Auto Loans

Apache is functioning normally

Apache is functioning normally

Buying a used car can lower the cost of your purchase, letting you move into car ownership with a much smaller loan. This might also be beneficial if you don’t have the credit or income to qualify for a loan amount that would cover a new car price. You might get an even better deal if you buy a used car through a private seller. However, it’s important to ensure you’re protected from scams and engaging in a safe transaction. 

This piece covers how to buy a used car from a private seller. That includes how to get a loan for a used car from a private seller. 

In This Piece

How to Buy a Car from a Private Seller

When you’re buying a car from a private seller, there are some additional concerns you may not have when buying a vehicle from a dealership. Private sellers don’t have consumer reviews and brand reputation you can consider. So, you have to do some legwork to ensure you’re getting a good deal and aren’t getting scammed. Follow the steps below to buy a car from a private seller.  

Shop Around for Local Deals

Start by understanding what you can afford. If you want to know how to finance a private car sale, start by getting an auto loan first. You can apply for auto loans online or with a local bank. Once you get pre-approved, you know how much used car you can afford. 

Not sure if you can get approved for a car loan? Get your credit score first to see your odds of being approved and work toward improving your scores before moving forward with your purchase.

Privacy Policy

Use your loan pre-approval or cash on hand to set a budget for your car purchase. Avoid going outside that budget so you don’t have a financial hardship once you buy the used car.

Get matched with a personal
loan that’s right for you today.

Learn
more

Start researching cars that fit your needs. Read about cars you’re interested in online, and look into different considerations for older models. This helps you know what type of common issues to look for when you start checking out cars from private sellers.

Next, review the cars available from private sellers in your area. You can research options on Facebook marketplace, Auto Trader, eBay and any local classified publications, such as your city’s newspaper.

Contact the Seller

Once you spot a potential new-to-you ride, start by making contact with the seller. Take some time to feel them out and ensure they’re legitimate. Avoid meeting anyone by yourself or in a location you’re not comfortable with. If the seller is willing to come to a public location with the vehicle, that’s best. If not, take someone with you when you go to their home.

Ask to test-drive the vehicle. If you can have a mechanic or someone you trust who knows a lot about cars look over the vehicle, do so. You can also look up the CARFAX report on the vehicle using its VIN. This database and others like it provide some information about the vehicle’s history, including potential accidents, service records and how many owners the vehicle might have had.

Once you’re confident you’ve found the vehicle for you, start negotiations. 

Complete the Sale

Once you and the private seller agree on a price for the vehicle, move forward with the transaction. Make sure you get any agreement in writing to protect yourself in the future. You may also want to pay by check so you have a paper trail demonstrating that money changed hands for the car.

Verify ownership documents when you complete the sale. If the individual has the title on hand, they should sign it over to you at that time. If the seller owes money on the car, there’s a lien on the title. You’ll need a bill of sale indicating you paid for the vehicle. The owner will then take your money to their bank to pay off the car so they can get a title to transfer to you.

Complete the Paperwork

Even if you go through a private seller and not a dealership, buying a car requires lots of paperwork. You’ll need to:

  • Ensure you have a receipt or bill of sale documenting the purchase
  • Get the title from the seller at the time of purchase or after the fact
  • Go to the DMV with the title and ask for a transfer of ownership, which includes the completion of a form and getting a new title
  • At the DMV, you may need to pay tax, title and registration
  • Depending on your state, you may have to pay sales tax on the vehicle purchase 

Bottom Line

Always have a plan when you’re making large purchases. Create a budget and stick to it to avoid overcommitting yourself financially. Do the research to protect yourself from scammers. If a deal seems too good to be true, it may be.

If you need a loan to buy a used car from a private seller, start by comparing auto loan rates. Then, you can prepare yourself with everything you need to help finance your new car.

More Money-Saving Reads:

Article updated. Originally published July 15h, 2015.

Source: credit.com

Apache is functioning normally

You’ve done your research, checked your credit reports to make sure they’re accurate, and you’re ready to get serious about buying a car. You feel more than ready to sign on the dotted line and drive home in your new ride.

It could happen. Or, you could drive home in your old vehicle, kicking yourself for having forgotten one of the documents you need to finalize the purchase. Here’s how to lay the groundwork for getting the deal done on the day you’re ready to buy.

Four Steps to Prepare to Buy a Car

Step 1:

You’ll want to talk to your insurance agent about what it will cost to insure the make and model you are considering buying. You don’t want that figure to be a surprise, and you also want to find out how soon you will need to notify your insurer you have the new vehicle.

Step 2:

Talk to your bank or credit union and get pre-approved for the loan you’ll need—and do this close to your planned purchase date. You may get something resembling a blank check (up to a certain maximum) that must be signed by you and the dealer. By getting pre-approved, you will know the total loan amount and interest rate you qualify for. Even if you plan to finance at the dealer, it can’t hurt to come in with a pre-approval; you are far less likely to agree to a longer term or higher interest rate because you really want to drive that new car home today. It can also help you stay within your budget by serving as a solid reminder of how much you planned to spend and how long you were willing to make payments — before the showroom floor made it so hard to remember.

