Professional Documents
Culture Documents
Consumer Finance
Consumer Finance
with
extensive
experience
representing
banks,
finance
of
collateral
protection,
claims
related
to
borrower
a policy that only allows jobs that are sold above a certain profit
margin to go on the financing. By setting up some rules in advance,
you can avoid losing money on the consumer financing.
SEC. The SEC did a terrible job of supervision over broker dealers. They
gave Bear Stearns a clean bill of health shortly before the company went
under. But Mary Schapiro, the new head, has a strong track record and
her promises to revitalize and reform the agency should be taken
seriously.
Why the SEC? In looking around the world at how different countries
manage their financial sectors, we have been impressed by the so-called
twin peaks approach, used for example by Australia.14 With the twin
peaks system there are two regulators, the prudential regulator and the
conduct of business regulator, with the latter charged with the protection
of small and minority shareholders and with consumer protection.
Together with the central bank, these two regulators make up a tripartite
group that should be required to work closely together to improve the
safety, stability and efficiency of the financial sector. Unlike the current
US system, this model has only a few separate regulators, each of which
has considerable power, each of which should be given the power to pay
well and expect accountability from its employees. There is no guarantee
that streamlining the number of regulators would avoid another crisis, but
both common sense and the experience in Australia and some other
countries suggest that a streamlined system would work much better than
the current overly complex US structure of regulation. The SEC is not the
only possible candidate for the consumer protection functions, but it
would be the natural home for a strong conduct of business regulator,
given its existing role in shareholder protection.
My favorite plan for the proposed CFPA, therefore, is that the group of
people that are now doing consumer protection at the FED and the groups
at other prudential agencies be relocated to a consumer protection
division at the SEC. The FED has neglected consumer protection in the
past but in recent months has become good at it. The current head of
One of the most important things you should remember about loan
contracts is that none of the clauses in the contract is in your favor; all of
the clauses are in the lenders favor. Lets talk about four clauses that you
will want to be aware of:
1. The insurance clause requires you to purchase life insurance that
will pay off your loan in the event of your death. It benefits only
the lender and increases the total cost of the loan. This clause is
often used in mortgage loans.
2. The acceleration clause requires you to pay for the entire loan in
full if you miss just one payment. This clause is oftenbut not
alwaysdisregarded if you make a good faith effort to catch up on
your missed payment. But it still is a risk.
3. The deficiency clause stipulates that if you do not pay back the
loan, and the company takes your collateral, you must pay any
amount in excess of the collaterals value; this clause takes effect if
the money earned through the sale of your collateral does not
satisfy the loan. You must also pay any charges incurred by the
lender that are associated with the disposal of your collateral.
4. The recourse clause allows the lender to collect any outstanding
balance via wage attachments and garnishments. This clause may
also allow the lender to put liens on other properties that you own
(these properties can act as secondary collateral) should you fail to
repay your loan.
There are a number of special types of consumer loans, loans that are
different from traditional consumer loans. These include home equity
loans, student loans, and automobile loans. These loans are discussed
below.
Home Equity Loans: Home equity loans are also known as second
mortgages. In a second mortgage, you use the equity in your house (i.e.,
the difference between what you paid for the house and what you could
sell the house for today) to secure your loan.
The benefits of a home equity loan are that you can usually borrow up to
80 percent of the equity in your home, and the interest payments may be
tax deductible. With this type of loan, you can also get a lower interest
rate because the house is secureit cant be moved. One disadvantage of
this type of loan is that it limits your future financial flexibility because
you can have only one outstanding home equity loan at a time. Moreover,
a home equity loan puts your home at risk; if you default on a home
equity loan, you can lose not just your credit score but your home as well.
Home Equity Lines of Credit (HELOC): Home equity lines of credit are
basically second mortgages that use the equity in your home to secure
your loan. These are generally adjustable rate notes that have an interestonly payment, at least in the first few years of the note. Generally, interest
rates are variable and payments cover only interest in the first few years.
These have lower rates of interest than other consumer loans.
The benefit of these loans is that the interest may be tax deductible,
reducing the cost of borrowing. The problem is that these loans will often
keep people from making the hard financial choices to curb their
spending. Why worry about spending when you can get a home equity
pawnshop transactions is at least one notch better than those availed from
the private money leaders.
In the
slowly but gained a more rapid momentum in the last 10 years, due
largely to the greater degree of competition (entry into the country of
more foreign goods) and the growing influence of the more sophisticated
distribution system brought by the foreign businessmen.
usually without any standard basis. Between 10% to 20% mark-up for
credit terms of up to six months is not uncommon.
of consumer credit resulted from this very implication and that it did
not help in the proper development of credit structure in the country.
In the
Consumers rejoice as interest rate drops below 9% for the first time in
over 30 years
At the conclusion of todays Monetary Policy Committee meeting,
Reserve Bank Governor, Gill Marcus, announced that the prime lending
rate would drop by a further 50 basis points, bringing the rate down to
just 8,5%.
This is a rate cut that many thought was unlikely and one which has not
been seen in the last 39 years, according to says Adrian Goslett, CEO of
RE/MAX of Southern Africa.
The record low rate coupled with the higher percentage of bond finance
being approved will continue to stimulate the improved property sales
over the past few quarters. Since the reduction of the rate to 9% in
November 2010, many consumers have been able to reduce their
household debt and show more disposable income at the end of the
month.
This has resulted in more first-time buyers able to enter the market than
before, due to them being able to show affordability and obtain bigger
bonds. The increased affordability levels are driving up demand in the
property sector, which in turn will continue to have an impact on property
pricing in the future.
Traditionally the South African property market reacts quite slowly to a
rate cut or increase, so the decrease in the interest rate will definitely spur
consumer confidence in the months ahead and will certainly give
prospective property buyers something to smile about.
Consumer Finance Company Rebrands
Consumer Finance Company (CFC), the leading provider of affordable
credit to households and groups in the country, has unveiled a new
corporate logo in line with its bid to increase its footprint in Ghana.
The new CFC logo, an Adinkra symbol known as Sidie or Nserewa,
which is the local name for cowries, comes in appealing colours of
magenta and cyan with the name of the company boldly written.
vvv