Emergency loans – Grantstation Trendtrack http://grantstation-trendtrack.com/ Tue, 17 May 2022 09:47:49 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://grantstation-trendtrack.com/wp-content/uploads/2021/05/cropped-icon-32x32.png Emergency loans – Grantstation Trendtrack http://grantstation-trendtrack.com/ 32 32 No-confidence vote against Sri Lankan leader fails as crisis simmers https://grantstation-trendtrack.com/no-confidence-vote-against-sri-lankan-leader-fails-as-crisis-simmers/ Tue, 17 May 2022 09:47:49 +0000 https://grantstation-trendtrack.com/no-confidence-vote-against-sri-lankan-leader-fails-as-crisis-simmers/

Sri Lanka’s ruling party has rejected a decision by parliament to urgently debate a motion censuring President Gotabaya Rajapaksa for the country’s worst economic crisis

We do not know when the motion will be resumed.

He does not legally force Rajapaksa to resign, but his refusal to do so has already rocked Sri Lanka, which is on the verge of bankruptcy as it negotiates with other countries and institutions for an economic lifeline to be able to import basic supplies, medicine and fuel.

MA Sumanthiran, an opposition Tamil National Alliance lawmaker, has proposed that parliament bypass the usual procedure to urgently consider the motion against Rajapaksa. But the ruling party rejected the motion by 119 votes to 68.

Protesters have occupied the entrance to the president’s office for more than a month to demand Rajapaksa’s resignation. Months of anti-government rallies have led to the near dismantling of the once-powerful ruling family with the president’s brother resigning as prime minister, and other siblings and a nephew stepping down from their cabinet posts.

Protesters accuse the Rajapaksas of triggering the crisis through corruption and mismanagement.

Monday evening, the new Prime Minister, Ranil Wickremesinghe, drew up a grim assessment of the disastrous situation in the country. He said around $75 billion was urgently needed to help supply the nation with essential items, but the country’s treasury is struggling to come up with even a billion dollars.

“At the moment we only have stocks of gasoline for one day,” he said in a televised address.

“The next two months will be the hardest of our lives,” he said. “I have no desire to hide the truth and lie to the public. Although these facts are unpleasant and terrifying, this is the real situation. For a short time, our future will be even more difficult than the difficult times we have crossed.

Attacks on peaceful protests last week sparked violence across the country that left nine dead, including a lawmaker, and 200 injured. Many homes of lawmakers and their supporters were burned down.

The motion accuses Rajapaksa of being responsible for the economic crisis by introducing untimely tax cuts and banning the use of chemical fertilizers, which led to poor harvests. It also indicates that the President has mishandled the COVID-19 pandemic by using it for weaponization, promoting unscientific solutions and making unfavorable vaccine deals.

Sri Lanka has suspended repayment of about $7 billion in foreign loans due this year out of the $25 billion to be repaid by 2026. The country’s total external debt is $51 billion. The Ministry of Finance says the country currently has only $25 million in usable foreign exchange reserves.

The shortage of foreign currency limited imports, leading to long queues for milk, fuel, cooking gas and medicine.

Wickremesinghe said on Monday that the diesel shortage will be solved to some extent with shipments from India.

“For more than 40 days, three ships carrying crude oil and fuel oil have been anchored in the maritime area of ​​Sri Lanka. We are trying to get dollars from the open market to pay for these shipments,” he said. .

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Your Queries – Loans: Pay a Heavier EMI Instead of Waiting to Prepay a Lump Sum https://grantstation-trendtrack.com/your-queries-loans-pay-a-heavier-emi-instead-of-waiting-to-prepay-a-lump-sum/ Sun, 15 May 2022 19:15:00 +0000 https://grantstation-trendtrack.com/your-queries-loans-pay-a-heavier-emi-instead-of-waiting-to-prepay-a-lump-sum/

By Chaitali Dutta

Home loan interest rates are rising now. I have a new 10 year loan. Should I double the EMI amount or accumulate a lump sum to pay off part of the principal?
—Dhiraj Kumar

In case you have excess funds monthly, increasing the EMI is an appropriate route at this time when interest rates will continue to trend higher. Interest is calculated on a daily declining balance of your home loan, so early repayments save you more interest.

What is the process I need to follow to take out a gold loan for a year as I need money for an emergency?
—Ashok

The first option would be to find out from your current bankers where you have your salary account or have most of your money. The chances of getting a better deal and better service would be higher. If your banker does not grant gold loans, you can approach certain financial institutions which are the market leaders in gold loans. It is advisable to go to known and reputable organizations for your gold loan, as you want to get your original gold ornaments/coins intact once you have paid off the loan. The process is similar for banks/FIs. Ornaments are first checked for purity of gold, weighed and approximated. You will be sanctioned with a loan based on gold valuations. The paperwork is then completed before the loan is disbursed into your account.

I am an elderly person and my retirement funds are in the term deposit schemes of a nationalized bank and earn a very low rate of interest. If I invest Rs 5 lakh each in private banks, will my money be safe?
— hidden name

DFs (or any deposit) that offer a higher yield have inherent capital risk. The inherent risks are liquidity risk and default risk. Under the DICGC guarantee, the deposit amount (including interest) up to 5 lacs per person per bank is covered. If you opt for interest payments, you can opt for Rs 5 lakh deposit. If you opt for cumulative deposit, the amount at maturity should not exceed Rs 5 lakh to be covered by DICGC.

