Consumer Finance & BankingJorden Burt's Consumer Finance & Banking Industry Group includes lawyers with extensive experience representing banks, finance companies, lenders and other corporate clients in state, federal and bankruptcy court litigation and counseling. Creditors' Rights, Loan Workouts and BankruptcyOur lawyers regularly represent banks and other lenders in enforcing secured and unsecured loans, including floor plan financing, retail motor vehicle, and vessel finance contracts, asset based and other commercial loans, and commercial real estate loans. With over 30 years of experience in lender representation, our creditors' rights/loan workout team has structured a number of successful commercial mortgage loan workouts so as to avoid protracted litigation, while ensuring that the lender's position was strengthened in return for any forbearance given. At the same time, our lawyers are experienced and adept at vigorously enforcing lender's rights in state and bankruptcy courts when uncontested workout solutions are not possible. Members of our Team have been active members in the ABA Banking Law Committee's Loan Workouts and Bankruptcy Subcommittee and the ABA Commercial Finance Creditor's Rights Subcommittee. Complex Credit-related Litigation Jorden Burt lawyers represent lenders in complex state and bankruptcy court litigation involving claims against borrowers, guarantors, controlling persons, and related entities for fraudulent procurement of financing, misuse of loan proceeds, claims against finance company providers of collateral protection, claims related to borrower mismanagement, accounting, fraudulent disposition and transfers of assets, receiverships, and assignments for the benefit of creditors. Credit-related Defense We also defend banks and other financial service industry clients in lender liability claims, and in both individual and class action claims alleging violations of Federal consumer financial protection legislation, including but not limited to TILA, FDCPA, FCRA, FCBA, and state laws applicable to consumer financial transactions and collection practices. Ever mindful of the business aspects of such litigation, we have enjoyed remarkable success at achieving quick solutions through prompt and thorough investigation with our clients of such claims, followed either by dispositive defensive motions, or economically sound, confidential settlements. Our clients know and appreciate us for our cost-effective and business-wise approach to such claims. Compliance Counseling Our lawyers also regularly counsel on compliance issues such as Federal consumer financial protection laws including the FDCPA, TILA, FCRA, FCBA, and obligations under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and state statutes regulating consumer and real estate finance. Jorden Burt also assists financial services organizations in evaluating anti-money laundering compliance (AML) issues and counsels on the design and implementation of AML compliance programs and procedures and Office of Foreign Assets Control (OFAC) compliance. Our firm's lawyers are active members of ACAMS (the anti-money laundering professional association).

Advantages & Disadvantages of Consumer FinancingX

Luke Arthur Luke Arthur has been writing professionally since 2004 on a number of different subjects. In addition to writing informative articles, he published a book, "Modern Day Parables," in 2008. Arthur holds a Bachelor of Science in business from Missouri State University. Consumer financing programs are offered by many businesses in various industries. These financing programs make it possible for customers to obtain the money they need to purchase goods and services from specific merchants. If you are a business owner, offering consumer financing can provide you with benefits like increased sales. At the same time, you will have to be aware of drawbacks like increasing your costs. Function Consumer financing is a type of financing that is offered by credit providers to merchants. The companies that offer this type of financing are generally the same companies that offer credit cards to the general public. These companies allow customers to set up accounts through a merchant to buy goods or services from them. Companies work directly with these credit issuers to offer their customers an alternative means of payment for their products.Closing Sales One of the benefits of offering consumer financing is that it often closes more sales. When a merchant has the option of offering financing to customers, this will have the effect of increasing closing percentages. Customers may not be willing to part with their cash quite as easily as they would be willing to finance a purchase. Most merchants find that when they offer customers financing, the customers begin to think about buying when they would otherwise not be willing to do so.Larger Sales Another benefit of offering consumer financing is that it often leads to larger sales. When customers find out that financing is an option, they start to think about what they could buy in addition to what they originally planned on buying. Customers may only have a certain amount of cash that they can use, but they will gladly charge the rest of their purchase on consumer financing in many cases. This increases sales volume and leads to a bigger average sale.Costs One of the big drawbacks of offering consumer financing is that it can increase your costs. The companies that offer this type of financing are in it to make a profit. They will charge the business a percentage of each transaction that is processed on the consumer financing. This comes directly out of your profit on the sale. While the increase in business may be worth it, this can make the sales that you close less profitable.Considerations To make consumer financing work for your business, you need to set up some rules associated with it. For example, if you have a sales force to sell your products, setting up minimum dollar amounts for sales can be beneficial. You may also want to institute a policy that only allows jobs that are sold above a certain profit margin to go on the financing. By setting up some rules in advance, you can avoid losing money on the consumer financing.

