EASY MONEY>HOW-TO

How to Get a Car Loan
You’ve decided on what car to buy. Now it’s time to shop for a car loan. Here’s the step-by-step guide to getting an auto loan:

Step 1: Shop around. Check out the Web sites of commercial and savings banks, especially those with good rates. Check the eligibility requirements, such as age and income, and the terms, including the rate, loan period, and down payment.

Step 2: Fill out and send the application form. You can either download the form from the Web site or fill it out online, if that function is available. You can also drop by the branch for a paper form. When you’re done, send the form by fax or through the branch. Some banks can give pre-approval within a few hours subject to submission of required documents while others require you first to submit these documents along with your application.

Step 3: Compile required documents. If you are employed, prepare a copy of your certificate of employment, latest pay slips, or Income Tax Return (ITR). If you are self-employed, there’s a little more work involved. Prepare your business registration papers, articles of incorporation and secretary’s certificate (if applicable), latest financial statements, and other documents (they differ per bank). You also need to give copies of valid IDs.

Step 4: Make the down payment. Once the loan is approved, you sign the loan documents and make the down payment. You also have to pay the chattel mortgage fee and other charges, including the premium for the comprehensive auto insurance policy.

Step 5: Decide how to pay. Your bank will let you pay either through post-dated checks (PDCs) or auto-debit arrangement (which means you have to open an account with them).

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5 Questions With David Lee

Visa President, Asia Pacific

Over the course of 50 years, Visa has evolved from our credit card roots to become one of the world’s leading global payments networks. Its vision is to “create better money in order to make cash and checks obsolete. Better money means more secure, convenient, and rewarding electronic payments and payment-related services.”

Today, Visa connects consumers, businesses, governments, merchants, and financial institutions in more than 170 countries. Visa’s network includes 1.6 billion cards, 29 million merchant outlets, more than 1.4 million ATMs and 16,500 financial institutions[1].

MoneySense asked newly appointed Visa President for Asia Pacific David Lee five questions about the economy, payment trends, and Visa’s plans for this year:

1. Given the global economic slowdown, how bad do you see the impact on consumer spending in Asia Pacific, including the Philippines, as well as Visa’s business worldwide?

Our business is built on driving more volume through our network by increasing the use and acceptance of our products and services, and Visa has more branded cards in circulation, more transactions, and greater total volume than all of our competitors combined.

Of course, we are not immune to the state of the global economy. As Visa’s CEO Joe Saunders mentioned in our fourth quarter earnings call, the markets are in turmoil and we have been impacted, like many other companies out there, over the past several months.

2. How is Visa responding to this?

We are continuing to do what we can to advance Visa’s overall business in these trying times. And, we continue to focus on key strategic initiatives, such as debit and prepaid, as well as growing non-discretionary spending tied to the secular shift towards electronic payments.

Part of this secular shift is an increasing proportion of non-discretionary spending on Visa cards. Everyday spending – such as gasoline, utility bills, groceries, drugstore spending, – has, in the past, been less susceptible to economic fluctuations and continues to grow.

This is why we have been continuing our focus on Visa debit card products in the Philippines.

3. There seems to be an increased push from banks to use debit cards for both payments and remittances. How is this area doing for Visa?

Visa believes that there is a global secular shift away from cash and checks to electronic forms of payment. Part of this shift is in debit transactions, which represent more than half of Visa’s global total volume. Our comprehensive range of payment products extends payment security, convenience, and access to consumers, businesses, and governments worldwide, allowing them to pay however, whenever, and wherever they want.

Total volume on Visa credit and debit products was US$4.2 trillion in the four quarters ended June 30, 2008. For Asia Pacific, the number of Visa debit and credit cards was 472 million in the four quarters ended 30 June 2008, an increase of 14.6% compared with the four quarters ended 30 June 2007.

4. What would you say is on the top of your agenda for 2009 as the newly appointed president of Visa Inc. AP business unit?

As a network business, our key to growth is driving the use of our products and services among cardholders, merchants, financial institutions, businesses, and governments.

To achieve growth, we will focus on expanding in two areas: Visa’s core payments business and the processing business.

We want to build upon Visa’s strength in established geographies around the world, focusing on high-opportunity segments where Visa products and services are currently under-penetrated. That includes investing in high-potential geographies in the early stages of migrating to electronic payments such as China and India. For example, Visa has invested significantly in India to develop more efficient payment systems. With a growing middle class numbering in the hundreds of millions, India presents a unique environment and opportunity for electronic payments.

