Options for Refinancing an Auto With Bad Credit

Refinancing your auto loan requires you to transfer the balance of your current loan to another auto loan provider. If you have bad credit, refinancing might not prove worthwhile. Consider the problems you might face when trying to refinance and how you might overcome approval issues.

Traditional Lender

Your credit might not be as bad you think. If you've consistently paid your current auto loan on time, you may have improved your credit score. Apply to a lender in your area, such as a bank or credit union. If your credit has improved, you might obtain a loan approval with a better interest rate, which can save you thousands of dollars over the term of your loan. Check the websites of lenders in your area to obtain interest rate offers for used car before deciding where to apply.

Subprime Lender

A subprime lender offers more leniency for bad-credit borrowers. You don't necessarily need good or excellent credit for approval, although some established credit is often required. A subprime loan often requires higher interest rates and loan restrictions. You might have to pay a large down payment money and borrow for a short loan term to increase your vehicle equity and decrease the lender's risk. Because of the higher interest rate and shorter term that subprime loans often entail, you're likely to pay a higher monthly payment amount and increase the total payback amount of your loan.

Co-signer Option

If you don't want to use a subprime lender or couldn't obtain a loan approval from any lender, use a co-signer. A co-signer secures a borrower's auto loan, resulting in lower interest rates and less loan term restrictions. Your co-signer should have good to excellent credit and verifiable income. Co-signers are equally responsible for a loan, so finding one might be difficult. If you default on your refinance, your co-signer's credit will also suffer. Ask a close friend or family member to co-sign your loan and apply to a lender with low rates.

Considerations

If you're currently behind on your car payment, you aren't likely to obtain an approval for your refinance. Before applying, pay your past due car payments, as potential lenders aren't likely to approve a new loan while other loan balances are past due. If you obtain a loan approval with a higher interest rate than you currently pay, the refinance is probably not worthwhile. Unless you're about to lose your vehicle to repossession, stay with your current loan provider until your credit improves.

Read More

How to Get out of Car Debt and Get Rid of Car Payments

Did you know if you invest the amount of an average car payment each month during your working lifetime, instead of paying a car payment to the bank, that at retirement you'd have well over one MILLION dollars? Are car payments keeping you from becoming a millionaire?

Instructions

1

Open a savings account for a car purchase.

If you are not currently making a car payment but you will need a car in the future, start saving now. Just a few thousand dollars in the bank in a "car fund" will give you enough money to buy a used starter car. It might not be pretty, but do you really care when you think about your future million or so dollars?

Once you have saved your few thousand dollars (anywhere from three to five thousand will buy you a very decent vehicle if you take a little time and shop around), keep it in the bank until you need it.

2

Purchase your used starter car and maintain it very well.

And, start right away putting money in the car fund again! In a couple of years, you'll have enough that by selling your current used car and adding what you have in the car fund you can "trade up" to a better used car and pay CASH to do it! And it will feel great!

3

Keep flipping those cars!

You can do this car flip as many times as you want and end up driving slightly used luxury autos if that's your thing. Do you know that most millionaires don't buy new cars from dealers? The reason is that the cars drop so quickly in value that they just aren't worth it. Smart wealthy people buy one or two or three year old "barely used" vehicles at a fraction of the cost of new.

4

Don't panic.

If you are currently making payments on a car, don't despair. You can get on the millionaire wagon by paying off your current car as quick as you can and then never buying a car on payments again!

Read More

Can Unmarried Couples Be on the Same Car Insurance?

Married couples have the ability to secure one common auto insurance policy instead of getting separate coverage. However, if you and your partner are not yet married but drive the same household cars, you may wonder if that would apply in your case. Do not immediately assume that you can't -- call a few insurers to investigate whether you can establish a shared policy.

Unmarried Couples

If a boyfriend and girlfriend who live in separate households attempt to get a shared car insurance policy, it is unlikely to be approved. Insurers will usually only consider adding multiple people to a policy if they share an address. So if the two individuals live in the same household, they may be able to get the same insurance policy with the required coverage for their vehicles.

Benefits

When a couple combines policies, they may enjoy a lower premium compared to taking on two separate policies. Both parties can also take advantage of the same discounts. For instance, if the primary policy holder has different types of insurance under the same company, he may qualify for a multiple policy discount, which his partner would benefit from as well. Some insurers also offer a special discount due to multiple automobiles listed on one policy.

Potential Downsides

Though a shared policy may offer benefits at first, it can also become a burden. If one half of the couple experiences incidents, such as moving violations and accident claims, that could drive up the auto insurance premium cost for all parties involved. Also, if one person has bad credit or previous driving record issues that could cause a higher premium or inability to secure the policy at all.

Other Considerations

Not all insurance companies allow this type of arrangement. Some insurers may prefer a couple who is legally married. So the unmarried couple has to shop around and use online quoting services to get a wide selection of options. If allowed, the parties must also agree on which person will take on the role of the primary policy holder. In many cases if the primary policy holder decides to cancel, the entire coverage plan ends and the other person must establish his own separate car insurance policy.

Read More

How to Take Over a Car Payment After a Death

When someone dies and leaves a car with an attached loan, the vehicle generally becomes part of the estate. If no will exists and the matter is not taken to probate court, you can usually become the owner of the vehicle. However, it is not as simple as sending in the payments from your checking account to the lender. Lenders do not simply add someone to an existing loan. Instead, the loan must be paid off and a new loan started.

Instructions

1

Look over the car loan documents to see whether it is listed as a joint account. If you applied for the loan with the deceased, your name is already on it. This means that you can make the payments with no other actions necessary.

2

Contact the lending institution if you are not listed on the loan documentation. Inform the representative of the death and of your intentions to continue paying on the vehicle. The representative might request that you fax over the death certificate for their records, which allows them to change the title. Before ending your conversation, ask for the payoff amount on the loan.

3

Submit a used car loan application with your local bank or other financial institutions for the amount of the loan payoff. You can even apply through the same lender as the deceased person. Information needed for the loan information is typically your name, address, date of birth, Social Security number, employment details and income information.

4

Once you are approved for a loan, use the new car loan to pay off the deceased person's car loan. This closes out that loan. You now make the car payments to the new lender for the vehicle.

Read More

Car Buying Behavior

Buying a car is a weighty decision, and many factors are involved in reaching that decision. For the car buyer, it is an individual decision, reflecting on his priorities. Some buyers value cost over safety, while others place an emphasis on style and comfort over economy. Knowing how people reach the decision to buy a car helps dealers and manufacturers develop future automobile strategies.

Groups

Understanding car buying behavior among certain groups helps businesses develop marketing and sales strategies. For example, if a trend among Hispanics reveals Hispanic buyers tend to gravitate towards imports in automobiles, dealers in predominantly Hispanic areas might steer inventory in their car lots to imports, rather than domestic automobiles.

Reliability

One factor car buyers consider is the reliability of the car. Companies such as Consumer Reports send out annual questionnaires. Consumers answer a series of questions about their current cars, and the results are published online and in print. While there are no guarantees a make and model will be reliable, viewing the histories of the car and manufacturer in question help provide a guide to reliability. Naturally, car buyers look to have reliable vehicles when looking to purchase a car.

Cost

Price is a paramount consideration in car buying behavior. In the "TRUECar Online Automotive Behavior Report" for 2011, nearly 90 percent of those responding to the survey ranked knowing what others paid for the same car would be useful in making a decision about buying the car. In the same survey, when choosing a dealership, price was the overwhelming factor used to pick a dealership, with nearly 80 percent listing that as the most significant factor in finding the right dealership.

