How to deal with Payday Loan Debt

A payday loan should be treated like any other loan even if it might not be of similar magnitude. It is a priority debt and should be dealt with first. Remember there are consequences if you do not repay the loan. Every Payday lender has their way of debt collection and might include among other things;

• Calling your home incessantly and threatening legal action.

• Harassing your referees by calling them frequently.

•  Harassment at work by sending frequent reminders about your loan obligation through your bosses or work colleagues. 

• A payday lender might hire a debt collector to recover their money. Very often debtor collectors use unlawful means to recover money from borrowers. It should never get to this!

It is advisable to honor your obligation as quickly as possible to prevent escalating your situation. Once your debt is turned over to a debt collector, it becomes a different ball game. Expect more "harassment" and possibly legal action. But there are steps you can take to avoid your situation from escalation cited as follows;

1. Never take out a payday loan if you do not have an urgent financial emergency. Payday loans are a high cost line of credit and should be considered as a last resort. Do so only if you must!

2. Try as much as possible to clear off the debt before the due debt to avoid surcharges from the lender. The best way to avoid this is to authorize an automatic deduction from your account or credit card by the due date.

3. If you took out a payday loan and do not envisage having sufficient funds on your account by the due date, drop by the payday lender's office and negotiate on a work around. If possible ask for an extension or give them an offer to pay off part of the accrued amount. Don't wait for the lender to come after you once the due date expires. It shows you are willing to repay the loan. Be very honest in your negotiations! Do not ask for an extension just to get some relief! 

4. If you can access an overdraft from your bank, allow the payday lender to overdraw your account.  An overdraft has much lower charges than a payday loan except that you might be restricted on how much your account is overdrawn. Otherwise, go for it!

5. Negotiate a totally new deal with new terms and conditions. If for some reason you are unable to pay off the loan as per contract, discuss with the lender for; a reduction on loan charges and interest, or an installment payment plan.

6. Seek help from colleagues, friends and relatives. Sometimes you might just have to shed your pride and ask for help. But do not ask to be given, explain you financial situation to them and promise to payback once you get back on your feet. 

7. File for bankruptcy? You should never get to this point because being bankrupt is worse than being indebted. Doing business and other financial dealings become very costly once you are declared bankrupt. But if in the foreseeable future you do not see any relief and you have exhausted all other options, it's the only option left to you. 

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Payday Loans

Payday loans are high cost short-term and unsecured cash advances obtained for small amounts of money. They are also called payday cash advances. If your payday is still days away and you are hit by an emergency situation, a payday loan can save you lot's of trouble. You can access a payday loan from a street corner shop, internet site or licensed individual. It's easy and quick to access for as long as you provide proof of previous payroll or employment record. The lender is in turn given a post dated check (bearing the loaned amount, interest and other charges), which the lender cashes when the loan term expires or after your next payday. Loaned amounts do not usually exceed $500 and typical charges plus interest are usually between $10 and $30 per $100. An amount that looks affordable until the loan is rolled over. If you are not able to pay off your loan on your next pay check, the loan is said to be rolled over or carried forward into a new term. The lender adds on a surcharge to the total amount (loan and interest) you already owe for the next term. Rolling over is a controversial issue and in some jurisdictions it has been outlawed. Typical loan terms are 7-30 days.

Payday loans in the UK

In the UK strong regulation has been enacted as a result of the efforts of consumer legal advocates and welfare agencies for increased protection for payday loan borrowers. The Financial Conduct Authority(FCA) took over regulation and registration of payday lending firms on 1st April 2014.  Payday lenders in the UK, charge interest rates of 1-2 per cent per day. This translates to an annualized rate(APR) of 365-730 per cent. This is way too expensive for the borrowed amount.  The Financial Conduct Authority (FCA) has come up with new regulations to curb these usury charges as follows;

• A maximum charge of 0.8 per cent in interest and fees per day or an annualized rate 292 per cent for £100 loan.
• A maximum rollover or default fee of £15 for customers who miss repayments on their next pay check.
• A maximum cap on interest and fees chargeable of 100 per cent of the amount borrowed, irrespective of how long the loan runs.

In simpler terms, if you were to borrow £100 for a 30day term, and repay on time, you would incur a total cost of not more than £24, while taking the same loan for 14 days would cost no more than £11.20 in fees and interest.The new regulations will become effective on 1st January 2015.

