What Are the Additional Fees When Buying a Car?

If you plan to purchase a vehicle privately without registering or titling it, you may not pay any fees at all. Registering and titling a vehicle requires you to pay a variety of fees, which depend on the state and county you live in. You'll also pay additional fees if purchasing from a dealership.

Tax

Most states charge tax for a vehicle purchase, and some charge more than others. Taxes are figured differently by state and county. Some states may require you to pay more than 8 percent for a car purchase. While the amounts vastly differ, some states allow you to deduct the trade-in value -- if you have one -- from your purchase price before applying taxes. Some states also view manufacturer discounts for new cars differently; some require buyers to pay tax on the vehicle's full purchase price before applying any discounts.

Document Fees

If you're purchasing from a dealership, you can expect to pay a document fee. This fee is justified by dealers as a charge for handling bank contracts or motor vehicle paperwork on your behalf. A document fee differs by dealer and state, and some states cap the total amount a dealership can charge. A capped fee might be under $100, but some dealers can charge moe than $600. Because the cost can fluctuate by hundreds of dollars, you should consider purchasing from a dealer who does not charge the maximum price for this fee.

Registration and Titling

To register and title your vehicle, you likely have to pay for your title application and registration fees, which are based on the weight and type of vehicle. If you are purchasing from a dealership, it handles the process for you and collects the state's applicable fees. Each state has a different process and charges differently for registration and titling. The pricing information can usually be found on your state's motor vehicle website.

Inspections and Emissions

Inspection and emission requirements also differ by state. Most cars have to pass some form of safety inspection or emissions testing. If purchasing from a dealership, you can expect the process to be completed before you purchase your vehicle; the dealer charges you for any inspections your state requires. If purchasing privately, you likely have to complete the testing on your own. Some states offer a temporary inspection sticker, giving you time to complete the inspection or testing, while other states require that the tests be completed before you apply for the car's title or registration.

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How to Transfer an Auto License Plate From Oklahoma to Florida

Personalized license plates allow vehicle owners to add unique touches to their vehicles. A person moving from Oklahoma to Florida needs to register her car in Florida and change her license plates to those of her new state. Although someone cannot actually transfer a license plate between states, Florida law allows a car owner to apply for a personalized plate with the same or similar number and letter combination.

Instructions

1

Go to the Florida Department of Highway Safety and Motor Vehicles' website, and download the "Rate Chart" (see Resources) to determine the amount of tax you must pay to register your car. Make sure to have your car's vehicle identification number and weight available.

2

Download and print the title application from the Florida Department of Highway Safety and Motor Vehicles' website (see Resources). Complete the form by hand.

3

Print and fill out a personalized license plate application form (see Resources). You can use a maximum of seven characters on a standard Florida license plate, and five characters for a left-aligned plate.

4

Mail your title application, along with a check or money order for the fee listed in the License Plate rate chart, to the tax collector in the county to which you are moving (see Resources). Additionally, send checks for the $225 -- as of June 2011 -- new registration fee and the $15 personalized license plate fee. You should receive your plates within 45 days.

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How to Get Out of a Lease Without Paying

Depending how far you are into your lease, you may be able to sell the leased vehicle for its payoff amount. Or, you can transfer your lease to an interested party if your bank allows it. Getting out of a lease is not usually a quick and easy process, but it can be done if you allow some time for a sale or lease transfer.

Instructions

Sell Your Leased Vehicle

1

Check your odometer and write down the exact mileage. Call your bank to ask for your lease purchase amount and provide your current mileage. Write the buyout figure down, as this is the amount you'll need to sell your vehicle for.

2

Go to the following websites to determine your leased vehicle's worth: Edmunds.com, KBB.com and NADAGuides.com. NADA is for dealer trade-in amounts, which is in an option if you plan to purchase or lease a new car. Compare your vehicle's value to your payoff amount and prepare to sell or trade your car if the figures are close. Otherwise, you'll have to come up with the difference.

3

Go to a dealership to trade your leased vehicle for a new or used car, if you prefer. The dealership will handle the lease payoff, a new finance or lease account and all applicable paperwork. Otherwise, clean your vehicle entirely for its sale.

4

Advertise your lease wherever applicable. Autotrader.com, Craigslist.org or eBayMotors.com will reach buyers searching for a used car. Provide as many pictures as possible for your advertisement and any details about your vehicle that will help it sell, such as year, make, model, color, options (such as sunroof or leather) and overall condition.

5

Meet with potential buyers until you have one who would like to buy your car. Contact your leasing bank for further instruction, as you'll need to send the payoff amount to the bank to obtain the title and lien release for your buyer. Once you have all transfer paperwork, contact your state motor vehicle's department to ensure state procedures and complete your sale.

Lease Assumption

6

Call your bank to find out if you can transfer your lease to another party. Some banks allow you to do so free of charge, while some do not allow for a transfer at all. Ask for an explanation of the paperwork and transfer procedures so you know what to expect for the transfer.

