December 2009 ~ Managing a Car Loan

Thursday, December 31, 2009

Tips on Buying a Car for a College Student

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Many college students don't have cars because they are busy studying and don't have a job, so they can't qualify for a car loan. Those who do buy a car need to take different social and financial conditions into account than someone who has completed school and is working full-time. Some students use cars that belong to their parents, or that were purchased for them by their parents.

A brand-new car is an indulgence that isn't appropriate for someone still in college. One- or two-year-old cars that are in excellent condition can be bought for thousands less than a new car. Some will even still have the warranty in effect. If you are a college student or buying for a college student, focus on getting a solid, dependable car that isn't going to give you trouble and require expensive repairs in the near future. Ideally, buy from someone you know or from a reputable dealer.

When you enter the car market, you may be tempted by cheap cars that look like really good deals. However, unless the owner is really ignorant about cars, virtually any car that is really cheap is cheap for a reason. Paying little money for a worn-out or problem-plagued car is just paying to inherit someone else's problems. While you can save a lot of money buying used as opposed to new, you need to find the happy medium between too new and too old, which translates to too expensive and too cheap.

Young students who are away from home for the first time probably have a lot to learn about many things, including car maintenance. Students who don't have the inclination, the talent or the time to care for their own cars should develop a relationship with a good mechanic who can perform regular oil changes, tune-ups and repairs. Students should also investigate the complications of owning a car at their college. Parking can be expensive on some campuses, and crime and break-ins also need to be taken into consideration in some areas. Be sure the student understands that the cumulative expenses of a car, including gas, insurance, registration and maintenance, can add up to a substantial amount of money.

Students who own cars need to have cars that their budgets can support. Making large payments on an excessively expensive car may be a distraction from college courses and may require the student to get a job to help pay for the car. A student who is the only person in his circle of friends with a car may find himself constantly being asked to give rides to people. A student who buys a car without a convenient place to park it may find himself with a car that he is paying for but not using very much.

Can a Family Member Repo Your Car if You Owe Them Money?

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"Repossession," or "repo," is a term used to describe a creditor taking back property from a debtor who has defaulted on a secured property loan. In general, this term is only applied to actual physical property, such as land, buildings, or vehicles, and a creditor can only repossess someone's property if he holds a lien on that particular piece of property. Under most circumstances, a personal loan given by a friend or family member does not entitle the lender to take the borrower's vehicle if the borrower defaults.

Auto lenders, or automobile financing companies, provide loans to assist people in purchasing new or used vehicles. Auto loan agreements usually state that if the buyer defaults on the payments, the lender has the right to take the vehicle from the buyer without notice, and without taking the buyer to court. Auto lenders may contract a third party to repossess a vehicle. The repo agent is allowed to go on to the buyer's property to retrieve the vehicle, but cannot enter the buyer's home or garage without permission. Any repossession involving threats, violence or a "breach of the peace" against the buyer are unlawful.

Credit card companies have many options available to help recover money a cardholder owes to them, but a credit card company cannot threaten to take someone's personal property, including a home, vehicle, furniture or electronics, as payment for a balance owed unless the credit card company sues the cardholder, is awarded a judgment by a court, and then files a legal lien against the cardholder's personal property. A credit card company cannot threaten to take someone's personal property without first pursuing the balance owed through the court system.

Some unscrupulous collection agencies will use harassment or threats to convince a debtor to find a way to pay the balance owed. Collection agencies are bound by the Fair Debt Collection Practices Act (FDCPA), and cannot use illegal methods to coerce someone into paying a debt. Unless a collection agency was hired by the original auto lender to collect a balance owed on a vehicle, threatening to repossess a debtor's car would be considered an unethical or illegal collection practice.

If an individual loans another person money to purchase a car, that individual may be considered a legal lien holder on that car, if there is a valid contract between the two people assigning that right to the individual lender. But if an individual makes a loan to another person --- such as a loan for living expenses --- without a contract designating something as collateral, that loan is unsecured, and does not entitle the lender to a lien on any of the debtor's personal property. So, if John loans Ann $500 to pay her rent after she loses her job, and Ann is unable to pay John back, John cannot threaten to take Ann's car unless John and Ann signed a contract stating the $500 was a secured loan, with Ann's car as collateral. If John takes Ann's car to repay himself for his loan without Ann's permission, Ann can charge John with auto theft.

What Is the Average Interest Rate for a Car After Bankruptcy?

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When you apply for a car loan, a lender uses your credit report and credit score as main factors to determine the loan terms you receive. A bankruptcy on your credit report does significant damage. Anyone with a recent bankruptcy may have difficulty getting a loan. If you can get a loan, you will likely receive much higher interest rates than those who have not gone through bankruptcy.

Your credit score will affect the interest rate you receive on any loan offer. A credit score is a number, usually between about 300 and 850, that represents how well you've managed credit in the past. Influencing this are positive factors, such as paying your bills on time, and negative ones such as bankruptcy. In general, a bankruptcy significantly lowers your score, but the longer you wait after the bankruptcy, the less impact it will have.

Credit bureaus do not typically reveal how much impact a bankruptcy has on your score. However, Yahoo Finance reports that a bankruptcy will lower your score by 130 to 240 points. If, for example, you had a credit score of 780, bankruptcy can drag your score down to between 560 and 540. If you started with a 680 score, you might go down to between 550 and 530.

Lenders generally consider anyone with a credit score below 620 as a "sub-prime" borrower. Anyone with a score lower than this will have trouble getting a loan. If a creditor makes an offer, you'll likely receive the least desirable terms and the highest interest rates. However, merely having a bankruptcy doesn't guarantee that you'll have a low score forever. If you increase your score before applying for the loan, you can get better terms, regardless of the earlier bankruptcy on your report.

Loan rates fluctuate over time. However, buyers with high credit scores receive the best interest rates available when taking out a car loan. Those with low credit scores receive the highest rates. For example, as of February 2011, Community America Credit Union offers auto loans with an annual percentage rate ranging between 3.75 percent and 15 percent. The rates not only differ because of an individual's credit score, but also depend on whether the car is new or used and the term of the loan.

What Gap Insurance Covers on Leases

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Gap insurance is purchased when you lease a vehicle. If your vehicle is determined a loss by your insurance company, whether by accident, damage or theft during your lease, you'd owe your bank for the vehicle's value instead of just the lease amount. Your insurance company would pay the bank for the vehicle's market value (instead of its retail value) and gap insurance would pay the remaining balance due.

To better understand the purpose of gap insurance, first understand the loss a leasing bank may sustain if your vehicle is declared a loss by your insurance company. When you lease a vehicle, your leasing bank pays the dealership the vehicle's entire value, whether you negotiated its price or not. If your vehicle is declared a loss, your bank loses the car's entire value, not just your lease amount. During a lease, you pay for about half of the vehicle's value. At the end of the lease, the bank resells the car to recoup the rest of its money.

You're required to maintain full-coverage insurance during the term of your lease. This coverage protects the bank from total financial loss of the vehicle. Reasons for a vehicle loss might include an accident, theft or any instance in which damages and repairs exceed the car's value. Your insurance company will pay your leasing bank for the car's market value and nothing more. New cars are most affected by depreciation, losing thousands in value once purchased. Because lease payments are lower than financing, you pay toward equity slower. For this reason, your insurance payoff is unlikely to cover the bank's loss during your contract term.

After your vehicle's market value is paid to your bank, it is very likely that the bank is still at loss for the vehicle's cost. As per your lease contract, you are responsible for paying the gap between your vehicle's market value and its actual cost. Gap insurance pays this balance so you don't have to. Without gap insurance, you would have to keep paying your bank until the vehicle's purchase price was satisfied. While paying toward the vehicle's value, your lease account would remain as an open account on your credit report, which can affect an approval for another loan or lease until the account is paid in full.

Prices for gap insurance differ by state and provider. Some states cap the cost of gap insurance to minimize provider profit. If you live in one of these states, expect to pay a one-time fee of about $100. A price that exceeds $100 results in provider profit and is negotiable. Some providers may charge in excess of $600 for gap insurance. Check with your insurance company, leasing bank or a dealership to shop costs. You'll only pay for gap insurance coverage at the beginning of your lease, as it is a condition of your leasing contract.

Help for Victims of Car Theft

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Victims of car theft are often left shocked and dismayed as well as confused as to what to do next. A careful and calm approach can lead to a satisfactory resolution -- possibly even a recovery of the vehicle. It is important to get in touch with all of the appropriate parties as soon as possible after the occurrence to resolve the situation.

