What Is a Private Lease on a Car?

Like subletting an apartment, private leases help lessees get out of car lease payments. Private leases are normally a minimum of 6 months, according to the website Exotic Auto Lease, but the new lessee assumes responsibility for the remainder of the contract.

Benefits

Private leasing saves money for both parties. The lessee is released from lease payments and a leaser avoids car rental fees when the car is only needed for a short period. A private lease possibly allows a person with poor credit to lease a car and repair their credit with on-time payments. Unless the lessees go through the leasing agency or another third party that checks the new lessee's credit score.

Types

While both types of auto leases are similar, the personal contract hire lease payments are lower and drivers always return the car at the end of the contract period. This is the type of lease is most often transferred in a private lease because the lessee is normally only interested in a short-term contract. The personal contract purchase requires a higher monthly payment, but at the end of the contract lessees can choose to pay the remainder of the purchase price and keep the car or return it.

How to Get a Private Car Lease

Shop online for a car available for private lease. Several websites, such as Swap Lease and Lease Traders, specialize in transferring car leases. They post available cars on their websites. Sometimes lessees wishing to hand off their lease will post ads on websites, too.

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Is Auto Insurance Full Coverage When Financing?

Your insurance coverage is separate from your car loan, meaning you must purchase an insurance policy on your own. Most lenders require a full-coverage policy, so you have to choose one that meets your bank's requirements. Read your contract over thoroughly or ask your lender for its requirements before pursuing a loan.

Full Coverage

Your lender likely requires you to maintain a full-coverage insurance policy until your loan is paid in full. This coverage is the most expensive you can purchase, as it covers your vehicle in the event of an at-fault accident. Liability coverage, required in most states, only covers damage to other people and property. Collision coverage, which fulfills the full-coverage requirement, also includes liability and comprehensive coverage, offering all-around protection. The policy pays your vehicle's market value to your lender or for vehicle repairs.

Additional Lender Requirements

Lenders often also require borrowers to maintain higher limits. Each state has its own personal injury and bodily injury requirements, but lenders often require increased coverage. Expect to increase bodily injury and property damage limits and to lower your deductible. A deductible is the amount of money you pay out of pocket for repairs to your car when you're at fault. Deductible options range from $0 to over $1,000, but lenders often require $500 or less. Increased limits and a lower deductible raise your policy cost.

Budgeting

Because a full-coverage insurance policy is the most expensive you can purchase, the price can easily exceed your car payment. Before pursuing a car purchase, check the price of your policy cost with your insurance provider. For an accurate quote, expect to provide the vehicle identification number, or VIN, and the lender's coverage requirements. You may benefit from obtaining quotes from different companies. Once you have your policy price, ensure you can afford your car and insurance payment.

Considerations

A full-coverage insurance policy doesn't guarantee your loan will be paid off if your insurance company declares your vehicle a total loss. A total loss occurs when the vehicle's repair costs are too close to its market value. Your insurance company pays only for the vehicle's market value, not your total loan amount. Consider purchasing a gap insurance policy if your loan balance exceeds your vehicle's value. Gap insurance pays your loan balance if your insurance payout isn't enough to satisfy the loan.

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What Happens With an Involuntary Car Repo on a Leased Car?

If you allow your lender to repossess your leased vehicle, the process is known as an involuntary repossession. Unless you arrange to bring your vehicle back to your lender, known as a voluntary repossession, the vehicle can be taken from just about anywhere. You may also have an opportunity to purchase the car from your bank.

Collection Procedures

Your bank will try to contact you before repossessing your leased vehicle. To avoid the involuntary repossession process, you should respond to any correspondence from your lease provider. Your leasing bank may have programs in place to help avoid repossession. If you do not respond to your bank, it will begin the collection process and make arrangements to seize the vehicle. You can also arrange to bring your vehicle back to a bank preferred location to avoid a potentially embarrassing situation.

Involuntary Repossession

Your bank hires a repossession company to seize the vehicle after attempts to collect payments have failed. The hired company can take your vehicle from your place of employment, a driveway or even a parking lot while you're shopping. Unless you're present when the vehicle is seized, you'll have to make arrangements to obtain your belongings from the vehicle. If you aren't sure where your vehicle is located, call your leasing bank or local police department to determine its location. Call the repossession company and make an appointment to obtain your belongings.

Lease Purchase Opportunity

Getting your leased vehicle back is difficult. Your leasing bank may offer you the opportunity to pay your past due amount and collection fees to continue leasing. Most leasing banks, however, require the vehicle's entire value in full, so expect to forfeit your leasing option if you plan to get your vehicle back. You'll have to obtain a loan for the vehicle's purchase value and collection fees, which is difficult since your lease has been reported as past-due and repossessed to the credit bureaus.

Credit Reporting and Payment

Your involuntary repossession is reported to the credit bureaus almost immediately after repossession occurs, which affects future credit opportunities. Expect the repossession to remain on your credit report for at least 7 years. Once your car is collected, the bank resells it within a few weeks. Expect a letter stating how much you owe toward your vehicle's total value, not its lease amount. You must pay your bank for its loss over the car's sale price, or the bank may sue you and garnish your wages.

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Vehicle Refinance Recommendations

People usually refinance auto loans to obtain a better interest rate. Others might want a lower monthly payment, achieved by extending the loan term or putting money down toward the refinance even if the rate is not significantly better. Whatever your reasons may be, plan your budget and overall expenses appropriately.

Calculate Budget and Expense

Use an auto loan calculator to find out the benefits of refinancing you car loan. Edmunds.com, an automotive information resource, offers one for free. If you believe you can lower your interest rate, plug your values into the auto loan calculator with different interest rates to view overall payback amounts and monthly payment differences. You might find you save substantial money or very little at all. Considering overall cost and benefits of pursuing a refinance allows you to choose your best option.

Check Your Credit

Make sure your credit report is accurate before applying for a refinance. If you want a lower rate, you'd likely need good to excellent credit to do so. Annualcreditreport.com offers one free credit report each year from the three major credit bureaus. If you do find inaccurate information on your report, correct it before you apply for a new loan. Contact the creditor who reported your information incorrectly and the credit bureaus to have the matter resolved, although it may take several weeks.

Shop Interest Rates

Visit bank websites to view current rate offers. Some banks only show new-car offers; you might have to call for rate information. Rates are usually higher for used cars, so keep this in mind while reviewing websites. Check credit union rates, which usually remain consistently lower than other local bank offers. Once you do find a worthwhile bank, apply for a pre-approval to find out the rate you qualify for. If you're unhappy with your approval rate, reapply elsewhere. A different bank may view your credit history differently and offer a lower rate.

Put Money Down

Rather than transfer your entire balance over, consider putting money down and borrowing a lesser loan amount. This discounts your monthly payment and decreases your overall payback amount. Some people may be required to put money down if extending the loan term for a lower payment; the bank requires decreasing equity and loan payoff amount to remain in line with one another. To gauge the benefits of putting money down, use the auto loan calculator to view the monthly payment discount and overall payback amount.

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How to Buy a Car with No Money Down

Buying a car with a down payment often results in a lower interest rate and monthly payment. Unfortunately, some buyers do not have the extra cash and choose to buy a car with no money down. Several auto lenders approve no-money down vehicle loans. However, not everyone qualifies for this type of loan. Before stepping foot inside a car dealership, familiarize yourself with a lender's no-money down loan requirements.

