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A Step-by-Step Guide on How to Apply for a Personal Loan
20 Nov 2023
Life is full of unexpected financial challenges as well as opportunities. If you need to consolidate debt, cover a medical emergency, or fund a dream holiday, a personal loan can provide the financial flexibility you need. However, applying for a personal loan can be a bit intimidating if you're not familiar with the process. Luckily, we are here to guide you through the process of applying for a personal loan. Step 1: Assess Your Financial Situation Before applying for a personal loan, it's important to assess your current financial situation. Consider the following: Loan Purpose: Clearly define why you need the loan. Knowing the purpose will help you determine the loan amount and term. Credit Score: Check your credit score, as it plays a significant role in the approval process. The better your credit score, the more favourable loan terms you may qualify for. In Australia there are three main credit reporting organisations you can use to check your credit score Equifax, Experian and Illion. Your credit report can be accessed at no charge once every three months from these organisations. Income and Expenses: Have a look at your monthly income and expenses. Create a list of what you spend every month This will help you establish a realistic budget and determine how much you can comfortably afford to borrow and repay. Step 2: Research and Compare Lenders Now that you have an idea of where you stand financially, start researching and comparing lenders. Look for the following factors: Interest Rates: Different lenders offer varying interest rates. Choose a lender with competitive rates and terms. Fees: Be aware of any application fees, origination fees, or prepayment penalties. Read the fine print. Reputation: Check online reviews and ratings to ensure the lender is reputable and trustworthy. Customer Service: Consider the quality of customer service, as it can be crucial if you encounter any issues during the loan term. Step 3: Gather Required Documents Lenders will require specific documents to process your application. Commonly requested documents include: Identification: A government-issued ID, such as a driver's license or passport. Proof of Income: Pay slips or even tax returns to verify your income. Bank Statements: Recent bank statements to assess your financial stability. Credit Report: The lender may pull your credit report, but it's good to be aware of your credit history in advance. Collateral (if secured loan): If you're applying for a secured personal loan, prepare documents related to the collateral or security. Step 4: Fill Out the Application Once you've chosen a lender and gathered the necessary documents, it's time to fill out the loan application. Many lenders offer online applications, making the process quick and convenient. Be sure to provide accurate information, as any discrepancies could delay approval. Step 5: Wait for Approval After submitting your application, the lender will review your documents and assess your creditworthiness. The approval process can take anywhere from a few minutes to a few days, depending on the lender. Some lenders offer pre-approval, which gives you an idea of your eligibility before a hard credit check is conducted. Step 6: Review and Accept the Loan Terms If your application is approved, carefully review the loan terms, including the interest rate, loan amount, repayment schedule, and any fees. Ensure you fully understand the terms before accepting the loan. Step 7: Receive the Funds Once you've accepted the loan terms, the lender will typically transfer the funds to your bank account. This process can take a few business days, so be patient. Step 8: Repay the Loan Make timely payments according to the agreed-upon schedule. Set up automatic payments, if possible, to avoid missing any due dates. Consistent, on-time payments can also help improve your credit score. Applying for a personal loan doesn't have to be a daunting process. By assessing your financial situation, researching lenders, gathering the necessary documents, and understanding the loan terms, you can secure the funds you need to achieve your financial goals. Remember to be responsible with your borrowing and repay the loan on time to maintain your financial well-being.
How Much Should I Be Spending on a Car?
06 Nov 2023
Buying a car is a significant financial decision, whether you're buying a new or used vehicle, determining how much you should spend on a car is crucial. Determining Your Budget: Factors to Consider Before You Buy Before you start, take a close look at your financial situation. Assess your monthly income, expenses, and savings. Make sure to factor in your existing financial commitments, such as rent or mortgage, utilities, groceries, insurance, and any outstanding debts. Once you have a clear picture of your financial situation, create a budget specifically for your car purchase. This budget should include not only the cost of the car itself but also related expenses, including: Monthly loan or lease payments Fuel costs Insurance premiums Maintenance and repairs Registration and taxes Depreciation (the decrease in your car's value over time) Emergency fund for unexpected expenses Spending on a Car? Use the 15% Rule to Keep Your Finances in Check! A common guideline to determine how much to spend on a car is the "15% rule." This rule suggests that your car expenses should not exceed 15% of your monthly income. This includes all car-related costs, such as the monthly payment, insurance, fuel, and maintenance. By following this rule, you can ensure that your car doesn't put a strain on your overall financial health. The Power of a Down Payment If you're financing your car purchase with a loan, consider making a substantial down payment. A larger down payment reduces the amount you need to borrow, which can lead to lower monthly payments and less interest paid over the life of the loan. Experts recommend a down payment of at least 20% of the car's purchase price. Striking a Balance: The Ideal Length for Your Loan Car loans are often available with various term lengths, ranging from 36 months to 84 months or more. While longer loan terms can result in lower monthly payments, they also mean paying more interest in the long run. Aim for a loan term of 48 to 60 months to strike a balance between affordable payments and minimizing