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Buying Your First Car

Posted on Oct 18, 2011 by Thalia Green
Oct 18

If you're a student in college and ready to buy your first car, you may be surprised to know that many dealers are eager to do business with college students, even if they have limited credit or no credit. Here are some things to think about if you are planning on buying a car.

 

New or Used?
When you buy a car you should have some idea as to how long you plan on keeping it. There are definitely benefits to buying a new car if you a college student. Many dealers offer special car loans for students, which can make it very affordable. In addition, a new car means that there is less likelihood of needing to pay for repairs with the car. If you are planning on keeping the car for several years, getting a new car might be the way to go. On the other hand, buying used means that you can often get a great deal, as the car has already taken its biggest depreciation hit. Financing for students is also available for used cars, through your local financial institution.

 

Do some research
Just as you would research a subject for a term paper, it's also important to research the car you will be buying. You should begin your search by deciding on the make and model. Reviews from websites such as Consumer Reports can help you determine which car will be right for you. You'll also want to consider the year the car was built, as sometimes the design of a car can vary greatly from year to year.

 

Get a checkup
Once you have determined the type of car you want and found a dealer or seller, you should take the car to a local mechanic so they can look it over and let you know about any possible problems. This step is necessary for used cars only. If the mechanic finds any issues, you should attempt to negotiate with the seller to either get them fixed or to adjust the price accordingly.

 

Because you'll be using your car every day for at least the next couple years, you should not take this purchase lightly. Do your homework and you'll be sure to get a great deal. 

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What to Expect When Shopping for Car Loans Online

Posted on Oct 18, 2011 by Thalia Green
Oct 18

If you have reservations about shopping online for car loans, this article is for you. Here is a brief overview of what shopping online is like, and what you can expect.

 

Is shopping online safe?
Although internet scams abound, shopping online with a reputable company is completely safe. There are certain things you should look for when examining a company's website. First, look over the grammar and spelling on the site. No legitimate company will permit bad spelling or grammar on their site. If you see a homepage with numerous spelling errors or unnecessary capitalization, it should send up a red flag. Another thing to look for is whether the website displays the Better Business Bureau emblem. Companies that are accredited with the Better Business Bureau can generally be trusted. Finally, no legitimate loan company that is trying to earn your business will ask for money up front before they provide the service for you. In most cases, the company will be compensated by the lender that they match you up with, therefore you should not have to provide any money of your own.

 

Couldn't I just go to the bank myself and get a quote?
Yes you could. However, when you're shopping for a large purchase such as a car loan, it's smart to get multiple quotes from people, to make sure you are getting the best deal possible. A difference of a couple percentage points on your interest rate could mean a savings of several hundred dollars over the course of the loan. You could go from lender to lender to get numerous quotes, but shopping online provides a faster way to get a good deal. The online company will act as a liaison between you and the lender. They will match your application up to the best options possible, which means you spend much less time shopping for a great loan.

 

What if I have questions?
While the initial process is done online, in most cases a representative from the online company will get in touch with you by phone. They will hold your hand through the process and be there to answer any questions you have. In this way, the online loan process still has a human factor.

We would encourage you to include online loan sites such as Carloan.com in your car buying plans. You might be pleasantly surprise at how competitive your loan bid from an online company will be. 

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Car Loans Online

Playing Offense: Being Proactive in Lowering Your Interest Rate

Posted on Oct 14, 2011 by Thalia Green
Oct 14

Lowering the interest rate on your car loan can save you several hundred to a few thousand dollars, so it definitely makes sense to do so if it is an option. If you are currently stuck with a car loan that has a high interest rate, here are some steps you can take to improve you situation and get a lower interest rate.

 

Look over your credit report.
Some people think that identity theft is what happens when someone takes your credit card and uses it illicitly. However, this type of theft is usually very easy to clean up, as the card company will usually reverse the charges for you, and it does not affect your credit score. But what if someone opens a line of credit (like a new card or a loan) without your knowledge? The only way to find out if this has happened is to review your credit report. The three big credit reporting companies, Experian, Equifax, and TransUnion, will permit you to download your credit report once a year for free. While it will not include your FICO score, you will be able to see your entire credit history. Read over the report carefully and make sure there is nothing on it that you don't recognize. You should usually review your report with at least two of the three bureaus, as items are not always reported to all three. If there is anything that you believe is in error, contact the credit reporting bureau to find out what can be done to remove it.