Where should consumer financial protection be located? The Treasury plan suggests that consumer protection needs a separate new agency. In the past, consumer protection has been part of the prudential supervision process, at the FED or other regulatory agencies. That has clearly not worked very well. The FED did not police mortgage lending effectively prior to the crisis. There were issues around the authority that the FED possessed, but certainly they knew about the erosion of mortgage standards in state chartered financial institutions and elsewhere and they did not respond. It would have been helpful had the FED brought all mortgage regulators to Washington, dressed them down and told them to stop the bad practices. The crisis would have been much milder, but unfortunately this did not happen. The argument for a new agency is that consumer protection will always be the poor relation inside a prudential organization.13 Today the FED and other regulators are very focused on consumer protection, but the danger is that situation would fade over time. The case for having the CFPA separate from prudential regulation is a good one. So that leaves only the question of whether it should be part of another agency or a free standing agency. 13 For Part of another agency There are candidates for existing agencies that could house the CFPA function. The FTC is a possibility, but perhaps the best candidate is the SEC. The SEC did a terrible job of supervision over broker dealers. They gave Bear Stearns a clean bill of health shortly before the company went under. But Mary Schapiro, the new head, has a strong track record and her promises to revitalize and reform the agency should be taken seriously. Why the SEC? In looking around the world at how different countries manage their financial sectors, we have been impressed by the so-called twin peaks approach, used for example by Australia.14 With the twin peaks system there are two regulators, the prudential regulator and the conduct of business regulator, with the latter charged with the protection of small and minority shareholders and with consumer protection. Together with the central bank, these two regulators make up a tripartite group that should be required to work closely together to improve the safety, stability and efficiency of the financial sector. Unlike the current US system, this model has only a few separate regulators, each of which has considerable power, each of which should be given the power to pay well and expect accountability from its employees. There is no guarantee that streamlining the number of regulators would avoid another crisis, but both common sense and the experience in Australia and some other countries suggest that a streamlined system would work much better than the current overly complex US structure of regulation. The SEC is not the only possible candidate for the consumer protection functions, but it would be the natural home for a strong conduct of business regulator, given its existing role in shareholder protection. My favorite plan for the proposed CFPA, therefore, is that the group of people that are now doing consumer protection at the FED and the groups at other prudential agencies be relocated to a consumer protection division at the SEC. The FED has neglected consumer protection in the past but in recent months has become good at it. The current head of consumer protection at the FED would make an excellent candidate to be head of the new agency within the SEC. The CFPA as a standalone agency The disadvantages of a separate CFPA are twofold. First, this approach adds one more agency to the list. There are already too many agencies and adding another one is a move away from streamlining and consolidating financial regulation. The second possible problem is that a separate agency is more likely to attract an activist group and end up in an endless fight with the financial industry. It is important that supervisors and regulators have the power and independence to stand up to private industry. But at the same time, they must be able to understand how the industry works, its need for profitable lines of business and challenges it may face from customers that do not always pay their bills. In the past, I have expressed pretty strong opposition to a standalone agency for the above reasons. At this time, after having spent more time examining the issues, I now accept that a separate agency is areasonable outcome that should improve overall regulation and help consumers. It would be important, of course, that it be well-designed and avoid the pitfalls and dangers described earlier.

