Car Loans Australia News

Wed, 2 May 2007
Interest rates on hold: reprieve for homeowners
In a boon for the nation's mortgage belt, the Reserve Bank decided at its quarterly meeting on May 1 to leave the official cash rate unchanged at 6.25 per cent. The Reserve Bank's decision followed the publication of a much lower than expected March-quarter consumer price index, which showed inflation rose just 0.1 per cent for the quarter and 2.4 per cent for the year. This was well within the Reserve Bank’s target of 2-3 per cent. In a rare show of consensus, many economic forecasters are now predicting a further easing in inflation and most believe interest rates will stay on hold for the rest of 2007, particularly given the impending federal elections.

Mon, 24 September 2007
Australian non-conforming lending industry is safe
Compared to the predatory practices of the US sub-prime market, Australia’s non-conforming lending industry is safe, with conservative policies and sensible consumer protections in place, according to the head of a large Australian non-conforming lender. Speaking at the IMN Sub-Prime Conference in Las Vegas, Bluescope Group chief operating officer Alistair Jeffery said Australia had viable safeguards and regulations that protected consumers from current pressures being felt in international finance markets, while the current US housing crisis underlined the need for fundamental principals for sound lending. Source: Moneymanagement.com.au

Mon, 12 November 2007
Thieves push aside Rolls to steal Ford
Thieves have stolen a 1971 Ford Falcon worth more than $600,000 from an auto repair shop in Perth. The stolen car, a red 1971 Phase III GT HO Falcon Sedan registration number 71 HO, also has distinctive 15 inch Bathurst Globe mag wheels and is a unique collector's item in Australia, police say. The shiny piece of automobile history was stolen on Monday night from a workshop in Perth's east suburban Osborne Park by thieves who forced open a padlock. They were forced to move other cars into the street to get to the Falcon - including a Rolls Royce stretch limousine, a late model Holden GTS Monaro valued at $100,000 and a Honda Odyssey. Source: The Age

Mon, 12 November 2007
No drivers as robot cars finish race
Cars sprouting whirling lasers on top, moving cameras on the sides, and banks of computers inside sped through the streets of a California desert ghost town in a robot race - no drivers needed. Spectators gasped as cars with empty driver's seats pulled out of the starting blocks, steering wheels turning on their own, and headed into the neighbourhood streets of a deserted air force base. Stanford University's "Junior" was the first to pass the finish line nearly six hours later, with five others among 11 finalists poised to complete the course, including entries from Carnegie Mellon University, Cornell University, Virginia Tech, the Massachusetts Institute of Technology and a joint University of Pennsylvania-Lehigh University vehicle. The winner of the $US2 million ($A2.2 million) prize, scheduled to be named on Sunday, will be determined based on safety as well as speed through the 100-km course. Hundreds of spectators turned out for the event, including 10-year-old Vernon Bussler, who compared the results to a robot arm and scorpion he had made out of Lego play bricks. "It's just different from the Lego - just way more things on it," he said. Source: The Age

