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A recent article in a UK newspaper claimed 1.6 million Brits currently lease their car – but how many actually understand what they’re doing?

When I first leased a car, I had no idea how it worked. I assumed a lease was something you got on a retail building and not a car!

Don’t let the complexity scare you though. Leasing can be a practical and affordable form of car finance if you take the time to get to know how it works. In this blog, I’ll run you through what leasing is, how it works and a couple different forms of leasing finance.

What is a lease?

To understand the difference between leasing and buying, you need to have a look at what you’re actually paying for in a lease.

When you buy a car outright, your payment covers the full value that the vehicle is worth. Once you’ve paid the full price (either immediately or over time), you become the legal owner of the car.

With leasing, you essentially ‘rent’ a car for a given period of time and return it at the end of your contract. Unlike buying a car, you’re never the legal owner of the car, although you are usually its registered keeper.

Why lease? Because depreciation hurts

Leasing is an attractive option for a lot of people because it eliminates one of the major problems that comes with owning a car – the cost of depreciation (depreciation is how quickly a car loses value).

According to the AA, new cars can lose up to 10% of their value the moment you drive them off the forecourt. Worse, the worst of the bunch can lose up to 60% of their value in the first year of ownership!

With these motors, if you’re planning on selling your car after a few years, you’re in for a shock when you check what it’s worth.

Contract Hire

Contract hire (more commonly known as leasing) is an arrangement where someone ‘rents’ a new car for a set period of time from a dealer. During the contract, the individual pays just enough to pay off the car’s depreciation. (Plus a little profit for the dealer, of course.) At the end of the contract, the individual returns the car to the dealer and they both go their separate ways.

With leasing deals, you aren’t the legal owner of the car but you are the registered keeper. That means you have get the car regularly serviced and keep it in a good condition.

The best thing about leasing compared to other finance options is the monthly payments, which tend to be significantly lower. That’s because, as I already mentioned, you’re only paying off the depreciation. You can also trade your car in every few years for a brand new model!

Tom Butcher worked behind the scenes in print journalism for years until he discovered the wonders of the web. He writes for several publications, covering the finance, automotive and tech sectors. At the moment, he is helping LeaseFetcher teach the world about car leasing.

Are you a hands-on investor who enjoys evaluating investment opportunities and finding a diamond in the rough? If so you may want to consider investing in peer to peer lending. As a peer to peer lender you have the opportunity to review individual borrower applications and select the ones that you think are going to repay their loans.

What is Peer to Peer Lending?

For those of you not familiar with peer to peer lending (also know as P2P lending), let’s take a moment for a quick introduction. In the past ten years several websites (known as platforms) like LendingClub and Prosper have sprung up offering personal loans to individuals. This is certainly not unique but what makes them different is that they are not banks or financial institutions in the traditional sense. These websites get funding for the loans they provide from individual investors in amounts as small as $2,500. In a sense, anyone can be a banker with just a small amount of money. The signup process is quick and easy, and as soon as you transfer the funds you can start investing.

How Do You Invest in Peer to Peer Loans?

The process for P2P lending investing is pretty simple. Once you have opened and funded your account you will be able to see all of the loan applications that the platform has approved. These loan applications have been evaluated based on industry standard underwriting techniques and many are rejected. The ones that are approved are rated and the highest rated borrowers get the lowest interest rates.

Lenders review the approved loan applications and decide which loans they would like to invest in based on their comfort level with risk and their desired return. Investment in a loan can be as little as $25 and most experts recommend investing the minimum amount and spreading your portfolio over as many loans as possible in order to minimize risk through diversification. This is where you get to Do-It-Yourself. The platform provides dozens of pieces of information from the loan application and the borrower’s credit history. You get to determine which factors matter, how much to weigh them and what a good borrower profile looks like. To some people this may sound boring and tedious but for many investing junkies this is the fun part. You can look at data like length of employment, debt-to-income ratio, home ownership vs. renting, late payments, outstanding debt, bankruptcies and so much more.

