How Does a Car Loan Improve Credit History?

FICO, the largest credit score company, explains that there are many ways to improve credit history. They all involve responsible financial management, like keeping modest credit card balances and paying all bills by their due dates. Car loans are reported on credit reports so they help improve the credit history if they are paid as agreed. Definition A car loan is an installment loan given specifically for the purchase of a vehicle. It is not a revolving line of credit like a charge card that provides a person with a certain spending limit...

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Can I Get a Car Loan If I'm Under 18 and My Parents Cosign?

A car loan is a legally binding contract. In most states, it is not possible for a minor under 18 years of age to enter into a legal contract. As a result, it is necessary for someone over the age of 18 to cosign on the loan and on the car title, which is also a legal contract. If a parent cosigns, you should have no problem obtaining a car loan. Legality The first step to obtaining a car loan as a minor is to ensure the loan is legal. For this, in most states, you will need to have a person over 18 years of age cosign on the loan. Typically,...

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The Best Ways to Refinance a Car

Car loans are multiyear agreements that are more flexible than people realize. If you signed up for a car loan that had a high interest rate or you cannot make your current payments, you may want to look into refinancing your car loan. Why Refinance? There are many reasons why people should consider refinancing a car loan. For the young car buyer who was forced into a high interest rate when they purchased their car a few years ago, it is the chance to lower the interest rate on the loan and make the payments more affordable. If your...

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How to Figure Out What Kind of Interest You are Going to Get in a New Car Loan

It is difficult to guess what interest rate you will get with a new car loan. If you go through the manufacturer's bank for incentive rates, such as 0, 1.9, 2.9 or 3.9 percent, you will either qualify or you will not. Traditional lenders use a tier scale, meaning your credit score and credit history, amongst other qualifying information, will be used to determine which rate you will get, which is not always the lowest rate advertised. It is advisable to obtain a preapproval before you shop for a new car so you know your interest rate. Instructions...

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How to Buy Your First Car Without Borrowing Money

Borrowing money to pay for your first car increases your debt-to-income ratio and could possibly lower your credit rating. Additionally, indebtedness raises your stress level. To avoid debt hanging over your head, save money for your first car and pay in cash. If you do not pay straight cash for the vehicle, you will have to borrow money in some way. Instructions 1 Set a goal for the amount of money you want to spend on a car. To avoid borrowing...

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Pennsylvania Mobile Home Repossession Laws

When consumers borrow money from lenders to finance their vehicles or mobile home purchases, they provide their vehicles or homes as collateral. If a borrower defaults on a loan, the lender has recourse to repossess the vehicle or mobile home. State laws establish the respective rights of borrowers and lenders in the case of default. In the commonwealth of Pennsylvania, creditors can repossess collateral upon default must comply with the commonwealth's...

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What Is a Charge-Off on a Car Loan?

When you don't make payments on your car as you agreed to in the financial contract you signed when you bought it, eventually the financial institution, after repeated collection efforts have failed, may charge-off your car loan. Significance Like the failure to pay any other type debt, the charge-off of a car loan is a black mark on your credit rating. Misconceptions To say that an automobile loan has been charged off may give you a false feeling that that is the end of collection procedures. Actually this is only the beginning....

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How to Calculate a Lease Payment for a Car

To get a fair lease payment on a car, seek the lowest net cap cost and money factor and the highest residual. These car-lease terms help you to see beyond the bottom-line figures on your lease contract. Understand the dealer's secret language and you can spot hidden fees and mistakes that otherwise would be unnoticed. Calculate your payments easily and avoid paying a premium while enjoying the benefits of leasing a car. Instructions 1 Obtain the gross cap cost, residual and term, or money factor, information from the dealership where you...

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Repossession Laws in Maine

Creditors usually differ from debt collectors. When someone borrows money using collateral, the creditor may seize that collateral if the borrower goes into default. Often, creditors hire third party repossession companies to obtain the goods. These repossession companies must follow certain laws. Each state, including Maine, has their own repossession laws. Licensure Any repossession company operating in Maine, repossessing goods bought...

