August 2012 ~ Managing a Car Loan

Thursday, August 30, 2012

How to Get Auto Financing With Bad Credit

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The impact that credit scores have on financial life can make it seem as though bad credit closes the doors to many opportunities. Bad credit is not the end of the world, but until credit is repaired, compromises are usually necessary, especially when it comes to financing a vehicle. Qualifying for auto financing with bad credit will take some work, but it is far from impossible.

Instructions

Order a copy of your credit report. Credit reports are available online from a variety of sources. While you may already know that your credit is less than perfect, a review of your credit report will let you know exactly what you are working with. This review also gives you the opportunity to look for and correct any erroneous reporting.

Understand your credit score. Credit score numbers range from 300 to 800, where 300 is poor and 800 is excellent. Scores lower than 620 are viewed as high risk, and lenders refer to scores in this bracket as subprime. Subprime auto loans almost always have higher interest rates and require a down payment, co-signer and/or trade-in vehicle to qualify.

Recruit potential co-signers. Friends or family members with good credit history may be candidates to co-sign on your auto loan. A co-signer applies for financing with you, and his good credit could help you qualify for a lower interest rate. Keep in mind that co-signers share legal responsibility for repayment of the loan, so if you go into default, the co-signer will be held liable.

Review financing options. Search online for car dealerships in your area. Some dealers have financing departments dedicated to buyers with credit problems. Independent "buy here, pay here" dealers provide in-house financing without the traditional finance qualification process, and these can be a solid option if your credit is extremely bad. You may also be able to secure your own financing online.

Assess your budget. Consider that subprime auto loans can have interest rates up to 25 percent. This can drastically increase the total price you pay for the vehicle. Bad credit leaves little room for interest rate negotiation, so plan to provide a trade-in vehicle or substantial down payment to make your monthly payments affordable.

Contact dealerships that offer programs that could meet your needs. Explain your credit situation, tell them what you can afford and what you can offer as a down payment. If you have a vehicle for trade, ask what they will offer for it. Keep notes about what each dealership can do for you.

Choose the dealership that offers a financing plan that best meets your needs. If only one offers you financing, the choice is easy. If multiple dealers can finance you, choose based on vehicle selection, interest rate, loan term and payment schedule. Bring your driver's license, down payment, trade-in vehicle, proof of insurance and co-signer to the dealership. Take your vehicle of choice on a test drive, then sign the financing contract.

Legal Rights Against Repossession of a Vehicle in Georgia

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Repossession is the legal right of a creditor to reclaim property after a debtor has failed to pay a loan secured by that property. With respect to automobiles, if you fail to pay your car loan, the bank or other financial lender can repossess the vehicle. In Georgia, a creditor can repossess as soon as you are delinquent unless the loan contract says otherwise.

Unless the loan contract expressly says otherwise, the financial institution can repossess the vehicle as soon as you default on the loan. Typically, most lenders won't repossess immediately but rather will send a warning letter and only repossess if the default remains for an extended period of time. However, this is just a courtesy -- the dealer is not obligated to grant extra time to pay.

Although a creditor has the right to repossess your vehicle, the manner in which the creditor goes about doing it is limited. Georgia law requires creditors to repossess the car without illegal force, breaching the peace or trespassing. For example, a creditor cannot remove the vehicle from your closed garage without your consent. Additionally, if a creditor causes damage to personal property during the process of the repossession, the creditor may be liable for the damage. Creditors also do not have rights to the personal property that is inside the vehicle during the time of repossession. For example, if the car is repossessed before you have a chance to remove your belongings, the creditor must return them to you. If they are lost or damaged, Georgia law requires that creditor cover the replacement and repair costs for those items.

After the vehicle has been repossessed, Georgia law gives the debtor the absolute right to redeem the car before it is sold at auction by the lender to help satisfy the debt. To redeem the repossessed vehicle, you must become current on the balance owed, plus pay and fees associated with the repossession of the vehicle.

If debtor has paid 60 percent or more of the price of the car, the lender is required to sell the car at auction to help satisfy the debt still owed. Georgia law requires the compulsory sale take place within 90 days from repossession.

How to Owner Finance a Car

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Any commercial transaction, including the sale of a car from one person to another, can be completed with owner financing. Owner financing--sometimes called seller financing--is when the seller of a given product extends credit to the buyer of that product and holds a promissory note for the loan. The opposite of owner financing is bank financing, where the seller receives payment in full from a bank and the borrower repays the lending institution. If you are going to owner finance your car there are some important documents you should use and some precautions you should take.

Instructions

Run a credit check. If you're going to consider extending credit to another individual you should run a credit check on them. There are a variety of credit check services available and running a credit report on someone only costs a few dollars. You should also verify current employment with a recent paystub when investigating your potential borrower.

Document your transaction with a bill of sale. All purchases need a receipt for proof that the agreed-upon transaction took place. A bill of sale is just that: a commercial transaction receipt. The bill of sale for a car should document some specifics such as the make, model, VIN number, and mileage of the car.

Get a substantial down payment. If you're going to offer owner financing, be sure that you're getting a substantial down payment. Many banks won't extend auto loans without a 15 to 20 percent down payment. Consider asking for 25 percent or more because you should be taking on less risk than a bank would when offering seller financing. You should also charge higher interest rates than a bank would for a similar auto loan to compensate yourself for the risk you're taking on.

Execute a promissory note. A promissory note is a personal loan agreement; this is the document that spells out the interest charges and terms of the loan. If the borrower defaults on the promissory note this is also the document that can be used to bring suit against the debtor and demand payment on the loan.

Transfer the title. Once you've completed the bill of sale and promissory note head to your local DMV and transfer the title of the car. The buyer will need to pay some taxes and fees to transfer the title. The seller will need to bring proof of a clean title to the DMV for the borrower to assume.

How Low Can You Negotiate for a Used Car When Paying Cash?

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Contrary to what some buyers may believe, used car dealers don't accept a lower price for vehicles when the customer is paying cash. The form of payment makes no difference in a sale. Also, most private sellers accept cash for payment only because of the risk that check payment may present. Before negotiating a lower price for a used car, understand why dealers prefer financing over cash payments and how to get a better deal, regardless of how you pay.

If a dealership handles your financing, it receives payment as an electronic transfer within days, which is basically the same as cash. Also, a dealer makes a profit for using a certain bank, whether it is by marking up your interest rate or just choosing to use the bank for a finance application over others. Even credit unions, which don't usually allow rate increases for dealer profit, offer a dealership a flat fee. For these reasons, cash purchases do not gain a better price.

A private seller may price a used vehicle high and negotiate, and a dealer may do the same. However, discounts vary by seller and car. Dealerships often purchase inventory from customers who trade in, and then put the vehicle through a shop to repair it or perform maintenance. So the car's value to a dealer varies by vehicle. No set discount amounts exist, as sellers own each car for a different amount. Also, private sellers may need to make a certain amount on the sale, perhaps to pay off a car loan or to purchase another vehicle.

Some people may believe that a dealership can somehow hide a cash purchase or keep a portion of it instead of reporting it as income. This is not true. It is highly unlikely that you will find a sales manager who would risk losing his job to sell a car. In addition, buyers are unlikely to sign paperwork declaring they spent less for a car than they really did. This would limit a buyer's recourse if the car had problems or had to be returned.

A better way to receive a discount is to offer to purchase the vehicle immediately. If you're purchasing from a dealership and you have cash, you can offer to buy the car that day, which will give you more negotiating power. You can tell the dealer that you will leave with the vehicle if he can meet your price, and you can discuss any counteroffers before deciding. A private seller may also take less for a car if you offer to purchase it immediately.

The Advantages and Disadvantages of Buying Vs. Leasing a Vehicle

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If you know what you want out of a vehicle, making the decision to buy or lease can be simple. If you're unsure, you can look at your pattern of use for your previous vehicle to see whether leasing or buying is the right decision for you.

If you're the type of person who likes to drive a car until it can't be driven any more, buying will likely be the best decision for you. When you purchase a vehicle, after you finish paying off the note to the bank, it is yours. You can drive it for several years, customize it and sell it when you no longer want it. Buying a car means that you can put as many miles on it as you wish -- neither the bank nor the car dealership will care if the car has 100,000 miles on it after only a year.

When you purchase a car, the value of the car goes down the minute you drive it off the lot. If you were to sell the car, you'd take a loss. As the car gets older and has more miles put on it, its value depreciates even more. By the third or fourth year of ownership, the car may begin having some mechanical difficulties and showing wear. At this point, you may decide you want a new car. Meanwhile, however, you may have two or three more years of payments left on the car.

