How to Shop for Car Dealers with Programs for Recent Graduates

Graduating students can expect to get discounts, lower interest rates and special rebates from car dealers with programs for recent graduates. Many car dealers expect graduates to be financially responsible and mature. If you are employed and have good credit, you can expect to save some money on the purchase of a new auto. To shop for car dealers with programs for recent graduates, follow the steps below.

Instructions

1

Check with the student resource center of your university for car dealers with programs for recent grads. Colleges usually have information about all kinds of student discounts.

2

Make sure you qualify for discounts from car dealers with programs for recent graduates. Typically you need to have recently graduated from college within the past two years to qualify. Requirements vary from company to company; however, most auto dealerships will give discounts to students who have graduated within two years or who will graduate within a few months.

3

If you qualify for a discount, start researching the type of automobile you want to purchase. You can start on the Internet. For example if you're interested in Audi dealers, Mitsubishi dealers or Toyota dealers, check out their websites and look for car dealers in your area. There are links to some of the more popular car dealers listed in the resource section below.

4

After you have narrowed down a few car models, call the car dealerships in your area and ask if they have incentives for recent graduates.

5

Search auto dealerships by incentives by going to Edmunds.com. Most car dealers have programs for recent graduates.

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6 Reasons to Pay Cash for a Car

Financing a car purchase can allow you to pay a relatively small monthly payment that fits into your budget, while helping to build your credit. Nevertheless, if you have the financial resources, there are several good reasons why you should pay cash for your next car. Before you head out car shopping, understand your financial options and use the one that is best for your situation.

No Payments

The most immediate, and obvious, advantage to paying for a car in cash is that you will not have to carry hundreds of dollars a month in a regular payment. You will save money on your personal budget, and you will free up money that you can save for future needs.

Interest

When you finance a vehicle, the lender charges interest on the loan. Consequently, at the end of the loan the total amount you paid is more than the actual sticker price you agreed to with the dealership. When you pay in cash, you don't pay interest on a financed amount, which translates to a savings of hundreds, or possibly thousands, of dollars.

Upside Down

According to John Rosevear, writing on the Motley Fool website, a car loan becomes "upside down" when the value of the loan exceeds the value of the vehicle. You are still making monthly payments, but it can be almost impossible to refinance an upside down car loan to try and lower your monthly burden. When you pay in cash, you do not have to worry about the value of the vehicle versus the amount left on financing.

Reselling

If you finance your vehicle purchase with a five-year loan, then you are tied to that loan until it is paid off. If you would like to sell your vehicle three years after purchase, you must first satisfy the lien holder, which is the institution that financed the vehicle. When you pay in cash, you get the title to the vehicle with no lien holder on it and you are free to sell the vehicle whenever you want for as much as you want.

Repossession

Defaulting on a car loan is something that can happen to anyone. When you first obtained the loan, your financial situation may have been stable. But, if you lose your job or get hit with unexpected medical bills, then your financial situation could change. When you pay in cash, you own your vehicle outright and you do not have to fear defaulting on the loan or losing your vehicle to repossession.

Fees

Leasing or financing a vehicle involves a schedule of fees. In some cases, those fees are attributed to the lease or the loan and have little to do with the value of the vehicle. For example, if the finance company insists that you have insurance placed on your auto loan because of your bad credit, then that insurance cost increases the amount of the loan without adding to the value of the vehicle. When you pay in cash, you do not pay lease or finance fees and only pay for the price of the vehicle plus administrative costs such as registration and title.

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Basic Budget Ideas

Budgeting for current and future financial needs is a basic principle in money management. Knowing how much money can be allocated to expenses, investments, savings and entertainment can minimize financial stress and offer a blueprint for personal financial success. Establishing a successful budget requires some up-front time and attention, then occasional adjustments as your financial situation changes. Budgets can be created and managed through multiple methods, so select one that meets your personal financial needs and lifestyle.

Yearly Budget

Scope out your financial requirements and anticipated income for the coming year and establish monthly spending brackets. Preparing a basic budget for the year minimizes your planning time and accounts for the once-a-year expenses that may be overlooked when only budgeting on a monthly basis. Include some flexibility in your budget to allow adjustments during the year.

Envelope Method

Designed for people who struggle with overspending, the envelope budget system is a simple way to minimize the reliance on credit while controlling spending. Each paycheck is divided precisely into different budget categories. These category names are placed on physical envelopes and the funds from paychecks are placed into the envelopes according to the budget. In order to maintain strict controls, spending is done in cash from the envelopes. Once the money runs out in each envelope, no further spending is allowed in that budget category.

The 60 Percent Budget

The 60 percent budget limits spending on essential items to 60 percent of income. Essential items consist of food, clothing, shelter, charity, taxes, insurance and household expenses. Ten percent of income goes directly into retirement savings, 10 percent into long-term savings, 10 percent into short-term savings for unpredictable or irregular expenses and 10 percent goes toward entertainment. Since everything is placed into basic categories, this type of budget does not require much planning or oversight to manage.

Budget Planners

Use a planning spreadsheet or software to help establish a budget. These programs can help minimize the task of classifying expenses and allocating funds. Enter all your financial information including income, expenses, investments and savings into the program. After entry, you should be given an overview of your current spending categories and how much you are saving or losing every month. Generally, these programs help you to modify your spending and create a budget based on your entries. This type of budgeting requires recording all spending and income on an ongoing basis for accuracy.

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What Do I Need to Not Have a Cosigner on Car Loan?

Lenders require borrowers to have cosigners if they are not creditworthy on their own. The cosigner offers the lender some security by agreeing to be held responsible for repaying the debt if the primary borrower defaults. To avoid having a cosigner, you will need to meet the lender's standards for creditworthiness.

Credit History

The main factor that lenders consider when evaluating your car loan application is your credit history. If you have consistently made on-time payments over a period of years, the lender can assume that you will handle your car loan responsibly as well. Because you represent a low credit risk, the lender will not require a cosigner. Some of the most important factors in your credit history include your payment history, the amounts you owe, especially on credit cards, and how long you have managed credit.

Large Down Payment

One of the ways you can make up for a mediocre credit history is to have a large down payment saved up. If you can pay for much of the purchase upfront, you will not have to apply for as big of a loan. The lender will be more likely to approve it because you are borrowing less and will have lower, more manageable monthly payments. The fact that you have the discipline to save a down payment will also work in your favor.

Steady Employment

Lenders for auto loans typically ask about your employment history and income on the application. If you have held a job with a good salary for a while, this is an indicator of financial stability and the ability to make payments on a car loan. If you are unemployed, have changed jobs frequently or make very little income, the lender might require a cosigner because you don't appear to be able to make payments on your own.

