What Happens When I Trade a Car in With Money Still Owed on It?

Even though many consumers are not familiar with the process, dealers are generally familiar with how to manage a car deal when you trade in a car with money still owed on it. Essentially, you are selling them one car and buying another, and your current loan payoff is important to you and the dealer.

Trade-In Basics

Trading in one vehicle when buying another is common practice in the U.S. car market. While car owners can often get more money selling their vehicles privately, many prefer the simplicity and efficiency of trading in with a dealership. A trade-in means the dealer offers you a certain value for your car as part of the deal when you buy a new one. The trade-in amount is taken from the purchase price, and the remainder is what you owe.

The Payoff

When you owe money on your existing car loan, the trade-in deal can seem a bit more complicated. However, the deal simply adds the remaining balance on your existing car loan to your total acquisition cost on the new car and pays off the loan for you. Thus, you get the new car at its purchase price, pay additional sales tax and registration fees, and pay off your loan within the purchase deal.

Formula

The formula for calculating the amount due when you close the sale on a new car is the selling price of the new vehicle, plus the sales and title fees, less the trade-in allowance for your current car, plus the payoff amount on your existing car loan. If you have any rebates or pay down any cash on the purchase, this is subtracted from the amount due as well.

Following the Purchase

When trading in a car, it is important to know its value. This is especially true when you owe money on it. Car dealers are often skilled at manipulating the negotiation by focusing on the fact that they are paying off your loan and giving you a trade-in, as opposed to the actual value of your car and the car you are buying. You should get in writing that the deal will pay off your existing car loan right away. While most do, some have been known to wait if they are cash-strapped.

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How to Cancel an Auto Lease in the State of Florida

In Florida, there is no grace period given once you sign an auto lease contract, which is a binding document. Florida law does provide a lemon law option for leases, however, in cases of manufacturer defect, warranty issues or extended maintenance problems. The leased vehicle may not be more than two years old and the dealer must be given three attempts to fix the problem. If you suspect your vehicle is a lemon, you must undergo a state-mandated arbitration, which will decide if the lease can be legitimately canceled.

Instructions

1

Determine if your leased car is a lemon under Florida's lemon law. By definition, lemons are cars that do not conform to the manufacturer's warranty or have a manufacturer's defect that adversely affects the safety, use or value of the vehicle. Once the dealer makes the three attempts to fix the problem, the original manufacturer must also be given an opportunity to mend the issue.

2

Notify your car dealer that you would like to participate in the manufacturer's state-certified dispute resolution process, which involves mediation, conciliation or arbitration. If the manufacturer does not have a state-certified program, you must file a dispute request with the Florida New Vehicle Arbitration Board.

3

Attend the Florida New Vehicle Arbitration Board or manufacturer arbitration hearing to state your case, with or without a lawyer present. The council will ruling on the case with a final verdict that establishes your legal right to return the leased vehicle. If you can prove that your leased vehicle is a lemon, you will be refunded the full price of the vehicle, plus any maintenance expenses.

4

File a repeal within 30 days of the arbitration hearing if you do not agree with the verdict.

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Five Smart Reasons for Buying a Used Car

There may be nothing like the smell of a brand-new car, but you could be paying dearly for it. Vehicle reliability and durability have improved so much that the most cost-effective way to own a car now is to buy one that's 2 or 3 years old and run it into the ground.

Price

Of course, a used car is going to cost less than a brand new one, but that's not the whole story. The popularity of leasing means a lot of well-maintained, 2- or 3-year-old cars are returning from leases. If you choose the right model, you could save up to 40 percent of the retail price by buying one that's 3 years old. Alternatively, buying used may mean driving a vehicle you could never afford at its new price. Be aware though that spares for luxury models such as BMWs are expensive.

Depreciation

Depreciation is the main reason for the price gap between new and late-model used cars. A new vehicle depreciates by about 20 percent as soon as you buy it, and a further 10 percent in its first year. That means your neighbor's $30,000 brand-new pride and joy will be worth less than $22,000 in a year's time. Edmunds and Kelley Blue Book are reliable sources of used car prices (see Resources). If you buy a car used and then decide to turn around and sell it in a year or two, it will not depreciate in price nearly as much, so you can recoup much of what paid for the car.

Reliability

Buying used means avoiding the inconvenience and potential safety issues of factory defects. Many manufacturers have programs for pre-owned vehicles, and when you buy a certified car from a dealer, you'll get a full-service history, the security of knowing that the car has passed a rigorous inspection and a manufacturer's warranty of up to 12 months. If you buy a non-certified car, get a history report through Carfax or AutoCheck to verify the car hasn't been in a major accident and also have your own mechanic do a full inspection.

Insurance

The value of the car is the major factor in determining the cost of insurance, so the lower purchase price of a used car will mean lower insurance premiums. Additionally, finance companies usually insist on full coverage, which can add 15 to 20 percent to the initial price of the car.

Ongoing Costs

State registration fees are often based on the value of the car, so a pre-owned car can cost significantly less to register each year. If your car is no longer under warranty, you can also save money by using an independent mechanic for repairs and maintenance.

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Car Lease Purchase Options

If your lease is up, you can purchase it for the amount stated in your contract; the buyout amount is listed as the last payment. You can finance through the bank you leased from or from a lender of your choice. If you went over your mileage and are concerned about lease-end fees, you can also trade your lease toward another car purchase.

Financing

You can finance through any bank you want, or have the original leasing bank finance the balance due. You don't have to finance the entire amount if you want to put money down toward the purchase price. Most states only charge tax on the payments you make, so you can expect to pay taxes on the finance amount, as well. Keep this in mind when you finance; you can put the tax amount down or include it in your loan. However, you will pay interest on your tax amount, so avoid financing it if possible.

Check Rates

Check rates before deciding where to finance your lease balance. Leasing banks, such as NMAC (Nissan Motor Acceptance Corporation), GMAC (General Motors Acceptance Corporation) or other manufacturer banks, are not the most competitive for rates when it comes to used-car purchases. You may fare better with a local bank or a credit union. Call banks to check used-car rates before deciding where to apply. Your interest rate can save you thousands throughout the term of your loan depending on how much you borrow.

Trade the Vehicle

You can let a dealership purchase your vehicle by trading the car toward another purchase; you do not have to finance the amount due. If you are concerned with lease-end fees, you can avoid them by allowing the dealer to purchase your vehicle from the bank. If you owe more than the vehicle's value, you can put money down toward a new purchase or carry it over. If you owe less than the balance due, you will have a credit go toward your new loan.

Considerations

Your vehicle's lease-end value was determined at the beginning of your lease. This amount is a guess based on future market values and lease-end mileage. Also, people typically pay more to purchase a lease because of lack of negotiating in the beginning of the contract. Many buyers focus on monthly payment and not overall sales price. Before deciding to purchase your lease, make sure your value is correct. Check the vehicle's value at Edmunds.com or the Kelley Blue Book website. You may fare better walking away from the lease if the value is not correct.