Get matched with a personal
loan that’s right for you today.

Learn
more

Step 3:

Make sure you have your driver’s license and proof of auto insurance with you. You shouldn’t be driving without these documents anyway.

Step 4:

Obvious as this seems, be sure you have a way of funding your down payment. If it’s not cash, make sure the dealer accepts the form of payment you’re planning to use. (If you forget to do this, you would not be the first, but that would be little consolation.)

Expert Tip: Be cautious about having your credit pulled unnecessarily. Each inquiry made for the purpose of extending credit can cause a small, temporary decrease in your credit score. And while inquiries for the purpose of getting a car loan made in a two-week period should count as only one entry, we’ve heard from consumers who have told us their credit scores dropped as the result of multiple auto loan inquiries. Some dealerships now ask customers to fill out a credit application even before a test drive, and there are reports that some have checked credit without customer consent. It can help to keep an eye on your credit through this process for this reason. Hard inquiries into your credit require permission, and it can be illegal for your credit to be pulled without your approval in this manner. You can get a credit report summary and two credit scores, updated monthly for free on Credit.com, to track your standing.

Can You Purchase a Car with a Credit Card?

Speaking of your down payment, you may have wondered if this can be charged to a credit card — or if the entire car can be paid that way. The answer is yes and no. It is possible that the dealership will not accept a credit card payment for the car, as this can come with large merchant fees that lower their profits. However, if your credit is in good standing, then it is still possible.

A better option would be to use your credit card for just the down payment. Not only is this better for your credit, since using all of your available $10,000–$15,000 credit limit can damage your credit score, but it’s more likely to be accepted by the dealer.

Finally, you’ll want to use a credit card that has excellent benefits. An appropriate credit card can earn you big rewards on your car purchase or other auto-related purchases. We have given you a couple examples of worthy rewards cards below.

Planning to Trade In Your Car? Don’t Forget These Items for the Dealership

If you plan to trade in a car, you have a bit more to do.

You will need to bring the following items to the dealership:

  • Your car’s certificate of title (If it has gone missing, your state department of motor vehicles can tell you how to get it replaced.)
  • The car’s current registration
  • Your car keys and the owner’s manual
  • Your account number or a payment stub if you still have a car loan (We’re going to hope that if this is the case, your car is worth more than you owe.)
  • A clean car, paying special attention to areas out of sight but convenient for stashing things: under seats, over the visors, in the glovebox and in every corner of the trunk

Besides a new car, expect to come home with a good bit of paperwork. Pay special attention to the purchase and sale agreement. You will need the information there to get or update your insurance — and you might even need it at tax time next year if you bought a car that qualifies for a tax credit.

What Do I Need to Apply for an Auto Loan?

While you won’t need to drive all the way to a dealership to get an auto loan (you can simply apply online), you will still need some important documents in front of you to easily fill out the application.

What do you need?

  • Proof of identity through an ID or passport
  • Your credit report, which the lender can pull using your name, address, date of birth and social security number
  • A valid state-issued driver’s license
  • Proof of monthly income through pay stubs or social security income receipts
  • Proof of residence through mortgage statements or utility bills
  • Contact information for personal references (note: this may not be required)
  • Vehicle make and model
  • Proof of car insurance
  • Payment type (cash, credit, debit, etc.)
  • Your car’s registration if you are trading in the vehicle

The list is rather long, but having each document will speed up the process and prevent you from going back and forth between your files.

Get Your Auto Loan and Car with the Help of Credit.com

Make sure that you can qualify for an auto loan by checking your free credit score, provided through Experian. From there, you can apply for your auto loan with confidence and compare credit cards that can help you finance your new car.

Frequently Asked Questions

Will my credit rating affect my auto insurance rates?

You should choose auto insurance coverage based on your credit rating and overall coverage needs. Check out Credit.com for car insurance quotes and to compare rates.

How can I find a credit card with a low interest rate to charge my car purchase?

We don’t recommend that you put your entire purchase onto your credit card, but there are cards with low APR or no APR for up to 15 months available to compare. If you can pay off the remaining balance during this period, then these credit cards may be for you.

How good should my credit be to get a credit card that is appropriate for a car purchase?

Many of the best rewards credit cards with high credit limits require good or excellent credit. A good credit score is considered 700–749 and anything over 750 is considered excellent.

You mentioned that hard inquiries can affect my credit score. What is a hard inquiry?

A hard inquiry is a credit check that indicates you have applied for credit, usually through a loan. Each time a hard inquiry is pulled from a different lender, your credit score can drop by up to 10 points, because it indicates that a lender has reviewed your credit and that you are trying to open up a new line of credit.