interest costs. Don't Overspend: How Prioritising Needs Can Save You Money When Buying a Car When shopping for a car, it's essential to prioritise your needs over your wants. Consider your daily commute, family size, and lifestyle. Choose a car that meets your practical requirements without excessive luxury features that can drive up the price. Maximising Your Car's Value: The Importance of Accounting for Depreciation Cars are assets that depreciate over time, so it's essential to be mindful of a cars depreciation rate when setting your budget. Studies have revealed that Australians tend to favour automatic transmission vehicles over manual ones, as well as cars with white, black, red, or silver paint jobs. If you're planning to purchase a car and want to ensure a higher resale value, it's important to consider which vehicles will be most in-demand among future prospective buyers. Opting for a car with popular features and colours can help you avoid rapid depreciation and give you a better chance of getting a good resale price in the future. Take Control of Your Car Buying Experience: The Power of Shopping Around and Negotiating Buying a car is a significant financial decision, and it can be a stressful experience for many people. However, it doesn't have to be. By taking control of the car buying process, you can save money, find the best car for your needs, and ensure a positive purchasing experience. Here are our top tips to help you take control of your car buying experience. Research: Don't settle for the first car you come across. Do your research on the car models you're interested in and their prices. Look up reviews and ratings to ensure you're getting the best value for your money.Consider buying a used or certified pre-owned vehicle to get better value for your money. Test drive: Take the car for a test drive to ensure it meets your needs and expectations. Pay attention to the car's features and performance. Be prepared: Before negotiating, know your budget and stick to it. Know the extras: Understand the additional costs, such as taxes, registration, and insurance, and factor them into your budget. Don't forget to ask about any warranties or maintenance plans. Determining how much you should spend on a car requires a thorough assessment of your financial situation and needs. By following the 15% rule, creating a realistic budget, and making informed decisions, you can ensure that your car purchase fits within your financial means. Remember that a car is just one aspect of your life, and maintaining a healthy overall financial picture should always be a priority. Make your car purchase a responsible and well-informed choice that aligns with your long-term financial goals. Applying for a car loan? The team at Finance King are here to help Apply Now
How old is too old to get a loan?
24 Oct 2023
Asset finance is a popular means of acquiring assets such as cars, machinery, or equipment in Australia. It offers individuals and businesses the opportunity to obtain essential assets without the burden of upfront payments. However, it's important to note that there are age restrictions in place when it comes to asset finance. These restrictions can vary depending on the type of asset and the lender. In this blog post, we will explore the age restrictions for asset finance, why they exist, and what options are available for individuals who may not meet these age requirements. Age Restrictions for Asset Finance Personal Loans for Assets: When it comes to obtaining asset finance through personal loans, many lenders in Australia have age restrictions. Generally, borrowers must be at least 18 years old to apply for a personal loan. However, some lenders may set their own minimum age requirement, often around 21 or 23 years old. Car Finance: Car finance is one of the most common forms of asset finance. To finance a car in Australia, you usually need to be at least 17 years old, as this is the legal driving age. Some lenders may also have maximum age restrictions, typically around 65 to 70 years old, which can affect the term of the loan. Business Asset Finance: Businesses looking to acquire assets through financing may also encounter age restrictions. Lenders typically require business owners or directors to be of legal age, which is 18 years old. Additionally, some lenders may set maximum age limits, often around 65 to 75 years old. Reasons for Age Restrictions Age restrictions in asset finance exist for several reasons: Legal Capacity: Borrowers must have the legal capacity to enter a financial contract. In Australia, this capacity is generally recognised at 18 years old. Repayment Capacity: Lenders assess borrowers' ability to repay loans. Age can be a factor because younger individuals may not have a stable income or credit history. Asset Lifecycle: The age of the borrower can impact the useful life of the asset. Lenders want to ensure that the borrower will be able to use the asset for the duration of the loan. Options for Individuals who Don't Meet Age Requirements If you don't meet the age requirements for asset finance, there are still options available: Co-signer or Guarantor: If you're younger than the required age, you may consider having a co-signer or guarantor who meets the age criteria and has a stable financial history. This can increase your chances of approval. Build Credit History: Younger borrowers can work on building their credit history by using credit responsibly and making timely payments on existing financial obligations. A good credit history can help in obtaining asset finance in the future. Explore Alternative Financing: In some cases, you may find alternative financing options that don't have strict age restrictions. These may include lease agreements or asset rentals. Seek Advice: Consult with financial advisors or lenders who specialize in working with younger borrowers. They may be able to provide guidance and tailored solutions. Age restrictions for asset finance in Australia are in place to ensure that borrowers have the legal capacity and financial stability to manage their loans effectively. While these restrictions can pose challenges for younger individuals, there are alternative options and strategies available to help them access asset finance. It's important to carefully research lenders, seek advice, and consider your financial situation before pursuing asset finance to make informed decisions that align with your goals and circumstances.
