What can I use my line of credit for?
Anything you want, except to buy additional securities or mutual
funds. The idea is to stay invested and avoid the capital gains
taxes associated with redemption of shares in time of financial
need. This loan is termed a "Non-Purpose" loan by the
Federal Reserve.
Is my interest rate fixed?
No, the annual percentage rate (APR) will increase or decrease
as the "Index" increases or decreases. Any increase in
the Periodic Rate will result in higher Minimum Payment amounts.
How much can I borrow? What is the ratio of Collateral
to the total line of credit amount?
The amount you may borrow is almost limitless and depends on the
risk category of your securities. Our collateral ratios vary widely
from 50% to 85% depending on your securities.
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How is my interest calculated?
A daily finance charge will be imposed on all credit advances made
under your credit line, calculated from the date of each credit
advance, based on the daily average balance. The finance charge
is determined by multiplying your "Periodic Rate" by your
daily average balance. Then we multiply the result by the number
of days in the billing cycle for the billing period.
Is the interest I pay tax deductible?
Sorry, in most cases no, but it might be, depending on the use
of funds. Always check with your tax advisor.
How often will I receive a statement showing
my mutual funds?
You will receive a consolidated monthly statement for all the transferred
fund shares showing the current value of your securities, your current
loan balance and the current finance charge.
When are my payments due?
Your payments are due monthly.
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How do I repay my line of credit?
There are two periods during the life of your line of credit: the
"Draw Period" and the "Repayment Period". The
"Draw Period" will begin on the Date of Agreement and
will continue for the exact number of years designated by you, either
1-Year, 3-Years, 5-Years or 7-Years. The "Draw Period"
is the length of time that you can take advances against your credit
line, and during this time you are only required to pay finance
charges. The "Repayment Period" of the Loan will begin
at the end of the "Draw Period" and will continue for
a period of exactly 8 years (96 months) thereafter. You will no
longer be able to obtain any credit advances under your Credit Line
after the end of the Draw Period.
Are there any fees?
All of our fees are plainly stated. A FundCash
Line of Credit is one of the least expensive loans you can take
out when compared to home equity lines of credit, second mortgages
and credit cards. Our interest rates and account fees are very low!
We are here to provide assistance with your financial needs, help
you avoid paying capital gain taxes and keep you invested.
How do I get my initial check?
In order to try to protect the borrower, it is the practice of
Presidential Bank that all initial disbursements be made in check
form and be physically sent to the address that is imprinted on
the account statement copies that are provided with the "Securities
Transfer" form.
What happens when the stock market significantly
swings downward?
Your loan, as well as every loan, has an established safety zone
that is monitored by our system on a daily basis. We first contact
you via the email address that you provided when establishing the
loan and follow the initial procedures you choose to address any
shortfall in your loan's collateral ratio. If a severe drop in market
prices occurs, we may not be able to reach you in advance of sales
of securities (partial or all), which may be necessary to preserve
the collateral ratio. The collateral ratio is your borrowing power
ratio of loan balance to the market value of the pledged securities.
If we can reach you then you will be given the choice of adding
more securities, making a cash payment to reduce the loan principal,
or both. This is why it so very important that we have home, work
and cell phone numbers as well as any additional contact points
like email, fax and close relatives or friends.
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What happens when the stock market significantly
swings upward?
Your borrowing power increases and you can write additional checks
from your checkbook.
Am I going to receive tax documents like 1099's
from the shares held in your control?
Yes, you will receive 1099's. If you provide the original purchase
date and the cost of the funds we can provide you with a report
that will assist you in preparing your tax returns.
Can I pay off the loan at any time?
Yes, there are no prepayment fees.
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