Cosigning for a Car Loan

My friend wants to get a car title loan and wants me to cosign for him. From what I understand, this is a secured loan since my friend is giving up his car title to the bank until it's payed off, and if he defaults they will simply take the car off his hands since they have the title. My name is nowhere on the car title.
I read that for a car title loan in most places they don't even do credit checks since he needs a cosigner, does that mean that my credit can be affected?

 Great question! How many times have we found ourselves wanting to make a purchase and not having the money to pay for it? The first thing we do is ask our family or friends to pitch in. Unfortunately in this case not only you are putting your financial life at risk but your friendship as well. When cosigning for someone other than your young children or a close family member I always recommend to look at it from this perspective. The bank is a financial institution that hires top underwriters and creates systems to determine the likelihood for an individual to repay a loan. If they deny him or her, what makes you think that you can determine if your friend will really be able to repay the loan back.?

 When you cosign for an individual you are telling the bank that you will be responsible for the debt if that individual does not have a way to pay the money back. That the payments will be made on time and in full. Even though the loan is secured by the automobile, and the bank can repossess the car. That does not mean that the bank will be happy with it. See, banks make money when the loans get paid in full. When a car get repossessed the bank has to pay to get it towed and then get it sold. Therefore is a loss for the bank.

 By cosigning a loan, you are responsible for that other individual to make the payments on time for the life of the loan. If a payment is made late, it gets reported to the credit bureau. Also, if while the car is being financed you need to apply for a loan. Your Debt to Income Ratio will be affected. What that means is that according to the credit bureau, you have a debt in your name, and even thought you are not the owner or the primary on the loan you are still viewed by the credit bureau and other financial institutions as a risk because of that car loan. And based on your income you might not be able to qualify until that debt gets paid. If your friend makes a late payment, loses his job and is not able to pay for the car. You will be responsible to pay the money back to the financial institution. If neither of you do, then your credit will affected.

 I would not risk my financial life and my friendship over a loan.

Credit Card Reform - Credit Card Accountability Responsibility and Disclosure Act of 2009

As of today, February 22 2010, credit card issuers will have to start complying with the Credit Card Accountability Responsibility and Disclosure Act of 2009 that passed last year. Over the past months the companies have started preparing for this change by boosting interest rates and changing credit agreements ahead of the law changes.

Rate Increases

Credit Card promotional rates must be for at least six months. In general, rates on existing balances cannot be raised unless your payment is more than 60 days late.

If you are more than 60 days late and your interest rate goes up as a result, you can get the original rate restored if you make six consecutive months of on time payments.

Card companies must give a 45 day notice before increasing the interest rate and they cannot increase the interest rate for unrelated reasons. For example, if you are late on your electric bill or another card, the company cannot increase your interest rate.

Double Billing

It's not legal for credit card companies to charge interest twice on the same balance by collecting finance charges on current and previous balances.

Previously card companies considered your previous months balance when computing your finance charge. So if you had a previous month's balance of $1000 and paid $500, your next month's interest payment would be computing using the previous month's average or $750

Payment Timing

Consumers will be given more time to pay their credit card bill. Previously card companies were required to send bills 14 day before the due date. Today Credit Card companies must send you a statement at least 21 days before the payment due date. You cannot be charged a late fee if you can prove you mailed the payment in at least 7 days before the due date. When payments are for more than the minimum amount due, the additional money must be applied first to the highest rate balance.

Payment Protection

The new law requires credit card companies to process payments on the same day they are received. Which means that payments are considered on time if they are received on the due date or on the following day if the company was closed on the due date.

Credit Limits

Credit issuers can no longer automatically enroll you in over the limit protection programs that charge fees for letting you borrow more than you have been approved to borrow.

Credit issuers do have the option of letting your borrow more than your credit card limit for a fee, but the new law only allows them to charge only one over the limit fee in a billing cycle. Make sure you know how much you'll have to pay for that service that might not come cheap.

Annual Fees

Annual Fees cannot exceed 25% of the credit limit. This is to help people who are issued subprime credit cards.

All of these changes are great for consumers, it might make it harder for some people to get credit cards.

