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8/9/2019 Consumer Credit Present
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Consumer CreditConsumer CreditGroup members:Group members:
Shellney @ Veronica SadomShellney @ Veronica Sadom20061321712006132171
Nurul Azzahra Bt OthamanNurul Azzahra Bt Othaman20061298632006129863
Shahirah Bt MohamadShahirah Bt Mohamad
20061298792006129879Erni Wahyuni TrimoErni Wahyuni Trimo20061353652006135365
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IntroductionIntroduction Uses and misuses of creditUses and misuses of credit Advantages of creditAdvantages of credit
Disadvantages of creditDisadvantages of credit
Protecting yourself against debit/credit cardProtecting yourself against debit/credit cardfraudfraud
Type of CreditType of Credit
1)1) Close End CreditClose End Credit
2)2) Open End CreditOpen End Credit Sources of creditSources of credit
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What is consumer credit?What is consumer credit? asas an arrangement to receive cash, goodsan arrangement to receive cash, goods
or services now and pay them in theor services now and pay them in thefuturefuture
a debt that someone incurs for thea debt that someone incurs for thepurpose of purchasing a good or service.purpose of purchasing a good or service.
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Uses and Misuses of CreditUses and Misuses of Credit
Credit is use to buy goods and servicesCredit is use to buy goods and services Examples of uses of credit :Examples of uses of credit :
-- A medical emergency may leave a person strappedA medical emergency may leave a person strappedfor fundsfor funds
-- An engineer may need a car to go to his workplaceAn engineer may need a car to go to his workplace
-- Students might need a loan to support theirStudents might need a loan to support theireducation. E.g. PTPTN loanseducation. E.g. PTPTN loans
-- Husbands who need to buya house for his family willHusbands who need to buya house for his family willneed a housing loan etcneed a housing loan etc
Example of misusing credit : Shopaholics.Example of misusing credit : Shopaholics.
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Enables people to enjoy goods and services nowEnables people to enjoy goods and services now Credit card allows purchase of goods when cash is lowCredit card allows purchase of goods when cash is low Having creditavailable during times of financialHaving creditavailable during times of financial
emergencies can be very importantemergencies can be very important It is safer to use creditIt is safer to use credit Creditallows consumers to take advantage of seasonalCreditallows consumers to take advantage of seasonal
sales or to avoid anticipated price increasessales or to avoid anticipated price increases
Some interestand finance charges can be claimed asSome interestand finance charges can be claimed asdeductions on federal income taxesdeductions on federal income taxes
Credit indicates stabilityCredit indicates stability
Advantages of credit
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Disadvantages of CreditDisadvantages of Credit
OverspendingOverspending The temptation to overspend especially during theThe temptation to overspend especially during the
periods of inflationperiods of inflation
Failure to repaya loan may result in loss of income,Failure to repaya loan may result in loss of income,valuable propertyand your reputation.valuable propertyand your reputation.
Misuse of credit can also leads to a longMisuse of credit can also leads to a long--term financialterm financialproblem, damage to family relationships, and aproblem, damage to family relationships, and a
slowing of progress towards financial goalsslowing of progress towards financial goals Borrowers are liable for their debts regardless ofBorrowers are liable for their debts regardless ofchanges that occur in the futurechanges that occur in the future
Credit costs moneyCredit costs money
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Type of CreditType of Credit
There are 2 types of consumer creditThere are 2 types of consumer creditavailable:available:
-- close end creditclose end credit
-- open end creditopen end credit
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Close End CreditClose End Credit
used for specified purpose and involves aused for specified purpose and involves aspecified amountspecified amount
only have to pay back one time loans in aonly have to pay back one time loans in aspecified period of time and in paymentsspecified period of time and in paymentsof equal amountsof equal amounts
Examples of close end creditare mortgageExamples of close end creditare mortgageloans, automobile loan, and installmentloans, automobile loan, and installmentloansloans
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3 Types of Close End Credit3 Types of Close End Credit
