Increasingly, smaller credit unions are finding it harder to compete for their member's business because of new governmental regulations, increasing competition, and lack of an adaptive business model.
The federal government passed major banking regulatory overhaul recently which will put additional burdens on financial institutions. If you are a credit union with only four or five employees total, this will represent a significant increase in costs. Some people even believe that this is the federal government's plan all along. Drive the smaller financial institutions into insolvency so they are forced to sell out to bigger institutions. If you haven't noticed, when the FDIC shuts down a bank, it is "sold" to a bigger bank. Soon we will only be left with mega banks which will be easier to control by the federal government.
Most of your small credit unions are one branch financial institution that services one company's employees. Also, some credit unions that have defined employer based membership are finding it more and more difficult to compete with those credit unions with community based charters. This is only natural because for the smaller credit unions your potential membership base is much smaller that as community chartered credit union.
When speaking of business model, financial institutions have traditionally relied upon taking deposits and making loans to supply their interest income. As the deposit and lending rates become more competitive, the amount of income you make from this decreases. The only way you can make up for this is the either make more loans or diversify your income stream. The smaller credit unions are unable to expand lending due to limited membership size, but they have yet to embrace other avenues of generating income. Some people find it strange when I speak about profits when it comes to credit unions because of their not-for-profit status, but every organization to remain solvent needs to generate profits or else they will soon go under.
My advice to credit unions are too either adapt to the new business climate or merge with a compatible credit union to increase your membership base. Either way, they should keep in mind that they should always do what is best for their members since they are the ones who own the credit union.
Sunday, August 22, 2010
Thursday, August 12, 2010
Getting the Best Deal on a Car
Have you ever heard horror stories from people who had bad experiences at car dealerships? This happens because most consumers do not do any research before showing up at the dealership. That is like showing up for a test without looking over the material! Here are some more quick tips when negotiating with a dealership.
Start from the Bottom
What I mean is start from the lowest price possible. The dealership is starting from the highest possible price (MSRP). Your first objective is to establish the "real value" of the car. If it is a used car, then you need to look up the NADA trade in value. This is most likely more than what the dealership gave the the individual who traded the car to them. This will make the dealer justify anything higher than that value. Meaning you will get a lower final sale price.
Keep Your Trade in to Your Self
If you plan on trading in your car to the dealership, it is vital that you negotiate the final price before letting them know you have a trade in. This will keep them honest and make them work to give you the best deal. If you tell them upfront that you have a trade in, they will get the keys from you and take it to get appraised. This is a trick dealerships use to keep you on their lot. Until they give you the car back you are stuck there.
Pre-Approve Finance Before Going to The Dealership
Go to your local credit union and get a pre-approval for financing before going to the dealership. This gives you the flexibility to negotiate the best deal without worrying about if the dealership will finance you or not. Larger dealerships get extra money to charge customers higher interest rates. This is called participation. What happens is a lending institution will tell a dealership that they will finance the customer at X%, but for every 1% above that rate the dealership gets you to accept, they get paid X dollars. If you see a deal claiming 0% interest for 60 months, most of the time you have to buy a brand new vehicle at MSRP. Which means you will end up paying more for the vehicle than if you financed it at a moderate interest rate.
I hope these and my other tips when buying a car find a way to help you get a better deal!
Start from the Bottom
What I mean is start from the lowest price possible. The dealership is starting from the highest possible price (MSRP). Your first objective is to establish the "real value" of the car. If it is a used car, then you need to look up the NADA trade in value. This is most likely more than what the dealership gave the the individual who traded the car to them. This will make the dealer justify anything higher than that value. Meaning you will get a lower final sale price.
Keep Your Trade in to Your Self
If you plan on trading in your car to the dealership, it is vital that you negotiate the final price before letting them know you have a trade in. This will keep them honest and make them work to give you the best deal. If you tell them upfront that you have a trade in, they will get the keys from you and take it to get appraised. This is a trick dealerships use to keep you on their lot. Until they give you the car back you are stuck there.
Pre-Approve Finance Before Going to The Dealership
Go to your local credit union and get a pre-approval for financing before going to the dealership. This gives you the flexibility to negotiate the best deal without worrying about if the dealership will finance you or not. Larger dealerships get extra money to charge customers higher interest rates. This is called participation. What happens is a lending institution will tell a dealership that they will finance the customer at X%, but for every 1% above that rate the dealership gets you to accept, they get paid X dollars. If you see a deal claiming 0% interest for 60 months, most of the time you have to buy a brand new vehicle at MSRP. Which means you will end up paying more for the vehicle than if you financed it at a moderate interest rate.
I hope these and my other tips when buying a car find a way to help you get a better deal!
Monday, August 2, 2010
Do Not Go Into Debt to Buy Gifts...
Whether it is for Christmas, Anniversary, Birthday, House Warming, or any other occasion, people tend to spend way too much. Don't get me wrong, it is a great thing to give a gift. It shows you care, love, and/or respect the recipient. The mistake that most people make is they use a credit card or take out a loan because they do not have the money.
There are many times I have had people come into my office and say to me, "I need a loan to buy (someone) a gift." Do you ever ask someone how they paid for a gift? No, we never do. So it is up to the purchaser to be responsible for their finances. I can guarantee you that no matter what you get someone, they are going to appreciate it. If they don't like it, then most likely they will keep from saying anything anyways. Plus if they were the type of person to look down on your for the kind of gift you got them, are they worth keeping as a friend, girl/boy friend, or partner?
So my advice, try giving a gift that has a low price tag but is high on thought and creativity. Here are some examples:
*99 Cent cards at most retailers like Wal-Mart and CVS: This will allow you to not spend a lot, but also you can write in a clever poem, story, or anything pithy comment that you think the recipient will cherish.
*Candy: The right candy will go a long way. If you know what there favorite candy is, get them a $2 -$3 bag of their favorite. They will love it!
*House Warming Gifts: The most inexpensive gift is to ask the host if you can bring some soda, chips, cookies, etc. that will help them provide the food, and save you some dough!
There are many other ways to save. Stay tuned later in the year when I will give you some money saving tips around Christmas!
There are many times I have had people come into my office and say to me, "I need a loan to buy (someone) a gift." Do you ever ask someone how they paid for a gift? No, we never do. So it is up to the purchaser to be responsible for their finances. I can guarantee you that no matter what you get someone, they are going to appreciate it. If they don't like it, then most likely they will keep from saying anything anyways. Plus if they were the type of person to look down on your for the kind of gift you got them, are they worth keeping as a friend, girl/boy friend, or partner?
So my advice, try giving a gift that has a low price tag but is high on thought and creativity. Here are some examples:
*99 Cent cards at most retailers like Wal-Mart and CVS: This will allow you to not spend a lot, but also you can write in a clever poem, story, or anything pithy comment that you think the recipient will cherish.
*Candy: The right candy will go a long way. If you know what there favorite candy is, get them a $2 -$3 bag of their favorite. They will love it!
*House Warming Gifts: The most inexpensive gift is to ask the host if you can bring some soda, chips, cookies, etc. that will help them provide the food, and save you some dough!
There are many other ways to save. Stay tuned later in the year when I will give you some money saving tips around Christmas!
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