May 2010 ~ Managing a Car Loan

Monday, May 31, 2010

How to Sell a Car With a Bank Loan

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If you paid cash for your car or have already paid off the original bank loan, you own your car free and clear and have access to the title -- making selling the car to another individual a relatively simple process. If you're still making payments on your car and want to sell it, however, you can't sign over the car title to the buyer because you don't have the title. The bank will hold your vehicle's title until you pay off the loan balance you still owe. There are two methods for selling a car with a bank loan, depending on whether your lender holds your title at a local branch or out of state.

Instructions

Call the bank and notify the bank representative you speak with of your intentions to sell the car. Ask for a final payoff amount. Depending on whether your loan carries a prepayment penalty, the final payoff amount may differ from the amount reflected on your monthly statements.

Meet the buyer at the bank branch that holds your car's title. Instruct the buyer to make the payment directly to the bank rather than to you. Provided the purchase price equals the amount you owe on the loan, the bank will then provide you with the title.

Sign the car title over to the buyer. Fill out a bill of sale recording the date of the transaction and the purchase price.

Ask a bank employee to make two copies of the bill of sale. Give one copy to the buyer and keep one copy for your records.

Meet with the buyer and conduct the sales transaction without the title. Fill out three copies of the bill of sale. Give one to the buyer, keep one for yourself and keep one for the Department of Motor Vehicles.

Visit the buyer's county's Department of Motor Vehicles with the buyer. Provide the DMV with a copy of the bill of sale. Request a temporary operating permit for the buyer until you can provide her with the car's title.

Pay off the vehicle loan with the proceeds from the sale. The bank will mail you the title. How quickly you will receive the car title will vary depending on the bank.

Sign your name on the title under "Seller" when you receive it in the mail. Deliver the car title to the buyer.

How to Cancel an Auto Loan Contract

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A car loan contract is a legally binding document. When you sign the contract, you agree to the terms listed until you pay off the auto lender. Once the lender is paid, you receive full ownership of the car, and you can do as you please. Canceling the contract before that point can be challenging, but there are several options available. These options include refinancing, prepaying and settling the debt.

Instructions

Get a prepayment quote from your auto lender. You can speak with the lender personally, or you may be able to find this online if you manage your auto loan through the Internet.

Locate a new dealer willing to extend you an auto loan. The new loan must be in a sum large enough to cover the remainder of your existing loan.

Contact your lender to inform them you will be prepaying on the loan.

Verify that the amount you have sourced in a new loan will cover the prepayment quote and any penalties.

Pay off the loan in one lump sum with the new loan.

Ensure your previous loan is closed by running a simple credit check. The loan should not be listed as active on your credit report.

Start with the same prepayment quote offered by your lender.

Save enough cash to cover this sum. Alternatively, you may consider selling the car to cover this sum if you no longer desire to own the vehicle.

Contact your lender to inform them of your intent to prepay.

Make arrangements to prepay.

Take the same steps to assure the contract is no longer on your credit score. Since you did not take a loan to prepay, you are debt free on the vehicle at this point.

Contact your lender to ask for a settlement quote. A settlement is lower than prepaying in full, but it will come with credit penalties.

Seek a settlement loan or save enough cash to cover the settlement quote.

Inform the lender of your intent to settle the debt.

Pay the lender the required settlement amount in one lump sum.

Monitor your credit to see the debt has been cancelled. You will see your credit score drop. This is a result of breaking a contract without paying the penalties.

The Disadvantages of Leasing a Vehicle

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Leasing a car can be appealing because monthly payments are usually lower and vehicles quickly lose value after they are purchased. Yet the potential cost of leasing a vehicle should not just be evaluated in terms of a monthly payment. People who lease cars can face significant additional costs if they exceed their mileage limits, damage their cars or terminate a lease early.

Leasing a vehicle does not provide the advantages of ownership. People who keep their cars for about three years or more eventually own them and are free of car payments. Purchased cars offer owners more options when it comes to replacing vehicles as well. For example, an owner may choose to keep an older vehicle that is paid off because his income has suddenly declined. People who lease vehicles do not have such flexibility, since lease payments continue no matter what financial troubles befall them.

Leased vehicles can be expensive for people who put a lot of miles on their cars. Lease agreements often require people to pay an extra 12 to 15 cents for every mile they drive over an agreed upon limit. Preset mileage limits usually range between 12,000 and 15,000 miles per year. If you know in advance that you will exceed that range, you can add more miles to your lease contract at a discounted rate. Yet you will still have to pay about 10 cents for every mile you add.

Companies that lease cars want customers to return their vehicles in good condition so they can sell or lease them to someone else. Therefore, leasing is not the best option for someone who is not meticulous about keeping the interior and exterior of a vehicle clean and free of damage. Lessees must pay for any damage to a vehicle that the leasing company sees as exceeding normal wear and tear. Modifying a leased vehicle by adding custom parts also can be a hassle because the parts have to be removed before the car can be returned to the leasing company.

Terminating a vehicle lease early can cost you as much as six months of payments, depending on the terms of your contract. That is one reason car leases are not the best option for people who frequently relocate or who are not sure how long they will be living in the same area. Relocating would require terminating a lease and would likely wipe out any savings gained from a contract that included a low down payment and low monthly expenses. Lessees who cancel early may have to make all remaining payments minus vehicle depreciation costs that have not yet occurred.

Information About Repossession of Car

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The Federal Trade Commission stipulates that your creditor has the right to repossess your vehicle as soon as your payment is late, if that is part of the terms of the loan agreement. Know your rights when it comes to auto repossession and be sure to communicate with your lender if your payment will be late.

According to CNN, a repossession is considered legally done when a repossession agent is in the vehicle or when the vehicle is off of the owner's property by way of a tow truck.

Depending on the lender, a repossession may stay on your credit report for up to 10 years. The time begins when the loan is officially declared delinquent by the lender.

According to Bankruptcy Law Firms, it is possible to negotiate with a lender and get a vehicle back after repossession. How much you would have to pay on the loan to get the vehicle back depends on the lender.

A lender is not required to give written notice regarding a repossession prior to having the vehicle taken. State laws vary on when a lender must provide a borrower with information regarding the repossession after the vehicle is impounded.

The Federal Trade Commission warns that if your lender agrees to any special considerations that allow you to avoid repossession then you should get those conditions in writing.

Auto Financing Help

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Buying a car is typically one of the largest purchases that most people make. When buying a car, many people use financing to help make the purchase a little easier. If you are in the market for a new car, there are a few things about financing that you need to keep in mind.

Many people bundle the process of buying a car with the financing. They go into the dealership, choose a car and then finance the purchase with the dealer. When you begin the process of buying a car, you need to separate each component. Focus on the financing, the price of the car and the value of your trade-in separately. Dealers generally try to bundle everything together, and it often ends up working in their favor.

Just because you are working with a particular dealer to buy a car does not necessarily mean that you have to finance the car through them. In fact, you can generally get a better deal by shopping around with multiple lenders before agreeing to the deal. You can go to local banks in your area to get quotes on interest rates for car loans. You can also check out online auto lenders before you go into the dealership.

Before you start shopping around for interest rates, you may want to look at your credit report first. You can get a copy of your credit report from each of the three major credit bureaus: Experian, Transunion and Equifax. Once you look at your credit report, you can see if there are any errors or omissions on it. If your credit score is not as high as it should be, it could end up costing you more in interest.

When you seek out financing from the dealer, you may also get access to incentives. For example, for qualified buyers, the dealer might offer 0 percent interest. In other cases, you may get a rebate if you finance the purchase with the dealer. If you are offered some type of incentive, you need to make sure that you do not pay more for the car than you would without these incentives.

How to Calculate Vehicle Loan Information

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Calculating vehicle loan information is important when shopping for a car. The interest rate will be given to you by an auto dealership or bank and there is not much you can do to change it---but there are other factors you can influence, such as the length of the loan and the total loan amount. Calculating vehicle loan information used to challenging for the layman. Today, it is now possible to calculate your loan and alter the variables until the numbers work for you by using an auto loan calculator.

Instructions

Find an online auto loan calculator. Some examples can be found in the "Resources" section of this article.

Input the auto loan amount, the term (length) and the interest rate.

Change the variables until you are satisfied that they will work for your financial situation. The loan calculator will output your monthly payments.

Increasing the term of the loan will lower your monthly payments, but you'll be paying more in interest towards the loan and the car's total cost will increase.

What Is the Difference Between a Lease & Finance?

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When it comes time to get a new car or house, you have three options. You can pay for the item outright with cash, lease it or get financing to purchase it over time. Both leasing and financing require you to make monthly payments, but you can take possession of the car or home right away. Both have many advantages and disadvantages depending on your lifestyle.

