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Whenever a person buys or leases a car, he seeks ways to finance this move.  Most auto financing involves a car loan, which entails a detailed check on his credit history and a tough interview about car finance.  When he undergoes all these to buy a used car, it is only fair that he also performs his own investigations about the car he is going to buy.  In fact, he should never consider buying a used car, which history has not been checked.  If he does, he may just end up paying for a piece of junk.

A used car must be checked for its title, registration, odometer, and the problems that it had weathered before it reached your eyes.  A “title check” will determine if the car is salvaged, flooded or rebuilt.  For example, many cars were destroyed during the 9-11 World Trade tragedy.  Many cars, too, were damaged during the hurricanes and floods.  These cars are salvaged by enterprising people.  The cars will be rebuilt and sold again at car auctions.  A title check will also discover if the used car has lemon history.

A “registration check” will determine if the used car has been used as a fleet car, or as a taxi, or even as a police car.  If the used car has been utilized in any of these, then it is safe to say that within a given period of time, this particular used car has covered more miles than the average privately used car.  A registration check will also reveal if the used car was ever rented or leased.

The car’s odometer is an instrument used to measure the distance traveled by a vehicle.  An “odometer check” will show if the odometer has been broken or fraud.  It will also show if it has been rolled back or rolled over.  If the odometer has been tampered, this does not bode well for the next owner of the used car.  The car may be older than what the dealer is telling you.  Or it may have mileage problems.

A “problem check” will determine if the used car has sustained fire damage or an explosion.  It will also show if it has been involved in a major accident.  The fire or accident may have inflicted a still undetected damage on the used car.  It is also quite creepy to use a car that has cradled dead bodies before.  A problem check will reveal if the car has been stolen.  A car that has been stolen may no longer have all its original parts.

A used car may give you more problems than you can manage.  But not all used cars are damaged, leased or stolen.  This is why there are still many people who take out car loans to buy a used car.  To be safe, the potential buyer must order a vehicle history report.

[Tags]Car Loan, Mortgage, Credit, Money Lending, Borrow Money, Car Mortgage, Car Payment, Budget, Buying a Car[/Tags]

Why is gap insurance considered as a financial safety belt?  Simply put, it keeps you from being financially ruined when disaster hits your car.  For example you are in this situation.  You bought a late-model car three months ago using a car loan with a regular car insurance.  The car costs $30,000 and you have already made three payments of $900 each month.  Then, disaster strikes.  An electric post falls and slams down on your car.  The car was flattened to half its height.

Immediately, you reported it to the auto insurance company, which in turn play with numbers, mileage, depreciation, market values, and other related stuff.  After a couple of days, the adjustor informs you that the worth of your car at the time of the accident is $25,000.  This is the amount that the auto insurance company will provide you.  But the finance company that gave you the loan will still consider the car to be worth its original price.  They also play with numbers, interest rates, taxes and license fees.  Then they come up with the amount of $38,000. This is the amount that you need to pay them.  If the auto insurance company releases the $25,000, where will you get the remaining $7,000?  Your car is already a wreck but you still owe the finance company.

You need not face such a dilemma if you have a gap insurance.  With the gap insurance, you can ignore the difference between the amount covered by the regular car insurance and the amount you owed the car loan company.  This difference is called a “gap” and the gap insurance bridges it so that you need not rack your head for additional financial resources.

A car lease contract must also have a gap insurance.  It is a feature that prevents you from draining all your finances.  Some dealers who lease cars don’t offer a gap insurance.  This is okay as long as they include a “gap waiver” in their lease contract.  This waiver declares that you are no longer responsible for gap charges that may occur when your leased car is wrecked.

When you get a gap insurance, determine how much is offered in the gap policy.  You should also know how much will be added to your monthly bill.  A gap insurance, for it to be recognized, must be accompanied with comprehensive insurance policies that cover collision.

Sometimes, a gap insurance may no longer be needed if the terms in your regular auto insurance policy indicated that the company will pay off the full amount you owed from the car loan lender.

[Tags]Car Loan, Mortgage, Credit, Money Lending, Borrow Money, Car Mortgage, Car Payment, Budget, Buying a Car[/Tags]

Most banks have strict policies about whom they will lend their money and for what the money will be used.  They will not grant you a car loan for a used car which is older than five years.  They charge higher interest rates on loans for used cars than on loans for new cars.  And very rarely do they grant loans to people who fall under the “subprime” category.

A person who is considered a subprime borrower is one who has a blemished credit history.  He may not be paying his bills on time or he may overextend his credit card.  A subprime borrower is usually someone who has a credit score below 620.  If your loan application has been rejected on the grounds that you belong to this credit-unworthy group, does this mean that you cannot borrow anymore?

You may still get a car loan if you will look for lenders that grant financing to subprime borrowers.  Avoid finance companies that advertise “1.9% interest**”.  Notice the sign (**)?  Below the big ads, written in fine print, the ** means for prime borrowers only or for people with excellent credit.  Clearly you do not belong to this worthy group.  People with bad credit will have less privileges when getting a car loan.  The interest rates are decidedly high.  You may opt to search for online lenders. But there are measures you may take to improve your circumstances.

