Buying a new car with a new loan can be a lot of shopping to tackle all at once. You have to do your research, compare prices, analyze the various features and packages and weigh the cost of each of the options on the menu – and that’s not just true for the car or truck but also for the complicated loan financing. Unfortunately you don’t get to kick the tires on a loan or take one for a test drive, however, so it is important to at least get up under the hood of any new car loan before signing on the dotted line. Otherwise you buy a lemon, thinking you got a sweet deal, and wind up with a sour taste in your mouth despite the new ride in your garage.
Here are three expert tips for receiving the best new car loans:
1.
Get Your Documents in Order before you Apply for a New Car Loan
Getting your ducks in a row – by getting your documents in order – is one of the first things you should do before you start shopping around for a new car loan. Doing so will greatly enhance your chances of a successful loan application, while not having your paperwork in order can cause frustrating delays and even cause you to risk getting turned down for the loan. Your banker can tell you what you’ll need, but the list will probably include copies of your most recent tax return, recent pay stubs from your place of employment, and an overview of your debts – including credit card balances, mortgages, and other car loans that are not yet paid off in full.
2.
Clean up Your Credit Starting Way Ahead of Time
To get the best new car loans – or the best rates and terms on any kind of consumer loan in today’s uptight lending environment and shaky economy – you need to have the best possible credit. Even those with average or below average credit can increase their chances of getting a good loan by taking strategic steps to improve their credit history and pay down their debts before they walk into a lender’s office and fill out the new car loan application. Consult a credit counselor or your banker or lender to find out ways to strengthen your credit in the manner than lenders will scrutinize if you ask for a new car loan, and then take disciplined and proactive measures to raise your FICO score. That will help immensely when you are ready to take out a new car loan and pay for that new SUV, truck, or car.
3.
Check the Loan Up Under the Hood
Just because a dealer tells you a car is a good deal, you do not take their word for it before you have a chance to evaluate it for yourself and give it a drive around the block. The same goes for new car loans. The way to check under the hood or kick the tires on a new car loan is to look at three big components – the APR, the length of the loan, and the charges to process it. The APR or annual percentage rate is the interest rate you will have to pay on the loan, and you want to get the lowest possible APR. These days some people are getting new car loans for as low as five or six percent, and the lower the APR the better. Then go for a shorter term loan because if you have a long loan you will spend many months just paying off the interest and it will be years before you actually pay off the loan and own your new car free and clear. Last but not least get an itemized written list of all other fees and charges related to the loan application and challenge any that seem unjustified or too high.
As complicated as it might seem to pick a good new car loan, there is really no getting around it unless you have enough money in your mattress to pay for the whole purchase in cash. But even if you are like the vast majority of consumers and you do not have a penny to spare, there is no reason to lose sleep over it. Just follow these three basic tips for getting the best deal on a new car loan and you can rest easy, assured that you did your homework and can reap the rewards of a wise consumer decision.
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Debt Settlement means you are working with your creditors and or collections agencies to settle your debt for less than you owe. Also called debt negotiation, this process is only used for unsecured debt. Unsecured debt can be credit card debt, personal loans, and some medical bills. Mortgages and auto payments are secured debt. You cannot settle a secured debt; the lender will just take the house or car as settlement.
Trying to settle your debt with the original creditors like the credit card company or the bank you got a personal loan from, is different than trying to settle your debt with collections agencies.
Tip Number 1
It makes sense to talk to your original creditor on the phone. If you are 60 plus days past due and are past due on other bills, credit card companies and some banks will have programs in place. This may vary from offering a bonus of taking at least $50 off your balance if you just make a payment, to cutting your balance if you pay it off all at once.
For collection agencies, it is important that you deal with them by mail so that you have a paper trail of any agreements. If they call and want to talk about any offer you’ve made to settle the debt, remind them that the settlement offer you sent them requires a response in writing and hang up the phone. If you are corresponding with them, you don’t have to talk to them on the phone. It is important to get any settlement terms in writing before you sign a check or send them any money. Never expect the collection agency to honor verbal terms. You could pay the amount and have them try to collect more.
Employee turnover at many collection agencies can be high. Making a verbal agreement with one agent means that you have to believe they will be there two months later and that they will remember and honor the agreement. Send all correspondence by registered mail, keep good records and definitely keep a copy of every letter you write to them.
For more information, http://www.creditinfocenter.com has detailed information on setting your debts yourself and working with creditors and collection agencies.
Tip Number 2
Besides negotiating a monetary settlement with the creditor, negotiate what is reported to your credit rating. Start with trying to get them to agree to remove the listing on the credit report. Do this as part of the monetary settlement. Agree to pay X% of the debt by the X of next month if you remove the listing from the credit report.
