Online Financial Tips

Archive for April, 2010

It is possible to find low cost automotive financing provided you’re willing to take the time to shop around for both your new vehicle and the loan to pay for it. Below you’ll find some basic suggestions that should help you to not only find the car or other vehicle that you want but also to save some money in the financing loan that you use to pay for it.

Where to shop for a car

If you’re planning to finance all or some of the cost of your new car, you’ll have a much easier time finding low-cost financing if you purchase your car through a dealership.

Many dealerships have special auto financing deals worked out with certain lenders, and the fact that you’re buying the car from a dealership helps to provide a guarantee for the potential lenders that the purchase is legitimate.

Compare lenders

There are a variety of different lenders that can be utilized for automotive financing… some dealerships even have an in-house financing department that you can utilize. You can also get a financing loan from a variety of banks, finance companies, and online lenders, though the interest rates that each of these potential lenders charges you will depend upon the lender, the cost of the car that you’re buying, the down payment that you’re willing to make on the car, and your credit history.

Making a good down payment

One of the major factors in getting a good interest rate on your auto financing loan is the down payment that you’re able to make on the car. The larger your down payment is, the lower the amount remaining to be paid.

Comparing loan quotes

After you’ve found the car that you want to buy, you should take all of the information from the dealer to several different lenders so as to get quotes on your financing loan. It’s important to consider a variety of different lenders and get quotes from them all, since different types of lenders will offer different interest rates on their loans.

Compare all of the interest rates carefully, as well as the repayment terms that each lender offers. Use all of this information to help you to make your final decision, knowing that you’ve done your best to get the lowest interest rate available to you.

You have heard of online savings accounts haven’t you? These are accounts where the transactions take place entirely online rather than at a brick-and-mortar bank location. Why would you want to have one of these accounts? Here are 5 reasons:

1. Higher Interest Rates – Because an online bank doesn’t have the expense of running a bank location, with tellers and such, they have more capital to use to offer better interest rates for their customers. This means your money compounds and grows faster than at a traditional bank.

2. Automatic Transfers – Most online savings accounts provide automatic setups where you determine a set amount you want to contribute on a set timetable (daily, weekly, monthly). This puts savings out of mind and makes sure you actually contribute to savings (rather than spend what you have and leave you nothing to contribute).

3. Setting up sub-accounts/Savings goals – Another benefit of most online accounts is the ability to set up sub-accounts or different savings goals. You can create different accounts for different goals to help you organize your savings better. Want a Christmas fund? Set up an account for it and for a bonus create an automatic savings so you have the money in your budget.

4. Great Customer Service – I’ve found that online savings accounts tend to have great customer service when needed. Because online banks want your business they tend to make sure they have great customer service to keep you a happy customer. You don’t need to be face-to-face with someone in order to have great service!

5. Excellent Place for Emergency Savings – It’s important to have emergency savings set aside for the times life throws you a curve ball and you need money! But where to put the savings? It has to be someplace safe and with easy access. Online savings accounts provide this as well as offer up interest for your savings and automatic transfers to help grow your savings.

As you can see, an online savings account can be a great tool in your personal finance!

Getting money for your commercial project can be quite a challenge if you do not know how to analyze and present the property properly to a commercial real estate lender. Before presenting your property to a potential lender it is important to determine the most probable ratios that the lender is going to use in making a decision to lend you the money.

There is an increased risk with commercial real estate loans because of the size of the loans. Hundreds of thousands to millions of dollars are loaned on commercial properties and projects. A commercial lender wants to make sure that he or she will get their money back from the generated income of the property.

Most lenders will use the following three ratios to determine if they will loan the money on a project.

The first ratio is the debt coverage ratio or DCR. The DCR applies to the property itself and how much income it is producing compared to the debt service, or how much money is paid out towards the mortgage on a monthly basis. It is expressed by the net operating income divided by the total debt service.

The net operating income is the total income left over from the property after paying all the operating expenses. The debt service is determined by the mortgage terms, such as interest rate, length of the loan, and how often a payment is made. The higher the DCR, the more ability the property will have to cover the debt service. Many lenders require a DCR above 1.2 in order to consider it a relatively safe investment. Anything below that indicates that the property is either barely breaking even, or losing money. A lender does not want to loan money on a project that is not able to cover its debt service.

