January 2011 ~ Managing a Car Loan

Sunday, January 30, 2011

Ways to Get Lenders to Work With You to Refinance a Vehicle for Financial Hardships

10:16 PM No comments

It's not in the interest of the lender for you to have your vehicle repossessed. Repossession of a delinquent borrower's car costs the lender money. Lenders are more than happy to assist borrowers faced with financial hardship. Contact lenders the moment you know your finances are in danger. If you wait, and chronic late payments become the norm, you may not have an avenue for refinancing.

Contacting the lender and asking for assistance is the best way to find help to refinance the vehicle. Lenders have access to numerous assistance programs designed to help those faced with financial hardship. Loan modification programs can allow the borrower and lender to redraw the terms of the loan and bring the payments down for the borrower. Call and make an appointment with the lender today or stop by your lender's location and take the next available appointment with a loan officer to find out what they can do for you.

When financial hardship happens, chronic late payments cause a borrower's credit rating to drop, and banks will likely require a cosigner for additional refinancing. Find a cosigner before discussing refinancing with your lender and ask the cosigner if they are willing to help you. Cosigners should have a substantially better credit rating than you and not have large amounts of debt. They should also understand that by co-signing the loan they are responsible for payments if you fail to make them. Parents, relatives and friends are where to start when looking for a cosigner.

Contact a lender you have other loans with and ask about including the car loan in a consolidation. Lenders may be willing to restructure a mortgage or other type of loan to include the car loan. This means the lender would pay off the original car loan and add the total of the payoff to the restructured loan. Consolidation loans can occur from any lender; you do not need to have a loan history with the bank to be extended a consolidation loan. Contact banks in your area and ask if they offer consolidation loans.

How to Calculate a Car Payment When Trading in an Upside Down Car

5:44 PM No comments

An upside-down car is one that is worth less than you currently owe on the loan. This leaves you in a sticky situation because even if you sell the car, you still owe money on the loan. When you trade in an upside-down car, you have two options. The first is to apply the trade-in value toward paying off your old car loan and making a large payment to pay off the remainder of the loan. The second option, if your lender allows it, is to roll over the negative equity into a loan for your new car.

Instructions

Look at your most recent car loan statement to find the outstanding balance on the loan. If you have made a payment since the statement, check the outstanding balance by calling the lender or logging into the online account management section for your car loan.

Divide your annual interest rate by 1,200 to find the monthly decimal interest rate. Multiply the result by the outstanding balance to calculate a month's worth of interest. Add this to your outstanding balance to get your payoff amount. You might not owe quite this much if your payment gets processed quickly, but the conservative estimate ensures that your payment will be enough.

Add a prepayment penalty if your car loan includes one. Look at your loan origination documents or call your lender to find out what the penalty is.

Go to a car dealership and ask for an estimate on your car's trade-in value. Alternately, you can look this up online by entering your car's information on a website that estimates used car values.

Subtract the trade-in value from the total payoff amount on your car loan. This is the amount of the final payment you will need to make to finish paying off the loan.

Complete the first three steps above to calculate the total amount of money you need to pay off your current car loan.

Add the purchase price for your new car. If you have already made a purchase agreement, use the exact price you settled on. Otherwise, you will have to estimate it.

Subtract the amount of the down payment you plan to make on your new car, if any.

Subtract your car's trade-in value. The result is the amount you need to borrow through your new car loan. When your car is upside-down, the amount you need to borrow will usually be more than the purchase price of the new car, unless you make a very large down payment.

Enter the amount you need to borrow, the interest rate you qualify for and the length of your repayment term into an online loan calculator to determine your monthly payment. You can also calculate this by hand by plugging the information into the formula: [A(r/12)]/[1-(1+r/12)^-m]. A is the amount you will borrow, r is the interest rate as a decimal and m is the number of months in the repayment term.

Auto Repo Rights

3:23 PM No comments

If you don't make your car payments, the finance contract that you signed at the time you purchased the car gives the loan company the right to collect their money, using legally available means. Repossession is when the bank takes your vehicle, and sells it to recoup the money you owe. You have rights in this process, and the bank's failure to follow the law can affect their ability to collect the debt.

If you are late on your car payment, you are at risk to have your vehicle repossessed. If the bank considers you a flight risk, they may repossess the car as soon as 10 days after you become late, but usually, it is two to three months before it takes this step. The agent repossessing a vehicle cannot tow it with someone inside, and he cannot enter a garage with closed doors to repossess a vehicle. Generally, the agent cannot use extremely aggressive methods to take a vehicle, because he must not breach the peace when carrying out his duties.

If the agent takes your vehicle and you are not around, you may have personal property stored in the vehicle, such as car seats. Repossession agents must log any personal property found in the vehicle, and keep the property for a certain length of time, often 30 days. You are allowed to claim it within that time frame. Accessories attached to the vehicle, such as aftermarket stereo systems, must often remain with the vehicle.

The bank will sell your vehicle in order to collect the amount that you owe. Often, these sales are made at private auctions only open to car dealers, but auctions may also be public. In some states, the bank must notify you of the date and time of the sale, so that you can participate in the bidding. The bank must sell the car in a commercially reasonable manner, meaning they should make every effort to get the highest value possible for the vehicle. You may have the right to purchase your vehicle before an auction, or reinstate your loan by paying the past due balance, depending on your local laws.

Your obligation does not end after the sale of the vehicle. Usually, the sale does not bring enough money to pay off the debt, particularly if the loan is fairly new or if you rolled negative equity from a trade into the loan. The bank will add its repossession and sale fees to the balance of the loan and will attempt to collect the rest from you. The bank can use all legal collection methods, including lawsuits, to collect this balance. If the bank violated your rights during the repossession, you may be able to collect damages, which may include a forgiveness of the deficiency balance.

Will They Check My Wife's Credit When I Buy a Car?

9:38 AM No comments

You've got your eye on a hot new set of wheels, but with your spouse's credit, you're bound to be going nowhere fast. That assumption is a common one for married couples when one comes into the union with stellar credit and the other's credit is a little lacking, but that common assumption is often a false one. Your spouse's credit doesn't have to slow your financial roll at all, and it doesn't have to be an issue when you're trying to get an auto loan. It all comes down to how you structure the deal.

When you get married, your lives may become one, but it is another story for your credit reports. Your credit remains completely independent of your spouse's credit until you apply for joint loans. As long as you keep credit accounts in your own name only, no one running your credit will have any idea what your spouse's credit score is.

Securing financing for a car is all about whose Social Security number is on the loan application. Even if your spouse drove with you to the dealership, is the only one who drove during the test spin and picked out the color and upholstery, if your spouse's name and Social Security number are not on the application, your spouse's credit will not be checked.

If your spouse has bad credit, an individual auto loan in your name only is advantageous. Even if your spouse's negative credit history does not prevent you from getting approved for a loan, it could land you with a higher interest rate than you could secure if only your own stronger credit standing was considered.

There would be a blip in the road, though, if you needed your spouse's income to be considered to qualify for the loan. If your credit is good, but your income does not meet the loan requirements, then you will need to seek a joint loan that includes your spouse's earnings. If you want to include your spouse's earnings, then they must be included on the application and the spouse's credit will be run -- for better or worse.

If you have the good credit for loans, but not the income, and your spouse is facing the opposite situation, consider working as a couple to improve your spouse's credit before making any large purchases. Focus on bringing delinquent accounts current, making on-time payments and paying down debt to improve the health of a credit score.

What Happens if We Surrender Our Leased Vehicle?

11:13 PM No comments

If you surrender your leased vehicle without paying for the early termination, it's known as a voluntary repossession. If the bank seizes your car for non-payment, the instance is known as an involuntary repossession. Both terms affect your credit score and future lending opportunities just the same.