Negotiations

Another aspect of car buying is haggling. In the TRUECar Online survey, over 90 percent of the respondents thought it valuable if dealers provided a solid, "no haggle" price for the buying process. Although haggling will likely always remain a part of the car buying process, having a solid foundation on which to stand could improve the process.

Purchasing Options

When examining car buying behavior, potential buyers examine purchasing options. Some buyers only want new cars, while others, desiring to save money, choose used cars. In addition, looking at the advantages and disadvantages of leasing versus buying the new cars is a consideration.

External Factors

Outside events also affect car buying behavior. When the price of gasoline rises, smaller, more fuel-efficient car sales increase. Buyers looking to purchase a status symbol might buy a less fuel-efficient car as a sign of wealth.

Read More

How to Get Approved for a Car Loan With a Cosigner

When you have your heart set on a new car, the last thing you want to hear is that your loan application was rejected. However, it does happen due to poor credit or a lack of credit history. The good news is that the lender may still approve you if you have a co-signer. A co-signer serves as the guarantor and tells the lender that regardless of what happens, the co-signer will repay the loan if you cannot. Co-signers lessen the risk a lender takes on.

Instructions

1

Review your credit score; get a free copy at AnnualCreditReport.com. If your credit score is significantly below 600, take steps to improve your score before you apply for a car loan. If your credit score is 400, for example, even a co-signer is unlikely to get you approved for a loan.

2

Determine who you should ask to co-sign. The co-signer must have good to excellent credit, which is typically considered a score of over 650. Tell the co-signer that his signature guarantees he will repay the loan if you cant. Explain that any late payment made by you also reflects as a non-payment on his credit report.

3

Apply for a personal loan or an auto loan. If youre buying a used car, and youre applying for a loan through a credit union or bank, you may have to apply for a personal loan if the car is more than 10 years old or has high mileage. Personal loans typically come with higher interest rates, but your car doesnt serve as collateral, which means the lender cannot take your car should you default. The co-signer must still repay the loan if you default, however.

4

Offer a larger-than-normal down payment if the lender rejects your initial loan application with a co-signer. A 20 percent down payment is standard. Offer a down payment of 30 percent to 35 percent if the lender rejects your loan application. A larger down payment pays for depreciation and also makes the lender more willing to give you a loan, because the lender isnt risking as much money.

Read More

What Does the Maturity Date on a Car Loan Mean?

The maturity date on a car loan refers to the date when the finance contract expires and the loan is paid off. The maturity date is the final payment date. When referring to auto loans and leases, the maturity date is fixed, meaning the date the loan or lease reaches full maturity is set at the start of the loan.

Significance

The maturity date for an auto loan or lease is the final time you must pay the lender. In the case of an auto loan, you will own the vehicle free and clear upon the completion of the finance agreement. On an auto lease, the maturity date refers to the final date by which you must return the leased vehicle to a dealership.

Ending a Loan Before Maturity

To end an auto loan before the maturity date, you must pay the remaining balance on the loan, plus any accrued interest that is not yet repaid. Contact your finance company to get an updated payoff amount before you send in a check to end the loan early. Most lenders provide a 10-day payoff, which means the amount quoted is valid for 10 days from when it was quoted. If more than 10 days elapse, you will be required to pay a per diem amount to cover interest for each additional day.

Ending a Lease Before Maturity

Ending a car lease before the scheduled maturity date requires paying the early termination amount to the leasing company. The early termination charge includes all remaining lease payments, plus a disposition fee assessed by the leasing company. If you consider terminating a lease shortly after starting it, you may be surprised to learn that the payoff amount is very high. For example, if you have a 36-month lease with $200 monthly payments, after one year of payments the early termination would still be $4,800.

Extending the Maturity Date

Although no consumer wants to spread out his debt over a longer term than necessary, you may need to delay the maturity date of your loan or lease for financial reasons. If you have missed payments on your loan, the finance company may tack those missed payments on to the end of the loan by extending the term. You may also choose to extend your lease in the hopes that lease deals improve in the coming months. A dealership cannot help with extending your lease, so you must contact the lessor to determine if lease extensions are available.

Read More

4 Key Questions You Need to Ask When Buying a Car

You won't regret a purchase later if you ask certain questions while car shopping. You must research the car, set spending limits, define needs and evaluate the seller before finalizing the deal to make sure you do not spend too much or end up with a car that needs costly repairs.

Who Owns the Car?

A car at a dealership may appear to belong to the dealer, but that is not always the case. Dealers sometimes sell cars for people they know, other dealers if sharing lot space or car rental agencies. Ask who owns the car, how long it has been at the lot and what the former location was. Cars from rental services typically experience heavy use in a short period of time, so consider a purchase of a former rental vehicle carefully.

What's the Vehicle History?

Ask for the car's certified history report or the Vehicle Identification Number to check the vehicle history. Visit the official website of the National Motor Vehicle Title Information System, a website maintained by the U.S. Department of Justice, to check the VIN at an approved online provider for free. A full history shows you where the car has been, maintenance and repair logs, and any accidents. Note odometer readings to protect against mileage fraud, in which the seller turns back the miles on the odometer to increase the car's value. Ask about the car's features if you want a particular option, such as power windows.

Why Are You Selling?

A vital question for private-party deals, asking why a seller is getting rid of her car can reveal past or current problems with the vehicle. Pay attention to hesitation and body language when she responds, as nervous or evasive behavior may indicate an undisclosed problem. She may mention accidents or other red flags that relate to her decision to sell the car and signal potential problems for you down the road.

Am I Comfortable with the Purchase?

Feeling uncomfortable, pressured or like the seller or salesman is not being truthful with the car's price, current state or history is a bad sign. Do not buy a car because of pressure sales tactics or you may end up with a lemon. Set a maximum price before shopping to avoid buying a car you cannot afford, and pay special attention to cars with features you want.

Read More

Is it Worthwhile to Buy Extended Warranties on Cars?

Facing unexpected and expensive vehicle repairs can happen to anyone, as the owner is responsible for vehicle repairs outside of the warranty period, even if parts become faulty through no fault of their own. Not having adequate protection in place can potentially cost you thousands. To avoid this situation, consider the benefits of purchasing an extended warranty.

Manufacturer's Warranty

Check how long the manufacturer's warranty lasts. Usually two are standard: a powertrain and a bumper-to-bumper warranty. The bumper-to-bumper warranty, which often runs for a shorter period than the powertrain, covers just about any vehicle items that are not maintenance or bodywork related. Examples of maintenance items are brakes, rotors and windshield wipers. Major components of the engine and transmission are covered by the powertrain warranty. Even if you buy a used car, the remaining mileage and years left on the original warranty still applies to the vehicle.

Extended Warranty Benefits

If the vehicle you purchase will be running out of its manufacturer's warranty while you own it, purchasing an extended warranty has its benefits. Car repairs are expensive and often unexpected, which can leave you without a car. Should you need to shell out hundreds or thousands of dollars, you'll be happy to have an extended warranty in place. The cost to purchase a warranty is around $1,000 and up, although the cost is usually made up if repairs are needed.

Vehicle Intentions

Consider the manufacturer's warranty period and how long you plan to keep the car. In the event that you want to lease a new car for 36 months at 12,000 miles-per year, you will be covered by a warranty already. Many warranty companies require owners to purchase coverage before the vehicle runs out of the manufacturer's warranty, and it is cheaper to purchase one while the odometer miles are low. If you plan to keep the car past its warranty period, it is beneficial to have an extended warranty in place as soon as you can purchase it.