Can You Get a Loan Without a Full-Time Job?
10 Oct 2023
In today's fast-paced world, the concept of a traditional 9-to-5 job is evolving rapidly. Many Australians are exploring alternative ways of earning income, such as freelancing, part-time work, or gig economy jobs. While these non-traditional work arrangements offer flexibility, they can also raise questions about eligibility for loans. If you find yourself in a situation where you don't have a full-time job but need financial assistance, you might be wondering whether you can still get a loan in Australia. This blog will provide insights into the possibilities and considerations when seeking a loan without a full-time job. Don't Get Confused by Loans: Understanding the Different Types and What They Mean Before diving into the loan application process, it's essential to understand the various types of loans available in Australia. Each loan product comes with its own set of eligibility criteria and requirements. Some common types of loans include: Personal Loans: Personal loans are typically unsecured and can be used for various purposes, such as debt consolidation, home improvements, or medical expenses. Car Loans: If you're looking to purchase a vehicle, you can apply for a car loan, which uses the vehicle as collateral. Home Loans: Home loans are used to purchase or refinance real estate. These loans usually require a more stable income source. Small Business Loans: Entrepreneurs and small business owners can apply for business loans to fund their ventures. How to Navigate Loan Applications with Non-Traditional Income or Supporting Documents for Loan Applications with Non-Traditional Income If you don't have a full-time job but earn income from non-traditional sources like freelancing, consulting, or part-time work, you may still be eligible for certain types of loans. Lenders are becoming more flexible in their lending criteria and may consider your income from these sources. When applying for a loan with non-traditional income, be prepared to provide: Proof of income: Bank statements, invoices, or tax returns can help demonstrate your earning capacity. A stable work history: If you have a history of consistent income from freelancing or part-time work, it can enhance your loan application. In general, asset finance lenders look for at least 6 months of continued part-time work in the same industry. A strong credit history: A good credit score can compensate for a lack of full-time employment. Collateral or Guarantors If your income is irregular or you're unable to meet traditional income requirements, you may consider providing collateral or having a guarantor co-sign your loan. Collateral can be an asset like a car or property, while a guarantor is a person who agrees to take responsibility for the loan if you cannot make payments. These options can increase your chances of loan approval. Explore Alternative Lenders: Traditional banks may have stricter lending criteria, making it challenging to get a loan without a full-time job. However, alternative lenders, such as online lenders or peer-to-peer lending platforms, often have more flexible eligibility requirements. Be sure to research these options and compare interest rates and terms before applying. Improve Your Credit Score: A strong credit score can be a significant factor in getting approved for a loan, especially if you have irregular income. Take steps to improve your credit by paying bills on time, reducing outstanding debts, and disputing any errors on your credit report. Create a Solid Financial Plan: When applying for a loan without a full-time job, it's crucial to demonstrate to lenders that you can manage your finances responsibly. Create a budget, show that you can cover loan repayments, and outline how the loan will be used for a productive purpose. While not having a full-time job may present challenges when applying for a loan, it doesn't necessarily make you ineligible. It's essential to research your options, consider alternative lenders, and be prepared to provide documentation that demonstrates your ability to repay the loan. Additionally, maintaining a good credit score and having collateral or a guarantor can increase your chances of a loan approval. Ultimately, your financial stability and creditworthiness will play a significant role in determining your eligibility for a loan, regardless of your employment status.
