Americans In Debt Stories From the HillAmericans In Debt Stories From the HillDebt professional blogs to help consumers with debt and personal finance. Articles
The Evolution of the Collection Department
2007-03-08 19:05:00 Hi,The collection departments of most companies have gone through very similar changes to their credit departments. In the past, when a problem existed on an account it was handled by someone who had the authority to deal with it and solve the problem. Today in many instances when one calls a collection department, one is talking to a customer service representative who has limited authority and is operating under generic guidelines on how to handle each call. It is often necessary to contact collection departments and talk to three or four customer service representatives before one finds someone willing to deal with the particulars of a specific situation. This often results in in the customers becoming frustrated and just paying the bill. Another method employed by corporations in order to save money, is to make access to collection departments very difficult. This is done by setting up a myriad of electronic options, giving the customers a multiple of generic choices, many times... More About: Evolution , Department , Men , Part , Coll
The Evolution of the Credit Department: Part 3
2007-03-07 20:15:00 Hi,In the last two blogs I have discussed how many credit departments have adopted a generic approach in how they decide to extend credit. I have also discussed the pressure sales people exert on credit departments to approve their credit requests. Now I want to examine some of the other pitfalls in eliminating the hands-on approach in extending credit:1) Validating information on a credit application is more accurately done by people than machines.2) Human involvement can identify when past credit problems should not interfere with current credit decisions. A common example of this situation is when a couple is divorced and the responsibility for financial obligations was put on the back burner during the divorce process, but both people became good credit risks after the divorce. 3) Another common occurrence is that when credit applications are rejected due to erroneous credit information on the individual's credit report. Human reviews can catch and rectify that situation more e... More About: Evolution , Credit , Department , Men , Edit
The Evolution of the Credit Department: Part 2
2007-03-06 19:44:00 Hi,The changes of staffing and structure in credit departments has been dramatic over the last thirty five years. In the past, it was a requirement for a lender to be familiar with the particular business to which they were granting credit. For example, if a lender was setting up a loan for a farmer to buy farm equipment, the lender understood the uneven income stream of each farmer and structured the credit to match it. The lender was also familiar enough with farming to differentiate between needs and wants in loan applications. It was also necessary for the lender to assess whether or not the income of the farm could service the additional debt. Today, in many instances, the credit people responsible for funding farms have no experience in farming and grant credit with a generic process rather than an individualized one. This sometimes results in farm loans that are doomed from the start which, in most cases, are doomed through no fault of the farmer. The other dynamic in a cred... More About: Evolution , Credit , Department , Men , Edit
The Evolution of the Credit Department
2007-03-05 20:26:00 Hi,Credit departments have changed dramatically over the last thirty five years. In the past, credit department employees checked and assessed all aspects of credit requests and dealt with each request on an individual basis. The result of this hands on approach was that credit was only extended to people who could genuinely afford it. As a result, the number of delinquencies, charge-offs and repossessions was very low. Due to the human verification process, it was rare that information on credit applications was falsified. Computer technology redefined how credit departments work and how credit is granted. By using computers to compile statistical data, creditors have established various formulas with which to generically grant credit. These actions have caused a multitude of problems in the credit field. It has allowed unscrupulous borrowers to obtain credit that they can ill afford and in some cases, have no intention to repay. One of the other negative effects of this generic ap... More About: Evolution , Department , Men , Edit
Conditional Sales Contracts
2007-03-02 19:13:00 Hi,A conditional sales contract is the financial instrument that is used to facilitate the purchase of such items as household furnishings, electronics, musical instruments, etc., Before the evolution of the credit card, conditional sales contracts were very common. The contracts were generally set up with finance companies who carried the contract for the retailer. The basic set up for a conditional sales contract is that whatever is purchased is used as collateral for the loan and can be repossessed if payments are not made. The interest rates charged on these contracts are generally exorbitant and the default rate on the loans is usually very high. The finance companies will use conditional sales contacts as a selling tool to offer additional loans reducing the interest rate, while rolling the conditional sales contract into the new loans. Often times, the borrower is not even aware that he or she is dealing with a finance company as he or she is under the impression that the co... More About: Sales , Sale , Contract , Condition , Contra