There are a limited number of filters available on the platforms that allow you to quickly find loans that meet certain criteria, then you can review them in the more detail individually. Or, for the really hardcore investment analysis junkies, the information for all available loans can be downloaded to a spreadsheet for study and review. There are approximately 50 to 250 loans available at any given time and there are approximately 80 pieces of information available so, as you can imagine, this can be an enormous amount of data to review. However, with some simple sorting and filtering in your spreadsheet you can pretty easily identify the loans that meet your criteria.

There is also room for intuition and past experience in the analysis process. There may be more loans that meet your criteria than you have funds to invest. Ultimately, you may have to ‘go with your gut’ in order to select the loan or loans that you think are most likely to be paid back.

For those who want passive income or do not feel they are savvy enough to select quality loans there is also an auto invest feature that will choose the loans for you based on your desired risk/return level. But for the investment analysis enthusiast the DIY approach is the way to do. All in all, this can be a fun way to achieve a great return on your investment.

These days, credit cards are driving the consumer market all around the globe. This is a mode of payment that yields benefits like car rental coverage, cash-back points, and automated payments just to simplify our lives.

However, a user needs to be aware of the ways in which a con artist can misuse these credit cards. It’s truly essential as these cards can yield disastrous outcomes when misused. With cards depicting high APR, you may find it tough to pull out of your debt burden. Avoiding debt is your only way out this problem.

You may do your research on using credit cards if you really wish to handle them responsibly. You may come across several online resources illustrating the use of credit cards regardless of whether you’re applying for your first card or is paying off dues to improve your credit rating. While repaying your credit card debt, you must arrive at an affordable minimum payment like when you calculated your personal loan EMI.

Know how to use your credit cards from now on:

1. Repay Your Credit Card Balance Each Month

You must stay focused on repaying your credit card dues every month. You shouldn’t find an excuse since it charges more out of your bank account once you fail to live up to these payments.

You’ll need to bear an interest worth up to 25% based on the outstanding credit balance if you fail to make a payment or opt for making a minimum payment.

You can only keep high rates of interest from piling up if you pay off your dues each month. You must also refrain from skipping a payment. You might have to pay a penalty interest (up to an APR worth 30%) in case you miss out on a due date. Your credit score takes a hit when you actually need to pay a penalty.

2. Restrict Credit Utilization to a bare minimum

Apart from improving your credit score, it will even help in restricting your debt. Credit utilization is the metric that constitutes a large portion of your credit score. Your FICO score tends to rise when your credit utilization falls.

For instance, your credit utilization looks great when it’s valued at 16% after you’ve used 2 credit cards with a balance worth $600 and a combined limit of $3,100. In order to fetch the maximum benefits, you may choose to restrict it below 30%. While avoiding the risk of acquiring debt, you’ll even enjoy an improved credit score.

3. Avoid Using Multiple Credit Cards Simultaneously

You may be lured by the benefits of opening several credit cards especially when you’re seeking the advantage of being a new cardholder or attempting to redeem reward points. You may be thrilled to make the most of cash-back or 0% APR offers. However, you must refrain from opening multiple accounts till you’ve learned to use a single card responsibly.

Chances of overspending get increased when you have several cards in your arsenal. You may even miss out on a due date. You must restrict the number of cards in your wallet as you won’t like to fall prey to any of these incidents.
Credit cards are indeed a very useful tool when you know how to use them properly. By considering the tips mentioned above, you may certainly walk a step forward and repair your credit rating. It will help in securing the financial future of your loved ones.

You must have sought ways to invest in various asset classes from time to time. You’ll get an opportunity by opting for a Unit Linked Insurance Plan. It will even cover you for certain unfortunate circumstances with a life insurance policy. A portion of the amount that you pay towards your premium may be invested in your hand-picked plans. It enhances your chance to achieve a higher return on investment.

If you’re truly eager to achieve your long-term financial goals, your investment portfolio must comprise of ULIPs. Apart from ensuring a cost-effective way of earning more on your investments, a ULIP plan even allows your savings to grow and accumulate more wealth over time.

Compared to other traditional insurance policies, ULIPs yield a unique opportunity for you to enjoy the freedom of customizing your policy while comparing a plethora of options that match your investment needs. Like any other insurance policy or wealth plan, the features of a ULIP plan get you overwhelmed.