The Hidden Risks of Online Finance Calculators: What You Need to Know
25 Sep 2023
In today's digital age, the internet has made financial planning and calculations more accessible than ever before. Thanks to the abundance of online finance calculators, individuals can easily calculate and estimate crucial financial figures that once required the assistance of a financial advisor. With online finance calculators for mortgage payments, retirement savings goals, loan affordability, and much more. These tools are undoubtedly valuable for providing quick insights, but do they really tell the full story? We'll explore the world of online finance calculators, their benefits, limitations, and when it's crucial to dig deeper. The Pros of Online Finance Calculators: Accessibility and Convenience: One of the most significant advantages of online finance calculators is their accessibility. They are typically user-friendly, requiring no specialised software or expertise to use. This convenience allows anyone with an internet connection to access financial tools for various purposes. Quick Insights: Online calculators provide instant results, enabling users to make informed financial decisions rapidly. Whether you're considering a major purchase, planning for retirement, or comparing loan options, these calculators offer a swift way to estimate your financial situation. Educational Value: Finance calculators can serve as educational tools, helping individuals understand the impact of different financial choices. By experimenting with these calculators, users can gain a better grasp of how variables like interest rates, investment returns, and repayment periods affect their financial outcomes. Goal Setting: Finance calculators are excellent for setting and tracking financial goals. Whether you want to determine how much you need to save for retirement or assess your progress toward paying off debt, these tools can help you set achievable targets. The Limitations of Online Finance Calculators Simplified Assumptions: Most online finance calculators make simplified assumptions to provide quick estimates. For example, mortgage calculators often assume a fixed interest rate throughout the loan term, which may not reflect real-world fluctuations. These simplifications can lead to inaccurate results, especially in volatile financial markets. Ignoring Real-World Factors: Online calculators often overlook real-world complexities that can significantly impact financial decisions. They may not account for factors like taxes, inflation, changes in income, or unexpected expenses, which can all have a profound effect on your financial situation. Lack of Personalisation: Finance calculators are generic tools designed to serve a wide audience. They don't consider your unique financial circumstances, goals, or risk tolerance. As a result, the recommendations they provide may not align with your individual needs. Limited Scope: Online finance calculators are valuable for specific calculations, but they may not address the broader aspects of your financial well-being. They can't replace comprehensive financial planning, including budgeting, investment strategy, and estate planning. When to Seek Professional Advice While online finance calculators offer valuable insights, they should not be the sole basis for making critical financial decisions. Here are some situations where seeking professional advice is essential: Complex Financial Situations: If your financial situation is intricate, involving multiple income sources, investments, or debts, consulting a financial advisor or planner is crucial. They can provide personalised guidance tailored to your unique circumstances. Retirement Planning: Planning for retirement involves more than just estimating how much you need to save. A financial advisor can help you navigate tax implications, investment strategies, and distribution plans in retirement. Investment Decisions: Online calculators may not consider the nuances of various investment options. A financial advisor can help you create a diversified portfolio aligned with your risk tolerance and financial goals. Tax Planning: Tax laws and regulations are complex and subject to change. A tax professional can help you optimise your tax strategy to minimise liabilities and maximise savings. Online finance calculators can provide quick insights into different financial scenarios, assisting in informed decision-making and goal setting. However, it's vital to acknowledge their limitations. Seeking professional advice is often necessary for intricate financial situations and significant decisions. A qualified financial advisor can provide personalised guidance, considering your unique circumstances, to ensure you receive a comprehensive financial plan tailored to your needs.
Know Your Financing Options: Exploring the difference between lease loans and car loans
21 Aug 2023
Navigating the world of automotive financing can be daunting, especially with various options such as whether to lease or buy a vehicle. But what sets lease agreements and car loans (also known as a goods loan) apart? We unpack these financial terms and discover how each method impacts your wallet, ownership rights, and overall driving experience, so that you can make an informed decision that aligns with your goals as a car owner. Lease Agreement (Car Lease / Vehicle Lease) Explained In a lease agreement, the leasing company or lessor retains ownership of the car throughout the lease term. The lessee (the person leasing the car) does not own the vehicle. Under a lease agreement the lessee makes regular lease payments to the lessor, usually monthly, for the right to use the vehicle. These payments cover the vehicle's depreciation and the leasing company's profit. At the end of the lease term, the lessee typically has several options: a. Return the car to the leasing company and walk away. b. Purchase the vehicle at the predetermined residual value (buyout option). c. Trade-in the car for a new lease or purchase. Take Note of Mileage Limits: It's essential to be mindful of mileage restrictions that commonly accompany lease agreements. Going beyond the predetermined mileage limit may incur additional fees.The primary advantage of a lease is that monthly payments are usually lower than those of a traditional car loan. However, the lessee does not build equity in the car and does not own it at the end of the lease unless they choose to buy it at the residual value. Car Loan (Goods Loan) Explained With a goods loan, the borrower (buyer) takes ownership of the car from the beginning of the loan term. The lender places a lien on the vehicle as collateral until the loan is repaid in full. Throughout the loan term, the borrower makes regular instalment payments to the lender, covering both the principal (the loan amount) and interest. As these payments are made, the loan gradually gets paid off. At the end of the loan term, once all payments are made, the borrower becomes the outright owner of the car, and the lender's lien is removed. As the owner of the vehicle, the borrower can use the car as they wish and make modifications without restrictions. The primary advantage of a goods loan is that the borrower attains full ownership of the car by the end of the loan term, granting them unrestricted usage without mileage limitations. However, it's important to note that compared to leasing, monthly payments are generally higher with this financing option. In summary, a car lease entails renting a vehicle for a fixed duration with a buyout option at the lease end. On the other hand, a car loan grants ownership to the borrower from the outset, requiring regular payments to gain full ownership over time. Still have questions? Our team of experts are here to assist. Motor Loans
