Credit Squeeze Hits Auto Industry

Banks are rejecting close to 60% of vehicle loan applications amid a credit squeeze.

Top on their red-flag list are applicants with two or more instalment defaults on other loans.

Nanyang Siang Pau reported today that apart from raising interest rates, banks are now more stringent in processing vehicle loan applications in order to lower the risk of bad loans.

"Defaulting on two instalments on any previous loan is enough to cost an applicant a rejection," a source said.

"However, it also depends on the period of default. If it is just one or two days each time, or if the borrower had forgotten about the due date, it is another story.

"But if the applicant had defaulted up to a month in repayment, it calls into question his/her ability to repay a loan," the source added.

As a matter of practice, banks consult the Central Credit Reference Information System (CCRIS) or CTOS (Credit Tip-off Service) to check the credit reports of loan applicants.

The credit reports provided by CCRIS or CTOS contain individuals' financial history specifically related to their ability to repay borrowed money.

This means past or existing loans or even credit cards held with other financial institutions will have a bearing on new loan applications.

Bank Negara Malaysia's statistics showed that of the total vehicle loans of RM7.24 billion applied for in May, only RM3.72 billion, or 51%, was approved.

The vehicle loan approval rate dropped further to 48% in June when only RM3.66 billion from a total of RM7.55 billion applied for was approved.

Perodua president and chief executive officer Datuk Aminar Rashid Salleh said many people want to make a booking but find it hard to secure loans.

"The rate of rejection of car loans is 40-45%," he said.

Federation of Motor and Credit Companies Association of Malaysia president Datuk Tony Khor said the used car business has also been hit hard by the credit squeeze and as much as 60% of the used car loan applications have been rejected.

Source:http://www.thesundaily.my/news/1158234

10 Down-To-Earth Ways to Make Money

Invest a little and let it grow

Neil McCarthy started investing in the stock market when he was 34, in the depths of the 1970s bear market. "It got scary for a while," he recalls, "but my philosophy was to invest a little bit and let it grow. When stocks went down, I would buy more."

McCarthy contributed the maximum to both his IRA and his 401(k) at Union Carbide, where he started as a research chemist and got a boost from a 100% employer match. He and his wife, Maureen, who worked as a teacher for several years, continued to save for retirement, even while they were paying for their two sons' college educations.

Their big payoff came with the 1990s bull market. "Everything kept adding up and compounding, and then it doubled in three or four years," says Neil. "It was $500,000, and suddenly it was $1 million."

The McCarthys invested mostly in stock funds but avoided technology companies. "People were going wild with Internet stocks, but it didn't make sense to me," says Neil, who did the financial analysis when he worked in marketing for Union Carbide. "When I saw P/E ratios of 200 to 300, I thought it was absolute nonsense."

Their practical investing style preserved their millionaire status when the market crashed. They also benefited from a bit of fortuitous timing when Neil, who spent the last 14 years of his career working for BP Amoco, retired in 2000. He took his retirement payout as a lump sum and invested part of the money in an immediate annuity just before interest rates started to fall, getting a bigger payout than if he had chosen the company's pension annuity.

Neil, 65, and Maureen, 61, have $1.3 million in savings, which they haven't had to touch. Counting the annuity and Neil's pension from his 20 years with Union Carbide, they have a net worth of about $2.1 million. And that doesn't include their house in Roswell, Ga., valued at about $525,000, which is almost paid off.

The McCarthys are classic stock-market millionaires, reaping the benefit of steady investing through bull and bear markets. But one piece of simple advice made all the difference: "If you wait to save out of what's leftover from your salary, it's not going to happen. Pay yourself first."

The following tips are practical, sensible, and honest ways to make money:

1.       A unique business idea: In this age of technological advancement, can you come up with a unique idea to create an app? If it is useful and popular, Google or Facebook will be willing to pay you millions to purchase your innovation and make you filthy rich. Do you have a wonderful business plan that can attract a lot of customers?  Get an idea to make a fortune.   

2.       Marketable skills: According to an article, the Best (and worst) jobs for 2014, CareerCast is out with their annual ranking of the 10 best and 10 worst jobs for 2014, and let's just say that math and science guys everywhere are about to high-five. Nine out of 10 of the best jobs fell into the STEM career category (science, technology, engineering, and math), with the "numbers guys," in particular, locking in three of the top four spots. Acquiring relevant technical skills so that you are an expert in your chosen field of endeavor. In the business world, your technical knowledge is highly sought after by employers. As long as you do a good job and continue to update your skills, you will be in demand. 

3.       Pay yourself first: You don’t spend all of what you have earned if you want to grow your wealth. You have to save some so that you can invest later when the amount is substantial.   