Officials estimate that there are more than a million cases of auto theft each year in the United States. These thefts cost consumers close to $8 billion per year. The majority of thefts occur in major metropolitan areas and near ports, where illegal exporting of cars sometimes occurs. Some car models, such as certain Hondas and Toyotas, are more susceptible to theft because their parts are very valuable on the black market. In other cases the presence of valuable components, such as stereo systems, increases the chances of theft.

The first step for a victim of car theft is to call the police to make a report. Describe the entire situation, from the time and place you left the vehicle to the moment you noticed that it was missing. The police initiate an investigation and provide you with documentation of the incident. In some cases the police may be able to retrieve surveillance tape to try to catch the thief in action.

If you have full insurance coverage, including coverage for theft, you must call your insurer to submit a claim. The insurer needs a thorough description of the incident and a copy of the police report in order to process the claim. After an investigation, the insurer can then authorize compensation or a replacement vehicle to get you back on the road. Your policy may provide for a rental vehicle during the investigation and replacement process.

Once you've been a victim of car theft, you know the importance of taking preventive measures in the future. Getting a standard car alarm is just the start --- consider investing in a number of additional, more effective tools. For instance, brake locks are often very effective in preventing theft. They slide over the brake pedal so that only you can put the car in gear using your key. Stolen vehicle recovery systems, such as LoJack, can track and locate the car as soon as it is determined to be missing. Some vehicle systems shut off the car remotely. Other simple preventive measures include securing a garage space when parking and removing valuables from inside of the car when not in use.

What Happens If I Don't Pay a Car Loan After a Total Loss?

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As it states in your contract, you're responsible for paying off your vehicle's loan even if you no longer have the vehicle. Before you assume that you owe the total loan amount, determine what kind of coverage you have on your car --- insurance is usually mandatory for a vehicle loan. If a balance is due, you must pay it, or the lender can take you to court.

You should have a full-coverage policy in effect on your vehicle because you have a loan on it --- this is a bank requirement. Insurance companies report lapses in coverage, cancellations and renewals to your lender. If you don't supply sufficient coverage, banks usually enforce an expensive, full-coverage policy. A full-coverage policy covers your vehicle's market value, even if you were at fault in the total-loss incident. Check with your insurance company to find out how much of the loan will be paid off.

Banks may also require guaranteed auto protection, or GAP, insurance coverage for car loans, or this type of insurance may be offered if you bought the vehicle at a dealership. Dealers may sneak the cost and coverage into your loan amount for profit reasons. GAP insurance covers the "gap" between the market value of your vehicle and its loan amount. Check your original purchase paperwork to find out if you have this coverage, or call the originating dealership to ask if it was included in your sale. Also check with your insurance provider, which may include GAP insurance.

Whether you have adequate coverage or not, you have to make arrangements to pay if a balance still exists on the loan. Call your bank to find out if you can set up a payment plan that works for you. Or, if you plan to purchase a new car, you can ask the dealership to roll over the loan balance in your new loan. This possibility depends on your credit and the new vehicle's equity, but it can eliminate the need for you to come up with the cash.

If you don't pay for your loan, the bank reports to the major credit bureaus that you defaulted on the vehicle's loan. The loan remains open with a balance for future creditors to see, most likely affecting future loan options and interest rates. The bank can sue you for the amount due, eventually garnishing your wages to satisfy the debt. Be sure to have adequate coverage in place for future loans, as the financial consequences can prove substantial.

Can You Make an Interest Payment on Your Car Loans?

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A portion of your car payment goes toward your loan's principal amount; the rest goes toward interest charges. Interest is figured on the loan's current balance, so the amount you pay toward interest changes as each monthly payment changes your balance. For this reason, you should aim to make payments toward the loan's principal amount to reduce your loan balance, not the interest.

The amount of interest you pay with each car payment is highest when you first initiate your loan. To fully gauge overall interest and the amount of your monthly payment that goes toward it every month, use an online calculator or talk to your lender. The First Car Guide website offers a calculator that breaks down changing interest payments each month and the total amount you pay over time. Because the amount you pay toward interest changes monthly, paying toward the loan's principal can save you money in interest charges.

Banks usually allow you to pay off your auto loan early. However, they may charge a penalty fee for doing so. Before you make any extra payments toward your loan amount, talk with your bank to find out if early payoff fees exist. Or you can review your bank contract, which also states applicable loan penalty fees. Banks may require that you keep your loan open for at least several months. If fees do exist for paying off your loan early, don't make extra payments unless you can significantly save on your interest charges.

Don't just pay a higher car payment without speaking to your bank beforehand. Some banks apply the extra payment toward your next month's payment; others apply it toward interest. Talk with your bank about sending in the extra payment and how you should go about doing so. It's financially beneficial to apply the extra payment toward your principal amount; most banks require that you add a note or send an extra payment to accomplish this.

If you feel your interest rate is high, consider refinancing your auto loan. If current interest rates are lower than yours, you can benefit from refinancing. You can save thousands of dollars with a lower rate and also decrease your payment. You can also shorten your loan term to pay off the loan faster. If your new rate is low enough, you may be able to shorten your term and pay the same monthly payment.

Can I Get a Car Loan With Credit Card Debt?

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The amount of credit card debt you carry will affect your overall credit score, which can ultimately reduce your chances of securing a car loan. However, if your debt is manageable compared to your income, your credit will not suffer.

Your credit score partly depends on the amount of debt you carry. It is wise to have a fair amount of credit available, but it is best to keep your limits low. The comparison of your available credit to actual debt will be used when considering your credit score for an auto loan.

If you have a bad credit score, you may not qualify for many traditional auto loans. Instead, you may have to seek high-risk alternatives. There is no shortage of lenders willing to extend high-risk loans, but these loans present higher origination fees, higher interest rates and larger penalties if you are late on payments or default.

If you have a high amount of credit card debt, try to wait until you have paid down some of the debt before seeking a car loan. Do not close your credit cards once you have repaid the debt; this can hurt your score in the end. Once your ratio of available credit to actual debt is low, seek a car loan first and shop for a car second. This will help you to assure you can afford the car you are shopping for before you find a vehicle you like.

The Best Auto Loan Financing Options

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Numerous auto financing options are available to car buyers. But if looking for the best finance package on your new vehicle purchase, do your research and learn techniques that can help you secure the lowest finance rate. Paying a low finance rate on the car results in a lower car payment.

Taking a look at your credit history first is one key way to get the best auto financing option. Various lenders are available to finance your car purchase, and some will accept your application with a low credit score. This doesn't guarantee the lowest interest rate and car payment. Check your personal report from AnnualCreditReport.com and consider purchasing your credit score from myfico.com. Aim for a credit score of 700 or higher to get the cheaper rate on the vehicle loan. Tips to improve your score might include a history of timely bill payments and lowering credit card debt.

Some car buyers may shy away from a reduced auto loan term due to the increase in monthly payment. But benefits to opting for a shorter term include paying less interest on an auto loan, paying off the car sooner, and some auto finance companies assign lower interest rates with reduced terms. A reduced term can include a three- or four-year auto loan, as opposed to a 60- or 72-month term.

If you can afford a 10 or 20 percent (or higher) down payment on your next vehicle purchase, consider purchasing with a down payment. A down payment decreases the amount you will need to finance with an auto lender, reducing your monthly payments. Plus, down payments help bring down the interest rate on the car loan, further reducing how much you spend in interest charges over the life of the auto loan.

No credit history or a bad credit history is practically an invitation for higher interest rates on an auto loan. But if applying with a cosigner (someone with good credit who signs the loan documents), you may qualify for a better interest rate on the loan.

Don't take the first offer you receive without first comparing this option to other financing packages. Get a quote from the dealership's finance team, and then request an auto loan quote from your personal bank or credit union to compare the rate and terms. Consider getting preapproved for an auto loan with your bank before talking with a dealership. This way, you know what you can afford to spend in advance.

Insurance Regulations for Vehicles With a Lien

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Insurance requirements differ by lender and state. Most states require a minimum liability policy for registered vehicles, but a lien holder often requires more coverage. Most lien holders require a full-coverage policy, increased policy limits and a lower deductible. Before you initiate a loan or change your current policy, determine your lien holder's requirements.

Expect to provide and maintain collision coverage on your vehicle until your loan is satisfied. A collision policy provides coverage for repairs to your vehicle or its replacement if you're at fault in an accident. A liability policy, required by most states, offers coverage only to other people or property if you're at fault in an accident. Your lien holder also requires that it is listed as your insurance policy's loss-payee. Your lender receives your vehicle's market value payout if your car becomes a total loss. If your insurance payout exceeds the loan amount, you'll receive money back. If you leased the vehicle, the leasing bank keeps the profit.

