Category: Uncategorized

FICO, Credit Cards, And Home Loans What Do They Have To Do With Me?

#1. – OPEN ACCOUNTS! – I have worked with several people that either had a Bankruptcy or got in trouble with credit cards and canceled them all. They use cash only now, thinking that is the best way to go. Well that is a great way to do things. However not if your trying to get a home loan or any other type of loan. In fact sometimes people don’t even generate a FICO score because they don’t have any credit at all! Thats bad news. You need three active credit accounts, preferably for one year to help your cause. “That means I have to use credit cards again? In the past they ruined me!” Well yea thats pretty much what it means. But lets understand how credit cards and loans effect your FICO score. First of all a FICO score doesn’t look at your job or how much money you make. You could have no debt and a $100,000.00 a year job but if you dont have active accounts, your FICO score may still be low. That means higher interest rates on loans. Here is what you can expect in terms of interest rates in relation to what your FICO score is:

  • FICO score:– APR:
  • 760-850—– 5.918%
  • 700-759—– 6.140%
  • 660-699—– 6.424%
  • 620-659—– 7.234%
  • 580-619—– 8.777%
  • 500-579—– 9.670%

Many people aren’t aware that you cant really negotiate the rate much with lenders. That FICO score indicates your risk factor. You may know you can pay your loan but they don’t. When they see a 500 credit score they think there is a huge risk you will default on your loan, so they give you the interest rate that makes them the most amount of money in the shortest amount of time. Don’t think the lenders actually care about you or your circumstances they don’t, they care about money, thats it, thats the bottom line. They see your score and offer you that high risk rate loan. No matter how good a loan officer/Broker is they cant get a 6% interest rate for someone with a 550 score. It doesn’t matter how long you shop around. They can however lower their fees for you, give you great service, give you a no Yield Spread Premium loan, etc. Thats why its good to shop around for loan officers and find someone who honestly cares about you, your goals, and your money. I like to treat everyones loan who comes to me as if it were my own. Any way back to credit cards and how they help. OK so you have a credit card with a $1,000.00 limit. If you carry a balance of $850 on it you will actually hurt your credit score. You see FICO wants to see how you manage your money and bases a score on that. If it thinks you aren’t managing your money wisely then you get a lower score. If however you are carrying a balance of around 30% and making your payments on time every month that will help your credit score, looks like your managing your money well. Now it doesn’t make a difference if you have a credit limit of $300 or a Platinum $10,000 limit card it works the same way. So if you’ve had problems in the past with credit cards my suggestion is use them for small things like gas and make sure you have the money to pay them off. Remember Credit Cards are basically LOANS NOT cash! You have to pay them back and sometimes at substantial interest. Please don’t ever think of credit cards as cash. Credit cards help your FICO score by showing that you can manage your money responsibly and pay your debts on time. Your score gets higher as you continue to pay every month for years. Which will help you get a higher score a lower risk factor with the lenders and a better interest rate saving you $1,000s and $1,000.00s of dollars.

#2.- NEVER GO OVER 30 DAYS LATE ON ANYTHING! – Many people want to refinance their homes because they have gone 1,2,3 or even more months late on their mortgage. They have a 7% interest rate and suppose they can refinance at the same and take some cash out as well. If you have gone even once 30 days past due on a mortgage that is a killer to your FICO score. It causes it to just tank! So once that happens your going to end up in the High Risk score column. Your account moves to the “unsatisfactory” column on your credit report and Your refinance loan may be 9% or more and you may not even get financing. Remember the lenders just want to make money. What do you think they see when someone is 3 months past due on their current mortgage at 7% and they can only offer them a 10% loan at $300 more per month. They see default. If you think you might be short of money and before you go 30 days past due try to get refinancing then! Don’t wait till its too late because your going to be stuck with this high interest loan until you can clean up your credit report and your score goes up. That could take 1, 2, or even 3 years or more! Don’t ever go 30 days late on your credit cards! You may get charged a fee, and your interest may go sky high after you accidentally pay 10 days late, but, if you don’t go 30 days or more it wont go on your credit report. 30 DAYS LATE=TANKING FICO SCORE. Remember that.

#3.- CHECK YOUR CREDIT REPORT – Get a copy of your credit report so you can see if there are any inaccuracies on it. Most people actually have one or two inaccuracies on their report. You may have old collection accounts that should be removed. These should be looked at carefully and then disputed with the credit agencies. There are 3 credit reporting agencies. EQUIFAX, EXPERIAN (formerly trw) and TRANS UNION. You will need to order a copy from each and dispute each individually they are separate companies. You should try to do this BEFORE talking with your loan officer/Broker/Lender. Your score can go up significantly in 30 days or less by removing inaccurate information. It could be the difference in a 9.75% loan and a 6.9% loan. You cant take that chance. ORDER, REVIEW, DISPUTE!

Your Loan Repayment Can Be Protected With Loan Payment Protection

When you take on a loan no matter what happens you have to be able to carry on meeting the monthly repayments. Your lender will not let your repayments slide if you should lose your income and be unable to meet your repayments. While your lender might be willing to make an agreement with you in the short term, if you remained out of work for many months then you could be facing problems. Loan payment protection can give you an income to replace your own if you are made redundant. It can also provide for you, should you have to take time off from work due to becoming ill or if you were to have an accident.

The cheapest way to take out valuable loan payment cover is by going online and choosing to buy it independently. By searching and buying your policy this way you are able to get the information necessary to make sure cover is suitable. You will also be able to compare not only for the cheapest premiums, but also when the cover would start and for how long it would payout. These dates vary with the provider as does the premium. Loan cover can be taken with your loan from the high street lender and in some cases lenders are known to add on the cover without asking.

If protection is added on this way then you could quite possibly see your borrowing double. This is due to the protection being added onto the borrowing and then the interest is calculated on the total amount of the loan and the protection for it. You should always ensure that protection has not been added on when taking out a loan and when buying a loan online make sure that you are not being tricked into taking out protection at the same time. Sometimes when buying a loan online you have to un-tick a pre-ticked box if you do not want the protection including.