Note: At publishing time, the Chase Sapphire Preferred® Card and American Express Green card are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

More on Auto Loans:

Image: Fuse

Source: credit.com

Apache is functioning normally

According to Kelley Blue Book, the average price for a light vehicle in the United States was almost $38,000 in March 2020. Of course, the sticker price will depend on whether you want a small economy car, a luxury midsize sedan, an SUV or something in between. But the total you pay for a vehicle also depends on a number of other factors if you’re taking out a car loan.

Get the 4-1-1 on financing a car so you can make the best decision for your next vehicle purchase.

Decide Whether to Finance a Car

Whether or not you should finance your next vehicle purchase is a personal decision. Most people finance because they don’t have an extra $20,000 to $50,000 they want to part with. But if you have the cash, paying for the car outright is the most economical way to purchase it.

For most people, deciding whether to finance a car comes down to a few considerations:

  • Do you need the vehicle enough to warrant making a monthly payment on it for several years?
  • Does the monthly payment work within your personal budget?
  • Is the deal, including the interest rate, appropriate?

Factors to Consider When Financing a Car

Obviously, the first thing to consider is whether you can afford the vehicle. But to understand that, you need to consider a few factors.

  • Total purchase price. Total purchase price is the biggest impact on how much you’ll pay for the car. It includes the price of the car plus any add-ons that you’re financing. Depending on the state and your own preferences, that might include extra options on the vehicle, taxes and other fees and warranty coverage.
  • Interest rate, or APR. The interest rate is typically the second biggest factor in how much you’ll pay overall for a car you finance. APR sounds complex, but the most important thing is that the higher it is, the more you pay over time. Consider a $30,000 car loan for five years with an interest rate of 6%—you pay a total of $34,799 for the vehicle. That same loan with a rate of 9% means you pay $37,365 for the car.
  • The terms. A loan term refers to the length of time you have to pay off the loan. The longer you extend terms, the less your monthly payment is. But the faster you pay off the loan, the less interest you pay overall. Edmunds notes that the current average for car loans is 72 months, or six years, but it recommends no more than five years for those who can make the payments work.

It’s important to consider the practical side of your vehicle purchase. If you take out a car loan for eight years, is your car going to still be in good working order by the time you get to the last few years? If you’re not careful, you could be making a large monthly payment while you’re also paying for car repairs on an older car.

Get matched with a personal
loan that’s right for you today.

Learn
more

Buying a Car with No Credit

You can buy a car anytime if you have the cash for the purchase. If you have no credit or bad credit, your options for financing a car might be limited. But that doesn’t mean it’s impossible to get a car loan without credit.

Many banks and lenders are willing to work with people with limited credit histories. Your interest rate will likely be higher than someone with excellent credit can command, though. And you might be limited on how much you can borrow, so you probably shouldn’t start looking at luxury SUVs. One tip for increasing your chances is to put as much cash down as you can when you buy the car.

If you can’t get a car loan on your own, you might consider a cosigner. There are pros and cons to asking someone else to sign on your loan, but it can get you into the credit game when the door is otherwise barred.

Personal Loans v. Car Loans: Which One Is Better?

Many people wonder if they should use a personal loan to buy a car or if there is really any difference between these types of financing. While technically a car loan is a loan you take out personally, it’s not the same thing as a personal loan.

Personal loans are usually unsecured loans offered over relatively short-term periods. The funds you get from a personal loan can typically be used for a variety of purposes and, in some cases, that might include buying a car. There are some great reasons to use a personal loan to buy a car:

  • If you’re buying a car from a private seller, a personal loan can hasten the process.
  • Traditional auto loans typically require full coverage insurance for the vehicle. A personal loan and liability insurance may be less expensive.
  • Lenders typically aren’t interested in financing cars that aren’t in driving shape, so if you’re buying a project car to work on in your garage during your downtime, a personal loan may be the better option.

But personal loans aren’t necessarily tied to the car like an auto loan is. That means the lender doesn’t necessarily have the ability to repossess the car if you stop paying the loan. Since that increases the risk for the lender, they may charge a higher interest rate on the loan than you’d find with a traditional auto loan. Personal loans typically have shorter terms and lower limits than auto loans as well, potentially making it more difficult for you to afford a car using a personal loan.

Steps You Should Follow When Financing a Car

Before you jump in and apply for that car loan, review these six steps you should take first.

1. Check your credit to understand whether you are likely to be approved for a loan. Your credit also plays a huge role in your interest rate. If your credit is too low and your interest rate would be prohibitively high, it might be better to wait until you can build or repair your credit before you get an auto loan. Sign up for ExtraCredit to see 28 of your FICO scores from all three credit bureaus.

2. Research auto loan options to find the ones that are right for you. Avoid applying too many times, as these hard inquiries can drag your credit score down with hard inquiries. The average auto loan interest rate is 27% on 60-month loans (as of April 13, 2020).

3. Get your trade-in appraised. The dealership might give you money toward your trade-in. That reduces the price of the car you purchase, which reduces how much you need to borrow. A few thousand dollars can mean a more affordable loan or even the difference between being approved or not.