When you choose to lease cars instead of buying them, it can feel as though you always have a relatively new car. You won't have to deal with many mechanical problems, which can bring peace of mind. Perhaps the biggest advantage to leasing a car is that you'll be able to make lower monthly payments, as you'll be paying on the depreciation of the car rather than its full value. Often, the down payment is lower as well.

If you tend to put a lot of miles on your car when commuting or traveling, you'll find that leasing can become an expensive proposition. Most leases limit you to 15,000 miles each year; exceed this mileage and you'll be charged for the extra miles once the lease is up. When the lease is up, the car must be in good condition, or you'll be charged for additional depreciation. Your daughter's clay sculpture for school that melted in the backseat will cost you. Once you turn your vehicle in, you must be prepared to lease or buy another vehicle, as you won't have any ownership in the car.

Can You Get a Car Loan If You Are Retired?

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A lender looks at a borrower's income when deciding whether to make a loan. Even if you are retired and no longer working, you can still qualify for a loan if your income is high enough. Generally, lenders look to see if you have a good credit history and the funds available to repay the loan. Lenders also measure your level of financial responsibility by the amount of any other debts you owe.

Standard practice for lenders is to ask to see copies of paycheck stubs and income tax returns as proof of income when a person applies for a loan. However, if you are retired, a lender will ask you to provide copies of pension or other retirement income statements as verification of income. You can also show evidence of assets to qualify for a car loan. Older individuals are more likely than younger borrowers to have significant savings, high equity in a home and income-producing investments. In fact, you may be able to negotiate a lower interest rate and choose your repayment terms if you have the assets to secure a car loan with collateral.

Your age can affect your credit score and work to your advantage. On average, older individuals tend to have higher credit scores. Retired individuals usually have a long credit history --- one factor that affects your credit score. According to myFICO, length of credit history accounts for 15 percent of your FICO score. Your credit score will be higher if you've had the same credit accounts for a number of years, especially if you have an excellent repayment record. Payment history accounts for the biggest percentage of your credit rating, therefore, lenders see you as a lower risk the longer you've maintained a credit account in good standing. If you decide to open a new line of credit to buy a car, a high credit score can help you get an auto loan at a much lower rate of interest.

A 2010 Associated Press-GfK poll found that retired people and individuals age 60 and older are among the population groups that report the least amount of stress related to debt. In most cases, those people with less debt have more money. One reason for retired individuals having less debt is that many people pay off their mortgage loans by the time they retire. How much debt you owe makes up about 30 percent of your credit score, so low debt can increase your chances for getting approved for a car loan.

Ordinarily, qualifying for a car loan with a term of five years should be no problem. Depending on your age, some lenders may offer you a shorter loan repayment than the longer loan term for which a younger borrower might qualify. Although this will increase your car payment, many retired borrowers have savings enough to pay a substantial down payment, bringing down the monthly payment. If you have excellent credit, you can take out a 24- or 36-month loan term at a low rate of interest. Qualifying for a lower interest rate can save you money and reduce the number of months you need to pay off the loan.

How to Compare Car Leasing Deals

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At first glance, just about all leasing payments look attractive. Manufacturers advertise their monthly leasing at the lowest possible price. What you see advertised for leasing is, in fact, the cheapest a lease can be for the month's incentives, meaning that if you change the mileage or years, the payment will rise. At closer glance beyond the low monthly payment, you'll see that leasing differs a great deal from one car to the next. Learn how to decipher the differences when comparing a lease so that you can find your best deal.

Instructions

Go to each manufacturer's website to view lease deals. Unless the lease is advertised on the main webpage, look for an option to click called "shopping tools" or "view current specials."

Read through the details to determine the amount of money required down and the payment for each month. Multiply your monthly payment by the term of the lease (how many months the lease will run) and add your money down.

Repeat that mathematical computation for each manufacturer and compare. In addition, compare the term and mileage. If you need more mileage than the advertised amount, you can expect your payment to rise around $10 per month for an increase to 12,000 miles-per-year and an additional $10 more for 15,000 miles-per-year.

Read the leasing details to determine the level and the options for each model you are comparing. If you're looking for an all-wheel-drive vehicle, it is likely you will see advertisements first on a front-wheel-drive model, which is cheaper and helps to keep advertised prices low to interest shoppers.

Call or email a dealership for pricing if you need to change terms. For example, some manufacturers offer a 24 month lease with only a 10,500 mile-per-year allowance. To compare leasing prices fairly, you'll have to view the same requirements.

Leasing Cars: Pros & Cons

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Determining whether or not to lease a car is a matter of personal choice, although some business elements should be considered as well. While leasing a car means that you might pay less in income taxes at the end of the year, buying the car gives you an actual asset when you purchase the vehicle.

If you're the kind of person who likes to drive a new car every three or four years, leasing will have some advantages. You'll be able to turn the car in at the end of the lease without having to go through the hassle of trying to sell it. At the end of the lease period, some lease options will let you buy the car if you desire.

In some cases, leasing the car is going to save you on monthly payments. Since leasing payments tend to be lower than monthly car payments when you're buying the car, you might be able to get behind the wheel of a car that might be out of your usual price range. Another cost factor, especially if the car is going to be used for business purposes, is the tax savings found on your income taxes since all or part of the monthly lease payment is considered tax deductible. When you pay your monthly lease payment, that money will go to the leasing company. At the end of three years of making payments, you'll have nothing to show for your money, which can be a disadvantage when you compare that to making three years of car payments.

Many leased cars tend to be new, which means you'll be less likely to have the car break down on you. Another advantage is that most leased cars have a specific mileage limit in place, your leased car will be a fairly reliable vehicle. The disadvantage, however, is that you won't own the car unless you buy it. Should your financial situation change, you might find early termination clauses in the lease.

Less than perfect credit can be a disadvantage when leasing a car. In many cases, the leasing company requires the person leasing the car to have good to excellent credit. If the person doesn't have the right kind of credit, the leasing company can charge a higher interest rate. This can lead to leasing costing more per month than simply buying the car.

Can I Get a Cosigner on a Vehicle?

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While you might ask someone to co-sign on an auto loan with the best intentions, co-signing an auto loan is extremely risk for the co-signer's finances. Putting your name on the same loan note as anyone immediately gives him a new liability that he may never be able to shake unless you pay off the debt. If you need help getting a car loan, there are other ways doing so.

The best place to look for a co-signer is someone close to you, such as a friend or family member. However, you should inform them of the risks of co-signing a loan even though federal law requires lenders to this anyway. Once a person co-signs an auto loan, he may have to repay the debt if the lender pursues him for it. If you miss a payment, this negatively affects both of your credit histories.

You might have more success asking someone to be a joint applicant on a car loan. A co-signer has no right to repossess the vehicle even if you default, but a joint applicant has full rights to the car. The disadvantage of becoming a joint applicant is that the other party has the same liability for the debt as a co-signer and may have some extra responsibility, such as paying insurance on the car.

In general, a co-signer on an auto loan needs to meet all of the requirements of a regular applicant. Thus, if you find a co-signer, he should have a good credit rating--at least a 600 to 620--and monthly debt payments that do not exceed 33 percent of his monthly income. The lender may ask for collateral even if you have a co-signer with good credit and a low amount of debt.

You may be able to obtain a car loan without co-signer, especially if you have a large income, low debt and agree to a put up thousands of dollars for a down payment--20 percent as a down payment usually gets you the best rate on a car. If you go with a co-signer, you may be able to offer him extra protection by drafting a contract between you guaranteeing payment. The lender also might limit a co-signer's liability, such as limiting his guarantee to a certain portion of the car's value.

What Is a Lease Buyout?

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At the end of your lease agreement, you'll have the option of purchasing your vehicle at a price called the "residual value." This is a lease buyout. If you have enjoyed driving your car, this may be a smart move for you. However, before you decide, crunch the numbers to make sure that you're getting a good deal.

Within your original lease agreement, the company specified the residual value at the end of your lease. This is the amount that the dealership estimated the car's value would be after the lease term. It can be above or below the market value. Look at the current rates for comparable cars at used car dealerships. If your residual value is at or below the market value, then buying is smart. If it's higher, you may want to negotiate a better deal or return the car and buy a similar used car.

Rather than contacting your leasing company to let it know that you are interested in a lease buyout, wait until the company contacts you at the end of the term. Even if you are interested, you can act as though you are undecided -- if the company sees you as a motivated buyer, you're less likely to get a good deal. Explain that you are hesitating because you are not happy with the residual value that you'll have to pay. The company may lower the price or it may waive the fees associated with the lease buyout.