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Can I Buy a Car With a Lien?

Many states do not allow title transfers when a lien is listed on the title. If your state does allow such title transfers, you may face repossession if the seller hasn't satisfied the loan. Check with your state's motor vehicle department for direction before you purchase a car with a lien and consider the financial risks of the purchase before you move forward.

State Lien Requirements

To find out if you can title and register a vehicle with a lien listed on the title, call your state's motor vehicle department for instruction. Many states do not allow title transfers when the title has a lien listed on it, even if the loan has been satisfied. Some states offer a spot on the vehicle's title for the lien holder to sign, so if the lender signs the title, the lien will be removed from the title you receive after transferring ownership. You must follow your state's rules to transfer ownership, so call ahead to ensure you and the seller follow state requirements.

Lien Release Paperwork

If you learn that you can't transfer vehicle ownership without a lien release or proper signature on the title, ensure the seller provides you with the necessary lien release paperwork. It is not your responsibility to obtain a lien release or title signature. In fact, many lenders will only send the lien release or discuss account information with the original account holder, which is the seller of the vehicle. Even if your state doesn't require the release, the lien holder will remain documented on your title when you transfer ownership without a lien release. This may cause issues when you try to sell or trade your car in the future.

Financial Risks

If you see a lien holder on the vehicle's title, it signifies that a lender still has financial interest in the vehicle. If your buyer does not provide you with proof that the loan has been satisfied, you can't prove the loan has been paid. Do not take a buyer's word for the vehicle's loan status; require proof the loan is paid. Otherwise, the lien holder can repossess the vehicle from you even though you paid for the car. You won't be liable for the loan's past loan amount, but if you want the car back, you'll have to pay the lender for the overdue loan balance.

Paying to Remove the Lien

The vehicle's seller may plan to pay his lien holder with the money from your sale, which is not unusual. If the seller plans to do this, accompany him to the auto loan provider to make your payment. If the lender is local, you can likely receive the car's title or lien release immediately. If the lender is not local, call the lender to make your payment directly. This way, you know the vehicle's loan is satisfied. The seller must note his account with the lender to allow you to call and make your payment.

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What Does It Mean When a Bank Puts Insurance on Your Car?

If a bank that has financed your purchase of an automobile places insurance coverage on your car, it is because you have failed---or your bank believes you have failed---to maintain insurance coverage as promised in your contract. Banks typically will try to contact borrowers before securing insurance coverage, which increases the monthly payment as a result of the extra cost of the bank-added policy.

Insurance Reporting

Insurance providers electronically notify lien holders and state motor vehicle departments of insurance policy changes, such as cancellation, lapse of coverage as a result of nonpayment and coverage changes. Many states require only a liability policy, but lien holders require full-coverage insurance.

Increased Car Payment

An insurance policy that a bank adds to your car is not acceptable coverage for driving legally in states that require liability insurance. The policy protects the bank from loss and does not offer coverage for you. The added insurance often costs much more than a policy you may purchase on your own---as much as $1,000 for a short term.

Removing the Extra Insurance

To resolve the issue, you must secure a policy or reinstate your full-coverage policy immediately. You will be required to make the payment covering the bank's added expense for the time the forced policy is in effect. Once you reinstate your policy or purchase a new one, obtain acceptable forms of proof of insurance as required by your state. Your insurance provider knows your state's requirements and will give you the proper paperwork to provide to your lender. Call your bank to find out if you can bring the proof of insurance to a local branch or if you should email or fax it instead.

Correcting Inaccurate Reporting

If you have maintained coverage consistently, provide your insurer with proof of continuous coverage. You may also ask your insurance provider to contact your bank to provide the proof of continuous coverage. If you plan to visit your lender to correct the situation, find out ahead of time which documentation you need to take with you to prove that you have had continuous coverage. Once you've proved the dates of your insurance policy, the bank will remove its extra insurance from your vehicle and correct any payment issues that resulted because of the added insurance cost.

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What Happens if I Turn in My Auto Lease?

You may turn in your auto lease by terminating your contract early, but you'll have to pay a bank termination fee in addition to any payments due until the end of your contract. If you intend to return your lease because you can't make payments, the instance is known as repossession.

Early Termination

Call your bank to determine its procedure for an early lease termination. You can cancel your contract, but doing so might be expensive. Expect to pay all payments you have left in your contract and a termination fee, which differs by bank. You might have to pay termination costs before returning your car. Once your vehicle is returned, a bank representative will inspect it. If you went over your allowable mileage or exceeded wear-and-tear limits, expect to pay additional fees.

Repossession

If you can no longer make your lease payments, contact your bank immediately. Don't wait until it starts the repossession process, which significantly damages your credit. Your bank may have programs in place to help you. If there is nothing more you can do, make arrangements to return your lease to the bank, known as a voluntary repossession. Otherwise, the bank may seize the vehicle from wherever it can find it, including your home or place of employment.

Effects on Credit

If you pay all applicable fees to terminate your lease, your credit will remain in good standing. Repossession, on the other hand, significantly reduces your credit score. Your lease will be reported as repossessed to the credit bureaus and remain on your credit history for at least seven years. Once your vehicle is returned by repossession, the bank will resell it. You must pay the bank for the remaining balance of the car's total cost, not just the lease amount. If you don't, the bank will pursue legal action and eventually garnish your wages.

Considerations

Paying to terminate your lease or returning it by means of repossession are not your only options. Consider transferring your lease to another person, known as a lease assumption. Transfer costs are far less than the cost of termination. Check the Swapalease website or LeaseTrader.com to learn more. If you've lost your job or are experiencing other forms of recognized financial hardship, tell your bank. It may be able to extend your lease, allowing you to miss several payments.

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Tips on How to Quickly Pay Off a High Interest Car Loan

Even buyers with good credit can find themselves paying high interest on an auto loan. The 2010 Financial Reform Act reins in many deceptive lending regulations, but exempts auto dealers, who often become middlemen between lender and buyer, marking up interest rates by 3 percent. A 2010 New York Times article cites one practice in particular, the "Yo-Yo" tactic. The buyer agrees to buy the car at a given price and interest rate "subject to loan approval." Later, the dealer yo-yos the buyer back, telling him the bank turned down the loan, but offering another loan at a significantly higher rate. Buyers with high-rate auto loans should pay them off quickly.

Review Credit Cards

Sometimes credit cars from credit unions or banks specializing in low-risk credit cards will have rates lower than high-rate auto loans. Simmons First, one bank that opens accounts for consumers with excellent credit, charges 11.25 percent on cash transfers, as of September 2010.

Get Better Loan

Consumers who have just taken out a car loan sometimes feel that they must wait before applying for a better loan. They can apply for a better loan immediately. If you belong to a credit union, refinance your car with them.

