Life on Credit

The art of borrowing money

motusbank – Meridian Credit Union Creates a New National Bank

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A subsidiary of Meridian Credit Union, Motus Bank features a suite of financial products, including mortgages, personal loans, investment solutions, and savings and checking accounts. As a full-service digital bank, it will soon introduce banking services tailored to the needs of business customers. Motusbank is a Canadian federally chartered bank that opened doors in 2018 and is headquartered in Toronto, Ontario. It is also a member institution of the Canadian Deposit Insurance Corporation.

The idea behind the new bank is to offer customers across Canada the opportunity to access all services and products and to manage accounts online. In fact, virtually everything can be done by phone, mobile app, and online. The new bank is customer-oriented and offers checking and savings accounts with no monthly fees.

Meridian Credit Union

As Canada’s third largest credit union, Meridian offers personal and business financial products and online banking services. Individual customers are offered a selection of checking accounts, including U.S. dollar, senior, electronic, and limitless. Meridian also features youth, advantage, and high-interest savings accounts. There is an array of credit cards to choose from, with cash back, U.S., travel, and Visa benefits. Lines of credit, personal loans, and fixed and variable rate mortgages are also available. Travel insurance and mortgage protection are also offered as well as investment solutions such as registered retirement income funds and tax-free savings accounts. Business customers also benefit from a wealth of financial products, including business U.S. dollar checking and small business checking accounts. In addition to cashback credit cards, customers are offered business lines of credit, loans, and mortgages, and equipment financing and leasing. Meridian also features cash management and investment solutions and business planning assistance.

Competitors

Unlike financial institutions that have shareholders and pay profits, motusbank has members and the main goal is to offer personalized service, competitive rates and pricing, and the option to access all products online, including mortgages, investment solutions, lines of credit, and more.

Why Choose motusbank

This new full-service digital bank features a selection of investment, borrowing, and savings solutions with competitive rates. Given that Motus has no physical branches and associated overhead costs, customers enjoy affordable interest rates on mortgages and personal loans. Another benefit is the fact that decisions on applications for loans, mortgages, and other products are made quickly.

Personal Loans and Other Borrowing Solutions

Personal loans come with low interest rates that can be as low as 5.15 percent, and members can borrow up to $35,000. Secured lines of credit feature even lower interest rates (3.75 percent) to help customers secure financing for major purchases. It is quick and easy to apply, and customers only need to provide their social insurance number and information such as housing and family status and employment type. They are also asked about the amount required and the loan purpose, i.e. vacation, investment, home repairs, debt consolidation, or recreational vehicle, boat, or vehicle purchase. Motusbank also features fixed and variable rate mortgages with affordable interest rates that can be as low as 2.90 percent. 5-year fixed rate mortgages come with an interest rate of 3.09 percent. In comparison, Scotiabank offers an interest rate of 5.34 percent on the same type of mortgage, and the Bank of Montreal offers 3.54 percent. Secured home equity lines of credit also feature a low rate of just 3.75 percent. CIBC, for example, offers a rate of 3.95 percent on secured credit lines.

Savings and Checking Accounts

Motusbank also features a selection of checking and savings accounts, including RRSP, TFSA, and high interest savings accounts. Customers who choose to open high interest savings accounts can enjoy a rate of 2.25 percent. Savings accounts offer multiple benefits such as the option to make unlimited withdrawals and purchases, free-of-charge access to ATMs, no banking fees, no minimum balance requirements, and no monthly account charges. Motusbank also features checking accounts with no monthly fees, and customers enjoy unlimited Interac e-transfers. There are plenty of reasons to choose this type of account over products offered by other banks. The account has no minimum balance requirement and allows for unlimited bill payments and debit purchases. Another benefit is that every dollar earns 0.50 percent interest. Customers are free to make mobile check deposits and are offered 25 checks free of charge. Those who are travelling to the U.S. can access cash through the Cirrus or Accel ATM networks.