4. Get prequalified for a loan online. While most dealers will help you apply for a loan, you’re in a better buying position if you walk into the dealership with funding ready to go. Plus, if you’re prequalified, you have a good idea what you can get approved for, so there are fewer surprises.

5. Buy from a trusted dealer. Unfortunately, there are dealerships and other sellers that prey on people who need a car badly. They may charge high interest or sell you a car that’s not worth the money you pay. No matter your financial situation, always try to work with a dealership that you can trust.

6. Talk to your car insurance company. Different cars will carry different car insurance premiums. Make a call to your insurance company prior to the sale to discuss potential rate changes so you’re not surprised by a higher premium after the fact.

Next to buying a home, buying a car is one of the biggest financial decisions you’ll make in your life, and you’ll likely do it more than once. Make sure you understand the ins and outs of financing a car before you start the process.

Source: credit.com

Apache is functioning normally

Owning a car comes with costs that go beyond getting an auto loan or needing to insure your vehicle. Maintenance and repair costs can add up, and it’s essential to be prepared for those financially. In 2021, for example, individuals in the United States spent more than $194 billion on vehicle maintenance and repair. Find out about some of the most common car repairs below, including what they cost.

10 Common Car Repairs and What They Cost

This list of car repairs isn’t comprehensive. However, it includes some of the most repaired or replaced items on vehicles. 

Replacing an Oxygen Sensor

Oxygen sensors check the exhaust from a vehicle’s engine to see how much oxygen is in it. Most modern cars have O2 sensors before and after the catalytic converter. Your check engine light can come on when the sensors aren’t working right.

While a rogue O2 sensor may not be an immediate emergency, if it isn’t functioning correctly, it can lead to fuel intake and other issues with the engine. The cost of replacing O2 sensors varies depending on which sensors need replacing and the make and model of your car. On average, you can expect this repair to cost $150 to $500.

Replacing a Catalytic Converter

Catalytic converters control the emissions expelled by vehicle exhaust. They’re required on most new cars. A damaged or broken catalytic converter causes your check engine light to illuminate. If your catalytic converter isn’t working, your vehicle might not pass state inspection requirements where applicable.

In most cases, a catalytic converter replacement doesn’t require much labor. However, the parts can be expensive. The job can cost $900 to $3,500 on average, depending on the make and model of your car and where you get the work done.

Get matched with a personal
loan that’s right for you today.

Learn
more

Replacing Brakes or Rotors

Brake jobs are common because your brakes and rotors wear down over time. Expect to pay $200 to $500 for a brake service or repair job. If you need a complete brake job, which includes replacement of brakes, calipers, pads and rotors, the cost can average $200 to $800, depending on the quality of the parts, the make and model of your vehicle and where you get the work done.

Tightening or Replacing a Fuel Cap

The cap you take on and off when filling your car with fuel is a critical component. It’s supposed to provide a true seal that keeps the fumes and evaporation of fuel inside the tank. You might need a new one when your fuel cap goes missing or doesn’t create a tight seal. On average, the parts and labor for such a replacement range from around $97 to $102.

Thermostat Replacement

A thermostat in a car measures the temperature in the cooling system and helps ensure the right amount of coolant is being cycled through the engine. That regulation can’t occur if the thermostat is broken, which can lead to issues with an overheating engine. The cost of repairing or replacing a car thermostat is $140 to $300—typically much less than you’d pay for engine damage.

Replacing Ignition Coils

The ignition coils take power from your car’s battery and magnify it enough to cause the spark necessary to ignite the fuel and get your engine running. Bad ignition coils can mean your car doesn’t start. If you need to replace an ignition coil, expect to pay $200 to $300 on average.

Mass Air Flow Sensor Replacement

The mass air flow sensor keeps track of how much air enters certain parts of your engine. Your car needs to know this to allow the right amount of fuel to flow into the engine. If the mass air flow sensor doesn’t work, your check engine light may illuminate, and you may also notice symptoms such as misfires, a rough-running engine, black smoke in the exhaust and engine issues on idle. The cost to replace this part is usually less than $300.

Replacing Spark Plug Wires and Spark Plugs

Spark plugs and wires are necessary to start your vehicle. Sometimes, you can easily replace these parts to save a bit of money. The cost for parts is $125 to $150. If you pay for professional service, expect the cost to be between $190 and $235 in total.

Replacing Evaporative Emissions Purge Control Valve

The purge valve keeps fuel vapors from being released into the air. It’s a required part of vehicle emissions systems. The cost of replacing this part ranges from around $160 to $180.

Replacing Evaporative Emissions Purge Solenoid

Purging solenoids are parts involved in the same process as the purge control valve. You can expect to pay $150 to $300 to get these parts replaced. 

Prepare for Car Ownership and Repairs Financially

Owning a car is a significant investment, and it’s important to be prepared for paying your car payment and covering unexpected expenses. 