4.       Invest: The amount you invest, the rate of return, and how long you hold your investment will determine the size of your wealth.  Like doing business there is an element of risk involved but it is better than keeping your money in the bank and allowing inflation to erode your purchasing power and making you poorer in the long run.  

5.       Free from debt: Living within your means is the only way to stay away from getting into debt. When you are in debt you have to pay interest for the outstanding amount. More interest will be added as long as the debt is not cleared.   

6.       Learn: Read books, go online to read the latest business news. Equip yourself with financial knowledge to make wise money decisions.

7.       Reinvest for growth: Earn more by ploughing back what you have made and grow your wealth.

8.       Property: Land is a scarce resource, so property investment makes sense for the long term. Choose the location wisely. Often your home is your first investment.  

9.       Shares: Invest in companies with a solid performance in terms of sustainable growth and earnings, healthy cash flow, and consistent dividend payout. It is a reliable source of passive income.  

10.   Do not believe in get-rich-quick schemes: Do not be greedy. There is no such thing as getting a very high return within a very short period of time.   

What are your ideas about making money?

10 Things You Don’t Do With Your Credit Cards

David, a 49-year old father of three, lives in Kuala Lumpur. He holds a high position in the Management of a large corporation in the city and his income is more than RM 90,000 every year. He lives a lavish life – driving luxurious cars, dining in expensive restaurants, living in an upscale area, and sending his children to expensive private schools.

On the surface, it seemed like David’s family led a great lifestyle, filled with many international vacations and expensive materials. However, in addition to the family’s impressive collection of expensive assets, they have a less impressive collection of credit card debts; a total of RM 60,000.

A few months ago, David tried applying for a housing loan to purchase another house to add to his list of assets. The application was unfortunately rejected due to a poor credit rating resulting from late bill payments.

He decided to come to AKPK to get some advice on resolving his financial position. Firstly, the counselor advised him to stop using his credit cards. He was also advised to practice discipline when using his credit cards and to live within his means. He was reminded that the more he uses his credit cards, the more debt he takes on.

David also shared that he never checked through his five credit card statements, he simply paid the minimum 5% amount required by the banks and moved on assuming everything was in order. He was advised against this practice because this will lead to him not knowing how much his debts actually are.

He figured that he could pay off half of the outstanding right away and by doing this, he could eliminate about half of his credit card debt. He was given a budget he could work with to settle his credit card debts within a year due to his high income.

In addition to this, he also realized that his expensive “assets” would not be able to help him through his financial position and promised to make changes to his lifestyle to avoid getting into more debt. David was thankful for the guidance given by AKPK’s counselors and commented that if he had been equipped with knowledge on managing his personal finances earlier, he would not have been in debt now.

Source of this story: http://www.akpk.org.my/learning/success-stories/id/1005/story-42

A credit card is a great financial tool. However, it controls and destroys you when you are unable to manage it properly. Be smart and avoid these 10 things:  

1.      Incurring debt: Yes, a credit card gives you credit.  It is only temporary and you have to pay the outstanding amount when the statement arrives.  When you do not pay or delay payment, hefty interest will be added. The amount snowballs with compound interest the longer you postpone your payment.

2.      Paying the minimum: Always pay promptly and fully to avoid interest charges. While you are paying the minimum at the same time you are also adding more charges to your credit card account and the outstanding amount will become a much bigger sum. Over time paying the minimum amount may be beyond your financial means.

  

3.      Using it when you are already broke: When the time is bad, more people use credit cards to charge their daily expenses. It is bad because you are already running short of cash and it is unlikely for you to pay what you owed. You will end up as a bankrupt.

4.      Ignoring the monthly statements: Look closely at the monthly statement to spot any fraudulent charges, do not just pay without matching all charges with your charge slips.

5.      Getting cash advances: It is another no-no because it attracts a cash advance fee and also interest on the amount advanced.   

6.      Paying for an annual fee: Get a card that is free for life. It is foolish to pay for the use of credit cards.

7.      Paying late: Pay promptly to avoid interest charges. Make it a habit to pay when you receive the monthly statement.

8.      Spending almost reaching the credit limit: As a general rule, you do not use more than 30% of available credit. It affects your credit score adversely. It is also likely that too large an amount can be out of your control.  

9.       Spending just to earn rewards points: It is another silly thing to do by charging more and spend unnecessarily just to earn reward points. Use your cards only when you need to.

10.  Spending more than you can afford: Avoid impulse spending to break your budget. Live within your means is a golden financial rule to stay away from debt and misery. 

Are you making these credit card mistakes? 

10 Effective Ways of Debt-Free People

First a story:

Appreciate what you have!

One day . . . a wealthy family man took his son on a trip to the country so he could have his son see how poor country people live.