Payday Lending in Australia

In Australia, the payday lending industry was loosely regulated until August 2012 when the Consumer

Credit Legislation Amendment (Enhancements) Act 2012 was passed by Parliament to further strengthen the National Consumer Credit Protection (NCCP) Act enacted in 2009 to regulate payday lending. Payday loans are also legislatively known as Small Amount, high interest, short-term loans. Payday loans are structured as follows; 

• STCCs(Short Term Credit Contracts)

STCCs have a loan term of 15days and less. These are banned by law regardless of whether they are secured or not. Lenders are explicitly prohibited from entering into STCCs.The rationale for banning STCCs was to address the risk of repeated use of this type of contract and the financial hardship which may result.

• SACCs (Small Amount Credit Contract)

An SACC is a non-continuing credit contract where the credit limit is $2,000 or less with a loan term of 16days to 2 years, and the borrower’s contractual obligations are not secured by a mortgage. Lenders are prohibited from charging interest on SACCs but charge a maximum establishment fee of 20 per cent of the adjusted credit amount and a maximum monthly fee of 4 per cent of the adjusted credit amount. The adjusted amount equates to the borrowed amount plus lenders fees.

• MACCs (Medium Amount Credit Contract)

MACCs are unsecured credit contracts in which the amount being lent is between $2001 to $5000, and the contract term is between 16 days and two years. With this kind of credit contract lenders are allowed to charge a fee of up to a maximum of $400 in addition to an interest rate of 48 per cent per year.

In addition to the above regulations, lenders are required to;

• Assess the credit worthiness of the borrower which may include checking credit reports, employment record, bank statements, etc.
• Disclose detailed loan terms including warnings such as this: "Do you really need a loan today? It can be expensive to borrow small amounts of money and borrowing may not solve your money problems."

Payday lending in the US

Payday lending is regulated by the Consumer Protection Bureau in the United States. There is very limited federal payday loan regulation,  and, despite the recent creation of the Consumer Financial Protection Bureau, the regulation of payday lending is still largely a matter for the individual states. Payday lending industry is legal in 37 states. Some US states regulate payday lending by imposing truth in lending and other disclosure obligations, responsible lending rules, and limits on the allowable amount of interest on loans.

In other states, such as; Arkansas, Georgia, Maryland, New York, etc, legislatures have concluded that the harm caused by payday loans to borrowers  is so acute and thus have prohibited these loans.

Payday lending Canada

A wide range of approaches to the regulation of payday lending exists across Canada’s provinces (where, again, there is only limited federal regulation of payday lending). Payday lending is allowed under section 347.1 of the Criminal Code of Canada for as long as there is sufficient provincial legislation provided for payday lending. In the event that no such provincial legislation exists (as is the case in New Brunswick, Quebec and Newfoundland) payday loans are restricted by usury laws to an interest rate not exceeding 60 per cent per year.

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Payday Cash Advance Repayment

In countries where payday lending is regulated, a payday lender is subjected to a disclosure and warning regulation. The lender is obligated to explain all the features of the loan, including how much you will have to pay back in terms of interest and arrangement fees, what happens if you do not pay the loan back, the extra charge you will have to pay if you do not pay the loan back on time and that the loan is not suitable for long-term borrowing. 

In the UK, all payday loan websites and payday loan adverts, must include the following warning ‘Late repayment can cause you serious money problems. For help, go to www.moneyadviceservice.org.uk. This was effected on 1 July 2014 for all payday lenders. A similar disclosure and warning regulation was made mandatory for payday lenders in Australia. While in the US, different states have instituted different regulations on payday lenders. In some states, Payday lending is strictly prohibited whereas in others similar disclosure obligations have been imposed to payday lenders.

Payday loan Repayment Options

You should engage the payday lender before engaging in any payday lending contract to explain to you the details of the loan as well as the available repayment options you can choose from. Commonly, the following options are available with most reputable payday lenders. 

• A regular one-off loan repayment on your next payday cycle: This is the cheapest and best option you should always choose. Payday lenders thrive on repeated borrowing and this option doesn't favor them much. They would rather prefer you default so that they charge you a late repayment fee in addition to your loan and interest.

• Rollover is an option which allows you to choose another date other than the initial loan due date. It is customary for a lender to levy an additional fee for late repayment. Some countries have gone ahead to put a cap on the additional fee citing predatory and extortionate charges imposed by some Payday lenders on borrowers.

• Payment Plans:  A payment plan allows an individual to pay off the loan in installments. The number of installment payments is determined by the payday lender. Some reputable payday loan lenders may stop charging interest for as long as you make regular payments as per your payment plan. In the state of Washington, law makers enacted a regulation in which you become eligible for a Payment Plan once you take four successive loans from the same payday lender. 