When you sign a lease, you agree to take possession of something for a set period of time and make monthly payments. For example, when you lease a vehicle, you get to keep it for a set amount of time, as long as you make monthly payments. When you finance something, you borrow money from a lender in one lump sum and use the money to buy a house or car outright. You make monthly payments to the lender to pay off the loan, but you own the item you financed.

Leasing is a good option for people who need something less permanent. For example, when you lease an apartment, you can simply move at the end of the lease. Leasing often has cheaper start-up costs. Unlike financing, you typically do not have to put anything down to lease a car. However, financing allows you to own something. By owning something, such as a home, you have equity, which you can use to leverage future loans.

When you lease, your money only goes toward making the monthly payments, and you don't develop equity. Some people see this as wasting money, since you could be putting your money toward ownership. However, since financing means ownership, you also have to deal with maintenance and repairs. When you finance a car, you typically have to pay for repair costs, but many lease agreements allow you to get free repairs through the leasing agency.

Both leasing and financing requires you to make monthly payments. Your monthly payment amount depends on what you lease or finance, your credit score and the leasing agency or lender's requirements. Both leasing and financing can effect your credit score. Making your monthly payments on time and meeting all of the terms will raise your credit score, but missing payments or defaulting on the agreement will hurt your credit score.

How Much Does a New Car Depreciate?

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Cars are not investments. The moment you drive them off the lot, they begin to lose value, although some lose their value faster than others. That loss in value over a car's useful life is called depreciation. It is one of the things that attracts some buyers to the used-car market. You can purchase a nearly new car for much less than a new car, because new cars lose so much value early on.

A car's depreciation during the first year will be the steepest. Buyers purchase cars at retail price, but once the car is driven off the lot, it is only worth its wholesale price. This is the amount a dealer would buy it for. On average, cars lose more than 20 percent of their value in the first year. Some may lose as much as 40 percent, according to Fool.com. This means a $20,000 car will be worth around $16,000 once it is purchased.

Once a car is off the lot and considered used, the general rule of thumb is that it will lose 15 to 20 percent of its value each year, according to Bankrate.com. This does not mean that the car will lose the same amount of money each year. The depreciation is based on the previous year's value. A two-year-old car will be valued at 80 to 85 percent of its one-year-old value. A three-year-old car will be worth 80 to 85 percent of its two-year-old value and so on and so on.

If you own a vehicle that loses value quickly, it means that the car will be of little help to you as a trade-in. One thing that will help you maintain the resale value of your car is to make sure you maintain it properly.

When buying a car, stay away from wild colors. You may like the color, but it may turn off other buyers. Look for brands that have a reputation for quality and good resale value. BMW, Honda, Acura and Volkswagen all have higher resale values that competing brands and models, according to MSNBC. Consumer perception helps these brands maintain their resale value as well as actual quality.

How to Finance a New Car With Car Insurance Rates

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When shopping for cars, many people neglect to research and include the insurance rates on the car and often wind up in a state of shock when they discover the car's bottom-line cost. There are numerous factors to consider when buying a car, but there are some things you can do to understand how to finance a new car with insurance rates.

Instructions

Determine how much coverage you need. If you are paying for the car in full, you have the option of insuring your car for as little or as much as you want. You can opt for the minimal insurance required, which varies by state but usually is liability at a minimum, or go for the whole package and get comprehensive insurance. Comprehensive covers damage that occurs to your car, while liability strictly covers you for accidents.
Cars Direct explains that automobile lenders typically require comprehensive coverage, since they want insurance to protect what they are financing. Banks and other lenders know that if a car is not drivable, the owner is likely not to make the payments; therefore, they require insurance that will cover repairs should the car be damaged. Also, if it's not in operating condition and the owner should default on the loan, the lender needs to be able to sell the car in order to recover as much of the debt as possible.

Research the insurance rates in your state based on the car you are considering. Auto insurance companies will provide you a quote based on the information you have; the more information you can provide them, the more accurate your quote will be. Sites such as Esurance offers quotes from several companies. In order to get the most accurate quotes, supply as much information as possible, such as your driving record, and, if you have been car shopping, at least one vehicle identification number (or VIN, the number usually found on the driver's side windshield). The VIN and your driving record will give you a more exact quote that you can use to figure what the total cost of the car will be in the end. This number may surprise you and could help you determine what vehicle will fit into your budget.

Include gap insurance in your insurance quote and total cost of the vehicle. The best way to define gap insurance, according to Car Insurance, is insurance that covers the difference between what your car is valued at and what your current payoff with the bank is on the car. Gap insurance is valuable if you owe more on your car than it is valued at if it is involved in a wreck that causes it to be considered totaled or unable to be repaired. Without gap insurance you could end up making payments on a car you cannot drive.

All of these factors should be considered when financing a new car. The insurance on a new car is more costly than the insurance on a car that is not financed.

How to Rebuild Your Auto Credit

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Late payments have a lasting impact on your credit history and your ability to qualify for loans, including auto loans. Buying a car when you have a low credit score can be a challenge, but there are ways to get an auto loan even if you've had some problems in your past. If you handle the loan responsibly, you can rebuild your auto credit and refinance at more favorable rates. The good payment history on your auto loan will also raise your overall credit score.

Instructions

Save up as much money as you can to use as a down payment for your car loan. If you can significantly reduce the amount of money you must finance, you will raise your chances of getting auto credit because the lender's risk is reduced.

Get a copy of your credit report from each of the major credit bureaus before applying for a car loan to start rebuilding your auto credit. Experian, Equifax and TransUnion must all give you one free copy of your report each year. If there is any negative information that is incorrect, file a dispute. The credit bureaus must remove it if they cannot verify it. This will put you in the best possible position to start rebuilding your auto credit.

Try to get pre-approved for a car loan. This may be impossible, depending on your credit history, but some lenders will agree to a pre-approved loan if your credit score is borderline and you having been doing business with them in the past. For example, you might be able to get pre-approval from your bank or credit union if you have accounts there. If you are unable to get pre-approved, expect to pay a higher interest rate for your loan.

Shop for a used car rather than a new one. When you are rebuilding your auto credit, it's best to purchase a more affordable vehicle. This reduces the loan amount, which means lenders will be more willing to take a chance on you and that your payments will be lower. You should aim for the lowest possible payments because it's critical to make every payment on time when you are rebuilding your auto credit.

Make every payment on time. Send payments early to make sure they are credited before the due date. When rebuilding your auto credit, every payment counts. Each on-time payment contributes to raising your credit score, but if you are late or miss even one payment, your credit score will go back down and harm your auto credit.

Apply for a loan with more favorable terms after you have made on-time payments for six months to a year. Once you have built up an on-time payment history, you may be able to refinance your auto loan with another lender who will give you a lower interest rate. Continue rebuilding your auto credit by paying the new loan as promptly as you paid the original one.

How Do I Cancel an Auto Loan in Indiana?

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Obtaining a car loan is a time-consuming task. However, canceling a car loan after you have accepted it is an even harder task. Some of the reasons you may want to cancel your car loan could include the realization that you owe more than the value of your car, a realization that your car is malfunctioning or a change of circumstances, such that you cannot handle the loan payments. In Indiana, you have a period of 18 months in which you can return your car and cancel your loan.

Instructions

Contact your car dealership if it has been 18 months or less since you purchased the car. According to the Indiana Lemon Law, Section 7, the term of protection in Indiana generally is 18 months. This means that you may return the car within 18 months from the date of purchase.

Take the car back to the dealership, showing the people there that you know you are under the protection of the Indiana Lemon Law statutes. The car dealer then must make all necessary arrangements and take your car back.

Contact your bank. Let them know the dealership accepted your car back and that they should cancel your loan. Ask for any refunds you may be eligible to receive, and for any requirements or terms you still must meet. Specific requirements vary from bank to bank.

Contact the car dealership if it has been more than 18 months since you purchased the car. Inquire if you can give the car back, cancel the loan and bypass complications that might ensue. According to Autos.com, some car dealers leave room for buyer's remorse.

Take the car back if the dealer agrees to cancel your loan after 18 months. When the dealer agrees to take the car back, inform the bank that the car dealership accepted to cancel your loan.

Pay the interest that has accrued while the car was in your possession. Also, you must keep in mind that, while the car was with you, its value has been reduced. This might result in additional costs on your part.

Try to refinance your current loan if it has been more than 18 months since you purchased your car and the dealer has not accepted to cancel your purchase and your loan.

Take your current loan to other lenders or dealerships. Refinancing means working out another contract deal, which would cancel your present car loan and start a new one. This is an option if you feel dissatisfied with your current loan.