Call your leasing bank to find out how much it costs to terminate your lease. Depending on how far along you are in your lease contract, you might have to pay a termination fee in addition to any payments due for the remaining of the contract term. If you can't afford to pay at all, you can voluntarily return your vehicle by calling your bank to find out where to drop off the car. If you don't pay your payments or contact your bank, it will hire a repossession company to seize the vehicle.

If you pay the lease termination fee to the bank, you dont need to do anything more. If the car was repossessed, the bank will resell it. Once the bank resells the car, the bank will contact you to let you know how much you owe toward the car's balance which is no longer just the lease amount, but rather the total cost of the car. If the car's sale price doesn't satisfy the vehicles purchase balance and repossession fees, you must pay the remaining balance to the bank. If you don't, the bank can pursue court action and garnish your wages. If you settle the remaining balance, you must pay taxes on the portion of the balance you didn't pay.

Repossession damages your credit. It makes no difference to your credit score or future credit providers whether the vehicle was voluntarily or involuntarily repossessed. If you dont pay the balance due to the bank, it may pursue a judgment to garnish your wages, which is also listed on your credit report. Furthermore, if you settle the amount due on your loan and don't pay your taxes, the IRS can issue a tax lien, which results in another derogatory mark on your credit. After your credit is damaged, obtaining another loan or line of credit will prove difficult.

You originally had good to excellent credit to obtain approval from a leasing bank. Don't surrender your vehicle before you research other lease-end options; you may be able to avoid a negative credit rating. Consider letting another person assume your lease, if your bank allows it. Check with your bank to find out whether you can sell your car while you don't own it, you might be able to sell it to a third party, depending on the rules of your bank and state. Ask your leasing bank to defer one or more lease payments. Many banks can work with borrowers who are experiencing financial hardship.

When to Refinance a Vehicle?

12:09 AM No comments

While the refinancing of home loans is relatively common, vehicle owners are also often able to refinance the loans that they have taken out to pay for the purchase of their vehicles. Refinancing auto loans is similar to refinancing home loans. However, the process is generally less expensive.

When a vehicle loan is refinanced, a lender purchases the original loan and pays it off. Afterward, he issues the borrower a new loan with different terms. Although borrowers may have various reasons for wanting a new loan, refinancing is mostly undertaken if the borrower believes he can gain some financial advantage from the transaction. The financial benefit must be large enough to overcome the cost of refinancing, which may entail the payment of various fees.

One of the main reasons a person may wish to refinance is if interest rates available to borrowers have dropped since he took out the original automobile loan. If lenders are offering lower interest rates, it may be a financially wise decision for the borrower to swap out his current loan for a new one on which he can pay less interest. However, if his current loan has a prepayment penalty -- a fee for paying off the loan early -- refinancing may not make financial sense.

A person may also wish to refinance if his personal financial situation has changed and the size of his income or his expenses have changed. In addition to changing the interest rate of a loan, a person can refinance to change the repayment structure. The person may be able to pay over a longer or shorter period of time, which will change the size of his payments to suit his ability to pay.

A person may also wish to refinance a vehicle loan if his personal credit rating dramatically improves from the time in which he took out the initial loan. Many lenders heavily base their interest rates on an individual's established ability to meet his debt obligations. If a credit rating bureau has raised the person's rating, he will receive lower interest rates. To determine whether his credit rating has changed, a person should request a copy of his credit report.

Can They Repo Your Car at Work in North Carolina?

7:57 PM No comments

In North Carolina, a vehicle repossession agency has a legal right to repossess vehicles on the purchaser's property, even when the purchaser does not consent to the repossession. A lender can instruct the repossession agency to perform the repossession during work hours on business property. As long as the agency does not breach the peace, then the state will not interfere with the lender's rights.

Neither repossession agencies nor banks have a legal duty to provide borrowers with prior notice of repossession, according to North Carolina law. Both may proceed with repossessing vehicles without first providing notice. Furthermore, banks can repossess their vehicles after one late or missed payment if their contracts give them the right of repossession after a missed payment. Since most vehicle loans will provide lenders with a right to accelerate or demand future loan payments after one late or missed payment, the bank may demand immediate payment from the debtor.

Repossession agencies may tow vehicles from the buyer's private property, from public property and from his place of employment. As long as the repossession agency does not violate North Carolina's "breach of peace" laws, they may proceed with repossessing the borrower's vehicle while she is working.

After repossessing a vehicle, the lender will most likely sell its vehicle through judicial sale, auction or to a private party. The lender must provide the car buyer with advance notice of the location of the sale, the time of the sale and its asking price for the vehicle. Under North Carolina law, lenders can sue borrowers for any deficiency after they sell their vehicles. The deficiency amount is the remaining loan amount minus the sale proceeds.

In addition to suing a borrower for a deficiency judgment to collect the remaining loan balance, a lender can sue the borrower for any incidental costs of towing or repossession. The North Carolina General Statutes, Chapter 25A or the "Retail Installment Sales Act" governs the rights that lenders have when borrowers default on their loan obligations.

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

What Is Better: Zero-Interest Auto Loans or Cash Back Incentives?

9:02 AM No comments

To determine whether you should take a cash-back incentive or zero-percent loan, calculate your overall cost for either option. Often, the amount of money you can save is very similar. Consider your long-term cost, whether you can pay off your loan early and negotiating at the dealership to save more money.

To fully gauge the long term benefits of your car loan options, use an auto loan calculator to view your long-term savings. Edmunds.com offers a variety of calculators to help determine overall loan payback cost, including your tax, fees and interest rate. Obtain a pre-approval from a lender of your choice so you know your interest rate, which can make a difference of thousands of dollars over the term of your loan. Enter the vehicle's price into the calculator, include a trade value if applicable, and view your overall cost for the zero-percent option. Do the same to view your rebate option, using your pre-approved interest rate.

Zero-percent financing is offered to buyers with good to excellent credit. Poor-credit customers may not be able to take advantage of zero-percent offers. Also, banks determine loan value based upon a borrower's debt-to-income ratio, so you can find that you're declined for the total loan amount, despite having good credit. Your total monthly debts are accessible on your credit report and proof of income is required. Therefore, if you make $5,000 per month but pay out $4,500 in debt, you are likely to be declined for a zero-percent loan if the offer is only for a 36-month term. Loan terms vary for zero-percent offers.

If you agree to take the cash rebate or zero-percent financing, the dealer makes full profit on your vehicle's sale. The vehicle's manufacturer, which offers incentive options, reimburses the dealer for either option. To save more money, negotiate your new-car pricing the same as you would for a used car. If you are choosing a rebate and regular rates, expect to save about $20 per month for every $1,000 you negotiate off your vehicle's price.

Use an auto loan calculator to determine if the zero-percent option suits your budget. Many manufacturers consistently offer zero-percent for shorter loan terms, such as a 36-month term. Rebates, the alternative option, are likely offered no matter how long of a term you choose. A 36-month finance at zero-percent for a $25,000 vehicle costs $694 per month, a payment that may not prove an affordable option. If the manufacturer offers zero-percent for 60 months instead, the same vehicle costs $417 per month. Without a hefty down payment, you may not even want the zero-percent option because of the high payment.

How to Get Out of a Vehicle Purchase Agreement

12:21 AM No comments

There are a number of reasons a buyer might want to 'undo' a done car deal; maybe the buyer discovered a fatal flaw in the vehicle, or perhaps he is experiencing an unexpected financial crisis. When this happens there are several options open to the purchaser; none of which involve a visit from the Repo Man. A contract is a legal and binding document, but that doesn't mean there's no way out if you're truly justified in seeking one.