Increase Payment Amounts

Think of your monthly income as a fund source you can reallocate. If you have credit cards with low interest rates and you currently pay more than the minimum on one or more of them, make minimum payments on your lowest interest rate credit cards, and reallocate that money to pay off the auto loan faster.

Accept Promotional Rate Card

Banks periodically send out invitations to accept new credit cards with teaser interest rates close to zero percent for 6 months or a year. Often, these cards come with checks you can write to pay off other debt without paying the usual high rates for money transfers. The senders hope you will pay off another credit card, but you can pay off or pay down your high rate auto loan instead.

Home Equity Loans

If you own your house and have enough equity in it to take out a home equity loan, that loan loan will probably have an interest rate of less than 7 percent. If you do this, be disciplined about the amount you borrow. The bank will encourage you to borrow as much as your equity will allow. Borrow just enough to pay off the auto loan.

Negotiate With Lender

Lenders during tough economic times anticipate that many borrowers will have liquidity problems. Banks do not like lowering interest rates on a current loan, but you have already fallen behind on your payments, your banker may be motivated to help you, particularly if you explain, convincingly, with data, that if you cannot renegotiate the loan, you must file bankruptcy.

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Is it a Good Idea to Trade in a Car You Are Upside Down on & Get a Lease?

If you purchased a car with regular financing and a low down payment, it is likely you owe more than the car is worth. This is called being upside down in your car loan. To trade for another car may require a significant out-of-pocket cash payment. Trading into a lease may be a way to get into a new car for a lower up-front cost.

Effects of Upside-Down

Trading a car with an upside-down financing situation has mostly negative consequences. The negative equity has to go somewhere. If you pay the negative equity in cash, the new car starts with a high loan to value since your cash went toward the old lease. The new car will again be quickly upside-down. If the negative equity is rolled into a new loan, the upside-down level will start out large and increase from there. Rolling negative equity into a new car loan probably means you will not be able to trade in the next car until the loan is nearly paid off.

Lease Away Negative Equity

The big advantage of trading to a lease is the ability to wipe out the negative equity in a shorter time. If the new car is on a 24-, 30- or 36-month lease, when the lease ends, you can go lease or buy another new car without having the negative equity of an upside-down car loan hanging over you.

Lower Upfront Lease Costs

A lease may also allow you to roll more negative equity into the new contract when compared with a car loan. Buying a new car with conventional financing requires you to pay sales tax on the purchase. If the leasing company is willing to finance the same amount as with car loan financing, the amount not paid in sales tax can absorb some negative equity into the new contract. Sales tax on a lease is paid on the monthly payments.

Effects on Payment

The negative equity on an upside-down trade-in goes into the lease payment. For example, if the amount of negative equity is $3,000 and the lease term is 30 months, the new payment will be $100 higher than leasing the car without the trade. The extra $100 will also accrue some interest and sales tax. You must decide whether it makes more sense for you to pay the $3,000 at the time of purchase or spread it over the term of the lease.

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How to Incorporate Text With Quotations

The use of quotations makes writing more compelling and persuasive to readers. Quotations can improve an article by adding authority, humor and value, especially by quoting well-known and respected figures. Quotes also can back up what a writer is trying to convey by giving readers more information and additional resources. However, quotations should be used properly so that they do not infringe upon copyright laws or make enemies of those quoted.

Instructions

1

Use the author's first and last name followed by a comma: According to....author's name,...

Use the title of the work (such as, according to American Science Magazine...) if there is no author name. Use only the author's last name for further quotes by the same writer.

Follow the initial phrase with your quotation in quotation marks: According to American Science Magazine, "quotation."

2

Use further citation, like a page number, for Modern Language Association (MLA) format:

According to American Science Magazine "quotation" (200)

--- this will act as a transition to the rest of your article.

Use an additional citation of a chapter when dealing with different editions of a book (80; ch. 2).

Add a volume number if necessary: According to American Science Magazine "quotation" (2: 2-4).

Shorten titles and put inside parentheses when citing several works by one author.

3

Add citations when writing in the American Psychological Association format (APA) by including the year the quote was written and "p." before the page number: According to American Science Magazine (1985) "quotation" (p. 200).

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How to Use a Broker for Buying a New Car

Nervousness about purchasing a new vehicle isn't uncommon. Buyers sometimes believe they have negotiated a good deal on a new car only to discover that hidden fees and service charges inflate their bottom line -- and their monthly payment. Car salespeople are professionals and have a variety of tactics at their disposal to confuse the customer while simultaneously inflating prices. An independent car broker handles negotiations with the car dealership for you. Experienced car brokers know all of the tricks new car dealerships use when dealing with customers. Because of this, a car broker can help you get the best deal possible while also saving you the trouble of stressful negotiations with the dealership.

Instructions

1

Read reviews, check prices and talk to your family in order to narrow down your choices. A broker can assist you better if he knows exactly what you're looking for. Even if you don't have a specific car in mind, narrowing down your list of possible vehicles to two or three helps your broker locate the right vehicle.

2

Ask car brokers in your area about the fees they charge, the different services they offer and if they receive a bonus from certain dealerships for bringing in customers. The right broker should charge reasonable fees, offer a variety of services and not accept kickbacks from dealerships, as doing so could compromise your broker's incentive to negotiate a lower price elsewhere.

3

Inform your new car broker of the type of car you want and how much you are willing to pay. This gives your broker a number to work toward with the dealership.

4

Give your broker a list of any leads that you have. If, for example, you found a car you like at a local dealership that's only slightly out of your price range, let your broker know. Not only does locating your own car save you fees with some brokers, it speeds up the process by saving your broker the trouble of hunting down the right car herself.

5

Ask your new car broker for regular updates on the process. Sometimes negotiations can drag out for a week or longer. Asking for updates lets you know where you stand with the dealership and gives you reassurance while you wait for the dealership to make a decision.

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How to Sell a Car Through an Ad

Advertising your vehicle through an advertisement allows you to reach a wider range of people looking for a car, as opposed to parking your car on the side of the road with a "for sale" sign, or trying to spread the word that your car is for sale. Some Internet and print advertisements are free, while some can prove costly or effective only in some areas. The more sources you use for advertisements, the more inquiries you can expect.

Instructions

1

Check out different advertising sources to decide where to advertise your car for sale. Check your newspaper to see the number of advertisements listed. Some areas prefer Craigslist over newspapers because it is free. Conduct a search for cars in your area to find where sellers are advertising. You may find used car publications specific to your area that prove worthwhile.

2

Check the cost of different advertisements to help you determine which to use. Some publications may offer free advertisements only if your car does not sell. Some are free and some require upfront payment, regardless if the car sells or not. Choose your advertising methods and pay, if necessary.

