Australians Are Still Struggling with Massive Credit Card Debt Issues

by: admin - June 18th, 2013   Filed under: Debt Add Comment

httpwww.onmoneymaking.comAlthough the recession has put a brake on the Australians addiction to plastic fantastic, it seems like the latest figures released by the Reserve Bank indicate that credit card debt remains an issue. According to the data issued forth by Australia’s central bank, Aussies are still amassing a massive amount of debt, currently standing at $50 billion. The past two years have seen the level of credit card debt oscillating between $48 and $50 billion – a large amount, by all standards, yet still nowhere near the impressive levels of the three decades that preceded the recession. That span of time saw the level of credit card arrears grow by 28 per cent each year. And while the global financial crisis has made consumers more aware of the impact that credit card debt can have on their lives, it’s likely that both past attitudes and current market regulations continue to influence the way Australians manage their arrears.

Aside from the cold, hard facts that the central bank made public, it seems that commercial banks are also contributing to the problem. The recent credit card reform in Australia has made conditions for inquiring credit card owners about credit limit increases more strict. Nowadays, a credit card holder can only receive an offer for a credit limit increase if they have specifically agreed to be handed such offers. However, they do still receive them, and often enough to actually buy into them. After all, it seems innocent enough: the bank agrees to let you spend more money – but if you’re cautious enough, there’s no need to end up piled-high in debt because of over-spending. What can go wrong?

Quite a lot according to mortgage brokers, including being denied your home loan. The bank’s take on your credit limit is that, the higher it goes, the more likely you are to have trouble in paying back your mortgage. This is especially true for mortgage loan applicants who have several credit cards and who do not spend up to their credit limit. The advice from Bankwest Credit cards is for credit card holders to be on their ‘best behavior’ in paying back the credit in time and in full, while also limiting their number of owned credit cards to the absolute bare minimum.

The way things stand right now, with many consumers seeking to lower their debt, it still looks like Australians are a long way away from paying off their credit card debt in full. According to a December survey, carried out by a banking product comparison website, some 11 per cent of the people polled acknowledged they were only making minimum repayments of their credit card debt each month. That means roughly 1.7 million credit cards are still largely unpaid for – and it’s going to take a lot of time to fully cover
that debt. A spokesperson of the website that carried out the poll said that, at an average minimum monthly payment of 2 per cent, with an average balance of over $3,200, it would take holders almost a quarter of a century to fully pay back their credit card purchases. On the one hand, that means the holder would be paying more than double the balance in debt alone. On the other, it draws attention to an even more jarring fact: paying off a credit card in full could take 24 years and 5 months, well over the average time span for paying off a mortgage.

What Is An Unsecured Loan?

by: admin - June 7th, 2013   Filed under: Loans 1 Comment

Father and teenager signing loan contractThere are two types of loans secured and unsecured. To understand the difference between the two is to describe each one.

A secured loan is one where the borrower uses collateral to secure the loan. The collateral  is something the person already owns such as a car or a house. The lender can use the collateral as an asset in the event the borrower defaults on a payment. The lender can then sell the asset for the amount due on the loan. A good example is a mortgage which is a type of secured loan in which the borrower’s home is used as collateral. Should the borrower default on repaying the mortgage loan, the lender can foreclose on the house and resell it for the amount due on the mortgage

An unsecured loan is one where the borrower doesn’t need collateral to get a loan. All the borrower needs to do is sign an agreement promising to repay the loan. The interest rate is determined and agreed upon by the borrower before any documents are signed. The interest rates for signature or unsecured loans are much higher than secured loans since no collateral is used.

Good examples for which unsecured loans are useful can be medical bills, payday loans and credit cards. Credit card companies require certain personal information when applying for a loan. This information includes your address, place of employment, the amount you make and whether it’s weekly, bi weekly or monthly and your social security number. They take a close look at your employment history and how long you have worked at your current place of employment and how much you make. This is a determining factor in considering you for a loan since how much you make determines if you can repay the loan. They also review your credit report to ensure there are no outstanding debts that would prevent you from repaying the loan.