Instructions

1

Establish a credit history. Obtain a credit account before applying for an auto loan. Apply for a secured credit card or obtain a student credit account. Because creditors report to the bureaus after the first month, you'll establish credit immediately. However, it can take between six and 12 months to develop a good credit score.

2

Check your credit score. To get a no-money down car loan, lenders generally require a good credit score (680 or higher). Check your credit report before completing an application. If necessary, improve your score by 20 or more points. Reduce your credit card debt, pay creditors on time and limit credit inquiries.

3

Select a co-signer. If you don't have a credit history, or if you have poor credit, find a co-signer. A co-signer can improve your chances of approval. And since he becomes equally responsible for the debt, the lender may grant you a no money down car loan. Choose someone with good credit, and make sure he understands the co-signer agreement.

4

Assume a car loan. If you know someone who's looking to get rid of her car, offer to assume her loan and take over her payments. Contact the auto lender to see if it allows car assumptions. If so, you'll have to qualify for the loan, in which lenders will request your credit and income information. However, car assumptions do not require a down payment.

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What Does As-Is Mean When Buying a Used Car?

Even a used car represents a major purchase, and discovering unexpected problems with the vehicle after you drive it home can be devastating. As with most purchases, the seller must deliver a product that satisfies all advertised claims. When a seller advertises a car "as is," he is making no promises and claims about the condition of the vehicle.

Advertised Claims

When a seller makes a claim that the product does not meet, the buyer has legal recourse. If a car on a dealer lot has a sign on the windshield that states "new brakes, new tires, recently serviced." If a post-purchase inspection by a qualified mechanic reveals the brakes are old, with only a little life left, the buyer can take legal action and perhaps win the case.

Implied Warranty

What if a particular car on the lot has merely a price tag with no further claims on it, and the salesperson admits that he or she knows nothing about the vehicle. Does this car have to meet any minimum standards? If it falls apart as soon as you take it home, can you take legal action and hope to win? The answer to this question depends on the state. In some jurisdictions, the car must meet certain standards unless otherwise stated. These may include requiring no major repairs to pass safety inspections or every feature, such as air conditioning, cruise control, seat heaters and so on being fully functional unless stated in the purchase documents.

As Is

When a dealer wishes to absolve itself of all possible responsibility, the vehicle will usually be offered on an "as is" basis. This means that no implied claims or warranties of any kind are made and once you purchase the vehicle, you cannot take legal action against the seller for any defects or problems. Even if the car falls apart within hours of the purchase, you will not have any recourse. An "as is" sale does not necessarily mean that the vehicle has serious defects. Large dealers often buy numerous vehicles in auctions and must resell them before they have time to fully inspect them.

Precautions

Unless you are capable of thoroughly inspecting a vehicle, hire a certified mechanic to check the car before you buy it. Inspect the title to see if the vehicle is classified as "rebuilt" or "salvage" and obtain a vehicle history report by using the Vehicle Identification Number. Also keep in mind that there is a difference between buying a car that comes with no claims and buying one that is explicitly sold "as is." If you are merely buying a car about which no claims of any kind are made, either by the salesperson or via promotional material, your purchase contract should not state "as is." If certain claims have been made about the vehicle, on the seller's website or on a notice placed inside the windshield, for instance, obtain a copy of these claims. You can print out the webpage with the claims, take a picture of the notice or request a written statement from the seller, for instance.

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When Will a Car Repossesion Go on Your Credit?

Car repossession reporting is almost immediate. Even if the repossession isn't immediately reported, your loan account is reported as significantly past due and is viewable to other lenders. Many lenders or credit providers will not approve a line of credit when a revolving account is reported as significantly past due.

Late Payment Reporting

Potential creditors can view your payment history for your car loan account. Even if your vehicle repossession is not immediately reported to the credit bureaus, it is obvious to creditors that your vehicle will repossessed soon. Your credit report, as viewable to businesses, reports the number of days your account is past-due. Additionally, if you're trying to pursue another line of credit or a loan, it is unlikely you'll be approved while your account payments are outstanding. Most lenders require accounts such as personal loans, car loans and mortgages to be current.

Repossession Reporting

A vehicle repossession is reported to the credit bureaus within days. The account reflects whether your vehicle was voluntarily or involuntarily repossessed. A voluntary repossession occurs when you arrange to bring the vehicle back to a bank-specified location for its return. If your lender hires a repossession company to collect the vehicle, your credit is updated to reflect an involuntary repossession. Either type of repossession has the same effect on your credit report.

Paying or Settling Repossession

Once your vehicle is repossessed, your lender resells the car. Once resold, the lender will send you a bill for money due if the car's sales price did not pay off your loan balance. You may make payment arrangements to satisfy the account balance or settle it for less than the amount due. Your credit report will reflect your payment type once the account is paid. If you settle the account, it will read as "Settled" on your credit report. The account will read as "Paid" if you pay the total amount due. Regardless of payment, the repossession remains on your credit report.

Effects on Credit

Expect your credit score to drop substantially once your repossession is reported. The negative account will remain on your credit report for at least 7 years. During that time, you may find it difficult to obtain a loan or end up paying higher interest rates if approved for another line of credit. If your repossession was recent or your account is seriously past due, you are unlikely to obtain another car loan immediately.

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How to Finance a Toyota

After a house, a car is likely the largest financial commitment you will make. Since it is such a large purchase, you want to get it right. If you do not have the money needed to purchase the car outright, financing allows you to borrow money from a financial institution and to pay it back in monthly installments. Financial institutions charge interest for the use of their money, and the interest rate varies with the amount borrowed based upon your credit rating and whether you are financing a new or used car.

Instructions

1

Request and review copies of your credit reports from the three major credit bureaus. Correct any erroneous information and be prepared to explain negative information.

2

Select the Toyota you want to finance and determine how much you want to finance. A car payment, as a rule of thumb, should not exceed 20 percent of your net monthly income.

3

Gather personal financial documents -- bank statements, pay stubs, tax returns -- and use the information to complete an auto loan application with a bank, credit union or Toyota dealer's finance manager. Also apply online with Toyota Financial Services.

4

Wait for your loan to be approved. Take a check for the purchase amount to the seller if you financed with a bank or credit union. Sign any final documents and get your keys if you financed at the dealership.

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How Does a Leased Vehicle Contract Work If the Car Gets Stolen?

During the term of your lease contract, you are required to maintain collision coverage on your car, which also includes comprehensive coverage. The comprehensive portion of your policy pays your leasing bank for your vehicle's market value if it is stolen. However, your insurance company does not consider the total value you owe to your bank, which you must satisfy on your own if the payout is not enough.

Insurance Company Payoff

After your insurance company determines your car a loss due to theft, it then determines the car's market value. Your car's market value may be more or less than the total value you owe your leasing bank. The insurance payment goes straight to the bank and not to you, as it is listed as the policy's loss-payee. When you lease a vehicle, the leasing bank purchases the car from the dealer to then lease to you. Therefore, the bank is entitled to your total insurance check as the car's true owner. Additionally, you become responsible for the car's total cost, not just its lease amount.

Car Payments

Before your insurance company pays your bank, you can expect to wait through an investigation process. The time you'll wait for your insurance company to complete its investigation differs by insurance provider. Talk to your agent or broker to obtain a time frame. Even though you no longer have your vehicle, you must make any payments due toward your lease. Any late payments are reported on your credit history, which affects your credit score. Continue making payments until the insurance payoff is received by your bank.