Payment Plans are flexible and convenient but not necessarily the cheapest option. It depends on the lender. That's why it is important to first understand all repayment options available from a payday lender as well as all the charges that apply for each option. It's advisable to limit the repayment term as much as possible to prevent getting trapped in a cycle of payday loan debt; even if it means cutting your budget to pay off the loan. 

How do you repay the Payday loan?

• If it is a one-off repayment, you can repay your payday loan by Debit Card or Credit Card. This option is more flexible and convenient.

• Continuous Payment Authority(CPA): If you anticipate to be late on your repayment or if you are on a Payment Plan, this option is the most convenient. With CPA you share your bank or credit card details with the payday lender, notify your bank or credit card provider, and instruct the lender to make regular installment debits on your account or credit card by the due date. However, you have to be careful and "keep your eyes" on your bank statements to ensure repayments and amounts are deducted to your expectation. You are free to cancel payments through your bank if payment amounts drawn are not to your expectation or if you do not have enough money on your account to cover loan repayment. You are expected to notify the payday lender should you choose to stop payments  because of the legal credit contract you have with the lender. 

• Repayment by Cash: Choose this option if you don't wish to use your credit card and running low on your bank account balance. It's not the most convenient because you will have to deliver the money in person to the lender and in addition, some lenders may reject this repayment method because they are only an online business. It's best to ask the lender the available repayment methods you can use. For a one-off payday loan repayment by cash might just be as convenient for you as adding gas in your tank!  

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Credit Card Loans

Credit cards offer a revolving line of credit. The amount of debt owed can be carried forward from month to month for as long as a minimum amount is paid before the due date. Interest charges apply on the debt carried forward. 

Just as already introduced under bank financing, credit card loans offer flexibility and convenience that we all desire. For an impulsive shopper, credit cards are just the real deal! Adding that 'super hot' pump or shoe to your collection is only a swipe away!
As convenient as it appears, you are obligated to pay back the debt to the card issuer! Most credit cards carry a maximum borrowing limit per month in the range of $2500 on average. Some companies though offer credit cards with no maximum borrowing limit, but impose certain preconditions for qualification such as full debt payment before the due date in addition to having an excellent credit history.

Credit cards

Credit card companies offer a wide range of credit card products tailored to their customers' needs and situation. For instance, there are credit cards tailored to young adults, traveling customers and those for making everyday purchases. 
The approval process for getting a credit card is a simple process that takes no more than two weeks at most. For some companies, a maximum of two days. Most importantly though, prior to applying for a credit card, you need to decide if you really need a credit card in the first place. I personally learned that credit card debt has to be controlled after getting into trouble. At one point I had over over 6 credit cards. Today, I can gladly say I carry just one for emergency situations. Discretion is key to using a credit card to your advantage. Gather as much information about the available products as possible before you get into debt. Things you need to look out for include; Annual APR, Interest rate on purchases, Transfer charges and Cash advance charges. In addition,  you might also want to know if the card option you choose is eligible for credit plans such as the zero-interest installment credit plan. 
On some credit card products you are charged a fixed interest rate and fixed annual fee, while on others, in addition to a fixed annual fee you are charged a variable interest rate. The variable interest rate varies with the prime rate from month to month. Evaluate all options and determine the package that gives you the most benefit.

Credit card costs

The following are some of the costs for using a credit card.
- Interest rate on purchases
- Interest rate on balance transfers
- Interest rate on Cash advances
- Penalty interest rate
- Card return Payment fee
- Card replacement fee
- Bad credit rate
- Instant approval rate
- etc.

Banks once in a while offer credit plans as a promotional package to keep their customers and win over some from competition. The details of these credit plans varies from bank to bank and may include variations of the following; 

Zero-Interest Credit Plan

This is a promotional product offered by banks to its customers with a good credit history usually premier customers. If you access an interest free installment credit plan, you only pay a minimum payment including a monthly installment by the due date. Depending on the arrangement with your bank and credit rating, you can access zero-interest installment plans from 6 up to 36 months durations. 

To determine the monthly installment, each purchase under an installment credit option, is divided through by the number of months specified in the installment credit plan and added to your standard plan balance plus minimum payment.

It is possible to use a zero-interest promotion to consolidate your debt. This will be discussed in detail in under debt consolidation. 

