It's that time of the year again, when many people are considering purchasing an RV. When I was a sales manager and finance manager for an RV dealership I would get asked lots of questions about financing RV's. I organized some of these questions and included them in the RV financing section of my book, "The RV Book". Here is an excerpt from my book on RV financing FAQ.
Will one RV lender offer better interest rates than another RV lender?
Interest rates change frequently. If the prime rate goes up RV finance rates will go up too. RV lenders send updated rate sheets to RV dealers whenever their finance rates change. RV specialty lenders watch each other closely and if one lender lowers rates the other lenders will generally follow suit. They will usually stay within a quarter to a half point of each other.
Are there other factors that will determine what interest rate I get?
Yes, there are several factors that will determine the rate you get.
1) It depends if the RV is new or used. A used RV (normally over 3 or 4 years old) will get a higher interest rate than a new RV.
2) Your down payment will affect your interest rate. If you finance the RV on a zero down program the interest rate will be higher.
3) The term of the loan will affect the interest rate. The shorter the term the higher the rate, the longer the term the lower the rate.
4) The amount financed will affect the interest rate. The lower the dollar amount the higher the rate, the higher the dollar amount the lower the rate.
5) Your credit history (credit rating or score) will affect the rate. The higher your credit score is the lower the interest rate will be.
Should I shop around for a better rate, or will the rate a dealer offers be the best rate I can get?
You should be aware of what the current rates are for RV loans, and based on the criteria listed determine if you are getting the best possible rate you can get. If you think you qualify for a lower rate, by all means try securing a better rate elsewhere. There are several RV specialty lenders on the internet that would like your business and will offer competitive rates. Do not however let too many lenders run a credit check on you to try and get a lower rate. This can backfire so be selective about who, and how often your credit is being checked.
Can you explain more about financing an RV with no money down?
There are usually a couple of RV lenders that will offer no money down finance programs. These programs will have certain guidelines to qualify. The type of RV, dollar amount, term of the loan and your credit rating can all factor into these types of programs. The finance rate will usually be higher too.
What length of term can I expect to get on an RV loan?
The term of the loan will be based on the dollar amount financed and the age of the RV. Some RV lenders are offering 20 year loans on new RV's with financed amounts over $100,000 and loans ranging from $25,000 to $99,000 can qualify for 15 year loans. Loan amounts between $10,000 and $25,000 may qualify for 10 to 12 years loan terms.
Why would anybody want to pay the interest on a 15 or 20 year loan?
Nobody wants to, but the biggest advantage of a long term loan is you get a lower monthly payment. Financing $100,000 for 240 months at 7% interest would be $775 a month. The same loan for 120 months would be $1,161 a month. You save almost $400.00 a month. But keep in mind you will have little or no equity if you try to trade within the first several years.
Can I finance an RV with below average credit?
RV's are basically considered a luxury item, so the criteria to finance an RV are more stringent than it is to finance an automobile. There are lenders that will finance below average credit but interest rates will be higher.
How is the interest on an RV loan calculated?
The majority of RV loans from RV specialty lenders are simple interest fixed rate loans. What this means is you will only pay interest on the principle owed, and in most cases there is no penalty for paying the loan off early. If you choose to pay more than your required monthly payment you can shorten the term of the loan and save on interest.
Can I write the interest off on my income taxes?
Yes, a fully self contained RV is considered a 2nd home and the interest paid is deductible, if you are not already deducting the interest on a 2nd home. At the time of this writing an RV is considered a qualified residence if it is one of the two residences chosen by the taxpayer for purposes of deductibility. To qualify it must provide basic living accommodations; meaning it has cooking, sleeping and bathroom facilities with fresh water and waste water holding tanks. Talk to your tax advisor about what is required to write the interest off on your RV.
Will I need a down payment and if so how much?
Down payments will vary slightly between RV lenders but 10 to 20% down, in the form of cash or a trade-in, is usually the range. There are programs that offer low down, or no down payment but this will usually increase the interest rate. Most banks want to see your good faith commitment to the loan.
Do I need to have insurance on the RV to get a loan?
