February 2011 ~ Managing a Car Loan

Monday, February 28, 2011

Car Leases Explained

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Leasing a vehicle is an alternative to buying. While a lease offers lower monthly payments, there is no equity built into the vehicle, although the lessee may purchase the vehicle at the end of the term. A lease can be an attractive option for the individual who prefers to change vehicles frequently and is not concerned about ownership.

There are two types of car leases: open-end and closed-end. In an open-end lease, the value of the vehicle is determined at the end of the lease period and is compared against the residual value that was set at the start of the lease period. The lessee is responsible for paying any difference. In a closed-end lease, the lessee returns the vehicle at the end of the lease period, but must pay any applicable charges for excess mileage driven and wear and tear.

The amount of a car lease is based in large part on the vehicle's residual value. This is the estimated value of the vehicle at the end of the lease period, which is determined at the beginning of the lease. For example, when leasing a vehicle worth $20,000 with a 50 percent residual value, the amount of the lease payments will be based on $10,000. The higher the residual value, the lower the lease payments will be.

In general, leasing is better when you want to keep the vehicle for a relatively short period of time, such as two to three years, and as long as the amount of driving is such that the mileage limits will not be exceeded. It can also be advantageous when you want a specific vehicle but the monthly payments of a full purchase are not affordable.

One advantage of a car lease is that it normally requires lower monthly payments than when purchasing a vehicle. In effect, the lessee is only paying for the value of the car that is actually used over the term of the lease. A lower down payment is also an attractive feature, although as when purchasing a vehicle, the higher the down payment made, the lower the monthly lease payments will be.

Costs associated with a lease can be higher than when purchasing the vehicle. For example, many leases come with a predetermined mileage limit, such as 12,000 miles per year. If at the end of the lease term the mileage limit has been exceeded, the lessee is required to pay a per-mile charge. There can also be charges for having to terminating the lease early, and the cost of insuring the vehicle is typically higher.

How to Repossess a Car Legally and Properly

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If you have sold a vehicle to a private party on an installment basis, the purchaser's right to possession of the vehicle depends on making timely payments in accordance with the contract. If the customer misses a payment, he has defaulted on the loan, and you have the right to repossess the vehicle. Legal vehicle repossession requires following specific steps and procedures to repossess the vehicle properly.

Instructions

Review your state's vehicle repossession laws. Each state imposes different requirements regarding notification to the borrower before repossession, as well as on the procedures followed to repossess the vehicle.

Compose a notice of default identifying the name and address of the borrower and the vehicle identification number of the vehicle in which you hold a security interest. State in the letter that you have contacted the borrower to attempt to cure the default, and that the borrower has not voluntarily paid past-due loan amounts. Document the exact amount past due as of the date of the notice of default.

State a future date by which the borrower must pay all past due amounts to bring the loan current, and indicate that if the borrower pays the past-due amount, the loan will continue as though the default had not occurred.

Explain in the notice of default that if the loan is not brought current by the specified date, you have the right to engage in collection activities, including involuntary repossession of the vehicle.

State in the letter that the amount due may include payments that become due between the date of the letter and the final date for payment of the past-due balance.

Mail the letter via certified mail so you will have documentation that the borrower received the notice of default. Keep the confirmation and a copy of the notice for your records.

Compose a repossession order if the borrower has not brought the loan current by the date indicated in the notice of default. Include your contact information, as the lender and owner of the vehicle, and the customer's information as the borrower. Detail the vehicle identification number, year, make and model in which you hold a security interest.

Write in the repossession order that the borrower has not cured the default, and that you are exercising your right to repossession of the vehicle.

List all charges to the borrower, including the remaining balance of the loan, repossession fees and storage fees. Indicate your right to impose additional charges for damage to the vehicle found after repossession.

State that you and your repossession agent are not liable for any damages, other than those caused by negligence, that occur during repossession, transport or storage of the vehicle. Provide the location where the vehicle will be stored, so the defaulting borrower can collect personal belongings from the vehicle and exercise her right of redemption, if applicable.

Take the repossession order to a notary public and have it notarized. Keep a copy of the notarized order for your records.

Contact a repossession agent in your area to perform the repossession. If you cannot locate a repossession agent, contact local banks, automobile dealerships and "buy here, pay-here" lots to obtain a repossession agent's contact information.

Provide the repossession agent with a copy of the notarized repossession order, as well as a copy of the title showing that you are the legal owner of the vehicle.

Pay the repossession agent his fee for performing the repossession. Fees vary considerably in the repossession industry; however, $300 to $600 is typical for a private repossession, at the time of publication.

The Statute of Limitations on Repossession

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A statute of limitations (SoL) is a law that sets a maximum period of time for which a claim or action can be filed in a court of law. These periods are set by, and vary by state and type of legal action.

Because a contract is signed, vehicle purchases fall under the written contract clause of each state's statute of limitations.

The statute of limitations becomes effective on the date of the last activity on an account. In most cases, this means on the date of the last payment made. However, entering an additional agreement, either written or verbal, with the debt holder will reset the statute of limitations.

Once the statute of limitations expires, debt collectors can no longer file a lawsuit against you in an attempt to collect on the debt. This does not mean you do not still owe the debt, it simply means that debt collectors have no legal means to force your repayment of the debt.

Each state has established its own time limit on SoLs, with the average being six years. Kentucky and Ohio have the longest limit at 15 years, while North Carolina and South Carolina have the shortest at only three years.

Can I Back Out of a Car Lease After Signing?

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Before you sit down to sign a lease for a new vehicle, make sure it's exactly the car you want and can afford. Turning the wheels around and heading back into the showroom with your newly leased vehicle can be a costly mistake.

When you sign an auto lease, you may notice a sign in the finance manager's office stating, "There is no cooling off period." Unlike a mortgage or other loan, a car lease contract is final, and there is no three-day right to rescind your contract. You cannot turn in your keys and change your mind. You have signed a contract to lease the auto for the terms and price described on your lease. You are responsible for the remaining payments that are left on the lease plus other early termination penalties that may be outlined in your paperwork, according to Lease Guide. Furthermore, once you drive the car off the lot, the car is now used and worth considerably less, even if there are just three miles on the odometer.

If your paperwork is still sitting in the finance manager's office and you can make a case for your costly mistake, ask to speak to the general manager. Explain your situation. The dealership may feel your pain and let you cancel the lease. This is not a likely scenario. But if the paperwork has been processed and the title has been transferred to the car, the car is now yours, and you are stuck with the car.

If you want to cancel the car lease because it is too expensive for your budget, you may better off asking the lender or leasing company if you can restructure the lease to a payment that is more affordable. Explain your situation in detail and ask for a lower lease price for the car. Explain that you are willing to extend the term period of the lease to cover the original agreed-upon lease price. According to Bankrate, this tactic may work if you describe in detail why you cannot afford the car and put it in writing.

