Personal Finance Tips

Of all the credit products that financial institutions can cross-sell to a new or existing customer, credit cards are the easiest. Why?

The most common analogy for credit cross-sell in the financial services industry is cross-sell in the fast food industry. Do you want fries with that? This question is perhaps the best example of cross-sell in its most fundamental and successful form. The decision on whether or not to add fries to my meal is one of the easiest decisions I’ll ever make. Why?

Well first off, fries are relatively small in size and cost compared to other items on the menu. Which means that the decision to add them or not will not produce very serious consequences either way. Additionally, most people find fries to be a delicious addition to their meal, which means that fries, as an economic product, have strong appeal to the average consumer. Finally, fries can be added to the meal automatically if the consumer wants to add them. This means that, in regard to the customer’s valuable time, there are no negative externalities to making the decision to add fries.

Now let’s apply the same logic that makes fries such an effective cross-sell product for fast food restaurants to credit cards and financial institutions.

Credit cards, when compared to other financial products such as mortgage loans, are a relatively small and financially insignificant decision for most consumers. Therefore, the decision to add another credit card to their wallet is a relatively easy decision for most consumers to make. Additionally, just like fries, credit cards can have tremendous appeal. This is especially true with credit cards that have benefits tailored to the individual’s specific passions and personality. A Boston Celtic’s credit card that enables the holder to get tickets to Celtic’s home games would be almost impossible for a Boston Celtics fan to resist. Lastly, the acceptance of a credit card offer and the subsequent booking and authorization processes can be instantaneous. This is important when cross-selling a product that the customer did not previously request, because any inconvenience in the process might cause the customer to just forget the whole thing.

Gaining credit card customers could be easy. With an enterprise decisioning system that can deliver instant credit card decisions, banks could enable their tellers to make realtime credit cross-sell offers to all of that bank’s new and existing customers. Why can’t every decision be as easy as, would you like fries with that?

Are you aware that even in the world of strict lending business, fraudulent activities are present? The mortgage system is one of this and having awareness will give you a better understanding to detect and avoid it.

Falsification of documents – the income statement is one of the important requirements that the borrower must obtain and submit in applying a mortgage loan. However, even if it is highly required, some people are not afraid to falsify it by adding an enormous margin into it.

Remember that in order for you to qualify and entitle for a loan, most lenders would take a look on your annual income before taxes. Mostly, they would lend you an amount thrice your salary. The more you increase your annual income, the higher your chances of getting a higher loan as well. However definitely, lenders will also consider your credit score and ability to pay. This has become a trend to self-employed people since they do not have registered and fix income, their salary is hard to verify. Other borrowers would falsify their deposits which they would claim and state in the said contract.

• Mendacious collaboration with broker

If you accept money from your broker (the mediator between buyer and seller), without the knowledge of the bank or your lender, whether if it is in the form of cash or check, is considered to be a fraudulent act. The same thing as giving gifts and any form of bribe just to obtain approval from your mortgagee.

• Falsifying any claims

Do not give any false promises to your mortgage lender such as declaring you are the legal tenant in the property. If you are not the owner do not make any bogus pledge if you do not intend to stay and keep the house for good. Chances are lenders will demand higher rates and fees with this risky undertaking.

Try to make your arrangements with your lender a pleasant one, with no fabrication of stories, setting up lies and deceiving people. The consequences will definitely lead you into big trouble. If found guilty, in submitting false application the lender will press you for immediate complete payment of the loan and worse comes to worse, you will be sleeping no longer in your dream house but behind those cold bars in the jail.

To keep your self away from any false activities, never get into something that you are not willing to pay in the long run. Make sure that every detail is presented to you clearly and you can provide the needed requirements to make everything legal.

Read all the necessary information presented to you. Try to correct it if they presented wrong details (incorrect rates and fees, etc.), to avoid difficulties in the future. Keep all your records and documents safe and organized.

Do not believe in any assurance by an unknown broker. Some of them will give you high hopes and promises regarding the benefits of applying in a particular lender. However some of them will not reveal any necessary information since they are avoiding giving you any hint regarding the high interest rates and fees.

Be aware with all of the said activities and fraudulent acts. You need a mortgage loans and not any forms of unlawful activities.

Even though student education loans can give you an enormous number of opportunities, there are also some serious consequences if you cannot pay them back. Unfortunately, each day, a number of factors are serving to drive the economy deeper into the likelihood of a depression. As a result, the chances of being able to afford to pay back your student loans is becoming significantly risky.

To begin, it is important to realize that obtaining a college education will not automatically guarantee a good job, or a high paying career. In addition, you will also find that a Bachelor’s degree, and even a Master’s degree does not carry as much weight as it used to. As a result, you may have to bear the financial burden of obtaining your masters and PhD in order to achieve a high wage earning potential. At the same time, you may find your choice of graduate degree programs limited.

Consider that many universities are suffering from a lack of sufficient federal and state funding. As a result, some may be cultivating students from overseas. In some cases, the university may receive funding from the foreign country to pay for tuition, as well as fellowships and other stipend programs. As may be expected, this has the potential to limit the opportunities for people in this country to compete. In the absence of a scholarship, even if the educational backgrounds are similar, clearly, the money from overseas would be an added incentive to the university.

