Archive for the ‘finance’ Category

New Car Taxes Would Hurt Sales, Cost Jobs

April 29, 2011 Leave a comment

April 12, 2011|By ART SCHALLER JR., The Hartford Courant

The state faces its greatest budget crisis since 1991, when then-Gov. Lowell P. Weicker Jr. proposed adoption of the state income tax as the solution to Connecticut’s fiancial issues. Twenty years later, we are facing the same basic issue, spending is outstripping the state’s revenue structure. The question is: Can we finally get it right?

Gov. Dannel P. Malloy and our General Assembly have a tough job ahead. They have to balance the budget. We agree with the governor, “Don’t kick the can down the road.” Otherwise, we would have to come back next year and fix a hole in the budget because spending again outpaced faulty revenue estimates. Let’s get it right the first time. Don’t make things worse, however, with deficits and job losses due to poor tax policy.

The proposed new taxes on automobile sales will tax the value of a trade-in vehicle that consumers use for a down payment on a new car, raise the sales tax to 9.25 percent on every dollar more than $50,000 paid for a car or truck and tax coupon price discounts as part of the sale price. Our association’s estimates suggest that these new taxes will actually reduce the state’s tax revenue rather than increase it. These proposals are bad ideas and are not well thought out.

Clearly these tax increases would make Connecticut auto dealers less competitive with our neighboring states. These proposals are shortsighted — and will result in fewer cars being sold and serviced in our state, causing the state to lose approximately $112 million in sales and income taxes and forcing more than 700 layoffs in Connecticut dealerships.

These new taxes equate to losses for Connecticut, not gains. These new taxes will increase the cost of a car loan and force most consumers to come up with more cash to qualify for a car loan. Because New York , Massachusetts and Rhode Island all wisely have avoided these types of taxes, consumers will save more than $1,000 in car payments just by going out of state to purchase a car. The unintended consequences of these new taxes will be to cause a Connecticut consumer credit crisis, killing in-state sales of cars and trucks.

Maine tried this a number of years ago and its legislature quickly came back into special session to repeal the mistaken taxes when revenue plummeted. From 2007 to 2010, auto sales in Connecticut crashed from $9 billion to $6.6 billion largely because of the credit crisis, which drove the cost of car loans up so much that consumers stopped buying. The state lost hundreds of millions of dollars in sales tax, nearly 3,000 jobs in auto retailing and 80 small car dealers went out of business.

Connecticut car taxes mean Connecticut loses. The state loses revenue, the employees who sell and service cars lose their jobs. Connecticut consumers lose by being taxed twice on the same car and by losing affordable credit and car payments.

Let me suggest a solution that works. National economists predict vehicle sales for the U.S. in 2011 will hit more than 12 million, a level not been seen for almost three years due to the recession and tight credit. If Connecticut makes the right decision and leaves the trade-in allowance in place and holds off on imposing a 9.25 percent incremental sales tax on higher priced vehicles, Connecticut new car sales will easily reach pre-recession levels. As sales increase, so will state sales tax revenues — far exceeding the estimated $40 million raised in the budget by these new auto taxes. Let Connecticut dealers sell cars to help balance the budget and preserve jobs and job growth.

Art Schaller Jr. is chairman of the Connecticut Automotive Retailers Association and president of Schaller Auto World.

Categories: auto, finance, news

5 best ways to cut insurance costs

March 26, 2011 Leave a comment

Save on five types of insuranceDeath and taxes are two sure things. But people sometimes forget insurance costs aren’t necessarily fixed, and getting the most policy for your money is worth checking out. All you’ll need is extra time and the tenacity to pepper your agent with knowing questions. But the payoff can be big — as much as 20 percent in savings.

These days, the odds favor consumers. Most insurers are in heated competition with each other. That means you’re likely to get insurance breaks for most types of insurance, such as home and car.

That said, here are our best tips for cutting costs on five types of insurance: car, home, disability, health and life.