The author is the founder, AZUKE Personal Finance Advisory (www.azukefinance.com).
Send your questions to fepersonalfinance@expressindia.com

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A Look at Recent Changes in the Online Lending Industry – CONAN Daily https://grantstation-trendtrack.com/a-look-at-recent-changes-in-the-online-lending-industry-conan-daily/ Sat, 14 May 2022 01:30:12 +0000 https://grantstation-trendtrack.com/a-look-at-recent-changes-in-the-online-lending-industry-conan-daily/

Over the past few years, there have been big changes in the online payday loan industry. In particular, many lenders have moved towards more responsible and moral lending practices. This is a welcome change, as online payday loans can be a useful tool for those who need cash fast.

However, it is important to ensure that you are borrowing from a reputable lender who follows all regulations and offers fair terms. In this blog post, we’ll take a look at recent changes in the online payday loan industry and explain why they’re so important.

American dollar bills (©Alexander Mills)

The payday loan industry is a $40 billion a year business in the United States.

There are approximately 22,000 payday loan stores in operation in the United States. The industry has been accused of preying on financially vulnerable people and trapping them in a cycle of debt.

Over the past few years, there have been significant changes in the payday loan landscape. New players have entered the market, offering alternatives to traditional personal loans that are more flexible and easier to repay. These new lenders are using technology to create a better experience for borrowers and restore morality to the industry.

One of these new players is Trick Technologies, which offers three main products, namely home equity lines of credit (HELOC), installment loans and refinance loans. All of these products have lower interest rates than traditional payday loans and can be repaid over time rather than all at once.

Another new player in the industry is Ipass.Net, which offers unsecured personal loans with fixed interest rates and terms up to 36 months. Borrowers can use the money for any purpose, and there are no origination fees or prepayment penalties.

These new lenders are using technology to create a better experience for borrowers and restore morality to the industry. With more flexible repayment options and lower interest rates, these companies help borrowers avoid the debt trap that payday loans can create.

What is the current state of online payday loans?

The online payday loan industry has come under fire in recent years for its high interest rates and aggressive collection practices. In response to these criticisms, some lenders have started offering more reasonable terms and conditions. However, many of these same lenders still engage in questionable practices, such as using hidden fees and loan renewals.

Rolling over a loan means that the borrower takes out another loan to repay the first loan. This can be extremely detrimental to borrowers, as it can quickly lead to a cycle of debt. Hidden fees are also problematic, as they can add significant costs to the already high interest rates charged by payday lenders.

These practices have led to calls for stricter regulation of the online payday loan industry. Some argue that the industry should be banned altogether, while others believe that more reasonable conditions should be put in place.

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Payday loans are short-term, high-interest loans that are typically used to cover emergency expenses or unexpected bills.

Orville L. Bennett of Ipass.Net warned us that while payday loans can be helpful in some situations, they can also be very detrimental to borrowers who are unable to repay the loan on time.

Over the past few years, there have been a number of changes in the online lending industry that have made it more difficult for borrowers to access payday loans.

Ipass.Net says one of the biggest changes was the introduction of new regulations by the Consumer Financial Protection Bureau (CFPB), a federal agency created in 2010 in response to the financial crisis. One of its main purposes is to protect consumers from predatory lenders. Its payday loan regulations are designed to prevent borrowers from being trapped in a cycle of debt.

The regulations require lenders to assess a borrower’s ability to repay the loan before making the loan, and they place limits on the number of times a borrower can renew or renew a loan. These changes have made it harder for borrowers to access payday loans, but they have also made it harder for lenders to take advantage of these loans.

As a result, many payday lenders have stopped offering loans altogether. While this is good news for borrowers, it has created a new problem: borrowers who need quick access to cash now have fewer options available to them.

One option that is always available to borrowers is called an installment loan. Installment loans are similar to payday loans, but they are repaid over a longer period and usually have lower interest rates.

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The CFPB is working to reform the payday loan industry by introducing new rules that will prevent consumers from being trapped in a cycle of debt.

The regulations, which came into force in July 2019, require lenders to verify a borrower’s ability to repay the loan before extending credit.

The CFPB actions are a response to growing complaints about payday loans, which typically have high interest rates and fees. According to the Pew Charitable Trusts, 12 million Americans take out payday loans every year, and they often end up paying more in fees than they originally borrowed.

The new rules are designed to help borrowers avoid getting trapped in a debt cycle by ensuring they can only borrow what they can afford to repay. This is good news for consumers, as it will help protect them from the predatory practices of some payday lenders.

The changes that the CFPB is putting in place are a step in the right direction when it comes to restoring the morality of personal loans. These regulations will help prevent consumers from being exploited by predatory lenders and being trapped in a cycle of debt.

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Business owners have waited years for Covid loans – and now it’s too late https://grantstation-trendtrack.com/business-owners-have-waited-years-for-covid-loans-and-now-its-too-late/ Thu, 12 May 2022 11:07:44 +0000 https://grantstation-trendtrack.com/business-owners-have-waited-years-for-covid-loans-and-now-its-too-late/
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Jaja Chen and her husband Devin Li were thrilled when they signed a lease for their new bubble tea shop, Cha Community. Both Asian American immigrants (she from Taiwan, he from China), they said it was hard to find authentic Asian food in their new home in Waco, Texas. So they finally decided to host a pop-up at a farmer’s market. Later, they moved on to a food truck. Finally, they opened a real showcase where they could serve customers tea and dumplings.

