Money Penny

Understanding The Fine Print

There has been a considerable amount of advertising lately around getting vehicles on interest free or low interest rate terms, or buy now, pay later finance options.

Some of the vehicle dealerships are making statements like pay one third now, one third in a year, and then the final third the following year - at a low interest rate. While others are stating you can drive away today and then just pay as you go!

So what are the pitfalls?

When you look at the fine print closer you may see initially that there is an interest free period with low repayments - but this is because there is a large deferred payment built in at the end (a final payment to be paid on an agreed future date). This can be confusing as the agreement may also state the vehicle is to be returned if the deferred payment is not repaid in full. And if the vehicle is returned, that the vehicle mileage must not have exceeded a maximum amount of kilometres - for example 60,000 kms over four years.

So, here are a few things to keep in mind before you commit to buying your vehicle:

 

  • Read the Terms and Conditions – When does interest kick in? & What is the interest rate?
  • Take a look at the establishment and administration fees – sometimes, they can be more than you think!
  • Double check any fees that can be charged – Is there a monthly fee? & Is there a fee to pay it o? earlier?

Once you have figured out if it is in fact a genuine interest free o?er or when the interest is to be charged, along with if there are any additional fees, such as an establishment fee or ongoing monthly fee - you can then make an informed decision if this is the best option for you.

It can take a little bit of time, but there is a definite advantage to making sure you get the finance o?er you were expecting – you just need to make sure that you completely understand the finer details.

Stay safe out there!

Talk soon . . .

Money Penny

The Secret of Compounding Interest!

When it comes to compounding interest the earlier you start saving - the more you make. Even saving a small amount of money each week, along with the benefit of compounding interest can really turn your savings into something extraordinary. Sorted.org.nz says “The best compounding happens when any interest we earn gets reinvested and earns even more interest. It’s interest earning interest, and our money is working for us instead of us working for it!” How does compounding interest work? Let’s say you save $10 a week at an interest rate of 2.5% pa (after tax) - the Sorted website shows that after five years you would have saved $2,600, and earned an additional $170 in interest. And by continuing to save for 15 years (and increasing your weekly savings amount to take inflation into account) you would have saved $10,400, and earned an additional $3,050 in interest! How can you calculate the amount you can achieve by regularly saving? It’s easy - Sorted has a calculator that does all the maths for you. You can find it at sorted.org.nz/tools/savings-calculator The great thing is that with the power of compounding interest even saving small amounts of money adds up over time. So don’t wait - start saving today! Stay safe out there. Talk soon...Money Penny

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Take Control of your debt

Throughout the Christmas and New Year period you can sometimes find yourself building up more debt than you expect. You may find that you have experienced a credit card blow out over the holiday period. Or, that the hire purchase you had on an initial interest free period is now going onto a high interest rate. With the festive season being traditionally more expensive, it makes sense to make a plan to get out of debt. Sorted.org.nz suggests you: Make a list of all your debts and the interest rate on each one. (Look up the interest rates in your loan agreements or credit card bill.)Identify which debt charges the highest interest.Make bigger repayments to pay off this debt faster. When it’s paid off, start paying more off the debt with the next highest interest rate. If you do find you need to borrow, do a bit of planning first. These are some of the things that you should consider when you are borrowing money: How much do you really need?Are there any fees or charges?How much is the interest?Will the time you pay it back over be a long period, meaning you pay more interest but have a lower repayment – or a short period, meaning less interest paid but higher repayments? The New Year is a great time to take care of your money matters and put yourself in control - so take the time now to consider your options, and take action! Stay safe out there. Talk soon . . . Money Penny

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Cyber Crime

Cyber Crime has become a constant and evolving threat to our everyday lives!

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Scams and more scams

Scams! They are happening all the time and when we least expect them. Recently the Financial Markets Authority (FMA) released a real life story about a chartered accountant who we will call ‘John’. Despite being an experienced investor, John was scammed of US$39,750 through a share scam.

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Be SMART with your money

Learning to be a regular saver is a giant leap towards having enough money for the things we want.

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What is Police Moneywise?

Police Moneywise is a financial capability course that is a joint initiative between Police and Families Credit Union and the NZ Police, which will initially provide free financial capability courses for all police employees, with participation being voluntary and free.

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To Invest, Or Not To Invest?

There are many different types of investments out there, and figuring out the best investments for you personally can be tricky.

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