How to Get Used Car Finance

Many financial institutions are now offering used car finance. Before anyone can go out looking for a deal, it is important to understand what this type of finance entails. Generally, there are two types of financing offered by financial institutions in this area. First, there is the unsecured finance and the secured finance, which uses the car as collateral. The financing is usually offered with a repayment period of five to seven years. However, the term can be shortened depending on the age of the car you are purchasing. Actually most financial institutions do not offer financing for cars, which are older than seven years.

Why finance the purchase of on old car?
It can be a good option to go for an old car if the new one is out of reach in terms of the price with relation to your income. It might also be a wise decision to buy a used car in order to save your self from the automatic depreciation that occurs once you get the vehicle from the dealership. In all these cases, you will need financing, as the cost of the cars is usually high that most of us have in cash.

When you want to finance the purchase of an old car, you still need to go through the formalities of a normal loan. This means there are certain areas you need to work on. First, you have to check the status of your credit score. Credit scores can be easily obtained online once per year free. This will make it easier for you to know your score before approaching the lender. The next step is to know how much money is required as down payment. The more you can avail, as down payment will result in higher savings on the loan’s interest. Finally, you will need to check the interest rates offered by different financial institutions. Lower interest rates will results in huge savings in the long-term.

Comparing different used car finance option
There are different lenders offering used car financing out there. All these have different policies and finance packages. It is important to compare different financiers in order to get the cheapest option. There are many ways, which you can use to compare used car finance. However, the easiest and most accessible way is through comparison websites such as Get Approved Finance or E-Car Finance.

The comparison websites usually look at different options provided by different institutions taking into consideration the loan repayment time, the duration it will take before approval, interest rate, loan terms and loan company fees. They will also establish if you get fee breaks if you are able to complete payment early. All these factors are very hard to compare on your own. Finally, the comparison websites provide you with information on all the extras offered with the loan such as car insurance, disability, unemployment and death credit protection. This will ensure that you have the best, used car finance option without considering the interest rates only.

Accoying the Fears of Real Estate Financing

Financial concepts in real estate can be frightening; these fears can be eased by understanding some simple concepts:

Three key financial concepts must be clearly identified prior to calculating the desirability of a real estate investment, which are the required rate of return, the time value of money and depreciation. The required rate of return primarily reflects the investors required rate of return. Whereas the concept of time value of money is that any specified amount of cash to be received at some date in the future is not the equivalent of the same amount of cash held at an earlier date. A sum of cash to be received in the future is not as valuable as the same sum on hand today.

In order to calculate the required rate for a real estate investment the following steps most be taken: identify the sources of financing that will be used to fund the investment, calculate the cost of capital for each of the sources of financing, calculate the Weighted Average Weight Cost of Capital. Investors use different source of financing for their real estate investment project. Most commonly mortgages are used, but there are other options such as owners financing and lease-buy-options.

Once the sources of funding have been identified the cost of capital of each source of financing must be calculated. These calculations vary depending on the type-financing source. There are two real and important concepts that must be identified before starting to calculate the cost of capital of each type of source of financing, these are taxes and flotation costs. When an investor borrows money to finance the purchase of a real estate asset, the interest expense is deductible for federal income tax calculations. This means that the amount from revenue that will be used to pay interest to your lender should not be taxed. On the other hand flotation costs are the transaction costs incurred. Transactions costs must be deducted from the real estate investment proceed before calculating the cost of capital.

The cost of capital of all the individual sources of financing combined together gives the weighted average cost of capital. To estimate the weighted average cost of capital of a real estate project the following elements need to be known:

1.Estimate the cost of capital of all the sources of financing used to fund the real estate project
2.Estimate the capital structure of each source of financing (capital structure is the proportions of each source of financing used by the investor).
3.Calculate the product of the cost of capital times the capital structure for each source of financing
4.The sum of all the products will give the Weighted Average Weight Cost of Capital

These methods are typically more applicable to advance real estate investors. Real and serious investors might finance their real estate endeavors using different sources of financing, whereas small investors typically only use one form of financing.

The concept of time value of money is that any specified amount of cash to be received at some date in the future is not the equivalent of the same amount of cash held at an earlier date. A sum of cash to be received in the future is not as valuable as the same sum on hand today, because cash on hand today can be invested to earn income.
When estimating the desirability of a real estate project all dollar values must be first comparable since a dollar received today is worth more than a dollar received in the future. Therefore in order to measure the desirability of a real estate project all dollar flows must be moved out to a common future date or back to the present. To move dollar amounts to the future one calculates the dollar amount compound interest and to move dollar amounts back to the present one calculates the dollar amount present value. Time value of money can become an important strategic factor in planning and presenting real estate projects.