Installment sales creditInstallment sales credit -- loan thatallow you to receiveloan thatallow you to receivegoods, that usually high priced item such as largegoods, that usually high priced item such as largeappliances or furnitureappliances or furniture
Installment cash creditInstallment cash credit -- direct loan of money fordirect loan of money forpersonal purposes, home improvements, or vacationpersonal purposes, home improvements, or vacationexpensesexpenses
Single lump sum creditSingle lump sum credit -- loan that be repaid in total on aloan that be repaid in total on a
specified dayspecified day
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Open End CreditOpen End Credit
the loans are made on a continuous basis and billed periodically forthe loans are made on a continuous basis and billed periodically forat least partial paymentat least partial payment
Example of open end creditare card issued by department stores,Example of open end creditare card issued by department stores,bank cards (Visa, MasterCard), Travel and entertainment cards,bank cards (Visa, MasterCard), Travel and entertainment cards,
(Diners Club, American Express), and Overdraft Protection(Diners Club, American Express), and Overdraft Protection make any purchases you wish ifyou do not exceed your line creditmake any purchases you wish ifyou do not exceed your line credit may have to pay interest, the periodic charge for the use of credit,may have to pay interest, the periodic charge for the use of credit,
or other finance chargesor other finance charges
Incidental credit is a creditarrangement that has no extra costs andIncidental credit is a creditarrangement that has no extra costs and
no specific repayment plan.no specific repayment plan. Most of the bank extend revolving check credit or also called asMost of the bank extend revolving check credit or also called as
bank line of credit. Bank line of credit is a prearranged loan for abank line of credit. Bank line of credit is a prearranged loan for aspecified amount thatyou can use by writing a special checkspecified amount thatyou can use by writing a special check
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1) Commercial Banks1) Commercial Banks CommercialCommercial banksbanks makemake loansloans toto borrowersborrowers whowho needneed
themthem andand whowho havehave thethe capacitycapacity toto repayrepay themthem.. LoansLoans areare thethe salesale ofof thethe useuse ofof moneymoney byby thosethose whowho
havehave itit (banks)(banks) toto thosethose whowho wantwant it it (borrowers)(borrowers) andand arearewillingwilling toto paypay aa priceprice (interest)(interest) forfor itit.. BanksBanks makemake severalseveral
typestypes ofof loansloans includingincluding consumerconsumer loans,loans, housinghousing loansloansandand creditcredit cardcard loansloans..
ConsumerConsumer loansloans areare forfor installmentinstallment purchases,purchases, repaidrepaidwithwith interestinterest onon aa monthlymonthly basisbasis.. TheThe bulkbulk ofof consumerconsumerloansloans areare forfor cars,cars, boats,boats, furniture,furniture, andand otherother expensiveexpensive durabledurablegoodsgoods..
HousingHousing loansloans maymay bebe forfor eithereither residentialresidential mortgages,mortgages, homehomeconstruction,construction, oror homehome improvementsimprovements.. CreditCredit cardcard loansloans maymay bebe availableavailable inin thethe formform ofof cashcash
advancesadvances withinwithin prearrangedprearranged creditcredit limitslimits..
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Examples of Comm.Bank :Examples of Comm.Bank :
Affin Bank BerhadAffin Bank Berhad Alliance Bank BerhadAlliance Bank Berhad
AmBank BerhadAmBank Berhad CIMBBank BerhadCIMBBank Berhad EON Bank BerhadEON Bank Berhad Hong Leong Bank BerhadHong Leong Bank Berhad
Malayan Banking Berhad (Maybank)Malayan Banking Berhad (Maybank) Public Bank BerhadPublic Bank Berhad RHBBank BerhadRHBBank Berhad
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2) Finance Company2) Finance Company
specializes in personal installment loans and secondspecializes in personal installment loans and secondmortgages.mortgages.
Consumers withoutan established credit history canConsumers withoutan established credit history can
often borrow without collateral.often borrow without collateral.often willing to lend money to consumers who areoften willing to lend money to consumers who are
having difficulty in obtaining credit somewhere else, buthaving difficulty in obtaining credit somewhere else, butbecause the risk is higher, so is the interest rate.because the risk is higher, so is the interest rate.
The interest rate varies according to the size of the loanThe interest rate varies according to the size of the loan
balance and the repayment schedule.balance and the repayment schedule.process of loan applications are quickly, usually on theprocess of loan applications are quickly, usually on thesame day that the application is made, and designsame day that the application is made, and designrepayment schedules to fit the borrower's income.repayment schedules to fit the borrower's income.