Deferred Payment Credit Plan

Deferred payment Credit plans are usually seasonal and short-term; usually not exceeding 4 months. A deferred payment period begins on the date of purchase and ends on the date when the number of months specified in the credit plan elapses. This period is also called the deferred payment period. Deferred Payment Credit plans are normally offered during festive seasons like Christmas period.

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Bank Financing

Banks make profit through issuing of debt by way of loans, lines of credit, letters of credit and overdrafts. There are several forms of debt banks can extend to you. You will be surprised by the number of loan products your bank can make directly available to you. For as long as you have a good credit score and history plus a stable source of income you can access bank debt. Some bank loans are long-term like a house mortgage while others are short-term, e.g car loan. Common examples of bank loans issued by banks are given as follows; 

Consumer Loans 

These are also referred to as personal loans. If you get a personal loan from the bank, it may be unsecured or secured against your assets or by a guarantor. Banks advance unsecured loans on the basis of your credit worthiness and ability to pay off the loan from personal income. Unsecured loans are more risky to the bank and as a consequence, the cost of accessing them is significantly higher. Higher interest rates and sometimes restricted borrowing amounts are very common for unsecured loans. Repayment is normally through fixed amount installments over a fixed term. Examples of consumer loans include; home equity loan, salary loan, computer loan, etc. 

Why get a consumer loan? 

You can get a consumer loan for;
- medical treatment
- Education
- Vacation or picnic
- Household improvement and repairs
- Purchase of appliances, computers,etc
- Daily Shopping
- etc 

Business loans 

You only get a business loan if you want to start a business, expand an already successful business, buy machinery and real estate, etc. To get a business bank loan, you apply as a business, not as yourself. If it's a new business, the bank requests for a lot of documentation to ascertain the credit worthiness of your business. Be prepared to avail all necessary documentation to this effect. In general you can easily access a business loan if your business is in the growth and expansion stage since there is clear documentation  of the profit and sales volume. Businesses in the startup phase are considered high risk and owing to this banks may ask for personal collateral in addition. 

Lines of Credit 

A line of credit can be extended to an individual or business. Just like you can tap the equity in your home to finance a purchase, a bank can lend against the value of an asset or property in your business as collateral to help finance your operations. Lines of credit are usually more fluid since you may not need to use the maximum of what you are allowed to borrow. You pay Interest only on the amount drawn. Repayments can be made immediately or over a specified period of time. To access this kind of loan you must have a good credit rating or a good relationship with the bank. 

Mortgage Loans 

This is a debt instrument in which a loan is extended to you for purchase of real estate property for which the bank retains a lien on the specified real estate property until the debt is fully repaid. A mortgage is used to make large real estate purchases without paying the entire value of the purchase up front. Over a period of many years, you repay the loan and interest, until the debt is fully repaid. If you default the bank may discretionary repossess the property to recover the amount accrued to you. 

Letters of Credit 

A letter of credit is a credit instrument mainly used in international trade to ensure that goods and services are shipped prior to receipt of payment . It is issued by the buyer's financial institution or bank(issuing bank) to the beneficiary's bank (confirming or accepting bank) to guarantee payment for the goods and services supplied for as long as the seller produces the documents specified in the letter of credit within a fixed time frame. The issuing bank assumes the buyer's obligation to pay off the seller for the goods and services supplied provided required documents are produced in a specific time frame. The buyer has the obligation to reimburse the issuing bank. Letters of credit are very useful in import and export trade where the are buyer and seller are far apart. 

Credit Card loans 

This is every shoppers 'friend'! We all like the convenience of carrying a 'plastic card' instead of chunks of cash for shopping and while on international travel (although still a few credit brands such as MasterCard, Visa, American Express, Optima, etc, are accepted internationally). Credit cards nowadays can be used literally to buy anything from an air conditioner to a pepsi at a convenience store. Although there is perceived convenience, you incur an obligation to repay the issuer of your credit card each time you hand your card to a salesman at a convenience store for billing. Some companies like American express require you to pay off all the debt in one month, while others like MasterCard,Visa and Optima offer revolving credit in which only a minimum monthly payment is made and the rest of your debt is carried forward. A finance charge is levied on the carried balance. It is prudent to limit usage of your credit and pay off all your debt each month to avoid interest charges. To learn more about credit cards please read on. 

Bank Overdraft 

If you overdraw your account below zero balance, your account is said to be overdrawn. Most banks do not provide this service explicitly to all customers. You have to make prior arrangement with your bank and agree upon the maximum amount your account can be overdrawn and the interest charged thereof. In the event you exceed the limit, higher interest rates may apply. 

