Monthly Archives: February 2013

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Buying a Car on a Budget?

When thinking about purchasing a new car in today’s financial climate which is the best option for people on a budget?  Nowadays many people can opt for different ways to get a car: used, leasing or new car offers – but which is the best choice?

For people on a budget they have to buy within their means. The cheapest way to obtain a car is buying used/ pre-owned. A benefit with buying this is that most of the time a new car will decrease in value by 25%-40% – this is a significant loss accumulated over the first two years. So why not let someone else take the percentage decrease? Purchasing a slightly used car that is two years or older could prevent from this drastic depreciation occurring and provide you with a cheaper deal. Obviously the negative with a used car is the fact you can never be guaranteed the car is in working order, although most cars have long warranties that may still be in effect.

Leasing a car is an option that has appealed to many people. Leasing a car has advantages and disadvantages that many should consider. A large payment isn’t needed to be put down on the vehicle, it only tends to be the first months payment, taxes, registration and security deposit amongst a few others. When you have reached the end of the lease you don’t have to worry about selling it on. The negatives with leasing are no damage can occur to the car, the agreed mileage needs to be met otherwise servicing can be refused, no modifications can take place as you technically don’t own the car and you will need maximum insurance cover.

Dealerships at the moment are trying to retain customer loyalty; one way they are doing this is through offering cars on finance. With many new car offers available at the moment a deal can be easily found with little deposits needed and low monthly fees. Take for example with this Hyundai dealership, a new Hyundai i20 can be financed with a deposit of £159 and the same price per month. Offers like this are very appealing for people on a budget as the cost is spread out and a lot easier to handle. The customer will have the peace of mind that the car will be under warranty and perhaps less will go wrong with a new car than a used car might, tax will be low and less costs will be carried out on maintenance. There are disadvantages however with depreciation occurring within the first two years, and some offers do contain high interest rates so it is always worthwhile checking the interest rates with each offer.

There are many advantages and disadvantages of the different ways to acquire a car. Weigh up each decision and decide whether or not it will suit you and your finances available. Don’t jump in at the first offer available shop around and try to find the best deal out there for you.

Banker’s Association on interest rate scandal: “There is no excuse for mis- selling”

Anthony Browne, chief executive of the British Bankers’ Association has spoken out on the mis sold interest rate swap scandal.  This comes after a report by the Financial Services Authority found that 90 percent of interest rate hedge products sold to small business owners were ‘outside regulations’.

An FSA investigation found that business owners were not always aware of the risks involved in buying these financial products. Interest rate hedge protections are intended to protect borrowers from future changes to interest rates on their loans. However, falling interest rates meant some customers faced increasing charges they could not afford to pay.  The issue was brought to media attention after a number of businesses failed because they could not afford to exit the schemes or pay charges.

In some cases banks were paying commission to those who sold interest rate protection schemes.

Mr Browne admitted, “There is no excuse for mis-selling” and that banks were “determined” to stop it. Mr Browne said banks were “changing remuneration practices” to make sure there was “no financial incentive” for staff to sell products to companies who did not need them. He added that banks would be setting up reforms to ensure the problem did not occur in the future.

Several British Banks including HSBC, Barclays, Lloyds and Royal Bank of Scotland have agreed to recompense customers who were inappropriately sold “very complex products” which they did not understand.

However, just how much banks are will have to pay is still unclear. Lloyds has reportedly set aside £400m whilst the Royal Bank of Scotland initially estimated the bill might come up to £50. However financial experts have suggested the real cost could be anything between £1.5b and £10b.

The Business Secretary Vince Cable said it was important that companies be recompensed promptly particularly those which were in financial distress.  Mr Cable said he had been in contact with the Federation of Small businesses, the FSA and individual banks to ensure all necessary action was being taken: “It was highly unethical – …. It comes on top of all the other stuff, the Libor scandal, the payment protection insurance and it is absolutely essential that… the banks [need to] clean up their act… they are going to have to turn over a new leaf and operate in a different way”, said Vince Cable.

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UK’s Gross Domestic Product Down by 3%

Its well known that the economic recession across the world has affected almost all countries, the United Kingdom not excepted. In the past four years, the UK has already experienced what it is to have many businesses in the market failing and banks are having a hard time recovering. Based on a report given by the United Kingdom’s Office for National Statistics (ONS), studies have showed a three percent (3%) decrease of the UK’s Gross Domestic Product (GDP).

The said fall was labeled as one of the worst GDP updates released during the fourth quarter. It was bad news for the country’s economic performance. This figure was based on the collated data given and analyzed by the Statisticians who work for the Statistics Office. The data has shown the cause of the fall might have come from the decrease in output coming from  productions that are situated in the northern parts of the country. The said result is alarming and could be bringing Britain to another recession that is more likely to happen, the third time. The citizens have already raised their concerned in a shocking figure that would hit the government and their policy for the economy. The government was said to be criticized by the Economic head of the IMF, also known as the International Monetary Fund.

Meanwhile, some members from the government have given their comment on the issue of the GDP downfall. The report has claimed that there are two ways to face the current problem, one is facing it and the other one is running away from it. A statement coming from the Chancellor George Osborne explained that the country is facing a very serious economic problem but the people should not run away and give up but instead make way to recover from the  fall.