Choose a refinance deal. In Indiana, one of the refinance dealerships available is Fort Wayne. According to Smaller Car Payments.com, Fort Wayne considers lowering your interest rate if you qualify. In addition, it can lower your interest rate by stretching the amount of time given to pay your current loan.

The Drawbacks of Using a Credit Card to Buy a Car

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The common ways to pay for a car when you visit the dealership include using cash, a certified check or a loan from a bank, but you may wonder about the possibilities of paying with a credit card. This method comes with a number of drawbacks that should convince you to consider all other options and possibilities available first.

The obvious method of paying for a car with a credit card is to swipe the card to pay for the transaction, just as you would for another type of sale. But if the dealership prefers a check, you may have to ask for a cash advance from the credit card company instead to pay for the car. Some creditors issue cash advance or balance transfer checks for this purpose. However, if you do a balance transfer you'll have to pay a fee to the credit card company on top of the price of the car, which is usually about 2 or 3 percent.

Credit cards commonly come with higher interest rates than standard car loans. You could easily end up spending 10 to 20 percent or more on the balance you've borrowed on a credit card instead of the 6 to 7 percent average for auto loans, as of December 2010. Even if the rate on the credit card is low at first, it could change in the future, whereas most auto loan rates stay fixed for the entire term.

When you make a large purchase on your credit card that takes up all or most of your available limit, that causes your credit utilization ratio to shoot up immediately. Credit utilization is the balance you've spent on the card divided by the available limit--generally, the higher this ratio the lower your credit score. So if your credit limit is $10,000 and you purchase a car for $5,000 on your card, your ratio jumps from 0 percent to 50 percent instantly.

Not all dealerships will accept a credit card payment to pay for a car. If they do, they may only accept it for a portion of the purchase. When a dealership takes a credit card it must pay expensive transaction fees to its merchant services provider, so the salesman may try to pass that extra cost on to you. Also, note that if the credit card company sees a charge of thousands in one instance, it might flag the charge and investigate the transaction.

How To Lower the APR on Your Car Loan

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The APR you receive on your car loan determines your monthly payment. People who receive a high APR typically pay more for their vehicles, and having a higher rate can limit your buying power. However, there are ways to lower the APR on your car loan. With a lower APR, you can likely afford a more expensive automobile, or reduce the payment on a moderately-priced vehicle.

Instructions

Maintain a good credit history. Your credit score impacts your car loan rate. Maintain a good payment history with your creditors and keep your debt to income ratio low.

Save money for a down payment. Although some auto lenders don't require a down payment, having a 10 percent down payment can result in a lower APR. As a result, you'll enjoy a reduced monthly payment.

Choose a co-signer. Individuals with bad credit or no credit history automatically pay a higher APR. Apply for a car loan with a co-signer and receive a lower rate. To qualify for a reduced rate, your co-signer must have a good credit history.

Select a shorter loan term. Typical car loans feature a five-year term. To lower the APR on your car loan, choose a shorter term--perhaps two or three years. A shorter term increases monthly payments. However, you'll pay off the loan sooner and you'll save money on interest payments.

Refinance the auto loan. If you didn't qualify for a low APR due to bad credit or no credit history, make the necessary credit improvements and then refinance the auto loan once you've raised your credit score. A refinance can lower your rate and reduce your monthly payments.

What to Do When Your Car Is Worth Less Than Its Loan

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You've probably heard the adage that a car loses value as soon as you drive it off the lot. The rapidly declining value also means that the value of your new wheels might not outlive your big loan. When you're ready for a trade-in, your old car probably won't be worth anywhere near as much as you think it should be. In fact, many people end up owing more on their cars than they are worth -- being upside down in the loan -- without even knowing it.

You could roll the old debt into a new loan when you buy a new car, but doing that will only make you more upside-down on the next car. Doing this can snowball your debt, and being upside down in the first place is a sign that you likely bought more car than you could really afford. Instead of jumping into a new purchase, wait until your car is completely paid off and you own it outright before you sell it. At the very least, don't sell it until its resale value is equal to the outstanding payments on your loan. Then, take out a smaller loan on the next one.

If you absolutely must sell the car right away, you should try selling it yourself before going though a dealer. Dealers are likely to low-ball you on the price. According to Bankrate.com, you might be able to make an additional $1,000 to $2,000 on the sale if you bypass a dealer, depending on your car's age, model and how well it's been maintained.

Another way to quickly get out of the upside down loan is to trade the old car in favor of a lease on a new one. The lease payments will likely be lower than your loan payments, even with the negative equity of the upside loan. Leaseguide.com says this only works if you can stick to the terms of the lease. Leaving it early will only compound your negative equity.

If your car is stolen or a total loss while you are upside down in the loan, you will still have to pay off the remainder of the loan after your car insurance company has paid you what it determines is the car's market value. To avoid this problem, you can take out gap insurance on your car.

How to Get Out of a Title Loan and Avoid a Repossession

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Title loans are short-term arrangements -- usually about a month -- with very high interest rates, using your car as collateral. Title loans are very dangerous because if you fail to repay the loan as agreed, the lending company can repossess your car and sell it to pay your debt. If you lose your car, your financial situation might get even worse because you cannot get to work anymore. Therefore, repaying your title loan should be a high priority. However, it's often difficult to come up with the full amount needed to repay the debt. Borrow this money from another source with lower interest rates to get out of the title loan and avoid losing your vehicle.

Instructions

Calculate how much you need to pay off your car title loan in full by its due date. This is the balance of the loan plus any accrued interest or fees. By coming up with this much money, you can pay off the title loan in full rather than rolling it over to another month and paying the additional interest.

Apply for a personal loan at a bank or credit union for that amount. A personal loan has a much lower interest rate than a car title loan and allows you to stretch repayment over a longer time period.

Ask a friend or family member with good credit to co-sign the personal loan if you cannot qualify on your own or if the interest rate is too high.

Take a cash advance on your credit card if you cannot get a personal loan and already have a card with enough available credit.

Use the personal loan or credit card cash advance to repay the car title loan and keep your vehicle.

Make regular payments on your personal loan or credit card to repay the money you borrowed. The larger your payments, the less interest you'll pay.

Is Interest on Car Loans Deductible?

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Deducting interest you pay on a car loan can help reduce your tax liability, but you must qualify to claim the deduction. If you deduct the interest on a car loan when you file your federal income tax return, be prepared to prove that you are eligible to take the deduction in case the IRS selects you for an audit. Generally, the interest you pay on a car loan is not tax deductible, although there are a few exceptions.

You cannot deduct interest on your federal income tax return for a loan you take to buy a car for personal use, according to IRS guidelines. This type of interest falls under the category of personal interest, which you cannot claim as an itemized deduction on Schedule A. Types of interest you can deduct on Schedule A Form 1040 include home mortgage interest and investment interest.

If you intend to use your vehicle for business purposes, you may be able to deduct some of the interest you pay on the auto loan. Use of the vehicle must qualify as a business expense. Business owners who regularly use a vehicle in the operation of their business can deduct expenses related to driving and maintaining a vehicle. In this case, the interest you pay on the car loan is considered an allowable business expense on Schedule C Form 1040. Complete Part IV of the form if you claim a deduction for car or truck expenses in Part II.

If you use the money you borrow with a home equity loan to purchase a vehicle, the interest you pay on the loan is tax deductible. Like mortgage interest, you can deduct the interest you pay on a home equity loan by itemizing deductions on your federal income tax return. Because you use your home to secure a home equity loan, if you fail to make the loan payments, you could lose it. Taxpayers who qualify to deduct the interest usually pay a lower interest rate on a home equity loan compared to an auto loan. Check first with your tax consultant, because high-income taxpayers cannot deduct home equity loan interest if they use the money for purposes other than improving their principal residence or a second home. This is the case when the Alternative Minimum Tax applies in addition to the regular federal income tax after credits are deducted.

You could also use a home equity line of credit to buy a car. Like a home equity loan, you secure a home equity line of credit with your home. It doesn't matter for what purpose you use the money, and most times you can deduct the interest you pay on home equity debt. Restrictions apply if you borrow more money than your property is worth, in which case you can only deduct part of the interest you pay on the loan. Unlike a home equity loan that allows you to borrow a lump sum at a fixed rate of interest, a home equity line of credit has a revolving balance. The interest rate is variable, which means that your monthly payments can vary.

How to Transfer Vehicle Ownership in the State of Maryland

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Getting rid of an old car in Maryland is not as simple as just giving it away. When you sell your car, there are procedures in place in the state of Maryland to ensure that the title transfers along with the vehicle ownership. The process provides peace of mind and assurance in knowing you will not be held fiscally responsible for any tickets or accidents involving the car once the vehicle is no longer in your possession because it has been sold.

