Tag: auto loans

Don’t Get Caught in a Pre-approval Scam

by Advantage One, posted in Credit, Lifestyle, Loans, security, Tips & Best Practices, Uncategorized

You’ve got mail! But beware, because this particular missive telling you that you’ve been preapproved for a large loan – maybe even a mortgage – may not be as it seems! The exciting news may be accompanied by a check that’s made out to you and even for the full loan amount! It’s a dream come true. Until, of course, it all turns into a living nightmare. 

Here’s what you need to know about preapproval scams and how to stay safe.

How the scams play out

In a preapproval scam, a target receives a letter in the mail, an email or a text message informing them they’re preapproved, or “prescreened,” for a large loan. The letter is often accompanied by a live check, or an unsolicited check that can be cashed in by the named recipient – which is you. The letter may also be highly relevant to your life. For example, if you’re in the market for a new home, the offer may feature an alleged preapproved mortgage loan. If you’re looking for a new set of wheels, the letter will likely offer a bogus auto loan. More commonly, though, will be the offer of a personal, or unsecured loan, through a live check. 

When you go ahead and cash that check, you may be playing right into the hands of a scammer. 

The authentic-looking check cannot be cashed unless the recipient shares their personal information. Of course, this means providing a scammer, or a scam ring, with all the info they need to empty your accounts, commit identity theft or worse. In addition, the check may appear to clear but then bounce a few days later, leaving you to pick up the tab for any of the money you’ve spent. Finally, if you really do need to take out a large loan, the bogus offer can set you back significantly by hurting your credit score.  

Checklist for legitimate preapproval offers

If you have a credit history, you’ve likely received these preapproval offers at least several times. Some of them are actually legitimate offers to cover a loan for a large amount. How, then, can you tell which of these offers are legitimate or scam?

First, it’s important to know that, while some of these offers may be legit, that doesn’t mean they’re good for your financial health. If you cash that check and/or accept that loan offer, you’ll be bound by the loan terms, which you may not be truly aware of until the first repayment bill becomes due. Most of these preapproval offers will have exorbitant interest rates and may demand full repayment quicker than typical loans obtained from a bank or credit union. 

Now, let’s take a look at how you can determine whether one of these preapproval offers is legit. If you receive an offer as described, look for this information to verify the authenticity of the offer: 

  • A disclosure of the loan fees
  • The annual percentage rate (APR), which is the annual cost of the loan 
  • The payment schedule
  • The loan agreement
  • A privacy notice about the sharing of your personal information
  • An opt-out notice for future offers
  • Contact information for the sender, which includes a number and street address

If any of this info is missing from the preapproval offer, you’re likely looking at a scam. 

If you’ve been targeted

If you’ve been targeted by a preapproval scam or a legitimate but shady offer, there are steps you can take to protect yourself from further harm and to stop the annoying letters from landing in your mailbox. 

First, let the Federal Trade Commission (FTC) know about the circulating scam. Next, it’s important to note that, under the Fair Credit Reporting Act, you have the right to opt-out of future loan offers for five years, or permanently. To opt-out for the next five years, call 1-888-5-OPTOUT (1-888-567-8688) or visit OptOutPrescreen. To opt-out forever, visit OptOutPreScreen to request a Permanent Opt-Out Election form. Return the signed form and you should be off the list of all preapproval offers. Finally, keep your online interactions safe from scams by using the strongest and most up-to-date security settings across your devices and being careful about the information you share online.

Preapproval scams can be super-annoying and destructive, but you can outsmart them. Stay safe!

Your Turn: Have you been targeted by a preapproval scam? Tell us about it in the comments. 

Should I Buy Out My Lease?

by Advantage One, posted in Announcements, Budgeting, Convenience, Credit, Debit, Lifestyle, Loans, News & Events, Reviews, Saving, Tips & Best Practices, Uncategorized

Q: My lease agreement is nearing its end, and I’m getting many offers to buy out my lease due to the current state of the economy. Should I ignore the hype, or is it really a good idea to buy out my lease?

A: With cars in hot demand, and selling at all-time high prices, many lease customers are looking at trade-in values for their vehicles with the intention of buying out their lease. While this can be a smart choice for many consumers, it’s important to consider all relevant factors before making a decision. Here’s what you need to know about buying out your lease.

What is a lease buyout?

Many drivers are confused by the offers they’re getting and the promotions they’ve seen for buying out leases. How is it possible to buy a lease when a leased vehicle, by definition, is essentially a rented car?

