Interest Free Finance is it possible
- Thread starter always_learning
- Start date
I have mentioned this a few times before but here we go again.
About 50-60% of Aussie securitised loans alredy go offshore (mainly the US but some to Europe and a bit to Asia).
The net saving (after hedgeing out the currency risk) made by the issuer of the bonds is typically 1/10 of 1% (or 10bp) ...sometimes it is less ...I have even seen deals where the cost of funds where hgher than borrowing in Aust but to get a big deal away (>$1.5 bill) the issuer was forced to go offshore as the local market was saturated with bonds from that issuer.
Overall there is no magic in doing this and there is certainly no free lunch.
Cheers Nat
About 50-60% of Aussie securitised loans alredy go offshore (mainly the US but some to Europe and a bit to Asia).
The net saving (after hedgeing out the currency risk) made by the issuer of the bonds is typically 1/10 of 1% (or 10bp) ...sometimes it is less ...I have even seen deals where the cost of funds where hgher than borrowing in Aust but to get a big deal away (>$1.5 bill) the issuer was forced to go offshore as the local market was saturated with bonds from that issuer.
Overall there is no magic in doing this and there is certainly no free lunch.
Cheers Nat
Hiya AL
Id say YES.
To what extent and how long for I hae nooooooooooo idea at this point.
Nat, you have a specific paradigm that may hold, you may be right, the models presented to date havent used a securitised lending model though I thought ????
One thing I have learnt in my short life, and that is not to make assumptions on things until I know the details.
While my scientific training (background is a scientist) tells me no bloody way, that same background being in geology also taught me that the biggest discoveries were made by people that did not accept current ways of thinking at face value. Indeed I leant explode what you know into little bits and re assemble the data with the CURRENT what ifs.
Only experience will tell, at the moment Id fall on the qualified yes side..........
ta
rolf
Id say YES.
To what extent and how long for I hae nooooooooooo idea at this point.
Nat, you have a specific paradigm that may hold, you may be right, the models presented to date havent used a securitised lending model though I thought ????
One thing I have learnt in my short life, and that is not to make assumptions on things until I know the details.
While my scientific training (background is a scientist) tells me no bloody way, that same background being in geology also taught me that the biggest discoveries were made by people that did not accept current ways of thinking at face value. Indeed I leant explode what you know into little bits and re assemble the data with the CURRENT what ifs.
Only experience will tell, at the moment Id fall on the qualified yes side..........
ta
rolf
Just be careful. I will believe it if the offer of interest free loan comes with cost-free application. Below is an ASIC news release.
http://theage.com.au/articles/2005/01/20/1106110876173.html
http://theage.com.au/articles/2005/01/20/1106110876173.html
Francesco,Francesco said:Just be careful. I will believe it if the offer of interest free loan comes with cost-free application. Below is an ASIC news release.
http://theage.com.au/articles/2005/01/20/1106110876173.html
I don't understand your point about free applications.
Many things charge application fees because there IS a cost in applying. This has little bearing on the validity of the product.
Many scams work because there is an application fee (register now for only $50 for a future return of $X,XXX,XXX).
And scams by their nature are not usually set up in legally registered entities with known people and faces behind them who are prepared to be put through a due diligence process by a government.
Generally they are anonymous, unregistered and unlicensed because they couldn't be licensed or registered and the people behind them don't want to be tracked down.
Putting up an example of a couple of anonymous web scams really doesn't corrrelate to the existence of interest-free loans that can be tested in a public forum.
Cheers,
Aceyducey
Rolf Latham said:
The model makes use of many securitsation terms and jargon...that being said it also makes use of many terms and jargon that seems to have been made up to add spin to the story.
BTW...if it doesn't use securitisation it makes the program even less possible. in its purest form securitsation is just 'securing' the funds lent (the liabilities) to the program against the cash flows generated from the assets.
Herein lies the problem...the assets yield less than the liabilities.
Hi all,
Not hard to guess my opinion from some earlier posts on another thread.
For anyone thinking about even low cost loans(ie the low interest rates available in Japan etc), you need to remember that the currency risk must be also covered, as already stated by Nat.
There were many(farmers in particular) who borrowed on very low rates in the 80's, the $A dived in value and they ended up owing huge amounts, often more than their property values.
As soon as you include the cost of hedging the value of your offshore loan, the point of doing it is lost.
Ohh, and back to the certain company that is offering interest free loans, their new web site will be up and running on Monday 24th Jan. That's right, today is the 24th, I suppose they still have 25 minutes to go before they miss another deadline.... err 24 now.
bye
Not hard to guess my opinion from some earlier posts on another thread.
For anyone thinking about even low cost loans(ie the low interest rates available in Japan etc), you need to remember that the currency risk must be also covered, as already stated by Nat.
There were many(farmers in particular) who borrowed on very low rates in the 80's, the $A dived in value and they ended up owing huge amounts, often more than their property values.
As soon as you include the cost of hedging the value of your offshore loan, the point of doing it is lost.
Ohh, and back to the certain company that is offering interest free loans, their new web site will be up and running on Monday 24th Jan.
That's right, today is the 24th, I suppose they still have 25 minutes to go before they miss another deadline.... err 24 now.bye
Bill.L said:Ohh, and back to the certain company that is offering interest free loans, their new web site will be up and running on Monday 24th Jan.
Oops.......
New office details, telephone and facsimile numbers will be published here on Friday 21 January.
Guess they are still in transition, shifting furniture and the rest of their belongings before they update the "Contact Us" details on their website.
Cheers,
Jo
No possible
There is no tangible, traded asset in this world which is free. There is no service or other product which is free.
True, the end user may not pay for the product or service (of which cash is one) but, someone, somewhere will pay.
Free health care, bollocks, the taxpayers pay.
Free this, free that, bollocks, someone will have to pay. End of story.
If the only way "that" company can explain the process is through gobblygook and double dutch then this is even more of a signal to me that the one who will end up paying is the end user.
Don't be deluded. Someone, somewhere ALWAYS pays. In the instance of "that" company, the only question is who?
Fact of life.
Jeff
There is no tangible, traded asset in this world which is free. There is no service or other product which is free.
True, the end user may not pay for the product or service (of which cash is one) but, someone, somewhere will pay.
Free health care, bollocks, the taxpayers pay.
Free this, free that, bollocks, someone will have to pay. End of story.
If the only way "that" company can explain the process is through gobblygook and double dutch then this is even more of a signal to me that the one who will end up paying is the end user.
Don't be deluded. Someone, somewhere ALWAYS pays. In the instance of "that" company, the only question is who?
Fact of life.
Jeff
Derivatives may be able to do miracles, but if you were to get someone to "invest" 450k on the basis that this would be recovered with a lesser sum earning interest over 20 years, why would 3 tranches of fundraising be necessary. Surely one $500,000 and an admin fee would be much simpler.
Here's an interesting link on derivatives
http://mt.sopris.net/mpc/finance/sumitomo.etc.html
Here's an interesting link on derivatives
http://mt.sopris.net/mpc/finance/sumitomo.etc.html
kissfan said:Of which year?
No year mentioned from memory.
Maybe it's not real currency and no real houses are to be involved
http://www.somersoft.com/forums/showthread.php?t=19080