They stayed one day and one night in the home of a very humble farmer.   At the end of the trip, and when they were back home, the father asked his son, "What did you think of the trip?"

The son replied, "Very nice dad."

Then the father asked his son, "Did you notice how poor they were?"

The son replied, "Yes."

The father continued asking, "What did you learn?"

The son responded, "I learned that we have one dog in our house, and they have four.  

Also, we have a fountain in our garden, but they have a stream that has no end.  

And we have imported lamps in our garden . . . where they have the stars!  

And our garden goes to the edge of our property.   But they have the entire horizon as their back yard!"

At the end of the son's reply, the father was speechless.  

His son then said, "Thank you, Dad, for showing me how poor we really are."

Isn't it true that it all depends on the lens you use to see life?

One can ask himself what would happen if we give thanks for what we have instead of always asking for more.

Learn to appreciate what you have. Wealth is all in one's point of view.

Author unknown

Debt-free people are masters of money. They make the best of what they have to enjoy a care-free and debt-free life. Here are their wise ways of managing their personal finance:

1.      Smart use of credit cards: They only keep credit cards that are free for life. They just want to take advantage of credit cards to earn reward points or pay less with cash-back offers. They totally avoid credit and pay promptly and fully every time.

2.      Pay themselves first: They understand that the source of their wealth is from their savings accumulated over time with compound interest. It is their habit to incorporate an amount for savings as part of their “expense” budget. They will do it by way of auto-transfer or they will set aside an amount regularly and consistently.  

3.      Read and learn: They are hungry for knowledge and the latest happenings in the financial world. They want to be on top of things to preserve their wealth. They learn and explore ways to invest their hard-earned money for maximum gain at risk levels they can tolerate. 

4.      Live within their means: They know that their financial resources are limited; they choose to live within their means to avoid their fund being depleted. Their lifestyle is tailored according to what they can afford and not how they want to live according to the standard of others.  It means they spend less than what they earn and so there is no debt to be incurred.  

5.      Have an emergency fund: They have ready cash to meet unexpected expenditures such as paying for a major repair of their house or car. They also foresee the uncertainty of job security and they are ready for it financially for a period of time.   

6.      Invest for retirement: They know that they need a replacement source of income when they are no longer capable of earning a living. They invest their savings regularly while they are still at work and slowly build a stream of passive income for their golden years.     

7.      Monitor their spending and net worth: They use a spreadsheet to record and monitor their spending and compare it with what they have budgeted.  They review their net worth once a year to measure their effectiveness in accumulating wealth.

8.      Simple lifestyle: They are practical people with practical needs because they appreciate what they have. They don’t follow their neighbors and spend unnecessarily to match other people’s way of life.

9.      They are in control: They are patient people and impulse spending is not their way. They think first and spend later and not to allow money to control them.

10.  They have an ultimate goal: Financial freedom is their financial mission. They want to live a financially independent life. They want to be self-supporting. They do not want to live a miserable life at the mercy of others.    

Finally:

A man in debt is so far a slave. - Ralph Waldo Emerson

7 Ways to Make More Money from Your Job

“The law of work seems unfair, but nothing can change it; the more enjoyment you get out of your work, the more money you will make.” -Mark Twain

According to an article, Only rich know wage gains with no worker raise in U.S. inflation, Five years of economic expansion have done almost nothing to boost paychecks for typical American workers while the rich have gotten richer.

What can you, as a wage earner, do?

1.     Ask for a raise: It is the easiest thing to do but you have to do a lot of homework. First, you have to check career websites and find out the salary scale of your position; if you are getting less, you stand a good chance. If it is within the ranch or above you still can ask for a raise but proceed cautiously. Here are important questions to ask yourself: Are you performing and contributing to the company such as making increases in sales, cutting costs, or improving productivity? Are you doing more than what your job description required? Are you in the good book of the boss? The most important issue is to find out whether the company is making money or running at a loss.

2.     Take on more responsibilities: Is there an opportunity to move up the ladder. Getting promoted is one good way to earn more money. Are you prepared to move up? Have you got the essential skills for the job? Have you ever assumed the responsibilities for the post you aim for in one way or another like temporarily acting on your boss’s behalf during his absence?  

3.     Move on to a new environment: With your experience and the skills perhaps you are in a position to get a higher pay package in a new company. Working in a new place in the same industry after a few years is another excellent way to get more pay. 

4.     Invest in yourself and hone your skills: There is nothing better than to obtain additional paper qualifications, learn new skills, and add more value to yourself and the company you work for. Be more productive with your extra expertise. Ask for new assignments. Indirectly you are promoting yourself to be paid more.   

5.     Do more: Employers are always happy to take note of workers who are doing more than expected like helping up in another department or working overtime.