10 Money Strategies to Improve Your Financial Future

I had the opportunity to attend to the "Get Motivated Seminar" today. I listened to people like Colin Powell, Rudolph Giuliani, Zig Ziglar, Phil Town, Tamara Lowe and many other great speakers.

According to the speakers, one of your biggest financial investment will likely be your retirement. Studies have shown that most Americans haven't set aside enough money for their retirement. Here are some proven money strategies to make sure you will have the cash you need.

1. Spend less than you earn - Your income is your main wealth building tool, when you spend all of your hard earning money it can not grow.
2. List your financial priorities and put your retirement at the top of the list - You need to learn to pay yourself first
3. Create a spending plan - When you put it on paper, you create a blue print of your financial plan.
4. Establish an emergency fund - Most experts agree that a 3 to 6 moths of expenses is perfect for an emergency fund
5. Make savings a habit - Even a little can add up
6. Create Income - Take a second job
7. Get out of debt - Finance fees eat up the principal that could be earning interest
8. Accept free money - Many companies match employee 401k contributions, take advantage of that benefit.
9. Handle credit card wisely - Keep one or two cards, too many cards can affect your credit score.
10. GIVE AWAY AT LEAST 10% - You will be amaze how this one will bring a new kind of freedom to your financial life.

When you give more than you have, leave more than you take... Krish Dhanam

Saving Money is not a matter of math.

According to Dave Ramsey

Saving money is not a matter of math.

You will not save money when you get that next raise. You will not save money when that car is paid off. You will not save money when the kids are grown. You will only save money when it becomes an emotional priority.

We all know we need to save, but most people don't save like they know they need to save. Why? Because they have competing goals. The goal to save isn't a high enough priority to delay that purchase of the pizza, DVD player, new computer or china cabinet. So we purchase, buy, consume all our dollars away or, worse yet, go into debt to buy these things. That debt means monthly payments that control our paychecks and make us say things like, "We just don't make enough to save any money!" Wrong, wrong, wrong! We do make enough to save money; we just aren't willing to quit spoiling ourselves with our little projects or pleasures to have enough left to save. I don't care what you make—you can save money. It just has to become a big enough priority to you.

If a doctor told you that your child was dying and could only be saved with a $15,000 operation that your insurance would not cover and could only be performed nine months from today, could you save $15,000? Yes! Of course you could! You would sell things, you would stop any spending that wasn't required to survive, and you would take two extra jobs. For that short nine months, you would become a saving madman (or madwoman). You would give up virtually anything to accomplish that $15,000 goal. Saving would become a priority.

The secret to saving? Focused emotion. The secret to saving money is to make it a priority, and that is done only when you get some healthy anger or fear and then focus that emotion on your personal decisions. Harnessing that emotion will make you move yourself to the top of your creditor list. Ask yourself, "Which bill is the most important? After tithing, who should I pay first this month?" The answer is you! Until you pay God first, then yourself, then everyone and everything else, you will never save money.

The advertisers and marketing community are affecting our emotions every day and taking every dollar we have by making us see our wants as needs. It is time for this to stop! Emotions make great slaves, but they are lousy masters. No matter how educated or sophisticated we are, if we are not saving all we should be, we are being ruled by emotions, not harnessing them as financial planning slaves.

So whether you are saving for college tuition, a trip to the family reunion, new school clothes for little Bobby or Sally, or anything else, start saving now! It's never too late!

Wells Fargo can help you set up a savings plan that fits your needs, please contact me if you have any questions.

To your financial success,

Roberto Hernandez

How to Establish Credit

At first, credit may seem frustrating — you can't get credit because you’ve never had credit. Or you can’t rebuild your credit because you’ve had credit problems in the past. Fortunately, there are steps you can take to start establishing a strong credit history.

Lenders carefully consider your credit score because it provides them with an objective measure of your credit worthiness. Your score can be impacted by many factors such as late payments, delinquencies, or high amounts of debt. Lenders may deny your loan or charge you a higher interest rate if you have a low score. If you have a good credit history, you may have more options available to you resulting in lower interest rates and big savings.

Why you should establish credit
If you've always paid cash or used checks to make purchases, and haven't used credit, it's a good idea to start. And if you’ve had credit problems in the past, it’s important to re-establish your credit history.