Medical bills are another form of unsecured loan. When you receive services or treatment you sign an agreement to pay for the costs. Most people have insurance which pays for most of the costs for services and treatment. However, there are many items that are not covered under insurance and that is the part the patient has to pay. They sign an agreement which states they are responsible for paying those costs and agree to pay them.

Payday loans are also unsecured loans. These companies pay you the amount you apply for upfront without any collateral. Payday loans usually have very high interest rates again since there is no collateral involved. They collect the same personal information that credit card companies and hospitals collect to determine if you are able to repay the loan. Both the interest rate and the amount you can borrow are discussed before an agreement is signed. Once all the paperwork is completed you receive the money.

Any company that pays a loan upfront without any type of collateral is offering you an unsecured loan. Another type of unsecured loan is called a person to person loan. This type of loan is usually done online through websites where one person agrees to lend money to another. The borrower agrees to repay the money at an interest rate determined by the lender. This type of loan has gained popularity in recent years due to the reason that the loan can be done completely anonymous. These loans are also very popular with people that have bad credit since a credit report is not required.

 

 

Personal Loan Tips

by: admin - May 25th, 2013   Filed under: Loans Add Comment

canstockphoto11709602Most everyone has been there sometime or will be in the future, the time when a personal loan will be required for whatever reason you need some extra money. The reasons for a loan are many, they range from people wanting some extra cash for renovations, or perhaps a holiday or really anything. However one should take financial inventory when deciding to take out a loan since you will have to pay it back and even though personal loans are at record lows for the interest they are charging. You still want to be smart in your decisions. The main rule you will want to follow is taking out only what you need and plan on paying it off as quickly as possible. Also keep these other points in mind:

- Treat your loan with respect don’t spend it foolishly since you will be paying it back. While this sounds obvious, studies have shown that people who have a higher respect, for their loan tend to use it wisely, end up paying less interest and default less.

- When borrowing there can be the temptation to pay if off over a longer period of time since the payments are lower however the interest become higher. The money you end up owing will be far greater than if you tried your best to pay it off quickly.

- Use a loan calculator such as: http://www.cbonline.co.uk/personal/loans/loan-calculator/ to determine what your payments will be from a financial institution. The previous calculator does not hide anything it lets you know your APR and total payable so there are no hidden surprises.

- Don’t apply at multiple places. Do your due diligence first and determine what you feel is the best place and apply there. Filling out several and just hoping someone approves you can flag your credit report. This will alarm your possible creditors that you are desperate for money or possible even trying to pull some scheme. This will make it less likely for anyone to lend to you. It tells your possible creditors that you may be a high risk recipient.

- Check into Payment Protection Insurance. This essentially covers your payments if you fall ill, injured or lose your job. But don’t just take the lenders first offer, there are independent insurers that may be able to provide this for cheaper or provide a better insurance. But also don’t feel you need to take this either, its your choice and whatever allows you to sleep well at night may be the way to go.

- Look at Secured or Unsecured Options. If you can use security or collateral you can probably obtain the loan for cheaper because it eliminates the creditors risk of you defaulting. On the down side if you are unable to pay your loan back, they can claim your house or car or whatever you put up to back it.

 

 

How to Buy a Car for Less

by: admin - May 13th, 2013   Filed under: Personal Finance Add Comment

canstockphoto5695432With the economy still struggling to recover, motorists all over the world  will no doubt have been feeling the pinch when it comes to fuelling their vehicles and keeping them on the road. While the purchase prices for cars have remained equally as high, the slump in global finance has not been enough to deter sales from continuing to grow year on year. The simple fact is; there are now more ways than ever to get your hands on a good quality car for an even better price.

Never rush into a sale

Car salesmen know all the tricks of the trade and entering into negotiations can at times feel intimidating. In order to ensure you get the very best deal on your chosen car, you need to know as much about the vehicle as the dealer does; this is why it is imperative you do your research and shop around. Even when you have decided on the best dealership for you; making several visits and conversing with the dealer can make you feel more at ease when it comes to working out the final deal with them, by having familiarised yourself with their sales patter beforehand.

