August 2013 ~ Managing a Car Loan

Saturday, August 31, 2013

Auto Loans for Limited Credit History

1:30 AM No comments

About 20 million to 25 million Americans have no credit, according to the Fair Isaac Corp., the originator of the FICO credit score. Getting an auto loan, like all other loans, depends upon both credit score and your income. If you haven't used a lot of credit in the past, or have not used credit in a long time, you may have more difficulty obtaining a car loan because of your limited credit history.

As a consumer, your interaction with different forms of credit, such as credit cards or mortgages, forms the basis of your credit history. If you've never had a loan or don't use credit, you don't have any credit history. While it is possible for people with no or limited credit histories to get a loan, it is up to each individual lender to determine the standards required to obtain funds.

Whenever you apply for a loan, your lender will want to know how you've handled credit in the past. If, for example, you've always paid your bills on time, you probably look like a good candidate for a lender considering giving you money. Your credit history shows a lender whether you represent a risk or a safe investment. If you don't have much of a credit history, your lender is probably less likely to give you a loan.

Your credit score is based on your credit history. If you have no credit history, you don't have a credit score. If you have a limited history, your score is probably lower than average because part of your history is based on the kinds of credit you've used, the number of accounts you have and the length you've had them. If, for example, you've only had one credit card for the past year, you probably do not have a very high credit score. Low credit scores make it harder to get a loan.

While people with limited credit histories will have a harder time getting an auto loan and may have to pay more interest than those with a strong history, your credit history is not the only factor lenders use. A lender may also ask you to prove your income, such as by requiring you to provide your tax returns from the previous two years or pay stubs. If you can't do this and have no credit history, it will be very difficult to get any kind of loan.

How to Cancel an Auto Purchase

4:43 PM No comments

Buyer's remorse is a common feeling, and it affects everyone from time to time. Certain items such as clothing, furniture and electronics are easily returnable; most retailers accept returns within the first 30 days. On the other hand, if you purchase a car and then decide to cancel the purchase, you may or may not be able to return the vehicle.

Instructions

Read your contract. Before taking your vehicle back to the dealership, read the sales agreement. Depending on your state, you may be able to cancel an auto purchase within the first two or three days.

Contact the dealership. If you're able to cancel the purchase, call the dealership and ask to speak with the sales manager. Express your desire to return the vehicle and cancel the auto purchase.

Call the finance company. Either you or the car dealer will have to contact the finance company and explain the situation. Contact the finance company after the dealership agrees to take back the car. Once the dealership receives the vehicle, it'll refund the lender.

Return the vehicle to the dealership. Bring the vehicle back to the dealership in a timely manner. Incurring excessive mileage or damaging the vehicle voids the arrangement, in which case you will be unable to cancel the auto purchase.

Pay interest on the vehicle. Interest accrues daily, and it begins the moment you sign the loan documents. You'll have to make an interest payment before the dealership will accept the vehicle and cancel the purchase.

Are Title Loans Legal in Arizona?

10:53 AM 1 comment

Car title loans, also known as secondary motor finance lines in the Arizona Revised Statutes, are cash loans that are backed by the equity in a vehicle. If the vehicle owner does not pay back the loan with interest after a month, the owner may renew the loan, or the loan company has the legal right to seize the vehicle. According to Jean Ann Fox of the Consumer Federation of America, the state of Arizona allows title loans and limits the amount of interest that a company may charge on such a loan.

Per 44-291(G) ARS, Arizona title loan companies may not charge a monthly finance rate in excess of 17 percent for vehicle loans of $500 or less in value. For loans more than $500 and less than $2,500, a finance company may not enforce a finance rate of more than 15 percent monthly. The state limits interest rates on secondary car loans between the amount of $2,500 and $5,000 to 13 percent, while all loans over $5,000 can incur a maximum monthly finance rate of 10 percent.

Under 44-287 ARS, a Arizona title loan contract must contain the names of the buyer and the seller of the loan as well as a description of the motor vehicle. Loan providers must provide the borrower with the annual or monthly vehicle financing rate in clear terms. According to 44-290 ARS, the buyer of a loan may request that the lender issue them a written statement that outlines all payment due dates and the amount of payments for recordkeeping. Title loan recipients have a right to a written receipt for any payments made in cash.

Secondary loan companies may assess late penalties for delinquent payments not made 10 days after the due date according to 44-291(E) ARS. These organizations may not charge more than 5 percent of the unpaid balance of the Arizona title loan as a penalty, and they must clearly disclose these penalties in the sales contract. The title company may seize a vehicle per the loan agreement if the borrower does not pay the loan back 11 days after the payment due date.

If a Arizona title loan company deliberately tries to collect more than the interest allowed by law or does not have a current license to issue loans, the person who took out the loan does not have to pay back principle, finance charges or penalties according to 44-291(H) and 44-295 ARS.

Government Lemon Law Information

2:16 AM No comments

Sometimes a bargain that looks too good to be true is too good to be true. Even a reputable dealer may sell you a car so defective that it's either unusable or worthless. To protect buyers from being stuck with a clunker, state governments have passed lemon laws, which empower buyers to get a better deal from their dealer. Lemon laws apply only to manufacturers and auto dealers; if you buy a lemon from a private owner, you're out of luck.

State laws set standards for what constitutes a lemon. In Iowa, for example, if a problem continues after three repair attempts and it's two years old or less, you have a lemon. In Vermont, the Department of Motor Vehicles states that a car out of service 30 days while covered by the express warranty may be a lemon. If the dealer fails three times to repair the same problem and the first repair took place under warranty, that could qualify too.

Like the definition for a lemon, the remedy for the problem varies from state to state. Many governments, such as the District of Columbia's, give you the right either to request a swap for a comparable vehicle or to claim a complete refund including all the taxes, fees and charges you paid. The seller can, however, deduct from the refund to cover mileage and depreciation. North Carolina also allows you to recover any costs caused by the car's malfunctions, such as towing charges and rental car bills.

It may take more than just complaining to the salesperson to get your refund. The Iowa Attorney General's office recommends you keep records of the repair attempts and submit them to the manufacturer along with a formal request for either a replacement or a refund. If the manufacturer refuses, you can sue under the lemon law. In Vermont, you have to go before an arbitration board and make your case. The rights and the exact procedures in your state should be available online.

One thing to check is exactly which vehicles are covered in your state. According to the Vermont Department of Motor Vehicles, for example, that state's lemon law doesn't cover motorcycles, but North Carolina's does. North Carolina also covers drivers who lease their cars rather than buy. Some states extend the coverage to boats as well as land vehicles.

For How Long Does a Written Warning Stay on Your License?

2:10 AM No comments

Having a "good" driving record means you have not been charged points for driving violations. However, it does not mean you've never received a written warning from an officer for poor driving, for instance. Written warnings are differentiated from traffic citations in a variety of ways. The most important of which is the former does not appear on your permanent driving record, whereas the latter does.

Every state department of motor vehicles uses vehicle codes to differentiate various counts of driver negligence. Such codes appear on a driving record for a set period of time and may adversely affect insurance rates, depending on the severity of the violation and the number of transgressions reported. All vehicle codes are documented in court and are issued to the driver as evidence of the conviction.

Although a written warning contains vehicle codes or a written description of your offense, it is not an actual citation and therefore is not reported on your driving record. Depending on the jurisdiction, the written warning will most likely show up on an in-house system, which isn't disclosed to the department of motor vehicles or outside third-parties. In some states, warnings records are maintained by the State Patrol.

In lieu of issuing you a citation, an officer may opt to issue you a written warning. In general, less serious violations receive a written warning. For example, a speeding ticket -- an example of a minor offense -- may receive a written warning, but an at-fault collision most likely will not. In some cases, you may be asked to correct an issue that resulted in the written warning, such as a broken tail light or an out-of-date vehicle registration.

In comparison, traffic citations remain on your permanent driving record for years. For example, traffic violations remain on a driving record in Wisconsin for five years, whereas alcohol-related offenses remain for 55 years. In some states, if you receive multiple written warnings for the same violation in a certain period of time, you may receive an automatic citation the next time you are pulled over for the same violation. Not all states adopt this policy.

Points remain on your driving record from the date of the conviction up to a set period of time, which is determined by state law. After receiving a ticket, you have a set period of time to contest the ticket in court. The clock starts ticking on the violation once you receive a conviction or you pay the ticket amount. The department of motor vehicles cannot charge you any points for a written warning, nor demand payment for fines or penalty fees. You will not be required to appear in court or provide an admission of guilt for any charges.

You will not lose your license or be subject to a higher auto insurance rate because of a written warning. Having multiple traffic tickets, on the other hand, can cause you to lose your license for a set period of time or be ordered to attend a safe-driving course. States evaluate the severity of your traffic violation in concert with your driving record to determine what penalty is appropriate under the law.