• You may need good credit to connect you utilities.
• Good credit is important to secure financing when buying furniture, a computer, a car, or even a new home.
• Employers often check the credit rating of prospective employees. A solid credit rating reflects positively on your ability to manage your job responsibly.
• Renting an apartment may be easier. A good credit rating tells landlords that you are a person who's more likely to pay the rent on time each month.
• If you need a loan, banks may look more favorably upon you if you have a good credit history.

What a credit card can do for you
Besides being a good way to establish a credit history, credit cards are very convenient. They allow you to:

• Buy items online, over the phone, and from mail-order catalogs
• Make travel reservations, purchase airline tickets, and rent cars
• Shop more safely by not carrying a lot of cash
• Budget larger purchases by paying in installments
• Access funds in emergency situations

Credit Cards

• Secured Credit Card: With a Secured Credit Card, you place a deposit with the lender and are allowed to make charges up to the amount of the deposit. Secured Cards work like any other Credit Cards, allowing you to charge purchases and to either make the minimum payments or pay off the entire balance. You may be eligible to graduate to an unsecured Credit Card if you maintain the Secured Card in good standing and you make your payments on time.

Other ways to start a credit history

• Establish a pattern of regular payments by putting your apartment and utilities in your own name and paying your bills on time.
• Apply for department store and gas station credit cards. Don't get a new store credit card every time you get a discount offer, but one way to start a credit history is to have one or two department store or gas station cards.

Use your credit wisely
Once you start using credit, it’s essential to manage it properly. By using all of your credit responsibly, you can go a long way in building strong and healthy credit.

If you have any question or would like to know other resources to build your credit or maintain your credit please contact me.

Wells Fargo reported a 47% rise in profit on the 2nd Quarter

Wells Fargo has reported second-quarter results, with a 47 percent rise in profit helped by its acquisition of Wachovia Corp.

Wells Fargo posted net income of $2.58 billion, or 57 cents per share, for the quarter, above analyst expectations for 34 cents per share.

The reason for the profit is the mortgage banking business.

But, like Bank of America Corp. and JPMorgan Chase & Co., it reported rising losses from failed loans. Wells Fargo said it recorded a $5.1 billion provision for loan losses during the second quarter.

This is just another reason why you should bank at Wells Fargo Bank. If you want more information on any banking products please don't hesitate to contact me.

https://www.wellsfargo.com/invest_relations/annualreport_video2008.html

IRA - What is an IRA

An IRA is an INDIVIDUAL RETIREMENT ACCOUNT. An IRA is a personal savings plan that provides income tax advantages to individuals saving money for retirement purposes.

You invest money in an IRA, up to the amounts allowable under the tax law. These investments are termed "contributions." In many instances an income tax deduction is available for the tax year for which the funds are contributed. The contributions, as well as the earnings and gains from these contributions, accumulate tax-free until you withdraw the money from the account. You therefore enjoy the ability to generate additional earnings, unreduced by taxes on these earnings, each year the funds remain within the IRA.

The withdrawals of the funds from the IRA are termed "distributions." Distributions are subject to income taxation, generally in the year in which you receive them. (Remember that in most cases you received an income tax deduction when you contributed the money to the IRA.) As with most things involving the government, the rules for distributions are more complicated than they need to be.

Since the original purpose of the IRA is to assist you in providing for your own retirement, there is a disincentive for withdrawing your IRA funds prior to an assumed retirement age of 59 1/2. This disincentive takes the form of a tax "penalty" in the amount of 10 % of the distributions received by you prior to age 59 1/2, unless certain exceptions apply. Given the complexity of this issue alone, professional advice should be obtained whenever significant amounts of distributions are needed prior to age 59 1/2. The fact is that many times the penalty can be avoided with proper planning. Obviously these distributions, whether before age 59 1/2 or later, are subject to income taxation upon receipt. Once you are age 59 1/2 this penalty, termed a "Premature Distribution" penalty, is no longer applicable.

On the flip side of the government not wanting you to withdraw your money at too young an age, it also has rules to prevent you from not withdrawing the money soon enough. (This is done in order that the government can tax it.) You usually need to begin taking money from your IRA no later than April 1 of the calendar year following the date you attained age 70 1/2

If you have anymore questions about IRA's you can contact me.

Roberto A Hernandez