Chen signed the lease and flew the next day to visit his family in Taiwan. There, she started hearing “Covid ideas”. A few months later, as the couple back in Waco prepared for their grand opening, pandemic shutdowns hit. The Cha community remained closed for another two months. In total, they lost around $20,000 upfront.

At the time, Chen decided to apply for emergency assistance through a host of new programs offered by the US Small Business Administration. The couple applied for both a 3.75% fixed interest loan under the Economic Disaster Loan Program as well as an advance grant of $10,000, getting their application a day before it opened to the public on March 20, 2020.

After two weeks, they registered with the SBA and were notified that the advance grant was coming, Chen said. Chen said they were also approved for a $20,000 loan, but turned it down because the grant was supposed to be on the way. But more than two years later, the grant has still not arrived. “As of today, we have no idea what happened,” Chen said.

She is one of hundreds of small business owners who say they have been waiting almost two years for help from the SBA. In a new survey released Thursday by the Small Business Majority, a national network of small businesses and community organizations, about a third of the 201 small business owners surveyed who applied for an EID loan said they had never received no response, no money, from the SBA.

And now, the SBA says funding for the program is likely to run out in the coming days.

As part of the federal government‘s initial response to Covid-19 and the sudden shutdown of the US economy during the first lockdown, the SBA was tasked with rolling out relief for businesses of all sizes. The EIDL program actually predates the pandemic, albeit on a much smaller scale (it disbursed $3.6 billion in disaster loans in 2018, compared to more than $369 billion in recent years). years).

The agency quickly ran into trouble, said Brian Pifer, vice president of programs and research at Small Business Majority. The pandemic has necessitated “a huge scale-up of the agency nationwide,” he said. The agency had “a capacity and staffing problem”, so small businesses “sort of fell through the cracks”.

In a statement, the SBA did not respond to complaints from small business owners who say they have never received a decision on loan or grant applications. The agency said it had increased processing capacity for pandemic-related EIDL loans and accelerated the pace at which decisions on applications were made. The agency also said a backlog of more than 600,000 requests for loan increases had been cleared.

During the pandemic, the SBA also raised the cap on EID loans, allowing businesses to apply for an increase of up to $500,000. But among respondents to the Small Business Majority survey, nearly a third of those who asked for a raise said they hadn’t heard anything yet. And of that group, almost a third said they waited more than a year.

“Although congressional appropriations for the Covid EIDL program will soon be exhausted, the SBA will continue to help our small business owners through this difficult transition using our existing resources,” the agency said. The agency said potential borrowers in the process of completing applications have until May 16 to complete any documentation or signature requirements on the portal, while existing borrowers have until then to upload their files.

“There are definitely livelihoods at stake.”

What the end of the program means for applicants who say they have been waiting for months and years remains unclear. But Pifer argues “there are definitely livelihoods at stake”.

Chen eventually got a $7,500 loan under the Paycheck Protection Program, but it wasn’t enough to avert a financial crisis. She and her husband were forced to open a line of credit with a local bank and ran out of personal credit cards. They also had to lay off a full-time employee, which slowed their business growth and strained the remaining workers.

“None of this would have happened” if we had received the grant, Chen said. “If we had all the different federal aid we might have been eligible for and got it in a timely manner, we wouldn’t be in debt right now.”

Some candidates who had waited months or years finally got a decision.

Tabota Seyon owns InfusedLife, a vegan cafe and shop in Minneapolis that included spaces for women of color to sell their wares. It opened in January 2020. In the summer when it reopened after lockdown, Seyon struggled to attract customers. The city has been rocked by protests over the killing of George Floyd by Minneapolis police. Thereafter, she continued to face obstacles thanks to the pandemic: each time she or a member of her family contracted Covid-19, she was forced to close again.

At the end of 2020, Seyon said she lost thousands of dollars and even became homeless for a while. She applied for an EID loan at the end of the year, but didn’t get a decision until March 2022 – and it was a denial due to her credit rating. In the meantime, she had missed a rental payment and the landlord decided to evict her.

Other business owners have been rejected more quickly, but claim they were wrongly rejected and never heard of their appeals. KB Brown, owner of a Minneapolis printing company, Wolfpack Promotionals, said he received an EID loan of $49,000 in 2020, but it wasn’t enough. Even with the money, his business plummeted by more than 90% and he was forced to lay off all of his employees. Brown’s PPP loan application was also rejected, so he requested an increase in the EID loan after the SBA raised the cap. He was hoping to receive at least $100,000, he said, so he could stay afloat.

In response, the SBA said parts of its request caused it to “question the validity of certain information,” according to a copy of the letter. Brown said he sent additional proof of his company, including a reputable letter from the state, but rejected the raise.

“We needed help,” said Brown, who appealed the decision in early February and said he had yet to hear back. Now Brown said there were only two employees left and one of her two embroidery machines had broken down. He recently went to a bank to ask for a loan of equipment so he could buy a new one – the extra money from EIDL would have covered that and allowed him to hire another employee, he said. he declares.

In total, the lack of additional funding has cost him about $70,000 in potential business, in part because his remaining employees are overstretched, Brown said. He started a commercial cleaning business on the side to earn extra money.

There is no clear plan to add more funds to the EIDL program, but members of Congress have urged the SBA to move existing funds to partially continue it. Senators Chris Van Hollen and Ben Cardin, both Democrats from Maryland, said they wrote to SBA Chief Isabella Casillas Guzman asking her to release money for pending applications and appeals.