Suppose your car has been tampered with; for instance, the odometer has been rolled back from a higher mileage reading. If so, you may have a case for canceling the lease. Tampering with an odometer is a federal crime, according to the website Auto PI, and you should return the vehicle to the dealership and demand the lease to be canceled. If the dealer has misrepresented the lease by manipulating the car's residual value, or by charging excessive early termination fees or deceiving you in any way, you should contact an attorney if the dealer will not cancel the lease.

How to Compute Vehicle Interest Rates

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The interest rate on your car loan determines your monthly payment and how much of each payment goes toward interest. Your interest rate is based on your credit score and the state of the financial sector when you take out the loan. Your lender tells you your interest rate when you first get your loan, but if you forget it, you can calculate it later based on information on your monthly statements.

Instructions

Subtract the outstanding balance on your most recent auto loan statement from the balance on your previous monthly statement. This gives you the amount of your payment that went toward the principal balance during that month.

Subtract the answer in Step 1 from the amount of your monthly car payment. This answer is the amount of interest you paid that month.

Divide the amount of interest from Step 2 by the outstanding principal balance on the older monthly statement. For example, say you paid $65.50 in interest on a balance of $9,247. The result is 0.00708, which is your monthly interest rate expressed as a decimal.

Multiply the monthly interest rate by 1,200 to find the annual interest rate as a percent. In this case, it is 8.5 percent.

Does a Car Loan From a Bank Need to Know If a Husband Is Deceased?

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When your spouse dies, his property goes into probate. The executor of the estate is responsible for settling debts and disposing assets. If you want to keep a car after the death of your husband, you have a few options, most of which involve probate. However, in community property states, the laws vary and you may be able to bypass probate.

Although laws vary from state to state, the probate process is very clear and precise; when someone dies, debts must be paid and then assets can be transferred to the beneficiaries. Under probate law, a car loan would be considered a debt and the car itself would be an asset. The executor of the estate is responsible for notifying all debtors of an individual's death and settling all debts before the executor can dispose of assets.

During probate, the executor must settle any debts as a part of the estate before assets can be distributed. The executor of the estate must notify all debtors, including credit card companies, banks and lenders, so they can attempt to collect any outstanding debts. If the estate doesn't have enough money to pay outstanding debts, banks and lenders may attempt to seize assets to pay off these debts. The executor must negotiate outstanding debts with lenders based on how the decedent or family members want the property disposed.

If you want to keep a car by assuming the payments after the death of your spouse, you must negotiate this directly with the creditor. In many cases, the lender will allow you to take over the payments and keep the car. Some banks may require you to qualify for the loan individually after the death of your spouse. If you can't qualify for the loan, a lender may choose to repossess the car after your husband's death.

If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, any property that you acquire during a marriage is considered to be community property: a joint asset that is divided upon divorce, annulment or death. In most community property states, you're responsible for paying your spouse's car loan after his death. The bank should still be notified during probate, but in most cases you can assume the property and loan as long as you continue to make payments.

Some lenders provide "Credit Life Insurance" on outstanding debts, such as credit cards or car loans. If your husband purchased this coverage, the coverage may pay off a portion of the debt or may pay off the car loan entirely. A car note itself typically doesn't state whether this coverage is purchased; it's typically an add-on that the spouse buys after the fact. Contact your lender to find out if your husband had this coverage and your car loan is paid upon death.

Florida Laws on Purchasing a Car With a Learner's Permit

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Learner's permits are given to help teens learn how to drive safely. With a learner's permit in Florida, you are allowed to drive between daylight hours only for the first three months and always with a licensed driver over the age of 21. After three months, curfew is 10 p.m. It is possible to buy a car in Florida when you have your learner's permit, but you may face some complications.

It is not required by law in Florida that you must have a license to purchase a car. Licensing is only required to drive a car and does not affect the purchasing process. However, dealerships may require a license if you are applying for a loan or a lease for the vehicle. You can pay cash to purchase a used car in Florida while only holding a learner's permit.

An insurance company in Florida is not likely to provide you with an individual policy for the newly purchased car if you only have your learner's permit. Instead, they may be willing to add you and the car onto your parent's policy if you live at home. The reason that the insurance company requires a license is it gives them access to a driving record to rate you on.

Your insurance company may give you a time frame to meet licensing requirements to keep your policy active on your newly purchased car. According to the Car Insurance website, companies may require that you have upgraded your learner's permit to a full license within 30 days to continue coverage. The car may continue to be insured if you are not listed as a driver on the policy.

To register a vehicle in Florida, you must present the vehicle title and proof of insurance. If you were able to obtain both of these items with only a learner's permit, you can register the car. Once registered, you'll be given plates and allowed to drive the vehicle. However, you must still follow the restrictions placed on your learner's permit. Otherwise, you may have the permit taken away.

How to Create an Auto Loan Calculator

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The easiest way to make an auto loan calculator is to use the PMT function embedded in Microsoft Office Excel 2003 (or later). The PMT function is a simple way to calculate the payment for any loan based on constant (same-amount) payments with a constant (non-changing) interest rate. The MS Excel syntax for using the PMT function is: PMT(rate,nper,pv). The payment amount calculated by MS Excel returns payment amounts for principal plus interest. It does not include other items such as taxes, reverse payments or penalties.

Instructions

Click on cell A1 and type Purchase Price.

Click on cell A2 and type Down Payment.

Click on cell A3 and type Amount of Loan.

Click on cell A4 and type Interest Rate.

Click on cell A5 and type Number of Monthly Payments.

Click on cell A6 and type Monthly Payment.

Click on cell B3 (currency amount of loan) and, with the cell highlighted, left-click in the formula bar area and enter: =B1-B2.

Click on cell B6 (monthly payments of loan) and, with the cell highlighted, left-click in the formula bar area and enter: =PMT(B4/12,B5,B3).

Left-click on the A column to highlight it, then right-click and choose column width, enter the number 25 and click return. This will increase the width of the column so all the characters can be seen.

Left-click on the B column to highlight it, then right-click and choose format cells, click on the Number tab, locate the category Currency and click on it. Verify that the decimal places are set to 2 and the symbol is set to $. Click OK to return to the worksheet.

Left-click on the B5 cell to highlight it, then right-click and choose format cells, click on the Number tab, locate the category Number and click on it. Verify that the decimal places are set to 0. Click OK to return to the worksheet.

Left-click and drag on cells A1 through A6 to select those cells, then right-click and choose Format Cells, click on the Patterns tab, locate the color box for yellow and click on it. Click OK to return to the worksheet.

Left-click and drag on cells B1 through B6 to select those cells, then right-click and choose Format Cells, click on the Patterns tab, locate the color box for green and click on it. Click OK to return to the worksheet.

Left-click and drag on cells A1 through B6 to select those cells, then right-click and choose Format Cells, click on the Border tab, locate the preset with the Inside and click on it. Locate the preset with the Outline and click on it. Click OK to return to the worksheet.

Save the worksheet for later use.

Open the worksheet.

Click on cell B1 and enter the amount of the purchase price of the car and click return.