Lenders also require increased limits and lower deductibles in addition to collision coverage. A state required liability policy requires a minimum amount of bodily injury and property damage coverage, but your lender likely requires more. The exact amount of coverage required for a borrower's policy differs by lender. In addition to increased limits, expect to choose a lower deductible, or the amount you can expect to pay for repairs yourself if you have an at-fault accident. Both increased limits and a lower deductible increase the cost of an insurance policy.

Your lender may also require you to purchase gap insurance coverage. Gap insurance isn't actually an insurance policy and must be purchased when you first initiate your loan. Gap insurance covers the gap between your vehicle's market value and its loan amount. Insurance companies do not pay off your total loan if the vehicle's value is more than you owe. Gap insurance takes care of the rest of your loan's balance so you don't have to. Expect costs to range between $100 and $600, which is a one-time charge.

Additional insurance requirements are explained in your loan contract. Review which penalties exist if your insurance coverage lapses or cancels during your loan period. Some lenders may repossess a vehicle if an insurance policy isn't consistently maintained. Or your lender may add an expensive insurance policy to your car loan, which increases your car payment. Your insurance company electronically notifies your lender and your state motor vehicle office if your policy cancels or lapses. If this happens, your lender can act as stated in your loan contract. Your state only requires that you carry its minimum coverage. If you don't, you may face fines or driver's license suspension if you don't return your license plates.

Do They Garnish Wages on Repossessed Cars?

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When you take out an auto loan, your lender holds a lien against the vehicle until you pay off the loan in full. This lien gives your lender the legal right to seize your car if you don't make punctual loan payments. Depending on how much you owe and how much your vehicle is worth, you could face additional financial consequences after losing your car to repossession.

Once it repossesses your car, your lender sells the car at auction or to a private buyer. The Federal Trade Commission notes that the lender does not have to sell the car for the vehicle's fair market value, but must only market it for a reasonable amount. If the car sells for less than you owe your lender, you remain legally responsible for paying off the remainder of the loan, which is known as the "deficiency."

Your auto loan deficiency includes not only your remaining loan balance, but also the expenses your lender incurred when it repossessed the vehicle. If you do not make arrangements with your lender to pay off the deficiency, your lender has the option to either write off the deficiency as a tax loss -- resulting in the IRS requiring you to pay income tax on the debt -- or file a lawsuit against you.

Your lender must win a lawsuit against you for the loan deficiency in order to garnish your wages. After the lender wins its court case, the court issues a certificate of judgment that the lender files with the county clerk's office. Once the certificate of judgment is on record, your lender can request a writ of garnishment. Provided the lender knows where you work, it serves your employer with the writ of garnishment, which is a legal document requiring your employer to withhold a percentage of your take-home pay.

The Consumer Credit Act restricts the amount any creditor can force your employer to withhold from each paycheck. Your lender is legally entitled to either the amount by which your weekly paycheck exceeds 30 times the federal minimum wage or 25 percent of your income after taxes -- whichever is less.

Each state has the option to either adhere to the federal wage garnishment guidelines or place stricter regulations on garnishment -- including prohibiting the practice entirely. Thus, state laws vary regarding how much your lender can garnish from you after a repossession.

Can a Balloon Payment Be Negotiated at the End of a Car Lease?

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Holders of car leases have two choices at the end of the lease term: turn in the car to the lease company or buy the car for the price listed in the lease contract, sometimes referred to as a balloon payment. If you want to keep the car, compare the purchase price listed in the contract with the current market value for similar cars. There may be some room for negotiation.

With a car lease, your monthly payments pay for a portion of the car's value; the balance at the end of the lease is a residual value. To purchase the car from the leasing company, you pay the residual value plus any other listed fees. Leasing companies base the residual value on their forecast of the car's wholesale value of a car at the end of the lease term. If the residual value is accurate, the price should be a good value for the car.

Determine if the Kelley Blue Book value is higher, lower or about the same as your car's residual value. Find the current trade-in value of the car, using an online value website, or have a dealer give a buy bid on the car. If the current wholesale value is significantly lower than the residual value, the leasing company will take a loss on the car if you turn it in and the car is sold at auction; you could turn this into a negotiation opportunity.

The leasing company may or may not be willing to negotiate a purchase price different from the contract's residual value. To ask for a lower price, select a value above what the leasing company would probably get at auction but lower than the residual. Be ready to buy the car immediately at the price you negotiate. You should be able to write a check or have pre-approved financing. Contact the leasing company, inquire if there is someone with whom you can discuss buying out your lease and make an offer. The leasing company may be willing to take a lower price.

A car dealer may be able to negotiate a better price with the leasing company and allow you to buy the car for a lower price than the residual value. This tactic has the best chance if you use a dealer in the same type of car and if the leasing company is the finance arm of the car manufacturer. In this scenario, the dealer buys the car from the leasing company and then sells it to you. The leasing company may be more willing to negotiate with a dealer. Another benefit is the dealer will take care of the sales tax and registration requirements.

The Best Way to Refinance a Car Loan

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Reducing your car payment might provide the extra money in savings you need and refinancing is the way to do it. Refinancing can change the term and the payment amount on your car loan, an important fact to keep in mind. The challenges are finding a reputable bank to refinance the loan and understanding the terms of the agreement. You will need to understand prepayment penalties, GAP insurance and other coverage features.

Review current auto loan documents. Understand the prepayment penalties (a financial penalty for paying your loan before the term), if any apply. Contact the lender to request a payoff balance on your loan. The payoff is the amount you owe before you can get out of the loan. The payoff balance is valid for only a certain period of time. If you do not act within that window you will have to get another balance. The payoff balance is not the same as the amount you owe on your loan statement. Your loan statement does not include processing or closing fees.

Your credit profile falls into two categories: either you've been paying your payments on time or you haven't. If you've paying on time, you have more options at your disposal. Contact your current lender and ask if they would consider refinancing you to a lower rate based on your payment history. Allow them to provide a rate first. If an online offer is less, request the lower rate. Shop for rates on Bankrate.com or RateGenius. These are both reputable online resources which serve as online marketplaces for financial institutions advertising refinancing rates. Then go to your local bank or credit union and ask them to explain the difference between the lowest rates found online and their rates.

If you haven't been paying on time, your options are more limited, however, you can still request a refinancing based on your current situation. If you can prove a source of income in the near future, most lenders will approve a deference of your payment amount for up to 3 months. Don't rule out refinancing online. While it may result in a higher rate, the payment structure may be over a longer period of time causing the monthly payment to decrease. Watch out for loan and title fees. These fees aren't always disclosed so you need to request a breakdown before making your final decision.

What Is Looked at to Get Approved for Car Financing?

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Several factors are used in determining your eligibility for auto financing. They include such items as information contained in your credit report and your financial payment history. The type of vehicle you're purchasing can also contribute to your eligibility for financing. Before agreeing to any auto loan, it's important that you understand the terms of the agreement.

Your credit score is the largest single determining factor in deciding if a dealership or other lender is able to approve you for auto financing. Some dealerships may have policies that allow only certain credit scores to be approved for financing, while other dealerships will work with just about anyone in the right circumstances. If you have poor credit and a dealership is willing to finance an auto loan for you, review the documents carefully and be certain you know the interest rate applied to the loan. A low credit score usually means a high interest rate on an auto loan.

A down payment toward the purchase of a car can greatly affect your chances to get approved for financing. A down payment is applied directly to the car's final price, which means the dealership or other lending institution has to take on less risk in extending a loan. A lender may also consider a larger down payment a significant financial commitment in purchasing a vehicle. This may enable you to get financing for a vehicle when your credit score might otherwise preclude you.

Your debt-to-income ratio is calculated from the amount of debt you have versus the amount of income you bring in. A dealership or other lender may look at this annually to see how much total debt you're carrying or may look at your monthly revolving accounts. Your monthly debt-to-income ratio shows how you are handling your credit card debt --- if you're making only minimum payments or paying off balances. These figures can determine if a lender considers you a safe risk in extending financing for a car loan.

A new car may have certain manufacturer financing requirements that restrict dealerships from extending financing to only those with good or excellent credit. If your credit is fair or poor, you have a much better chance of securing financing when purchasing a used car as opposed to a new vehicle. This is because the dealership may be able to inquire with more lenders to get you approved for financing with a used car. A new car may have only the manufacturer's financing available.

