October 2014
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Cash America Announces That Its Board of Directors Has Approved the Spin-off of Enova International, Inc.

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9 Scary Things Consumers Do With Their Money

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South African govt boosts power utility Eskom with 20 bln rand cash

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Speed kingpin 'couldn't remember' when he buried cash

A SPEED kingpin has claimed almost all of the $1 million cash he buried in bundles across his Mooloolah Valley property came from lucrative pizza and car businesses.

William Fredericis Barker, 50, told the Brisbane Supreme Court he could not remember when he buried the packages, but testified at his contested sentence that they were cash reserves from businesses that he ceased operating about 1997 and 2007.

The court heard the majority of the 656 notes picked randomly from 20,083 notes uncovered during a police search were manufactured in 2008 and 2009.

Justice Peter Flanagan said the suggestion the buried cash – totalling $995,250 – were from old businesses “seems to beggar belief”.

“I don’t accept your client’s evidence in relation to the cash reserves from the pizza business or from the car business. I don’t believe him,” he said.

Police found cash – many stacks cryovacked and then carefully wrapped in duct tape – beneath shipping containers, inside wall cladding, in shopping bags buried inside a plastic drum and inside other items.

Barker pleaded guilty to drug trafficking with four key customers on-selling to people in the Bundaberg, Warwick and Sunshine Coast regions.

Under questioning from his own barrister Tony Kimmins about “skimming” cash from those businesses, Barker said he ended the Pizza Hut businesses in about 1997 and was then unemployed for about a year.

Barker said he then ran a car sales business for about 12 years but sold the land for $2.3 million in December, 2007.

He agreed he was selling speed for $3000 an ounce during the six months police were monitoring him but refused to accept he was trafficking much longer than that.

Crown prosecutor Sarah Farnden suggested police did not find all the cash Barker had hidden on his property.

She recited an alleged conversation where he was bragging about having more buried.

“I don’t recall,” he said.

It was a popular phrase for him throughout the day.

“It may well have but, you know, I didn’t, I could have, I can’t, I can’t give you a straight answer to that cos I don’t actually recall,” he said when asked about whether the cash was buried in 2008-09.

Ms Farnden submitted that Barker was deliberately vague about his conduct before police phone intercepts and that his evidence about obtaining cash from a legitimate source could not be accepted.

Barker said a $100,000 cheque from co-accused Paul Stainer, who was sentenced to 11 years jail, was the return of a loan, not drugs.

“You needed to lend someone money who had a $5 million drug trafficking business going?” Ms Farnden asked.

“He had a few properties and financial difficulty, I was lending him money. I’ve known the bloke for 20 years,” Barker said.

Stepson Ben Henderson, who said he considered Barker his father, told the court he woke up every morning to his mum and “Bill” counting cash at breakfast that he assumed were takings from the pizza businesses.

Stepdaughter Irini Hondroudkis said the kids were told not to use the dryer and when they looked inside they found a huge amount of cash.

Barker tried to argue no more than $200,000 of the cash was from drug trafficking.

Justice Flanagan found the trafficking period was at least from July 1, 2008, to April 22, 2009, and he could infer the bulk of the cash found on the property and the $1.8 million unexplained income was from drug trafficking.

“There was a close-knit fully operational criminal syndicate,” he said.

“It would stagger belief that the period of trafficking did not commence months before the telephone intercepts.”

Justice Flanagan, noting the way the cash was maintained, said he doubted Barker would have “gone to the steps which he did for the purpose of secreting money” from the tax office as his defence had suggested.

Barker accepted his drug trafficking must have begun “a few months” before police intercepts in October 2008.


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Four in ten borrowers get a payday loan even if one lender rejects them

Four percent of these people admitted to taking money from an unlicensed
lender after they were rejected, and 2pc went into debt with a credit union.
More than three-quarters did not know whether their lender was licenced, and
33pc said they had considered borrowing from an unlicensed lender after they
were rejected by the major payday loans firms.