First, buying out a lease involves paying the car’s “buyout price” as specified in the lease contract, which makes you the car’s new owner. Second, it’s important to establish that buying out a lease generally makes the most sense when you are nearing the end of your lease term.   Finally, this may necessitate taking out an auto loan to afford the buyout price, just like you might do when purchasing a new or used car at a dealership.  

How can I determine my car’s buyout price?

To estimate how much you’d need to pay to buy your leased car, look for the term “residual value” in your lease contract. This tells you what your leased vehicle is expected to be worth at the end of the term, which may be months or years away. To reach your vehicle’s buyout price, add the residual value to any remaining payments. For example, if your car’s residual value is $25,000 and you owe another 10 payments of $500, the car’s buyout price is $30,000. Of course, the more time left on your lease, the higher price you can expect to pay to buyout.

Will I need to pay any fees in addition to the buyout price?

Depending on your home state, your vehicle’s buyout price may be subject to an auto sales tax. Your lender may also charge additional fees, such as a ‘purchase option fee’. It’s important to know about any additional fees you may need to pay in addition to the buyout price and to 

estimate the total you’ll be paying before deciding to purchase a leased car.

The good news is that you won’t be accountable for the typical lease-end fees, which can include the costs of reconditioning the vehicle for resale, fixing any damage the car may have incurred during your term, and an over-mileage penalty for every mile you may have driven over the official limit.  

What are the advantages of buying out a lease?

Many drivers are opting to buy their leased vehicles now due to the current state of the auto industry. Supply is low and both new and used cars are in high demand. A driver nearing the end of their lease agreement may find it challenging to purchase or lease another car. Buying a car you already lease will give you first dibs at a hot commodity.  

Some drivers are choosing to capitalize on the high demand for used cars by buying out their leases and then flipping the car to a dealership or selling it privately to a new owner. They assume they will earn enough from the sale to help offset the price of a new car. While this may be true, it’s important to remember that it may be difficult to find a new car in a desired model and at an affordable price.

Before taking out a loan to buy out a lease, find out what your car is actually worth. Due to the state of the market, it’s likely worth more than you’ll pay. However, if it’s worth less than the buyout price, you’ll be upside-down on your loan, which is never a good idea. In addition, you may find it difficult to qualify for a loan in an amount that is higher than the value of the asset.  

How do I buy out my lease?

If you decide to go ahead and buy out your lease, you’ll first need to run the numbers as described above to be sure it’s a financially responsible decision. When you have the total buyout price, your next step is to work on financing. You can choose to take out an auto loan or a personal loan to help cover the costs. 

Next, you’ll contact the company behind your lease and complete the purchase. The sale process will be similar to the sale of any car. Finally, be sure to notify your insurance company about the change in ownership of your vehicle. Leases generally require plans with low deductibles and high premiums, so you may want to choose a new plan with higher deductibles and lower monthly premiums.

If you’re looking to finance an auto loan for a lease buyout car, look no further than Advantage One Credit Union! Our auto loans offer low interest rates [see for current rates], easy payback terms and a quick approval process. Call, click or stop by to get started or discuss available options!

Your Turn: Have you bought your leased car? Tell us about your experience in the comments. 

Should I Buy or Lease a Car Now?

by Advantage One, posted in Budgeting, Checking, Convenience, Credit, Lifestyle, Loans, News & Events, Reviews, Tips & Best Practices, Uncategorized

Q: It’s no secret that the semiconductor chip shortage is driving up the price of both new and used cars, but I do need a new set of wheels. Am I better off buying or leasing a car now? 

A: The chip shortage and other factors relating to the pandemic and inflation have created a tight auto loan market, the likes of which haven’t been seen in years. 

As a result, finding a new or used car that meets your criteria is challenging in today’s market. Unfortunately, though, leases have also risen in price and there is limited availability among many models. 

If you need a new car right now, what’s your best choice? 

Let’s take a deeper look at buying and leasing a car, paying particular attention to factors that are unique to today’s market, to help you determine which option makes the most sense for you. 

Buying a car in 2021

If you choose to buy a new or used car, you’re looking at inflated prices and a supply shortage that’s been ongoing for months. Expect to pay approximately $40,000 for a new car and $23,000 for a used car, according to Edmunds.com. You’re also unlikely to get the service you may be used to getting at a dealership since salespeople likely have more customers than they can serve at present. This can translate into reluctance to move on the sticker price and in a delayed processing of a car purchase. 