Can I Get My Car Title After Paying All of the Payments Except Excessive Late Fees?

6:58 PM No comments

If you're still paying for your car, you signed a contract that allows a lender to collect fees for late payments, no matter how excessive the fees might seem. Whether you have a traditional auto loan or a car title loan where you used your vehicle as collateral, you must pay any fees stated in your contract to obtain your car's title.

Read over your contract to determine the accuracy of your late fees. Lending contracts outline the cost of late fees and when the fees are charged to your account, such as after 10 or 30 days. You might find that you're charged a percentage of the payment amount, including late charges. If you determine the late fees are incorrect, call your state's attorney general's office to find out where to submit a complaint. You only have to pay the fees stated in your contract, meaning the lender can't make up fees or charge you more than you agreed to.

After you determine the fees are accurate, try negotiating with your lender to decrease the amount of your fees. Review your finances to determine whether you can pay a portion of your fees in one payment, which may motivate the lender to accept a lower offer. For example, if you owe $500 in late fees, offer $250 to dismiss the remaining charges. It might prove difficult to negotiate with a lender to decrease your late fees because you agreed to pay the fees when you initiated your loan. The lender is within its rights to collect any money due before releasing the cars title.

Ask to have your payment arrangement or the negotiated fee agreement in writing before you make your payment. Otherwise, the agreement is verbal, meaning you must still abide by the terms of your original contract. Keep a copy of the agreement for your records. If you can't negotiate a lesser fee amount, pay your late fees and find out when you'll receive the vehicle's title. If your lender is local, you might obtain your car's title immediately after making your last payments.

It can take weeks before you receive your vehicle's title, even if your lender is local. Some lenders have a title processing department, but it often takes time to process payments and complete your state's title work. Your state's motor vehicle department also needs time to process your title. Ask your lender to rush the processing of your payment and title release if you need the title quickly. Some motor vehicle offices offer a rushed-title option, meaning you can receive your title faster for a fee.

What to Know in Buying a Pre-Owned Car

4:40 PM 1 comment

Buying a pre-owned car can save you a considerable amount of money. However, even used cars represent an expensive purchase for most people, so it is important that you shop wisely to get the best value possible. By understanding what you need to know in buying a pre-owned car, you can research the history of each vehicle, get accurate pricing information and avoid getting ripped off by shady sellers.

Pre-owned cars may look perfectly fine, but may have serious problems you need to know about. Unscrupulous sellers can change odometer readings, hide mechanical problems or fail to disclose accidents. Running a vehicle history report may protect you from such scams. The most comprehensive vehicle history reporting system is Carfax. Check the VIN number for cars you are considering buying to find out about permanent damage caused by accidents or flooding, to check the mileage for accuracy and even to find out if the car received regular maintenance, such as oil changes.

Mechanics charge a fee to inspect a pre-owned vehicle for problems, which can get pretty expensive if you do it repeatedly. Check used cars for common problems before spending money on a mechanic. Pop the hood and look at the engine before and after a test drive. The engine should be clean; watch out for oily residue or signs of a leak. Clean the oil dipstick and check the levels and how clean the oil looks. Signs of water in the oil could mean a bad head gasket, an expensive repair, notes Cars.com. Check the undercarriage and wheel wells for signs of oil or leaking fluids. When you test drive the car, make sure it starts easily, shifts gears and accelerates smoothly.

It is not unusual for sellers to price a used car according to how much money they want instead of what the car is actually worth. Do your homework to avoid overpaying. Kelley Blue Book values are industry standard for pricing new and used cars. Private party cars are separated into three pricing categories based on the condition of the vehicle. Dealership prices are higher, but the dealer markup frequently includes a limited warranty to protect you from repair expenses immediately after purchase. In addition, a private seller's used car is rarely in excellent condition, while dealerships will often make repairs before putting a vehicle on the lot, notes Kelley Blue Book.

Always have an independent mechanic inspect the vehicle before you hand over your hard earned cash. Many pre-owned vehicle sales are "as is," which means you may have no recourse if the car self destructs five minutes after you buy it, warns Kelley Blue Book. A mechanic can find potential issues, such as temporary fixes to hide a serious oil leak or transmission problem, as well as alignment issues that could indicate an unreported accident. Additional things to look for during an inspection include rust spots, uneven wear on the tires and badly fitted door, trunk or hood closures.

What Happens If Your Car Payments Go Into Default?

7:36 AM No comments

When you get behind on your car payments, the loan will eventually go into default. When this occurs, your car could be repossessed and your credit will be negatively affected. You can expect plenty of phone calls from a collection agency as well as notices in the mail.

When you go into default, the lender will most likely contract with a collection agency to attempt to collect the debt. The collection agency will call you frequently as well as mail you notices. The collection agency will try to reach you to get you to pay back the debt. If you do not communicate with the collection agency or the lender, they will assume that you have no plans on repaying the debt.

After the collection agency attempts to get you to pay and you ignore the request, your car will most likely be repossessed. Every state has different laws when it comes to determining at what point your car could be repossessed. Some states will allow your car to be repossessed after one month while in others, it might take as long as three or four months. A car repossession company will most likely be contracted to take back your car.

In some cases, the lender may take additional action against you. The lender could potentially file a lawsuit against you to collect the money that you owe. The judge in the case could decide to garnish your wages or require you to pay through some other means. If the amount that you owe is much greater than the value of the car, the lender is more likely to take this approach.

In some states, when a lender takes your car through repossession, the lender must tell you what it will be doing with the car. If your car will be sold at an auction, the lender must notify you of the time and place of the auction. This way, you can actually bid on the car. If the car is sold through other means, you might have the right to buy back your car for the amount that is owed.

Instead of going through the repossession process, you may be able to negotiate with your creditor. Lenders do not want to have to repossess the car because it means that they will lose the regular payments and the interest that you have been paying. The lender may be willing to offer additional payment arrangements so that you can avoid default. For example, the lender might lower your interest rate or extend the repayment term to make your payment more affordable.

Is it Illegal to Sell My Car If I Owe Finance on It?

12:51 AM No comments

It is not illegal to sell your car if you still owe money on your car loan, but you'll have to abide by your state and lender's requirements to transfer ownership. Some states don't allow vehicle title transfers when a lien exists, so you'll have to provide a lien release from your lender. Expect to pay off your loan to sell your car.

States vary on title processes when a lien exists. Some states send the title to the lien holder; once the loan is satisfied the lender will release the title. If this is the case in your state, you won't be able to sell your vehicle without the title. Other states may send you the title, but decline transfer without a valid lien release. In states that allow title transfers while liens exist, buyers usually steer clear of a vehicle purchase if it has a lien. Your lender can repossess the vehicle from your buyer; this fact is well known.

If your lender has the vehicle's title, you must satisfy the loan before you can officially sell your car. Call your lender to discuss its payoff process and to obtain your payoff amount. Some states allow the lien holder to sign the front of the title to prove the lien has been satisfied. If no spot exists for this on the title, you can obtain the lien release document to give to your buyer after you pay off the loan. Be clear on your lender's requirements before you sell your car to avoid issues after you've found a buyer.

Selling your vehicle while it has a lien is not unusual, but you should plan ahead to sell your vehicle. Call your lender before you advertise your vehicle for sale to find out how long the title transfer or lien release process should take. If you can't sell the car for the entire loan amount, expect to come up with the rest of the money needed to satisfy the loan. If your lender is local, bring your buyer to the bank to pay off the loan. If not, allow your buyer to call your lender to pay off the loan directly.

If you had originally bought a vehicle that had a lien listed on the title or the loan is in someone else's name, you can remove the lien from the title before your sale. Look up the lender's information to call in and request a lien release. Acquiring the lien release may prove a hassle; most banks can send the release only to the original borrower. Expect to provide the bank with a copy of the car's title and registration to prove ownership. Once you have the proper lien release, retitle the vehicle. This way, you can simply sign over the title when you sell the car.

The Advantages of Having Trade-Ins When Leasing Cars

7:49 PM No comments

Depending on the value of your trade-in vehicle, you might decrease your lease down payment amount and still obtain low monthly payments. However, if your trade-in is worth more than the amount of the lease's taxes and fees, consider selling it privately to avoid financial risk if the car becomes declared a loss by your insurance company.

If you plan to pursue a lease advertisement, it likely calls for a down payment in addition to taxes and fees. This amount is often thousands of dollars. You can minimize or decrease your money out-of-pocket with your trade-in. If you owe money on your vehicle, the dealer must pay off your vehicle's loan before taking ownership of the car. If you owe less the vehicle's value, the excess amount goes toward your vehicle lease as a down payment.