Remaining Balance Due

Check your lease contract or purchase paperwork over to determine if you purchased a gap insurance policy when you leased your car. Many leasing banks require gap insurance, which you pay for at the beginning of lease inception. Gap insurance pays the difference between your insurance company's payoff and the remaining balance due to the bank when your car becomes a loss. If you do not have gap insurance and the bank's balance has not been satisfied by your insurance company, you must make arrangements to satisfy your bank. Otherwise, your bank can sue you for the amount due. Non-payment is also reported to the credit bureaus.

Loss of Monthly Payments and Down Payment

If you aren't in a negative equity situation with your lease, meaning that the amount you owe your leasing bank for the car's total value is less than your insurance payoff, you won't receive any of your leasing payments back. Your down payment amount and any monthly payments you made toward your lease belong to the bank. For this reason, it is advisable to put little or no money down toward a lease because of potential loss.

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Does Gap Insurance Cover Depreciation of Cars?

In the event of a vehicle loss, gap insurance pays off the remainder of your loan if you owe more than your car is worth. A full-coverage insurance policy pays your lender only for the vehicle's market value, so your insurance may not pay off your entire loan. Guaranteed asset protection, or gap, insurance does not necessarily cover a vehicle's depreciation.

Coverage

Lenders require borrowers to purchase and maintain a full-coverage insurance policy throughout a loan term. In the event the car is totaled, the insurance company does not pay off your entire loan amount. It only pays for the vehicle's market value. If you owe more than your vehicle is worth, because of depreciation or carrying money over to your loan, a gap insurance policy covers the "gap" between the vehicle's value and loan payoff amount. Gap insurance is unnecessary for vehicles without a loan or negative equity.

Benefits

If your vehicle was declared a total loss and your loan is not paid off, it's your responsibility to pay off the remaining loan balance. Without gap insurance, you might owe thousands more on your balance, which may prove difficult to pay when you don't have a car. Also, trying to pursue an additional car loan while you still have one may prove difficult. Most lenders require buyers to pay off existing car loans before borrowing another. Gap insurance can eliminate this problem.

When to Pass on Coverage

If you pay cash for a car, gap insurance serves no purpose. If you put a large down payment toward your purchase or have an equitable trade-in vehicle, your loan amount and car value is likely in line. To determine whether you are upside down, or owe more than the vehicle's worth, check the value of the car you want to purchase. Use the Kelley Blue Book website or Edmunds.com to appraise your vehicle's value. Don't purchase the policy unless you need it.

Providers

Purchase gap insurance from a dealership, insurance provider as a policy add on or from the lender who provides your loan. Check the prices from each provider, as many stand to make a profit from selling the coverage. Gap insurance should cost several hundred dollars at most, but dealerships or subprime lenders can charge more than $600. Gap insurance should cost around $100; any amount beyond this price is profit. Be sure to shop prices and negotiate if necessary.

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If a Car Has a Loan, Can You Add Someone to the Title?

A car title is a document reflecting ownership of your vehicle. It is different from the car loan document, which only reflects the debt you owe a lender on the vehicle. You can add someone to your car title without adding them to your car loan. However, if your lender is holding your title, you will have an additional step in order to do so.

Owner Holding States

There are 11 states where you receive a title regardless of whether or not you have taken a loan to purchase a vehicle. Check to see if your state is an owner-holding state (see Resources). If so, you should have the original copy of your car title in your files. You will need this document alone to add a name to the title.

Title Holding States

If you live in any other state with the exception of Kansas, your lienholder will also hold your title. You will receive your title back from the lienholder when you repay the debt in full. Until then, you cannot make any changes without the lender's approval. You will first have to access the title from the lender before you can make a change to the title.

Adding a Name to a Title You Hold

If you hold the title to your car, you can add a name directly at your state Department of Motor Vehicles. Typically, you will only need to sign a form or sign the title directly. The original title holder must be present as well as the individual being added. You will both need forms of government identification. In some states, you may be able to mail in the request. Check with your DMV in order to make an appointment or file the correct forms.

Adding a Name to a Title Your Lender Holds

If your lender holds your title, you will have to request to add a name with the lender's approval. Inform the DMV you would like to add a name to a title purchased with a loan. Each state handles the rest of the process differently. However, in most states, the DMV will send a form to the lender requesting verification of the title. The title will be sent temporarily to the DMV if the lender approves your request and signs the required forms. You will be notified to come to the DMV and add the name to the title, then the title will then be sent back to the lender. Once you have repaid your loan, the lender will send the title to the DMV or to you directly.

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How to Find Blue Book Value

Calculating the current market value of your car can present some challenges if you do not know what resources to use. Named for the Kelley Blue Book, a price guide for all vehicles that originally was created by car dealers, blue book value is an important variable to calculate before you sell your car or trade it in. Use three types of resources to find your car's blue book value.

Instructions

1

Check the Kelley Blue Book. The Kelley Blue Book is a blue booklet containing pricing data and resale values on 15 years' worth of cars. All makes and models are available in the book. Check your local public library for a copy of the Kelley Blue Book. Libraries usually keep the book in the reference section. The publisher of the Kelley Blue Book also offers an online version of the book. For a small fee you can purchase access to up-to-date data on used car values.

2

Use dealer resources. Talk to a local dealer that sells the type of car you own and ask him to help you find your car's blue book value. Dealers usually keep reference materials, pricing information and data on which models hold value in their showrooms. Although most dealers will only have information for the brands of cars they sell, the data they have should help you find your car's blue book value. The National Automobile Dealers Association publishes a book that helps consumers appraise the value of their cars. The association's website offers a digital version of the book, along with tools to help you calculate your car's blue book value.

3

Examine consumer pricing and purchase sites. Groups like Carmax and Edmunds offer pricing information on a variety of makes and models of cars, including tools to help you calculate blue book value. Carmax offers a free appraisal service for owners who are thinking about selling their cars. The service includes calculating blue book value for your car. Edmunds' educational portal provides tools to help you research blue book value, sorting these pricing guides by manufacturer. With a few mouse clicks, you can calculate the blue book value of your car.

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Channels You Go Through When Purchasing a Car

If it has been a while since your last car purchase, you should be pleased to learn that going to a dealership can serve as a last step in the process, as you can view price comparisons, vehicle information and discounts online. Going to the dealership with an understanding of your pricing and financing options saves you money in the long run; you can rest assured you won't pay too much for your vehicle or finance at too high a rate.

Pricing

Determining vehicle price and affordability should play a major part in your car purchase. If buying new, check manufacturer websites for pricing; use the online tools to build a car with the options you want, and see what it will cost. You can also review leasing and interest rate offers or price discounts. If you're in the market for a previously owned car, you can research values at the Kelley Blue Book and Edmunds websites to ensure the prices you find are fair. You'll be better prepared for the negotiating process when you know real values.

Financing

Unless you're paying cash for the vehicle you want to buy, have your financing in order before setting out to shop. Dealerships profit from marking up interest rates, so it's in your best interest to walk in with preapproval from a lender. Even if you plan to purchase from a private seller, having preapproval helps you set a budget and complete the loan process more quickly. Interest rates affect car loan payments significantly. Knowing your financing rate and term ahead of time allows you to shop within your means.

