Hercules Capital, Inc. (HTGC – Free Report) has estimated the approximate effect of the recent rate hike on its debt investment portfolio. The company expects a 25 basis point increase in the Prime Rate to contribute 2 cents per share to the annual Net Investment Income (NII) based on its shares outstanding as of Dec 31, 2016.
In what is likely to be the start of a growing trend at banks, the Co-operative Bank has re-priced its personal loans on a risk-based basis.
Banks have had fixed carded rates for this type of lending for a long time with the only distinction being whether the loan was unsecured, or secured on other customer property.
But the emergence of positive credit scores in New Zealand, and the coming of peer-to-peer personal lending which started with risk-based pricing, banks are finding they need to respond with similar plans.
A single carded rate takes little account of the customers credit profile. Rivals that reward good credit histories find they can attract such customers with lower rates which leaves those that dont offer such benefits with a pool of clients with worse credit histories.
For this reason alone, the personal loan market will move this way. Personal loan borrowers are about to find out the real value of good credit.
The new Co-operative Bank loan pricing signals how this may work.
Their ‘risk-based’ approach considers factors such as a consumer’s credit bureau score, adverse credit history (if any), employment status and income.
Most importantly, those several years we were especially frugal, we were able to pay off all our student loans, buy an apartment in the city and then use our financial freedom to experiment with our careers. Now were both in jobs weve chosen and enjoy instead of stressful, high-paid positions designed to support an expensive lifestyle.
Who needs to retire early when you love what you do?
This is what relationship advice-types mean when they say to make sure youre with people who share your values. If you want to be an ant, dont shack up with a grasshopper. Dont even go out drinking with grasshoppers that often or youll start questioning your decisions, second-guessing your priorities and, perhaps, feeling strapped, like the couple that makes $500,000 a year and still can barely save.
As Sean the Money Wizard puts it, figure out what you want, independent of anyone else: What makes you happy is not decided by your friends, your neighbors, or the commercials on TV. And then surround yourself with the kind of people who want the same things.