Yes, insurance is required when you close on the loan. The bank will not loan the money until they have proof of insurance.
Monday, May 3, 2010
Importance of Trade Finance
Trade finance is the method importers and exporters of commodities and goods use to finance their business. Basically, trade finance has been in existence for many thousands of years - and one can trace the roots of trade finance and structured trade finance right back to the early days of China and the silk route, Mesopotamia and Europe. Trade finance was around long before Europeans settled in America and long before the world's stock markets were born!
Today, trade finance is a massive, multi-billion dollar business. As the world trades more and more goods and commodities are bought and sold, so more and more banks and financiers are needed to lend money to finance the purchase and sale of these goods and commodities - right across the global supply chain.
How is trade finance and structured trade finance useful?
Take an example: imagine you are a trader in cocoa beans in Cote d'Ivoire, buying beans locally and selling them to foreign buyers. To make your purchases, you will need to have money to buy the cocoa up-country in Africa, prior to their export. Where will you find money to make these purchases? And supposing you are the international buyer; the shipper, purchasing from cocoa traders all over West Africa - how will you finance your transactions, which at any one time may exceed your cash reserves? What might be supported by your bank who, if they are traditional lenders, will only lend against your balance sheet?
This is where trade finance and structured trade finance is useful - your business can grow and develop if you use the services of a specialist trade finance department who will structure trade finance structures can be tailored to your needs, using the collateral of the goods you are trading, rather than your own balance sheet or other assets.
What is the basis of trade finance and structured trade finance?
Goods and commodities have an underlying value of their own. For example, if cocoa beans are worth many hundreds or even thousands of dollars per tonne, then once a big pile of beans is accumulated in one place; in a warehouse or on a ship, it is worth a lot of money. A bank may lend money against the total value of the beans, minus some amount to take account of price and other risks
.
It is the same for every commodity or trade good which is resalable. A bank will make a loan as long as the collateral "adds up" and as long as the bank is comfortable with the way the deal is structured between both the buyer and the seller. Of key importance is that if something goes wrong the bank is able to take possession of the commodities or goods and sell them to realise monies to repay any loan amounts outstanding.
Basically, when we talk of structured trade finance we are talking of deals whereby complex arrangements are put in place to ensure a bank can take possession and sell the underlying capital used for the loan; in this example, the goods and commodities themselves.
Is trade finance complicated?
No. It is a simple business although the structures used in trade finance in more complex deals require a lot of work for all of the parties involved. This is why the total loan amount of a structured trade finance loans must be high enough to warrant the involvement of highly-paid bankers, lawyers and other advisers.Importance of Trade Finance &
Today, trade finance is a massive, multi-billion dollar business. As the world trades more and more goods and commodities are bought and sold, so more and more banks and financiers are needed to lend money to finance the purchase and sale of these goods and commodities - right across the global supply chain.
How is trade finance and structured trade finance useful?
Take an example: imagine you are a trader in cocoa beans in Cote d'Ivoire, buying beans locally and selling them to foreign buyers. To make your purchases, you will need to have money to buy the cocoa up-country in Africa, prior to their export. Where will you find money to make these purchases? And supposing you are the international buyer; the shipper, purchasing from cocoa traders all over West Africa - how will you finance your transactions, which at any one time may exceed your cash reserves? What might be supported by your bank who, if they are traditional lenders, will only lend against your balance sheet?
This is where trade finance and structured trade finance is useful - your business can grow and develop if you use the services of a specialist trade finance department who will structure trade finance structures can be tailored to your needs, using the collateral of the goods you are trading, rather than your own balance sheet or other assets.
What is the basis of trade finance and structured trade finance?
Goods and commodities have an underlying value of their own. For example, if cocoa beans are worth many hundreds or even thousands of dollars per tonne, then once a big pile of beans is accumulated in one place; in a warehouse or on a ship, it is worth a lot of money. A bank may lend money against the total value of the beans, minus some amount to take account of price and other risks
.
It is the same for every commodity or trade good which is resalable. A bank will make a loan as long as the collateral "adds up" and as long as the bank is comfortable with the way the deal is structured between both the buyer and the seller. Of key importance is that if something goes wrong the bank is able to take possession of the commodities or goods and sell them to realise monies to repay any loan amounts outstanding.