Tips

If you start preparing at least a year before buying a loan, you should be able to work on all three of the major factors that help you avoid having a cosigner. If you have never managed credit before, get a secured credit card, a retail card or a small personal loan and start making regular monthly payments. Also keep your credit card balance to a small percentage of your limit to improve your credit. Get a good job and save money out of every paycheck for a down payment. Also consider buying a used car instead of a new one so you do not need to borrow as much money. Plus, used cars depreciate more slowly than new ones, making them less of a risk for lenders.

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Laws on Repossession of a Car and Buying Another Outright

When you no longer want to or are unable to make your car payments, your car will eventually be repossessed. However, some people actually stop making payments to save money and use it to buy a vehicle outright after their other vehicle is repossessed. While technically this could work, it could also cause some financial problems for you.

Right to Repossess

After you stop making your car payment, by law the lender has the right to repossess your vehicle. When you sign your car loan, you agree to a clause that allows the lender to repossess the vehicle when you do not meet the terms of the agreement. Once this happens, the lender can take the car and sell it to repay the amount of money that you borrowed to purchase the car on the front end.

Deficiency Balance

While you may try to save up your money and pay for another car outright, this does not necessarily eliminate the money that you owe for the first vehicle. If the lender sells the car for less than what you owed on the loan, this creates a deficiency balance. When this happens, you still owe money to the lender. The lender then has the legal right to come after you for this deficiency balance. If you do not pay the balance, the lender may take legal action against you.

Legal Action

When you have a deficiency balance, it is essentially the same as owing money to a credit card provider or to another lender. Because of this, the lender has the right to sue you in civil court to get a judgment against you. Once a lawsuit has been filed and a judgment given, the lender can then use that judgment to collect the balance from you. One way to collect the balance is to place a lien on your property or to seize it through a levy.

Considerations

Even if you use cash to pay for another vehicle after getting your first one repossessed, this does not necessarily mean that your new vehicle is secure from a levy against you. If the lender of the repossessed car gets a judgment against you and has the right to levy your property, it could levy your new vehicle to pay for the old one. As such, your new car could be seized and sold by the local sheriff to generate enough cash to pay for the deficiency balance that you owe.

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What Does Leasing a Vehicle Mean?

Leasing is a form of financing for assets that decrease in value. If you lease a car, you are arranging to pay for the amount that the car depreciates over the term of the lease. With a lease, you do not own the vehicle. At the end of the lease, you can turn the car in to the bank or leasing company that financed the deal.

Function

A vehicle lease allows a driver to have a lower payment than he would have if he bought the vehicle. If you buy a $30,000 vehicle, you have to finance and pay for the entire $30,000. Over the time period of a lease, you would only pay for the depreciation of the vehicle, which could be as low as $15,000. The lower overall amount translates into a lower payment over an equal length of time. Since the payment is lower, a person can lease a more expensive vehicle than he could afford to buy. A lease is also an attractive option for drivers who like the idea of having a new vehicle every three or four years.

Residual Value

The residual value is the amount that the leasing company or bank estimates that the vehicle will be worth at the end of the lease period. This is an important factor in your monthly payment. If two vehicles both sell for $25,000, and one has a residual value of $15,000 and the other $11,000, you will pay less per month to lease the first one, because you are paying off a lower amount. This is true if all other terms of the lease are the same. You can find the residual value in your leasing documents, and the residual value usually reflects the amount you would pay to buy the vehicle at the end of the lease.

Types

There are two types of leases: closed-end and open-end. At the termination of a closed-end lease, you turn the car in, settle up for any mileage overage, damage and excessive wear and tear, and walk away. If the vehicle's value is lower than the expected residual value stated in the lease documents, you are not responsible for the difference. With an open-end lease, however, you would be responsible for this difference at the end of the term. Most consumer auto leases are closed-end, but check your lease documents carefully.

Time Frame

Automotive lease terms, or the length of time of a car lease, are commonly 24, 36, 48 or 60 months. Sometimes, leases have odd terms, like 30, 39 and 42 months. This can result when dealerships try to get people in during slow sales times to buy new vehicles.

Misconceptions

Some may think that since a lease never mentions an interest rate, it does not have one. Leases do have a form of interest rate called a "money factor." This is a finance charge on the money that the bank or leasing company had to pay to buy the vehicle to lease it to you. Leasing companies show money factors in small decimal numbers. If you multiply the small decimal number by 2,400, however, you will get the equivalent of an annual interest rate for comparison purposes. The money you pay will be close to the interest rate you would pay if you bought the car.

Warning

Leases have mileage allowances, commonly between 12,000 and 15,000 miles per year. If you go over these allowances, there will be a charge at the end of the lease that could be as high as 25 cents per mile. If you need more than the mileage being offered, it is usually less expensive to purchase the mileage at the time that you sign the lease. Also, do preventive maintenance according to the manufacturer's requirements and keep records of the maintenance. You could be charged extra if you do not do this.

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What Value of Vehicle Do Banks Use When Using a Vehicle as Collateral?

In a purchase of a vehicle, the vehicle itself is usually the collateral for the loan to buy it, but using a car as loan collateral is a risky move if you're desperate for fast cash. A bank may charge a high interest rate for the quick infusion of capital and will move to seize your car if you default on the loan. A bank or other financial institution uses a number of methods when determining the value of your vehicle for any loan, including fair market value and minimum appraised value.

Fair Market Value

A bank usually calculates the value of a vehicle used as collateral for a loan at the vehicle's fair market value. This is the price that the majority of other comparable vehicles are selling for on the open market. The bank considers a variety of factors when determining fair market value, including mileage, number of sustained accidents, remaining original parts and special vehicles features. A vehicle with a low fair market value won't be as useful for collateral in a loan situation as a vehicle selling for a high price. The bank generally wants collateral that can cover the cost of a loan if the bank must seize the vehicle due to non-payment of a loan.

Auto Loans

When you purchase a car, the bank or lending institution buys the car for you and agrees to allow you use of the vehicle while you make payments on an auto loan. Failing to make those payments will cause the lender to repossess the vehicle. A bank can, and usually will, repossess a vehicle, regardless of value, at any point during the repayment process if you miss even a couple payments. This move protects the bank's interest and allows the financial institution to recoup as least a portion of the original price of the vehicle.

Auto Liens

A lien is a judgment by a court allowing a creditor to place a security interest in a piece of property you own to guarantee the payment of a debt. The court may grant a creditor a security interest in an automobile you own if the court deems the value of the vehicle sufficient to pay all or a significant portion of the debt. The lien entitles the creditor to a portion of the profits from the sale of your vehicle up to the amount of the debt you owe. This means your creditor could receive all of the proceeds from the sale of your vehicle.

Minimum Liquidation Value

Appraisers employed by banks usually establish a minimum liquidation value when determining the total value of your vehicle used as collateral. The appraisers then issue a certificate of guarantee to the bank, which locks in this minimum amount in the event the bank must sell the vehicle due to your default on your collateral auto loan. The bank may also base the amount of money you receive through your loan on this minimum value as a means of mitigating losses in the event of a default.