“Senators urged the SBA to use its transfer power to accommodate borrowers who wish to undergo a modification, rehearing or appeal,” according to a May 6 statement. “By closing the program prematurely, the agency appears to have prioritized its own administrative needs over those of the thousands of borrowers awaiting decisions on their applications.”

Pifer, of Majority Small Business, said he would “like to see those dollars stay in those programs to make sure those people who have been left behind, who are still waiting, that those dollars get to them.”

For now, business owners like Seyon, Brown, and Chen have been left to fend for themselves one way or another. Chen said loyal customers and local support organizations are the only thing keeping the Cha community alive. “I realized that the city of Waco, the residents and the nonprofits here, have helped us more than the federal government, which is pretty unfortunate.”

More stories like this are available at bloomberg.com

]]> Gold loan from banks, Nbfcs can help you overcome short term financial crisis https://grantstation-trendtrack.com/gold-loan-from-banks-nbfcs-can-help-you-overcome-short-term-financial-crisis/ Tue, 10 May 2022 02:32:46 +0000 https://grantstation-trendtrack.com/gold-loan-from-banks-nbfcs-can-help-you-overcome-short-term-financial-crisis/

Most precious metals and jewelry are traditionally considered as good as cash, if not better. And among all of them, gold is considered to be the most sought-after and persistent de facto currency. Come rain or shine, the importance of gold does not fade.

And in case you get too attached to your gold jewelry, you can mortgage it for a loan offered at a modest interest rate – rather than sell it.

Interest rates charged on gold loans by NBFCs such as Muthoot Finance are different from those charged by commercial banks. Muthoot Finance, for example, charges a rate that starts from 12% per annum, while Manappuram Finance charges 9.9% and IIFL’s interest rate starts from 9.24%.

Why Gold Loan?

Pursuing a gold loan has some advantages over a personal loan. The first and most important is that the loan is available for a lower interest rate compared to other unsecured loans such as personal loans. Another reason is that it can be used by anyone and everyone.

“What sets gold loans apart is the fact that you don’t need a credit score to apply for these loans. Even a student can take out a loan if they don’t have proof. income, such as a payslip,” says Delhi-based chartered accountant and financial adviser Deepak Aggarwal.

Banks charge lower rates

Banks usually charge a slightly lower interest rate on gold loans. For example, HDFC Bank charges 9.9%, ICICI Bank charges an interest rate of 11% per annum and Canara Bank charges 7.65% while SBI charges 7.5% per annum.

Another difference that can be noticed between the two categories of institutions is the loan amount and processing fees that one has to pay.

Example: Muthoot Finance offers loans for an amount as low as 1,500 while the processing fee is between 0.25% and 1% of the loan amount. Similarly, Manappuram Finance offers loans from 1,000 and charges a negligible processing fee.

However, banks tend to charge higher processing fees and the loan amount is also higher at the same time.

For example, HDFC Bank offers a gold loan for an amount greater than 25,000 and levies a 1.5% processing fee, Axis Bank’s minimum lending threshold is 25,000, or 10,000 for ICICI Bank.

It should be noted that the banks’ gold loan portfolio increased by more than 89% year-on-year to reach 60,700 crores in FY21 and 70,900 crore in the first nine months of FY22, according to the India Ratings and Research report.

Additionally, the rating agency said NBFC gold loan auctions rose in April-December FY22 – the highest since FY14 when gold saw a higher price volatility.

However, it is essential to mention that a borrower can lose the jewelry if he does not repay the loan. And the value of the jewelry is usually much higher than the loan taken out. You can only get 75% of the value of the jewelry. Add to that the manufacturing costs.

So what you end up receiving would be far less than what you spend on your gold jewelry.

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Sri Lanka in talks for $100m emergency funding from Beijing-backed bank https://grantstation-trendtrack.com/sri-lanka-in-talks-for-100m-emergency-funding-from-beijing-backed-bank/ Sun, 08 May 2022 09:42:00 +0000 https://grantstation-trendtrack.com/sri-lanka-in-talks-for-100m-emergency-funding-from-beijing-backed-bank/

A man counts Sri Lankan rupees at a currency exchange counter in Colombo September 4, 2015. REUTERS/Dinuka Liyanawatte

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COLOMBO, May 8 (Reuters) – The China-backed Asian Infrastructure Investment Bank is considering providing $100 million in emergency aid to Sri Lanka, the country’s finance ministry said on Sunday. .

Sri Lanka has asked the lender for foreign exchange liquidity support for state banks, it said in a statement.

Hit hard by the pandemic, rising oil prices and populist tax cuts by President Gotabaya Rajapaksa’s government, the South Asian island’s economy is in crisis, with dwindling usable foreign exchange reserves $50 million, Finance Minister Ali Sabry said last week.

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Shortages of imported food, fuel and medicine have taken thousands to the streets in more than a month of mostly peaceful protests. Rajapaksa on Friday declared a second state emergency in five weeks.

The multilateral AIIB, founded in 2014 to promote infrastructure investment across Asia, gets most of its funding from China.

China is Sri Lanka’s largest bilateral lender, with an outstanding balance of $6.5 billion, mostly lent over the past decade for major infrastructure projects, including highways, a port, an airport and a coal-fired power plant.

Beijing provided Sri Lanka with a $1.3 billion syndicated loan and a $1.5 billion yuan-denominated swap to boost its reserves. The two countries are in talks for a $1.5 billion line of credit and a new syndicated loan of up to $1 billion.