Instructions

Review the terms of your agreement. If you did not sign a written contract and the sale was for an amount greater the $500 dollars, then by law you may back out of the arrangement. This is covered under what is known as The Statue of Frauds which clearly states that any sale or transfer of property for an amount greater than $500 dollars must include a written contract to be considered legal.

Check to ensure the seller has fulfilled all the terms outlined in the agreement. Read each provision carefully and be certain you understand exactly what each one says as well as what is required to complete it. If the seller has not carried out her end of the deal, she is in breach of contract and you can legally get out of purchasing the vehicle.

See if your car qualifies for a return under the 'Lemon Law' statutes. It is not illegal for the seller to fail to disclose every flaw the vehicle has; it is, however, illegal to lie to you about them if you ask, or to alter the mileage or service records in any way.

Make some form of record of the state of the car when it is newly purchased. If the car is in running order when you obtain it, you can reasonably assume it will run for a minimum of 30 days after the date of purchase. After that time, any necessary repairs are yours to contend with.

Hire an attorney. If you have a legitimate complaint and not simply a case of buyer's remorse and you're unable to resolve the situation on your own. Put a stop payment on the check and obtain legal representation. However, do this only as a last resort.

What If I Stop Paying My Car Lease?

9:08 PM No comments

You will default on your leasing contract if you stop making your payments. As specified in the contract, you must make your monthly payments or face repossession, meaning the bank will take the car back. Before you decide to stop making your payments, consider your options and how your choices can affect your future finances.

Call your bank as soon as you realize you can't make your payment. If you have a good payment history, the bank may work with you so you can keep the leased vehicle. It may be able to defer your payment for up to several months, giving you time to get your finances back in order. The bank is likely to suffer a loss if it has to repossess your vehicle, so call to find out your options.

If you stop making your lease payments, the bank will attempt to contact you through mail and by phone. If you provided references for your application when you initiated your lease, the bank may contact the friends or family you listed in an attempt to reach you. If you still do not contact the bank, it will hire a repossession company to collect the vehicle. In this case, the repossession company will try to contact you until it us able to collect your car.

An involuntary repossession occurs when the bank hires a repossession company to take its vehicle back. The collection company can take your car from your home, work or a parking lot. You can choose to voluntarily repossess your vehicle, meaning that you return the car to the bank's possession and avoid possible embarrassment. In this case, you can call the bank to arrange the vehicle's return to a dealership or another location that the bank prefers. Either option affects your credit report the same.

Avoid repossession if at all possible. Your credit will suffer immensely. Try to sell your vehicle or even trade it to a dealership for a cheaper car, if possible. You can also have someone assume your lease if your bank allows it; some shoppers prefer to take over someone else's lease to avoid putting money down or to take advantage of a shorter leasing term. If your vehicle is repossessed, the bank will eventually pursue legal action to get its money. This can end in a possible judgment or wage garnishment.

Do You Pay for Repairs on Leased Cars?

4:11 PM No comments

You must consistently maintain your lease during your contract. If your vehicle needs repair or maintenance upon its return, the bank will charge you for damages. Your factory warranty will pay for vehicle repairs that aren't maintenance or cosmetic-related. Otherwise, you must pay to return the car to good condition to avoid paying your leasing bank for the car's loss of value.

New cars come with a factory warranty, which covers many vehicle repairs during your lease term depending on the lease mileage and term that you chose. A vehicle's bumper-to-bumper warranty covers repairs for free as long as the repairs aren't related to body damage or maintenance issues. The warranty covers the interior components of your car and major components of the engine and transmission. A vehicle's powertrain warranty, which may be equal to or longer than its bumper-to-bumper warranty, offers coverage for major transmission and engine components only. Repairs covered under the vehicle's factory warranty are free but must be completed at a new car dealership.

You can purchase an extended warranty for your leased vehicle if the lease contract exceeds the term and mileage of your factory warranty. You may choose a warranty that offers the same coverage as your factory warranty or one with less coverage. Some extended warranties may exclude coverage originally offered by the car's manufacturer. If you should need repairs covered under your extended warranty, you can usually take your car to a certified shop or a same-make dealer. Expect to pay a deductible; most extended warranty companies require some out-of-pocket payment unless you chose a zero dollar deductible at the time of purchase.

With or without a warranty, any damages caused by your lack of maintenance are your responsibility. Items considered wear-and-tear, such as tire maintenance, oil changes or windshield wiper replacement, are not covered by factory or extended warranty coverage. If you should sustain damage from lack of maintenance, your warranty will not pay for repairs. For example, if you don't change your oil and damage your engine as a result, you must pay to repair the engine. Or, if you run over a curb or other object that damages your wheel or results in the need for an alignment, you must pay for repairs.

Damages covered by insurance are also your responsibility. If your vehicle sustains any damage from accidents, theft, debris, animal impact or a hit-and-run accident, you must repair the vehicle to its original state before you return it to the leasing company. Otherwise, your leasing bank will bill your for damages. You must maintain a full-coverage insurance policy during the term of your lease, so submit an insurance claim for repairs or pay to fix the car yourself. Most insurance policies require a deductible payment for at-fault damages; the deductible is determined at the time you purchase your policy. Unless you chose a zero dollar deductible, you must pay out-of-pocket for a portion of repair costs.

Auto Help for Low-Income Families

7:03 AM No comments

Auto financing can seem unobtainable for low-income families. That can be due to several factors, including being unable to afford a down payment. Low-income borrowers may have bad or no credit histories, which hurt their chances of qualifying for an auto loan.

There are auto-financing programs available to low-income families. The trick is to find the one that puts these borrowers in vehicles without further worsening their finances.

One option available to low-income families who can't qualify for traditional, or prime, auto financing is "buy here, pay here" programs.

These programs are generally administered by the car dealership, which finances the auto, explains Jon Acuff, author of the article "Buy Here Pay Here Financing Basics."

Acuff notes that many dealerships have in-house financing departments that allow buyers to purchase the vehicle through the dealership instead of through a third party, such as a bank. The dealership's loan officers structure the terms of the loan, including the interest rate, payments, payment frequency and the number of months for the financing.

Instead of making monthly payments to a traditional lender, buyers who go through these programs make weekly or bi-weekly payments to the dealership, according to Acuff. Furthermore, the buyer usually has to pay in person, hence the phrase "buy here, pay here."

Those who may not qualify for a traditional loan might also find help through their own bank.

Buyers who have checking or savings accounts at a bank should find out whether that institution makes loans to people with flawed credit, advises Warren Clarke, the automotive content editor for Edmunds.com.

Clarke notes that bank loan officers tend to look more favorably upon applicants with whom they already have a banking relationship.

Credit unions can also be an option. Although they have a reputation of lending only to members with good credit, that is changing as many are now beginning to expand their business to include those with less-than-perfect credit, according to Clarke.

Like all buyers, low-income buyers should familiarize themselves with the financing process before they go to the dealership.

Because low-income buyers often have less-than-stellar credit ratings, they should be prepared to pay higher interest rates. Therefore, shopping around for the best interest rate is important for low-income buyers.

Clarke notes that there are credit grantors who specialize in lending to low-income buyers, and they willing to loan money to those with bad credit. However, there is a catch: the loans come with high interest rates.

If a low-income buyer has a poor credit history and obtains a loan through non-traditional lending programs, he can improve his credit rating by making payments on time. Lenders report borrowers' payment histories to credit reporting agencies, so if the borrower follows the obligations of paying off the loan, his credit rating may improve.

What Happens if a Person Who Has No Spouse Dies Before the Term of Their Car Lease Expires?

5:19 PM No comments

Among the myriad of things you might not want to think about following the death of a friend or loved one is what happens to their possessions. Some decisions may be easy, like what to do with their clothing. Others aren't so simple. Less common questions arise, such as what happens to a leased car after the lessee dies, particularly if the lessee is unmarried.