Leasing a car in 2021

The leasing market has not been spared the after-effects of the chip shortage and resultant lag in supply of new vehicles. Many lease companies are struggling to service customers while facing a shortage in available cars. The rising prices have hit this market, too. 

If you’re nearing the end of a lease, you may be in luck. Auto dealerships are in desperate need of cars to sell, and they may offer to buy out your lease at an inflated price, leaving you with extra cash to finance your next car. The dealer pays the leasing company what you owe, and gives you a check for the remaining equity. Of course, you’ll also be facing high prices, but it may be worth getting a head-start on your purchase. 

Buying VS. leasing

In every market, there are some drivers who are better suited toward owning a car and others who benefit more from leasing. Here are some important factors to consider when making this decision: 

  • How long do you hold onto your cars? If you like to swap in your cars for a newer model every few years, a lease may be a better fit for your lifestyle. On the flip side, if you tend to hold onto your cars for many years, consider buying a car instead. 
  • Insurance costs. Leases require full insurance coverage, which can be pricey. When you own your vehicle, though, the amount of insurance coverage beyond what is required by law is your decision. If you like having full protection, including GAP insurance, which pays the difference between what you owe on a car and its true value if it’s totaled in an accident or stolen, a lease may be a better choice for you. If, however, you tend to purchase just minimum coverage, you may be better off purchasing your vehicle. 
  • Mileage. If you usually put more than 10,000 miles on your car each year (the standard amount allowed by most leasing companies before charging extra), you may be better off buying a car. Keep in mind, though, that you’ll still need to pay for those miles in depreciation costs of the car. 
  • Maintenance costs. When you lease a car, most maintenance costs are on the leasing company. You’ll need to spring for anything related to wear and tear of the vehicle, but most other repairs will be covered. You’ll also have the option to pay extra for tire protection, and dent and scratch insurance. 

When you own your car, you’ll be footing the bill for all these costs, plus any maintenance needs. To minimize these costs, don’t finalize a car purchase without first ensuring it’s in good working order. You can do this by using its VIN (vehicle identification number) to look up its history and by having it professionally inspected by a mechanic.

While individual circumstances vary, in general, you can expect the cost of purchasing and leasing a vehicle to break even at the three-year mark. While a lease may offer you cheaper monthly payments, you’ll likely earn back two-thirds of the price you paid on a car if you sell it after three years. 

Today’s auto loan market makes every decision challenging. If you’re choosing between buying or leasing a car, be sure to weigh all variables carefully before making your decision. 

Your Turn: Do you buy or lease your cars? Which factors drive that decision? Tell us about it in the comments. 

Navigating the Current Auto Loan Market

by Advantage One, posted in Budgeting, Convenience, Credit, Lifestyle, Loans, Uncategorized

If you’re in the market for a new set of wheels, get ready to experience sticker shock. Prices on new and used cars have soared since the beginning of 2020, and experts aren’t expecting them to fall anytime soon. Here’s what you need to know about the current auto loan market and how to navigate it successfully.

Why are auto prices so high? 

The coronavirus pandemic has touched every sector of the economy, and the auto industry is no exception. According to the U.S. Consumer Price Index, the price of used cars and trucks has jumped a full 9.4% in the last 12 months, while the price of new cars and trucks increased by 1.5%. The drive behind the increase is multifaceted and linked to several interconnected events.

When the pandemic hit American shores, demand for new and used cars increased significantly. This was largely due to the many people who were avoiding public transportation for safety reasons. The mass exodus from big cities and their high rates of infection also boosted the demand for new cars.

At the same time, supply of new and used cars dried up, thanks to these factors:

  • The pandemic put a freeze on the production of new vehicles for nearly a full business quarter. The factory shutdowns reduced output by 3.3 million vehicles and sales dried up, along with subsequent trade-ins.
  • The production freeze prompted chipmakers to focus on the electronics industry instead of creating chips for automakers. Now, the industry is still scrambling to keep up with the automakers’ demand.
  • Business and leisure travel was halted for months. This led to a steep decline in travelers renting cars, which in turn led to rental agencies holding onto more of the cars in their lots instead of selling them to used car dealerships.

The rise in demand and shortage of supply naturally triggered a steep increase in the prices of both new and used vehicles.