Basically, when we talk of structured trade finance we are talking of deals whereby complex arrangements are put in place to ensure a bank can take possession and sell the underlying capital used for the loan; in this example, the goods and commodities themselves.
Is trade finance complicated?
No. It is a simple business although the structures used in trade finance in more complex deals require a lot of work for all of the parties involved. This is why the total loan amount of a structured trade finance loans must be high enough to warrant the involvement of highly-paid bankers, lawyers and other advisers.Importance of Trade Finance &
Careers in Finance
finance is a very broad subject. Speaking in terms of employment doesn't narrow the term much. There are a wide variety of careers and job positions available in the finance field. Education requirements and salary expectations depend on the area of interest, as well as the geographical position.
Several careers opportunities are available in finance. Banking is probably the more common position that comes to mind. Commercial Banking, Corporate finance, Financial Planning, Insurance, Investment Banking, Money Management, and Careers in Real Estate are all related to the field of finance. Studies done recently have shown that the need for people in the finance field is growing. Incidentally, as long as there is money involved, there is a need for finance. Some characteristics of finance professionals include; Strategic thinking, and the ability to comprehend complicated matters fairly quickly, a new, fresh perspective, and candor. If you are interested in a career in finance, you should also possess some leadership qualities, have a firm understanding of risk management, and have strong analytical and problem solving skills.
Keeping in mind that finance is a global industry, a second or even third language would be a very helpful skill in this field. Education requirements vary, depending on the career path that you have chosen. An Associates Degree would be beneficial for a few minor career choices, but most companies require at least a Bachelor's Degree for jobs such as accounting, investment banking, commercial banking, and so forth. You can opt to pursue your Master's Degree, and expect to earn a much higher annual income. Income ranges with a Bachelor's Degree start around $25,000 per year and top out at over $40,000. Starting salaries with a Master's range from $30,000 to $80,000 annually. Incidentally, if you choose a Bachelor's degree, your starting title would probably be "Junior Financial Analyst", as with a Master's it would be "Financial Analyst". So, besides the annual income being higher, with a Master's Degree, you can expect to have more responsibility and a much higher "clout" with companies than if you simply pursue a Bachelor's Degree.
Whatever degree you decide to obtain, there will be specific courses of study that you must take. Actual course titles will, of course, vary by institution, but an example of your required courses would be: Developing Business Perspective, Management and Leadership, Fundamentals of Business, Marketing and Sales, Human Resource Management, Organization and Communication, finance and Accounting, Financial Markets and Institutions, Investment and Portfolio Management, Business Ethics, Public and Nonprofit finance, and Risk Management. Keep in mind that these courses are not the only ones that you will be required to take, depending on your choice of degree, and the institution that you attend.
The Government finance Officers Association has information, news, and helpful links to help you whether you are in the finance industry, or just thinking of entering finance. You can find lists of companies that are hiring, as well as their salary requirements and educational requirements. There are also links to local training events, as well as general news that affects the finance industry in the United States and Canada.
A look at some current job openings in the finance field, shows that the need for financial advisors is very much in demand. In California, an Assistant Chief Fiscal Officer, for a county government office, with only 1 year of experience, has a salary range of $81,765 to $99,424 annually. There are many opportunities in the government, if you have a finance degree, and you can expect the salary to be very competitive. Other, non-government companies, such as AIG, American Express, and local banks are a good place to get your start in the finance world. Also, private firms such as Deloitte & Touche Corporate finance Canada, Inc., Chapman and Cutler, and William Blair & Company, all which serve the US and Canada, and other private firms hire periodically for new positions, and offer competitive salaries.
If you are inclined to seek your career in the finance industry, research companies well to find the best one for you. Educationally speaking, most colleges and institutions offer a wide range of courses, depending on the focal point of your finance choice. You would need to delve into the path of finance that you are planning to pursue, and with a little research and a good head for business, you could well be on your way to a very lucrative career in the ever-growing finance World.
