Monthly Archives: August 2018

How to Finish the Car Buying Process With Flying Colors

Follow a Strategic Approach

Are you worried about making a good car buying decision? Do not get anxious. Follow a strategic approach for finishing the buying process successfully. Consider the following steps and you will get closer to your first car:

1. Define the Purpose of the Car

A car defines your personality as well as your profession. A working woman will preferably choose a hatchback or a sedan than a pickup truck. Also, while choosing a car, look for the purpose that it would fulfill. Decide the type of car that you want to buy and then calculate the average distance you will travel in a day. It will enable you to choose a fuel-efficient car. Once you are sure of the type of car, consider several car features. Remember that more features mean higher price.

2. Financing Process

Ideally, the process of financing should start right in the beginning. Why? It is because it will help you save time in the future. So, decide your budget and stick to it. Allocation of money for the down payment is another aspect of buying a car. Start finding ways through which you can save money for the down payment without compromising your needs. Also, consider getting a pre-approved auto loan. It is the best way of taking care of the financing process because it will give you a peace of mind.

3. Cost of Ownership

The cost of ownership of a car depends upon various factors such as car model, engine type, car manufacturer, etc. Look for a fuel-efficient car so as to minimize your monthly fuel budget. Do not forget the resale value of the car. Choose one that provides you with high resale value in the future. Remember to select a car with low maintenance cost. Ensure that its parts are available easily in the market so that you do not have to face any trouble in buying new parts for your car.

4. Visit to the Dealership Lot

Examine each and every aspect of the car at the dealership lot. Clear all your doubts by talking to a dealer executive. Talk about all the hidden costs and understand the terms and conditions clearly. Do not forget to test drive your favorite car models to choose a car that ensures comfortable driving.

When it comes to buying a car from a dealer, timing is everything. Dealers offer discounts at the end of the month to improve their sales. So, wait for the right time and do not hesitate in asking for additional discounts from the dealer. Buying your first car should not become a nightmare for you. If you want to finish the car buying process with flying colors, do not make an emotional decision. Make a practical choice and don’t get swayed by the dealer’s talks.

Reasons Lease Equipment

There are numerous benefits of leasing, a method of financing equipment which has been popular for many years. It provides some very unique benefits over conventional bank financing or an outright purchase, and here are 20 reasons to lease equipment.

1. Pay As You Use

Leasing highlights the utility value of the equipment. In other words, leasing provides the opportunity to pay for equipment as it is generating revenue for the company. No different than paying employees bi-weekly or monthly as opposed to pre-paying them for the next 2 or 3 years of work. Both are assets of the company, and it makes no sense to pre-pay for either.

2. Payments Are Fixed

In most cases, lease payments are fixed for the duration of the term. This has a major advantage over conventional bank loans or purchases from a credit where the interest rate are commonly based on a floating rate. Knowing in advance what the payments will be, facilitates ease of budgeting and reduces interest rate risk.

3. Longer Terms / Lower Payments

Many banking institutions will limit the term of a loan to 12or 24 months, at which time the rate and terms of the loan are re-negotiated. Based on the useful life of the equipment being leased, it is not uncommon the see fixed lease terms as long as 48 or 60 months. This in effect lowers the monthly payment at a fixed rate.

4. Obsolescence Protection

In this era of major technological advances, certain types of equipment purchased today, can be obsolete within one or two years. Most leases offer a provision to economically upgrade equipment within the last year of the lease contract thus giving the company a built in obsolescence protection. In addition, although the leasing company holds title to the equipment, the will generally allow the vendor to provide a trade in on the existing equipment.

5. No Down Payment

Conventional banking institutions will generally require a down payment of 10%-25% in order to undertake financing on most equipment. In a lease transaction, the entire amount is financed with only the first or first and last payment being required at the time of lease inception. In some cases where the financial strength of the company is not sufficient to support the amount being leased, a small down payment may be required.

