Your 2018 Guide to Financial Freedom

So, we’re into another year and with a new year there are often new challenges. One of the biggest challenges that any one individual will face is one which involves finances. Most of us will have hopes, dreams and aspirations for the rest of 2018 which could involve anything from, career, leisure or even starting a family to name a few. Whichever one of these categories you may fall into, one thing’s for sure is that they will all invariably require money.

It’s often said that New Zealand is one of the best countries in the world to live in and I’m sure most Kiwis as well as many visitors will happily advocate that fact. It is indeed a beautiful country, an island nation with clean fresh air and breathtaking scenery. However, it’s also a rather expensive country to live in so with that in mind, it’s a good idea to have a firm hand on your finances.

Housing

Despite a lot of global uncertainty in the world, Many Kiwis will be possibly looking into taking the plunge into the housing market. New Zealand like most developed countries has a thriving housing market and attaining a mortgage will require a lot of dedication and patience due to the competition for not only the house but for the finance through a NZ finance company itself.

To acquire a loan for a property, you will normally need to raise approximately 20% of the asking price as a home deposit. This will mean that a house that is selling for say 500,000 New Zealand dollars will require a deposit of 100, 000 New Zealand dollars. The deposit is of course one of the most difficult hurdles to overcome when deciding to buy a home. However, there are government schemes to assist prospective buyers with raising a deposit. Schemes such as KiwiSafe Homestarter Grant will provide up to 10,000 NZ dollars towards a new build home. Find out more about this option, here.

Business

If, on the other hand the coming year does not involve buying a home and you are say a budding entrepreneur who wants to either start up a business or an existing one, you will undoubtedly still require some form of finance.

If you are an existing business owner, you may want to explore the option of personal asset finance. The assets of your business are crucial to its survival and with asset finance you can often finance 100% of the purchase price of any asset. Whether it be for new or used commercial vehicles, computer equipment or factory equipment, there are many options available to help. Finance providers will be able to provide a tailor-made service to suit your requirements with terms typically between 3 months and 5 years. They will usually have flexible credit approval schemes. From a tax planning services point of view, it should be noted that the associated fees and interest are tax deductible. Talk to your income tax agent to learn more. Both the new and existing assets of your business can be used to secure the finance.

Another option you may want to consider as an existing business owner may be that of asset finance factoring. This is a way of receiving finance based on the organisations prospective cash flows. A business can effectively raise cash on up to 90% of their invoice sales.  If you are a business that typically has long payment terms of say 60-90 days, then you can attain immediate cash payments based on those sales invoices. What you are technically doing here is selling your accounts receivable to a third-party entity to receive faster funds. You send the invoices over to the factoring company and you subsequently receive the funds usually within 48 hours. The customer in turn will then pay the factoring company instead of the business after the 60-90 days. This is known as invoice factoring and it’s a practice that is widely used in business every day.

Other Finance

However, if you are not a business and just want to secure finance to maybe buy a new car or possibly home improvements, then there are various channels you can utilise in order to realise your dreams. Most finance companies will provide personal loans. These will typically vary in range between (NZ) $1000 and $15000. You can generally use the money for any purchase within reason with terms up to 3 years.

To be eligible for a loan you will need to be at least 18 years of age with a corresponding regular income. You also need to be a citizen of New Zealand or at the very least permanently resident. You will also require some form of collateral in order to secure the loan such as a house, vehicle or land. These criteria will apply to your guarantor if they are securing your loan on your behalf. Loans in Wellington can usually be tailor made to suit your needs with flexible payment dates which can be linked to your salary pay date. Applying for a personal loan is quite a straightforward process and it also one of the most popular ways of achieving finance in order to purchase those larger ticket items whereby you can take advantage of sales, discounts with an immediate cash transaction.

If you don’t have the benefit of collateral or a guarantor, then you may still be able to obtain a personal unsecured loan. Of course, the credit criteria may be more stringent but if you have a good history of meeting your financial liabilities, then you stand a good chance of acceptance. You will of course need to have a minimum and regular income and will have to prove your employment status which will usually mean providing evidence of 3 months payslips or bank statements. Depending on what the loan is for, you might need to consider life cover in NZ as well.

Rounding Up

Finally, in a situation whereby your present financial liabilities are making life somewhat difficult for you, you may want to utilise a debt consolidation programme. If you have numerous short and long terms commitments, a debt consolidation loan will take all these payments and turn them into one single payment, often with slightly better rates than what you were paying previously. The criteria are like the financial arrangements previously mentioned and it is a great way to truly achieve financial freedom for the coming year!

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