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Loans

A loan is a debt extended to you by another party (organization or individual) at an interest rate, and evidenced by a promissory or contract agreement which specifies the principal amount, interest rate, date of repayment plus other terms. A loan can also be any material asset and not just money.

The sum of money you initially receive is called the principal, and you are obliged to repay an equal amount of money to the lender at a later time. In most cases depending on the size of the loan and the party from which you access the loan, you may be required to pay back in regular equal installments. The cost of the loan also called interest on the debt is lumped up together with repayments on principal in the regular repayments.

You can access a loan from an individual, colleague or relative or a legal financial institution authorized  to extend credit for profit to its customers. Such a loan could be secured or non-secured depending the arrangement and size of the loan.

Secured Loans 

To access a secured loan you need some kind of collateral normally an asset; property, car, land, house, etc. A mortgage is one example of a secured loan by which you can buy housing. In this arrangement, the money is used to buy a house. The bank, however, is given security — a lien on the title to the house — until the debt is fully discharged. If you default on the loan, the bank has the legal right to repossess the house and sell it, to recover what you owe to them.

In similar circumstances, you can take loan to buy a car and secure the loan in much the same way as a mortgage is secured by housing. The duration of a car loan is considerably shorter — 36 to 72 months normally. 

Unsecured Loans

No collateral or security is required to access this category of loans. They are offered by financial institutions as marketing packages. Some examples include; credit card debt, salary loans, corporate bonds, bank overdrafts, lines of credit, etc. The interest rates chargeable on these loans may be somewhat higher and not regulated by law depending on the lender and borrower. Interest rates on unsecured loans are always higher than for secured loans, because an unsecured lender's options for recourse against the borrower in the event of default are severely limited. An unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be irrecoverable.

Demand Loans

Demand loans are short-term loans that do not have fixed repayment dates and carry a floating interest (APR & VPR) rate which varies according to the prime rate published regularly by the wall street Journal in the US. In the UK it is known as the LIBOR or London Inter Bank Offered Rate. Demand loans can be "called" for repayment by the lending institution at any time. 

Concessional Loans

A concessional loan is a soft loan granted on more generous terms than market loan terms either through below-market interest rates, by grace periods or a combination of both. Such loans may be made by foreign governments to poor countries or may be offered to employees of lending institutions as an employee benefit.

Subsidized Loans

A subsidized loan is offered at a reduced interest rate. College loans in the United States are an example in which no interest accrues for as long as the student remains enrolled in education.

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Dealership Add-ons

Dealerships give several options to buyers to make more money and among them include finance, vehicle and security protection.  

Finance Protection

Finance protection covers Life insurance, Disability Insurance and Extended Protection warranties.

a) Life insurance protects your family from the financial risks due to an untimely death. Should you die before the financial obligation on your vehicle is fully re-paid, your family does not pay out the loan. Life Insurance Protection covers the entire term of your loan.

b) Disability insurance is designed to protect you from financial risks of an interruption in your ability to earn an income. It is a 24 hour accident and sickness insurance that makes your payments for an extended period should you become injured or fall sick and unable to earn an income.

c) Extended Protection Plan is similar to vehicle compressive insurance. It protects you from unexpected breakdowns and unforeseen costly repairs.

Vehicle Protection

a) Leather and Vinyl Protection

The sun's harmful ultraviolet rays cause fading, cracking, and discoloration of your vehicle's leather and vinyl interior. Leather and Vinyl Protection involves using penetrating conditioners to create a barrier that locks in the essential oils and pigments, and provides ultraviolet sunscreen while still allowing the leather to "breathe". This in turn prevents aging of your vehicle's interior leather and vinyl.

b) Fabric Protection

Spills and everyday mishaps are almost unavoidable, many leaving permanent stains on your new vehicle's seats and floor. Fabric Protection is an invisible barrier that ensures easy clean-up of spills to avoid permanent staining. Penetrating each fiber to repel moisture and dirt, while the treated fabric remains perforated.

c) Paint Sealant

The sun's powerful ultraviolet rays cause your car paint to fade. The clear coat finish on your vehicle's painted surface is uneven. These peaks and valleys trap dirt, salt, pollutants and moisture which dull the finish, ruin the look of your vehicle, and affect its resale value. Paint Protection bonds to the surface completely sealing the paint. It creates a smooth, durable finish that protects your vehicle against a harsh environment. This long-lasting sealant protects and enhances your vehicle's clear coat with no need for waxing or reapplication.

