Be cautious just before you refinance

Christmas is a busy time of year, spending-sensible and the indications are that retailers could be in for some festive cheer, with the Australian Retailers Association estimating that Australians will commit $ 45 billion between 15 November and 24 December. This represents a 4.3% obtain on sales throughout the identical period in 2013.

Personal loan providers are possibly gearing up for this seasonal frenzy, with CANSTAR noting some especially low loan rates in the marketplace – possibly to combat the rise in numbers of credit card balance transfer bargains.

Just due to the fact interest rates are low, though, doesn’t mean you must take out a loan – or even consolidate debt that you have. We caught up with Glen Calder, senior enterprise financial planner, Westpac Economic Arranging, for a fast Q&A on individual loans and debt consolidation.

Q: So is it a good notion to consolidate your private debt?

A: There are 2 logical and rational reasons to consolidate your debts.  Firstly it is a lot easier to be paying off one particular loan and secondly it may possibly be attainable to get the interest price on the consolidated loan considerably decrease.  The very best scenario is to take credit card debt that may be costing 15-20% interest and place it on your home loan that is closer to 5%.

While this makes very good financial sense there are a couple of factors why it could be best not to consolidate.  Credit card debt is designed to be short term, it is also simple credit and effortless to run up huge debts.  If you pay off this debt by consolidating in onto your home loan, you now convert quick term debt to lengthy term debt.  This indicates that the television paid for on the credit card may possibly nevertheless be becoming paid off 20 years later.  Worse, if you then run up much more credit card debt due to the fact it is cleared you are now in a larger debt position than before.

Q: Does debt consolidation influence your credit rating?

A: Negative credit ratings arise because of default, not consolidation, even so the action to consolidate debts may seem on your credit report, noting for your application for a loan.  You can request a totally free copy of your credit rating by way of many providers.

Q: How can you keep away from receiving into debt problems once more?

Be honest with yourself.  Everybody has items they are very good at and things they are not.  If managing debt is not a strength then get credit card with low limits or only use a debit card.  Have a plan on how you pay off every debt.

If you want some aid kickstarting your savings, probably try a income detox and see how you go.

Be cautious just before you refinance

Be Cautious of those “anticipating” the green traffic lights at Intersections!

The safety of road users at intersections and traffic lights have become a major concern. The biggest threat remain blatant lawlessness amongst drivers and them not obeying the Rules of the Road!

Amongst the types of Road Traffic Crashes that are most dangerous are the T-Bone crashes where one vehicle collides at speed into the side of another. The side-walls of a vehicle offers much less protection than the engine and airbags situated at the front of a vehicle.

One of the causes of these crashes are the so-called “Red Light Accellerators and Green Light Anticipators” – Some drivers increase speed to try and get across the lights that has just turned red whilst others start driving too early in anticipation of the light going to turn green!

This is best illustrated by the above video sent to the Arrive Alive website!

View Video

Also view:

Crash Types and Types of Injuries 

Safe driving at Intersections / Intersection Safety

Be Cautious of those “anticipating” the green traffic lights at Intersections!

Light and commercial vehicle market adopting a cautious ‘wait and see’ attitude to new purchases

Steven Barker, Head of Secured Lending at Standard Bank

While the Reserve Bank remains confident that the economy is unlikely to fall into a recession, the possibility that South Africa could slide into a recession if a second quarter of negative economic activity is recorded, will impact on the sales of light and commercial vehicles alike, says Standard Bank.

The increasing pressure on the automotive sector has been particularly felt in the sales of new vehicles, says Steven Barker, Head of Secured Lending at Standard Bank. This has been apparent in the slowdown of credit growth within households, to its lowest level since November 2012 when it stood at a high of 10.4%. In April this dropped to only 4.6%.

Commercial vehicle sales are also under pressure across all categories. Fleets are getting older as replacement cycles are lengthened, and this has resulted in rapidly increased vehicle maintenance costs. Fierce competition for loads between transport operators is also leading to reduced profit margins, placing further stress on the sector.

When considering that fuel costs have increased considerably and continue to fluctuate, insurance premiums are up, and wear and tear increases as vehicles exceed their replacement cycles, and their values depreciate, the pressures within the commercial sector become obvious.”

“It was therefore no surprise that recent sales figures revealed that during May, domestic sales of new light commercial vehicles, bakkies and minibuses continued to decline year on year by 5.1% to 13866 units, although in comparison to April of the same year, we have seen a marginal increase in the number of units sold. Sales of medium commercial vehicles, at 752 units continued to dropped 14.4% year on year whilst new heavy trucks and bus sales increased by 4.3% to 1785 units.

“Vehicle Exports continue to show a sharp decline year on year at 40.5% with a total of 15613 units, some 10000 less units than May 2013. Expectations of increased exports rest heavily on an improved production in the second quarter and an introduction of another vehicle for the export market” Barker says.

With inflation creeping past the 6% ‘comfort level’ set by the Reserve Bank, many potential car and commercial vehicle buyers could also be delaying purchasing decisions, says Mr Barker.

“There was a welcome respite last month when the Reserve Bank decided not to increase the base prime interest rate-despite many predictions to the contrary.”

It can be expected, however, that rates are on their way up. More cautious vehicle buyers will consider this and the impact it could have on mortgages and other financial commitments. On the other hand, many buyers will stay in the market and either ‘buy down’ or look to acquire a pre-owned vehicle in the belief that buying now could pre-empt further increases later in 2014 and early in 2015.”

“A bright spot in an otherwise subdued outlook for the remainder of the year is that exports of the new Mercedes-Benz C-Class are expected to begin in July. This could see volumes of exports increasing and a recovery in export sales in the second half of 2014.”

Although various authoritative sources within the industry expect either a decline (Naamsa 3, 5%) in new car sales, there is consensus that the second-hand car market will show significant growth in the personal market.

“The value of sales in this arena will be bolstered by the number of low mileage vehicles that come on the market with portions of service and maintenance contracts intact. This sector will be made more attractive by expected subdued economic growth. Further price increases for new vehicles will be above the inflation rate due to pressure on the rand and interest rates.

“Whilst businesses are under strain, we urge business owners to weigh up the increased costs of servicing older fleets plus the increased down-time on your business versus purchasing new vehicles. When your maintenance costs out way the cost of a new vehicle, then the obvious choice of replacing becomes financially sound”

“Many will regard the purchase of a new vehicle at this stage of the year as a way of staying in the market, and will attempt to stabilise their motoring costs by defining their budgets and holding them at a set level. Mechanisms like balloon payments, no deposits, as well as competition amongst finance houses will undoubtedly assist these decisions.”

“Other buyers will purchase down to stay with their favourite car brand, with the belief that we have weathered recessions before, and that economic downturns are cyclical events. They will rationalise that where there is a downturn there must be an upturn, and that the purchase of a new vehicle should be seen in this light,” says Mr Barker.

Also view:

Vehicle Finance, Car Insurance and Road Safety

Buying and Selling a Vehicle – Informed decisions and the Vehicle Retailer

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Light and commercial vehicle market adopting a cautious ‘wait and see’ attitude to new purchases