How to Go About Budgeting for a New Vehicle and Financing It Too

Buying a new vehicle is a big financial commitment and not a decision which should be entered into lightly. If, like most of us, you are unable to buy a new vehicle cash, you’re going to have to consider car finance in order to complete your purchase. Financing a vehicle is often associated with unnecessary problems and a fair amount of stress, too.

But financing your vehicle needn’t be fraught with uncertainty, confusion, or indecision. By acquainting yourself with the appropriate information you’ll find that the process of purchasing a new or used vehicle can be an exciting process. whether you enjoy the process or not hinges on whether or not you’re comfortable with your knowledge of the process.

So, what should you know before you finance a car?

The first and most important question you need to ask yourself is: Can I afford to purchase a vehicle? As important as it is to have your own set of wheels, overcommitting yourself to repayments you cannot afford will only end in disaster. At best, you’ll be able to scrape by and you’ll manage to purchase the vehicle. At worst you stand a chance of having the vehicle being repossessed and destroying your credit rating.

To figure out how much you can afford on a monthly basis use the following simple formula:

Income – Expenses = Surplus

Once you’ve determined what your monthly surplus is you’ll have a pretty good idea of how much you can afford on a monthly basis, but don’t get too excited just yet. Your surplus cash is not the final amount you can spend on a vehicle. You also need to factor in how much insurance you’re going to have to pay on a monthly basis (all financed vehicles need insurance) and you’re also going to have to factor in the monthly running costs of the vehicle, ie. How much petrol will I need? Does the vehicle require any additional maintenance to keep it on the road? Don’t forget that you still need to save on a monthly basis – life happens to all of us so it’s best to stay prepared.

How to go about financing your vehicle:

There are a number of options available to someone looking to obtain finance. You can either:

  • Apply for finance online
  • Use one of the bank’s pre-approved finance facilities
  • Apply for finance at a dealer
  • Each of the options outlined above offer their own benefits, however, using an online application will make the process as simple as possible.

Stay tuned for our next article which will cover everything you will need when financing a car.

Reasons Why Companies Use Asset Based Financing

Anybody can fall on hard times financially, including businesses. Many of them will have a difficult time getting any financing in these difficult times as well. Some of them will turn to asset based financing options to help them get what they need.

There are many reasons why they will use this option. One of the main reasons that they turn to this type of financing is because they are unable to get the financing that they need from any place else. When they can work with the creditors and vendors to get what they need to keep their company running, they will do it.

It keeps them from closing their doors. When someone is looking into starting up a brand new company, they may have difficulty obtaining the funds that they need. Using a company that will give them the money on a short-term basis can help them to utilize the capital or assets that they have already.

When a company is on a path for continual growth, they want to continue down that path. Even though the company is growing, they may still fall on difficult financial times. There are many things that can cause this. Just because they have a bump in their road to success does not mean that the company has to shut down.

When they have an opportunity, they need to take advantage of it. If their borrowing capabilities are holding them back, they will have to find a different method to do this. There are many different amounts of money that they could need for an opportunity.

The accounts can be limited with some financing options. Companies have to have the flexibility to be able to purchase their supplies. They also need to be prepared in case their products do not sell as planned.

Companies that grow at a rapid rate have difficulty getting financed. This is because lenders are worried that it will be short-lived. They want to see success over several years, not several months.

They can customized their packages. It allows them to get the supplies that they need. They can restructure their existing companies and many other things. Every company has a different reason for needing the financing.

When a company cannot fill orders because they are unable to obtain financing, they are likely to go out of business. Their customers are unhappy so they will find the products elsewhere. This can be very bad for the company.

When they can find a company to give them the funds that they need based on what their assets are, it will help them tremendously. They may have to pay a higher interest rate, but that is much better than closing down the business. The interest can be as high as ten percent.

When their traditional financing is not an option, they can still get what they need. Vendors can supply the company with what they need. The company providing the financing will collect payments from their customers, pay the vendor and send the rest to the company after they deduct any fees associated with it.

Mergers are sometimes possible with financing such as this. There are a lot of different types of things that this can be beneficial for. The companies will utilize this for many different reasons. Every company has their own reason for using this type.

Traditional financing may be much better for many companies. When they are unable to obtain traditional financing, they can use asset based financing to get what they need. It is something that can bail them out of situations that could potentially shut down their business.

Options for a Career in Finance

Individuals who are interested in a career in finance typically have a plethora of options available to them. These positions typically require candidates to have advanced experience with numbers and money management. Earning a degree in business finance can also be beneficial in other fields, including marketing or computers. A degree in finance may also be useful in corporate, residential, or government settings.

Credit analyst
The goal of this position is to help businesses and individuals determine their creditworthiness. Using different factors and techniques, their job is to see how likely it is that a borrower will be able to reimburse another individual or corporation if they take out a loan. These professionals should be able to effectively use credit analysis to assess financial history and the current market state to decide if loan repayment would be a realistic option for a certain borrower.

Finance officer
Finance officers are also known as financial managers, and often act as supervisory leaders. These professionals typically work with a fair amount of technology, as the finance industry relies more on computers and other software. Finance officers also often work with data analysis and often act as advisors to senior managers. The exact responsibilities of each individual vary from company to company, but, generally, job duties include the same daily tasks. Difference will appear, for example, in the government, where individuals will be asked to focus more on the budget process and government appropriations, in contrast to those who work in healthcare, where one vital skill includes understanding healthcare finance.

