Self-Liquidating Loans - Fact or Fiction?

by Allen Martin

MYTH! The concept of a self-liquidating "LOAN" is not recognized in the financial world. If you try to ask for such a loan in a bank, you'll likely be met with puzzled looks!

You might come across advertisements claiming -

- Self-Liquidating "LOANS!" - Immediate Investment Capital! - Your "LOAN" is Approved! - BORROW Money And Never Repay! - and so on.

A self-liquidating "LOAN" is not real. No one will ever grant you a loan that doesn't require repayment. It's crucial to be wary when you see offers of "free money!"

A genuine self-liquidating "LOAN," standing independently, is nothing more than a fantasy - it's like a perpetual motion machine. A loan that repays itself provides no advantage to the lender - so, why would they offer it? The answer is simple - they won't!

Fraudsters often demand initial fees to secure a Self-Liquidating Loan. “Your “Loan” is Approved” is their usual trick. As there's no such thing as a Self-Liquidating “Loan,” this should be a clear sign that they're only after your money and you'll never get such a “LOAN”! Remember, the money must come first and if they can't demonstrate how the money will be used to facilitate such a transaction, you'll lose any money you give to these swindlers.

Also be cautious of the fraudsters who don't ask for upfront fees but check your eligibility for such a “LOAN,” then later notify you that you've been approved for a “Loan” and demand payment for points, closing costs, advance interest fees, etc.

However, there's a way to utilize this IDEA!

In the concept of a Self-Liquidating Loan, there are no such expenses! The money is received first, and then the transaction is facilitated through a Roll Account (Compensating Balance)!

A Self-Liquidating loan doesn't actually exist. Despite numerous advertisements promoting such loans, many people falsely believe that getting a so-called Self-Liquidating Loan is as simple as applying and voila! You have a multi-million dollar loan with money pouring out! Unfortunately, it doesn't work that way - but the concept of a Self-Liquidating Loan is utilized every day, and you can learn how to do it!

There's ONE way for a KIND of self-liquidating loan to exist. Notice, I said *kind* of self-liquidating loan.

A more accurate 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, a roll-over loan is a loan secured by assets such as a CD, zero-coupon bonds, government savings bonds, debentures, bank notes, etc. These assets serve as collateral for the loan and as final repayment for the loan.

These can be acquired at a fraction of their final value and used as collateral for a loan.

Example 1a:

Government Zero Coupon Bonds serve as a good example. These bonds can be purchased at normally 33% of their face value. A bond with a face value of $1,000 could be acquired for approximately $330. The government guarantees a return of $1,000 or a $670 profit. Offering this guaranteed financial instrument to a financial institution as a compensating balance for your loan creates a semblance of a self-liquidating loan. Borrow $1,000 and receive $670 back.

Example 1b:

An alternate example could be life insurance or an annuity. If you have an annuity that pays a fixed or variable amount, it could potentially be used as a compensating balance for the loan you wish to secure. In many instances, the insurance company might be able to arrange this type of self-liquidating loan via an annuity.

Example 2:

You'll need to identify an investment group operating in an offshore setting. (Offshore environments offer higher interest rates and returns on your money, as well as lower lending rates.) Utilize this group to leverage your funds, thereby creating a compensating balance. This, in effect, creates a "self-liquidating" scenario. In this instance, you not only receive a "loan," but also a residual income!

Final Note.

Keep in mind, without upfront security, NO lender would consider offering a loan under these conditions. However, there are places where you can learn how to initiate a roll program! The challenge is finding one that's trustworthy.

If you're interested in learning more about how to create your own roll program, a useful resource to obtain the necessary information is:

http://www.valtechservices.com

Here you'll find an enlightening eBook on "Self-Liquidating Loans." The eBook offers working formulas, tips on spotting fraudsters, and also provides access to investors who can help set up the larger roll programs mentioned in example 2!