Start by understanding what you need to finance a car, including what’s a good credit score to buy a car. Then you can shop around for an auto loan that meets your needs.

Once you have a car, create a budget and set money aside for emergency needs. You can also work on your credit to ensure you have access to credit cards and loans if you need temporary help with a major unexpected expense.

More on Auto Loans:

Article updated. Originally published April 19th, 2016.

Source: credit.com

Apache is functioning normally

Apache is functioning normally

This article originally appeared on The Financially Independent Millennial and was republished with permission.

When consumers purchase a car, there are several things to think about. While the primary process has been handled entirely with test drives and dealerships or private sellers, it’s up to you to continue further down the checklist to get the most out of a used car.

People might think that there’s nothing left to do after buying a car, but don’t forget to take the steps needed to keep a used car on track.

1. Get the Car Insured

When you buy a car, the first thing to always do is to get insurance before leaving the car lot. Getting into an accident just after leaving is a terrifying possibility after spending hard-earned money on a car, even if it’s a used car. Either way, it’s an investment, and buyers need to protect themselves.

It’s a good idea to call around before purchasing the car model you have in mind to get a quote. If that didn’t happen before, getting the best car insurance must be the top priority to get taken care of once a vehicle is purchased. Some dealerships require buyers to have insurance before leaving, so being ready with insurance is imperative for a good experience.

Get matched with a personal
loan that’s right for you today.

Learn
more

2. Check for Existing Recalls

Recalls happen in brand-new and used vehicles as technology changes over time. Sometimes, manufacturers will send out information for a recall because of a necessary update, too. Certain recalls can also affect driver or passenger safety, so recalls cannot be ignored.

After the purchase is complete, buyers can find information about recalls from the National Highway Traffic Safety Administration. Get the vehicle identification number or VIN from the car to complete a search. It’s also a good idea to check for recalls multiple times a year because new recalls are released periodically. 

3. Transfer the Title

If a car is purchased from a dealership, the dealership typically handles the title transfer. The title is the official document that proves ownership, so if you buy privately, it’s critical to get this taken care of as soon as possible after purchase.

When purchasing from a private seller, buyers need to verify liens do not exist from the previous owner. If there are, those need to be handled immediately. Buyers need proof that the seller has documents that prove any loans have been paid as required. If a buyer has any questions about transferring a title, the DMV needs to be contacted for state-specific answers.

4. Get the Car Registered

Once a car has been purchased, it must be registered with the DMV soon after. Car dealers will typically handle getting the vehicle registered in the buyer’s name, but it’s different when working with a private seller. Private sellers should provide documentation to the buyer to show to the DMV to get the registration done.

Some of the documents needed include the bill of sale showing the purchase price, the title that has been signed over by the previous owner, the VIN, proof of insurance, odometer reading, sales tax if applicable, and evidence of passed inspections. Buyers also need to contact the local DMV to find out if any further documents are required.

5. Find a Trusted Mechanic

Finding a mechanic can be challenging, which is one reason that buyers may prefer to purchase from a well-respected dealership. Dealerships have mechanics on staff that are responsible for conducting an inspection and doing any preventative maintenance before the purchase.

Private sellers are different, and buyers need to be aware of getting a used car with issues. Ideally, the vehicle should be checked before purchase, but it needs to have a thorough inspection done when that’s not possible. When in need of a trusted mechanic, buyers should research reviews and request recommendations from local groups to get an idea of who to trust.

6. Schedule Any Necessary Repairs

Once the mechanic has had a chance to complete an inspection, it may be recommended to replace spark plugs, belts, or any frayed wires, along with any other issues. There may also be cosmetic issues that may need to be dealt with if the buyer deems these repairs are essential.

Some repairs may be more critical than others, so depending on what the mechanic says, there may be a list that needs to be followed. It’s possible that the new owner might need to prioritize repairs to get things done over time. If that turns out to be the case, working out a schedule with a trusted mechanic will be a great way to get things done.

7. Read the Owner’s Manual 

It’s a good idea to read the owner’s manual to get to know your newly purchased vehicle inside and out. It may not be full of entertaining reading, but knowing what the lights on the dashboard mean can be helpful should they come on. Buyers can also read about any potential existing warranties that might still apply to the car.

Getting to know more about the car is helpful because new owners can learn about what to expect regarding the engine and other internal components of the vehicle. It also gives the owner a chance to become familiar with some of the more specific details about different parts of the car.

8. Create a Maintenance Schedule

Using the manual, buyers can also get to know what the regular maintenance schedule is for the car. Each manual contains a suggested maintenance schedule, so a buyer knows what to expect and plan for in the future. Sticking with the recommended schedule can help in saving money over time, too.

Maintenance is a crucial part of being a responsible car owner. That includes keeping an eye on the wear and tear of tires, keeping up with oil changes, and getting regular tune-ups. Finding a trusted mechanic is essential in keeping car maintenance from becoming overwhelming.