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How to Return a Leased Vehicle Early

Car leases are good options for people who need low monthly payments on a car. A lease is basically a short-term contract requiring you to make payments for a certain number of years. At the end of the time period, you return the car to the dealership. If you decide to turn the car in early, this is called breaking your lease. While it is possible to do so, be aware that penalty fees typically apply. Instructions 1 Wash the entire vehicle as well as vacuum the interior and wipe down the insides. You want the car to be in perfect condition...

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Can My Finance Company Add Insurance to My Vehicle?

Your auto finance company can add insurance to your vehicle; read your contract over for details. As part of your lending agreement, you must keep a full-coverage policy on your vehicle until you satisfy your loan. If you don't, the lender can add its own policy or even repossess your car. Bank Contact Your bank likely tried to contact you before adding the extra insurance to your vehicle. When you first took out your car loan, proof of full-coverage insurance was required, so most likely, you changed insurance companies or let your policy...

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Does More Money go to Principal Instead of Interest, if You Pay Your Car Loan Early?

When a consumer finances a vehicle, he wants to pay it off as soon as possible and to avoid paying a large amount in finance charges. Unless he receives a zero percent financing, a finance charge on his car loan will depend on the interest rate and the way the financial institution calculates the interest. Car Loan Basics When a consumer applies for a loan, a lender reviews his application and a credit report to evaluate his creditworthiness....

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Definition of a Chattel Mortgage

While a chattel mortgage may sound like a term used for mortgaging a house, it is car financing available in Australia. It is a source of financing for the purchase of a vehicle when a car buyer does not have enough or doesn't want to buy the car with cash in a lump sum. How a Chattel Mortgage Works When a car buyer in Australia wishes to mortgage the purchase of a car, the mortgage lender provides the funds for the purchase of the vehicle....

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How to Negotiate a Lease Price

Lease advertisements offer attractive payments, considering that you can drive a new car for up to half of what it costs to finance one. For a dealership, a lease is as profitable as a finance -- the leasing bank pays the dealer for the car in full while you make payments to the bank. While some people do not question lease payments or pricing, you should negotiate as you would for a financed vehicle. Instructions 1 Go to the manufacturer's website to review current lease terms and payments. Note that you'll have to put a certain amount...

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Advantages & Disadvantages of Buying a New Car

Keep your overall budget in mind if you're debating the advantages and disadvantages of buying a new car. Look beyond the sticker price when weighing a new car's cost--consider items such as insurance costs, which are higher for a new car. A used car will come with a cheaper price tag, but it can cost you in other ways--for example, if it's a gas-guzzler or if it frequently breaks down. Costs One big disadvantage of buying a new car is that...

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How to Handle the End of an Auto Lease

Leasing a car suits drivers who don't want to commit to driving the same car for five or more years. They can lease the car and then have the option of selecting a different car every couple of years. Leasing is similar to renting a car. You don't own the car, and leasing involves returning the car. If nearing the end of your auto lease, consider several options available to you. Instructions 1 Complete any maintenance on the car. While you don't own the car, you're responsible for the car's maintenance. Return the leased car in good condition....

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If I Bought a Car With a Cosigner Who Owns It?

A change of terminology when signing a car loan with another person can mean the difference between the ability to repossess it or having no recourse if the other party skips town. Cosigning is one way to help another person get a car, but also the most risky. Instead, the co-signer would fare better signing on as a joint applicant. Ownership If you cosign on an auto loan, only the primary borrower retains ownership of the car. As a cosigner, you only promise to repay the lender if the original applicant cannot meet his debt obligation....

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How to Avoid Car Loans

Many people consider car loans a necessary part of life, but a car loan is not a necessity. If you have struggled with high car payments or you want to begin saving more money for retirement, you can find that money by avoiding car loans. With careful planning and execution you can break the car loan cycle and never have to borrow to pay for a car loan again. The money you will save on interest is worth it, but it also frees up extra money in your...