3

Take various pictures of your car to include with your sales advertisement. Take pictures from the back, passenger side corner that shows the trunk and side of the vehicle and do the same from the front driver's side of the vehicle, showing the front and side body in your shot. Continue to take pictures of the front seats, back seats, trunk area, under the hood, odometer, audio or navigation system, roof rack and DVD player.

4

Include all vehicle identifying information in your advertisement, such as year, make, model, interior and exterior color. Include all vehicle amenities, such as transmission (automatic or manual), engine size, power features (windows, seats or locks) and any extra options your vehicle offers (sunroof or leather).

5

List what you can about the vehicle's repair and service history. State how often you've had the vehicle serviced, recent replacement items, such as timing belt, water pump, tires or brakes, as buyers prefer a maintained vehicle. If you have all of your service records, state so and have the receipts ready to present once you have interested buyers.

6

Tell interested buyers what you liked about the car or anything that sets it apart from the rest, in the body of your advertisement. For example, if you achieved 40 miles-per-gallon on your commute to work, say so in the advertisement. If you've never had to replace mechanical items or used synthetic oil every 3,000 miles, stating so can interest buyers.

7

Include the sales price. You can expect people to negotiate unless you state that the price is firm. Provide your phone number and email information in your advertisement. Answer emails and voice mails as often as possible, as you can lose a buyer if you do not return contact within hours.

8

Meet with the people who may want to buy your car. Go for test drives together and continue to meet with people until you find your buyer.

9

Follow all of your state's procedures for selling your car. Sign the title where appropriate, along with any additional forms your state requires. Contact your insurance company to remove your car from the policy and take your plates off of the vehicle before releasing it to its new owner.

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How Good of a Credit Score Do I Need for 0 Percent Financing?

The truth is few car buyers qualify for 0 percent financing. Aside from an excellent credit rating, you usually have to earn a high monthly income and be willing to take out a short-term loan. Before you decide if a zero percent auto loan is the best financing deal for you, find out what factors other than your credit score are involved in getting the loan.

FICO Score

Your credit score can help you get financing easier and faster. Lenders use credit scoring to make credit decisions by considering only those factors that relate to a borrower's credit worthiness. Credit scoring takes into account both the good and bad information contained in your credit report, according to myFICO. Some items carry more weight than others with past mistakes meaning less as time passes. Creditors have different guidelines and cutoffs as to what they consider a good credit score. Car dealers are no exception, although a score above 720 usually qualifies for the lowest interest rates.

Buyer Beware

When it comes time to close the deal on a 0 percent finance, car buyers often are surprised to find that they can only take out the loan for 24 to 36 months. This increases the amount of the monthly payment, making it unaffordable for some consumers. Most car dealerships offering 0 percent financing also limit car buyers to purchasing vehicles, which are in stock. You have to be careful, too, as a dealer often increases a car's sticker price to make up for the lost interest charges.

Getting the Best Finance Deal

For car shoppers, an offer of 0 percent financing is not always the best deal. Some new car dealerships give you the option of choosing between 0 percent APR or getting a rebate. In some cases, a manufacturer or dealer rebate may be the wiser financial move. Most car buyers don't qualify for the 0 percent financing anyway, so taking the cash-back rebate and applying for an auto loan with the lender of your choice can actually be the better deal. If you have a reasonably good credit score, you should be able to negotiate favorable loan terms.

Other Requirements

Even if you qualify, what's not included in the dealership's ad offering 0 percent financing can kill the deal. Often 0 percent financing is only for a limited time. After the specified grace period passes, you can find yourself paying a high annual percentage rate. If you make a late payment, you lose the 0 percent and could find yourself paying back interest as a penalty. Most dealers don't allow you to negotiate a lower price but require you to pay the manufacturer's suggested retail price for the car. You might also have to make a hefty down payment and buy additional options to qualify.

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How to Modify Vehicle Loan With Poor Credit

If you have poor credit, but the current terms and interest rate on your vehicle loan are unfavorable and causing you to spend more money than you would like, you may still be eligible to modify your vehicle loan by refinancing. Although poor credit will always prevent you from getting the best possible rates, it does not have to hold you back from being approved for a better interest rate than you now have. In addition, you may wish to modify the terms of your loan, such as by extending the repayment period, to lower your monthly payments.

Instructions

1

Contact your current lender to find out if it is willing to modify your loan by extending the loan or temporarily modifying your payments. Some lenders are willing to work with individuals who are facing financial hardships to help them avoid a repossession. You might be able to avoid refinancing with a cooperative lender.

2

Evaluate how much you owe on your vehicle loan to make sure the loan itself qualifies to be refinanced. According to Credit.com, if you owe less than $7,500 on your current loan, lenders may be hesitant to offer you refinancing regardless of your credit score.

3

Find out your credit score. If you have not checked your credit recently you may be surprised to discover that it is not as bad as you think. Negative items on your credit report will fall off on their own after a certain period of time and your score will improve. Pull your FICO scores from myFICO.com, as these are the credit scores lenders will review--not the consumer credit scores offered by the credit bureaus.

4

Ask someone you know that has good credit to cosign a new loan. If a cosigner appears on the loan, you will be a lower default risk and your lender is likely to offer a lower interest rate on your new vehicle loan.

5

Prepare to provide collateral for a new lender. Collateral secures your loan and gives the lender something to seize if you fail to make the payments. Although the vehicle itself serves as a form of collateral, if you owe more on your current vehicle loan than you car is worth, providing extra collateral may be necessary.

6

Shop around. Even if one lender gives you a lower rate than you now have, another lender may offer even better terms.

7

Consider Internet lenders. Lenders that offer to extend vehicle loans and vehicle refinancing over the Internet often have different standards than banks and credit unions. Buyers with poor credit can sometimes find better deals online to modify their current vehicle loans.

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How to Convert the Lease Rate Factor to an Interest Rate

When you're purchasing a car, financing is an important consideration. The most important aspect of financing is the interest rate. The higher the interest rate, the more money you're paying for the car. The lease rate factor, also known as the money factor, is a component of the interest rate used to determine loan payments. It's a different way of showing the amount of interest the lessee must pay on a lease with monthly payments. The lease rate factor is easy to convert to the more common annual percentage rate.

Instructions

1

Find the lease rate factor in your loan documents from the car dealership or financier. It should be a decimal, such as 0.0004.

2

Multiply the lease rate factor by 2,400. For example:

0.0004 x 2400 = 9.6

The interest rate in this case is 9.6 percent.

3

Recalculate the equation to eliminates the chances of mathematical error. And just to be 100 percent sure, perform the equation in reverse:

9.6 / 2400 = .004

The calculations were correct. The interest rate is 9.6 percent.

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Should You Pay Cash for a Car?