In some cases, the retail value of the car is significantly higher than the residual value that you owe. You may consider doing a third-party buyout, where you find a buyer willing to pay the retail value and pay the dealership the residual value, pocketing the difference. If you're going to do this, however, take care to avoid paying double sales tax -- you paying sales tax when you buy from the dealership and the buyer paying sales tax when buying from you. Some dealerships will facilitate this action for you, but others may charge fees, according to Edmunds.com.

If you cannot afford to pay the residual value in cash, you can apply for financing. You will need to meet the same types of requirements that you would for a regular car loan -- good credit score and a positive lease payment history. If the residual value of the car is higher than the retail value of the car, expect to make a down payment on the loan, but if not, you may not need a down payment.

What Happens If the Car Dealer Can't Find Financing After You Take the Car?

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If a dealership lets you take a car without having a definite loan approval, the car is not paid for and you must return it. Paperwork you signed likely includes a blank bank contract, a buyer's order that states your price agreement or a document that allows you to use a dealer plate. The dealer did not process the motor vehicle paperwork and still owns the vehicle.

Dealerships work with a variety of lenders, including subprime lenders, banks, credit unions and nationally based lenders. Dealers submit credit applications electronically and are familiar with each lender's loan approval process. Based on your credit, budget and down payment amount, your dealership likely thought your application would be approved. It then let you take the vehicle because it thought your loan would be approved during business hours or after negotiating with a lender.

Your dealer couldn't obtain a loan approval, but that doesn't necessarily mean you're out of options. If the dealer did obtain a loan approval but at a higher interest rate or with a higher down payment requirement, you can pursue the loan based on the lender's requirements, although your payment is likely higher than originally stated. You can also reapply for a loan with a co-signer, or a person who has good credit that secures your loan. With a co-signer, you might eliminate any down payment requirements and high interest rate issues.

Unfortunately, you must return the vehicle to the dealer if it is not paid for. If you had obtained a loan approval, your loan provider would have paid the dealer for the cost of the vehicle. Dealerships do not provide financing, so any paperwork that you signed was not between the dealer and you, but likely a bank contract between you and a lender it hoped to use; dealers have bank contracts on hand. Bring your vehicle back immediately. Unless you can find a co-signer or agree to any loan counter offers, the car is not yours.

You'll receive correspondence from any lenders that declined your loan. The letters will state the reason for the lender's decision and, as required by law, allow you to receive one free credit report from the bureau that the lender used to make its decision. Determine which issues affect your credit and improve your history for future lending possibilities.

If you need a car but financing is not an option, consider using a buy-here, pay-here lot. These dealers offer lower priced cars that buyers can purchase by paying the dealer directly. You will likely have to provide a down payment and pay off the car's balance within one year.

Auto Lease Vs. Loan

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When it comes time to get a new vehicle, many debate whether it is more beneficial to buy a vehicle using an auto loan or to lease the car. Choosing the better of the two options depends on your personal situation, so there is not a one-size-fits-all option that is right for everyone. To weigh which option is right for you, you have to learn about the differences between the two options and the advantages and disadvantages of each option.

When you decide to buy a vehicle using an auto loan, you generally make a down payment, pay tax and title costs and drive off the lot with your new car. When you buy a vehicle, you do not have restrictions on how many miles you can drive it per year and you can decide to trade the vehicle in for another vehicle at any time.

Leasing a vehicle tends to have a few more limitations and restrictions. Typically, leased vehicles limit the amount of miles you can drive the car each year and if you exceed this mileage then a per mile fee is charged to you at the end of the lease. For leases, you may not have to put a down payment on the vehicle depending on the dealer where you're leasing the car. In some states, you may not have to pay sales tax on a leased vehicle either. Instead, a portion of your monthly payments include the sales tax. Instead of your monthly payments going toward reducing the balance you owe on the car, it instead is the charge for your use of the vehicle. When the lease on the vehicle ends, which can be anywhere from two to five years after you lease the vehicle, you have the option to either buy the vehicle for its depreciated resale value or turn the car in to the dealer. At the time you turn the car in, you can either walk away and make other vehicle options or turn it in for another vehicle--leased or financed with an auto loan.

The composition of car lease payments are slightly different from auto loan payments. The lease payments are composed of a depreciation charge and a finance charge. The depreciation charge is a fee paid to the leasing company for the amount of depreciation the vehicle takes on for your use of the car. The finance fee pays the leasing company for the interest on the money it has tied up in the car. So you're repaying the leasing company for these fees while you're driving the car. The balance is paid when you buy the car or turn it back in at the end of the lease.

When you take out an auto loan to buy a vehicle, the monthly payments are also composed of two parts. The first part of the monthly payment is the principal, which is the part of the payment that reduces your total loan balance. The second part of the payment is the finance charge, which the is the interest you pay for borrowing the money to buy the car.

Whether leasing or buying is right for you depends on your end goal. If you want to own the car at the end of the loan, then buying may be right for you. If you drive a lot of miles each year, buying may also be right for you. If you prefer to turn your car in every couple of years for a new one and don't drive too many miles per year, then leasing may be the right option for you. It is typically more expensive to lease a car and then decide to buy it at the end of the lease because lease payments tend to be less expensive than auto loan payments so if your ultimate goal is to own the car, then an auto loan is a less expensive way in the long run to achieve your goal.

How to Buy Back a Repossessed Vehicle at an Auction

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When a person who has taken out a loan to purchase a car becomes delinquent in paying back the debt, the lender may choose to repossess the vehicle, which acts as a form of collateral on the loan. While the specific procedures for this repossession vary by state, in many cases, the lender will be required to sell the car at auction. The borrower may then attempt to repurchase the car by entering the bidding.

In many states, before the lender places the car up for auction, the borrower is given another chance to retain the car by paying the money he owes on the car loan. The borrower may be required to pay not just the money owed on the loan, but also the expenses incurred by the lender in seizing the car. If he fails to pay, the car will be put up for auction.

The borrower generally will be informed of the auction at which his car is being placed for sale. Before going to auction, the borrower should familiarize himself with its rules. These include the requirements bidders must abide by to bid and the procedure used for bidding on items. For example, a bidder may be required to put down a deposit before he bids and must settle immediately in the event he purchases an item.

Once a bidder has won the car, he is required to furnish payment immediately for the vehicle. Depending on the rules of auction, the bidder may be required to pay immediately in cash or with a cashier's check. Generally, a car won at auction cannot be paid for in installments. This means that, depending on the price the car fetches, the borrower may have to pay more than he initially owed on the vehicle.

Whether the borrower successfully repurchases the car at auction or not, he is responsible for paying any expenses the lender incurred in the course of repossessing the vehicle. He also is responsible for making up the difference between the amount outstanding on the loan and the amount the car fetched at auction. Although he may retain possession of the car, these debts are not automatically dismissed.

Ways to Finance a Used Car

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Several finance options exist for a used car loan, while each offers its own benefits depending on consumer credit standing or convenience. You can obtain financing on your own or let a dealership handle the process for you. Learn which finance options you should consider before you make your financing decision.

Credit unions usually offer the most competitive rates and term options in an area. Other lenders, such as Chase, HSBC or Bank of America also exist on a local level. You can find used-car interest rates advertised on the bank's website, or you can call for details. The rates you see advertised require a good to excellent credit rating, but fortunately, you can still obtain an approval with a decent interest rate, even if you do not qualify for the best rates. You may qualify for rates by tiers used by the bank, meaning that if you are not an "A" tier (to obtain the lowest rates) you may qualify as a "B" tier, which might offer a point difference for interest rate. In addition, using a local bank may allow you to finance up to 84 months. Check with lenders to determine requirements for different terms. You can go to any local lender to apply for a pre-approval, which is good to have on hand when shopping, or you can apply online if the bank allows it. A pre-approval can take up to a week, so plan enough time before shopping.

If you are considered a risky borrower, meaning your credit is fair to poor, you may find an approval through a subprime lender. Subprime lenders charge very high interest rates (up to 29 percent) and often require a significant amount of money down for purchase. Subprime lenders also don't allow as long a term, which, combined with a higher interest rate, can make for a larger car payment. While these pitfalls are unfavorable to some buyers, a subprime lender may prove the only option for some. Subprime lenders do not exist locally in all areas, but larger dealerships (if you are using one) likely work with subprime lenders. Even though a subprime lender may be your only option, decide on your budget before shopping and stick to it. Obtaining financing through a subprime lender can leave you paying over $100 more a month in payment than a regular finance. If you cannot make your payments, the vehicle will be repossessed, further damaging your credit rating. Proceed with caution if using a subprime lender and seriously consider your monthly payment and its affordability.