Usually providers will payout on your policy for between 12 and 24 months and during this time you receive a tax-free payment each month you remain unable to work or unemployed. There is also a period of time which you would have to wait before the cover would begin paying out and again this varies. Some providers will begin paying you after 30 days while others could ask you to wait for up to 90 before beginning payout. There are providers who would also backdate your benefit to the first date of unemployment or incapacity; again you have to check the conditions before buying.

Loan payment protection is a perfect solution to stop you worrying about how you would be able to continue meeting the repayments. It guards your credit score, as if you get behind on your repayments this would be affected and then future borrowing could be impossible. If you have large debts by way or loans or credit card the lender could take you to court. If this happens you could get a County Court Judgement against you and see bailiffs seizing your belongings to pay the lender what you owe.

Need Bad Credit Loan: Get It With These Simple Steps

If you have been knocked out of your loan application because of blemishes on your credit, it can be hard for you to deal with everyday life. Good thing, you have lots of options available to get the loan you are looking for, while, at the same time, rebuilding your credit.

Tips to follow before getting a loan

1. Consumers should be aware about the importance of checking credit history. A credit history is included in the credit report and is usually checked for inconsistencies and discrepancies before taking out a loan. The report allows the consumer to detect if something wrong has been reported, because this can affect their credit rating and the decisions of creditors giving out loans for bad credit. Keep in mind that a bad credit score limits an individual’s ability to get premium loan offers, but checking credit history will help decide what type of loan best suits him/her given that his/her current credit standing isn’t doing good.

2. Try other options available for you, like seeking assistance from family members or friends. Before applying loans at major lending institutions, ask significant others first if they can extend a loan to you. This could be very beneficial for both parties, because there’s no need for them to check your credit history. Aside from this, you could save a lot from the high interest rates of bad credit loans, as well as the time it would take to get your loan application approved. Just be responsible in paying them what you owe, or your relationship could be injured.Another option could be through P2P (or peer-to-peer lending) – usually found online. P2P is a win-win for both the borrowers and lenders. Borrowers have to pay low interest rates than regular loans, while independent lenders could earn high interest rates.

3. Check with the credit union or your personal bank first. These are two common places that best suit individuals with poor credit. Your personal bank may approve your application without too much inconvenience, because they are more than willing to work with long-time clients – like you – than with first-time strangers. Keep in mind, though, that your banks will still impose applicable interest rates on your bad credit loans, but they are more lenient in extending a loan to you, because you have money in them. Credit unions, on the other hand, are more suitable for those who have a stable paycheck. Loans from credit unions are usually offered through an employment. Clients with jobs are more agreeable option because credit unions are guaranteed to have the loan repaid properly. Usually, the loan is deducted from the employee’s salary.

4. Loan-seekers can also search online to look for companies that give out loans for bad credit. Make sure to read the terms of conditions before applying, because you might get caught up on hidden fees and charges. Finally, see to it that the company is well-established and has a good consumer rating.

5. The fastest way to obtain a bad credit loan is to look for payday loan. This loan can be applicable for someone who has emergency with no other options of obtaining cash. However, payday loan carry high interest rates and has an extremely short life. If an individual cannot repay on time, more interest is added and the life will be extended. Proceed with caution before taking this option into consideration. If necessary, opt this as your “last resort.” Don’t just go for payday loans if you aren’t sure of repaying on time, because this can cause serious problems on your credit and your finances, as well.

 

Premium Auto Loans That Won’t Leave You Running on Empty

How many times have you heard the story about somebody who spent so much on their new car they can scarcely afford the monthly repayments on the auto loan, let alone the petrol to run the darn thing?

Sadly, it’s a story that occurs all too often. You are blinded by the glare off the gleaming duco, your senses are heightened by the plush leather trim, the blast from the quad speaker system, the dashboard that looks like it was pulled straight from the cockpit of an F111, and that’s it – you’re sold.

Repayments of $2357.43 per month? Sure thing! I can do that if I give up drinking, smoking, um…eating. And if I stop taking toilet breaks, the boss might give me overtime? Yeah!

Okay, so that scenario may be a bit extreme, but car dealerships can certainly make even the most basic sedan look like a Maserati, well, maybe a Mazda, with the right lighting and a spit of polish. And who knows what can happen one year into your 5 year loan term? A change of location…a job layoff…a new baby…you just never know what’s around the corner.

So, we’ve decided to get serious and look at how you can secure the best possible auto loan for the best possible auto without going down the gurgler.

* Always do your homework before you commit yourself to any loan – particularly car loans. Ensure you are getting a premium loan package with the best possible auto loan rate. Check out all the major financial institutions first and then make a decision based on the best value for money loan.

* Don’t buy a car on impulse. Even if it’s the bargain of the century and the sales assistant tells you there are 12 people backed up behind you waiting to grab it out from under you. Chances are, he’s lying (about all the people) and if you’re meant to have it, it will still be there tomorrow. Be realistic.

* Do your sums. Don’t let the salesperson do them for you – he will have you bamboozled in no time at all. That’s his job.

Work out the total cost of the vehicle including registration, stamp duty and insurance costs and deduct your deposit – assuming you have one?

Then go online and find a car loan calculator (they are everywhere!) and input the figures to give you a rough estimate of the monthly repayments over different repayment periods, like 3 years, 5 years or 7 years.

* Look at your current family budget and factor in the loan repayment. Can you meet all basic expenses and have surplus funds to fund the repayments. Add in ‘contingencies’ of 20% over your current budget for the items you didn’t count on. Can you still meet the monthly repayments? If you can’t, scrap the idea.

* Remember: the more you borrow, the more you have to repay. And the longer the duration of the loan, the more interest you’ll be paying on the total package. In addition, the longer the loan term, the more likely it is that circumstances may change – and not always for the better.

Sure. In a worst case scenario you could sell the vehicle, but you rarely, if ever, recover the amount you originally paid; unless you bought a ’71 XY Falcon GTHO from a bloke’s back shed for $1,750 that you’ll restore and sell for $1.75million, in which case you wouldn’t need a loan and you wouldn’t be reading this article.

Now that most of the negatives have been covered, we can look at the positives.

One of the best ways to check out the best auto loan rates is to go online. Most of the major banks and lending institutions all have loan packs available with all the information you’ll need, including an application form.