7

Advertise your lease as a lease transfer, or lease assumption. Go to LeaseTrader.com or Swapalease.com to target people who are looking for a lease transfer. Or, you can advertise your lease through any automotive classified publications (online or in print).

8

State the current mileage and total mileage allowed on your vehicle, the monthly payment and months of payment left for the lease. Clean your vehicle completely and provide pictures of the car, along with applicable vehicle information, such as year, make, model, level and options.

9

Work with the Swapalease website or LeaseTrader website to transfer your lease, if using either. Both companies provide assistance with paperwork and the total transfer process. Sign any necessary documents to transfer the lease, and complete the transfer by following the bank's or website representative's instructions.

10

Call your bank to start the lease transfer process if transferring on your own, which includes an application from the potential buyer. Follow all instructions from your bank, including notarizing signatures, filling out and returning paperwork or providing paperwork to your buyer.

11

Find out when the lease application is accepted and all paperwork is completed and received by the bank by answering the bank's phone calls or calling to check in. Provide the new lessee with the vehicle after removing your plates, once the bank has confirmed the completion of paperwork.

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Can a Co-signer Be Liable to Pay If a Car Is Repossessed?

Co-signing an auto loan for a relative or friend requires careful consideration. If the person can't afford the car or has credit that is too poor to qualify without you, the risk of default may be too high. If you already co-signed and the borrower is not making regular payments, the vehicle can be repossessed. If this happens, you are liable to the finance company to pay any remaining unpaid balance on the account.

Co-signer

Co-signing on an auto loan so the buyer of the vehicle can qualify for approval is the same as carrying the debt yourself. Even though you are responsible for the loan payments if the borrower doesn't pay, you usually do not receive the benefit of using the car. The federal government requires lenders to give co-signers a statement prior to finalizing the loan that states their liability in the transaction. In some states, the lender is allowed to attempt collection of the debt from you without first asking the borrower to pay.

Repossession

If the borrower fails to make one payment, then the loan is in default. The creditor may repossess the car without notice, but more than likely it has attempted to contact the borrower to resolve the balance due without taking the vehicle. You may not know about the default until you receive a demand for payment of the loan. When co-signing the loan, you can ask the creditor to add a clause to the contract that requires you to be contacted as soon as payment has not been made.

Deficiency Balance

After the car is repossessed, the creditor may sell it at an auction. If the vehicle is sold for less than the amount owed on the loan, then a deficiency balance for the difference remains on the account and must be paid. To collect the balance, the creditor can sue you and the borrower and receive a deficiency judgment. With this court order, the creditor can attempt to collect from you in several ways, such as placing a lien on your home or garnishing your wages or bank accounts.

Credit Impact

You may lose money if you are required to pay as a co-signer after a car is repossessed. In addition, the impact to your credit can last seven years, and your score can drop by 100 points or more. With the repossession and deficiency judgment on your credit report, it may be difficult to qualify for credit cards, a mortgage or a car loan. As time passes, you may be approved for new credit, but banks can charge you a higher interest rate because of your history.

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How to Transfer a Vehicle Title Without Tax in Tennessee

If you are buying or selling a vehicle in Tennessee and you want to complete the transaction without needing to pay taxes, you are out of luck. There is no way to do this legally. However, if you simply want to transfer the vehicle to another party and no money will exchange hands, you can do so and avoid needing to pay any taxes.

Gifting

The Tennessee Department of Revenue allows those who have a vehicle to give the vehicle as a gift to another party through a process known as gifting. The interested parties must both participate in submitting a Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats form. Those who gift a vehicle not only avoid paying taxes when the vehicle changes ownership, but they also may write off the gift as a donation when they file their taxes for the year.

Avoided Taxes

A Tennessee resident who gifts a vehicle or who receives a vehicle as a gift avoids three different types of sales tax. Neither the giver nor the recipient needs to pay the local tax, the single-article tax or the state tax. While the combined sum of the local and single article tax could not be more than $80, the state tax is 7 percent of the purchase price. This is the area in which those gifting and recipients see significant savings when a vehicle is gifted.

Potential Costs

While no sales tax is due when a vehicle is gifted, there are types of costs that may arise. Some cars require emissions testing information forms. The recipient must test the emissions of the car before he can register it in his name. Tennessee charges a titling fee of $10.50. Your county clerk also may charge a small fee to process the paperwork.

Information Needed

To gift a title, you must have access to some specific information that is needed to fill out the gift affidavit. This includes the year and make of the vehicle, the vehicle's Vehicle Identification Number and the fair market value of the automobile. Both parties are required to sign this document to make it valid.

