Auto Lease Help

Buying a new vehicle is a complicated and expensive process. One of the biggest decisions you have to make as a buyer, aside from what type of car you want, is whether to buy or lease. Each option has its own advantages and drawbacks, but leasing can be difficult to understand without some prior information.

Function

A lease is essentially a long-term rental. You pay a monthly bill for use of a car over a lease term, which is usually around three years. During that time, you have an allotted annual mileage (often 12,000 or 15,000 miles) and keep possession of the vehicle until the end of the lease. When the lease is over, you may return the vehicle to the dealer or pay a buy-out, which is defined in your original lease agreement, and own the car outright.

Costs

The costs associated with leasing a vehicle are different from those that come with a purchase. The monthly payment on a lease is generally lower than the monthly payment to purchase the same car. Dealers may also offer lease deals with no down payment, which makes leasing possible for drivers who don't have enough money saved up to make a down payment to finance a vehicle purchase. However, when the lease term ends, you'll be responsible for a buy-out that usually exceeds the car's market value. If you choose not to buy, you may be responsible for a disposition fee, as well as fees for exceeding your allotted mileage or excessive wear and tear.

Benefits

One benefit of an auto lease is the chance to always drive a relatively new car. If you lease regularly, your vehicle will never be more than three years old, removing concerns over reliability and safety that accompany some older models. You'll also have a chance to try new vehicles without a long-term commitment; if you find one you especially like, you can buy it at the end of the lease term. Low monthly payments and the lack of a down payment make leases attractive to other drivers.

Considerations

When you lease a vehicle, you never have a chance to build equity in the car. This means that when you turn in your vehicle, you have nothing to show for your years of payments. Financing a new car gives you a vehicle that, once paid off, is yours to trade in, sell or keep driving without a monthly payment.

Lease buy-outs are generally priced above the market value of the car after three years of depreciation, which means you'd be better off surrendering the lease and buying a similar used model. However, if you exceed your annual mileage allotment, the fees may make it less costly to simply pay the buy-out. Consider your driving needs and mileage trends, especially before signing a lower-cost lease with a smaller mileage allotment.

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Is it Wise to Buy a New Car?

Deciding to buy a new car is a difficult process. You must analyze your financial situation, lifestyle and the new car market to determine what works best for you. If you're considering keeping an old car, you also must determine whether you should hold off on your purchase until the deals are better or until your financial situation improves. There's no easy solution, but proper research and an accurate appraisal of your finances can help you make a wise decision.

Finances

Perhaps the most influential factor when deciding whether to buy a new car is your personal financial situation. If you can't afford a new car, then you shouldn't buy one. But if you do have enough money to buy a car, research carefully to learn which auto manufacturers are offering the best deals, such as low interest financing, factory-to-dealer incentives and zero-down promotions. Many online resources exist to help you in your search for data about particular models and manufacturers, including Cars.com, Edmunds.com and KBB.com.

Old Car

If your old car still drives well or requires repairs within your budget, it might be better to hold off buying a new car. But if your old car has high mileage or needs extensive repairs, it might be best to buy a new car. Visit a mechanic to get an exact estimate of how much repairs are going to cost and use that data to help you determine whether it is wise to buy a new car.

Lifestyle Changes

Buy a new car if your old car doesn't match your needs anymore. If you've had children, for example, your old car might not have enough room for a large family. Or if you have a new job that requires a long commute, it might be best to buy a new car that can handle long distance traveling.

Fuel Efficiency

If fuel costs are too much for you, it might be wise to buy a new, fuel-efficient car. Older cars might not meet the same fuel-burning standards as newer, more advanced cars. While you're looking for new cars, note how many miles they get per gallon and consider buying a hybrid vehicle, which will use much less fuel than cars with traditional gasoline engines.

Considerations

If you need a loan to purchase a new car, you must factor into the cost of the car the amount you will pay in interest over time. Research the prices of cars you're interested in purchasing and the amount of money you'll get for trading in your old car. Use that data to determine how much you need to borrow, then use an online loan calculator to determine how much interest you'll pay for different loan term lengths and for different minimum payment schedules.

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How to Calculate the Price of a Car

The price that a dealer pays for a new vehicle and the price you should pay to the dealer are two different numbers. To calculate the price that you should pay for the car, you first have to know the specific details of the features that the car has. You also need a copy of the factory invoice, which is not the Manufacturer's Suggested Retail Price (MSRP) sticker that the dealer sticks to the car, along with the added charges the dealer puts on the sticker price.

Instructions

1

Identify the manufacturer's invoice price for the car. You can obtain copies of the manufacturer invoice for the car you are pricing on various automobile information websites. To find the invoice with the correct pricing, you need to input the features on the car, such as number of doors, sunroof, navigation system and alarm system. The invoice lists the base price of the car and then itemizes and adds the cost for each of the additional features.

2

Subtract the holdback charge from the manufacturer's invoice from the total price on the invoice. This is a fee that the dealership pays upfront to get the car on its lot, but that is reimbursed once the dealership sells the car. You should subtract the holdback fee since it is not a lost cost for the dealer.

3

Subtract the floor-plan or dealer floor assistance from the manufacturer's invoice. The same holds true for the floor-plan fee as for the holdback charge. Since the dealer gets a reimbursement of this fee from the manufacturer when they sell the car to you, subtract this fee from the price of the car when calculating what you should pay.

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What Insurance Is Required for a Financed Vehicle?

Beyond your state's required liability policy, your lender may require you to keep a full-coverage insurance policy on your car throughout the entire period of its loan. A full-coverage insurance policy is the most expensive available, but will pay your lender for the car's market value in the event of a loss, possibly paying off your entire loan.

Full-Coverage Insurance

A full-coverage insurance policy is often required by lenders. This insurance policy covers damage to your vehicle even in accidents that are your fault. Minimum liability policies, the coverage required in most states, only covers damage to other people or property, but not any damages to your vehicle. Banks require this policy because it ensures the loan, or most of it, will be paid off in the event of a loss. The policy pays for the market value of your vehicle.

Insurance Considerations

Check with your lender to find out if requires higher limits and deductibles than your state's minimums. Most banks do not allow more than a $500 deductible and require extra coverage for bodily injury and property damage limits. Some insurance companies allow deductibles over $1,000. Raising your limits and lowering your deductible does increase your policy cost, but also protects your vehicle and your finances in the event of an accident. Finding out the coverage your lender requires also allows you to receive an accurate policy quote.