Or instead, you can visit one of the quality online loan providers who use a vast panel of lenders to provide you with the best auto loans on the market, and one that is specifically tailored to suit your needs.

Once you have provided them with your personal and financial details, they will verify and confirm your financial situation and can usually get back to you within 24 hours with a response. How’s that for service?

And if you should happen to find that XY Falcon GTHO for $1,750 in the back shed, please let me know, okay?

Is Life Insurance Premium Financing a Smart Move For You?

Although people may understand the need for life insurance, sometimes it can be a burden to pay the monthly premium. This is particularly true for senior life insurance as retirees are often living on fixed incomes and have limited ability to pay their expenses.

Premium financing options are available to allow people to keep up their payments and maintain their policies.

How Life Insurance Premium Financing Works

When the insured doesn’t have the income to cover the monthly premium, the payments are borrowed from a third-party lender such as a bank or from the insurance provider itself. The amount owed the lender will increase over time. Every month the insured borrows the premium amount plus the accrued debt earns interest.

In most cases, the lender is reimbursed upon the death of the borrower by taking a portion of the life insurance value before it is passed on to the beneficiaries. Although the amount owed steadily rises, as long as it is less than the total value of the policy then the beneficiaries still receive a benefit. This is considered preferable to canceling the policy due to inability to pay, thus leaving the beneficiaries with nothing after the policy holder dies.

Who Should Consider This Option?

Life insurance premium financing is a viable option in several cases. Premium financing is a popular option among retirees. They often have their assets tied up in investments and may not wish to liquidate their assets to provide cash. Some investments can’t be sold or can be sold only at substantial discounts so borrowing is a better financial option.

Some individuals without substantial assets also consider premium financing. Even considering the cost of the loan, leaving something to their heirs is deemed more important than losing the policy completely.

In some cases the interest rate on the premium loan may be less than the return on investments, making liquidation the less preferred choice. Or the interest rate may be less than the rate of return on the life insurance, making borrowing preferable to canceling the policy. There are also situations where this arrangement carries tax benefits.

Seek Expert Advice Before Making A Decision

There is no simple formula for determining who would benefit from life insurance premium financing. As with all investment choices, the advice of an experienced financial counselor will help you determine if this is the right option for your set of circumstances.

If you decide that this is the right financing option for you, there are some details that will need to be attended to. A trust will need to be created to coordinate payments from the financing company to the insurance and from the policy to the beneficiaries after the policyholder passes away. If the trust is not set up, the payout may be held up in probate or subject to substantial estate tax.

 

How Does Premium Finance Life Insurance Work?

Premium Finance Life Insurance is not something that you hear about every day, mostly because so few people are eligible to apply for it. Those who can qualify for this type of life insurance policy funding stand to gain a great deal of money if all of the variables associated with the transaction remain in their favor. In fact as much as 15% of the face value can be seen in a return only two short years later-with no investment! With millions and millions of dollars involved in the transaction, you can calculate just how lucrative a 15% return would be.

This is how Premium Finance Life Insurance Works. You must first have an insurable net worth or asset value, called an insurable interest, of more than two million dollars. These policies have been written for up to $100 million. You apply through a premium finance broker for the life insurance policy and the financing at the same time. If the lender approves your Premium Finance Life Insurance loan, you will be given the premium money for the policy for two to five years or “life”, depending on what your requirements are. Obviously the insurance policy will be quite substantial, as there are a great deal of assets being covered. Therefore the premium payments are also going to be quite significant. This is why a low interest loan to cover the cost of these premiums is so appealing. At the end of the two year period you will then have the legal option of selling this life insurance policy into a secondary market for 3% to 15% of the face value, less the paid-to-date premiums loan and interest charged by the lender, and settlement fees.

This type of arrangement definitely sounds too good to be true, but it can be just that easy to make a huge return on no investment if you play your cards right. First you have to realize that not just anyone can apply for Premium Finance Life Insurance. You typically have to be at least 69 years old but no older than 85 to even apply. If you meet these requirements and are approved for both the loan and the policy, you must live through the two year repayment period in order to have an opportunity to sell the policy to the secondary market. If you die prior to the two year mark, your beneficiaries will receive the face value of the policy less the paid-to-date premiums and interest charged by the lender. An example : Assume a five million dollar policy with annual premiums of $350,000 and a 10% interest rate. The beneficiaries receive $4,230,000 if the senior passes at the two year mark.

Obviously, life insurance companies are aware of what Premium Financing is all about and have added that anyone looking to apply for it needs be in decent health. They may ask for a detailed estate plan. Insurance companies are also unhappy when life insurance policies are sold to secondary markets because then those policies become much less likely to lapse. Insurance companies count on the lapsing of insurance policies to keep their earnings high. This is because if the policy holder allows his or her policy to lapse, the insurance company gets to keep all of the premium money that had been paid minus any small accrual of benefits that have cash value. When all high profile life insurance policies are guaranteed eventual payment, it certainly puts a strain on insurance executives’ pockets.

It is anticipated that for these reasons insurance companies may soon find ways to make premium financing less available and attractive. Already, during the underwriting process they will ask the senior if anyone has talked to them about selling their policy in two years, and if the answer is “yes,” the company will not underwrite the policy. But for now the buzz of possible investment dollars is being heard loud and clear on Wall Street, and interest in the secondary market purchase and sale of life insurance policies is growing rapidly. Lenders like Goldman Sachs find this an attractive area, and investors like Warren Buffet see the investment of paying premium money for these life insurance policies as a very small sacrifice for a return of about 12 to14%, the industry average.

 

What Is a Return of Premium (ROP) Life Insurance Policy?

At the company that I previously worked for the Return of Premium Life Insurance Policies were the new thing. They had two different versions. There was the ROP-20 & ROP-30. That’s a 20 year term and 30 year term policy. So what’s so great about this policy versus other ones out there? Well, the selling point is that if you outlive your policy all premiums paid in are returned to you when the term expires. What you can expect from this type of policy: It’s a great policy if you can afford it. The premiums are generally more expensive than normal term policies. But, if you have the money to pay for it then it’s a great policy. It’s sorta like a Savings Account that you can’t touch. At least that’s how I approached it when I sold this type of policy. Also, with most term insurance policies you can usually convert the policy to a type of permanent insurance if your needs change. The features of the policy can vary from company to company, but here are some of the features that were offered at the company I worked for:

Dividends – This policy does allow for them, but as with other policies they are never guaranteed.