9. Consider an Extended Warranty

When purchasing a used car, buyers may also want to consider a used car warranty. There are many different options available for warranties that range from expensive repairs to bumper-to-bumper coverage. Buyers should still do research to figure out the best options available.

Keep in mind that some warranties appear to be scams, so researching is vital in making the best selection. Buyers should also check for any specific fine print regarding repairs and coverage. Some warranties are only effective at particular mechanics, so those might be ones to steer clear from.

10. Get Familiar with Features

Once the car is ready to go, buyers need to familiarize themselves with the car’s features. Learning what all of the buttons do is vital because the last thing anyone wants to deal with is trying to figure out how to open the gas tank at an inopportune time. Knowing how to program the dashboard is helpful, too, to enjoy driving to the perfect soundtrack.

Features go beyond the buttons, though, and include levers for seats and the position of latches if installing a car seat is an essential aspect of the car. Finding out where all of the power outlets are is also important so owners can charge their gadgets as needed.

A Few Last Words on What to Do after Purchasing a Used Car

There’s a lot to think about after purchasing a used car. Getting car insurance and title transfers are essential to getting started. Finding out about recalls is critical to keeping the car safe for drivers and passengers. Once registration is complete, it’s time to get the car inspected by a trusted mechanic.

After that, it’s all about creating a schedule for repairs or maintenance to get the most out of a newly purchased car. Getting familiar with the features is also essential to feel comfortable with a new car, even if it’s a used car, because it will be new to you.

Once all of the necessary tasks are done, it’s time to get down to the fun stuff, like finding the accessories that reflect your personality. Adding some exciting goodies to a vehicle should be a part of what it means to have a new car. Taking care of it with regular car washes and giving the car some character is the icing on the cake. When everything is squared away, it’s time to take a drive and enjoy your new car experience.

Source: credit.com

Apache is functioning normally

This post originally appeared on The Financially Independent Millennial and has been republished with permission.

Okay, so you’re tired of puttering along in that same 1996 Honda Civic with which you picked up your Homecoming date during your senior year of high school. How do you even begin? No doubt, you’ll have questions to ask when buying a used car. Well, first, you need to narrow it down to which car you want, what options you want/can live without, your budget, etc. Once you’ve gotten that down and have taken a few cards for a spin, it’s time to get down to business. 

I bought my first car just about ten years ago and have bought and sold seven cars within that time frame. Except for one, I made a profit off every single one of them. For example, My INFINITI G37 just stole my heart. I got such a good deal on it (I bought it for $4,700 under dealer internet price) that I made the conscious decision to take a loss by keeping it longer and thus having to deal with depreciation.

However, it never needed any maintenance for the six years I had it other than $40 oil changes periodically. So, considering all costs (parking, annual registration, gas, car insurance, and depreciation), the car probably cost me $150 per month over those six years. That’s well below what some friends spent on the luxury of ride-sharing.

What to Ask When Buying a New Car

When you’re ready to buy a used car, you want to come armed with questions. Ensure you’re informed, and then you come across as a knowledgeable buyer and ward off any unscrupulous sales tactics.

#7. When Is the Best Time to Buy a Used Car? 

We’ve all seen those charts on the best time to buy everything from winter apparel to laptops. But did you know there is a sweet spot for buying cars, as well? Buying towards the end of the month and even the end of the year is your best bet. Why? Because dealerships have quotas to meet, salespeople are hungry to get one last commission for their paycheck. 

Get matched with a personal
loan that’s right for you today.

Learn
more

As far as the end of the month, most dealerships close the books, project that month’s sales amounts, and try to move inventory to keep the interest fresh. You may know that when new models come out and leases get returned, the used car market is usually more flexible, which means more selection and a better price for you. 

If you’re daring, go into the dealership on a Sunday evening during unpleasant weather when they’re hungry to meet quotas. If you’re paying cash, and you’re there with money in hand, they’re much more likely to get you a good deal. Make sure you come with evidence of comparable models elsewhere.

#6. Why Is Buying Used Better Than New? 

While many people justify their decision to buy new as having a more reliable vehicle and spending less on repairs than an older car, cars have markedly improved their dependability over the last 10-15 years. 

Plus, many online tools help you with price transparency, find service records, and owner/expert reviews. You’ll find anything you want to know about the car you’re considering over the last decade. 

According to a recent report, new cars lose up to 20% of their value after the first year. And then they depreciate more than HALF their value after five years. On a $32,000 car, that’s almost a $7,000 hit after just a year of driving! On the other hand, you can easily buy a car that’s just a few years old and let someone else take the depreciation hit. 

Besides houses, cars are generally the most expensive purchases you’ll make. Buying used enables you to strategically get a reliable vehicle that can last you years without breaking the bank. My neighbor once bought a 4-year-old Honda Accord for $12,000 and still drives it ten years and 90,000 miles on the odometer later!