Click on cell B2 and enter the down payment amount of the car and click return.

Click on cell B4 and enter the yearly interest rate of the car loan and click return.

Click on cell B5 and enter the number of monthly payments that will be made on the car and click return. The monthly payment will be calculated in cell B6.

How to Factor Auto Loans Based on Interest Rates

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Buying a car involves being able to afford the monthly payment on a loan. Monthly payments depend on the vehicle price and the finance term. However, since the majority of vehicle loans involve interest, which is what a lender charges to lend money, you must factor in your interest rate when figuring your auto loan payment. Once a lender determines the rate on your auto loan, you can calculate the payment using a simple formula.

Instructions

Write down the maximum that you're willing to pay for a vehicle. Research different cars, and once you decide on a make, model and year, record the new or used price for the vehicle.

Determine a car loan term. The shorter your finance term, the less you spend on interest payments. The average car term is between 36 and 60 months. Be prepared to pay a higher auto loan payment with a shorter term.

Call local banks or finance companies for information on current auto loan rates. Acquire your personal credit score from one of the three major bureaus -- Experian, TransUnion or Equifax -- or order your score from Myfico.com. The bank can quote an interest rate based on your credit score.

Calculate the formula (P x (i / 12)) / (1 - (1 + i / 12)-n) to determine your payment. The letter (P) stands for principal, (i) stands for interest and (n) represents the number of months in the loan term. The formula with a 4.25 percent interest rate on a $20,000 auto loan for five years is the following:
($20,000 x (4.25% / 12)) / (1 - (1 + 4.25% / 12)-60) = $370.59 (monthly payment).

Auto Financing Laws in Texas

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Buying a vehicle often requires consumers to borrow money. These major financial loans are complex, and there are a number of issues that can present themselves during the life of an auto loan. To help both the creditor and consumer, states establish various laws on automobile financing. Texas features several such laws. Some pertain to the financing after the purchase. Others deal with financing at the point of purchase. Failure to follow or understand these laws can have serious consequences for creditors and borrowers.

Commercial loans in Texas must follow state law guidelines on interest rates. These laws are part of Chapter 306 of the Texas Finance Code. For auto loans, Texas state law limits lenders to an annual interest rate of no more than 27 percent. For some vehicles, the rate is lower. The determining factors are the age of the vehicle and the amount borrowed.

Texas state law allows consumers three days to cancel some automobile purchases. If they choose to chance a purchase, they must repay the auto loan. Otherwise, the lender will can claim title to the vehicle and make it impossible for the buyer to back out of the deal.

In accordance with Texas state law, an auto lender retains significant rights in cases where the buyer does not fulfill the terms of the financing contract. If the buyer defaults on the auto loan, the creditor has the right and legal authority to enter the consumer's property and seize the vehicle without prior notice or consent. The creditor is allowed to keep the vehicle as compensation for the unpaid debt, and the creditor can sell or auction the vehicle. If the vehicle is sold, the consumer is still responsible for the difference between the outstanding loan balance and the sale price.

The Texas Motor Vehicle Commission Code, known in the state as the Lemon Law, provides buyers of new automobiles with protection from defective automobiles. The law provides a complaint procedure buyers can use to demand repairs or reimbursement for their purchases. Dealers are given a reasonable amount of time to repair a defective new vehicle. The state law sets the limit at four attempts to fix the defects. If the defects are not addressed, vehicle owners can appeal to the Texas Motor Vehicle Commission, which becomes involved in mediating the dispute between the manufacturer, dealership and buyer. If the commission finds that the vehicle is defective and that repairs are not possible, the commission can require the dealership to issue a refund. This refund releases the finance loan on the vehicle. The state law, though, allows the seller to keep a small amount in exchange for the period during which the buyer used the vehicle. The buyer remains responsible for paying this amount. If it is financed, the buyer must continue to make payments for the amount determined by the commission. If the buyer has made payments on the vehicle to the lender, the dealer must reimburse the buyer directly for the principal paid. The Lemon Law does not address whether the dealer is responsible for reimbursing any interest that the buyer paid on the auto loan.

Compare Auto Refinance Rates

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Comparing auto loan rates before you purchase can save you thousands of dollars over the term of your loan. Dealerships make a profit from marking up your loan's interest rate, so it's best to check and become knowledgeable of the rates local banks and vehicle manufacturers offer. Learn where to compare interest rates and which factors to consider so you can make the most financially rewarding decision.

Instructions

Use an auto loan calculator to determine how long of a term you'll need. The term of your loan affects your interest rate---generally, the longer the loan, the higher the rate. The Edmunds website offers an auto loan calculator (see Resources) to help you determine how long your term should be based on your budget.

Go to the manufacturer's website to view current incentives for new cars. Often these low rates cannot be beat by traditional lenders. While traditional lenders use a tier system for rates, meaning you may get a slightly or much higher rate than the one you see offered, a manufacturer's incentive is more lenient, and does not offer a tier scale for approvals, meaning you are either approved or you are not.

Click on "locate a dealer" from the manufacturer's website, or input your ZIP code in the space provided. Visit local dealer websites to find if any special rates are being offered for used cars, which the dealer may advertise apart from the manufacturer.

Go to the websites of banks in your area, both nationally based lenders and credit unions. Check the rates offered by different lenders.

How to Roll Negative Equity Into a Lower Interest New Car Loan

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"Negative equity" is a bad term for most people. It occurs when the value of your car is less than what is owed on the loan, and is very common for long-term loans. Unfortunately, you may not have a choice in terms of when you need to apply for another car loan. Perhaps your car no longer works or is simply unreliable. If this is the case, you can apply for a roll-over.

Instructions

Research dealers who accept negative-equity roll-overs. Not all dealers accept these types of loans.

Review the terms of the roll-over carefully. Most dealers will not dissolve your balance. Instead, the negative balance is rolled over into the financing of your new vehicle; that is, the balance will be "rolled over" to your new loan balance.

Opt for the dealer rebate instead of a low introductory interest rate. The dealer will likely offer you a lower rate on your loan, especially with the roll-over. Choosing the low rate keeps the loan value high, and delays payment. However, the rebate will reduce the loan amount, which might also eliminate the negative-equity add-on.

Consider early payment options. Avoid rolling into a lower interest loan that comes with prepayment penalties.

Avoid long loan terms. While this will lower your interest rate, it will also increase the amount of interest paid over time. Your best option is a low rate, with a rebate which lowers the negative equity roll-over within the shortest term available.

How Much Can I Get for a Title Loan?

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Title loans are high-interest, short-term loans that use your vehicle as collateral. Although many states do not allow this type of lending, if you live in a state that does and have little to no chance of getting a traditional loan, a title loan may be one of your few remaining options.

How much you can get for a title loan depends on your lender and the value of the vehicle. Most use either the Kelley Blue Book or NADA guidelines (see Resources) to determine a current fair market value, and then offer you a loan that is a percentage of this amount. The most common percentage, according to the Consumer Federation of America, is 50 to 55 percent of the fair market value. The average loan amount is $600 to $2,500, according to the Centers for Responsible Lending.