“The more rigorous affordability checks mean they are turning down people
[who] still want a short-term loan,” said Russell Hamblin-Boone, chief
executive of the CFA. “The worry is, are the other payday lenders being as
rigorous as the most compliant members or are they new lenders that are
under the regulators’ radar at the moment?”

The FCA took over regulating consumer credit in April, bringing about 500
payday lenders under its remit. The watchdog found in its own survey of
2,000 customers that 60pc said they would not borrow money if they were
denied access to payday loans, while up to 30pc said they would ask family
and friends for help.

The regulator plans to introduce a price
cap of 0.8pc per day on short-term loans
and an overall ceiling on
charges set at 100pc of the loan value from next year in an attempt to curb
the proliferation of lenders that offer debts with excessive interest rates
and punitive charges. Firms must also apply for FCA permission to offer
consumer credit.

A competition
investigation by the Competition and Markets Authority
in June found
that the average customer takes out six payday loans a year.

“If a consumer has one loan application declined, it does not necessarily
mean an application won’t be approved by another lender elsewhere,”
said an FCA spokesperson. “Not all lenders offer loans for the same
amounts, rates or durations. A decision to lend will vary between lenders
based on how they assess credit risk, their appetite for risk and the amount
of capital available to lend.

“The FCA also expects all lenders to carry out appropriate affordability
checks to ensure that people can afford to pay back what they borrow.”

The FCA and CFA polls both found that users of short-term loans often have
mixed feelings about borrowing in this way. The FCA found that 41pc of
first-time borrowers regretted taking out the loan, while 44pc of the CFA
respondents said they would feel better off if they no longer had access to
short-term debt.

company Wonga announced
earlier this month that it was
writing down £220m-worth of customer debt after reviewing its affordability

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Concerns over loan shark customers

One in three people whose payday loan application has been rejected since the sector was forced to adopt stricter lending rules has considered using an illegal loan shark instead, research suggests.

The study was commissioned by the Consumer Finance Association (CFA), a body which represents short-term lenders including the Money Shop, Cash Converters, Quick Quid, Peachy and Sunny, to find out what choices the sector’s 1.8 million customers have if they are turned down for a payday loan.

Its findings suggest that someone who is turned away by a payday lender is twice as likely to go a loan shark as they are to seek help from a credit union.

The payday lending sector has been mired in controversy in recent years for handing out loans which some people could not afford in the first place or which customers were allowed to roll over numerous times, meaning the cost ballooned, and its regulation was taken over by the Financial Conduct Authority (FCA) in April.

The CFA said payday loan firms have seen lending fall by more than 50% under new rules, which force them to carry out stronger affordability checks and prevent them rolling over loans more than twice. This means many customers who may have previously relied on a payday lender to plug holes in their finances are having to look elsewhere.

Research was carried out by YouGov on the CFA’s behalf among 720 people who were turned down for a loan by a member of the CFA directly as a consequence of them tightening up loan assessments in line with the FCA’s requirements. None of the customers surveyed was declined for a non-credit related reason such as fraud.

A third said they had thought about going to an illegal lender after they were declined. One in 25 (4%) said they had used an illegal lender, which is double the proportion who said they had gone to a credit union.

The Government has been making efforts to boost the credit union sector and allow it to modernise and grow so that it can provide a realistic alternative for people who find it hard to access mainstream credit and end up turning to payday lenders.

Without access to a payday loan, more than half (51%) of those surveyed said they had incurred a late or missed payment fee for a payment such as a credit card, utility bill or rent, and 45% said they incurred overdraft charges.

However, over a quarter (27%) said they ended up better off financially than if they had taken out a payday loan.

Russell Hamblin-Boone, chief executive of the CFA, said: “The new rules and regulations mean that hundreds of thousands of people are now out of credit.

“Our survey shows that these are people who need the most protection but are at risk of using illegal or unlicensed lenders, which operate out of the reach of the regulator.

“Being denied access to short-term credit is reducing their options, costing them more and putting them at financial risk.”

Mr Hamblin-Boone warned the lack of choices for people who are turned down by a payday lender could be exacerbated by a cap on the cost of a payday loan which is being finalised and is due to come into force in January.