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What to Look for in an Auto Lease

Individuals looking to save money with lower monthly payments sometimes lease rather than purchase automobiles. When leasing an automobile, different considerations come into play and certain factors need to be examined. Before leasing an automobile, consumers need to know how much money is due when signing, as well as any additional charges at the end of the lease. Comparing the lease terms to the purchase terms can highlight differences, especially when it comes to negotiations.

Amount Due

When leasing a car, it is necessary to find out how much money is due at signing. There are various fees incorporated into the signing amount, including security deposits, as well as title and registration fees and the initial monthly payment. Before signing any lease, it is prudent to get firm prices on the amount of money needed when the lease is signed.

Mileage

When examining an auto lease, pay attention to such areas as mileage. Some leases contain mileage provisions. When the lease is over and the car is returned, the person leasing the car pays for every mile over a certain limit. Depending on the mileage limit, substantial fees can accrue.

Gap Insurance

People looking to lease a car need to make sure gap insurance is available. When a leased car is involved in an accident, the insurance company pays the cash value of the car. Unfortunately, the cash value considered is the actual cash value and not the actual retail value. Sometimes, a large gap exists between the actual cash value and how much remains on the lease. Having gap insurance ensures the insurance company pays the difference.

Comparison

When looking at an auto lease, it is useful to compare the terms of the auto lease with conditions for buying the car. Trade-offs are found in both areas. While leasing provides the consumer with the opportunity to put no money down on the car and buying requires up to a 20-percent down payment, the person buying the car eventually owns the car, while the person leasing will not own the car, unless a lease-to-own program is in place.

Negotiations

Very few elements in a lease are negotiable. One of the few negotiable items, however, is the price of the car. The dealer has a limited amount of room in which to engage the customer in negotiations. For the most part, dealers act as agents for the leasing company, limiting the amount of negotiation allowed.

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When Does an Auto Loan Go Into Default?

An auto loan goes into default as soon as you fail to abide by the terms of your loan contract. A default might include a late payment, failure to satisfy your loan balance or lack of full-coverage insurance. Auto loan providers may differ on the reasons for default, but expect to find the information detailed in your loan contract.

When Your Payment is Late

Your auto loan goes into default once you miss a car payment. Grace periods offered for late payments differ by lender. Read your contract over to determine how much time your lender offers for late payments before it starts the repossession process, assesses late fees or reports your non-payment to the credit bureaus. Some lenders consider a loan in default as soon as a borrower misses a payment, but often, lenders will not act or penalize a borrower until his payment is at least 30 days past due. Call your loan provider to determine its rules.

When You Fail to Maintain Insurance Coverage

Most lenders also require a continuous full-coverage insurance policy on your vehicle until the loan is satisfied. If you do not maintain this coverage, you failed to abide by your loan contract agreement. Insurance companies electronically notify lien holders and the state motor vehicle department if your policy cancels or lapses. Repercussions for lack of required insurance are also outlined in your contract, but may include repossession. Some lenders may add an insurance policy to a car loan, which increases your car payment.

When You Don't Pay Your Loan Balance

Your contact also states your responsibility to fulfill your loan balance. If your vehicle becomes a total loss, your full-coverage insurance policy pays your lender for the car's market value without regard to your total loan balance. If your car's market value doesn't pay off the loan, you must complete your payments or satisfy the loan in full. If your vehicle is repossessed, you must also satisfy the loan amount. Once your vehicle is repossessed, your lender resells it to minimize its loss. If the sales price doesn't satisfy the loan balance, your lender can pursue legal action that may result in wage garnishment if you do not pay.

Credit Reporting

Potential lenders that view your credit report can identify a past-due loan account. If you're past your grace period for payment, your account is likely reported as past-due to the credit bureaus. Potential creditors are not likely to extend a loan or line of credit while an auto loan is in default. To ultimately determine if your credit is affected by your non-payment, obtain a copy from the credit bureaus. Even if your loan becomes current, the late payment remains on your credit report as part of the loan's payment history.

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The New Car Buying Process

Buying a new car takes more than just walking into a dealership and choosing the one you like. To get the best deal on a new car you have to follow a specific new car buying process even before walking into the dealership. In fact, if you do thorough research and buy a new car at the right price, according to the experts at Edmunds, you may be able to finance a new car at lower monthly payment than what you are now paying.

Research

Any new car buying process needs to start with thorough research. Investigate suggested invoice and retail pricing, any special rebates available by the manufacturer and any other cost related information, by visiting the car maker's website and reading about the different models you like. Learn of discounts or financing methods available for these models. When you make your final car dealership visit you want to know exactly what car model you want, color and special features you need. This knowledge will give you better negotiating capabilities. You should also decide whether you actually want to purchase or lease the vehicle before entering a dealership.

Insurance

Before considering final new car options, call your insurance provider to get a quote on what a yearly premium will cost, as this information may influence your final car buying decision. Luxury or sports cars are known to have higher insurance premiums that may make purchasing the vehicle out of your budget range.

Credit Score

In any new car buying process your credit score will determine your final purchase price. People with a bad credit history and a poor credit score will have to pay a higher interest rate of as much as much as 20 to 24 percent. Scores below 720 will not get that special 0 percent new car financing rate. Pull a copy of your credit report before visiting a car dealership. Give yourself enough time to clean up your credit and raise your credit score before buying a car. This way you get a better car purchase price. Raising the credit score can take at least 60 days, so don't apply for new auto financing until you have resolved any credit disputes. Try to get your credit score to a 680 or above score, making you a prime borrower. Find a copy of your credit score at Experian, Equifax or TransUnion.

Cash Back or APR Decisions

Some dealerships offer either special low APR or cash back programs when buying a new car. The choice you make will depend on how long you plan on keeping the vehicle. For instance, if you plan on keeping the car less than three years you should considered taking the cash back, but if you plan on keeping the car for four or more years then the low APR is the option you want to choose.

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Things to Remember When Selling a Leased Car to a Dealer

The process of selling a leased vehicle to a dealer is similar to the process of selling a vehicle that you own, except it requires the dealer to purchase the car from the leasing bank. You are responsible for any balance due to the leasing bank if the dealer's purchase price isn't sufficient.

Check Your Car's Value

You can sell your leased vehicle for any amount that you want to. You are only responsible for satisfying the leasing bank's buyout amount, whether you sell the car, trade it or purchase it yourself. Even though the dealership will pay to purchase your leased vehicle from the bank, you should still negotiate its trade-in value to obtain the best deal. Use several different appraisal guides to determine the car's value before accepting a price from the dealer. Check trade values on Edmunds.com, the Kelley Blue Book website and NADA Guides. Use an average of the three values to determine a fair sales price. You can keep any profit you make from selling your leased vehicle or use the profit as a down payment toward a new purchase if you're trading in the vehicle.