Instructions

Remove the lien, if it is not already removed. Contact the lienholder for a letter stating the lien is paid and releasing the holder's interest in the car. File the letter from the lienholder or a Notice of Security Interest Filing with the department of motor vehicles, showing the lien is paid even though it is still on the title. Request a lien release from the department.

Sign and date the title in the space marked "Seller." Use the date of the sale. Write down the odometer mileage on the title in the space provided. File an Odometer Disclosure Statement if there is no place to write the odometer mileage on the title.

Request the buyer sign and date the title in the spot marked "Buyer."

Write a bill of sale for the transaction. Include the sales price of the vehicle and the sale date. Have both parties sign the document.

Notarize the bill of sale in the following situations: The vehicle is under 7 years old; the price of the vehicle is more than $500 over its book value; or the buyer wants to use the sales price to pay the excise tax.

Copy all documents. Give the originals to the buyer. Place your copies in a file for record-keeping purposes.

Consumer Advice for Buying a New Car

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Buying a new car is a different experience than buying a used one. Be aware that you are paying for a warranty and peace of mind when buying from an established dealer, but you won't necessarily be getting more car for your money than if you bought a vehicle that's one or two years old.

Your job as a new car buyer is to sift through the spectrum of economy cars, sedans, trucks, SUVs and vans to determine what vehicle will suit your needs most effectively. Your needs will be affected by where you live (rural or urban), the prevailing weather conditions, how big your family is and whether you frequently haul large amounts of merchandise. Don't buy a vehicle that is bigger than you need.

Some car dealers cater to high-end buyers while others cater to low-end buyers. Research your local car dealers by reading their websites, checking for any complaints that might have been made to the Better Business Bureau, and most importantly, talk to friends, family members and colleagues who have purchased cars from dealers. A dealer who consistently sells high-quality vehicles and treats her customers fairly will develop a good reputation in his community, and people will be happy to recommend him.

The test drive is the moment of truth when buying a new car. The dealer might stretch a fact here and there to make a sale, but the car can't lie. Take it out for as long as the dealer will allow, and put it through its paces. Drive it at high speed on the highway, then in traffic in town. Parallel park it, back it up, take some tight corners, and generally do everything you can think of to reveal any weaknesses or problems that it may have. Take a friend along to give you a second opinion.

You might find that dealers are less flexible when it comes to the price of a new car as opposed to a used one. If you are trading in a used car that is less than five years old and in good condition, you will probably have some wiggle room regarding how much the dealer will take off the new vehicle in exchange. While he may not come down too much on the price, you can probably haggle in some extras if you are persistent. Learn about what options are available for the car you're looking at before you take the test drive.

How to Reduce Your Auto Loan Interest Rate

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Car loan interest rates vary greatly and are based on a number of criteria, including your credit history and rating, down payment, type of vehicle purchased, and whether it is new or used. If your current auto financing arrangement offers unfavorable terms, you may be able to obtain a better rate by refinancing your car loan, with possible savings of hundreds of dollars over the life of your loan.

Instructions

Before seeking new auto financing, pull out your current agreement to review various clauses contained within it. Determine whether there are prepayment penalties and, if so, what it would cost you to pay off the loan early.

Some lenders simply charge a percentage fee based on the outstanding loan balance. For example, if you owe $7000 on your car loan and the prepayment penalty is 1%, then you would be charged $70 by your financing company. If this amount is more than you would save through refinancing, you may not want to refinance.

Other loan agreements contain what is called the rule of 78s, under which interest charges are front loaded. With this type of loan arrangement, which is not as common as it once was, your first payments go toward interest only, with subsequent payments designed to reduce the principle. Most states restrict this practice or allow it only on short-term loans.

Finally, some car loans are precomputed and interest and principle payments must be paid, though no prepayment penalty are charged. In effect, when you pay off this type of loan early, you pay the same amount even if the interest charges have yet to accumulate.

Compare price quotes and offers. Now that you know what prepayment penalties you may face, do not allow that information stop you from pursuing refinancing. It does not cost you to look, but it may cost you dearly if you continue to pay your current lender's high interest rate by ignoring better terms.

Visit price quote sites such as LendingTree.com to obtain compare auto loan rates. If you bought your car new and have had it only for a few months, you still may be able to get a new car loan rate. Otherwise, plug in the data for your now used car and see what offers are available. Use the onsite comparison calculator to compare loan offers, then use the same calculator to compare the best offer with your current loan. Add in prepayment penalties and fees to get a true picture of your savings.

Accept the best offer. If you can save money after considering any prepayment penalties or other fees, then consider switching lenders.

Your new lender may pay off your current car loan itself or issue you a check to you, which you can use to close the previous loan. In any case, send future monthly payments to your new lender and inform your auto insurer of the new lien holder.

Should I Get Gap Insurance for My Leased Car?

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New cars depreciate at a very rapid value and this depreciation can put you in a risky situation when you are the owner. Gap insurance is a type of insurance product that is designed to protect you against this depreciation risk. It is available for those buying new cars as well as those who lease.

When you buy or lease a new car, you might be surprised at how quickly the value of the car depreciates when you drive it off the lot. It could potentially depreciate thousands of dollars within a very short period of time after purchase. During this stage of your car ownership, you might owe much more than what the car is currently worth. If you are in a wreck, your auto insurance will pay what the car is worth in the open market. This could put you in a situation where you have to pay more than what the insurance company pays if you total the car.

To overcome this potential problem of depreciation, you have the option to buy gap insurance when you finance a new vehicle. The gap insurance is usually provided directly by the company who finances the car purchase or lease for you. If you wreck your car and the insurance company does not pay for the total amount of what you owe, the gap insurance will kick in and pay the difference. This keeps you from going upside down on your auto lease.

When you lease a new car, you might be required to buy gap insurance. Most leases require you to carry collision and comprehensive insurance on your new vehicle. When you buy gap insurance, it will usually only pay when you already have collision insurance on the car. Since the auto dealer is technically the one who still owns the car, it may require you to buy this kind of insurance so that both you and the dealer are protected from the extra liability after a wreck.

When you get gap insurance for your lease, it will add something to the total cost of your monthly payment. Generally, the gap insurance is simply bundled in with your payment, and you will not have to make a separate payment to the insurance company. This insurance coverage is generally inexpensive for the benefit that it provides you. It may add to your payment by $40 or less, depending on the value of your car at the time of the purchase.

Vehicle Buyer Rights

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Buying a vehicle is a significant investment as part of your transportation needs or personal enjoyment. Whether it's a new or used car, truck, aircraft or motor home, you likely have special rights under state laws when you purchase a vehicle. But you can only enforce those rights if you understand them beforehand.

State laws protect vehicle buyers during the purchase process and beyond. These laws require certain disclosures dealing with vehicle condition, mileage and history. For example, in Maine a dealer selling a used vehicle must post the method by which it acquired the vehicle, a statement of all known mechanical defects, the previous owner's primary use of the vehicle and the dealer's policy for returning purchase deposits. You have the right to understand your vehicle's warranty, which means that if dealers offer formal or implied warranties, they must honor them, and if not they must state the terms of the sale and the absence of any warranty.

Some states have lemon laws to protect new or used vehicle buyers, or both. These laws give state courts the power to enforce warranties or require refunds when vehicle dealers or manufacturers refuse to do so. In some cases they also add limited short-term warranties to used vehicles that would otherwise have no warranty protection. Some states have special lemon laws that apply to recreational vehicles, while others only cover passenger vehicles, such as cars, trucks and SUVs.

Consumer protection laws also cover your rights when it comes to financing a vehicle. Financing can add thousands of dollars to the cost of a vehicle, or impact your finances with changing monthly payments of unexpected fees. While vehicle dealers often facilitate financing, they usually don't provide the loans themselves. Instead, they work with lenders that must note their interest rates, loan policies and other disclosures when you sign a loan agreement. As a vehicle buyer, you always have the right to compare loan offers and use the lender of your choice, which can save you a great deal of money if the first offer you receive has a high interest rate.

Some states and local governments charge property taxes on the value of vehicles you own. This may include personal or business aircraft, boats and recreational vehicles. However, you have the right to pay prorated taxes based on when you purchase a vehicle during the tax year. For example, if you purchase a new motor home at the end of June to use during the summer, you will only need to pay half of the full property tax amount since you only owned it for six months of the year. To protect your right to pay prorated vehicle taxes you'll need to have a dated proof of purchase from the seller.

Can I Have a Co-Signer on an Auto Lease?

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A car leasing company may pass on your application if you have no credit history or a bad credit history. But adding a person to the lease agreement can get your application approved, and quickly put you behind the wheel of a new automobile.