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Example ofFinance Company:Example ofFinance Company:
There is none as all previous onesThere is none as all previous oneshave been acquired by theirhave been acquired by theiranchor (commercial) banks.anchor (commercial) banks.
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3) Credit Union3) Credit UnionCredit UnionsCredit Unions are nonprofit cooperatives organized toare nonprofit cooperatives organized to
serve people who have some type of common bond.serve people who have some type of common bond.The nonprofit status and lower costs of credit unionsThe nonprofit status and lower costs of credit unions
usuallyallow them to provide better terms on loans andusuallyallow them to provide better terms on loans andsavings then commercial institutions.savings then commercial institutions.
The costs of the credit union may be lower becauseThe costs of the credit union may be lower becausesponsoring firms provide staffand office space, andsponsoring firms provide staffand office space, andbecause some firms agree to deduct loan payments andbecause some firms agree to deduct loan payments andsavings installments from member's paychecks andsavings installments from member's paychecks andapply them to credit union accounts.apply them to credit union accounts.
Credit unions often offer good value in personal loansCredit unions often offer good value in personal loansand savings accounts.and savings accounts.
usually require less stringent qualifications and provideusually require less stringent qualifications and providefaster service on loans than do banks or Savings & Loanfaster service on loans than do banks or Savings & Loan
Assoc.Assoc.
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Credit unions exist in a wide range of sizes, ranging
from volunteer operations with a handful of
members to institutions with several billion
dollars in assets and hundreds of thousands of
members.
List of licensed credit union :
COMPANYCOMPANY SERVICESSERVICESa)a) Wing Bee Credit &Wing Bee Credit &Leasing Sdn. Bhd.Leasing Sdn. Bhd.
No. 199 & 199A, Jalan SanNo. 199 & 199A, Jalan San
Peng, Kuala Lumpur WilayahPeng, Kuala Lumpur WilayahPersekutuan 552000MalaysiaPersekutuan 552000MalaysiaTel : 03Tel : 03--92229222--46694669Fax : 03Fax : 03--92229222--46764676
Credit UnionsCredit Unions
Financial ServicesFinancial Services
LoansLoans
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Credit unions.Credit unions.b)b) JUNE CREDIT & MORTAGE SDNJUNE CREDIT & MORTAGE SDNBHDBHD
14 JLN MORSHIDI SIDEK 96000 SIBU14 JLN MORSHIDI SIDEK 96000 SIBUSibu Sarawak 96000MalaysiaSibu Sarawak 96000Malaysia
Tel : 08432Tel : 08432--05120512
Credit UnionsCredit Unions
c)c) GAN KENG KET & SONS CREDITGAN KENG KET & SONS CREDIT
SDN BHDSDN BHD
15114 JLN ZAABA 70100 SEREMBAN15114 JLN ZAABA 70100 SEREMBAN
Seremban Negeri Sembilan 70100Seremban Negeri Sembilan 70100
MalaysiaMalaysia
Tel : 06763Tel : 06763--11221122
Credit UnionsCredit Unions
d) CHEE HONG CREDIT & LEASINGd) CHEE HONG CREDIT & LEASING
SDN BHDSDN BHD21 JLN DATO KOYAH 1005021 JLN DATO KOYAH 10050
GEORGETOWNGEORGETOWN
Georgetown Penang 10050 MalaysiaGeorgetown Penang 10050 Malaysia
Tel : 04262Tel : 04262--69636963
Credit UnionsCredit Unions
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e) Malaysia Export Credite) Malaysia Export CreditInsuranceInsurance
BerhadBerhad
Level 17, Bangunan BankLevel 17, Bangunan Bank
Industri,Industri,Bandar Wawasan, 1016, JalanBandar Wawasan, 1016, Jalan
SultanSultan
Ismail, Kuala Lumpur WilayahIsmail, Kuala Lumpur Wilayah
Persekutuan 50734 malaysiaPersekutuan 50734 malaysia
Tel : 03Tel : 03--26912691--06770677
Fax : 03Fax : 03--26912691--03530353
Cargo InsuranceCargo Insurance
CreditInsuranceCreditInsurance
Credit UnionsCredit Unions
ExportRepresentativesExportRepresentatives
Financial ServicesFinancial Services
InsuranceInsurance
Logistics ServicesLogistics Services
f)f) TAYEN KREDIT SDN BHDTAYEN KREDIT SDN BHD
320 JLN TUANKU ANTAH 70100320 JLN TUANKU ANTAH 70100
SEREMBAN Seremban NegeriSEREMBAN Seremban Negeri
SembilanSembilan
70100Malaysia70100Malaysia
Tel : 06762Tel : 06762--19231923
Credit UnionsCredit Unions
g)g) )) KIMLING CREDITKIMLING CREDITCORPORATION (M) SDN BHDCORPORATION (M) SDN BHD
26 JLN KAMPUNG KULI 7520026 JLN KAMPUNG KULI 75200MELAKA 75200MalaysiaMELAKA 75200Malaysia
Tel : 06284Tel : 06284--91199119
Credit UnionsCredit Unions
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4) Savings & Loans Assoc.4) Savings & Loans Assoc.
