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4 Car Buying Tips People Often Overlook

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When you drive off the lot with your new car (even if it’s just new to you), the feeling of adrenaline and excitement is hard to replace. You are, inevitably, in love with your new ride and have dreams of it lasting you for decades to come. All of these adventures in your mind, however, can be short-lived if you are careless in your purchase. There are important car buying tips to keep in mind to ensure your new vehicle takes care of you, and many are often overlooked. Here’s a take on a few of these tips.

Do Your Homework

Never just walk onto a used (or new) car lot with the attitude, “I’d like to buy a car.” This is the fastest way to get into a vehicle that might not be prime for your needs. Before you hit the lot, spend some time doing research.

Look at fliers, drive past several lots, and look up reviews of vehicles online. Know what you want: is it a sedan, a crossover, a full-sized SUV, or a compact? Do you have a specific make, model and year in mind? Next, investigate prices. There may be ten options that fit your needs in the area. Check the prices on each and see if you can find out which dealers have a reputation for negotiation. The more you know about what you want, the better poised you’ll be to make a deal.

Get Pre-Approved

Get pre-approved for a loan! This will help you secure a prime rate and will greatly expedite the process of buying the car. A pre-approval says that you’ve got good credit, you’re a strong bet for making payments, and that the money is there, waiting.

Investigate and Inspect

Even when you think you’ve found the one, look at others in the area. Actually, physically go to the lots and inspect the vehicles. Test drive them if possible, and if you’ve got a friend or colleague who is a mechanic, by all means bring them along to take a look!

Check the starter, the AC system, the heater, all of the indicator lights and the idle. When you test drive, try to get a good 10 miles out of it and if possible, take it on the highway. You’ll be surprised at the problems that can crop up at 60mph after the car is at full heat.

Shop and Deal

Don’t be afraid to tell the lot you’re looking at other cars. This might make them more willing to deal. If they threaten you or try to push hard-sell tactics, don’t be afraid to walk away. They might not be the best bet for you, anyway.

In the end, the most important thing to keep in mind when car shopping is this: be thorough. Do your homework, investigate your options, know what you want and give a test vehicle a full rundown to put it through the paces before you agree to buy. Don’t fall prey to predatory sales tactics. If you are ready to start your shopping for a new car, check out our pre-approval page and get going today!

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How Often Should I Check My Credit Report?

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Most people who are trying to build, rebuild or repair their credit know that monitoring your credit reports is the best way to stay on top of your current status. Checking your report can not only keep you appraised of where you stand as far as your debts and score go, it can allow you to spot and remove costly mistakes. But how often should I check my credit report? Let’s take a look at an overview of how your credit report works.

The Three Bureaus

In the United States, there are three major credit bureaus whose reports are used to monitor credit. These bureaus are Experian, TransUnion and Equifax. The reports from each of these bureaus can be very different from one another, and no lender is required to check all three or any given one, nor report to any or all. This means that monitoring all three is important to keeping your credit top notch.

Each credit bureau is required by law to provide you with a free report once every year. It is your choice whether to look at one or all of these, but checking them all is often a good idea.

Watching Your Credit

Monitoring your credit very closely is vital to keeping a strong credit score. Not only will it permit you to take control of your own legitimate credit issues, it can be an important way to spot fraud. Identity theft is all too common these days and strange charges on your credit report can indicate lines of credit that you never opened. This can be a strong tool in stopping criminal activity.

One at a Time or All at Once

Since all three reports are available to you for free once per year, checking them on a rotating basis will allow you to monitor your credit approximately every four months. However, if you are trying to improve your score, or are finding you have a tough time getting credit, you may want to look at all three at once. Doing this allows you to look for errors on one or more, and compare the results of each.

Effects on Credit

Requesting multiple copies of your credit score for review, or checking them more than once per year, will not negatively affect your credit score. Making multiple credit applications at the same time or within close proximity of each other may create a red flag when creditors do what is known as a “hard” pull of your reports. This can negatively affect your overall score. When you request reports, however, this “soft” pull does not have any effect on your overall score. It will, however, incur a small fee for each report you request before twelve months have passed.

Put Simply

Put simply, how often you should check your report is really up to you. If you are monitoring your scores very closely, several times a year can be helpful. For many people, rotating your reports every four months is plenty.

If you are looking to purchase a car to help get your credit flowing, we can help. Take a look at our featured dealerships, and get in touch for a one-on-one consultation today!

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Having Trouble Paying Your Loan

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Everyone runs into financial problems now and again. Whether it’s from injury, job loss or other unfortunate money circumstances, it’s possible that you find yourself having trouble paying your loan and bills. Skipping payments on your auto loan, however, is never a good idea. This can result in bad credit and even losing your car to repossession. Here are some tips for what to do when the money monster bites and you find yourself behind.

 

Hardship Modifications

Reach out to your lender and ask if they have any options for temporary financial hardship. Some lenders will permit you to adjust your loan so that you make lower payments for a while. They may even allow you to take forbearance for a month or two, making up the difference down the line. However, if you think you will have issues, reach out to the lender before you miss a payment.

 

Refinancing

For many people, refinancing your vehicle can be a smart move to lower your interest rate and thus lower your monthly payments if you’re having trouble paying your loans. Be warned, however, that refinancing does not always simply mean lowering your rate. It often means replacing your current loan with a new one. This new loan can be longer term than your old one, placing you upside down by the time you pay off your vehicle.

 

Turn Over Your Loan

In some cases, especially if your loan has a good interest rate, you may be able to find a buyer who is willing to simply take over your payments. This requires working with your lender. Firstly, you will want to be sure that your loan is “assumable,” meaning it qualifies for this arrangement, and secondly the lender will want to vet the buyer to be sure that they will be able to make the payments you cannot.