If your car's trade-in value exceeds the down payment amount needed to obtain a certain monthly lease payment, you'll pay a lower monthly payment. For every thousand dollars you put toward a lease, your monthly payment decreases by about $30 per month. Most states allow a sales tax deduction when a trade-in exists, since you've already paid taxes on the vehicle you own. Many states only tax leased vehicles on the monthly payment amount, not the entire price of the car. If the tax deduction applies to your purchase, you might eliminate any out-of-pocket down payment requirements and still obtain a lower monthly payment amount.

To sell your vehicle privately, you'd have to advertise your vehicle for sale, answer and meet with potential buyers and arrange the paperwork for your sale. When trading your vehicle to a dealer, you only need to sign over your vehicle's title. If you still owe money on the car, the dealer arranges to satisfy the loan. If you sell privately, you must arrange to pay off your loan and acquire a lien release to sell your vehicle, which can take weeks.

When you lease a vehicle, it belongs to the leasing bank, not you. Leasing banks require lessees to purchase a full-coverage insurance policy that names the bank as the loss-payee. If your vehicle becomes a loss because of damages or theft, your insurance pay off goes directly to the leasing bank. You will not receive any of your money back from the bank, even if you paid the entire lease cost upfront. If your vehicle's value exceeds the cost of taxes and fees, consider selling it on your own to provide a down payment. Keep the rest of the money to pay your lease payments instead.

Car Repossession Laws in Virginia

8:51 PM 1 comment

The Virginia Consumer Protection Law and Title 6.2 of the Code of Virginia outline the rights consumers have against lenders performing repossessions of their vehicles. The Virginia Code requires lenders to disclose their rights in their written loan contracts before they can legally repossess their vehicles. If they fail to disclose their rights to repossess, they cannot proceed with repossession.

Effective October 1, 2010, the Virginia Assembly passed legislation requiring lenders to send borrowers a default letter before attempting to repossess their vehicles. The lender must send a written notice by first-class mail at least 10 days before repossession. The notice must state the amount of principal and interest due and owing, and alert the borrower of default and provide him with notice of the lender's ability to repossess the vehicle if the buyer does not pay the entire delinquency by a prescribed date.

If the buyer does not pay the entire amount owing in principal and interest, the lender can repossess his vehicle. However, the lender cannot sue for any remaining loan obligation and the costs of repossession if he does not provide the written notice at least 10 days in advance of repossession. At least 15 days before selling the borrower's repossessed vehicle, Virginia law requires lenders to notify the borrower of the time and date of the vehicle sale; a written account of the amount due and interest charged through the date of repossession; costs of repossession; and the costs of preparing to sell the reclaimed vehicle. During the period after repossession but before the sale, the lender must give the delinquent borrower a right to redeem his vehicle.

Under Virginia law, borrowers have a right of redemption to reclaim their vehicles before the sale date if they pay all expenses due, including the costs of repossession, principal, interest, expenses incurred to advertise the sale and any other preparation costs. Additionally, Virginia allows buyers to receive any surplus funds obtained from sales if they do not exercise their rights of redemption. Lenders must return any overage after deducting for interest, the principal loan amount, reasonable expenses and sale costs. Lenders have 30 days from the date of auction or sale to send their proceeds.

Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

What Car Loan Documents Do Banks Require From an Individual Seller?

6:02 AM No comments

Selling your car directly to an individual buyer can bring you a higher price than if you trade it in at a car dealer. Assembling the necessary paperwork beforehand may make your car easier to sell. The transfer of ownership also will go more smoothly when you find a buyer. Lenders require certain documents from both the buyer and seller when making a car loan.

A bill of sale is an agreement that makes the sale contract between you and the buyer legal. The document must include your name and address, the buyer's name and address and the selling price. In many states, the law requires both the buyer and seller to sign the bill of sale. Other information listed on a bill of sale includes a description of the vehicle, the vehicle identification number (VIN) and odometer reading at the time of sale. The buyer needs a bill of sale to show the lender as well as to register and title the vehicle.

A vehicle history report from a national database such as Carfax , AutoCheck or the National Motor Vehicle Title and Information System shows that your vehicle has a clean history, which can improve your chances of selling it. Vehicle history reports include information about past owners, previous odometer readings, service records and accidents involving the vehicle. The vehicle's maintenance record also gives a potential buyer more information about the car's history. A mechanical inspection report could be a worthwhile investment on your part as well. Showing that the vehicle was mechanically inspected before the purchase could help the buyer's chances of getting an auto loan. Ask the mechanic to include the make, model and VIN of the vehicle on the report along with a cost estimate for any necessary repairs.

As the seller, you cannot transfer ownership of the vehicle until there is no lien holder listed on the title. In most states, you are not allowed to privately sell a vehicle until you have clear title. This means you have to repay your car loan in full before the lender will release the lien on the vehicle. A lien release is proof that a loan you have on the vehicle has been satisfied. Once you pay off the auto loan, a lender usually releases the title marked paid. However, some states require you to go to the department of motor vehicles to get your title. These states generally require you to pay a fee before releasing the title.

Providing an estimated retail value for your vehicle based on Kelley Blue Book or National Automobile Dealers Association and trade magazines can be helpful to a buyer's lender. Other documentation that is not always required but which can be useful includes transferable manufacturer's warranty documents or service contracts that haven't yet expired. Writing a formal purchase agreement can also be helpful to a buyer applying for financing. A written contract holds more ground, as the seller must honor any promises stated in the contract. If you sell the vehicle "as is," clearly state that in the contract. Even though implied warranties don't normally apply to private individuals selling a vehicle, stating it in the sale contract gives you additional protection by removing any implied warranties.

If a Car Company Closes Do I Still Have to Pay the Remaining Balance on the Car?

2:22 AM No comments

The process of getting a loan to buy a new car is complicated, especially when you deal with representatives from different companies including the automaker, the car dealership and one or more banks. Whatever the terms of your loan and purchase are, you'll need to continue making payments according to your purchase agreement even if one or more of these companies closes.

Once you sign a loan agreement to take possession of your new car, your loan becomes a valuable commodity. The dealer receives the full purchase amount from your lender, whom you must pay in monthly installments according to the terms you agree to. The lender takes on the risk that you won't be able to pay but also reserves the right to repossess your vehicle to recover some of its cost. The lender may sell your loan, often packaged with other auto loans into a financial instrument known as a debt security, to an investor who is willing to pay cash up front and wait to make a profit by collecting the interest you pay.

Most auto lenders are commercial banks, which means they are exposed to risk through many types of loans that they issue. If the bank that owns your loan fails, it does not release you from your obligation to pay off the balance of your car. Instead, the bank will likely sell your loan to another bank, which will continue to collect your payments. Your loan is an asset, which means the bank that owns it can sell it to raise cash or use it as collateral to borrow money to stay in business.

If the dealership where you buy your car closes, it will do nothing to affect your loan. Dealers don't make loans directly to customers, even if the salesperson who shows you the car and negotiates a price also handles the loan paperwork. Instead, dealers work with banks through special arrangements. The company listed on the loan statements you receive is the owner of your loan, although the dealer may continue to contact you regarding your satisfaction and service or warranties for your vehicle.

Automakers are even further removed from the auto loan process. They work with dealers through franchise agreements, selling their vehicles at wholesale prices and allowing dealers to handle the final transactions. If an automaker closes or goes bankrupt, its customers continue paying off their loans. When automakers offer financing through affiliated lending programs, these programs are actually separate entities that may not be affected by the bankruptcy. In other cases, the automaker-affiliated lender will sell your loan to another bank, which will change who receives your payments but not how much, or for how long, you need to pay.

Is a Down Payment Required to Lease a Car?

12:24 AM No comments

Many lease advertisements offer low monthly payments but state that a down payment is necessary. You do not have to pay the entire specified down-payment amount, although your payment will likely increase. Most leasing banks only require you to put your first payment down, although some banks may require additional fees, such as a security deposit.

Manufacturer lease advertisements boasting low monthly payments are designed to attract buyers. Lease programs are usually based on predetermined future resale value and interest rate. For current promotions, the low monthly payment is usually a best-case scenario, meaning a longer term, less money down or additional mileage allowance will increase the price. If you want the exact payment you see, you do have to put the required money down unless you negotiate the vehicle's sticker price.

You can change the lease's annual mileage allowance, term and money down requirements to fit your driving and budget needs. Any changes to the lease will increase its monthly payment. For example, every $1,000 that you put down toward the lease equals about $30 less in payment per month. Keep this in mind when you're shopping for a lease. A lease that looks attractive at $199 per month can easily become $260 per month if you decrease your down payment by $2,000.