Auto leases lay out the terms of what happens if the lessee breaks the lease prior to the end of the contract. There is nothing in the standard lease that visits the topic of what happens if the lessee dies prior to fulfilling the contract. While it may come as a surprise to grieving friends and family, death does not alter the terms of a lease agreement in any way. If payments are missed, the leasing company is within its rights to repossess the car. If the car is simply turned back into the leasing company, the company will ask for a lump sum of the payments that were not made. For example, if the monthly lease payments were $300 and the lessee died with 12 remaining payments to make, the lease company will ask for $3,600, plus lease-break and turn-in fees.

When a car is returned to the dealership before the expiration of the lease, it will frequently be sold at auction and the company will apply whatever money it makes toward the balance due. If it doesn't make enough to cover the entire amount, it will look to the decedent's estate to make up the balance.

The lease company will get in line with other creditors, asking that any money in the lessee's estate be used to pay off the debt. An estate includes any cash, stocks, bonds, life insurance and property the decedent owned. If there is not enough money in the estate to satisfy the debt, the lease company must absorb the loss.

One way to avoid early termination fees is to find someone who is credit-worthy and willing to take over the remainder of the lease. The leasing company can help you take the necessary steps to transfer the lease to a new holder.

If I Can't Pay My Car Loan Because I Lost My Job, Will it Be Repossessed?

7:28 AM No comments

Losing your job can create a multitude of financial problems. With loss of income, paying your bills such as automobile loans can prove challenging. Defaulting on auto loans increases your risk of losing your car. Repossession refers to an auto lender taking back the car for non-payment of the monthly note. But fortunately, certain strategies can help you avert a repossession after losing your job.

Car repossessions do damage credit scores; thus, it's imperative to keep a repossession off your personal credit file. With this type of negative remark on your permanent file, future auto lenders may deny your application for financing. And if they accept your application, you are more likely to pay a higher auto loan rate, which inflates the monthly payment on the car. Higher interest rates can also affect other types of financing from mortgage loans to credit cards. A repossession stays on credit reports for seven years.

With knowledge of your employment situation, your auto lender may defer a repossession and postpone payments on your account for a few months. By allowing you to skip payments, you're able to secure new employment and get your payments back on track to avoid a repossession in the future. To receive this type of help, notify your auto lender of your situation immediately and submit the necessary documentations (unemployment verification, bank statements, income statements) to qualify for deferred payments.

Another method to avoid repossession after losing a job is to negotiate partial payments with your auto lender. Discuss your finances with your auto lender and tell the lender what you can afford to pay each month. Agree to make partial payments each month, and agree to resume your normal payment amount once you find new employment. You can either add money to your payments to compensate for making partial payments or ask your lender to lengthen your loan term.

If your auto lender is ready to repossess your vehicle, but you get a new job before the lender acts, you can stop a repossession by paying the delinquent debt plus interest and fees. Call up your lender and inform it of your employment status. Mention your plans to pay off the delinquency and keep your automobile. This action may move your lender to defer repossessing the car and allow you time to pay the balance owed.

New Car Guide: Buying vs. Leasing

2:37 PM No comments

What Is Needed to Sell a Car in Florida?

2:26 PM No comments

If you're selling your car in Florida, you need to have your title handy. A signed vehicle title officially transfers ownership to another party. Signatures do not have to be notarized and you do not need to provide a bill of sale for the transaction, but you should notify the state of your sale.

The Florida Department of Highway Safety and Motor Vehicles (DHSMV) website states that you (as the seller) are responsible for filling out the title. Fill out the odometer in the space provided and the vehicle's selling price. A space is provided for you to both sign (on the left) and print (on the right) your name in the section labeled "Transfer of Title by Seller." Also include the name and the address of your buyer, although he will have to sign the title to complete the transfer. If an additional buyer exists, she must sign and print her name in the area provided for the co-purchaser. The Florida DHSMV website also suggests you make a copy of both the front and back of your title to keep for your records after the sale.

Give the buyer a lien release, if a lien is named on the title. A lien holder is the bank that originally financed or leased the car. Once the loan was paid off, you should have received a lien release that states the loan has been satisfied. Give the buyer the original copy, as a copied lien release is invalid.

According to the Florida DHSMV website, you have 30 days to bring the Notice of Sale form (form HSMV82050) to a local tax collector's office (see Resources), which in turn, updates state records that the vehicle has been sold. Submitting this form ensures you will incur no liability for future accidents or violations that the new owner causes. Unless you go with the buyer to confirm the transfer of title, you should submit this form as soon as possible.

Return your plates to a county tax office--do not lend the plates to the buyer. Call your insurance company to update your policy and remove the sold vehicle.

What Happens to a Car Loan If the Borrower Dies & I'm the Co-Signer?

9:15 PM No comments

A co-signer on a loan is a person that guarantees the debt will be repaid. It's common for friends and relatives to ask for assistance with co-signing a loan if the applicant doesn't have good credit. However, as a co-signer, you may be responsible for the full balance of the loan for any reason---even if the debtor dies.

When you co-sign a loan for a borrower, you are being asked to repay the debt. In fact, creditors are required by federal law to give co-signers a notice that explains what a co-signer is and what your responsibilities are. The notice typically says you are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, it will be your responsibility.

In most states, co-signers can be called upon to immediately collect a payment from you without contacting the borrower. You could also be subject to late fees or collection costs like attorney fees. If you don't pay, your wages could be garnished or a lien could be placed on your property. There is no part of the law that states you don't have to pay if the borrower is deceased, which means you'll probably be on the hook for the full amount.

The loan contract will outline what happens if the borrower refuses to pay. In all likelihood, the car loan is a secured loan, which means that the car is held as collateral by the lender. In case of non-payment, the lender can seize the car and sell it. If there is a difference between the selling price of the car and what the lender is able to get at auction, you may be billed for the difference.

According to the Federal Trade Commission, three out of four co-signers are asked to make repayment for co-signed loans that are in default. You lender may not pursue you if the amount is small, or if they feel they will not be able to collect on the loan. There may even be a policy in place for bereavement; contact the note holder, explain the situation and ask them if they have any kind of bereavement policy.

Facts About Auto Loan Refinancing

12:13 AM No comments

The process by which an auto loans is refinanced is very similar to that by which a mortgage is refinanced. With auto loan refinancing, you can pay off your current car loan using a loan issued by another lender--usually one who is willing to offer more favorable terms.

You refinance an auto loan very much as you would refinance a home loan--by approaching various lenders that offer car loans and inquiring about rates and terms. The easiest means of doing this is by using a website devoted to refinancing--these will often given you multiple lenders and their rate information. You will need to provide a variety of information, including the make and model of the car, as well as your name and Social Security number, so that lenders can run a credit check.

If you don't want to use the Internet, you can contact lenders by phone and get their information that way.

According to the website Car Buying Tips, generally, the loan for a car must be over $7,500 for a lender to be willing to make it. A loan of a lesser amount is generally not worth effort for a lender to make. Some lenders also put caps on the size of the loan. Capital One, for example, will not issue a loan for more than $30,000. According to the website Car Buying Tips, unlike homes, cars do not need to be appraised before receiving a loan.

The chief benefit of receiving a new loan for a car is that you get better terms on the loan. In many cases, you may wish to refinance your loan because interest rates have dropped since the time you took out the original loan. By refinancing, you may be able to save yourself a large amount in interest payments.

Before refinancing a loan, consider whether is makes financial sense. According to Capital One, states impose a fee of $5 to $65 on the transfer of a title for a loan. In addition, the company that made the existing car loan may charge you a penalty for early payment, while the new lender may charge a service fee. Together, these charges could negate the savings from the new loan.