If they won’t agree to a full deletion, work on the wording. The collection agency will want to list the settlement as something like ‘Paid Charge-off,’ ‘Paid Collection,’ or ‘Paid was 30-, 60-, or 90-days late.’ You want them to delete the debt, but if you can’t get them to budge on this, ask them to report only the word ‘paid’ with no qualifiers.
Tip Number 3
“Never let them see you sweat.” If you are eager or mention that you plan to buy a new home or anything else, they won’t settle. Be polite, be firm, hang up the phone if you are getting upset or don’t want to discuss it anymore. Remember, with the collection agencies you can work with them in writing and it is better to do so.
You don’t have to accept the first settlement offer the company makes. Take time, think about it and counter with a different offer.
Debt Settlement is a process. It isn’t the easiest thing to do and sometimes the results depend on personalities and or persistence. Depending on how many debts you need to settle, you may want to pursue credit counseling services or check out debt settlement companies. Just make sure to do your research into the company and the charges.
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Debt consolidation is the process of getting a loan that will ultimately be used by the consumer to combine their loans and liabilities into one loan. This allows debtors to pay one bill instead of several separate bills each month. The bank, credit union or other financial institution loan is meant to decrease the amount paid, versus the total of all the separate debt payments.
This payment is smaller because the debt can be paid over a longer period of time, and/or the interest is lower. Another advantage is to get a fixed rate loan if some of your debts have fluctuating rates.
Tip Number 1 – It Starts With Your Credit Report
Pull your credit report and verify that all your personal information, account information, balances and payment history is correct. If there are mistakes, get them fixed and cleared off. This process can take a good 30-45 days, so make sure this is where you start.
There are several places that offer free credit reports, some offer free FICA scores, but be careful. Sometimes these services are free for a short, limited number of days before they start charging you for some type of service or monthly fee. One of the websites that provides a free report and the ability to clear some of the problems online is www.annualcreditreport.com.
After you’ve taken care of your credit report, then start looking at options.
Tip Number 2 – Know What The Numbers Are
You need all the facts and figures and information. www.moneycentral.msn.com has two calculators that are your best tool during this time. The Consolidate Your Debt Payment calculator allows you to change the payment amounts and see how that affects your debt, The Consolidate Your Debt Time Frame Calculator allows you to enter different terms and see how that affects your results.
To use these calculators, you’ll need to know what your total debt is and what your details are. Make a list that includes the balance owed on each loan or credit card, the monthly payment and the interest you are paying on each account. Include how many payments are left for each bill. Know that you have an idea of what your total debt is, you can play with the terms and rates and see what you need to get from a lender in order save you money.
Tip Number 3 – Your Best Options
Your best options for debt consolidation start with your house. If you have equity in your home and can qualify, the interest rates will be the lowest on either a home equity loan or a cash-out refinance.
- Home Equity Loan: The advantages are a fairly low interest rate and the interest is tax-deductible. Make sure you get a fixed-rate loan. The term might vary, but most are 15-year. Check the origination fee, the cost of appraisal and if you need title insurance, what it would cost.
- Cash-out Refinancing: The advantages are very low rates and tax-deductible interest. Again, check fees, appraisal costs and closing costs. The downside could be stretching payments out for 15 to 30 years. Figure the interest on the amount and make an informed decision.
- Refinancing your car: The advantages could be a fairly low rate and this might be a good option depending on how much money you need and what the car is worth. The downside to this is if you need a new car in a few years and owe more on the car than it is worth.
- Personal Loan: This unsecured option might have an 11% or higher interest rate, but if you are paying 20% and more to credit card companies, this could still be a great option. These loans can be harder to get and your credit report score will feature prominently. Check with your credit union.
There you go, tips to get you started if you are considering a debt consolidation loan.
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Student loans are something you get when you are going to college or university. These loans are used specifically for college tuition and books and might also provide enough money to pay for all or a portion of living expenses while you are in school.
The interest rate on student loans is substantially lower than other loans and the payment schedule can be deferred while you are in school. Paid back over a longer period of time, a student loan usually accrues interest while you’re in school and you rarely have to pay for the loan until you’ve been out of school for a few months.
Tip Number One
File for Federal Student Loans first, through the free online Federal Application for Federal Student Aid or FAFSA. Without this application and the Student Aid Report (SAR) that tells you what you qualify for, you won’t have access to federal student loans. Many of the federal student loans are not based on need or your income.
The federal government in the United States has a federally guaranteed student loan program. The program also includes a complete financial aid package that could include scholarships, grants, or work study options. Most US students qualify for some type of federal student aid, it is important that every student start with the federal student aid and loan program.
To fill out the FAFSA, first you need a pin number. The pin is used to sign the Free Application for Federal Student Aid or FAFSA if you apply online. If you mail in your application, you can still use the pin to access and correct a processed FAFSA at a later time. Go to www.pin.ed.gov and set your pin number. If your parents’ information is going to be included on the FAFSA, you will need one of them to sign the application as well. Your parents should get their own pin number.
