I'm going to be answering some of your questions around credit. In case you've forgotten or don't know I worked in the banking industry for 6 years, my last role being a mortgage lender so I am qualified to answer these questions.
Here are some of your credit and cash questions:
Do I need to apply for credit if I have cash? How do you get yourself out of a bad debt situation? How can i boost my credit worthiness?
So many questions, so let's get started.
I've always been a simple girl and years ago my dream car was the nissan micra. It was small, stylish and so customizable I wanted one. When I mean customizable i mean customizable! I had a neighbour who had one with very long eye lashes just above her car lights. Her car was pink inside and outside. I wanted one badly.
So I got my licence, after the 4th go hahaha and on one fine rainy Sunday afternoon, much like this one, I gathered my family and friends and went to buy my dream car.
I found my car, customised it, said yes to all the extras...of course. Paint protection, check!
Yes, you can add the water protection package too and while you're at it lightening and thunder protection haha.
I skipped a very important step didn't I? Saving for my dream car! Yes I had my dream car and yes I knew I could get credit. But I didn't try to save or in the least look for some form of deal. And considering i didn't have cash of my own, adding extras was a huge error in judgement.
The fact is, I wasn't ever going to be able to save up the $23,000 loan i racked up. And if i had my time again I would have sought out a second hand nissan micra that I would've loved just as much. But I didn't know any better. I told myself I needed a brand new car because I didn't want a car that'll break down on me.
So I learnt from that experience that cash is king, however if you need to get a loan ensure you've done your research and that you have friends who will ask you the honest, hand on heart questions that'll make you think or make you uncomfortable.
Some African countries don't have an established credit system. In a way it's good. It forces people to live within their means, however credit is positive for giving people the opportunity to have broader opportunities, a better lifestyle and investment opportunities.
Next question
How do you get yourself out of a bad debt situation?
Depending on how knee deep into debt you may be, you can get yourself out of a bad debt situation by doing the following:
Extra payments: simply paying extra, no matter how little can reduce the overall term of your loan and help you pay it off faster. You also pay less overall interest and monthly service fees if you pay your loan off faster.
Another way you can get yourself out of a bad debt situation is by organising a debt consolidation loan or a credit card balance transfer:
Debt consolidation is combining a number of different debts such as multiple credit cards or unsecured loans into one single loan that will save you cash in the long run. The savings through debt consolidation is often due to lower interest and reduced fees. It’s just a new loan with a different purpose so talk to your bank if that’s what you need.
A balance transfer is pretty similar. The interest rate on a credit card balance transfer is much lower than you might get for a debt consolidation loan. Most banks today offer zero per cent balance transfer interest rates and this allows you to move your existing credit card debt to a new credit card with a lower or zero interest rate allowing you that opportunity to pay it off without minimal additional fees. Simply getting in touch with your current financial institution and checking for any deals that they may offer you may work too.
The final step that you might take before bankruptcy to get yourself out of a bad debt situation in Australia is something called a part 9 debt agreement. Under a Part 9 debt agreement, your creditors agree to accept an amount of money that you can afford to pay, over a set period of time, to settle your debts. When you apply for a part 9 debt agreement, you'll be unable to get loans for a limited period of time, from 5 years to seven years sometimes so do your research and seek professional advice before making this decision.
How to boost your credit worthiness:
Make sure your account is not overdrawn regularly. In fact, 3 overdrawn fees in a year may hinder your credit application because it implies financial hardship. For the purpose of clarity, If you are overdrawn or if your bank account is overdrawn, you have spent more money than you have in your account, and so you are in debt to the bank. Typically you can only be allowed to be overdrawn by a small amount of money or no money at all. Some banks will charge you if you don't have the money for a direct debit and some banks may charge you and honor the payment so it depends on the bank, your account conduct and relationship with you financial institution.
Another way you can boost your credit worthiness is to make sure you pay off your loans and credit cards, if you have one in full and on time.
This segment is on unsecured loans, that is personal loans and credit cards. Secured loans, that is mortgages, are pretty similar in that you still have to present to be credit worthy. But it's a whole new ball game and a topic for another segment.
Finance is an often boring topic I find so if you're interested in me posts like this let me know.
In summation:
If you take away anything from this segment it is to always do your research and seek opinion from experts.
Be smart about how you manage your finances and lastly, always try to use cash first and credit later.
In case you were wondering what happended to pinkie my loyal gold nissan micra? I sold it for $4000 less than 5 years later when I moved to Nigeria in 2017. It was sold to a friend, one of the many friends who went to choose it at the dealership. I miss Pinkie some days when I drive past a similar looking car or some days when I cast my mind back to simpler times. It was a great car...while it lasted.
SIDEBAR
Can we as a society not be able to simultaneously honor the life of a person whilst discussing all aspects of that persons life? I mean no one is perfect right? If there are parts of a persons life that is uncomfortable such as that they were abusive while alive or a rapist alleged or not why can't we bring that up when discussing that persons life? Why is that disrespectful?
The craziest thing for me this week has to be Gayle King receiving death threats because she had a question about Kobe Bryants alleged sexual assault during an interview, with his mate Lisa Leslie. This interview is yet to be aired by the way. She asked a pretty simple question, does the sexual assault against Bryant complicate his legacy for her? This to me is a legitimate and incredibly intelligent question. Why the black community is up in arms about it is beyond me. Please let me know if I missed something here.
This is all we have time for today.
If you like our content let us know. If you'll like to reach out, you can do so at my Instagram handle @thenigerianimmigrant
Don't forget to share, follow and susbribe.