Benefits of Novated Leasing

Here are a few of the benefits of novated leasing:

1. This type of leasing system is designed to let the employer take payments for the car and upkeep from the employee’s pre-taxable salary. This is useful for cutting the taxable salary and also to lower the income tax that will be due throughout the year. Also, the lease can include added expenses on top of the main lease repayment, such as running costs like servicing, registration and fuel. So it is possible to rely on the pre-tax salary to pay for these day-to-day costs and perhaps help lower the taxable income further. In the event that any funds set aside for running costs aren’t used up, there is the option to have this money returned to the employee.

2. For many employers, the option to offer novated leasing can provide a cost-effective and simple method to add significant value to an employment package. This is certain to make a company more appealing when it comes to staff retention or recruitment.

3. It is a practical alternative to a company running a fleet of their own vehicles. In the event the employee leaves the company, the lease and future payments or obligations will leave with them. This helps to remove a lot of the burden a company has to manage and maintain a large number of vehicles.

Disadvantages

Beyond the wide-ranging benefits of novated leasing, there are also a few disadvantages of this particular type of car financing. For instance, the tax benefits can vary with the different individuals. It is typically more favorable for the employees on the higher tax bands. There are lease companies that will which say which dealership can be used for purchasing the car. This can limit the general choice of vehicle and also the ability to negotiate the price. Also, the lease agreements contain a variety of clauses that should be read and fully understood before taking things further.

 

Mistakes Most Investors Make

Many investors have unknowingly scattered their assets, resulting in no one person managing or fully understanding their entire situation, goals or dreams. Without comprehensive planning, there actually is no plan at all.

1. Improper Asset Allocation

Most investors have their assets dispersed with several advisors and several financial firms. No single advisor knows what the other is doing resulting in an uncoordinated portfolio. One advisor in firm A might be selling the very asset that an advisor in firm B is buying. Unless there is one coach reviewing the entire portfolio, then your money is not coordinated. Your asset allocation should always reflect your current position in life, your current goals, future, feelings and family characteristics. When your hard earned money is scattered to other advisors and institutions, you alone are left to properly manage your portfolio. Many individuals are not trained to monitor this correctly and consistently. Unfortunately, the overall plan suffers.

2. Improper Correlation Within Investments, Managers and Funds

Without saying, each investment needs to be excellent on its own. The investment, manager, or mutual fund needs to have a strong track record. You might be able to select quality investments. That’s not the problem. Where the breakdown occurs is knowing how these investments interrelate. This is nearly impossible to track when one advisor is doing one thing, and a different advisor is doing just the opposite. Let’s think about a recipe analogy. You might have the best ingredients to make your favorite dish. You might even have quality chefs at your beck and call, ready to make this dish for you. If you put all of these chefs in the same kitchen, but don’t let them know what the other is doing, a culinary disaster awaits. You can see that the likelihood of your dish coming out correctly is very low, no matter how good the ingredients were. Same is true with your investment portfolio.

3. Failure to Monitor the Consolidated Portfolio

You know life is not static. Life is constantly changing. Whether it’s your job, children, the economy, world events, new laws, unplanned expenses, your world constantly moves. Your entire portfolio needs to be dynamic as well. When market forces move, the properly managed portfolio needs to move with it. I am not talking about day-trading, but rebalancing when and where appropriate. Additionally, your goals, future, feelings and family characteristics are changing as well. Every day is either a day closer to your goals, or not. Having your assets scattered makes it nearly impossible to properly monitor your portfolio based on your changing life. With the technology and tools available, along with the new open architecture available at full service financial institutions, you are better off hiring one advisor to help you monitor your portfolio. This trusted advisor will coordinate all of your eggs and not put them in the same basket.

In conclusion, years ago, many firms were limited to the solutions they could individually bring to the client. Many had their own proprietary funds or investments, which may or may not have been in your best interest. Today, full service firms have an open architecture and are able to go out into the market place and bring any solution to you that is appropriate. For your strong consideration, only hire an advisor who can go anywhere in the marketplace without limitation!