The Loan ContractThe loan contract is the most critical document of the loan process. It describes what the lender requires of you once you are granted the loan. Whenever you borrow, you put your future into someone elses hands; therefore, you need to know what you are doing. Read the entire contract and make sure you fully understand the details of the loan before you sign the loan agreement.One of the most important things you should remember about loan contracts is that none of the clauses in the contract is in your favor; all of the clauses are in the lenders favor. Lets talk about four clauses that you will want to be aware of:1. The insurance clause requires you to purchase life insurance that will pay off your loan in the event of your death. It benefits only the lender and increases the total cost of the loan. This clause is often used in mortgage loans.2. The acceleration clause requires you to pay for the entire loan in full if you miss just one payment. This clause is oftenbut not alwaysdisregarded if you make a good faith effort to catch up on your missed payment. But it still is a risk.3. The deficiency clause stipulates that if you do not pay back the loan, and the company takes your collateral, you must pay any amount in excess of the collaterals value; this clause takes effect if the money earned through the sale of your collateral does not satisfy the loan. You must also pay any charges incurred by the lender that are associated with the disposal of your collateral.4. The recourse clause allows the lender to collect any outstanding balance via wage attachments and garnishments. This clause may also allow the lender to put liens on other properties that you own (these properties can act as secondary collateral) should you fail to repay your loan.

Special Types of Consumer LoansThere are a number of special types of consumer loans, loans that are different from traditional consumer loans. These include home equity loans, student loans, and automobile loans. These loans are discussed below.Home Equity Loans: Home equity loans are also known as second mortgages. In a second mortgage, you use the equity in your house (i.e., the difference between what you paid for the house and what you could sell the house for today) to secure your loan.The benefits of a home equity loan are that you can usually borrow up to 80 percent of the equity in your home, and the interest payments may be tax deductible. With this type of loan, you can also get a lower interest rate because the house is secureit cant be moved. One disadvantage of this type of loan is that it limits your future financial flexibility because you can have only one outstanding home equity loan at a time. Moreover, a home equity loan puts your home at risk; if you default on a home equity loan, you can lose not just your credit score but your home as well.Home Equity Lines of Credit (HELOC): Home equity lines of credit are basically second mortgages that use the equity in your home to secure your loan. These are generally adjustable rate notes that have an interest-only payment, at least in the first few years of the note.Generally, interest rates are variable and payments cover only interest in the first few years. These have lower rates of interest than other consumer loans.The benefit of these loans is that the interest may be tax deductible, reducing the cost of borrowing. The problem is that these loans will often keep people from making the hard financial choices to curb their spending. Why worry about spending when you can get a home equity loan or HELOC to pay it off? These loans sacrifice future financial flexibility and put your home at risk if you default.Student Loans: Student loans have low, federally subsidized interest rates; these loans are often used to pay for higher education. Examples of student loans that are available to parents and students include federal-direct loans, plus-direct loans, Stafford loans, and Stafford-plus loans.One benefit of student loans is that some have specific advantages, such as subsidized interest payments and lower interest rates. Also, you can defer payment of federal-direct loans and Stafford loans until six months after you graduate or discontinue full-time enrollment. The disadvantages of these loans are that there is a limit to how much you can borrow, and, like all debts, you must pay these loans back.Automobile Loans: An automobile loan is a consumer loan that is secured by the automobile that the loan is paying for. This type of loan usually has a term of two to six years.The advantage of an automobile loan is that it usually charges a lower interest rate than an unsecured loan. The disadvantage is you must make interest payments, and since vehicles depreciate quickly, you are often left with a vehicle that is worth less than what you owe on the loan you got to purchase the vehicle.Payday Loan: Payday loans are short-term loans of one or two weeks; these loans are secured with a postdated check. The postdated check is held by the payday lender and cashed on the day specified. These loans charge very high interest ratessome payday loans charge more than 500 percent on an annual percentage rate basis (APR). I recommend that you avoid using these loans completely.RURAL MARKET ANDCONSUMER FINANCE

Sales were high during festive season.Rural people feel ease in giving installments instead ofsingle down payment.Rural persons found consumer loans useful becauseconsumer durables are used for productive purposes.

PROBLEMS FACED IN RURALSECTORS

Process of sanctioningloans,documentation and formalitiestakes too much time.Higher interest rates for quickersanctioning of loans.People want advance informationabout the documents needed fortaking loan.