Till next time...
Here are some of your credit and cash questions:
Do I need to apply for credit if I have cash? How do you get yourself out of a bad debt situation? How can i boost my credit worthiness?
So many questions, so let's get started.
I've always been a simple girl and years ago my dream car was the nissan micra. It was small, stylish and so customizable I wanted one. When I mean customizable i mean customizable! I had a neighbour who had one with very long eye lashes just above her car lights. Her car was pink inside and outside. I wanted one badly.
So I got my licence, after the 4th go hahaha and on one fine rainy Sunday afternoon, much like this one, I gathered my family and friends and went to buy my dream car.
I found my car, customised it, said yes to all the extras...of course. Paint protection, check!
Yes, you can add the water protection package too and while you're at it lightening and thunder protection haha.
I skipped a very important step didn't I? Saving for my dream car! Yes I had my dream car and yes I knew I could get credit. But I didn't try to save or in the least look for some form of deal. And considering i didn't have cash of my own, adding extras was a huge error in judgement.
The fact is, I wasn't ever going to be able to save up the $23,000 loan i racked up. And if i had my time again I would have sought out a second hand nissan micra that I would've loved just as much. But I didn't know any better. I told myself I needed a brand new car because I didn't want a car that'll break down on me.
So I learnt from that experience that cash is king, however if you need to get a loan ensure you've done your research and that you have friends who will ask you the honest, hand on heart questions that'll make you think or make you uncomfortable.
Some African countries don't have an established credit system. In a way it's good. It forces people to live within their means, however credit is positive for giving people the opportunity to have broader opportunities, a better lifestyle and investment opportunities.
Next question
How do you get yourself out of a bad debt situation?
Depending on how knee deep into debt you may be, you can get yourself out of a bad debt situation by doing the following:
Extra payments: simply paying extra, no matter how little can reduce the overall term of your loan and help you pay it off faster. You also pay less overall interest and monthly service fees if you pay your loan off faster.
Another way you can get yourself out of a bad debt situation is by organising a debt consolidation loan or a credit card balance transfer:
Debt consolidation is combining a number of different debts such as multiple credit cards or unsecured loans into one single loan that will save you cash in the long run. The savings through debt consolidation is often due to lower interest and reduced fees. It’s just a new loan with a different purpose so talk to your bank if that’s what you need.
A balance transfer is pretty similar. The interest rate on a credit card balance transfer is much lower than you might get for a debt consolidation loan. Most banks today offer zero per cent balance transfer interest rates and this allows you to move your existing credit card debt to a new credit card with a lower or zero interest rate allowing you that opportunity to pay it off without minimal additional fees. Simply getting in touch with your current financial institution and checking for any deals that they may offer you may work too.
The final step that you might take before bankruptcy to get yourself out of a bad debt situation in Australia is something called a part 9 debt agreement. Under a Part 9 debt agreement, your creditors agree to accept an amount of money that you can afford to pay, over a set period of time, to settle your debts. When you apply for a part 9 debt agreement, you'll be unable to get loans for a limited period of time, from 5 years to seven years sometimes so do your research and seek professional advice before making this decision.
How to boost your credit worthiness:
Make sure your account is not overdrawn regularly. In fact, 3 overdrawn fees in a year may hinder your credit application because it implies financial hardship. For the purpose of clarity, If you are overdrawn or if your bank account is overdrawn, you have spent more money than you have in your account, and so you are in debt to the bank. Typically you can only be allowed to be overdrawn by a small amount of money or no money at all. Some banks will charge you if you don't have the money for a direct debit and some banks may charge you and honor the payment so it depends on the bank, your account conduct and relationship with you financial institution.
Another way you can boost your credit worthiness is to make sure you pay off your loans and credit cards, if you have one in full and on time.
This segment is on unsecured loans, that is personal loans and credit cards. Secured loans, that is mortgages, are pretty similar in that you still have to present to be credit worthy. But it's a whole new ball game and a topic for another segment.
Finance is an often boring topic I find so if you're interested in me posts like this let me know.
In summation:
If you take away anything from this segment it is to always do your research and seek opinion from experts.
Be smart about how you manage your finances and lastly, always try to use cash first and credit later.
In case you were wondering what happended to pinkie my loyal gold nissan micra? I sold it for $4000 less than 5 years later when I moved to Nigeria in 2017. It was sold to a friend, one of the many friends who went to choose it at the dealership. I miss Pinkie some days when I drive past a similar looking car or some days when I cast my mind back to simpler times. It was a great car...while it lasted.
SIDEBAR
Can we as a society not be able to simultaneously honor the life of a person whilst discussing all aspects of that persons life? I mean no one is perfect right? If there are parts of a persons life that is uncomfortable such as that they were abusive while alive or a rapist alleged or not why can't we bring that up when discussing that persons life? Why is that disrespectful?
The craziest thing for me this week has to be Gayle King receiving death threats because she had a question about Kobe Bryants alleged sexual assault during an interview, with his mate Lisa Leslie. This interview is yet to be aired by the way. She asked a pretty simple question, does the sexual assault against Bryant complicate his legacy for her? This to me is a legitimate and incredibly intelligent question. Why the black community is up in arms about it is beyond me. Please let me know if I missed something here.
This is all we have time for today.
If you like our content let us know. If you'll like to reach out, you can do so at my Instagram handle @thenigerianimmigrant
Don't forget to share, follow and susbribe.
Till next time...
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