Gap Insurance

Gap (guaranteed automobile protection) insurance is not required by all lenders, but you should consider purchasing it if you're borrowing more than the vehicle's market value. Gap insurance pays the difference between the car's market value and your loan amount. Without it, you would have to pay any balance due if there is a balance left after your insurance payment. If you're leasing a vehicle, this coverage is most likely required. Ask your dealer, insurance agent or lender for pricing information if you're borrowing more than the vehicle's market value.

Lack of Coverage

If your bank requires a full-coverage policy during the term of your loan and you let your policy lapse or cancel it during the loan period, you are likely to face financial repercussions. The bank may enforce an expensive full-coverage policy and charge your loan account. A bank-enforced insurance policy is more expensive than one you can purchase on your own. You can expect a bill for a higher car payment, which reflects the cost of your new loan amount. You will have to prove you purchased another policy to cancel the extra loan amount, but may end up having to pay extra for the time you did not maintain coverage.

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The Meaning of Vehicle Refinance

Refinancing your vehicle can provide the same benefits that refinancing a house provides. If done at the right time with the right lender and interest, it will not only reduce your monthly car payments, but will also reduce the total amount of the final loan amount. You can also end up with higher payments and higher interest depending on when and why it is done. Understanding the meaning and purpose of refinancing a vehicle will help you avoid potential pitfalls and use the process to your advantage.

Who Should Do It

Just because you are able to refinance your vehicle, doesn't mean you should. If your current auto loan for a new car is at 3 percent interest or less, it's unlikely you will find a better rate. However, if your current car loan is for more than 3 percent or you have a used vehicle with higher interest rates, then vehicle refinancing may provide financial benefit to you.

How it Works

Refinancing a vehicle is the same yet also different than refinancing a house. When you refinance a house you must have a new appraisal because the loan is attached to the amount of equity in the house. A vehicle refinance is not attached to the vehicle but attached to the amount you owe on the loan, therefore, no new appraisal is needed.

Applying for a vehicle refinance typically requires an application, a new credit check and employment verification. Once approved, you use the new loan to pay off the old loan and you begin paying the new loan off. You don't have to use the same lender that provided the original loan. You can go anywhere that will give you the reduced interest rate.

Benefit

Refinancing your vehicle loan at a smaller interest rate reduces the amount of your monthly payment. In addition, because of the reduced interest rate, your total loan payout will often be less. You can also take the money you are saving each month and apply it to the new loan and get the loan paid of early.

Possible Pitfall

According to Bankrate.com, refinancing a new car is not always a good decision because your vehicle is no longer new, therefore, you may be asked to pay higher interest on your "used" vehicle. If your current loan is only a few months old, however, you may be able to convince the new lender to give you the new car rate.

If you are far enough into the current loan, refinancing might extend the time to pay it off, meaning you will not own your car until later.

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If My Car Is Paid Off Will My Credit Improve?

Paying off a car loan can bring great emotional satisfaction, but most consumers have a practical question: whether paying off a car will translate to an improved credit score. Higher credit scores frequently lead to preferred interest rates and terms on home mortgages, so if you're looking to buy a home after paying off that car, it makes sense to check whether your scores are due to rise. If your car is paid off, there's a good chance that credit will improve.

Credit Components

Car payments represent just part of what's taken into consideration in factoring your credit score. The FICO score, created by the Fair Isaac Corporation, helps lenders determine the risk factor in doing business with you based on your previous financial decisions when handling credit. FICO scores range from 300 to 850; in general, scores over 720 are considered good and scores in the range of 500 or below are considered bad. Payment history represents 35 percent of your credit, amount owed represents 30 percent, length of credit history represents 15 percent, new credit reflects 10 percent and types of credit used represent 10 percent.

Significance

With that in mind, consider how paying off your car will affect your credit. Hopefully you've been making timely payments over the course of your auto loan, contributing to overall good credit. Having your car paid off may significantly reduce your total amount owed if you had a huge car loan and finished paying it off with a few lump sums; otherwise, your credit may have been steadily improving all along as the loan balance slowly diminished. In that case, don't expect a giant leap in credit improvement. If you've been making payments on the car loan for a number of years, this has probably positively contributed to overall credit as your lender relationship lengthened.

Other Factors

If paying off your car leaves you with extra cash in hand and you feel inspired to go on a shopping spree, racking up extra credit card debt or opening department store credit cards for celebratory purchases; beware. Remember that types of credit used represent 10 percent of your credit score. Installment loans (such as car loans, student loans and home mortgages) are considered better credit risks on your account than revolving credit, such as credit cards. Opening new credit cards after you've paid off your car may hurt your credit score, not improve it.

Report Rate

Another consideration is how fast that final car payment is reported to the credit bureaus. Lenders may take their time in reporting that you've paid off your car since they're more concerned with targeting delinquent accounts than giving you a gold star for repayment. Bureaus may have contracts with lenders that specify reporting timetables, but these may not be strictly enforced, since lenders are customers of the bureaus, according to Stason.org. If reported, it may show up in 30 to 45 days. If your credit report incorrectly shows that you still owe money on a car loan, then contact the bureau to fix this information.

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Automobile Lease Information

Leasing an automobile is like renting it for an extended period of time. Leasing allows an individual to have a new car with little or no down payment at the time of purchase and a smaller monthly payment.

Definition

A car lease is when an individual makes monthly payments on a vehicle but those payments do not go towards owning the car. The lessee is only paying for the depreciation on the vehicle plus vehicle charges.

Benefits

Individuals who like owning a new car every few years or those wanting a lower monthly payment benefit from a car lease.

Payments

A person should negotiate with the dealer for the lowest possible price on a leased vehicle, as well as check for any rebates or incentives, since this will affect the monthly payment on the lease.

Mileage

Lease contracts specifically outline the number of miles a lessee can drive the vehicle. Most often it is limited to 12,000 to 15,000 miles a year. Going over the allotted mileage will result in costly fees when the car is returned to the dealer.

Care

Maintaining the vehicle is crucial when leasing. It is the responsibility of the lessee to keep the car in good condition both mechanically and in appearance. The lessee will be responsible for the costs to repair the car when she turns the car back in to the dealer.

Length

An automobile lease is normally two to five years in length.

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Tips on Buying Salvage Vehicles

The phrase "salvage vehicle" means several different things, depending on how it is used. When buying a vehicle that has been salvaged, you should find out exactly how the seller is using the phrase, and decide whether you want to buy it with that knowledge in mind. Buying a car that has been in a fender bender and repaired is a different thing than buying a car that was submerged in the ocean for a week.