Understanding Vehicle Financing

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Regardless of the make and model, every new vehicle purchased from a dealer is a major purchase, and many used vehicles' high resale values also push automotive prices out of the range of most people's price range. Instead of saving $30,000 for a new vehicle, automotive customers may turn to financing and make payments on their car over a set period of time. As with any other loan, credit must be approved and other conditions must be met. Customers should expect to pay finance charges on the money borrowed.

Financing a vehicle is such a commonplace part of the car-buying experience, many auto dealerships provide financing through in-house loan officers, although banks also provide automotive loans. Although car dealers provide financing, it often comes at less favorable terms to the borrower for the convenience of one-stop shopping. On the other hand, many automotive companies don't want a customer's lack of financing to cost them a sale, so many provide financing to buyers who couldn't secure a loan elsewhere. Seek at least three options before settling on a lender.

Depending upon the laws of your state, when you purchase a vehicle using financing, the lender will either hold the title of the vehicle until you repay the loan or will place a lien against the title that you hold. Either way, the lender effectively owns the vehicle until you repay your loan. Because of this, the terms of your automotive loan may require you to carry comprehensive insurance until you pay off the loan and may require other conditions as terms of the loan.

Unlike home loans, vehicle loans may not require the car buyer to make an initial down payment, as 100 percent financing is not uncommon in vehicle loans. In many other cases, down payments don't exceed 10 percent of the vehicle's value. Lenders may provide better rates to buyers who can make a down payment, and any cash paid upfront will lessen the interest charges accrued over the lifespan of the loan, the length of the loan or the monthly payment. The Truth in Lending Act requires lenders to provide borrowers with written information about finance charges, total annual percentage rates, payment due dates, late payment penalties and the length and terms of the loan. Borrowers should request and study all information and seek clarification from their lenders on terms they don't understand.

Although laws vary between states, the lender may immediately repossess your vehicle if you default on your loan. Loan documentation typically defines default terms, and skipping a payment or payments received outside of a grace period may qualify as defaulting. Lenders may allow vehicle owners to renegotiate the terms of their loan if they default, but in most cases, they're not required to do so. Vehicles repossessed by lenders may be kept or sold to recoup the costs of the loans. Lenders must tell the owner what they plan to do with the vehicle if it's repossessed.

Can I Settle a Car Title Loan With a Lien Lender?

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A car title loan can be used to purchase a car when a borrower is struggling to qualify for other types of loans or needs to purchase a car quickly. These title loans carry innate risks that borrowers should be wary of, usually connected with the length of the loan and the motives of the lender. Settling a car loan refers to using means other than normal payments to end the debt, especially when it becomes too difficult to pay. Borrowers may be able to settle car title loans in this way, but it is not likely.

A car title loan uses the title for the car itself as collateral. This means that the borrower gives the title to the lender he used to purchase the car. This allows the lender to quickly and easily take possession of the car and sell it if the loan terms are not met. If the car does not sell for enough money to pay back the loan, then the lender can sue for the remainder. Car title loans tend to only last months and have high interest rates.

A lien is a claim on property that a lender can use to collect on debts owed which have not been repaid. Repaying a car title loan is often difficult for a borrower because of the short term (which means higher payments) and the high rates. In this case, the car title lender is already a lienholder because the lender possesses the title. The lender can seize the car when payments are not made, but any money still owed must be paid back.

In some cases, borrowers may be able to settle the car title loan by giving up other personal property but keeping the car. This is rare, because it is much easier for the lender to simply use the car. But if the loan contract makes specific allowance for the use of other property, such as a bank account or another car, then the lender can use this property to settle the loan. However, the lenders that do allow such unorthodox action will often require property value higher than the debt to settle.

Car title loans are infamous for their use by predatory lenders. These lenders attempt to trap borrowers in a cycle of loans that build up uncontrollable interest, or do not expect the borrower to pay off the loan and plan on seizing the car regardless of borrower actions. This means that many lenders will be averse to any type of settlement that includes a lien other than the lien to seize the car. They may not care about the borrower's position at all, which can make negotiations difficult.

How to Finance a Moped Today

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A moped may be an economical way to get around, but financing a moped today may be a bit more involved than financing a car since mopeds are not sold in as many places as cars are. However, with some effort and research, you can get financed on a moped today, especially with a good credit rating.

Instructions

Select a local moped dealership that sells a moped you are interested in financing. If you are not able to find any local moped dealerships, check websites, such as the ones listed below for a list of United States moped dealerships.

Contact the moped dealership and inquire about financing, asking exactly what information is required to apply for moped financing there. While not every moped dealership will offer financing, most dealerships will offer some financing options for mopeds.

Provide the dealership with all requested information. An application for moped financing will typically require your name, address, phone number, social security number, and employment information. This credit check, which takes only minutes in many cases, is a way for the lender to establish your credit-worthiness: Essentially, if you have a positive loan repayment history, then you are a good credit risk and are more likely to secure moped financing.

Discuss the moped total cost, the annual percentage rate (APR) and the monthly payments with the lender. Be sure that the amounts are something you feel comfortable paying and that you are not overextending yourself financially.

Read and thoroughly review the moped financing contract. Sign the contract only after you are certain about all the costs and fees involved.

When Can You Refinance Your Car?

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Although the refinancing of home loans is relatively common, many borrowers also choose to refinance their car loans as well. The process of refinancing a car loan is very similar to the process used to refinance mortgages. A borrower will approach one or more lenders and ask whether they would be willing to replace his current loan with another one. While a loan can be refinanced immediately after it is taken out, refinancing an automobile loan only makes sense in certain situations.

When a person refinances his current loan, the lender from whom he receives his new loan agrees to buy up the current car loan he has and issue him a different loan under different terms. Some car loans have prepayment penalties -- fees incurred if the loan is paid off too soon. Sometimes, the penalties expire after several years. Although a person can refinance a car loan whenever he wants, it makes more financial sense to refinance after these terms have expired.

According to the automotive reference website Car Buying Tips, a finance company will generally only refinance a car loan if the loan is for more than $7,500. If the loan is smaller than that, the profit on the loan will simply be too small for the finance company to find it worthwhile. Therefore, a person may not be able to refinance the loan on a car that has lost significant value or a loan he has paid too much on.

A person may wish to wait to refinance a loan until he is confident that he can receive a lower rate of interest on his new loan. This will usually happen under two circumstances: the person will see his own personal credit rating improve, qualifying him for a lower interest rate from lenders; or interest rates will fall across the board due to changes in the lending market or the wider economy.

Sometimes, a person may not be able to get a better interest rate on a loan, but he may be placed in such a financial situation that changing the size of his monthly payments is to his advantage. For example, if the person has seen a rise in his income, he may wish to change to a loan that he can pay off faster, thereby saving money on interest. Conversely, if his income has shrunk, he may wish to decrease his monthly payment size.

Is There Any Way to Get Out From Under an Upside Down Car Payment?

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If you owe more on your vehicle than what it is worth, you're in a situation known as being "upside down" in your loan. This may be the result of the fact that vehicles depreciate in value as soon as they are driven off a dealer's lot or from rolling an old car loan into a new one. There are some possible remedies to the situation, although they don't always offer a great deal of relief.

If you can afford to pay an extra amount in addition to your regular monthly car payment, you can speed up the time frame where your car's value catches up to what you owe. Before considering this option, be sure to read the terms of your loan agreement. If it calls for the assessment of prepayment penalties, making additional payments probably won't help, and will likely hurt, your situation.

If you originally financed your vehicle at a high interest rate, consider refinancing to a lower rate. When you refinance, you will need to borrow an amount large enough to pay off the current balance on your existing loan. You may have to use a method such as obtaining a home equity loan to refinance, as traditional lenders may not be willing to extend financing on a vehicle that is worth less than what you owe. As with making additional payments, you'll need to be sure your original lender won't assess any prepayment penalties when you pay off the loan.

Consider selling the vehicle if it still fairly new and has retained a good bit of its value, as suggested by Fox Business. If you owe $20,000 on a vehicle that is worth $17,000, try to sell it at its true market value and take out a loan for $3,000 to cover the difference. If you need a vehicle, look into purchasing a used car where the amount you need to finance is much lower. You could even purchase it with cash if you have the funds available.

If none of these other options is feasible, the best you can do is to continue to make timely payments each month, according to the Dollar Stretcher website. You'll keep your credit in good shape, and as time goes by and you pay more and more of the loan's principal, the situation will improve. When the car is finally paid off, you'll be able to drop comprehensive and collision insurance coverage, which will also help you improve your overall financial situation.