As of 2010, 15 states allow title loans with few to no restrictions. These include Alabama, Arizona, Delaware, Georgia, Idaho, Illinois, Louisiana, Mississippi, Missouri, Nevada, New Mexico, South Dakota, Tennessee, Utah and Virginia. An additional eight states -- Florida, Iowa, Kentucky, Minnesota, Montana, New Hampshire, Oregon, and Vermont -- allow title loans but limit the rate of interest a lender can charge. An additional four states -- California, Kansas, South Carolina, and Texas -- permit title loans only because of loopholes in existing legislation. In the remaining 21 states, title loans are not legal.

In order to get a title loan, you must have a clear title to your vehicle. Although lenders do not check your credit, you will need a pay stub as well as the title, personal identification and a second set of keys to the vehicle. After a representative appraises your car or truck and determines your ability to pay based on your pay stub, your will receive a loan offer. If you accept, you turn over the title and second set of keys, which the company holds until you pay the loan in full.

Because this is a short-term loan with full repayment required within about 30 days, it is wise to consider potential consequences before making a decision on a title loan. Most often, title loans have significantly higher interest rates than other types of loans with some going into triple digits, according to the National Association of Consumer Advocates. If you find you cannot pay in full after 30 days, you risk trapping yourself in continually having to renew the loan at an increasingly higher cost or alternatively, losing your vehicle via repossession.

Can You Garnish Secure Car Loans?

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When a person owes money to a creditor and fails to repay the creditor according to the terms of his contract, the creditor may take a number of actions to receive payment of the money owed. If the creditor is able to receive a legal judgment in civil court, he may be allowed to garnish the person's wages. However, he can't garnish other transactions, such as the payment on the loan of a car.

When a person takes out a car loan, she typically agrees to pay back the lender in a series of payments, usually made once a month, over a number of years. These payments count as a form of income for the lender and an expense for the borrower. This loan is considered "secure" if the car is used as collateral. This means that the lender can seize the car as compensation if the borrower defaults on the loan.

If the borrower owes a creditor money, the creditor may petition a judge to allow him to garnish the debtor's wages. Generally, a creditor is required to receive approval from a judge and then approach the debtor's employer. Whether the lender of a car loan or the borrower making payments owes a creditor money, the money turned over when the borrower makes a payment can't be garnished by an outside creditor.

Although the money turned over in the payment of a car loan can't be seized as it's being paid, it may be seized at a different time. A creditor can petition a judge to freeze the bank account of a debtor; the creditor can then seize money from this account and use it to pay back a debt. Although a transaction can't be intercepted, the money may be seized after it has been deposited.

Under U.S. law, private property can't be seized by a creditor unless the debtor has granted contractual permission to the creditor to do so in the event of a default. So, were a borrower to default on the car loan, the lender could likely seize the car as payment. Outside parties can't, however, seize the car, nor can they seize the money used to pay for the car.

What Is the Difference Between Dealership Auto Loans & Bank or Credit Union Auto Loans?

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When you borrow money to buy a car, you have the option of borrowing from a direct lender like a bank or credit union, or you can finance at the dealership. While these options ultimately get you in the car you want, the way they go about it can vary.

When you work with a bank or credit union, you can get pre-qualified for the loan. This means that you can take your time, shop around and get pre-approved for the loan you want. This allows you to see what interest rates are being offered and if your credit is good enough to get the best rates. When you work with a dealer, you simply show up and deal with the financing after selecting a car.

One of the key differences between direct loans and dealer financing is the credit verification process. If you want to work with a bank or credit union, you must have a certain credit score. According to Consumer Affairs, most auto dealers have access to a captive lender that can work with customers who have poor credit. However, those with very bad credit scores can still be declined. When you have poor credit and get financing directly from the dealer, you will have to agree to a higher rate and payment.

When working with a dealer, the financing department may try to add in extra items to the amount you are borrowing. For example, most auto dealers will offer gap insurance as part of your purchase and will add it to the loan amount. Gap insurance covers you when the balance on your loan is less than the insurance company pays if your car is totaled. The dealer may also try to get you to finance other items such as an extended warranty or a maintenance plan. When you finance outside the dealer, you will not usually have to worry about being asked to finance extra items.

Many dealers run zero percent interest financing offers from time to time. These offers make it possible for those with good credit to borrow money without paying any interest on it. To qualify for this offer, you must have very good credit. Traditional lenders do not offer this type of loan as they only make their money on the financing. Dealers can sometimes allow no interest loans because they make enough on the sale of the car.

Definition of Financing a Car

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Buying a new car requires you to make many decisions besides choosing the make and model of vehicle you want, such as how to finance the car. In the auto industry the term "financing" refers to how you pay for a vehicle. Buyers can choose from several different financing arrangements that can affect the cost of vehicle ownership.

Car financing, in the broadest sense, can refer to any arrangement made to fund a vehicle, but the term is commonly used in a more narrow sense to refer specifically to auto loans. Most people that want to own their car do not have enough money to pay for it in cash, so they take out loans to help finance their purchase. According to LendingTree, the auto loan industry generates around $500 billion a year, as of 2011.

While auto loans and auto financing are often used as synonyms for one another, there are other options to pay for the use of a car apart from borrowing money. Perhaps the simplest car financing option is to pay in cash. When you pay for a car in cash you will not have to pay interest and you will fully own the vehicle as soon as you start using it. Leasing is another common option. When you lease a car you pay a dealer a monthly fee to use the car rather than buying the car outright with cash or a loan.

When you own a car you can sell it later on to recoup some of the cost of its purchase. The cost of buying a car may also be less than leasing over the long term. Leasing is advantageous in that it typically requires low upfront costs and you do not have to use a car for more than a few years. Once a lease ends you can sign a new lease on a different vehicle, allowing you to upgrade to a newer model.

Auto dealers usually offer loans to help customers finance their purchases. If you choose to take out a loan to finance a car, borrowing from the dealer may be the most convenient option, but interest rates may be higher than those you could get through other lenders like banks. In general, the longer the term of a loan, the more costly it will be in terms of interest paid. Choosing a three-year loan versus a five-year loan can save you thousands of dollars in interest.

How to Break a Car Loan Agreement

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Car loan agreements are contracts between a financial institution or car dealership and someone purchasing a vehicle. A car loan agreement outlines any stipulations for the person to buy the car, along with detailed information about how many monthly payments he must make to the bank or dealership and the amounts of each of those payments. If you determine that the monthly payments are more than you can handle or that you no longer need the car, you can break a car loan agreement with some creative thinking.

Instructions

Check the date and clauses of your car loan agreement. If you signed the agreement within the past few days, the agreement may not yet be officially signed by the loan officer. In addition, your car loan agreement likely indicates the number of days from the date of the contract that the buyer has to use a clause in the car loan agreement to cancel the contract; typically, you have five days. Canceling your agreement before it gets started is the easiest way to break a car loan agreement, as there is less paperwork and fewer penalties.

