According to new data, credit demand has increased only slightly but the value of loans for businesses and home loans is almost at a record low. The month of May saw an increase of 0.4% in home loan values, reflecting an annual growth rate of 4.5%. The lowest level was 4.4%, documented for January 2013. Business loans increased by 0.1% in May to reflect an annual increase of 0.9%.
Personal finance dropped by 0.1% for May to take them to an overall drop of 0.2% for the year. Critics say while the reserve Bank’s rate cuts have succeeded in stimulating some growth the economy is still under pressure as the banks are apprehensive about lending.
The new financial reforms that will be passed on 01 July require everyone to renew their financial commitments and the advice they get from financial planners. FOFA, or the Future of Financial Advice, was passed through Federal Parliament about a year ago and proposes new responsibilities for financial advisors and planners. Most notably they enforce the professional obligation that the customers’ needs and interests have to be put first.
That means there is a lot in them for consumers. From now on when you seek financial advice the professional you work with is mandated to charge a flat fee and not a commission. In addition, clients need to be furnished with a letter of disclosure about all the associated fees and charges for using the service.
The changes have been made to protect consumers’ interests, especially with regard to superannuation accounts, as savings and profits were being eroded by commissions.
While you might need financial advice to buy a car it is a big step to take, and one that shouldn’t be taken lightly. Next to buying a home a car purchase is likely to be the second most expensive buy you will make in your life. For people who are buying their first vehicle, it is important not to get too carried away with the freedom of being able to choose something and overspend on what you can afford.
A lot of us do not have the cash to buy a car so we need to borrow the money from a financial provider. But the cost of being able to afford a car is more than the price you pay for it. You also have other important costs to bear in mind. Investigate what the running costs will be as well as the initial payment to cover the cost of the asset. You can also expect to pay an annual registration fee and insurance cover and roadside assistance. You will need to budget for services, maintenance and repairs, and the cost of road tolls and parking.
Fortunately loans are available for new and used cars. Loan terms usually last between 12 months and five years. If you don’t finish paying your loan off in the agreed time frame you will need to settle what’s outstanding in one lump sum payment at the end of the contract.
Most car loans on offer are fixed rate so you know what your monthly repayments will be for the full term of the contract. It may sound like a good idea to pay the loan off early and bring yourself some financial relief but you will need to check if you will be charged a termination fee, by your provider, first.
Pre-approved loans are the most useful way to go out shopping for a new car. If you are shopping for a new car you will need a secured loan while a second hand car may only require an unsecured loan.