Test Diving

Once you've pinned down pricing and financing, you can start test driving vehicles that interest you. While a vehicle's price, appearance and specifications may seem attractive online, you'll have to gauge whether or not the car performs to your expectations. From acceleration to seat comfort, all cars feel and drive differently. Some people buy the first car they drive, while others drive many before coming to a decision.

Trading

If you have a vehicle to trade to a dealer, research its trade value on the same websites you used to check purchase values. A dealership will appraise your vehicle and make you an offer, which you can accept or try to negotiate. If you have a loan on the car, the dealer will pay it off upon agreement on the trade. Any value above the payoff amount is deducted from the vehicle sales price, but if you owe more than your car is worth, the debt exceeding the value of the car is added to the purchase price.

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Is Leasing Cars Better Than Buying?

Consumers looking to drive a new car are confronted with two basic options --- to lease or to buy. One choice is usually preferable to the other, but that depends entirely on personal preference, individual financial circumstances and expected time frame. Leasing covers use of the vehicle and is generally the better option when you plan to replace the car every two or three years with little risk of major repairs. Purchasing a car, by contrast, represents ownership.

Lease vs. Buy

Buyers pay the car's full cost, which usually involves a down payment, state sales tax and interest charges over the life of the loan when financing the purchase. Automobile lessees are responsible for a piece of the vehicle's total value, covering depreciation during the lease's term. Leasing does not require a down payment. Sales taxes are paid monthly and cover the amount of total payments rather than full value, and the process involves no trade-in hassles. Once the lease expires, and if the driven miles are less than the total permitted, drivers have the option of handing in the keys or buying the car for its residual value. Going over the permitted mileage involves an extra per-mile assessment that covers the increased depreciation.

Lower Monthly Payments

Leasing nearly always involves lower monthly payments. For a car that retails for $25,000 with an approximate value of $10,000 after three years, lessees pay the $15,000 difference plus interest charges and fees. Buyers will have to pay the entire cost, and unless they are in a position to pay cash up front, the monthly payments will be higher.

Alternative Investments

Leasing does not involve accumulating equity in the vehicle by paying for its total value over an extended number of years. Lessees simply pay for what they utilize over a fixed time frame, typically 24 to 36 months. While they own nothing upon the contract's expiration, they can use the extra monthly cash toward higher-yielding investments such as bonds, stocks or mutual funds. Consumers on fixed budgets may also prefer to use leasing's increased cash availability to pay a mortgage or basic living expenses.

Long-Term Considerations

Leasing is nearly always the more expensive option over the long term. Buyers who continue driving their cars well after they have been paid off can then drive for no monthly cost beyond repairs. Lessees must continue to pay monthly ad infinitum, but without the nuisances of ownership, repair costs that invariably become higher over time and the bother of having to sell or trade in the car at some future point.

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How to Determine an Auto Credit Loan

Determining an auto credit loan is not complicated but does require proper planning. An auto credit loan is a loan used to finance the remaining balance owed on the purchase of a vehicle. When purchasing a vehicle the buyer is often required to put money down toward the purchase and in some instances is allowed to trade in her vehicle to the dealership to deduct the value from the total sales price of the new vehicle.

Instructions

1

Calculate the final total sales price of the automobile you want to purchase. The final sales price is the price you will pay before any taxes and dealership fees are to be applied to your purchase.

2

Multiply the total sales price by the appropriate sales tax rate to determine the amount of tax you will owe on the purchase. For instance, if your final sales price is $14,000 and the appropriate sales tax is 7 percent, you would owe $980 in sales tax.

3

Add to your total sales price the amount of sales tax owed. For instance, if the total sales price is $14,000 and the amount of taxes owed is $980 your total purchase cost would be $14,980.

4

Subtract from your total purchase cost your down payment and any trade allowance if applicable. For instance, if your total purchase cost is $14,980 and your down payment is $3,000 and your trade allowance is $4,000, the total amount of your auto credit loan would be $7,980. This sum is the amount of money you will need to borrow through an auto credit loan.

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If I Purchased a Car, Can I Put Two Names on the Title?

Every vehicle purchase involves completing a title for the car, which provides vital information about the vehicle's owner and identification. The Department of Motor Vehicle prepares the title, but before the document can be completed, buyers must provide information on names to include on the vehicle title.

What is Car Title?

A car title is a legal certification of ownership. During the buying process, auto dealers prepare information for the car's title, and buyers can either put one or two names on the title. Dealers submit this information to the DMV, and the department prepares a new car title listing both individuals as owners of the car. Along with outlining the car's owners, vehicle titles include pertinent details about the car such as make, model and year. Auto lenders or finance companies retain the car's title until a owner pays off the loan.

Reasons for Two Names on Title

It's beneficial to put two names on a car title when purchasing a car with another person. This is common practice when spouses buy a car together and share the responsibility of paying for the vehicle. Having two names on the title gives both parties a legal claim to the vehicle. Before selling the car, both parties must agree to the sell and sign the vehicle title to transfer ownership to another party.

Cosigning and Titles

Cosigning a car loan for a friend or relative can help this person qualify for a vehicle loan. But as cosigner, you may not have a legal claim to the vehicle -- even if the primary borrower stops paying the note altogether. Your name appears on the vehicle loan and the lender can come after you for payment in the event of default. When cosigning a car loan for someone else, only agree to this arrangement if the primary borrower agrees to put your name on the vehicle title as an owner. This way, if the primary borrower defaults, you can possibly take possession of the car and remove his name from the title.

Removing Name from Title

Sharing ownership of a car with another person can create problems if you decide to part ways with the other owner. Vehicle titles aren't written in stone; and even if you purchase a car with someone and put both names on the title, you can remove a name. This is a mutual decision by both parties, wherein one party decides to sign over ownership and relinquish his claim in the car. Giving up ownership involves first notifying the lender to have the loan rewritten, and then changing the title with DMV.

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How to Buy a Car From an Out-of-State Owner

An out-of-state vehicle may be a good deal, but transferring title and registration between owners and states at the same time can get a little tricky. When you make your purchase, have a checklist ready to ensure you get everything you need from the car's previous owner before departing. Otherwise, you may be running back across state lines to take care of the paperwork and arrangements needed to complete a vehicle registration in your state.

Instructions

1

Research the emissions standards for both your state and the state in which you intend to purchase your vehicle to see if they are compatible. California, for example, has its own specific and strict emissions standards that a car from out of state won't meet. Ask the seller about the emissions standards on the vehicle to see if it's compatible with your state's requirements. If not, you will need mechanical work on the car before you can register it.

2

Verify that any liens on the car's title have been successfully removed before completing your transaction and taking possession of the car. Although a few states such as Connecticut allow an out-of-state car to change registration and ownership using a valid vehicle registration, many including California and Pennsylvania require a lien-free title with proof of lien satisfaction when a lien existed.

3

Record the sale using a receipt or bill of sale signed by the car's previous owner. Include the sale price and odometer reading. If you and the seller agreed on any warranty provisions, such as the ability to return the car within a week if you're not satisfied, make sure that's also on the bill of sale.

4

Ask the seller to sign the car over to you in front of a notary public. Titles have a line for naming a new owner along with signature and date lines. Have the owner use these. Although not all states require the title sign-off to be notarized, notary certification can help fend off concerns about fraud, theft and legitimacy of the title.