A co-signer is a person who promises to manage the lease payments if you default. Leasing companies are particular about whom they approve for financing. Someone with a horrible payment record or no credit history can run into problems and have the application rejected. By adding a qualified co-signer, leasing companies feel confident that they will receive lease payments. The primary lessee is obligated to forward payments to the leasing company, but if this person cannot fulfill the obligation for whatever reason, the co-signer steps in to settle the debt.

Since a primary lessee usually cant qualify for financing due to an unstable credit history, it makes sense for the co-signer to have a better credit history. Leasing companies decide whos eligible for a lease by reviewing credit scores and history. Expect the leasing company to take the name and Social Security number of you and your co-signer, and then conduct a thorough credit check. Leasing companies pay attention to how well the co-signer pays his bills, and whether he has delinquencies or a bankruptcy in his recent past.

A person with no income or employment cannot co-sign a lease agreement. The person chosen to co-sign the lease must demonstrate the ability to make lease payments if the primary lessee defaults. Leasing companies take numerous factors into account, such as the co-signers monthly income and his amount of present monthly debt payments. A co-signer thats already overextended is likely a bad candidate for the lease.

Co-signing only benefits the primary lessee because hes able to qualify for a lease with another persons help. Quite the contrary, co-signing a lease puts the co-signers credit in jeopardy. The leasing information appears on both parties' credit reports, and if the primary lessee makes a payment late or skips a payment, the co-signers score can drop. Co-signers can take extra precautions by staying in communication with the leasing company and arranging for the leasing company to contact him the first time the lessee misses a payment.

Can a Repo Man Take Your Car Without Letting You Know?

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In the United States, vehicle repossession laws are mandated at the state level to protect both consumers and lenders. In most states, a repo man can legally take your vehicle without your permission, as long as the car loan agreement is in default. However, repo men cannot violate your state's breach of peace laws, which include any unnecessary harassment or unlawful entrance to your home.

While a repo man can take your car without warning, he cannot threaten or use force, enter your home or disrupt the peace in any way. If you believe that a repo man violated your state's breach of peace laws, you can take your lender to court to nullify the car loan agreement, repossession charges or any existing deficiency, which is the amount of money left on the car loan after the dealer sells the car to the next buyer. To find out your state's individual vehicle repossession laws, visit your state's attorney general website.

A repo man can take your car without notice, but he may not take any personal items left inside the vehicle, such as your CD collection, wallet or sports equipment. If the items are still in the car at the time of repossession, the lender must return your items at your first request. If you do not receive your items within the timeframe and manner set by your state's repossession laws, you may sue the lender for theft.

Your car loan agreement will dictate when a repossession can take place. In most states, a lender can only repossess a vehicle if the payments go into default after a set period of time, such as two missed payments.

Once a car has been repossessed, the lender has a state-mandated amount of time to notify you of the repossession and list your options, which may include an opportunity to buy back the vehicle from the lender, or bid on your vehicle at a future auction. In some states, such as Illinois, you may only have to pay the overdue amount if you have already paid for a certain percentage of the vehicle.

A surprise repossession can cause a lot of stress and financial problems, particularly if your deficiency is high or you are charged additional repossession or auction charges. To avoid the headache, try working out an agreement with your lender if you miss a payment. Lenders are more likely to avoid a repossession if they can help you, and you may be able to start a payment plan. If you cannot make your payments, consider selling your vehicle to a family member or friend who can take over the payments. If all else fails, consider filing bankruptcy, which will absolve the debt in some cases.

How to Refinance an RV Loan

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You know it is time to refinance your RV when interest rates have dropped a point or two since you obtained the loan. You will save quite a bit of money over the life of the loan with a lower interest rate, especially if you have a few years left to pay.

Instructions

Find out the value of your RV. The value is based on the year, make and model of the RV as well as the mileage and special features. You do not need to know the exact value of your RV, but you should know the general amount before you apply for the refinance loan. You want to make sure you don't owe more than the RV is worth. Find out the value by calling an RV dealer for an appraisal or by using a source such as the Kelley Blue Book Official RV Guide.

Check first with your existing lender to see if you can refinance the RV loan. Some lenders will streamline refinances for current customers and other lenders offer the best interest rates to existing account holders who have maintained a good payment history.

Check with other lenders to see if you can find a better interest rate than the one offered by your existing lender. If you can find a better interest rate with a different lender, there is no reason why you should not refinance the loan through another lender.

Submit a loan application with the lender offering the best interest rates and terms. You will need to additionally supply the lender with information about the RV including the mileage and the vehicle identification number. In some instances the lender will want an inspection of the vehicle.

You will not have to worry about transferring the title if you refinance with a different lender. The new lender will send a demand letter to the previous lender and request the title. You will, however, need to contact your insurer and notify the company of the change of lien holder. Your new lender may require proof that this has been accomplished soon after the refinance is completed.

How to Lease a Car With Less Than Perfect Credit

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If your credit history reflects negative entries such as late payments on debts, credit card charge-offs or a bankruptcy, this will leave you with a much lower credit score than someone who pays all debts on time and has never had to file for bankruptcy. When you attempt to lease a vehicle, the automobile dealership will pull your credit score to determine the risk it will incur by allowing you to lease the car. Having less-than-perfect credit, however, will not bar you from ever getting a vehicle lease. There are steps you can take to increase your odds of being approved for the lease that you want.

Instructions

Check your credit score before the car dealer does. It is important that you know what your buying power is. Always check your credit report thoroughly for any derogatory information that is either too old to still appear on your report or that you do not recognize. Requesting that the credit bureaus remove this information will increase your credit score and, in turn, increase your chances for a lease approval.

Choose the right type of car. As a rule, dealerships that offer American cars tend to have stricter credit requirements than dealerships offering foreign alternatives. Given that most car companies have comparable models, trying to find something you like and can be comfortable with at a Nissan dealership rather than a Ford dealership may be in your best interest.

Evaluate the various financing options available to you. You do not have to finance your lease through the dealership that offers the vehicle. Your bank, credit card company or even an online financier can finance your lease. Regardless of how high or low your credit score may be, it benefits you to shop around for the lowest rate.

Talk to your dealer about ways to decrease your risk factors and gain approval for a lease contract. Offer to make a larger down payment on the lease or secure a co-signer with good credit. Often a dealer will make concessions if you provide him with a good reason to do so.

Consider taking over someone else's unwanted lease. Websites like Swapalease.com specialize in connecting those who need a lease with those who need to get out of one. You will need to be approved to take over the lease, but the credit score requirements are often more lenient for an individual taking over a lease than an individual who initiates one.

How to Finance a Fifth Wheel Camper

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If you want to buy a fifth-wheel camper, you may have to finance your purchase with an RV (recreational vehicle) loan. These loans often have different rules from other loans. Some lenders require you to take out a minimum loan of $5,000, while others refuse to finance fifth-wheel campers manufactured by companies that are out of business or that have declared bankruptcy. You will also need good credit because lenders categorize fifth-wheel campers as luxury items. Despite these differences, financing a camper with an RV loan does not have to be stressful.

Instructions

Copy the paperwork needed to prove that you can pay back your RV loan. These items include your most recent federal income tax return, two most recent paychecks and current savings and checking account statements. Make copies of your credit card bills and additional loan statements to verify your monthly debt obligations.

Contact mortgage lenders or banks to check interest rates and loan requirements. Wide varieties of lenders provide these loans, including national lenders and specialty companies. Choose a bank or lender with which you feel comfortable.

Verify that your fifth-wheel camper meets your lenders requirements and then apply for the RV loan. Many lenders providing RV loans now allow you apply through online forms, or you can call your lender and schedule a time to sign the application forms in person. Your lender might also be able to send the loan application to you by mail or fax.

Provide your lender with the copies you made in Step 2. Your lender will verify that your gross monthly income is strong enough to support the RV loan payments and that your monthly debt obligations aren't too high.

Give your lender permission to run your credit, which will give lenders your three-digit credit score. This score tells lenders how well you've managed your money in the past. For the best interest rates, you will need a credit score of 720 or higher.

Agree on a closing date for your RV loan if your lender approves your application. On this date, you will sign the papers and pay the origination fees that make your loan official.

How to Finance a Used Car From Another State

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When you find a used car in another state that you want to purchase, financing it does not have to be any different than buying a vehicle in your state. Financial institutions do not make lending decisions for auto loans based on where the vehicle is purchased in relation to where you reside. Financing decisions are based on creditworthiness.

Instructions

Apply for financing with the out-of-state car lot or car dealer. Just fill out the standard credit application. Some car dealers have online credit applications on their website. If you are visiting the car lot or car dealer in-person, you can fill out the application with the on-site finance department.

Visit your local bank and submit an application for a car loan. Your bank will not mind that you are purchasing the vehicle in another state. If you submit a credit application for a car loan and pass the bank's requirements, you can get financed for the purchase.