You can finance your vehicle through a dealership, who uses local lenders like credit unions, subprime financing and national banks with a local presence. Larger dealerships use more banks, while smaller, independent dealers often use just one or several banks. You do not have to find financing on your own if you plan to purchase from a dealer. However, dealerships do make a profit from your financing in some cases. Credit union financing offers dealers a flat fee -- you would receive the same rate whether you used the dealer for financing or went straight to a credit union, but the dealer will receive a small bonus for choosing to finance your loan through the bank. Other banks allow a dealership to mark up your interest rate point to make more of a profit. For example, if your excellent credit warranted you a 5.9 percent interest rate, the dealer can mark the rate up to 7.9 percent and receive a profit from the bank for doing so. If you plan to use the convenience of dealership financing, it is wise to bring a pre-approval with you. Doing so will motivate the dealership to beat your rate instead of increasing it for profit.

How to Refinance a Van

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A van purchased during a period of higher interest rates or with a low down payment could present an opportunity to lower your monthly payment. Refinancing the loan for a longer term or a more attractive finance rate might help lower your expenses. If your credit history and credit score has improved since you purchased your van, you may qualify for better financing terms.

Instructions

Verify the credit reporting for your van loan and other items that appear on your credit profile. Obtain your credit report and score online from Annual Credit Report. Pay off any past due items and accounts that reflect a collection status. Dispute credit items that do not belong to you but appear on your credit report.

Refinance your van with your current lender. Tell your lender that you are shopping the marketplace for a loan to refinance your van. Inquire about current rates, terms and whether your payment history will qualify for preferred or standard auto refinance rates.

Visit auto lenders online to compare rates for refinancing. Check the interest rates, fees and other costs for lenders who advertise auto refinance loans.

Use an auto refinance calculator to compute your estimated van payment. Enter details such as your loan balance, number of years to finance your vehicle and the average interest rate you observed during your research of auto lenders.

Submit your request to refinance your van loan. Supply your income details upon request.

What to Do When You Drove More Miles Than Allowed in Your Lease Agreement?

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If you drove more miles than allowed in your car lease agreement, you must pay the per-mile overage charge as specified in your contract. The typical charges for each mile in excess of the maximum contracted mileage typically ranges between 15 and 25 cents per mile, depending on your leasing company. If you have far exceeded the mileage restriction, it may be more viable to complete a lease buyout than pay the mileage penalty in full.

Leasing companies must assess overage penalties when you drive more than the maximum mileage defined in your lease agreement because lease payments are calculated using a residual value. The residual value is the projected value of the vehicle at the end of the lease, after the vehicle is driven a set maximum number of miles. If this maximum is exceed, the residual value of the vehicle decreases. In order to hold lessees liable for the decreased value, mileage charges are assessed.

Upon returning the leased vehicle to a dealership, you will receive a lease end statement from the leasing company. It may take a few weeks for the statement to arrive after you terminate the lease. Once you have returned the vehicle to the dealership and you receive a final bill, the charges are final. You must pay the excess mileage fee to the leasing company in a timely manner. Occasionally, a leasing company may let you go on a payment plan if the amount owed is extreme.

If you have driven well over the allotted mileage for your lease, you may want to consider a lease buyout to avoid the charges. If you like your leased vehicle and can imagine keeping it for years to come, the buyout lets you keep the vehicle without the mileage penalty. In order to buy the vehicle out, you must pay the residual value as stated on your contract. You may also take out a loan to cover the residual value, provided you meet the credit requirements of the finance company.

If you have been charged for excess mileage put on your leased vehicle and you fail to pay the balance to the leasing company in a timely manner, the lessor could sell your debt to a collection agency, who will report the non-payment on your credit report. In addition to the harassing phone calls, this collection account may keep you from getting another car loan or lease, depending on the total amount placed in collection and the overall strength of your credit file.

Tips on the Purchase of Used Cars

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Buying a car is a process that requires planning and thoughtful consideration, especially if you want to save money in the process. Since new cars depreciate so quickly, you can find some of the best deals by opting for a used car that's still in excellent condition. But buying a used car presents new risks that new car buyers don't have to worry about.

The biggest risk of buying a used car is the chance that it will need repair sooner than a new model would. Some used cars still have the manufacturer's warranty, which may last for five years or more from the original date of purchase, or until the car reaches a certain mileage, whichever comes first. Used car dealers may offer additional warranties or extensions that make buying a used car less risky. Compare warranty options and know what you are, and are not, covered for before you buy.

Before you look at cars in person, do some research to determine what you want and what you can afford. Your local newspaper's classifieds give a good indication of what particular models are actually selling for in your area. The "Kelley Blue Book" is a useful resource for determining the typical value of a used car based on age, mileage and overall condition. Once you identify a car you like, ask the dealer for a vehicle history report. If the dealer won't provide one, consider buying one yourself. This report will let you know if the car has been rebuilt or involved in a major accident, which should raise red flags about its reliability.

Before you buy a used car it's always a good idea to take it for a test drive. Whether you're buying from a dealer or a private seller, you'll never know how a car handles and what it feels like to drive until you get behind the wheel. This is also a time to be attentive for any strange noises, warning lights or inconsistent behavior from the car. Even if the car is in excellent condition, you may feel uncomfortable if you're used to a much larger or smaller vehicle.

If you don't have money saved up to make a large down payment, a used car might be your only option. But if you do have some savings, a large down payment can save you money on a used car. The more money you pay up front, the less you'll need to finance. This means that you'll pay interest on a lower principal amount, and less interest will compound to add to the amount you owe each month. Even if a large down payment means you need to finance for a longer period of time you might still save money. Be sure to compare not only the monthly payment amount, but also the total payoff amount when you look at the financing options your dealer offers.

How to Get Car Payments Deferred

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Although most individuals only take on car loans they can afford, sometimes an unexpected crisis--often a job loss or unexpected medical bill--causes the borrower to be without the necessary funds to make the payment. Fortunately, most car loan officers are willing to defer payments for a short time if you can prove the need.

Instructions

Contact your auto lender as soon as you realize you cannot make your monthly car payment. Auto lenders are more apt to work with you if it looks like you are making an effort, versus just ignoring them.

Inquire as to whether the lender has a hardship deferment. The lender may offer to defer the loan payments for a total of 30 to 90 days. You will still have to pay the loan; the deferment is simply a postponement of your car payments to a later date.

Gather all of the necessary documents needed to prove why you cannot make your monthly car payments. A letter from your doctor or a pink slip from your employer can be copied and faxed to the loan officer for verification.

Make arrangements to begin payments at a later date. This is often done through a document called a forbearance agreement. The forbearance agreement will list why you needed the hardship deferment, how long the deferment is good for and the payment plan that will take affect once the deferment period is over. The loan officer may mail it to you to review and sign.

Request a written letter that the hardship deferment was granted, or a copy of the forbearance agreement, if one was made. Keep these documents for your records.

Problems Associated With Buying a Used Car With a Lien

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If a vehicle title has a lien listed on it, a bank has legal financial interest in the vehicle, meaning that there is an active loan on the vehicle that has not been satisfied. If a lien exists, a bank's name and address will be listed under the "lien holder" section on the front of the title.

Many states do not allow title transfers if a lien is listed on the title. Even if you pay the seller for the car, you can find yourself being turned down for a new title. Check with your state's motor vehicle department to find out if title transfers are allowed when a lien is documented on the title; more often than not, the vehicle cannot be transferred without a lien release.

If the seller pays off his original vehicle loan, he is provided with an official lien release, which is a bank letter that states that the loan has been satisfied along with all owner and vehicle information. It also states that the bank no longer has financial interest in the car. The note is signed by a bank representative in ink. You should have a lien release handy to transfer ownership. Even if your state allows title transfer with a lien, the lien holder will be listed on your new title, which can present issues if trying to sell the car in the future. Some people will not purchase a vehicle when a lien exists on the title.

If you do manage to transfer the title to your name with the lien holder listed, you can face vehicle repossession despite having already paid for the car. Because the vehicle is not owned entirely by the seller, the bank can take it back if the seller fails to pay the loan.

If the seller stops making payments or does not complete the total loan payoff, the bank can easily track the vehicle and locate you as the registered owner. In this case, the bank will hire a repossession company to take the car back. A repossession can happen anywhere; while the vehicle is in your driveway or even a parking lot while you are shopping or at work.

Do not buy a car that has a lien release listed on the title. Ask the seller for the official lien release statement, and do not accept a copy. You need the official document should any problems arise. If you are buying a car that has a loan on it, but the seller is going to pay off the loan with your purchase price, work directly with the lender to submit payment so that you receive the lien release. This also helps to ensure that your payment is going to the vehicle's payoff amount. While you can transfer the title with a lien in some states, the risks are not worth it.

