Can I Get Gap Insurance if I Refinance?

Consumers often dismiss gap insurance as an unnecessary expense when buying and financing a vehicle. If a buyer doesn't put any money down, he may benefit from gap insurance if his vehicle gets totaled in an accident. A lender can issue a gap insurance policy when setting up or refinancing a car loan.

What is Gap Insurance?

An accident can leave a vehicle damaged beyond repair. When an insurance company declares it a total loss, it calculates the fair market value and pays that amount on the loan. The vehicle's fair market value may be more or less than the loan balance. If it is less, the borrower will owe the difference to the bank. This difference is very likely to happen if a consumer buys a new car and an accident occurs within the first two years. New vehicles tend to depreciate as much as 25 percent within the first two years. Gap insurance covers the difference between the insurance payout and the loan balance.

Refinancing a Loan

A lender issues a gap insurance policy for a particular vehicle in connection to an auto loan. Gap coverage ends when a consumer pays off the loan or refinances it. You can buy a new gap policy when you refinance. You will need to pay a full fee at that time but you may receive a prorated refund for the insurance company for the previous policy. Some insurance companies may not issue a refund after 60 or 90 days after the contract date. Your lender will issue a new gap insurance contract and mail a copy to you.

Other Options

You can buy gap insurance through your lender or check other insurance companies for better rates. Ask your auto insurance agent if he sells gap insurance. Some companies may offer a Gap Plus coverage, which offers $1,000 toward a new car loan in addition to regular coverage. A one-time fee for the regular gap insurance starts at about $100, while Gap Plus policies may cost from $200 to several hundred dollars. Dealerships generally charge much higher fees for gap insurance than lenders or insurance companies.

Paying for Gap Insurance

You can pay for gap insurance with cash, check, a credit card or a bank account transfer in some cases. A lender may include the fee in your car loan monthly payments when you refinance. This may not be the best option as you will end up paying more in the end due to accruing interest. If you cancel gap coverage during the life of the loan, your loan payments will remain the same. The difference will go towards the loan principal. The lender would need to refinance the loan to adjust the payments.

Read More

Financing Vs. Leasing a Vehicle

When you're in the market for a new vehicle, you have two purchasing options: financing or leasing. Both will get you a new car quickly; however, the similarities end there. Leasing and financing are two entirely different beasts, and your unique financial and lifestyle situation should determine whether buying or leasing is a better option for you.

Financing a Vehicle

When you finance a vehicle, you are essentially making an agreement to purchase the vehicle from the dealership. To do this, you'll take out a loan from a bank or credit union, who pays the dealership in full for the car. The issuing bank is the official owner of the car until you pay off the loan; should you stop paying your car loan, the bank can repossess the vehicle. Once your loan is paid off, the car is yours to keep.

Leasing a Vehicle

In a lease agreement, you make payments on a car and you can use the car, but you don't actually own the vehicle. Instead, you merely have the right to drive the car for an agreed-upon term, which is usually two to four years in length. During this time, you must abide by specific mileage limits and properly maintain the vehicle; failure to do so will result in additional charges at the end of the term. When your lease is up, you have the option to purchase the car or begin another lease with a new vehicle.

Lifestyle Issues

The intended use for your vehicle plays a big role in whether you'll choose to lease or finance the car. If you have a long commute to and from work, buying a car would probably work best for you, as any cost savings you'd realize by leasing the vehicle would be nullified by the excessive mileage you'd incur. This is also true if you plan on taking a lot of trips out of town with your new car. On the other hand, a quick commute may lend itself to a lease since you won't be at risk of going over your mileage.

Financial Issues

If you want a new car, but are a little short on cash, a lease may be a better option than financing. A lease will be better right off the bat in this instance since a lease requires a small down payment, if one is even required at all. Financing a vehicle, however, requires a significant down payment; car buying site Edmunds.com recommends a down payment of 20 percent on new vehicles. Furthermore, no matter how much money you put down when financing a vehicle, leases almost always have lower monthly payments.

Credit Issues

As is the case with any type of borrowing, credit problems can keep you from qualifying for automobile financing or leasing. However, according to CarsDirect.com, it's harder to qualify for a lease than it is to qualify for a car loan if your credit is less than perfect. This is because leasing lenders have higher credit standards for borrowers. Furthermore, buying a car allows you the opportunity to put down a large car payment to demonstrate your ability to pay for the vehicle. In either case, a blemish-free credit history can save you hundreds of dollars in interest.

Read More

What Happens if You Stop Paying Your Car Lease After a Reaffirmation?

Repossession has significant consequences. If your vehicle was recently repossessed and you paid the lender to get the car back, it will repossess the vehicle a second time if you stop making payments. Your credit becomes further damaged and obtaining another lease may prove impossible until you reestablish your credit. If you reaffirmed your car loan after bankruptcy and then stopped making payments, the leasing bank will likely sue you soon after repossession.

