Unit 8 Personal Credit and Borrowings

Unit 8 Personal Credit and Borrowings - 1/12/2012 Learning...

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1/12/2012 1 Unit 8 Personal Credit and Borrowings Learning Outcomes • Discuss household credit trends in Australia • Explain the different type of credit available for consumption and investment purposes Compare within and across types of credi • Compare within and across types of credit products • Explain the mechanics and conditions for the appropriate use – Gearing – Marginal lending Household Finance Chart from RBA http://www.rba.gov.au/chart- pack/household-sector.html 4 5 Types of Retail Credit • Consumption Financing – Credit cards – Personal loans • Leasing Financing • Asset Financing – Home loans – Re-draw or lines of credit – Bridging loans – Margin loans
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1/12/2012 2 Secured Debt • The most common examples are – Home/investment property loans – Margin lending There are several options in home loans • There are several options in home loans – Principal and Interest Mortgages – Lines of Credit – Balloon Payments Loans – Fixed/Variable Rate Loans – Reverse Mortgages 7 Regulation of Lending Industry • Consumer Credit Code – Better disclosure before the loan/credit has been advanced and assistance for reasonable cause. •C o rporation Law – Failure of Opres Prime and Tricom – Since 2009, Chapter 7 of Corporation Law – Imposes disclosure and ASIC licensing requirements in margin lending facilities. 8 Confusing Rates! • Cost to a home loans includes – Interest (Honeymoon, standard variable, fixed, discount) – Fees – Generally need to look at the comparison rate specific to principal and repayment schedule • Key features include – Variable vs fixed rate – Additional repayment and redraw facility 9 Credit Product Information • The InfoChoice website – are run by InfoChoice Limited an Australian independent ‘infomediary’ in the market place for
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Unit 8 Personal Credit and Borrowings - 1/12/2012 Learning...

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