Homeowners insurance: Go for discounts

Don’t forget to ply your insurance agent with questions about discounts.

“There are five to 10 discounts on house insurance that people aren’t aware of,” says Don Griffin, vice president of personal lines for Property Casualty Insurers Association of America. For example, he says, insurers offer discounts for homes built to higher building codes.

Other discounts include one for groups, such as professional organizations, and another for people over 55 that can slice up to 10 percent off your premium. Discounts for safety improvements for installing deadbolts or smoke detectors can pare another 5 percent off premiums. Also, loyalty pays off; your insurer may lower your payments 5 percent if you’re a long-term client.

All discounts vary from state to state and among companies, though. So it pays to get three to four quotes online with different insurers, says Griffin.

Auto: Is your new car an insurance hog?

Most people buy car insurance backward: buying the car and then considering insurance costs. That can be costly.

“Before you buy, compare insurance costs for different cars,” says Claire Wilkinson, vice president of global issues at Insurance Information Institute. “Their insurance costs vary, based on the likelihood of theft, etc.” Once you know your insurance costs, you can ask yourself another key question: Is it within my budget?

After kicking a car’s tires, check out its safety at the Insurance Institute for Highway Safety’s website, says Griffin. “In most cases, (having a safer car) will lower your insurance costs,” he says.

Health: Mix and match policies

In insurance, one size doesn’t fit all. And that includes one health insurance policy per family.

“People don’t realize they can mix and match policies within families,” says Carrie McLean, a consumer specialist at online insurance broker “Perhaps one member of the family needs more care, such as preventive care, and others don’t.”

For example, she says, it may be cheaper to buy an individual plan for a child than include him or her in a family plan.

The downside, she says, is that family members may go to different hospitals and doctors. “But it’s saving you money in the long-run,” says McLean.

Know your budget for the coming year, says Susan Pisano, a spokeswoman at America’s Health Insurance Plans. Do you have a chronic condition? Do you want to have a baby? Do you have a lower premium and need higher cost services? “Make sure to get your preventative services,” Pisano says.

Disability: Join group plans

Disability insurance can be expensive, so it pays to cut corners when you can, though the options are limited.

“It’s harder to save money on disability than other kinds of insurance,” says Byron Udell, CEO of AccuQuote in Chicago. “Group plans are much less expensive.”

Basically, disability policies are priced by two components: waiting periods before benefits begin and actual benefit periods. Rejiggering either option can lower your policy costs, but Udell doesn’t recommend it. For example, lengthening the policy waiting time from, say, 90 to 180 days only saves 5 percent on a premium, he says.

Life: Term insurance is a better buy
Term insurance is one of the cheapest forms of life insurance.

The savings come from buying a term policy and investing the savings on your own instead of in a policy. “Half of the life insurance policies sold are dropped,” says James Hunt, a life insurance actuary with the Consumer Federation of America. “They’re too complicated.”

If you do need life insurance, though, opt for a multicarrier broker and shop around. “Half the time people are paying more than they need

via Bankrate

Categories: finance, insurance

6 Steps to Getting a Mortgage

March 24, 2011 Leave a comment

You’ve heard it before: mortgage rates are at historic lows and housing prices are more affordable than they’ve been in years. But no one said buying a home was any easier.

If you’re hoping to become a homeowner this year, you still have to brace yourself for a lengthy process – not least confusing of which is securing a mortgage loan. Here are six tips to get you started.

1. Get Organized
Since the mortgage meltdown, lenders have tightened the requirements on loan documentation. Even highly qualified customers are no exception. Be prepared by taking some time to organize your latest financials in advance.

With stricter lending guidelines, for example, you’ll need to explain any anomalies in your paperwork.

Did you have an employment gap in the past two years? Were you late on a credit card payment? You may need to provide written explanations for these sorts of mishaps, in addition to proving your income and assets. Start collecting:

* Pay stubs from your current employer from the most recent one-month pay period,

* The past two years’ W2s from all employers,

* A two-year history of your employment, including names, address and phone numbers,

* Two months of bank statements on each and every account, including investments, IRAs and your 401(k),

* Two years of tax returns. (Tax returns aren’t required just from self-employed applicants these days. Many lenders require two years of tax returns for every customer.)