6.    Appearance: Though your image has nothing to do with what you can do at work, it plays a very important part when a boss decides to appoint someone to a higher position. When you dress smartly, display an image of confidence and you are always cheerful and happy you radiate an air of positivity.  It transmits a message to your boss that you can get the job done.  Are you projecting an image of success? Do it right and be the best candidate to get spotted and promoted.    

7.      Networking: Get connected with the right people at work so that you are on top of things and know in advance the latest development in the company. News about staff movement and new openings are important for you to decide and act before it is publicized.   

What else can you do to get more money from your job?

7 Objectives of Personal Finance

The goal of personal finance is financial freedom. There are 7 objectives to achieve this goal:

1.      Income: Your earning power is limited by what you can do with the ideas and skills you have. There are also other factors that contribute to the amount that you can earn. Among other things, luck plays an important role. Money may not bring you happiness but without money, you cannot survive. You can try to make more money but the point is that money is one of the scarce resources. This brings us to the next point.   

2.      Expenses: Your lifestyle is determined and limited by your financial resources. It does not matter how much you earn, if you don’t live within your means, you will incur debt and end up bankrupt.  The objective here is to spend less than what you can earn so that you can achieve your next objective.    

3.      Savings:  The objective of saving money serves many purposes. Having an emergency fund is on top of the list. You need an amount sufficient to meet unforeseen circumstances such as getting retrenched or meeting an exceptional expense like a major repair to your plumbing system. It is also prudent to save enough for a big-ticket item or an overseas trip.  Needless to say, you need to save for down payments to purchase your dream house and your dream car. One important objective of savings is to accumulate and build an investment fund.  

4.      Investment: The objective of investing is to grow your wealth to serve two important purposes. You need money for your children’s education and for your own retirement. The investment provides a source of passive income when you are no longer working to earn a living. It is all so well and good but life is full of unexpected events. That is the objective of the next topic.

5.      Insurance protection: Accidents do happen. You may suffer from one of the lifestyle decreases because your life is so stressful that your body cannot cope with it anymore. You need a life policy to compensate for your earning capability when you are disabled because of an accident or a critical illness. You also need insurance protection for your assets like your home and your car against unforeseen perils.

        

6.      Estate planning: When you are alive, you are there to manage your wealth, but you are not going to live forever. The objective of estate planning is to take care of your wealth when you are no longer around.  Drawing up a will is the sensible thing to do and a hassle-free way to distribute your wealth to your loved ones.   

7.      Constant monitoring: Life can present opportunities for you to earn more; you have to be prepared and ready for it. On the other hand, you have to control your spending and avoid overspending and getting into debt. You have to closely monitor your investment to meet the changing environment for the purpose of wealth preservation. You may also need to rewrite your will to reflect the current situation. Personal financial management is not a one-off thing; review your financial standing periodically. 

Conclusion

You can be financially independent when you achieve the seven objectives. 

MAS Plans to Strengthen Oversight of Credit Bureaus

Monetary Authority of Singapore

The Monetary Authority of Singapore (MAS) has published a consultation paper outlining proposals to strengthen oversight of credit bureaus so as to safeguard sensitive credit information and protect the interests of consumers.

The plan to subject credit bureaus to formal oversight under a new Credit Bureau Act comes as such entities collect more detailed borrower information from members such as banks, finance companies, and credit card companies.

MAS on Tuesday (Aug 12) said a key focus of these requirements will be for credit bureaus and their members to ensure data confidentiality, security, and integrity.

For example, members of licensed credit bureaus will be required to provide a consumer with a copy of his credit report at no cost within a specified period of approving or rejecting a credit application. MAS said this is to better enable consumers to access and verify the accuracy and completeness of their credit records.

MAS also said the proposed Credit Bureau Act will impose a legal obligation on licensed credit bureaus and their members to adopt clear and effective procedures to facilitate investigation and rectification of credit data when consumers dispute the accuracy of their credit data.

In addition, as part of good governance, a licensed credit bureau will be subject to annual audits by a MAS-approved auditor and will need to seek MAS' approval for changes to its substantial shareholders, the board of directors and chief executive officer.

The consultation paper on credit bureaus is available on the MAS website and comments should reach the central bank by Sep 12.

Currently, there are two credit bureaus in Singapore - Credit Bureau (Singapore) Pte Ltd and DP Credit Bureau Pte Ltd - that are recognised by MAS to collect and disclose credit data to members.

Credit Bureau Singapore (CBS) said in a statement on Tuesday that "the role of the credit bureau will also become increasingly important now that new measures on unsecured credit have been introduced." It adds that "on the consumers' end, the regulatory oversight will boost consumer confidence in their credit bureau".