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How to Calculate the Early Buyout of a Leased Vehicle

Most of the numbers you need to calculate an early lease purchase are stated in your lease contract. Your monthly lease payment includes an interest rate and tax charges, which you'll need to deduct from your figures when determining your cost. Expect to pay taxes on the car's purchase price, as long as you didn't pay taxes on the car's entire price at the beginning of your lease. You'll have to ask your leasing bank, your state motor vehicle office or a dealer if a portion of your payment goes toward taxes.

Instructions

1

Locate your lease contract. Find the following information: the residual value, your monthly payment amount and money factor, which is the interest rate charged to your monthly payment. The money factor is often expressed in decimal form, such as 0.00150.

2

Add the amount of lease payments you have left on the term of your loan. For example, if you have a 36-month loan with a $250 monthly payment and have paid for 12 months, multiply $250 by 24.

3

Multiply the result by the money factor. Using the same example with a money factor of 0.00150, multiply $3,000 (24 multiplied by the monthly payment of $250) by 0.00150. The result is the amount of interest payments you'll avoid paying when purchasing the lease.

4

Add the remainder of monthly payments to your residual value. Subtract the interest charges from the total cost. The result is your purchase price without taxes or fees.

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How Do Car Payments Affect My Credit Score?

Many people use car loans to purchase cars, trucks or other automobiles instead of paying cash. As with all loans, borrowers must pay back the loan with interest. These payments can affect your credit score in several ways.

Significance

Car loans are a line of credit that financial institutions issue on the basis of your creditworthiness. According to Edmunds.com, your payment history is a major portion of your credit profile. Automotive loans with on-time car payments positively affect your credit score, while late payments and non-payment hurt your credit rating.

TIme Frame

Lending companies report late payments to credit bureaus, where they will lower your score. According to the CMPS Institute, making a car payment 30 or more days late will adversely impact your credit score. In addition, making a payment 90 or more days late will have an even greater negative impact on your score.

Considerations

If is imperative for you to ensure that you make your car payments in full and on-time. If your credit score drops, it will become very hard for you to obtain a new car in the future.

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How to Finance a Rav 4 Toyota

If you're in the market for an SUV, you might be set on purchasing a Toyota Rav4. You have some different options to finance a Rav4, from getting a loan at your local bank to getting approved through Toyota's financial department. While your credit history has a lot to do with getting approved for a Rav4 loan, it's possible to still get a loan, even if one financing option doesn't work out.

Instructions

1

Visit your financial institution, and ask for an auto loan. Many banks or credit unions will be happy to give you a loan if your account is in good standing and your credit history isn't poor. Provide the financial institution with your social security number, and bring your driver's license, your last two paystubs, two utility bills or two documents that prove your place of residence, last month's bank statement, vehicle information documents that provide the VIN, year, make and model, and proof of insurance. Some financial institutions might not ask for all of the documents.

2

Apply for a loan through Toyota Financial Services. Toyota Financial is Toyota's financial services and focuses strictly on financing Toyota vehicles, such as the Rav4. You can apply for a loan through the Toyota Financial Services website (see Resources) or by visiting the dealer from which you wish to buy the Rav 4. If you're applying online, select "Rav 4" as the vehicle you're financing, and enter the amount you need to finance and the required information, such as social security number, name, address and employment history. If your loan is approved online, you will receive the check within three to five days.

3

Talk with the dealer that's selling the Rav 4. If Toyota Financial denies your credit application, you can still take other financing routes, such as applying for financing at various banks and credit unions through the dealer. A car dealer typically has a list of financial institutions from which it tries to obtain financing for buyers. While one bank may deny your application, another may give you the loan. The bank's decision is based on your credit rating and past financing history.

4

Apply for a loan through auto financing website. There are many auto financing websites that offer new and used auto loans to car buyers; most will send you a check within one week if you are approved. For example, Capital One's auto financing website will approve you within minutes and send you a check within three to five days if you are approved. You will need to enter your personal information on the application, such as your name, social security number, address, employment history and loan amount.

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How to Calculate Lease Payment With a Factor Rate

Most car lease payment amounts are a combination of two parts. The first part of the payment is the value of the vehicle you will be using up during the lease term divided by the number of months in the lease. The second part is a calculated interest amount on the money that is derived by a formula that uses a lease factor. How that lease factor is figured is not a secret. Most people can master the formula if they are made aware of the numbers that go into it.

Instructions

1

Subtract the value of the vehicle at the end of the lease from the initial price. This will give you the amount of the car's worth that will be consumed during the lease period. The residual value (value at the end of the lease) can be obtained from the dealer who is leasing the vehicle. If you are leasing a $30,000 vehicle that will be worth $18,000 at the end of a two-year lease, the amount of value used would be $12,000 ($30,000-$18,000).

2

Divide the difference by the months of the lease's duration. In this case, it would be $12,000 divided by 24 months. This would equal $500 per month of principal payment. The next step will be to calculate the interest cost per month during the lease period by using the lease factor.