Mon, 21 January 2008
Indians Hit the Road Amid Elephants
NEW DELHI — A few weeks ago, the traditional Indian joint family household of Vineet Sharma, a fertilizer industry consultant, achieved a long deferred dream. Having ferried themselves on scooters all these years, the Sharmas bought a brand-new, silver-gray hatchback known as the Tata Indica. Never mind that none of the six adult members of the household knew how to drive. No sooner had the car arrived than Mr. Sharma, 34, took it for a spin and knocked over a friend. His brother slammed into a motorcyclist, injuring no one but damaging the bumper. The brother was so scared that he no longer gets behind the wheel, except on Sundays, when the roads are empty. “We bought it first, and then we thought about driving,” Mr. Sharma confessed. This week, as Tata Motors unveiled the world’s cheapest car, the $2,500 Nano, and automakers from across the world came to New Delhi to peddle their wares to a bubbling Indian car market, Mr. Sharma began to think about his driving. He enrolled in a weeklong driving course and dived headlong into the madness of the morning commute in a beat-up Maruti 800. Its odometer had long ago stopped working, and it carried on its roof a sign for the driving school, accompanied, improbably, by the smiling face of the animated movie character Shrek. He wasn’t going very fast and said he was very nervous. He had good reason, for his first real foray on four wheels revealed how many hurdles still hinder the new Indian romance with the road. Amid a cacophony of horns, a blood-red sport utility vehicle weaved between cars, passing Mr. Sharma within a razor’s edge on the right. A school bus snuggled close up on his left. No one seemed to care about traffic lanes. Cars bounced in and out of crater-size potholes. Indians are rushing headlong to get behind the wheel, as incomes rise, car loans proliferate, and the auto industry churns out low-cost cars to nudge them off their motorcycles. They bought 1.5 million cars last year. By some estimates India is expected to soar past China this year as the fastest-growing car market. The capital was aflutter with car mania this week, as the biennial Auto Expo opened Thursday and carmakers, both Indian and foreign, began rolling out the first of 25 new models. The greatest hype came from Tata Motors, which introduced the Nano as the theme from “2001: A Space Odyssey” played loudly in the background. There were also luxury sedans and sport utility vehicles being offered, as well as a variety of small cars, gadgets and car parts. Not unexpectedly, Indian environmentalists have assailed the car craze, particularly because of the country’s relatively relaxed emissions standards and the proliferation of diesel-powered cars. Even the usually nonconfrontational chairman of the Nobel Peace Prize-winning Intergovernmental Panel on Climate Change, Rajendra K. Pachauri, has sharply criticized the small car boom, questioning Tata Motors in particular for devoting itself to building cheap cars rather than efficient mass transportation. Greenpeace this week called for mandatory fuel efficiency standards, including information on carbon dioxide emissions. In his first driving lesson, Mr. Sharma had more immediate worries in mind. Sharing the road with him were a bicyclist with three cooking-gas cylinders strapped to the back of his bike, a pushcart vendor plying guavas, a cycle rickshaw loaded with a photocopy machine (rickshaws often being the preferred mode of delivery for modern appliances). There were also a great many pedestrians, either leaping into traffic in the absence of crosswalks or marching in thick rows on the sides of the road in the absence of sidewalks. At one point, a car careered down the wrong side of the road. Then a three-wheeled scooter-rickshaw came straight at Mr. Sharma, only to duck swiftly down a side street. At least this morning there was no elephant chewing bamboo in the fast lane, as there sometimes is. Dinner party chatter here is usually rife with theories on road management. It is said that Indians drive as though they are still on two wheels, or that snaking in and out of lanes is the only way so many cars can survive on narrow, ill-kept roads. Mr. Sharma’s theory was simpler. “We have a knack for breaking laws,” he muttered. The city’s top police official in charge of traffic shared that sentiment. He was vexed by all this talk of new low-cost cars.



Mon, 10 March 2008
Man crushed under car
A man has been crushed to death under a car he was repairing in Melbourne's south-west on Sunday.

The victim, 48, and a friend were working under the car at a private residence in Werribee about 3.30pm (AEDT), police said.

One of the men got out from under the car to get a pair of pliers when the small electric forklift holding up the car failed, causing the car to fall on the other man.

Neighbours used jacks to lift the car again.

Ambulance officers tried to revive the man but he died at the scene. Source: The Age

Mon, 10 March 2008
BMW reports nine per cent sales jump
The world's leading luxury carmaker, BMW AG said sales in February jumped by 9.0 per cent helped along by solid demand for its compact Mini car and its X5 SUV.

Despite rising energy costs and concerns about a global economic slowdown, the Munich-based auto company said group sales rose to 105,994 from 97,256 for the same month last year.

When the data from January and February was compared to the same two months a year ago, total sales were up 3.8 per cent at 198,628 vehicles, BMW said.

The release of the latest BMW data comes in the wake of figures showing the carmaker's rivals - Mercedes Benz and Audi - also enjoying a good start to the new year. Source: The Age

Mon, 28 April 2008
Car loan for refugee
SOME heart-warming corporate social responsibility guff landed from Ralph Norris's Commonwealth Bank of Australia yesterday.