Your Credit

The first repossession is already noted on your credit report even though you reaffirmed the car lease. The notation of a second repossession further damages your credit score. Future opportunities for car loans, lines of credit and other retail loans significantly decrease while the repossession exists on your credit report. The repossession remains on your credit report for seven years, although the impact on your credit score is most significant immediately following repossession. If you reestablish your credit by paying your bills on time, you may decrease your lending risk and increase your score as time passes.

Debt and Payments

Following the second repossession, you must pay your lender for the car's total cost value, which is more than the lease amount. When you purchased the car, the leasing bank paid a dealership for the total cost of the car. The bank then leased the vehicle to you. Once the leasing bank resells the vehicle, you're responsible for the difference between the car's selling price and loan balance, plus repossession fees. Contact the bank to set up a payment plan. You don't have to pay the total balance in one payment.

Result of Nonpayment

Many states allow creditors to garnish your wages for a judgment. If you don't pay your debt, the leasing bank will sue you for the amount you owe. When it wins its case, the court issues a judgment, which is also reported to the credit bureaus and lowers your credit score. After obtaining a judgment, the bank can take up to 25 percent of your wages before taxes. Once you're served a notice from the court regarding the debt, you must act fast to avoid the judgment and wage garnishment. Call to arrange a payment plan instead.

Bankruptcy Considerations

If you declare bankruptcy, you won't have to pay the repossession debt and the bank won't garnish your wages. Bankruptcy isn't for everyone, but if you aren't able to pay your debts and the balance of your car lease, exploring the option might prove worthwhile. If you reaffirmed your car loan after bankruptcy, you cannot discharge your debts again for four to eight years after the original bankruptcy. During this time, the lender may sue you and garnish your wages if your state allows it.

Read More

Tips on Buying a Used Truck

Purchasing a brand-new truck can mean opting into a lengthy payment contract with a significant interest rate. The used-truck market not only provides several more model options, but can also be a less expensive way to successfully procure a new rig. A few simple steps can be taken to insure that your used-truck purchase is a smart one.

Research

There are a vast number of resources available both in print and electronically that rate used trucks in a variety of categories, including safety specifications, payload, engine size, passenger capacity and overall value. Take some time to consider what specific jobs you'll need your truck for, what its most common cargo will be and what driving conditions you'll use it in most. Most uneducated vehicle purchases are completed on a whim. Impulse buys can leave you with a truck that has too little or too much power and is unsuitable to your needs.

Test Drive

Test-drive any truck and inspect it thoroughly prior to any purchase. If you are not mechanically savvy, ask the seller if you can bring it to your mechanic for a brief inspection. Obvious visible signs of engine wear include rust, fluid accumulations, smoke and engine odor. Don't be swayed by sellers who try to pass off flaws as part of the vehicle's charm. Purchasing a dilapidated vehicle can result in expensive repairs that can even cost more than the actual purchase of the vehicle.

Shop Around

The advent of online classified ads means that you're no longer stuck with choosing a used truck from those available in your surrounding area. An entire world of used-truck choices is available through major national used-vehicle websites and auction sites. Used-car dealerships have the same profit-driven motivations behind them when conducting used-truck deals as they do with new-truck deals. If you see a truck you're interested in, consult other vendors and compare prices prior to committing to any purchase. Finding the vehicle at a lower price can increase your negotiating power.

Read More

What Are the Additional Fees When Buying a Car?

If you plan to purchase a vehicle privately without registering or titling it, you may not pay any fees at all. Registering and titling a vehicle requires you to pay a variety of fees, which depend on the state and county you live in. You'll also pay additional fees if purchasing from a dealership.

Tax

Most states charge tax for a vehicle purchase, and some charge more than others. Taxes are figured differently by state and county. Some states may require you to pay more than 8 percent for a car purchase. While the amounts vastly differ, some states allow you to deduct the trade-in value -- if you have one -- from your purchase price before applying taxes. Some states also view manufacturer discounts for new cars differently; some require buyers to pay tax on the vehicle's full purchase price before applying any discounts.

Document Fees

If you're purchasing from a dealership, you can expect to pay a document fee. This fee is justified by dealers as a charge for handling bank contracts or motor vehicle paperwork on your behalf. A document fee differs by dealer and state, and some states cap the total amount a dealership can charge. A capped fee might be under $100, but some dealers can charge moe than $600. Because the cost can fluctuate by hundreds of dollars, you should consider purchasing from a dealer who does not charge the maximum price for this fee.

Registration and Titling

To register and title your vehicle, you likely have to pay for your title application and registration fees, which are based on the weight and type of vehicle. If you are purchasing from a dealership, it handles the process for you and collects the state's applicable fees. Each state has a different process and charges differently for registration and titling. The pricing information can usually be found on your state's motor vehicle website.