Will Gap Insurance Cover a Car That Has Been Repossessed?

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Gap insurance offers no coverage for the money you owe on your car loan after repossession. The coverage offers financial protection for totaled vehicles when an insurance payoff does not cover a loan or lease amount. If your vehicle is repossessed, you must make arrangements to pay your remaining debt to avoid being sued by your lender.

You can purchase a gap insurance policy at the time you purchase your vehicle. Costs range from $100 in states that cap the cost and profit for providers, up to $600 or more in states that do not. Gap insurance covers your loan balance in the event that your insurance company determines your vehicle a total loss, whether from damages or theft. Your insurance company pays your lender only for the vehicle's market value without regard to your total loan balance. Gap insurance pays your remaining loan balance.

You should purchase gap insurance if you lease a vehicle or borrow a loan that's higher than your vehicle's market value. If a leased vehicle becomes a total loss, you are responsible for the car's total value, not just the lease amount. If you carry over a previous loan balance to your new car loan or fail to offer enough down payment to create vehicle equity, gap insurance is advisable. Without gap insurance, you must satisfy the remainder of your loan, even if you no longer have your vehicle. Your auto loan or lease remains as an open account on your credit report, which affects other loan opportunities.

Gap insurance does not apply to repossessed vehicles. Expect to receive a bill from your lender stating the amount you owe toward your loan. Once your car is repossessed, your lender prepares it for resale and sells it either privately or at auction. Once the vehicle is sold, the bank will send you documentation of the car's selling price. If the sales price is not enough to pay off your loan balance and repossession fees, you must pay the amount due. If the sales price is more than your loan balance, you'll receive a refund after the bank collects its fees and loan payoff amount.

Expect to pay your lender for the balance remaining on your vehicle's loan amount after the sale. You can work out a payment arrangement with your lender to satisfy the balance due on your loan. If you fail to pay your lender, it can pursue legal action. Your lender can garnish your wages to collect payment. A vehicle repossession remains on your credit report for at least seven years, even if you pay the balance due.

Car Financing for People With Credit Problems

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Credit problems make it difficult to get any kind of financing, including loans for new or used car purchases. Getting loans with bad credit is possible, but it takes research and you usually end up with less-than-favorable terms. You may have to accept whatever financing you can find initially, and then get a new loan once you fix your credit.

Your credit problems affect your car loan prospects when your credit score is between 620 and 680, according to the LeaseGuide automotive website. Those numbers are below prime, so lenders will force you to pay a premium of as much as 5 percent over the average interest rate to get a loan. A score below 620 labels you as subprime, and most lenders will deny your application.

Check your credit report before applying for your car loan because you may be able to alleviate some of your credit problems. Annualcreditreport.com gives you free credit reports every 12 months, so get your TransUnion, Experian and Equifax records from that site. Look for wrong balances, payments, dates and anything else in need of correction. The Federal Trade Commission explains that the credit bureaus must respond to error disputes and remove whatever they cannot confirm within 30 days of hearing from you. Your credit score goes up if you get negative data removed.

Common auto financing sources include dealerships, credit unions, banks and loan companies. Some dealers advertise that they specialize in working with people who have bad credit. Try to get financing through an outside source before you try the dealer, advises editor Warren Clarke on the Edmunds.com auto website. Dealerships link you with high-interest loans because they share in the profits. Outside financial institutions and other lenders work directly with you so their rates are generally lower.

You are not stuck with an expensive high-interest car loan forever if you fix your credit problems while you pay off the vehicle. Clarke explains that you can refinance the loan with another lender for better terms. Prepare for this by always making your car payments on time, paying all your other bills by the due date, and reducing your owed balances as much as possible. The MyFICO credit score website explains that these are all important factors in score calculation.

If you cannot qualify for any car loan, or if the interest rates are too high, consider using a co-signer to get the financing for you. A cosigner is someone with excellent credit who applies for the loan with you and agrees to take full responsibility if you stop paying. Consider this option carefully because you ruin your co-signer's credit, as well as your own, if you default. The co-signed loan helps repair your credit problems if you always pay on time because its history appears on your credit reports.

Texas Unemployment Benefits for the Self Employed

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The Texas Unemployment Compensation Act is included the Texas Labor Code, and establishes the requirements for unemployment eligibility. Under the Act, the commission can deny benefits to an applicant who was responsible for the sale of his business before applying for unemployment benefits, and this may include self-employed sole-proprietors.

Generally, the Texas Workforce Commission does not provide unemployment compensation benefits to self-employed applicants, unless they paid self-unemployment taxes as sole proprietors. Generally, most sole proprietors are neither required to pay self-unemployment taxes nor pay them. However, under Texas law, an employee who is a self-employed independent contractor is eligible for benefits if the commission determines he was actually an employee of a company, and the employer improperly and illegally categorized him as an independent contractor to avoid paying employment taxes and providing him with fringe benefits.

The Texas Workforce Commission will deny benefits to corporate shareholders if they owned a majority share of their corporation, and they were in control of their corporation's sale. Additionally, limited and general partners and sole proprietors are not eligible to receive benefits if they sold their business. However, self-employed individuals are eligible to receive unemployment benefits if they are still performing business activities, report their earnings and voluntarily pay self-unemployment taxes.

Most commonly, if an unemployed sole proprietor is eligible to collect unemployment insurance benefits, the Texas Workforce Commission based its decision on his employment history as an employer for a company that paid unemployment taxes for its employees. Approved self-employed claimants must report their gross earnings each week they submit a claim for benefits, even though they did not generate a net profit.

If the Texas Workforce Commission decides an applicant was not actually self-employed but a temporary employee of a staffing company, it may approve benefits. Additionally, if the commission approves a self-employed applicant's claim for benefits before she became a sole proprietor, the state will reduce her weekly benefit allowance when her profits exceed 25 percent of her weekly amount. If the commission denies her benefits, she can file a written appeal within two weeks of receiving her formal denial notice. If she requests a hearing, she may be able to convince the adjudicator that her self-employment should not be counted against her.

Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

How to Buy a Car With Credit Problems

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It's easier to buy a car with perfect or good credit. You'll obtain the best interest rate on the loan, which results in cheaper or manageable monthly payments. But even if you don't have the best credit rating, it's possible to get approved for a car loan. Shopping around for the best auto loan and taking other measures improve your odds of driving away with a new car.

Instructions

Read your credit report. Assess credit damage by obtaining a free report from AnnualCreditreport.com. Order a copy of your credit score to learn your credit rating.

Get your finances in order. Auto lenders want to see proof of income or other assets if you have credit problems. Make copies of your most recent paycheck stub, tax returns or bank statements to demonstrate your ability to pay the monthly note.

Start saving for a down payment. A down payment reduces the loan balance, and it can help you acquire an auto loan with credit problems. Plan to pay at least 10 percent of the purchase price.

Find a co-signer. Ask someone with an excellent credit history to co-sign your auto loan. As co-signer, he is required to pay the monthly car note if you default or stop making payments.

Shop around for the best deal. Some lenders take advantage of people with credit problems by inflating the interest rate. Secure your own financing before visiting a dealership, and obtain loan quotes from at least two or three lenders to ensure the best rate and loan term.

Pay cash. Consider saving your money and paying cash for a used vehicle. Apply for an auto loan once your credit improves.

Is There a Way to Terminate a BMW Lease Due to Disability?

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People choose to lease a car for several reasons. One of these is the low monthly payment, which can make driving a luxury car like a BMW an affordable option. The only way a car-lease customer is able to take advantage of low monthly payments is if he fulfills the terms of the lease as agreed upon when signing the paperwork. Sometimes circumstances develop, causing some to need to terminate their leases. When this happens, the lease customer needs a process in place, allowing him to legally terminate his auto lease without taking a big financial hit.

Instructions

Read through your lease contract and find out if your leasing company will allow you to get out of your lease by transferring it and the BMW to another person. If so, contact the company and let them know of your new disability. Inform them that you won't be able to make the lease payments and that you have someone in mind to take over the lease. Then they can approve this person, according to Lease Guide.

Contact a lease transfer company after reading your lease contract. Register with one of these companies and get help finding a buyer for the lease on your BMW. Lease transfer companies assist with the lease transfer and all paperwork, according to Auto Lease Breakers.

Return your car and pay the remainder of your lease to the auto dealership. This is the least desirable option because of how much you may end up owing in early termination fees and the remainder of your lease balance, according to Lease Guide.