Premium Banding – This type of policy will normally offer rate bands. Usually you will see something like banding at $250,000, $500,000 and 1 Million. Typically with banding the premium per $1,000 of coverage will decrease as the amount of coverage you bought moves into the higher bands. So if your thinking about purchasing a policy with a death benefit of $200,000, it could possibly be cheaper or more beneficial for you to purchase $250,000 because of the premium band.

Riders – With the ROP, usually there are not as many riders offered. You will probably see the “Wavier of Premium” and “Children’s Term Rider” You will want to double check though that the premiums you pay in for the riders will be returned to you. Not all companies will return the premiums for some riders.

Loans – You can still take out a loan against the cash value on your policy. With these policies the Cash Values usually starts a little later, with most companies it’s around the 5th policy year. At the company I worked for the cash value was equal to a percentage of all premiums paid into the policy. Then the percentage increases each year after the 5th year until it reaches 100% of the total premiums paid at the end of the term. Don’t forget that you are still charged interest on your loan. Also, any death benefits will be reduced by any outstanding loans and interest you may have. Some companies also offer “Automatic Premium Loan Provisions” With this, if your at the end of your Grace Period and the premium due has not been paid, a policy loan will automatically be made from your policy’s cash value to pay the premium. This is to prevent the unintentional lapse of your policy. This is usually an option on the application when you sign up for the insurance.

Renewability – As with most Term policies, this type of policy is renewable annually after the initial term period with annually increasing rates. So if you get the ROP-20, then on year 21, you would be able to renew this policy each year.

Death Benefits – The death benefit is paid to the beneficiary, federal income tax free, as long as the policy is still in force. If the insured person dies prior to the end of the term, the Return of Premium Benefit is not paid in addition to the face amount. All the premiums paid up to that point and any cash value would be kept by the company. They would however pay out the death benefit, but you can not have both.

Taxes – The Return of Premium benefits are taxed, but only to the extent that premiums paid for a WPD (Wavier of Premium Rider) are returned. Tax laws do not allow for inclusion of WPD premiums. So, only those portions of the premiums paid for a WPD Rider are taxable. Keep in mind that not all companies return the premiums paid for the WPD rider, so this would only apply if your company does. So is it worth the extra money? This really depends on how you look at it. With most term policies, it’s sorta like your renting a house. You pay your monthly Premiums (rent) but when your term expires you have nothing to show for it. The return of premium policy is the exception to this. That is usually the biggest complaint about Term policies. You pay in but have nothing to show for it in the end. But, with the ROP, if you outlive your policy then you get all your premiums back. So it sounds like a win/win to me.

During my time in the insurance industry I did sell a ROP-20. It was to a younger couple who was planning on using the money to pay for their child’s educational costs in the future. They figured that in 20 years, their child would be going to college and the Returned Premium would be a great way to help pay for that. So I personally think it’s a good policy to check into. As with any policy their are pro’s and con’s so it’s a good idea to sit down with your agent and go over all your life insurance options. There are many Life Insurance policies to choose from and now you can say that you know about one more.

 

How Crowdfunding Can Help Pay Medical Bills

Crowdfunding can help pay for medical bills… it really is that simple. You can crowdfund for just about anything, including medical bills. Many times people are placed in a medical crisis and aren’t sure where to turn. Medical bills can accumulate in no time and medical bankruptcy is a real thing. You’d be amazed by how many people in “your own crowd” are willing to help.

In a study published in January 2014 from the Center For Disease Control (CDC), one in four families experienced financial burdens of medical care.

This “financial burden” of medical care equates to medical bills that they can’t currently pay and are forced to pay monthly over time.

This study goes on to share that families with lower incomes were more likely to experience the financial burdens of medical care. Those families with incomes at or below 250% of the federal poverty level had the highest levels of any financial burden of medical care.

250% of the federal poverty level (based on guidelines for 2013) means that a family of four with an annual income of $58,875 or lower were at the highest level of the population feeling the financial burden of medical care for a loved one. That’s our middle class America. Those are the families living paycheck to paycheck and not prepared for a medical crisis.

The is a baby with his eyes closed and an oxygen canula in his nose. He was born with a bad heart, a weak immune system, and problems eating which caused a condition labeled by doctors as “failure to thrive”. Isaac spent the first year of his life in and out of hospitals in Las Vegas and at Stanford where he underwent multiple heart catheterizations and procedures, open heart surgeries, and had a feeding tube placed surgically to ensure he received the proper amount of nutrients. Isaac’s family had great insurance, covering 80% of all medical costs. But, they still spent over $100,000 out-of-pocket the first year of his life in deductibles and medical related expenses.

Shocking… right?

I know… My name is Kathy, and I’m Isaac’s mom.

I remember people asking us if they could have fundraisers for us, give us money… they would offer to do anything just to help. At that time, I could not have imagined the costs that we would incur, nor could I imagine all the things that insurance doesn’t cover. You assume that you pay for insurance, you’ll have a deductible… The End.

If that were only so.

Words of Advice:

Start a Crowdfunding Campaign Immediately

Don’t be too humble to let other people offer to help you. You really can’t imagine the costs of things in the medical world and how they add up. It is TOO hard to think about money when you’re talking about the healthcare of someone you love. You want anything and everything done… you’ll worry about the bills later.

From a Mom that’s Been There

Don’t expect the people in the middle of a medical crisis to be thinking clearly (well, I sure wasn’t). If you’re related to the family or just a loving friend… talk to them about the medical bills and the reality of the situation. Talk with them about what they need now and what their needs may be in the future and help them come up with a budget and plan to get everything their loved one needs. From bills, equipment, therapy sessions… even therapy dogs, all these things can be a necessity now or in the future.

How exactly will crowdfunding help pay my medical bills?

Well, they can’t send a check to the hospital for you, but they can offer you a platform that will help you tell your story as well as share it with your friends and family. The right crowdfunding platform will provide support for you all along the way, from guidance writing your story, picking pictures to post, sharing on the social media channels, and even help writing press releases to get national exposure.

