Loan stock

From My Wiki
Revision as of 21:32, 12 August 2022 by Darael (talk | contribs) (Init: Copy text from Finance)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)

One of the advantages of being a Co-operative Society is that co-ops can run and publicly advertise 'loan stock schemes' (sometimes written as one word, "loanstock"). Loan stock is a way of raising private arrangement finance, usually from individuals (including group members) and other co-ops.

Loanstock can be relatively short term, and interest is often cumulative, so compared with a mortgage style loan at the same interest rate, it will cost you more over time. You can get around this by paying the interest annually if your cash flow can support this.

On the other hand, you don't need to pay it every month, so it has a beneficial effect on your early years cash flow, when finances are often at their tightest. Lenders also often require little or even no interest.

The pros and cons

Advantages

Disadvantages