Rethink your auto purchase

If you’re in the market for a new car and the price tags are scaring you, you may want to rethink your decision. If your car is in decent condition, consider holding onto it a little longer until the market stabilizes. To go this route, consider the following tips to help make your car last longer:

  • Use a trickle charger to keep the battery in excellent condition.
  • Change your filters regularly.
  • Follow the service schedule. Most cars need to be serviced every 10,000 miles.
  • Keep all fluid levels high. This includes coolant, oil, antifreeze and windshield washer fluid.
  • Drive carefully to avoid sudden braking and prolong the life of your brakes.
  • Replace spark plugs when they begin showing signs of wear or melting. Depending on the vehicle, spark plugs need to be replaced every 30,000-90,000 miles.
  • Check your tires regularly and rotate and inflate them as needed.
  • Pay attention to all warning lights that are illuminated on the dashboard.
  • Have your car rust-proofed to keep the exterior looking new.

Tips for buying a car in today’s market

If you’ve decided to go ahead with buying a car, it’s best to adjust your expectations before hitting the dealership.

First, a seller’s market means many dealerships will not be as eager to close a deal as they tend to be. They have more customers than they can service now, and that can translate into a willingness to move only slightly on a sticker price of a car, or a refusal to negotiate a price at all. Processing a car loan may now take longer, too.

Second, expect to pay a lot more than usual for your new set of wheels. If you’re looking to purchase a new car, prepare to pay approximately $40,000. Also, as mentioned, supply of new cars is down while demand is up, so you likely won’t have as many choices as you may have had in the past.

The used-car market has been hit even harder by the pandemic since prohibitive prices and a short supply has pushed more consumers to shop for used cars instead of new vehicles.  This increase in demand, coupled with the dwindling supply, has driven the prices of used cars up to an average of $23,000, according to Edmunds.com. If you’re thinking of buying a used car, prepare to encounter a highly competitive market where bidding wars are the norm and cars are super-expensive.

If you’re looking to take out an auto loan, consider one with your credit union. The most recent data shows that auto loans at credit unions are a full two points lower, on average, than auto loans taken out through banks. Car prices may be soaring, but credit unions continue to deliver lower rates and customer service you can really bank on.

The auto loan market has been hit hard by the coronavirus pandemic. Follow the tips outlined here to navigate today’s car market successfully.

Your Turn: Have you recently bought a new set of wheels? Share your best tips on navigating today’s auto market in the comments.

Learn More:
chicagotribune.com
marketwatch.com
barrons.com
cnbc.com
yourautoadvocate.com

New Cars Vs. Used Cars

by Advantage One, posted in Tips & Best Practices

young brunette woman in white dress shirt holding up the words "new" in her right hand and "used" in her leftQ: I need a new set of wheels and I’m wondering if it’s better to spring for a new vehicle or to go the cheaper route and buy a used vehicle. What do I need to know about each kind of purchase?

A: Any decision surrounding a purchase as large as a car needs to be made with careful research and consideration. There are pros and cons on both sides of the fence here. Your final decision, though, will depend on your budget, personal preferences and particular needs.

To make your job a little easier, we’ve outlined the pros and cons of each purchase type below.

Pros of new cars

  • Status symbol. The strongest allure of owning a new vehicle is obviously its attractiveness. You don’t hear many people bragging about their just-purchased used car or posting pictures of it all over their social media pages.
  • Fewer repairs. With a new vehicle, you can assume you won’t be dealing with major repairs or maintenance issues for a while.
  • Easier shopping. When everything is completely new, there’s no need to drag your prospective new car to the mechanic. It’s also easier to determine a fair price for the car.
  • More financing options. If you’re considering a new car, you’ll be offered attractive incentives like cash rebates from the carmaker and better interest rates from the lender.
  • Improved technology. Cars are getting more updates, and recent models have incredibly convenient technology, such as programmable settings, autonomous emergency braking, adaptive cruise control, blind spot monitoring, built-in Wi-Fi hotspots or lane-departure warnings.
  • Automaker’s guarantee. All new cars come with warranty coverage for their first three years or 36,000 miles, whichever comes first.