Understanding Car Finance Interest: A Guide for Australian Drivers
09 Aug 2023
In Australia, car finance interest operates in a manner similar to other countries, with options like secured car loans and unsecured personal loans to suit different buyers' needs. Understanding the dynamics of interest rates, credit scores, loan terms, and repayment frequency is crucial for making informed decisions when financing your car. By navigating the world of car finance wisely, you'll be well on your way to driving your dream car while managing interest costs effectively. Let's explore how interest functions within the context of car finance in Australia. 1. Secured Car Loans: Under a secured car loan arrangement, the car you're purchasing acts as collateral for the loan. This means that if you have difficulties in repaying the loan as per the agreed terms, the lender retains the right to repossess the car to recover their funds. 2. Interest Rate: Car interest rates in Australia can vary depending on several factors, such as the lender, your credit history, the loan amount, the loan term, and the duration of the loan. Generally, individuals with a good credit score tend to be eligible for more competitive interest rates. 3. Comparison Rate: When considering car finance options, it's essential to look at the comparison rate. The comparison rate is a percentage that includes both the interest rate and any additional fees and charges associated with the loan. It provides a more accurate representation of the overall cost of the loan. 4. Loan Term: Car loans in Australia typically span from 1 to 7 years in duration. Opting for shorter loan terms generally leads to higher monthly payments but reduces the overall interest paid. On the contrary, longer loan terms may result in lower monthly payments, but it could mean paying more interest over the extended period. 5. Monthly Repayments: Car finance in Australia typically involves making regular monthly repayments over the loan term. Each payment comprises a portion of the principal amount borrowed, and the interest charged for that period. 6. Balloon Payments: Certain car loans in Australia may offer the option of a balloon payment. This type of payment involves paying a larger lump sum that becomes due at the end of the loan term. Choosing this option can reduce your monthly repayments during the loan term, but you need to plan and budget for the balloon payment at the end. 7. Early Repayment: Depending on the loan terms, you may be allowed to make additional repayments or pay off the entire loan early. However, some loans may have early repayment penalties, so it's essential to check the terms before doing so.Before finalizing a car finance agreement, it's crucial to read and understand the terms and conditions, including all fees and charges associated with the loan. Additionally, shop around for the best deal, compare interest rates, and consider seeking advice from a financial advisor to ensure that you choose the best car finance option for your specific circumstances.
Good Debt vs Bad Debt: What’s The Difference
03 Jul 2023
Debt is something that just about everyone experiences in their lifetime. It can be in the form of loans, credit cards, mortgages, or other financial obligations. But did you know that there is such thing as good debt and bad debt? Good debt and bad debt are terms used to describe different types of borrowing based on their potential benefits and risks. So, what exactly is good debt, and what is bad debt? Good Debt: Good debt refers to borrowing that can potentially bring long-term benefits or improve your financial situation. It typically involves investing in assets that have the potential to increase in value or generate income. Examples of good debt include: Mortgage: Taking out a mortgage to purchase a home can be considered good debt. Real estate generally appreciates over time and owning a home can provide stability and potential equity growth. Student Loans: Borrowing money to invest in education or professional training can be seen as good debt. It can enhance your skills, increase your earning potential, and lead to better job opportunities. Small Business Loan: Starting or expanding a business often requires borrowing money. If the business is well-planned and has potential for profitability, taking on a loan can be considered good debt. Investment Loans: Borrowing money to invest in stocks, real estate, or other income-generating assets can be considered good debt if the potential return outweighs the cost of borrowing. The key characteristic of good debt is that it has the potential to increase your net worth over time or improve your financial situation over time. Bad Debt: Bad debt refers to borrowing money that typically does not provide long-term benefits and can negatively impact your financial well-being. It often involves purchasing items that quickly lose value or using credit for unnecessary expenses. Examples of bad debt include: Credit Card Debt: Using credit cards to make impulsive purchases without the ability to pay off the balance in full can lead to high-interest debt. Paying excessive interest charges can be detrimental to your financial health. High-Interest Consumer Loans: Borrowing money at high interest rates for non-essential purchases, such as luxury items, can be considered bad debt. These loans often come with high costs and may take a long time to repay. Car Loans: While having a car may be necessary for some, taking on excessive debt to purchase a brand-new vehicle can be considered bad debt. Cars typically depreciate, and high-interest loans can lead to negative equity. Payday Loans: These short-term, high-interest loans are often used by individuals facing immediate financial challenges. However, due to their exorbitant interest rates, they can quickly trap borrowers in a cycle of debt. The key characteristic of bad debt is that it does not contribute to long-term financial growth and can lead to financial stress and difficulties in repaying the debt. It's important to note and know that the classification of debt as "good" or "bad" can vary depending on individual circumstances and financial goals. While some types of debt are generally considered more favourable, it's crucial to carefully evaluate the risks, costs, and potential benefits before taking on any debt.
Simple tips to save for a holiday.