RECOVERY OF LOANS

Recovery of loans is the toughest jobin rural area.Recovery rates are higher in co-operative banks.Schemes for hardcore defaultersdiscourages the consumers who payon time. About Bajaj Capital

BFL was created by the three-way demerger ofBajaj Auto, inheriting the insurance and financebusinesses. Now, it is into consumer financethrough listed firm Bajaj Auto Finance. It is alsointo general and life insurance businesses inJVs with Allianz.Bajaj Auto Finance, which initially financedpurchases from Bajaj Auto, is now changinginto a consumer finance firm. Last year, autofinance brought 55% business while 45% camefrom personal loans and financing consumerdurables and PCs.

Process of consumerFinance

Consumer meet with dealer- Purchase decision- Filling of form- Submitting documentsTransfer of document from dealer to finance companyChecking of details by Operation DepartmentTransfer from Operation to Finance DepartmentFinance given to customerFinally Collection Department collects the installmentspaid by customer(In case of default on finance collection departmenttake legal action against customer)

Role of Consumer FinanceCompaniesIt was the American industrialist who developed and propagated the concept of mass production which has led to a mass consumption economy not only in America but through most parts of the world. One important consequence of mass production was the rapid increase in the use of installment credit. With its propagation, the America businessman was at least assured that his market the consumer would have the purchase vehicle with which to obtain his mass-produced goods. What happened with cars in America in the 1920s and with automatic washers and television sets after World War II has been replicated in Western Europe, gradually in most Asian countries, and certainly now in Thailand. Installment selling, in spite of its having been practiced elsewhere in the world for so many number of years, is relatively new in Thailand. There is no clear record as to when installment selling was started here. It has been observed that the practice caught up rather slowly but gained a more rapid momentum in the last 10 years, due largely to the greater degree of competition (entry into the country of more foreign goods) and the growing influence of the more sophisticated distribution system brought by the foreign businessmen. Something has to be said about the culture of the Thais with regards to their response to the idea of installment credit. It is perhaps the sense of apprehension for foreign-bred schemes, and justifiably so, that was responsible for its slow start. There is, likewise, the element of giving out information on oneself that provided a resistant factor to its acceptance. Even now it is generally difficult for a trading company or financing company to solicit credit information from the prospective buyer. The Thai consumers are a sensitive lot. For one, they generally avoid being goaded into signing any kind of formal contract. They feel that if you, the seller, trust them, then there should not be any need for elaborate contractual agreement. Hence the strong resistance to fill up complex information sheets. The apprehension for having anything to do with the legal implications of a formal contract is another reason for them to shun organized plans. This is why most local retailers admitted that they really have not practiced any advanced installment plans. Their credit sales could extend anywhere from one month to six months without as much as an invoice to support the transaction. One has to be flexible, they would insist. How much carrying charge does the retailer in these cases then add to his normal cash price? This again is usually without any standard basis. Between 10% to 20% mark-up for credit terms of up to six months is not uncommon. Another side to the sensitivity of the Thai consumer is in the mild affront which he takes if he is queried to need some credit. Sometime ago, we launched a direct-mail campaign to a selected set of professionals offering them financing service. Much to our chagrin, some took offense and quickly disclaimed any need for financing. In spite of all these, the impact of installment selling in Thailand could not be abated. The demand for durable consumer goods was stimulated while the ability on the part of the consumers to acquire said goods has been greatly facilitated thanks to the increased availability of consumer credit. The commercial banks have heretofore played a major role in the financial structure of Thailand; yet consumer credit assistance has been left with much to be desired. This situation has lent itself to the widespread use of the so-called unorganized money market in Thailand. In fact, it has been estimated that of the financial transactions carried out during 1966 and 1967, 75% to 80% took place in the unorganized sector of the Thai financial system. To some extent, the way the unorganized financial market has thrived could partly be traced to the innate preferences of the Thai consumers. The flexibility and the informality of it all not to mention its virtual secrecy, therefore avoiding any loss of face were some reasons for this preference. The matters of cost, or of interest, become secondary. Apart from the commercial banks, the pawnshops in Thailand have been credited with having contributed as well to the countrys economic development. It is they who have coped mostly with the specific demands of the average consumer. It may be said that pawnshop transactions is at least one notch better than those availed from the private money leaders. The pawnshops, to be sure, are adequately regulated by the government. The private money lenders, however, which consist much of the unorganized sector of the Thai financial system, are outside any official supervision. It is generally known that such financial dealings were carried at an excessive cost to the consumer and with little, if any, protection to him. Much of it has depended on the liberal use of post-dated cheques. It used to be that to issue a bad cheque was a criminal offence until August this year when the law was revised. The proponents of the law argued that to obtain credit information was next to impossible and only a grave penalty would secure