Use the My Auto Loan website (see Resources) if you are buying a car from an individual in another state and you cannot get financing from a local bank. You can get up to four loan offers in a matter of minutes when you submit your application. The loan offers come from national banks and are based on your credit score.

Submit an auto loan application with an online lender that works with dealers, such as Capital One Auto Finance or Up 2 Drive (see Resources). If approved for one of these loans, you get a check that you can take to one of their pre-approved dealers. The check will only be good for up to a certain amount. You can usually view the dealers in your area that are associated with the company before you submit the application.

How to Negotiate the Down Payment With a Used Car Salesman

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Down payments aren't always required as a term of loan or lease approval. Borrowers can often finance the total cost of the car, including taxes and fees, depending on credit. Negotiating the down payment amount of a vehicle finance or lease is the same as negotiating the car's retail value. If you have poor credit and apply to a dealer for financing, however, the lender may require a percentage of the vehicle's value as a down payment, meaning your loan was approved but the lender requires increased equity in the vehicle.

Instructions

Appraise the value of the car you want to purchase. Go to Edmunds.com, the NADA Guides and the Kelley Blue Book website. All offer different values, but should offer an idea of where to start your negotiations.

Research the vehicle's trade-in value and suggested retail value. The trade-in value is similar to wholesale value and likely a good estimate of the dealer's cost for the car. Compare the trade-in value to the retail value to determine the dealer's profit.

Decide a fair profit for the dealer, keeping in mind that dealers recondition cars and run a business to make money. Aim to pay $500 over wholesale value, as financing through the dealer adds additional profit to the sale.

Subtract the trade-in value from your car's purchase price and add $500 for dealer profit. The result should be your target purchase price before taxes and fees. Compare your ideal cost to the dealer's price to determine how much to negotiate off of the purchase price; the decreased cost will lower your down payment requirement.

Tell your salesperson you'll buy the car immediately if she can reduce the purchase price to the amount you determined as fair. Explain that you don't want to provide such a large down payment and want the dealer to reduce the cost of the car instead. Allow the dealer to make a counteroffer; it may own the car for more than you estimated.

Agree to the car's new price, which will offset your down payment requirement, or keep negotiating. Use your readiness to buy as an incentive for the dealer to meet your request.

Pros of Leasing a Car

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If you prefer driving a new car every few years and don't mind an ongoing monthly payment, then leasing may be for you. Other than Bankrate.com's warnings to be aware of leasing mileage restrictions and the need to keep the car's condition as close to original as possible to avoid penalties when you return it, there are many pros to leasing a car.

Leasing is a great option for many people, but gather as much information as possible before you make the financial commitment.

LeaseGuide.com notes that one of the most significant pros of leasing a car is the low down payment. Most dealers require only the first month's payment at the time you pick up your leased vehicle; in effect, you pay for your lease one-month in advance. Some states may require that you pay state sales tax on the vehicle's value in advance, as well; others allow sales tax on the monthly payments to be rolled into the financing arrangement. Check with your dealership or your tax adviser to understand your state's requirements before leasing.

The Federal Reserve Board notes that with leasing, you'll have lower monthly payments because you pay only for the portion of the car's value that you use during the lease, plus interest and sales tax. You can drive more car for the same payment each month, or save money on driving the same car as you would have purchased.

Also, because dealers want your leased vehicle returned in very good condition to maintain its resale value, they might offer lower payments if you commit to drive fewer miles each year. On the other hand, you can negotiate a slightly higher payment if you need to drive more miles than their average.

As vehicles age, they require more care. But most cars will still be under the manufacturer's warranty when your lease expires in two to three years, leaving the cost of most repairs during this period with the manufacturer. Your dealership might also roll the cost of regular maintenance, such as oil changes, into your lease.

Leasing offers an advantage over buying because at the end of the lease, you turn the car in and shop for a new one. There's no haggling with potential buyers or with a car dealer over the depreciated value of the vehicle. The leasing dealership bears the risk of resale value at the end of your lease, leaving you free and clear to make a new decision on leasing versus buying your next car.

Another pro of leasing a car is that tax law permits businesses to deduct monthly lease payments as a business expense. Purchased vehicles must be capitalized and depreciated over the vehicle's useful life, resulting in a longer tax impact.

Individuals benefit as well, simply because they don't pay as much sales tax on a lease in most states. Check with your tax accountant to understand the implications for your situation.

How to Extend the Lease on a Nissan

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When you lease a new vehicle at a local Nissan dealership, the financing goes through Nissan Motor Acceptance Corporation, or NMAC. As your lease period draws to a close, you will get communication in the mail from NMAC to remind you that the lease period is coming to an end and to let you know of your options. NMAC gives lessees three options. You can return the Nissan, you can get a new Nissan or you can keep the car. Traditionally, keeping the car means purchasing it, but NMAC does allow for lease extensions as well.

Instructions

Look on a recent NMAC lease statement or on the communication you received from the company to get the customer service phone number.

Call the NMAC customer service phone number.

Ask for a lease term extension. As long as you are not in default and have made all of your lease payments on time, NMAC can extend your lease for an initial term of six months.

Request a lease extension agreement if you want to keep your Nissan lease for a period longer than six months. NMAC allows a lease extension agreement to be signed for a period of up to one year, provided your account has remained in good standing for the duration of the lease.

Sign your lease extension agreement when it arrives and return it to NMAC. You can then continue making your lease payments for the new extended lease period.

Can a Lien Holder Reposess a Vehicle if Only Partial Payments Are Made in the State of Texas?

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The Federal Trade Commission warns borrowers to obtain any verbal agreements with your lender in writing, including an agreement for partial payments. Otherwise, you must abide by the payment requirements stated in your original contract. The state of Texas doesn't allow "breach of peace" during the repossession process, such as threatening you or taking the car from a closed garage, but the lender sets the terms for the vehicle repossession, which you agreed to when you signed your contract.

To determine when and why your lender can repossess your vehicle, read your contract. Your contract states your payment amount and how many days without payment warrants a repossession. You might find that your lender can repossess the vehicle after a payment is one or up to 30 days late. Some lenders also repossess a vehicle for lack of insurance coverage. If your payment is later than the allowable time period stated in your contract, your lender is within its legal rights to repossess the vehicle.

Call your lender before you decide to start paying partial payments. Ask to have your payment deferred, which might help you to remain current on your loan payment. If your lender agrees to defer one or more payments, the missed payments are added on to the end of your loan term. You won't pay late fees during the deferment and your lender won't report the late payments to the credit bureaus. If your lender agrees to defer your payments, obtain the agreement in writing. Otherwise, the terms of your original contract still apply.

Consider modifying your loan to avoid repossession. If you're nearing the end of your deferment or still can't catch up with your payments, your lender might change the terms of your loan to help you avoid repossession. You might have to prove financial hardship, such as unemployment or disability. If your lender approves a loan modification and a payment deferment, your new payment might not be due until months later. Your interest rate and term may increase, but you'll pay a lower monthly payment. You must sign a new loan contract to cancel the terms of your old contract. Keep a copy for your records.

Don't assume your lender will accept partial payments. Your lender may still repossess the car even though you're trying to pay. Contact your auto loan provider as soon as you know you can't afford your car payment. Some lenders only allow a payment deferment if the loan account is current, meaning you can't have a recent history of late payments. If you don't abide by the terms of your new contract, your lender can still repossess the vehicle.

Can You Buy a Car at Age 17 Without a Parent's Consent?

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Most 17-year-olds look forward to getting their first driver's license. However, they may not be able to purchase their own vehicle until they turn 18. Most states do not allow minors to sign contracts or legal documents on their own. Therefore, 17-year-olds usually have to wait a year, or get parental consent to purchase a vehicle.

Vehicle ownership laws differ from state to state, according to CarInsurance.com. In some states, only people over the age of 18 may own vehicles, while in other states minors can legally own their own vehicles. To determine the law in your state, visit your local Department of Motor Vehicles office. Representatives can tell you the exact procedure for purchasing and registering a vehicle if you are under the age of 18.

A few states allow minors to purchase vehicles if they are emancipated from their parents. Emancipation requires going to court to demonstrate that you have the financial means to live on your own and that it is in your best interest to do so rather than continuing to live with your parents. If the court agrees, it terminates your parents' rights over you. Emancipation may entitle you to enter such contracts as car loans on your own.

If you are not emancipated, you will have to get parental consent to purchase a vehicle in most states. Some states, such as Michigan, have a standard form that your parent or parents must fill out and sign. In some states, you only need a signature from one parent or guardian, while in other states you must get consent from both of your parents.

Even if you get consent to purchase the vehicle, you may need your parents' signature on some of your other paperwork. Many states require parents to sign titles when minors purchase vehicles. In addition, your parents may need to sign the insurance paperwork. This is because these documents are additional legal documents associated with purchasing a vehicle, and in most states unemancipated minors cannot enter contracts or sign legal documents.