Titled Sustainability 08, the newsletter declares that the bank "takes its obligations to lend responsibly very seriously".

That's good to hear from Australia's biggest lender. The timing, however, was interesting. It comes just days after ABC's Four Corners program put the spotlight on lending practices by a range of financial institutions in light of mounting consumer debt.

The CBA copped a shellacking by the show over its approval of a $20,000 car loan for a Sudanese refugee with a family of nine to support.

Mon, 28 April 2008
Bank thugs get heavy on loan payments
VINOD Kumar was sitting in a friend's car listening to the radio one evening early last year when a stranger appeared, yanked him from the vehicle and beat him with an iron bar.

While the 21-year-old college student lay bleeding in the parking lot, the assailant sped off with the tiny silver hatchback. This was no ordinary mugging, as Mr Kumar's attacker was a goonda - a thug - working on behalf of one of India's largest banks.

Incidents like the one that left Mr Kumar with 12 stitches in his scalp and a 10-day hospital stay reflect a dark side of India's economic boom.

As consumer lending soars to record levels, India's banks face mounting criticism and government sanctions for their aggressive loan recovery tactics, which sometimes include hiring thugs.

With the economy growing at more than 8.5 per cent a year for the past four years, Indians are taking on home, car and credit card debt as never before.

Retail loans have almost tripled over the past three years, according to the Reserve Bank of India (RBI), reaching $US124 billion ($141 billion) for the fiscal year ended March 31, 2007.

The lending has helped drive a surge in consumption, but it has also created new headaches for Indian banks, which have limited experience recovering loans from defaulting borrowers.

Traditionally, most Indians have avoided debt. Even now, only 30 million credit cards have been issued nationwide, a very small number for a country with more than a billion people. As a result, banks haven't evolved standard procedures for recouping bad debts.

In another recent case, an HDFC Bank manager and two recovery agents were charged with criminal intimidation, extortion and "outraging the modesty" of a woman in Mumbai. The customer claimed to have already paid back a loan, while his wife told the police the agents had "misbehaved" with her. The case is yet to come to trial and the manager still works for the bank. HDFC declined to comment.

Ruling on Mr Kumar's case in November, the Delhi State Consumer Commission fined ICICI Bank, India's largest privately owned bank by market value, almost $US140,000 for what a judge called "the grossest kind of deficiency in service and unfair trade practice".

ICICI Bank has appealed against the decision to the Delhi High Court, arguing that the consumer court has no authority to impose such a large fine and the collection agency should be held responsible for the attack, not the bank. It has fired the agency responsible for the attack.

While India's overall percentage of non-performing loans is low - about 2.5 per cent of all outstanding loans - the absolute number of bad retail loans is growing with increased lending. ICICI Bank, for example, currently grants about 150,000 small-ticket loans (up to $US1270) each month. So, even a default rate of 2.5 per cent means an additional 3750 bad loans.

ICICI has been India's most aggressive bank in the retail market, using the internet, phone banking and autoteller machines to target the increasingly affluent middle class. As of March 31, 2007, retail loans accounted for 65 per cent of its total lending.

The change has come at a cost. The bank's gross non-performing loans in the retail sector more than doubled during the financial year ended March 31, 2007, rising from $US364 million to $US790 million, and accounted for almost 74 per cent of all its bad loans by value. Defaults are expected to keep rising, according to a Fitch Ratings Ltd report on Indian banks released last month.

The report cites rising interest rates as the major factor affecting borrowers' ability to repay. "The glorious run of an ever improving gross NPL ratio that began in the late 1990s (when the ratio was more than 15 per cent, before falling to 2.5 per cent in 2007) may just be over."

Loans are classified as non-performing if a customer fails to make payments for 90 days. At that point, banks are supposed to issue legal notices to those in default. Because it can take years to pursue a debtor through India's turgid legal system, many banks hire collection agents.

"The legal system is not attuned to dealing with a large number of retail banking cases where you need a quick remedy," Indian Banks Association chief executive HN Sinor said.

The collection agents are paid a basic fee plus a percentage of the amount recovered. Unlike in the US, the bank retains ownership of the loan instead of transferring it to the collection agent.