The amount of the loan issued by lenders for cars are based solely on the amount of money that you must still pay off on the car, not on the car's actual value. Because cars depreciate, be wary of taking out of a new loan on a car for an amount significantly greater than the car is currently worth.

Estate Laws: Can I Pay a Deceased's Car Loan?

2:25 PM No comments

When a loved one dies, it is a difficult time for the family, both emotionally and financially. The relatives may wonder who is responsible for the debts of the deceased. The estate must pay his debts. A spouse may be liable for some debts, such as joint credit accounts. However, according to the Fair Debt Collection Practices Act, a creditor may not collect the deceased's individual debts from his relatives.

Generally, the deceased person's estate is responsible for paying his debts, including the car loan. If it doesn't have enough money, the loan will go into default. The creditor may repossess the collateral if the loan remains unpaid. You may continue to pay the loan. However, if the value of the collateral is less than the loan balance, you may let the creditor take it. Also, you should check the loan documentation to see if the deceased has purchased loan insurance. Credit life insurance pays the balance off if the borrower dies during the term of the loan.

If you are a co-signer on a car loan, the creditor may require you to make payments if the second borrower dies. Also, you may be legally responsible for paying some debts if you reside in a community property state. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. An estate attorney will determine which debts you are liable for. If you must repay debts, you may negotiate with the creditors. Some creditors may be willing to settle debts with the surviving relatives who have limited income and assets.

If you inherit the car from the deceased, you will receive it during the probate process. However, the process does not eliminate the loan unless the estate pays it off. You may have to pay off the loan or assume it if a bank allows it. Since the borrower is deceased, most banks will require a payment in full. If you can't assume the loan payments, you will need to apply for a car loan and change the title of the vehicle to be in your name.

All assets must be divided equally between all heirs. Co-owners of assets will receive equal rights to the property. If an heir is a co-signer on the car loan, he is entitled to receive the car and should continue to make payments on it. If he doesn't want to keep it, you may buy it from him. If the deceased was the only owner of the vehicle, the probate court will decide who gets it during the process.

Can I Buy a Leased Car From the Lessee?

11:12 AM No comments

You might be able to buy a car from a lessee. The process is more complicated than a private-sale purchase, as the lessee doesn't actually own the vehicle. During a lease, a bank owns the vehicle and the lessee only pays for depreciation. Banks differ on lease-purchase options, but you'll probably have to purchase the vehicle directly from the bank.

Call the lender directly to find out if you can purchase the leased vehicle. Depending on state rules, the bank might not be able to sell you the car. If not, you'll have to purchase the vehicle from the lessee after he buys it himself from the leasing bank. Check with the bank and your state's motor vehicle department to determine tax rules, as the lessee might have to pay taxes when purchasing the vehicle from the bank. Depending on vehicle tax rates in your area, the lessee might have to pay thousands in addition to the lease buyout amount. Otherwise, obtain a buyout amount from the bank and arrange to make payment directly to the lender, not the lessee.

The purchase process may take time, depending on your state's title rules and the bank's process for releasing titles. If the lessee has to purchase the vehicle from the bank, he may have to wait several weeks before he receives the vehicle's title. Or, if you make payment directly to the bank, the process can take just as long. Before you agree to a purchase, find out how long it will take to receive the vehicle's title. Otherwise, you might find yourself without a car.

Purchasing a leased vehicle isn't always cost effective. The bank's purchase price is usually a predetermined amount calculated at the time of the original lease. The bank may have calculated the future value incorrectly or the market might have changed, reducing the present value of the car. Use online appraisal guides, such as Edmunds.com or the Kelley Blue Book website, to determine if the bank's purchase price is more than the vehicle's private or resale value. Also check the cost of the same vehicle as a brand new option, as interest rates and rebates might save you money.

Consider assuming the lessee's contract. If there's still time left on the lease and the bank allows lease assumptions, you can take over the remaining lease and decide if you want to purchase the car at the end of the term. This might prove an ideal option if the lessee would otherwise have to purchase the vehicle before he could sell it to you. At the end of the lease, you can return the vehicle and walk away, or purchase it for the buyout amount. You must have good to excellent credit to assume someone's lease.

Auto Lease Vehicle Return Issues

3:48 PM No comments

Leasing a car has many advantages, such as driving a new vehicle and having a low monthly payment. However, many people get anxious when it's time to return the car at the end of the leasing period. The most common issues when returning a leased car are penalties for excessive mileage and damages. To avoid the fees at the end of the term, take a few steps to prepare your vehicle for the final inspection.

One of the most common fees is for the mileage over the limit specified in the lease contract. Before signing a lease contact, estimate how many miles you will drive every day, including holidays and weekends. If your estimate is over the allowed limit, purchase the extra mileage up front. It will be cheaper than paying the excessive mileage fees at the end of the lease term.

If the vehicle has damage over and above "normal wear and tear" as defined in your lease contract, the leasing company will bill you for the repairs. The charges can add up to three monthly lease payments. To avoid these charges, have the vehicle serviced regularly and keep the interior and exterior clean. If there are scratches or minor damage, fix them before returning the car. It will cost less than paying the leasing company's repair bill. Your insurance company may replace a cracked windshield free of charge. Service and clean the car before the inspection.

Disposition charge is the fee, from $250 to $450, to compensate the leasing company for the expenses of selling or disposing of the vehicle. The company may waive the fee if you purchase the vehicle at the end of your lease. Some leasing companies don't charge a disposition fee, while others require you to pay it even if you purchase the vehicle. Try to negotiate the fee before signing the lease contract.

How to Make My Car Payment Every Two Weeks

1:27 PM No comments

Interest rates on car loans add a hefty surcharge to what you pay for the auto. After five years of making those payments, you might have doubled the actual price of the car. Making an extra car payment every once in a while is good, but making a full car payment every two weeks, instead of once a month, gets the car loan paid off in less than half the time. Even making half the payment every two weeks rather than once a month gets the loan paid off more quickly. That's because there are 12 months in year, but 52 weeks divided by two is 26 payments, so you actually make two extra payments.

Instructions

Read the financing contract. Check to see if there is any prepayment penalty.

Call the financing company if you have any doubts about making the payments. Find out if the company will apply the payments to the principal, which reduces the total interest paid over the life of the loan.

Write out and mail your check for the amount of the car payment. Enclose one of the payment coupons with the check.

Set up a payment account online. This should not be difficult to do if the financing company is a credit union or bank. Transfer the amount of the car payment from your bank account to the car payment account every 14 days.

Contact the financing company to see if it will change your contract from once-a-month payments to half the payment amount every two weeks. Be aware that if you miss or are late with one of the two-week payments, the car can be repossessed more quickly than if you miss a once-a-month payment.

Make the first payment a full month's payment on or before the due date, if you don't want to change your contract with the financing company. Two weeks later, send in a half payment. If you just send in a half payment on the due date, you've technically breached the contract. Depending on your state and what's in the contract, the car may be repossessed.

Note on the check the financing account number. If you're paying online, make the full payment the first time and then half a payment every two weeks.

Can a Car Dealership Take a Car Back If Your Financing Is Not Approved?

11:24 AM No comments

A car dealership can take back a car that is not approved for financing, even if it let you take the car and led you to believe a bank approved your loan. Consider pursuing financing on your own and learn how to avoid this issue in the future.

Dealerships work with a variety of banks. Many can submit a credit application electronically. Dealers can view your credit information to determine your rate and chance of approval. If the dealer believed one of its banks would finance your loan based on the vehicle you chose, down payment, credit history and income, it may chose to let you take the vehicle home. This often happens after bank business hours. The dealer will let you take the car and hope to have the loan approved the next business day.