Cons of new cars

  • Price. Of course, a new car is going to be more expensive. But it’s not just the price that puts you at a disadvantage – it’s the fact that you can get a perfectly comparable vehicle for much less.
  • Depreciation. New cars go down in value as soon as they leave the lot. In fact, a new car can lose 20% of its value once it’s owned. At the end of the first year of ownership, your new car can drop another 10% thanks to the mileage you’ve clocked and the wear and tear. You’ll feel this loss if you try to sell your car a few years down the line.
  • Higher premiums. Insurance companies charge more for newer vehicles. You’re also more likely to want the maximum coverage and protection when every dent in your new car is enough to bring you to tears.

Pros of used cars

  • Price tag. Let’s be honest here: No one would think of buying a used car if it weren’t for the savings. And those savings can be enormous! Consider this: according to the National Automobile Dealers Association (NADA), the average American own 13 cars in their lifetime. A typical new car costs $30,000. If each car that a person owns throughout their life is just 3 years old and costs $20,000, the driver can save $130,000 on car costs throughout their life!
  • Less depreciation. The savings on a used car don’t end at the dealer’s lot. With the previous owner absorbing the initial depreciation on the car during its first few years of ownership, your vehicle will only experience a minimal drop in price. You can save yourself thousands of dollars in loss if you want to sell your car a few years down the line.
  • Lower insurance premiums. With your car weighing in at a lower value, your monthly insurance premiums will be more manageable. You can also opt out of full protection when your car isn’t a new model anyway.
  • Lower interest. If you choose to finance a used car instead of a new one, you’ll likely have a higher interest rate. However, since the loan amount is lower, you’ll save in total interest payments over the life of the loan.
  • Predictability. When purchasing a just-released car, you never know what issues might crop up in the future. But, when you’re buying a model that’s been around for a few years, you’ll have a wealth of research and ratings available on your car so you’ll know what to expect.

Cons of used cars

  • Complicated purchase. You won’t be able to walk into a lot and walk out with your new car an hour later. With a used vehicle, you’ll want to get a vehicle history report, ask to see the vehicle’s service records and bring it to a mechanic for a professional inspection.
  • Fewer choices. When buying pre-owned, you don’t get to be picky about things like colors, upgrades and features. If you find something in your price range that meets most of your specifications, you grab it!
  • Risk. Even if you do your homework well, you still run the risk of walking out with a lemon when you buy a used car.

It’s a multi-faceted decision, but by carefully weighing your options and personal preferences, you’ll drive off of the dealer’s lot with a real winner!

[Whether you choose to go new or previously-owned, don’t forget to call, click, or stop by Advantage One to hear all about our auto loans.]

Your Turn:
Did you buy your car new or pre-owned? Are you happy with your decision? Tell us all about it in the comments below.

SOURCES:

https://www.nerdwallet.com/blog/loans/compare-costs-buying-new-car-vs-used/

https://www.autotrader.com/car-shopping/4-questions-help-you-decide-new-or-used-car-167808

https://cars.usnews.com/cars-trucks/new-cars-vs-used-cars

https://www.iwillteachyoutoberich.com/blog/cost-vs-value-should-you-buy-a-new-or-used-car/

What You’ll Need for an Auto Loan

by Advantage One, posted in Loans, Tips & Best Practices

Make sure you have these things before you go into an office for a car loan

Car keys, calculator, and loan paperwork on a deskWhen buying a new car, getting a loan to cover the cost is an increasingly popular option chosen by new drivers. In fact, data from the Federal Reserve Bank of New York and reported by CNN Money shows that a record 107 million Americans currently have auto loan debt, a number which has been growing rapidly over the past 5 years.

If you plan to take out your own loan for your next vehicle, you are definitely in good company. However, first-time buyers may be surprised that getting an auto loan requires bringing along a certain number of items.

Proof of income
According to CarsDirect, proof of income is the first document that the lender will want to see, and the reasoning for it is fairly self-explanatory: whether the lender is a bank or an automaker, it wants to know that you are employed and therefore capable of paying back the loan. CarsDirect adds that proof of income generally would take the form of your last two pay stubs, or your direct deposit receipts if your employer prefers that payment method.

These pay stubs offer a good deal of information about your employment history, including how much money you have made to date, how much you pay in taxes, how long you have been with this employer and whether you have any wage garnishments.

If you are self-employed, you will need to provide at least a year’s tax returns, although it’s a good idea to bring more just in case.

Credit and banking history
According to LendingTree, the next thing a lender will want to see is your credit history. This may include mortgage or lease agreements, statements from credit cards or banks and records from any alimony or child support payments.