#5. Why Is Buying Better Than Leasing?

According to Consumer Reports’ comparison for buying versus leasing, the average cost of a new car has now topped $38,000. You might think to yourself, “I don’t have $38,000 laying around!” Well, take a step back and a deep breath, realizing this is average. Meaning, you can easily find cars for less than this amount. Plus, just another reason to look at a mint used car! 

Leases can be appealing because they enable the consumer to drive a new car for a monthly lease payment. Lenders are happy to collect the interest! And then, you return the vehicle at the end of the lease without worrying about maintenance or repairs. Leasing is ideal for people who like to have the newest car (and can afford it) or deduct leasing expenses like realtors. And yes, if you’re wondering about this question, you can lease a used car as well. However, there are mileage limits, and if you lose your job or have a child, you typically can’t just hand the keys back without penalty.

Buying a car means you can drive it freely and have something of value that you can sell when the need arises. With leasing a vehicle, you typically have to either return it, have nothing at the end of the lease, or pay off the car at an agreed-upon amount when you lease the vehicle. For these reasons, buying a car is the best option for most people. 

#4. How Many Miles Should a Used Car Have?

Congratulations, we’ve convinced you to buy used! Well, hopefully, you’re empowered to ask questions and find and buy a quality used car, over lining the dealership’s pockets with a new one. Mileage is an essential factor to consider, and the lower mileage, the better. Think about it, cars don’t run forever. So, there’s a cap on mileage before the vehicle is pretty much worthless. (though if you want to see some impressive machines with millions, yes millions of miles, check out this car.)

Most people drive about 10-12,000 miles per year. And with ever-changing technology, it might be best to keep it under 100,000 if you plan to keep the car for a while. After 100,000 miles, more expensive servicing like timing belt change, transmission replacement, and electrical repairs come along. 

Consumers who question a used car’s value can turn to The Kelley blue book as an excellent resource when buying or selling. I have found that buying cars with low-mileage, i.e., under 30,000, is the sweet spot if you can snag a good deal because it still feels new. These cars usually come with the balance of a new or extended warranty and yet have decent value locked in. Bonus points if you flip it a year later for a profit as I did! 

#3. What Are the Benefits of Buying a Used Car from a Dealer?

You can compare buying a certified pre-owned (aka used car) from a dealer instead of a private party to purchasing a laptop from the store versus a seller on Amazon. You typically get more hand-holding and a concierge process with inspection of the car, service and registration assistance, etc. Yet, that comes with a price. 

Buying a used car from a dealer means there’s no question: they have to stand behind that car and not sell you a lemon because their reputation lies on that. So, peace of mind is a big plus when it comes to buying from a dealer. Also, you can typically find more variety in what you want and have someone reach out to you when they get something closer to what you’re looking for. You can also negotiate free service for a year, a multi-point inspection, printouts of service records, and things like replacing the tires at a reduced cost. Moreover, suppose haggling, negotiations, or dealing with salespeople make your stomach churn. In that case, you can always pay a slight premium for peace of mind by using a service like Carvana or Carmax.

Buying from a dealer can also help you make sure you get your title and tag done correctly. One thing to look out for is some dealerships charge a Dealer or “Document Preparation” fee, which can be hundreds of dollars in some states. Be sure to understand what value they’re providing for that fee and where it goes. Few waive them and even charge their employees that fee.

#2. What Are the Benefits of Buying a Used Car Privately?

How do you save the MOST amount of money when buying a car? Well, you buy a pre-owned vehicle that already got whacked with depreciation and cut out the middleman. By middleman, I mean the dealership. 

Now, you read about the perks of buying through a dealer and all the peace of mind it brings. So, why bother dealing with the hassle and uncertainty of a private party? Well, the significant cost savings, of course! There’s no dealer doc prep fee, no markups to pay for payroll or overhead, and no burdensome certification process. Buying a used car privately gives you the best chance of getting a great deal if you ask the right questions.

In simpler times, a handshake and trust were all we had to go off before things like CARFAX reports and AutoCheck. When you find a private seller, you can find out the vehicle history. For example, if they were the original owner, who drove the car, why they bought it, and how it’s been treated over the years. Also, you’ll have to make sure they have the title free and clear. Otherwise, you’ll want to go to the bank and have them call the company that holds the title to make sure the loan gets paid off before any other money changes hands.

 #1. What Are the Best Ways to Find a Used Car?

Now how do you go about finding a used car? There are many more online tools at our disposal than ever before. Do you remember the times when you would flip to the classified section of the newspaper to find boxes of 6 point font describing a car for sale? Or you saw a car parked on the road with a “For Sale” sign? How times have changed.

Now, you can easily find any car you want online, know everything about it, see high-resolution pictures of its every angle. And you don’t even have to limit yourself to your geographic area!  

The thing to know is most private-party sellers will usually try to sell their car for free or cheaply. So, be sure to start your search by scanning Craigslist, Cars.com, and Facebook Marketplace. 

