Personal Finance

Car Financing for College Students is not something that every car lender would seriously think about, therefore, if you are a student you have to make all the necessary preparations before you fill the application for the car loan. One thing is straight and clear – students are denied car loans because lenders feel that they will not be able to pay back the loan. And also since students enrolled in college or university have no sound income proof, it makes it extremely difficult for the lender to believe them and offer auto financing. However; there is fresh lease of hope for the students who want to buy a car.

The online auto financing is available and it offers students low interest rate car financing. The competition between online lenders is severe, and for this reason, students have fair option to get low interest car auto loans. Students who are serious about procuring car loan online should always search for primary vehicle loan companies and not car loan dealers. It is because car loan dealers charge more interest rates and you’d not be able to save on the car loan.

Now that you have decided, get ready to avail auto finance from primary vehicle loan companies and be a happy car owner while you are still in the college. This would ease your life on the campus as you can move to and fro between college campus and you place of residence. Moreover you do also save plenty of time too.

Student car financing can be easily availed if the students honestly disclose the source of their income to the lender. Even if students provide proof where they get consistent monthly income, lenders will feel credulous and offer them car finance at lower interest rates. A college or a university student who applies for car loan should genuinely answer following questions:

What is the Source of Income for Paying Car Loan Payment? How Will the Student Pay for Car Insurance? Will the student be able to bear Fuel Expenses? Will the Student be able to bear Car Maintenance Charges like Oil Changes, Car Tuning etc.

The online auto finance provider place a free car finance calculator which will help the college students to calculate the total monthly expenses associated with the car buying. This will in turn give a fair idea to the students on what necessary preparations need to be carried out before going for car auto loans. Do not apply for the student car finance blindly, or you have to face serious repercussions.

All businesses have some sort of an operating cycle. This is essentially the time it takes from purchasing needed materials or supplies and converting them into a finished product that can be sold. The operating cycle further consists of selling those products and collecting payment for all that effort. Once products are sold and payments collected, the cycle is completed.

For retail businesses (including online businesses) the cycle starts with purchasing products for resale (inventory) then displaying those products on shelves or on web pages, closing the sale and collecting payment.

Even service businesses, while their operating cycle can be much shorter, still see a time lag between providing the service (to include any purchases of material or labor to complete the job) and collecting payments from customers.

It is because of this time lag that working capital financing comes into play.

All these businesses need some form of assets, be it inventory, materials, supplies, labor, etc. (usually termed: current assets) that can quickly flow through the operating cycle and be converted into cash (revenue). This is essentially what business is. Once payment (revenue) is received, the company can then use any operating cycle profits (gross margin) to cover overhead expenses like salaries, marketing, loan payments and interest, capital purchases, or any fixed general, administration or selling expenses.

The problem that arises for most businesses (especially small and growing businesses) is not having the cash on hand to purchase the needed materials to complete their operating cycle. Not only do some businesses not have the cash or capital to purchase needed materials they may also not be able to cover other variable costs related to the operating cycle like paying labor, landlords, utilities, etc.

In a perfect world, all businesses would have the necessary financial wherewithal to cover all expense while waiting for payment. But, the business world is not perfect. Most businesses have to wait anywhere from one day to years to complete their cycles and get paid by their customers (typical operating cycles usually last from a few weeks to a few months but depend on the industry and business).

But, in the mean time, while these businesses transform goods into finished products or services and wait to be paid by their customers (or wait to see if they can even sell the products or services they offer), their suppliers and vendors, landlords, utility companies, employees, IRS, bankers, etc. all want to be paid now and not wait for the business to receive payments; keep in mind that these businesses are also facing their own time lag in their operating cycles. Thus, for businesses that do not have the cash on hand to meet these expenses, they must turn to working capital financing or face going out of business.

Working capital, by definition, is the difference between current assets and current liabilities where current liabilities are used to finance current assets; and the conversion of those current assets into revenue is what is used to pay off those current liabilities.

There are many methods to working capital financing; here are a few of the most common:

Trade Credit: The fastest and most efficient way to finance materials or supply is via trade credit. How it works is simple. You purchase goods from your vendors or suppliers. They tell you that you can delay payment for those goods for 60 days. This 60 day period will give your business time to convert those goods, via your operating cycle, into revenue in which to repay the vendor or supplier. If you are not currently getting trade credit terms from your vendors – you might think about asking for them. If you are, you might look into getting them extended. The longer the payment delay terms, the better for your business as it has more time to convert those goods into revenue.