How to Buy a Used Car From a Private Seller When the Title Is Held by the Seller's Lender

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When an individual selling a used car still owes money on his car loan, he will not have the title in hand to complete the sale with you. He needs to pay off the loan to get the lien released so he can sign the title over to you. In general, there are two ways to go about completing the sale. Use the method at the seller's lender's office if possible because it ensures that you receive the title right away. Otherwise, you can use the bill of sale method.

Instructions

Agree on a purchase price, and have the seller call the lender to make an appointment to come into the branch office to pay off the loan and complete the sale.

Ask the seller what the payoff amount on the loan is. He can get the information from his lender if he does not know offhand. If the payoff amount is less than the purchase price, you will need to bring cash or two separate checks. Make out one for the payoff amount to the lender and the other for the remainder of the purchase price to the seller. If the payoff amount is greater than the purchase price, make sure the seller is planning to bring the rest of the payoff amount.

Take the cash or checks to the branch office with the seller at the scheduled time.

Give the lender the money for the car purchase, and have it applied to pay off the loan. If that money was not enough, the seller must pay the remainder of the loan at this time.

Give the lender your name, address and other information that needs to go on the car title. The lender will fill out the paperwork to have the title transferred into your name.

Complete a bill of sale that lists the vehicle identification number (VIN), vehicle description, odometer reading and purchase price. Both you and the seller need to print your names and addresses and sign the bill of sale. If the car is expensive, you might want to have it notarized as well to protect yourself from potential fraud.

Give the seller the money in the agreed form, whether it is cash, a check or a money order. The seller will give this money to the lender to pay off the loan and release the title. Also, make sure the seller has your name and address to give the lender to put on the title.

Take the bill of sale to the Department of Motor Vehicles in your state and get a temporary operating permit to use until your title arrives.

Can You Roll a Car Loan Into a Home Loan?

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When you "roll" a debt into another debt, you are taking a consolidation loan. The new loan replaces both of the existing debts with a single debt, allowing you to make just one payment. You can consolidate many different types of loans, and it is even possible to consolidate a car loan and a home loan. To do so, you must consolidate the loans into a new debt.

In order to consolidate an auto loan and a home loan, you will need one loan with a limit large enough to pay off both. Since your home is a bigger asset than your car, you will be able to get the new, large-limit loan using your house as collateral. You can approach your mortgage lender and ask to refinance your home loan. With this model, you can pull equity out of the home to pay off your car loan. In doing so, you would be consolidating the two debts by making the amount you owe on your current mortgage bigger. Another option is to take a new mortgage large enough to pay off your existing mortgage and your car loan; this new loan will be your consolidated loan.

The main advantage of rolling a car loan into a home loan is the simpler payment plan: You will only have one bill each month. You may also reduce the length of time it takes to pay off your debts or reduce your total costs by consolidating. For example, if your home loan has a low rate and your car loan has a high rate, consolidating the car loan into the home loan will save you money in interest payments.

Your home is the collateral for your mortgage. Right now, it is not the collateral for your auto loan. If you were to default on your auto loan, you would not lose your home. However, once you consolidate the debts, there is no separation. If you cannot pay the new, larger payment, you will face default on your home loan, and this can lead to foreclosure. A second risk is the financial effect of consolidating your two debts; you will not always save money. For example, if your home loan rate will go up after the consolidation, even by a small amount, you may end up costing yourself money in the long run. Finally, consolidating a loan is, in the strictest definition, breaking a loan contract. Therefore, the original lender you are paying off early may report negative activity to your credit report, lowering your score.

If you would like to reduce your car loan debt but do not want to risk your home, consider other refinancing options. You can refinance the debt independently, consolidate it with other consumer debts or pay off the loan early. You may also consider a home equity loan, which is a type of secondary loan against your house, to pay off your car debt. In this case, your new loan would still be separate from your mortgage, but the home would be used as collateral on each. You can still lose your home if you default on a home equity loan, but the process is much less likely to result in foreclosure than default on a mortgage is.

How Long Can You Default On An Auto Lease Before They Repossess It?

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Repossession laws vary from state to state and from contract to contract. Generally, there's no difference between not making lease payments on a vehicle and not making your payments on an auto loan. In both cases, you've signed a contract to pay a certain amount of money over an extended period of time. Most lease contracts include fine print that the leaseholder can repossess the auto immediately, or right after the grace period, if you default on a payment. While it's unlikely that your auto would be repossessed for just one missed payment, you're more at risk with each successive payment you don't make.

As of May 2011, in all but two states, a leaseholder can't send a repo agent for your car without getting a court order first. The exceptions are Wisconsin and Louisiana. Everywhere else, you should receive at least two written warnings from the leaseholder. In most states, you'll first receive a "right to cure" notice. The leaseholder will give you a certain amount of time to make your past due payments and bring the account current before the company takes action. Next, you may receive notice that the leaseholder has begun legal proceedings to get the court order allowing the repossession.

Once the leaseholder has gotten a court order to repossess your vehicle, some states require that the company must again give you a certain amount of days to pay what you owe before it can send a repo agent for your car. Once the company has taken your car, you should also receive notification of it being up for sale so you have a chance to buy the vehicle if you want to. Your lease agreement terminates with the repossession, but you can purchase the vehicle at auction.

Most states prohibit a repossession agent from committing any "breach of the peace" when he comes for your car. In some states, this can include taking the car over your objections. However, objecting only buys you a certain amount of time. The agent will surely come back unless you cure the default. He also usually can't take your car from a closed garage or threaten you into letting him take it.

Rather than let your lease payment lapse for more than one month, contact the leaseholder immediately when you know you're going to be unable to make a payment. In many cases, the leaseholder will work with you to get you back on track. The leaseholder wants your money, not your car. If there's no way you can make the payments any longer, you may also have the option of giving the car up voluntarily. You'll still be responsible for the balance of the lease payments you contracted for, minus whatever the leaseholder sells your car for, but you can potentially save yourself some collection fees, court costs and penalties if you simply surrender the car.

How to Trade in a Vehicle If It Is On a Loan & You Don't Have the Title

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Many states are "title-holding" states, meaning the state motor vehicle office sends the title to the lien holder instead of to the registered driver. The bank holds the title until the loan is paid in full. In the event you trade your car to a dealer, he must pay off your old loan to obtain the title of the vehicle. State paperwork varies for the procedure of receiving a title, but your dealer will ask you to sign paperwork authorizing him to sign it on your behalf or at least get the title delivered to the dealership.

Instructions

Call your lender to determine your loan's payoff amount. Work with a dealer who has a car you want and allow a dealer representative to appraise your car for a trade value. Let your salesperson know that you have a loan on your car.

Give your salesperson your loan account information so she can call to get the payoff amount from the bank. Offer your account number if you have it, or your Social Security number, which the bank uses to review your account information. Ensure the buyout amount the bank gives to the salesperson matches the amount the bank gave to you.

Go over the new car's financing and pricing. The salesperson will subtract the trade value from the purchase price of the new vehicle, add on taxes and fees, then add your payoff amount to the total to figure your purchase price. Provide your dealer with your current registration (which proves your ownership) and arrange to pick up the new car.

Sign your vehicle loan and motor vehicle paperwork with the dealer. Because you have to release ownership of the trade-in vehicle, you may have to sign a Power of Attorney form, which allows the dealer to obtain the title and sign it on your behalf. Ask any questions if you are unsure of the process.

Sign the dealer form that authorizes him to pay off the loan on your behalf, as the Power of Attorney procedures may not be used in your state. In this case, the dealer will pay off the loan and receive the title, but you must go back in to the dealership to sign over the title when it arrives.

Go back to the dealership to sign your title. Your dealer will call you when it arrives. The amount of time for title processing and mailing varies by state, so ask your dealer when it should arrive, if you want to know.

Car Sales: Cash Vs. Payments

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Paying cash or financing your car purchase both have advantages and disadvantages, especially if you're purchasing from a dealership. Paying cash doesn't always save you the most money, nor is it a reason for a lower negotiated price with a dealership. Consider the benefits of each option to determine which can earn you the most money or deepest discounts.

New car manufacturers constantly offer incentives for financing, such as low interest rates or automatic discounts. To qualify for some of the price reductions you see advertised, you might have to finance. If so, ask your dealer if the lender charges a prepayment penalty fee. If not, you might find that financing and paying off the loan shortly after saves you more money than paying cash. As for negotiating a better price, dealerships increase profit when arranging financing for its buyers. Paying cash isn't a reason to reduce the selling price of a vehicle, as the dealer loses extra profit.

Having cash on hand allows for a speedy purchase process. If you have to apply for financing after you find the car you want or transfer money around to obtain your payment, you might lose the vehicle you want to purchase. Sellers are often looking to make a sale quickly. To prevent losing your car purchase opportunity, apply for a preapproval before you shop. If paying cash, create a budget and transfer your money around before you shop. Waiting for a cash transfer or preapproval can take up to a week or more.