Title

You should get proof of a valid title before purchasing a salvage vehicle. If the vehicle doesn't have a title, don't buy it unless you plan to use it for parts and are not planning to register it. If there is any question about the title, ask the seller to give you some time to do some research on it. If he is hesitant to let you do this, take this as a warning sign.

Be Aware of Risk

You can often purchase a salvage vehicle at a price that is far below the cost of a conventionally purchased car. The reason for this is that there may be questions about the condition and history of the vehicle. In other words, you get what you pay for, so be prepared to have some problems. This doesn't mean that you will have problems, but chances are certainly higher than if you were to buy a brand new vehicle with a warranty at a dealership.

Parting Out

"Parting out" means buying a vehicle for the purpose of taking it apart and using its components for other vehicles. If you are a car dealer, mechanic or enthusiast, salvage vehicles can be gold mines of parts that you can buy for a fraction of what it would cost to buy all the parts new. Particularly in the case of older, rare or unusual foreign cars, it can be well worth the trouble to buy salvage vehicles for their parts.

Vehicle Identification Number

The Vehicle Identification Number (VIN) is located on a plate that can be seen through the windshield, attached to the driver's side dashboard. If you have time before the sale occurs, write down the VIN of the salvage vehicle you're thinking about buying and research its history. You can do this through the Department of Motor Vehicles. There are also websites that offer VIN searches, usually at a cost. By researching the VIN, you can find out a lot of information about the vehicle, including who has owned it and sometimes its service history.

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Repossession Vs. Voluntary Surrendering a Car

If you are in a bad financial position and cannot afford to make your car payments anymore, you probably are aware that unless you can somehow come up with the money, you will lose the car. Although there is not much difference between repossession and a voluntary surrendering of the car, a voluntary surrender is somewhat better for you. If you voluntarily surrender your car instead of waiting for your lender to take it from you, you are showing some responsibility and that you are working in good faith with the lender.

Features

In a repossession, the creditor takes back your car if you stop making payments. In a voluntary surrender, you give back the car, usually after you have fallen behind on your payments. Both have the same negative effect on your credit rating, because both will appear as a repossession, according to Bills.com. Not paying back the debt you agreed to pay is what hurts your credit. The benefit of voluntarily surrendering your car is that you will not be charged any costs associated with a repossession.

Function

In order to voluntarily surrender your car, contact the lender and explain that you can't make your payments and that you want to surrender the vehicle. The lender will tell you what you must do. With a voluntary surrender, you aren't burning any bridges in case you ever want to obtain another loan with this lender, according to Experian.com.

Considerations

Your creditor may be resistant to the idea of your surrendering the vehicle, according to Bills.com. Lenders are not in the car business and would rather have you pay back the loan, so the creditor may try to work out a deal with you. If no deal will work for you, then surrendering the vehicle may be your best choice.

Warning

In repossessions and voluntary surrenders, the lender will sell your car at auction. You will be liable for any money the lender is short after the sale. For example, if you owe $10,000 on your car and the dealer is able to sell your car at auction for only $7,000, you will owe your lender $3,000. Some states have consumer protection laws that restrict creditors from doing this. Your state consumer protection agency can explain the laws of your state.

Prevention/Solution

Before you voluntarily surrender your car, see if any better option exists for you. If you have a good credit history, you may find a lender who will refinance your loan. Many banks will work with consumers to find a loan with better terms, according to Bills.com.

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How to Change Your Mind on Buying a Car After the Papers Are Signed

If you regret buying a car and want to return it, you aren't alone. Buyer's remorse is a common feeling once a buyer returns home with a shiny new car and the hefty monthly payment that goes along with it. Whether you feel you've been subjected to high-pressure sales tactics or if you just can't afford that car payment after all, you may be able to return the car in some situations.

Instructions

1

Contact the dealer and tell employees there you would like to void the contract and return the car. Each dealer sets its own policies for returning cars and you might just luck out if you went to the right dealer. Unless there are specific state laws that cover buyer's remorse on cars, the dealer is under no obligation to take the car back. As of December, 2010, two states have buyer's remorse laws: New Jersey and California.

2

Check your state's consumer laws. Contact your local Motor Vehicle Department and ask if there is a law in your state for car buyer's remorse. You can also try contacting your state's attorney general office. Although most states have a three-day buyer's remorse for contracts, it usually doesn't apply to cars.

3

Contact an attorney if you feel you've been misled or the dealer misrepresented something on the contract. A simple letter to the dealer from an attorney might prompt it into letting you give the car back. You may have no choice but to instigate legal action.

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What Is a Certificate of Title for a Vehicle?

A certificate of title for a vehicle, at the very least, provides proof of ownership of that vehicle. It is required if you want to register the car, and you must have one if you decide to sell or otherwise transfer ownership of the vehicle. If you buy a car, particularly from a private seller, you must get the title as part of the deal. The title provides other valuable information such as liens on the car.

Basic Information

The certificate of title includes the car's year, make, model, Vehicle Identification Number (VIN) and mileage at the time of the last sale. Ownership information includes name and address, but also shows if there is a lien holder and who it is. When you purchase a used car from a private buyer, check the VIN on the title and the VIN on the plate attached to the car. They must match, as should the owner's name on the title and seller's name.

"Branded" Titles

A branded title permanently labels a vehicle involved in some exceptional event. For example, cars that were flooded during hurricanes have titles that brand them as "flooded." If an insurance company totals a car that was covered with collision insurance, the car's title is branded as salvaged. A branded title is important information because it may be difficult to insure a car with that type of title.

State Differences

In some states, the vehicle isn't branded as salvage unless a certain dollar amount has been paid out on it. In others, just the declaration of total loss is sufficient, regardless of the dollar amount. Some states require titles on all vehicles while others only require titles on vehicles over a certain age. Though vehicle history reports such as Carfax are helpful, according to "Consumer Reports" they are not complete. In a comparison study it found that vehicle history reports may not include information about accidents if the vehicle was self-insured, as many fleet or rental vehicles are. Vehicle history reports also don't show any repair costs below the state's total loss threshold.

Federal Titling

The Anti-Car Theft Act of 1992 established the National Motor Vehicle Title Information System (NMVTIS). In 1996, the Department of Justice notified the states that they must furnish title information on all vehicles that enter and are titled in their state. Full compliance was required by January 2010. As of 2011, only Illinois was not in compliance. The system is a national database of vehicles so states can instantly verify the integrity of a title prior to issuance of a new one.