That's where the trouble starts. Increasingly, critics say, loan recovery has involved the use of strong-arm tactics by goondas, a Hindi term for gangsters who use intimidation and violence to recover debts.

Mr Kumar got a brutal taste of goonda methods. He was waiting in the parking lot of a cricket stadium in New Delhi when he was confronted by a man saying he was from ICICI Bank and was looking for Tapan Bose, whose last three car loan repayment cheques had bounced.

Mr Kumar tried to call Mr Bose on his cellphone, but "before the phone rang once" he was dragged out of the car. He tried to resist but the man began to beat him. In the scuffle, Mr Kumar's gold chain was snatched from his neck, and the next thing he remembers was being hit on the back of his skull with an iron rod.

"I never thought anything like this would happen to me," Mr Kumar says. Source: The Australian

Mon, 28 April 2008
Nelson says 2020 a 'schmozzle'


OPPOSITION leader Dr Brendan Nelson has issued a provisional judgement on Kevin Rudd's 2020 summit, labelling it "schmozzle" that over represents elite opinion and has yet to produce a single new idea.

Dr Nelson told The Australian Online that while supported the general concept of the summit, with its emphasis on the exchange and development of fresh ideas, the summit’s success must ultimately be judged on outcomes.

“The real test will be what will actually happen to the ideas that are proposed. Will they find their way to policy? To what extent will the government put money aside to actually implement these policies?’’

Dr Nelson also criticised the make-up of the summit, saying elite opinion had been overrepresented.

“You’ve got to do a lot of research here to find somebody who’s got three kids, a mortgage, a car loan and actually struggled to find childcare to get here.’’

He said while it was early days, there had not yet been a great deal of fresh thinking, the stated purpose of the summit.

“At this stage I haven’t heard any ideas that I’d not heard before, but I’ve only been in two sessions. But certainly I think there is an atmosphere of constructive deliberation and thought about the future,’’ Dr Nelson said.

“It’s a bit of a schmozzle, but I think there’s some method in the madness.’’ Source: The Australian

Mon, 28 April 2008
Consumers in eye of economic storm
THE consumer leg of the economy, which has been remarkably stable throughout the housing downturn, may now be tottering.

The Dow Jones Industrial Average tumbled 246.79 points, or 1.9 per cent, to 12,606.30 early Saturday on the back of fresh signs that consumer spending is slowing.

In an indication that even well-heeled shoppers may be cutting back, luxury jeweller Tiffany & Co said that its US sales slumped during the holiday period.

On Friday, American Express warned of rising delinquencies and slowing spending among its cardholders.

They joined a host of companies with ties to consumers sounding alarm bells. A number of retailers, including Kohl's, cut earnings projections after reporting weaker than expected sales.

Credit card company Capital One Financial said last year's earnings would fall short of its earlier forecast.

And AT&T said it had been cutting off more landline and high-speed internet customers for non-payment.

December car sales also slumped broadly, with a 3 per cent drop in sales compared to a year ago, according to industry tracker Autodata. "All of these things that are taking place - credit markets, energy prices, housing - are hitting consumers right now," said JPMorgan chief economist Bruce Kasman. "We're in the teeth of the storm."

Consumer spending fuels around 70 per cent of US economic output, so a pullback could severely crimp growth.

To be sure, US consumers have been resilient in past years and have continued spending even as economists have grown worried about the housing downturn. But now, evidence is mounting that consumers are curbing their spending as they grapple with a growing load of debt.

That's not to say that Wall Street's fears of impending recession will become reality.

Mr Kasman puts the odds of recession at 40 per cent, in line with most other economists recently surveyed by The Wall Street Journal.

But it does appear that the trouble that began in the housing market is spreading to other sectors.

What's more, high household debt loads may signal that consumers are in a particularly fragile state.

According to the Federal Reserve, credit market instruments - mostly home mortgages, car loans and credit card receivables - have hit the equivalent of 18.7 per cent of household and non-profit organisation assets, an all-time high. Source: The Australian

Mon, 07 July 2008
Chrysler woes spark bankruptcy rumour
SPECULATION Chrysler might seek bankruptcy protection has served to further deflate investor confidence in the company's debt.

