Car Buying Options

You have several payment options to choose from when purchasing a vehicle. Some purchase options require excellent credit, such as leasing, although some lenders and dealers market specifically to poor credit buyers. Before you start car shopping, consider your various purchase options and which best suits your budget.

Financing

If you don't have the cash on hand to purchase a car, you can finance it with an auto loan provider, regardless of whether you purchase from a dealership or a private seller. Many dealerships use a variety of banks and local credit unions to provide loans for its buyers. You can also pursue an auto loan at any lender you'd like. Rates differ by lender; be sure to check rates before you decide where to apply. Credit unions, local banks or online lenders are available. Obtain a preapproval before you shop. Doing so allows you to determine your interest rate and price range so you can stick to a budget.

Leasing

Leasing is an option for new cars; used car leasing may exist, but the monthly payments aren't usually worthwhile. For a lease, a bank purchases the vehicle you want from the dealership and then leases it to you, similar to renting with the intent to return at the end of the contract. Rather pay for the entire vehicle's cost, you only pay for its depreciation, which is based on the mileage and term that you choose. Because you end up paying for about half of the vehicle's value over a period of usually 3 years, your payments are cheaper than a comparable finance. Good to excellent credit is required for leasing.

Cash Payment

Dealerships and private sellers alike accept cash for a vehicle purchase. If you have the cash on hand, search within your price range to find an affordable car, but ensure you budget for taxes and motor vehicle fees, as well. Taxes can add thousands more to your purchase price. If you plan to purchase from a dealer, cash does not warrant a lower sales price. When consumers finance a vehicle, the dealership receives a check that is as good as cash. If purchasing a low-priced car, avoid having to spend additional cash on repairs after the purchase. Have a mechanic inspect a car out of warranty before you buy it.

Other Options

If you lack the cash needed to purchase a car and can't obtain a loan, you may have other options. Buy-here, pay-here dealers exist in many areas; or dealerships that do not check credit for a vehicle purchase. These dealers usually require a down payment and a monthly payment arrangement to pay off the car within one year. Subprime financing, which offers high interest rate loans to risky buyers, may also prove an option. These lenders exist locally and online. You may also pursue a loan using a co-signer, or find a person with good credit and sufficient income to secure your loan.

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How to Refinance a Lease

Items like new cars and equipment can be leased instead of purchased. A lease usually allows a consumer to purchase something for a short time period with a low down payment amount. At the end of a lease, the consumer is presented with a buyout amount and has the choice to pay the buyout amount and assume ownership or return the item to the company. A consumer can refinance a lease into a loan, but the buyout amount must be included in the loan. This means that the consumer ends up owning the item.

Instructions

1

Gather a current lease statement and the original leasing contract. If you manage your lease online, log into your online account.

2

Get the payoff amount for the lease either online or from a statement. If you cannot find the payoff amount, call the leasing company using the customer service number listed on the statement.

3

Look into the details of the contract for the buyout amount. This will be the large balloon payment that is due at the end of the lease if you wanted to purchase the equipment at lease end.

4

Add together the payoff amount and the buyout amount. This is the total amount you will need to refinance.

5

Contact lenders or local financial institutions to inquire about a loans to refinance your lease. Online quote websites, such as MyAutoLoan.com, can be used to get multiple loan quotes at the same time.

6

Choose a lender and submit a loan application. Wait for approval and dispersal of funds, and then pay off the lease. Then you will only have the new refinanced terms to pay.

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Florida's Laws on How a Repo Works

During periods of high unemployment, repossession agencies benefit from increased profits as increasing numbers of vehicle buyers default on their car loans or title loans. In Florida, title loan lenders and car loan lenders can repossess their collateral without providing notice to borrowers. However, they must comply with the state's redemption and licensure laws requiring them to obtain proper licensing allowing them to operate as title loan lenders or as vehicle finance lenders.

Voluntary Repossession

Voluntary repossessions occur when borrowers default on their loan obligations and voluntarily return their vehicles to lenders before lenders hire repossession agencies. According to the Florida Attorney General's Office, voluntarily returning a car to the lender may reduce the borrower's overall expenses. As a result, the total fees she may pay to redeem her vehicle will be less than if the lender involuntarily repossessed her vehicle.