d) Undercoat Protection

Disturbing road noise and vibrations can make a long road trip even longer and more tiring. Undercoat Protection is specially formulated for exposed high impact areas. This pliable product will not crack, peel, or chip. It seals out moisture and protects your under-carriage components from road debris. It also provides insulation from extreme temperatures and reduces disturbing road noise, offering you're a quieter more enjoyable ride.

e) Tire and Rim Protection

This includes flat tire repair, replacing irreparable tires or rims if damaged and won't hold air, all related taxes & levies, no deductible, mounting, balancing, installation plus covers original or replacement tires.

f) Rust Spray

Rust not only ruins the appearance and value of your vehicle, it shortens its life and structural integrity. Today's vehicles have many hard to reach places where moisture can collect causing rust formation. Platinum Shield Rust Inhibitor Spray Protection Seals your vehicle's inner body metal surfaces and stops rust perforation from the inside out.

g) Corrosion Control Module

Corrosion Control Module is the ultimate solution in the fight against rust. A pulse amplifier microprocessor generates a repetitive pulse surface current, distributed to all grounded body panels thereby, protecting other areas such as the roof and inseams that conventional products cannot reach.

The Corrosion Control Module draws a small amount of DC energy from the vehicle's battery and directs it through a microprocessor, which converts this energy into an AC current.

Through patented state of the art technology built into the Corrosion Control Module, a pulse amplifier (another microprocessor) generates a repetitive "pulse" surface current, which is distributed on to conducting (grounded) body panels of the vehicle (travels on the surface of the metal) to help inhibit the corrosion process (slows down the oxidation process).

Being energy efficient, the Corrosion Control Module is built with "Smart Circuit" technology to insure that when the battery voltage is low, you are not put into a "no start" situation.

The Module is mounted in the engine compartment of the vehicle with a Velcro pad and is powered by the existing 12 volt car battery. Actual size of the module is 8 cm x 5.5 cm x 2.2 cm. Grounded body panel to create surface flow. Externally fused to protect the unit from power surges, the Corrosion Control Module has been tested to exacting standards by world-renowned certified testing laboratories.

h) Maintenance Kit

The Maintenance Kit will noticeably extend the life of your vehicle's appearance when properly maintained. It includes; a Paint Cleaner, Car Wash Concentrate,  Premium Leather Conditioner,  Spot Remover,  Chamois and  Applicator Sponge.

Security Protection

a) Vehicle Identification Code

A non-removable, police traceable identification code is permanently etched on all the major glass of your vehicle or imprinted onto selected body panels of your vehicle. The identification code is registered into a national database that is cross-referenced to the manufacturer's Vehicle Identification Number (VIN), the selling dealership, and the vehicle's owner.

b) Warning Decal

Visible warning decals on the driver and front passenger windows identify the vehicle as being registered with a national theft prevention company. These decals warn thieves that the vehicle's key components are marked.

c) Theft Recovery

Security Protection also aids in recovering stolen vehicles and assists you with related expenses. The Platinum Security Protection system discourages thieves from stealing marked vehicles.

d) The Nitrogen Tire Inflation Safety Program

e)Paint Protection

Paint protection film to help prevent damage such as rock chips, bad weather and salted roadways to your vehicle and headlights. The protection is virtually invisible to the naked-eye, allowing the manufacturers aesthetics to shine through.

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Car Dealership Financing

When you approach the dealership for financing, the first thing your business manager does is to run your credit report and sends your credit information to the lenders they deal with. The business manager then takes the lowest approved interest rate and tops it up with dealership's profit on the financing. There is no law saying the dealer has to show that profit to you. This is why you have to do loan and price research and have a benchmark for negotiations! Be equipped with some business lingo that might be used to take advantage of you.

Zero percent APR (Annual Percentage Rate)

Also known as zero percent interest. To good to be true, isn't it? Not everyone can get 0% APR, because it applies to those with a good credit score to ramp up sales on select models. The chances are high that model for which it applies is not the car you want. Very often 0 % APR is applies to short-term loans (not exceeding 3 years) only.

Consumer Rebates

The manufacturer gives rebates to consumers directly on certain models, so this shouldn't come up during price negotiation with the salesperson. It is not part of the dealer's package.

Simple Interest

Also called "flat rate interest," simple interest is calculated only on the total amount of the loan by multiplying the principal balance by the rate of interest by the term of the loan. This number is then divided by the number of months of the loan for the amount of interest paid each month. This is the best option for you and should bargain for this.