Inspections and Emissions

Inspection and emission requirements also differ by state. Most cars have to pass some form of safety inspection or emissions testing. If purchasing from a dealership, you can expect the process to be completed before you purchase your vehicle; the dealer charges you for any inspections your state requires. If purchasing privately, you likely have to complete the testing on your own. Some states offer a temporary inspection sticker, giving you time to complete the inspection or testing, while other states require that the tests be completed before you apply for the car's title or registration.

Read More

How to Transfer an Auto License Plate From Oklahoma to Florida

Personalized license plates allow vehicle owners to add unique touches to their vehicles. A person moving from Oklahoma to Florida needs to register her car in Florida and change her license plates to those of her new state. Although someone cannot actually transfer a license plate between states, Florida law allows a car owner to apply for a personalized plate with the same or similar number and letter combination.

Instructions

1

Go to the Florida Department of Highway Safety and Motor Vehicles' website, and download the "Rate Chart" (see Resources) to determine the amount of tax you must pay to register your car. Make sure to have your car's vehicle identification number and weight available.

2

Download and print the title application from the Florida Department of Highway Safety and Motor Vehicles' website (see Resources). Complete the form by hand.

3

Print and fill out a personalized license plate application form (see Resources). You can use a maximum of seven characters on a standard Florida license plate, and five characters for a left-aligned plate.

4

Mail your title application, along with a check or money order for the fee listed in the License Plate rate chart, to the tax collector in the county to which you are moving (see Resources). Additionally, send checks for the $225 -- as of June 2011 -- new registration fee and the $15 personalized license plate fee. You should receive your plates within 45 days.

Read More

How to Get Out of a Lease Without Paying

Depending how far you are into your lease, you may be able to sell the leased vehicle for its payoff amount. Or, you can transfer your lease to an interested party if your bank allows it. Getting out of a lease is not usually a quick and easy process, but it can be done if you allow some time for a sale or lease transfer.

Instructions

Sell Your Leased Vehicle

1

Check your odometer and write down the exact mileage. Call your bank to ask for your lease purchase amount and provide your current mileage. Write the buyout figure down, as this is the amount you'll need to sell your vehicle for.

2

Go to the following websites to determine your leased vehicle's worth: Edmunds.com, KBB.com and NADAGuides.com. NADA is for dealer trade-in amounts, which is in an option if you plan to purchase or lease a new car. Compare your vehicle's value to your payoff amount and prepare to sell or trade your car if the figures are close. Otherwise, you'll have to come up with the difference.

3

Go to a dealership to trade your leased vehicle for a new or used car, if you prefer. The dealership will handle the lease payoff, a new finance or lease account and all applicable paperwork. Otherwise, clean your vehicle entirely for its sale.

4

Advertise your lease wherever applicable. Autotrader.com, Craigslist.org or eBayMotors.com will reach buyers searching for a used car. Provide as many pictures as possible for your advertisement and any details about your vehicle that will help it sell, such as year, make, model, color, options (such as sunroof or leather) and overall condition.

5

Meet with potential buyers until you have one who would like to buy your car. Contact your leasing bank for further instruction, as you'll need to send the payoff amount to the bank to obtain the title and lien release for your buyer. Once you have all transfer paperwork, contact your state motor vehicle's department to ensure state procedures and complete your sale.

Lease Assumption

6

Call your bank to find out if you can transfer your lease to another party. Some banks allow you to do so free of charge, while some do not allow for a transfer at all. Ask for an explanation of the paperwork and transfer procedures so you know what to expect for the transfer.

7

Advertise your lease as a lease transfer, or lease assumption. Go to LeaseTrader.com or Swapalease.com to target people who are looking for a lease transfer. Or, you can advertise your lease through any automotive classified publications (online or in print).

8

State the current mileage and total mileage allowed on your vehicle, the monthly payment and months of payment left for the lease. Clean your vehicle completely and provide pictures of the car, along with applicable vehicle information, such as year, make, model, level and options.

9

Work with the Swapalease website or LeaseTrader website to transfer your lease, if using either. Both companies provide assistance with paperwork and the total transfer process. Sign any necessary documents to transfer the lease, and complete the transfer by following the bank's or website representative's instructions.

10

Call your bank to start the lease transfer process if transferring on your own, which includes an application from the potential buyer. Follow all instructions from your bank, including notarizing signatures, filling out and returning paperwork or providing paperwork to your buyer.

11

Find out when the lease application is accepted and all paperwork is completed and received by the bank by answering the bank's phone calls or calling to check in. Provide the new lessee with the vehicle after removing your plates, once the bank has confirmed the completion of paperwork.

Read More