Paying cash for a new or used car has its advantages and disadvantages. Cash payments can speed up the negotiating process and circumvent costly vehicle financing. Cash also has its disadvantages, including federal tax requirements relating to how much cash you use to pay for a car. Whether you decide to incorporate cash into the purchase of a vehicle depends on your particular financial situation.

Cash on Hand

Using cash to purchase a car can be a smart move as long as the cash you use to buy the vehicle comes from your checking account and not your investment portfolio. Pulling cash out of your investments to buy a car can hurt the long-term growth of your accounts, according to financial information website The Motley Fool. This means you're effectively sacrificing more cash than you're paying for the car because the money you remove from your investments no longer has the opportunity to grow.

Buying a Used Vehicle

It's always a smart idea to use as much cash as possible when purchasing a used vehicle. This is particularly true for older model cars with higher mileage. The last thing you want is to finance a used car, have the vehicle break down and need to pay for repairs while still making payments to your lender. Paying cash for a vehicle can also eliminate any additional auto insurance requirements a lender may have when extending credit to purchase a car. If you own the vehicle outright you can decide if the car needs any additional coverage past your state's minimum standard.

Bad Credit

Paying cash for a vehicle can help you obtain a car you may not otherwise be able to get with bad credit. The credit requirements for new vehicles are typically higher than those for used vehicles. If you have bad credit, financing a new vehicle may be difficult to impossible, depending on the price of the vehicle. Paying cash eliminates the need for a credit check and allows you to pick from vehicles you can afford versus what a dealership may agree to finance.

Cash Payment Declarations

If you pay more than $10,000 in cash for a used or new vehicle, the seller of the vehicle is required to fill out IRS Form 8300 within 15 days of the transaction . This form must be completed whether you pay the $10,000 in one lump sum, in two or more related payments or in related payments over a single 12-month period. The filing of IRS Form 8300 requires your personal information including your full name, current address, social security number and whether the dealership considers the transaction to be suspicious. The IRS may cross-reference this form with your income tax returns to determine if any criminal act, including money laundering, has occurred.

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Is it Better to Lease or Buy a New Car?

The perennial question among those looking for a new car is whether it makes more sense to lease or buy. Personal preferences and individual circumstances will be the guiding factors, rather than a general rule that one method of getting into a new vehicle is better than the other. Also, occasional deals and low-financing options on that dream car may sway the decision in either direction.

Payment Amounts

Consumers looking for both low monthly and down payments may choose to opt for leasing. Many lease terms will allow those with good credit to turn the ignition key on a new car with no money down. The consideration then becomes about the importance of the monthly payment amount -- for the higher the initial payment, the lower the monthly cost. Lessees generally pay the car's depreciation rather than its total value, so the payments come in measurably lower when choosing that option.

Trade-Ins

Selling a car can be fraught with time-consuming headaches and uncertainties, as can trading it in when purchasing a new one. For those seeking a quick, hassle-free exchange when desiring a new car every few years, the lease option provides the direct benefit of walking into the dealership, giving back the keys, choosing the latest model and driving out within the hour. As the previous car's value was already decided at the time of the initial lease, the financial predictability is also a plus when leasing.

Equity

Those who choose to buy rather than lease can look forward to the time when the loan is paid, the garage's tenant is free and clear, and no further payments are necessary. Lessees pay each month without the promise of ownership, although they do have the choice of whether to purchase the car at the lease's expiration. This option, however, is generally more expensive, making the decision whether to purchase or lease critical from the beginning.

Options

Consumers who choose to lease have very little flexibility if they want or need to get out of the lease prior to its expiration. They may be responsible for as many as six extra payments for the privilege of dropping the lease early. Mileage charges can be another problem. Depending on the lease terms, any miles driven over the standard 10,000 to 15,000 annual allowance can lead to an expensive consequence.

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What Is the Process for Transferring an Auto Loan Into Another Person's Name?

To transfer an auto loan, the person you intend to transfer to must apply to your lender for the vehicle's payoff amount. Technically, you are selling your car and the person you are transferring to is considered the buyer. The buyer must pay taxes on the newly acquired vehicle (if required in his state), register and insure it. The buyer might also get a different interest rate.

Bank Contact

Call your bank to inquire about the application process and procedures for paying off your car loan when a buyer applies to the same bank. You will need the vehicle's payoff amount to give to the buyer; this is the amount he will have to apply for. Ask also for the vehicle's per-diem amount, which is the cost of interest added daily, and add it to your payoff amount. The bank will most likely request that the buyer come into the bank, if it is local, or call to complete a credit application.

Application Process

Give the buyer your vehicle information. He will need its year, make, model and VIN (vehicle identification number). The bank should have your vehicle's information on record, but let the buyer know your exact odometer mileage, which affects the lending value of the car. The buyer can expect to provide his Social Security number, address and employment information for the credit application. Once the application is submitted, the buyer should find out within a few days whether or not the application is approved. Once the buyer notifies you of the approval, contact your lender for further instruction.

Insurance Requirements

Once the loan is approved, the buyer must provide a full coverage insurance policy for the car, just as you had to, before taking full possession of your vehicle. The bank will let the borrower know its insurance coverage requirements; you do not have to. Once the applicant provides proof of insurance, he can go to a state motor vehicle office to complete the registration process. You may have to provide a signed title to the bank or buyer, depending on your state's requirements. If you live in a title-holding state, the bank will handle the title process for you.

Transferring Vehicle Ownership

Once the buyer's loan is complete and yours is paid off, you can fully complete the vehicle transfer. Give all sets of keys, the owner's manual and any other relevant vehicle accessories or parts to the buyer. If you have saved your service and repair history receipts, give him those as well. Take your plates off of the car; the buyer should have his own to use. Call your insurance company immediately to cancel your policy and follow your state's procedures for handling license plates.

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How to Bargain a Buyout of a Lease

If you have decided to buy out your lease on your vehicle, you should prepare yourself to negotiate the buyout price. The price for an end-of-lease buyout is set when you first pick up the vehicle from the dealership. If your vehicle is no longer worth the buyout price, you have more leverage coming into the negotiations. Even if your car is worth more than the buyout price, if your buyout offer is greater than your end-of-lease balloon payment, you have a good chance in being successful in your negotiations.

Instructions

1

Determine the value of your vehicle. Have your vehicle appraised at a dealership for resale value and not the value it would place on the car to purchase it as a trade-in.

2

Shop around at local banks and credit unions to determine where you can get the best interest rate on a car loan to cover the buyout cost. If you have savings to cover the purchase, you will not need a loan.

3

Set an appointment with the leasing company or dealership to discuss buyout options. Present an offer for less than the amount you are willing to give for the vehicle.

4

Look over the counter-offer presented. If it is below the amount you are willing to pay, you may wish to accept the offer. Otherwise, you should respond with your own counter-offer.

5

Present the current value of the vehicle if the leasing agent is making offers above the value and is unwilling to negotiate. This is when knowing exactly what the car is worth should the dealer resell it can be to your advantage.