3

Add the initial cost of the vehicle to its residual cost. This would be $30,000+$18,000 to equal $48,000. Now, divide the interest rate by the number of lease months to get the lease factor. If the interest is 12 percent, it would be 0.12 divided by 24 equals 0.005. Multiply this number by the product from the first part. This will be $48,000 times 0.005 equals $240.00.

4

Add the principal amount to the interest amount to arrive at the final payment. This is $500 + $240 equals $740 for the final payment amount. So, you will pay $740 per month for a two-year lease on a $30,000 vehicle at 12 percent interest.

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Keys to Leasing a Vehicle

Many individuals expect to buy their new car or truck outright. Purchasing isn't the only option available to those who want a new car, as dealers typically offer lease options as well. Leasing a vehicle can be significantly different than buying one, so interested individuals should learn about the key concepts of leasing.

How Leasing Works

An auto lease can be likened to a middle step between buying and renting. You do not own the vehicle, but you do have exclusive use of it during the period of the lease. Once the lease period ends you can return the vehicle and lease a new car or truck.

Lease Period

A typical lease lasts for two to four years. The lease period may be open to negotiation.

Lease Payments and Costs

Monthly payments are required during the lease period; these payments are often lower than what you would pay for an auto loan on the same vehicle. An up-front payment is typically required at the beginning of the lease, which includes the first month's payment, taxes, a security deposit and other costs. Early-termination and end-of-lease charges may also apply, depending on whether your lease is complete when you turn the vehicle back in to the dealer.

Liability and Responsibility

The dealer that you lease a car or truck from retains ownership of the vehicle, though you are responsible for maintaining insurance coverage on it as mandated by law. In most cases you will be held responsible for any damage that occurs to the vehicle, though some dealers may offer a damage waiver as part of the lease if you agree to a higher monthly payment or pay an additional fee at the beginning of the lease.

End-of-Lease Options

When the lease period ends you are required to return the vehicle to the dealer, at which point you can generally exercise one of three options. You can choose a purchase option, buying the vehicle you've been driving at a reduced price. You can also continue your lease, receiving a new vehicle and beginning a new lease period. If you don't wish to continue your relationship with the dealer you can also choose to cancel the lease after turning in the vehicle.

Limitations

Leased vehicles often come with limitations. Mileage restrictions are often placed on a leased vehicle, resulting in additional fees at the end of the lease if you exceed the mileage limit. Restrictions on general wear and usage may also be in place, resulting in additional charges when you return the vehicle if it shows signs of wear beyond normal use for its mileage.

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Rights When Purchasing a Car

Purchasing a car can be an exciting endeavor; however, you must be an informed consumer to avoid being swindled in the process. After all, depending on where and from who you purchase the vehicle, you might buy a car that has a host of problems that will now be yours when the vehicle is in your name. Knowing your rights before you purchase a car offers you some level of protection from this scenario.

The Price Is the Price

When you purchase a vehicle for a certain agreed upon price, once you sign the paperwork, the price is the price. Some unscrupulous dealers will try to call you several days -- or even weeks -- later to try to get you to pay more money because the price has somehow adjusted. However, you have the right as the consumer to pursue legal action if the dealer tries to swindle you in this fashion; keep your original paperwork.

Comparison of Loans and Interest Rates

If you obtain financing to purchase a vehicle, you have the right to pursue the best financing options for your situation, which applies even if the dealership is responsible for finding your financing for you. Ask for several loan types and interest rate options, and request that the dealership present you with all of your options and the particulars of each loan to ensure that you will make the most informed decision about your car financing.

You Should Not Be Sold a "Lemon"

You have the right to purchase a vehicle that is in good working condition, which is the crux of the lemon law principles. Lemon laws vary among states, but the idea behind all of them is to make illegal a dealership or individual knowingly selling you a vehicle that has problems that will prevent it from running properly. If you have to take a new car -- or even used, but new to you -- in for the same repair at least three times, you may have the right to file a claim under this provision.

Know the Vehicle's History

As a consumer, you have the right to know the car's history before you purchase it. You can do this through a commercial company, such as Carfax, or through your state's Department of Motor Vehicles division. Not only should you know about any major accidents the car has been in but also any damage it may have sustained from a natural disaster. This information ensures that you have a full accounting of the history of the vehicle before you purchase it.

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How to Sell a Vehicle Without a Co-Signer Signature

If you are planning to sell a vehicle that is jointly owned, you will need to examine the title to determine whether a signature from both owners will be required. If the title is listed with your name or the co-signer's, only one signature is required to sell the vehicle. However, if the title is listed with your name and the co-signer, both signatures will be required to sign over the title. In this case, you would need to obtain a power of attorney to be legally able to sell the jointly owned vehicle without the co-signer's signature.

Instructions

1

Create or obtain a standard power of attorney form if the co-signer is deceased, active duty military, or unable to sign due to medical reasons. Forms can typically be accessed from your local financial institution or medical facility.