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Can Finance Companies Refuse to Refinance Your Vehicle?

If you refinance your vehicle you replace your existing loan with an entirely new loan. Consequently, lenders underwrite vehicle refinance loans using the same methods that are used during the underwriting of purchase loans. While a lender cannot discriminate against you, a lender can refuse to finance or refinance a vehicle loan for a number of different reasons. Value Vehicles do not last forever. In most instances the value of a vehicle steadily decreases over time as the vehicle approaches the end of its useful life. To keep your loan...

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Ways to Get Out of a Car Lease

You can get out of a car lease, despite having signed a contract for a set term. Although you can pay to terminate your contract, you have other options available to you that may cost you little or no money at all. Explore your lease-end options to determine which works best for you. Lease Assumption You can transfer your lease to another person at anytime during your contract, as long as your bank allows. Most leasing banks require an up-to-date account and require that the lease be at least several months old. Some banks may charge a...

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What to do if You Are Upside Down in Car Payments?

Being upside down in a car loan means you own more than your vehicle's worth for your car loan. This is not unusual for newly purchased vehicles; it can take several years to even out value and loan amount if you didn't offer a down payment or take advantage of rebates. Determine Your Vehicle's Value Since several avenues exist for ending your car loan, you must determine your vehicle's value. Use the Kelley Blue Book website, Edmunds.com and the NADA Guides website to determine the vehicle's value; use a median value from all websites...

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Company Car Vs. Cash Allowance

If your company requires you to travel in the course of business, it should cover expenses associated with that travel. Some firms offer employees the option of taking a company car on business trips or using their own vehicle and receiving a cash allowance for travel expenses. If you're offered this choice, you'll want to explore the advantages and drawbacks of both options. Company Car - Advantages If you choose to take a company car when traveling for business, you don't need to worry about putting wear and tear on your own vehicle....

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How Long Do I Need Full Insurance Coverage on a Financed Vehicle?

If you look at your vehicle's loan contract, you'll see a full coverage insurance policy is required until your loan is paid off. The policy must remain in effect because it protects the bank from losing the car it partially owns. It's important to understand how long you need full insurance coverage on a financed vehicle, the benefits of having that coverage in place and about the financial repercussions of not keeping the policy enforced. Policy Details A full coverage insurance policy protects your vehicle in the event of an accident,...

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Cosigner Rights for Car Loans

Lenders may require cosigners for primary borrowers who have minimal credit history, or if the borrower has negative credit history. A cosigner on a loan to buy a car is assuming a financial risk that the lender is not willing to take for the primary borrower. Cosigners, however, do have rights that come with their financial committments. Responsibilities A cosigner is agreeing to certain financial responsibilities regarding the loan. If...

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What to Watch for When Buying a New Car

Buying a new car can be an exciting experience. However, it is important to be an informed consumer and go into the process with proper research, thought into the type of vehicle you want and a set budget which you will not exceed. These components ensure a successful purchasing experience and a car that fits your budget and lifestyle. To make sure this happens, watch out for several key issues when you buy a new vehicle. High-Pressure Tactics...

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The Effects of High Interest Rates on Consumer Demand in the Automotive Industry

Higher interest rates affect consumer spending decisions, especially for big ticket items such as automobiles. When interest rates are high, it indicates an overall high level of consumer demand for goods and services. In the auto industry, it denotes that consumer demand for cars is relatively high. When the supply of vehicles produced does not meet consumer demand, it drives car prices higher. The problem is that increased demand and high interest...

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How to Understand Car Interest Rates

In many places around the country, a car is a necessity. But even a no-frills new car costs thousands of dollars, making a car purchase without financing generally impossible. Even the cost of a used car is often more than you can afford out-of-pocket, so chances are that your next car purchase will require some type of financing. When financing a new or used car, it is important to understand interest rates charged by banks, car dealers and other...

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Is It Cheaper to Lease or Buy a Vehicle?

