It’s all ’bout the money

If you want to buy a new car but you do not have enough money, there are some options for you. Nowadays, different financial institutions offer car loans in various forms. For instance, you can choose between financial leasing and operational leasing. The financial one is the better choice if you want a car to become your property. The operational leasing is a good option for all companies that need up-to-date cars all the time.

The statistics show that the down payment of a car loan is between 5 and 20 per cent of the car value. After paying the initial payment it is possible to count the amount of a credit. The difference between the car price and the initial payment is exactly the value of your car loan. Your repayment schedule is based on the value of your car loan.

The period of car loans amortization varies from one to five years for a new car. On the market there are larger periods but their conditions are really unfavorable.

Other statistical results show that Bulgarians buy cars on leasing in 75 per cent of cases from financial companies that are part of bank groups, and in 22-23 per cent of cases from official car importers.

The leasing process consists in some simple activities. The leaser buys a car from a provider and makes the car available for use from a lessee against leasing payments. Also, the lessee should pay additional car expenses such as insurances, road taxes, etc. The lessee should bear this in mind.

Depending on the contract, it is possible for the lessees to become the car owners after paying their car loans. This type of possibility is the so-called financial leasing. In this case the leaser is the legal owner of the asset by the moment of the last leasing payment. The lessee pays for the usage of the asset concrete amount of money each month on the same date of payment. The other type of leasing is the operational leasing. The lessee uses the tangible fixed asset, paying regular cash as rent. After the expiry of the agreed period the lessor keeps on being the owner of the asset. Also, there are some restrictions for lessee about the exploitation of the asset. Often the additional expenses are included in the monthly payment.

According to the most up-to-date news there is a big discount for car loans if the car is a hybrid, i.e. energy efficient. There are some EU programs that give a lot of money for updating the automobile parks with new modern and more energy saving cars. It is possible now for Bulgarians to take advantage of this opportunity as well.

Since 2006 the Bulgarian website “www.moitepari.com” has offered the online service “Car loans calculator”. There are more than 140 offers of loans or car leasing. Also, consumers have an opportunity to compare the price of concrete cars sold by different sellers. The future buyers can understand how much it will cost them to take a car loan and who is the seller with best offers.

The calculator actually is a table with subscribed diverse parameters. These parameters are the acceptable limits of the price, the amount of the first payment, new or used car, model and year of the used car, concrete type of leasing etc. After doing its calculations, the electronic device gives the best offers. In this way, the consumer is able to choose within diverse options and select the most appropriate for him self. By seeing the real price of a car loan, the car-seeker is able to ponder his real financial statement and take a reasonable decision.

By 2006 there was no clear information about all types of loans, leasing or each type of financing. Since then there are a lot of changes in Bulgarian legislation. All financial institutions such as banks or leasing institutions and so on, are obliged to present all consumer expenses. According to the amendments to the law, there should be more accuracy and clearance in granting credits including car loans.

It is really important for each future candidate for a car loan to know the difference between financial leasing and operational leasing. In the first case, the lessee receives the asset after paying all the payments. In the second case, i.e. operational leasing, the lessor provides the temporary use of the asset, but for a long period of time.

Now let us see what the statistics tell us. According to the Bulgarian Leasing Association during 2010 Bulgarians were spent about BGN 268 million for car loans, more precisely for financial leasing of cars, and BGN 195 million were spent for financial leasing of trucks and vans. During the year of crisis-2008, before and after it, the results are better. In 2007 for car loans are spent about BGN 832 million and for trucks and vans leasing – BGN 728 million. In 2008 the numbers are about BGN 1 billion and a half for car leasing and for trucks and vans leasing about a billion BGN. In 2009: car loans- BGN 433 millions, and trucks and vans loans of BGN 214 million. These results are based on the information of all twenty Bulgarian Leasing Association members.

The yen rose against most major currencies due to speculations that the Japanese bank will not be able to influence the depreciation of the currency.

The yen rose to its highest value since 31 October when the Bank of Japan made ​​the largest intervention.

This week the euro registered its highest levels after yesterday the Italian Prime Minister Silvio Berlusconi offered to resign. This created optimism that a new Italian leader can do more to tackle the debt crisis.

The Australian dollar decreased right before a report on the unemployment in October.

The dollar fell to 77.54 against the yen and traded a few pips from this level. “Over the next few days I expect dollar-yen to reach 77,” said Callum Henderson, an analyst with Standard Chartered Plc.

The intervention made by the Japanese bank was massive, but short, adds the currency analyst.

Earlier this morning, the euro also recorded losses against the Japanese currency. One euro was traded at a level of 107.20, compared to 107.50 late yesterday.

However, the demand for the single currency against the dollar is limited because of the uncertainty about whether there will be a solution to the debt crisis.

The dollar rose 4.8% in the last three months and performed the best among the 10 major currencies in developed countries.

For the same period of time, the yen has risen by 2.2%.

The dollar tends to become more expensive in times of financial instability, because the currency is in reserve.

Tensions in Europe are growing, this time Italy appears to be in the center of events.

All the recent political uncertainty and the expectations that the Prime Minister will resign the country, initiated a rise in the yield investors demanded for the Italian government securities and overall decline in stock indices.

For the first time since the introduction of the euro in 1999, the yields on five-year Italian bonds rose above 7% . It rose by 27 basis points up to 7.14% annually.

Insurance against non-payment for the Italian bonds also rose to new record high levels.

European stock markets were affected, as well as the euro.

The single currency showed a drastic decline against the dollar down to levels of 1.3660. This was the lowest value of the euro since the beginning of November.

The price of the euro fell strongly against the Japanese yen too, having been traded at levels of 106.18 yen.

Overall, the dollar price rose against almost all major currencies except the yen, which performed extremely well at times when investors are looking for safety and security.

The index tracking the performance of the 50 largest European companies – Euro Stoxx 50, lost 2.6% of its value after the indices Germany and France registered 2% decrease.

The index, tracking the performance of the 40 most liquid positions in Italy – FTSE MIB Index, lost 4.3% of its value.

Regional indices also show some serious losses. Hungary’s BUX lost 1.4%, while the Polish WIG 20 registered loss of 1.2%. The Russian indices RTS lost nearly 4%. Surprisingly, the Romanian indices showed significantly less decline where the leading among them lost 0.2% of its value.