Involuntary Repossession

Florida law allows lenders to involuntarily repossess their vehicles without providing advance warning and without first obtaining a legal judgment for repossession. However, the state's law restricts the method of repossession and the right of resale. Repossession agencies and creditors cannot "breach the peace" by engaging in violence or by threatening physical harm. If they resort to using these illegal activities, borrowers can sue them for damages.

Right of Resale

Florida law requires lenders to conduct "commercially reasonable" auctions or sales, and they must sell their vehicles at reasonable rates. Since Florida law also allows lenders to obtain a deficiency judgment for the deficiency amount remaining after the resale, lenders cannot deceptively underprice their vehicles. In other words, since a lender can sue the borrower for the difference between the sale amount and loan delinquency plus incidental costs, it must not unreasonably underprice its asking price. Lenders must return any profits made over the delinquency to borrowers within 30 days.

Consumer's Rights

A Florida consumer has the right to retrieve his personal belongings remaining in the vehicle, and the creditor is obligated to provide a written accounting of personal property found within the vehicle. Additionally, Florida law requires creditors to contact borrowers to notify them after repossessing their vehicles and providing them with advance notice of the place and time of public auction. For private sales, lenders must notify borrowers of their final date to pay their delinquencies before their vehicles are sold. Consumers have a right to demand sale of the vehicle if they are unable to exercise their rights of redemption. Consumers also have rights to ask courts to deny lenders' deficiency judgment suits if either lenders or their repossession agencies violated the state's peace laws.

Considerations

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.

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How to Return a Car on Credit

Returning a car that you financed and are still making payments on is called voluntary repossession, according to bills.com. Usually, consumers who seek voluntary repossession have fallen behind in their payments and realize they no longer can afford the car. Rather than wait for the lender to repossess it, the consumer decides to return it himself. A voluntary repossession and a regular repossession will have the same negative impact on your credit rating. Both will be listed on your credit report as repossessions, and will remain there for seven-and-half years.

Instructions

1

Consider other options first. Can you protect your credit rating by selling the car or earning extra money to afford the payments? If those options aren't possible, prepare to return the car to the lender. The main benefit of a voluntary repossession, according to bills.com, is that costs associated with the process are often significantly less than those associated with a forced repossession. In a forced repossession the lender incurs costs such as hiring a tow truck operator to find your car and take custody of it. The lender can then file suit against you to recover that cost as well as related fees associated with the repossession.

2

Find the customer service telephone number for your lender by checking one of your statements. Dial the number and ask for the automotive loans department. Explain your situation and tell the representative that you are seeking a voluntary repossession of your car.

3

Make sure you fully understand the terms of the voluntary repossession and what will happen. Ask the representative to explain the entire process. Even in a voluntary repossession the lender has the legal right to collect any balance remaining on the debt after the car is sold at auction or to another private buyer, according to bills.com. The remaining balance is called a deficiency balance. The lender could grant you a payment plan to repay the deficiency balance or he could file a lawsuit.

4

Make arrangements with the representative to turn over the car. Remove all your personal belongings and follow the lender's instructions for surrendering it. Sign the required paperwork when you surrender the vehicle and await further communication with the lender regarding any further financial responsibility.

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Benefits of Leasing and Buying a Car

Depending on your annual driving habits, your vehicle needs and your credit standing, a lease or a purchase may prove beneficial. Leasing does not make financial sense for everyone, although it may appear beneficial because of its cheaper payment or short-term ownership. Before pursuing either option, consider which one is financially beneficial or most suitable for your driving habits.

Future Market Values

Leasing payments are based on a vehicle's expected depreciation. Once the lease is over, the bank resells the leased vehicle for the purchase amount that's stated in your contract. Future market value is predetermined at the beginning of your lease. If the leasing bank assumed the car's future value incorrectly, it assumes the loss. Even if your vehicle drops significantly in value, the bank loses money, not you. If you purchase a vehicle, you assume all risk for future market value when trading or selling the car in the future. Purchasing the vehicle may prove beneficial if the car holds its value.

Payment

Both leasing and finance purchase options offer payment benefits. If you intend to lease, you're only paying towards depreciation. You do not have to pay more toward your monthly payment amount. If financing the vehicle, your payments may prove higher, but you are paying for vehicle ownership. You can increase your monthly payment or pay off your loan early if you prefer. Paying more toward a vehicle finance decreases your loan payoff amount, so you can trade in or sell your vehicle sooner.