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How to Do a Mechanic's Lien

Building a home involves more than simply hiring an architect and a construction company. Before any construction can start, mechanic's liens must be completed and filed. A mechanic's lien is a guarantee that the construction workers and contractors will be paid before anyone else in the event of liquidation. These liens are necessary to perform work, and they remain in force until the workers and contractors have been paid.

Instructions

1

Prepare a fair notice document detailing the contributions to be made. These contributions can be either services or materials. Most state laws stipulate that fair notice must be given to the property owner of the contributions to be made before a lien can be filed. Deliver the notice to the property owner within 20 to 30 days after the date the materials or services were first contributed to the property.

2

File a claim of mechanic's lien at the county recorder's office. This is essential if the owner has not paid after the materials are delivered or work has begun. This step sets the lien process in motion. A 60-day limit, starting the day the claim is filed, goes into effect. Within those 60 days, the payment problem must be worked out or a legal action is filed against the owner in the county courthouse.

3

File a lawsuit against the property owner within the 60-day deadline. Alternatively, file legal proceedings against the property within the deadline. The third option is to file suit against the owner and proceed against the property simultaneously. Either option can ultimately result in the property being sold at auction. Whichever enforcement action is filed, it must be done within the 60-day deadline or the lien becomes null and void. The majority of mechanic's liens fail to include an enforcement action within this deadline, so be sure to do so to recover the promised payment.

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How to Get Guaranteed Auto Financing

Guaranteed auto financing is a type of lending that makes it possible for almost anyone to borrow money to buy a car. Guaranteed financing usually requires the borrower to have a valid driver's license, a fixed address and a record of employment for a minimum period of time, and a small down payment, typically a few hundred dollars. Requirements may also include signing an agreement to have monthly payments deducted automatically from a borrower's paycheck. There are downsides to guaranteed financing, such as high interest rates on the loan, which typically affect people with bad credit scores.

Instructions

1

Bring your driver's license and proof of employment and residency to a car lot or dealership that offers guaranteed financing.

2

Review the available loan plans and decide how much you are willing to spend for a vehicle, then consider what the monthly payment would be for different loan amounts. It is important to borrow an amount you can comfortably repay on a monthly basis.
A number of factors determines the amount a car dealer will finance for a car loan, including income, credit history, additional debts and housing expenses. You can reduce the amount of the loan, your financing costs and monthly payments by making a larger down payment on the car.

3

Present your documents and driver's license to the salesperson, who will ask you to authorizer a computerized check of your credit score. Your score will determine the interest rate that the dealer will offer you for a loan.

4

Consider the terms of the loan carefully. Although financing may be guaranteed, for borrowers with a poor credit history it may come with an exorbitant interest rate, as high as 25 percent annually. With that interest rate, over the course of a four-year loan your total payback amount would be almost twice the price of the car. For example, a $5,000 guaranteed loan with a 24.99 percent interest rate for monthly payments over four years will ultimately cost about $8,000.

5

Understand the penalties for late fees, which can add to the final cost of the loan as well as harm your credit score.

6

Sign the paperwork for the loan, keeping in mind that these are legal contracts and you will be obligated to pay back the guaranteed loan at the agreed-upon terms. Auto dealers specializing in guaranteed loans can often put the buyer behind the wheel of a car he has purchased in an hour or less.

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What Is the Difference Between a Secured Loan & a Co-Signer?

Loans help customers cover emergency expenses and buy the high-ticket items they could not otherwise afford. If managed responsibly, a loan also can help a customer build a good credit history and raise her credit rating. Customers with a troubled credit history or a low income may not qualify for a traditional loan. As an alternative, the lender may offer a secured loan or the customer can look for a co-signer.

Basics

To qualify for any type of loan, such as an auto loan, mortgage or personal loan, a customer will have to meet the lender's eligibility requirements. The majority of lenders require that the customer have proof of income that would cover the loan payments. The lender also will look at the customer's credit history and score. Customers who do not have adequate income or a low credit score may not qualify for traditional loan products.

Co-Signers

A co-signer agrees to back the loan should the primary applicant default on the payments. This way, a customer who does not qualify for a traditional loan can still have access to the funding he needs. If he fails to make the monthly payments, the lender will charge the co-signer. The co-signer will need to have a better credit score than the primary applicant and a good source of income to qualify for the loan.

Secured Loans

A secured loan requires that the customer put up something as collateral against the loan. If the customer defaults on the loan, the bank can take possession of the collateral for payment. For example, with a mortgage loan, the house acts as the collateral. If the customer does not make the payments, the lender can foreclose on the house. Some lenders also offer personal loans backed by deposits. The customer puts a percentage of the loan into an account. The lender holds the deposit in the account during the duration of the loan.

Warnings

Both co-signers and secured loans present a level of risk. As a co-signer, the loan will appear on your credit report. If the primary applicant defaults on the payments, it will appear on your credit history as a negative remark. By putting up collateral on a loan, you risk losing your asset. If you lose your job, have a sudden illness or simply cannot make the payment, you run the risk of damaging your credit score and loosing whatever property or funds you used to get the loan.

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Auto Financing With High FICO Scores

When you finance an automobile, the prospective lender rates you on a scale, usually called a tier rating. This rating is based on your FICO credit score. If you have a high FICO score, you have a definite advantage when applying for bank auto loans over someone with a poor score.

What Is a FICO Score?

FICO stands for the Fair Isaac Corporation, the company that calculates credit scores. Each score is based on credit reporting information from each of the major credit bureaus (Experian, Transunion and Equifax). The score is based on a number of key factors, including payment history and the amount of money owed on debt accounts. The highest credit score a consumer can have is 850.

Tier One

When a car lender evaluates your credit profile to determine your creditworthiness, it categorizes your application as tier one, two, three or four credit. Tier one credit is for applicants who have the best FICO scores--of 720 or higher. The exact minimum may vary depending on the lender's rules. If you have a score of 700 or higher, a car lender will commonly rate you as either tier one or two, which affords you the best rates and financing deals.

Low and Zero-Percent Financing

When you have a high FICO score, you'll usually have a much easier time sailing through the application process to get a car loan. Sometimes dealerships offer low and zero-percent financing deals to people with tier one credit. If you check the fine print of advertisements you may see the tier levels listed. You may also avoid the need for a down payment in order to get a car loan if you have a high FICO score.