The Advantages of Buying a Hybrid Car

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A hybrid car is one that runs on a combination of electric powered batteries and gas. There are also fully-electric cars that can run for a period of time before needing recharging. Many car manufacturers offer hybrid vehicles including Toyota, Chevrolet, Nissan and Ford, giving consumers a variety of options to choose from. There are many advantages to owning a hybrid car that can make the purchase more enticing.

One of the more attractive factors of a hybrid car is the miles per gallon (MPG) that the car gets. For example, the 2010 Nissan Altima Hybrid receives an average of 35 miles per gallon in the city, with an average range of 700 miles on a full tank of gas. The standard 2010 Nissan Altima receives an average of 23 miles per gallon in the city, with an average range of 460 miles on a full tank of gas. The decrease in fuel costs can provide enough room in the car buyer's budget to cover the higher cost of purchasing a hybrid vehicle.

Purchasing a hybrid vehicle can lead to a federal income tax credit on the buyer's annual tax return. As of 2010, consumers could qualify for a credit of up to $3,400. To qualify, the taxpayer must be the owner of the vehicle, purchase or lease the car for use by himself and not for resale, and operate the vehicle mostly within the United States. To claim the credit, the taxpayer must report the credit on Form 8910 on his annual taxes. Additional credits may be available under individual state tax laws.

Hybrids are largely popular with the environmentally friendly crowd, as the cars do not emit as many pollutants into the air. The cars work by using the electric motors when idling, and thus do not produce exhaust, leading to a decrease in smog levels. The ingredients found in auto exhaust add toxic pollutants to the atmosphere and can play a role in global warming. But a hybrid car's electric motor uses clean energy and does not produce the toxic ingredients found in normal auto exhaust.

What Happens When an Auto Loan Matures?

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When you purchase a vehicle, your loan contract lists the term of the loan and the payment information. A loan officer may also give you an amortization schedule which shows the breakdown of each payment into principal and interest. When your auto loan matures, your last payment should bring the loan balance to zero, with no money owed.

When you finance a vehicle, your lender places a lien on it as a first secured party. If you default on payments, the bank has a legal right to repossess a vehicle and sell it to pay off your debt. When a borrower pays off an auto loan, the bank must send him a lien release. If you reside in a state which requires a lender to hold the car title until a loan is paid off, the bank will send you the title within 30 days. You may pick up the lien release in person, or call the bank and request it be mailed to you right away.

A term for an auto loan is usually between 48 and 60 months, and may be as long as 72 months for newer vehicles. When a loan approaches its end, the final payment should pay it off. However, sometimes a borrower may have a balance due when a loan matures. This may happen if he has fallen behind on payments. Banks sometimes run promotions to skip a loan payment during a holiday season. If a borrower takes advantage of such offer, he will have a payment due at the end of the loan. A balance may include late fees and any unpaid interest a borrower has accrued during the term of the loan.

If you owe a balance when your loan matures, you must pay it off to receive your title and lien release. If you don't pay the owed amount, a creditor may send the account to collections and report it to the credit bureaus. A bank has a right to repossess your car if it cannot collect the amount you owe. If you can't pay it off in one payment, try to negotiate a repayment schedule with the lender to avoid accruing late fees. Interest will continue to accrue on the balance you owe.

Once the loan matures, your bank will send the information to the credit reporting agencies. Once the loan matures, your credit file will show a closed loan with a zero balance, or a closed loan with an amount you owe. If the bank sends the past-due balance to collections, it may also show a collection record. Collection accounts remain on a credit report for seven years. It may hurt your credit score and prevent you from getting new credit accounts, a job or an apartment rental.

Can I Use My Own Leasing Agent to Lease a Car From a Dealership?

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Leasing a vehicle is different from leasing an apartment. If you employ a leasing company to handle your properties or worked with one to handle real estate matters, your agent does not put forth any money to complete a home or rental contract. Leasing a car requires payment of a vehicle's total cost, so you'll have to use an auto leasing bank to take on the financial responsibility and risk.

When you lease a vehicle, you're actually leasing it from a bank, not a dealership. A bank purchases the car from the dealer, then leases the car to you. Your payments are based on expected depreciation determined by mileage and length of the lease term. Your monthly payments also include an interest rate. The leasing bank is the vehicle's titled owner and remains on the registration. Your full-coverage insurance, a requirement of leasing because of the risk of loss, lists the leasing bank as the loss-payee.

If you know which vehicle you want to lease, you can go to the manufacturer's website to view monthly lease offers. You can review monthly payment amount, term, mileage allowance, down payment requirement and the name of the bank providing the lease. You'll have to lease the vehicle from a new car dealer. If you prefer, you can change the lease terms once you've found your car. Advertised lease payments are based on a best-case scenario showing a down payment, mileage allowance and term predetermined to show the lowest payment possible.

You can apply to the manufacturer's bank online or use a dealership. The dealer, a go-between for the bank and your lease, electronically submits your lease application for approval. Once approved, the dealer provides all bank contracts and motor vehicle paperwork, following the bank's requirements for signatures and insurance requirements. Once you take the lease, the dealer submits your contracts to the bank and your paperwork to your state's motor vehicle office.

Manufacturers usually change lease offers monthly, so if you like the leasing terms you find, check the offer expiration. You can also negotiate pricing to lower payments, as most leases are based on full sticker price. Dealers make full profit for a new car sale when the vehicle's price isn't negotiated, as the leasing bank then purchases the car for full price. Vehicle leases require good to excellent credit, so not everyone can obtain an approval. If you can't obtain an approval, you can use a cosigner, who joins the lease contract with you and is equally responsible for the payments.

What Happens if You Damage a Leased Vehicle?

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When you lease a vehicle, you are essentially borrowing the car from a financial institution. If you damage the vehicle while it is in your possession, you will be held accountable for the wear and tear. Review your lease contract before returning the vehicle to determine what type of condition the car is expected to be in upon the end of the lease terms.

Before the end of your vehicle lease, the lessor sets up an inspection to decide if you owe money due to excessive wear and tear. Exterior, interior and mechanical components are all inspected and evaluated. The inspector may ask for explanations if major damage is found during the evaluation.

General wear and tear is typically permitted as part of your lease contract. Normal wear and tear may include minor stains, small nicks, minor mechanical issues and exterior scratches on the vehicle. Broken pieces, paint chips, damaged auto glass, multiple dings on the exterior, water damage, major mechanical problems, and tire and wheel damage are all likely to be classified as excessive wear and tear.

Although some wear and tear is allowed, measurements may be taken to determine if the damage exceeds what is outlined in your lease terms. For instance, Hyundai requires that lease vehicles be returned without holes in the interior measuring more than 1/8 in. and without tire tread less than 1/8 in. from the shallowest part of the tire.

It is advisable to repair damage to a vehicle before turning it into a dealership. Dealership prices for repairs are likely to be much higher than finding a private body shop to fix the damage. Instead of charging you for the repair, you may be asked to pay the estimated cost to bring the car to perfect condition again. Service fees may also be charged when you don't fix damage on a leased vehicle. Call several body shops to receive quotes before choosing the lowest price. If major damage was sustained as a result of an accident, consider going through your insurance company to fix the car. Deductibles may apply.

Reasons Not to Lease a Car

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Leasing a vehicle has been a popular alternative to making a purchase for some time, but it may not be the most cost effective method of acquiring your next car or truck. Compare costs, including acquisition, insurance and maintenance over the entire period you will have the car. This is not always easy because the terminology of leasing can be confusing.

When you lease a car, you are financing that portion of the car's value that you are using. Focus on three factors when determining the final cost of a lease. First is the purchase price of the vehicle, second, the "residual value" or that amount that they determine the car to be worth at the end of the lease, and finally the interest rate that you are charged to finance the vehicle. Know that your payment goes strictly to financing and you accumulate no equity. When you purchase a car, you finance the entire purchase price of the vehicle and accumulate some equity, even though the amount decreases with time. Generally, the longer you lease your vehicle the more expensive it is versus buying outright. A lease of three years in often the break even point and anything longer leans toward a purchase as the better alternative. Of course a dealer incentive, such as cash back or a low interest rate, could make the purchase a better deal from the start. A third and cheaper alternative to buying or leasing a new car is to purchase a used car. Even purchasing a vehicle that is only a year old can be less expensive than the new car alternatives.

The ultimate cost of your lease will depend upon how many miles you drive each year. At the outset of your lease, you negotiate a set number of miles, usually between 12,000 to 15,000 miles per year, that you are allowed to drive. You pay a premium of 5 to 20 cents per mile for anything over your total limit. This additional charge can add up quickly. Check with your state, because lemon laws may not apply to your leased vehicle. Insurance rates are sometimes higher on leased vehicles. When you turn in your car, you may be charged for repairs to dents and deep scratches, and if all four tires are not a match, you will be charged the cost of a new, matching replacement.