Some loans are trading as low as US50 cents on the dollar.

A Chrysler spokesman said the company has ample liquidity and that a bankruptcy filing is "not on the table."

Yet the news reverberated through the markets, weighing on stocks and credit as investors continued to trade the troubled automaker's loans at severely distressed levels. Chrysler has been struggling in the debt markets since it was bought by private equity firm Cerberus Capital Management a year ago. It's difficult to obtain much information about the company's debt because it's in the privately held loan market, unlike the public junk bond market.

"You can't go to Wall Street and get an equity report, there are no bonds outstanding," said King Penniman, president of KDP Investment Advisors. "Information is only made available to holders of loans."

But certain news can't be kept private. Within the past week, prior to the bankruptcy rumours, Chrysler's credit rating was downgraded further into junk, and the company tapped a $US2 billion ($2.1 billion) credit line from its owners, Cerberus and Daimler, to bolster liquidity.

US automakers have all been struggling with a weakening economy, rising fuel costs and diminished demand for the sport-utility vehicles and large vehicles that had been a driver of profits for the past decade. Chrysler is at a disadvantage to its competitors because it relies heavily on the troublesome US market, which accounts for 90 per cent of its sales.

In the bank loan market, Chrysler Finance’s first-lien, or senior, loans traded around US82c on the dollar, down from US86c yesterday and US90c on Friday, while the second-lien loans traded around US71c on the dollar, down from US73.5c yesterday and US78c on the dollar on Friday.

Chrysler Financial's debt package initially included $US6 billion of first-lien debt and $US2 billion of second-lien loans.

Chrysler's auto unit's first-lien, or senior, loans are being quoted in the US50c to US55c range, a severely distressed level. On Friday, those loans were quoted around US63c. The buyout of Chrysler's auto business was financed with some $US10 billion of debt.

"You don't often see bank debt go to 50 or lower unless a company's in pretty significant financial distress," said Brian Hessel, managing partner at Stonegate Capital Management. "Even some bankrupt companies' bank debt trades higher than that." Source: The Australian

Mon, 07 July 2008
Gas Was Once a Bigger Expense
WHICH costs more, the car or the gasoline? In the United States, the quarter that just ended was probably the first period since the early 1980s that a bigger proportion of the consumer's pocketbook was spent on gasoline, oil and other energy products than was spent on motor vehicles. Source: New York Times

Mon, 07 July 2008
Hydrogen cars commercially unavailable until 2020: Mazda
Hydrogen-powered cars will not be commercially available on a large scale before 2020, a senior official from Japanese auto maker Mazda said Monday in Spain at an international oil conference.

"The earliest that customers will use these environmentally-friendly vehicles in a normal way will be 2020," the general manager of the firm's technical research centre, Tsutomu Matsuoka, said at the World Petroleum Congress in Madrid, one of the oil industry's biggest events.

"We have many things to do before then," he said.

Infrastructure making it possible for drivers of hydrogen-powered cars to refuel must be put in place before the vehicles are widely used, Matsuoka said.

A way to mass produce the cars at an affordable price must also be found before they take off as an alternative to traditional petrol (gasoline) powered vehicles, he added.

Mazda is one of several auto makers working on the development of hydrogen-powered cars amid growing concerns over soaring oil prices and pollution. Electric-powered vehicles are also in the works.

Earlier this month, its rival Japanese manufacturer Honda started the first commercial production of a hydrogen-powered car, a medium-sized four seater called the FCX Clarity which has a top speed of 160 kilometres (100 miles) an hour.

Honda will start leasing the cars, which run on an electric motor powered by hydrogen fuel cells and only emit water vapour as waste, to residents of southern California by the end of August. Source: The Age

Mon, 08 September 2008
Summit brought light to the hill
WAS the 2020 Summit manipulated by Kevin Rudd? That is like asking whether politicians use their political power. The answer is yes. Did the summit produce enough good ideas to make it worthwhile? Yes again.

One came from the National Australia Bank's chief executive for Australia Ahmed Fahour: a micro-finance scheme to provide loans to people excluded from normal sources of credit.