Colombo said this month that talks had started on Chinese debt refinancing after Sri Lanka suspended some foreign debt repayments in April.

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Reporting by Uditha Jayasinghe; Written by Alasdair Pal; Editing by Christian Schmollinger and William Mallard

Our standards: The Thomson Reuters Trust Principles.

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UK credit card borrowing to skyrocket as cost of living crisis hits https://grantstation-trendtrack.com/uk-credit-card-borrowing-to-skyrocket-as-cost-of-living-crisis-hits/ Wed, 04 May 2022 06:45:00 +0000 https://grantstation-trendtrack.com/uk-credit-card-borrowing-to-skyrocket-as-cost-of-living-crisis-hits/

Credit card borrowing in the UK is set to jump nearly 8% to a five-year high in 2022, proving that a spike in the cost of living is straining household finances.

Consumer credit demand could rise another 5.5% in 2023 on top of the expected 7.9% rise this year, according to consultancy EY.

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The increase would mark a trend reversal during the pandemic when many people stayed home and didn’t spend money, leading to a 12% decline in consumer credit over the past two years, said EY.

Credit card borrowing rose by 1.5 billion pounds ($1.9 billion) in February alone, the biggest increase since the Bank of England began keeping records in 1993.

Inflationary pressures brought on by the war in Ukraine will cause consumers to turn even more to credit cards to finance their expenses and cover their bills, according to the EY ITEM Club UK Bank Lending Forecast.

Soaring prices for essential goods could dampen the growth of some unsecured loans, as some households may be forced to cut back on spending on non-essentials and big-ticket items.

Other forms of borrowing could also disappear due to cost of living pressures. Mortgage lending is expected to fall to 3.8% this year from 4.3% in 2021, while business lending will feel the ripple effects of supply chain disruption, EY said.

“Current economic pressures, exacerbated by geopolitics, are likely to dampen appetite for most forms of bank lending, except credit card borrowing, as people rely more on credit to fund spending. essentials,” said Anna Anthony, Head of Financial Services UK. partner at EY.

“If there are silver linings to be found both for consumers and for the companies that finance the lending activity, it is that interest rates currently remain historically low.”

Read more:

British army believes Russia will try to capture two more cities in Ukraine

Obesity rates reach ‘epidemic’ level in Europe: WHO report

UK government ‘failing to tackle corruption’: anti-corruption groups

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Down 85% from peak, 4 reasons to bet Carvana stock will fall https://grantstation-trendtrack.com/down-85-from-peak-4-reasons-to-bet-carvana-stock-will-fall/ Mon, 02 May 2022 14:27:29 +0000 https://grantstation-trendtrack.com/down-85-from-peak-4-reasons-to-bet-carvana-stock-will-fall/

Shares of Tempe, Arizona-based online used car retailer Carvana are heavily shorted. In mid-April, 20% of its shares were sold short, meaning traders borrowed shares from a broker, sold them on the open market and hoped to profit by buying back the shares at a lower price. to repay the loan.

But that short-term interest is down from the last time I reported on it here – November 2019 – when a whopping 51% of stocks were sold short. As I wrote at the time, I thought these shorts were in trouble for a simple reason – despite burning cash and a terrible credit score on its debt, Carvana had one thing investors loved – growth three digits.

After that, Carvana shares soared 365% to peak in August 2021 at around $377 per share.

Unfortunately for the bulls, Carvana’s stock quickly tumbled and it is now trading 85% below its peak.

Is it too late to take advantage of Carvana’s decline? Here are four reasons I think his stocks are sub-short:

  • Decrease of sales
  • Bespoke accounting for securitized auto loans
  • Negative cash flow
  • Lower debt rating

Decrease of sales

Although its revenue increased from the previous year, Carvana sold fewer used vehicles in the first quarter of 2022 than in the last quarter of 2021. Carvana reported a 7% drop in the number of cars sold to individuals in the first trimester. – 105,185 – about 7,800 less than in the previous quarter, according to the Wall Street Journal.

To be fair, compared to the first quarter of 2021, revenue was up nearly 56% to $3.5 billion.

This represents a considerable slowdown for Carvana. As the Journal noted, since the spring of 2020, Carvana has “roughly doubled its quarterly sales volume as more consumers shopped online.” However, the Journal wrote that Carvana has “struggled backlogs in its logistics network and reconditioning centers” due to labor shortages resulting from the pandemic.

Unfortunately, its first-quarter slowdown was accompanied by a 622% increase in its net loss to $260 million and a nearly 23% drop in its gross profit per unit to $2,833. External factors — including rising interest rates, falling used-car prices, inflation-conscious consumers and a dwindling appetite for debt — are contributing to slowing growth, the Journal noted.

With shares down 85% from their peak, Carvana’s biggest challenge is convincing investors that it can meet its growth targets – which had driven its death-defying stock price.

Analysts doubt Carvana can meet its 2022 retail sales target – announced in February – of more than 550,000 cars – about 29% more than the 425,237 units sold in 2021, according to its letter to shareholders for the fourth quarter of 2021 .

It is not known if the company will achieve this goal. Carvana said, “Over the next few quarters, we expect to better align sales with expense levels through a combination of higher sales and expense efficiencies.”

It also doesn’t help investors that Carvana has stopped providing financial advice due to “rising interest rates, rising fuel prices and macroeconomic uncertainty, all of which are affecting the market for used cars,” according to the Journal.