Crowdfunding can help you pay for your medical bills by allowing YOU to take care of your family and letting your “crowd” help YOU. Donations will be made by people you have inspired and want to help you. These people will have a platform to donate to you on their schedule and an amount that is within their means. They will be assured that the funds are going directly to YOU and not an anonymous organization.

You are not alone in your medical crisis. Crowdfunding is a viable source for helping to pay for medical bills and other medical related necessities.

The Process of Car Repossession – Understand It So It Doesn’t Happen to You

In a perfect world, things would always go as they should.

Sometimes that’s just not the case.

If you’ve found yourself in a bind or on the verge of falling behind on your payments. The best thing to do is contact your credit card, mortgage or auto loan companies and explain your situation.

Take action

If you have a car loan, you understand the importance of paying your loan on time. If you cannot make your payments on the exact due date.

You are granted a 30-day grace period to make a payment without having this late reported to the credit bureaus.

If you don’t think you’ll be able to make a payment before the 30-day grace period ends or foresee yourself being in a bind that will last longer than 30 days, there is something you should know.

Ignoring calls from your creditor is the wrong route to go.

*While you may feel embarrassed or reluctant to contact your creditor, you are not alone. Thousands of people fall behind on their payments due to financial hardships. The person on the other end of the phone is trained to handle these types of calls and will be more than willing to help you the best way they can.

What should you do?

Most car loans have a stipulation that allows you to defer your payments for a short amount of time while you get your finances situated. Other options besides deferment might be offered such as lower payments until you can make the full payment.

Your options will depend on your specific car loan and terms agreed upon at the time of sale.

If you are currently in good standing:

Call your creditor and explain that you’ve had some setbacks and ask about your options to defer your loan payment until you can make payments. This will usually give you about 2 months to catch up.

If you are currently not in good standing(late beyond 30 days):

Call your creditor back and explain that you’ve had some setbacks and would like to make a plan to catch up on your payments or defer a future payment. Ask about your options to defer your loan payment until you can make a payment. You will usually be asked to make your account at least current up to 30 days before a deferral can be granted.

How will this help you?

Car repossession doesn’t end well for anyone. Not you and certainly not your creditor. Once a car is repossessed, it is usually sold at an auction for a fraction of the cost. This is a lose-lose situation for everyone.

While your loan is in deferment you will not be reported late to the credit bureau as you have made an agreement with the company to pay at a later date.

The downside to this, of course, is that your loan agreement will be extended and you will end up paying more interest in the long run. This is, however, a better alternative to having your vehicle taken.

When can your car be repossessed?

It all depends on the specific car loan you have in place. You are usually considered in default of your loan agreement as soon as you miss a payment.

With that being said, you are granted a 30-day grace period. Some states allow cars to be repossessed after one missed payment. The longer you take to make your payment is one step closer to having your car taken and a serious ding on your credit report.

A repossession will remain on your credit for up to 7 years and hurt your chances of obtaining other car loans in the near future. Even after a repossession, you may still owe the difference between what you owed your lender and what your car was sold for. This is called a deficiency balance. A deficiency balance is usually the norm especially if you purchased a newer vehicle.

Please note that these options are for those experiencing temporary hardships. It is not recommended for long-term foreseeable situations.

All You Need to Know About 2 Wheeler Loan Finance

With growing demand in semi urban and rural areas, 2 wheeler industry is a high growth sector. The industry is estimated to be Rs.6, 000-Rs.7, 000 crore in size. This means there is abundant opportunity for 2 wheeler finance companies. There was limited awareness about financing for a 2 wheeler in the olden days but with the increasing penetration of financial institutions across the country, it has become possible to obtain 2 wheeler finance quickly and conveniently.

Getting 2 wheeler loan finance has become easy. The eligibility criteria, documentation requirement and the process has been mentioned below:

Eligibility:

Individuals above the age of 18.
Salaried individuals who have been employed for more than a year.
Business owners who are running a business for over a year.

Documentation:

Identity Proof
Address Proof
Income Proof
Valid KYC documents
Passport size photographs

Procedure:

In order to apply for 2 wheeler loan finance, the applicant needs to scout the market for various Banks and financial institutions offering the loan. Based on the terms and conditions of the respective financial institutions, the applicant should choose the one that suits his requirements. The application process is quick and transparent. The applicant needs to meet the eligibility criteria in order to apply for the loan. Further, the applicant needs to submit the application form and provide the required documents to the financial institution. The customer executives are friendly and will guide through the entire process of application. The application will be processed within 48 to 72 hours and the loan will be approved in no time.

It is advisable to seek a loan from a trustworthy financial institution. They offer flexible tenure and easy repayment options. With a low rate of interest and a flexible repayment tenure, purchasing a 2 wheeler has become quick and easy. Individuals with a positive credit history can get the loan approved quicker and are also eligible for the special schemes. Once the loan amount has been disbursed, it is not possible to change the tenure and amount, hence it is important to give the loan application a good thought and settle for a repayment tenure which is possible based on the monthly income of the applicant. Financial institutions offer customized solutions to the applicants based on their requirements. Depending on the type of 2 wheeler to be purchased, the loan amount will be sanctioned.

The applicant will only be required to pay a small amount as down payment and the balance can be converted into a 2 wheeler loan which is to be repaid in easy monthly installments. Upto 95% of the on road price of the vehicle is available as a loan to the applicant and the repayment tenure ranges between 12 months to 48 months. With the increasing demand of 2 wheelers across the country, Banks and financial institutions are offering loans which meet the requirements of the consumers and they also settle the terms accordingly.

Some of the Biggest Mistakes When Looking For a Motorcycle Loan

The Essentials in deciding On Motorcycle Loan.

Sometimes the necessity or excitement of owning a motorcycle cast a bad spell on our buying decisions, especially when the purchase form is a loan. So, before making that impulsive mistake only to regret later consider these essential factors when deciding to apply for a motorcycle loan.

  1. Interest Rates:

The moment you think of a loan, the interest rate coupled with it should ring a bell. Most often attract interest rates over shadow the risk factors involved. Always begin with good amount of research and comparison of interest rates. You do not want the burden of high interest rates steal the joy of riding your new bike!