One reason it attracted attention is because he was the only banker, let alone bank head, among the 100 people in the summit's communities and families group.

The other is that he lobbied hard for his proposal, including to Rudd when he wandered into the discussions.

The result was that the group adopted it and Rudd mentioned it in his final remarks to the summit.

Fahour envisages a national scheme involving collaboration between the Government and all the banks. So is this just another way of asking for a handout from the government? Not judging by Fahour's actions. He put his bank's money where his mouth was two years ago by setting up a $30 million non-profit micro-finance fund. It aims to fill a little of the gap left by the 25 per cent of loan and credit card applications his bank knocks back for reasons such as employment status, income or credit history. Source: The Australian

Thu, 11 September 2008
Your Car Loan TIPS - Part I
* Avoid unsecured loans if possible

Avoid using unsecured personal loans if you can put up some security for your borrowings. This will get you a lower interest rate. A home equity loan / redraw of extra repayments (that allows you to borrow against the equity built up in your own home or investment property), is the best option and could get you finance at up to 5% less than a car loan.

* Tell the truth in loan applications

Be honest about why you want the loan. Your bank may be able to offer you a loan option that better suits your circumstances. There are an increasing variety of different types of personal credit these days for e.g. car loans, commercial loans, leases, home equity loans

* Alternatives to standard loan

There are alternatives to banks, building societies and credit unions if they refuse to lend to you money just because you're self employed, newly arrived in the country or have a poor credit history.These are non-conforming and "low doc" loan market. A number of non-bank lenders offer loans which especially cater for this type of borrower. The interest rates on non-conforming loans are generally higher but come down after a few years of on-time repayments. Source:getacarloan.blogspot.com/

Thu, 11 September 2008
Get an Auto Loan the Smart Way
Have bad credit? Try going to your credit union, bank or another institution where you have a relationship. Lenders like to help out established customers. If your bank still won’t help, online "bad credit auto loan" lenders usually offer better less expensive loans than dealers who advertise their great deals for people with poor credit.
Use a vehicle loan calculator. It will tell you what your loan will cost each month. It saves you the time of looking at vehicles you can’t afford, makes you aware of what information you’ll need to apply for a loan, and is a "reality check" of your financial condition.
Comparison shop, comparison shop, comparison shop. You don’t get the least expensive car by choosing a dealer at random, and you won’t get the least expensive auto loan that way, either. Source:mycarloan.blogspot.com/

Tue, 07 October 2008
High interest rates hit car loans
Rising interest rates have applied brakes on car loans with banks reporting a sharp drop in fresh disbursals during the current year. But bankers expect a turnaround and spur in growth around Diwali.

As reported by Hindustan Times Business, Ashok Khanna, head auto loans, HDFC Bank said, "The growth for the industry has been on a slowdown and we expect the arrears of the sixth pay commission will bring in liquidity and will improve the demand in the festival season. The growth has come down from 13 per cent in the first quarter to 7 per cent in the second quarter." Source: Apnaloan

Tue, 07 October 2008
Toyota urges drivers to change habits
TOYOTA is urging motorists in Europe to do their bit to help the environment, car loan customers may be interested to learn.
It is launching an EcoDriving programme in a number of European countries, including the UK, which may be of benefit to those with Car Finance.

The firm is organising 800 workshops across the continent and the UK to teach local authorities, private companies and community groups new ways of driving.
Graham Smith, chairman of the Toyota Fund for Europe, said EcoDriving did not necessarily mean people had to buy "costly devices" or make modifications to their vehicles.
"By making simple changes to every-day driving behaviours, every driver, no matter what kind of vehicle they own, can contribute and benefit," Mr Smith remarked. Source: creditplus.co.uk

Mon, 13 October 2008
Credit will flow to the real economy
WHILE investors question whether the US Government's $US700 billion ($905billion) bank bailout will be sufficient to halt the financial panic gripping the world, it was essential. After baulking earlier in the week, the US House of Representatives is to be commended for its 263-171 vote early on Saturday (AEST) in favour of the rescue plan. Politicians on both sides initially feared an electoral backlash from voters, who perceived the package as letting failed financial houses off the hook. But that view was always mistaken. The package is all about providing credit to enable banks to recapitalise and extend credit to businesses and home buyers in the real economy.