Financial advisor
The responsibilities of this individual usually land between a combination of investment advisor and financial planner. Their main task is to provide financial services to their clients. This job usually requires at least a bachelor’s degree, and completion of the Series 7 exam from Financial Industry Regulatory Authority (FINRA).

Loan officer
A loan officer acts as a guide through the loan process. Loan officers, similar to financial advisors, will assess creditworthiness to see if certain borrowers are eligible for a loan. Other skills that would be useful in this position include experience with computers and various banking applications.

These are only a few options available to those who hold a degree in finance, or a related degree, such as in management or business. However, those who wish to enter into a career that deals mostly with numbers and money management should strongly consider earning a finance-focused degree.

Is Revenue Based Finance Right for You?

Some of my clients have been asking me what Revenue Based Finance (RBF) means and if it is advisable for them to obtain such finance. “After all, money is just money irrespective of the label attached to it”, they say. No, that is not entirely true. Not all types of loans are good for your business. Just like how a doctor prescribes drugs for a type of illness, a lender matches funding to a borrowing cause [Tips for borrowing causes parts 1 & 2]*. The reason is to ensure that funding is used wisely for the intended purpose to enable the borrower achieve the intended goal(s).

Revenue Based Finance is a type of financing structure (commonly known as investment) aimed at financing future subscription revenue in return for a percentage of ongoing gross revenues until the finance (investment), plus a multiple is repaid to the investor. This type of financing is appropriate for fast growing companies that generate high monthly recurring revenues, such as SaaS (Software as a Service) companies. These companies may not qualify for traditional bank loans due to lack of assets to collateralize the loans. “This type of financing is excellent for early-stage companies with high revenue growth in need of additional funding to finance growth”, says Daniel Landver, CEO of Bloomloan, a California based RBF /investor lender.

Monthly loan payment is based on a percentage share of the client’s monthly gross revenue, similar to royalty payments. If revenues drop, so do payments, and vice versa. Maturity of the funding is tied to the time when a predefined total repayment cap is reached, usually 6 to 60 months, depending on a client’s needs. Some RBF investors offer modified short term financing, 3 to 12 months with fixed monthly payments and fixed maturity. The key qualifying requirements for a potential client are generation of monthly recurring revenue (MRR), high gross margin, low customer/revenue churn rate and cost of acquiring a customer, just to mention a few.

Normally, RBF investors/ lenders do not ask for collateral or personal guarantees. They rely on the financial performance of the borrowers, instead. However, there are instances when personal guarantees may be required, particularly if the borrowing company is a start-up or financially weak. Some RBF investors may require to register a 1st lien on the borrowing company’s assets such as, patents, domain names and trademarks. This is usually done to ensure that the debt is categorized as a senior debt in case of foreclosure.
The borrower benefits from easy access to capital without diluting equity or giving up personal or business assets for collateral. The finance is pricy but it is worth it given the benefits and the circumstances of the borrower.

Understanding the Financial Industry and How to Get the Best Finance Jobs

Most people aim for a finance career because finance is one function that is common to all types of business enterprises in every industry. You will be hard pressed to find a company that doesn’t need a financial expert or two or even private individuals who can do their taxes and bookkeeping. Finance is all about managing money and it is a skill that people are scrambling to learn especially in these times when the economy is in a roller coaster state.

Another reason why finance jobs are so popular is because they encompass a variety of job categories. When you want to find a job in finance and you go to specialist recruitment agencies, the number of job positions available can be staggering but also inspiring because that only means more opportunities for those who want them and more chances to launch a rewarding career that can bring you closer to getting the best of what life has to offer.

The financial industry is one that is filled with companies that are engaged in investing, lending, insurance, securities trading and securities issuance. It is characterized by its involvement in businesses like banking, securities brokerage, investment banking, securities trading, investment management, securities analysis and financial planning. Jobs in particular, include credit analysts, finance officers, financial advisors, financial analysts, financial planners, loan officers and investment bankers.

Careers in finance are something people go for because it challenges them. Ambitious and driven people in particular, are attracted to the compensation, career advancements, bureaucracy, pace and caveats. They are also in awe of the famous personalities who have made a career out of finance and are now enjoying unparalleled success and as such, they want to be able to enjoy the distinct advantages and benefits a lucrative and flourishing finance career can give.

The compensation for example, is substantially more than any other industry. There are more bonuses, draws and commissions available to employees who work hard and compensation packages that tend to be more generous than any other sector in the economy. Career advancement as well depends on the determination of the employees and tends to base any career growth more on the readiness of the employee rather than seniority.

Also, since most of the companies tend to have a small staff, decision making and advancement tend to be quicker. Employees can easily communicate with their superiors although there is a tendency that you will be handling more than what your job duties usually comprise so if you’re not willing to do more than what you are tasked with, then you might want to consider other career options.

And lastly, to get the best finance jobs, you need not only to be driven and ambitious, but you must also be already working towards a career from the time you are still in college. Getting an internship with any of the top financial companies as well as continually enhancing and improving your networking skills are some of the best ways to put a foot into the door. You must also work with specialist recruitment agencies that are usually partnered with the top finance companies and will know the best job positions available and the ones that will perfectly match your skills and experience.