In essence, it would seem that getting a credit card is easy. After all, credit card company representatives are out and about on the streets and in shopping malls signing up new customers all the time. However, filling out the form is only the first step, and your credit score will be used to determine if you are actually wanted as a customer. So, what credit score is actually needed to get a credit card?
Will A Personal Loan Affect Your Credit Score
In 2014, changes were introduced into credit score reports. History regarding personal loans is now scrutinised more thoroughly by lenders, meaning that if you have successfully paid off a personal loan on time and on schedule it will positively affect your credit score. On the other hand, defaults or recurring late payments will reflect badly on your credit score.
The changes to the system provide a more comprehensive overview of an individuals capacity for sound money management. Rather than only negative ‘black marks’ showing up on the credit report, positive information is also taken into account. Lenders and service providers will take previous financial management into consideration.
What Credit Score Is Needed to Buy a House or Car
For most of us, purchasing a house and a car are two major situations where borrowing money is essential. They are significant financial outlays that require dedicated effort to pay off over a long period of time. Banks and other lending institutions rely on our credit score for approval of loans, so what credit score is needed to buy a house or car?
Credit scores are the safeguard banks use to protect themselves against the possibility of loan defaults. They are based on a range of data related to the borrowers previous financial accountability and present financial status. Whether we like it or not, our credit score is a personalised risk assessment, and involves disclosure of both good and bad financial dealings. The positive and negative are taken into consideration for our individual credit score.
When to Refinance a Home Loan
Paying off a home loan mortgage takes a dedicated effort over a number of years. During this time your personal circumstances might change, finances could fluctuate, and lenders will vary their interest repayment rates according to financial markets. As a borrower, you may be on the lookout for a better deal, but there are a range of factors to consider before moving ahead and refinancing your loan.
What Home Loan Can I Afford
There are a number of factors that will determine the amount you can borrow for your home. Before commencing the search for your ideal property, you will need to get an accurate idea of how much money you have to work with.
Your bank or credit provider is taking a calculated risk every time they lend money. In order to minimise the risk they will require proof of your ability to repay the loan, and an up-front deposit to protect themselves against any loss if the loan is terminated early.
How Home Loans Work
For most people, buying a home is the most significant financial investment they will make. A sizeable loan is usually required, and repayments are generally spread out over many years. Therefore, it’s important to also invest a little time into understanding your options and getting a deal that suits you. Let’s begin by learning the basics of how a home loan works.
Before discussing the different types of home loans it will help to understand what all home loans have in common.
How Much Carer’s Leave Can I Take?
Sometimes, despite the best intentions, an accident or illness can affect you or your loved ones. Such times are distressing for the individual concerned, and can also be disruptive to any business or workplace. Every situation is different, but a time could come when you are called upon to care for a close relative or household member. Fortunately, all full and part-time employees are eligible to take paid or unpaid carer’s leave in times of emergency.
How to Claim Paid Parental Leave
Modern Australian households typically involve both parents engaged in occupations outside the home, or a single parent working full or part-time in order to make ends meet. The Australian Government provides Paid Parental Leave for parents or primary carers of newborn children. Paid Parental Leave can be provided for up to 18 weeks.
Paid Parental Leave Eligibility
Paid Parental Leave is available for the primary carer (usually the birth mother) of a child. You will need to meet Australian residence requirements, and earn less than $150,000 during the year prior to the date of the child’s birth. If you are employed, you will need to be on leave or not working for the duration of your Paid Parental Leave. You will also need to satisfy the work test requirements.
How Does Home Loan Interest Work
Understanding how interest affects your home loan is an important step in the loan process. Even if the interest rate remains relatively low it will still add up to a large portion of your total repayments over the duration of a 25-30 year home loan term.
Understanding interest
Many people misunderstand how interest is calculated. For example, when investigating a $100,000 loan at 10% interest, a novice borrower might think the total amount of interest to be paid will be $10,000.