* Documentation of any other sources of income for the past two years, such as received child support payments,

* Divorce decree and separation agreement, if applicable, and

* Driver’s license numbers

Note that lenders won’t accept documents that are older than 60 days.

2. Know Your Credit Score
To get the lowest interest rate and the best possible loan pricing, lenders now require the cream of the crop of credit scores – you have to have a FICO score of at least 740, up from 720 in recent months. And if you have a score below 620, most lenders will not consider you for a loan application, even at higher interest rates.

Typically, lenders will look at the FICO credit scores from all three credit bureaus and use the median (or middle) score. So if your scores are 705, 725 and 745, lenders will use 725.

According to the most recent pricing and guidelines from Credit Sesame partners, a range of 700 to 739 is considered “excellent,” 699 – 680 is “good” credit, and 679 – 620 is “fair”.

Applying with a co-borrower? Lenders will use the lower of the borrower and co-borrower’s median credit scores. (So if your median score is 725 and that of your co-borrower is 695, the lender will make a decision based on a 695 score.)

If you have a co-borrower with a lower credit score whose income or assets are not required to qualify for this loan, you many wish to drop him/her from the loan application.

3. Review Your Credit History
In addition to the score, lenders review your credit history to check for delinquencies and liens, among other factors.

Make sure you review your credit reports before applying. If you find errors, dispute them. But keep in mind that disputes filed right before the mortgage application process will not make a good impression with lenders. Most lenders require an undisputed record of credit, and since it takes at least 60 days for credit bureaus to respond to disputes, it’s best to check up on your credit well in advance.

4. Know How Much You Can Afford
Lenders use a debt-to-income ratio (DTI) to judge your capacity to repay the loan. Your DTI ratio is the percentage of your total monthly obligations, such as existing car loans and credit cards, including the home loan you are applying for, out of your total income. The standard DTI ratio requirement today is 38%; however, lenders will accept solid borrowers who are approved, with a DTI up to 41%. Most lenders are looking for a DTI that is lower than 45%.

5. Shop Around and Ask Questions
Rates and fees can vary widely. Shop around online, talk to numerous lenders and make sure that you are searching for not only the best rates, but also the lowest fees. Some cost are negotiable, others are not.

Real costs (non-negotiable) include your home’s appraisal, the fees to buy copies of your credit report, and home inspection fees. This will also include fees paid to the government for the transfer of the home’s title, known as title costs.

Also, expect to pay processing fees, which are the cost for a loan processor to order the title, insurance, the appraisal, and put it all in order for the lender. This fee should not exceed $400.

Real costs also include the first year of homeowner’s insurance and taxes on the property, pro-rated for the amount of time you will own it for that year. You will also have to pay some interest on the home upfront. If you close on March 25, for example, you would be charged six days of “prepaid interest” for the remainder of that month.

Commission costs, on the other hand, are negotiable. Yes, your lender should be paid for his work. But not overpaid. Currently, lenders are earning an origination fee (one point) and one additional point. (One point equals 1% of the loan amount.) Lenders can earn up to three or four points more to offer borrowers a discount on the interest rate!

6. Don’t Forget the Down Payment
Depending on your credit, income and the cost of the home, you will generally need a down payment of 10% to 20% of the home’s value.

Saving for a down payment is the first step toward home ownership, helping you prepare for the extra financial burden of owning a property. If you do not have enough savings for a down payment, you may want to reconsider homeownership for the time being. Also, keep in mind that when you apply for a mortgage, lenders will want to see that you also have three months of mortgage payments in savings, or “cash reserves.” Finally, most lenders will want to know where your down payment is coming from, limiting how much can come as gifts from family and friends.

via MintLife

Categories: finance, home Tags: ,