If your money is in a savings account that earns interest, paying cash might cost you more money than financing, especially if the manufacturer or lender offers a low rate. To determine which option saves you the most money, determine the interest you'll earn over time if keeping your money in an interest-bearing account. Use an auto loan calculator to determine your total loan pay back amount with interest. If discounts or zero-percent interest applies to your loan, you're probably better off keeping your cash in a savings account.

If you're selling your car, your buyer might ask to make payments. If so, don't transfer any title transfer paperwork over to the buyer until he pays for the vehicle in full. Create a car payment contract and require a deposit. If you're waiting for a buyer to make payments, you might lose out on the opportunity to sell your vehicle to another person. Discuss whether the buyer's deposit is refundable before allowing him to make payments. Be clear on when payment is due and state the terms of the sale in your contract. If you don't know the person buying your car, consider accepting only payment in full to avoid non-payment issues.

How to Assume an Automobile Lease

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You need a new automobile, but times are tough. You know you can make the monthly payment, but have little to no money to put down. With preparation it is possible to assume the payments of someone else's automobile lease. Armed with knowledge you can easily avoid the pitfalls of auto leasing while reaping the benefits.

Instructions

Determine your needs. If you have a family of six, a compact car is unlikely to satisfy your day-to-day driving requirements. Be realistic about which make and model best fits your lifestyle, even if it means you'll have to wait another few years to drive that sports car.

Decide what's important to you in a vehicle. Are you looking for a prestige car or a work horse? If you have a long commute to and from work, it may be more important that you opt for a fuel efficient car. If the farthest you drive is to church on Sunday or your grandchild's dance recital, you may find that a less frugal automobile more to your liking.

Set a realistic budget and stick to it. If you predetermine how much you can afford to spend in monthly payments you are much less likely to impulsively sign on the dotted line for the first car that catches your fancy. Remember, you're going to have to be able to live comfortably with the monthly cost of any auto lease that you assume.

Do your research. Websites like MyProductAdvisor and autoebid can help you winnow down your choices to the cars that best suit your circumstances.

Find a lessee looking for someone to assume his lease. Shop for this lease assumption like you would any new car purchase. Check newspaper ads, online sites such as Craigslist, and websites, such as LeaseTrader.com and TakeMyPayments.com to get started.

Check out the company or individual that you're dealing with, whenever possible. You want to know who you're dealing with before you commit to signing your name. Check the Better Business Bureau and conduct an online search for any signs of a red flag.

Don't be afraid to ask for the moon. Many people are desperate to get out of their leases during these tough economic times. According to Lucy Lazarony of bankrate.com, some people are going so far as to offer cash incentives. Lazarony claims that it's not unusual for a person to drive away with a car and $500 to $1,000 in his pocket.

Lock down financing. Assuming the current lessee has called his leasing company to make sure the loan is assumable, you'll need to pass a credit check. Many leasing companies charge in the neighborhood of $300 to transfer the lease, so make sure it's understood that the current lessee will be paying that fee. While a verbal agreement is nice, you'll want to have this agreement in writing before beginning a credit check.

Taking over a auto lease is not without risks. Remember that any dings or other body damage the current lessee has inflicted upon the automobile become your problem. Any harm to the interior or mechanical problems will likewise be yours. Spend the money it takes to have the car thoroughly inspected before assuming the lease. Better yet, negotiate for the current lease holder to pay for the inspection.

Know what to look for. You don't want to assume someone else's problem. Just because the current lessee paid too much for his car does not mean that you need to do the same. LeaseCompare.com is just one of the websites that will help you decide a fair price for the automobile you're looking to lease.

Investigate what's left on the lease. How many miles are remaining before you'll be expected to pay the per mile premium? What about the warranty? Will it last for the duration of time you expect to be driving the car?

How to Buy a Car with a Low Income in Michigan

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Cars can be expensive, but having a low income doesn't mean you can't buy a car. It just means you have to buy a car within your means. For most people, that means buying an older used car straight out, without financing or making payments to anyone. The car may not be as flashy as some others but it will do fine as basic transportation.

The first step is preparing yourself. Review your finances and savings carefully to determine what you can afford to buy. Remember you also have to insure the car, put gas in it and pay for any unexpected repairs. Spend a few months saving up so you have enough to pay for the type of vehicle you'd like and several months of insurance payments. Then start searching. Browse the newspaper sales ads and your local section of Craigslist. Ask friends, family and acquaintances if they know of any cars for sale with your budget.

As you isolate cars you want to buy, contact the seller of each car you are considering buying to set up an appointment to see it. Ask the seller any questions you may have about the car, such as the gas mileage, any accidents its been in or if the seller is offering any warranties on it. Verify the seller has the title of the vehicle in his possession. Test drive the car with the seller to get a feel of how it drives. If the seller of the car does not offer a warranty, he's selling you the vehicle "as is." This mean he makes no guarantees on how well the car runs. Michigan does not have a "cooling-off" law for car sales that would allow you to back out of the contract with a full refund.

Ask a mechanic to look over the vehicle to check for any possible mechanical problems before you buy the car. If you can't afford a mechanic, try contacting an automotive trade school. Often those schools offer low cost mechanic services by students with instructors supervising.

Give the seller the money required to buy it once you are satisfied it's in good working condition. Pay the seller buy cashier's check, personal check or money order so you have a record of the payment. Indicate the year, make and model of the car you're buying on the memo line. Do not give the seller any money unless he can give you the title of the vehicle at the same time the money transfers hands. If the seller is offering any warranty on the car, get it in writing when the money changes hands.

Buy car no-fault Michigan car insurance on your new car before you drive it. If you haven't registered and insured the vehicle, you can have it towed from the seller to another location until you have a chance to do so. Do not drive the vehicle before you've registered and insured it. Otherwise, take your proof of insurance and the title the seller gave you to a Michigan Secretary of State location. Change the title over to your name and register the car with the state, paying any necessary fees for the vehicle. Go back to the seller to put the license plates on your car and drive the car away.

How to Buy a Car in Nevada

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If you need a new vehicle in Nevada, you can purchase one from either a local car lot or from an individual seller. The buying process is similar for buying both new and used vehicles. When you buy from a car lot, the dealer takes care of processing the majority of the paperwork for you. With an individual buyer, you must visit your local Department of Motor Vehicles office on your own. If you are going with an individual seller, inspect the car title before agreeing to purchase to make sure it does not say "Salvage" at the top because salvage vehicles are difficult to register in the state.

Instructions

Find a vehicle that you want to purchase by visiting local car lots and browsing through classified ads in your local newspaper or online, such as on Craigslist or eBay Motors (see "Resources").

Attain financing, if you do not already have money for the car. If you are at a car lot, you can fill out a loan application on-site. You can also fill out a loan application with your local bank in Nevada.

Sign the sales paperwork once you agree on a price, have financing and are ready to buy. If you are at a car lot, the dealer will present you will all of the paperwork that needs completed. If you are buying from an individual, the seller will likely have a bill of sale for his records for you to fill out and you will fill in the "buyer" section of the car title. You must get a car title that is signed by the seller if you are buying from an individual, otherwise you cannot register and title the vehicle.

Visit your local DMV office with the signed title to register the vehicle and get the title in your name, if you bought from an individual. If you bought from a car lot, the dealer will take care of this for you. The Nevada Department of Motor Vehicles website (see "Resources") has a list of office locations.

How to Sell Luxury Cars

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Whether you are trying to sell an Audi sports car or a Ferrari, selling luxury cars is a similar process to selling any other type of vehicle. The main difference is that more money is involved in the transaction. When selling a luxury car, you must look beyond the standard newspaper classified ads to reach the luxury automobile buying audience. When you find a buyer, the transaction should be like selling any other car.

Instructions

Take photos of each luxury car. Get long shots of the body that include the whole car along with close-ups of the interior and any other special features.

Make a list of the features and specifications for each luxury car that you have to sell. For example, if you have added some customizations to one of the cars, it should be mentioned. Also note the mileage reading for each car.

List each car for sale using the photos and your list of features. Include a way for interested buyer to contact you, such as a phone number or email address. For high end luxury cars, the Dupont Registry or the Luxury Asset Network can be used. For other luxury cars, try R Luxury Cars or AutoTrader. The price to post your ad varies. As of 2011, fees range between free and $359. If you are not sure how to price your vehicle, look around the site for similar vehicles to see what they are selling for and use that as your pricing guide for fair market value. For blue book value, use the Kelley Blue Book website. For rare or high demand cars, the fair market value may be higher than the blue book value because it reflects current market demand.