Many lessees focus on monthly payment rather than overall vehicle cost. If you lease a vehicle and don't negotiate, the dealer makes full profit for its sale, as the leasing bank purchases the car at sticker price. The bank must purchase the vehicle before it leases to you. If you negotiate the price of the vehicle, you may achieve a monthly payment close to the one you saw advertised without putting any money down.

If your leased vehicle should become a loss from an accident, damage or theft, any money you put down is lost. Even though you will likely pay a higher lease payment, you won't experience the financial hardship that can result from a large down payment. A leasing bank is the true owner of a leased vehicle and your full coverage insurance reflects this. The bank is listed as your insurance policy's loss-payee, meaning any insurance payoff goes to the bank; you will receive nothing.

How Hard Is It to Get an Auto Loan From a Bank With No Credit?

8:17 PM No comments

If you have no credit history because you've had no loans and few --- if any --- credit cards, getting a car loan is going to be a challenge, but that doesn't mean it's impossible. The key to finding financing is taking your time, shopping around and knowing where your credit stands. You have options if your credit score is very low, so avoid the temptation to get desperate.

If your credit is below 550, it may be almost impossible to get a car loan from a bank, even one designed for those with bad credit. Scores between 550 and 680 are considered "subprime," which means they command a higher interest rate than those with a higher credit score. Those below 620 are particularly low, with the highest interest rates in the car loan industry, but you may find a bank willing to lend to you. To know where you stand and how hard it may be to get a car loan, consider paying for a copy of your credit score.

Certain online lenders offer financing options for college students or other first-time buyers who wish to buy a new car. These have high interest rates but may be the only option if you have a sparse credit history. If you have no credit simply because you haven't used credit for very long, this might be an option. Always research other choices first because of the high APR on these loans. These loans often prey on uneducated borrowers with high fees, so do your homework before you apply.

If you need a loan and have credit so low that no bank will give you a loan, you may be able to get one with a co-signer. If you choose to go this route, make sure both your signature and the signature of your co-signer are on the car loan. Certain lenders accept just the signature of the co-signer, which places the car's title in his name. Choose someone with a solid credit score to offset your negative one.

If you can wait to get a loan, you can take a few steps to improve your credit and make it much easier to get a car loan. By opening a couple of credit cards, using them regularly and then paying off the bills each month, you can establish credit history and improve your chances of qualifying for a loan. Try to maintain the same job and avoid moving from one home to another, as these can also affect how a lender looks at you when considering your loan application.

The alternatives to getting a car loan when you have no credit revolve around finding a way to pay cash for the car. If you can wait to purchase the car and save the money you would have been making toward the car payment, eventually having enough to pay cash, you can avoid the loan process. If you need a car now and know someone who's willing to offer you a loan, you can make payments to that individual rather than the bank. This option doesn't help improve your credit history, and it can create a strain on your relationship with that person, so use it cautiously.

How to Get an Auto Loan Without Credit

7:56 AM No comments

Need an auto loan without credit? It is possible, and it may be easier than you think. Run through these steps, consider your options, and get an auto line without credit.

Instructions

THINK ABOUT FAMILY AND FRIENDS FOR HELP WITH YOUR AUTO LOAN.

If you have bad credit, or no credit, one of the best ways to get it is to ask a close and trusted family member. Be sure to explain your situation and give them plenty of room to say 'no thanks' without feeling awkward. Before you ask though, be sure to know the options. See the next two steps for two options. Otherwise, skip to step four.

Just be sure you aren't always asking family and friends for money and help. Make it a one time deal and make sure you pay it off on time or even early.

DRAFT A LEGAL PROMISSORY NOTE WITH YOUR FRIEND OR FAMILY MEMBER

Your personal lender can pick the percentage and set up the pay back period. Promissory notes are available for free online. You can even pick up a free amortization table online and they might as well be the bank. Let them know you will pay automatically every month. (See tips below)

GET A CO-SIGNER FOR YOUR AUTO LOAN.

If you know someone with excellent credit you can piggy back on their credit. If someone is willing to cosign a loan with you at the bank they are truly offering you a huge favor. This lets their good credit build your credit. However, if you don't pay the loan, their credit suffers. Do not break their trust.

GET HELP FROM THE AUTO DEALER FOR YOUR LOAN.

Sometimes an auto dealer will lend you money themselves. If there is a good reason you don't have credit that you can prove, this may be an option for you.

CONSIDER PEER-TO-PEER LENDING SOURCES

If you don't have family or friends who can help, and neither banks nor auto-dealers will help turn to the online community. You will have to create a profile, reveal your credit number, and decide the highest interest rate you are willing to pay on your auto loan. Since these sites often base their loans on a 360 month cycle, it fits well with an auto loan.

Does Gap Insurance Replace a Totaled Vehicle?

11:12 PM 1 comment

Gap insurance does not replace a totaled vehicle. This optional insurance pays off your car loan if your insurance company's market value payout does not, which can help you acquire another loan on a vehicle. Once your loan is paid in full, you can apply for another loan to replace your car.

Gap insurance is available for purchase through dealerships, lenders or your insurance company. Some states cap the cost for gap insurance, in which case you can expect to pay less than $100 for its purchase. Otherwise, you may pay in excess of $500. If you purchase the policy from a lender or dealer, you can add the cost to your loan balance. You do not receive the cost of gap insurance back if you do not use it.

Most lenders require a full coverage insurance policy for a car until its loan is paid off. Your insurance company pays for the car's market value if it becomes a total loss, without regard to your loan balance. If your vehicle's value is more than your loan balance, you may keep the profit. If not, you are responsible for paying the remaining loan balance, unless you have gap insurance. Gap insurance only covers your excess loan balance; it does not replace your vehicle.

Without gap insurance, your loan balance remains as an open account on your credit report until you pay if off. An open car loan may be unfavorable to possible lenders if you're trying to replace your vehicle through another loan. A second car loan is possible, depending on your credit history and income, but you'd have to make two car payments until the old loan is satisfied. Because gap insurance pays off the old loan, creditors view the loan balance as paid in full, which allows you to get financing for another vehicle with less difficulty.

If your insurance payout and gap insurance cover your loan balance, you'll have to start the car shopping process all over again, which includes applying for a new loan. An insurance company may claim that it can replace your vehicle, but it cannot replace it while you have a loan. Bank lending guidelines are separate from insurance replacement offers. Loans are based on your credit and vehicle value, so you can't change your vehicle in the middle of your loan. Expect to apply for a new loan if you want to replace your totaled vehicle.

How to Negotiate a Purchased Car Loan Payoff Balance

1:28 AM 1 comment

When you signed your auto loan contract, you agreed to pay your lender for the vehicle's cost, plus interest. The lender then paid the total selling price for your purchase to you or a dealership, so trying to negotiate a lower payoff balance might prove difficult. If you're able to pay your loan in full, you can make an offer to your lender for a lower payoff amount. Because of your signed contract, however, your lender doesn't have to accept your offer.

Instructions

Organize your finances so you can easily access the funds for your loan payoff amount. If you're refinancing the loan, obtain an approval before negotiating. If you're paying cash, transfer your money around if necessary so that you can access your cash quickly.

Call your lender and ask for your loan payoff amount. The amount you'll receive differs from the loan payback amount stated in your contract, as your contracted amount includes interest charges. Decide your target payoff amount for negotiations.

Tell a lending representative you'd like to pay off your loan and state the amount of your offer. A special department may deal with reduced loan payoffs, so arrange to speak to the department that handles payoffs if the representative isn't authorized to make a decision.

Discuss a counteroffer if your lender doesn't accept your initial offer. Once you decide on a reduced payoff amount, get the agreement in writing and arrange to pay your lender quickly.

Questions to Ask When Selling Cars to the Dealers

10:38 PM No comments

Selling a car to a dealership as part of a trade-in can be a harrowing experience. The majority of car owners place a lot of faith in online pricing estimates and market-value books and don't ask the right questions to help secure the best price for the vehicle. Asking the correct questions, along with being honest about the trade-in vehicle's condition, can go a long way to securing the best sale price.

A trade-in value or sale price of a car to a dealership can depend greatly on what the dealer has on hand in his lot and what cars are popular at the moment. A large, gas-guzzling SUV may net a smaller return, whereas a hybrid vehicle with a high fuel economy may command a larger trade-in value or sale price. Asking each dealer what's in his current stock of vehicles can help you gauge what level of interest exists for your vehicle and may grant you some negotiating wiggle room.

There's nothing wrong with putting a dealer on the spot and making her name her best offer. If you have several offers already in your back pocket, this can grant some ability in eliminating a dealership from contention if other dealers have already named a higher selling price or trade-in value for your vehicle. When pressed, some dealers may go higher than market value in attempting to secure your business. This situation can only be to your benefit.