5

Obtain proof of sales tax if you paid out-of-state sales taxes. Some states tax incoming vehicles unless the owner already paid sales tax in another state. Dealers and smaller auto sales companies always charge tax and issue proof. However, if you are buying from a private party, you may not be paying taxes, in which case you may be subject to additional fees and taxes when registering your car.

6

Pay with a cashier's check or money order so that you have proof of payment. This provides additional proof of ownership in case your state's department of motor vehicles has questions or concerns.

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Is it Possible to Modify My Auto Loan?

The option to modify your current car loan depends on your auto loan provider's willingness to do so. Some lenders may offer loan modification for financial hardship, allowing you to increase your loan term although you may have to agree to a higher interest rate. If your lender won't work with you, consider refinancing instead.

Talk to Your Lender

Call your auto loan provider to ask if it offers any loan modification options. If you're experiencing some form of financial hardship, such as unemployment or disability, your lender may offer the option to extend your term if you can prove the hardship. Expect to prove your hardship before modifying the loan amount. If your lender does agree to modify your loan, consider your vehicle equity before moving forward. If you add another year to your loan and obtain a higher interest rate, your monthly payment will decrease but it'll take longer to pay off the loan and create vehicle equity.

Paperwork Requirements

Submit any documents that your lender requires to obtain the loan modification. If your lender is local, bring your paperwork into a local branch. If not, email or fax your documents quickly. Once your loan provider accepts your loan modification request, you must resign your bank contract. A verbal agreement will not stop repossession if you are behind on your loan payments, so make sure you get any modification offers in writing. Save a copy of any paperwork that you sign.

Refinancing

Loan modification options are often limited. Aside from extending your loan term to lower your monthly payment, your lender might not offer other options. If you want a lower interest rate or shorter term, consider refinancing, or applying to a different lender for your loan's payoff amount. Check the interest rates of banks and credit unions in your area as well as those of online auto loan providers. A lending representative can let you know how much your monthly payment will decrease or how much money you'll save over the term of your loan so that you can decide if refinancing is beneficial.

Benefits of Refinancing

A lower interest rate can save you thousands of dollars over the term of your loan, depending on the total amount you borrow. You may also find that you can decrease your loan term with a lower interest rate and still pay the same monthly payment or less. If you have a down payment to put toward a refinance, you can also lower overall loan costs. Even if your credit has suffered, you can use a co-signer to secure your auto loan and still take advantage of lower rate or term benefits.

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What Happens to GAP Insurance if You Refinance?

Many consumers make a small down payment or none at all when they purchase and finance a vehicle. Due to depreciation, a gap exists between the value of the vehicle and the loan balance during the first two years of the loan. To protect themselves and the borrowers if a vehicle is declared a total loss, lenders offer guaranteed asset protection (GAP) insurance in connection with an auto loan.

How GAP Insurance Works

A car accident can damage your vehicle beyond repair. An insurance company then declares it a total loss, determines the market value of the vehicle and pays that amount on your loan. However, if you have a new vehicle that is less then two years old and you did not made a large down payment when you purchased it, chances are you owe more than the vehicle is worth. Thus, you have a gap between the insurance payment and the loan balance. GAP insurance would cover that difference so you would not have to.

Refinancing a Loan

GAP insurance is connected with an auto loan. When you pay off the loan or refinance it, GAP coverage ends automatically. When refinancing, you will need to purchase a new GAP policy and pay the full fee, although you may receive a prorated refund from the insurance company. Your lender will provide the form to fill out. Additionally, the insurance company may charge a refund processing fee, which it will withhold from the total due to you. When a lender issues a new policy, it will send you a new GAP contract.

Types of GAP Insurance

Lenders may offer different types of GAP insurance, including GAP and GAP Plus. A GAP Plus policy offers the same protection as GAP, and also offers the consumer $1,000 towards the next vehicle purchase after a vehicle loss, although some restrictions may apply. A GAP Plus policy, meanwhile costs about $100 more than GAP, and coverage costs may also vary. Dealerships generally charge higher fees, while credit unions often offer the same policies for much less.

Paying for GAP Coverage

You can pay for GAP coverage with cash, a check, a credit card or a bank account transfer, and the lender may include the fee in your car loan monthly payments. If you cancel GAP coverage any time during the life of the loan, your loan payments will not automatically decrease. To lower payments, the creditor would need to refinance the loan. When purchasing GAP coverage, it's a good idea to ask about a cancellation policy. Most companies will offer a full refund when cancelled within 60 to 90 days of the purchase date. Some may offer a prorated refund after that, while other companies will not issue any refund after 90 days.

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What Is a Tier 1 Credit in Auto Loans?

Many lenders use different credit tiers to determine the interest rate to offer you on your auto loan. Where you fall within these tiers depends largely on your credit score. The credit score cutoffs for each tier level also differ by lender, but not by much, typically around 10 to 20 points.

Tier 1 Credit

Other names various lenders use to refer to Tier 1 credit are A tier and platinum tier. People that fall into this credit tier must typically have a credit score of at least 720, depending on the lender. Some lenders consider those with a credit score of 700 or higher to be in the Tier 1 category. People in the Tier 1 credit category are the ones that qualify for the zero down and zero percent interest auto loan promotions.

Tier 1 Credit Characteristics

Those with Tier 1 credit generally have a credit history that includes a previous car loan with a positive payment history and no history of late payments on their other lines of credit. Other lines of credit include student loans, credit cards and mortgages. People in the Tier 1 category also have low outstanding balances relative to credit limits on revolving lines of credit such as credit cards or home equity lines of credit.

Negative Accounts

Those with Tier 1 credit typically have no negative credit information, though some slightly negative information may be acceptable. If a person has a few slow pays, meaning she made one or two late payments on one of her other lines of credit, as long as those payments were not for a previous car loan or mortgage, she may still fall into the Tier 1 category. Also, if she has a collection account for a low amount, typically under $300, she may also fall into the Tier 1 category.

Considerations

If you are thinking of applying for an auto loan and are wondering which credit tier you fall into, it's a good idea to get a copy of your credit report. See what credit card and loan balances you can pay down to lower your outstanding balances relative to your credit limits. Minor adjustments like paying down your credit card balances can bump you up into the Tier 1 credit category, which will allow you to qualify for the best interest rates. With a lower interest rate, you pay less for your car over the life of the loan.

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How to Calculate the Maximum Amount You Can Borrow

The maximum amount you can afford to borrow depends on three things: the interest rate of the home or car loan, the length of the loan period, and how much you can afford to pay each month. If you are looking for auto loans, or home loans, use the steps below to compute how much you should borrow.

Instructions

1

Divide the annual interest rate by 12 and call the number "R," and call the number of months in the loan period "M." Now compute the following fraction:

(1+R)^M - 1
------------------
R(1+R)^M

2

Multiply the number you obtained in Step 1 by the amount of monthly payment you can afford to make each month. The resulting answer is the amount of money you should borrow.

3

Use the formula above with the following example: annual interest rate of 4.5%, 7 year loan period, and $350 per month. So, R = .045/12 = .00375 and M = 84. And then,

(1.00375)^84 - 1
-----------------------------
(.00375)(1.00375)^84

equals .36945/.005135 = .36945/.005135 = 71.947.

Now multiply that by $350, the amount of the monthly loan payments. So (350)(71.947) = $25181. This means that you can afford to borrow $25181 for a home or auto loan.

