the mozo blog

Guest Blogger: Kylie Ofiu

Sometimes you need a personal loan. I needed one last year when my car broke down. Even with the cost of interest and fees, getting a car loan was thousands of dollars cheaper than fixing up my old bomb and driving that.

We went looking at new cars. There were some great deals on which on the surface, looked fantastic such as low interest, but once I looked deeper into the contracts, the fine print would have cost us a lot.

There are two types of finance at car yards, the car dealer finance and factory finance and it’s important to understand there are differences between this type of finance and a regular car loan or personal loan from a bank or credit union.

Dealer Finance

Most car dealers will give you on the spot finance. Car dealers bet on the fact that you will see something and want it instantly. Whilst some car yards have their finance backed by major banks such as St George, others do not. When looking into dealer finance, there are a few things to watch for:

• Interest rates were often higher than if you went to the bank directly.
• You could not pay the loan out early. If you did, the interest for the full term of the loan would be charged anyway.
• Add-ons such as insurance are usually built in and more expensive than elsewhere.

You can negotiate and request those clauses to be removed or amended to reduce the cost. Also go in to the dealer at the end of the month. Dealers get commission on loans as well as the cars and at the end of the month, they will be keen to secure a bonus and be more likely to negotiate.

When we were looking, we were offered extras worth thousands in an effort to secure the loan and sale because it was the end of the month. We spoke to a few different dealers, all with offers and one even said, “Look, it’s the end of the month and I haven’t made my bonus. If you buy this, I get a bonus”.

Factory Finance

Car companies sometimes offer factory finance. Instead of the finance through the car yard, the company (e.g. Toyota) offers the finance. The interest rates are often low, with insurance included. The payments are also lower and at the end of the loan, you need to make a lump sum payment or hand the car back.

These cheap deals are often only on certain models, not the entire range of cars and the interest saved is usually less than if you negotiated a lower price with finance from elsewhere, so they are not always a great deal.

By knowing what to look out for, what to negotiate on and the differences in loans, you are much better prepared to secure a good deal and save yourself thousands.

Kylie Ofiu the author of 365 Ways To Make Money, a blogger and freelance writer. On her blog, Kylie Ofiu she discusses real ways to make and save money.

Guest Blog: Kylie Ofiu

Many of you are undoubtedly aware of credit card purchase protection. I know not everyone has it, but when you look at what is on offer from some of the companies now it can be well worth it.

Traditionally credit card purchase protection has only really covered you if goods were lost or stolen in a set time frame, but now there are so many more features included, such as price protection, and some even offer it for free with the card.

What kind of features and why should you bother?

What if you could be guaranteed to never miss out on a sale? No matter what, you will always get the best price on an item. How? Well there are some cards now which allow you to claim back the difference in price if you purchase an item for a certain price than see it on sale later, sometimes for just 1 -3 weeks after, sometimes much longer.

For example, you purchase some swimmers at David Jones, then the next week you see the exact swimmers on sale for $50 less. You contact your credit card company, use the credit card purchase protection and you get refunded the $50! How amazing is that? Even if there was a small monthly fee for it, as is the case with some cards, it would still be worth it.

Even larger items like washing machines are included which means you could save hundreds of dollars by paying with your credit card and keeping an eye out to see if what you bought goes on sale later.

What is even better is it’s all done online and as long as you are keeping track of your finances, what you buy and how much you pay, it will be easy to use your credit card to make your money work hard for you.

**Mozo EDITOR’S NOTE**

Some of the credit cards offering shopper’s purchase protection include:

• Bankwest Breeze – claim the difference if you buy goods within 21 days. Also available with Breeze Gold and Breeze Platinum cards.
• GEM Visa Card has an optional insurance cover. The premium is just 1% of the monthly closing balance (capped at $50).
• NAB Gold Card – complimentary price protection insurance . Get reimbursed the difference between the price you paid for a new item and a lower printed advertised price for the same item.

Kylie Ofiu blogs about ways to make and save money at her site Kylie Ofiu She is also the author of 365 Ways To Make Money and a freelancewriter.

It’s that time again, and everybody’s talking about Mozo’s second annual People’s Choice Awards. Has it already been a year?

For those who live under a rock, the People’s Choice Awards are like parent-teacher night for bankers, with a dash of ‘financial Logies’ glamour. A massive 23,000 votes were cast (in the form of ratings from banking and insurance customers around Australia) to determine the best performing providers. Mozo’s election officials counted the beans and certified the results.

And the big winners?

The Greater Building Society achieved a record average rating of 9.2 out of 10, and scooped the Awards of Best Building Society, Best Home Loans and Best Savings Accounts.

ING Direct was voted Australia’s Best Bank for the second year running for its consistently competitive products, and also scooped Best Bank Accounts and Most Trusted Bank.

Victoria Teachers Credit Union was again voted Best Credit Union with a towering rating of 9.1 out of 10, and earned the extra credit of being the only provider not to receive a rating less than 5.

The top 18 providers all scored an average rating above Mozo’s ‘Fan’ score of ‘8 and above’, while the next 24 managed the ‘Fair’ score of ‘5 to 7’.