The second ratio is the loan-to-value ratio. This is expressed by the total loan balances (sum of all mortgages) divided by the market value. When you apply for a commercial loan, as you do for a residential loan, you must determine how much value of the property you are actually borrowing versus what will remain as equity. If you can acquire a loan-to-value ratio of 75%, then that is generally a good number.

If you can get more than 75% of the value loaned to you, then consider that a bonus. Lender’s rules and guidelines may differ greatly depending on how much they are willing to risk on the project.

The third ratio is the debt ratio. For smaller commercial projects commercial lenders may require that you submit personal information to back the loan. This includes your personal income and debt on a monthly basis. The debt ratio is expressed by dividing monthly housing expenses by gross monthly income.

The results show how much debt stands in relation to income. Many commercial lenders will not accept a debt ratio greater than 25%. However, some commercial lenders have been known to go up to 28% or even 36%. A debt ratio greater than 25% stands a good chance of having budget problems.

The lower debt ratio you have, the more likely you will be able to get funding for your smaller commercial project.

Before approaching any lender, it is really important to analyze these ratios on your own. They pertain to your specific deal for which you want to get financing. By performing the ratio analysis on your own, you can better determine if financing will be easy or difficult to obtain, depending on the nature of the project and its level of risk.

It may be a good idea to contact several potential lenders and ask them their basic criteria and guidelines that they follow in evaluating properties. You may find that some lenders are far more conservative than others.

By understanding your property, you can better fit a lender to your specific needs. Also remember that private lenders can be extremely helpful with those risky deals that public lenders will not even consider. Be sure that you are well equipped with the proper information and supporting documentation no matter what lender you approach.

When you set up your first internet banking account, you may have reservations about it. After all, anyone could set up a website, claim to be a bank, and fraudulently take your money. There are some precautions you can take to be sure your online bank is a legitimate one.

Start by going to the bank’s website. There, you can get the information the bank gives you about their banking credentials. The bank’s official name should be listed. There may be articles describing the history of the bank, including their internet banking history.

There should be an address where the headquarters can be found. There will be a base of operations somewhere, even if it is a virtual bank internet banking operation. If they are on the up-and-up, they will not be hesitant to tell you about their FDIC coverage.

It is easy to check a bank’s FDIC insurance. If you see the words “FDIC Insured” or “Member FDIC” or the FDIC logo, you might be on the right track. However, it is wise to go a step further. Go to the source to find out if the internet banking company is really affiliated with the federal insurer.

The FDIC has its own data base that includes all of the banking institutions, including internet banking companies that are covered by FDIC insurance. Just go to their “Bank Find” site to find out if your bank is one of them. You can start your search with the name of the bank or its address.

If your internet banking company is on that list, the FDIC will provide you with a whole list of helpful information. You will learn when the bank became insured, and the number on its insurance certificate. You will find out the location(s) of your bank and its official name. You will find out what government entity regulates that bank.

If your internet banking company does not appear on the list, it is time to go directly to the FDIC. They will be concerned with the legitimacy and safety of that bank. It is probably not wise to put your money in an uninsured bank. At that point, it is better to look for another internet banking operation.

Once you do sign up with an online bank, be cautious about how you use their internet banking website. Some unscrupulous people will use the internet to get your banking information. They will do this when you log onto your bank’s website.

The trick these dishonest people use is to set up a website that looks like your bank’s website. They have a URL that is very similar to your bank’s URL. Then, they sit back and wait for you or others to make a mistake typing in your bank’s URL that will get you to them.

From there, the fraudster will track all the information you type into the opening page. They will be able to get your user name, your password, and any other information you type. The best way to make sure you are dealing with your legitimate bank is by being very careful when typing in their site address.

If you are to trust your internet banking company, you must take precautions to assure yourself that it is a respectable business. Once you do that, you can bank with ease.

HOW DOES ONE PLAN FOR THE POSSIBILITY OF A NURSING HOME?

People are living longer – surprise, surprise. This is the good news. The bad news is that because people are living longer, there are more ill older-generation people than ever before. Whereas people used to look forward to living long enough to retire at age 65, now they anticipate living for another 20-30 years. Now, when people think about getting older, they worry about what they will do in their “golden years.”

Each generation is a little wiser than the preceding generation, and even though many of their worries are the same, the later ones have the advantage of building upon the knowledge of the previous generations. One thing that many – if not most – have learned is the need for planning. Many have seen family and friends become disabled because of illnesses or accidents in their later years, and they are also aware that there will be care needed for the older folks as their health deteriorates.

