michaelg ..thanks for youyr reply your professional dedication and your committment to furthering the positives of vendor financing will greatly enhance a facility hereto largely operated on a one off basis .. i look forward to perusing your website in the future..alan
WRAPPER Charging 15% interest
- Thread starter hwd007
- Start date
Hi all,
Looking at it from both sides here, I have wrapped a property in the past. I charged 2% over my interest rate. My wrappees were advised to seek independant legal advice. I became a licenced credit provider, which I believe is really the only licencing you could say is "required" to wrap. Our wrappees were fully informed as to what price we purchased the property for, and what price we wrapped it to them for, and the spread in interest rate. They accepted all these details when they signed our contract. I don't feel in any way that I've ripped these people off. They were renting and getting nowhere previously. Their property has since experienced significant capital gain and they will possibly refinance shortly. I'm no snake oil salesperson.
From the other side, last year I required finance on very short notice to settle on a property. I borrowed this money at 24% interest and allowed my car to be used as security. All this and I have a good credit rating and history - but I needed the money in two days and this was the quickest and easiest way to get it. Was I ripped off? Well, the interest rate is certainly the highest i've found! But I agreed to all their conditions when I signed their contract. And, if I had to do it again, I would. And, this lender was no snake oil salesperson either, but a well known public lending company.
If I was in the position of not being able to obtain a loan in the traditional manner, I'd certainly look at buying a wrapped property too. Banks lending conditions can be restrictive and unforgiving and people's situations vary so enormously that it is unfair to say that if they can't get a loan from a bank, they shouldn't be lent any money from anywhere.
Really, when you wrap a property, you are simply acting as a bank. Banks take other peoples money and lend it out again for more than they pay for it. Lots of people complain about the way a bank carries on it's business too, but at the end of the day we all still use them. This is no different.
Kylie
Looking at it from both sides here, I have wrapped a property in the past. I charged 2% over my interest rate. My wrappees were advised to seek independant legal advice. I became a licenced credit provider, which I believe is really the only licencing you could say is "required" to wrap. Our wrappees were fully informed as to what price we purchased the property for, and what price we wrapped it to them for, and the spread in interest rate. They accepted all these details when they signed our contract. I don't feel in any way that I've ripped these people off. They were renting and getting nowhere previously. Their property has since experienced significant capital gain and they will possibly refinance shortly. I'm no snake oil salesperson.
From the other side, last year I required finance on very short notice to settle on a property. I borrowed this money at 24% interest and allowed my car to be used as security. All this and I have a good credit rating and history - but I needed the money in two days and this was the quickest and easiest way to get it. Was I ripped off? Well, the interest rate is certainly the highest i've found! But I agreed to all their conditions when I signed their contract. And, if I had to do it again, I would. And, this lender was no snake oil salesperson either, but a well known public lending company.
If I was in the position of not being able to obtain a loan in the traditional manner, I'd certainly look at buying a wrapped property too. Banks lending conditions can be restrictive and unforgiving and people's situations vary so enormously that it is unfair to say that if they can't get a loan from a bank, they shouldn't be lent any money from anywhere.
Really, when you wrap a property, you are simply acting as a bank. Banks take other peoples money and lend it out again for more than they pay for it. Lots of people complain about the way a bank carries on it's business too, but at the end of the day we all still use them. This is no different.
Kylie
Good post Kylie!
A perspective I find interesting is how people (not TV programs) that decry wrapping seem to take the view that if an individual loans money there's a big risk of unethical practices.
However if a major institution lends money it MUST be OK.
Personally I find the practices of many institutions highly unethical at times.
Just because an organisation employs hundreds or thousands of people, has millions of shareholders and is bound to meet various legislated conditions does NOT make them behave ethically.
In fact if anything, it's easier to hide unethical practices or take the finger pointing route.
The money the NAB lost recently is not some nebulous money inside the bank, it's money taken from individuals that should be returned in some form to shareholders.
The impact in the mid-term may be increased fees to NAB customers, or reduced share values for shareholders - or both.
So who actually bears the cost?
At least dealing with individuals it's very clear where the buck stops.
Cheers,
Aceyducey
A perspective I find interesting is how people (not TV programs) that decry wrapping seem to take the view that if an individual loans money there's a big risk of unethical practices.
However if a major institution lends money it MUST be OK.
Personally I find the practices of many institutions highly unethical at times.
Just because an organisation employs hundreds or thousands of people, has millions of shareholders and is bound to meet various legislated conditions does NOT make them behave ethically.
In fact if anything, it's easier to hide unethical practices or take the finger pointing route.
The money the NAB lost recently is not some nebulous money inside the bank, it's money taken from individuals that should be returned in some form to shareholders.
The impact in the mid-term may be increased fees to NAB customers, or reduced share values for shareholders - or both.
So who actually bears the cost?
At least dealing with individuals it's very clear where the buck stops.
Cheers,
Aceyducey
So the cost of the NAB scandal is now:
Cost of the currency trading claimed by NAB: $300M (I think)
REAL cost of the currency trading: ?????
Cost of the internal investigation: ?????
Cost of the review of procedures: ?????
Cost of media spin: ?????
Cost of CEO retiring: $3.7M
Cost of sourcing a new CEO: ?????
Cost of other execs/staff leaving: ?????
Cost of replacing other staff: ?????
So how much has this actually cost customers and shareholders?
Not too transparent is it
Cheers,
Aceyducey
As far as the shareholders- isn't it just a nebulous amount based on perceptions of what the bank is doing, rather than what the bank is actually doing, which determines the share price?
Otherwise, why should a share price rise on a resignation of one person, or (as has happened in the past), fall on a record profit announcement?
I think you're spot on there Geoff. I trade the markets every day, and i've learnt not to expect anything. If there is an announcement that I think will make the share price either rise or fall, I now know to wait to see just which way it's going to go. I've been caught out many times! Sometimes, it makes no sense to me the direction a stock goes in following a particular announcement. It really is just people's perception.