Contact your car dealership immediately upon deciding to break a car loan agreement. You are responsible for paying interest on each day that you have possession of your car. The longer you hold on to the vehicle, the more money you owe and the less the car is worth.

Ask the dealership to take the car back in a voluntary repossession. If the dealership takes the car back, it can sell the car again. If the car sells for less than what you owe on the car, the dealership may hold you responsible for paying the difference. When a dealership asks for the car back, call your finance company immediately and tell a bank representative that the dealership wants the car back and that the loan is canceled; ask the bank representative to end any daily interest accruals as of that date.

Pay your financial institution or dealership any interest payments, fees, monthly payments and penalties for breaking the car loan agreement. When you break a car loan agreement without a reason outlined in your contract, you are subject to potential penalties by your bank and by the dealership. Pay these fees.

Sell your car for the amount you owe on your loan to break a car loan agreement, if you are unable to get your dealership to take your car back. If you can find a buyer to take the car off your hands for the amount you owe on your loan, you can then pay the lender what you owe, close out your loan agreement and have the car off your hands.

Easiest Way to Trade in a Car

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Buying a new car can be an exciting and potentially frustrating process, but if you also intend to trade in your existing vehicle, you have a chance to save yourself time and effort. Trading in is faster and simpler than attempting to sell your car yourself, and if you know what to expect, you can make it even easier on yourself and the dealer.

Researching the value of your trade-in is the only way you have to get an accurate picture of what it's worth. Even though this adds a step to the trade-in process, it means you'll know whether the price a dealer offers you is close to its actual value or way off the mark. Instead of looking for the best, highest or most precise value, collect several different values to get a general sense of your car's worth. For example, your local newspaper's classified ads, Internet auction sites and used-car dealer fliers may all provide different prices that approximate what your car is worth in resale.

Before discussing your trade-in with the dealer, negotiate a price on your new car as if you don't have a trade-in. If you attempt to negotiate two deals at the same time, there's more room for confusion and you might not realize that you received too little on your trade-in until it's too late. Dealers can also adjust the trade-in value to give you the deal you want on the new car, which hides its actual price. Once you've negotiated the total price (not the monthly price) and had the dealer put it in writing, but before you sign anything, note that you have a trade-in and ask the dealer for an offer.

Car dealers are less likely to haggle on the value of a trade-in than they are on the price of a new car. If you feel as though you're getting a good price for the new car, be willing to accept the dealer's initial offer for your trade-in to keep the process simple and move on to finalizing the deal. If the value is close to your estimated value from before you started shopping, accept it. Remember that the dealer needs to consider his inventory, the condition of your car and its appeal to buyers, as well as the cost of preparing it for sale and working out a deal with a new buyer, all of which takes up a sales professional's valuable time.

Once you accept a dealer's offer for your trade-in, the simplest way to apply it to your new car is by using it as a down payment. The larger your down payment, the less you'll need to finance and the more you'll save on interest. If you have enough cash to make a down payment anyway, use it to cover the dealer costs, tax and other fees that add to the balance of your loan. This will leave you with more money each month to apply toward maintenance, fuel and insurance.

Is an MBA Education Tax Deductible for the Self-Employed?

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In certain situations, self-employed people can deduct the cost of an MBA education by treating it as a business expense on Form 1040, Schedule C. It must be a career-related expense integral to the job at hand, rather than in preparation for an entirely new field. Provided that the pursuit of an MBA qualifies, a wide range of costs may be appropriately deducted.

For tax purposes, the term "education" can cover a broad array of pursuits, coursework and seminars. The first qualifier is that the expense either improves or keeps current those skills necessary to perform the tasks necessary for the business. For example, a stock research analyst would directly benefit from the knowledge required to obtain an MBA. The second consideration is that the MBA is mandated by regulation or law to be able to continue working with new or existing clients.

The cost of an MBA education is deductible only if it goes to meet the requirements of the current business or trade. If, for example, an ambitious owner of a dog-walking business decides to obtain the degree for a job in the brokerage industry, the education is not tax-deductible. By contrast, that person may deduct all MBA expenses if the education's purpose is to improve entrepreneurial skills so that the dog-walking business can become more professional and grow its client base.

The MBA degree must be shown as integral, rather than for bragging rights or as a nice accomplishment to share with friends, family or peers. A medical or law degree is an absolute requirement to be able to obtain certification or pass the bar, but an MBA can be seen as subjective. Self-employed people who wish to deduct the costs should take care to document all expenses and treat the education itself as a business.

The 2011 case of Lori Singleton-Clarke v. Commissioner is instructive for those deciding whether and under what circumstances to deduct the cost of an MBA.

Singleton-Clarke was a certified nurse with 24 years in the field. She had become a manager and decided to obtain her MBA degree to enhance her skill set. The IRS did not allow her deductions and she appealed. The IRS claimed that she obtained the degree to get a new job, which she did soon afterward, but the Tax Court ruled that the degree did in fact aid the job she had when working toward the degree.

How to Finance 250cc Scooters

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Offering an impressive gas mileage average of 70 to 80 mpg, 250cc scooters are commonly known as mopeds. If you're looking for ways to cut your gasoline bill, a 250cc scooter can help. Mopeds are street legal and can be driven on just about any road. Scooter prices vary widely depending on the model.

Instructions

Apply for financing through your scooter dealer, if you are buying from a shop that offers financing. Some dealers that specialize in a specific scooter brand are able to offer company financing. Other scooter shops might have joined with local finance companies to offer customer financing. Typically you need proof of income and good to excellent credit. Specific credit requirements vary by financing company.

Visit your bank or credit union to inquire about getting a personal loan to cover the scooter purchase. Credit requirements for a personal loan to buy a scooter vary by financial institution. Typically you need proof of income and good to excellent credit. Your bank might have a minimum amount that you have to finance, which may be more than the cost of the scooter. Alternatively, you could take out a home equity line of credit, if you own your own home, to use to finance the scooter purchase.

Use a credit card to cover the 250cc scooter purchase. If you have no other alternatives, you can use a credit card that has enough available credit to cover the purchase. This allows you to take immediate delivery of the scooter while still being able to make monthly payments on the purchase. Before using a credit card, check the interest rate to see what rate you will be paying because you might have another card with a better rate.

Can You End a Car Lease Early?

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You may have several options available to end your car lease early. Be aware that some options are more expensive than others. If your lease is nearing the end of its contract, your leasing company may offer an opportunity to end the lease penalty-free. Consider all of your lease-end options to determine which may work best for your situation.

You may have the opportunity to end your vehicle lease early without penalty if you lease or finance again through the same bank. Most leasing banks send out notification of this opportunity, but call your lender or a same-make dealer to find out if any lease-end offers exist. You may find you can end your lease up to one year early without penalty. Also check with other dealers if you don't want to purchase the same-make vehicle again. Some dealers offer special discounts to customers who end a competitor's lease or finance, which may cover your termination costs.