Check Out a Few Points on Why ULIPs Are a Good Investment Option:

Multiple Goals:

ULIPs enable you to invest a portion of your premium towards debt, balanced, and equity funds, while the remaining portion goes out towards life cover. Thus, a single product allows you to enjoy the benefits of investment and insurance at once.

Higher Returns:

By opting for ULIPs, you’re actually investing your money across numerous reliable investment options like equity and bonds. ULIPs are a great opportunity for you to obtain quality returns linked to the share market. You won’t enjoy such returns with any traditional insurance policy.

More Flexibility:

The fact that a ULIP enables you to shift from one investment fund to another is a proof of its flexibility. Facts concerning your market performance and risk appetite will help you to pick any of the balanced, equity, and debt funds.

Economic:

ULIPs are certainly amongst the most inexpensive market policies that yield both investment and insurance benefits. The fact that the latest ULIPs don’t demand any policy or allocation costs often makes them more inexpensive than that of the mutual funds. ULIPs are also quite popular due to their tax benefits.

Tax Benefits:

ULIPs can act as an efficient tax-saving tool. The amount that you pay towards your ULIP policy premiums is entirely tax-exempted under certain circumstances. Being a policyholder, you’ll get more chances of extending your savings at a time when there’s no need to pay tax on the amount of premium.

In addition, the portion of your income that’s taxable comprises of deductibles like that of the maturity and death benefit. There’s no reason for you to be concerned about paying a hefty sum as tax out of your savings.

Long-term investment plans like ULIPs are meant for individuals that opt for financial planning for the long run. There’s a 5-year lock-in period that comes with every ULIP. It helps you set your long-term goals in a proper way. The growth that you achieve with ULIPs can help you meet your long-term financial objectives like that of buying a property or fulfilling your daughter’s wedding plans. These days, you may even pick one out of a diverse range of ULIPs.

It’s not advisable that you keep your surplus funds in a regular savings account for long. In that case, you can’t just expect a high ROI against this fund. You may choose to go with multiple options like mutual funds and shares, but they have an element of risk. The risks are much lower with FD investments as they’re regulated.

What’s so special about Fixed Deposits?

You may open FD account while you’re looking for some safe and sound investment option. Besides being safe, FDs yield a lucrative rate of interest for the investors. You may earn quality interests on the amount that goes out in your FD account for a certain period.

1. Fixed Deposits create earning opportunities by compounding interests

FDs yield interest for over a uniform period when issued by banks. If you don’t need the amount of interest to come as regular quarterly or monthly income, you may consider reinvesting in your FD account. You’re likely to witness a growth of the principal amount and the interest of the upcoming period will be ascertained on the new value. In this way, you’ll end up earning more on the invested amount. All you need to do is to pick your payment option besides opting for the compounded FD option. You may use any FD calculator online to check the returns.

2. Sound investment option for senior citizens

You may consider an FD among the most lucrative investment options when you don’t have a source of steady income, especially when you’re old and retired. Many of the Indian banks provide you with an FD account and abide by the safety norms laid out for protecting your invested principal. The rates of interest might not be very high, but you may still gain something on these deposits. Under circumstances when you’re heading towards a financial crisis, you may close all FDs even if they haven’t matured.

3. Fixed Deposits yield tax-saving opportunities

FDs come with great tax saving options when you’re specifically interested in investing a portion of your funds for a long term. You may avail them in the form of a 5-year term deposit and set your money to be locked in for those 5 years. Until the maturity of your FD, you won’t be able to achieve credits or loans on your fixed deposits and can’t break them. With tax saver FDs, you may enjoy tax exemption on the principal amount invested by you. Depending on the tax slab, taxes are levied on the interest.

4. Fixed Deposits are much safer

The RBI governs all FD schemes that are issued by the NBFC and Indian banks. Issuers of these schemes are required to follow certain stringent regulations and rules from time to time. In India, the banking industry is safer for the investors as most saving schemes yield adequate protection towards the principal.

If you’re not among those who looks for a high ROI then you may be in need of a more secure investment. FDs are certainly one of those safer schemes that you’ve been looking for. All of your capital is in safe hands as the FDs are regulated by stringent norms laid down by the government authorities. That is also the reason why FDs are considered so safe for the members of low-income groups that don’t possess any alternative source of income.