Investment Products

Motusbank also features investment solutions such as 5-year RRSP guaranteed investment certificates, 18-month TFSA GICs, and 18-month GICs. The 5-year RRSP GIC, for example, comes with a competitive interest rate of 3.25 percent, which makes it a good addition to a balanced investment portfolio. In comparison, CIBC offers non-redeemable 5-year RRSP GICs with an interest rate of 1.25 percent. Opening an account is quick and easy, and customers are asked to provide details such as personal information, term and length, and renewal option, i.e. reinvest in the same term or payout to the account. The bank features additional benefits such as tax free options, choice of non-registered and registered plans, and a low minimum investment of just $100. Terms vary from 1 month to 5 years.

Online Banking and Features

The online banking platform of motusbank offers convenient features to access and monitor investment accounts and view e-statements. Customers are free to download deposit forms and transactions and filter and sort accounts. Notifications, alerts, and secure messaging are also available. Depositing checks is also quick and easy and can be done from the customer’s phone. There is also an option to set up mobile alerts. The mobile app offers convenient features that allow customers to transfer money, make bill payments, and check account balances, including savings and checking accounts and tax free savings accounts. Mobile Bill Pay is a convenient feature that allows users to make bill payments and access more than 10,000 payees. The app can be used on Android and iOS devices.

The Money Mover service featured by motusbank offers customers the option to transfer large amounts of up to $10,000 daily and is free to use. Money is transferred within 3 business days. Users are also free to set up recurring and future transfers through the mobile app or online. Motusbank also features Interac payments to transfer amounts of up to $3,000 a day, and money is deposited immediately. Customers can make an unlimited number of transactions up to $10,000 a month.

The bank’s contact centre offers assistance to members and can be reached by dialing its international or toll free number. While the bank is fully digital, the fact that it is customer-centric means that the emphasis is on customer service. Motusbank also places an emphasis on safety and security, and all deposits are insured by the Canada Deposit Insurance Corporation.

Finally, the new bank also offers advice and practical information across a host of different topics related to borrowing, investing, and saving. The goal is to help customers learn more about dealing with debt, planning for retirement, preparing financially for a new child, and choosing the best investment solution. Other topics include home improvement loans, choosing between variable and fixed rate mortgages, down payments. The bank also features handy online tools such as mortgage prepayment calculator, savings calculator, retirement planning calculator, and loan and line of credit calculator. These online tools help customers figure out what size of mortgage to apply for, whether their monthly payments are affordable, and other important issues.

5 Ways to Save on Car Insurance

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There are smart ways to save on car insurance policies and lower the premium. Maintaining a very good credit score, shopping around for deals, and comparing costs and premiums are good ways to save on vehicle insurance.

Maintain Good Credit History

Credit history is one factor that insurers take into account. Different studies show that people with fair and average scores are high-risk customers. They are more likely to commit fraud, file inflated claims, and file more claims compared to people with very good and excellent scores. Other factors that insurers take into account include miles driven per year, vehicle use and vehicle type, previous coverage, and deductibles. Additional factors include things like your claims history, driving record, years of experience, and marital status. Insurers pay close attention to your driving record before making an offer. If you have a history of traffic violations and accidents, you will pay more. Insurers also use rating factors such as gender, age, and geographic location. These factors are taken into account to assess the probability of customers filing a claim.


There are other vehicle and driver factors for insurance companies, among which:

• Level of education
• Residence and location
• Home ownership
• Financial security
• Number of drivers
• Prior liability limits
• Number of insured vehicles
• Car alarm and other safety devices
• Length of time being insured with them

Where you live is one factor that affects rates. If your location has a higher than average claims ratio or accident rate, then you are likely to pay more. Obviously, insurance companies also take into account factors such as payment plans, profitability, and existing legislation.

Shop around for Deals

When shopping around for deals, try to get as many quotes as you can and discuss your options with insurance providers. Depending on your individual circumstances, you may benefit from discounts offered to customers with no moving violations and no accidents. Those with multiple policies are also offered better terms. Some insurers also offer discounts to long-term customers, those who have low annual mileages, and even students enrolled out of province.