When money is moved to the future the initial amount of money is known and the goal is to try to determine how much that sum of money will grow in a certain number of years when compounded at a specific rate. Whereas when money is moved back to the present the goal is to determine the value in today dollars of a sum of money to be received in the future.

In summary more than one source of financing for real estate projects, when doing so there are some concepts that need to be considered, such as the weighted average weight cost and time value of money. Advance investors with large real estate projects typically use different sources of financing, as opposed to smaller investors who typically finance their projects using mortgages. Using a mix of financing sources can provide a boarder platform of opportunities, but it also complicates the calculations when assessing the desirability of the project.

Financing For Equipment – Three Things You Need to Know About Canadian Equipment Leasing

Financing for equipment is sometimes a challenge for Canadian business owners and financial managers. What if you had a solid understanding of 3 key elements of Canadian equipment leasing and financing. Let’s explore some key information around three critical elements of lease financing -

1. What can be financed?

2. What are the type of leases and rates available to my firm?

3. What is the best way to obtain a prompt approval at the best rate, terms and structures for my business asset acquisition?

So what assets can be financed in Canada? The reality of that answer is that almost every business asset can be financed, and moreover, two other key points need to be made. In many cases even intangible assets can be financed – a solid example is software for your business, or even the additional add on requirements that come with many asset acquisitions – these might include installation, warranties, maintenance, shipping/delivery, etc. And, furthermore asset financing in Canada definitely includes the financing of used equipment, which is a major part of the Canadian equipment financing industry.

Millions of dollars of used equipment, purchased here or in the U.S. or other international locations are financed annually. We add two critical cautionary items of note here – in certain cases and appraisal or asset valuation or inspection might be required if the asset is new, and in many cases a down payment might be required on a used piece of equipment. These two points would still clearly not negate the major benefits of financing a piece of used equipment. Why used? Simply because many assets in many industries still have a very useful economic life after a typical usage of 3-5 years, for example thing production equipment, etc. In many instances, especially with the use of the internet and auction sites pricing on used equipment might be exceptionally favorable.

One other solid tip is to get your lease financing approved in advanced, as this might allow you to negotiate a better price with the vendor given you are pre approved and the vendor knows they will be paid directly from the leasing company.

Let’s move on to our second point, which is simply that there are some critical technical aspects to lease financing that are very important for business owners to be aware of. First of all you should ensure that you understand there are two types of lease financing available – to keep it simply we will simply call them, as the industry does:

Capital leases

Operating Leases

Which one is best for your firm?

We always dislike saying to our clients ‘it depends ‘but the reality is that the choice of lease type should be driven by your final motivation with the asset. By that we simply mean that you need to determine, in advance!, if you intend to own the asset at the end of the lease, or if you simply want to use and return it after an agreed upon amount of time, usually 2- 5 years, although shorter and longer terms might apply (that’s the flexibility of lease financing).

Choosing the type of lease you pick will significantly impact how the lease is carried on your books, and also it is a critical factor in driving pricing. Operating leases will always be priced with a lower monthly payment as the asset is returned to the lessor at the end of the lease. Clients ask us ‘what if we later determine the asset still has a useful economic life and we wish to keep it? Again, here is where the flexibility of lease financing comes in, because you are allowed in an operating lease to pick one of three options at end of term – you can return, purchase, or upgrade. Actually there’s a fourth option, which is simply to agree to extend the lease for a pre agreed upon amount of time.

Let’s move on to our final point, which is simply – You have made the decision to acquire an asset through lease financing. How do you go about that in Canada? We advised clients to work with a credible, experienced, and trusted lease financing advisor – even basic assistance around the final rate, term, and structure could save you many thousands of dollars in payments. Or at the same time, negotiating on your behalf any critical areas such as down payment, limited personal guarantees, or end of lease options can all be the make or break point in Canadian lease financing success. Additionally, the lease financing industry in Canada is very fragmented and consists of captive firms tied to manufacturers, independent Canadian and U.S. firms, and very specialized firms that only do or finance certain things.

In summary, arm yourself with some critical knowledge of lease financing and you will be rewarded with the knowledge that you have chosen the best financing method for the acquisition of new and used equipment and business assets in Canada