As for the losers, well, not everybody’s going to be happy with their report card. The Big Four as a group performed rather averagely, although there were winners and losers amongst them. Westpac scooped the awards for Best Term Deposits and Best Personal Loans,while the Commonwealth Bank copped a caning for its super sized home loan rate rise last November, being rated Australia’s worst home loan provider and worst Big 4 bank.

NAB marketed ‘break-ups’ and ‘asterisk-killing’ instead of mega rate rises, and won fans as a result. NAB’s average customer rating climbed to 7.1 out of 10, vaulting it to pole position as Australia’s favourite Big 4 bank.

And at the bottom of the pack? American Express gained more than a point over last year’s rating but still only managed 5.6 out of 10, while HomeSide, Citibank and GE Money each ended up with a ‘Fail’ rating of below 5 points.

The average rating for the whole class fell from 7.4 in 2010 to 7.2 in 2011, which suggests that less empty marketing hype and more real actions that benefit customers are needed in 2012.

For the full run-down of winners and losers, check out Mozo’s People Choice Awards page.

Guest Blog by Kylie Ofiu

Recently on the Mozo Facebook page there was a poll “Which song about money best describes you?” It was no surprise really that at the time of writing “Money’s Too Tight To Mention” by Simply Red was winning. For many, times are tough financially.

Have you ever stopped to think though, just how music affects you and how it could affect your financial situation? Music can be very inspiring and motivating. The fun beat with catchy lyrics makes songs easy to remember and often we are singing or humming them without even realising it. Many people believe that what you think about is what you attract into your life. If you are listening to upbeat, positive songs, you are more likely to be upbeat and positive. If you are listening to songs with a negative undertone, that is more than likely how you are going to feel.

Lots of us have music we work out to. It often has a fast beat which motivates us to work faster and harder. Why not have a money mix? Find songs that inspire you to do better, make more money or improve your financial situation. They are not as easy to find as songs about being broke, but here are a few suggestions:

• Opportunities by Pet Shop Boys
• If I had a million dollars – Bare Naked Ladies
• I made it (cash money heroes) – Kevin Rudolph
• Everything is Everything – Lauryn Hill

A money mix will make you feel better and help you focus on the positives, which in turn leads to finding solutions to problems. In a financial sense, finding solutions to problems could mean finding a new way to make money or a way to save money you might not have noticed had you been focussing on the negative.

What songs inspire you?

Kylie Ofiu is the author of 365 Ways To Make Money, a freelance writer and blogger. She shares ways to make and save money on her blog Kylie Ofiu.

Mozonians were quick to respond to the news last week that Lisa Montgomery, CEO of Resi, was on hand all week to answer their home loan questions on Mozo Answers. Lisa covered off some of our most frequently asked home loan topics and so we thought it would be a great idea to detail them here in a single post for easy reading.

What happens to a fixed rate on expiry?

Most fixed rate loans will roll on to a variable interest rate at the completion of the term but your financial institution should contact you prior to the expiry to talk about the options available to you. The options could include: fixing again for another term, moving to a variable rate (make sure the rate is competitive) or choosing a combination of part fixed and part variable.

Lisa suggested that before making a decision you should do some comparative shopping to make sure that your current provider is offering you the best solution for your financial situation.

Can I get a 100% home loan?

According to our industry insiders, 100% home loans are a thing of the past. You’ll need to demonstrate between 5 – 10% deposit as genuine savings.

Is there different lending criteria for investment property loans?

The good news is no. The same rates and criteria will apply for an investment loan as with owner occupied. If the property is going to generate an income that rental income is taken into consideration as well. Most lenders will take 80% of the rental income into consideration if the property is residential. Some will take 100% of the rent into account.

How much stamp duty will I need to pay?

The answer varies depending on what state you live in, the value of your property and whether or not you’re a first home buyer. Try using an online tool like Mozo’s stamp duty calculator to see what you’ll be up for.

Does good rental history count towards home loan approval?

Yes, according to Lisa lenders are starting to look at this more closely these days. A good rental history helps to illustrate your ability to service the home loan debt.

How much is too much to borrow for a home loan?

The resounding advice from the experts is that you need to balance your home ownership aspirations with your lifestyle. Do your homework (do up a budget) and only borrow as much that will allow you to be comfortable with the repayments now and into the future.

Do you have a question on home loans or other money matters? Head to Mozo Answers, Australia’s largest money conversation.

Kylie Ofiu, Guest Blog

This week is the first week of spring and is the perfect opportunity to spring clean your finances. Too often we set and forget many things such as our insurance which can cost us a lot of money. If I left my insurance as is each year instead of comparing it would have cost me $200 this year alone, let alone the $1,500+ difference there was when I was under 25. That’s right, one year by comparing and changing just my insurance company I saved $1,500 on that bill. By reviewing your finances with the following 5 steps can save you hundreds, even thousands of dollars! This year I have saved $510 just on step one.

