Many of us will research our choices in life before coming to a decision, it is embedded in our bio-systems. Buying our dream car, we find ourselves on a Saturday going from car dealership to car dealership, test driving our lives away until we find that perfect match.
So why then do we not have that same passion and excitement when it comes to our finances? The simple answer is “fear”. It is the fear of the unknown.
We know what kind of car we would like. We know what kind of house we would like. We even know what kind of bed and furniture we would like, what we don’t know is what kind of finance we like or need.
Understanding the basics of finance can help you ease that fear we all have when it comes to finding the right finances for our choices.
Understand and know your credit file:
A credit file includes your personal information, including your full name, date of birth, driver’s licence number, gender, addresses and employer information. It also records any credit applications you have made in the past five years, such as home loans or store financing of household goods, plus any bills you have defaulted on and any financial matters on the public record, including any bankruptcies or directorships. These days your credit file will show your conduct on repayments towards credit cards and in the future will include repayments on any finance facilities.
Lenders will use your credit file to verify your creditability and reliability when assessing your financial needs. Your credit file is part of the “character” indicator.
At dollars with sense we can assist you with understanding your credit file and obtain a copy for your own records.
Understand what “discretionary expenses” are:
To gain finance we know we need income to support it however with our ever-changing environment, lenders will not only just look at income but what it is being spent on regularly. These are known as “discretionary expenses”.
Lenders will look at your spending pattern and allocate dollar amounts per month to relevant areas such as transport (MyKi, Petrol, toll ways, parking), groceries, insurances (car, health, pet), childcare costs (school, child care services, activities), utility payments and the main one these days our spending on mobile phone plans, internet plans and our need for pay TV (Netflix, Foxtel, Stan).
Working through our own budget and working through our true needs can boost the chances of gaining finance by reviewing these expenses. Discretionary expenses are part of “capacity” indicator.
Understanding “your story”:
Gone are the days of a lender just looking at income and liabilities- the black and white guidelines of lending.
Lenders these days have on obligation whether it be through a mortgage broker, a branch manager, a car dealership manager to “know your customer”.
It is “your story” that can make or break lending.
Allow your story to be known when finance comes into play, it could be as simple as you have been renting since you were 20 years old and due to this have minimal savings available, you bought your first car mainly using cash that you had saved working 2-3 part time jobs whilst studying, you have saved around $15,000 in a period of 12 months because you were driven to buy your first home. Whatever the story is behind your finances allow it to be heard.
Savings and renting form part of “capital” indicator.
At DWS, we have the finance specialists that can work with you as a team, not only to assist you with the “fear factor” that goes with finance, but get to know you as a person and tailor financial solutions based on who you are, where you are and where you are heading.
Our experts have developed an E-Book outlining key indicators that the finance industry will use when looking at what finance options are available to you, whether it be car finance, business finance, property finance or equipment finance. These indicators are known as the “Five C’s”.
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