At present, payday lenders only have interim permission from the FCA to operate under its supervision and they will each have to undergo checks to make sure their practices are up to scratch before they can get full permission. Some payday lenders have exited the market in recent months.

Wonga, which is Britain’s biggest payday lender and is not a member of the CFA, recently wrote off £220 million worth of debt belonging to 330,000 customers after the FCA found it had made loans to people without checking sufficiently that they could afford to repay them .

Wonga, which has put stronger lending criteria in place, also recently said it expects to be ”smaller and less profitable” in the near term as it works to clean up its reputation.

The Competition and Markets Authority (CMA) is looking at ways to inject more competition into the payday loan sector and encourage new entrants. It has recently proposed forcing payday firms to put details of their products on impartial price comparison websites to make it easier for people to shop around.

The CMA has said that the development of effective price comparisons would make it easier for new players to become established to help serve the need for short-term credit .

A Treasury spokesman said: ” The Government is determined to make sure that the consumer credit market is able to meet the needs of consumers.

“That is why we created a new stronger regulator, the Financial Conduct Authority (FCA), to regulate the payday lending industry, and why we legislated to require the FCA to impose a cap on the cost of payday loans.”

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Finance companies, banks cash in on the festive spirit

cash loan – Yahoo News Search Results:

Offers of cash-back, 0% interest rates and overseas trips made to woo buyers

Mumbai, October 21:

It is Diwali time again and banks and non-banking finance companies are trying to woo customers with attractive offers such as cash-back, zero per cent interest, ultra-quick loan approvals, extra reward points, and, in some cases, even an overseas trip.

The idea: Amid weak credit demand in the financial year so far, banks are trying to grab market share when the consumer propensity to spend is high.

Private lender HDFC Bank, for instance, is trying to entice customers to spend, by offering a range of discounts on the use of debit and credit cards for purchases.

Parag Rao, Senior Executive Vice-President, Business Head – Card Payment Products & Merchant Acquiring Services, HDFC Bank, said: “During the festive season, consumer spending is at the highest and credit card transactions are usually of bigger ticket size compared to cash.

“Hence, merchants and banks promote the usage of cards with these deals.”   

HDFC Bank is offering various cash-back schemes, two-wheeler financing up to 90 per cent as well as reward points on credit and debit card purchases especially through e-commerce websites and at lifestyles stores.

Since the loan demand is weak, other banks such as State Bank of India, HDFC Bank and ICICI Bank are also relying more on reward points and various card and cash-back schemes to boost credit demand to ride on the consumer spending wave during Diwali.

Big ticket

India’s largest non-banking consumer finance company, Bajaj Finance, on the other hand is trying to woo customers by offering them a trip to Europe or a chance to win cars.

The Pune-based company is looking to increase its loan book size by 1.5 times during this festival period.

In the quarter ended September 30, the company reported assets under management of ?28,000 crore. Ever since the company launched a series of festive offers across the product categories, it said it has achieved 80 per cent of its target.

“With its ongoing festive sales, the company aims to increase its market share to 25 per cent (from 16 per cent now), effectively ensuring that one in every four consumer durables sold in the country is financed by Bajaj Finance,” the company said in a press note issued on Tuesday evening.

The company expects 25 lakh loan applications across product categories in a span of about a month through the promotional offers in the season. On the other hand, banks are trying to push their offers silently through the various distributors they have partnered with.

According to Rao, “HDFC Bank promotes these deals through various touch points. Customers avail these deals as they are over and above the discount offered by the merchant. Typically, the number of customers transacting in the participating merchants’ increases by two-three times during the offer period.”

(This article was published on October 21, 2014)

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Finance companies, banks cash in on the festive spirit

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Tax Guy: How to write off bad-debt losses

The issue of deducting bad debt losses has been a continuing source of controversy between individual taxpayers and the IRS for decades. Even so, you may be entitled to a tax write-off if you made what turned out to be an ill-fated loan to another party. Here’s what you need to know.