  1. Smart negotiation:

When you are about to make a purchase decision, do not merely focus on the form of payment and negotiate on how you intend to go about it. A smart negotiation effort would include, negotiating on the payment. Payment always precedes the payment method!

  1. Loan Inclusions:

Discuss with the lender all the accessories that the loan is inclusive off. You do not want to pay additional bills besides paying off your loan. The wiser discussion and decision would be to know about the inclusions and the exclusions of the loan you have applied for.

  1. Loan security:

Always consider what is at stake should you face difficulty in paying off your loan. Some lenders hold the purchased motorcycle as the security, failing to pay will mean ceasing your bike. Some other lenders may consider other collaterals as security. Unsecured loan plans are other alternatives but comes with a high cost of increased interest rates. So, your loan security should be well thought through deliberate decisions considering all the risks involved. You do not want to risk something in vain!

  1. Loan penalties:

Pause before you sign your loan agreement. Although knowing the details of the penalties tailed to your loan amount can be cumbersome and you want to skip through it, it may not be the best of your decision. At best, avoid signing loan agreements that come with stringent penalties. A decision in time, saves you from a future disaster!

  1. Easy loan termination:

Most lenders allow early clearance of your loan and some do not. It is best for you to verify the termination policies before you sign that loan agreement. You do not want to pay with interest rates, while you own the money to clear a credit.

Owning a motorcycle is useful as well as exciting, but what is more important is sustaining both while using it. Using the right loan tailored to your needs is worth every effort.

Hidden Advantages of Outsourcing Services for the Car Loan Industry

Let us face the reality that today, we live in a ‘do-it-yourself’ way of life. As they should, people want to show off their auto repairs, home improvement projects, and many other tasks that majority of us would more often not seek professionals to perform the task, as they just prefer to do it by themselves.

It is absolutely a great value in a number of ways. You can gain expertise from your experience. Sometimes, it does not necessarily mean that it is a better way to go from doing something by yourself because oftentimes, it pays more to hand over and look someone for help.

Many of the car loan businesses are beginning to worry about not only getting in the game but also in maximizing their returns with all sizes racing to compete in the lending market. To outsource car loan business services, many industry experts understand that it is often considered more cost-effective.The most obvious reason for doing this is because industries don’t have to hire new staffs or underwriters solely for car loan operations and services. You have to keep in mind that those industries are also avoiding the other expenses related to assisting the infrastructure associated with an internal underwriting team.

But the advantages don’t stop there because there are a number of hidden advantages that many businesses fail to consider when entertaining ideas of outsourcing their car loan business processing that includes staffing and funding. Here are some of the hidden advantages of outsourcing for car loan business:

Increase the Number of Loans that Leads to More Net Profit

Just consider it as any consumer business committing to sales. As this dealer management is all about being able to see, looking for your niche and catering your offers to the biggest needs of your dealers. Better and stronger relationship with dealers and having more dealerships in the network in order to drive portfolio growth is one of the end goals of outsourcing some services when you are in the car loan business.

Improved Relationships with Customers

Your staff will be able to intensify its focus on strengthening relationships with your customers- making visits, gathering feedback and better addressing their needs that will drive growth for your car loan business portfolio.

A Guideline that Allows the Outsourcing Provider to Serve as an Extension of Your Car Finance Team

Your outsourced car loan provider should be able to efficiently, quickly, and easily customize its financing scorecard to fit your representation. By doing this, it guarantees that making a decision for car loan financing is consistent and fits your appetite and business plan.

Access to Consultation and Expertise

It allows your business to avoid common pitfalls that businesses fall victim to when trying to get in-house functions off the ground when outsourcing your car loan business processing. Through outsourcing, those businesses must hire the expertise that is readily available.

After-Hours Process

By waiting until the next business day to respond to proposals, don’t miss out on those deals especially over the weekend when many consumers have time to hunt for motorcycles, cars, and trucks.

It will absolutely offer a significant benefit over businesses with in-house operations that are confined to traditional business hours when you have an access to after-hours processing service.

Are you ready to revolutionize the way you do business? Grow your business by outsourcing.

Systematic and Unsystematic Risks: How to Mitigate Them

There are always risks in the business world. Understanding these risks enables us to seek the most effective approaches to mitigate them. What are these risks and how can they be categorized?

There are two major components of risk: systematic and unsystematic. Let’s explore each risk and learn the best way to mitigate it.

Systematic Risk
Systematic risk, also known as “market risk” or “un-diversifiable risk”, is a result of external and uncontrollable variables, which are not industry or security specific. Generally unavoidable, it affects the entire market leading to the fluctuation in prices of all the securities. The risk can be attributed to a number of broad economic factors such as inflation, changes in interest rates, fluctuations in currencies, recessions, etc.

Since systematic risks cannot be controlled, investors can avoid them by staying away from all risky investments.

Financial Planning- Mitigating Systematic Risk
Systematic risks can be mitigated with certain courses of action. How can they be mitigated?

Asset allocation can partially mitigate systematic risks. Owning different asset categories (i.e. bonds, cash, commodities, etc.) with low or zero correlation helps because they reach differently to macroeconomic factors; some asset categories may increase and others may fall.

Asset allocation should also be adjusted according to valuations. Investments that are overpriced should be avoided or owned less. When mitigating systematic risks within a diversified portfolio, cash may be the most important and under-appreciated asset category.

Another way to reduce systematic risk is through hedging. Investors can use options such as purchasing protective puts on their securities. A protective put is risk-management strategy that investors use to guard against the loss of unrealized gains. Put value will rise if securities value drops. However, options are for a certain time and once they expire, investors need to buy new ones to stay hedged.

Unsystematic Risk
In contrast, unsystematic risk refers to risk factors that are specific to a company, industry and sector, and can be controlled to a certain degree. These factors include a company’s management, financial practices, financial health, and its competitive position in the market.