If your lease is too new to end without paying a substantial penalty, consider transferring your lease to another party. Most leasing banks allow this option as long as payments are current and the lease has been in effect for at least several months. Some banks may charge a fee for a lease transfer, which you can pay yourself or transfer to the person who assumes your lease. Check the websites of LeaseTrader.com or Swap a Lease; both advertise to people who want to assume another person's lease.

Sell your leased vehicle or trade it to a dealer. Even though the leasing bank owns the car, you can call at any time to find out its purchase price. Once you have the purchase cost, you can sell the leased vehicle for the stated amount or for less if you can provide the extra money to satisfy the lease buyout. This may prove cheaper than terminating your lease. You can also trade the vehicle to a dealer and roll over any additional money owed into your new loan or lease.

Review your lease contract to determine the cost of terminating it. This option can prove most expensive if you still have a lot of time left on the lease. The termination fee, which often exceeds $1,000, does not include the amount of monthly payments you have left, over-mileage charges or excess wear-and-tear fees. Call your leasing bank to ultimately determine the cost of your lease termination and compare the cost to selling the vehicle on your own if you owe more than the vehicle's purchase price.

Basics for Renting a Car

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Rental cars save mileage on your own vehicle, provide transportation while on vacation or give you a way to get around when your car is in the shop. Before you book a rental car, gain a basic understanding of the process; knowing the ins and outs of renting a car helps you get the best car for your needs and save money.

Rental companies set their own standards for renting a car to a customer. Many companies require the person renting the car to be 25 or older. You can find a few companies that will rent to people 21 and over. A company may look at your driving record to determine if you have any major driving-related incidents that indicate you are a poor driver. You need a valid credit or debit card to cover the deposit on the car.

In most cases your own auto insurance covers any damages you cause to a rental car. The rental company will offer you additional coverage options like Collision Damage Waiver, Personal Accident Insurance and Personal Effects Coverage for an extra fee per day. Check with your car insurance company before you rent to determine if you are covered in a rental car. If not, contact your credit card company, which may offer a rental protection coverage. For an additional fee, the credit card company may cover deductibles and other expenses not covered by your primary insurance. To put this into effect, you must use that credit card to pay for the rental. If your luggage is damaged in an accident in the rental car, your homeowner's insurance may cover the cost. You can save a significant amount of money on the rental if you don't need the extra coverage plans.

The daily rental rate for the vehicle is the base cost. You will often incur additional expenses that are added to the final bill. Check on the mileage limit or restrictions on where you can drive the vehicle to avoid additional charges for driving long distances. The fuel you use may be included in the final fees. You may pay for a tank of gas when you rent the car so you can return the car empty, but consider how much you will drive and the cost of gas in that location. The rate charged by the company may be higher than filling up the tank yourself before you return the car. If you won't drive the car very much, you may not go through an entire tank. Another option may be to pay for the amount of gas you use. Other possible fees include airport surcharges, extra drivers, young drivers and an extra charge for dropping the vehicle off at a different location. The taxes you pay on the rental vary based on local tax rates.

Shop around for rental car rates by contacting the companies directly and using discount travel sites. Some rental companies offer occasional discount codes for reduced rates. The cost also varies based on where and when you rent the car and how long you keep it. For a full week, your per-day rental cost is likely to be lower. A smaller vehicle also saves you money. Request the total charge based on the additional features and surcharges you will incur so you are able to accurately compare the quotes.

Car Lease Early Return Facts

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While some are content to follow through with the planned terms of their car leases, others opt to trade their vehicle in early for financial reasons or to get a new set of wheels. Although you certainly can turn in your car before the end of your planned lease term, doing so often also means that you will have to pay extra fees. Before you set your sights upon an early turn-in, consider how much this plan will cost you, and evaluate whether or not it will likely prove worth it in the end.

All leases have an out clause. The terms of this early termination clause will be spelled out clearly in your lease agreement. While the specifics of each lease termination procedure vary, all include the payment of fees for ending your lease early. In some cases, these fees represent the entire remainder of the amount you owe on your lease term, making early lease return a very unwise financial choice. In other leases, you will pay a reduced amount to turn your car in early, potentially saving you some cash on your lease yet still not leaving you financially unscathed.

If you are sick of your current car, but don't want to pay fees for early turn-in, a rollover my be a wise choice. Many car dealers will allow you to roll over your current lease into a lease on a new car. While it may seem that doing this eliminates your previous lease entirely, such is not often the case. In most instances, a small portion of the amount you owe on your current lease is rolled over into your new financing agreement, potentially making the payments on your new lease slightly higher than they would have been had you not returned your other leased vehicle early.

While potentially challenging to orchestrate, a lease transfer is usually the most cost-effective way of getting out of your lease early. In a lease-transfer, you transfer the lease as it currently stands to another individual. If you can arrange a lease transfer, you can leave your lease early without paying potentially astronomical fees and without damaging your credit score as you would were you to simply stop paying on your lease. To arrange a lease transfer, you can find an interested party and go about the transfer process yourself, or you can contact a company that specializes in lease transfers and allow them to help you move through the process.

Much to the chagrin of many, you are often still obligated to pay over-mileage fees if you exit your lease early. Even if you have not reached the mileage limit set for the term of your lease, upon early turn-in of your car, the miles you are allotted will be prorated, and you will have to pay for any miles over the number that you should have accrued at that point in your lease.

What Kind of SOL Is a Car Loan?

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Your state maintains a statute of limitations that protects consumers from facing lawsuits over particularly old debts. The statute of limitations doesn't always prevent lawsuits, but it does provide you with an affirmative defense in the event a lender sues. Every state's statute differs, but most states' statute of limitations (SOL) falls within the three- to six-year range. Car loans only fall under the statute of limitations under certain circumstances.

A vehicle loan is a secured debt. If you stop paying your lender, the lender has the right to repossess the collateral that the loan was originally based on. In this case, the collateral is your car. There is no statute of limitations on a lender's right to seize its collateral. After repossessing the car, the lender sells the vehicle. The lender's goal is to sell the vehicle for enough money to cover the remainder of your loan. If this does not occur, the statute of limitations for your state comes into play.

Sometimes a car is worth less than the borrower owes his lender. In other cases, a poor market for the vehicle leaves the lender unable to recover what the debtor owes through selling the car. Whatever the case may be, if your lender does not recover the full loan amount through the sale, you remain responsible for paying the balance. The balance you owe, known as the "deficiency," is no longer secured by the vehicle. Because the deficiency is an unsecured debt, it is subject to your state's statute of limitations, and the lender must honor the statute of limitations when collecting the deficiency.

If the lender cannot collect the deficiency from you, it may opt to sell the debt rather than filing a lawsuit against you. Any collection agency that purchases the deficiency leftover after your repossession must also adhere to the statute of limitations for lawsuits in your state. The statute of limitations applies to all creditors who purchase the debt, not just the account's original lender.