2

Complete the form with all applicable information and have it signed and notarized by a notary public. Typical required information includes the name and contact information of the person granting the power and the person who will be acting on his behalf, as well as any limitations on the types of decisions the individual will be authorized to make. You may also be required to furnish supporting legal documentation such as a death certificate, medical certification or military orders.

3

Record the power of attorney with your local probate court if this is required by your state. Otherwise, simply retain the original notarized power of attorney form as proof of your legal authority to conduct business on the subject's behalf.

4

Fill out the back of the title. Sign for both yourself and the co-signer, and include a copy of the power of attorney. Complete a bill of sale, or official sales agreement. Both documents will also require the buyer's signature.

5

Give the original bill of sale and title, complete with all appropriate signatures, to the buyer, along with the keys to the car. Make copies of these documents for your records.

6

Notify the department of motor vehicles (or other relevant agency) and your city treasurer's office that you have sold the car, and be sure to update your insurance policy once the car has transferred ownership.

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How to Get Out of a Nissan Lease Cleanly

If you have leased a Nissan vehicle from a local dealer, the lease is valid only for the term you initially agreed on with the dealer. As you approach the end of your Nissan lease you will get a letter from Nissan Motor Acceptance Corporation, or NMAC, the in-house financing unit for all Nissan leases, letting you know what your options are. The letter you will get comes with a wear-and-use guidebook, which you will need if you are going to return the vehicle to the dealer.

Instructions

1

Keep the Nissan and pay the balloon payment that is due at the end of the lease to get out of the lease cleanly. This allows you to keep the vehicle and be free of the lease. You can get a loan to cover the balloon cost of keeping the Nissan if you do not have cash for it. Keeping the Nissan is just one option.

2

Drive your leased Nissan only within your allotted annual mileage limits. When you return the car to the Nissan dealer, it should be within your mileage limit in order to avoid a penalty fee. If you're near your mileage limit and the car lease term is ending soon, you might fare better to park the car than to go over the mileage.

3

Clean the Nissan vehicle thoroughly and make sure it has no damage. While you are typically granted normal wear and tear as part of the lease, anything considered excessive can result in a penalty fee at the end of the lease. Excessive wear and tear can include things like tires that do not have much tread left on them or multiple dents and scratches on the body of the vehicle.

4

Return the vehicle at the end of the lease if you do not want to keep it or get a new Nissan. Once you return the vehicle to the Nissan dealer, you are free of the lease unless you owe some additional penalty fees.

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How to Take Over Payments on a Semi

Taking over another person's semi-truck loan payments might seem like an affordable option, as the original borrower already provided a down payment. The loan terms, however, including length of the loan and interest rate, were based on the original borrower's income and credit history. For this reason, you can't exactly take over the semi loan with the same loan terms, as your credit and income likely differ from the original borrower. Expect to complete a credit application to secure your own loan terms for the remaining loan balance instead.

Instructions

1

Obtain the semi-truck's identification number, mileage and the borrower's loan information, such as balance due on the loan and the lender's phone number.

2

Call the lender and tell a loan representative that you want to take over another person's loan. The original borrower may have to contact the lender first to add a note to the loan account stating you'll call to apply for the remaining loan balance.

3

Provide the loan representative with the semi-truck's identification number and the loan amount. Submit your credit information, including income, Social Security number, employer information and date of birth.

4

Leave a contact number where the lender can reach you, as the approval process isn't instant. Once approved, discuss your interest rate, monthly payment and down payment requirement, if any. If the loans terms are acceptable, find out which documents you need to supply to the lender, such as proof of insurance or a recent pay stub.

5

Submit any documents the lender requested and arrange to sign your new loan contract. If completing the process by mail, overnight the paperwork back to the lender to complete the transfer process quickly. Arrange to take the semi from the original borrower once the lender notifies you of the loan transfer.

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What Are Subprime Auto Loans?

Subprime auto loans are written for borrowers who have low credit scores. Typically, lenders are reluctant to lend to subprime borrowers due to the fact that low credit scores are indicative of past problems with managing credit. However, some companies specialize in lending to subprime borrowers.

Subprime

People that banks view as creditworthy customers can borrow funds at a low interest rate known as the prime rate. Credit scores range from 300 to 850, and in order to qualify for prime rate loans, borrowers must have credit scores of at least 620, although many lenders require borrowers to have scores in excess of 700 to get the lowest rate loans. Consequently, people with credit scores below 620 are commonly described as subprime borrowers.

Risk

While most lenders refuse to finance cars for subprime borrowers, some lenders do write loans for these borrowers but counter the default risk by charging high interest rates. The interest rates on subprime loans are often two or three times higher than the rates available on prime loans. High rates result in high monthly payments, and therefore people who have struggled in the past to manage their finances end up having to pay more to borrow than people who have fewer money problems.