Business Lines of Credit (BLOC) are short term revolving credit lines (usually with a 12 month or less term) and are specifically designed for working capital needs. These credit lines allow businesses to purchase needed material, supplies, labor etc., convert those into some form of revenue over a very short period and pay back the borrowed funds as soon as possible. BLOCs are usually revolving lines meaning the business can pay them down from one operating cycles and draw on the line again for another operating cycle. Most BLOCs are set for 12 month periods as these lines are meant for short-term financing only and from a banker’s prospective should be paid to zero some time during each of the business’s operating cycles.

Business Cash Advances: These cash advances are not loans but advance against future sales. These advances are great methods of working capital financing as they allow businesses to receive capital up front and pay it back from future sales. Business cash advances are usually based on the total revenue of the business but do require the business to accept credit cards as a form of payment from their customers – as it is these credit cards receipts that are used to pay back the advance. Very good working capital products for retail (online and brink and mortar) as well as service businesses.

Accounts Receivable Factoring: Some businesses may find themselves in (according to baseball terms) as pickle – stuck between waiting for customers to pay on one side and having trade partners (vendors and suppliers) demanding payment on the other side. Let’s say your business purchases materials Net 10 days – meaning that you have 10 days to pay in full for those materials. You convert those goods into finished products in 5 days and ship them to your customer with a NET 30 day invoice – meaning your customer has 30 days to pay you. In these situations, Accounts Receivable Factoring can be used to obtain the working capital needed to pay off the supplier as well as purchase additional materials for another operating cycle. Then, when payment is received by your customer, the business can repay the Accounts Receivable loan or line of credit and use the remaining gross margin profits to cover other costs and overheads. Most factoring company will advance 80% of the invoice amount and base their approval decisions on your customer’s creditworthiness.

Purchase Order Financing: Purchase Order Financing is a great method of securing working capital for a business’s operating cycle. Let’s say that your business has one or more jobs that need to be completed but finds itself without the needed working capital to complete the job(s). A purchase order factor may advance your business the funds (up to 80% of the purchase order amount) – essentially paying your supplier or variable costs on your behalf – so that you can complete the orders, satisfy your customers and earn a profit.

Lastly, and this cannot be emphasized enough, working capital financing is short-term financing and should only be used for short-term needs. Keep in mind that most operating cycles are very short periods – usually less than 90 days. Thus, any financing to be used in the operating cycles should be short-term – matching that 90 day period. Anything else is bad financial management as the business would be paying far more in interest and fees if it uses long-term financing options for short-term, working capital needs.

Your Financial goal starts with a plan.

If we break this up, we have a financial plan and a goal at the end.

The first thing you need to determine is what the goal is or what your dream is.

Why?

If you just have the desire to ‘have a lot of money’ and then a way to achieve this, it is not something you will succeed in by just determining these vague pictures.

A better goal would be for example:

1. In 10 years, I want to have X amount of dollars in passive income in excess of my monthly expenses.

2. In 5 Years I want to be Financially Free, meaning that your passive income is equal to your monthly expenses.

If you have determined what your goal is, then determine what your dream is and how long that would take in contrast with your goal(s).

Your dream could be as simple as being able to travel the world for 10 years and relocated where you feel best. Or starting a successful franchise, you name it..

Then you want to know what the strategy or financial plan will look like to achieve these step-by-step goals.
For example:

you have a total debt amount of let’s say $100,000 and your monthly expenses for paying these debts are $700 + living expenses, insurance,… totaling $1,250/month.

To become financially free in this simplified example, you need $1,250 per month in passive income.
How will you do that?

There are many possibilities but I will outline one that I think is one of the best way to achieve realistic goals in a relative short amount of time.

Step 1: Analyze your income statement (income/expenses) in excel and see what your cash flow is.

Step 2: Find a mentor in Internet /affiliate marketing and learn from the already successful.

Step 3: Start or improve your online business by promoting other people’s products (affiliate marketing).
Re-invest some earnings back into your business until you can outsource/automate a few aspect of your business to save time.

Step 4: Take a % of your earnings from your job or business and start investing it in your financial education.

Step 5: Apply your newfound knowledge to the investment world.

Step 6: Enjoy your journey into the world of the rich and make new friend socialize with the wealthy and network with other successful people. You will grow financially as well as individually and your goals will become closer and closer as time passes.

These steps will serve you as guidelines to reaching your financial goals you set for yourself and reach your dreams faster than you ever thought possible.