15 Jun 2023
Don't let your ideal holiday pass you by! Holidays and trips away take careful preparation, often you need to start a savings goal, you need to do research for your destination and then start to look for best offers to then make the right reservations. So, whether it be an international trip, or even a weekend away we have some handy hints to get you ahead and save to enjoy a financially stress-free holiday. Tip 1 - Set a goal. Estimate how much your holiday will be or how much you think you should spend per day? This includes thinking about accommodation, transport (how are you going to get around?), tours, experiences, food, plus do not forget to set aside additional funds for emergencies and the unexpected. Now that you have a rough figure in mind, set a goal for how much you want to save and how often. Set up a separate savings account and transfer money into it regularly, to help you track your progress. Tip 2 - Track your spending. Create a budget tracking system that works for you. Start by writing down how much you earn, then list and take away your expenses giving you an amount that potentially could be the beginning of your savings. Now write down how much you holiday savings goal is, are you close or way off? Don’t be put off, it’s good to understand your goal at this early stage so you know how much you need to save each week, month etc. Another handy hint is to keep track of your spending each week, each month to make sure you don’t get side-tracked and spend the money early on something else. Remember it can often be the little things, that un-used gym membership, that dinner at home instead and even the good old coffee can save you $1825 over a year! These cuts don’t have to last forever but will have you heading off on that dream holiday sooner rather than later. Tip 3 – Make Use of Loyalty Programs and Points. Make use of loyalty programs and points and reduce your holiday travel expenses. Whether shopping in-store or online, taking advantage of cash back rewards, loyalty programs and rewards credit cards can substantially reduce out of pocket holiday expenses. Remember it takes time to build up your points so avoid the temptation to use points throughout the year and instead bank them to pay for your travel. Tip 4 – Research. Make use of the many online travel and booking sites to compare prices and take advantage of any offers or discounts on flights and accommodation. There is no such thing as booking too early when it comes to holidays plans, the early bird always wins here so try to book tours, attractions, flights, and accommodation well in advance. But check the cancellation policy as well just in case! Tip 5 - Exchange money in advance. If travelling overseas, make sure to exchange currency before you start your trip. Your local bank or credit union generally offer the best rates, and without the exorbitant fees charged by businesses overseas who charge extra to make a profit. By following these tips, you'll be well on your way to saving enough for your dream holiday! So, there you have a few hints that could make all the difference when it comes to your next trip away, of course, if you need a little extra help, Finance King can help get you there with a personal loan.
Household Expenditure Measure (HEM) Explained
01 Jun 2023
Obtaining a home loan is a major investment, and in most cases, it is generally one of the biggest that you will make in your lifetime. It is also a process that can be long and quite complex. When applying for a mortgage, lenders will want a full financial profile including your income, savings, deposit amount, and expenses to determine your borrowing power. To make a thorough assessment of your current financial situation and to determine if you can meet the loan repayments, lenders will use combination of methods to stress test your finances, these include: Review bank statements Request a self-assessment of your living expenses Adjust expenses to match bank account history Compare against the Household Expenditure Method (HEM) What is the Household Expenditure Measure (HEM)? The purpose of a Household Expenditure Measure (HEM) is to provide a consistent measure of household financial wellbeing across the country. The Household Expenditure Measure (HEM) uses data gathered from a survey conducted by the Australian Bureau of Statistics called the Household Expenditure Survey (HES). Completed every six years, the HES analyses the household expenditure patterns of all working and non-working Australians, looking at the amount of disposable income available, as well as the amount of debt and assets they hold. It considers all the different types of expenditure that households make such as food, transport, housing (rent or mortgage), health, electricity, insurances, clothing, expenses on entertainment and other living costs, factoring in over 600 points of data. The data collected is then used by the Australian Government to inform policy decisions on welfare, taxation, and other areas of expenditure. How do lenders use the HEM? Utilised by an estimated 80% of Australian lenders the household expenditure measure (HEM) is a benchmarking tool used by lenders to assess a borrower’s capacity or ability to service a loan. This is done by analysing your household size, your income and whether you are living in a metro area or non-metro area to determine your actual living expenses. In summary, the HEM model considers the entire households living expenses versus the household’s income to determine if a loan can be serviced / repaid. What are HEM expenses? Household Expenditure Measure (HEM) factors in expenses such as: Childcare / Nanny Fees / After School Care etc Insurances: Car, life, health, home and contents etc Recreation: festivals, concerts, take-away meals, sporting matches Transports: public transport, car registration, petrol, servicing, repairs, car share ride Groceries: monthly grocery bills Personal Care / Clothing: shoes, clothing, care products and cosmetics Subscriptions: mobile, internet, streaming services, and any other subscriptions such as monthly magazine subscriptions / beauty boxes Education: Uniforms, school shoes, textbooks and all associated school fees Investment property expenses: rates, maintenance, utilities etc Medical Expenses: doctor, dentist, optometry, medications etc Any other regular expenses that are ongoing. Remember: It is important to ensure that all expenses are factored in when providing a financial profile as incorrect reporting can affect your borrowing power. Consulting your mortgage broker or lender before starting the home loan application process to ensure you understand your borrowing capability and finding the best loan for your personal needs and budget is always a good idea. For assistance with gaining an accurate assessment of your living expenses contact us today to get started.