Fill out a bill of sale and the car title, once you have a buyer. The Cars.com website has a free bill of sale that you can download. Before the buyer leaves with the car, remove the license plate because he must get his own license plate. You can accept any form of payment that you feel comfortable taking, such as cash, money order or cashier's check. Before signing over the title, get the payment from the buyer. If you are concerned about the validity of the payment, contact the issuing bank.

How to Terminate an Auto Lease to Lease Another Car

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Terminating an auto lease to lease another vehicle is a common occurrence, but it can be intimidating, especially when you consider the unique stipulations and terminology related to a lease. In order to terminate an auto lease to get another vehicle, you must return the leased vehicle to a car dealership that sells the same brand as your leased car. You may also be required to pay lease-end charges, which may include the remaining lease payments, excess mileage charges and a disposition fee.

Instructions

Contact your leasing company. Whether you want to end your lease early to lease another vehicle or your lease is approaching its scheduled maturation date, contact the leasing company before you visit a dealership. Be sure to have your account number available.

Verify the lease-end date and any fees due at the end of the lease with the finance company. You may be surprised to discover that your lease is longer than you expected or that you have gone over the total mileage allowed in your contract. Getting in touch with the leasing company ahead of time helps prevent surprises when you get to the dealership.

Contact a dealership that sells the type of vehicle that you want to lease. Schedule an appointment so that you can review lease options on your vehicles of choice before your current lease matures.

Visit the dealership and get quotes on your vehicles of choice. If you have remaining lease payments that must be paid as part of the transaction, have the dealership include the remaining balance on your lease in the quote. Whether the dealership sells the same brand as your current vehicle makes no difference, as it can still pay off the early-termination amount for your lease.

Agree to terms on a new car lease.

Return your old leased vehicle to a dealership that sells the brand. The dealership will take the vehicle identification number and mileage and report it to the leasing company, which will then order a third-party inspection to check for damage and wear beyond that allowed in the lease agreement.

Have the dealership where you are leasing your new car roll the payoff amount into your new lease, if you wish. If you prefer to avoid paying that extra interest or raising your payment, which will happen if you carry a balance into your new lease, you can pay the balance on your own.

Automobile Lease Pros & Cons

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Driving and use restrictions apply to a vehicle lease, so the option is not beneficial for everyone. Leasing penalty fees can prove expensive. A leased vehicle must be returned in good mechanical condition and remain under the contracted mileage allowance. Consider your various lease options and contract restrictions to determine whether a lease is beneficial.

Leasing payments often prove cheaper than a comparable finance. Unlike financing, lease payments go toward the vehicle's depreciation, not its entire cost. Expected depreciation and payment amount is based on the mileage and term you choose. The predetermined future market value of the vehicle at the end of the term does not affect your payment, even if it is wrong. Because leasing payments are cheaper, you can drive a new vehicle with more features and options for less than it would cost to finance it.

Because depreciation and future market value is figured on your intended mileage, you must remain under the contracted mileage to avoid excess fees. For example, if you choose a 12,000 mile per year lease for 36 months, you must return the vehicle with less than 36,000 miles on the odometer. Depending on the annual mileage you choose, expect to pay 10 to 18 cents per mile over the mileage allowance. A lease is not beneficial for people who drive more than 18,000 miles per year.

Leasing is somewhat flexible, which can prove beneficial. You can end your lease early, although depending on the vehicle's depreciation and market value, it may not prove worthwhile. At any time, you can purchase the vehicle from the bank. You can trade it to a dealership toward another purchase. Lease transfer is also an option; most leasing banks allow lessees to transfer a lease to another qualified buyer for the remainder of the term. If you go over your mileage or want to avoid excess lease-end fees, you can purchase the vehicle at the end of the term for the buyout amount stated in your contract.

A lessee can incur various fees from the leasing bank after the car is returned, a risk and disadvantage of leasing. Most contracts offer wear-and-tear allowance, which covers slight seat wear, light scratches or dings. Some banks do not offer enough coverage. If you return your vehicle over mileage, in need of repairs or damaged, expect the leasing bank to bill you. You must pay the final lease bill; otherwise, your debt is reported to the credit bureaus.

Pros & Cons of Subprime Auto Finance Companies

11:24 AM 1 comment

Working with a subprime auto finance company is an option that many people with bad credit have to consider. While this will not give you the benefits that come with a traditional auto finance company, these lenders can still provide you with a few advantages.

The big advantage of this type of lender is that it is willing to work with people who have bad credit. If you have a bad credit score, there is a good chance that most traditional lenders will not extend you a loan. With a subprime auto lender, you can still get approved even if you have had a bankruptcy or foreclosure.

Many subprime auto lenders also have a very quick application process. Many promise not to run a credit check. This means that you will only have to provide them with basic information, including your employment situation. As long as you meet their other criteria, you should be able to get approved very quickly.

Many of these lenders also make paying your auto loan very convenient. You can often make payments at the same location where you bought your car.

The big drawback of working with a subprime auto lender is that you will have to pay a higher interest rate than with a traditional loan. These lenders have to charge higher interest to offset the greater likelihood of default with subprime borrowers.

When you work with a subprime auto finance company, you essentially pay more for your car because of the higher interest and loan fees. If you can save up and pay cash, you'll be better off.

What Happens When a Car Loan Does Not Go Through?

7:08 PM No comments

Dealers are sometimes so eager to sell cars that they get you to sign loan contracts even though the loan hasn't been approved. Dealers do this because they believe you may not come back and purchase the vehicle if the approval takes several days, or they fear you may shop elsewhere. In the event your car loan doesn't go through, you must return your vehicle to the dealership.

You may have stopped by the dealership at the end of the month to purchase the vehicle, which is usually when dealers are most pressed to sell vehicles. The dealer may believe he can find a lender for you based on a review of your credit, money down, loan term flexibility or stated affordability. Even though you signed what you believed to be a real bank contract, the paperwork is simply printed out from the dealer's computer onto the bank's form. A vehicle loan isn't actually completed until the lending bank receives the contract and funds the dealership for the cash amount of your loan.

If your dealer notified you that your loan application has been declined, you may have other options. You can apply to an outside lender on your own to obtain financing or you can find a cosigner. A cosigner goes on the loan application with you to secure your financing. He must have good credit and a job and also make enough money to afford your car payment if you can't make it. While a cosigner can help you to obtain an approval with a better rate, extended term or less money down, finding one may prove difficult. A cosigner becomes liable if you default on the loan or miss payments.

If you're unable to purchase the vehicle and have no other resources, the dealer should give you back any deposit you left, even though you must return the car. If the dealer tries to keep your deposit, demand your money back. Hold on to your copy of the contract and vehicle buyer's order. Call your state's motor vehicle department to find out where you can report the dealership. Consumers in this position may be led to believe that because they drove the dealer's vehicle, it allows the dealer to keep their deposit for cleaning, marketing or other fees the dealer may cite as the reason for not returning the deposit.

If your dealership believed that your loan would go through and it didn't, he may send you into another lender for approval, meaning that loan terms and money down you originally agreed upon could change. Don't put yourself in a position that causes you to go over your budget or forces you to borrow money to put down toward your purchase. Even if you're desperate for a vehicle, not being able to pay for one can result in repossession, which causes significant damage to your credit report.

If you already signed the contract and have your car but receive a letter from different banks --- or the bank that you believe approved your loan --- stating that your application is declined, call your dealer to clarify the approval. You may have been turned down by several banks before being approved. Dealers send your application into several lenders at once, hoping to get you a lower interest rate or just one approval if you have credit issues. The bank must send you a copy of its reasons for declining the loan. Additionally, loan applications may be turned down at first because of dealer error or before dealer negotiations with the lender; you may have been sent the letter before your final approval. Before jumping to any conclusions, call the dealership right away to confirm the approval of your application.

Tips to Negotiating Car Financing

3:58 AM No comments

Most car buyers anticipate having to negotiate the price of a car, but they may not expect to negotiate the terms of their auto financing. In reality, almost all of the terms of the car loan are negotiable. Coming into the negotiation with the proper information can help you save you a substantial amount of money.

Before you negotiate a loan, get quotes from other lenders. Shop for financing before you start shopping for your car. Get some quotes on paper. When you negotiate after you choose your car, you will have some ammunition. If you have quotes for lower interest rates, you can use these to your advantage.

You will usually be offered several extras. These extras may seem attractive at the time, but they can significantly add to the price of your car and your monthly payment. For example, most dealers will offer you an extended warranty on top of the one that comes from the manufacturer. An extended warranty is usually not worth the price, so you should probably pass on the offer. Try to avoid add-ins that cost you money.