used to specialize in longused to specialize in long--term mortgage loansterm mortgage loanson houses and other real estate.on houses and other real estate.
offer personal installment loans, home improvementoffer personal installment loans, home improvementloans, second mortgages, education loans, and loansloans, second mortgages, education loans, and loanssecured by savings accounts.secured by savings accounts.
S&Ls lend to creditworthy people, and usually, collateralS&Ls lend to creditworthy people, and usually, collateralmay be required.may be required.
The loan rates on S&Ls vary depending on the amountThe loan rates on S&Ls vary depending on the amountborrowed, the payment period, and the collateral. Theborrowed, the payment period, and the collateral. The
interest charges of S&Ls are generally lower than thoseinterest charges of S&Ls are generally lower than thoseof some other types of lenders because S&Ls lendof some other types of lenders because S&Ls lenddepositors' money, which is a relatively inexpensivedepositors' money, which is a relatively inexpensivesource of funds.source of funds.
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Types of S&Ls.Types of S&Ls.
AEON Credit Service (M) Sdn BhdAEON Credit Service (M) Sdn BhdAmerican International Assurance Company LimitedAmerican International Assurance Company Limited Bank KerjasamaRakyatMalaysiaBerhadBank KerjasamaRakyatMalaysiaBerhad Bank Pembangunan MalaysiaBerhadBank Pembangunan MalaysiaBerhad Bank Perusahaan Kecil dan SederhanaMalaysiaBerhad (SMEBank Perusahaan Kecil dan SederhanaMalaysiaBerhad (SME
Bank)Bank)
Bank Simpanan NasionalBank Simpanan Nasional Borneo Development Corporation ( Sabah ) BerhadBorneo Development Corporation ( Sabah ) Berhad Borneo Development Corporation ( Sarawak ) BerhadBorneo Development Corporation ( Sarawak ) Berhad CreditGuarantee Corporation MalaysiaBerhadCreditGuarantee Corporation MalaysiaBerhad ExportExport--ImportBank MalaysiaBerhadImportBank MalaysiaBerhad INGInsurance BerhadINGInsurance Berhad
MalaysiaIndustrial DevelopmentFinance BerhadMalaysiaIndustrial DevelopmentFinance Berhad MBF Cards ( Malaysia ) Sdn BhdMBF Cards ( Malaysia ) Sdn Bhd Prokhas Sdn BhdProkhas Sdn Bhd Sabah DevelopmentBank BerhadSabah DevelopmentBank Berhad
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5) Sales finance companies5) Sales finance companies
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Sales finance companiesSales finance companies
Act likes any other commercial bank orAct likes any other commercial bank orcredit unioncredit union
Provide credit for customer ofan affiliatedProvide credit for customer ofan affiliatedcompany, eg. Ford motor credit co., Eoncompany, eg. Ford motor credit co., Eonand Proton co.and Proton co.
Offer less expensive interest ratesOffer less expensive interest rates
under 4%under 4%
Customer not deal directly with sfc, butCustomer not deal directly with sfc, butwill pay monthly payment to sfc.will pay monthly payment to sfc.