Other Considerations

Extended warranty companies differ. Ask the warranty provider where you can take your car for repairs; some require you to return to a same-make dealership to complete repairs. Others allow you to take the car to any authorized shop. Ask about your deductible, as well. If you lower your deductible, the policy costs more, but it may not make sense to purchase a warranty and then find you need to shell out money for repairs anyway. Choose a low deductible or none at all, otherwise your warranty may not cover the repairs you need.

Read More

What Are My Rights When Buying a Car?

In a perfect world, when you go to buy a new or used vehicle, all dealers and private sellers seek your best interests instead of just profit. The reality is that while most dealers and sellers treat customers fairly, some aren't above acting as con artists. Understanding your rights as a consumer can protect you from possible abuse.

Good Title

When you purchase a vehicle, you have a right to a clear or "good" title. This means that you can prove that you (or your lender) are the owner of the vehicle. This is important, because you need a title to register your vehicle, and in most states, to sell it, too. Having the title also prevents anyone else from asserting ownership of the vehicle, which means you legally can list the vehicle properly as an asset.

Warranties

When you purchase a new vehicle from a dealer, you have a right to a warranty through the manufacturer or dealership. The warranty essentially guarantees that the vehicle will be in working order and that it should not have unexpected repair costs. If you buy a used vehicle, dealers may sell the car without a warranty, but they must post a Buyer's Guide on the vehicle and check the "As Is -- No Warranty" box. If you buy the car with this box checked, you accept responsibility for the vehicle's condition.

Accurate Data

As a car buyer, you are entitled to accurate data about the vehicle you're acquiring. This includes information about the condition of the vehicle (this usually is detailed in the warranty, if applicable), the price, the odometer reading and number of previous owners. Car sellers should not misrepresent the vehicles they plan to release. You also have a right to know your credit score and how your dealer is using the score to determine your financing options.

Cooling Off Period

In some states, you may be entitled to a cooling-off period. This means that you can return the vehicle and cancel your contract without penalty if you have buyer's remorse. Depending on the state, the cooling-off period may be anywhere from 48 hours to one week. Some states, such as California, offer cooling off periods, but only if you purchase the option with your sales contract, and in some cases, the cooling -off period applies only to used vehicles. You should check with your local department of motor vehicles if you aren't sure of the laws that apply in your state.

Read More

End of Auto Lease Secrets

You might be able to get out of your lease contact early and penalty-free if you plan to purchase or lease again. If you plan to purchase your lease, you may save money by choosing a competitive interest rate from a different lender. You can save money in various ways at the end of your contract, whether you want to return the lease for another vehicle, purchase it or walk away.

Purchase Considerations

Plan ahead for extra fees you'll pay if you want to purchase your lease at the end of your contract term. You can buy the car for the amount stated in your contract as your last payment amount, or lease buyout price. Your leasing bank owns your vehicle until you purchase it, so expect to pay taxes and necessary state fees on top of the vehicle's purchase price. Depending on the price of the leased vehicle and where you live, taxes and fees can add thousands of dollars to your buyout price.

Purchase Options

Some buyers believe that going to the original purchasing dealership to complete a lease buyout is the only way to purchase a lease. Avoid this, if possible. Some leasing banks allow dealerships to increase the price of the lease purchase price to make a profit. Call your leasing bank directly to obtain exact purchase figures. You can then finance the buyout amount anywhere you wish; you do not have to use a dealer. Leasing banks offer competitive interest rates for new cars and lease offers, but when it comes to used cars, you're likely to find a better interest rate elsewhere. Shop interest rates to determine where to finance your purchase.

Optional Inspection

Some leasing banks require a vehicle inspection before the end of the contract term. Even if an inspection is not required, you can call your leasing company or a same-make dealer to arrange an optional inspection. During the inspection, a bank representative checks your vehicle over to determine if your car needs repairs or if you have exceeded your lease wear-and-tear fees. Even if you find that you have to pay your bank for loss of value, you can budget for the costs ahead of time. You'll also have time to fix or repair any issues with your vehicle to avoid charges.

Early Termination

You may not have to wait until the end of your contract to return your lease. Many leasing banks allow lessees to turn in a lease penalty-free if the person buys or leases again through the same bank. So, if you planned to shop a same-make vehicle, you may not have to wait until your contract ends. Call a same-make dealer or your leasing bank to find out about special lease-end offers. Some banks allow up to a one-year early termination period. Some competitors offer the same incentives if you plan to purchase or lease a different make vehicle. If you plan to shop a different manufacturer, ask a dealership if it has any offers to help end your current lease.

Read More

New Car Buying FAQ

Buying a new car is a major investment, and it helps to have your questions answered before you head out to the dealership. New cars can come with rebates and incentives, but they can also come with additional fees if you are not careful. Take the time to do some research on how to buy a new car before you try and tangle with a car salesman.

What Car is Best for Me?

Talk to family and friends about their cars and evaluate the feedback you get. Read about the newest models and features in car-buying magazines and on car-buying websites. Online resources such as Edmunds.com can provide advice on comparing models and features. Understand the differences between the various models before you set out to test drive anything.

Should I Trade in My Old Vehicle?

When you trade in your vehicle you will get what is referred to as the trade-in value for it. The trade-in value can be different among dealerships but, as a general rule, you can get more for your vehicle if you sell it on your own. If you still owe money on your vehicle, don't trade it in; if you do, the dealership will roll the pay-off amount into your new car loan. This means the remainder of your old loan gets added to your new loan and raises the cost of your new vehicle.

Should I Finance Through the Dealer?

This depends on the deal being offered by the dealership. Some auto sales incentives include financing with very low interest rates. As long as there are not any additional fees loaded into the deal, you can save money. That does not mean you should not shop around for financing. Get pre-approved by your bank so you understand your spending limit and your monthly payments, and then ask the dealer to beat your financing. Either way, you stand to get the best deal possible.

What Price Should I Pay?

The retail price will be listed on the sales sticker in the car window, and that is the price the dealer will try to get you to pay. Ask to start negotiating at the dealer invoice price. You can find invoice pricing at websites such as Cars.com and others like it. The dealer may supply you with his invoice price, or he may refuse to show it to you. The dealership needs to make a profit to stay in business, but if the salesperson will not start negotiating at the invoice price, find a new dealership.

Read More

Auto Financing or Pay in Full Advice

The process of buying a car might be complicated, with small and large decisions alike. Decisions range from choosing a reliable model and picking a color you like to deciding how you want to pay. Both new and used cars can represent major financial decisions, and the financing you arrange will further contribute to the total cost of your car.

The Difference

Many car buyers, especially those interested in new models, finance their purchases. Auto dealers work with banks and commercial lenders who offer auto loans that buyers can pay pack over an extended period of time, usually about five years. The lenders charge interest but allow drivers to spread out the cost of a car and make a down payment.

When you pay cash for a new or used car, you forgo paying interest. This may save you money in the long run but also requires ample savings and takes away money you could invest or spend elsewhere while paying off your car if you financed.

Interest Rates

Interest rates have a significant impact on the cost of financing a car. Lenders typically offer their lowest rates to buyers with excellent credit scores. If you have bad credit you can expect not to qualify for the lowest advertised rates. Auto dealers and lenders also work together to offer low interest rates as promotional deals. For example, a dealer may be able to secure a low interest rate for certain models that aren't selling well or for certified pre-owned vehicles that carry an additional warranty.

At the same time, investment interest rates vary over time. If you have a savings account or certificate of deposit, compare its interest rate with the rate you would pay on a new car. If you can earn enough interest from your investment to cover the interest on your car, you're better off leaving your money in the bank and financing the vehicle.