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How Do I Finance a Dump Truck in Virginia?

If you own your own business or want to start your own dump truck business in Virginia, you may need to purchase a dump truck. Buying a dump truck in Virginia is no different than in any other state, as no special laws exist for the finance of the specialty truck. As with a dump truck purchase in any other state, you have your choice of financing options, and you can even shop around for the best interest rates and terms.

Instructions

1

Finance your dump truck through the dealer or truck sales company. For example, if you want to buy a new Ford dump truck from a Virginia Ford dealer such as Wynne Ford, you can finance directly through the Ford dealer. For the credit application, you will need your business name; if buying through a business, you'll need the business address, type of business, business tax ID number, date of organization, your name, your address, your social security number and disclosure of any bankruptcy filings in the previous 10 years.

2

Use a specialty finance company, such as Advance Truck Capital, Capital Funds Leasing or Vitality Finance Group, to finance your dump truck. These types of finance companies specialize in financing for commercial trucks and specialty trucks. For the credit application, you need your business name; if buying through a business, you'll need the business address, type of business, business tax ID number, date of organization, your name, your address, your social security number and disclosure of any bankruptcy filings in the previous 10 years.

3

Visit a bank in your area of Virginia to apply for a personal or business loan to finance your dump truck purchase. Some banks with locations in Virginia include Wachovia, BB&T, Chevy Chase Bank, First Virginia Bank and Burke & Herbert Bank. For the credit application, you need your business name; if buying through a business, you'll need the business address, type of business, business tax ID number, date of organization, your name, your address, your social security number and disclosure of any bankruptcy filings in the previous 10 years.

4

Put your purchase on a credit card, if you have a card with enough available credit and an interest rate that is better than what you have been offered for a loan or other financing.

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Steps in the Car Buying Process

Purchasing a new or used vehicle can be a time consuming and disorientating process for many car buyers, especially first time buyers. Many buyers many be wondering what the process is from the time the decision is made to purchase a car to when the vehicle can be transferred into their possession. Luckily, there are only a few essential steps in the car buying process such as selecting the right vehicle, having a used vehicle inspected, negotiating a price, securing financing and complying with state regulations.

Determine Your Vehicle Needs

Every individual's vehicle needs will be different depending upon their situation. Before purchasing a new or used car you should carefully consider your budget as well as the size and safety features that you will require in a vehicle. Research vehicles that meet you needs by visiting manufacturer's websites or reading consumer reports.

Inspection

If you are considering a used vehicle you should have it inspected by a mechanic to determine whether or not there are any problems or underlying issues with the car. This is especially true if you are buying the vehicle "as-is" without a warranty or from a private party. New vehicles will not require an inspection since the buyer is typically protected under the lemon law.

Negotiating a Price

Most car dealerships and private party sellers are willing to negotiate on the price of the vehicle. This is especially true in the case of used cars; however, you should always attempt to negotiate a lower price on new vehicles as well. The first step in price negotiation is understanding the market value of the vehicle. Market values for nearly every make, model and year car are listed in the Kelley Blue Book. Once you know the market price, you should make an offer for the vehicle that is slightly less that the market price. You should rarely accept a price that is higher than the market value of the vehicle.

Financing

After you have settled on a price for a vehicle you must work out a financing agreement unless you intend to pay for the total cost of the vehicle upfront. Financing is an extension of credit by a bank or financial institution that allows car buyers to make payments overtime by paying back the principal with interest in monthly installments. You can secure financing by requesting a car loan from your bank or a car dealership's financing department.

State Requirements

All states require drivers to maintain insurance and registration on their vehicles. Your new vehicle will not come with either of these items. Before you drive your new car off the lot, you must purchase a car insurance policy from an insurance agency. If you financed the purchase of your vehicle, you will need collision insurance which will cover the cost of getting the vehicle repaired in the event that you are in an accident. Some dealerships will provide you with a temporary registration. You will need to file paperwork with your state's Department of Motor Vehicles in order to secure a permanent registration on the new vehicle.

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Can My Car Be Repossessed After the Original Contract Is Modified?

When a consumer is experiencing financial difficulties, a creditor may lower the payment to prevent the loan from going into default. When a creditor modifies the loan terms, he must issue a new contract that voids the original loan contract. However, the lien remains on the vehicle, and a creditor has a right to repossess it if a debtor stops making payments.

How Loan Modification Works

Lowering a monthly payment amount on a car loan is a good solution for most debtors. A creditor can do it by extending a loan term by a few months or a couple of years depending on the collateral. A debtor will pay slightly more in interest over that time but this is a better option than default and repossession. A creditor may lower the loan interest rate to lower the payment. When a creditor modifies a loan, he must give a debtor a copy of the new loan agreement.

Vehicle Repossession Under New Contract

Loan modification does not affect the lien on the vehicle. The lien remains until you have paid off the loan and allows the creditor to repossess your vehicle without notice if you miss a payment. The new loan contract will specify when a creditor may repossess the collateral. Many creditors usually give debtors time to catch up on missed payments. A creditor may start a repossession process when a debtor misses two or three monthly payments. You should read the new contract to find out when a creditor may repossess your vehicle.

Negotiating With Creditor

In some situations, you may still find it difficult to make payments even after a contract has been modified. If your financial problems are short-term -- for example, due to a strike or a temporary lay off -- you should contact the creditor and ask for a deferment. In some cases, a creditor may postpone a payment for up to three months. The interest will continue to accrue during that time. A creditor may modify the loan by further extending the term and lowering the payment even more if the collateral allows it. Lenders generally consider the value of the collateral when making a decision.

Alternatives to Repossession

If you cannot make payments under the new loan contract, you may try other, less costly options. You can try selling the vehicle if the value is the same or more than the loan balance. You may consider voluntary repossession. While it still makes a negative affect on your credit, your surrendering the vehicle cuts the repossession costs that you will ultimately have to repay. Bankruptcy is an option if you have other debts and cannot afford the payments.

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What Is a Joint Signer on a Car Loan?

A joint signer on a car loan is known as a cosigner. A cosigner secures your loan with his credit and income information, which also makes him equally responsible for your auto loan. The cosigner is also half owner of the vehicle you purchase; once the loan is paid off, your cosigner may release ownership of the vehicle to you.

Why Use a Joint Signer

If you can't obtain an auto loan on your own, you likely have credit or income issues. A joint signer's credit and income is used in addition to yours for loan approval. If your joint signer has excellent credit, you can take advantage of competitive interest rates that the joint signer would qualify for on his own. Credit issues also result in loan restrictions, such as down payment requirements or term restrictions. As a result, using a joint signer can lower your interest rate and lift loan restrictions to reduce your overall loan payback amount by thousands of dollars and lower your monthly payment.