In addition, we plan to grow Visa’s network-processing business by facilitating a greater number of transactions through VisaNet, thereby adding value for all our stakeholders. Visa has recently set up a joint venture with Yalamanchili Software Exports (P) Limited, a leading payments processor and software products and solutions company, to extend our processing capabilities in some of the fastest-growing payments regions in the world. Initially, the joint venture will focus on providing financial institutions, processors and other payment companies with prepaid and debit processing solutions. We will also extend Visa’s value-added processing services, which we believe can increase network utility and value for our key stakeholders – cardholders and merchants.

5. What numbers are you looking at in terms of first quarter defaults compared with the first three months of 2008 and 2007?

We can’t discuss any financial impacts specifically. We remain confident in our ability to compete successfully for client businesses. We are not resting on the positive history of our relationships or taking them for granted. We believe Visa’s brand, product breadth, geographic diversity, and processing capabilities are strong differentiators. We remain focused on serving our clients and adding value to our relationships wherever we can.

Part of this secular shift is an increasing proportion of non-discretionary spending on Visa cards. Everyday spending – such as gasoline, utility bills, groceries, drugstore spending, – has, in the past, been less susceptible to economic fluctuations and continues to grow. This is why we have been continuing our focus on Visa debit card products in the Philippines.

[PROFILE]

David Lee is president for Visa Asia Pacific, responsible for continuing to grow Visa Inc.’s business in the region. He joined Visa in 1985 from international accounting firm Peat Marwick Mitchell & Co. He has held a number of roles in the Singapore regional headquarters culminating in his appointment as chief operating officer in 2007. Born in Malaysia, David was educated in Singapore where he was awarded the Lee Foundation Prize by Singapore’s Chartered Association of Certified Accountants as the year’s top graduate on gaining his ACCA. In 2003, he graduated from the Harvard Business School’s Advanced Management Program. David currently serves as a director of the National Library Trust Board, the Singapore Management University School of Accountancy Advisory Board, and the Naval Base School Advisory Board – his alma mater. Most recently he was appointed to the board of Visa Processing Service Pte. Ltd. (VPS), a joint venture between Visa Inc. and Yalamanchili Software Exports (P) Limited, a leading payments processor and software products and solutions company with operations in India and Singapore. He is married with three children.

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[1] For the four quarters ended June 30, 2008; merchant outlets and ATMs as reported by our client financial institutions and therefore may be subject to change; includes merchant outlets and ATMs in the Visa Europe territory.

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By Kendrick Chua

The 7 Deadly Sins of Financial Planning

Fear and greed are the two most talked emotions at the heat of the financial crisis. After all, it was the world’s richest man and greatest investor Warren Buffett who famously said these words: “Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Although they are considered as the cardinal sins of investing, there are still other financial sins we are committing on a regular basis which are oblivious to us and these could cause our financial dreams to crumble.

Envy

An envious person constantly compares himself with others whether it is his salary, financial status, or possessions. Now, envy itself is not bad as long as the emotions are channeled into positive actions. However, it becomes a sin if this person can’t stand others getting ahead of him and if he were to be surpassed, say a friend made a killing at FX trading, he tries to justify why he was able to do so or simply rationalizes it as plain luck. He may congratulate his friend but deep inside, it’s eating him alive. Before he knows it, he is also trying his hand in FX trading with little or no knowledge at all, hoping to have the luck his friend had, but ends up with undesirable results.

Pride

A proud person feels he is superior to everyone. Hubris is how the Greeks call it. He believes he knows more about financial planning than anyone else and would refuse to heed the advice of others and shoots down all other ideas presented to him. Often, this person criticizes even the most respected advisers saying that their theories are flawed And even if he clearly made a mistake, he would never revised his ways for a person inflicted with this sin will never admit he made one.