the creditor. On the other hand, those who supported its revision argued that reckless granting of consumer credit resulted from this very implication and that it did not help in the proper development of credit structure in the country. When Commercial Credit Corporation (Thailand) Ltd., otherwise known as CCC, was formed in 1964, it marked the birth in Thailand of a true consumer finance company with the prime objective of serving the consumers needs. In a way, it could also be said that it started the finance company era. For just within a few years from then, finance companies have literally mushroomed. Finance companies have flourished since. Ostensibly they have offered services which the commercial banks have considered outside their regulated sphere such as financing hirepurchase sales of durable consumer goods. By the same token, they have carried on certain banking operations such as accepting funds from the public. Since public welfare and safety or as we would like to refer to as consumer protection were now at issue, the government finally passed the Finance Company Law. Henceforth finance companies would be regulated as from September 21, 1972. One immediate good effect of these regulations is that it will enhance the consumers confidence in finance companies. He would now perhaps be more acceptable to such basic credit practices as filling up credit application forms, signing contractual agreements, receiving payment notices and, hopefully, be more conscious of his credit rating. Slowly but surely, a gradual shift to utilization of consumer finance companies is deemed inevitable. As for the retailer, he is quick to admit that the continuing impact of consumer credit has shown favorably in his sales book. A doubling of volume between 1960 and 1970 were reported by the retailers we sampled. Much was attributed in the introduction of installment credit. Consumer credit has thus served as a potent marketing tool for the creation and building up of demand and penetrating into the markets. Meanwhile the pressures of competition have led to granting longer credit terms, and lower down payments. In the automobile hire purchase market, 15% down payment, where it used to be 35%, is not uncommon. Thirty-six months term has become standard while the precarious 48-months term is believed forthcoming. In the appliance business, an advanced payment of the first monthly installment serves as down payment. While selling terms have become more liberal, yet the consumers lack of exposure to standardized credit procedures have prevailed. The gap widens. Much can be done. In the direction, effects towards the upgrading of the credit profession have been started. We suggested last year through the Thailand Management Association that the formation of a professional association to be called the Association of the Credit Managers in Thailand would be one way to achieve this goal. It is gratifying to note that the TMA has already put this into action. Within its framework, it is hoped that a fluid interchange of credit information can be practiced in a prudent and discreet manner. We believe that with passing of the Finance Company Regulations, consumers confidence in finance companies will increase; as much as it will lead to the development of standardized financing procedures. The needs of the consumers are very many, while their financial resources are few and limited. Those of us who are directly involved in the granting of consumer credit are trying to bridge that gap between needs and means. To accelerate this process, we in the business must play a significant role in settling the standards so that he the consumer is not only served but protected as well.Role of Consumer FinanceCompaniesIt was the American industrialist who developed and propagated the concept of mass production which has led to a mass consumption economy not only in America but through most parts of the world. One important consequence of mass production was the rapid increase in the use of installment credit. With its propagation, the America businessman was at least assured that his market the consumer would have the purchase vehicle with which to obtain his mass-produced goods. What happened with cars in America in the 1920s and with automatic washers and television sets after World War II has been replicated in Western Europe, gradually in most Asian countries, and certainly now in Thailand. Installment selling, in spite of its having been practiced elsewhere in the world for so many number of years, is relatively new in Thailand. There is no clear record as to when installment selling was started here. It has been observed that the practice caught up rather slowly but gained a more rapid momentum in the last 10 years, due largely to the greater degree of competition (entry into the country of more foreign goods) and the growing influence of the more sophisticated distribution system brought by the foreign businessmen. Something has to be said about the culture of the Thais with regards to their response to the idea of installment credit. It is perhaps the sense of apprehension for foreign-bred schemes, and justifiably so, that was responsible for its slow start. There is, likewise, the element of giving out information on oneself that provided a resistant factor to its acceptance. Even now it is generally difficult for a trading company or financing company to solicit credit information from the prospective buyer. The Thai consumers are a sensitive lot. For one, they generally avoid being goaded into signing any kind of formal contract. They feel that if you, the seller, trust them, then there should not be any need for elaborate contractual agreement. Hence the strong resistance to fill up complex information sheets. The apprehension for having anything to do with the legal implications of a formal contract is another reason for them to shun organized plans. This is why most local retailers admitted that they really have not practiced any advanced installment plans. Their credit sales could extend anywhere from one month to six months without as much as an invoice to support the transaction. One has to be flexible, they would insist. How much carrying charge does the retailer in these cases then add to his normal cash price? This