Money to Buy Out the Lease

You can't sell your car to a dealer and assume that you'll be free of any further leasing obligation. You're responsible for paying the leasing bank for the total purchase price. If the dealer offers you less money than your vehicle buyout amount, you must provide the remaining balance to the dealer or the bank to complete the payoff. Call your leasing bank yourself to determine the car's buyout amount. Once you complete the deal with the dealership, call to ensure the bank received payment from the dealer. Otherwise, you might pay penalties if the dealer takes too long to make payment.

Paperwork

Bring your maintenance records, service and repair documents to provide to the car's new owner. The dealer will eventually sell your vehicle and the new owner will want proof of the car's history. If your state sent you the vehicle's title, bring it to the dealer. Remove personal paperwork from the vehicle before you leave it at the dealership, such as your registration and insurance cards.

Vehicle Items and Accessories

Put your owner's manual in the vehicle. Don't remove any items or accessories from the car without first consulting the purchasing dealership. A dealer manager appraised your vehicle and offered a price assuming you'd turn in all items that were in the car when it was appraised. Items as small as floor mats can cost a dealer hundreds of dollars to replace. If you plan to swap items in the car or remove accessories, discuss your plans with the dealer before you agree on a sales price.

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Can You Get a Loan on a Salvage Title Auto?

Cars get into accidents. While this is no surprise, you may have found that some companies are able to repair significantly damaged vehicles and, as long as it's an ethical operation, will typically disclose the title's status. Many auto buyers have found phenomenal deals in such situations. As long as you are aware of the car's history and know what you're getting into, you could find a popular model at a fraction of its original price. However, you may find that financing can be tricky, so keep a couple of things in mind.

Salvaged Titles

According to AutoCheck.com, a salvaged title is produced by individual states when a car has been seriously damaged and the cost of repairs reach a certain amount above the fair market value. A vehicle also may be issued this type of title if an insurance company deems it to be a total loss. If such a car is repaired, the salvaged status may be reworded after a certified inspection. Regardless of the verbiage, finance companies pay close attention to these types of vehicles.

The Reality

A car is collateral for a lender. If you default on your loan, the bank can repossess your car and resell it to offset their losses. When it comes to reselling a salvaged title, however, the financial institution has much less opportunity to recoup their money. Because of this, most banks and credit unions are unwilling to loan any money on a salvaged title. If your credit is damaged, your chances of being approved for such a loan are even more narrow, as there's a higher likelihood of default.

Consider Your Options

If that deal is just too good to pass up, consider liquidating or borrowing against other assets. If you own other vehicles that are paid off, you may be able to borrow against their equity. Only pursue this option if you are sure that it will benefit your overall financial situation. In general, you should be very cautious about investing in a depreciating asset, especially one that is worth less than market value.

Factor in the Future

You might be getting a great deal, but be sure that it aligns with your long-term needs. If you don't intend to keep the vehicle for very long, consider the fact that it's already worth far less than its unblemished counterpart. Reselling a salvaged title can be difficult because of buyers' hesitancy. While you may be able to find a buyer, be prepared to part with it for significantly less than you paid. Deals like this typically make the most sense for drivers who plan to keep them for a long period of time and don't expect much resell value.

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What Happens After Car Repossession?

Car repossession takes place when an individual defaults on his car loan by not paying for more than two months. The financial institution or lender sends out employees or a contracted company to take the car back in lieu of payment for the loan. If your car is repossessed, you have a small window of time to bring your loan current, or you will not be able to get your back. It's essential that you always pay for your car on time; otherwise a repossession will take place.

Notice is given

Notice is the time from when the repossession orders come from the lender to when the car is actually repossessed. Notice usually is in the form of a letter, in which the repossession company tells you that you are in danger of having your car taken and gives you a final chance to bring your loan current. Repossession is an expensive process, so they want to make sure you have no intention of paying for the car before they repossess it.

Removal of personal objects

Once the repossession agent takes the car from you, she will remove any personal object from the car. This basically includes anything that did not come with the car when you purchased it, such as CDs, clothing, papers and purses. If you have added after-market accessories to the car, such as stereo systems or security systems, these are considered part of the car and will be taken with it. You will be given notice when you can pick up your personal items from the impound lot or the repossession office.

Impound lot

The car will be taken to an impound lot. The impound lot may be public, like the lot used for cars that are seized by police, but it is most likely private and owned by the repossession company. While in the impound lot, you may have a chance to purchase the car by paying back the loan in full. If you are not able to do so, the car remains at the impound lot until the time of auction.

Bank auction

Your car will be sent to the next bank auction. At a bank auction, cars are sold to bidders in an attempt to recoup the amount of the loan for the bank. Most auctions take place in a city other than the city that the car was seized in, to avoid irate car owners who lost their car due to nonpayment. Most cars go for prices well under what they are worth at a car auction.

Loan repayment

Once the car is sold at auction, the amount it sold for is given to the bank to apply to the outstanding loan. Any money left over is the sole responsibility of the debtor. If the debtor is not able to pay the full amount left over after the sale of the vehicle, the lender can send the case to court and have a judgment brought about to the debtor, which can lead to wage garnishment until the balance is paid in full.

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How to Purchase a Car With Outstanding Financing

When a car for sale has outstanding financing, that means the current owner has not fully repaid the loan he took out to buy the car. The lender has a lien on the car title, meaning that the lender has the right to repossess the car if the owner does not repay the loan. Ensure the previous loan is paid off so you own the car free and clear.

Instructions

1

Agree on a purchase price with the seller. If the price is less than the amount the seller owes on the car loan, ask the seller if he has enough money to pay off the remainder of the loan. If he does not, he must arrange to borrow money to meet the difference.

2

Ask the seller for the name of the lender with which the car is financed. The lender's name should appear on the current title of the car.

3

Call the lender and ask how its lien release process works. In most cases, the lender will not remove its name from the car title until the loan has been fully paid. If needed, set up an appointment for you and the seller to go to the lender's office together.

4

Go with the buyer to one of the lender's branch offices. Give the lender the amount you and the seller agreed on as a purchase price and wait while the seller repays any additional outstanding financing on the car.

5

Complete the bill of sale and, if the lender has the title available, the title transfer documents. If the lender does not yet have the title available, submit the required paperwork, which the lender will then send to the department of motor vehicles to have a new title issued in your name.

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Can You Sell Your Car Privately When You Have a Car Loan?

You can sell your vehicle while you still have a car loan. However, you'll have to pay off your loan before you can transfer ownership, as required by most states. Even if your state doesn't require a lien release for title transfers, most buyers won't purchase your vehicle because of the risk of repossession.