This also means that a lender will be looking at your credit score. This three-digit number encompasses the above information, plus other factors, to show how much risk would be involved in giving you a loan. As such, a good credit score would show a potential lender that you are trustworthy, and you’ll have a better chance of securing a loan and setting better terms for that loan.

Since holding a good credit score is so important to this process, the U.S. Consumer Financial Protection Bureau (CFPB) offers a few rules for doing so.

First, pay your bills and loans on time and take care of any missed payments as quickly as possible to stay current. Then make sure you’re not too close to your credit limits, since credit scoring models check to see if you are close to maxing out. On a related note, you should only apply for credit that you need. Many credit applications in a short amount of time signal that you are in dire economic straits and may not be able to pay back a loan.

In general, the CFPB adds, a long, consistent credit history is the end goal to achieving a strong credit score. The longer you continue paying on time (and catching any mistakes), the better the effect will be.

Proof of residence
According to CarsDirect, proof of residence confirms to the lender that you live where you say you do. This information is needed so you can be contacted by mail or, in a worst case scenario, so your vehicle can be located for repossession. This document can be a bill or driver’s license, showing both your name and the address given on the loan application.

Vehicle information
This refers to the vehicle you want to buy, not any trade-in that may be involved. For a new car, LendingTree says that you will need the dealer’s sheet or buyer’s order for the vehicle, including purchase price and vehicle identification number, as well as its year, make and model. If buying a used car, you will need the same information from the seller, along with the mileage, original title and disclosures of any loans currently on the car, called liens.

Proof of insurance
According to CarsDirect, you need to prove that the vehicle has current, valid insurance. This should take the form of a document showing the specific vehicle is insured, and not simply proof that you have insurance with a particular company.

With these documents (and a good credit score) in hand, securing an auto loan can be turned into a streamlined and easy process. However, LendingTree explains that all lenders are different, so it pays to call ahead to see what specific information they want you to bring to help speed up the process.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

How to Find the Best Loan for Your Next Car

by Advantage One, posted in Budgeting, Tips & Best Practices

Here are the best tips on how to get the best loan for your new carYoung man and young woman applying for an auto loan
Purchasing a vehicle is one of the largest and most important financial investments that any individual will ever make during their lifetime, excluding the purchase of a home. But the process of acquiring loans for a vehicle can often be confusing. There are many questions to ask leading up to the purchase of a new vehicle and customers need to determine whether they want to buy new or used, whether they want to buy outright or lease and which type of vehicle that they wish to purchase.

However, before any of these decisions can be made, customers need to determine how they will pay for the vehicle. While paying in cash is an option for a select group of new car buyers, most people will have to rely on an auto loan. Determining from where this money will come from can be the trickiest part of the process. Fortunately, there are ways to make the search for the best loan a little bit easier.

Loan pros and cons
While automotive loans can carry several benefits, they are not without their drawbacks. The most obvious benefit is that by using a loan, customers don’t have to pay for their new vehicle in its entirety, all at once. Another benefit is that automotive loans can help build credit. While you need good credit to qualify for most loans, paying for those loans will only improve your credit score. Auto loans, of course, do add another monthly payment to your pile of bills. Keeping up with those payments will be a necessity for many months ahead.

Who provides loans?
Automotive loans are offered to customers through a number of financial institutions. According to Consumer Reports, banks and credit unions are often the most common sources. If you have a good credit standing, then you will be able to attain some of the best loan rates from these institutions. But if your credit score is less than desirable, you may not qualify. Another very common source for auto loans is the dealerships themselves.

Determining which loan is best
Once you determine where you want to apply for a loan, the next step is looking for the best rates across the board. It’s important to pay careful attention, as some loans may look good on the surface, but could spell financial trouble in the future. As vehicle prices increase with each passing year, longer loans become available. However, Herb Weisbaum at CNBC suggests that drivers choose the shortest loan that they can afford. Not only will longer loans cost drivers more in the long run, but paying off a loan sooner removes one more payment each month.

If you happen to find the loan that works best for you before you are ready to purchase your vehicle, then this can be used to your advantage. The DMV says that getting pre-approved for a loan can carry several benefits. If you are pre-approved, this removes a lot of uncertainty during the entire financing process when it comes time to pick up your next set of wheels.