For this, the package did not come a day too soon, with the US recording its biggest monthly fall in non-farm jobs -- 159,000 in September -- since March 2003. As Wayne Swan said yesterday, the $US700billion Wall Street bailout is not "a magic bullet" but will help restore confidence by giving the US Government the capacity to put a floor under the system and restore confidence over time.

Fifty-eight congressmen and women changed their votes to support the measures, many, according to The Wall Street Journal, in the face of intense pressure from constituents. After the house defeated the package a week ago, voters became alarmed by the abrupt drop in financial markets and the impact on retirement savings and the availability of credit for small businesses. As Michigan Republican Joseph Knollenber, who switched his vote, said: "All you have to do is talk to people who are trying to get a car loan, who are trying to get a home equity loan or something like that, and they can't. That tells them that there's something frigid out there, there's something frozen." Source: The Australian

Mon, 27 October 2008
Job ads decline as lending plunges
CONSUMERS continued cutting up their credit cards and business wound back borrowings in August, contributing to the biggest annual dive in lending finance in three decades.

The latest monthly decline, led by commercial finance, came as further falls in the ANZ job advertisements series added to fears on the state of the economy.

CommSec chief equities economist Craig James said new lending commitments were down by more than 30 per cent on a year ago, a slump unmatched in 33 years of records.

"Borrowers are effectively on strike, unwilling to take on new loans in these current jittery times," he said.

The grimmest news out of yesterday's lending finance figures was the seasonally adjusted 7.9per cent slump in business borrowings, given its potential to curb investment.

Mr James said the sharp fall raised doubts about the future strength of business investment, the "current mainstay of the Australian economy".

Business reduced its exposure to fixed loans in particular (down 14.6per cent), opting for shorter-term use of credit cards and other revolving credit commitments (up 4.2per cent).

Personal finance took a hit, falling by a seasonally adjusted 5.2per cent from July to August.

The value of borrowings on credit cards and other revolving debt was down 7.4per cent, as consumers held off on car loans and avoided refinancing as well as debt consolidation.

Owner-occupied housing finance and lease finance fell by a more modest 2.1per cent and 3.2per cent respectively for the month. Source: The Australian

Mon, 03 November 2008
Finance world not beyond us: Kathy Lette
SHE may be a best-selling author living in a posh area of London, but Kathy Lette never considered what she should do with her money until she became the face of a financial services company.

"I've never really thought about investing or nest eggs or whatever," Lette said. "I run the household, but I've never thought of actually expanding it and making my own wealth base."

Along with TV presenter and author Pamela Stephenson Connolly, and banking executive Anna McCreery, Sydney-born Lette has recently become a non-executive director of Superwoman, a financial services company for women.

The company aims to provide financial advice and products including mortgages and car loans using a minimum of jargon.

Since first achieving success as a teenager with Puberty Blues, a semi-autobiographical book she co-wrote with her friend, Gabrielle Carey, Lette said she had always been independent. "I don't think any woman should wait to be rescued by a knight in shining Armani."

But she believes that, like her, many women have never really tried to understand finance.

"We've been bamboozled into thinking it's beyond us and, of course, it's not," she said. Source: The Australian

Mon, 03 November 2008
When debt is easy to bank up
LOOKING back, Robert Tranter can't quite believe that he was ever allowed to borrow so much money.

At 27, he has two car loans, a loan for a motorcycle, Centrelink debt and two outstanding credit cards. To add to the financial burden, Mr Tranter has also accumulated more than $5000 worth of car-related fines.

Mr Tranter, who earns $670 a week after tax as a bus driver, says his application for a credit card was approved in April this year despite having a blemished credit history and falling behind in repayments for existing debts. He applied for the (second) credit card online and spent the entire $2000 limit "on rubbish" shortly after receiving it. Since then, he has struggled to make the monthly repayments on his card which, he says, has an interest rate of about 18%.