again is usually without any standard basis. Between 10% to 20% mark-up for credit terms of up to six months is not uncommon. Another side to the sensitivity of the Thai consumer is in the mild affront which he takes if he is queried to need some credit. Sometime ago, we launched a direct-mail campaign to a selected set of professionals offering them financing service. Much to our chagrin, some took offense and quickly disclaimed any need for financing. In spite of all these, the impact of installment selling in Thailand could not be abated. The demand for durable consumer goods was stimulated while the ability on the part of the consumers to acquire said goods has been greatly facilitated thanks to the increased availability of consumer credit. The commercial banks have heretofore played a major role in the financial structure of Thailand; yet consumer credit assistance has been left with much to be desired. This situation has lent itself to the widespread use of the so-called unorganized money market in Thailand. In fact, it has been estimated that of the financial transactions carried out during 1966 and 1967, 75% to 80% took place in the unorganized sector of the Thai financial system. To some extent, the way the unorganized financial market has thrived could partly be traced to the innate preferences of the Thai consumers. The flexibility and the informality of it all not to mention its virtual secrecy, therefore avoiding any loss of face were some reasons for this preference. The matters of cost, or of interest, become secondary. Apart from the commercial banks, the pawnshops in Thailand have been credited with having contributed as well to the countrys economic development. It is they who have coped mostly with the specific demands of the average consumer. It may be said that pawnshop transactions is at least one notch better than those availed from the private money leaders. The pawnshops, to be sure, are adequately regulated by the government. The private money lenders, however, which consist much of the unorganized sector of the Thai financial system, are outside any official supervision. It is generally known that such financial dealings were carried at an excessive cost to the consumer and with little, if any, protection to him. Much of it has depended on the liberal use of post-dated cheques. It used to be that to issue a bad cheque was a criminal offence until August this year when the law was revised. The proponents of the law argued that to obtain credit information was next to impossible and only a grave penalty would secure the creditor. On the other hand, those who supported its revision argued that reckless granting of consumer credit resulted from this very implication and that it did not help in the proper development of credit structure in the country. When Commercial Credit Corporation (Thailand) Ltd., otherwise known as CCC, was formed in 1964, it marked the birth in Thailand of a true consumer finance company with the prime objective of serving the consumers needs. In a way, it could also be said that it started the finance company era. For just within a few years from then, finance companies have literally mushroomed. Finance companies have flourished since. Ostensibly they have offered services which the commercial banks have considered outside their regulated sphere such as financing hirepurchase sales of durable consumer goods. By the same token, they have carried on certain banking operations such as accepting funds from the public. Since public welfare and safety or as we would like to refer to as consumer protection were now at issue, the government finally passed the Finance Company Law. Henceforth finance companies would be regulated as from September 21, 1972. One immediate good effect of these regulations is that it will enhance the consumers confidence in finance companies. He would now perhaps be more acceptable to such basic credit practices as filling up credit application forms, signing contractual agreements, receiving payment notices and, hopefully, be more conscious of his credit rating. Slowly but surely, a gradual shift to utilization of consumer finance companies is deemed inevitable. As for the retailer, he is quick to admit that the continuing impact of consumer credit has shown favorably in his sales book. A doubling of volume between 1960 and 1970 were reported by the retailers we sampled. Much was attributed in the introduction of installment credit. Consumer credit has thus served as a potent marketing tool for the creation and building up of demand and penetrating into the markets. Meanwhile the pressures of competition have led to granting longer credit terms, and lower down payments. In the automobile hire purchase market, 15% down payment, where it used to be 35%, is not uncommon. Thirty-six months term has become standard while the precarious 48-months term is believed forthcoming. In the appliance business, an advanced payment of the first monthly installment serves as down payment. While selling terms have become more liberal, yet the consumers lack of exposure to standardized credit procedures have prevailed. The gap widens. Much can be done. In the direction, effects towards the upgrading of the credit profession have been started. We suggested last year through the Thailand Management Association that the formation of a professional association to be called the Association of the Credit Managers in Thailand would be one way to achieve this goal. It is gratifying to note that the TMA has already put this into action. Within its framework, it is hoped that a fluid interchange of credit information can be practiced in a prudent and discreet manner. We believe that with passing of the Finance Company Regulations, consumers confidence in finance companies will increase; as much as it will lead to the development of standardized financing procedures. The needs of the consumers are very many, while their financial resources are few and limited. Those of us who are directly involved in the granting of consumer credit are trying to bridge that gap between needs and means. To accelerate this process, we in the business must play a significant role in settling the standards so that he the consumer is not only served but protected as well.