Perhaps to seek new avenues for growth, Carvana is in the process of acquiring ADESA – America’s second-largest physical vehicle auction network – for $2.2 billion. Carvana expects the deal — funded by $3.275 billion in committed debt financing and “$1 billion in improvements at all 56 sites” — to add about two million new production units, according to the letter. to shareholders in the fourth quarter of 2021.

Something important for Carvana changed between February and April. On April 20, Carvana said it planned to sell $2 billion of common and preferred stock, in part to fund the ADESA deal – which “came as a surprise to investors because Carvana said it had received a funding committed,” the Journal noted.

Bespoke Accounting for Securitized Auto Loans

Securitization, that is, bundling loans and selling them as securities to investors, can work very well in good times. But when the tide goes out, securitization can cause problems.

A case in point is the 2008 financial crisis. Back then, lenders created subprime mortgages, bundled them together and sold them to investors – with sterling credit ratings that masked the risk. Investors – including Bear Stearns and Lehman Brothers – borrowed heavily to buy the subprime mortgage-backed securities – then crashed.

I’m not saying Carvana is going to cause a financial crisis on the order of 2008. However, Carvana is no stranger to securitization – wrapping up the car loans it makes to consumers who buy its used cars online. Dubbed other sales and revenue, Carvana generated about $1 billion from the sale of auto loans in 2021 – nearly 8% of total revenue, according to its 10K 2021

In my opinion, if a company chooses a different method of accounting than its peers, that alerts investors. This is exactly what Carvana does when it comes to accounting for car loan sales. As the Journal reported, “Carvana is making immediate gains, unlike competitors who are making gains over time.”

It would be useful for investors to know how much Carvana’s income would be reduced if he recorded his gains over time. How? The Journal suggests that Carvana’s accounting method “boosted its revenue when consumer credit — and investor demand for auto loan-backed securities — was particularly strong.”

Carvana’s accounting approach contributed significantly to its earnings and caught the attention of its auditor. In 2021, 54% of its $4,537 gross profit per vehicle came from “other profits,” compared to 36% in the second quarter.

Carvana’s method of accounting – which relies on “relatively delicate accounting to remove loans from its books” is an audit problem. According to an August 2021 report in CFO Dive, the company’s auditor, Grant Thornton, “identified initial sales as a critical audit matter, a reference to the complexity of the transaction.”

To be fair, Carvana’s accounting method is not a potential misapplication of the rules; however, it requires “a lot of moving parts to make it work”. And Carvana must buy a small portion of each bond in which the loans are sold to comply with a federal 5% “skin-in-the-game” requirement that was enacted after the 2008 financial crisis to ensure that companies do not pledge bad debts. to investors”, according to the Chief Financial Officer

CFO
Dive.

CFO Dive noted that this approach works in good times and backfires when times get tough. This is because when money is flowing, investors are willing to buy the auto loans at a premium and when the market pulls back, Carvana “could be forced to sell the loans at par or at a discount, leading to a sharp drop in revenue. “.

It seems to be happening now. As the Journal notes, “Investors are demanding higher yields for securities backed by riskier consumer loans. They are beginning to fear that rising rates and inflation will affect borrowers’ ability to make payments.

In March, Carvana issued two securitizations — one backed by prime auto loans, the other backed by subprime loans — with a combined value of about $1.49 billion. Financial data provider Finsight noted that investor demand for higher yields reduced Carvana’s profit on trades compared to the fourth quarter of 2021.

Falling profits are a broader challenge for Carvana’s management. JPMorgan Chase

JPM
analyst Rajat Gupta “estimated in March that the company’s gain-on-sale margin from loan securitizations – a measure that compares proceeds received to the total value of loans sold – declined to 4.4% in the first quarter, compared to 9.1% in the previous quarter,” the Journal noted.

Negative cash flow

FLOW2

As measured by free cash flow (FCF), Carvana is a cash incinerator. How? between 2017 and 2021, Carvana’s negative FCF grew at an average annual rate of nearly 87%, from -$278 million to -$3,374 million.

This rate of cash burn contributed to a 23% drop in Carvana shares last week. Automotive News attributed the stock decline to “increasing cash burn, resulting from soaring used vehicle prices, capital spending” as well as a drop in the value of its junk bond offering. of $3.3 billion” even after Apollo Global Management

APO
bought about half the debt.

Debt rating downgrade

Rating agencies are not fans of Carvana. On April 25, Moody’s downgraded Carvana’s corporate family rating to Caa1. Moody’s has a litany of reasons for the downgrade. These include “very weak credit metrics, a persistent lack of profitability and negative free cash flow generation.

Additionally, Moody’s cites “governance considerations” – such as Carvana’s decision to update its “external floor plan facilities” despite the expectation of significant negative free cash flow, as well as its decision to finance the acquisition of ADESA partly through debt despite its very high leverage. .”

Moody’s could downgrade its ratings “if the business is unable to generate positive operating income on a sustainable basis or if liquidity were to weaken for any reason.”

One of the possible reasons for this weakening is the outlook for the automotive e-commerce industry. Namely, William Blair analyst Sharon Zackfia expects rivals such as “Vroom, Shift and CarLotz to be largely disappointed with the number of units sold in the first quarter,” according to Automotive News.

Carvana does not give up. As CEO Ernie Garcia told investors on April 20, “While this quarter may be a little harder to see than most, we remain on the path of building the biggest and most profitable automotive retailers and changing the way people buy and sell cars. . The march continues.”