Joint Signer Credit Considerations

The ideal joint signer should have good or excellent credit and a verifiable income. Many auto loan providers prefer at least a two-year employment and address history. Your joint signer will have to prove her income to verify that she can afford your monthly car payment along with other debts listed on her credit report. The lender will review the joint signer's entire payment and credit history to assess her debt-to-income ratio, or the amount she pays each month versus the amount she has coming in.

Auto Loan Responsibility

Because of the responsibility of the joint signer for your auto loan and its effects on credit standing, finding a cosigner may prove difficult. The joint signer is as responsible for the auto loan as you are. If you pay your auto loan late, the late payment is reported on your cosigner's credit report and will affect the joint owner's credit rating. If you default on your loan, the repossession is reported also listed on the cosigner's credit report. For this reasons, you should ask a close family member or friend to cosign your loan.

Ownership

Your joint signer is also partial owner of your vehicle. Once your auto loan is satisfied, the title is issued in both you and your cosigner's name. If you plan to sell your car or trade it in at anytime during or after your loan is satisfied, you'll need your cosigner's signature to do so. If the joint signer does not want you to sell your car, then he can choose not to sign the title to release ownership. You cannot remove a cosigner from a loan without your lender's and cosigner's permission.

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Selling a Used Car With Money Owed

When you still owe money on your used car, but you want to sell it, you will have to pay the money you owe to the lender before the other party can take ownership. While you may think you must have the funds up front to pay off your car loan, you don't. In fact, you can close the current loan and sell the car at the same time when you take the right steps.

Instructions

1

Call your lender and ask specifically for the "pay-off amount" on the car. Write the amount down for future reference.

2

Find a buyer who is willing to pay you the amount that you owe on the used car. If you can't sell it for the amount you owe, you will have to pay the difference.

3

Call your lien holder and ask if you can come to their office to conduct the sale. Meet the buyer at the lien holder's location.

4

Instruct the buyer to pay the lien holder the amount owed on the vehicle, or the agreed-upon amount. Pay any outstanding balance out of your own pocket.

5

Complete any paperwork the lien holder requires to close the loan. Sign over the vehicle's title to the buyer.

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Questions Car Dealerships Do Not Want You to Ask When Buying a Car

A car is a major purchase, and you should do everything you can to not only make the best decision, but also to get the best price. No matter if you're in the market for a brand-new car or a pre-owned vehicle, ask your dealer the right questions to get the best deal. Some dealers don't want to hear certain questions, but asking them may help you save money.

New Vehicle Questions

If you're in the market for a new vehicle, ask lots of questions about the features of the vehicle. Remember, as soon as you drive it off the lot, it begins to depreciate, so you'll want to ensure you've made the best choice for your needs. Rather than letting the dealer "sell you" on all the bells and whistles, ask him which features are standard and which ones are options. You can request to see a written list of all the options, along with their fees, in order to compare it with other vehicles. Ask if you can remove pricey options, such as expensive wheel rims, so you can lower the cost. Test the salesperson's knowledge by asking him to compare his vehicle with a similar one from a different manufacturer. Ask questions about the car's safety ratings and features as well.

Pre-Owned Vehicle Questions

You might be able to save thousands of dollars purchasing a pre-owned vehicle that's only a year old. However, you need to ask questions to ensure you're not getting a lemon. Ask the salesperson about the dealership's specific reconditioning processes, as well as their inspection standards. Ask questions about the chosen vehicle's past, such as whether the vehicle was ever in an accident, has ever had body work or was ever in a flood. These types of potential issues may not be obvious so asking questions can help determine if the vehicle is in good shape. Ask the dealer about the previous owner, including exactly how many previous owners there was, as well as what the car was used for.

Warranty Questions

Before you drop a grand or more on an extended warranty, ask specific questions about that particular warranty. Ask what is covered in the warranty and if coverage changes over time. For example, some warranties only cover the car bumper to bumper for the first 12,000 miles. For the remaining warranty time period, only manufacturer recalls or obsolete items are covered. Ask if all maintenance and warranty work can be done at the dealership where you bought your car or if you would have to drive to another dealership that is far from your home.

Price Questions

While most American car dealerships clearly list both the invoice price and manufacturer's suggested retail price (MSRP), they do not tell you what the dealer holdback price is. According to The Negotiation Academy, this particular price is how much money the dealer earns from the manufacturer when they sell a vehicle. It is usually around 3 percent of the overall sticker price, which means that the dealer has a much lower cost than they would want you to know. Ask what it is, and then you can use that information during your negotiations.

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How to Negotiate With Car Dealers if You Are Paying Cash

Just because a dealership says its selling a car for a specific amount doesnt mean you cant negotiate the price. One of the staples of the car-buying process is negotiation. The salesman says one price, you say another and the two of you try meet somewhere in the middle. Revealing that youre a cash customer before negotiations begin gives you less power in the negotiations. Dealerships prefer to land finance deals for customers, because the dealership often pockets a small percentage of the loan payments.

Instructions

1

Shop around and ask for quotes from several dealers for vehicles that interest you. Ask for an estimate of the price. Decline any offers to test drive the vehicle until youve heard quotes from at least four to five dealerships.

2

Avoid mentioning that youre paying in cash. Most dealers assume people plan to finance, so theres no need to disclose your type of payment.

3

Point out any flaws you see while touring the vehicle or experience while driving it. A new vehicle should not present any problems, but used vehicles often will. Point out bad tires and brakes, the need for a wheel alignment and any other flaws that could cost you money down the road. Talk assertively when you point out problem areas. Dont say, I think the tires might be bad. Instead, state that the tires are bad. Dont give the dealer an opportunity to convince you otherwise.

4

Sit down with the car salesman and try to get him to mention the price first. If he doesnt, start out offering a few hundred dollars below the invoice price for a new car. If youre buying a used car, factor in the problems you saw and experienced with the car. Always shoot for lower than the advertised price.

5

Talk about your need for a cheaper overall price. Make sure the salesman understands youre not interested in talking about monthly payments. Doing so wont reveal youre a cash customer, but it does tell the salesman you want to focus on the total price and wont listen to tactics that reduce the monthly price.

6

Mention quotes from other dealers in an attempt to get the salesman to bring the price down.

7

Agree to a price thats close to the invoice, if youre buying new. The strategy of negotiating is knowing when to stand your ground and when to give in. Dont expect the salesman to give you the car $300 below invoice, but you should expect a price thats fairly close to invoice. If youre buying a used car, strive to meet the salesman in the middle, but dont agree on a price close to the sticker price if you dont feel the condition of the vehicle warrants that cost.

8

Reveal that youre paying for the car in cash once you and the dealer have agreed on a price.

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What Are the Chances Of Getting a Better Deal If I Refinance a Car Loan?