Considerations

Paying cash for a car gives you freedom that you won't have if you finance. For example, the lender might require you to carry more insurance than your state requires. This will cost you more each year in insurance premiums, adding to the total cost of ownership. You'll also need permission from the lender before you sell or trade in your car, which isn't the case if you pay cash and own it outright.

Tips

If you can afford to buy a reliable used car without financing, this is likely your best financial option. Compare loan offers from multiple sources and don't assume that the dealership's preferred lender offers the best rates. If you feel comfortable borrowing from family or friends, ask for a low-interest loan that will save you money on financing and allow you to pay cash to the dealer. Whatever you choose, don't discuss financing or payment information with the dealer until you've negotiated a price. If you reveal the fact that you plan to finance, the dealer may focus on your monthly payment, which is easy to manipulate while obscuring the actual price you'll pay for the car.

Read More

How to Rent a Motor Home

Traveling in an RV is an excellent way to get to your destination, whether you are vacationing with your family, attending a business meeting with work colleagues, or headed to your band's next gig. An RV provides plenty of space for multiple passengers and lots of room to stretch your legs, use the restroom, take a nap, or watch TV while you're on the road. In most states, renting a car or truck is fairly simple. The process for renting a motor home is similar, but may require a little extra leg work.

Instructions

1

Determine what size motor home you may need. A number of different sizes are available for rental. Some motor homes are designed to comfortably fit about 4 or 5 individuals, while others are much larger and can comfortably accommodate as many as 8 to 10 individuals. Consider how many individuals are in your party, and whether you will be sleeping in the motor home.

2

Make a list of any additional equipment or conveniences you may need to rent in addition to the RV itself. In most cases, you can also rent a vehicle trailer to tow a car or van, and you may need to request a separate rental for a generator if you planned to stay overnight in the RV.

3

Look in your local business directory for an RV Rental agency located in your area. Go online and search for motor home rental websites, if there are none listed in your business directory. Sites such as getrv.com match RV owners with those who need to rent a motor home. Call the RV rental agency, or search the online database to determine if the rental company has any motor homes available that might suit your needs. Inform the representative of how many members are in your party, how long you'll need the rental, whether you will require power or an overnight stay in the RV, and any other requirements you may have.

4

Verify the rental requirements with the RV rental agency. Typically, all you need is a valid driver's license to drive an RV, but according to privatemotorhomerental.com, you must also be at least 25 years of age to rent a motor home. RV rental requirements vary depending on the agency's rules. In most cases, you will be asked to pay the rental fee using a credit card or traveler's checks, and you may also be required to submit a security deposit, proof of insurance, and a copy of your driver's license.

Read More

How to Get Your Ex-Spouse's Name Off Your Car Loan

Dividing property and debt during a divorce is difficult and often emotional. Parting ways with respect to joint loans is even more challenging. Perhaps a divorce decree stipulates that one spouse keeps the car and assumes the loan payments. One of the problems with joint loan debt in a divorce is that you both signed the loan contract and agreed to the auto finance company that you would make a set number of payments for a set amount of money. A divorce does not remove you from that binding contract, no matter what your divorce decree says.

Instructions

1

It is possible to refinance the loan under your name. Refinancing not only puts the loan solely in your name, but it also may result in a more favorable interest rate and lower monthly payment. You will need to be able to qualify on your own based on your personal credit history, which of course includes other joint debts incurred during the course of your marriage.

Be aware that modifying or refinancing the loan requires all parties to agree. This includes your spouse.

2

Secure a personal loan through your financial institution that you can use to pay off the loan in its entirety. If the current auto finance company is not willing to work with you to modify or refinance the loan, the next best option may be to obtain your own financing. This is not without its complications, as you will need to be able qualify based on credit and collateral, which is sometimes tricky during a divorce.

3

If all else fails and you are not able to remove your former spouse from your loan, continue making the payments and be aware that your default or late payments affects his credit too. Pay the loan off as quickly as your are able.

Read More

How to Break an Auto Lease

Leasing is a financing transaction where you pay for the amount of depreciation that the vehicle experiences over the time period of the lease, but the bank or leasing company keeps ownership of the vehicle. About 20 percent of all new vehicles on the road are leased, according to Kiplinger.com. Many people do not think that you can get out of an auto lease early, but with some planning, you can break an auto lease with minimal impact.

Instructions

1

Determine if you have an assumable auto lease. According to Edmunds.com, 80 percent of all leases are assumable by qualified buyers with no conditions. They estimate 10 percent of all leases can be assumed with one important condition; the original owner assumes at least partial responsibility for the lease after the transfer. Examine your lease documents carefully to see what terms apply to you.

2

Locate someone who wants to assume the lease. Many companies specialize in finding people who are interested in taking over a lease. Leasetrader.com and Swapalease.com are two examples, as well as TakeMyPayments.com. People will assume a lease because they may need a shorter term, more favorable terms or a lower payment.

3

Complete the lease transfer paperwork. Find out the requirements that the leasing company has to transfer the lease, both for you and the person assuming. They will probably want to run a credit check on a candidate. Also find out about any fees that apply to the transfer, or lease ending fees. You may want to negotiate who pays these fees.

4

Sell your vehicle outright if you can't work out a transfer of the lease. Call the leasing company, and they will give you a payoff amount for the lease. If you can sell the vehicle for that amount or more, you will be able to clear the title. If you sell the vehicle for less, you will need to arrange to pay the difference to clear the title. A local credit union may give you a short-term unsecured loan for this. Also check with the leasing company and see if they are interested.

5

Turn the keys in to the bank or leasing company. This should be looked at as a last resort; it will probably report on your credit report as a voluntary repossession, which typically has a severe negative impact on credit. A leasing contract usually states that you will pay a certain number of payments, and also that you can be held responsible for the total of all the payments. Or the leasing company will sell the vehicle at auction and try and recoup the difference from you. Either way, you will end up owing money, and they will probably use aggressive methods to collect their money.

Read More

What Happens If I'm Unable to Pay the Lease on a Vehicle?

A lease is a binding legal contract for the long-term rental of a vehicle. The lease calls for you to make timely payments as they are due. If you fail to make the payments, then there will be ramifications similar to if you do not make payments on a vehicle that you are purchasing.

Requirement for Payments with a Lease

When you finance and purchase a vehicle, you agree to pay a certain amount of money to the bank or finance company for a loan to purchase the vehicle. You can pay the vehicle off by paying the balance the next day if you like. A lease requires you to pay a certain amount of monthly payments of the specified amount. You do not own the vehicle and in theory there is no payoff amount on a lease. Most leasing contracts specify that if you default on the lease that you may owe the total of the remaining payments.

Non-payment of a Lease

You are in default when you do not make the lease payments as agreed. Expect to be contacted within 30 days of missing that first payment with a letter asking for the payment. This letter will also specify what the leasing company can do if you do not pay. In reality, the leasing company will probably contact you sooner, possibly as soon as one day after the missed payment. If you continue to not make your payments, your vehicle will be repossessed. This usually happens when you are three months past due. Late payments are reported to credit agencies as well.

After the Repossession

The leasing company may give you a certain amount of time to bring the lease current and pay the past-due payments. They probably will not accept a payment arrangement at this time and will want the past-due amount in full if they choose to do this at all. Unless it is stated in your lease agreement, they do not have to give you this opportunity. After this, the leasing company will sell the vehicle at auction.