If the banks declined your application, you must come up with the vehicle payment on your own. Even if you signed motor vehicle paperwork, the dealer will not process it. Signing bank contracts does not secure your loan either. The paperwork you sign at the dealership is sent off to a lender and state motor vehicle office for processing days after you complete it. You will not receive financing, the vehicle's title or registration.

Come up with a higher down payment or agree to a higher rate if a potential lender offered you the option. Otherwise, you can pursue financing on your own. Apply to a local bank or an online lender. If you still can't obtain a loan, consider using a cosigner to guarantee your loan. Using a cosigner allows you to take advantage of rates, term and other lending options you did not qualify for otherwise. If you are able to obtain your own loan, you can keep the vehicle after paying the dealer.

In the future, obtain a loan pre-approval before you set out to shop. A lender can alert you to credit issues you didn't know existed, prepare you for down payment requirements or other lending restrictions. If you have a pre-approval, a dealer can offer to beat your rate. Dealerships can mark up an interest rate to make a profit, which you can avoid with your pre-approval. The pre-approval also allows you to shop by your budget without concern for dealer financing.

Vehicle Leasing Versus Buying Recommendations

6:29 AM No comments

The decision to lease or buy a vehicle can be difficult as each offers some advantages and disadvantages. For example, lease terms are easier on a consumer's monthly budget, but buying makes more financial sense over the long term. In order to make the best decision for their financial situation, consumers should understand the differences between buying and leasing.

The initial cost to lease a vehicle is very low. The down payment and monthly payment required for a lease is often significantly lower than the down payment and monthly payment when buying a comparable vehicle. In fact, many times there is no down payment at all on a leased vehicle depending on dealer promotions. Drivers also do not pay taxes at the beginning of a lease, further reducing the out of pocket expenses. Lease drivers also avoid the hassle of selling their car when it is time for a new one.

The primary advantage to buying a car is the financial cost over a period of time. While a lease owner is making payments for the use of a car, a buyer is building up equity. Though cars decline in value over time, the driver that buys a vehicle does end up with some value when the vehicle is paid off. Drivers that buy a vehicle are free to sell or trade the vehicle whenever they choose. A driver that leases a vehicle is stuck with it until the lease term expires or she must face additional expenses for early termination.

Most lease agreements allow about 15,000 miles per year. Those that drive substantially more or substantially less may benefit from buying instead of leasing. Those that drive more than 15,000 miles per year will generate a large fee at the end of the lease for overage miles. As mileage is a large factor in determining value, those that drive less than 15,000 miles per year will get more value from buying a new car that will not quickly depreciate in value due to mileage. For the same reasons, those that are very rough on their vehicles or keep them in perfect condition should consider buying instead of leasing.

Drivers who want a new car every two or three years will benefit from leasing. Leasing allows a driver to drive a new car every few years with a minimal down payment and reasonable monthly payments.

Those who may have dramatic changes in the near future should consider buying instead of leasing. For example, drivers that lose their job, get divorced or have other changes that impact their finances may find they are unable to pay the lease, which will cause numerous fees and other expenses. While the driver would also be unable to make the payment on a vehicle purchase, the driver could sell the vehicle with no additional penalties.

After Leasing a Car What Is the Depreciated Value?

11:01 PM No comments

When you're looking to lease a vehicle, the bottom line usually is whether you can afford the monthly lease payments. Lease payments are related directly to the vehicle's depreciation value, so a better understanding of what depreciation value is and how it works in leasing may let you walk away with a better deal.

In order to understand what the depreciated value is with a lease, you first have to understand some other terms dealers use when leasing. The first is manufacturer suggested retail price, or MSRP. This is the dollar amount the manufacturer suggests that dealers ask for the car based on what they calculate the car to be worth. This is the price normally put on the sticker in the car window. The second term is lease price, or cap cost. This is the price of the vehicle after you negotiate with the dealer based on the MSRP through rebates and other deals. The third term is residual value, or resale value. This is the value the car will have at the end of your lease. Because dealers can't know for sure what the market will be like for your vehicle in the future, residual value is just an estimate. However, dealers will use it to calculate the depreciation in your lease.

Once you have a cap cost for your car following negotiation on the MSRP, your dealer subtracts the residual value of the car from the cap cost. The difference is how much the dealer believes the car will depreciate over the course of your lease term. It represents the value of the vehicle you'll use up as you drive. The dealer divides the depreciation value by how many months are on your lease to get a base for your monthly payment. He then adjusts the monthly payment to accommodate other fees like interest to get your true monthly lease cost. For instance, if the depreciation value was $10,000 and you had a 36-month lease, your monthly payments would be about $278 a month before added fees.

As LeaseGuide.com points out, some dealers may tell you it isn't possible to negotiate cost when leasing, but this is not true. When you get a lower cap cost, the difference between the cost and the residual value ends up being lower, giving you a lower depreciation value. Subsequently, you end up with lower monthly lease payments. Thus, negotiation is a vital component of getting the biggest bang for your lease buck.

In general, as Christopher Cruise of Bankrate discusses, vehicles with initially high MSRPs also tend to have high residual values, meaning they provide low depreciation values. Low depreciation values mean lower monthly lease payments. Thus, it can be to your benefit to look for a higher-end vehicle when you go to lease. However, this isn't a hard and fast rule, as some low- to mid-level vehicles maintain their values over time, as well. It all depends on the demand for the vehicle and the quality of the manufacturing.

Can I Get a Better Deal if I Pay Cash for a Vehicle?

1:52 PM No comments

Although your goal should always be to become debt-free, you can often find a better deal on a vehicle if you finance it rather than pay cash. Part of the reason financing a car benefits you is the opportunity cost you incur by putting your money in a car rather than an appreciating investment. However, you have to factor in other considerations, such as the amount of savings you have and interest rate on a car loan.

Car dealers often offer the option of zero percent financing or a cash rebate. The initial thought of lowering the car's price might tempt you, but you may save more money by financing and putting your car allowance in an investment. If you take a rebate -- say $3,500 off a $25,000 car -- you save only $25 because you could have put the money you paid for the car in a CD investment that returns 5 percent annually, which would equal about $3,475 over the life of a typical auto loan.

You may not get the best price on the car if you state upfront that you plan to pay in cash, because dealers receive extra commission when they get you to take out a loan, according to David Kiley of DailyFinance. You have another option: leasing. Leasing usually costs less than financing and the vehicle is under warranty for most of the lease, so you don't have to pay for repairs. If you like to change cars every few years, leasing is the best option, according to Colin Bird of Cars.com.

Paying cash for a vehicle eliminates some tax deductions. For instance, if you use a leased vehicle for your business, you almost always can deduct some of the costs of using the car for work. If you own a home, you can use a home equity loan to purchase the vehicle and deduct up to $100,000 in interest payments.

The best way to get the lowest price possible on a car is to be a ready, willing and able customer, according to Wiley. Car dealers want to close deals as soon as possible. If you choose to finance, find a pre-approved car loan and carry the title to any trade-in into negotiations. However, assess your financial situation before you buy your car. A cash purchase may garner the best deal, but if you have to use all of your savings, you put yourself in a position of potential financial ruin in case of a hardship, such as unemployment. Check the Web for a car financing calculator. Enter your data, such as down payment and interest, and the calculator can tell you which option costs less (see Resources).

How Can a 16-Year-Old Get a Good Car Loan With a Permit?

12:53 AM No comments

The short answer to this question is you can't. Even though car loans are some of the easiest kinds of financing to get, a loan is a legal contract. You must be 18 to sign a legal contract in the United States. However, with the help of an adult you can both buy a car on credit and begin building responsible credit habits that will help you succeed later in life.