Suggestions

If your score is low or just slightly below the 720 mark for tier one credit, work on boosting your score to get the best possible car deal. One way to improve your FICO is to pay off some of your debt. Thirty percent of your credit score is based on amounts owed, so the more you reduce this figure, the better your score gets over time (holding all other credit details constant). You should also seek auto financing at a credit union, which often offers the best rates compared to traditional banks.

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Risks of Leasing a Car

When you lease a car there are a number of advantages but there are also a lot of risks that many people are not aware of. Before leasing a car always read the contract and terms and agreements. You may be able to avoid paying extra fees when you are completely aware of and understand the language of the contract. Contact several leasing agents before you sign a contract to see who has the most cost effective terms.

Mileage

When you drive a leased car it is easy to forget about the mileage limitations. Most leases allow you to drive 12,000 to 15,000 miles per year. Once you exceed the allowable mileage there is a charge for every mile over the limit. This amount can build up fast. If you do a lot of driving the amount you have to pay when the lease is complete can be quite extensive.

Increased Payments

Auto leasing becomes more expensive in tough economic times. Monthly payments increase. Leases are no longer being subsidized by auto makers. In the past many people would lease automobiles because of the low monthly payments but leasing is not as profitable for dealers as it used to be.

Early Termination

When you sign up for a lease the term could be three or four years. Sometimes things happen that will cause you to break the lease. If this happens you will be responsible for paying a substantial penalty for early termination.

Down Payment

When you sign up for a lease you may be required to pay a down payment. The amount can vary but normally it is in the area of $1,000 to $2,000. Terminating a lease early will mean you lose your down payment. If you have bad credit you may be required to have a larger down payment, which serves as a cushion for the risk that the lessor will incur.

Expenses

Leasing allows you the opportunity to operate an automobile without having to worry about normal maintenance or if the vehicle has some sort of manufacturer recall problems. These are normally covered by the lease agreement. However there are some expenses that you will incur such as insurance, registration and possibly repairs.

Security Deposit

You may be required to pay a security deposit. This is usually refundable. When your lease expires, if there was any type of damage to the car you could lose your security deposit because it will go toward the repair of the automobile. It's your responsibility to make sure the automobile is in the same shape it was when you leased it.

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Can a Business Put a Mechanic's Lien on My Title to My Car If It is Paid in Full?

A mechanic's lien is taken against property to secure the amount of repairs that the property owner has authorized. These liens apply to homes as well as vehicles; both types of liens are called mechanic's liens. An automotive repair facility can place a mechanic's lien against a vehicle, even if the owner of the car has clear title because it is paid in full.

Unpaid Repairs

An automotive repair facility has the power to place a mechanic's lien against a vehicle in order to secure an amount due for repairs. Most repair orders state that the customer acknowledges that an express mechanic's lien is placed against the vehicle for this purpose. If the repair facility completes repairs as authorized by the customer, and the customer does not pay for these repairs, the repair facility has the right to enforce its lien and not allow the customer to take the vehicle back. The repair facility with a signed repair order does not have to file any paperwork to enforce such a lien.

Storage Fees

If a person places her vehicle in a parking facility or other storage area for a fee, the parking facility may have the same right to claim a mechanic's lien against the vehicle. This situation may be different, however, because the parking attendant usually collects the balance due when the customer is leaving the facility. If the customer refuses to pay, and the attendant retains the customer at the gate, the parking facility operator could be guilty of breaching the peace and be unable to collect the money due.

Vehicle Location

With a repair facility, the location of the vehicle is critical. The repair facility operator has the right to retain the vehicle with a mechanic's lien in order to collect the amount due for the repairs. Generally, the operator will retain the keys or lock the vehicle inside a fenced in area or in the shop overnight. If the customer leaves the property with the vehicle, the mechanic's lien is considered void. The customer still owes the money, but it becomes a collections matter instead of a property lien.

Taking Ownership

If a customer who owes money on a vehicle repair does not pick up the vehicle, the repair facility operator can, subject to state law, charge a storage fee for each day that the vehicle is there. After a certain amount of time, the owner of the repair shop can begin the process of taking legal ownership of the vehicle. The process varies by state, but in most cases a certified letter must be sent to the car owner's last address of record. After a certain amount of days, the facility owner can ask the state to issue a new title granting ownership to the repair facility. The mechanic's lien generally takes first position over any other liens against the vehicle. If a lender wishes to repossess, it must pay off the repair bill first.

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Do You Need a Credit History to Lease a Vehicle?

A car lease is both similar and different than a car loan. A lease means that you're basically borrowing the car, while a loan means that you're purchasing the car. Both a loan and lease require some credit history. If you've made any past car payments, rent payments or anything where credit is involved, you have credit history.

Credit Needed

Unfortunately there's no magical credit score that will get someone approved for a car lease, although credit scores over 620 are more likely to get a person approved. A lack of credit history will be a problem, because if someone has no credit history, they likely won't have a credit score. Financial institutions consider leasing a car more of a risk than buying a car, which means the person leasing must show the financial institution that he has a history of repaying borrowers. If the potential lessee cannot show such proof, the financial instruction has no choice but to deny him the lease.

Interest Rate

If a financial institution does offer a lease to someone who has very little credit history or poor credit, the interest rate on the lease will typically be above the national average. A lease interest rate is expressed as a money factor, which is a small number and bears no resemblance to a normal APR on a car loan. To find the APR on a lease, a person can multiply the money factor by 2,400. For example, if someone is offered a lease with a money factor rate of .001875, the APR would be 4.5 percent. According to bankrate.com as of January 29, 2011, the national average APR for a new 48-month auto loan is 5.16 percent, so the interest rate for someone with no credit history would likely increase significantly, to the tune of 3 to 5 percent. It's important to note that the average interest rate for auto loans and leases do not differ; they're nearly identical.

Co-signer

The financial institution may still approve someone with no credit history for a car lease if the person has a co-signer. A co-signer acts as a guarantee to the financial institution that the lease will be paid. If the person granted the lease does not make the specified payments, the co-signer must step in and make the payments. A co-signer must have good to excellent credit. A credit score of over 620 will usually suffice, although if the lessee's credit score is abysmal, such as 500 or below, the bank may want a co-signer with higher credit.

Upfront Payment

Unlike a car loan, a down payment for a car lease is not required. However, if a person has poor credit or no credit history, the financial institution may request a down payment. The reason the financial institution would ask for a down payment is because a down payment minimizes the institution's risk of granting a lease to someone with no credit history. For example, a down payment of $2,400 minimizes any potential losses the bank would incur if the person cannot make their payments.