 

Pay your bills on time.
Your credit score is determined by a number of factors, but the biggest one is your history in how often your bills are paid on time. If you've missed a payment or two, this can have a significant impact on your credit score. Without a doubt one of the easiest ways to improve your credit score is to establish a history of on time payments to your creditors. This includes rent or mortgage, utilities, and outstanding credit cards. The longer you pay your bills on time, the more your score will improve.

 

Responsible borrowers have the power to improve their credit score significantly. This can mean that you'll be able to negotiate a lower interest rate on your car loan, which would give you more money to use elsewhere in your budget. 

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Interest Rates

What is "Subprime Lending"?

Posted on Oct 14, 2011 by Thalia Green
Oct 14

subprime car lendingMany people have heard of "Subprime Lending" but not everyone understands what that means. If you're curious about the definition of "subprime" and whether you fall into this catagory, read on.

 

What does "Subprime" mean?
In order to understand the meaning of "subprime", we must also understand the meaning of "prime". Customers are considered "prime" if their credit score is above a certain number, usually 620. Prime borrowers have good credit, a job, and a stable living situation. If the credit score is too low, the buyer may be told that they are "subprime". This is another way of saying they have bad credit. Usually the credit score determines whether a buyer is prime or subprime, but other factors can affect this as well. It is estimated that almost half of all borrowers are subprime. While this is not a desirable situtation, it might be comforting to know that you are not alone.

 

Does being Subprime mean that I can't get a car loan?
Once a borrower understands the definition of subprime, the next question they might have is whether or not they can still obtain a loan for a major purchase, such as a car loan. The good news is, not only is it possible, but there actually companies that specialize in subprime car loans. The interest rate will likely be higher because of the additional risk associated with subprime buyers. However, if you make your payments on time over several months, you may be able to negotiate a lower interest rate in the future.

 

Will my credit status be Subprime forever?
The good news is, credit scores can definitely be improved over time. Whether you stay in subprime status is very much in your power. If you make on-time payments on your car loan and other outstanding debt, this will improve your credit score and eventually raise you to prime status.

 

There are many subprime lenders, but finding them can sometimes be difficult if you don't know where to look. Consider using the assistance of an online company such as Carloans.com, which already has established relationships with many subprime lenders. The online company can perform a search for you and match you up with the best situation possible, so that you don't pay more than you have to.

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Bad Credit Car Loans

How To Budget For A Car Loan

Posted on Oct 12, 2011 by Thalia Green
Oct 12

car loan budgetAre you wondering if you can afford a car loan? Many adults were never trained on the process of keeping a budget, although the benefits of learning how are numerous. Creating and sticking to a budget can give you control over your money, so that you control it rather than it controlling you. This can result in improved self-esteem, which can impact a variety of areas in your life. Here are the basics to creating a budget, as well as the items you'll need to consider if buying a car.

 

Write down your income and your expenses
There are many computer programs available to help you create a budget, but your first budget doesn't have to be any fancier than a list made with pen and paper. You'll want to list your monthly income sources first. For most this is the income from employment, although other regular income sources, such as rental property or alimony, can be included as well. After determining your income, you'll write down all your expenses. Expenses are the items that you must pay for each month. Common expenses include utility bills, rent, and food. Of course if you are already making payments on a car loan, you'll want to include those as well. For irregular items such as certain taxes, you'll want to plan to save up a certain amount of your paycheck each month, so you'll have the money available to pay the expense when it comes due.

 

Adding in the car-related expenses
After you have accounted for all your expenses, you should have a good idea as to whether you have a surplus (extra money) or debt (not enough money). If there is debt, you may need to look at your expenses and see where you can cut how much you spend, or increase your income by taking a second job. If you have extra money you'll be able to take on some of the additional expenses of owning a car, such as gas, insurance, the car payment, and routine maintenance.

 

Making a budget is easy, but sticking to the budget can sometimes be difficult. You must have the discipline to say to temptation to spend if you do not have it. By doing this you will learn to live within your means. 

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Bankruptcy Car Loans 101

Posted on Oct 12, 2011 by Thalia Green
Oct 12

Bankruptcy can be a scary thing if you're not familiar with it. Here is an overview of what bankruptcy is, how it works, and what you can expect if you file for bankruptcy.