Before You Sell

Expect to pay the remainder or your car loan if your vehicle sales price is not enough to pay off the loan balance. Call your bank to obtain your loan's payoff amount and check your vehicle value to determine whether you'll need to provide additional funds. You can access private sale values through the Kelley Blue Book website and Edmunds.com. If you vehicle's sale value is more than the car's payoff amount, you can keep the profit. If not, ensure you have your funds ready before you attempt to sell your car.

Time Frame for Transfer

Ask your lender how to obtain a lien release or title once you sell the car. Determine a time frame so you can plan accordingly. Some states send the car's title to the lender, in which case, you must wait to receive it from the bank before signing it over to the new owner. In states that release the title to the registered owner, you'll only need a lien release. Find out how long your bank needs to complete the lien release or title process once the loan is satisfied. You may find that you can receive the lien release the same day that you pay off the loan or that you have to wait several weeks to receive the necessary paperwork.

Dealing with a Buyer

You don't have to immediately tell potential buyers that your vehicle still has a loan. Once you have an interested buyer, explain the pay off process and time frame for the sale. For buyer peace of mind, arrange for the buyer to make his payment to your lender. If your bank is local, take the buyer to the bank to make the payment, or at least offer the option. Provide any excess payment at the same time to prove the car loan is paid off. If your bank isn't local, call your bank to authorize the buyer to call and make the payment himself.

Financing Issues

If your buyer plans to finance the vehicle, suggest she use your bank as her lender. Doing so can quicken the sales process, allowing the bank to handle most of the transfer paperwork for the buyer since it holds the lien. Otherwise, the buyer can apply for a loan wherever she'd like, but expect the overall finance and purchase process to take up to a week. In this event, you may want to take a deposit from the buyer to ensure the sale.

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How to Get a Car Loan With No Credit History

Getting approved for a car loan with no credit history is a difficult task. Lenders normally want to ensure that you will pay back the loan, and one way of doing this is checking your credit history. People with no credit history often have a difficult time proving to the lender that they are reliable and can be trusted with paying back the loan. However, getting a car loan with no credit is not impossible.

Instructions

1

Apply for a credit card. Being approved for a credit card is difficult with no credit, but gas, retail and secured credit cards are usually easier to obtain. Applying and being approved for a credit card allows you to begin building credit, which ultimately makes it easier to buy a car.

2

Open and maintain a savings and checking account. Maintaining a positive balance in your checking and a healthy sum in your savings shows that you are financially responsible.

3

Make a down payment. Putting a down payment of 20% or more on a car shows that you were committed to save and are committed to paying for the car. Lenders reward down payments, even if you have no credit history.

4

Maintain a solid background. Lenders are more apt to give loans to people with a steady income and residency. Utilities, phone bills and any other bills in your name that are paid timely also help your cause.

5

Compare dealerships. If your bank will not give you a loan, then shop around various dealerships and talk to their financial departments. Some dealers specialize in giving loans to people with no credit.

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How to Get a Lien Release for a Motorcycle

Whether you drive a Kawasaki or a Harley Davidson, your motorcycle is likely valued at thousands of dollars. If you had to borrow money to purchase your motorcycle, your vehicle has a lien attached to it. That lien serves as your financial institution's way of reminding you that it owns your motorcycle until you pay off the loan. A lien release allows you to free yourself and your motorcycle from your creditor's grip. It also makes the process of selling your motorcycle much simpler than it would be if you still had your bank listed as a lienholder.

Instructions

1

Pay off your motorcycle. You cannot obtain a lien release without paying off the debt associated with the lien. A lien represents a creditor's financial interest in the motorcycle. The lien allows the creditor to seize and sell the motorcycle if you fall behind on your payments. Liens can stand in the way of a motorcycle owner's ability to sell the motorcycle because purchasing a motorcycle with a lien on it means accepting the consequences of the original owner's failure to pay off the debt. In other words, if a person purchases a motorcycle with a lien on it, and the original owner subsequently stops paying the loan, then the creditor can potentially take the motorcycle from the purchaser and sell it to pay the seller's debt.

2

Contact your lienholder and request a lien release. Each state's lien release form is different; however, there are certain commonalities. Lien release forms typically request the title number, vehicle identification number and descriptive information such as the vehicle's year, make and model. The forms also request the date the lien was placed on the vehicle and the date it was paid off. The names and signatures of each lienholder are also required. The signatures certify the lien has been satisfied.

3

Request a lien release from the Federal Depository Insurance Corporation if your financial institution doesn't give you one. If your creditor was an FDIC-insured institution but no longer exists, you may send a written request to the FDIC to have your lien released. The request must contain the name of your financial institution and proof that you have paid off your financial obligation. The request must also contain your contact information so that FDIC representatives may communicate with you as necessary.

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How to Purchase a Car for Your Nonprofit Organization

Nonprofit groups often buy cars or other vehicles to transport members or to use for other day-to-day purposes. When you buy a car for a nonprofit group, the state records the title under the name of the entity rather than an individual. You must ensure that you have clear association rules in place that detail the purpose of the vehicle and the people entitled to use it. You must have registered your nonprofit with the state where you operate and have a tax identification number for the organization from the Internal Revenue Service before buying the vehicle.

Instructions

1

Amend your organization's operating agreement to specify by job title who can use the car. Do not mention individuals' names because nonprofit members often change. Decide how to fund the car purchase. If you have sufficient funds on deposit, you can make a cash purchase. If you do not have sufficient cash, you can apply for a bank loan.

2

Apply for a business automobile loan. You must provide the loan officer with an association resolution signed by all the required members that authorizes you to apply for the loan. If your nonprofit group belongs to a nationwide nonprofit organization, you must provide a document from the national association enabling your local chapter to apply for credit in the name of the organization. Provide the banker with a cash-flow analysis for the group, two years of business tax returns and the tax identification number. You must provide the banker with your ID. The banker uses the nonprofit's financials to consider the application.

3

Choose a vehicle that meets the group's needs and the criteria described in the association document authorizing its purchase. Ask the dealer to make a sales contract between the seller and the nonprofit group. Take the sales agreement to the bank. Sign the loan documents as the official signer for the nonprofit group. Take the check back to the dealer and exchange it for the car.

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What Can I Do When I Need a Car But Have Poor Credit?

A car is a major purchase that typically costs thousands of dollars. Banks and loan companies finance vehicles for consumers who cannot afford to pay the entire amount all at once. It usually takes good credit to qualify for a car loan, although Warren Clarke, an editor at the Edmunds car buying research website, states that there are some options for borrowers with poor credit ratings.

Definition

Poor credit can mean anything from a few delinquent or missed payments on loans or credit cards, to court judgments, previous vehicle repossessions and even bankruptcy. Credit score provider FICO explains that different problems have different effects on a person's score. Even late payments can have a big impact because they make up more than a third of a consumer's overall credit score. Bigger issues like unpaid bills that get charged off, repossessions, foreclosures and bankruptcies can make it nearly impossible to get loans.