You have two choices at the end of your lease. You can either settle the final bill and walk away or you can purchase the car at a predetermined price. The predetermined price is often higher than you might pay for a similar vehicle if you were to bargain from scratch. It is almost always more expensive to purchase your leased vehicle than to buy it from the outset.

How to Buy a Repo VW

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The best place to get a repossessed -- or repo -- car is at an auction. However, car auctions are not usually not advertised. If you are looking for a repossessed VW, you will need to do some additional work to find potential auction facilities that may have the specific VW you're looking for. You will need to examine various sources, such as the bank and local car dealerships. With some persistence, you purchase a repo VW of your choice at a good discount.

Instructions

Go online to check the resale value and performance reviews of all VW cars. A good source is "Kelley's Blue Book." It will give you an idea of how much you would expect to pay for a pre-owned or used VW, based on vehicle specifications like interior packages.

Decide how much you can afford to pay for the VW. Auctions do not offer financing options. Winning a bid means putting down at least 10 percent of the sale price on the day of the auction and paying the remaining balance using cash, money order or credit card the following day or shortly thereafter.

Conduct a search for repossessed VWs. A good place to start is with the auto loan department at a bank. You can ask the representative about whether the bank has VWs in its inventory of repo cars. You can also ask the bank about which auction facility it uses to sell its cars. This may require some finesse on your part, since banks do not like to advertise their repos. Alternatively, ask a used car dealership about car auctions in the area. Explain to the car dealer that you are looking to buy a repossessed VW. Car dealers use auctions to buy cars at wholesale.

Bring an auto mechanic who specializes in VWs with you on the day of the auction. On auction day, you will have a limited amount of time to inspect vehicles. A mechanic can point out defects or issues, such as a rolled back odometer, that your untrained eye may not see.

How to Lease a Car in Los Angeles

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Instead of buying or getting a loan for a new car, you can lease a new car to drive around Southern California. With the high cost of living in Los Angeles, leasing a car can be a good option; the monthly lease payment is usually lower than a car loan payment. Leasing a car in Los Angeles is no different than leasing a car in any other city in the United States. You do need to have top tier credit to qualify for the lease, which is generally an auto FICO score above 700.

Instructions

Look in the "Los Angeles Times" for car dealer ads for leasing specials. Finding a leasing special can lower your monthly leasing cost. Pay attention to the fine print, because some specials may not include sales tax and fees, which result in a higher monthly payment. The Edmunds Website maintains a list of current incentives and rebates that can help you find leasing specials in Los Angeles. Just enter in your Los Angeles zip code for results.

Determine how you long you to keep the car, so that you will know what lease term you want. Lease terms in Los Angeles are similar to other areas of the country; they can be between two and five years. According to Edmunds, a three-year lease is a popular choice.

Use an online auto calculator, such as the one on the Bankrate Website. (See Resources.) Estimate what your lease payment will be. This is a good idea if you are trying to decide between different vehicles.

Visit several Los Angeles area car dealers to narrow down the specific car that you want to lease. As you visit or talk with the various Los Angeles area dealers, you can also narrow down which dealer is offering you the best price.

Test drive the vehicle you want to lease. Considering the traffic situation in Los Angeles, you may want to schedule your test drive at an off-peak time for commuters. You will need your California driver's license and proof of insurance to test drive the vehicle. Test drive as many cars as you want to make your decision.

Negotiate with the salesperson once you are confident that you have found the car you want to lease. You can get quotes from multiple Los Angeles area dealers; try to play them against each other for a lower price. You can also look on the True Car Website (see Resources) to see what others have paid for the same vehicle in Los Angeles. The length of the lease, allotted annual mileage, down payment and monthly amount are the things you want to focus your negotiations on.

Review the lease agreement once you have come to an agreeable lease term. Check that all of the items you agreed on verbally are actually listed accurately in the lease agreement. Sign the lease, if everything is in order.

How Can a Retired Person Buy a Car?

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Many people who are retired like the independence driving brings. However, many retired people may have strict budgets, as they are relying on pensions, retirement accounts, savings or government benefits. However, these people have many options when it comes to buying a car.

The kind of car that a retired person should buy depends on several factors, particularly financial situation. A retired person with a healthy income and few expenses has a far wider selection that a person on a tight budget with significant medical expenses. Before shopping, a retiree should make out his list of needs for the car and his income and savings for buying it.

Retirees on a limited budget might consider a reliable used car. Many economical used cards have safe handling, roomy interiors and good gas mileage. A retiree can browse the classifieds section of his newspaper.

Many people who purchase new cars and expensive used vehicles must take out a loan to support their purchase. If the retiree has good credit and a steady income, she may be able to get a car lease for a good rate. Many retirees have excellent credit ratings, gained through decades of paying off their loans on time. Retirees should check with both finance companies and auto dealerships about the possibility of taking out a loan.

If a retiree does not have the money to purchase a car with his own funds, he can approach a charity the provides cars to low-income individuals. Many cities have social service organizations and churches that provide cars for little or no cost to people who cannot afford a car on their own. Retirees should inquire at human services organization for a list of local programs.

The Average Salary of Car Haulers

11:21 AM No comments

A car hauler's job is sometimes risky and unpredictable. In addition to his own vehicle, he must also take responsibility for others. If you take the time to learn the job description and average salaries of drivers in this position you then have a point of reference when applying for towing jobs in the future. This position is included in the heavy trucking industry, according to the United States Bureau of Labor Statistics classification system.

A car hauler is a truck driver who must move vehicles from one location to another. In many cases, car haulers work as tow-truck drivers with establishments who need individual cars towed from private lots. They also work for local parking authorities who require towing from restricted areas. Car haulers also transport multiple vehicles to car dealerships and manufacturers. These workers are responsible for filling out paperwork, loading vehicles, unloading them, communicating with customers and safely transporting the cars in their care.

The U.S. Bureau of Labor Statistics classifies car haulers under the "Support Activities for Road Transportation" category. These workers earn an average of $32,630 per year as of May 2010. That salary translates to about $15.69 per hour.

The demand for workers in the heavy and tractor trailer truck driver category under motor vehicle operators, which includes car haulers, is expected to be strong going into year 2018. The employment change estimate between 2008 and 2018 is estimated at an 18.6 point increase during that period. The projected increase in demand may be attributed to a number of factors. For instance, as a way to generate more revenue, some cities and municipalities may start to hire more tow drivers to deal with illegally parked vehicles.

In addition to a career working as a car hauling driver for another company, you might also consider working for yourself in this profession. You can apply for a towing license from your local municipality. You must also secure sufficient commercial vehicle insurance and lease or buy your own truck if you choose this path. Hauling owner-operators may earn the same or even more than haulers who work as employees.

First-Time Car Loans With No Credit History

3:08 AM No comments

It's tough to get credit, especially when you don't already have credit established. Automobile loans are secured, so even if you have no credit history, you may have a better chance of getting a car loan than an unsecured personal loan. There are strategies you can employ to help you get that first-time auto loan and not have to pay more for it.

Start building a healthy credit history by paying all your bills on time. Another way to establish credit when you have none is to get a secured credit card from the bank where you do business. Your credit limit will be whatever amount of cash you deposit. You prepay for the credit you use, but the bank will report your payment history to the credit bureaus. Although retail credit cards typically offer low credit limits and charge high interest rates, this is another way to build your credit. Avoid paying high interest rates by paying your balance in full each month. Make certain the creditor reports your payments monthly to a credit bureau.

Apply for a car loan with a no credit auto lender. Getting approved for a no credit loan actually helps you establish a credit history. The major disadvantage is the lender will charge you a higher interest rate if you've never had a car loan before. Lower the risk to the lender by making a down payment on the loan. Some no credit auto lenders will require that you make a down payment. Putting money down lowers your monthly payment, making the loan more affordable. It also may get you a lower interest rate.

Parents often co-sign for young adults applying for a car loan for the first time. If the co-signer has a high credit rating, you will qualify for a lower interest rate on the loan. The person who co-signs a car loan for you is responsible for making sure that the monthly loan payments are paid or else suffer negative consequences to her own credit score. A co-signer must be financially able to pay off the debt if you default on the loan. Failure on your part to make the monthly payments means the creditor will go after the co-signer for payment of the debt.