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Sri Lanka’s economic crisis, explained https://grantstation-trendtrack.com/sri-lankas-economic-crisis-explained/ Sat, 30 Apr 2022 21:04:49 +0000 https://grantstation-trendtrack.com/sri-lankas-economic-crisis-explained/

After a month of intense civil protests over Sri Lanka’s deteriorating economy, President Gotabaya Rajapaksa agreed to appoint a new council on Friday to lead the formation of an interim government. The resolution would create an all-party coalition in parliament and remove the grip of the Rajapaksa family dynasty that currently rules the country. At stake is the country’s economic future which is in shambles after defaulting on its mountain of foreign loans – estimated at $50 billion – for the first time since the country gained independence from the British in 1948.

Signs of Sri Lanka’s impending economic crisis have become increasingly apparent over the past two years of the Covid-19 pandemic as food prices soared and power outages increased in frequency. . Sri Lanka currently has around $7 billion in total debt due this year.

Many attribute Sri Lanka’s economic crisis to the mismanagement of its finances by successive governments due to rising foreign debt and continued investment in infrastructure. The Rajapaksa administration also implemented sweeping tax cuts in 2019, reducing the rate of Value Added Tax (VAT) – the tax applied to imports and domestic supplies – from 15% to 8%, which contributed to a decline in the country’s income.

The president’s older brother, Mahinda Rajapaksa, is set to be removed as prime minister in a deal brokered by former president Maithripala Sirisena, who defected along with dozens of other members of the ruling party in outgoing president in April to protest against the poverty of the Rajapaksas. governing.

But the country’s power struggle may have sown discord between the two brothers, which could exacerbate his political stalemate. On Friday, The Associated Press reported that a spokesman for the prime minister did not immediately confirm the dismissal of the former Rajapaksa, saying such moves would be announced by the prime minister in due course.

The country continued to accumulate foreign debt without sufficient revenues

A big part of Sri Lanka’s economic woes is its burgeoning foreign debt, not least to fund its aggressive shift towards infrastructure development under former President Mahinda Rajapaksa, Rajapaksa’s older brother and two-time prime minister. With its finances already bleeding, Sri Lanka took out large investment loans from Chinese state-owned banks to finance its infrastructure projects, including a controversial port development in Hambantota district.

The Sri Lankan government has justified the Hambantota project as a way to develop its economy as a bustling commercial hub comparable to Singapore. However, the project was riddled with corruption and stalled, and Sri Lanka eventually ceded control of the port to China as collateral after it was unable to repay its loans.

Over the past decade, Sri Lanka has racked up $5 billion in debt to China alone, accounting for a large chunk of its overall external debt, according to the BBC. Sri Lanka’s ballooning debt to China and the failure of the Hambantota project are often held up as an example of the “debt book diplomacy” that China has pursued over the past two decades.

Some believe China has expanded this approach to monetary diplomacy through its ambitious Belt and Road Initiative (BRI), a global infrastructure project involving Chinese investment in infrastructure development in parts of Asia. , Africa and Europe, which is then repaid, as part of China’s attempt to increase its global influence as a growing economic power. About 139 of the world’s 146 countries, including Sri Lanka, have joined China’s BRI project. While an infrastructure project on such a global scale can bring certain economic benefits to participating countries, the BRI has inevitably become a strategic means for China to gain political influence with economically vulnerable countries in the Asia-Pacific region. At least 16 countries involved in the BRI project have been saddled with billions of dollars in debt that China then raised, according to an independent analysis by Harvard’s Kennedy School for the US State Department.

According to CNBC, around 22% of Sri Lanka’s debt is owed to bilateral creditors – institutional investors from foreign governments. Neighboring India has sought to expand its bilateral cooperation with Sri Lanka in part to try to secure its influence in South Asia over China. India recently provided Sri Lanka with a $1.5 billion line of credit to weather the country’s energy crisis, on top of another $2.4 billion through a currency swap and loan deferral since January. .

As the country piled up foreign debt, its tourism sector – previously a $44 billion industry and a main source of income for the island – suffered successive blows. In 2019, tourism suffered after a series of church bombings that killed nearly 300 people, including some foreign nationals.

The following year, the Covid-19 pandemic brought tourism and other major sectors to a halt, causing a global economic slowdown. Although Sri Lanka saw some increase in foreign visitors last year, the ongoing pandemic combined with Russia’s invasion of Ukraine – the two main tourism source nations for Sri Lanka before the conflict – have continued to slow the industry’s recovery.

A worsening crisis has sparked mass protests

The country’s problems worsened in March when the Sri Lankan government announced a daily 1 p.m. blackout as a way to save energy amid the current crisis. Without sufficient power, many were unable to do their jobs as the economic crisis continued, causing mass unrest. Thousands of Sri Lankans took to the streets in the weeks following the power cut to protest the country’s growing crisis.

On April 1, President Rajapaksa declared a state of emergency as unrest grew saw protesters clash with police. The entire Sri Lankan government cabinet resigned in protest soon after the emergency law was implemented, forcing Rajapaksa to revoke the law. Among those who resigned was Sports Minister Namal Rajapaksa, another member of the Rajapaksa family and the president’s nephew.

With political unrest growing and no resolution in sight, Rajapaksa’s rivals have issued calls for a vote of no confidence in his administration.