Several careers opportunities are available in finance. Banking is probably the more common position that comes to mind. Commercial Banking, Corporate finance, Financial Planning, Insurance, Investment Banking, Money Management, and Careers in Real Estate are all related to the field of finance. Studies done recently have shown that the need for people in the finance field is growing. Incidentally, as long as there is money involved, there is a need for finance. Some characteristics of finance professionals include; Strategic thinking, and the ability to comprehend complicated matters fairly quickly, a new, fresh perspective, and candor. If you are interested in a career in finance, you should also possess some leadership qualities, have a firm understanding of risk management, and have strong analytical and problem solving skills.
Keeping in mind that finance is a global industry, a second or even third language would be a very helpful skill in this field. Education requirements vary, depending on the career path that you have chosen. An Associates Degree would be beneficial for a few minor career choices, but most companies require at least a Bachelor's Degree for jobs such as accounting, investment banking, commercial banking, and so forth. You can opt to pursue your Master's Degree, and expect to earn a much higher annual income. Income ranges with a Bachelor's Degree start around $25,000 per year and top out at over $40,000. Starting salaries with a Master's range from $30,000 to $80,000 annually. Incidentally, if you choose a Bachelor's degree, your starting title would probably be "Junior Financial Analyst", as with a Master's it would be "Financial Analyst". So, besides the annual income being higher, with a Master's Degree, you can expect to have more responsibility and a much higher "clout" with companies than if you simply pursue a Bachelor's Degree.
Whatever degree you decide to obtain, there will be specific courses of study that you must take. Actual course titles will, of course, vary by institution, but an example of your required courses would be: Developing Business Perspective, Management and Leadership, Fundamentals of Business, Marketing and Sales, Human Resource Management, Organization and Communication, finance and Accounting, Financial Markets and Institutions, Investment and Portfolio Management, Business Ethics, Public and Nonprofit finance, and Risk Management. Keep in mind that these courses are not the only ones that you will be required to take, depending on your choice of degree, and the institution that you attend.
The Government finance Officers Association has information, news, and helpful links to help you whether you are in the finance industry, or just thinking of entering finance. You can find lists of companies that are hiring, as well as their salary requirements and educational requirements. There are also links to local training events, as well as general news that affects the finance industry in the United States and Canada.
A look at some current job openings in the finance field, shows that the need for financial advisors is very much in demand. In California, an Assistant Chief Fiscal Officer, for a county government office, with only 1 year of experience, has a salary range of $81,765 to $99,424 annually. There are many opportunities in the government, if you have a finance degree, and you can expect the salary to be very competitive. Other, non-government companies, such as AIG, American Express, and local banks are a good place to get your start in the finance world. Also, private firms such as Deloitte & Touche Corporate finance Canada, Inc., Chapman and Cutler, and William Blair & Company, all which serve the US and Canada, and other private firms hire periodically for new positions, and offer competitive salaries.
If you are inclined to seek your career in the finance industry, research companies well to find the best one for you. Educationally speaking, most colleges and institutions offer a wide range of courses, depending on the focal point of your finance choice. You would need to delve into the path of finance that you are planning to pursue, and with a little research and a good head for business, you could well be on your way to a very lucrative career in the ever-growing finance World.
The field of corporate
The field of corporate finance deals with the decisions of finance taken by corporations along with the analysis and the tools required for taking such decisions. The principle aim of corporate finance is enhancing the corporate value and at the same time reducing the financial risks of the company. In addition to this, corporate finance also deals in getting the maximum returns on the invested capital of the company. The major concepts of corporate finance are applied to the problems of finance encountered by all type of firms.
The discipline of corporate finance can be split into the short term and the long term techniques of decisions. The investments of capital are the long term decisions relating to the projects and the methods required to finance them. On the other hand, the capital management for working is considered as a short term decision that deals with the short term current liabilities and asset balance. The main focus here rests on the management of inventories, cash and, the lending and borrowing on a short term basis.
Corporate finance is also associated with the field of investment banking. Here, the role of the investment banker is the evaluation of the various projects coming to the bank and making proper investment decisions regarding them.