Deficiency

After the sale, the leasing company will calculate an amount that you owe. This could be based on the total of the remaining lease payments and will also take into account the amount of the residual value on the lease. If the vehicle brings less than the residual value at auction, you may end up owing the difference between the sale amount and residual value. The formulas to calculate this amount are complex. The leasing company will probably then sue you for the amount that you owe and may pursue attachment of assets or garnishment of wages to collect.

Be Proactive

When you first determine that you are going to be late with payment, contact the lender to let them know. They may be able to defer some payments or temporarily reduce the payments. If you are not going to be able to make the payments going forward, it would be best to either sell the vehicle or find someone to take over the lease. Companies like Swap A Lease and Take My Payments specialize in finding people to take over a lease. You may be able to sell the vehicle yourself. Contact the lease company for a sale amount that would clear your obligation under the lease and to work out this arrangement. If you have no other option but to give the vehicle back, try to arrange that voluntarily with the leasing company.

Read More

How to Get a Car Title & Still Owe Money on the Loan

When you borrow money, a lender may want collateral such as a car title or a home. Lenders usually require collateral when the amount you want to borrow reaches a certain amount. Usually you cannot get your car title until your loan is paid in full. You may be able to negotiate the release of your car title before the loan is paid off. A lender may take something else of value in place of your car.

Instructions

1

Contact your lender to see what it will take to get your automobile title. Call your lender and let the financial institution representative know that you want to get your car title but you cannot pay off the balance.

2

Find out the possible solutions. Ask the lender if you can receive the car title after you make a large lump sum payment. When your loan balance reaches a certain amount, you may not need collateral or security. If this is not acceptable, ask the lender if you can refinance your loan and add a guarantor. A guarantor is a person who will make the payments if you are unable to do so.

3

Determine if there is some other item you can add to the loan as security. You may be able to use furniture, equipment, jewelry or a bank account as security in place of the automobile.

4

Work out the details with the bank. Depending on what you work out, the bank may refinance your entire loan and release the automobile title to you, based on the new collateral or security agreements. You may be able to convince the bank to refinance the remaining balance without any collateral based on your credit history and good standing with the bank.

Read More

How Long it Takes Before a Repossessed Car Is Sold

A process usually exists for a repossessed vehicle's sale. It is first taken back from the borrower and then stored until the bank's auction or resale (if it sells vehicles privately). It then takes time to sell a vehicle once it is for sale; not all sell immediately. If you're wondering if you have an opportunity to get your car back or how long it will take to receive a check for equity, you must first understand the process.

Before the Sale

To repossess your vehicle, the bank hires a repossession or tow company to collect your car. Once it is collected, it is not usually returned to the bank right away. You can expect a week's time before the vehicle is brought to auction for resale or back to the bank to be sold privately. Once the vehicle is returned, it must be prepped for resale and paperwork must be in order. In addition, the bank offers you an opportunity to get your vehicle back before the scheduled sale, usually two to three weeks after repossession.

Getting Your Vehicle Back

The requirements for getting a repossessed vehicle back differ by lender; some require past due payments, late fees and repossession cost to be paid in full before the intended sale date. Others may require you to pay the loan amount in full, in addition to these fees. If you can pay the money to get the vehicle back, you will have to go to either the auction site where the vehicle is sitting or to the bank if the bank is going to resell the vehicle itself. You will receive official notification of this information.

Notification of Sale

Once your vehicle is sold, you will be sent a letter to notify you of the vehicle's selling price. The bank sends you this notice to let you know if any money is due to you or if it owes you money. If the vehicle is sold at an auction, you can expect quite a price difference between its retail value and selling price. Auction sales warrant wholesale value, which is equivalent to a car's trade-in value. The retail value is usually several thousand more.

Money Due or Owed

Your bank should return any money due promptly. Some will send you a check with the notice of sale. If you do not receive the check, call to find out when it will come or if you can pick it up. If you owe money, you can expect collection methods to begin. If you ignore all collection attempts, the bank may sue you for the amount due. In this event, the bank may eventually garnish your wages after taking you to court.

Read More

What Is a Bad Credit Auto Loan Rate?

A bad credit auto loan is a car loan made to a consumers with a low credit score. The cutoff score varies from lender to lender; however, it's usually applicable to scores that are 620 or below. Consumers with such scores are considered subprime borrowers.

Function

A bad credit auto loan gives consumers the opportunity to buy a car when they don't qualify for traditional financing. Not all dealers offer such loans, however.

Features

A bad credit auto loan will have a higher interest rate than a traditional loan. It may also require a large down payment.

Effects

Since bad credit auto loans have higher interest rates,the loan will cost the consumer more money overall. It may also lead to bigger monthly payments.

Benefits

If a consumer makes on-time payments with a bad credit auto loan, the positive payment history can actually improve his credit score over time.

Warning

Bad credit auto loans may include hidden charges and a pre-payment penalty, which means the consumer will pay a fee if she pays the loan off early or refinances with another bank.

Read More

Procedures in Buying a Car

Buying a car typically involves more than breaking out the checkbook or credit card and driving home. Widely recognized as the second-most expensive purchase people will make beyond their homes, cars come with their own checklist that should be met before completing the credit check and paperwork that precedes driving your new car home.

New Car

Once the decision has been made to purchase a new car, buyers should determine the exact make, model, color and features desired, then explore the marketplace. The Kelley Blue Book is one of the respected sources to use in determining fair market value. Car buyers can then call multiple dealerships within their region to determine the general availability of the desired car. Those seeking hard-to-find-colors and features, for example, will find they have less leverage in negotiating a favorable price. Once the right car is found, prospective buyers can often negotiate the price by telephone or e-mail, as well as determine an approximate range for the value of any trade-in.

Used Car

With increasingly savvy buyers emboldened by both competition and the Internet, respectable used-car dealers are generally mindful of educated consumers. And used cars are widely available for significantly lower prices than new, without the inevitable depreciation to bear. According to Edmunds.com, "Even cars that are only a year old are 20 to 30 percent cheaper than brand-new cars." Once a decision has been made on the appropriate car, buyers should consult a source like Kelley Blue Book to determine the fair market value, check whether the car is still under factory warranty and secure insurance, which is cheaper for used cars. Buyers should also check the car's history by consulting a source like CarFax or the local Department of Motor Vehicles.

Leasing

Leasing a car has become an increasingly popular option. For fixed monthly payments, consumers can transition to a new car every two to four years without the extra time and sometimes hassle of selling the car or trading it in when the time comes to change. Those wishing to lease should look at their driving habits to determine the expected miles put on the car each year, then craft the lease to accommodate that. They typically come with annual mileage allowances from 10,000 to 15,000, with generally steep per-mile charges over that figure. Once determined and the desired car found, the typical credit and income checks conclude the process.

Buying

For those in a position to buy the car outright, private sellers will typically ask for a cashier's check or cash. As a buyer, it is best to take the former route to have a documented record of how much was paid and when. Auto dealers have access to various financing options, and typically provide a range of choices for buyers at the time of sale, once the car model and features have been set. Buyers would also do well to contact their individual banks to check on special auto financing rates, which are often provided to valued customers.

Buying from a commercial seller also opens up the possibility of using a credit card to pay for the vehicle. This can be convenient, although if any of those funds will not be immediately repaid, the cardholder should verify the interest rate to avoid paying far more in interest than with a traditional auto loan.

Read More

If I Have a Bad Credit Score, Can I Still Buy a Car?

Credit woes can leave you nervous at the idea of creating a new loan. Some purchases, however, do not require the use of your personal credit score. When buying a car with bad credit, there are loan programs available but you can also avoid loans altogether by considering alternative financing options.