Compound Interest

Compound interest requires you to pay more interest at the beginning of the loan period than at the end. The longer the term of the loan the more interest you will pay. This is only good for short-term loans.

Base M.S.R.P

A short form for Base Manufacturer's Suggested Retail Price. This is the manufacturer recommended retail for a particular model as delivered from the factory. It does not include items the dealer has added such as security systems, Vehicle Identification Number etching, etc.

Base M.S.R.P Plus Options

This price includes the Base M.S.R.P. plus all options added at the dealership. The options range might include, finance protection, Vehicle protection and  Security protection. The sales person will always try to sell you these options because that's where they make the most money. Only accept what you can afford and in your view is necessary. Don't stretch your pocket too much!

­While negotiating for a financing deal with the business manager, you should bargain on the chargeable Interest rate, duration of the loan, down payment, rebates, and monthly payments. Ask about early repayment penalties and nature of interest(should stay the same for the loan duration). If you can't get a good deal, walk away! You can always get it elsewhere, but don't compromise too much for the sake of completing the deal. If you do, you will be exerting a strain on your finances.

Once you have agreed on these, verify your contract terms and only sign if satisfied with all the numbers and filled out correctly.

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Vehicle Financing

Buying a new 'ride' always comes with a bit of excitement and it's always a hastily concluded process. This level of urgency to drive home in a new car often times works against you as revealed here. If you love your car as I do, you might want to slow down a bit and take a deep breath.  A decision to get a new car should not come as a result of seeing a TV commercial or seeing a cool car at a dealership showroom. Consider your expected use, work out your budget, which type car fits your budget and how to finance that particular car. Do some research from the manufacturers websites, visit car dealerships to scout for favorable car prices to help you make an informed decision. Take your time to gather as much information as possible and workout your numbers. Once you have decided which car fits your budget, then choose the financing model.
There are several ways  of paying for your new car. Each has its pros and cons. You just have to figure out the best possible option for you based on your current financial position. You could choose to; 

Pay cash from your savings for the new car 

Not a bad idea at all, isn't it? As great as it might sound, it is not always your best option especially if you are going to deplete your savings account buying the new car. You might also prefer to use your savings to start up a profitable business to eventually pay off your car loan. 
On one hand, if you have a bad credit history, you might choose the cash option to avoid paying a huge interest on the loan and damaging your credit rating even further.

Auto Leasing

In auto leasing, you use a motor vehicle for a fixed period usually in years at an agreed amount of money for the length of the lease. The period is normally 1-4 years and once the lease expires you return the car to the dealer for disposal. So literally, you can drive a new car every few years! Lease payments are usually much lower and the qualification process is easier than obtaining a car loan. The car lease agreement though comes with certain conditions; maximum allowable mileage per year(usually 10,000 miles), allowable wear and tear, early lease termination fee, etc. Beware penalty fees may apply if you violate the lease agreement. Work out what is best for you basing on the projected use and if possible negotiate for a higher mileage for a slightly higher lease payment if necessary to avoid penalties. You can also opt in for a lease with maintenance; excluding fuel and insurance to save yourself the headache of breakdowns and regular maintenance. Newer vehicles, however, require less maintenance. So it is not worthwhile paying extra unless you make frequent long trips. This option is good for businesses and large companies. 

Auto Loan

You can get a direct car loan from a financial institution or individual, namely; a bank, credit union, online lending institutions, a relative or indirectly from a car dealership which deals with financial institutions on your behalf. 
If you have decided to finance your car by loan and not pay cash, then you need to do some research to get the best financing deal. It is best to begin with your bankers since you already have an established relationship with them. Your banker will often give you a competitive rate, tell you if you're paying too much for a car, give free life or disability insurance with loans; and the loans are usually simple interest loans (whose interest is evenly spread throughout the term of the loan).

If you own a home, you can free up tied up equity to finance a new car. This is however risky since you could lose your home if you default because a financing bank or individual retains a lien to the home until the debt is fully repaid.

Car dealerships often give a fast, convenient and competitive option. Be ready for a big sales push on add-ons; loans are often compound interest loans (You pay more interest in the beginning of the loan than towards the end). It works against you if the loan servicing period is longer. Always negotiate for a good interest rate rather than a small repayment installment. If you negotiate for a small repayment installment, the your business manager instead extends the term of the loan in which you pay more for the car.

If you can get a loan from a friend or relative, so much the better, because this option offers very flexible terms and payment period. It is not always possible though to get very big sums this way. In any case, care not to jeopardize your relationship with them. Be truthful and pay off your obligation to them.