At first glance, it may appear that leasing a vehicle is cheaper than financing it. While leasing payments may be cheaper initially, you might spend more than the finance amount if you purchase the vehicle after the lease or if you supply a large down payment. Before you pursue either option, consider overall and long-term costs. Payment If you compare a finance payment to a lease payment, the lease payment is likely cheaper, sometimes by more than $100. This can help you to budget a new car payment that you couldn't have afforded otherwise....

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How to Buy a Car After You Go Bankrupt

Going bankrupt influences financing options; if trying to buy a car after filing for bankruptcy, you'll need to take specific steps and apply with certain auto lenders. Acquiring financing after bankruptcy can actually help rebuild your credit score. Auto lenders report payments made on the car loan, and paying on time each month can add points to your overall rating. Instructions 1 Save for a down payment to lower the monthly payment. High interest rates are standard with car loans after a bankruptcy. Because higher rates increase the payment,...

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Can a Dealer Take Your Vehicle Back If He Can't Finance It?

If the dealership can not obtain financing for you but let you take the car anyway, you do have to return it. It is not paid for. However, you should receive your deposit back. You may have other options for financing outside of the dealership though. Dealership Intentions The dealer had hoped to obtain financing for you, and thought he could based on your credit information. While you probably signed contracts and motor vehicle paperwork, none of it is valid until submitted. Dealers have contracts on hand for each bank they work with,...

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What If a Bank Can't Find a Lien on Car?

You may think you've hit pay dirt if your bank can't find your car lien, but don't celebrate your "free" car just yet. Even if the bank can't find your lien, you are still on the hook for paying for the car. In fact, if you're filing for bankruptcy, the lack of a lien can actually work against you. If you plan to sell your car or are facing bankruptcy, you will need to track down your lien, even if the bank can't find it. Liens Defined A...

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Do Voluntary Car Repos Affect Your Credit?

The short answer to whether voluntary car repossessions affect your credit is that they do. In fact, a voluntary repo is just as bad for your credit as a standard repossession is. They both appear as a repossession on your credit report. If you cannot pay your car payment, however, the best action for you to take is to notify your lender. Notify the Lender The Federal Trade Commission recommends that you notify your lender as soon as you realize that you cannot make your car payment. Your lender does not want to take the car, so you may...

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How to Get Your Car Loan Modified & Not Reposessed

If you're struggling to pay your car loan on time and you're worried that your car might be repossessed, it might be time to contact your auto lender to negotiate a loan modification. Through a modification, your auto lender can lower your payments so that you won't lose your vehicle. But you'll first have to convince your lender that you really have suffered a financial hardship serious enough to keep you from making your payments. Instructions...

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Can You Buy a Car With a Repo on Your Credit?

A repossession is a major blow to your credit report, but you can bounce back and move forward. If you have had a car repossessed, you can buy another car, although you may need to be more creative in how you do it. Take your time and find the right deal on the best car for you. Banks or Credit Unions First check with your own bank or credit union, preferably the branch where you normally do business and the employees know you. Smaller, regional banks or credit unions want to build relationships with their customers and may look at your...

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Why Not to Buy a Used Car

Used cars, sometimes called preowned vehicles, are automobiles, usually from a past model year, that other individuals previously owned. Many people choose to purchase used vehicles, rather than new cars, to save money, both on the original purchase price and the automotive insurance premiums. Although buyers may save money by opting for preowned vehicles, many pitfalls exist to buying used cars. No Warranty Protection Many used cars, especially...

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Texas Title Loan Laws

A title loan is one in which you give a lender a lien on your vehicle in exchange for funds. In Texas, title loans must comply with state loan and title laws. You should always consult with a Texas lawyer if you need legal advice about the state's laws about title loans. Title Loans A title loan can seem like a good idea, but these loans can often be disastrous. When you take out a car loan, you agree to give the lender a legal interest in your car, known as a security interest, in exchange for a set amount of money. You agree to repay...

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