What Happens if I Can't Make the Payments on a Car Loan?

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Any borrower can face the inability to make a car payment because of unexpected circumstances. While this is sometimes a temporary problem, you may find it is impossible to make any future car payments. Whichever the case, there are consequences when you can't make your car payments, and you have options.

You can call try to sell your car if it has equity in comparison with its payoff amount. If you can sell your car for more than you owe, you can keep any profit you make. You can also purchase another car and trade your current car in, possibly lowering your car payment. Refinance your vehicle through another lender if your payment is too high because of interest rate or to extend your loan. This will also allow you up to 45 days until your next payment is due and also lower your payment. Repossession, or returning your car to the lender and defaulting on your loan, should be a last option only. If you have a good payment history with your lender, you can cask to defer your car payment or extend your loan term to lower payments.

If deferring your car payment is not an option, your car must have established some equity in order to sell, trade or refinance. Vehicle equity depends on the term of your loan, payments you've already made, your interest rate and the price you bought your car for. Once you have your vehicle's payoff amount, you can check popular Internet appraisal guides for values, such as those at Edmunds, MSN Autos or National Automobile Dealers Association Guides to judge. Refinancing may prove impossible if you owe more than your car is worth, as banks lend based on vehicle value.

Repossession should remain your last option. When you return your vehicle to the bank, it will be sold at auction for wholesale value, also known as trade-in value. You must pay for any loss to the bank once it is sold. While the bank will give you some time to work out payment arrangements, the debt must be paid or settled. If you settle your debt instead of paying the total amount, you are responsible for paying taxes to the Internal Revenue Service on the amount left out of your settlement, as the IRS considers the amount profit. Or the bank may pursue a judgment and garnish your wages for nonpayment.

Repossession and bankruptcy have long term affects on your credit rating. It becomes extremely difficult to obtain another line of credit for years to come. Even if you voluntarily repossess your car, meaning you call bank to arrange return instead of the bank having to send out a tow company to get the car back, the affect on your credit is the same. If you plan to pay off the debt afterwards, the repossession will show as "settled" or "paid" on your credit, but does not remove the mark from your report. If you are late on your payments and want to trade your car in and obtain another loan or refinance, approval is unlikely because your credit report will state the amount of days you are past due on your account.

Call your bank as soon as you realize you cannot make your car payment. Many banks would rather work with you to make payment arrangements than repossess your car. Some banks will allow you to adjust your contract for a longer term, which can lower your payment for the time being. In addition, your lender may defer one to several car payments, allowing you time to find a job, catch up with bills or even sell your car. Don't wait until you are past due; call when you realize you cannot pay to find out your options.

What are the Benefits of Buying vs. Leasing Vehicles?

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Leasing a vehicle offers several benefits to buyers who can maintain a somewhat restrictive contract. Leasing requires a yearly mileage allowance, specific term, possible penalty fees and maintenance requirements. If you can't fulfill those contract requirements, however, then a finance or cash purchase may offer benefits over a lease.

If you are financing or purchasing a vehicle, you can expect to own it immediately or at the end of your loan term. When leasing, the leasing bank owns the vehicle, not you. Rules and requirements over a lease affect how you can use your vehicle, as mileage limitations and repair or maintenance requirements can limit your vehicle use. If you are financing, you can pay off your vehicle early to own it sooner. When leasing, you can pay your lease amount upfront but will not be able to take advantage of your vehicle's equity. When you return the leased vehicle, the bank will sell it and keep any profit from its sale.

At first glance, leasing appears cheaper than purchasing because of comparable monthly payments. If you plan to purchase your leased vehicle at the end of its contract, leasing may prove more expensive than a purchase or finance. Compare overall prices before you determine whether to lease or buy. Leasing often includes a down payment of several thousand dollars and lack of rebates or price negotiations. A vehicle purchase, whether your finance or pay cash, is often less money because of available rebates and price discounts.

Your life situation can change over the term of your lease. If you find that you have to commute farther to work or increase your driving habits for other reasons, you might face over-mileage fees of 10 to 20 cents per mile over your contracted allowance. If you are purchasing, you can drive your car as much as you'd like. Leasing also requires that you consistently repair and maintain you vehicle; otherwise, expect a bill for necessary repairs or maintenance once you return the vehicle, also known as wear-and-tear fees.

Expect to maintain a full-coverage policy during the term of your loan or lease with increased bodily injury and property damage limits and a lower deductible. For leasing, you likely need to purchase an additional gap insurance policy, which ensures vehicle value payoff to the leasing bank. If you total your vehicle during a loan, you'll receive your insurance company's market-value payout if it exceeds your loan payoff amount. Even if you pay all of your lease payments upfront, you won't receive any money back if your vehicle becomes a loss since the vehicle's owner is the bank and your insurance policy's loss-payee.

When Two People Are Signed on a Car Loan Who Is Entitled to Have the Vehicle?

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Two important documents to be aware of with your car are the loan and the title. The loan reflects the debt on the vehicle, and it can have multiple parties named. The title reflects ownership of the vehicle, and multiple parties may also be listed here. The names on the two documents do not necessarily match. If two people are on a car loan, the car still belongs to the person who is named on the title.

With a joint auto loan, more than one person is responsible for repaying the lender the debt for the vehicle. For example, you and a spouse or parent may both be listed on a joint auto loan. If the debt goes unpaid, both parties will be responsible for the consequences. The auto loan in no way reflects ownership of the actual vehicle, however.

Joint ownership is determined by the names on the title for the vehicle. When you purchase a vehicle from a dealer, the parties wishing to be on the title should be present to sign the title. The title is then filed with the Department of Motor Vehicles for the state where the owners live, and only those parties listed on the title have a claim to ownership of the vehicle by law. Often, a lender will be listed on the title if the debt is not yet paid, since the lender has a lien on the vehicle while the debt is outstanding.

Check your title to verify who is entitled to have a vehicle. You should have a copy of your title in your records, and you may have the original. Each state deals with this process differently. Some states allow a lender to hold your title until you have repaid the debt. In other states, the lender will provide you with the document immediately. If you are unsure who has your title, check with the DMV in your state. The DMV will have a record of your vehicle's title as long as your vehicle is legally registered.

It is possible two people are listed on the car loan and on the title. In this case, it is not clear who is entitled to have the vehicle if there is a dispute. You can take this issue to court, and a judge may seek to verify who actually made payments, who used the car as a primary vehicle, and other factors. However, ultimately, if two parties are listed on the ownership document, both parties share ownership of the vehicle. In order to remove a party from ownership, that individual would have to sign over the transfer to the other party. In doing so, it also is advisable to remove this person's name from the loan by refinancing to a single-borrower loan.

How to Get a Car Loan on Severance Pay

11:54 PM 4 comments

Losing a job can have significant financial implications, and one of the most devastating results involves the ability to obtain a loan. Lenders generally do not approve loans for borrowers without a steady income. If you receive severance pay, though, you can obtain a loan for a car by following a few key steps.

Instructions

Establish a strong credit score. Borrowers who do not have a good credit history can find it difficult to secure an auto loan, and the lender likely applies greater skepticism if a borrower has no work income. While severance pay may meet income requirements, the lender still could deny your loan application if your credit score is too low. You can establish a good credit history and repair a poor credit history by avoiding late payments and by paying off debts.

Gather documentation showing that you receive severance pay. This documentation must show the beginning and ending date for your severance pay payments and the frequency and amount that you will receive in severance payments.

Make copies of these documents. You need to keep your original documents. Thus, you want to make copies to provide to the loan officer at the bank or at the dealership. This ensures that nobody misplaces or loses your documentation.

Save money for a down payment. Most lenders require you to pay at least 10 percent of the purchase price for a vehicle when you apply for a loan. Therefore, you should save some money prior to beginning the loan process.

Apply for a car loan. You can do this on your own through a financial institution or through a car dealership's financial network.

Sign the loan paperwork to close the loan.

Make the down payment to the car salesman and take possession of your new vehicle.

Alabama Laws on Title Loans

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Alabama title loans are short-term, high-interest loans secured by the title of a vehicle. If the owner does not pay a title lending business monthly interest on the title, the business may legally seize the vehicle. In Alabama, title lenders are considered to be pawnbrokers, and they do not fall under the restrictions of the Small Loan Act.