Lust

The sin lust differs greatly from being in love. Lust is an irrational attachment or commitment to a particular system, investment, or company. A lustful person is head-over-heels over the things cited and would encourage others to also be lustful over them! In early 2000 some people were deeply in love with a particular multi-level-marketing company. Despite the tell-tale signs of it being a pyramiding scheme, they just wouldn’t listen and would continue to plow in money after money in hopes of theirs earnings growing bigger and bigger. Lo and behold, this company eventually closed down and left with the members’ hard-earned money and leaving them broke, broken-hearted, or both

Greed

There is a thin line between being greedy and wanting to earn more money. For instance, if you have constantly parked your cash in conservative time deposits and special depository accounts, your hard-earned money would just be eaten away by inflation. Therefore there is nothing wrong looking for a higher yielding instrument to have a positive net real return on your investments, so don’t consider yourself greedy…not just yet.

It becomes a sin for everyone if the objective is to make the biggest returns at the shortest possible time. High-Yielding Investment Programs (HYIP) and get-rich-quick schemes are example of these. Greedy people follow the herd and invest where everyone else is investing, hoping to make a killing. And when they have made a killing, they’d wish they had invested some more to earn more or they’d hold on longer hoping for another round of easy money.

Anger

Anger, unlike the other deadly sins, always has a recipient. The rage is always directed towards something or someone. Now, anger itself is not a sin when it is manifested occasionally and with valid reason. It becomes one, however, when the anger clouds up our judgment causing us to lose our cool and make irrational decision based on the emotion.

At one point in time of our financial planning process, we have experienced anger in one way or another. A typical example would be investing in mutual funds today only to discover that the net asset value plunges drastically the next day. What do we do? The ordinary angry person will be upset but will stick to the objective and listen to his adviser no matter how painful the loss maybe. The sinful angry one will bail out immediately, fire his adviser, and spend the rest of the day cursing and complaining of how the market is out to get him. He forgets that the market discriminates no one. The anger blinded him, causing him not to see the long-term outlook.

Gluttony

The adage “too much of a good thing becomes bad” is the best description for this sin. Gluttony is the most difficult to discern because of its similarity with greed. Gluttony can exist in different areas simultaneously or one at a time. For instance, gluttons gobble up news information like gobbling food. But like food, gluttons only select the good ones and pig out on these while ignoring the bad. This already leads them to false optimism and hope. In financial planning, we know we have to be realistic about situations and to incorporate the best and worst case scenario into our projections.

Another thing about gluttons is that they want to have as many different investments as possible and the more complex it sounds, the better it is. They hoard up on these investments which they hardly understand and most don’t fit any of their financial objectives at all. They simply want to have them. While it is suggested in prudent financial planning to diversify your holdings, again, too much diversification can be dangerous to one’s financial health and it may be wise to remove some of the eggs from those baskets before they crack, not hatch.

Sloth

Sloth by far is the most dangerous sin of all and why wouldn’t it be? Sloth causes people to ignore their financial future all along. They couldn’t care less about the uncertainty of the future. They find it a big hassle to start setting up a budgeting system to manage their personal expenditures or they find the needs analysis survey done by their life underwriter too complex to start reviewing. Slothful people can come up with every reason to justify their slothfulness. Another reason why this sin is the deadliest is that it not only jeopardizes your personal financial dreams but the dreams of your love ones as well.

However, don’t be deceived. Sloth can disguise itself and attack us differently. Doing little research on a particular investment or company we want to invest in because of too much work is one example. Not participating actively enough in our financial program because we feel our adviser is more qualified to do is also another sign of sloth.

The scenarios presented above are very prevalent and we have to admit that all of us are sinners. However, despite that financial salvation can still be achieved. Here’s how:

1. Know which sin or sins you are committing now. It is important to note that if those sins are not addressed immediately, other sins will gradually manifest themselves. It’s the case of a sin leading to another sin.

2. Accept the fact that we all don’t have the same risk profile. Others may have a higher-level of risk tolerance and therefore may have invested in instruments that generate higher yields.

3. Learn to filter the noise from the useful information. Not all information is applicable to all. React only to the news that are relevant to you and calm your heart first before making any decision. Do not make any move at the heat of the emotions.

4. Don’t be too attached to a particular theory, system, or investment and don’t be enamored by financial gurus. Always keep an open mind and accept that others have their own flaws and yours is not an exception. Learn to be flexible too.

5. Regularly evaluate your financial plan with your adviser and make sure the fund allocations are diversified enough to let you achieve your financial goals. And if you still can’t resist speculate investing, invest only the money you can afford to lose. That way, you won’t be devastated in case this fund goes ka-poof!