The statute of limitations is subject to change depending on when and if you made any payments on the deficiency after the repossession. Because the statute of limitations begins to time out after your most recent payment, submitting a payment to either your original lender or any collection agency that purchased the auto loan deficiency will reset the clock. Withholding payments after that point could leave you subject to a lawsuit even if your state's statute expired before you began making payments.

Solutions for Car Title Loan Problems

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Vehicle title loans are cash loans in which the title loan company places a lien on your vehicle until it is paid off. The loan is typically due in approximately 30 days and comes with an extremely high interest rate. If you cannot pay the loan in full, you have the option to make a state mandated minimum payment and renew the loan for another month. Title loan problems usually arise from the inability to make the loan payment.

Though each state sets its own laws regarding allowable interest rates and remedies for title loans within its jurisdiction, typical title loans are due every 28-30 days. Many consumers cannot pay it in full that quickly, therefore, pay a renewal amount. The initial renewal payments on such a loan include mostly interest with a tiny amount going toward the principal. For example, on a $1,400 title loan the payments might start at $250 with $8 going to pay the principal down and $242 going to interest. The next month the payment may be $242 with $10 going toward the principal and $232 going toward interest. The payments continue to decrease gradually, while the principal payment increases slightly. Because of the way title loan payments are structured it the customer can end up paying double the original loan back when all is said and done.

Most title loan contracts include a clause that if the customer is one day late on paying the renewal amount, the entire loan can be called due immediately. This means that the customer must pay the whole loan off including the first-time interest payment. Few customers who turn to title loan companies are in a financial position to do so, which puts their loan in default. A defaulted loan status sets the stage for the customer to receive several phone calls a day, to have friends, relatives and employers contacted in the effort to find the customer and finally the vehicle can be repossessed. Repossessions are mandated by law to provide methods for the vehicle to be returned, but usually the entire loan, plus the repossession fee, plus impound/storage fees must be paid within a matter of days. If not paid in the allotted time, the vehicle is sold to pay the loan balance.

The most important solution to title loan problems is communication. Contact your title loan company as soon as you realize you cannot make the payment on time. Most title loan companies want to avoid the cost and hassle of tracking down your vehicle, seizing it and putting it up for sale. They would much rather work with you if possible. The majority of title loan companies will not take a partial payment, as it becomes a sticky legal problem with regard to calling it due for nonpayment once a partial payment has been accepted. Being honest with the company about when you will be able to make the payment is the best way to handle the problem. Many companies have rules about how many broken promises they can accept before they must default your loan, therefore, do not make promises you cannot keep. Tell the company honestly what date you can make the payment and that you will also make the next payment on time rather than begin a cycle of late payments.

If the company refuses to work with you on a late payment, you might be able to borrow the funds from friends, relatives or take it off a credit card cash withdrawal. Be sure to set up a repayment agreement for the funds that will not interfere with the ability to make the next title loan payment.

If you do not make the payment and the title loan company sends it for repossession, you will be racing against the clock. Repossession companies are aggressive and relentless in their search for the vehicle. Check with state laws regarding repossessions. Most states do not require you to bring the vehicle to the repo man, but do provide criminal charge statutes for anyone who purposely hides a vehicle from a repo company. The loan is considered secured, therefore, hiding the car constitutes hindering a secured credit agreement, which can be a felony. If your title loan goes into default you must pay the loan in full before the repossession company finds your car, or turn the car in voluntarily and attempt to come up with the finds to get it out within the allotted time frame, typically three to 20 days from the date you turn it in. The same time frame is allotted when the car is repossessed.

The decision to do a voluntary turn-in or let it get repossessed is an individual choice. Waiting for the repo man to locate the car can stall for time giving you more time to save toward the total "get out" fees. The down side is that the cost will be more because repossession fees will be added to the total cost of getting the car back. In addition, the repossession agent may find your vehicle in a store parking lot, your work parking lot, a doctor's office, your child's school or elsewhere. Having it towed away without warning can put you in a bad position as well as cause embarrassment to you at your place of work or your child's school.

A voluntary turn-in may start the clock ticking sooner than waiting for the repo man to find your car, however, many title loan companies are willing to drop the repossession fees from the total amount if you turn the car in voluntarily. In addition, you can avoid the embarrassment of having the vehicle hooked up and towed away in front of your co-workers, friends or family members.

If you have paid off a substantial portion of the loan when you run into financial difficulty meeting the next payment, the title loan company may be willing to have you refinance the loan. This process puts you deeper into debt as it typically sets up a second title loan with additional payments and interest, but if your financial crisis is temporary, it can be a solution to letting the loan default. If you have not paid enough of the loan down, or the company has rules against such practices, this solution will not be available.

Does a Bank Keep the Title When Taking Out an Auto Loan?

6:17 PM No comments

Some states don't release a vehicle's title to a borrower until the lien holder notifies the state that the loan is paid off. Other states send the title to the borrower but don't allow the borrower to transfer ownership without providing proof of a satisfied lien. Once you pay off your car loan, you'll receive the vehicle's title or a lien release.

To find out about your state's rules and title release process, ask your lender for information or contact your state's motor vehicle department. If you just initiated your auto loan and live in a state that provides titles when a lien exists, it may take several weeks for your title to arrive. Most states don't allow title transfers without proof of a satisfied lien, so even though you have your title, there isn't much you can do with it until you pay off your loan.

If you don't have your vehicle title and want to sell your car before you are finished paying your loan, you can do so without the title. Once you sell your vehicle, you can use the money from your sale to satisfy the car loan. After paying off the loan, you'll receive the car's title or a lien release. If your vehicle's value exceeds your loan payoff, you may keep the profit. If you owe more than the car's resale value, expect to pay your lender the remaining balance after the sales price to obtain your title or lien release.

Check with your lender to find out about its title or lien release process before you arrange to sell your car or transfer ownership. If you live in a state that doesn't release titles to borrowers and your lender's payoff department is in a different location, for example, you might not receive your title for several months. Local lenders may provide an instant lien release when you pay off the loan. Dealerships in title-holding states don't need a title to complete the trade-in process. Your dealer will have you sign paperwork that authorizes it to receive the title after it pays your loan balance.

If you're not in a rush to sell your vehicle after paying off your loan, you'll receive a title or lien release by mail. If you don't live in a title-holding state, you can remove the lien holder from your title by submitting a lien release and title application at a motor vehicle office. Otherwise, expect to provide a buyer or dealer with the car's original lien release and title. Keep your title or lien release in a safe place.

What Happens to an Automobile Loan if the Car Gets Totaled?

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Most lenders require a full-coverage insurance policy as part of your loan agreement. Assuming you have maintained this coverage, your bank will receive a payment for the vehicle's market value from your insurance company in the event your automobile is totaled. Depending on your vehicle's equity, you may still owe money toward your loan or receive a payment from your bank.