Commercial Leases
2007-03-01 19:18:00 Hi,In today's business world, commercial leases are used for everything from the salt and pepper shakers at the restaurant down the street to the irrigation systems in rural farming areas. Leasing enables business owners to get the equipment they need while conserving their cash flow. In many cases, business owners would not be able to afford some of the equipment they are able to acquire through a lease. A good example of this is when farmers lease $750,000.- $1,000,000. worth of irrigation equipment: equipment they would not be able to afford even with a conventional loan.By taking advantage of the irrigation lease, the farmer might increase the yields on his crops three to four times over, while increasing the value of his or her farm 200%-300%. Another good use of commercial leases is for restaurants. When opening a new restaurant for the first time, most people need to conserve their cash flow and can ill afford to buy $250,000.-$500,000. worth of equipment and furnishings. Le... More About: Commercial , Comm , Lease , Ease , Merc
Personal Leases (cars, household furnishings etc., )
2007-02-28 19:35:00 Hi,Leasing offers the consumer another financing option when obtaining cars, household goods, musical instruments etc., A lease is really nothing more than a rental agreement which, at the term of the lease, means you own nothing. Leases have advantages and disadvantages. The most important thing is to be aware of the total cost involved in leasing and comparing it to buying the same item. For example, many people prefer leasing cars compared to purchasing them due to a lower outlay of cash, and in most instances a lower monthly payment. Most car leases have a built in maintenance program that is factored into the cost of the lease. The downside of car leases is that you have a perpetual car payment you may avoid if you purchase the vehicle. Another lease people encounter is the furniture lease. This type of lease is beneficial when a person's situation dictates a short predetermined amount of time in which they will be staying someplace. Furniture leases are not to be confused w... More About: Personal , House , Cars , Household , Furnishings
Other Mortgage Structures
2007-02-27 19:58:00 Hi,Some of the remaining mortgage structures are 15, 20, 40 or 50 year mortgages. In addition some financial institutions are utilizing reverse mortgages. 15 and 20 year mortgages are generally used when people do not want the burden of a 30 year mortgage and want to realize the savings of a shorter term. Either one of these mortgages saves the borrower tens of thousands of dollars over the term of the loan. In some instances, certain institutions are not allowed to give over a 20 year mortgage due to credit guidelines. The trade-off in either one of these mortgages is that for a slightly higher payment the borrower realizes substantial savings. The interest rates on these loans are usually comparable to those of the 30 year fixed mortgage. 40 and 50 year mortgages evolved to allow high credit risks the ability to purchase property and in some cases, borrowers to purchase a more expensive home than they normally would be able to afford. These mortgages generally come with a variety ... More About: Other , Mortgage , Gage , Structure , Structures
Conventional Mortgages
2007-02-26 19:45:00 Hi,A 30 year fixed rate mortgage is a loan in which the principal and interest is repaid in equal monthly installments through the term of the loan. Until 35 years ago, almost all mortgages were 30 year fixed rate mortgages. The primary reason for this was the peace of mind that borrowers received knowing that their house payment would not change. Another benefit of conventional mortgages was that they didn't have points, prepayment penalties and other hidden fees. People had to meet strict credit guidelines to qualify for conventional mortgages. Beginning in the late 1970's, interest rates began to rise, peaking at over 13% in 1983. When the interest rates began to rise, the number of people who qualified for mortgages decreased. In order to support the housing industry, it became necessary for financial institutions to create a multitude of other mortgage structures people could qualify for in order to purchase homes. Very often these other mortgage structures enabled borrowers ... More About: Mortgage , Mortgages , Convention , Gage , Vent
Adjustable Rate Mortgages: Risks and Attractions