1. Compare your providers. Compare all your bills such as car insurance, phone and electricity to see if you really are getting the best deal. You might not need everything in your contract and could downsize or switch providers for a better deal.
2. Transfer any debt. If you have a credit card you are struggling to pay off, check to see if there are any interest free or low interest offers on and transfer your debt. Cancel the old card and use the interest free time to pay down your debt. Do this with any debt, personal, home and car loans too.
3. Check direct debits. Sometimes we set up direct debit for bills or subscribe to offers and then forget about them. They money keeps coming out of our account whether we are still using the services or not. Go through your statements to see if you have an unnecessary direct debits coming out of your account.
4. Work out a budget. A budget is a plan for your money. It doesn’t need to be complex. Write out your expenses, divide them by how often you get paid (e.g. 52 for weekly) then compare the total expenses to your income. If they are more than your income, see where you can cut back. Then stick to it!  Try an online budget calculator.
5. Set up automatic savings. Ask payroll at your work to direct debit savings from your pay before you even get it. This way you won’t miss it. Alternatively set up a direct debit through your online banking to transfer a set amount out the day after pay day.

It doesn’t take long to go over your finances and save yourself money. A quick comparison online and changing is all you need to save yourself money.

Kylie Ofiu is an author, freelance writer and blogger. Her blog Kylie Ofiu is all about ways to make and save money as well as her goal to be a millionaire by 30 (April 2015).

With stock markets around the globe in free-fall this week, we asked the Mozo community what advice they had to protect hard earned super and savings. Mozo Answers Guru Katie responded with a provoking question of her own. We thought it was worth sharing with our blog readers, and wondered what other Australians think…         

Is superannuation a con?

Many people are starting to wonder. Nothing can really protect people from the uncertainty of the stockmarket in relation to superannuation. Unfortunately, unless you are one of the really lucky few who are reaping the benefits in retirement from a (now unavailable) superannuation scheme that is indexed against the CPI on DEFINED BENEFITS, you will join the majority of us punters on the “Super Roller Coaster”!

The tax benefits, whilst substantial if you are prepared to stick it out for decades, may not offset the severe losses experienced by many in a undulating market which has set some people back to the same level they were on five years ago!

If you do the math and invested $200,000 in a term deposit five years ago at the, then, available 8% you would be $80,000 better off even when you deduct tax. Whilst the gains MAY be made over 30+ years, the share market (forming the base of superannuation investment) is a gamble. Of course, one must NEVER change their options or attempt to withdraw Super when it is at its lowest as it will compound your losses severely. However, I really do believe that Super is over-hyped and under-performing.

The REAL danger with Super is that it is also subject to ongoing political interference. Don’t be surprised if, in the near future, the federal government will prevent anyone from taking LUMP SUMS and change the laws so that everyone will need to eke out a pension. As huge numbers of Baby Boomers are retiring, the federal government will be prodding and poking away at the methods of superannuation payments to ensure they will not have the burden of paying out massive lump sums over time.

Personally, I believe that it is preferable to invest in an investment property over time which, at least, will provide you with a steady rental income. Alternatively, take the lump sum as soon as you hit 60 (or 65) and put it in a Term Deposit. The HIGHS may not be as good as the occasional uplift in Super, but you can sit on the money (without worry) and sleep at night knowing exactly how much you are going to get each month.

That means a lot when you’re retired – who needs the stress?

We recently launched a comparison quote service for life insurance and income protection insurance on Mozo and were surprised to discover how shockingly underinsured many Australian families are in the event of an illness, injury or death. To share her personal experience on the issue, we are thrilled to have guest blogger, Kylie Ofiu on the Mozo Blog. Kylie is the author of 365 ways to Make Money and this is the first of a series of guest posts she will be doing for us, sharing insights and tips on how to save (and make money) with the Mozo community.

How much are you worth?

When I was a teenager my mother was diagnosed with cancer. I often wondered what would have happened if it was my dad going through the treatment, as he would have been unable to work. In our house, my parents openly discussed finances with us, so I asked my dad how we were coping with less work and increased expenses. Dad said it wasn’t a problem, as they had insurance for both him and mum.

At the time, I thought only houses and cars got insured, but I learned you could get life insurance and income protection insurance as well. Income protection insurance covers you if you are ill or have an accident, whereas life insurance covers you after death or if you are diagnosed terminally ill. It doesn’t cost much, but can help out a lot when you need it.

Mozo offers a free service where you can compare different policies to find the one that best suits your needs with just one search. If you have a family I think they are essential insurances.  As my mum was terminally ill, her life insurance covered everything. But what if she had had an accident or something instead? She ran the home. She cooked all our meals, cleaned, ran us around to all our sports, music and other activities, which with 5 children is a lot of work. There was no insurance for her.

There is now though.

Million Dollar Woman is where you can get insurance to cover full-time mums for situations such as accidents where they are unable to do their normal duties. Imagine the cost of getting a cleaner in, ordering in meals and getting people to run your kids around. It’s certainly not cheap. If you have the right insurance, this isn’t a problem.

About the author

Kylie Ofiu is the author of 365 Ways To Make Money. She posts about ways to make and save money on her blog, particularly about work from home options as she is a mother of 2 herself.

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