The first thing to avoid is to rely completely on the car dealer.  He will always get a certain percentage out of car loan transactions.  In fact, it will be advisable if you are able to secure a car loan before you allow a car dealer to be within a shouting distance from you.  When you look for a credit grantor, don’t accept the first one you encounter.  Compare interest rates offered by lenders, but don’t accept the average rates they give.  A lender may offer a lower interest rate for a person with a credit score of 800 and a higher interest rate for someone with a score of 600.   Ask for specific rates. You may also approach credit unions and banks where you have a current account.

You also have a chance to improve your “category” by checking your credit report and reforming your credit score.  For example, there might be an error in the information found in your credit report.  This error may have been the one responsible for the black mark on your credit history.  You must immediately have this error corrected by informing the credit bureau in writing.

Credit scores can change.  If you pay your bills on time and if you always stay within your budget, then your credit score will likely improve.  Once you have a higher number, you may get a lower-rate refinancing for your car loan.

[Tags]Car Loan, Mortgage, Credit, Money Lending, Borrow Money, Car Mortgage, Car Payment, Budget, Buying a Car[/Tags]

Getting pre-approved for a car loan before shopping for a loan can offer a great deal of flexibility and savings.  Below are some of the advantages:

•    By getting pre-approved, the expense and pressure of dealer financing is eliminated

•    With pre-approval, dealer rebates or and/or discounts are not sacrificed in lieu of a lower interest rate

•    Before making an appointment with the dealer, there is already knowledge of the car

•    Shelling out a large initial cash-out can be avoided

PRE-APPROVED CAR LOANS

Know your credit history

Interest rates and payment terms have varied credit scores just like all loans.  Credit points are determined by scores ranging from about 350 to 800. A loan offering a least attractive rate might be given to people with a score of less than 600.  A score of 720 can qualify for the best rate.

Dealer financing provides another option.  The three C’s govern the acquisition of  a car loan:

Credit

Responsibility in budgeting and paying should be demonstrated – punctual payment of bills, limitation of debt and regular savings.  Before applying for a loan, know your credit history by asking for your credit report.

Capacity

The ability to repay the loan amount should be shown as well.  Secondary documents may be attached to support your claim.

Collateral

Liquid assets become a guarantee that payment can be recovered in the event of late payment or non-payment.

The finance departments of car dealers can offer to finance the car.  An additional 7 to 15% for the sticker price is determined by the credit rating, financial history and repayment capability.

Utilizing dealership financing

The advantage of dealer financing over a bank loan is that qualification is relatively easy.  You should anticipate the amount to pay.

Some words of warning:

Be extra careful in making a decision.  Getting the better end of a deal is a part of the training of car dealers.

Social security numbers should not be provided unless a decision has been made.  Inquiries on credit affects credit score.

Whether the choice is bank or financing through a dealer, the loan process should be controlled by you.  Have sufficient information about the rates of the interest and payment terms.  When no option is profitable to you, improve on your credit score or when the down payment is affordable.

In order to get a car loan, the tips mentioned above should be slowly considered before saying “YES” to any car loan dealership.

[Tags]Car Loan, Mortgage, Credit, Money Lending, Borrow Money, Car Mortgage, Car Payment, Budget, Buying a Car[/Tags]

Planning to purchase a new car? More often than not, anybody experiences making this big decision.  Whether your choice is a Rolls Royce or something else less flamboyant, it is always exciting for a prospective buyer.

Before getting into the motion of buying a new car, take a look at the advantages of financing:

Equity

After completing the loan, the car is already yours.  There will be no more hassles paying your car.

Flexibility

Yearly car mileage is one requirement in leasing.  Car owners do not need to have annual mileage.

Freedom

Maintenance as well as appearance of the car is a freedom that car owners have when they choose car financing.

Having the require funds is the key to a successful purchase. Also, remember the additional charges that may come along the way – car insurance, license fee, air fresheners, brand new car mats- that needs to be added to the budget.

The question that faces any buyer is what car loan will fit for him. Doing some research may be needed to find out the answer.  It is important to talk to a dealer before biting to the offer of finance.  Dealers are trying to maximize their potential income so you may find the repayment options unfair. Likewise, the APR offered is uncompetitive compared to the average lender. The advantage though is that you need not look elsewhere to get a loan.  Ask for a warranty if it is in the package that is being offered by the dealer.

Where is the APR better than a dealer? Chances are you might find competitive prices in the banks and building society.  Try to visit  a bank or building society to find low repayment options.

The Internet poses a great challenge for car loan scouts.  The market of the Internet is global so prospective buyers can choose anywhere in the world. In a highly competitive market, lenders can compete for good business deals among companies that would like to be their customer.  The most competitive deals regarding loans and financing have been put together in one site such as creditmonster.co.uk.  Following the procedures for signing up is relatively easy and choices provided on these sites and can be done right within the confines of your homes.

Because buyers are generally responsible for the loans and contracts they sign up, it is important that the buyer read and understand the contract.

Negotiate with the dealer finance about the APR as well as the repayment options that is best. Enjoyment of the new car can be achieved if the buyer forgets the money he spent first.

[Tags]Car Loan, Mortgage, Credit, Money Lending, Borrow Money, Car Mortgage, Car Payment, Budget, Buying a Car[/Tags]