Consumers rejoice as interest rate drops below 9% for the first time in over 30 yearsAt the conclusion of todays Monetary Policy Committee meeting, Reserve Bank Governor, Gill Marcus, announced that the prime lending rate would drop by a further 50 basis points, bringing the rate down to just 8,5%. This is a rate cut that many thought was unlikely and one which has not been seen in the last 39 years, according tosays Adrian Goslett, CEO of RE/MAX of Southern Africa.The record low rate coupled with the higher percentage of bond finance being approved will continue to stimulate the improved property sales over the past few quarters. Since the reduction of the rate to 9% in November 2010, many consumers have been able to reduce their household debt and show more disposable income at the end of the month.This has resulted in more first-time buyers able to enter the market than before, due to them being able to show affordability and obtain bigger bonds. The increased affordability levels are driving up demand in the property sector, which in turn will continue to have an impact on property pricing in the future. Traditionally the South African property market reacts quite slowly to a rate cut or increase, so the decrease in the interest rate will definitely spur consumer confidence in the months ahead and will certainly give prospective property buyers something to smile about.Consumer Finance Company RebrandsConsumer Finance Company (CFC), the leading provider of affordable credit to households and groups in the country, has unveiled a new corporate logo in line with its bid to increase its footprint in Ghana.The new CFC logo, an Adinkra symbol known as Sidie or Nserewa, which is the local name for cowries, comes in appealing colours of magenta and cyan with the name of the company boldly written.At a colourful ceremony in Accra to reveal the new logo, Patricia Afriyie Boateng, Marketing Manager of CFC, said the Nserewa symbol stands for wealth, affluence, abundance and sanctity.We, at CFC, aim to make the working class wealthy, with abundance of lifes little essentials so that they can have peace of mind in going about their daily affairs.The colours of cyan and magenta, she said, were chosen to give the new logo the ability to appeal and attract diverse workers and professionals in the country.Managing Director, Justice Boahene, said 22,000 workers across the country had benefited from credit in excess of GH30 million.He noted, This year we plan to almost double this amount by granting additional GH25 million to more workers in the country.He noted that CFC commenced business in 2007 after it was incorporated under the Companies Code on June 8, 2006, stressing that the firm was ably backed by the Social Security and National Insurance Trust (SSNIT) and a Mauritius-based personal credit provider, Bay Port ML Group.CFC has since its inception been providing personal credit to the workers in the formal sector who are unable to access credit from the traditional financial institutions.On a high purchase basis, he mentioned, the company started providing household furniture and appliances to the formally employed to help them meet their needs.In August 2010, the company was granted license to operate as a finance house to extend its services and undertake a wide range of activities including cash loans to individuals and operators of Small and Medium-scale Enterprises (SMEs).Theodore K Gyau, Board Chairman of the company, stated that access to credit plays a fundamental role in the socio-economic development of a nation.However these mainstream banks have their limitations, he said, It is therefore essential for finance houses and other non-bank financial institutions such as the CFC to bridge the gap, especially in the area of personal and SME financing.Fiifi Kwetey, a Deputy Finance Minister, who was the guest of hounor at the event, urged CFC to aspire to extend their services to workers in the informal sector and comply with the laws per the terms of their license.

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