POWER! BORROWING BASICS 28 JAN 2014 DESMOND CHONG.

Slides:

Advertisements

Similar presentations

Banking, Borrowing & Credit More On Managing Your Income.

Advertisements

Credit Buy Now, Pay Later. Credit Someone is willing to loan you money (principal) in exchange for your promise to pay it back, usually with interest.

Credit is the promise to repay borrowed money (principle) with interest over a certain period of time. Credit cards, mortgages, car loans, student loans,

Home Buying Process Financial Options. Objectives Define the Four “Cs” of the Loan Process Determine How Much You Can Afford for a House Calculate Front-End/Back-End.

Introduction to Business and Marketing Chapter 26.2.

Earning Credit. Compelling Question Have you ever borrowed money from someone and not repaid it? Or has anyone ever borrowed money from you and not repaid.

Credit Cards. CREDIT DEFINITIONS Credit Trust given to another person for future payment of a loan, credit card balance, etc. Creditor A person or company.

Unit 4 - Good Debt, Bad Debt: Using Credit Wisely PG 73.

Personal Finance Chapter 16

HOW CREDIT CARDS WORK What you need to know about credit cards- including what credit cards companies can and can’t do, and what information they have.

1. What is Credit and What is Debt? 2. Using Credit: The Rewards & Risks 3. Four Types of Debt 4. The Cost of Using Credit 5. Running the Numbers.

Chapter 19, Lesson 3 Saving and Investing.

Shopping for an Automobile Loan What Do I Need to Know? Using Standard Calculators.

Building: Knowledge, Security, Confidence Borrowing Basics FDIC Money Smart for Young Adults.

Consumer Math p Definitions  Down payment – part of the price paid at the time of purchase  Financed – borrowed  Mortgage – a property loan.

Unit Home Ownership Learning Objectives: Understand the three requirements to buy a home How to calculate debt-to-income ratios Realize how home.

Credit and Borrowing Vault Lesson 4.

LSP 120 Financial Matters. Loans  When you take out a loan (borrow money), you agree to repay the loan over a given period and often at a fixed interest.

Financing Unit 6.

Credit Cards An Introduction “Hi! Nice to meet you!”

Credit Intro to Credit & Establishing Good Credit.

Chapter 4 “going into debt”

 a type of credit that is typically started at the time of purchase for a specific asset  Common for purchases of $1,000 or more  Ex. car, motorcycle.

Credit Cards Adult Living. Advantages of using credit It’s convenient. You don’t have to carry large amounts of cash and you don’t have to go through.

SMALL BUSINESS MANAGEMENT Chapter 7 Financing the Small Business.

Chapter 1 Overview What is: Finance? Financial Management? Financial Intermediary Function (the cycle of money)?

Chapter 36 financing the business Section 36.1 Financial Analysis

Section 36.2 Financial Aspects of a Business Plan

Shopping for an Automobile Loan What Do I Need to Know? Using Financial Calculators.

 Buying on credit = buy goods and services now and pay for them later (usually with interest)  Having credit depends on the suppliers’ confidence in.

The Basics of Credit Objective: To explain the concept of consumer credit, including major types and their benefits/drawbacks.

Interest on Loans Section 6.8. Objectives Calculate simple interest Calculate compound interest Solve applications related to credit card payments.

Credit Credit is a sum of money a person can use for a period of time before having to reimburse the lender.

Advantages of using credit cards Ability to use item while paying for it No need to carry cash Use of card builds credit history Quick source of funds.

Credit What YOU need to know!. What is Credit? Credit is borrowing money now to make an immediate purchase and promising to repay it later.

Building Credit RisksTrouble Types of Credit Fees Final Jeopardy.

Learning Objective # 2 Determine the effective cost of borrowing by considering the quoted rate, the number of compounding periods, the timing of interest.

Unit 7: Credit- You’re in Charge?

Section 6.2 Notes. Can you afford a loan?  First way to tell  Second way to tell.

Money and Capital Markets 6 6 C h a p t e r Eighth Edition Financial Institutions and Instruments in a Global Marketplace Peter S. Rose McGraw Hill / IrwinSlides.

The CASH FLOW Statement (Statement of changes in financial position) Text Chapter 18, Pages , Practice Questions: 1.BE18-1, BE18-2, BE18-3,

Copyright ©2004 Pearson Education, Inc. All rights reserved.8-1 What Is Consumer Borrowing? Obtaining funds from a lender under specific loan provisions.

Credit. What is it? – the ability of a customer to buy goods or services before paying for them, based on an agreement to pay later. Always investigate.

Investment To put money to use for something offering potential profitable returns (as in interest, income, or appreciation). Appreciation = the value.

 What are advantages of credit  What are disadvantages of credit.

Loans Presented by S. Cox. Objectives  Describe the different types of loans  Explain the types of financing assistance provided to businesses.

Building: Knowledge, Security, Confidence Borrowing Basics.

Using Credit SSEPF4.a, SSEPF4.b, SSEPF4.c. Loans and Credit Cards: Buy Now, Pay Later The U.S. economy runs on credit. Credit – The ability to obtain.