"I feel resentful to the people that gave me the loans … I don't know how I got them. With my previous credit history I don't know how I got approved," he says. Mr Tranter has contacted Financial Counselling for help and is planning on filing for bankruptcy. The debt, he says, has become too much to bear. "It's the end for me, I can't do it," he says. "It (bankruptcy) is a relief because it will stop these arguments with creditors and these annoying phone calls and it will just make my life a little bit easier." Source: The Age

Thu, 18 December 2008
'Risk is good' latest US market mantra
THE US Government has opened a new front in its efforts to contain the financial crisis.

Its latest moves, while not explicit, appear to be an attempt to encourage risk capital back into the financial system, or at least to stop it leaving. And that means helping that capital make an attractive return.

First, there was Sunday’s Citigroup bailout. Instead of punishing shareholders for the latest cash injection and the backstopping of risky assets, the Government's terms were relatively gentle.

That federal strategy helped light a fire under the share prices of both Citi and rival banks - and was a shift from the negative shareholder impact of rescues at AIG and Fannie Mae.

Second, there is the Federal Reserve's term asset-backed securities loan facility, or TALF, announced overnight.

The TALF is an attempt to kick-start the moribund securitisation market, which used to facilitate a huge amount of consumer credit.

Effectively, the Fed will offer one-year financing for those willing to buy new securitisations of car loans, student loans, credit-card loans and small-business loans.

That allows investors, including hedge funds, to enjoy a spread between the interest on the securitised debt and the interest the Fed will charge. Source: The Australian

Thu, 18 December 2008
Non-banks want US Fed to free up credit markets
COMMERCIAL and industrial companies are clamoring for more federal action to unlock credit markets, saying that moves to prop up the banking sector haven't done enough to jump-start lending to businesses.

Among the latest seeking relief is car-rental chain Avis, which wants to turn the Troubled Asset Relief Program, or TARP, into a bigger tent.

The Treasury's TARP and US Federal Reserve programs to ease the financial crunch have focused on banks and, more recently, consumer-based lending.

Non-bank companies now are vying for relief, taking the lead of the Big Three vehicle makers, who are seeking a combined $US34 billion ($53 billion) federal bailout.

BlueFire Ethanol Fuels chief executive Arnold Klann said: “It's great that TARP is helping the banks. But it's doing nothing for industry in general because of the freeze in the capital markets.”

Avis, a subsidiary of Avis Budget Group, is floating a plan to have the Treasury and Fed purchase the debt issued by fleet purchasers. The plan also calls for Congress to authorise direct loans to such companies for the purpose of buying cars and trucks.

Due to the credit freeze, trucking companies and companies that rent cars and limousines haven't been able to raise enough cash to finance their fleets. Such companies are “critical to the overall stability and long-term sustainability” of the US auto industry, reads a legislative proposal that Avis has circulated on Capitol Hill.

The Treasury has restricted capital injections under TARP to companies with a federal regulator.

Earlier in the northern autumn, the Fed unveiled a program to backstop the commercial-paper market, a source of funding for day-to-day operations of many businesses. Under the program, the Fed agreed to buy commercial paper directly from issuers, ensuring that they can roll over their maturing paper to repay investors.

Last week, the Fed and Treasury announced a $US200 billion program to lend money directly to companies that post as collateral securities backed by car loans, student loans and credit-card debt, as well as loans guaranteed by the Small Business Administration.

Treasury spokeswoman Jennifer Zuccarelli said the department was working on developing new programs. “It's premature to say that there is some program that is going to apply to any particular industry,” Ms Zuccarelli said.

Thu, 18 December 2008
Toxic mortgages ignored in US bailout
US authorities have scrapped plans to use a huge financial rescue plan to buy up toxic mortgage assets.

Treasury Secretary Henry Paulson said the $US700 billion ($1 trillion) Troubled Asset Relief Program (TARP) would focus now on continued capital injections to struggling banks, but would also look at ways to help the "non-bank'' financial sector.

This could include rescue efforts for credit card and car loan debt which, like mortgages, was often packaged into securities sold to investors, Mr Paulson said. Source: courier mail

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