4

If you don't know the precise interest rate, test the formula with a range of values for R. All things being equal, the higher the value of R, the less you can afford to borrow. The lower the interest rate you can secure, the larger the loan you can take out.

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How Do I Work With My Auto Loan Finance Company?

If you are behind on car loan payments, you are at risk of having your vehicle repossessed. Likely, you have already received several calls and written notices about your account, instructing you to make payment at once or risk losing your car. Even if you can't catch up on payments now, your finance company may be willing to work with you but only if you take action immediately.

Communicate

If you're behind on car payments, the most important step for you to take is to talk with your loan finance company. Failure to communicate indicates to your lender that you are avoiding the problem or have no intention of making payments. In that case you'll soon be paid a visit by the repo man.

Contact your lender and explain to them your situation. If you have lost your job, are ill or have experienced some other life event that is keeping you from making timely payments, you may find a sympathetic person willing to work with you.

Ask your lender if they'd be willing to accept smaller amounts, interest only payments or add your late payments to the end of the loan, effectively agreeing to new loan terms. You stand a better chance of having your request granted if you have a job, but by keeping open the lines of communication you may be able to forestall repossession long enough to come up with another, solution such as asking friends or family members for help.

Be proactive and expect to answer some tough questions, including how you plan to catch up on payments, what income you can expect in the months ahead, and follow up your phone conversation with a letter in writing to the same person. Consider selling your car to a third party or find someone to take over payments. You may still be on the hook for past due payments however.

Repossession

If you don't have the means to make payments and your financial situation is hopeless, then prepare for a visit from the repo man. Keep in mind that if you choose this option, your credit will be impacted adversely, perhaps for several years. You'll also lose whatever money you poured into the vehicle to date and you may be held responsible for the loan deficiency. A loan deficiency is the difference between what the repossessed car sold at auction and your outstanding payments.

Tips

Seek legal counsel to learn your rights. To avoid a visit from the repo man, quickly secure alternate transportation, remove personal effects from the car, then take it to the finance company and turn in your keys. You'll avoid the embarrassment of a repo man coming to your home with his tow truck and taking your car removed in front of everyone in your neighborhood. Your credit will take a major hit, but if you've exhausted your other options, then an orderly repossession is better than an untimely knock at your door.

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What Are Typical Car Lease Interest Rates?

Approximately one in five new-car transactions are lease agreements rather than traditional purchases. While leasing a vehicle is more akin to renting, lessees also face finance charges similar to those incurred when borrowing money to purchase a vehicle. Some lease agreements don't advertise their interest rates, although automotive manufacturers create nearly every lease option to incur interest on the amount that a vehicle's value depreciates during the lease term.

Common Lease Interest Rate

Many lease agreements are built around a 9 percent interest rate, according to Edmunds.com. Interest rates may vary widely depending upon manufacturers, consumers' credit ratings and other factors among dealerships. For example, in a 36-month lease where a car's value depreciates from $30,000 to $22,000 over the course of the lease, consumers pay interest charges on the difference between the capitalized value -- purchase price -- and residual value -- depreciated value at lease end -- which, in this case is $8,000.

The Money Factor

In many lease structures, dealers substitute the "money factor" for interest calculations. To convert money factor to an estimated interest rate, multiply it by 2,400. A 9-percent interest rate has a money factor of 0.00375. Dealers use the money factor to calculate monthly finance charges rather than applying a direct interest rate to the depreciated balance. To compute monthly finance charges, add the purchase price of the vehicle to its depreciated value at the lease's end, and multiply that figure by the money factor. In the example above, finance charges would be computed as ($30,000 + $22,000) * 0.00375, or $195 per month. Over a 36-month lease, that equates to $7,020 in finance charges.

Calculating Monthly Payments

After the dealer applies the money factor formula to determine monthly finance charges, he adds that to the monthly base payment. A lease's base payment is calculated by dividing the amount of depreciation, $8,000 in this example, by the number of payments, or 36 because it's a three-year lease. This lessee's base monthly payment is $222.22. Combined with $195 in money-factor charges, that totals $417.22 monthly. Over a three-year life of the lease, the consumer will pay $15,019.92 in monthly lease charges.

Comparison to Common Auto Loan Interest Rates

Automotive loans' interest rates vary around the country and may vary significantly between lenders, and, as with most forms of financing, may be impacted by a consumer's credit score. Average new auto loan rates vary between 4.77 and 6.93 percent as of December 2010, according to HSH.com. Rates on loans for used vehicles are typically higher, and range from 5.47 to 8.54 percent around the country.

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When I Sell My Car to an Individual What Happens to My Tag?

License plates, also known as tags, help identify vehicles and ensure that drivers have the proper licensing for their vehicles as required by state law. But when you sell your car, the procedure to follow regarding your tags can be confusing. Each state has its own policy and some states offer multiple options. Before selling a car, contact your department of motor vehicles or browse its website for resources on what to do with the old tags.

Nothing

In some states tags stay on a vehicle for the life of the car. This is the case in California where the tags that a car's first owner affixes to the vehicle are likely to remain on the car until it comes off the road. If tags that stay on the car include valid registration stickers the new owner may be required to pay a transfer fee to allow the registration to remain valid. After it expires, the new owner will be responsible for renewing the registration and affixing the sticker to the old tags.

Transfers

Transferring license plates is an option or standard practice in some states. In California, drivers with custom or special interest plates can apply to retain their tags and affix them to a new vehicle. In New York, transferring tags is more common. All drivers can retain their existing tags and add them to a new vehicle. However, the new vehicle needs a new registration sticker, which does not carry over from the car being sold.

Surrendering Tags

You may need to surrender your tags to the department of motor vehicles when you sell a car. This is an option for drivers in New York State who wish to take a vehicle off the road, sell it to another party or register it in another state. The New York State Department of Motor Vehicles allows drivers to surrender their tags to receive a partial refund from the registration paid on the car. If you sell a car in a state with laws like those in New York and plan to buy your new car in a different state, surrendering your plates is a better option that transferring them to the new car, which will need new tags from the new state.

Penalties

The penalties for failing to comply with your state's vehicle tag laws vary. Some states give buyers two days to display temporary or permanent tags. If you plan to surrender your vehicle tags after selling your car, the new driver is responsible for complying with this law. Fines for driving without valid tags range up to $200 in states such as Wisconsin, as of 2011. Failure to surrender your tags in states such as New York may not carry a specific penalty but will prevent you from receiving a partial refund on your prepaid registration.

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Does Having a Co-signer on a Vehicle Help With Financing?

A co-signer can help you to obtain a car loan approval as long as she has good to excellent credit, a good debt-to-income ratio and enough income to afford the additional debt. If you can't obtain a loan with affordable and reasonable terms or an approval at all, a co-signer can secure favorable terms for your auto loan.

When You Should Seek a Co-signer

If you have poor credit, you might still obtain a loan approval as a high-risk borrower. To offset risk, the lender might require a large down payment and restrict the term of your loan to increase vehicle equity. This results in a high monthly payment. Borrowers with limited credit or no credit history at all might be declined for a loan or obtain a high interest rate as a term of approval. Using a co-signer with good credit and income allows you to obtain an approval that the co-signer would qualify for as a lone applicant, opening up your vehicle, payment and loan options.