“We are confident that we have the numbers and we will bring the motion forward when the time is right,” opposition MP Harsha de Silva told CNBC. Hoping to appease critics, President Rajapaksa sought to form a new coalition of unity under his leadership but failed to garner support. In April, the government also announced it would temporarily suspend foreign debt payments, marking the first time Sri Lanka had defaulted on foreign loans since independence.

Experts had been warning for some time of a potential dire situation surrounding the country’s finances. When the country defaulted, the government had negotiated a bailout with the International Monetary Fund, which had assessed its accumulated debt as unsustainable.

“The government intends to continue discussions with the IMF as soon as possible with a view to formulating and presenting to the country’s creditors a comprehensive plan to bring Sri Lanka’s external public debt to a fully sustainable position,” the statement said. the Ministry of Finance in a press release. .

In a meeting with Cabinet officials a week later, President Rajapaksa acknowledged his government’s role in the country’s declining economy. Specifically, the President said the government should have contacted the IMF earlier for help in tackling its out-of-control external debt and should have avoided the import ban on chemical fertilizers that was intended to preserving Sri Lanka’s foreign exchange assets but which has instead harmed its agricultural production.

“Over the past two and a half years, we have had vast challenges. The Covid-19 pandemic, as well as the debt burden and some mistakes on our part,” Rajapaksa said.

Today, Sri Lanka’s future hinges on whether the president’s proposed changes in government will quell his growing opposition long enough for a solution to come from the IMF. Sri Lankan finance chief Nandalal Weerasinghe, however, said such a hoped-for deal could still take months.

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Fullerton India offers personal loan to meet emergency medical expenses https://grantstation-trendtrack.com/fullerton-india-offers-personal-loan-to-meet-emergency-medical-expenses/ Fri, 29 Apr 2022 04:30:00 +0000 https://grantstation-trendtrack.com/fullerton-india-offers-personal-loan-to-meet-emergency-medical-expenses/


Bombay, Maharashtra, India:
Fullerton India Credit Company is a leading non-banking financial institution that offers a convenient way to get a loan. Customers can have a smooth and hassle-free experience with Fullerton India. Salaried applicants can apply for an emergency medical loan on the fully digital Fullerton India InstaLoan app for planned and unplanned medical expenses. Enjoy instant approvals, faster loan processing and more.



Meet unforeseen medical expenses easily with Fullerton India


Medical emergencies are rarely accompanied by a clear indication. These situations must be dealt with quickly, without causing delay. However, an emergency can impose heavy financial burdens on people. A Fullerton India personal loan helps eligible applicants acquire funds easily through simple loan eligibility and accessible online application services.



Why trust Fullerton India in medical emergencies?


Below is a list of key features offered by Fullerton India to help customers during all kinds of medical emergencies:

 

  • Get a higher sanctioned amount:



When people run out of funds, they compromise on treatments. However, with Fullerton India, personal loan customers can avoid a cash crunch and risky delays in processing. Depending on their eligibility, applicants can get a loan of up to INR 25 lakhs*. Moreover, they can use it to pay for all medical expenses without any restrictions on end use.

 

  • Smooth application and approval process:



The Fullerton InstaLoan app allows salaried applicants to apply for a loan from anywhere, anytime. Depending on their eligibility, they may also receive an approval in principle or a decision instantly within minutes of submitting the online application form. Thus, the hassle of visiting a branch and waiting in long queues can be easily avoided. One can also check the maximum loan amount they can get using the Personal Loan Eligibility Calculator. After successful verification checks and evaluation of documents, the loan is approved, after which the required funds will be credited to the respective bank account.

 

  • Flexible repayment plans:



Fullerton India offers easy repayment plans with an option to schedule their monthly EMIs and tenure based on the monthly income of the borrower. Clients have the opportunity to be financially stable in the midst of a medical crisis. They can choose a repayment term between 12 and 60 months so that the resulting EMI fits into their budget.

 

  • Competitive interest rates:



Personal loan interest rates are cost effective. Competitive rates are in line with market standards. Eligible borrowers with excellent repayment capacity and good credit ratings can negotiate better deals. As a result, customers can take out a loan and weather the crisis without too much stress.

 

  • Get an unsecured loan:



With an emergency loan from Fullerton India, sudden and unforeseen expenses can be tackled without the need to pledge existing assets or investments as collateral.

When clients are looking for a personal loan for an emergency, they can trust Fullerton India personal loan. Its prominent features such as online application, instant approvals, online disbursement, competitive interest rates and flexible terms make it a reliable and convenient option for borrowers. Salaried borrowers can also apply with the Fullerton India Instaloan app, which is available on Android and iOS.

About Fullerton India

Fullerton India Credit Co. Ltd. is an NBFC (non-bank financial company) registered with the Reserve Bank of India and is owned by SMFG and FFH. As an NBFC, Fullerton India offers different types of loans to customers for their distinct needs with low interest rates and easy EMIs. Fullerton India offers quick personal loans, business loans, SME loans and home loans. In addition, it offers various retail financial services to clients ranging from rural households to SMEs in the areas it serves. Headquartered in Mumbai, the company employs over 14,000 people in 648 branches, serving nearly 3.6 million customers in 600 cities and over 58,000 villages in India.



For more information,

Contact: 1800 103 6001
Opening hours: 9:00 a.m. to 7:00 p.m. (every day except Sunday, the 4th Saturday of the month and public holidays)

Website: www.fullertonindia.com
You can also visit: https://associations.fullertonindia.com/contact-us.aspx


*Terms and conditions of application.


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