Loans

Having bad credit does not automatically exclude you from qualifying for a loan. There are loan program for people with bad credit as long as they can prove they are employed. However, these loans have inflated interest rates which can mean high monthly payments. You may also be required to pay a higher down payment on the car due to your bad credit rating.

Cash

Consider a used car set at a "cash" price instead of a bad credit loan. A cash price is an amount that can often be paid from a savings account. If you have savings or time to save a few thousand dollars for a car, you can circumvent the process of applying for credit. You can sometimes purchase cash cars from dealerships, but the most common way to find them is in the classifieds section of your newspaper or in online classifieds.

Credit Cards

Many credit cards carry limits to support the purchase of a used car. If your credit card has a high limit, consider using it to finance your vehicle purchase instead of applying for a loan. However, if your credit card interest rate is higher than the interest rate you would receive on the loan you may want to reconsider. Review the prepayment penalties of the loan as well as administrative fees. Compare these to the fees on your credit card before making a final decision.

Considerations

Using your own money instead of getting a loan gives you control over the transaction and does not impact your credit score. If you prefer a new car over a used car, saving for a down payment while improving your credit score over time may be your best bet. New car costs are generally too high to be paid for with cash.

Read More

How to Buy a Vehicle Out of State

Buying a vehicle out of state may save you some initial money on the purchase price because you may see the same vehicle for cheaper in a neighboring state. Shopping in another state may even allow you to easily find a vehicle that is hard to find in your state. If you are buying in a neighboring state that has no sales tax or a lower sales tax rate, it does not get you out of paying the tax in your state, however.

Instructions

1

Visit your state Department of Motor Vehicles website to check the vehicle registration requirements in your state before buying. In some states, such as California, a vehicle must be able to meet smog standards to be registered in the state. Find the link for your state on the Nevada DMV website's 50-State DMV Links webpage (see Resources). If you are buying from a current owner, you will need to visit your local DMV in person to purchase a temporary tag so that you can legally drive the vehicle back to your state. Prices for this vary.

2

Arrange financing through your local bank or other financial institution if you want to have financing before you arrive in the other state. If you are buying from a car dealership in another state, you can apply for financing at the car lot if you prefer. If you have enough cash to cover the purchase, you do not have to apply for financing.

3

Pay for your vehicle purchase by signing up for a car loan at the car dealership or giving the seller a check or cash to pay for the vehicle. In return, you should get a bill of sale for the purchase. If you are buying from a current owner, you should also get the current title signed over to you. If you are buying from a dealer and financing, the title still goes to the lender, but if you are not financing it will usually be mailed to you.

4

Drive the vehicle back to your state. If you are buying from a car dealership, you will usually be given a temporary 30-day tag so that you can legally drive the vehicle until you get it registered. If you are buying from a current owner, you must put a temporary tag from your state DMV office in the window of the vehicle to be able to legally drive it back to your state.

5

Take your bill of sale, and title if you have it, and proof of insurance to your local DMV office to register and title the vehicle in your name. You are required to pay the difference in sales tax on the vehicle to your state. For example, if you paid 6.5 percent in the state where you bought the vehicle but the rate is 8.75 percent in your state, you are liable for the additional 2.25 percent when you register the vehicle.

Read More

Can You Repo Cars If Someone Owes You Money?

According to New Hampshire Legal Aid, there are circumstances where a car can be repossessed and sold to pay off a debt. If you loaned someone the money to buy a car, took a valid legal security interest and they are in default of the loan, you can repossess their car.

Promissory Note

In order to have the right to repossess the car, there must first be a legally enforceable loan. The promissory note must be in writing, signed by the debtor, and must set out in detail how much money the debtor must pay the lender and when he must do so.

Security Agreement

There must also be a clause in the note or a separate document that gives the lender a security interest in the car. This means that the debtor must keep current in payments or the lender will have the right to repossess the car. Failure to make payments on time is called default. The note will specify how many payments must be missed or how late they must be before there is default and the car can be repossessed.

No Breach of the Peace

If a debtor defaults on a legally binding note and security agreement, the lender may repossess a car in any manner that does not cause a breach of the peace. This happens when any violent force is used to repossess the car. If the debtor confronts the "repo man" and tells him to leave the car alone, he must do so or he breaches the peace. This is why cars are frequently repossessed at night. If the car is in a garage and the repossession man breaks in the garage, this is a breach of the peace. The repossession company is also supposed to allow the debtor to take his personal belongings out of the car before it is repossessed. The repossessor may not be assisted by the police, but they should inform them after the repossession.

Commercially Reasonable Sale

The repossessed car must be sold for a reasonable price and in a reasonable manner. Repossessed cars are usually sold at an auction by dealers. If the auction is well advertised and attended and the car sells for around retail value, the sale is commercially reasonable. The lender must notify the debtor when and where the car will be sold. If the car sells for less than the debt plus the costs of sale, the debtor owes the bank a deficiency. On the other hand, if the sale price is larger than the debt plus costs, the lender owes the debtor the surplus.

Read More

How Much Car Loan Can I Afford?

Edmunds.com suggests spending less than 20 percent of your income on your car payment after your gross monthly income, or the amount you take home after taxes. This suggestion might not work for everyone, as personal affordability depends on current debt and financial situation. Before you apply for a loan, consider the various costs of owning a car to make sure all ownership costs fit your budget.

Creating a Budget

Assess your current debt and present or future financial situation to determine how much of a car payment you can afford. If you live at home with your parents or have no other debt, you may be able to afford more than 20 percent of your income. If you plan to change jobs or suspect you may be unemployed in the future, consider future affordability. Calculate your monthly income and subtract your monthly bills to view how much money you have left over. Then, based on your own personal spending habits, decide how much you can reasonably afford to spend without limiting yourself.

Considerations

Your car loan payment is only a fraction of the costs that you'll pay for your vehicle. Most auto loan providers require a full coverage insurance policy during the term of your loan, which is the most expensive insurance policy you can purchase. The amount you can pay for your full-coverage insurance can equal or exceed your car payment amount. Determine your maintenance and gas costs, as well. Talk to a dealership or service shop to determine costs of regular maintenance, such as oil changes, tire rotation or recommended servicing. Budget for all ownership costs, not just your monthly car payment.

Auto Loan Calculator

Use an auto loan calculator to decide your vehicle price range and monthly payment amount based on different loan scenarios. Edmunds.com offers several loan calculators. Enter in your target monthly payment to view the amount of vehicle you can afford. Use the calculator to view average rates, tax charges, dealer fees, term options and various down payment scenarios, all of which play a big part in your monthly payment amount.

Preapproval

Obtain a car loan preapproval so you can be sure of your interest rate and car payment. When you apply for a preapproval, use the information you gathered using various scenarios from the auto loan calculator, such as price range, term and down payment with consideration of tax and fees. You may not obtain the car loan you wanted; banks determine down payment requirements, rate and term based on credit history and income. Based on your approval rate, alter your price range to shop for a vehicle that fits within your budget.

Read More

Common Mistakes When Purchasing a Car

Purchasing a car is one of the biggest financial commitments that most people make in their lives. With such a large amount of money on the line, you want to ensure that you get the best deal you can find. Many people make some common mistakes when engaging in the car buying process.

Focusing on Payment

When buying a new car, one of the biggest mistakes that you can make is focusing on the monthly payment instead of the total price. There are many different things that a sales representative can do to lower the monthly payment for you without lowering the actual price. This could end up costing you a lot more money in the long run. Focus on negotiating the price of the car first, and then worry about the financing later.