Compare Premiums and Costs before Buying a Vehicle

You may want to compare insurance costs before you purchase a vehicle. The reason is that insurers calculate premiums based on factors such as vehicle use and type. When it comes to vehicle type, if the company’s data shows that owners of this particular model file more claims or cause more car accidents, then you are in a high-risk category. Other factors that insurance providers look into include safety tests, accident rate for your car model, cost of repairs, as well as theft rate and purchase price. If you plan to buy a used vehicle, then the age of the vehicle is a factor for companies. While the repair costs for old vehicles are about the same as new ones, old vehicles tend to break more often. At the same time, owners of new vehicles sometimes benefit from a new car discount.

Ask about Group Insurance

Group coverage is yet another way to save. Another benefit for policyholders is the greater payment flexibility. There are further advantages such as cost sharing between employer and employees, considerably lower costs, and the chance to get basic coverage. There are benefits for employers as well, among which better retention rates, increased productivity, and others.

You may want to ask whether your employer or local organization offers this option. In fact, many companies offer group insurance to employees and so do organizations, clubs, universities, and colleges. Employers usually offer group health insurance policies but some plans also feature car insurance as an added benefit. University alumni are also offered discounts on different plans, including home and auto coverage. Finally, some membership and professional organizations offer group coverage options, including societies, honorary groups, and others.

If this is not an option, contact insurance companies in your area and inquire about the benefits they offer. Many insurers offer discounts on vehicle-related services such as repairs, towing, and others. Others offer discounts on vehicle accessories, car rentals, and parking at designated facilities and areas.

Higher Deductible Results in Lower Premiums

Many are unsure whether to choose a low or high deductible on their car insurance policy. Common wisdom says that a high deductible means lower monthly payments. If you increase your deductible by $300, then your premiums decrease by up to 30 percent. If your budget is tight, then a low deductible makes more sense. The same goes if you have a history of traffic accidents. To make a choice, however, it is important to learn what a deductible is. This is the amount you are asked to pay when filing a claim. For example, if your policy covers medical payments and a hospital stay costs $250, what you are left paying depends on the deductible. If it is $150, the insurance company will pay $100 and you will pay $150. Basically, insurers and customers share the risk should anything happen. The deductible applies in two cases – when you have collision or comprehensive coverage. There is no deductible on liability plans.

Some experts recommend getting comprehensive coverage with a low deductible and a collision policy with a high deductible. This is one way to lower the risk of accidents. To figure out which option suits you best, you can use an insurance quote tool, and there are plenty available online.

So You Have Bad Credit but Need to Get a Car Loan?

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autocreditexpressThere are finance companies and other establishments that offer bad credit car loans to consumers with damaged credit, and the prospects are often better for such applicants compared to borrowers with no history. In times when the economy is improving, more lenders are willing to accommodate customers with different credit profiles, and new players quickly expand and gain a market share. What is more, lenders have different criteria, and your credit profile is not the only factor they take into account. Your score is a more important factor when you apply for a larger loan, for example, a mortgage because financial establishments take more risk. Even if you are considered a moderate- or high-risk borrower, some finance companies will be willing to offer a near-prime car loan.

Car Loans in Canada

Bad credit car loans are available from finance companies, credit unions, and banks and major banks such as the Royal Bank of Canada, Toronto-Dominion, and others. Consumers are offered old and new auto loans with variable and fixed rates and flexible amortization and repayment schedules. Some banks advertise secured options with lower interest rates. Finance companies also offer funding and advertise quick processing and approval. While banks take longer to review and process applications, finance companies advertize quick approval within 1 or 2 business days. There is an option to apply together with a cosigner, but many lenders are unwilling to approve applicants with a history of bankruptcies. Many finance companies in Canada also run a credit check.

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Loan Types – Options and Differences

Secured Bad Credit Car Loans

Lenders usually offer lower interest rates compared to unsecured financing because the vehicle itself guarantees repayment. The rate can be as low as 4 percent but this depends on your credit profile. Financial institutions usually offer funding in the amount of $20,000 – $30,000, and the interest rate is usually fixed over the repayment term. Secured car loans for people with questionable credit are offered with:

• 95 – 100 percent approval rate
• No down payment required
• Or lower down payment compared to unsecured options
• Varying amounts based on the collateral

Unsecured Bad Credit Car Loans

This option is more expensive because of the lack of collateral and the higher risk involved for lenders.