I do not recommend financing through online lending institutions because there are more scams than legitimate ones. So beware! Be very cautious if you choose this option! Only deal with them if you know them well!

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The "Monster", Debt

Are you swamped up in debt? 

If you answered yes, you are not alone! Kind of reassuring, or is it? Not at all! For those of us who know what debt can do, it's never an easy thing to deal with. Before I delve into the core issue of this article, let me begin by  explaining what debt is. A debt is what you owe another party who could be a friend, family member, city council, state, company, bank, institution, etc. You can get debt in form of money, assets, tuition, loans, bank overdrafts, taxes, rent arrears, mortgage, etc. The list is endless! In today's world, we can almost access whatever we want on credit; a nice house, a cool ride, the latest smart phone, interior furnishing, tuition, shopping,...You can go on and on! How we go about this "monster" called credit can determine whether we drown in debt or not!

Is debt a nuisance?

I will answer this question with another of its kind. Why do we go into debt? We go into debt just like governments and big corporations, to access resources to enable us meet our obligations and build capacity. This could be paying off rent or a mortgage and in other cases to build a viable business. The  reasons for going into debt are always good intentioned in most cases but somewhere along the way we lose our financial discipline and get entangled deep into debt! Otherwise, we live with debt and "debt is our good friend"! Things you could work for a lifetime are achievable through debt in the short run! Governments and corporations borrow to build economies or massive investments. In the same way our dreams of building successful companies, nice homes or driving a dream car come to life because of debt well-managed. A friend of mine once said, "the secret to success is debt" - a notion I thought was ridiculous then, but not anymore. Debt is a necessary evil!

How do we get entangled into debt?

It's very easy to unknowingly get entangled into debt if you do not exercise caution. The temptations to get into debt are so many today. These include among many; mortgages, phone plans, auto loans, health insurance, overdraft and credit card debts. Let alone the providers of these services will virtually find you anywhere; at work, home or school to bring you up to speed on the latest attractive offers! You do not have to seek for "debt", it will find you! I remember a colleague at work who took a loan he was not ready to take just because a bank agent pitched him while at work. The loan turned out to be disaster for him! So it is important to remember credit is never your money until you have earned it!

Worth noting too, the companies that offer credit services promise manageable and flexible repayments yet claw on your monthly salary or revenues for a protracted period of time. Unless you understand that living in debt is living a lifestyle you are yet to attain, you might not know how to keep your debt to manageable levels. The biggest victims are normally the employed. Citing meager salaries with a pile of responsibilities, they resort to taking loans by way of bank loans, credit cards loans, tuition loans, mortgages, etc to meet the current demands. The size of the repayment installment is often very flexible and manageable that we overlook other financial obligations that we have while making decisions to get more debt. For instance, while still single, you might have obtained a 20 year mortgage loan and during the course of servicing this loan, you get other short-term loans such as auto loans, phone plans, credit card loans, etc. This might seem OK and very manageable at that time, but when you get a family, the responsibilities bulge up and squeeze out the little left after your debt obligations. Survival becomes hard and stressful to the family because of not having enough disposable income. Borrowing more(usually from friends, relatives, etc) always seems the obvious interim solution, instead it shrinks your income even further - burrowing deep into debt! 

Categories of debt

There are two categories of debts; Priority debts and Non-priority debts. Priority debts always carry serious consequences if you default. You could lose property or serve a jail term. Such debts include, state taxes, mortgage, rent arrears etc. Defaulting on state taxes might amount to a jail term while defaulting on rent or mortgage might lead to loss of a home.

Non-priority debts carry less severe consequences if you default. These are debts from colleagues, friends, relatives, bank over drafts, etc. They do not adhere to strict deadlines for repayment. As a debtor you decide which debts are of a priority nature and deal with them first. Keeping record of your debts is very important for budgetary planning purposes.

For all kinds of debt, it is always important to keep in touch and explain to your creditors your financial situation and your plan to sort out your issues. This can save you from costly legal action and possible loss of properties.

Forms of Debt

There are several kinds but the following are most common; atleast everyone one incurs in their lifetime.

• Auto loans and insurance
• Bank loans and overdrafts
• Credit card loans
• Mortgage and rent Arrears
• Health and life Insurance
• State and council taxes
• TV and media license
• Utility and Phone bills
• All forms of borrowings from colleagues, friends and relatives
• Payday loans
• Student loans
• etc

For details about each of these categories, follow the links for an in depth coverage. 

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