Insurance Centre

When you bought your home you might have had a wonderful job with great benefits, a company car, and maybe even an inheritance that helped you with the down payment. Now, your financial situation has changed and perhaps you have gotten married or become a parent, the great job was outsourced and you had to settle for something else, the company car is gone and you have a car loan, and at the end of the day there does not seem to be enough money to go around. You might have begun to rely on credit cards and in some ways you are robbing Peter to pay Paul every month but you can tell that this kind of financial planning is catching up with you. Mortgage arrears are just around the corner and you are afraid of what will happen when you cannot pay that high mortgage payment anymore.

Probably the best way to head off possible mortgage arrears is to get a clear picture of your financial health. Writer down every penny that comes in and every penny that goes out. Next, you will need to shift your priorities. For example, while it might be nice to have cable television, you can live without it. Your mortgage always needs to be the top priority and it needs to be paid before you pick up any other bills for payment. Some bills may be for goods and services that are redundant or perhaps not as important as they were when you signed up for them. After cutting your cable, take a look at your car insurance. Obviously, you will need car insurance, but do you really need the same kind of coverage you had when the car was new six years ago? You may be able to free up some funds by adjusting the services to which you subscribe.

If you have cut and pruned your budget but there is still a foreseeable shortfall, you will need to seek ways to increase your income. Obviously a second job is a good idea, but perhaps there are other avenues as well. Are you able to qualify for tax refunds that you have not explored? Are there write offs that you might be entitled to but have not applied for? Are you getting the homeowner exemption you should have? Are your taxes too high because the taxing authority has overvalued your home? Asking these questions may help you to find ways to keep more of your hard earned money.

Similarly, do you have a hobby that perhaps you could turn into a little freelance business? For example, if you enjoy making pottery in your spare time, you might be able to sell it online for a bit of extra income. If you dedicated a room in your home to this effort, you may even qualify for a new tax exemption! As you can see, mortgage arrears can be kept at bay if you take a diligent look at your financial health before it becomes ill!

Consumer banking is a very competitive industry. Banks battle for market share with advertising, free gifts, lower charges, higher interest rates and more.

So much energy and expense are spent attracting new business. But so little effort is invested in truly appreciating the customers they already have.

For example, have you ever bought a house with a housing loan? After you moved in, did the bank call to ask about your new home, or send you a housewarming gift?

Have you ever purchased a car with a car loan? Did the bank send you a note afterwards to congratulate you on your new car, or send you a friendly coupon for a free car wash and wax?

Do you have a credit card? Does your bank ever call you just to say ‘Thank you’ for using the card and ask if you are happy with the bank’s service?

At a bankers’ convention I asked if anyone in the audience of 3,000 routinely called their customers just to say ‘Thank you!’ The answer, predictably, was ‘No’.

The bankers were stunned by their own admission.

‘Relax,’ I said. ‘None of the other bankers here are doing it either…not yet.’

Most banking customers have accounts at more than one bank. You probably do too.

What would it take to get you to consolidate most of your banking activity to one bank? A free gift, slightly lower charges, or a higher rate of interest?

Not likely. Those incentives exist today and you still have multiple banking accounts.

But if one bank started genuinely thanking you, calling you, truly listening to your thoughts and suggestions about their banking service, would you be more inclined to rely on that bank in the future? to use them again and again? to migrate your accounts to that one bank for more comprehensive service?

What would it cost the bank to make those telephone calls to you? Not much. What might it earn the bank? A lot.

Key Learning Point

——————————————————————————–

Picking up new business is important, but it can cost a lot in advertising, special discounts, promotions and new customer orientation. Increasing your business with existing customers magnifies the loyalty of those you already have, and substantially boosts your profits.

Action Steps

——————————————————————————–

Pick up the telephone. Write a letter. Send out a few `free gifts’ – not to the new customer you’ve just signed up, but also to the loyal customers who have been with you all along.

Car loans after a bankruptcy is one of the first secured loans you will qualify for. Not only will you obtain transportation with a car loan, but you can also rebuild your credit. The following three facts will help you get the best financing deal.

1. Seven Years Doesn’t Mean Seven Years Of No Credit

Bankruptcy doesn’t mean that you can’t qualify for credit for seven years. After a few months of reestablishing your credit, you can apply with a subprime lender for vehicle financing. With a good credit record of two years or longer, you can look at conventional lenders.

Subprime lenders work with non-traditional borrowers. With their slightly higher rates, they can offer a variety of financing options to people with all sorts of credit records. Conventional lenders also look at people with bankruptcy once they have regained a good credit score.

2. Lenders Offer Different Rates – So Compare First

Lenders offer different rates from the market index. By comparing the APR, which also includes any fees, you can find the lowest costing loan. This doesn’t always mean the lowest interest rate.

Another way to reduce your rates is to increase your down payment to 20% or more. A large down payment reduces the risk of default, enabling lenders to provide better rates.

Rates also vary by the type of vehicle you purchase. New cars purchased from a dealership qualify for the lowest rates. But budget considerations, such as vehicle price, should also be considered in choosing your car’s financing.

3. You Can Refinance Car Loans

Once you sign a contract for your car loan, you don’t have to feel trapped by the rates. Today’s lenders offer refinancing options for car loans. Even if rates go up, you may find that by improving your credit score, you will qualify for better rates in two years.

If you plan on refinancing, make sure that your current car loan doesn’t have any early payment fees. Also, be aware that the majority of your interest is paid at the beginning of your loan. Waiting too long to refinance may not save you any money, so check the numbers first.

Reasonable car loan rates can be found by researching and planning ahead.