Preparation

Prospective car buyers should check their credit reports to see how much negative information is really contained in their files. Credit bureaus often make mistakes, according to Dayana Yochim of the Motley Fool money advice website, so there may be harmful items that are appearing in error. Anyone can request their own Equifax, Experian and TransUnion credit reports for free once a year through annualcreditreport.com, the Federal Trade Commission (FTC) advises. Errors can be disputed through the credit bureau websites, and the bureaus must wipe them out if they cannot be verified within 30 days. This may raise a person's credit score enough to qualify for a car loan, or to get a better interest rate.

Process

Clarke advises car buyers with bad credit to shop around for loans. Dealers often advertise that they can help people with credit problems, but they make additional profits from the loan, so the interest rate is often excessive. Sub prime borrowers can talk directly to credit unions, banks and other lenders who may be willing to grant the financing, especially if there is a large down payment. The rate is lower because the dealer does not take a cut.

Alternative

Lenders often allow car buyers to get loans with co-signers who have good credit. The loan is granted based on the co-signer's records, and that person is equally responsible for repayment. The Experian credit bureau warns that if the car purchaser makes late payments, or skips some altogether, it hurts the co-signer's credit just as badly, and the bank can go after that person for the entire loan amount.

Solution

Sub prime borrowers who have no choice but to accept high interest loans can often refinance their accounts once their credit is rebuilt, according to Clark. Consumers who pay their bills on time, and keep their balances low, can often qualify for better financing within one to two years.

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What Happens When You Have a Vehicle Lease Default?

Vehicle leases are long-term rental agreements where the user does not take actual ownership of the vehicle. Lease contracts usually go into great detail as to what will happen in case of default and what events constitute a default. In general, failure to make lease payments gives the leasing company the right to repossess your vehicle.

Definition

A car lease is essentially a rental agreement that allows you to use the vehicle during the term of the lease. Just as you have full access to your rented home and can refuse to allow anyone to enter the property, unless there is just cause, you will have full and unrestricted access to a leased vehicle. Similar to an apartment, you are obliged to keep the leased vehicle in reasonably good condition and cannot make permanent changes, such as repainting it or modifying the engine. You are also obligated to return the vehicle to the location specified in the contract at the end of the lease term.

Default

The definition of default is always clearly spelled out in the lease contract. The leasing company can be a subsidiary of the automaker or an unrelated corporation such as a bank. Usually, missing payments by a day or even a week does not constitute a default. There is often a grace period following the due date, during which you can make payments and still be considered in compliance with the contract. The financing company may still chose to charge you a late fee, even if you make payments within the grace period. However, you will likely avoid repossession of the vehicle.

Repossession

Once you are in default, the creditor will usually contact a repossession agent and ask him to repossess the vehicle. This agent can simply place your locked car onto a flatbed truck and drive away with it, without your permission, and with your personal belongings inside the vehicle. Whether the agent can enter the vehicle, and which areas thereof, depends on the laws of your state. Your personal items will be returned to you later. The removal of your vehicle in this manner is fully legal. Calling the police will not help, unless the agent is acting irresponsibly or harming you or your property in the process.

Sale

The next step is the sale of the car. This is often done in an auction at which the creditor collects the proceeds. The difference between the amount owing on the lease and the sale price at the auction, minus repossession fees and expenses, will determine how much you may owe to the creditor. You may then be sued for the difference.

Precaution

If you cannot make the lease payments on the vehicle, contact the creditor and explain. Even if the company is not willing to work with you by providing additional time to pay, or allowing you to downgrade to a cheaper vehicle, you can at least drop off the vehicle as opposed to forcing the creditor to repossess it. This way, you will not be held responsible for the repossession fees and expenses.

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How to Buy a Used Dodge 2500

Purchasing a used vehicle instead of a new one can be a sound financial decision because new vehicles depreciate in value quickly. If you are interested in owning a Dodge Ram 2500 pickup truck, buying a used one is a way to save on the cost of a truck. Both car lots and individuals can sell used Dodge pickup trucks, which gives you a variety of purchasing options. Prices can vary from one seller to the next; comparison shop before purchasing a used Dodge 2500.

Instructions

1

Check the average value of a used Dodge 2500 in your area by looking on the Kelley Blue Book or NADA Guides websites. This gives you an idea of the worth of the car so you know if an asking price is too high or a good deal. Damage and high mileage can lower the value of the vehicle.

2

Visit local used car lots to see the available selection of used Dodge 2500 trucks. If you come across some that you are interested in, write down the price, mileage, year and any other identifying information.

3

Look for individuals selling a used Dodge 2500 to determine if you can get a better deal than at the car lots. Browse the ads in your local newspaper classifieds and online. Online sites you can check include eBay Motors, Craigslist, Auto Trader and Automotive.com.

4

Make arrangements to see and test drive any of the vehicles you are considering purchasing. If you are looking at any vehicles from individual sellers, ask to see the title and look for the word "salvage" on it. Salvage titles are vehicles that have been declared a total loss and rebuilt. Some states do not allow you to register salvage vehicles.

5

Input the specific details of the vehicle you want to purchase into the Kelley Blue Book or NADA Guides websites to get an accurate value. Use the value amount in your negotiations for the vehicle.

6

Apply for an auto loan at your local bank or with the car lot, if you are buying from a used car lot. If you have the cash for the vehicle, you do not need to apply for financing.

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The Downside of Vehicle Lease Options

Leasing usually offers a cheaper payment than financing. Despite the lower payment, leasing is restrictive. Expect mileage, wear-and-tear and term requirements in your lease contract. Before pursuing a lease, consider its various restrictions and the possible penalty fees you can face once the lease is over.

Mileage

You can choose the mileage allowance for your lease contract. Most leasing banks allow mileage adjustment anywhere from 10,000 miles to 18,000 miles per year. Advertisements often display the lowest mileage option because it allows the leasing bank to advertise a low monthly payment. If you increase your mileage allowance beyond 15,000 miles per year, the lease payment becomes similar to a finance payment. As a result, the lower payment that leasing usually offers is no longer beneficial. If you go over your mileage allowance, expect to pay penalty fees of 10 cents to 18 cents per mile beyond your allowance amount.

Term

Leasing terms are also flexible. Despite advertisements, you can often choose a term of 24 months to 60 months. If the 39-month option offers a cheaper payment, ensure your vehicle remains under warranty during the lease term. Most factory warranties run from three years or 36,000 miles, whichever comes first. During the last three months or additional mileage that you're out of warranty, you are responsible for repairing your vehicle before its return. You may also have a difficult time getting out of your contract if you need to; most banks charge an early termination fee in addition to any payments due until the end of the contract term.

