Self-Liquidating Loans
- Fact or Fiction?
by Dave Laforge
FICTION! There is no such thing as a self-liquidating "LOAN."
If you walk into a bank and ask for a self liquidating loan, they’ll
look at you as though you were nuts!
You may see ads promising -
- Self-Liquidating "LOANS!" - Investment Capital Overnight!
- Your "LOAN" has been Approved! - BORROW Money And Never Pay
Back! - etc.
A self-liquidating "LOAN" is fiction. You will never get a
loan that you will never have to pay back from anybody. You need to be
very careful when you are presented with the opportunity to get "money
for nothing!"
A true self liquidating "LOAN," standing on it's own is a pipe
dream - it's perpetual motion. A loan that pays itself off is of NO benefit
to the lender - so, Why Would They Do It? The answer is simple - they
WON'T!
Con men typically ask for up-front fees to get people a Self-Liquidating
Loan. “Your “Loan” Has Been Approved” is their
typical ploy. Since there is NO such thing as a Self-Liquidating “Loan”
this should be a tip off that all they want is your money and you will
never see such a “LOAN”! Remember the money MUST comes first
and if they can’t prove to you how the money will come first to
create such a transaction you will lose any money you pay to these con
men.
Also beware of the con men that do not charge front fees but want to
see if you qualify for such a “LOAN” then notifies you later
that you have been approved for a “Loan” and want you to pay
points, closing costs, advance interest fees, etc.
But there is a way to use this CONCEPT!
In a Self-Liquidating Loan CONCEPT there are no such expenses! The money
comes first then the transaction is created using a Roll Account (Compensating
Balance)!
A Self-Liquidating loan actually does NOT exist. I know you see several
ads in many publications advertising such a loan. There has been a mystique
about these loans. Many people believe that to get a so-called Self Liquidating
Loan one only needs to apply and like magic there it is! A multi-million
dollar loan with money pouring out of the envelope! Not so - but the Self-Liquidating
Loan concept is done every day and you can learn how!
There is ONE way for a TYPE of self-liquidating loan to exist. Remember,
I said *type* of self-liquidating loan.
A better term for a "self liquidating loan" would be a Roll
Over Loan, Roll Program or a Compensating Balance Loan.
What is a Roll Over Loan?
Simply put - a roll over loan is a security-based loan that starts out
with a security such as a CD, zero coupon bonds, government savings bonds,
debentures, bank notes, etc. as collateral for the loan and as final payment
for the loan.
These can be purchased at a fraction of their end value and can be used
as collateral for a loan.
Example 1a:
An example would be Government Zero Coupon Bonds. These bonds can be
bought at a discount of normally 33% of the face value. A $1,000 face
value bond could be bought for around $330. The government guarantees
you a return of $1,000 or a $770 profit. Offering this secured financial
instrument to a financial institution as a compensating balance for your
loan creates a form of a self-liquidating loan. Borrow $1,000 and receive
$770.
Example 1b:
Another example would be life insurance or annuity. If you have an annuity
that pays a fixed or variable amount it would be possible to instruct
this financial instrument to be used as a compensating balance for the
loan you want to take out. In fact many times the insurance company could
be in a position to arrange this form of a self-liquidating loan via an
annuity.
Example 2:
You will need to find an investment group that functions in an offshore
environment. (An offshore environment provides you with higher interest
rates and higher returns on your money along with lower lending rates.)
Use this group to leverage your money, thus creating a compensating balance.
This creates in affect a "self liquidating" situation. In this
example you not only receive a "loan" but you will receive a
residual income besides!
Final Note.
Remember, if there is no security placed up front, NO lender will even
consider providing loan under these conditions. However, there are places
where you can find information on how to create a roll program! You just
have to find one that can trust.
If you are interested in finding out more on how you can create your
own roll program, a good place to get the information you will need is
at:
http://www.valtechservices.com
Here you will find an informative eBook on "Self Liquidating Loans."
The eBook provides the formulas that WORK, how to spot the con-men and
also provides access to investors who will help set up the larger roll
programs I mentioned in example 2!
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