When you refinance a car loan, you can often dramatically lower your interest rate and your monthly loan payments. However, a number of factors including interest rates, your credit score and the age of your car have a direct impact on your ability to get a better deal by refinancing your car loan.

Credit Score

When you take out a car loan your lender checks your credit score. Most lenders require you to have a credit score in excess of 620 to obtain any kind of loan. People with credit scores higher than 740 are viewed as low-risk borrowers and pay the lowest interest rates. If your credit score has improved since you took out your original loan, then a lender may offer you a lower rate when you refinance. However, if your credit score has fallen since you bought your car, then expect your interest rate to increase if you refinance.

Interest Rates

The interest rates on car loans are directly impacted by movements of the U.S. prime rate -- an interest rate barometer that reflects the cost of borrowing for people with good credit. If you bought your car when rates were high, you can lower your rate by refinancing. If you bought your car when interest rates were low and rates have since risen, then you cannot lower your rate even if you have good credit because interest rate rises cause the bank's costs to increase and banks pass on these costs to borrowers.

Car

Cars lose value over time and most lenders only finance cars that are less than 6 or 7 years old because beyond that point most car warranties expire and cars tend to have more mechanical problems. The older your car gets, the more it costs to borrow against because banks offer better deals on newer cars that have a greater resale value than older cars with minimal resale value. Therefore, even if you have good credit and rates are low, the age of your car may preclude you from getting a better deal.

Considerations

If interest rates are low, you have good credit and a relatively new car, a finance company may offer you what sounds like a good deal on a refinance loan. However, take the loan term into account when you refinance because lowering your payment by $50 a month may sound good, but if you add two or three years to your loan term, then you end up paying more in the long run. Additionally, on some car loans you have to pre-pay the interest, in which case you gain nothing by refinancing and actually add to your costs because you basically pay interest on the same money to two lenders.

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How Do Joint Accounts Work When Trading in an Automobile?

If you and another person are listed on a vehicle title, both of you must sign the vehicle's title to transfer ownership to the dealership. You must have your joint co-owner's permission to trade the vehicle in toward another purchase. Dealers must follow state motor vehicle requirements for title transfers, and owner authorization is required.

Dealership Requirements

Your vehicle co-owner must come to the dealership to sign in front of a dealer representative. Even in states that require notarized signatures, owners must still sign at the dealer, as only one area is dedicated for a Notary to sign. Don't ask the co-owner to sign his portion of the title before you arrive at the dealer, as the dealer can't confirm that the owner signed for himself. If the co-owner doesn't want to visit the dealership, you can have him sign his portion of the title and go to a motor vehicle office to transfer the title into your name only. This way, you can offer the dealer a proper title that only you'll have to sign.

Out of State Joint Owner Consideration

If the co-owner lives out of state and can't come to the dealership, your dealer may work with you to get the title signed. If so, your dealer will mail any required paperwork to your joint owner for proper signatures. Before the dealer does this, it will confirm the co-owner's identity by obtaining personal and driver's license information to keep on file in case problems arise. The dealer will likely require a notarized form from the joint owner to validate authorization.

Title Holding States

A title holding state is one that doesn't send a vehicle title to the registered owner until the vehicle's lien has been satisfied; the title goes to the lender instead. If you live in a title holding state, you and your co-owner will have to sign paperwork other than the title that allows the dealer to pay off the vehicle's loan and transfer ownership on your behalf. Expect to complete a Power of Attorney form with the dealership. This form authorizes the dealer to transfer the vehicle's title without you or or your co-owner once it receives the title from the lien holder.

New Vehicle Purchase

If you're curious at to whether trading a vehicle with your co-owner requires you to also co-own the vehicle you purchase, the answer is no. Once the co-owner signs his portion of the title, he is no longer a part of your car deal. You can purchase the car in cash or finance it in your own name. States vary on registration rules, but you can expect to purchase new plates if the prior vehicle's registration was only in the co-owner's name. You can't transfer plates unless your name was on the previous registration.

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What a Repo Man Can Not Do by Law?

When you fail to make your car payments, the creditor can repossess your vehicle at any time. The creditor does not have to give you notice before doing so and most times will not in fear that you will move the car to a different location. Individuals must abide by certain laws when they come to your home to repossess your vehicle.

Physical Repossession

When the individual comes to your home to repossess your vehicle, he cannot use physical violence or threats of physical violence against you in the process of physically repossessing the vehicle. Doing so would constitute a "breach of peace." The individual also may not remove your vehicle from a locked garage without permission from you. In some states, this law applies if your car is behind a locked fence or other type of locked barrier structure on your property.

Repossession Actions

The repossession company hired by your creditor can send an individual out to repossess your car at any time of the day or night. In many states, you do not have to be present at the time of the repossession. Typically, when a company plans to repossess your vehicle, they will notify your local police department. Giving this notification makes local authorities aware of the repossession in case you report your car as stolen.

Personal Items

The individual repossessing your car and your lender do not have a right to keep your personal property inside the vehicle at the time of repossession. If you are present at the time of repossession, the individual repossessing your car may allow you to retrieve your personal items before towing the car away. If this does not occur, the creditor must give you notice of when and where you can retrieve your items.

Identification

Many state laws do not require repossession companies to have any identifying signs on the tow trucks they use for repossessing vehicles. However, the person actually repossessing your car must have proof, such as a repossession agent license, of their identity. Some states also require that repossession companies display a state licensing number. Repossession laws vary by state so it is important that you check with your state's specific repossession laws.

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State of Florida Auto Repossesion Laws

An auto loan is a binding contract. If you fail to make the payments on your loan, the creditor reserves certain rights. Any contract you sign at an auto dealer specifically states that the title holder (the bank or finance company) reserves the right to recover the vehicle in the event of a default. The laws regulating the methods a creditor uses to recover the property vary by state, and Florida, like many states, puts few restrictions on the rights of the creditor if you fail to pay.

Seizure

A creditor is legally allowed to repossess your vehicle at any time without notice. They are also permitted to impose the fees for the retrieval added to the total unpaid balance of the loan. They may not "breach the peace" by using violence or threats of violence in recovering the vehicle.

Belongings

The items in the vehicle not considered permanent enhancements such as a stereo or luggage rack may not be sold to satisfy a portion of the unpaid debt. If you've left valuables in the car, you are permitted to recover them from the repossessing agency. If there is a dispute about missing items, you may be entitled to compensation if you can prove that the items were in the car at the time of the seizure. In a civil matter such as this, it is always best to contact an attorney.

Licensing

Recovery agents must apply for a class "E" recovery license from the state of Florida. Applicants must submit the required personal and employment information and proof of completion of a Recovery School training program.

Deficiency Judgment

When the creditor sells your car, they may sue you for the difference between the amount garnered in the sale and the total amount owed including the outstanding loan, collection fees, lien sale fees and recovery fees. This remainder is called a deficiency judgment.

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