This may seem like an obvious question, but it's still worth asking. A dealer that offers you market value or above for a trade-in vehicle may be compensating for it by tacking on extra fees to a new or used car you may be purchasing. Asking for the final sale price of your new vehicle can help determine if any dealer shenanigans are taking place. If a dealer hesitates in any way to be forthright in presenting you with an itemized list of charges and fees, it's best to walk away from the situation and search for a more reputable dealer.

Why Car Loan Refinancing Is a Bad Idea

2:03 PM No comments

Refinancing a car loan means taking out a new loan to pay off the balance of the existing loan. Some consumers do this to get a lower interest rate and decrease interest debt, while others are just trying to lower their monthly payments. While car loan refinancing can sometimes sound like a good solution, it also has the potential to be a bad idea.

If you choose to refinance your auto loan in the late stages of your existing loan, you could end up extending the financing on your vehicle by three to five more years. Check the current Kelly Blue Book value on your vehicle to see if it is worth the remaining balance. Remember that a refinanced loan will add more interest debt as it extends the payment terms. When you add up the interest you will pay on the loan balance, you can find yourself in a position where the loan is worth more than the vehicle. If the vehicle were to be totaled in accident, you could be liable for paying off a large portion of that refinanced loan.

Refinancing your auto loan means you are carrying financing on the vehicle beyond the normal five-year loan term. If you get a refinanced auto loan in the third year of your original loan, and the refinance is a new five-year loan, then the vehicle would have a total of eight years worth of financing on it. If you want to purchase a new vehicle after owning the original vehicle for six years, you will have to attach the remaining balance of the loan to a new car loan. That creates multiple layers of auto financing to your next car loan and means you will be rolling two car loans into one when you finance the new vehicle.

One of the advantages to purchasing a new vehicle is that it carries the manufacturer's warranty that will protect you from the financial burden of major repairs due to normal wear and tear. Extending the loan on your auto by refinancing it means that your loan term could extend beyond the term of the manufacturer's warranty. At the point where your car payments should end, you will still have the refinanced loan to pay on and you will also be responsible for the cost of any major auto repairs.

Read the conditions of your original auto loan before considering refinancing. Some car loans have a penalty for paying the loan off early, according to Colin Bird, writing on Cars.com. If the penalty to pay off your auto loan early is more than the savings to refinance the loan, then getting involved in a refinance is a bad idea.

How to Calculate Automobile Payments

7:56 AM No comments

Most people take out a loan to cover the cost of their new vehicle. Calculating the monthly payments are important because you need to budget appropriately to make sure you can afford the car. You should also be careful that you do not get upside-down on a loan you may have trouble repaying. Upside-down refers to the situation where you owe more on your car loan than the car is worth. To calculate monthly payments, you need to know the interest rate, term and amount borrowed.

Instructions

Determine the interest rate you will pay on your auto loan. The better your credit score the lower the interest rate you will pay. Also, used car loans have higher interest rates than new car loans.

Determine the amount of time you will take to repay the loan. Most car loans range from 24 to 60 months. The longer the term of your loan the higher the interest rate you will pay.

Determine the amount that you will borrow. Do not forget to include closing costs, taxes and licensing when considering how much you will have borrow.

Calculate your monthly payment by using the following formula where A is the amount borrowed, R is the annual interest rate and T is the term of the loan in months.

Monthly Payment = ( R/12 + R/12 / ( ( 1+R/12)^ T - 1)) * A

For example, if your interest rate is 5.5 percent, your term is 48 months and you borrowed $15,000, your monthly payment would be $348.85.

The Best Time to Turn in a Car on a 48 Month Lease

1:46 PM No comments

Depending on which bank you lease through and the equity of your vehicle, you may be able to end your lease before the end of your 48 month contract. Ending your lease early is a personal decision that doesn't work for everyone. The best time to end the lease is either before your bumper-to-bumper warranty expires or when you have an opportunity to end it without penalty charges.

Ending your 48 month lease is less of a hassle if you wait until the end of the term. You won't incur early termination fees or penalty charges if you finish out the contract. Otherwise, you would have to pursue other avenues to get out of the lease; you cannot just walk away from the lease. Waiting until the end of term allows you to start a new lease or finance again without concern. Extra fees apply only if you went over your mileage allowance or exceeded the wear-and-tear allowance.

The bank you leased from may offer an opportunity to end your lease early in the event that you purchase or lease from the same bank again. Call your bank to find out if it offers the option. If you have your eye on a vehicle made by a different manufacturer, call a new-car dealer to find out if its manufacturer offers lease-end options for your type of car. The program is often known as a conquest incentive and serves to entice buyers to come to a new brand. Most pull-ahead programs are offered during the last year of the lease.

Trading out of your lease may prove another lease-end option. During the term of your lease, you pay for expected depreciation based on the term and mileage you agreed to. If the bank was wrong about the lease-end value, you may have equity in your leased vehicle. You can work with a dealer to trade out of your lease early. The dealer must purchase the lease from the bank, but if the value is more than the leased buyout amount, you can use the extra money to put toward your new loan. This is likely to work after you've leased for at least two years.

You can always pay to get out of your lease or transfer it to someone else if you need to. Lease termination is not cheap, so you may not want to terminate it unless you have to. To end the contract, the bank charges you a fee in addition to your remaining payments due. You can also transfer your lease to someone else. A person who assumes your lease must have good to excellent credit. Lease transfers can work at any time during your lease, as long as your bank allows it.

Early Lease Termination Options

4:49 AM No comments

If you want to get out of your lease contract, you may have several options available to you. Paying to terminate your lease with your bank is likely the most expensive avenue you can pursue. Explore your other lease-end options to choose one that saves you the most money.

Pay to terminate your lease at any time during your contract. This lease-end option is the most expensive you can pursue. To terminate the lease contract, most banks require lessees to pay all payments due until the end of the contract in addition to a termination fee, which is a set price determined by the bank. This one-time charge is likely to cost $1,000 or more. Call your leasing bank to determine the cost of termination. Over-mileage or wear-and-tear fees are not included in the termination fee.

Many manufacturers offer incentives to end a lease early, but only in the event that you lease or finance through the same bank again. This opportunity is likely offered during the last year of a lease. Most manufacturers send mail to offer lease-end incentives, but you can call monthly to inquire about the bank's lease-end offers. If you can take advantage of a lease-end offer, you won't have to pay any termination fees. Over-mileage and excess wear-and-tear fees still apply; they are not waved for incentive purposes.

You can purchase your vehicle from the leasing bank or sell it at any time. Obtain a lease buyout quote from your bank. You can sell your vehicle privately for the buyout amount; if you owe more than the car's actual private sale value, you'll have to come up with the additional money needed to satisfy the bank's buyout amount. This amount may prove cheaper than a lease termination. You can also trade the vehicle to a dealer toward another trade; you can transfer, or roll over, any excess balance toward a new loan or provide a down payment.

A lease transfer option is worthwhile, especially if your contract is new. If your leasing bank allows it, you can transfer your contract to another party; the new lessee must abide by your original contract terms. Check with your bank to find out if it allows lease transfers. Many banks require that an account be in good standing and at least several months old. Some banks charge a transfer fee, which is usually around $500, as of 2011. You may pay the transfer fee or transfer it to the person assuming your lease.

How to Turn in a Leased Vehicle Before the Term of the Lease

9:39 AM No comments

You have several options for returning a lease early. You might choose to terminate your contract and pay any remaining payments and a termination fee. If you plan to purchase a new car of the same make using the same leasing bank, you might find you can end your lease up to one year early without penalty. Banks differ on termination costs and new lease incentives. Discuss the termination with your bank and explore any lease termination options and costs before determining your best option.

Instructions

Contact your leasing bank and ask how much you'll have to pay to terminate your lease contract. Provide you exact odometer mileage to receive your termination amount. Determine where to send your payment and where to return your vehicle.

Wait to receive your lease-end paperwork. Ask to have it emailed if possible. Complete your lease-end paperwork and call your lease-return dealer to make an appointment.

Arrive to your appointment with your lease-end paperwork. Sign any additional paperwork the dealer provides and retain a copy of any paperwork you sign to keep for your records. Pay your termination fees directly to the bank, not to the dealer.

Contact your leasing bank to find out if you can return your lease early if you lease or purchase from the same bank again. If your bank offers offers this incentive, call a dealership and make an appointment to shop and return your vehicle.

Bring any items the dealer requests and choose another vehicle. Your salesperson will confirm your lease-end incentive availability. Apply to the same bank for your new lease or purchase.