The Capital Structure:
A proper finance structure is required for achieving the set goals of corporate finance. The management has to therefore design a proper structure that has an optimal mix of the different finance options that are available.
Generally, the sources of finance will comprise of a mix of equity as well as debt. If a project is financed through debt, it results in causing a liability to the concerned company. Hence in such cases, the flow of cash has various implications regardless of the success of the project. The financing done by equity carries a lower risk regarding the commitments of the flow of cash, but the result of this is the dilution of the earnings and the ownership. The cost involved in equity finance is also higher in the case of debt finance. Hence, it is understood that the finance done through equity, offsets the reduction in the risk of cash flow. The management has to hence have a mix of both the options.
The discipline of corporate finance can be split into the short term and the long term techniques of decisions. The investments of capital are the long term decisions relating to the projects and the methods required to finance them. On the other hand, the capital management for working is considered as a short term decision that deals with the short term current liabilities and asset balance. The main focus here rests on the management of inventories, cash and, the lending and borrowing on a short term basis.
Corporate finance is also associated with the field of investment banking. Here, the role of the investment banker is the evaluation of the various projects coming to the bank and making proper investment decisions regarding them.
The Capital Structure:
A proper finance structure is required for achieving the set goals of corporate finance. The management has to therefore design a proper structure that has an optimal mix of the different finance options that are available.
Generally, the sources of finance will comprise of a mix of equity as well as debt. If a project is financed through debt, it results in causing a liability to the concerned company. Hence in such cases, the flow of cash has various implications regardless of the success of the project. The financing done by equity carries a lower risk regarding the commitments of the flow of cash, but the result of this is the dilution of the earnings and the ownership. The cost involved in equity finance is also higher in the case of debt finance. Hence, it is understood that the finance done through equity, offsets the reduction in the risk of cash flow. The management has to hence have a mix of both the options.
Accounts Receivable Financing
The Merriam-Webster Online Dictionary defines "secret" as:
"1 a: kept from knowledge or view : hidden b: marked by the habit of discretion : closemouthed c: working with hidden aims or methods : undercover (a secret agent) d: not acknowledged : unavowed (a secret bride) e: conducted in secret (a secret trial)2: remote from human frequentation or notice : 3: revealed only to the initiated : esoteric 4: designed to elude observation or detection (a secret panel)5: containing information whose unauthorized disclosure could endanger national security".
As used in this article, secret means: revealed only to the initiated; kept from knowledge or view; and designed to elude observation or detection.
The first secret- "revealed only to the initiated" relates to the fact that most schools, even business schools, do not teach the subject of factoring or purchase order financing; most banks do not offer these financing facilities as products. Therefore, it is not surprising that many businesses are unaware of the cash potential that lays dormant in their business invoices.
Let's suppose you own a small to medium business and you depend on customers paying invoices within a 45-60 day period for your working capital. In essence, you are extending credit like a bank to your customers. For that period of time your cash is tied up in your invoices- your accounts receivable. This limits growth and may create problems regarding meeting payroll and paying your suppliers. Accounts receivable financing is the process of selling your invoices for cash as soon as they are issued which allows you to make more effective use of your assets. Purchase order financing is the process of obtaining a third party commitment to pay your suppliers as soon as products are received by your clients (in advance of payment by you or your client), based on the surety of an accounts receivable financing arrangement.
All businesses are limited in their growth and profits by the amount of capital and cash flow available to take advantage of business opportunities. The availability of virtually unlimited cash creates a powerful paradigm for potential growth. It also can expand your thinking about what business is possible and how you might go out and develop new business.
The second secret- "kept from knowledge or view" relates to the practice of non-notification factoring. Some business people are concerned that working with a factor, an accounts receivable financing company, may not be viewed favorably by their customers. In many cases it is possible to structure a transaction legally so that the accounts receivable financing is transparent to the ultimate customer.