 

Auto Lending

Most people who buy a new or pre-owned vehicle from a dealership choose to finance their purchase rather than paying cash upfront. While this makes financial sense for most people, making a mistake while negotiating the terms of an auto loan can end up costing the borrower a lot of money.

1. Credit reports sometimes contain mistakes.

People with lower credit scores often must pay higher interest rates on loans, so anyone considering borrowing money should become very familiar with his or her credit report. Sometimes mistakes happen. These errors should be fixed before meeting with a lender. Some shoppers might even find that dishonest lenders may try to claim their scores are lower than they actually are. Being familiar with all three reports could give the borrower additional negotiating power and save a lot of money in the long run.

2. Shop around for the best deal on an auto loan.

Although dealerships often advertise low-APR specials, those rates are usually reserved for borrowers with the best credit. Many people will find better terms at a credit union or an online or community bank. If the borrower gets prequalified at a bank, they will be in a better position to negotiate at the car dealership without being legally bound by any agreement with the bank. Bonus tip: Any credit inquiries within the same two-week period will only count as one inquiry when affecting a report.

3. Some lenders will take advantage of subprime borrowers.

Some dishonest lenders will offer high-interest loans to drivers with poor credit, and as soon as the driver misses a payment, the dealership will confiscate the car and resell it. Defaulting on a loan will do additional damage to already bad credit, so borrowers should be sure they can afford payments before agreeing to a loan. Even subprime borrowers should shop around for the best APR. Auto lending requirements are usually lower than mortgage requirements, so shoppers should check to make sure they are getting the best deal.

 

Planning and Achieving Financial Fitness

The complex nature of financial planning means that everyone would require a financial plan tailor-made to suit their unique financial positions and circumstances. While it is impossible to do so with an article, we can give you the next best thing – an overview of the steps taken to become financially fit.

Step 1: Settling Debts

Financial planning is always complicated, so allow me to tell you a story to simplify this subject. The same applies to your bank loans. The quicker you settle your debt, the less interest you have to pay. Hence, the first step of financial planning should always be to settle all debts as soon as possible so that you can start building and accumulating wealth. By the same token, avoid rolling over your credit card balance and avoid using unsecured credit lines. Many people unwittingly bleed financially from their over-reliance of easy credit.

Step 2: Build a Safety Net

One of the reasons why financial planning is so complicated is because life is a series of wild cards. Car breakdowns, theft, layoffs, fire, flood, hospitalisation – there are a number of events that could hinder your plans to grow your wealth, for example, if you are planning to invest in fixed deposits or invest in real estate.These avenues are less flexible and you may not be able to access the funds locked up in them in the event of an emergency. Even if you are able to unlock them,you’d have to incur some form of financial penalty. And that brings me back to the second step of planning for financial fitness. A safety net is a sum of readily available fund that is set aside specifically to cushion emergencies. As such, you should steer clear from using that fund, regardless of how much you want that new phone or what discounts the Great Singapore Sale is offering. Note that you may set aside another sum of money for entertainment purposes or for occasional splurging, but your safety net should be separated from these other funds.

Health insurance is another safety net you need to consider. Medical bills are not getting any cheaper, and huge unforeseen medical bills have been known to wipe out entire savings, so do prepare, I mean, insure yourself adequately. Another issue you may wish to take note when planning for this step is that the amount needed for a safety net differs across individuals and families. Due to the fact that there are many incidents – such as layoffs, major illnesses or accidents – that halt your income, some financial experts state that your safety net should be able to cover your expenses for at least 6 months. Others, however, claim having a safety net that covers 2 months of expenses is plenty. Planning your finances with the help of a financial consultant can help you determine the amount you need to set aside for your safety net. While you’re talking to your financial consultant, you can also have them get you the appropriate life insurance or medical insurance to protect yourself and reduce your exposure to large medical bills.