Be budget conscious

It is always best to begin your search for a new car with the clear knowledge of exactly how much you can afford to spend. Real gems can be found to suit any budget, so working out your maximum outlay and then trying to shop below this level will ensure your finances never run dry and you avoid slipping into car related debts.

Organize finance before a purchase

Many people use car loans to help fund their purchase but this money should be organized before you enter into negotiations to allow the deal to run as smoothly as possible. With an online car finance calculator you can estimate what your monthly repayments will be to ensure you get a deal that will work for you while simultaneously granting you the money you need to buy your dream car.

Size matters

Generally speaking, the bigger the vehicle the more expensive it will be not only to buy initially but also to fuel, insure and maintain in the future. Smaller, more compact cars will set you back less to get your hands on one and take you further for less money. Commanding SUVs may look great but if you don’t need and cannot afford to run one, then opting for something more suitable will save you a lot of cash.

Personal Contract Purchase

Personal Contract Purchase (PCP) is becoming an increasingly popular way of obtaining a new car for less. You pay a deposit on the model you want and immediately gain use of the vehicle. You will then pay monthly instalments over an agreed period of time until the end of your contract. The estimated value of the car at the end of your contract will have been deducted from what you have paid and you can either pay this sum and take full ownership of the car or return it in exchange for a new deal on a different model. This is a great way of regularly gaining access to the latest cars without ever paying the full purchase price.

Lying on Your Life Insurance Application: What is a Lie?

by: admin - May 8th, 2013   Filed under: Insurance Add Comment

canstockphoto8654543Unfortunately, in some cases, those who are looking into making a life insurance purchase are doing so with a bit of reluctance. They understand its necessity and benefits, but the idea of factoring it into their budget brings on migraines; especially, if they have any kind of significant medical history, or ongoing medical struggles.  You can click here to visit Suncorp directly.

This is where scribbling a few little white lies down on their life insurance application becomes a temptation—after all, when one little lie can possibly save you a few hundred bucks a month, what’s the harm?

What most don’t understand is that there is a lot of harm that can be caused from committing insurance fraud. I know what you might be thinking… “I mean, that’s an exaggeration, right? It’s not really insurance fraud, right? …. RIGHT?!”

It is! Sure, it will save you money while you’re alive and well, but what happens when you pass away and the very purpose of your life insurance policy comes to fruition; who pays the price? Your loved ones. That is, if you don’t get caught right from the get-go.

Before you hyperventilate, it’s important to understand what is and what isn’t a lie. In some cases, there is such a thing as just having bad luck and poor timing.

A WARRANTY LIE

This is any item on your application that can be filled in with full guarantee from the applicant that it is the whole truth and nothing but the truth. With these items, there’s no wiggle room—if it’s determined to be a lie, there’s going to be almost nothing you can say to get out of it.

This kind of lie would be to note on your application that you’ve never had any kind of previous heart condition, when you in fact had open heart surgery a month before your application.

Typically, you won’t succeed in getting away with a lie on one of these items, either. They are extensively investigated by the insurance company when you apply and if you’re caught, you will not only have your application rejected, but a record of this offense will be filed with the Medical Insurance Bureau (MIB: mibgroup.com), which will alert any other insurer that you might apply with.

If you do make it past the application phase with the lie and it’s discovered later, your contract will be voided and your premiums refunded.

A REPRESENTATION LIE

This is any item on your application that is filled in only with the applicant’s fully educated belief to be true. To the best of your ability, you know this to be true, but there is the possibility for human error, or discovery that it could be false.

Using the same example as before, this type of lie would occur if you noted on your application that you’ve never had any kind of previous heart condition, and then a week later it is discovered that you did all along (a first diagnosis).

When this kind of lie occurs, with no deliberate intent to fool the insurance company, there typically won’t be repercussions, only adjustments. From insurer to insurer, it will be different; some policies come with a contestation period attached and they will alter your policy and premiums according to what your new condition is. Others, will only look at your health at the time of the application and as soon as it’s accepted, you’re free and clear.