The Pros and Cons of Buy Now Pay Later
10 May 2023
"Buy Now Pay Later" or BNPL is a financial service offer that allows consumers to pay for goods now and take delivery of it but pay for it later over a period of time. "Buy now, pay later" options can be convenient, but they also come with some risks. It's important to fully understand the terms and conditions of any "buy now, pay later" agreement before committing to it, and to make sure you have a plan to make payments on time and avoid additional fees. Here are some pros and cons of using a BNPL service. Pros: It’s Convenient: BNPL is a convenient way to make purchases without having to pay for them upfront. This can be particularly useful if you need to make a large purchase but don't have the cash on hand. Helps with Budgeting: BNPL can also be helpful for budgeting purposes, as you can spread the cost of a purchase over several months, making it more manageable. There is Interest-free periods: Many BNPL services offer interest-free periods, allowing you to delay payment without accruing any interest charges. Heaps of Competitive offers: With increasing competition in the BNPL industry, providers are offering more competitive offers and flexible repayment options, making it easier for consumers to access and use the service. Cons: Yes, you have debt: One of the biggest risks associated with BNPL is the potential to accumulate debt. If you're not careful, it can be easy to get caught in a cycle of buying now and paying later, leading to long-term debt. The Late Fees: Late payments can lead to additional fees and charges, which can quickly add up and become expensive. Impact on your credit score: BNPL services can also impact your credit score, as missed or late payments can be reported to credit bureaus and negatively impact your creditworthiness. Even applying for a BNPL service will have a impact on your credit score! Impulse buying: BNPL can also lead to impulse buying, as it's easy to make purchases without thinking about the long-term consequences. In summary, BNPL can be a convenient way to make purchases and manage your budget, but it's important to use it responsibly to avoid accumulating debt and negatively impacting your credit score.
Refinancing: Everything You Need To Know
30 Mar 2023
What is refinancing? Refinancing is the process of replacing an existing loan with a new one that has different terms, such as a lower interest rate or a shorter repayment period. Refinancing can allow borrowers to change their loan structure, consolidate debts, refinance a balloon repayment or to finance over a longer term. Refinancing is often used to reduce borrowing costs and / or to obtain a better loan structure. In most cases, refinancing is done to obtain a lower interest rate, which reduces monthly payments and overall borrowing costs. Refinancing can be a smart financial move for many borrowers, but it is important to understand the process and the potential benefits and drawbacks before deciding to refinance. Why refinance? Perhaps your needs have changed, or perhaps you are looking at getting the best deal possible. There are several reasons why you might consider refinancing a loan. Some of the most common reasons include: Lower interest rates: You’ve found a loan with a lower interest rate, allowing you to take advantage of lower rates and potentially save money over the life of the loan. Shorter repayment periods: Refinancing can also allow you to shorten the repayment period of your loan, which can help you pay off the debt faster and save money on interest. Switch to a fixed rate: If you have a variable rate loan, refinancing can allow you to switch to a fixed rate loan, which can provide more stability and predictability in your monthly payments. Consolidate debt: Refinancing can also be a way to consolidate multiple loans into a single loan, which can simplify your finances and potentially lower your overall interest rate. Either way there are several factors that need to be considered when thinking about refinancing. Refinancing is not suitable for everyone, which is why it is important to first speak with a professional, such as a finance broker, to discuss your wants, needs and current financial position before beginning any refinance application. Potential Drawbacks of Refinancing While refinancing can be a smart financial move for many borrowers, there are also potential drawbacks to consider. Some of these drawbacks include: Closing costs and fees: Refinancing typically involves closing costs and fees, which can add up to thousands of dollars. It is important to factor these costs into your decision to refinance. Longer repayment periods: If you choose to refinance to a longer repayment period, you may end up paying more in interest over the life of the loan, even if you have a lower interest rate. Impact on credit score: Refinancing can also have an impact on your credit score, as it involves applying for a new loan and potentially opening a new line of credit. Recoup your costs: Consider how long it will take to recoup the costs of refinancing through lower payments, as refinancing may not be worthwhile if the loan is paid off before the savings are realized. Understand your options, and shop around for the best deals possible. You can do this yourself, however seeking assistance from a professional, such a finance broker, takes all the heavy lifting off your shoulders. Plus, brokers have access to a broad range of lenders. Refinancing Process If you decide that refinancing is the right choice for you, the first step is to shop around and compare rates from multiple lenders. You can also work with a financial advisor or broker to help you find the best refinancing options for your specific needs. Once you have selected a lender and loan, you will need to go through the application process, which typically involves providing documentation such as income verification and credit reports. How to Shop Around When shopping around for loan interest rates, there are a few things to keep in mind. These include: Compare rates from multiple lenders: Start by researching and comparing rates from multiple lenders, including banks, credit unions, and online lenders. Consider the APR: The Annual Percentage Rate (APR) is a more accurate representation of the overall cost of the loan, as it includes both the interest rate and any fees or charges associated with the loan. Check your credit score: Your credit score will play a significant role in the interest rate you're offered, so it's essential to know your score before applying for a loan. Ask about prequalification: Some lenders offer prequalification, which can give you an idea of the interest rate you're likely to be offered without affecting your credit score. Refinancing can be a smart financial move for many borrowers, but it is important to carefully consider the potential benefits and drawbacks before making a decision. By doing your research and working with a trusted financial professional, you can make an informed decision about whether refinancing is right for you. Our team of experienced brokers are here to help you refinance. We offer refinancing solutions for: Home Loans Motor Loans Leisure Loans Equipment Loans Balloon / residual Loans With access to over 35 lenders, we do the hard work for you. The team at Finance King can get your preferred term and rate. Speak with us today on 1300 086 329.