Bad-debt deduction basics

The IRS is always skeptical when individual taxpayers claim deductions for bad-debt losses. The reason: Losses from purported loan transactions are often from some other type of deal that went south. For example, you might have actually made a contribution to the capital of a business entity that turned out to be a loser. Or you might have advanced cash to a friend or relative with the unrealistic hope that you would be repaid without having anything in writing.

So to claim a deductible bad-debt loss that survives IRS scrutiny, you must be prepared to prove that the loss was actually from a soured loan transaction instead of some other ill-fated financial move.

Proving you made a loan

Over the years, the courts have identified the following factors as being relevant in proving that you made a bona fide loan.

1. Written loan document. If you don’t have one and get audited, you can pretty much kiss away any chance for claiming a bad-debt loss deduction.

2. Descriptions in other documents (for example, showing a loan receivable on your personal balance sheet).

3. Presence of a stated interest rate and a stated maturity date in the loan document.

4. Source of funds to repay the loan.

5. Your right to enforce repayment.

6. Intent of you and other party.

7. Borrower’s ability to obtain loans from other lenders.

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Equity release: how much can you borrow and how much could it cost?

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Sears turns to CEO again for cash to boost confidence

(Adds analyst comments and background, updates share price)

By Sruthi Ramakrishnan and Nathan Layne

Oct 20 (Reuters) – Sears Holdings Corp said it would raise as much as $625 million through an unsecured loan and equity warrants, its third fundraising in a month, as it seeks to ease suppliers’ concerns about its finances going into the critical holiday season.

Shares of the retailer jumped 21.4 percent to $34.5 on the news.

Sears said Chief Executive Officer Eddie Lampert and his hedge fund, ESL Investments Inc, would purchase roughly half of the offering, in which the right to buy unsecured senior notes and warrants will be issued to existing shareholders.

If the offering is fully subscribed, it could bring the retailer’s total fundraising this year to $2.07 billion, double the target set in March. The additional funds “will provide confidence to our vendors and other constituents,” Chief Financial Officer Rob Schriesheim wrote in a blog post.

The move comes after some insurers who offer protection to suppliers against the risk of nonpayment had cancelled or scaled back their coverage of Sears in recent weeks due to concerns over the company’s finances, people familiar with the matter told Reuters.

Analysts and suppliers said the latest funding would ease, but not eliminate, worries about Sears as a credit risk.

“It helps for this year. They will still have to inject liquidity for the next year,” given how quickly they are burning through cash, said Fitch Ratings analyst Monica Aggarwal. “There is a need for cash inflow to keep the operations going.”

Sears also announced on Monday that it would lease out seven stores to British discount fashion chain Primark for an undisclosed amount. It has been seeking to clinch such deals to earn income on underperforming space in its roughly 2,000 U.S. stores.

The fundraising marks the third time Sears has turned to Lampert for money in recent weeks. In September ESL anchored a $400 million loan, and earlier this month the fund agreed to buy $168 million out of a rights offering in Sears’ Canadian unit aimed at raising up to $380 million.

Sears said the clients of its second largest shareholder, Fairholme Capital Management, would subscribe to the latest offering. Fairholme owns 24 percent of Sears while ESL and Lampert together own 48.5 percent, Thomson Reuters data show.

Each subscription right will give the holder the right to buy one unit, comprising a senior unsecured note due 2019 and paying 8 percent interest as well as warrants to purchase common shares at a strike price of $28.41. The number of warrants will be set after the principal of the notes is fixed, Sears said.

The rally in Sears’ stock was in part due to the fact that Lampert had agreed to put in money on unsecured terms, analysts said. Last month’s $400 million loan had spooked some investors and suppliers because it was secured against 25 stores.

“I think this financing shows more of a longer-term support, and its unsecured so it’s certainly a stronger statement than the real estate financing,” said Moody’s analyst Scott Tuhy.

Tuhy said the latest financing would not ease concerns over the company’s operations.

Sears has lost almost $1 billion in the last two quarters as it struggles to cut costs to keep pace with dwindling sales.

(Editing by Kirti Pandey and Alan Crosby)

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