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The Bank Does Not Want to Repossess My Car

When a consumer defaults on a car loan, a creditor has a right to repossess the vehicle without giving any notice. However, in many cases a bank may not want to repossess a vehicle right away and give the car owner a chance to make payment arrangements. Some financial institutions want to avoid repossession, as the process is costly and time-consuming.

Seizing a Vehicle

When a consumer finances a vehicle, the loan contract lists what constitutes a default. Most financial institutions consider it to be three or more consecutive missed payments. If a consumer doesn't bring his loan current and doesn't contact the lender to make payment arrangements, a financial institution can seize the collateral without notice. A bank pays the expenses associated with towing and storing a car and adds them to the consumer's loan balance.

Selling the Vehicle

Most creditors sell seized vehicles in a public or private sale to cover a consumer's loan balance and the repossession expenses. Some financial institutions have lists of seized vehicles available for sale that they mail to the public. Most banks don't go through the hassles of private sales. Any excess from the auction sale is refunded to the borrower. When there is a deficiency, the owner is responsible for paying it. While sale or auction expenses, attorney fees and other charges associated with the sale of a vehicle are the responsibility of a consumer, a financial institution must pay them first.

Repaying the Loan

In most cases, a consumer has a deficiency balance and has to pay it. This amount includes any remaining loan balance, plus late fees, interest and repossession charges. Since the loan collateral is sold, the bank may convert the remainder into a personal loan. If a consumer had no money to pay his car loan, chances are he will not make regular payments on the deficiency loan. Most states allow a creditor to sue the car owner for a deficiency balance. To file a lawsuit, a financial institution has to hire an attorney, whose services will cost additional money.

Negotiating with a Creditor

As demonstrated, a creditor has to incur many expenses to repossess collateral. While repossession expenses are a consumer's responsibility, a creditor may recover only a small portion of this amount. A consumer may file bankruptcy, in which case a creditor doesn't receive anything. This is why most creditors do not want to repossess and will try to negotiate a different payment schedule with a consumer. If a consumer's financial difficulties are temporary, a bank may postpone a payment or two. A lender may offer to refinance the loan with more favorable terms, such as lower monthly payments or a reduced interest rate. It is also in a consumer's best interest to avoid repossession as it will have a negative affect upon his credit history and score, and he may have difficulties obtaining another loan.

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Can a Minor Legally Purchase a Car?

Teenagers dream of owning their own car. Some of them will even save up to buy their first car. However, once they have the money saved, will they be able to purchase a car if they are under 18 years old? The answer to that depends largely on what state the minor lives in. Some states are willing to allow a minor to purchase a vehicle.

Ability to Enter Into Contract

The biggest thing preventing most minors from owning a car is that they cannot enter into a contract. Because a purchase agreement is considered a contract, a minor would not be able to be the sole owner of a vehicle. The minor's parents or guardians would have to sign the contract as the majority owner of the vehicle. Minors cannot be majority owners until they reach the age of majority in their state or unless they become emancipated from their parents.

Someone Else Holds Title

If a parent co-signs a loan for a car, then the parent is the majority owner of the car and the holder of the title. This does not prevent the minor from buying the car or using it, just from owning it. While there are some states that allow a teenager to register a care, a parent or guardian still needs to sign the contracts and legal documents concerning the car. One variation on this is that Ohio will allow minors to title vehicles, though a parent or guardian has to complete a minor consent form and accompany the minor to the Clerk of Courts office to title the vehicle.

Emancipation

Minors can be emancipated from their parents, which also frees the parents from any responsibility for the child. Emancipation happens if a minor joins the military, marries or is ordered emancipated by a judge. In essence, the child is being proclaimed an adult before the age of majority. He can do all that an adult can except purchase tobacco, pornography or lottery tickets. This means that an emancipated minor can enter into contracts and title a vehicle in his own name.

Age of Majority

When a minor reaches driving age, it does not mean he can purchase and title a vehicle. Driving age is not the age of majority. In most states, the age of majority is 18. The exceptions are Alabama and Nebraska at 19 years old, and Mississippi, Indiana and New York at 21 years old.

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How Are Finance Charges Calculated on Auto Loans?

A new car can represent freedom, but for many drivers it also means a five-year loan and another monthly payment to the household budget. Auto loans are issued by lenders that work with car dealers to provide loans at competitive interest rates. Understanding how finance charges are calculated is essential to knowing what a new car will actually cost you.

Understanding APR

When you buy a car the dealer is likely to quote you an annual percentage rate, or APR. This number represents the percentage the lender will multiply by the amount you owe (the principal balance) to determine your finance charge. But lenders compute finance charges monthly, not annually. This means you need to divide the APR by 12 to determine the monthly interest rate. For example, an APR of six percent means a .5 percent (.005) monthly interest rate.

Monthly Charges

If you buy a $20,000 car with a $5,000 down payment, you'll owe $15,000. At a six percent APR, your first month's finance charge will be $75 ($15,000 x .005). This means $75 will go towards interest and the rest toward reducing your principal balance. Your next payment will have a smaller principal balance but still the same .5 percent interest rate.

Determining Rates

Car dealers work with lenders to determine interest rates that will attract buyers. In some cases dealers and lenders will offer special low interest rates on specific models, such as those in surplus or those about to be replaced by a new model. In other cases lenders will reserve their lowest rates for buyers with strong credit scores since they represent less of a lending risk. A lower interest rate means a smaller monthly finance charge and overall savings.

Cost and Savings

You can use a web-based loan calculator to determine your total finance charges over the life of a loan. These programs allow you to enter the amount you owe, your interest rate and the term of the loan to compute the total cost of borrowing. Of course, you can reduce this cost by making the largest possible down payment, or making payments above the amount due each month. The extra money will go toward reducing your principal balance and future payments.

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Is it Possible to Quitclaim a Vehicle Title?

A quitclaim is the process that a property owner follows to forfeit his ownership of a piece of property to another party. Although the term "quitclaim" is generally more often used when referring to a piece of property --- not an automobile --- being transferred from one individual to another, you may still transfer an automobile from one person to another. It's more appropriate to refer to this process as removing a name from a car title to avoid confusion.

Permission

You can't simply remove your name from a car title in all situations: You must have the proper permission to do so. If the wording on the back of your car title says "And/Or," at the top where it refers to the owner of the vehicle, you don't need to receive permission from another party to remove your name. However, if the title says "And" only, you need permission from the other party on the vehicle title. If a name is listed with the word "And" and is followed by another name, this means that both parties have legal ownership of the car.