There is no such thing as a perfect automotive loan, as each driver has specific wants and needs. Still, there are processes and guidelines set in place to help you find the right loan for you.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Do You Need a Co-signer for Your Auto Loan?

by Advantage One, posted in Loans, Uncategorized

If you don’t have enough income or good enough credit, you may need a co-signer

As with any type of loan, your income and credit history will be major determinants of whether you are approved for an auto loan application. If you’ve been denied for an auto loan, you may want to consider using a co-signer.

Understanding how a lender determines loan approval
According to a January 2016 article in The Balance by author of “The Everything Improve Your Credit Book” Justin Pritchard, the lending company or financial institution must have reason to believe you will pay back the loan in order for you to be deemed worthy to receive the auto loan. A financial institution looks at two factors to determine whether you are credible: your credit score and your income.

Your credit history is a true indicator of how well you repay your loans; if you’ve borrowed money through loans previously and have successfully paid them off, or are making on-time payments, the lender will be more likely to believe you are a safe bet and will approve your loan application. On the other hand, if you have a poor credit score from defaulting on loan repayments, or don’t have any borrowing history, the financial institution may not want to approve you for a loan, explains Pritchard. To the financial institution, such a person is a bad investment, as the likelihood of the financial institution being repaid decreases.

Lenders also consider the income of the individual in deciding on a loan application, says Pritchard. In fact, the financial institution often calculates a debt to income ratio to determine if you make enough income to cover the expense of the loan payment each month.

Larger vehicles are generally more expensive than smaller ones, but smaller cars can also be more costly depending on the make and the engine build. The price of the vehicle and its calculated monthly payments under a loan in comparison to your monthly income will determine whether you have a low enough debt to income ratio to afford the monthly payments.

When to bring in a co-signer on your auto loan
If you have poor or no credit history, or your debt to income ratio is deemed too high by the lender, you will likely not be approved for a loan. In essence, the financial institution has determined you are too risky and will likely struggle to repay the loan, so it is unwilling to work with you.

A co-signer can help you meet the income and credit score requirements of the financial institution, as the financial institution considers the added income and credit history of the co-signer to the loan terms, explains Pritchard.

“Co-signing happens when somebody promises to pay a loan for somebody else. This happens when a [financial institution] won’t approve a loan (or it won’t approve the original application, but it’s willing to lend if a co-signer is involved),” says Pritchard in an October 2016 article in The Balance.

To the financial institution, the co-signer acts as a backup plan to collect payment if you default on the loan repayment. And if the co-signer has good credit history, the financial institution knows that at least one person on the loan has experience borrowing and repaying loans on time, adds Pritchard.

“The co-signer (who presumably has strong credit and income) promises to ensure that the loan gets repaid by signing the loan agreement with you. In other words, the cosigner takes full responsibility for the debt — if you don’t pay off the loan, your co-signer will have to do it.

“As a borrower,” Pritchard explains, “you need to have sufficient income and good credit to qualify for a loan. Using a co-signer therefore boosts your appeal as a borrower to the financial institution if you can’t meet the loan application requirements on your own.”

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Vehicle Details: Top Vehicles That Are Affordable and Cool

by Advantage One, posted in Lifestyle

A cool ride doesn’t need to break the bank

There are so many choices if you’re looking for a new vehicle that it can be difficult to know where to start. But if your priorities are on coolness and affordability, here are some great options.

Kia Soul – The Soul is frequently awarded for its value and coolness, and the new 2017 model starts at an MSRP of $15,990 while delivering the same charm that has won over many buyers. The Soul continues to find ways to improve, with the newest model adding a turbocharged 1.6-liter four-cylinder engine that produces 201 hp and 195 lb/ft of torque through a seven-speed dual clutch transmission, and estimated fuel ratings up to 26 mpg city and 31 mpg highway. The Soul is easily spotted in a crowd thanks to its unique design, and some of its impressive features include the UVO infotainment system with eight-inch touchscreen display, navigation, and Apple CarPlay or Android Auto connectivity. You can also add a Harman Kardon audio system, ventilated front seats, heated rear seats, a heated steering wheel, and plenty of advanced safety features like the Blind Spot Detection System, Lane Departure Warning System, Forward Collision Warning System and Rear-Cross Traffic Alert.

Consumer Guide summarizes it nicely: “The competitively priced Soul is a very compelling mix of personality and practicality.”