Complete your new finance or lease contract with the dealer. Complete the lease return forms that the dealer provides and ask for copies to keep for your records. Leave your old car behind.

How to Understand Vehicle Finance

11:25 AM No comments

Vehicle financing is a means by which an individual may acquire a new or used vehicle without having to pay the full price upfront. Vehicle financing eases the financial pressure on the consumer by allowing the payments to be made over time. When relying on financing to acquire a new or used automobile, the buyer must make monthly loan payments that include interest and finance charges. To become familiar with the process of vehicle financing, you should first know about the different financing options offered by lenders and key terms.

Instructions

Understand direct lending. This is a form of vehicle financing in which the consumer takes out an auto loan from a bank, credit union or another financial institution. Under this arrangement, the buyer enters into a business relationship with two separate parties -- the automobile dealership that sells the car and the financial institution that makes the loan. In direct lending, the buyer uses the proceeds from the loan to pay for the car and repays the lender the amount of the loan, plus finance and interest charges, over a stated period. Payment is usually made monthly over terms ranging from 12 to 72 months.

Consider dealership financing. In this arrangement the buyer does business with only one party that acts as both the seller and lender. In dealership financing, the seller finances the vehicle, and the buyer repays the financed amount over a stated term. Once the contract is formed, the dealership may either retain the contract or sell it to an assignee. If the contract is sold, the assignee -- usually a bank or credit union -- is responsible for servicing the account and collecting payments from the buyer.

Understand and appreciate the benefits of dealership financing over direct lending. Dealership financing is a one-stop solution for buyers, offering vehicles and financing under one roof. Apart from the convenience of having to deal with only one entity, this arrangement also opens up multiple banks and lenders to the buyer, allowing him to choose from a wide selection of financing options offered by various institutions that partner with the dealership.

Compare leasing to financing and weigh the pros and cons of each. When you lease a car, you are required to return it to the owner at the end of the term, unless the owner allows you to purchase it at the end of the lease period and you agree to the terms. For a lease, monthly payments may be considerably lower than monthly payments for financing because you only pay for the vehicle's depreciation, plus taxes and rental charges. Other cost considerations in leasing are early cancellation fees, mileage, insurance requirements by the leasing company, and wear and tear on the vehicle.

Understand key terms used in vehicle financing, such as "down payment," "amount financed," "APR" and "finance charge." Down payment refers to the amount paid to the dealership at inception, that is, at the time the ownership of the vehicle transfers to the buyer. This may be below 25 percent of the vehicle's price. The amount financed is the amount of credit you receive, and the APR (annual percentage rate) is the cost of the credit, represented in percentage form. The finance charge is the amount you pay to access and use the credit.

Auto Lending & Financing

3:14 AM No comments

When you decide to buy a car, one of the most intimidating aspects can be securing the loan for it. Understanding the basics of auto financing can help you avoid making mistakes when taking out a loan for your car. This is one of the most important parts of the car-buying process.

When you are buying a car, it is important to shop around for the financing for your purchase. Many consumers make the mistake of thinking that the dealer financing is the best deal that they could possibly get. Instead of settling for this, you need to go to multiple lenders before you commit to a purchase. In some cases, you can get a lower interest rate and a longer repayment period with another lender.

The terms of a typical auto loan can vary significantly from one lender to the next. The interest rate and the length of the loan will play a role in how big your payment is. For most auto loans, the term will be somewhere between four and seven years. Five years is one of the most common terms for an auto loan. Each lender will also have different requirements when it comes to how much you have to pay down on the car.

When financing a new car, it is generally a good idea to purchase gap insurance from the lender. The lender will offer this as it helps insure that they receive their money if you total your car. Vehicles depreciate rapidly and if you wreck your new car soon after buying it, there is a good chance that you will owe more than the car is worth. Gap insurance pays the difference between what your insurance company pays for the car and what you owe on the loan.

When you apply for an auto loan, the lender will evaluate several factors when looking at your application. The application will be based largely on your credit profile. The lender will pull a copy of your credit report and look at your credit score. The lender will also want to see that you can bring in enough money to support your new loan payment. They will look at your debt to income ratio to determine if you have enough income for the payment.

When Do You Need Car Gap Insurance?

12:48 AM No comments

Gap insurance can save you money if your car becomes a total loss and your insurance company doesn't cover your loan balance. Without gap insurance, you would have to pay the remaining balance of your loan, even though you don't have the car anymore. Purchasing the policy may not be optional; some lenders or leasing banks require it as a condition of loan approval.

Because gap insurance covers the balance of your loan when an insurance payoff does not, you should purchase the policy if your car loan is upside down -- that is, when the car's loan balance is more than the vehicle's market value. Check the value of your car at Edmunds or Kelley Blue Book websites to determine whether your loan amount is more than the car's value. If you finance other items involved with the car purchase with your loan, such as your taxes, a warranty or other aftermarket items, you likely will be in a negative equity position and may benefit from purchasing gap insurance.

Many leasing banks require gap insurance on leased vehicles. Leasing payments are lower than a comparable finance, as the car's value is paid slowly. If you total the vehicle or it becomes a total loss, its market-value payoff is unlikely to cover the bank's loss. Also, many people fail to negotiate pricing for leased vehicles, which the leasing bank purchases from the dealer to lease to you. If you lease a car, you may want to purchase gap insurance, even if the purchase is optional. Otherwise, you would have to pay the leasing bank for its total loss, not just the lease amount.

Your auto loan provider can require that you purchase gap insurance. You may have the opportunity to shop elsewhere, but most lenders require that you purchase from them. The requirement is most common for high interest rate loans, such as those through subprime lenders. Interest rates can soar as high as 29 percent in some states. Because you'll pay so much money toward interest, it takes longer to create vehicle equity. Therefore, your lender can require that you purchase gap insurance so it doesn't lose money if your vehicle becomes a loss.

If you determine you need or want gap insurance, shop around among providers to find the cheapest policy. Some states cap the cost of gap insurance, so it may only cost $100 to purchase. In states that don't cap the cost, your provider can charge as much as it wants to make a profit. Prices can exceed $600. Check prices from your dealership, insurance provider or with the lender providing your auto loan.

What Documents Do I Need to Get a Car Loan?

12:40 AM No comments

Expect to provide proof of identity, income and address when you apply for a car loan. Depending on the accounts listed on your credit report, you may have to provide additional information to your lender. Have your paperwork ready before you apply for a car loan to ease the application and approval process.

Auto loan providers require proof of identity, so bring a driver's license or other acceptable proof identification, such as a passport or military or state identification card. Many auto loan providers also ask for proof of residency, so bring a recent utility bill along with you that shows your name and your current address. Bring proof of your income, such as your most recent pay stub. If you are self-employed, ask your lender what documentation it requires. You may need to bring several years' worth of tax return forms to prove your income.

Aside from your pay stub, you should also have relevant employer information on hand to provide to your lender. Find out your employer's official name and address. Obtain a phone number that the lender can use to verify your employment. Most lenders do not accept a co-worker's cell phone number. Find out the exact dates of your employment, which you'll also need for your credit application. Do not guess how long you've been with your employer; reporting inaccurate information to an auto loan provider may result in the decline of your loan.

If you pursue financing from a lender other than a dealership, expect to provide detailed information about the car you want to finance. If you're purchasing from a dealer, your lender requires a bill of sale, which states relevant vehicle and pricing information. If you're purchasing privately, have the car's year, make, model, level and vehicle identification number ready to provide. Also note any extra features on the vehicle, such as a sunroof, leather, alloy wheels or heated seats. Extra features increase your vehicle's loan value.

Many auto loan providers require the names, addresses and phone numbers of three to five references. Obtain this information beforehand, as some of your friends or relatives may not answer their phones when you find you need the information. You may be asked to provide a copy of your Social Security card or birth certificate, so have the documents handy. Bring your tax identification card if you're not a permanent United States resident or have recently applied for a Social Security number. If you have past due accounts on your credit report, your lender may ask that you prove the accounts are paid.

Can I Return the Car if I Can't Pay My Monthly Car Payments?

11:49 PM No comments

You can return your car if you can't make your payments -- known as voluntary repossession -- but doing so can destroy your credit rating. Your bank may be able to help you if you can't make payments. Also, you may be able to sell your vehicle instead. Consider all of your options and the effect that repossession will have on your credit before you decide to return your vehicle.

Call your bank as you soon as you know you can't make your payment. Your lender may work with you to help you keep your vehicle. As long as you have a good payment history, the bank might allow you to defer your payments. A deferment allows you to miss up to several months of payments without penalty. You can use the time to get your finances back on track or pursue other options, such as selling the car.