While you have a loan on your vehicle, your lender is listed as the insurance policy's loss-payee. This means the insurance payoff amount goes to the bank, not you. If you owe less than the vehicle's payoff amount, the bank will issue you a check for the excess amount. Your insurance company does not consider your loan balance when determining your vehicle's value. Insurance companies figure vehicle values differently; some use an average of local selling prices, while others may use an appraisal guide.

In the event that you owe more than your vehicle is worth, a gap insurance policy can cover the remaining balance due. A gap insurance policy is optional, usually purchased from a dealership, a lender or insurance provider. Check your lending contract to see if the extra coverage is included in your bank loan, as leasing banks usually require it. Also check dealership paperwork (if applicable) or ask your insurance provider if you have the additional coverage as part of your policy.

If you owe more than the car's payoff amount and did not purchase gap insurance, you must pay the excess loan amount yourself. Call your bank to find out if you can set up a payment plan. You may not have to continue making the same monthly payments as you did for your loan, but you must satisfy the loan amount stated in your loan contract even if you do not have the car anymore.

Other disadvantages may exist until your old car loan is paid off. You may have trouble pursuing another car loan until your old one is satisfied, making it difficult to get another loan immediately. Potential auto loan lenders who view your credit report will see that your car loan is still open. Lenders may ask you to prove various information, such as the insurance company's payoff quote or a payment agreement you have made to satisfy your loan.

Are There Car Loans Out There for People Who Have Had Repossessions?

11:57 AM No comments

Having a repossession reported on your credit history doesn't necessarily mean you can't obtain another auto loan from a traditional lender, especially if years have passed since your repossession and you've re-established your credit rating. Consider viewing your own credit to decide where to apply for your loan and whether a down payment or cosigner might help to obtain an approval.

To determine if your credit has improved since your repossession, review your credit report to check your positive and negative credit history. Obtain a copy of your credit report to find out your credit standing. The Annual Credit Report website offers a free annual credit report from each of the main bureaus. Review your current accounts. If years have passed since the instance and your current credit is up to date, meaning all accounts are paid on time and you've re-established your rating, you may apply for traditional financing. Correct any inaccurate account information before applying for a loan to improve your chances for a loan approval.

Apply to a local credit union or bank, such as one you have an account with, to determine if you need to pursue other lending options. A reported repossession still reported on your credit report is likely to raise your approved interest rate, so don't shop on interest rate alone. Search for a bank or credit union with a good reputation or that offers other loan incentives, such as free checking or a rate decrease for automatic payments. Call the lender to submit for a loan preapproval. You may receive a counter offer from a lender, such as a down payment requirement, price or term restriction.

Subprime lenders offer loans to borrowers with poor credit. Interest rates are higher than you can obtain using a traditional lender. Subprime lenders don't automatically approve everyone for a loan, but if you find that you can't obtain lending elsewhere, apply to one of these lenders instead. Subprime lenders often require a large down payment and restrict loan terms, which can affect your vehicle choices if you plan to stick to a budget. Subprime lenders are located in most areas. Also, apply for a preapproval if you plan to use a subprime lender so that you can secure the terms of your auto loan before shopping.

Potential lenders look at various pieces of information aside from a reported repossession. If you paid your previous lender for its loss from the repossession, you'll have a better chance of obtaining an auto loan than someone who did not. A stable income, employment and address history also is favored by lenders. You may also apply for financing using a cosigner. A cosigner secures your auto loan with his credit and income information. Providing a large down payment may also help you to obtain an auto loan. If you can provide a large down payment, you'll create equity in your vehicle, which limits lender risk.

How to Get a Report on a Car at Car Fax

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CARFAX is a company that collects and maintains a database of vehicle records. These records can help those buying a used car learn about a particular vehicle's history. The CARFAX report may include: the number of owners a car has had; its dates of sale and odometer readings; accidents; and other damage reported to CARFAX. Sometimes the report even includes the car's service records, if the service was obtained at a business that reports to CARFAX. The information in a CARFAX report can help buyers identify and avoid a car that has had significant problems.

Instructions

Locate the vehicle identification number, or VIN, of the car you're considering. You can find the 17-character VIN on the lower driver's side corner of the windshield; it is visible from outside the car. The VIN may also be printed on a sticker on the driver's side door jamb or door post, visible when the door is open.

Type "www.carfax.com" into your web browser to navigate to the CARFAX website.

Type the VIN into the box under "Start Your Search" on the CARFAX home page.

Click "Get the CARFAX."

Confirm at the top of the next page that the vehicle year, make and model matches the car you want the report on. If it does not, double check the VIN number and try again.

Read the line that tells you how many records were found on this car. If the number is zero, do not purchase the report because there is nothing there. Records could include information such as when the car was sold, its odometer readings, accidents and service records. You cannot find out what types of records your report includes without purchasing it.

Click the circle next to the number of CARFAX reports you would like to purchase. In most cases, this will be one, unless you plan to purchase reports for other vehicles as well within the next 60 days. If you are shopping for used vehicles and anticipate purchasing more reports, buying a package is much more cost-effective than buying individual reports. As of 2010, one report costs $34.99 and six reports cost $44.99, which averages to $7.50 each.

Enter your credit card information and click on "Buy Now" to view the full CARFAX report.

Monday, February 28, 2011

Types

Residual Value

When to Lease

Advantages

Disadvantages

Saturday, February 26, 2011

Instructions

Notice of Default

Repossession Order

Vehicle Repossession

Written Contract

Time Frame

How SoL Affects You

State Limits

Thursday, February 24, 2011

The Lease is a Final Contract

Unprocessed Paperwork Scenario

Request a Lease Restructure

Fraudulent Lease

Instructions

Responsibilities of Probate

Settling the Debts

Keeping the Car

Community Property States

Credit Life Insurance

Wednesday, February 23, 2011

Features

Considerations

Time Frame

Significance

Instructions

How to Start the Auto Loan Calculator

How to Use the Auto Loan Calculator

Instructions

Tuesday, February 22, 2011

Interest Rate and Cancellation Laws

Repossession Laws

Vehicle Lemon Law

Instructions

Monday, February 21, 2011

Instructions

Sunday, February 20, 2011

Facts

Availability

Process

Considerations

Thursday, February 17, 2011

Car Loan

Garnishment

Account Freezing

Asset Seizure

Pre-Qualification

Bad Credit Approval

Dealer Add-Ons

Zero Percent Financing

Wednesday, February 16, 2011

Car Financing Basics

Financing Options

Buying vs. Leasing

Considerations

Monday, February 14, 2011

Instructions

Research Value

Negotiate Your New Car First

Don't Haggle

Applying the Value

Saturday, February 12, 2011

Qualifying Factors

Current Business or Trade

Subjectivity

Real-World Example

Friday, February 11, 2011

Instructions

Thursday, February 10, 2011

Lease-End Offers

Lease Assumption

Sell or Trade

Early Termination

Tuesday, February 8, 2011