- Auto industries must provide competitive price and easy, clear plans
- Govt must introduce financing or lease system to encourage consumer financing in solar energy
Interview with Mr. Altaf Hussain — a dynamic young professional
Profile:
Altaf Hussain is a dynamic young professional working for public sector. He is a Cost and Management Accountant from Quetta.
PAGE: What is your take on consumer financing these days?
Altaf Hussain: Consumer financing refers to the process of providing credit or financial assistance to individuals or households to purchase goods or services. This can be done through various means, such as credit cards, personal loans, installment plans, or financing programs offered by retailers or lenders.
In today’s economy, consumer financing has become an essential aspect of many industries, including retail, healthcare, and education. It allows consumers to purchase items or services that they may not be able to afford upfront, which can lead to increased sales and revenue for businesses. There are several benefits of consumer financing, including:
Increased sales: By offering financing options, businesses can attract more customers and increase sales.
Customer loyalty: Financing programmes can help build customer loyalty by providing a convenient and flexible way for customers to purchase products or services.
Competitive advantage: Businesses that offer financing options can differentiate themselves from competitors and attract customers who are looking for a more convenient and affordable way to purchase goods or services. Some examples of consumer financing include:
Retail financing: Many retailers offer financing options for customers to purchase items such as electronics, furniture, or appliances.
Healthcare financing: Medical providers offer financing options for patients to pay for medical procedures or treatments.
Education financing: Educational institutions may offer financing options for students to pay for tuition and fees. Overall, consumer financing is an important aspect of many industries, and businesses that offer financing options can benefit from increased sales, customer loyalty, and a competitive advantage.
PAGE: How would you comment on auto financing over the period of preceding one year?
Altaf Hussain: Auto financing refers to the process of borrowing money to purchase a vehicle such as a car, motorcycle etc. this type of financing allows individuals to buy a vehicle without paying the full purchase price upfront, instead, they make monthly payments to repay the loan, along with interest and fees or any other charges. Auto financing can be obtained through various sources including banks, credit unions, dealerships and online leaders.
As Pakistan is under high financial stress and facing high inflation, which has affected a consumer deeply and he is compelled to think not only about the consumption of his goods but also about the quantity of his goods consumption as well. In the preceding one year, there will be huge increase in auto financing and the consumers wants multiple valuable and easy auto financing options for a single product. They will seek the financing offers best quality, easy monthly installments, easy documentation and legal smooth procedures in vehicle possession and loan payment process. This is the need of time as well as wise financially rather investing a huge some at once for a single product, its better to spend less amounts frequently for a number of products.
The auto industries should provide a real competitive price and easy and clear auto financing plans that consumers get attracted and also to remain in the competition. Mostly, the consumers before involving in a auto financing agreement, compare the lump sum price of the vehicle and the financing price of the vehicle. If it becomes a huge difference between the two prices then the customer may not enter into a financing rather he prefers to stop his spending if he is in shortage of lump sum price for the time being. As the inflation is uncontrollable and increasing day by day, so the prices tomorrow will be higher than today’s prices. Mostly people prefer to enter into auto financing today to get a vehicle in today’s price, instead, to wait as the price will be higher tomorrow. Auto financing can be structured in various ways like secured loans (where the vehicle serves as a collateral), unsecured loans (where the vehicle does not serve as a collateral) and leasing (where the borrower pays a monthly fee to use the vehicle for a set period).
PAGE: What must be done to encourage consumer financing in solar energy?
Altaf Hussain: Pakistan is in crucial energy crisis and financial distress. The government doesn’t collect the required money in terms of taxes for the investments. Rather, doesn’t generate enough money to meet its payment of debt installments. In such a weak financial position, government has no money to invest in energy sector. Few days back, a report stated that Pakistan pays huge money in terms of debt money to other countries in terms of electricity generation or production. The report further states that the electricity production exceeds the consumption. Due to which the government charges huge per unit cost from the consumers. Looking at the consumption hours, we find long hours of power outages for households and industries. It creates a big question that if production exceeds the consumption then why power outages prevails everywhere in the country?
As discussed above the situation of the country, the best and cheap alternate source of producing energy is solar energy. The government must provide different financing plans that consumers can avail benefits from the use of solar energy to fulfill their needs which in the big picture helps the government not to take loan for energy generation sector and pay huge amount of debts and also helps the government to reduce the per unit cost of electricity which minimalise inflation as well. The government must introduce financing or lease system to encourage consumer financing in solar energy and also there should be minimal or zero tax on the import of the solar panels and other related equipment.
PAGE: Real estate sector seems to be in crisis in the wake of exorbitant discount rate. What is your standpoint?
Altaf Hussain: The discount rate is a real state metric that represents an investor’s required rate of return in an investment. It helps to determine a fair sales price for a property. The real estate sector is in crisis not only due to exorbitant discount rate but some other factors too.
Property is directly related to population, in few years Pakistan’s population increased highly and the demand for the property whether residential or commercial increased too. One of the biggest reason of increase in the population is Afghan migrants after the collapse of the Afghan government in Afghanistan. There were huge bombardment of properties for sale and people invested in those but unfortunately, the schemes turned into fraud and people suffered huge losses. Then we have seen many orders against the encroachments by the courts and many housing and commercial schemes were banned and declared doubtful.
But no rehabilitation or cooperation provided to the people who suffered huge losses in form of money of their houses. One big dilemma in the country is that government. is failed to control the prices of property. There is huge inflation in the economy and people have no or less savings left and the huge price of property is beyond the purchasing power of the people which decreases the sale and affecting the real estate business. People also reluctant to invest in property as many cases of fraud has come. One reason of the crisis is that government has announced to deport the Afghan migrants, so the property they had, they had bought costly and now they are reluctant to sale those in cheap and other are on a wait and expecting more fall in the prices. There are so many inter-related factors too which creates crisis for the real estate sector like security, lack of trust, huge prices, legal requirements, location, hospitals, schools, water and roads etc.
Putting in a nut shell, Pakistan needs political stability, stable calculated mature policies by the government, zero tolerance against corruption in real ways and government’s policies must be based on long-term visions otherwise it is becoming difficult day by day and the crisis are getting severe and uncontrollable.