When applying for your first auto loan, shop for a used vehicle. Your payments will be lower because you won't be borrowing as much money. Taking a short-term loan will cost you less in interest and allow you to pay off the debt more quickly. Another strategy you can use to qualify for a loan is to open a savings account. This shows a potential lender that you are putting money aside and have cash reserves available to repay the debt. Another option is to join a credit union, where you may have an easier time getting approved for that first-time auto loan.

New Car Buyer Financing Guide

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According to "Where to Get the Money," a 2005 Bankrate.com article, about 70 percent of new car purchases involve some type of financing. If you are in a position where you need to finance the purchase of a new car, be prepared so the lending company does not take advantage of you.

One of the advantages of shopping for a new car is that the interest rate on your loan should be lower than rates for used cars, according to Bankrate.com. When you are ready to shop for a car, spend some time shopping for the financing first. You do not have to take the deal that is offered by the auto dealer. Instead, you can shop rates at lenders online and in person first.

When you work with a lender, whether at the dealer or elsewhere, get specifics about the loan before you close the deal. For example, find out if the loan has prepayment penalties or other hidden charges. Ask exactly what your interest rate is, what the payment is and how many payments you have to make. Find out if the deal is contingent on finding financing. In some cases, you might not actually have a loan when you leave the dealership. The dealer then looks for a lending company that will finance the deal.

In the auto industry, it is not uncommon for dealers to offer 0 percent financing on new cars. While this might sound particularly attractive if you have good credit, it may not be the best option for you. One of the issues with these loans is that they sometimes have shorter terms than other loans. This makes it difficult to afford your monthly payment. In some cases, you might also have to make a very large down payment to qualify.

When you are financing a new car, the dealer might try to get you to buy gap insurance. While this might seem unnecessary, with gap insurance, you guarantee that you will not end up owing more than what the vehicle is worth if you get in a wreck. New cars depreciate rapidly, and if you are in a wreck, your auto insurance company will only pay what the vehicle is worth, regardless of how much you owe. Gap insurance pays the difference between what the auto insurance company pays and what you owe.

Is It Worth It to Refinance a Car Loan?

9:18 PM No comments

When you cannot afford your car payment, one option that you may explore is the possibility of refinancing your car loan. Refinancing your car loan may work to your advantage or it may not help much, depending on your individual situation. Before making the decision, you have to look at several factors.

Refinancing an auto loan is a step that many people never consider, but it can help them save money. With this process, you take out a loan from a new auto lender. Then you use the money that you receive from the new loan to pay off your existing loan. Once you have done this, you begin making payments on the new loan. Your loan will essentially start over with a new term and a new interest rate.

When you consider refinancing your auto loan, it may be to your advantage if you are in the middle of a loan term. For example, if you are in the third year of a five-year loan, it might work to your advantage to refinance. Since you have already paid down some of the balance of the loan, you can then refinance that remaining balance over another five-year period. This extends the repayment of the smaller amount and gives you a lower payment every month.

When you refinance your auto loan, one of the major benefits you can receive is lowering your interest rate. If you are considering refinancing your auto loan so that you can save money on interest-only payments, you have to make sure that the interest rate is lower than what it was on your original loan. For example, if you had an auto loan at 8 percent and the market rate is now 6 percent, you can refinance to save potentially thousands of dollars on interest.

When considering refinancing your auto loan, you may be worried about the potential costs of this process. Although refinancing a mortgage does come with closing costs, you should not have to worry about this with an auto refinance. Most of the time, you may only have to pay a small fee to transfer the title of your car from one lender to the next. Beyond that, you should not have to come up with anything out of your own pocket.

How to Finance a Car With a Bad Credit Rating

5:22 PM No comments

Financing a car with bad credit may not be as difficult as you think. The website Bank Rate says banks and credit unions often approve auto loans to people with poor credit, partly because cars are easy to repossess, providing the lender with collateral for the loan. That means you could qualify for an automotive loan even if your credit score is below 620, which is the cutoff for "good" credit, according to Bank Rate.

Instructions

Obtain a free copy of your credit report from the website Annual Credit Report. The website was established by the three national credit bureaus, Equifax, TransUnion and Experian, to offer free reports as mandated by the Fair Credit Reporting Act. You also may order by phone by calling 877-322-8228. Order your credit score separately by following instructions on the credit report.

Evaluate your credit score. In 2008, Bank Rate reported that only 2 percent of Americans with credit scores had scores lower than 500, with overall scores ranging from 350 to 850. There is no rule for a minimum credit score required for loan approval, although the higher your score, the better your chances.

Review your credit report for any existing accounts that are reported as past due. Make payments to bring these accounts current before applying for a loan. Resolve any accounts that have been sent to debt collection agencies. Bank Rate says that because of your poor credit score, it's important that loan officers see that you're currently paying your bills on time.

Apply for a car loan at your bank or credit union. Bank Rate says you should avoid automatically settling for dealer financing or dealers who say they specialize in lending to people with bad credit. Banks and credit unions may offer lower interest rates even for people with bad credit. Apply where you bank, because having accounts at the bank could improve your chances for approval. Also, improve your chances by making as large a down payment on the car as possible.

The Average Auto Depreciation

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Unlike investments, such as real estate, mutual funds or savings bonds, the purchase of a vehicle typically does not result in a long-term financial gain. Through a process known as depreciation, your vehicle loses its value over time. Depreciation occurs whether you drive the vehicle frequently or leave it parked in a garage for months at a time.

When you purchase a vehicle, it begins to depreciate as soon as you drive it off the lot, as your new vehicle is now considered to be used. According to BuyingAdvice.com, the average depreciation rate ranges from 15 to 20 percent in the first year alone. Vehicles continue to depreciate at a rate of about 10 percent per year during years two through five. This means that by year six, your vehicle has lost more than half of its original value.

A number of factors contribute to the depreciation rate and subsequent value of your vehicle. The more miles you drive, the faster your vehicle will depreciate, as higher mileage generally results in increased wear and tear. How well you take care of the vehicle is also important, as poor vehicle condition reduces its value. Some models also depreciate more rapidly than others, regardless of their condition or the number of miles driven.

Depreciation will have its biggest effect when it comes time to get rid of the vehicle. When you go to trade the vehicle in, the car dealer will take depreciation into account when assessing how much it will give you toward the purchase of the new vehicle. If you sell the vehicle privately, a savvy buyer will check resources, such as Kelley Blue Book, to determine the true market value of your vehicle while factoring in depreciation.

Depending on how much of a new vehicle purchase you finance, the decrease in the vehicle's value due to depreciation may mean that you may owe more than the vehicle is worth, a situation referred to as being "upside down." If your insurance company declares your vehicle a total loss as the result of an accident, you're still responsible for any balance still owed to the lender. You can avoid this predicament by purchasing gap insurance when you buy the car, which will cover the difference for you.

Thursday, December 31, 2009

Buy Used

Pay for Value

Considerations for Students

Traps to Avoid

Auto Lenders

Credit Card Companies

Collection Agencies

Individual or Personal Lenders

Wednesday, December 30, 2009

Credit Scores

Bankruptcy's Impact

Highs and Lows

Car Loan

Tuesday, December 29, 2009

Your Bank's Loss

Insurance Payoff

Benefits of Gap Insurance

Gap Insurance Purchase and Cost

Monday, December 28, 2009

Statistics and General Information

Police Report

Insurance

Preventive Measures

Full-Coverage Insurance

GAP Insurance

Arranging Payments

Credit Reporting

Interest Charges

Early Payoff Penalty

Bank Contact

Another Option

Expert Insight

Significance

Alternatives

Sunday, December 27, 2009

Credit History

Benefits of a Reduced Term

Down Payment

Cosigner

Loan Shopping

Saturday, December 26, 2009

Collision Coverage

Increased Limits and Lower Deductibles

Gap Insurance

Your Contract and Insurance Reporting

Friday, December 25, 2009

How It Works

Auto Loan Deficiency

Wage Garnishment

Garnishment Limitations

Car Lease Residual

Actual Value

Negotiation

Using a Dealer

Thursday, December 24, 2009

Reivew Current Loan Documents

On Time Payments

Late payments

Tuesday, December 22, 2009

Credit Score

Down Payment

Debt-to-Income Ratio

New Car or Used Car

Selecting a Finance Company

Ownership of Vehicle

Down Payments, Interest Rates and Terms

Defaulting and Repossession

Car Title Loan

Liens

Other Property

Considerations

Sunday, December 20, 2009

Instructions

Saturday, December 19, 2009

Refinancing Contracts

Payment Size

Interest Rates

Changes In Personal Finances

Pay Extra Each Month