Auto Loans for Limited Credit History

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.

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.

Lenders

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.

Credit Score

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.

Other Factors

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.

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How to Cancel an Auto Purchase

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

1

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.

2

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.

3

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.

4

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.

5

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.

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Are Title Loans Legal in Arizona?

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.

Interest

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.

Contract

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.

Penalties

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.

Remedies

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.

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Government Lemon Law Information

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.

Identification

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.

Solution

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.

Procedure

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.

Considerations

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.

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

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.

Identification

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.

Time Limits

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.

Considerations

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.

Warning

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.

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

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.

Your Loan Contract

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.

Negotiating

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.

Paying Your Fees

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.

Title Release Process

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.

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What to Know in Buying a Pre-Owned Car

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.

Vehicle History

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.

Inspection

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.

Pricing

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.

Additional Considerations

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.

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