2007-02-23 18:30:00 Hi,Adjustable Rate Mortgage s,(ARMS), are structured in such a way that your monthly mortgage payment is tied to the current prime rate. It is unlikely, but possible, for your mortgage payment to change every month with the fluctuation in the prime interest rate. These mortgages are most common in the secondary market because they are geared to take advantage of high risk borrowers. By using this type of structure, the lender effectively eliminates the risk of funding a mortgage at an interest rate under current prime rate. For example, if a lending institution funds a 30 year fixed mortgage at 6% and two years later, the prime interest rate rises to 8%, in effect, the institution is not getting the maximum yield on its' investment. In contrast, with an adjustable rate mortgage, that risk factor is eliminated because the borrower's mortgage payment is adjusted according to the rise in interest rates. Due to volatile interest rates, borrowers are faced with payments that can increas... More About: Action , Attractions , Attraction , Just
Adjustable Rate Mortgages: Risks and Attractions
2007-02-23 18:30:00 Hi,Adjustable Rate Mortgage s,(ARMS), are structured in such a way that your monthly mortgage payment is tied to the current prime rate. It is unlikely, but possible, for your mortgage payment to change every month with the fluctuation in the prime interest rate. These mortgages are most common in the secondary market because they are geared to take advantage of high risk borrowers. By using this type of structure, the lender effectively eliminates the risk of funding a mortgage at an interest rate under current prime rate. For example, if a lending institution funds a 30 year fixed mortgage at 6% and two years later, the prime interest rate rises to 8%, in effect, the institution is not getting the maximum yield on its' investment. In contrast, with an adjustable rate mortgage, that risk factor is eliminated because the borrower's mortgage payment is adjusted according to the rise in interest rates. Due to volatile interest rates, borrowers are faced with payments that can increas... More About: Action , Attractions , Attraction , Just
Mortgage Overview
2007-02-22 20:27:00 Hi,Different types of mortgages have grown enormously over the last ten years. The reasons for this vary from accommodating buyers to making more money for lenders. There has been quite a change since our grandparents' day when 90%+ of mortgages were one type: the 30 year fixed rate mortgage. In the the past, many of these were assumable mortgages, which meant that buyers generally did not have to seek financing on their own. They simply needed to qualify for the existing mortgage on the home they wanted to purchase. In today's mortgage market, the most important factor is for people to do their research and find the most economical form of financing to fit their needs. Generally, the cost of mortgages is directly related to the credit worthiness of the buyer. A mortgage is no different than any other loan in that obtaining funds from a primary lender (IE., banks, credit unions etc., ) is more economical than dealing with secondary lenders. The costs in getting a mortgage differ f... More About: Mortgage , View , Over , Gage , Overview
Secured Loans
2007-02-21 19:24:00 Hi,Some of the most common secured loans we encounter at one time or another are car loans. Generally car loans are financed in one of three ways:1) Banks or Credit Unions: the first place to investigate for a car loan. When dealing with your bank, the ideal situation is to get pre-approved for a specific amount before you go shopping for a car. This will allow you to take advantage of the most favorable credit terms and will solidify your financial history with the bank. Inquire to see if your bank carries an inventory of repossessed cars, which are usually favorably priced. Also banks sometimes have relationships with car rental companies and offer special loan rates to their customers for car rental purchases.2)Major Dealer Financing: Dealers advertise auto loans at incredibly low interest rates that often seem lower than banks or credit unions. The reason for this is that they can inflate the cost of the vehicle. Another way they off-set the cost of their low interest rates is b... More About: Loans , Loan , Secure , Cure
Risks Associated With Other Personal Unsecured Loans
2007-02-21 01:12:00 Hi,Some other unsecured personal loans take the form of charge cards for department stores, gas stations, credit cards for home improvement stores, small businesses which have open charge accounts, etc.,. There are inherent risks associated with each one of these. Many times we find ourselves purchasing goods at a department store or home improvement store, because that is where we have a credit card, even though the same items might be available for less at another store. The same scenario applies to gas purchases and is particularly important due to the large fluctuations in gas prices from one station to another. Also, charge cards influence us to use convenience as a value when buying, rather than price. These are some examples of various unsecured loans we grant ourselves. Using these types of loans can become risky if we are experiencing financial difficulty. When experiencing financial trouble, it is imperative to contact these creditors as soon as possible.Tomorrow I will d... More About: Personal , Loans , Other , Loan , With