PLANNING, WHEN AND HOW?

Bill has just turned 65 and has retired. His wife, Ann, is now 63, and they have three children, all married with children of their own. Bill’s mother typically outlived her husband, Bill’s father, and has recently moved into an assisted living facility as she has difficulty in “getting around.” One of their grandchildren is autistic and required a lot of attention from her parents – her mother had to give up working to take care of the child. Their son is struggling financially as he has two children in college, one of which will go to law school if there is any way that he can afford to do so. Their daughter has a happy family, with a good husband and three lovely children. All-in-all, each of their children is totally wrapped-up with their own family matters and Bill or Ann would not want to disturb those situations under any circumstances.

Bill remembers visiting with his grandfather in an “old folks home” when he was small and his memory is that the place where his grandfather stayed smelled “funny” and was full of people who seemed to have no place to go or nothing to do, and every visit was depressing. Bill decided that he never would go to a place like that to stay.

Ann’s parents have a “plan” for such contingencies; one that they feel would serve them quite nicely. Her parents are in their early 70′s and are just now ‘starting to slow down.” Her father has difficulties in walking any distances at all and her mother is terribly forgetful, so Ann must check on her parents very often. Their plan, which they have just now started to fulfill, is to sell their house – it is way too large for them now anyway. They want to be “independent” so they do not want to move to any kind of place that “does for them.” They cannot stand the thought of not being independent. Therefore, they are planning on buying a small house or condominium in an area where they can walk to the grocery store, Wal-Mart and Applebee’s. They will use the money that they get from the sale of their house so that they will not have a mortgage, and whatever is left over will provide additional funds to supplement their Social Security and a small pension that her father has. That, in a nutshell, is their plan.

For Bill and Ann, there must be additional planning because if either of them becomes incapacitated, they are going to have to take care of themselves, as they would never impose on their children to help, as they are all busy raising their own families. If they have sufficient funds to make it worthwhile, they could use the services of an estate planner so that the surviving spouse will not be hit with a large tax burden. Trusts could be established so that the funds will be used to the best advantage of each other and their children when they both pass on, or are not able to handle their own financial matters. Perhaps they may want to use the services of a financial planner also, especially if their income is derived from various sources or they are invested in the stock market or similar investments.

What does this have to do with Long-term Care Insurance (hereinafter referred to as “LTCI”)? To jump ahead a little, in those situations where a financial planner or an estate planner becomes involved:

FT here have been, and will probably continue to be, lawsuits involved where a financial planner, estate planner, or sometimes, just an insurance agent – does not make the client aware of the availability and advantages of Long-term Care Insurance.

Heirs who anticipate inheriting sizeable estates will be quite offended if they learn that the estate has been diminished by nursing home and/or other long-term care expenses, and that the “professional” who assisted in the estate or financial planning, did not make the estate owner aware of such a program.

The debt settlement process involves negotiation with the creditors to pay off a percentage of the total debts at an agreed upon settlement amount. People often use the services of a debt settlement company for this. The process generally takes between 12 to 36 months

You can avoid creditor harassment using the debt settlement process. Debt settlement companies normally contact all your creditors and inform them that you are working with them and that you are now being represented. This helps minimize or eliminate creditor calls. The standard practice is to communicate with the company that is representing you. However creditors do not have any legal obligation to do so.

Once you sign the power of attorney authorizing the debt settlement company to negotiate with your creditors, the process begins. During the process, you must make a monthly deposit into a settlement account. The company will use funds collected in this account to repay your debts. Once all your debts are paid off, the account will be closed.

Credit card debt, medical and hospital bill debt, business loan debt, personal loans, utility bills, department store credit cards and generally any debt that is unsecured can be settled using this process. With negotiation, debt settlement companies will try and convince creditors to lower the amounts you owe them.

Using their experience, these companies can convince creditors to dramatically reduce dues and have the dues paid off in a shorter period of time. Their success lies in convincing the creditors that this is the only chance the creditors have to get back their dues rather than being left with nothing. For a debt settlement to be a success, the creditor must be satisfied that the debtor can no longer afford to repay the debt in full.

Use the services of a debt settlement expert. Most experts will provide you with a free consultation. The consultation will help you immensely. Work with the expert to set up a plan that works best with your lifestyle.