Before taking a student education loan, it is very important to consider what your wage earning potential will be. Among other things, you will need to plan on being at least $50,000 in debt before you even get into the job market. While consolidation can help reduce your interest rates, it will not be of much help if you cannot afford to pay your loans.

It is also important to realize that there are some serious consequences for defaulting on federal education loans. Among other things, you cannot file bankruptcy and obtain relief from Perkins loan debt. Even if you obtain your loans through GMAC, you will be forced to pay your loan back.

If you are planning to apply for a student education loan, you will need to gather info from a number of sources. Among other things, you will need to study your chosen career field, and find out how much advancement you will get from a particular degree type. If you find that graduate work is necessary, you will need to obtain information related to overseas student demographics. In particular, you will want to gain this information with respect to the program that you want to get into.

Each year, millions of students apply for student loans, hoping that the education they receive will lead to a rewarding financial future. At the same time, many students find that it is impossible to obtain a job that will cover their living expenses plus the student loan payments. While student loan lenders do everything they can to help you manage your loans, there are still times when defaulting on them is inevitable.

Though almost everybody knows how balloon loans work, it is always smart to reexamine the concept so as to have the variables implied fresh to analyze how they work on car loans.
Thus, we will give a short explanation on balloon loans and then, we’ll analyze how balloon loans can help you afford a car purchase and in which situations it is advisable to resort to car balloon loans.

Balloon loans explained

A balloon loan is a loan that has monthly payments that are not set up to repay the loan in full when the loan repayment program ends. Instead, when the loan schedule has ended, the borrower has to make a balloon payment which is larger than the rest of the payments and cancels the whole loan’s principal so until then, the loan isn’t fully paid off.

Balloon loans help keep the monthly payments low as they usually include interests only or maybe a small portion of the balance. Thus, when the final balloon payment is due, the balance of the loan usually equals the loan’s principal or is well close to it. This particularity makes balloon loans useful for certain situations or when the purpose is to eventually sell whatever has been bought with the loan’s money.

Consequences on Car Loans

Balloon loans are a good alternative when you can’t afford the monthly payments on a regular car loan. The affordability of balloon car loans’ monthly payments is excellent and lets almost anyone to obtain finance to purchase a car. However, the problem comes when you need to make that balloon payment at the end of the repayment program. If you can’t afford it, you’ll loose the vehicle and damage your credit.

Why do we say that car loans of the balloon type can be advantageous then? Because, if used correctly, the cost to you can equal almost nothing. If you are one of those who likes to change cars every now and then (i.e. every five years at most), balloon loans can be an excellent tool for you. By using balloon loans you can get a car, use it for five years owning it and paying monthly payments even lower than rent installments.

The idea is quite simple: You purchase a vehicle with a balloon car loan, you use your car for up to 75% of the loan’s repayment schedule and then you put it for sale. Hopefully, before the balloon payment is due, you’ll have completed the sale and canceled the loan in full. Then, you can take another balloon loan to purchase your new vehicle. It’s cheap and viable, the only problem is that you have to make sure that the car is sold before the balloon payment is due or else, you’ll have to obtain the money to cancel the loan or refinance it.

Of course, the environment can be a factor contributing to accident risk. Bad weather, rain, snow, strong wind – the likelihood of an accident to occur in such conditions is certainly quite high. But still, it’s much easier and cheaper to try to avoid an accident rather than having to deal with the consequences. Not to say that accidents are quite hazardous and can be deadly even if you’re not speeding. However, if you faced an accident, it really helps to remember certain things that will help you cope with the situation as effectively as possible. Here are some things to keep in mind that will actually help you.

It would be very good if you’ve had these tips printed and stored somewhere in your car, because it is so easy to forget everything when being in a stress situation. And having an accident, regardless of how serious it is, is surely a stressful situation.

First of all, you should do everything possible in order not to panic. Try to calm down and examine the situation. See what damage has your and the other party’s car sustained, ask if anyone’s injured. Other people’s health and life has priority than car damage, so if there’s anyone hurt call for medical assistance in the first place and then get busy with the vehicles. It may be a single scratch or a serious crash, so being cool-headed and able to evaluate and react accordingly is very important.

Cooperate with the police and tell everything they ask you too. Escaping the scene is not a very bright idea, because it will cause much more trouble and legal action when they find you. And it will be almost impossible to get car insurance coverage if your accident is not documented with the police. No matter who’s at fault in the accident, be there and tell everything as it happened. This will make it a lot easier and faster for everyone involved.

Don’t let yourself go. Try talking only to the policeman, answer all the questions in an informative manner. Of course, it is quite hard to remain calm, especially when you’re not at fault and the other party starts talking to you aggressively. Getting caught in an argue will only make things worse. So keep the conversations to a minimum, speaking in details only to the police and your car insurance company.

Take note of everything you can. When an accident takes place, people sometimes forget to write down the info of the other party involved, which only makes the coverage process longer. Make sure you have all the names, contacts and details written down. Before the police arrive, it really helps to call your insurance agent for an advice, and he or she will surely ask you to learn the other party’s insurance company.

In general, your insurance company should be the first to know about the accident, so it really makes sense of having their contact number somewhere in your wallet. Ask how to proceed and tell everything required as it will ease the process of filing and processing your car insurance claim.