The seven deadly sins do not discriminate in a bullish economy or a bearish one. Sins will be committed in either situation. Mustering the steps above may take time but don’t get frustrated. The key here is the less sin we commit, the better it is for us and our loved ones. In the end, we can all hold on to the promise of prosperity by the Lord and surely, we will reach our financial paradise someday.

Sloth by far is the most dangerous sin of all and why wouldn’t it be? Sloth causes people to ignore their financial future all along.

Author

Kendrick Chua started his career as a life insurance underwriter and licensed mutual fund representative for one of the leading financial institutions in the country three years ago. He also contributes to Income-Tacts (www.income-tacts.com), a fast-growing financial e-group that has close to two thousand members. A marketing management graduate from De La Salle University in 2005, he has always shown strong interest and enthusiasm in financial planning and investment management. Comments and suggestions may be sent to drickchua99@gmail.com.

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By Ma. Salve Duplito

Should You Tell Your Child You’re Broke?

Money problems have a way of keeping us parents awake at night, bathing dinner conversations with tension even when we try to be cheerful, or worse, turning us into super serious mommies and daddies who have momentarily forgotten how to simply have fun.

Sure, 2008’s holidays were probably still warm and fuzzy with the financial crisis feeling like a distant relative in the United States losing his job. But I bet that with the festivities over, the overspending is causing big reality bites.

Unless you live under a rock, you know that 2009 will be tough. The economic nausea that has rocked Wall Street has turned into a major, global vertigo. Everybody’s getting dizzy. It would be foolish to think that Filipinos can escape the ramifications of Wall Street’s excesses. At one level or another, we’ll all have to deal with yet another economic downturn.

Should we shield our children from all these worries? Or are we allowed to dump on them our troubles? In my view, there’s a fine line that separates being open and frank, and treating them as our therapists. Stay balanced. Children know a lot more than we think they know. They can understand and they can make adjustments, and most likely amaze us with their deep insights along the way.

Adult worries can get blown up into giant, unknown monsters in the mind of a child. I remember taking out a couple of pre-teenagers I know at church one day for an early, fast food dinner. One girl had been having a really tough time because her father had disappeared, leaving her unemployed mother to take care of four children, all under 18 years of age.

They had been living in relative affluence all their lives, and I’ve watched from the sidelines as the family tried to cope with the fears, the insecurities, the loneliness and the uncertainty of not knowing where to find money for the next meal. I know how it felt; I’ve been there when I was young and my father left my mom and five young girls.

“Where would you like to eat?” I asked the group of five kids with a light voice. “Pancake House sounds good to me,” I said.

“Tita, why not try KFC? It’s not too expensive and then we can eat more,” she says in a little, shy voice. I had a little lump in my throat at that.

I let them decide so they felt empowered, and we ended up eating in KFC, so they could eat to their heart’s content.

There wasn’t a lot of open talk in this little family. Burdened by her own personal monsters, the mother could barely keep her head above the din created by her inner demons. Her mood fluctuates wildly from hope to suicide. Her children, who are still grappling with the change in lifestyle and complain when they can’t buy materials for their projects, for example, could hear her sometimes threatening to leave them.

My heart often went out to the mother when I visit and talk to her. Her situation taught me several things: it’s that children need to know with clarity what is happening, and yet they need to know there is hope that everything will turn out all right. It’s that we need to be frank and honest, using words that they can understand (no hedge funds and credit default swaps, please) but never talk down to them. Children can often think of solutions that are more creative than adults, unfettered as they are by traditions and rules that make us parents think in a box.

A child’s mind is amazing. They don’t need to be shielded from a financial crisis. They need to be included in the family team. Only then can we expect them to play their best to reach the goal—the financial goals that we seek for them.

There’s a fine line that separates being open and frank, and treating them as our therapists. Stay balanced.

Ma. Salve Duplito is a financial journalist writing about personal finance for more than 10 years. She is editor of INQUIRER.net and writes a blog called MoneySmarts (blogs.inquirer.net/moneysmarts), one of the most-read blog in the INQUIRER.net network. She is also co-editor of the best-selling books Pwede Na: The Pinoy Guide to Personal Finance and Pwede Na2: The Pinoy Guide to Estate and Retirement Planning. More importantly, she is a mother of three, has been married for more than 10 years, and has been through a lot of the struggles in family finance. E-mail her at lightdream@gmail.com.

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