consumer credit present

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


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


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



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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


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


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



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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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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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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



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Thank YouThank You

consumer credit present

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