Not Shopping for Financing

Before buying a car, you need to shop around for the financing first. Many people make the mistake of going into a dealer and taking any offer that the dealer gives them. In many cases, you can get a better deal for the financing from an outside source. Treat every aspect of the sale as if it is a different process. Work with the dealer to get the best bottom-line price for the car. Shop around for the financing, and then use the best deal to pay for the price that you have negotiated.

Avoid Add-Ons

When you buy a car, you may feel good about the price that you were able to negotiate. But while you may have received a good deal, the car seller may be able to get more money out of you. If you are not careful, the seller will try to add on many different items. For example, he may try to sell you an extended warranty or some other type of plan for maintenance that you do not really need.

Rushing

When buying a car, you need to take your time and make sure that the purchase is right for you. Car dealers are all about trying to get you to buy immediately. They want you to act with your emotions instead of thinking things through. It is generally a good idea to go home and think about the deal before moving forward. This will give you some time to consider every angle. Do not believe dealers if they tell you that you cannot get the same deal tomorrow.

Read More

Can I Trade My Car in If the Balance Due Is More Than the Car Is Worth?

If you owe more than your car is worth, also known as being "upside-down," you might still find you can trade your vehicle. Ultimately, your credit is used to determine the amount of a vehicle's value you can borrow, so excellent credit buyers may find this process easier. The selling price of the vehicle plays a big part in loan determination. Consider the overall costs before you decide to trade in an upside-down vehicle.

Money Down

You can put the excess money you owe as a down payment. Whether you keep your car and pay off the loan or come up with the cash difference after the car's trade value, you still end up paying the excess amount. If you purchase a new car, shop for one with sufficient rebates, or manufacturer discounts, which helps to cover your negative equity. In most states, when you have a trade, its value is deducted from the new vehicle's cash price, which also saves money. For example, if you have a trade worth $10,000 and live in an area with an 8 percent tax rate, you'd save $800 in taxes.

Interest Rate

Consider your current and potential interest rates, as well. If you have a high interest rate on your current loan and can lower it substantially, you'll save money by carrying over some of your loan's balance. Manufacturers sometimes offer as low as zero percent for new-car loans, so you won't pay any interest at all. Your current loan is likely charged interest every day, also known as the loan's per-diem amount. Trading in your loan immediately saves you interest charges; transferring to a lower rate may prove beneficial.

Vehicle Value

Not everyone can obtain a loan approval when attempting to carry over a balance. Banks use the vehicle's market value to determine how much to lend, known as a loan-to-value ratio. Banks offer a range of 60 to 120 percent of vehicle value based on credit. Poor credit customers who fall into the lower lending percentage would have to put money down even without a trade in. Excellent credit borrowers might be able to carry over taxes, fees and the excess loan without a problem, but the lender ultimately determines approvals based on this ratio.

Warning

It is not advisable to carry over excess money to a new car loan. Unless you put money down to eliminate the negative balance, your vehicle's value and loan payoff amount will take longer to level out. This can make selling or trading your car in the future difficult because the negative equity will continue. Some borrowers may also decide to borrow for a term longer than 60 months to lower monthly payments, which costs more money in interest (rates increase after a 60 month term).

Read More

How to Sell a Car as a Co-Signer With the Owner's Permission

After you find a buyer for your vehicle, you and the vehicle's titled co-owner must sign the vehicle's title. Since you already have the co-owner's permission to sell the car, follow your state's rules regarding seller signatures. Depending on where you live, you might need to have your signatures notarized. Have your co-owner sign the vehicle's title if she can't be with you when you sell your vehicle. If your state requires notarized signatures, the co-owner can have her signature notarized before you sell the vehicle or sign the title.

Instructions

1

Call your state's motor vehicle department to determine the proper procedure for completing a title transfer when two owners are listed on the title.

2

Arrange for the co-owner to sign the vehicle title first if he won't be available for the transfer and purchase. If your state requires the signature of a notary, go with the co-owner to the motor vehicle office, where you can both sign in front of a notary. You don't need the buyer with you to sign your portion of the title.

3

Provide your buyer with the signed title. If your state requires other documents, such as a bill of sale or odometer statement, you can complete the forms with your signature only. The co-owner's signature is only necessary for a title transfer.

Read More

How to Pay Off a Car Title Loan Early

Paying off a car title loan early can have many benefits. When a car title loan is paid off early, you can save money from not having to pay the pre-arranged monthly interest. Another benefit is that you will reduce the amount of debt that shows up on your credit report. This can also improve your credit score, which will increase your chance of getting a loan at a lower interest rate. When the car payment is paid off early, there is one less bill to pay each month.

Instructions

1

Check with the lender to ensure that there are no prepayment penalties for paying off your car title loan early. Some lenders have details of a prepayment penalty included in the loan contract.

2

Pay in excess of the monthly payments on your car title loan, to reduce the interest payments.

3

Write a check and mail it to your car title loan lender. Some lenders will give you a discount for paying off your car payment early. Check with your lender for details of when they may offer these types of promotions.

4

Log into your online account, if you normally pay your car title loan online. Instead of clicking on the amount that is due for the month, choose the option that allows you to pay off your complete balance.

5

Contact your lender by telephone to pay off your car title loan. You may pay the total balance using your checking account or your debit card. When your payment is completed you will be given a confirmation number and details of when you will receive your car title.

Read More

Is it Better to Lease or Finance a Vehicle?

There are many variables involved when deciding between leasing or purchasing a car. Most people who buy a new car do so through financing. They make monthly payments to their lender and eventually own the vehicle. Leasing also requires monthly payments, but typically you don't own the car at the end of the lease. There are pros and cons to each option that are dependent upon your financial situation, lifestyle and preferences.

Down Payment

The ability to come up with cash for a down payment sometimes is the determining factor in choosing a lease over financing to purchase a car. Down payments for leases typically are lower than when buying a car because with a lease you're paying only for the portion of the car covered by the length of the lease. In other words, when you buy a new car, you're financing the cost of the entire purchase price over the length of the loan. With a lease, which usually lasts two or three years, you're paying for a partial cost the car, namely the first two or three years. The residual cost of the vehicle -- what it's worth at the end of the lease period -- is owned by the car company. Cars with higher residual values will have lower monthly payments; those with lower residual values will have higher monthly payments. Thus down-payment amounts are lower for leased cars.

Monthly Payments

When purchasing a car, you at least know that as long as you keep the car you'll some day own the vehicle outright and won't always have a monthly payment. As long as you're leasing, you'll always have a monthly payment. You'll never own the vehicle outright, unless you purchase the car at the end of the lease, which may require you to get an auto loan. Monthly payments on a purchased car normally are higher than with a leased auto, all other things being equal, such as make, model and price.

Equity/Depreciation

Because automobiles depreciate so quickly, many people dismiss the advantages of building equity in a purchased car. But if you plan to keep the car for a long time -- well past the length of the loan -- then buying a car makes sense. You can sell the car once you've paid off the loan or continue to drive it. People with children approaching driving age sometimes use this buying strategy, knowing that a teenage driver will be piloting the car once it's paid off.

Driving a New Car

Some people like the idea of driving a new car every few years. If that's the case, a lease is for you. You'll always have monthly payments, but you'll always be driving a new car. You also can afford more car for the same monthly payments. The residual price at the end of the lease allows for more bang for the buck.

Mileage and Maintenance

Leased vehicles have mileage restrictions, usually in the neighborhood of 15,000 miles per year. If you know that you'll be driving well over that limit, be prepared to pay a mileage fee at the end of the lease. Ten to 15 cents per mile is a typical penalty for going over the mileage limit, and luxury cars have even higher penalties. One of the myths of leasing a vehicle is a notion of "free" maintenance. This usually isn't the case. You are responsible for all standard maintenance on a leased vehicle, and you usually are required to use authorized dealers to perform such maintenance tasks. Insurance costs usually are lower for owned vehicles than for similar leased cars.