If yours is the only name on the title, no further permissions are needed. You may receive permission by asking the other party to sign a title and registration application, available from the your state's department of motor vehicles.

Signatures

Sign your name on the back of the car title to release the car title from you to another person. You can fix mistakes you make when signing your name; however, don't scratch out these mistakes. Instead, simply draw a line through your name and re-sign it. Scratching out a mistake may lead a DMV employee to believe that you've scratched out something important or that you're trying to hide something that was written.

Registration

Simply signing off on the title doesn't immediately release you from all obligations associated with owning the vehicle. The person to whom you sign over the title must register it with the department of motor vehicles in your state so that the title is now in his name and no longer under your name.

Gifting a Vehicle

If you plan to gift a vehicle to another party, there's additional paperwork that you must fill out. Your state's department of motor vehicles requires that you fill out a gift affidavit, which includes information concerning the worth of the vehicle, its make and model and its VIN.

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Options for Refinancing a Car

Refinancing your car loan offers the opportunity to lower your car payment or save money over the term of your loan. You may be able to lower your interest rate, change your loan term or provide a down payment to lower monthly payments. Before applying for a loan refinance, determine if the option is beneficial.

Resources

Apply for your refinance at any bank or credit union that offers car loans. Check interest rates before choosing your car loan provider. Many lenders advertise rates on their websites. Credit unions or nationally based lenders with a local presence likely exist in your area. Online lenders without local presence are also available. If you don't find used-car rates advertised on lender websites, call to verify. Some lenders may have term or down payment restrictions depending on the age and mileage of the vehicle you want to refinance.

Term

You can change your loan term when you apply for refinancing. Most lenders offer a 24- to 72-month loan option, although rates increase for terms beyond 60 months. Because your balance has likely decreased over the term of your current loan, it should prove beneficial to obtain a shorter loan term; your payment should remain the same or decrease. Use an auto loan calculator to view monthly payment differences for rates and term options. Also, view your overall payback amount to determine which term is most beneficial.

Down Payment

You can offer a down payment toward your loan refinance, which decreases your monthly payment and overall loan payback amount. If you paid off half of your car loan with your current lender, you would not see a difference in monthly payment, although you would pay off your loan early. You may be required to provide a down payment if your current loan is relatively new. Most lenders offer 60 to 120 percent of vehicle value, based on credit rating and vehicle year, make, model, options and mileage.

Rate Considerations

If rates have decreased since your original loan, refinancing can save you money. If you didn't originally obtain a good rate on your current loan because you were unprepared, uninformed about rate options or had credit issues, you can save thousands if your credit has improved or your credit qualifies for a better rate. If you are experiencing financial hardship, you may want to pursue a loan that allows you to extend your term without necessarily lowering your rate. This way, you can lower your monthly payment even though your rate may cost you more in the long run.

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Buying a New Car Vs. Old Car

Various vehicle options exist for new or used car purchases that can suit your budget. Depending on the vehicle you choose, you may find that prices for new and used cars are somewhat competitive. Before pursuing a vehicle purchase, determine your vehicle needs and overall costs of ownership.

Price Comparisons

Research pricing, safety ratings, fuel economy, specifications and values at manufacturer websites for new cars. Use Edmunds.com or the Kelley Blue Book website to obtain used car information. You may find that a particular SUV costs over $30,000 brand new but only $20,000 if used. Manufacturers' websites also list any discounts or special rates. Also compare competitors' vehicles. For example, a Honda Civic may be priced higher than a Nissan Versa, although both offer comparable room and options.

Warranty

Details for new-car warranties are advertised on manufacturer websites. Used-car information websites offer information on original factory warranty time periods. Even if a used car has had multiple owners, the factory warranty transfers to the car's new owner. Consider your vehicle's warranty, which can save you money if you need repairs. You can always purchase an extended warranty for a used car, although doing so adds money to your purchase price. Consider the total cost of a used car if purchasing an extended warranty to fairly assess cost differences between new or used options.

Leasing Option

Leasing is available for new cars, which may prove beneficial if you traditionally trade out of your car every 3 years and don't drive more than 15,000 to 18,000 miles per year. Leasing allows you to drive a new vehicle under warranty, which you can return to the bank at the end of the contract term without concern for market value. Term and mileage restrictions apply. You are free to lease or finance a new vehicle once your contract is satisfied. Leasing options for used cars are rarely available, and if you can pursue the option, the payment is often more expensive than financing. If leasing a brand-new car, expect to pay less than a comparable finance.

Insurance

Lenders require a full-coverage insurance policy during the term of your loan. Banks also require a lower deductible and higher bodily injury and property damage coverage than your state requires, which increases the cost of your insurance. Leasing banks often require you to purchase gap insurance, which pays for the difference between the vehicle's payoff balance and insurance payout amount in the event of a loss. Talk to your insurance agent to determine cost differences for any vehicles you're considering.

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Borrowed Car Agreement

Borrowed-car agreements are used frequently at car dealerships to allow prospective car buyers the option of borrowing the car they are contemplating purchasing. The agreement allows the buyer to borrow the vehicle for a specified period.

Purpose

A person deciding to purchase a car may ask the dealer if it offers borrowed-car agreements. Such an arrangement allows a person to take a car home for the night or for a specified amount of hours. This time allows the buyer to decide if the car is something that is really needed and suitable for this person's needs.

Details

A borrowed-car agreement states the customer's name, address, insurance company name, insurance policy number and the customer's driver's license number. It lists the vehicle's description and Vehicle Identification Number. It outlines the agreement between the dealer and the customer and lists fees if the contract is violated. A car inspection form is completed by the borrower and the borrower then signs the contract.

Benefits

Borrowed-car agreements allow customers to avoid buyer's remorse, the syndrome people feel after making an impulse purchase. This also gives the customer time to negotiate prices and get a feel of the vehicle.

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Does Paying Off an Auto Loan Earlier Improve One's Credit Score?

Credit bureaus use five distinct categories to determine your credit score, which lenders use to determine your creditworthiness. Payment history, outstanding debt, length of credit history, new credit applications and types of credit are the five categories that determine consumer credit scores, and some categories carry more weight than others. The benefit of paying off debts such as car loans ahead of the amortization schedule depends on the other type of credit accounts you have and the amount of money you owe on those accounts.

Payment History And Length of Credit History

The length of credit history and your payment history combined account for 50 percent of your credit score. Making timely payments on your credit accounts is a key factor to boosting your credit score. In addition, continuing to pay long established counts not only shows that you have a good payment history for specific loans, but this shows that you have a track record of making timely payments across the board for all of your debts. So, if your car loan is one of your oldest credit accounts, paying of the loan will cause this portion of your credit score to decrease.