 

What is bankruptcy?
When someone files for bankruptcy, they are declaring their inability to repay their debts. Individuals can declare bankruptcy, but so can municipalities and businesses. Individuals can file either Chapter 7 or Chapter 13. Chapter 7 is also known as straight bankruptcy. In this situation virtually all possessions are surrendered to be liquidated (sold off). The money from the sale of these goods is then turned over to the creditors to pay their debts. By comparison, in Chapter 13 the debtor is allowed to keep their belongings, but is required to present a plan as to how they will pay off their debts. In this instance part of the debts might be forgiven, but the balance is expected to be paid off.

 

What types of debt are not discharged?
Although both Chapter 7 and Chapter 13 will forgive most debts, are there certain types of debt you will still be expected to pay. Among debts not discharged are student loans, child support, some types of taxes, fines, as well as any interest incurred on these types of debt. If you are thinking about filing bankruptcy, its important that you speak with a lawyer to determine which of your debts will be discharged, and to discuss what will happen to the non-discharged debts.

 

How will bankruptcy affect my credit?
Fewer events in your life will have a greater negative impact on your credit than a bankruptcy. In the first year following the bankruptcy, you may find it extremely difficult or impossible to obtain a loan or credit from anyone. The interest rate on larger purchases, such as a car loan, will likely be extremely high. The good news is, as you get further away from the bankruptcy in terms of time, it will have less of an impact on your credit report. It's important that you stay current on any payments for non-discharged debt. By doing so, you can begin to rebuild your credit. 

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Bad Credit Car Loans

Why Some People Get Better Car Loan Rates Than Others

Posted on Oct 12, 2011 by Thalia Green
Oct 12

"I have a car loan with 3% interest!" "That's nothing, I have a car loan with ZERO interest!" If you have ever heard others brag about their super-loan car loan interest rates, you might wonder where how they got so lucky. The truth is, the car loan interest rate by itself means nothing. Here are some reasons why some people get better car loan interest rates than others.

 

1) Better Credit
Make no mistake about it, in most cases having great credit can mean you will get a lower interest rate. Those with great credit have shown that they are worthy credit risks, and are accordingly rewarded with lower car loan rates. Those with bad credit will have higher rates in order to make the loan more profitable. The lender views bad credit as higher risk, therefore to offset the risk they will raise the interest rate. This way if the buyer defaults on the loan, the lender can still make some money.

 

2) New Cars vs. Used Cars
Another factor to consider is whether the individual is buying a new car or a used car. If they are buying a new car, there's an increased likelihood of getting an outstanding interest rate, even with so-so credit. This is because the financing for a new car can come directly from the car manufacturer, and as such they have the flexibility to offer zero interest, because they are still making a profit off of the car. Keep in mind that if you elect to go with a zero interest car loan at the dealer, it's very likely that you'll end up paying the sticker price on your new car or close to it; there is very little wiggle room on the price when you opt for a zero interest car loan.

 

3) The Source of the Loan
If you think all loans are equal, think again! Interest rates can vary greatly among lenders, so be sure to shop around to find out who can give you the best rate.

 

Bottom line, while a low interest car loan is usually a good thing, you need to look at the whole picture, such as the length of the loan, the type of car (new or used), and where that loan originated from. Knowing these factors will allow you to determine whether you truly got a good deal on your car loan.

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Interest Rates

Nowhere But Up: Restoring Credit After a Bankruptcy

Posted on Oct 10, 2011 by Thalia Green
Oct 10

car loans with bankruptcyIf you've just come out of a bankruptcy, it might feel a little bit like you're attempting to put the pieces of your life back together. The good news is it is definitely possible to recover from bankruptcy, although it can take some time to do so. The first year following the bankruptcy is when it will have to most impact on your credit score. During this time it may be very difficult to obtain financing for larger purchases, such as a car loan. It's usually a good idea to put major purchases on hold until the worst passes. In the mean time, here are some steps you can take to proactively rebuild your credit.

 

Be diligent about paying off debt not covered by the bankruptcy.
There are certain types of debt that you will still be expected to pay, even if you file for bankruptcy. Back taxes to the IRS, for example. If you have any outstanding debt after filing for bankruptcy, put together a plan to get it paid off as soon as possible. Make sure that you make the payments on time or early each month. If possible, you might also think about setting up an automatic payment system.