Forget the fact that you have no credit. Ignore the fact that you're far more likely to wreck the car before the loan is paid off. In the United States, only an adult can be held responsible for a legal contract. This means if you sign a contract, there are no legal repercussions for you if you don't hold up your end of the deal. For this reason, nobody's going to loan you money on a contract. They can't do anything if you never pay them back.

You'll have to get a legal adult's help in securing an auto loan from any traditional source. However, it's a good idea to involve yourself in as much of the process as you can. You might not be able to sign anything, but if you go through the process with your adult, you'll learn how it's done for when you are old enough to get your own loan.

Another option would be to get a loan from an adult you know. Even if it's with your favorite grandmother, set up specific terms of payment and stick to them. This will help you practice for later on. If you can, get the loan from someone who's not in your immediate family. With successful payment, you can turn that person into an effective personal reference when you look for your first adult credit.

A third option would be to 'borrow' the money from savings already in your name. If you have money saved that's earmarked for another purpose (like college), your parents may allow you to finance the car that way, making regular monthly payments to restore the funds in time for it's intended purpose. Be sure to include interest in this loan to make up for interest it doesn't earn while you're paying on the loan. This may be a hard sell to most parents, but if you present a well thought out plan they just might go for it.

How to Obtain a Clean Title for a Paid Off Loan

6:02 PM No comments

After you finally pay off a secured loan in full, the lender is supposed to remove his name from the property -- most commonly a car or house. Since the loan is no longer associated with the property, you need a clean title, meaning that it does not contain information about the lien holder. In some cases, the lender routes the title through the state or county office that manages these matters on your behalf. In other cases, you might have to take care of the whole process of getting a clean title yourself. The exact process varies by state.

Instructions

Call your lender to ask for confirmation that youve fully satisfied the loan. In some cases, even though youve sent your final payment, the lender might still show an open balance due to late fees or other costs. Settle those costs to fully pay off the loan.

Ask for a timeline from the lender to receive your car title and notice of loan satisfaction in the mail. It usually takes a few weeks.

Review the title upon receipt to check the lien holders section. In most cases, the section is signed off by the lending official, indicating that the loan is satisfied. Take the title, along with the notice of satisfaction, to your local DMV office to request a clear title.

Fill out the required paperwork, present the notice of loan satisfaction and submit the old title to the department of motor vehicles for review. The DMV usually issues a new clear title via mail.

Contact your lender after you've made your last payment to request a satisfaction of mortgage. This paperwork is signed and stamped legal proof from the lender that you've paid off your loan and the lender is no longer a lien holder on the home.

Receive your satisfaction of mortgage and a copy of your mortgage note from the lender. Bring these forms to your local county recorder's office (usually located at the county or town courthouse).

Present your paperwork and fill out any required forms to request a new "clean" title (more commonly called a deed for a house). The recorder's office sends the new deed to your home after issuance. In some cases, the lender sends the paperwork directly the county recorder's office to save you the trip.

Check your new deed thoroughly to ensure it no longer lists the lender as a lien holder. File the deed in a safe place, such as a safe deposit box.

Can I Lease a Car With a Charge-Off?

5:17 AM 5 comments

Leasing a car provides you with the freedom to exchange your vehicle every lease term. In addition, if you choose to lease rather than buy, your monthly payments will be considerably lower. For some individuals, however, a past credit card charge-off can stand in the way of a new car lease.

One of the requirements car dealerships have for individuals hoping to lease a vehicle is that the consumer pass a credit check. A credit card charge-off appears on a credit check and demonstrates to the dealership that the individual has failed to make regular payments to a creditor in the past -- making him a higher risk for the dealership. Thus, some dealerships will refuse to lease a vehicle to individuals whose credit reports reflect a past charge-off.

How badly a credit card charge-off hurts your credit rating depends on a variety of factors. The more recently the charge-off occurred, the more impact it has on your credit score. If a collection agency purchased the charged-off debt and added a collection account to your credit report as a result, this also adversely impacts your credit rating. Accounts in positive standing, such as current loans and credit cards that you pay on time each month, help offset the derogatory effect of a past charge-off.

The Fair Credit Reporting Act notes that most derogatory entries on your credit report can only remain there for seven years before being removed by the credit bureaus. Thus, if your old credit card company charged off your debt more than seven years ago, all evidence of the charge-off has already been purged from your credit file -- this includes any collection accounts that appeared on your credit report following the charge-off.

Different dealerships have different policies regarding credit checks. While some car dealerships want to review your credit report in its entirety, others will only check your credit score before making a leasing decision. If your charge-off occurred several years prior and you have practiced responsible debt management in the years since, a car dealership that only reviewed your credit score would have little reason to suspect a charge-off lurking within your credit file.

If the first car dealership you apply for a lease with turns you down, that doesn't mean that all car dealerships will turn down your request for a new lease. Different car dealerships have different methods of evaluating you for financing or leasing a car. Individuals with damaged credit may also consider finding a co-signer to fill out a joint lease application. The presence of a co-signer reduces the car dealership's risk and makes a car lease more attainable for those with a damaged credit history.

Help With Financing My Car

12:53 AM No comments

Not everyone has cash to buy a car outright. If looking to finance your next automobile, consider ways to get a good deal on your auto loan and the best interest rate possible. The rate determines the monthly payment on your car loan. Acquiring a high rate can reduce buying power and increase payments.

Auto lenders do offer bad credit loans to people who're looking to establish a credit history. But if looking for the best finance rate on your auto loan, it's best to establish credit first and maintain a good credit rating to qualify for competitive rates. Review your credit report and order your credit score. And if there's any negative information on your report like late payments and judgments, work with creditors to pay off these delinquencies and get the remarks deleted from your report.

Another method for getting a better interest rate on your auto loan involves paying off the loan in two, three or four years. Five years is a typical term for auto loans. However, banks will offer an interest rate reduction with a reduced term. Check your finances to see if you can afford a higher payment.

Using your dealer's financing is quick and convenient. But if you want a good finance deal, don't rush the loan and take time to shop around for the best interest rate on the auto loan. Once you find a vehicle and know the sale price, contact your personal bank or credit union for a loan quote. These institutions often charge less interest, which equals lower monthly payments.

Down payments and co-signers aren't required when financing a car. But if you want a better rate, or if you don't have a strong credit history, putting money down on the car loan or asking someone to co-sign the loan documents can help you get inside a new or used automobile. Down payments vary--aim for 10 to 20 percent down.

Credit Problems & Financing

9:56 PM No comments

Buying an expensive item that requires a loan can be a stressful, especially if you've had credit problems in the past. Many people require financing to purchase of a car. While other people are concerned about getting the best rate possible, you may be worried whether you can obtain a loan at all. However, there are actions you can take to help get the loan. This article focuses on financing the purchase of a car.

Some car advertisements feature promotions such as zero percent financing, cash back and employee pricing. However, these promotions usually are available only to people with high credit scores. The fine print typically notes that these terms are for Tier A customers, which are about half of all applicants, according to MSN Money. According to a study by the Consumer Bankers Association reported by MSN Money, Tier A applicants usually have credit scores above 720. Tier B applicants' scores are between 680 and 720, and the remaining tiers have lower credit scores. The lowest tier, Tier E, can expect to pay as much as 30 percent interest on its car loans.

Before you go to the dealer, check your score so you know where you stand, which can help you negotiate. You can obtain your credit report through AnnualCreditReport.com, which grants you one free copy of your credit report each year from each of the three major credit bureaus -- Equifax, Experian and TransUnion. The credit report does not include a credit score, however. You can buy your score from the credit bureau after requesting your free report, but it's not necessarily the score that will be used by the dealership. Most car dealers use the FICO score, which is available through MyFICO. You can sign up for a free trial and get your FICO score. This requires you to enter your credit card information, and you will be charged if you don't terminate your subscription within a certain time frame.