Financial Planning- Mitigating Unsystematic Risk
Unsystematic risk can be reduced by diversifying. To achieve this, the investor can diversify its product portfolio so the revenues are not solely dependent from a few products only. Much risk is reduced when an investor’s risk is spread among different industries (such as banking or healthcare) and asset classes. For example, if an investor owns a diversified portfolio of more than 10 individual investments as opposed to only one, the damage done to their portfolio is minimized when something negative happens to some of the companies.

Again, unsystematic risk can be nearly eliminated by diversification as it is not correlated to market risk.

Both systematic and unsystematic risks are part and parcel of businesses. Through risk management solutions as mentioned above, these risks can be partially mitigated, and investors will be able to see an increase in portfolio returns and optimization in investment portfolio.

Seven Cures for a Lean Purse

1. Make your purse – or wallet – get fatter.

That doesn’t mean filling it with receipts for all the items you’ve bought with your credit card. It means, fill your purse with money. And the best way to do that is to spend less than you earn. This cure follows from the first law of gold that we looked at last week: aim to save 10% of your income. Minimum. Save more than that if you can. Save for the long term, for your mortgage deposit or pension, depending on where you are in life. If you need to save for short to medium term things, such as a holiday or car, that should be in addition to and separate from the 10%+ that you save for your long-term needs.

Your 10% can include your pension contributions, ISAs, premium bonds or any kind of high interest/restricted access savings account. With compound interest, your purse will get very plump over the coming months and years, even if interest rates remain low.

2. Control your expenditure.

If you’re going to save at least 10% of your income for the long-term, you must make sure that your current spending is no more than 90% of your income. This means wherever you are on the income scale, you’ll need to apply some self-discipline when it comes to treating yourself and your loved ones.

For a start, keep your credit card(s) for emergency use only, and if you do use them, pay them off before you start racking up interest. Similarly, avoid taking out loans, unless you can justify the interest you’ll end up paying for that privilege. A car acquired on one of the popular leasing schemes can be justified if it’s essential for your work or business. But a loan for a holiday? Staycation would be a better choice. Learn to distinguish between wants and needs. A roof over your head and food on the table are needs; a month in the Maldives is a desire. Treat yourself to that when you have saved 10% of your income for a year or two and you can afford to fly off to paradise without dipping into those savings.

The secret to controlling your expenditure is to build a budget and then stick to it. If you have Microsoft Excel you can download a template to help you track your spending over a week or month. You can also find ready-made templates on the internet or apps for your phone. Work out how much you spend on mortgage, rent, travel to work etc. and set yourself limits on items such as eating out, entertainment, travel etc. This will help you keep below 90% of your income.

3. Make your money multiply.

You are looking for steady returns over the long-term, not a lottery win. What you need is a steady increase in your capital, your core wealth, such as compound interest from an ISA or savings account, or – more risky – dividends from shares you hold in well-managed companies, including your employer, if they have an employee share ownership scheme. If you are not an expert in financial products and investment vehicles, find someone who is. Don’t make any commitments until you talk to a professional financial adviser. Explain what your investment goals are and ask them to help you develop a plan for realising achieving them.

4. Guard yourself from loss.

The sickening nightmare of seeing your dreams of wealth turn to dust as Bitcoin plummets or the bloke you met in the pub the other night disappears with your life savings. One way to guard against loss is to make it an unbreakable rule that you do not touch that core wealth that you are saving and investing for the long-term. Keep a ring of steel around that! If you are tempted to try your luck with Bitcoin or currency trading, only use money that you can afford to lose. That means any money that you have left over after you have saved your 10%, paid the bills and filled your belly. Money that you might otherwise spend on nights out can be handed over to the online bookies, if you can budget for it – see the second cure above. Never use a credit card or a loan for spread betting, gambling or any high risk investments. Before you engage in any high risk investing or betting, though, make sure you have thoroughly researched the field and that you understand what you’re getting into. If online poker is your dream, practice with your mates for match sticks first.

5. Make your home a profitable investment.

Owning your own home (and ideally a few buy to let properties) has become an obsession over the last thirty or forty years. Given the way property prices have ballooned over that time, it makes perfect sense to get on the property ladder as soon as you can, particularly when house prices are increasing at a much faster rate than incomes.

However, be aware that at some point the bubble may burst. Yes, people have been saying that for years and it hasn’t happened yet. But it is becoming increasingly likely that the authorities will take steps to let some of the air out of the property market. Potential measures include revaluing property tax bands and punitive taxes on buy to let properties and properties left empty. A major increase in house building is unlikely to have much impact on house prices by itself, but when combined with the potential tax changes, we could see prices reach a plateau and stay there for some time.

Given all that, the best approach is to find an affordable house or flat in an area where you would like to live for the foreseeable future, bearing in mind such things as local amenities, schools and the journey to work. Think also of the benefits of paying a mortgage and gradually acquiring total ownership (leasehold and freehold issues aside) of your home over 25 or 30 years, compared with being beholden to a landlord who can raise the rent or evict you at a month’s notice, and who will still own the roof over your head despite all the £000s you put in his or her pocket.

If you can’t afford to buy outright in the area where you want to live or work, consider such options as shared ownership and self-build. Check out what schemes are available in the area where you want to live.

If you already own your own home you can use it to generate extra income by taking in a lodger. If you live in a major city, a good source of lodgers is contractors – professional people working on a project local to you who need a place to stay for a few months and don’t want to use hotels. Often they will go home for the weekend so you have the place to yourself. Another option is to take in exchange students. They will usually come in for a week or two. You provide them with a bed, breakfast, a packed lunch and an evening meal, and get paid for doing so. Another option is to use your home for holiday lets while you’re on holiday yourself. This works particularly well if you live in a major city or a historic town.

Even if you rent, take a lodger (if your landlord will allow this) or run a home business (see below). You can still make your home a source of extra income, even if you don’t own it.

Two other things to consider. First, home and contents insurance. Make sure you have adequate cover for the worst that can happen: fire, flood, burglary. Second, if you have a mortgage, look at insuring it against unemployment and illness. Take advice and make sure that any policies you take out are fit for purpose and will pay out if the worst happens.

6. Develop a future income.

Who wouldn’t want to wake up in the morning knowing that whatever happens, they are assured of a steady income for eternity? Well, you can achieve this through your long-term savings, that 10%+ that you put by month after month, year after year.