The Application Process

The co-signer must apply for the loan with you and in person unless the lender or dealer allows otherwise. The co-signer must supply his Social Security number, income, employment, driver's license and housing information for the loan application. Once the lender approves your application, a loan representative will discuss your loan terms, such as maximum term, rate, down payment requirements and loan-to-value ratio, with both of you. The loan isn't established until you both sign lending contracts, so you can decide whether using the co-signer is beneficial.

Finding a Co-signer

Finding a co-signer might prove difficult because of financial risk. The co-signer is just as responsible for the auto loan as you are, and his credit may suffer as a result. The co-signer might have trouble initiating an additional line of credit until you've established a good payment history and decreased the amount of the loan. If you default on the loan, the co-signer's credit also suffers. Ask a close family member or friend to co-sign your loan. The person should have good to excellent credit and an income that affords her own debts and the amount of your car loan.

Considerations

Before moving forward, determine whether the ownership terms are worthwhile. You can't remove a co-signer from an auto loan, so if issues arise in the future, you'll still have to deal with the co-signer to sell the car or refinance the loan. Find out whether both names have to be on the title and who has to insure the car. Some lenders require both names on an insurance policy, so find out the lender's rules before finding a co-signer.

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Should You Get Extended Insurance When You Purchase a Car?

You can rest assured that you'll have the coverage you need if you purchase extended insurance for a car purchase, although you may never need it. Different types of extended insurance purchases are available, so determine costs and ultimate savings before pursuing any options. Lenders may require you to purchase extended coverage, so budget accordingly.

Full-Coverage Insurance

Full-coverage insurance is usually required by lenders. Without a loan, most states require only a liability policy, but a lender requires comprehensive and collision coverage in addition to a limited liability policy. This policy covers your vehicle for damages even in an at-fault accident. In the event of a loss, your insurance company pays your vehicle's market value to the lender. Collision coverage is the most expensive coverage you can purchase. If you're not using a lender, consider the cost of a full-coverage policy and the value of your vehicle to determine if the purchase is worthwhile.

Deductibles and Limits

Many lenders require increased limits for the liability portion of your collision coverage and insurance companies often recommend increased limits for liability-only policies. State requirements may not offer enough coverage. Deductibles, or the amount you can expect to pay out-of-pocket for repairs for an at-fault accident, are also optional. Most lenders require a $500 deductible or less. Talk to your insurance agent about cost differences to determine if lowering your deductible is beneficial. Your payment may increase, but you'll have adequate protection if you do have an accident.

Gap Insurance

Gap insurance is required by some lenders and is often a requirement for leasing. Otherwise, it's optional. This extended coverage offers financial liability protection in the event of a loss. If your insurance company's determined market value and payout do not cover your loan balance, gap insurance picks up the difference so you don't have to. Without it, you would have to satisfy the loan even though you no longer have your car. Purchase gap insurance if you owe more than your vehicle's market value.

Extended Warranties

Purchase an extended warranty to cover vehicle repairs, which limits your out-of-pocket expenses during the term of your warranty contract. Depending on the warranty coverage you choose, you may spend several thousand dollars to purchase an extended warranty. Talk to a warranty provider to determine best coverage options, making sure to choose the correct term or mileage based on your driving habits. The warranty may pay for itself the first time you use it, and is well worth consideration.

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4 Tips to Save a Bundle on Your Next New Car Purchase

To successfully save a bundle on your next new car purchase, educate yourself about vehicle pricing. This way, you know a good deal when you see one. Luckily, you can do most of your negotiating online. Researching and shopping same-make dealers online helps you to save a bundle; you do not have to go into a dealer until you have negotiated a price online.

Determine Invoice Pricing

Invoice pricing is the amount a dealership paid for a new car. You'll need to know it to determine how much you can save. A majority of dealers will not sell under the invoice price, but will work with knowledgeable consumers from invoice price rather than window sticker price. Edmunds.com offers a "True Market Value" tool to help buyers determine invoice price. To effectively use it, go to the manufacturer's website to build a car with the options you want (true market value pricing initially shows base model pricing). Add the same options and packages into the "True Market Value" tool as you did on the manufacturer's website.

Shop Multiple Dealers

Once you've determined the correct invoice amount, figure a fair purchase price. From the manufacturer's website, locate dealers in and around your area. Choose several within driving range (or as far as you will go). From the results list, access individual dealer websites and email addresses. Start with any dealer and state that you are ready to buy a specific vehicle if the dealer can reach your price. Once you have a price offer from one dealer, you can use it to continue negotiating with other dealers. Continue emailing other dealers stating your intent to buy and your current price offer. This way, dealers compete for your business.

Time Frame

Dealerships are more likely to make deals at the end of the month. Salespeople have goals and bonuses to reach, which are set by dealer management. The dealership itself has goals and bonuses in place for its region, set by the manufacturer or regional manager. If you wait until after mid-month, the dealership is more likely to reach a lower price to earn your business and move closer to its goal.

Considerations

Customers shopping multiple dealers may have an opportunity to shop outside of their own state. Because each dealership charges a document fee, or a nonnegotiable fee charged for completing a variety of paperwork, you may save more money purchasing outside of your state or eliminating a nearby state altogether. Some states cap the maximum document fee allowed and some don't. The difference can cost you over $500, which is worth considering when you are trying to get the best deal possible. Call or email to ask about the document fee before you send your price offers.

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How to Refinance a Vehicle in Southern California

If you have a car loan in southern California with a rate that is too high, you can try to refinance your auto loan to get a lower rate. Getting a lower rate when you refinance can result in a lower monthly car payment and a reduction in the amount of interest you will pay for the life of the car loan. Typically, you must refinance a balance of at least $7,500.

Instructions

1

Check the balance on your current auto loan by calling the loan company and asking for the payoff amount. Look on your recent statement to get the customer service phone number to call.

2

Gather your income details, monthly debt obligations, current auto loan account number and lender information.

3

Submit an application to your preferred southern California auto loan lenders. Do this in person or online. Banks in southern California that offer auto loan refinancing include Chase Bank, Bank of America and Wells Fargo. You can also opt to apply online through Up 2 Drive or Lending Tree (see Resources), where you can get quotes from up to four southern California lenders.

4

Evaluate the refinance offers you are approved for. Look for an interest rate that is at least 1 percent lower than your current rate. Also look at any fees associated with accepting each offer.

5

Select the refinance loan with the lowest rate and fees. Let your current auto loan company know who the new lien holder is so that the title can be sent to the new loan company. Some states require a fee to transfer the title to a new lien holder.

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Can a 17-Year-Old Get a Car Loan?

A 17-year-old is legally considered a minor in all 50 states. Being a minor excludes a 17-year-old from many "adult" activities, and one of those activities is signing a legal contract. Since a car loan constitutes a legal contract, a 17-year-old cannot sign a car loan without a parent or guardian also signing the loan as a cosigner.

Ownership Limitations

One important aspect in car financing for minors is the limitations he or she will face in actually owning a vehicle. In most states, a 17-year-old cannot be the legal owner of a car. However, there are certain exceptions wherein a person under this age could possess a vehicle title if she has proven financially and legally responsible. For example, an emancipated minor may be able to enter a contract if he has an income history and credit history. Even then, however, a cosigner may be necessary if the minor does not have enough resources to get the loan.

Loan Limitations

If a 17-year-old gains state approval to own a car, the next step will be financing the vehicle, and this presents another hurdle. A financial institution cannot enter a contract with a minor, and since 2009 it cannot market loans to minors. As a result, a parent or guardian must be present to cosign on the loan. In actuality, the adult party will be the primary borrower on the loan.