 

Sell the Vehicle

Another option is to sell the vehicle outright. See if you can make enough off of the sale to pay off what you owe on your loan. If you can manage to be without your vehicle and you can get a good enough sale price, this can solve your problem in both the short and long term.

However, if you cannot sell the car at least for what you owe, you will still need to make up the remainder before you can transfer the title. Remember, even though you have possession of the car, you don’t own it as long as you still owe on the loan. The financing lender has a lien on the vehicle until it is paid off.

 

Less Attractive Solutions

Repossession, bankruptcy and the like are also options for getting out from under your loan. These, however, are never the best solution to pursue. For one thing, they will severely damage your credit, sometimes for a period of seven to ten years. They will make it difficult for you to get credit of any kind, including for a new vehicle. You are always best off to work with your lender for a better solution.

If you would like to refinance your car loan, we can help. Check out our refinancing page and give us a call to get started today.

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What Length Should My Car Loan Terms Be?

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When you go looking for a new car, one of the first things you should consider is how to structure your loan terms. Many people go for the lowest

monthly payment, even if it means a longer loan term. According to Edmunds.com, 62 percent of car loans last year were for terms of over five years. This is not always the best solution. There are many factors to consider when applying for an auto loan, and almost all of them figure into
the overall length of repayment.

 

Monthly Payments

When people shop for a car, most think they are being smart by working out their budget. Unfortunately, the way in which they approach this all-important idea is not always the best. For many, the first thing they consider are their monthly finances — how much more each month can they afford to pay?

This is certainly valid; most of us deal with bills on a monthly basis. The problem is if that’s your only guiding star. You could very well end up in over your head when you buy a car that you can’t afford, even if the monthly payments seem sound.

 

Interest

Consider: if you can only pay $250 a month, and you have a choice between an economy car that will let you pay that out over four years, and a luxury sedan or SUV which will cost you that over eight years, which is better? Far too many people go for the sedan or SUV, thinking that if they can afford the luxury they should, or believing that the high-end car will hold its value longer.

The truth is, the longer you pay on a vehicle, the more you are going to pay in interest. Edmunds reports that the difference between a 5-year and 6-year loan in interest alone can be over $4,000! That’s a difference of only one year in the cycle of the loan, all in interest.

 

Depreciation

The longer you own a car, the less it is worth and consequently, the less you can get when you go to trade it in on a new model. In addition, the longer your loan terms, the longer it will be before you can get your head above water and actually build equity into your car because of the increased interest. If you go too long, it won’t be worth the trouble. Your car will be worth too little and you will still owe more than it is worth.

 

Go Smaller, Go Smart

In the end, if you have a choice between a more affordable vehicle at a shorter term, you should go for that. The less time you are paying on a car loan, the better off you will be.

In general, it is recommended that you not go beyond 60 months (5 years) for your vehicle loan. The choice you make may not be your dream car, but love at first sight burns out fast anyway and you might grow to love your second choice even more.

If you need a car loan and you have non-ideal credit, we can help. Give us a call to consult today!

 

 

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How Auto Loans Can Improve Your Credit Score

 

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Cars may be more expensive than most people’s six month income, but the good news is that getting that expense financed can help you out a lot down the road. In fact, cars lie in a perfect price range to help people build credit without high barriers to entry.

Financing a car is much more practical than smaller purchases like furniture and more affordable than homes or business loans. People with below average credit can work their way towards bigger purchases and better credit availability as a result of paying off their auto loans gradually.

Here is how:

Auto Loans Create Their Own Collateral

Many people have difficulty asking for a loan for home improvement or to get through tough times because they do not have much collateral to offer. People who rent and who do not have significant savings or investments often have little to bring to the table as far as lenders are concerned.

With a vehicle purchase, the vehicle itself is the collateral. People can secure the loan using the car and enjoy benefits such as lower interest rates, more flexible terms and payment options compared to an unsecured loan.

Making Loan Payments on Time Builds Credit

Auto loans are installment loans, which means they are paid back in preset increments. Unlike revolving credit loans, which grant lump sums up to a limit and only require minimum monthly payments, installment loans have a preset payback time that keeps the loan-holder on a steady track to paying it off.

Every single time you make a car payment on time, you are helping your credit rating improve just a little. At the end of a 1-5 year loan, the person making payments will have built quite a dependable credit history. Even better, credit bureaus want to see a mix of revolving credit and installment loans, and auto loans are arguably the easiest and most practical installment loans to procure.

You Can Refinance Later and Make Paying the Loan Even Easier

Chances are, if you have bad credit or limited credit your first car loan will be stricter than usual. Expect higher interest — possibly even in the double digits — and origination fees.

However, after one or two years of making timely payments, you have built up a more solid credit history and have likely increased your score. You can then refinance your existing auto loan for a new one with much lower interest and friendlier monthly payments. You can even fast track your loan to get paid off in a shorter amount of time, assuming your financial situation has improved.

Car Payments Are Much More Flexible Than Other Loans

As long as you do not get a loan with early payment penalties, you will be able to pay your car off largely on your own terms. Securing low monthly payments and then adding any extra cash can reduce the life of the loan more quickly and can often help you avoid paying a portion of the interest.

With refinancing, you can also readjust the loan to lower your payments or even raise them in exchange for a lower interest rates. These options make a car loan much more flexible than something like a mortgage or student loans.

To find a loan that is right for you or to learn more about auto loans, visit our bad credit auto loans page.

 

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