Gap insurance is a product that the dealer may offer when you finance your car. This product has some value, even though it may seem like an add-in. Gap insurance helps pay the difference between your car's value and how much you owe against it if you are in a wreck. This way you will not owe more than your car is worth if you total your vehicle.

Read the fine print before agreeing to any terms. You can often find terms that you may not be comfortable with. For example, see if the loan has any prepayment penalties. If so, you would be penalized if you paid off the loan early. Some loans carry interest rate increases if you do not make your monthly payment on time. Read through the contract thoroughly and make sure that you agree to all of the terms before moving forward. If you do not like any of the terms, do not hesitate to ask for their removal.

How to Paydown a Car Loan

6:36 PM No comments

Most car loans are set up for a term of 60 months, or five years. For much of that time, your car loan will be "upside-down" because the car depreciates in value faster than you pay the loan. Being upside-down can be problematic if you want to trade in your car for a new one, because what you still owe will be added to your new loan. You may want to pay your car loan off faster to get of this upside-down situation, reduce your debt-to-income ratio or just to reduce your monthly expenses.

Instructions

Check you car loan for a "pre-payment clause." A pre-payment clause prevents you from being able to reduce your interest on the loan by making extra payments. In this case, any extra payments you make would only extend the time until your next payment is due. If there is no pre-payment clause, you can paydown your car loan early.

Make your monthly payments as normal.

Make additional payments or partial payments as you are able. Specify that these additional payments should be applied to the principal of the loan.

Check your loan balance and verify that your extra payments were actually applied to the principal. If they weren't, call your lender to have the problem corrected.

Does Buying a Car Decrease Your Credit Score?

1:56 PM No comments

Credit scores fluctuate based on new inquiries, new lines of credit and payment history for existing lines of credit. If you're financing your vehicle, your credit score may have decreased because of inquiries. If you're paying cash for your vehicle, the purchase won't affect your credit score.

Each time you authorize a creditor to view your credit report, your score decreases. The MyFICO website states that inquiries make up 10 percent of a credit score and that the impact of an inquiry varies on individual credit history. Someone with little credit or short payment history on open accounts might see more of a decrease in her FICO score than someone with a strong and established credit history. Each inquiry can reduce a borrower's FICO score by up to five points. Once you initiate your car loan account, your score decreases again temporarily because of the new line of credit but improves as time passes and payments are made on time.

The type of vehicle you buy, such as a new or used purchase, doesn't impact your credit score, with the exception of a dealership that lends directly, such as a buy-here, pay-here lot. These types of dealerships provide their own financing instead of using an outside lender. Most buy-here, pay-here lots don't submit loan accounts and payment information to the credit bureaus. If you are purchasing from one of these lots, find out if the dealer checks your credit or reports the loan to determine if the purchase has any impact on your credit score.

If you're concerned about the impact a car purchase has on your credit score because you're in the middle of a a mortgage application or refinance, check with your lender before applying for a car loan. The temporary decrease in your credit score or debt-to-income ratio might disqualify you for certain types of loans. While paying a car loan increases your credit score over time, your debt-to-income ratio decreases. Lenders use this ratio to compare the amount of money you make to your total debt responsibility and determine if you can afford a loan.

Before you apply for a loan, choose a lender with low interest rates. Reduce the amount of your inquiries by visiting lender websites or calling in to find out about rate offers before you decide where to apply. If you're purchasing from a dealership, ask your salesperson not to send your application to only one or two lenders. Dealers can submit your application electronically to several lenders at once to find you the best interest rate. Discuss your options before providing a credit application.

What Do I Do if My Leased Car Is Totaled?

6:31 AM No comments

A lease allows you to drive a car at a lower monthly payment than if you purchased the car. A lease is a short-term agreement of a few years, which allows you to trade in for a newer car every few years. When you lease a car, you agree to return it in good condition at the end of the lease. If you damage the car, you will be charged additional fees.

After the accident, file with your insurance company and the insurance company of the other driver if he was at fault. The insurance company will determine if the car is totaled or if it can be repaired. If the car is totaled, the insurance company will issue a check to the lienholder of the car to pay for the replacement of the car. According to the terms of the lease, you may owe more money on the lease than the insurance company will pay for the replacement of the car. If you did not meet these requirements, you will be held responsible for the entire amount of the remainder of the lease as well as the fees associated with breaking the lease early.

Gap insurance will pay the difference between what your traditional insurance policy will pay for the car, and what it will cost you to pay off the remainder of the lease. Some leasing contracts require you to purchase gap insurance in addition to your traditional car insurance. If your company does not require this, you will be held responsible for coming up with the additional money to settle the lease with your current company.

It may take a few months for the insurance company to process the claim. It is your responsibility to keep your lease current until the insurance company has paid it off. You are responsible for any monthly lease payments until the matter has been completely settled, even if you no longer have a car to drive. If there is any remaining balance left after the insurance has paid out the settlement, you will need to find a way to cover the rest.

Since your car was totaled, you will need to find a new car to purchase or lease. When looking for a car, find one that has affordable car payments. If you decide to lease again, make sure your insurance will cover the replacement of the car if it were to be totaled or stolen. Additionally, purchase the gap insurance so you will not need to come up with extra money to settle the lease.

How to Scrap a Car for Cash

9:09 PM 1 comment

Many people see old, non-working or barely-running cars as worthless items. Old junked cars retain some value, however. Scrap yards pay cash for rusted-out junk cars. These businesses often crush and melt the car, then sell the metal to manufacturing or refining companies. Additionally, scrap yards may sell parts from old cars to independent buyers or auto repair shops. You can turn your old junk car into cash by selling it to a scrap yard in a few easy steps.

Instructions

Make a list of the damaged items on your car, including both external sheet metal and internal items such as the engine and/or transmission. Include minor damage such as dents, rust and corrosion, as well as major damage .

Determine your car's Kelley Blue Book value by entering your car's make, model and year, as well as its mileage (if known), into the online calculator on the Blue Book web site. Enter your zip code, select "private party value" and choose "fair" condition to get your car's most accurate blue book value. If your car does not run, you can skip this step as Blue Book values do not apply to non-working cars.

Call local salvage yards and vehicle recycling centers and ask if they currently accept old cars. Mention your car's list of damages, whether or not it is in operating condition and Blue Book value if it still runs. Cars that still run are worth far more than those that do not, so driving your working car to the salvage center will get you far more money than towing in an inoperative vehicle. Prices at salvage yards can vary widely, so contact yards both in your area and those within a reasonable distance.

Select a yard at which to sell your car, and schedule an appointment to bring your car there for sale.

Drive your car to the salvage yard you selected, or if your car is not running, tow it or have someone tow it to the yard.

Present the list of damages and car's title to the associate at the salvage yard. Fill out the yard's required car sale forms, including a bill of sale. Accept payment for the vehicle. The salvage yard will handle the official title transfer.

Thursday, August 30, 2012

Instructions

Creditor's Repossession Rights

Debtor's Repossession Rights

Right to Redeem

Compulsory Sale

Sunday, August 26, 2012

Instructions

Saturday, August 25, 2012

Financing Is More Profitable for Dealers

Used Car Discounts

Misconceptions

Alternative Negotiation Technique

Advantages of Buying

Disadvantages of Buying

Advantages of Leasing

Disadvantages of Leasing

Thursday, August 23, 2012

Proof of Income

Credit History

Outstanding Debts

Loan Term

Instructions

Wednesday, August 22, 2012

Commitment

Payments

Reliability

Credit

Sunday, August 19, 2012

Auto Loan Co-signer

Joint Applicant

Considerations

Tip

Lease Buyout Terms

Negotiating a Good Deal

Third-Party Buyout

Getting Financing

Friday, August 17, 2012

Dealership Intentions

Overcoming Finance Issues

Bringing the Vehicle Back

Notice of Decline

Other Vehicle Purchase Options

Auto Loan

Car Leases

Lease Payments

Loan Payments

Lease or Buy

Wednesday, August 15, 2012

Buying Before the Auction

Auction Rules

Paying For the Car

Additional Debts

Tuesday, August 14, 2012

Traditional Financing

Subprime Financing

Dealership Financing

Monday, August 13, 2012

Instructions

Reasons for Mileage Charges

Handling the Charges

Avoiding the Charges

A Warning for Non-Payment

Sunday, August 12, 2012

Know the Warranty Status

Do Your Homework

Take a Test Drive

Make a Large Down Payment

Saturday, August 11, 2012

Instructions

Thursday, August 9, 2012

Transfer of Ownership

Repossession

Precautions

Wednesday, August 8, 2012

Instructions

Lender's Office

Bill of Sale

Process

Advantages