When you talk to your financial adviser (as you must!) about your saving and investment goals, the first two issues you should focus on are a pension for you (and your partner, if you have one) and providing for your family when you’re no longer around, i.e. life insurance. Your financial adviser should also point you to other investments that can deliver additional income for you and your family, such as ISAs, unit trusts and government bonds.

Your aim is to ensure an adequate income for a long old age. Remember, people are living longer, but not always healthier. It’s not pleasant, I know, but think about the worst that can happen to you (short of an early death). You or your partner become chronically ill or disabled and need long-term care. How will you fund that? If you sell your home what will you leave to your children. This is the kind of issue you need to discuss with a financial adviser. You need a pension, plus other income streams, that will pay for all your needs for perhaps thirty or forty years after you stop working. Develop a plan, implement it, then get on with enjoying life.

7. Increase your ability to earn.

There is no such thing as a job for life anymore. These days, even professional occupations such as lawyer, accountant and insurance underwriter are threatened with automation and off-shoring. So, it makes sense to develop additional skills that you can make use of if you find yourself out of work.

If you think you’re at risk of being replaced by a robot, you should look very carefully at “future-proofing” your career. Think about jobs that are unlikely to be automated or off-shored in the future. They tend to be ones that involve face to face contact e.g. complementary therapies, nail technician hair stylist, personal trainer, life coach, counsellor. Also, jobs where a local presence is essential: electrician, plumber, lock-smith, builder.

Of course, many of these jobs are relatively low-paid and are in highly competitive sectors. That means you need to find a unique selling point: something you do that no one else does, or no one else does as well as you. Focus on something you are genuinely interested in – or better still, passionate about – and that you know you can be brilliant at. Be realistic about the potential income, the competition and the time and energy needed to make it work. Unless you already have experience in your chosen field, you will need to devote a lot of time, and perhaps money, to acquiring the necessary skills and certifications. You will also need to decide how you will operate: sole trader, limited company, franchise? Take advice before committing yourself to anything.

A popular option for generating extra income is online selling. Even if you’re in full time work and happy with your income, you can try it in your spare time and get a feel for what’s involved. A regular declutter will reveal all sorts of things you can sell: clothes, DVDs, mobile phones, unwanted presents. If you enjoy online selling, you could develop a successful business without risking your core capital.

Which Cash Flow Quadrant You Are In

A great number of people don’t have an idea of Cash Flow Quadrants. Are you one of them? If yes, no problem. Today, we are going to have a look at the same which have divided all the population of our world in different classifications. These cash flow quadrants are:

E Quadrant: You have a job and works as an employee for a company/organization

S Quadrant: You are self-employed and own your job

B Quadrant: You are a business owner and have a team to work for you

I Quadrant: You invest money in different businesses and money works for you

This gives you a very clear picture of what classification you are in and the financial status you have right now. Most of all, these four quadrants have four different mindsets and values. Many people will be surprised to know that. Let’s take a detailed look at it:

E Quadrant:

E stands for ’employee’. More than 65% of the total population around the globe comes under E quadrant. These people work for others. You have heard the elders advising you like: study whole heartedly, have good marks and grades, and you will get a handsome job. Earning a hi-profile degree like MBA, engineering etc. is considered necessary for getting a highly paid job.

Now matter how high scale of a job you have, but it would be a mere job. Whether you have a seat of executive or a clerk, you will be recruited under specific rules and regulations. Both of the executive and clerk get salary at the end of the month, and privileges along with it. Though, there is a hell of a difference between the level of a hi-class officer and a clerk, however, one thing is quite same: if you stop going office due to any reason, you won’t get salary any more.

Also, a fixed salary is enough only for meeting the monthly expenses, making savings like mutual funds, and/or purchasing stock market shares. This cash flow quadrant gives you security and a steady paycheck every month so you stay satisfied. But have you ever thought that this security is only a temporary thing? Money is coming only in case you keep on going office regularly. If you are fired, or retired, no more paychecks will be arriving. Also, you can’t continue working in old age. You must have to do something for retirement before it comes. Therefore, the job security is only for the time before retirement.

S Quadrant:

S stands for self-employed or small business. The people who work for themselves and own that work, come under this category. Like, you run a shop/store, or a website on a small level or single-handedly. This quadrant brings more satisfaction and freedom as you don’t have to work for someone else. You are your own boss. However, it is also like E quadrant. You or your staff has to work to keep the money coming. Therefore, people in this quadrant are also forced to work continually.

B Quadrant:

B stands for business. Medium or big sized business owners come in this category. Moving and staying in this quadrant needs a lot of effort, patience, time, expertise and experience, and above all, leadership qualities. If you want to move in to this quadrant, you need to possess all these qualities. Here, you are the boss and in driver’s seat. Your team and workers work for you, rather you go to work or attend the office daily. You just need to supervise the business operations and take decisions. If you are a great leader and action taker also, you can uplift your business and team to the highest level of success and achievement.

This quadrant gives you the freedom of time and money. The best advice for moving in this quadrant is that you should start with a small business and expand it gradually. You can keep on doing a job for earning a steady monthly income while give a few hours daily to your business also.

I Quadrant: The Superlative Cash Flow Quadrant

I for investor is the advanced level of owning and running a business. When you have plenty of money, you don’t need to do anything. Rather, money will do everything for you. This quadrant gives you the highest level of freedom – freedom of time and money.

After completing 10 to 12 fruitful years in business, you can become a successful investor. However, it needs great experience and knowledge of market ups and downs. Planning and joining successful business groups make moving into this quadrant easy for you.

E and S quadrants are called poor or mediocre person’s quadrants. These people can’t enjoy life as they are bound to work to earn money. These two are called active income quadrants. No work; no money, this is as simple.

Whereas in B and I quadrants, as long as you run the business and invest wisely, you don’t need to worry at all. This ‘passive income’ continues to come. If you want to be rich and to build wealth, you can do it in B and I quadrants only. But first, you will have to change your thinking patterns and have a mindset of business person and investor.

Gradually and constantly, you can move from the first and second quadrant to the third and even forth one. It is quite possible. So, don’t wait and start planning right now. When you decide to change your destiny, nothing can stop you from achieving your goal.

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