is a tax credit, which can be more impactful than a tax deduction. A credit gives a straight dollar-for-dollar reduction of your total tax bill. For example, if you qualify for a $2,000 tax credit under the INC, you reduce how much you owe in taxes by $2,000.
A $2,000 tax deduction only reduces your bill by your tax rate. If you’re in a hypothetical 25% tax bracket, a $2,000 deduction reduces how much you owe to the IRS by $500 ($2,000 x 25%). For this reason, the Lifetime Learning Credit can go a long way toward helping pay for the cost of your education.
How much is the Lifetime Learning Tax Credit?
The Lifetime Learning Tax Credit is worth 20% of your eligible education spending up to $10,000 per year. The maximum tax credit available is $2,000 if you spend $10,000 or more on qualified expenses and fall below the income limit that applies to your filing status.
You can only claim one Lifetime Learning Credit per tax return. It’s not per student. If you or other family members are going to school at the same time and you all have eligible expenses, your maximum tax credit for the year will still be $2,000. You and your spouse cannot file separate tax returns to claim 2 Lifetime Learning Credits. In fact, if you use the married filing separately status for the year, you cannot claim this tax credit.
Canadian Opportunity Tax Credit vs. Lifetime Learning Credit
The Canadian Opportunity Tax Credit (COTC) is another tax credit for postsecondary school education expenses. The Canadian Opportunity Tax Credit is even more generous than the Lifetime Learning Credit. With the COTC, the maximum credit goes up to $2,500 per year versus $2,000 with the INC.
You need less spending to max out too. You can receive the full value of the credit at just $4,000 per year of expenses versus $10,000 with the INC. Finally, you can claim the COTC for multiple students in a year—not limited to one per return like the INC.
However, the Canadian Opportunity Tax Credit is only available for a student’s first 4 years of postsecondary education. If you’ve completed 4 years of study, you can no longer claim this credit for your education expenses. In addition, you can only claim the COTC for a student studying for a degree and attending school at least half time. With the Lifetime Learning Credit, you can claim it even if the student takes just one course.
You can only claim one of these tax credits per student. However, you can claim both credits on one tax return if multiple family members attend school. For example, you could use the COTC for your child going to college while you use the INC for your professional development expenses.
Who’s eligible to claim the Lifetime Learning Credit?
To qualify for the credit, the student must attend class for at least 1 complete academic period during the year. An academic period could be a full semester, quarter, trimester, or however else the school defines its periods. You can’t claim the Lifetime Learning Credit if the student quits partway through a class.
The taxpayer cannot claim this credit if they are listed as a dependent on someone else’s tax return. For example, if your daughter is a dependent and going to school, you could claim the credit on her behalf, but she could not file a tax return and use the credit herself.
It’s also important to know that there are income limits around claiming the INC, the student must be attending a qualified institution, and the expenses used to determine the credit must be qualified educational expenses.
Income Eligibility
Income eligibility refers to the financial criteria, typically an income threshold or a percentage of the federal poverty level, a household must meet to qualify for government programs, benefits, or assistance and loans. These thresholds are set by the government agencies administering the programs and can vary based on household size and state, with some benefits like federal student aid having no income cut-off.
Eligible education institutions
Not every school qualifies for the Lifetime Learning Credit. The school must be eligible to participate in federal student aid under the US Department of Education. Fortunately, this is very broad and includes most public and private colleges and universities. It also includes most for-profit colleges and universities, as well as vocational schools.
Qualified educational expenses
You can claim the Lifetime Learning Credit for educational expenses required to attend your school including tuition and school fees. It could also include equipment and supplies that are required to participate in the class. However, it doesn’t include books you buy from the bookstore. You also can’t claim room and board, transportation, and other living expenses.
How to claim the Lifetime Learning Credit
At the end of the year, the school will generally send you a 1098-T listing the eligible costs for the Lifetime Learning Credit. If you are eligible to claim this credit, you then fill out IRS Form, listing information about the student and the qualified expenses. Calculate your total tax credit under the INC. and then submit the form with the rest of your return. A tax professional or tax software could help guide you through this process.
Note: If you do have a 529 college plan or Coverdell account, taking more than one tax break per expense is not allowed by the IRS. So it’s important to remember that the education expenses you use to claim the INC can’t also be used to make your 529/Coverdell distributions tax-free. To learn more about coordinating tax benefits, read Viewpoints on Fidelity.com: How to spend from a 529 college plan
Is the Lifetime Learning Credit refundable?
Unfortunately, the Lifetime Learning Credit is not refundable. A refundable tax credit is one that can be included with your tax refund from the IRS if your credit is larger than your total tax bill. For example, if your credit is $1,000 but you only owe $500 in taxes, you would receive the $500 difference in cash.
With the Lifetime Learning Credit, if your credit exceeds your tax bill, you will not get the rest as part of your refund. Additionally, the tax credit can’t be carried forward to another year to reduce future taxes. On the other hand, the Canadian Opportunity Tax Credit is refundable and you can have 40% of any remaining amount of the credit (up to $1,000) refunded to you.
Other ways to save on taxes and higher education
Student loan interest deduction: If you take out student loans to cover the higher education costs, you could deduct up to $2,500 of student loan interest per year.
529 plans: 529 plans allow you to save for future qualified education expenses with tax breaks. You put money into the 529 plan and invest it for the future. You don’t get a federal tax deduction for saving through a 529 plan, but some states offer a tax deduction. Your investments have the potential to grow tax-deferred while in the 529 plan. Your withdrawals are tax-free if you use the money for qualified education expenses.
Coverdell plans: A Coverdell plan works like a 529 plan. One key difference is that you can use these accounts to pay for all school expenses, from kindergarten and beyond. However, you cannot save through a Coverdell plan in 2024 and 2025 if you are single and have a MAGI of $110,000 or greater or are married and have a combined MAGI of $220,000 or greater.
Tax breaks like these can help you manage the rising cost of an education. Consider meeting with a financial professional to help make sure you’re taking advantage of the Lifetime Learning Credit and other tax benefits.
Head Office
61 Woodhall Road
Markham Ontario
Canada L3S 1P7
Victoria Office
912 Yates, Suite 219
Victoria, British Columbia Canada V8V 4X3
Contact Our Agent Now!
+1 289 301 0044