Read More

What Are the Steps for Purchasing a Car?

When you buy a car you must first establish a car buying budget and then attempt to find a car that meets your needs but falls within your budget. You should research the cost of comparable vehicles, get insurance quotes and make you sure you understand the sales agreement before agreeing to buy a car.

Financing

You can either buy a car with cash or finance it. Aside from the actual cost of the car you must also take into account the cost of the tag, transfer of title and any other legal expenses that car buyers must pay in your state. If you lack the cash to buy a vehicle you can apply for financing either through a financial institution or through the dealer. Dealers sometimes offer financing for buyers with very poor credit who cannot qualify for loans at banks but the payments are typically very high. Credit unions, which are not-for profit financial institutions, generally offer the lowest rates on car loans, so if you are a credit union member you should find out if you qualify for a loan. Get prequalified by submitting a preliminary application so you know how much you can afford when you start looking for cars.

Choose a Car

Begin to look for cars at local dealerships, in classifieds and online. You can look for a stylish vehicle, but do not forget to take into account the practical side of owning a vehicle. If you live in an apartment complex where you can only park compact cars, do not buy a large vehicle. If you live in a metropolitan area with heavy traffic, you should consider the cost of gas if you buy a vehicle with poor fuel efficiency. Research cars online to find out about the overall performance and customer ratings before you make your choice.

Negotiating

Sellers tend to price cars higher than the vehicles are actually worth, so you should attempt to negotiate the price down before agreeing to make a purchase. You can research the typical cost of a car online by visiting the Kelley Blue Book website. The blue book includes a directory in which you can find out how much every make and model costs adjusted for age, condition and geographical location. You can negotiate better if you have done your homework. If a seller refuses to drop the price of an overpriced vehicle then find another similar vehicle from another seller.

Complete the Sale

When you buy a car, make sure you read the warranty before you leave the lot. Some warranties offer very limited protection, so make sure you understand the terms and conditions of the coverage before you make the purchase. Additionally, get a quote from your insurer before completing the transaction as the insurance costs vary greatly based on vehicle types and safety features. You should not complete a purchase until you know the total cost including insurance. If you buy a car from an individual, you should contact the department of motor vehicles in your state to ensure you complete all paperwork necessary for the purchase.

Read More

How to Qualify for Auto Refinancing

The primary reason to refinance an auto is to lower the interest rate and decrease the monthly payment on the vehicle. Qualifying for a refinance is similar to qualifying for financing a vehicle, so the lender is going to check your credit, ask for employment information and evaluate the value of the vehicle.

Instructions

1

Collect your credit report and score. One of the primary factors that determines your qualification for a refinance is your credit score. You can order your credit report and score from each of three credit agencies --- Experian, Equifax and TransUnion.

2

Obtain a payoff on your current auto loan. Call the current financing company for the vehicle and request the payoff amount. The payoff amount includes the total you owe, including interest, up to the date that the payoff amount is issued.

3

Gather interest rates, terms and qualification criteria from at least three auto financing companies, including your current lender, banks and credit unions. Interest rates and qualification criteria differ from one lender to another. When you contact lender write down this information for each one so that you can go back and choose the loan that is the best for your financial situation.

4

Go through the qualification criteria of each lender and make sure you meet each of the requirements. If for example, the minimum credit score is 720 and your score is only 700, then you either have to apply with a lender that accepts your credit score or work on boosting your credit score by clearing up negative items on your credit report and making all of your bill payments on time.

5

Put together a complete application package. When you choose a refinance company, obtain the application and the list of documents that you are responsible for submitting to the financing company. These documents may include a copy of your last two months pay stubs. Go line by line on the application to make sure that you fill in the information on all of the lines that apply to you. Go through the list and place a check mark next to the document as you add it to the application package to submit to the financing company.

Read More

Tips on Buying a Car With Bad Credit

Credit reports and credit scores are very important. Good credit scores open doors to the best financing options, while bad credit scores do the opposite. However, if you have a bad credit history, a major purchase, such as a car, isn't out of the question. There might be some financing options available, depending on how low your credit score is.

Put Together a Down Payment

Putting together even a small down payment will significantly increase your chances for loan approval. Car dealerships also might allow a higher loan amount if you have a down payment. A person applying for a $12,000 loan with a down payment has a better chance of approval than someone applying for a $10,000 loan with no down payment.

Do Some Homework

Try to learn the market. Research what the rates of interest typically are for someone with your credit score. Don't rely on a car dealer to be honest. They are out to make money, and someone with poor credit provides an excellent opportunity. Having some information on hand will help you greatly when you negotiate.

Do Not Buy the Extras

Car dealers may try to tell you that you are legally required to purchase extended warranties, extra insurance or credit life policies. Even if your credit is poor, you are under no legal obligation to purchase any of these. Politely refuse and threaten to take your business elsewhere if they persist.

Inquire About a Lower Interest Rate at a Later Time

With poor credit, your initial interest rate might be rather shocking. Ask about the possibility of a lower rate at a later time. Some finance companies will lower the interest rate if you maintain your payments for 12 to 24 months.

Read More

How to Obtain a Motorcycle Loan

The requirements for motorcycle loans are similar to those required for car loans in that the ability to repay the loan, repayment history and value of the vehicle are used to make loan decisions. Motorcycle loans often have steeper interest rates than car loans, however, because banks view motorcycles as a greater risk due to the fact that they are recreational vehicles. The logic follows that a person is more likely to allow a motorcycle that they use only occasionally for pleasure be repossessed than they are an automobile that is their primary form of transportation.

Instructions

1

Select the motorcycle. Often, banks base interest rates on the year of the motorcycle, making it important to have a motorcycle selected before contacting banks.

2

If purchasing the motorcycle from a dealership, obtain the vehicle identification number (VIN); a sales agreement that details the selling price, the make and model; and a list of options. If the bike is used, record the mileage as well.

3

If purchasing the motorcycle from an individual, obtain the VIN and a writeup from the owner detailing the sale price, any options and the mileage of the bike.

4

Compare the interest rates offered through local banks by visiting their websites or contacting them by phone. Have your sales information handy in case it is required to receive a quote on the rates, and record the rates on paper.

5

Select the bank with the lowest rate.

6

Gather your personal information, such as how long you have lived at your address. If you have not lived or in the same place for very long, be prepared to offer previous addresses.

7

Gather your income information, and locate your most recent pay stub. You will need the name and address of your employer, your dates of employment and your hourly pay rate or yearly salary. If you have not worked at the same place for very long, be prepared to offer your previous employer.

8

Gather your housing information. If you own your home, you will need to know your mortgage payment, bank, approximate balance and monthly payment. If you rent, it will be necessary to know your monthly rent.

9

Make a list of all of the credit cards where you have balances. Include the name of the creditor, the type of card, the balance and the monthly payment.

10

Make a list of other loan payments. Include the name of the creditor, the purpose, the balance and the monthly payment. Include any other vehicle loans, student loans, unsecured loans, medical bills, same-as-cash financing and credit lines.

11

Complete an application by visiting or calling the bank. If going to the bank in person, bring along all of the information and lists that you have gathered in the above steps.

12

Contact an insurance company to obtain motorcycle insurance. Obtain proof of insurance, as it will be needed to close the loan.

13

Upon approval, visit the bank to sign the loan paperwork.

Read More