When you obtain a copy of your credit report, you can review it for inaccuracies. The CBS News website reported in 2004 that a study conducted by the National Association of State Public Interest Research Groups discovered that 79 percent of all credit reports contain inaccurate information, and your credit score might be negatively affected as a result. If you detect errors in your credit report, you can file disputes online with the three major credit bureaus, or you can write letters to the individual creditors. Because your credit score might change during and after the dispute, TransUnion recommends that you not shop for an auto loan during the dispute process.

After you've learned your credit score and cleaned up your credit file, you can attempt to get a car loan. Apply for loans from multiple sources. Although each application for credit adds an inquiry to your credit report that can lower your score slightly, all auto-related inquiries within a 14-day period are rolled into one inquiry. That's because the credit scoring formula takes into account that you are shopping for a single loan. Also, don't immediately settle for what the dealer tells you. Try securing a loan through a credit union or bank, as you may be able to get a better rate.

How to Lower Your Car Payments With Ford

8:12 PM 2 comments

If you have purchased a car through Ford Motor Credit but are having trouble making the monthly payments, you may be able to have the payments lowered. Ford does allow for people to lower their car payments if they meet certain criteria. Lowering your Ford car payments does extend the term of the loan, however, which means that you will end up paying the full amount in the long run. If you feel that you cannot continue to make your monthly payments to Ford Motor Credit, you can try to get them lowered on your own.

Instructions

Look on a recent statement from Ford Motor Credit for the customer service phone number for your account. Once you have the phone number, call it and keep your statement handy for reference and so that you can give the representative your account number.

Tell the representative that you want to lower your payments on your Ford vehicle and ask if you can be considered for a rewrite. A rewrite is the only way to lower your car payments with Ford, and it works by extending the period on your loan.

Wait for rewrite paperwork to appear in the mail. Typically, you have to consent to a credit check and provide proof of income. Once you fill out the paperwork you should send it in to the address on the form along with the supporting documentation.

Make your payments as normal until you get a decision on your rewrite request. Typically, you must have good credit, proof of income and a good payment history with Ford to qualify for a rewrite to lower your payments. A good payment history means that you have never made any late payments and that you have been paying on the car for at least one year.

Trade in your car for another car at a local Ford dealer if you do not qualify for a rewrite. By getting new loan, you may be able to roll in the cost of the other car to the new car loan and get a longer term. This may end up lowering your payment, however it may also increase it. Before signing any new loan paperwork be sure to verify your new monthly payment amount.

Pros & Cons of Buying a Used Car

7:05 PM No comments

Over a five-year term, it costs less to drive a used car instead of a new one, according to the Edmunds website. Pricing is an obvious benefit of a used car purchase, although several disadvantages may also exist. From warranty coverage to prior owner history, a used car may not be your best bet.

Price and equity are an immediate advantage of a used car purchase. A vehicle suffers its biggest dip in depreciation the moment you drive it off the lot as a new car, a disadvantage the car's original owner already suffered. However, paying too much for a used car or carrying over money into its loan can prove just as much of a disadvantage. Researching price, successfully negotiating and being financially responsible when taking out the vehicle's loan, such as not carrying over money or adding unnecessary add-ons, keeps the vehicle's value in line with depreciation.

Whether or not a warranty comes with your used car purchase is either a benefit or a disadvantage. Even if you are the used car's third owner, you can take advantage of any warranty that still exists under the manufacturer's coverage period. If not, you can purchase an extended warranty, but prices start around $1,000 and rise from there. You may not be getting the price break you really want when comparing the price of the car with a purchased warranty to one that already has extra coverage included.

Another advantage of a used car purchase is that you can pay off the vehicle's loan and own it outright sooner than you can a new car because of lower payments and less borrowed money. At the same time, the used car you choose may cost more than a new one, which can result in you paying more money back over the long term. Interest rates for used cars are higher than those for new. Use an auto loan calculator (the Edmunds website offers one) to fully gauge your payback amount.

Your service schedule also determines whether or not the used car purchase is advantageous or disadvantageous. The previous owner's service history plays a big role in your vehicle's expected reliability, so ensure the seller can prove the vehicle's maintenance history. In addition, most vehicles require their most expensive services every 30,000 miles or at around 100,000 miles. Ensure you can verify the car's previous history and check the prices of upcoming services and maintenance requirements. Large services can exceed $500, so consider upcoming services in your price.

How to Calculate Percentage in Payment When Buying a Car

3:49 AM No comments

When you purchase a car the amount of the payment is important. Some people will give more consideration to the amount of their monthly payment than to the loan total or interest rate. If they can afford the payment then everything else is "OK." You can calculate the percentage of your monthly payment in relation to your monthly income by following a few steps. Make sure your monthly payment fits comfortably into your budget.

Instructions

Find out the amount of your monthly payment. Get an auto loan calculator to determine how much your monthly payment will be. For example if you have an auto loan for 72 months, in the amount of $20,000 with an interest rate of 8 percent you can calculate your payment using an online auto calculator.

Enter the terms of your loan into the calculator. When all of the terms and conditions have been entered into the auto loan calculator hit the "calculate" button to see what your monthly auto loan payment will be. In the example the payment will be $350.66.

Determine your monthly gross income. Gross income is the amount you receive before any taxes are deducted. If you make $15 per hour, your monthly gross income is $2,598, ($15 x 8 hours x 5 days per week x 4.33 weeks per month).

Divide your monthly car payment by your gross income to determine the percent of your gross monthly income. Your car payment will be 13.49 percent of your gross monthly income, ($350.66 out of $2,598). All of your debt payments including your mortgage, credit cards, loans and other installments should not exceed 36 percent of your gross monthly income, according to Consumer Reports online.

Calculate 36 percent of your gross monthly income. $2598 x .36 = $935.28. Your other debts should not exceed $584.62 per month.

Sunday, January 30, 2011

Ask the Lender

Use a Cosigner

Consolidate Loans

Saturday, January 29, 2011

Instructions

Calculate Payoff Amount

Future Car Payments

Taking the Vehicle

Personal Property

Sale

Deficiency

Credit and Marriage

Car Loans

Pros and Cons of Individual Car Loans

Getting Help

Friday, January 28, 2011

Paying Fees or Repossession

After Repossession

Credit Report and Score

Before You Surrender the Vehicle

Refinancing

Change in Interest Rates

Change in Financial Situation

Change in Credit Rating

Tuesday, January 25, 2011

Advance Notice Rights

Location of Repossession

Sale and Deficiency Rights

Full Payment of Outstanding Fees

Considerations

Saturday, January 22, 2011

Long-Term Calculation

Approval Considerations

Negotiations

Budgeting

Instructions

Friday, January 21, 2011

Payment Options

Collection Process

Repossession

Warning

Factory Warranty Coverage

Extended Warranty Coverage

Maintenance-Related Issues

Vehicle Damages

Thursday, January 20, 2011

'Buy Here, Pay Here' Financing for Low-income Buyers

Seek Financing Through Your Own Bank

Understanding Auto Financing

Long-Term Benefits of Auto Financing

Wednesday, January 19, 2011

Terms of the Lease

Auction

Estate

Transfer the Lease

Consequences of a Repossession

Deferred Payments

Negotiate Partial Payments

Consideration

Tuesday, January 18, 2011

Vehicle Title

Lien Release

Notice of Sale

Plates and Insurance

Saturday, January 15, 2011

Co-signer Responsibilities

When You Have to Pay

Check the Paperwork

Negotiate

Features

Requirements

Benefits

Considerations

Warning

Friday, January 14, 2011

Secured Loans

Legal Responsibility

Refinancing the Loan

Other Heirs