Potential Solution

One option for a minor looking to own a car is to go through the process with a parent or guardian first. Once he turns 18, he can then refinance the loan to remove the cosigner's name, and also remove the cosigner from the title. Removing a name from a title is straightforward; removing a name from an auto loan can be more involved.

Refinancing Challenges

When a young person first turns 18, she will have no credit. Since she has been excluded from taking loans in the past, it was impossible to build a credit score. The only possible credit reports will come from co-signed loans. Further, this person is not likely to have a full-time job with a high income. As a result, it can be very costly for a young person to refinance a co-signed loan to her name.

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How to Calculate Truck Financing

Purchasing a truck is a major financial investment that involves a significant amount of preparation. The decision of how to finance a truck involves several key steps and will require you to do a fair amount of research to prepare for your purchase. To calculate truck financing, you must establish the cost of the truck, decide on how much you will pay as a down payment, explore loan options and make a decision that best fits your personal wants and needs.

Instructions

How to Calculate Truck Financing

1

Determine the cost of the truck. You should identify the truck you want to buy and locate a detailer where you can purchase your vehicle. You should shop around to ensure you have the best possible price for the truck you want to buy. Once you have identified where you will purchase the truck, you should negotiate a price. Once you have the price set, you can begin to explore various ways to finance the purchase.

2

Decide on what kind of down payment you can afford. You should examine your personal finances and establish a cash amount that will be placed directly towards the total cost of the truck. If your truck costs $20,000 and you can make a $5,000 down payment, you will have $15,000 left to finance through a loan from a financial institution.

3

Examine loan options. Just as different businesses will have varying prices on a specific truck, different banks may offer varying interest rates and fees on automobile loans. You should speak with several banks in your area and inquire about interest rates, fees and repayment periods. If you have $15,000 remaining to pay for a truck, you should examine financing options for that total remaining amount. Automobile dealers may also offer financing options. You should look for a low interest rate, little or no additional fees and a repayment term that fits your personal needs and budget.

4

Calculate your expenses over time. This calculation can be done very easily by using an online lease calculator, such as the one provided by Cars.com or Edmunds. You will need to input the information you gathered in the previous steps such as the price of the car, the interest rate and the repayment term. This will yield a calculation that will illustrate your total monthly payment, as well as the total cost of financing.

5

Choose the best option. Once you have identified the pros and cons of the financing options available to you, you must make a decision as to your best option. The best option is usually the least expensive option that best fits your needs. If you decided to take out a loan through a financial institution or an automobile dealer, you must apply for the loan. If you are approved, you can use the funds to purchase the truck. Your payments will begin immediately.

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Can I Defer a Car Payment?

Sometimes a consumer finds herself unable to pay monthly car payments. There is an option referred to as a deferment that many banks offer.

Identification

In the case of a deferment, the lender allows the consumer to pay only the interest due for the month, and the principal is added to the end of the loan.

Function

Most banks require paperwork to be submitted to set up a deferment. The auto loan may have pre-arranged terms that limit the number of payments that can be deferred, and the circumstances under which a deferment will be approved.

Significance

It is possible that the bank will not report a deferment agreement as a negative credit event, but the consumer must verify with the bank to explain how a deferment is reported to the credit agencies before applying for a deferment.

Considerations

An option to a deferment is a forbearance, in which payments are skipped and moved to the end of the loan, but interest continues to accrue during the skipped payment period.

Misconceptions

Even if there are terms of a deferment outlined in the car loan, the bank has the option of denying a deferment.

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How to Figure Out a Car Loan Price

Before securing a loan to purchase a new vehicle, it's important to calculate how much you can afford to pay on a monthly basis. You should stick to that predetermined amount even in the high-pressure venue of a car dealership. By doing due diligence and conducting research before entering the dealership, you will be prepared to stand your ground and stick to your plan if the dealership attempts to engage in aggressive sales tactics such as upping your interest rate immediately before the contract signing.

Instructions

1

Conduct a basic Internet search for a car loan calculator. There are a number of these calculators available for free (see Resources). A good car loan calculator will allow you to see what your monthly payment would be like, accounting for the sale price of the car, a down payment, sales or excise tax, interest rate and term of the loan. You should use a car loan calculator to calculate the effect on your budget from a series of different loan contingencies, such as higher or lower interest rate or extended term of the loan. When calculating the interest rate, your loan's interest rate should not exceed 7 percent if you have a good credit history.

2

Calculate the additional costs that will accompany vehicle ownership. Your new vehicle may require a more expensive insurance policy, which will drive up the cost of the monthly overhead. You should contact your insurance provider and get a quote for the types of cars that you're considering purchasing.

Also make sure that you do a cost comparison of miles per gallon with your old vehicle. A poorer fuel economy will also lead to higher monthly overhead.

3

Visit the dealership. If you become confused while you're there about the impact of the loan on your budget, it's probably wise to simply leave the dealership and recalculate the loan at home. The dealer will almost always be interested in attempting to sell you the car upon your return if you determine that the loan is acceptable. This particular decision will have a long-term impact on your budget, so you can't go wrong with taking your time and doing it right.

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Does My Loan Cosigner Have to Be on the Title or My Car Registration?

The co-signer of a loan is legally responsible for the repayment of the borrowed funds. A person whose name is on the title of your vehicle, along with your name, is considered a co-owner. While it is reasonable for a co-signer to also be the co-owner, this is not a legal requirement.

Co-signer

The co-signer of a loan guarantees the repayment of the borrowed amount. In simpler terms, if you default on your debt, whether it is a home-improvement loan or the money you had borrowed to buy a new car, the lender can hold the co-signer legally responsible for the shortfall. When you default, the co-signer is subject to the same measures, including wage garnishment and a freeze of his or her bank accounts, as you are. Naturally, banks always prefer to have a co-signer on the funds they lend out as this increases the probability of repayment. As a result, you can almost always get a lower interest rate on the loan if you have a financially sound co-signer.

Co-ownership

The co-owner of the vehicle is the individual whose name appears alongside yours on the title. While motor vehicle laws can vary by state, usually the signature of both owners are required to sell the vehicle. The sales proceeds can be shared in any way agreed upon by the co-owners. The law does not mandate that the income from the sale be split evenly between co-owners. It is therefore important that the co-owner is an individual you can trust and reach joint decisions with. Otherwise, disputes over sale is highly likely.

Requirments

There is no legal requirement for the loan's co-signer to also be a co-owner of the vehicle. If a friend or relative accepts to be legally responsible for your loan, it is often reasonable for them to ask to also co-own the vehicle. However, a parent, for instance may not require such a guarantee and happily co-sign a child's loan without mandating that his or her name be placed on the title as a co-owner. Keep in mind that the loan is handled by a financial institution, while the title is issued by the department of motor vehicles. The latter will not care how the vehicle was financed, as long as it is legally purchased.

Lien

When a bank or other financial institution provides a loan for the purchase of a car or any other motor vehicle, there will be a lien on the title. This means that the owner(s) cannot sell the vehicle without the consent of the loan provider, which often requires the repayment of the loan in full. The concept is very similar to a mortgage, which requires that you pay the loan before you are allowed to sell the home. Therefore, in reality neither co-owner truly owns the vehicle until the loan is repaid.

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