• Less risky for applicants
• Higher down payment
• More difficult to find
• Interest rate of 7 – 10 percent or higher

Compared to secured options, finance companies offer smaller amounts. Even if the borrower defaults, the vehicle has not been pledged as collateral and cannot be repossessed. Besides, lenders take even more risk by offering loans to borrowers with damaged credit, and the terms are less competitive.

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What Happens if You Have Bad Credit

Finding auto financing with competitive terms can be a challenge if you have poor or no credit. Some banks are willing to accept applications from borrowers with а borderline score provided that they have stable income and good debt to income ratio. If your score is low, you may want to look into non-traditional lenders because they have more lenient requirements. They will factor in the condition of the vehicle, the length of the term, amount required, down payment offered, etc. Auto loans for people with poor credit are available online as an alternative to the frustration of dealing with banks and dealerships. Some lenders offer auto financing to consumers with a history of repossessions, consumer proposals, maxed out cards, written off accounts, collections, and late or missed payments. This is one alternative for consumers with bad credit and major issues who plan to purchase a vehicle. Another option is to try and improve your credit profile and apply with your local union or bank.

What Are Bad Credit Car Loans

Basically, this is a subprime or near-prime vehicle loan with a higher interest rate compared to standard solutions. The term varies from lender to lender and is usually between 36 and 72 months. Some finance companies offer terms of up to 8 years. A longer term, however, means paying more in interest charges. The monthly payment is based on the term, APR, and other factors. When applying for a bad credit car loan in Canada, consumers must be employed to qualify.

There are two types of financing offered, new and used car loans, and the latter usually go with higher rates. Both options are available through some finance companies, regardless of your credit profile. Some non-traditional lenders even offer financing to customers with past bankruptcies but this is rather unusual.

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Find a Poor Credit Car Loan in Canada

There are several options to look into, your local bank, your insurance company, bad credit lending services, and peer to peer lenders. If you are an existing customer, your local bank is your first stop because it is more likely that their loan officers treat you favorably. The same goes for your insurance company. A non-traditional lender is yet another option but make sure that you deal with an established and reputable finance company. To improve your chances of getting approved, you may want to bring some documents with you, including personal references, photo ID or driver’s license, and utility bills such as electricity, water, gas, or other bills. Make sure you bring recent pay stubs as well. If bad credit lenders are not an option for you, you can check with peer to peer lending services. What you do is create a profile on an online platform of your choice and post a listing that indicates the purpose and loan amount. There are investors that are willing to offer auto financing to consumers with a less than perfect score. The interest rate varies but if you are lucky, you can get a loan with a rate of about 7 percent. Finally, one option to improve your chances is to offer a significant down payment. You may ask your family for a loan or draw on your line of credit.

Buying a New Car – Should You Lease or Finance?

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People buy new vehicles for different reasons – they need a second car, their lease expired, or their old vehicle broke down beyond repairs. New vehicles are equipped with safety technology such as rear-view camera, blind spot monitoring, and lane departure warning. One of the main reasons to buy a new vehicle, however, is that banks and dealerships offer better interest rates compared to rates on used vehicles. Some finance companies even offer no-interest auto loans but think of factors such as higher auto insurance premiums, high repair bills, and depreciation. People usually buy a new vehicle because of the high trade-in value, luxury features, power, and fuel savings. If you own an older model vehicle and parts are unaffordable or unavailable, this is yet another reason to buy a new vehicle. If the engine is damaged and needs replacement, this makes sense only if all other parts are well maintained and in perfect condition.LOC16

What Factors Do Financial Institutions Take into Account to Offer Car Financing

Type of Vehicle

The vehicle’s market value is obviously an important factor and so is the vehicle type. Other factors that financial institutions take into account are the cost per month, repair and maintenance costs, and the expected depreciation of the vehicle. The cost to own, for example, depends on the model and make as well as fees and taxes, insurance, fuel, and other aspects.

Credit History

Тhe applicant’s credit and payment history are important aspects for banks. Credit rating is based on factors such as types of revolving and installment credit, number of accounts, length of credit history, and others. It is used by financial institutions to assess creditworthiness, reliability, responsibility, and financial health.