The FAFSA site is at www.fafsa.ed.gov. Follow the process, there is no fee to do this and you should never pay someone to fill out the FAFSA. It is a free government form. Once you’ve submitted the application, eventually you’ll receive a Student Aid Report. This report will list your availability and approval for all student aid; including approval for government funded and partnered loans.
Tip Number Two
Always use federal loans first. The federal loans are know by names like the Perkins, Stafford, and PLUS loans. These lower, fixed interest rate loans will often have more favorable terms than private student loans. If you are looking at private loans, look at all the costs. Private loans can have higher interest rates, different ways of compounding interest, and origination fees.
Because private student loans are based on your credit score, know what it is. Most private loans will have interest that fluctuates over time. Read the information and know what all the charges and rates are.
Tip Number Three
Make sure you know if your loan has borrower rewards and what the specifics are on your loan if there are borrower rewards.
What are borrower rewards?
These rewards or loan discounts are reductions and waivers that can save you money on your loan. Some of these discounts you get just because of the type of loan you have, others you earn. Sometimes there are rules to follow to get the discounts, like having your payment taken directly from your bank account or making all your payments when due.
A sample of the type of rewards or discounts are, rate reductions, fee waivers, principal reductions, cash rebates and a possible waiver of final payments.
These discounts or rewards can make a big difference on your monthly payments and total cost. One example of a possible savings is a loan that gets a 3.75% reduction on principle if there were 36 on time payments. Another lender gives a .25% interest rate reduction if there are automatic payments for paying the loan.
When you are checking out student loans, look for these features and benefits and make sure you understand what you need to do to get the rewards. Then make sure you follow the rules and get these rewards. The lenders offer it as a benefit, and then hope you won’t use them. Figure it out and follow through for better pricing. If you already have a student loan, call your lender and get a list of the rewards.
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A business loan is specifically targeted to financing your business, whether it is the initial loan to pay startup costs or a later loan on the existing business. Business loans can be used for a number of things, including expenses, new equipment, expansion, or as a debt consolidation loan.
In the current economy, getting a loan for anything is tougher. Let me give you a few tips.
Tip Number One
Spend time on the paperwork. The requirements for getting a business loan may vary a little from lender to lender, but they will all want a package that tells them about your business, how much money you want, and what you plan to use the money for. But everything starts with paperwork.
Make sure you have a neat, data rich documentation that will give the lender the information they need to grant your loan and asses a specific loan repayment plan. The creditor will want to know how much money you need and what it will be used for. They’ll want the business plan to include the planned contingency options if things don’t go as you’ve projected.
Creditors will look at the businesses’ credit report and/or your personal credit report. The better your FICA scores the better chance you have to get funding. But don’t forget the paperwork. The more thought out, confident and concise you are in the required paperwork and in person—the better chance you’ll have of securing the loan.
The reverse of this is if you go into the loan process with incomplete, missing, or disorganized paperwork—you are liable to delay the loan processing and ultimately take a risk of being turned down for the loan just for your lack of preparation. Money is tight and lenders have lots of applications on their desks. Don’t make it easy to pass you by because you aren’t prepared.
Go online and do a search on ‘sample business proposal.’ There are templates and samples that have been filled out for other companies. Look at them. Compare and contrast what information has been included. The better your proposal, the better chance you have.
Tip Number Two
Don’t assume the lender understands your business. Write your business plan and data sheets as if you are explaining your business to someone who has never heard of your company or industry. Be very careful to stay away from using terms that may be well-know to business insiders, but aren’t recognizable by the general public.
Acronyms are the enemy. Spell out the terms and be sure to include definitions of any word that is industry specific. Make the plans and data understandable by anyone.
Have someone outside the business read the plans and information. If your reader truly has no understanding of your business, they can read your plan and proposal and point out confusing terms, as well as anything they don’t understand. Having a reader will give you the opportunity to make clarifications before you present the loan documentation.
Tip Number Three
Don’t ignore the 800 pound gorilla in the room. Make sure your business plan addresses risk in the application. There is no business without risk, the lender is going to ask about it, don’t try and pretend it doesn’t exist. If you do, the creditor will think you haven’t thought about it and are ill prepared.
The lender will want to know you’ve considered the major risks and what you’ve planned to do about those risks. You can’t plan for every contingency, nor should you try and include every known risk in your business plan. But you can show that you’ve thought about the possible pitfalls and are prepared to handle the major ones with an eye on changes. If you don’t know what the risks are for your industry, you definitely need to do some research and figure it out.
On the reverse side, what happens if your business is a huge success? If everything explodes and the demand for your service or products is off the charts, then what do you plan to do? Make it realistic and show that you have a plan for everything in your control.
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