Financing

Lenders have to raise money to write subprime loans, but few banks are willing to lend funds to institutions to fund subprime lending because of the risks involved. Therefore, subprime auto lenders usually rely on borrowing money from investors. Bonds are sold against funds that contain subprime car loans and the interest payments on the loans are passed onto the bond holders as monthly bond payments. Some investors view these high yield bonds as a good alternative to more conservative income generating investment options.

Considerations

Some subprime lenders even report subprime loans to credit reporting agencies, so even if you make your payments on time, you do not improve your credit standing. If you cannot qualify for a car loan due to your credit score, you can attempt to find a co-signer with good credit who can co-sign your application and improve your chances of obtaining a prime loan. Alternatively, rather than agreeing to high loan payments, you could first try and settle your delinquent debts as doing so should improve your credit score and lower your borrowing costs.

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Options for a Person Buying a Car With Negative Equity & Limited Credit

If you've paid your current car loan on time, you can likely pursue another car loan, although negative equity might be an issue. Depending on your credit, the bank may allow you to carry over all or part of your old loan. You may have to put money down.

Loan-to-Value Ratio

Banks determine your loan amount based on your credit and vehicle value, known as a loan-to-value ratio. The vehicle's loan value is based on its options, mileage, year and make. Using your credit score and history, the bank determines your loan value at roughly 60 to 120 percent of the vehicle's value. If you have a positive borrowing history with your current loan, you may obtain a high enough lending percentage to carry over money, despite having limited credit.

Apply for a Loan

Apply for a loan to see if you qualify for the amount you need to borrow. Call your bank to obtain your car's payoff amount, and apply for a loan at any bank you want. Check rates at bank websites or call for details. Most banks offer an online application process, but you can benefit from calling in to discuss your credit and negative equity concerns. Have your vehicle information handy, such as its VIN (vehicle identification number), payoff amount, year, make, model and options.

Co-signer

If you can't obtain an approval because of your credit history, a co-signer can help. A co-signer uses his good credit to secure your loan. The bank uses the co-signer's credit information to determine the loan-to-value ratio, so you may obtain an approval for the total amount you want to borrow. If you cannot find a co-signer, consider putting money down. The bank you apply to should let you know how much it needs you to put down if it doesn't approve you for the requested amount.

Other Options

Consider selling your current car. You can possibly start a fresh loan without negative equity this way. Your car may sell for thousands over the bank's determined market value. If you make a profit, you can use the extra money to put it down toward a new car loan. Or, you may not have to come up with as much money to pay off your loan amount. If you have paid your loan payments on time, you are likely to obtain another loan approval, despite having limited credit.

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How Does a Simple Interest Car Loan Work?

Simple interest financing is the most common setup for a car loan. According to Vertex 42, simple interest loans require "paying interest only the principal." With a car loan, you pay interest on the principal balance of the loan at the time of payment.

Basics

Car loans, like home loans, have payoff periods. Car loan terms commonly range from 36 to 72 months. Your original loan balance is what remains when you add the sales price, taxes, registration and other purchases fees and deduct any down payment.

Payments

Car loan payments are set up on an amortized schedule, similar to home loans. Your monthly payment includes principal and interest. The total payment is based on the assumption that if you pay the same amount each month for the loan term, you will reach a balance of zero. Initial payments have higher interest amounts, while later payments have lower interest amounts since the principal balance reduces over time. This is why you benefit from paying extra on principal each month.

Interest Formula

You can determine your total interest payments on a simple interest loan using the standard formula Interest (I) = Principal (P) times Rate Per Period (r) times Number of Periods (n). For instance, a $10,000 loan at a 7 percent interest rate paid over 60 months would cost $3,500 in total interest without any extra principal payments.

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Do I Pay Tax on a Lease Buyout?

Drivers who lease an automobile for a set term must make a decision when the lease is up: Turn in the car to the dealer or leasing company, or purchase the car as a lease buyout. A lease buyout can be an economical way to buy a car with a history you know, depending upon the residual rate you agreed to at lease inception. Because a lease buyout is different from a lease, you may be faced with paying sales tax on the agreed-upon price.

State Sales Tax

When you lease a car, you may pay a small monthly use tax on the lease depending on your state or local tax rate. When you purchase a car, you pay sales tax on the total price of the vehicle. Since the lease buyout is a purchase, you must pay your state's sales tax rate on the car. As of September 2011, Oregon, Alaska, New Hampshire, Montana and Delaware do not assess a sales tax on consumers, but if you live in one of these states, you may be subject to local taxes.

Residual Value

To calculate the sales tax on your lease buyout, look at your lease to find the residual value of the car. This is the price you negotiated when you signed the lease, and is an estimation of its value at the end of the term, including depreciation. Multiply your state sales tax by the residual price. The sales tax you pay on your buyout will be less than if you purchased your car initially, but it could still be hundreds of dollars depending upon the sales tax rate.