Try to sell your vehicle, if possible. As long as your loan balance and vehicle equity are in line with one another, you can sell your car. If you owe less than the car is worth, you can keep the profit you make from your sale. Ask your lender for the car's payoff amount and check its private-sale value using an appraisal guide, such as the one offered at Edmunds.com or the Kelley Blue Book website, to see if the option is worthwhile. If your value is lower than the loan balance, you must come up with the difference to satisfy the loan.

If your inability to pay has not affected your credit history, refinancing your loan may prove an option. To refinance, you must apply for your loan's balance amount to another lender. If your approved interest rate is lower, you can enjoy a lower monthly payment. Refinancing may offer an opportunity to extend your loan term, which also lowers your monthly payment. If approved for a refinance, you likely have 30 to 45 days until your next payment.

If all other avenues fail, you can return your vehicle. Call your lender to find out where to return it. Avoid an involuntary repossession, meaning the bank will hire a repossession company to collect your car. If this happens, your car can be taken from anywhere, even from your place of employment. Repossession should be your last resort. A repossessed vehicle is later resold by your lender, and you are still responsible for any money still due on the loan after the sale. If you don't pay it, the lender will likely pursue legal action.

Is It Better to Make Payments or Pay Cash for a Car?

10:21 PM No comments

Most consumers have little choice but to finance the purchase of a new vehicle. However, if you have the cash to spare and your overall financial picture is sound, it is usually better to pay cash. There are some situations where financing a vehicle purchase does offer some valuable benefits, even if you have the cash on hand.

By paying cash for a new car, you avoid the finance charges that can add up over time. Depending on your interest rate, this could easily add up to thousands of dollars over a period of four or five years. You won't have the stress of making that large monthly car payment and the associated fear of falling behind and losing the vehicle. You can also potentially lower your insurance costs, since you won't be forced to carry some of the coverages and deductible amounts that lenders require.

Of course, if you're buying a brand new car, you can easily spend $25,000 or more, an amount that can be difficult to obtain without financing. Even if you do have that kind of money, it can take a big bite out of your retirement savings, emergency fund or your kids' college education fund. Consequently, you could be jeopardizing your financial future just so you can own a new car without taking out a loan.

By paying cash for a vehicle, you may miss out on other investment opportunities. Instead of taking your $25,000 and purchasing a new vehicle that will depreciate in value over time, you could purchase an investment instrument like a mutual fund that will offer a return on your money. You could still use a portion of your money to make a down payment on the vehicle and finance the rest and have plenty left for investing.

Paying cash can be a big advantage when negotiating with the dealer. If you let the salesperson know you have the cash and are ready to make a deal, you can often negotiate a lower price than you could by financing. Dealers typically make less money on a cash transaction than they do when your finance the purchase, so the salesperson will likely expedite the transaction so she can move on to the next customer. This means less time and hassle at the dealership for you, as well as a less expensive purchase.

Things to Remember When Selling a Used Car

9:53 PM No comments

When your used car has lost its favor with you, there are a few options to dispose of it. If you want to trade it in on a new car, a dealer may take it off your hands. But if you own the title free and clear and want to make more of a profit than you would at a dealership, sell your car on the used car market. Before you place your ad, do your homework to make sure you fetch the best price for your wheels.

Research your year, make, model and mileage to determine a fair market value for your car. There are many websites that help you evaluate the condition of your car to arrive at a competitive price. Check your local paper as well as online classified websites to get a feel for the competition. If there are similar cars in the same or better condition than yours, don't overprice your car. You can put it at a disadvantage right off the bat.

Your car must be in the best possible physical condition to attract buyers. Wash, wax and clean your car to make it shiny inside and out to help increase buyer confidence. Detail your car if you can afford it. Get your car checked out and repair the mechanical issues you can afford to take fix.

Gather your maintenance records and after-market purchase receipts, if any. Detailed records of timely and regularly scheduled maintenance will help the buyer feel more at ease because the car was cared for. Purchase a vehicle history report and print out the most recent price estimation. Have all your records ready so you can answer the potential buyer's concerns and questions about the condition of the car.

Gone are the days when you would simply slap a "For Sale" sign in the back window and hope for the best. Now you can increase the odds of selling the car at the price you want by utilizing the free online classifieds and car-buying websites. Use social media websites to help spread the word about the car. Include lots of pictures of the car's interior and exterior. These websites are free.

Every state's Department of Motor Vehicles has different requirements, but generally speaking, you must provide a clear title, free of loans, to sell a car. According to Edmunds, you must provide everything the buyer needs to successfully register the car, which includes releasing ownership and liability to the buyer; then, if there is an accident, you are not held responsible. You must document the sale to the DMV. In some states, such as California, you must also provide a smog test for cars over a certain year. The odometer reading must be verified before the sale.

Can I Get My Leased Vehicle Back After Repossession?

5:54 PM No comments

You may be able to get your leased vehicle back after repossession. Your bank might allow you to pay either your past due amount or the total price of the car in addition to late fees and repossession costs to get the car back. To avoid paying the full vehicle cost and extra fees, call your lender before the vehicle is repossessed.

Contact your bank before your car is repossessed. Your leasing bank may offer payment options or defer your payments if you're experiencing financial hardship. If it doesn't, expect the bank to repossess your vehicle. Once the car is collected, contact your bank immediately to discuss your options. You may have lost the opportunity to continue leasing and find you'll need to pursue a finance or pay cash for the car's purchase price instead.

Reasons for repossession are noted in your lease contract. A repossession company can take your car from just about anywhere, so if possible, make arrangements to return the vehicle instead of having it taken from you unexpectedly. Once the car is taken back, expect to receive a letter that outlines your payment options and the date the bank plans to sell the vehicle. Once the car is sold, the leasing bank will bill you for the remainder of your car's purchase if its sales price didn't cover the car's total cost. Once the vehicle is resold, you cannot purchase it back from your leasing bank.

Review your leasing contract; it likely states that the bank can repossess your vehicle after one missed payment. Repossession time frames differ by bank. Once the vehicle is repossessed, you must act quickly to get it back. If you plan to apply for a loan to purchase the vehicle for its total price, an approval can take up to 5 business days. Mail is not guaranteed, so if there's a delay in receiving your notification from the bank, you'll have even less time to purchase it back.

Expect to provide a bank or certified check to purchase your vehicle back. A personal check is not acceptable. Your bank may require you to pay the establishment holding your vehicle, such as an auction or impound location. Ensure you obtain payment and pick-up instructions from you bank. Expect to also provide proof of insurance again. It is unlikely that you can bid on your vehicle if the bank auctions it off. Most auctions do not allow the general public to bid on vehicles; you must have a dealer's or wholesaler's license.

Can You Lease Used Cars on Car Lots?

2:10 PM No comments

Leasing a used car could save you hundreds on your monthly bill, but it comes with extra risk and leasing a used car on a car lot usually does not give you the most cost-effective deal. Private lease swapping can result in a cheaper payment and allow you to forgo some of the fees normally charged to customers.

It is possible to lease a car on a car lot, but it is the dealer's choice whether to offer this or not. Leasing a car a few years after the manufacture date could drastically lower your monthly payment, as cars tend to depreciate the most during the first three years after the consumer drives it off the lot, according to a July 2004 article in USA Today.

You must pay for damages to a leased car, even though the dealership owns the title. Cars significantly lower in value during the first few years of their life because of the higher incidence of mechanical breakdowns. A three-year old car, for example, has twice as many problems as a one-year old car, according to Consumer Reports. It is also harder to predict the future value of the car. You could be paying more than you should for car in year five if the dealer understates its loss in value.

An alternative to leasing a used car from a dealer is lease trading. Private parties can resell their lease, which is often far cheaper than a dealer's. This is because the seller is less likely to charge any fees and may offer a competitive rate to get the car off his hands. Lease trading also allows you to have a car for a shorter length of time than an auto loan or a traditional car lease.

If you go with a leased used car from a dealer, you can still negotiate a lower price. The warranty should last for the duration of the lease and the dealer should go over the actual coverage guidelines. You can opt to take the car to a mechanic for an inspection and run a vehicle history report on it if you want to be thorough about your agreement. In some cases, you may be able to bargain with private sellers, as some may offer a cash bonus to quickly take their lease or pay the transfer fee.

How to Finance a Car Without a Cosigner Showing Up on the Title

12:59 PM No comments

A loan contract and your state's motor vehicle paperwork are prepared separately. State motor vehicle departments don't require that a co-borrower's name appear on the vehicle's title. Your co-signer, however, may require her name on your car's title to protect her rights as the vehicle's co-owner. If you default on your loan, the co-signer may not have any rights to the vehicle if her name is not on the title. Both you and your co-signer should discuss vehicle titling and speak to your lender or dealer to submit motor vehicle paperwork in only your name.