Credit Account Types

The type of credit or loan account you own make up 10 percent of your credit score. Banks and credit bureaus not only like to see a stellar payment history, but they also look for varied types of credit accounts. The reason being, if you can pay varying types of loans in a timely manner, this shows that you can handle all of your bills responsibly. Because car loans are paid in monthly installments, similar to mortgage loans, these accounts are considered installment accounts. If the only other type of debts you owe are non-installment accounts, paying off your car loan early could lead to a dip in your credit score.

Outstanding Debt

The outstanding amount of money you owe on credit accounts makes up 30 percent of your credit score. For this portion of your credit score, scoring models tend to assess how much you owe on a particular account in comparison with the account's credit limit. Since you can't borrow against your car loan continuously like a credit card, paying off your car loan early could boost this portion of your credit rating, especially if your total outstanding debt is considerably high.

Savings Considerations

If your car is old or in poor condition, or your car loan is your highest interest loan, paying of the debt early will help you save money. Using extra money to pay off your car loan early is comparable to investing the money at an interest rate similar to your car loan. In addition, paying off your car loan early can help you reduce the amount of insurance coverage required on for your car, saving you even more money. However, if you must pay your car loan off early, wait 12 to 24 months to capitalize on the credit amount on the account.

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How to Add a Lien Holder to a Certificate of Title

A title to a car can be corrected or another lienholder added fairly easily in most states. Usually, the owner of the vehicle does not add the additional lienholder; instead the person who holds the lien will file it with the state. However, if a lienholder was omitted from the original title, the vehicle owner may have to file the amendment. It's important to get the correct forms for adding a new lienholder on your vehicle's title and to make sure the new title is clear about ownership.

Instructions

1

Contact your state's department of motor vehicles and ask for the appropriate form for amending a title. Alternatively, you can visit the department's website and download the appropriate form.

2

Fill out the form completely. In Massachusetts, a Title Amendment Form is required and must include the registration number of the vehicle as well as the year, make and vehicle identification number. Include the original title number and the contact information for the vehicle owner.

3

Add the name of the additional lienholder, their code, if applicable in your state, the date of the lien and the address of the lienholder.

4

Provide the address to which a new copy of the title must be sent.

5

Fill out another title application if your state requires it, as in Texas.

6

Attach the original title to the form and either mail them into the motor vehicle department at the address indicated on the form or bring it into a branch in person.

7

Pay the appropriate fee to add the lien holder. In Massachusetts, this is $25 and in Texas it's $33. Check with your state to find the correct fee amount.

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Auto Refinance Options

You have several options available to you when refinancing your loan. You can ask your lender for lower rates and loan incentives and you can alter your loan term and provide a down payment. Before you apply for a car loan refinance, determine which loan factors you can change to obtain a more affordable loan.

Auto Loan Provider

To refinance your car loan, you can choose whichever lender you'd like. Rates vary for used car loans, so check websites of local and online auto loan providers or credit unions. If you choose a local bank, you may want to choose one with incentives for banking or holding a checking account; most banks require borrowers to open a checking account to initiate a loan. Look for incentives like an automatic monthly payment option; some lenders offer up to a one-point interest rate deduction.

Term

You don't have to apply for the same term that you have left on your auto loan. You can increase your loan term to lower your car payment if necessary. If you can obtain a significantly lower rate than you currently have, you may be able to shorten your loan term and pay the same or less of a monthly payment. Shortening your loan term also results in a decrease in your overall loan payback amount, which is worth consideration if you don't plan to pay off your loan early.

Down Payment

If you have extra money to put toward your refinance, do so to lower your payment and overall loan payback amount. Every $1,000 you offer toward your down payment results in roughly a $20 monthly payment discount per month. Use an auto loan calculator to determine the differences a down payment makes to your monthly payment and loan payback amount. Edmunds.com offers several free calculators. You may find that a several thousand dollar down payment allows you to decrease your term while still providing an affordable payment.

Considerations

Your auto loan provider may approve your loan but restrict your options. If your vehicle's value is less than your requested loan amount, you may not obtain an approval for the amount for which you apply. In this event, your lender will require a down payment. If your credit has suffered since your original loan, you may find that the lender restricts your term or raises your rate, which effects your monthly car payment. Based on your current credit or vehicle value, it may prove beneficial to keep your current loan and refinance at a later date.

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How to Renegotiate Auto Financing

There are two options for financing an automobile: Purchase financing in which the consumer takes out a loan to purchase the vehicle, and lease financing, where the consumer leases the vehicle for a predetermined term. In the former instance, the consumer incurs the depreciation of the vehicle and must cover any repairs or maintenance not included in the purchase--while in the latter, a consumer is shielded from depreciation, and leasing often includes maintenance but has limitations on mileage.

In either case, a consumer may renegotiate their form of financing by requesting a change of terms, temporary suspension of payments, or both.

Instructions

1

Determine the value of the vehicle. The value of a vehicle can be determined by visiting auto value websites or by reading schedule books that establish value based on make, model, year, mileage, condition and ratings comparability to class and trim models.

Because cars always decrease in value through wear and tear depreciation, the vehicle will not be worth the price you originally negotiated before securing purchase financing or lease financing. In the event you cannot successfully renegotiate the financing, selling the vehicle may be an option.

2

Contact the lender. Lenders should be contacted as soon as the vehicle owner is aware that present or near future circumstances will not allow them to keep current on their lease or auto loan. (Consumers should note that most lease or purchase financing institutions will not renegotiate a lease or auto loan that is current but will have options once payments fall in arrears.)

3

Renegotiate the financing. Your lender may have options for accommodating your particular situation. Most financing institutions have "hardship" option that allows a lessee or borrower to miss up to three payments and defer those payments to the end of the financing term. For leased vehicles, a "market adjustment" option might be available. In instances where a lease was recently taken and the market fluctuates downward, the lease financier can readjust the lease amount to be in-line with the new market value. Another option may be to extend the term of the lease or finance loan. Extending the term will mean a longer commitment, but will also lower the monthly obligation of the consumer.

4

Refinance the vehicle or terminate the lease early. Purchase finance consumers should seek to refinance the vehicle for a better interest rate, thereby lowering their monthly payment obligation. Lease consumers may inquire as to early lease termination. Early lease termination will include early termination fees and may also appear as a repossession on the consumer's credit report because it is a form of repossession.

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