Calculating Cost Of Credit. Types of Credit Closed-End Credit ◦ One-time loan that you pay back over a specified period of time in payments of equal amounts.

UNIT FIVE. CREDIT: BUY NOW, PAY LATER. Coming soon to a mailbox near you: Credit Card offers.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L9.1 Understanding Interest Interest can be a life long friend or an unforgiving master. Making interest.

Chapter 16 What is Credit?. Borrower(Debtor) – Someone who borrows money Creditor – Person or company who loans money or extends credit.

Agribusiness Library LESSON L060021: CALCULATING THE COST OF CREDIT.

Using Credit Wisely Types of Credit Credit Card Allows user to charge amounts in different places Given a credit limit, or maximum amount you can.

Shopping for an Automobile Loan What Do I Need to Know? Using Financial Calculators.

Credit Credit: borrowing money to pay for something now while promising to repay it later. Lender: the person loaning the money Borrower: receives the.

 A holding place for money at a bank.  The amount available to spend in an account.

Early Payoff of Loans. Payment is first applied to interest owed. Then,the balance is used to reduce the principal. 1. Find the simple interest due from.

Financial Literacy & Capabilities Houston Community College Financial Literacy and Capabilities Prosper Chapter 2.

Chapter 6 Measuring and Calculating Interest Rates and Financial Asset Prices.

Responsibilities and Costs of Credit

Using Credit Wisely. Credit  Credit is a sum of money a person can use before having to reimburse the credit lender.  It allows a person to receive.

TYPES OF BORROWING, PART I 5.1 Students can identify different types of borrowing and explain the process of paying back borrowed money.

Chapter 36 Financing the Business Section 36.1 Preparing Financial Documents Section 36.2 Financial Aspect of a Business Plan Section 36.1 Preparing Financial.

Loan Against Property At Best Interest Rates Rubique.

Write down one costly item that you would buy right now if you had enough credit. What steps can you take now to start building and maintaining a strong.

Financing Unit 6.

Personal Finance: Credit and Interest,

Unit 5: Personal Finance

Presentation transcript:

POWER! BORROWING BASICS 28 JAN 2014 DESMOND CHONG

AKPK set up by BNM on April 2006 to provide:- Financial Education Credit Counselling Debt Management All services to individuals are FREE OF CHARGE 2

Debt Management Program AKPK DATA BASED PARTICULAR PERSON Credit Counseling 248,491 Debt Management Program 100,871 As at end June 2011

REASON FOR DEFAULT

OPEN YOUR EYE

SOMETHING DIFFERENT!

LIFE CYCLE

GOAL

GOAL MUST BE SEEN CAN’T SEEN！

1

WHAT IS POWER! Programme provides young adults & prospective borrowers with practical financial knowledge & debt management

CONTENTS Chapter 1 - Cash Flow Management Chapter 2 - Borrowing Basics Chapter 3 - Wise Usage of Credit Card Chapter 4 - Buying a Car Chapter 5 - Buying a House Chapter 6 - Managing Your Debts

“To borrow or not to borrow?” …….that is the question!

WE ALWAYS LOSS

HARD TO GET

THEY CAN GET IT M’SIA RICHEST : ROBERT KUOK HK RICHEST : LE KA SHENG

CREDIT & DEBT

RULES OF BORROWING For productive purpose only Within your means With a moral commitment

COMMON SOURCES OF BORROWING Licensed financial institutions Co-operatives Licensed money lenders Unlicensed money lenders Browse website of BNM at www.bnm.gov.my for a complete listing of licensed financial institutions

DEBT TO INCOME RATIO Important factor in credit assessment Ratio = Monthly loan repayments x 100 Net monthly income General rule: Ratio should not be mora than 40% En. Daud’s gross monthly income is RM3,800. His total monthly loan repayment - housing, car payment & credit cards is RM2,128 = RM2,128 x 100% RM3,800 = 56%

RISK OF GUARANTOR Guarantee is risky for guarantor Responsible for unpaid portion of loan, including interest if principal borrower defaults Think first before agreeing to be a guarantor! Ensure guarantee for loan is for productive purpose

Types of Interest Rates Flat rate Interest is calculated upfront on amount of money borrowed over entire loan tenure (Hire Purchase & Personal Loan) Fixed Rate Interest is calculated based on a reducing balance, whereby interest rate does not fluctuate during loan tenure (Housing Loan) Floating Rate Interest is calculated based on a reducing balance, whereby interest rate is tied to an index or base rate & fluctuates over loan period. Common index or Base lending Rate (BLR) (Housing Loan/Overdraft)

COMPOUND INTEREST Interest is paid on principal & on accumulated past interest Interest calculation can be on a daily, monthly or annually rest Advantages: More return on investments Disadvantages: More interest payment on loans

PURPOSE

PAY CAPABILITY

PAYMENT HISTORY

Make Prudent Financial Management a Way of Life THANK YOU Make Prudent Financial Management a Way of Life Website: www.akpk.org.my Toll Free Number: 1 800 88 2575 71