The third secret- "designed to elude observation or detection" has to do with your business plan and how the way you think about the world can affect your success. In 2006 Prime Time Productions produced a film and a book called "The Secret". The film dramatically describes the "Law of Attraction" which asserts that people's feelings and thoughts attract real events in the world into their lives. Can your feelings and thoughts attract more business and success? Is the visualization of what you want an aid for manifesting your business goals? Is The Secret "just a new spin on the very old (and decidedly not secret" The Power of Positive Thinking (a book by Norman Vincent Peal written in 1952) wedded to 'ask and you shall receive' -as opined by Karin Klein, editorial writer for the Los Angeles Times? Did The Secret fail to discover the real roots of powerful thinking?
In the book, "The Diamond Cutter", Geshe Michael Roach examines The Budda on Managing your Business and your Life. Roach graduated from Princeton University with honors, studied the ancient wisdom of Tibet and traveled to the Tibetan Lamas at the seat of His Holiness, the Dalai Lama. In 1983 he took the vows of a Buddhist monk.
His teacher encouraged him to enter the world of business. Mr. Roach choose the diamond business. He hid the fact that he was a monk and maintained a façade of a normal American businessman on the outside. The business developed from nothing to a one hundred million dollar per year business.
"1 a: kept from knowledge or view : hidden b: marked by the habit of discretion : closemouthed c: working with hidden aims or methods : undercover (a secret agent) d: not acknowledged : unavowed (a secret bride) e: conducted in secret (a secret trial)2: remote from human frequentation or notice : 3: revealed only to the initiated : esoteric 4: designed to elude observation or detection (a secret panel)5: containing information whose unauthorized disclosure could endanger national security".
As used in this article, secret means: revealed only to the initiated; kept from knowledge or view; and designed to elude observation or detection.
The first secret- "revealed only to the initiated" relates to the fact that most schools, even business schools, do not teach the subject of factoring or purchase order financing; most banks do not offer these financing facilities as products. Therefore, it is not surprising that many businesses are unaware of the cash potential that lays dormant in their business invoices.
Let's suppose you own a small to medium business and you depend on customers paying invoices within a 45-60 day period for your working capital. In essence, you are extending credit like a bank to your customers. For that period of time your cash is tied up in your invoices- your accounts receivable. This limits growth and may create problems regarding meeting payroll and paying your suppliers. Accounts receivable financing is the process of selling your invoices for cash as soon as they are issued which allows you to make more effective use of your assets. Purchase order financing is the process of obtaining a third party commitment to pay your suppliers as soon as products are received by your clients (in advance of payment by you or your client), based on the surety of an accounts receivable financing arrangement.
All businesses are limited in their growth and profits by the amount of capital and cash flow available to take advantage of business opportunities. The availability of virtually unlimited cash creates a powerful paradigm for potential growth. It also can expand your thinking about what business is possible and how you might go out and develop new business.
The second secret- "kept from knowledge or view" relates to the practice of non-notification factoring. Some business people are concerned that working with a factor, an accounts receivable financing company, may not be viewed favorably by their customers. In many cases it is possible to structure a transaction legally so that the accounts receivable financing is transparent to the ultimate customer.
The third secret- "designed to elude observation or detection" has to do with your business plan and how the way you think about the world can affect your success. In 2006 Prime Time Productions produced a film and a book called "The Secret". The film dramatically describes the "Law of Attraction" which asserts that people's feelings and thoughts attract real events in the world into their lives. Can your feelings and thoughts attract more business and success? Is the visualization of what you want an aid for manifesting your business goals? Is The Secret "just a new spin on the very old (and decidedly not secret" The Power of Positive Thinking (a book by Norman Vincent Peal written in 1952) wedded to 'ask and you shall receive' -as opined by Karin Klein, editorial writer for the Los Angeles Times? Did The Secret fail to discover the real roots of powerful thinking?
In the book, "The Diamond Cutter", Geshe Michael Roach examines The Budda on Managing your Business and your Life. Roach graduated from Princeton University with honors, studied the ancient wisdom of Tibet and traveled to the Tibetan Lamas at the seat of His Holiness, the Dalai Lama. In 1983 he took the vows of a Buddhist monk.
His teacher encouraged him to enter the world of business. Mr. Roach choose the diamond business. He hid the fact that he was a monk and maintained a façade of a normal American businessman on the outside. The business developed from nothing to a one hundred million dollar per year business.
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