Finance Issues

If you cannot afford to pay for the car in cash, with good credit, you can arrange a lease-buyout loan from either the original lender or another financial institution that offers loans for used cars. The sales tax and any other fees, such as registration, can be added to the loan amount. Be aware that you will pay interest if you finance the car and roll in the sales tax, but if you don't have the cash to pay for the car, this may be your best option.

Lease Buyout Considerations

As much as you love the car, a lease buyout may not always be as the best option for you, and you may need to shop around for another car. If your residual payment is much higher than the going market rate for the car, or if your original lease stipulates a large buyout fee, or if you can find a better deal on a newer lease, it may be best to pass on the lease-buyout. Negotiate with your lease holder. Lease-buyout loans may also carry a higher interest rate than new or used cars. Do your homework and weigh the pros and cons before you buy the leased car.

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Giving a Receipt when Selling a Car

The receipt you give when selling a car is also known as a bill of sale. It is optional in some states and required in others. It also serves as a title replacement in some states for transfer of ownership if the car's original title is not on hand.

Types

Depending on the state you live in, an official, state-provided bill of sale may be required along with the title. In such a case, you can download the form from your state's website or find you have to go to a local office to obtain one. Most states allow you to create a bill of sale on your own, either by hand-writing it or printing it from your computer. Before creating a bill of sale, contact your motor vehicle office for any state requirements.

Features

Several pieces of information should be included in the bill of sale. Either the seller or the buyer can create one, listing the name, address, driver's license and phone number of each party, the date of sale and all relevant vehicle information. The vehicle information should include year, make, model, VIN (Vehicle Identification Number), sale price and odometer reading. If the seller is creating the bill of sale, he should include that the vehicle is being sold "as is," or without any warranty. Two documents should be created: one for the buyer and one for the seller. Both parties sign the copies.

Significance

In states that require tax on the sale price instead of the value determined by the motor vehicle department, stating the price serves as the taxable amount that the motor vehicle department will collect. In come states, the bill of sale serves as an odometer statement. If not a requirement, the bill of sale protects both the buyer and the seller. The seller can keep the bill of sale to prove the car was sold, should the buyer not immediately register and title the vehicle, making her liable for tickets, accidents, damage or abandonment. The buyer, having all of the seller's contact information, can rest assured that if something should go wrong at the motor vehicle department (such as an unmentioned lien or notice of salvage title) he can contact the seller by using the contact information on the bill of sale, or by driver's license number depending on the issues that arise.

Misconceptions

The bill of sale should accompany the certificate of title and any other forms required by the motor vehicle department. The bill of sale rarely, if ever, substitutes the official certificate of title. If you are buying a vehicle and the seller states the he does not have the title but can offer a bill of sale, contact your motor vehicle office to confirm that this kind of ownership transfer is possible. even if allowed, you should have the seller go to a motor vehicle office with you before you pay, to ensure that the title is free of any trouble, such as a non-transferable title with a lien on it, or a "salvage," "flood damage" or "fire damage" title, all of which lower the value of the vehicle you're purchasing.

Warning

Even with the bill of sale on hand, some states require that the seller notify the state of the vehicle's sale to avoid liability of actions by the new owner who did not retitle the vehicle. Check with your state's motor vehicle website or call to ensure the bill of sale is enough for proof of sale. Some states allow you to notify the state motor vehicle department online or by phone. Others require you to go into an office to complete the transaction.

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Auto Title Loan Regulations

Auto title loans are short-term loans granted to consumers for the rights to the car title. These loans are often thought of as emergency loans and carry higher interest rates than normal consumer loans. The incentive for unsuspecting consumers is that lenders usually do not check credit--instead, they assume a risk because they can repossess the vehicle if need be. The business of auto title lending has been scandalized after scores of investigative studies report the business is a front for predatory lending.

Federal Regulation

There is no federal government body that controls the distribution of auto title loans. Instead, it is up to the State legislatures to determine guidelines for lending. Beginning in 2004, states began to step up oversight of these loans often setting rate caps and restrictions on lending to those in the armed services.

Illinois

On April 1st, 2009, Illinois enacted a sweeping reform bill for auto title loans. The new regulations include: a loan amount maximum of $4,000; a limit on monthly payments (no more than 50 percent of a borrower's income); creating a database of all title loans on record (which is used to track loans and ensure compliance with the new restrictions); and, a mandate that compels all title loan lenders to inform potential customers with literature about responsible credit and money management.

California

California has looser regulations than many states. While they do enforce rate and monthly payment caps, there are loopholes that allow lenders to skirt the restrictions and charge whatever rate and payment the lender and borrower agree to. (For example, if a lender can persuade a customer to take more than $2,500, he or she can charge any rate.)

Rapid Growth

Before the restrictions started coming down, some lenders were charging as much as 300 percent interest over the course of the auto title loan period. This enormous profit led to a boom in the industry--particularly in the southern states like Mississippi, Alabama, and Tennessee (where there are often more than 100 auto title lenders in a single county).

