POWER! BORROWING BASICS
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Transcript of POWER! BORROWING BASICS
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POWER! BORROWING BASICS
28 JAN 2014
DESMOND CHONG
AKPK set up by BNM on April 2006 to provide:-
Financial Education
Credit Counselling
Debt Management
All services to individuals are
FREE OF CHARGE
AKPK DATA BASEDPARTICULAR PERSON
Credit Counseling 248,491
Debt Management Program
100,871
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REASON FOR DEFAULT
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OPEN YOUR EYE
SOMETHING DIFFERENT!
LIFE CYCLE
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GOAL
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CAN’T SEEN!
GOAL MUST BE SEEN
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WHAT IS POWER!
Programme provides young adults
& prospective borrowers with
practical financial knowledge &
debt management
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CONTENTSChapter 1 - Cash Flow Management
Chapter 2 - Borrowing Basics
Chapter 3 - Wise Usage of Credit Card
Chapter 4 - Buying a Car
Chapter 5 - Buying a House
Chapter 6 - Managing Your Debts
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“To borrow or not to borrow?”
…….that is the question!
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WE ALWAYS LOSS
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HARD TO GET
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HK RICHEST : LE KA SHENG
M’SIA RICHEST : ROBERT KUOK
THEY CAN GET IT
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CREDIT & DEBT
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RULES OF BORROWING
For productive purpose only
Within your means
With a moral commitment
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Licensed financial institutions
Co-operatives
Licensed money lenders
Unlicensed money lenders
Browse website of BNM at www.bnm.gov.my for a complete listing of licensed financial institutions
COMMON SOURCES OF BORROWING
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DEBT TO INCOME RATIO Important factor in credit assessment
Ratio = Monthly loan repayments x 100Net monthly income
General rule: Ratio should not be mora than 40%
En. Daud’s gross monthly income is RM3,800. His total monthly loan repayment - housing, car payment & credit cards is RM2,128
= RM2,128 x 100%RM3,800
= 56%
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RISK OF GUARANTOR Guarantee is risky for guarantor
Responsible for unpaid portion of loan, including interest if principal borrower defaults
Think first before agreeing to be a guarantor!
Ensure guarantee for loan is for productive purpose
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Types of Interest RatesFlat rate
Interest is calculated upfront on amount of money borrowed over entire loan tenure(Hire Purchase & Personal Loan)
Fixed RateInterest is calculated based on a reducing balance, whereby interest rate does not fluctuate during loan tenure(Housing Loan)
Floating RateInterest is calculated based on a reducing balance, whereby interest rate is tied to an index or base rate & fluctuates over loan period. Common index or Base lending Rate (BLR)(Housing Loan/Overdraft)
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Interest is paid on principal & on accumulated past interest
Interest calculation can be on a daily, monthly or annually rest
Advantages: More return on investments
Disadvantages: More interest payment on loans
COMPOUND INTEREST
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PURPOSE
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PAY CAPABILITY
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PAYMENT HISTORY
Make Prudent Financial
Management a Way of Life
Website: www.akpk.org.myToll Free Number: 1 800 88 2575
THANK YOU
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