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6) Life Insurances Companies6) Life Insurances Companies
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Life insurance companiesLife insurance companies
For policyholders who own policies thatFor policyholders who own policies thatinclude saving component or cash valueinclude saving component or cash value
Low interest rateLow interest rate take no risk, pay notake no risk, pay nocollection costcollection cost
Allow to borrow up to 80% ofAllow to borrow up to 80% ofaccumulated cash valueaccumulated cash value
No date or penalty on repaymentNo date or penalty on repayment
Eg, ING Co., GreatEastern LifeEg, ING Co., GreatEastern Life
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7) Brokerage firms7) Brokerage firms
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Brokerage firmsBrokerage firms
For investor who have securities in a marginFor investor who have securities in a marginaccountaccount
Maximum amount of borrowingMaximum amount of borrowing depend ondepend onmarket value of securitiesmarket value of securities Additional collateral may be requiredAdditional collateral may be required Can be used for any purposeCan be used for any purpose not only fornot only for
investment needsinvestment needs Eg, Asia Pacific brokerage, UBS SecuritiesEg, Asia Pacific brokerage, UBS SecuritiesMalaysiaMalaysia
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8) Pawnbrokers8) Pawnbrokers
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PawnbrokersPawnbrokers
For personal property that left in theFor personal property that left in thepossession of lenderpossession of lender
UnconventionalUnconventional but secured loansbut secured loanssourcessources
Eg, Keris emas services Malaysia & RHBEg, Keris emas services Malaysia & RHBIslamic BankIslamic Bank
Pay loan and interestat timePay loan and interestat time get backget backthe propertythe property
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High interest ratesHigh interest rates -- in Malaysia 5%in Malaysia 5%
Some other country, the maximum rate is:Some other country, the maximum rate is:-- 36% on $.01 to $990 of the loan36% on $.01 to $990 of the loan
amount;amount;
-- 21% any portion of the loan amount21% any portion of the loan amount
from $990.01 to $3,300;from $990.01 to $3,300;
-- 15% on any portion of the loan amount15% on any portion of the loan amount
over $3,300over $3,300
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9) Loan sharks9) Loan sharks
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Loan sharksLoan sharks
Unlicensed lendersUnlicensed lenders operate illegallyoperate illegally
Charge excessive ratesCharge excessive rates exceed 100%exceed 100%
Borrower not protected byany form ofBorrower not protected byany form ofcontract or term and conditionscontract or term and conditions
Collection methodCollection method involve violence orinvolve violence orother criminal conductother criminal conduct
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10) Familyand friends10) Familyand friends
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Familyand friendsFamilyand friends
Best sources of creditBest sources of credit
Treatall transaction suchTreatall transaction suchbusinesslike mannerbusinesslike manner to avoidto avoidmisunderstandingmisunderstanding
Interest rateInterest rate can be discusscan be discuss
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ConclusionConclusion
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ConclusionConclusion
Consumer creditConsumer credit
Debt that someone incurs for the purposeDebt that someone incurs for the purposeof purchasing a good or service.of purchasing a good or service.
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Conclusion contConclusion cont
Uses and misuses of creditUses and misuses of credit
Advantages of creditAdvantages of credit Enables people to enjoy goods and servicesEnables people to enjoy goods and services
Purchase of goods when cash is lowPurchase of goods when cash is low
Safer to useSafer to use
Take advantage of seasonal salesTake advantage of seasonal sales
Indicates stabilityIndicates stability
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Conclusion contConclusion cont
Disadvantages of creditDisadvantages of credit OverspendingOverspending
LongLong--term financial problemterm financial problem Liable for their debts regardless of changes thatLiable for their debts regardless of changes that
occur in the futureoccur in the future
Costs moneyCosts money
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Conclusion contConclusion cont
Type of creditType of credit Closed end creditClosed end credit
installment sales creditinstallment sales credit
Installment cash creditInstallment cash credit
Single lump sum creditSingle lump sum credit
Open end creditOpen end credit Credit cardCredit card
Debit cardDebit card
Smart cardSmart card
Travel and entertainment cardTravel and entertainment card
Home equity loanHome equity loan
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Sources of Credit.Sources of Credit.
Commercial bankCommercial bank
Finance Co.Finance Co.
Credit UnionCredit UnionSavings & Loans AssociationsSavings & Loans Associations
Sales finance co.Sales finance co.
Life insurance co.Life insurance co.
Brokerage firmBrokerage firm
PawnbrokerPawnbroker
Loan sharkLoan shark
Familyand friendsFamilyand friends
Conclusion contConclusion cont
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Thank YouThank You