Fixed? Variable? What’s The Difference
30 Mar 2023
When you're shopping for a loan or a credit card, you'll likely come across two types of interest rates: fixed and variable. Understanding the difference between these two types of rates can help you make an informed decision about which type of loan or credit card is right for you. Fixed Interest Rates A fixed interest rate is a rate that remains the same for the entire term of the loan or credit card. This means that your monthly payment will be the same every month, making it easier to budget and plan for your expenses. Fixed interest rates are typically higher than variable rates, but they offer stability and predictability. Variable Interest Rates A variable interest rate is a rate that can change over time based on market conditions. This means that your monthly payment can fluctuate, making it more difficult to budget and plan for your expenses. Variable interest rates are typically lower than fixed rates, but they offer less stability and predictability. Which is Better? There is no one-size-fits-all answer to this question, as the best type of interest rate for you will depend on your individual financial situation and goals. Here are some factors to consider when deciding between fixed and variable interest rates: Stability vs. Flexibility: If you value stability and predictability, a fixed interest rate may be the best option for you. If you're willing to take on some risk in exchange for potentially lower rates, a variable interest rate may be a better choice. Market Conditions: If interest rates are low and expected to stay low, a fixed interest rate may be a good choice. If interest rates are high and expected to decrease in the future, a variable interest rate may be a better option. Loan Term: If you're taking out a long-term loan, such as a mortgage, a fixed interest rate may be a better choice to provide stability over the life of the loan. If you're taking out a short-term loan, such as a personal loan, a variable interest rate may be a better choice as the fluctuation in rates may not have a significant impact on the overall cost of the loan. Understanding the difference between fixed and variable interest rates can help you make an informed decision when shopping for loans and credit cards. Consider your financial situation, goals, and the market conditions before deciding which type of interest rate is right for you. Seeking assistance? Let our team of financial experts here at Finance King help you find the best loan for you.
5 Tips for Saving on Interest
30 Mar 2023
Interest is the cost of borrowing money, and it can add up quickly over time. Whether you're dealing with credit card debt, a mortgage, or a personal loan, finding ways to save on interest can help you save money and pay off your debt faster. Here are some tips for saving on interest: 1. Pay More than the MinimumOne of the most effective ways to save on interest is to pay more than the minimum payment each month. By paying more than the minimum, you can reduce the amount of interest you'll pay over the life of the loan and pay off your debt faster. Try to pay as much as you can afford each month, even if it's just a little bit more than the minimum payment. 2. Consolidate Your Debt Consolidating your debt can also be an effective way to save on interest. By consolidating multiple loans into a single loan with a lower interest rate, you can save money on interest and simplify your finances. There are several options for consolidating debt, including balance transfer credit cards, personal loans, and home equity loans. 3. Refinancing Refinancing can be a way to save money on interest over the life of the loan. By refinancing to a lower interest rate, you can reduce your monthly payment and save money on interest over the life of the loan. Make sure to shop around and compare rates from multiple lenders to find the best deal. 4. Negotiate with Your Credit Card Company If you have credit card debt, it's worth reaching out to your credit card company to see if you can negotiate a lower interest rate. Many credit card companies are willing to work with customers to lower their interest rates, especially if you have a good payment history. 5. Use Automatic Payments Setting up automatic payments for your bills can help you save on finance interest. This will ensure that you don't miss any payments, which can result in late fees and additional interest payments. Saving on interest can help you save money and pay off your debt faster. By paying more than the minimum, consolidating your debt, refinancing your mortgage, and negotiating with your credit card company, you can reduce the amount of interest you'll pay over the life of your loan. Remember to shop around and compare rates from multiple lenders to find the best deal. Need help with shopping around for a better rate? Let the team at Finance King help. Phone 1300 086 329