Interest Rate Caps

Some states (Connecticut, Maryland, Maine --15 in all) have placed an outright ban on auto title lending. Others have simply capped the rates at which these companies can charge. In general, the rate caps hover between 30 percent and 38 percent--a massive decrease in the previous, and highly unethical, triple digit rates.

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Can You Go From Buying a Car to a Lease Option?

You cannot go from a vehicle purchase to a lease contract after purchase, although you can buy a lease at any time during the contract term. If you haven't completed the purchase paperwork for your vehicle with your dealership, you may still have an opportunity to lease the car instead.

Before You Purchase

If you haven't signed your new car paperwork yet, inquire about leasing with your purchasing dealer. To view current lease offers, visit the manufacturer's website to find out about current lease terms, mileage allowance, down payment requirements and monthly payment amount. If you don't see lease options online, ask your dealership for details; some vehicles are not available for leasing. Even if the manufacturer doesn't offer a leasing option on the vehicle you want, the dealer may be able to lease you a car using another lease provider.

Lease Process

Leasing differs from a purchase or finance, so not all auto loan providers offer the option. A manufacturer's bank usually offers a lease option. For leasing, the bank bases payments on depreciation. Depreciation is based on the vehicle's price, expected mileage allowance and term. Lessees usually pay for about 50 percent of the vehicle's total price over the contracted term. For this reason, leasing is rarely available for used vehicles. Leasing banks aren't set up to inspect used cars for value or able to accommodate all used car pricing, which differs by dealer and area. New vehicle leasing is based on the car's sticker price.

Credit Issues

Purchase and lease requirements differ. You can finance or pay cash for a vehicle with poor credit, but excellent credit is required for leasing. Even if you change your mind in the beginning of your purchase, you might not obtain an approval without good to excellent credit. You can, however, use a co-signer to obtain a vehicle lease. Otherwise, consider financing or purchasing outright. Subprime lenders, who offer loans to poor-credit borrowers, do not offer a lease option at all.

Other Options

You do not have to wait until your loan is satisfied to get rid of your car. Many loans equal out in payoff amount and vehicle value after around two to three years of payments. If you don't want to keep your vehicle beyond three years, which is a common leasing term, plan ahead to increase your vehicle's equity. Pay more toward your loan's principle during the term of your loan. After several years, check your car's value against its loan payoff amount. You can trade or sell your vehicle as long as you satisfy your loan amount. If you owe less than the vehicle's value, you can keep the profit.

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How to Refinance an Auto Loan With a Bad Credit Score

Credit plays a vital role in American society. Information in your credit report impacts your credit score. Your approval for a mortgage, credit card, car loan and even a job depend upon this score. If you're experiencing credit problems and have a bad credit score, it can be difficult to obtain financing. Fortunately, there are lenders that specialize in providing financial assistance to consumers with less-than-perfect credit.

Instructions

1

Gather your salary information and all pertinent details of your current loan. Know how much you owe, current interest rate, car mileage and the vehicle identification number (VIN). Keep up your current payments while you search for a new loan.

2

Check the value of your car and compare it to the outstanding amount of your loan. Like with home loans, it will be extremely difficult to refinance a car loan if the amount you owe on the car exceeds the value of the car itself. This is referred to as being "upside down" on a car. Several websites, such as the one run by Kelley Blue Book, can help you make that determination. See the Resources section for the link. If you are upside down, make a few more payments until the loan value gets closer to the car value.

3

Purchase a copy of your credit score to see exactly where your credit stands. The Fair and Accurate Credit Transaction Act (FACTA) requires credit bureaus to give you a free credit report but not a free credit score. They're allowed to charge you a fee for that service. According to Fair Isaac, inventors of the FICO scoring model, the FICO score is the score lenders use most. You can order yours at myfico.com.

4

Compare auto loan refinance companies to see which one works best for your situation. Look for a lender that accepts applications from consumers with bad credit; otherwise, you will waste your time and add unnecessary inquiries to your credit report, which may further lower your score. Choose at least two lenders. See the Resources sections for lenders that specialize in bad credit loans.

5

Submit your applications online. This will speed up the loan process and may allow you to check the status of your loan application as it progresses. Be as accurate as possible. The lender will use the information that you submit to determine if you're approved or not. Avoid giving false or misleading information. If you receive a loan based on false information, the lender may consider that fraud. Read its Terms and Conditions policy before you apply.

6

Wait to hear back about your approval. If you're approved by both lenders, then you have the luxury of comparing the two offers to see which one is best. Read the loan details thoroughly and know if there are any added fees involved. Ask questions if anything seems unclear. Once you've made your decision, sign the documents and continue with the refinancing process. The lender will instruct you on what steps to take next.

7

Wait six months to apply again if you're not approved by a lender. Continue to make your payments on time and avoid any late payments on your other accounts. This will help improve your credit score so that you will be in a better position to qualify in the future.

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