Honda Fit – Named to Kelley2017_fit_yellow Blue Book’s KBB.com’s “10 Coolest Cars Under $18,000,” and currently ranked as the No. 1 subcompact and hatchback by U.S. News & World Report, the Fit has plenty to love. All Fit models have a 130 hp 1.5-liter four-cylinder engine that gets up to 37 mpg highway, but the versatility of the Fit is arguably its biggest strength. A maximum cargo capacity of 52.7 cubic feet is more expected from a small SUV, and clever features like the second row Magic Seat allow buyers to haul larger items. There are also plenty of standard features including Bluetooth wireless connectivity, a multi-angle rearview camera and a five-inch color LCD touchscreen.

Edmunds adds, “If there’s one thing this Honda is known for, after all, it’s the incredible amount of stuff you can fit inside its pint-sized hatchback body. Today’s Fit also has more rear legroom than ever, and it’s got a respectable roster of standard and optional technology too.”

Chevrolet Sonic – Also named tofebruaryfeatured_coolcars Kelley Blue Book’s KBB.com’s “10 Coolest Cars Under $18,000,” the 2017 Sonic is an affordable compact that offers excellent value (a starting MSRP of $15,145), two engines (a 1.8-liter four-cylinder and a turbocharged 1.4-liter four-cylinder) and plenty of technology, including a new Chevrolet MyLink infotainment system bundled with Apple CarPlay and Android Auto compatibility as well as OnStar 4G LTE with Wi-Fi hotspot. Safety is provided by 10 standard airbags and you can also add Lane Departure Warning, Forward Collision Warning and the new Rear Park Assist.

Autotrader says, “If you’re in the market for an affordable pint-sized champ that won’t make you feel second class for driving it, the Chevrolet Sonic may have your number.”

Other vehicles to consider include the Toyota Yaris iA, Honda Civic, MAZDA3 sedan and hatchback, Nissan Versa Note, Hyundai Elantra and Kia Rio.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Questions You Should Ask the Dealer When Car Shopping

by Advantage One, posted in Tips & Best Practices

Five answers to know before you sign on the dotted line

No matter whetherfebruaryfeatured_dealerquesitons you are shopping for a new or used vehicle, there are certain questions you will always want to know the answers to. The answers the dealer provides will tell you whether you are getting the most car for your money.

What are the additional fees?
Legitimate costs include sales tax, registry costs and a documentation fee. However, the amount dealers charge for filling out the contract (the doc fee) is not universal. According to the trusted automotive resource Edmunds.com, some states regulate these fees and cap them below $100, so before you seal any deals, check the paperwork and negotiate down an outrageous doc fee. Another questionable fee you may encounter, in an effort for the dealer to build a potential profit back into the deal, is a “vehicle preparation fee.” This means, for example, they are charging you for making sure there is oil in the vehicle and for performing other menial tasks that one would expect to be done inevitably before a car is rolled off the lot.

Are there any aftermarket parts on the vehicle?
Inclusion of “add-ons”-from things as simple as tinted windows to things as complicated as car alarms-is another way dealers attempt to boost profits by raising prices.

“Mud flaps, rust-proofing and paint sealants make the dealer a lot of money, but you can get them for less-often much less-elsewhere,” writes David Muhlbaum, online editor of Kiplinger.com

Before saying yes to a vehicle purchase, you will want to double-check with the dealer and in the contract, and negotiate accordingly.

What special promotions are you running right now?
Manufacturers are always running sales events, and sometimes dealerships even tack on their own discounts and deals. Investigate up front what promos are going on so you can take a closer look at the vehicles with the best incentives.

“If you’re diligent-and a little bit lucky-you can use one of these events to knock a few thousand dollars off of your total cost or secure 0 percent APR financing for the first year or so of your loan,” says Business Insider personal finance writer Ben DeMeter in an article on Investopedia.

What is the lowest price you can give me?
Instead of telling the auto dealer the highest price you can afford to pay each month, take the reins by figuring out the lowest possible price you would pay on the vehicle in question. While it is smart to go into negotiations with financing options already lined up, the dealer may be able to offer you lower financing, so don’t show your cards too soon.

Can I see an accident history report and title history?
Most dealers these days automatically provide a CARFAX report for all vehicles, as well as an AutoCheck report to be thorough. These documents also report title history, which will disclose any previous problems with the vehicle such as odometer issues, a rebuilt engine or whether it was ever reported stolen. If you choose to proceed without checking one or both of these reports, or something like them, you are putting yourself at risk for a large devaluation of the vehicle.

Once you ask these questions and are satisfied with the responses provided, you can feel comfortable signing on the dotted line as an informed consumer.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.