Applicant Details

The applicant’s details are also taken into consideration. Bank clients fill in details such as housing payment, time at current residence, social insurance number, housing status, and citizenship. Clients are also asked about their monthly mortgage or rent payment and income and employment details, including annual income and employment status. In general, financial institutions look at a number of factors which have different weight depending on the lender of choice. Some financial institutions also offer the option to apply together with a co-applicant.

Down Payment

A larger down payment is looked favorably by dealerships and financial establishments. The amount of the down payment depends on the value of the vehicle. If you have bad or average credit, a large down payment means more favorable terms on the car loan and interest rate. If you have good credit, putting 20 percent down will get you a competitive interest rate. You still owe 80 percent of the vehicle’s asking price, plus interest.

Other Factors

Your debt to income ratio is a key indicator for banks and dealerships as it shows your ability to manage debt payments. The higher the ratio is the less friendly the rates and terms. Customers with lower ratios and higher income levels are favored by prospective lenders and are rewarded with affordable rates and competitive terms. The car loan term is yet another factor – the longer the term, the lower the rate offered. It also makes a difference whether you buy a low-priced vehicle or a low-mileage, high-priced car.LOC18

How to Find the Best Offer

There are some tools that help customers to negotiate with banks and dealerships. Services such as carcostcanada.com offer pricing services and detailed reports with cash rebates and incentives, dealer cost information, dealer recommendations, and more. Pricing services advertise guaranteed financing for different credit profiles, from poor to good credit. Reports offer information on lease and finance programs, and there are build and price tools that allow customers to select from different models, makes, and model years. Customers are free to choose from different factory options such as air conditioning excise tax, seat trim, paint scheme, and primary paint and are offered detailed pricing summary with information on the total options price, manufacturer design charges, base price, and total price. Basically, the goal of pricing information services is to help clients to find a new vehicle at an affordable price. These services specialize in new vehicles only because subsidized financing and leasing rates and factory incentives substantially lower the price of new cars. In fact, services claim that new vehicles are actually cheaper because used cars do not qualify for cash rebates and incentives.

Lease or Buy a Car: What’s the Better Option?

Both leasing and financing have pros and cons to consider. Before you make a decision, you may want to look at your savings, monthly cash flow (income and additional sources of income), and whether you drive a lot.

Pros and Cons of Leasing

One of the main benefits of leasing is that you will pay less in down payment on the car loan. This is also a better option if your monthly income is low as the monthly payment is likely to be lower compared to financing a vehicle.  Leasing a vehicle also means lower insurance limits. Other benefits of leasing are the low maintenance costs and the fact that clients are not required to make upfront tax payments. On the down side, clients agree on a fixed ownership period meaning that they don’t actually own the car. With a lease, individuals basically rent a vehicle of their choice for a period of 3 – 4 years. This can be a good alternative if purchasing a vehicle is not an option (you need a vehicle over a short period). If you decide to keep the car, one option is to finance the car’s remaining value. And if you go for a lease for business trips, you may be offered tax advantages.LOC17

Pros and Cons of Financing

If you drive a lot and go for a lease, you will probably pay more. Financing is a better choice in this case. If you have enough for a large down payment, buying a vehicle may be a better option. Obviously, the interest rate on your car loan also plays a role. If you are offered a low-interest auto loan with an affordable down payment, then buying a vehicle makes sense. The main benefit for borrowers is that the car is theirs to sell or keep once they pay off the loan. On the downside, applicants with a fair or poor credit score are offered unfavorable terms and interest.

Conclusion

If you plan to buy a new car – there are two options to consider, financing or leasing and both are forms of vehicle financing. What matters is which option is within your financing grasp. In both cases you will need money upfront but financing requires a substantial down payment. Leasing a car helps save money. The warranty covers any repairs over the contract duration, be it maintenance, tire rotations, oil changes, or anything else. The main benefit of car financing is that you have equity in the car. This is really a lifestyle choice to make, depending on whether you have good offers on your hands.

Resources:

Car Loan Calculator: https://www.cibc.com/ca/loans/calculators/car-loan-calculator.html
Car Price Comparison: carcostcanada.com