 

Get a secured credit card.
A secured credit card is one which is backed by personal savings account. The limit on the card will be equivalent to the amount in the savings account, because if the card used defaults on a payment the card issuer will pull the money from the account. If you decide to get a secured card, make sure you have a conversation with the issuer about how payments are reported to the credit bureaus. Not all secured card issuers report payments to the credit bureaus, so you want to make sure that the one you choose will do so, as that is the reason you are getting the card in the first place.

 

Take out a small personal loan.
Any loan that you are able to acquire following a bankruptcy will likely have a very high interest rate attached to it. But a smaller personal loan would still allow you to have affordable payments. If you use the loan money to purchase a CD, you can also make money off the interest on the CD.

 

Rebuilding credit takes time, but it can be done. Be diligent about paying your bills and you'll take some great strides in making this happenn. 

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Bad Credit Car Loans

Steps In The Car Buying Process

Posted on Oct 10, 2011 by Thalia Green
Oct 10

Buying a carThinking about buying your first car? If you're new to the car buying process you might be a bit worried about what you can expect. Here is a suggested process to follow when buying a car.

 

Step 1: Look at your budget (or, make a budget if you don't have one.)
Before you even head to the car lot, you'll need to do some homework to make sure you can afford the car payment. If you don't already have a budget, now is the time to create one. List all of your income at the top, followed by all your expenses. Everything you spend money on during the course of an average month should be included, even "fun" expenses like money for evenings out or your morning coffee. You may find it helpful to also journal all of your expenses for a month or two, if you're not really sure where your money goes.

 

Step 2: Research the car.
Once you have an idea of your budget, the next step is to research your car. Keep in mind how you will be using the car, how many people on average will be travelling with you, and what features are important to you. Remember that when you budget for your car, you'll need to not only allot money for the car loan payments, but you'll also need to budget for gas and regular maintenance, such as oil changes.

 

Step 3: Shop for the car loan.
Now that you have an idea of what kind of car you want, and what price you can afford, you should begin shopping for car loans. Most dealers have onsite financial departments, but by no means is this your only option. You may also find options for financing through your local bank or credit union. Interest rates can vary greatly among lenders, so it's worth it to shop around and get a few different options for your car loan.

 

Step 4: Visit the car lot.
You might be surprised at the amount of research that should be done before going to the car lot, but this is so that you get the best deal possible. Car salesmen are quite good at turning car buying into an emotional process. By doing your homework in advance, you'll be able to lead with your head rather than your heart.

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Financing a Car Purchased On Ebay

Posted on Oct 05, 2011 by Thalia Green
Oct 05

Ebay is quickly becoming a popular source for used cars. If you are comfortable shopping on Ebay, you might also enjoy shopping for your next car on Ebay as well. However, many car buyers wonder if it is possible to finance a car purchased on Ebay? The answer is not only is it possible, but there is more than one way to do so. In this article we will discuss some of the ways you can finance your car if you purchase through Ebay.

 

Ebay Motors Financing Center
To respond to the demand created by customers, Ebay has created the Ebay Motors Financing Center. This allows the auction winner to finance the car. The Financing Center does not handle the loans directly; they take the information provided by the customer and match them up with a lender, who then collects the payments. This service is available on a variety of vehicles, including cars, trucks, SUV's, and even less traditional vehicles such as boats and snowmobiles. A wealth of information about Ebay's financing is available on the website; be sure to review it so that you know how this option works.

 

Financial Institutions
Of course, just because you purchase the car through Ebay does not mean that you need to get your financing through Ebay. You do have the option to set up financing through a bank or credit union. Depending on your relationship with the bank and your credit history, you might find that your bank can give you a better rate than Ebay's Financing Center. If you choose to go with this option, you would either have the bank wire the money to the vehicle seller, or you would send them a cashier's check via certified mail.

 

Private Financing Through The Seller
If you are buying a car through a larger seller, you may find that the seller is willing to negotiate financing with you directly. If this option is available, you may find that it's worthwhile to do so, depending on the rate that is offered.

 

Although most purchases on Ebay are done via cash or credit card, there are definitely financing options available for those who wish to buy their next car off of Ebay. Be sure to shop around and see what options are available to you. It's hard to say who will give you the best deal, but it is always a good idea to get quotes from two or three sources before you decide who to use for your car loan. 

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