Alabama title loans are an issue of strong legal debate, as title lenders are accused by some activists of preying on the poor with high-interest-rate loans. In 1993, the Alabama Supreme Court decided to classify title lenders as pawnbrokers, which allowed them to be covered under the Pawn Shop Act. In September 2006, Alabama Circuit Court Judge Charles Robinson Sr. came to the ruling that parts of the Pawn Shop Act were unconstitutional. Judge Robinson ruled that Alabama title companies can charge up to 300 percent in interest, compared to other states that restrict title loan interest rates to 24 percent annually. As of August 2010, the Alabama Supreme Court has not reviewed this ruling, so predatory interest rates on Alabama title loans remain in effect until the higher court makes a decision.

Alabama title loans are covered under the Pawn Shop Act. If a title lender receives no payment on a title loan after 30 days from the signing of the original contract, then the vehicle legally becomes the property of the title lender. The title lender may charge a maximum of 25 percent of the amount of the loan per month in interest. Since most Alabama title loans are under $1,000, many poor borrowers cannot pay off the loan and lose their vehicles.

While Alabama title loans are not currently covered under the Small Loan Act as of August 2010, some individuals are lobbying to have title loans reclassified into this category. According to this act, Alabama recognizes that most wage earners of low incomes are taken advantage of by payday loan lenders. The Small Loan Act covers loans of $1,000 or less and limits interest payments. Under the Small Loan Act, lenders cannot charge more than 3 percent a month for the first $200 and more than 2 percent interest on the loan between $200 and $1,000.

The State of Alabama puts very few restrictions on title lending businesses. According to the Pawn Shop Act, all title lenders must pay an annual fee to the state for licensing. Alabama title lenders must provide full disclosure of the terms of the title loan and may not use any false advertising. Title lenders are required to keep detailed records of all transactions. Any broker who violates rules listed in the Alabama Pawn Shop Act will receive a fine of up to $1,000 per title loan entry.

How Can I Buy a Car With an Already Upside-Down Car Loan?

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You might still be able to obtain another car loan even if you're upside-down in your current car loan, meaning you owe more than the car's worth. You might have to provide a down payment covering your negative equity. Otherwise, your new car's loan value might be as high as 120 percent if you have excellent credit, which helps to cover up negative equity. If you're purchasing a new car, try to find one with rebates to help offset your negative equity and minimize your down payment amount.

Instructions

Go over your available funds and budget. Decide how much money you can offer as a down payment for a new loan to decrease your negative equity, which a lender will likely require. If you aren't carrying over substantial money from your previous loan, you may not need a down payment at all.

Find a dealership who has a car you want. Allow the dealer to obtain your loan payoff amount and to appraise your vehicle. Your dealer will show you the car's total purchase price, which includes tax, your loan payoff and any state and dealer fees.

Tell your dealership you want to carry over the excess money from your old loan to your new loan. Many dealers work with a variety of lenders and can provide financing for you. Allow the dealer to obtain your credit application and wait for your approval or a lender's counteroffer.

Ask the dealership to provide you with a buyer's order if you plan to finance through an outside lender. A buyer's order lists the price breakdown and vehicle information that a lender needs to determine your loan approval. Apply for your auto loan at a lender of your choice.

Make arrangements to pick up your new car if you're approved for a loan with the excess loan balance included. If you are declined for the loan or receive a counteroffer, have your funds ready to provide to your dealer even if financing elsewhere, as your down payment reduces your car's purchase price.

Sign your loan contracts. If using a dealership for financing, you'll complete your loan paperwork with the dealership. If financing elsewhere, you'll need to sign your contracts with your lender to obtain a loan check for the dealership.

Pay your dealership your down payment, if required. Provide your loan check if you used an outside lender and complete the remainder of your paperwork, which includes your state motor vehicle paperwork.

How to Calculate the Balance of a Car Loan

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Car loans usually extend over a period of years, and you may find it necessary at some point during the term to calculate the remaining balance. You'll need to know this if you want to pay off the loan early, or if you're trading the car in, or even if you've had an accident and your insurance doesn't pick up the entire amount. Here's how to calculate the balance of your car loan.

Instructions

Obtain the original amount of the loan. Your loan documents should have the loan amount clearly stated. Also, a monthly car payment bill may provide the information as well. We can take for example a $20,000 car loan.

Find the length of the loan. Because car loans are done with compounding interest, the term of the loan will tell you how long the interest is compounding. In the example we will look at a 60 month loan.

Check for the interest rate on the car loan. The interest rate is different from the Annual Percentage Rate or APR because the interest rate does not take into account the compounding aspect of a car loan. So you'll need to use the interest rate to get the APR. For the example, say the interest rate on the $20,000 loan is 5 percent. This would give a monthly payment of $377.42.

Determine how many payments have been made. For the example, say that 24 payments had already been made.

Plug the variables into the equation. You now have all of the tools to plug into the equation to figure how much money is left on the balance of the car loan. The equation is as follows:

Balance = Original Loan Amount x (1 + (Interest Rate / 12))^ Number of Payments - Monthly Payment / Monthly Interest Rate [(1 + Monthly Interest Rate)^24-1]

First calculate the monthly interest rate by dividing .05 by 12. This equals .004166.

Plug the rest of the numbers in to the equation to get the following:

B = 20,000 x (1.004166)^24 - (377.42/.004166) x [(1.004166)^24 - 1]

This results in a balance due of $12,592.88

This means that after 40 percent of your payments are complete (24/60), you've paid off 37 percent of your loan (7,407.12/20,000).

How to Buy a Car From a Seller

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If you are buying a car from a private seller, the process is slightly different than buying from a new or used car dealer. The main difference is that you cannot get financing through a seller. Instead, you must already have financing or have the money available to pay for the purchase of the car. Other than financing, you will find the car-buying process to be almost identical when buying from a private seller.

Instructions

Look for private sellers advertising cars for sale in your area by browsing the local newspaper classified ads, Craigslist and any other local bulletin board-style listings.

Contact the seller when you find a vehicle for sale that you are interested in looking at. Typically the contact method will be a phone number. When you make the call, you can ask any questions you may have about the vehicle and set up a time to look at it.

Check the value of the vehicle before you go look at it so that you are prepared to negotiate the price. You can check the value on sites such as Kelley Blue Book, NADA Guides and Edmunds websites.

Inspect the vehicle when you arrive to meet the seller because cars are generally sold as-is, which means that if you find a problem with the car after you buy it there is no recourse available for you. You may be most interested in seeing if the car is clean, what the mileage is, if it has any dents or looks as if it was wrecked. You may want to have your mechanic take a look at the car to make sure it has no major mechanical problems. The seller should also allow you to test drive the vehicle so that you can see how it drives.

Negotiate the price with the seller if you are not happy with the asking price. You can use the value amount you got online as your guide for negotiating. Once you agree on a price with the seller, you can pay for the vehicle. Usually you can pay by check, money order or cash when buying from a private seller.

Ask to see the title of the vehicle before making payment for the car. Confirm that the VIN on the title matches the VIN on the car, which can usually be found on the inside of the driver side door. Also confirm that the name on the title matches that on the drivers license of the seller. If everything checks out, you can proceed.

Fill out a bill of sale with the seller, which should be provided by the seller, and the title. In some states, the Department of Motor Vehicles requires that the bill of sale be notarized. You can check with your state DMV to find out the requirements for your state. The Nevada DMV website has links for the sites of all 50 states.

Monday, May 31, 2010

Instructions

Locally Held Title

Title Held Out of State

Instructions

Refinancing to Cancel an Auto Loan

Prepaying to Cancel an Auto Loan

Settle the Debt to Cancel an Auto Loan

Sunday, May 30, 2010

Lack of Ownership

Mileage Limits

Damage Fees

Early Termination

Considerations

Time Frame

Features

Misconceptions

Warning

Separate the Process

Shopping for Financing

Credit Report

Dealer Incentives

Saturday, May 29, 2010

Instructions

Definitions

Advantages

Disadvantages

Considerations

Friday, May 28, 2010

The First Year

Rule of Thumb

Holding Onto Value

Minimizing Depreciation

Instructions

Instructions

Instructions

Canceling Auto Loans

After 18 Months

Refinancing

Thursday, May 27, 2010

The Process

Higher Rates

High Credit Utilization

Warnings

Wednesday, May 26, 2010

Instructions

Wait to Sell the Car

Sell the Car Yourself

Lease Your Next Car

Gap Insurance

Tuesday, May 25, 2010

Instructions

Personal Interest

Business Expense

Home Equity Loan

Home Equity Line of Credit

Monday, May 24, 2010

Instructions

Saturday, May 22, 2010

Choosing the Car for You

Researching Dealers

Test Drives

Haggling

Instructions

Instructions

Depreciation of Cars

Gap Insurance

Lease Requirements

Payment

Disclosures and Warranties

Lemon Laws

Rights for Financing

Prorating Taxes

What is a Co-signer?

Credit Qualifications

Income Criteria

Considerations

Thursday, May 20, 2010

Breach of Peace

Personal Items