Interest and Fees

Both leasing and finance purchase options require an interest rate, unless you obtain zero-percent financing. Interest is charged to auto loans on a daily basis, known as a per diem, which is based on your monthly loan amount. Making extra payments toward your loan's principle amount decreases the interest paid back over the term of the loan. Leasing can result in various fees charged by the leasing company, such as wear and tear, early termination or over mileage fees. If you properly maintain your vehicle and abide by your contract, leasing is beneficial. Purchasing the vehicle eliminates any risk of these fees.

Insurance Considerations

Expect to be required to purchase a full coverage insurance policy for your vehicle whether you are leasing or purchasing. Leasing banks often require an additional gap insurance policy. In the event that your vehicle becomes a loss from theft or an accident, your insurance company pays your lender for the vehicle's market value. Gap insurance pays for the gap between the vehicle's market value and the bank's loss. As long as you don't pay your entire lease upfront or provide a large down payment, your loss is minimal. If financing, your lender will return any excess insurance payment after the loan is paid off, which is worth your consideration if you plan to offer a large down payment.

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What Credit Score is Required to Get 0% on a New Car Loan?

If you are in the market for a new car and you plan to finance the deal, then you probably know that a number of financing companies who work with the car manufacturers offer zero percent financing for the duration of the loan. Interest free financing is like money in the bank: you pay principle only while incurring no interest charges. Though zero percent consumer financing is available, the advertising fine print stipulates that this offer is only good for qualified buyers. Dig deeper and you learn that means people who have good credit.

Credit Scores

Before we look at what credit score is required to get 0% consumer financing, you need to understand what goes into your score in the first place. The Fair Isaac Corporation (MyFico.com), a business who sets the standard for scoring consumers creditworthiness, offers details about what goes into a credit score.

Your credit score consists of five components: payment history, amounts owed, length of credit history, new credit, and types of credit used. Certain components are more important than others, but collectively they determine your score. That score helps lenders decide whether to extend credit to you and for what terms (interest rate, down payment and length of loan).

The three credit reporting bureaus--Equifax, Experian and Trans Union--base their scores on Fair Isaac Corporation data, though there are slight variations in the way they calculate and arrive at these scores. Obtain your latest credit score from one or more of the credit reporting bureaus to determine where you stand.

Lenders

Banks, credit unions and other lenders offer consumer loans with varying interest rates. When it comes to car loans, the car manufacturer typically offers a loan through their consumer financing arm. For example, Ford Credit finances purchases of many new Ford, Lincoln and Mercury models. Similar arrangements exist throughout the industry.

Required Score

The base credit score that lenders require to offer you zero percent financing is not exact and fluctuates. Edmunds.com, a consumer site designed to help buyers get a fair deal on their new or used car purchases, identified Tier 1 borrowers (those with top credit) as having a credit score of 720 or above.

The required score can fluctuate as lenders tighten lending requirements when the economy is in the recession or loosens them during an economic boom. Contact your lender directly to learn what their current requirements are for you to receive zero percent consumer financing for your new car loan. Consider taking the cash rebate instead of the loan deal if the money offered is generous.

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How to Write Up a Bill of Sale in Massachusetts

If you are selling a car on your own in Massachusetts, you need to have a bill of sale form for the vehicle. A valid bill of sale form is required for the buyer to register the vehicle in the state. A generic bill of sale form cannot be used, unless it is valid for all 50 states. This is because the Massachusetts Registry of Motor Vehicles Department has specific requirements as far as what information needs to be on the bill of sale form.

Instructions

1

Use a computer word processing program, or a piece of paper, to start your bill of sale. It should say "Bill of Sale" at the top of the document.

2

Include all of the information required by the Massachusetts Registry of Motor Vehicles Department, or RMV. RMV bill of sale requirements are the name of the buyer, the name of the seller, the address of the buyer, the address of the seller, the date of purchase, the purchase price, the car make, the car model, the car year, the VIN, the seller signature and the buyer signature. You can leave blank the information you do not have if you are creating your bill of sale before the actual sale.

3

Include a statement that you are selling the vehicle in "as-is" condition to exempt you from any liability in the future.

4

Print out your bill of sale form once you have created it on your computer, if you are not writing it out by hand. Fill in any missing information that you did not have once you sell the vehicle.

5

Make a copy of the completed Massachusetts bill of sale. The buyer gets the original and the seller gets the copy.

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