Instructions

Talk to your co-signer about your title intentions. If you need a co-signer, but don't want anyone's name on the title but your own, you must have your co-signer's agreement. If you can't come to an agreement, you might lose your co-signer.

Apply to lender or dealer for your car loan. Fill out a credit application along with your co-signer and wait for an approval, which can take several days if using an independent lender, or might be instant if using a dealership.

Sign your loan contracts with your lender or dealer along with your co-signer. Tell the lending representative that you want the title in only your name. You may sign your contract with your co-signer, but you'll sign your motor vehicle title application alone.

How to Negotiate a Car Price If Financing

5:29 PM No comments

Buying a car can be intimidating if you are not prepared. According to the National Automobile Dealers Association, the average purchase price of a new car at the time of publication is $28,400. It is the second largest consumer purchase most people will make, next to a personal residence. Purchasing a car involves up to three separate transactions--the purchase, the trade-in and the financing. While each of these transactions should be handled separately to ensure the best deal possible, it is especially true concerning the financing.

Instructions

Determine the exact car you want. Do all of your test driving and research before you begin to negotiate price. Let the salespeople who approach you know you are just researching but will be making a decision soon. Check with magazines and websites and read consumer reviews about the cars you are interested in. This information should also give you a retail price, and you should be able to find the price the dealer paid for the car.

Shop for financing with several lending institutions. Compare interest rates for new or used car purchases over different repayment terms. Tell each institution the down payment you will be paying and the approximate price of the car. Each can quote you an interest rate as well as a monthly payment based on that information. Ask for the total interest you will pay on each loan. When you have negotiated your best deal, ask the lender to write it down for you. See if you can be pre-approved for the loan to make shopping easier.

Negotiate the purchase price of the vehicle, without consideration for monthly payments. If you are trading in a vehicle, you can negotiate your trade-in price separately, but it might make it easier for the dealer to conceal what you are actually paying for the car. Buyers can become distracted by a high trade-in allowance. There is no difference between paying $20,000 for a new car with a $5,000 trade-in and paying $25,000 for the same car with a $10,000 trade-in. You will be paying $15,000 for the vehicle and giving up your vehicle in both cases; they are identical deals.

Ask the dealer to put his best price in writing. Shop with at least two other dealers on the same car with the same equipment. If the cars at other dealers have different options, make sure you either add or subtract the value from the appropriate deal to compare who has the best deal.

Go back to the lowest priced dealer and tell him you are ready to buy today but you need a better price. Depending on how good the deal was the first time, you may be able to negotiate a bit more off the price.

Ask the salesperson to give you a quote on the financing when you have negotiated a satisfactory price. He will have to run your credit application, but should be able to deliver a quote quickly. If the quote is lower than what you received from the private lender, go ahead and close the deal with the dealership. If not, tell the dealer the quote that you received from the lender, and give it an opportunity to do better. If the dealer gives you a better deal, you have saved more money. If the dealer matches the loan offer from the private lender, it may be quicker and easier to close the sale right at the dealer even if you do not save money.

Is It Safe to Use a Home Equity Loan to Buy a New Car?

11:38 PM No comments

Twenty-four percent of homeowners used a home equity loan -- line of credit secured by real estate -- in a 2006 survey by Synergistics Research Corporation. Buying a car using funds from a home equity loan might save thousands in finance charges, but the borrower could lose his car and home if he defaults. Overall, a regular auto is usually the way to go.

Home equity loans (HELs) are a lump sum of money usually at a fixed rate and set repayment schedule that a borrower gets by using his home as leverage. This is not the same as a home equity line of credit, which has a variable rate and offers interest-only payments. If the borrower defaults on the HEL, he can lose his house should the creditor sue for the debt. At the very least, the lender can prevent the sale or transfer of the home.

Since property secures the HEL, lenders usually offer lower rates than one would find on a car loan. However, most HELs have a 10-year repayment plan, so the borrower could pay more with a lower interest rate because of the long life of the loan. Most car loans last three to five years. Also, this type loan often has a higher origination fee than a car loan.

The longer life of the HEL usually means lower monthly payments than on an auto loan, and if the borrower repays the loan early, he can avoid the extra finance charges. The borrower may also qualify to deduct the interest on the loan. How much the mortgage interest deduction saves depends on the borrower's tax bracket. With an HEL at 6 percent and a borrower in the 25 percent tax bracket, for example, the effective tax rate is 4.5 percent. Taking out an HEL does not automatically qualify a taxpayer for a deduction. Renting out a home, for example, could disqualify one from using the deduction.

Consumers should always consult a professional if they plan to use the mortgage interest rate deduction to lower the cost of a car loan. In general, however, car loans are usually the cheapest way to finance a car, according to financial expert Don Taylor of Bankrate.com. However, consumers should calculate the cost of all options. Some websites, such as LotPro.com, have calculators comparing the cost of a car loan versus a home equity loan.

Laws on Title Loan Repossession in Nevada

9:09 AM No comments

In exchange for the loan, a borrower uses his car title as collateral with a title loan lender. Although title loan practices are legal in many states, some have enacted consumer protection laws governing lending practices of title loan lenders and the steps lenders must take when borrowers default on their loans. Generally, upon default, a lender can repossess his collateral. In Nevada, the Nevada Revised Statutes and Nevada Code govern title lending practices.

Under Nevada law, a title loan lender's sole remedy when a borrower defaults on his loan is to repossess or reclaim his collateral. The lender cannot pursue civil legal liability for repayment unless the borrower conducted fraud or intentionally damages his vehicle to avoid repossession. If there is no fraud, concealment or intentional waste, the lender's exclusive remedy is to pursue repossession.

Title loan lenders can sue borrowers for defaulting on their loans or loan repayment extensions in egregious situations. If a borrower intentionally tried to conceal his vehicle to evade repossession, the lender can sue him for fraud. If a borrower intentionally damaged or neglected his vehicle, the lender can sue her for intentional dissipation or waste. However, the Nevada Code states that it is not considered waste when a borrower continues to drive her vehicle in the same manner before she obtained the loan.

Similar to vehicular fraud or waste, a lender can sue a borrower for fraudulently obtaining the loan by providing false information or transferring title to a third party in an effort to avoid repossession. For example, if a borrower transferred title to his brother after he obtained his loan, his title loan lender can sue him for fraud. Lenders can sue borrowers for fraud and collect reasonable attorneys' fees and legal costs. Furthermore, courts may award other equitable remedies, such as damages.

Title loan lenders have a legal obligation to post their fees and interest rates in conspicuous places to notify prospective borrowers of the applicable fees. Furthermore, title loan lenders must post their licensing information in conspicuous areas. Generally, title loan lenders cannot charge more than 40 percent of the principal loan amounts as an annual percentage rate. Under Nevada law, title loan lenders are not allowed to make more than one loan to one customer at the same time until the customer pays off any existing loans to that title loan lender. The Nevada Revised Statutes place further prohibitions on title loan lenders who engage in business with military borrowers. If a title loan lender repossesses his collateral, the lender must allow the borrower to reclaim her personal property left in the vehicle.

Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

Saturday, August 31, 2013

Credit History

Lenders

Credit Score

Other Factors

Friday, August 30, 2013

Instructions

Tuesday, August 27, 2013

Interest

Contract

Penalties

Remedies

Identification

Solution

Procedure

Considerations

Identification

Time Limits

Considerations

Warning

Monday, August 26, 2013

Your Loan Contract

Negotiating

Paying Your Fees

Title Release Process

Vehicle History

Inspection

Pricing

Additional Considerations

Collection Agency

Repossession

Lawsuit

Redemption

Modification

Your State's Rules

Lender Requirements

Using the Sale to Satisfy the Loan

Lien Release Issues

Sunday, August 25, 2013

Less Down Payment Required

Lower Monthly Payment Amount and Tax Deduction

Getting Rid of the Vehicle Without Hassle

Warning

Saturday, August 24, 2013

Written Notice

Repossession

Right of Redemption and Right to Surplus

Considerations

Bill of Sale

Vehicle History Report

Vehicle Title

Other Documentation

Your Auto Loan

Bank Failure

Dealership Closures

Automaker Bankruptcy

Friday, August 23, 2013

Advertisements

Lease Modification

Negotiating

Benefits

Wednesday, August 21, 2013

The Credit Lowdown

Loans for College Students

Co-Signer

Establishing Credit

Alternatives

Instructions

Tuesday, August 20, 2013

Gap Insurance Information

Total Loss Payoff

Paying off Your Loan

Replacing Your Car

Instructions

Monday, August 19, 2013

What Vehicles Are in Stock Currently?

What's Your Best Price?

What the Price for My New Car?

Value

Trade-In