Down Payment

The effect your down payment has on your lease payment is substantial. Every $1,000 you put toward your lease takes about $30 off of your monthly payment. However, you do not have to provide additional money beyond your monthly payment amount. To lease a vehicle, the bank requires that it become your insurance policy's loss-payee, meaning you won't receive any of your down payment or money back if your vehicle is totaled or stolen. Providing a down payment may seem beneficial because of your monthly payment decrease, but you can potentially lose that money if you sustain a vehicle loss.

Other Contract Requirements

Some leasing banks require lessees to purchase a gap insurance policy, which covers the difference between the payoff of your leased vehicle's total cost to the bank and its market value if you incur a loss. A gap insurance policy can easily exceed $600. You must also maintain and repair your vehicle as needed or face fees upon returning the car. If you exceed the bank's wear-and-tear allowance, expect to pay for any necessary repairs or wear-and-tear that decreases the vehicle's market value.

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How to Buy a Car With Cash From a Dealer

According to NewCars.com, only 27 percent of car buyers in the U.S. do not finance a vehicle purchase. Buying a car with cash means that you do not have to worry about monthly car payments, having a car that is worth less than you owe on it and dealer financing costs. Using cash to pay for the entire cost of a car can be a lot of upfront money, but it can lower your overall vehicle costs.

Instructions

1

Visit local car dealers to shop for cars that you are interested in purchasing. Once you find one that you like, take it out for a test drive to see whether you want to buy it.

2

Tell the salesperson that you are interested in purchasing, once you find a vehicle that you like and want to take home. The salesperson will begin to prepare your purchase paperwork.

3

Give the sale person your personal information, but decline the request to run your credit or pull your credit report. Because you are paying cash, you do not need to have your credit report looked at. Since the number of inquires on a credit report can affect your credit score, prevent the dealer from making the inquiry. Do not want to tell the salesperson that you are going to pay cash just yet; say that you want to negotiate a price first.

4

Negotiate the price of the vehicle so that you can pay an amount you are comfortable with. When you are thinking about how much you can afford, factor in sales tax, licensing and registration fees. Focus on the total vehicle cost and not a monthly amount, since the salesperson will likely ask you the monthly amount you want to pay for the vehicle.

5

Tell the salesperson that you are paying cash once you have settled on a price. This is important because car dealer make money off of the financing, which means waiting to disclose this can result is a better negotiated price.

6

Give the dealer your cash. It can be in actual cash form or in a check or cashier's check form. Once you pay, you will need to sign all of your car ownership documents before you can drive the car home.

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What Information Do You Need to Get a Car Loan?

Finding your dream car is easy. The challenge comes with obtaining financing for your desired vehicle. If you are unable to purchase the car in cash, opt for a low-interest car loan. Lenders use your personal financial data to determine whether you can afford the loan. If you prepare your financial information in advance of finding your car, you can save time when closing on the loan.

Identification

When applying for a car loan, identification is required. Bring a government-issued photo ID and a second form of identification, such as a Social Security card, to the dealership when you buy a car. The dealer may require that your first form of ID is driver's license. Physical copies of each ID are needed for the lender's records. The salesman will make copies of each item and return them to you as you complete your loan application.

Applications request personal data, such as your current address and any previous addresses if you've been at your current address less than two years. You must include your employer's name, phone number and a list of references on your application.

Income

Bring copies of your recent pay stubs to the dealership to verify your income. If you are self-employed, a copy of your most recent tax return, and bank statements can replace pay stubs. Generally, income verification of up to four pay periods is needed to process your loan. The longer your employment history, the better your chances of approval for the loan. Borrowers who change jobs frequently or who have a short employment history are viewed as a high risk.

Credit

Lenders check your credit score to determine your level of risk as a borrower. Information in your credit report, such as whether you make timely payments or carry high balances on credit cards, allows the lender to make a sound judgment on whether to extend new credit to you. If you have a history or abandoning debt, a lender is less likely to approve you for a car loan.

However, each item in your credit report is not judged separately. Your risk as a borrower is reflected in your credit score. The higher your credit score, the less of a credit risk you are to lenders. Consumers with low credit scores are higher risk, which means higher interest rates when applying for a loan.

Insurance

Bring a copy of your full-coverage insurance policy to the dealership when searching for your new car. Insurance isn't required for all car loans. State laws mandate whether you can buy a car without an insurance policy. However, insurance is a vital resource as it can protect you in the event of an accident. The amount you pay in car insurance varies based on the type of car you own.

As soon as you have a make and model for your new car, call your insurance provider to add the car to your existing policy. If you need a new policy, you may be allowed a grace period of up to 48 hours to provide your lender with a copy of your insurance policy.

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What Is an Open-Ended Lease?

Most people lease cars so that they can save money on their monthly car payments and avoid maintenance problems along the way. In some cases, this plan can backfire, and you can be forced to pay a large amount of money on the back end of the transaction. With an open-ended lease, you are responsible for the value of the car at the end of the term.

Open-Ended Versus Closed-Ended

The two types of lease agreements that you can have with a vehicle are open-end and closed-end. With a closed-end lease agreement, you are responsible for any damage to the car when you turn it back in to the dealer. This is the most common type of lease agreement in the auto industry. With an open-end lease, you are instead responsible for the residual value of the car and you have to pay the difference between what it is and what it should be.

How it Works

When you have an open-end lease, you could potentially have to come up with a large amount of money at the end of your lease term. For example, if the early termination payoff of your vehicle is $12,000 and the dealer says that your vehicle is only worth $9,000 at the end of your lease term, this creates a difference of $3,000. You would have to come up with the $3,000 to pay the dealer back.

Transferring Risk

One of the primary reasons that automotive dealers use open-end leases is so that they can transfer risk to the lessee. When you take on an open-end lease, you are placing yourself in a position of risk. You take on all of the risk of the depreciation of the car and become responsible for paying for it in the future. With a closed-end lease, the automotive dealer is in a position of risk instead because it are responsible for the depreciation.

Business Purposes

Most open-end leases are used in commercial settings. If a business needs to lease a vehicle, it may be offered a open-end lease instead of a closed-end lease. This happens because the business may need to drive much more than the mileage limit that is allowed with a traditional closed-end lease. This is not as big of a problem for businesses because they can deduct the amount that they have to pay for depreciation on their taxes.

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Is Leasing a Car Good?

Purchasing a car can be an overwhelming experience. Every day, you are bombarded with sales messages that promise you the deal of your dreams. Purchasing a used car can save you money, but you don't get the excitement of driving away in a brand new vehicle. If you're worried about how to pay for your next vehicle, then leasing is worth your consideration.

Definition

When you purchase a car, you own it. With a lease, however, you are allowed to use the car for a set period of time (usually 24 months). At the end of the term of your lease, you must return the car.