How to Buy a Car with Loan
There are a number of ways to finance a car loan, and it’s important to know you are avoiding scams, not paying for things you don’t need, and getting the best deal possible. Paying cash for a new car is beyond the realm of most people, and even if you have cash to draw on, it may still not be the best financial option due to interest and repayment rates. More than likely your new car purchase will be financed by the dealership, a bank, credit union or other financial institution. There are a range of considerations to evaluate before you make your choice.
Financing Options:
Dealership
On the face of it, financing your car purchase through the dealership would seem to make sense. After all, it’s convenient, and you can be behind the wheel of your new car in no time. The downside is that you might be negotiating with a seasoned (or even shady) dealer who is expert at extracting every dollar from their customers. It could turn into a high pressure situation where you are persuaded to accept unnecessary add-ons such as rust-proofing and additional insurance cover. The loan repayments from a dealer are often also front-loaded, meaning interest rates will be exceedingly high at the beginning of the repayment schedule.
Banks and Credit Unions
This is a popular option for a number of reasons. Interest rates are competitive, and there is no additional sales pitch for add-ons. Some banks even entice customers with free insurance. The interest rates are also spread evenly for the duration of the loan. The only real drawback is the time it takes to set up a face-to-face meeting with your bank loan-manager.
Online financiers
Institutions are understandably offering more online services, including car loans. The rates are competitive and loan approvals can be made on the internet, without additional inconvenience. However, not everyone feels comfortable with the impersonal nature of online deals, and there are always scams to beware of.
Using home equity
The rates are competitive, as your bank is in competition with other major financial institutions. If you have already paid off a large amount of your home loan, it could be convenient to extend the loan without eating into your savings. On the other hand, if you use too much equity and then decide to sell your home it could cause financial strain.
Interest rates
One of the biggest influences on your car loan repayments will be your credit rating. Lenders can access information about your credit history (including defaults) that will affect your prospects of getting a loan and the interest you will be asked to repay. If you are in the high-risk category your interest rates will be higher.
You will enjoy driving your new car more if you are not saddled with oppressive monthly repayments. Consider the duration of your loan, as a shorter loan term will incur higher monthly repayments.
Understanding how dealerships work
A car dealership has several income generating departments. Often the finance and insurance department makes as much (if not more) profit than the sales department. A dealer often acts as a middle contact between the buyer and lender. A dealer will try to get the lowest possible interest rate, and then increase it in order to profit. If you are financing through a dealer, take your time and research available rates to make sure the mark-up is not unreasonable.
Your new car dealer will also offer a bunch of incentives such as zero-percent interest or extravagant rebates on your old car. Rebates can actually be a real saving to you and are sometimes offered when dealerships are overstocked with certain makes and models. However, don’t forget that the rebate is money for you and not leverage for the dealer to insist you pay full price for your new car. There is still plenty of room to negotiate.
More ways dealers make people pay extra
Extended warranties are offered on your new car. Actually, all new cars come with a warranty that could be suitable for your needs. There are also other sources of acquiring an extended warranty such as banks and credit unions, often at better rates.
The dealer will probably also offer you rust, fabric or paint protection for additional cost. If you are purchasing a new car, rust protection and undercoating has already been applied in the car manufacturers factory. Fabric protection is the equivalent of that which you can buy in a can from any hardware store, and paint protection is a sealant car wax that you will be applying anyway when your wash your new vehicle.
Window etching and alarm systems are additional items that will safeguard your purchase. They are relatively inexpensive procedures and installations that can be done yourself or by a reputable company at a fraction of the price a car dealer will offer.
Research first – buy later
Not all car dealers are cowboys. After all, it’s in their best interest to satisfy customer requirements, and you can get a very good deal. Prior to purchasing, shop around for a loan by approaching the various lending institutions, as well as talking to your dealer. When you know exactly how much you have to spend you will be in a position to negotiate and take advantage of the best deal on offer. A little research could save you thousands of dollars on your next new vehicle purchase.
I also recommend checking the NSW Fair Trading’s Steps to buying a car page and the Moneysmart’s Buying a car page as well.
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