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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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Presidential Bank
© 2002 - 2018, Presidential Bank, FSB

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Equal Housing Opportunity
 

FundCash® is a product of Presidential Bank, FSB, which does not provide advice about how or whether to invest. Price and yield information available on this site is believed to be accurate but is not guaranteed. All descriptions of loan terms are limited in their entirety by the actual loan documents. All loans are subject to approval. Federal regulations prohibit the reinvestment of loan proceeds in securities. Pledged assets are subject to involuntary sale with risk of loss and possible tax effects. Retirement plans and certain fiduciary accounts are not eligible. Presidential Bank is an equal housing lender.

Updated: 16 Aug 2018 - MH