New Car

One of the advantages of leasing your vehicle is the chance to drive a new car every two years. At the end of the lease period, you return your vehicle and begin a new lease on a different one. You also don't have to worry about finding something to do with your old car when it is time to get a new one. You simply return the older car at the end of your lease.

Lower Payments

The payments on a lease are usually lower than on a car you purchase. This allows you to be able to afford to drive a more expensive car than you would if you had purchased it. A lease may be a more affordable option for those with a lower monthly budget.

More Expensive

Leasing a car does have its disadvantages. One is the overall cost. While your monthly payments are lower, the payments never end. Therefore, you pay more because you never pay your car off in full.

When Your Lease is Up

At the end of your lease, you must choose between returning your car and purchasing it. If you choose another lease, you never have the satisfaction of ownership and you will always have a car note. If you want to keep your car after the lease period is up, you have to pay additional money to purchase it.

Early Termination

Breaking your lease early will also cost you. It is impossible to predict the future. If you lose your job or suffer some other financial hardship, you may unexpectedly need to opt out of your lease early. Often, you are still required to pay the remainder of the lease or a financial penalty for early termination.

Other Costs

Leased vehicles also have a mileage restriction. If you drive a lot, this could be a problem. Leases usually restrict your yearly mileage to between 12,000 and 15,000 miles. For each mile you drive over the limit, you must pay a fee of about 25 cents.

Each individual's situation is different. Carefully consider the advantages and disadvantages of leasing to determine if a lease is right for you.

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Auto Lease Disadvantages

Some prefer leasing cars rather than buying. Leasing allows you to get a new vehicle every few years, and you can typically lease a more expensive car than what you can afford, and for a low monthly payment. The dealer performs all maintenance free of charge on leased vehicles, as long as the vehicle has regular oil changes. While leasing sounds ideal, it does have disadvantages.

Payment

You always have a payment while you are leasing. You have an option to get another lease once your current lease ends, usually after three years. If you purchase a car, you typically make payments for five or six years, after which you own the vehicle.

Penalties

If you return the car before the end of the lease, you will pay a penalty for early termination. If you go over the maximum amount of miles allowed in your contract, the penalty can be costly. Damage to the leased car, such as scratches, can result in additional penalties. Some minor damages are often difficult to avoid, however.

Final Value

There are two types of leases: open-end and closed-end. With open-end contract, your lease will have a large balloon payment at the end, including all the extra depreciation. This means that you owe much more for the vehicle than it's currently worth. With a closed-end contract, you are not responsible for paying the final value of the car at the end of your lease.

Additional Expenses

It is recommended to purchase GAP coverage, which will cover the payment if the vehicle is damaged in an accident or stolen. Leasing companies may require you to carry a larger liability limit insurance.

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How Long Do You Have to Work Somewhere to Take Out a Car Loan?

Lenders determine credit risk based on information obtained from your credit report, your employment history and annual income. Most lenders prefer at least two years of verifiable employment history and income. Some lenders may allow less, although you might obtain a higher interest rate than average or other loan restrictions.

Traditional Lending

If you intend to apply for low interest rates through an auto manufacturer bank or local lender, such as a credit union, expect to submit two years of employment information. If you've just started a new job, your lender will consider whether you remained in the same line of work and how long you were at your last job. Some lenders offer special incentives for recently graduated students, so you might still qualify for a loan without years of employment history depending on lender offers. With good to excellent credit, you might obtain a loan with less than two years of time established with your employer.

Subprime Lending

Subprime lenders provide auto loans to risky borrowers at higher interest rates. These lenders are more lenient with employment or income requirements but require a shorter loan term and higher down payment requirements. Subprime lenders minimize risk by requiring thousands of dollars for a down payment and shorter loan terms for faster payment of principle. You must have a job to obtain a subprime loan, but might only need to provide one year or several months of employment information.

Other Determining Factors

Even if you've been with employer for many years, you aren't guaranteed an auto loan approval. Lenders also review your credit history and past accounts. If you haven't paid your bills, your credit score will decrease. Instances such as repossessions, foreclosure, late payments and judgments will decrease the likelihood of obtaining a loan, despite employment history. Your debt-to-income ratio, or the amount of debts you pay each month compared to your income, is also a factor used to determine a loan approval. Someone employed less than two years might obtain a loan approval with a good debt-to-income ratio and credit score.

Employment Considerations

Expect to provide your employer information to your potential lender along with a paystub that lists your year-to-date income. If you work "off the books," meaning you receive payment that isn't reported to the Internal Revenue Service, you can't use your employment information unless your employer writes a letter to your lender, although some lenders do not accept a letter from an employer. Expect to provide proof of previous tax returns if you're self employed. Some lenders may recognize other forms of income, such as a pension, Social Security, disability or investment income.

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Can I Put My Sales Tax Into My Truck Loan?

Many lenders allow a borrower to finance vehicle tax with a truck loan. The approval depends on several factors, such as credit standing and the bank's determined loan-to-value ratio. If the truck is new, you may have rebates in place to help offset taxes. Otherwise, the bank may approve your loan but ask for a down payment.

Tax Amount

Your tax amount can prove costly, depending on where you live. If you purchase a new truck for $40,000 and live in an area with a tax rate of 8 percent, your tax charges are $3,200. Some states recognize a trade in as a tax deduction, so ask your dealer if you can deduct your trade value from the vehicle's purchase price before applying tax. Rolling thousands of dollars into your loan creates a negative equity position, which can cause problems if you try to trade or resell in the future.

Loan-to-Value Ratio

Banks determine how much to lend based on a vehicle's loan-to-value ratio and other credit information. If you have excellent credit, the bank may lend up to 120 percent of the truck's bank-determined value. The value is based on the year, make and model of the truck you choose, along with additional features. If you purchase a truck for a price that exceeds bank values and attempt to roll another loan balance (in the event of an upside trade) and taxes, your application may be declined. A bank may also request that you put thousands down to reach your loan-to-value ratio, which may be as low as 60 percent.

Debt-to-Income Ratio

Even with excellent credit, you can still find yourself required to provide a down payment because of your debt-to-income ratio. Your lender reviews your monthly debts, including loans, credit card and housing payments to decide your maximum monthly payment amount. Even if you make $100,000 a year, you are not guaranteed a loan that covers full truck value and taxes. Your lender may require you to find a truck with a maximum monthly payment based on your debt-to-income ratio, and you may have to shop accordingly. Get a pre-approval before you head out to shop.

Budgeting

Unless you obtain a zero percent loan, expect to pay interest on your tax charge, which is unadvisable. Before you decide to roll tax charges into your loan, use an auto loan calculator to check differences in monthly payment and overall payback cost. If your taxes amount to $3,000, you can expect an increase in monthly payment of about $60 a month. Even if obtaining a loan is not an issue, carefully examine your budget and determine if rolling your taxes into your loan is affordable.

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