Loans can be used as a deliberate strategy to reach a large financial goal. - Winston Sill

Time is money, as the saying goes, that normally referring to an income earning activity which could have been undertaken in otherwise idle hours or even minutes.

However, when it comes on to a business deal time is really of the essence, as normally there is a limit placed on the period in which the process should be completed. And there are financial penalties on the purchaser for going over that limit.

For most persons not involved in commercial activity, real estate and motor vehicle credit purchases will be the most likely encounters with the time limits on transactions. But considering that most persons will buy a limited number of vehicles and houses in their lives, it could be a traumatic overrun.

And certainly costly.

The best approach, therefore, is to get as advanced in the process as possible, as quickly as possible. And while the limit on real estate purchases is normally three to four months, for motor vehicles it is two to three weeks.

"We give a limit of 21 working days after a receipt for a deposit is issued, then we reserve the right to return the deposit less $20,000. It is written into the contract the purchaser signs," said Everton, a salesman at a Washington Boulevard-based car mart. "It is best that the person lines up the credit before and not wait until after they make a deposit to go look for financing," he said.

The same goes for housing purchases, where it is not a matter of the deal being cancelled, but interest charges being applied for the time the transaction goes over the agreed limit. The daily sum, normally about $3,000 a day when the annual rate is applied, may seem small, but when a person has been through the house purchase process and funds have been exhausted (as almost invariably happens) it can be the final straw.

Real estate agent Delores advises that the mortgage options should be researched before the deposit is made and a contract signed.

"It is all well and good to see a house and be able to make the deposit, but getting a mortgage is another matter. It is not only the qualifying income for the mortgage, but also a matter of the age of the purchasers, as well as other loans that they might have. Then there is the situation where the age and condition of the house may simply indicate that the remaining life before major repairs are due is simply not sufficient for the bank to risk a loan. In fact, there are cases when the person cannot get the life insurance necessary to access a mortgage," she said.

"If the deposit is paid and the purchaser cannot secure a mortgage, then there is a very real risk of the deposit being forfeited," she said.

Advance checks before advancing a cheque is therefore the way to go, to ensure as smooth a process as possible, with no or certainly minimum penalties.