Credit Principles Past and Present
2007-02-19 23:56:00 Hi,If we thoroughly examine the way credit practices were carried out in the past, we will find solutions to many of today's credit problems. Many people who find themselves in current credit trouble are people who would not have been extended credit under past guidelines. In the past, people used unsecured loans to obtain needed goods or services. Therefore, it was worth their time and energy to go through the credit process to qualify for the loans. Very seldom were personal loans issued for such things as a trip to the mall, or a night out on the town. Credit cards are now easily obtainable, and people are enticed to spend money. Consumers are encouraged to utilize credit cards whenever possible in lieu of cash. The ease in which consumers can use their credit cards causes overspending which results in financial hardship. Some ways we can integrate past credit principles into our financial management techniques of today are:1) Have the mindset that credit cards are personal unse... More About: Edit , Past , Present , Principles
Unsecured Personal Loans
2007-02-16 19:55:00 Hi,Unsecured loans have come a long way since their inception. The pinnacle has been reached in the form of bank credit cards that allow the consumer to take out many little unsecured loans. Every time you make a purchase on your credit card, you are, in effect, taking out another loan from your credit card company. At the end of each month your credit card company combines all your many little unsecured loans and bills you for the total. Compared to fifty years ago, when most unsecured loans involved going and talking to your bank, filling out applications, and going through an approval process, today receiving unsolicited pre-approved credit cards in the mail is considered a streamlined way to get consumer credit business. This practice of the lending industry results in many financial problems for the credit user. One of the major advantages of past credit practices was the full disclosure of the terms and conditions of the loans to the customers. This allowed consumers to be ful... More About: Personal , Loans , Loan , Person , Secure
A List of Various Ways We Incur Debt
2007-02-16 06:27:00 Hi,We're going to investigate various types of debt in detail:1) Personal loans both unsecured and secured2) Credit card debt: business, personal and Internet3) Leases4) Mortgages5) Conditional sales contracts6) Finance company debt7) Credit lines8) Charge accountsThis is not an exhaustive list of types of debt, but one which covers the instruments by which most people incur debt. We will discuss the risks and rewards of each of these loan structures in following blogs. Tomorrow the topic is unsecured personal loans.Until then,Alanbiz.googlepages.com/olympicdebts pec olympicdebtspecialists@gmail.com More About: List , Vari , Debt , A list , Vario
A Budget Method For People In Trouble
2007-02-14 19:32:00 Hi,When your income can't possibly cover your fixed monthly expenses and other monthly expenses, drastic action has to be taken for month to month survival while you're working yourself out of your situation. First let's address a monthly budget for your fixed expenses. The following methods might help to ensure that you meet your monthly goals for food, utilities, and transportation:1) Pay your rent or mortgage.2) Analyze your utility bills. Investigate any payment programs offered by your companies. Some companies offer programs in which utility costs are calculated evenly over the year reducing fluctuations in monthly payments. This will prevent you from being caught with an unexpected high bill one month due to weather etc., Find out every method available given to you by your utility companies to conserve and reduce, which will then reduce your cost.3) Revisit your monthly transportation cost. Is this an area which can be trimmed?4) Food and drugstore expenses: Establish yo... More About: People , Budget , Method
Entering The Caution Zone
More articles from this author:2007-02-13 19:19:00 Hi,When you feel as if you are losing a grip on your expenses, it is time to act in order to reverse the trend before it does damage. Some typical red flags are as follows:1) You find yourself sending in a little less on your credit cards each month.2) You stop opening bills when they arrive in the mail.3) You find yourself transferring money from savings to checking more often than usual.4) You stop putting money into savings.5) You start charging items you used to pay for with cash.6) You stop the maintenance of your monthly budget.7) You stop talking about finances with your partner.If any of the above sound familiar to you, it is time to take immediate action to prevent financial chaos. The first thing to do is sit down and reacquaint yourself with your budget and increase the amount of maintenance you've been allotting to it. By comparing your credit card bills for the last few months with prior months, you should get an indication in what area spending has increased. This ana... More About: Ring , Enter , Zone , Teri , Erin 1, 2, 3 |
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