|Advantages Compared to Leasing
||Sep 26th, 2012
With an auto loan, each monthly payment you make goes toward eventually
owning the vehicle yourself. When the loan is paid off, you own a piece
of property. In a lease agreement, you rent a car for a specific time.
At the end of your lease contract, you have the option to buy the
vehicle or return it to the dealer. Auto loans do not limit the amount
of miles you can drive the car before incurring costly over-mileage
charges, as is the case with a lease. Another consideration is auto
insurance. If you finance through a loan, the amount an insurance
company will pay for damage depends on the market value of the vehicle.
When a leased vehicle is damaged, the dealer's repair costs often are
greater than the insurance company will pay, leaving you responsible to
cover the difference.
|How Bad Credit Auto Loans Can Help Credit Repair
||Sep 26th, 2012
The first thing that you should consider doing, if you haven't already
started it, is to create a budget for yourself. Consumer credit repair
(bad credit auto loans are also a form of credit repair), in its
simplest form, is all about setting up a budget and sticking to it.
This involves looking at your income and controlling how much you
spend. Once you have calculated how much of your paycheck needs to go
towards basic expenses (food, utilities, rent/house payment) the balance
can be set aside for the next step in the process.
second step is to prioritize the balance of your debt. You should first
determine the line of credit with the highest interest rate. If you have
any additional funds, try and make more than the minimum payment on at
least this one account. Pay the minimum due on all the others until this
account is paid off. Once the account with the highest interest rate is
paid off, look for the account with the next-highest rate. Repeat the
procedure until all lines are paid off, including the loan you received
through bad credit auto financing.
Finally, keep some money in
reserve, but concentrate on paying off your debts. It always makes sense
to have an emergency cash fund, but don't put any more money in it than
necessary. Savings accounts pay notoriously low interest rates. Keeping
your cash in one that pays 5% while your credit card interest is
costing you 17% is a losing proposition all the way around. It's better
to use any extra cash you have to pay off high-interest debts, such as a bad credit auto loan
Always keep this in mind: reestablishing your credit requires a
two-pronged attack. Decreasing your debt while establishing a positive
payment history with an auto loan using bad credit auto financing can
help raise your credit score and put you back on the road to better
|Get The Best Loan Possible
||Sep 26th, 2012
Before you seek preapproval for a car loan,
there are some things you can do as far as a year in advance (if you are
that forward-thinking) to improve your credit score and improve the
chances that you will get a larger loan if you need one for the car of
your choice. Here are some tips for convincing lenders to 'go all out'
for you when it comes to your preapproval:
down debt: If you have a lot of credit card or other debt (such as
title loans or mortgages), it will reflect poorly on your ability to pay
for a new car loan unless you have significant income above and beyond
your monthly payments. What banks and credit unions like to see before
offering a car loan is that if you have many credit cards, they are all
carrying relatively low balances (less than 50%). If you have the time
before you need to buy, you should pay down your other debts or loans as
much as possible before applying for your car preapproval.
any collections: If you've had a few 'issues' in the past with your
credit that have lead to your account being placed in collections, you
should deal with that right away before you apply. Having one or more
accounts in collections is a sure way to sour any lender and may
relegate you to the subprime lending market before anyone will approve
be late: For as long as possible before you shop for your car, you
should stay on top of all of your payments, both to your debts such as
credit cards or loans, but also to your utilities and other bills such
as your rent/mortgage and utilities. This is because if you are
significantly late on any debt you owe, it may be reported to the credit
reporting agencies and damage your chances of getting a loan in the
Build up your down payment: Having a strong down payment built up for your car does several things for you:
It convinces lenders that you are serious about doing your part to borrow less from them and make this deal work.
It gives you significantly more negotiating power at the auto dealership.
may help keep you from going upside down in the value of your car.
Since cars depreciate immediately after leaving the lot, if you have
paid atleast 20% down on your vehicle, that depreciation is much less
likely to catch up and surpass how much you owe on the car.
order to maximize your credit before getting preapproval, you should
get a copy of your credit report from the three major credit reporting
agencies; Equifax, Experian and TransUnion. Study it carefully, note any
errors or mistakes, and write to the CRA in order to have mistakes
removed. Then deal with any other issues you find such as paying down
debts or making any collections accounts 'disappear' by negotiating or
paying off the debt.
|Some Essential Auto Loan Info
||Sep 26th, 2012
When you are approved for a car loan the lender
typically will set the maximum monthly payment for which the loan is
approved. Generally, the maximum payment is either 12% to 18% of your
gross monthly income or 45% of you income less your monthly obligations.
items to include in the budget are the total cost of ownership of the
vehicle. When comparing the total cost of a vehicle consider such things
as insurance rates, gas mileage, and repair costs. To mitigate repair
costs we recommend including an extended service contract with the
vehicle at time of purchase.
with a poor Fico score pay higher finance rates than consumers with
Fico scores above 700. If you have a Fico score below 700 we recommend
buying a car that meets your basic transportation needs. Wait until your
Fico score improves before buying a more expensive automobile.
you have a low credit score we recommend selecting with the shortest
repayment term possible. This will allow you to trade out of the
vehicle, and finance another car at a better interest rate, much quicker
if your credit improves.
you have negative equity, consider buying an affordable new car with a
cash rebate. A lot of folks in Dallas TX fall into the negative equity
trap. This cycle occurs by continually buying more expensive cars and
rolling negative equity from their pervious car loan into their next
fact the only way to avoid rolling money on to your new loan is to own
you car until the lien is paid, use enough money down to cover the
previous lien, or buy a car that you can pay off fast. We should also
mention that in most cases, if you the money you own on your used car
trade in is greater than the lien amount, it is probable that your new
auto loan payment will be higher than the payment on the vehicle you are