Now, if you’re looking to expand your search across the state or nation, check out cars.com, Cargurus.com, and Truecar.com. All of these sites provide decent vehicle descriptions and history, such as accident reports. 

Cars.com has a very user-friendly interface and easy navigation filters for color, features, cloth/leather, etc. It also has a price analysis tool to let you know if that particular car is a “good” or “great price” as compared to other vehicles for sale.

CarGurus is also user-friendly and has a similar price comparison tool. Also, it’s got a cool little “negotiation” section in the description. It tells you how long the car has been on the market and its different price changes. It can give you a glimpse of how motivated the dealer is to get rid of the vehicle. I love CarGurus because it answers the most basic questions I’d ask about the used car I’m thinking about buying.

Finally, TrueCar has a unique pricing analytics report that will tell you what you can expect to pay based on what similar vehicles have sold for. They also can offer a unique “personalized offer” on a car, which might be lower than other sites, in exchange for inputting your contact information. It might be an easy trade to shave a few hundred off your car purchase!

Final Thoughts about Buying A Used Car

Consumers looking to buy a used car certainly have to ask a lot more questions than when buying new. But, the extra work will save them thousands in unnecessary depreciation. The key is to do your homework and get the car inspected. That way, you’ll come out ahead by knowing the car’s history. And don’t be afraid (ever) to walk away from a bad deal!

Source: credit.com

Apache is functioning normally

Depending on your contract, a bank or dealership could revoke your loan even after you’ve signed a contract.

Whether or not a bank can revoke an auto loan depends on the contract you have with them. If you’ve financed your new car at the dealership, they could also deny your financing after you’ve driven the car off the lot.

Find out more about how this could happen, what other issues you should watch for, and how you might deal with it.

In This Piece

Can You Be Denied a Car Loan After Purchase?

You can be denied a car loan after you’ve purchased it. It’s unlikely that a bank will do so, but it’s more common for a dealership to revoke a loan if you’ve financed through them.

Banks

If you got your loan through the bank directly, it’s rare to have your loan revoked after you’ve purchased your car. Banks may be able to revoke your car loan if your contract had language that protects the bank’s right to do so. Always read the fine print on auto loans. It’s more likely that there has been some sort of mistake, and you should contact your bank immediately to discuss your options.

Dealerships

If you got financing at the dealership, however, you could discover later that the financing has not gone through and you must return the car. This is typically because car dealerships don’t finance loans themselves: after you purchase the car, the dealership sells your loan to a finance company or bank to maintain. After reviewing your application, the bank may require a larger down payment or different terms. And if the dealership is unable to find a bank willing to fund your loan, you may be required to return the car. This is called a “spot delivery” and it’s not always clear to buyers that they haven’t officially been approved for a loan.

Get matched with a personal
loan that’s right for you today.

Learn
more

Review your contract carefully for a “seller’s right to cancel” clause before signing anything. The dealership will attempt to sell your contact to a finance company or bank, and they typically have a certain number of days to do so—after which they may cancel your contract.

Why Would a Car Loan Be Denied After You Signed All Papers?

Even if a dealership has preapproved you for a loan, the lender has the final say. They’ll take a closer look at your application and credit profile than the dealership likely did, and they may find a few reasons to deny you a car loan.

  • Poor credit or no credit is a common reason for loans to be denied. Take a look at your credit score before going to the dealership so you have a better sense of your credit strength. ExtraCredit shows you 28 of your FICO® scores, including those most commonly looked at by auto lenders.
  • Incorrect information on your application may lead lenders to deny your loan. Make sure you fill out your application completely and accurately.
  • Too much debt can make lenders nervous. Make sure that you have enough discretionary income to make your new car payments before attempting to apply for a new loan.

What Can You Do if You’re Denied a Car Loan after the Fact?

If the bank legally revokes the loan, you’ll probably receive a letter asking you to bring the car back to the dealership. The dealership is now out a sale it may have already marked in the finalized column. So, your salesman and the dealership finance department might be keen to help you take care of the problem by finding financing elsewhere.

But before you do that, it’s a good idea to take a few steps.

  1. Read your contract. Make sure the bank is within its rights.
  2. Contact the lender and ask why the loan was revoked. It might be a misunderstanding or clerical error you can easily resolve. And if it’s something bigger, you need to know about it before you apply for more financing. 
  3. Consider consulting legal counsel. If you don’t think the bank is within its rights under the contract or you think you might be a victim of a spot delivery scam, reach out to a lawyer for help.

How to Avoid This Issue

One of the best ways to avoid this issue and not worry about your loan being revoked after the fact is to get preapproved for a car loan on your own before you visit the dealership. You can apply for car loans online and get approved for a certain amount. Then, when you arrive at the dealership, you’re armed with buying power you can count on.

Before you apply for a car loan, consider signing up for ExtraCredit to get details about your credit history and score and where you stand in all the important categories.  

Source: credit.com

Apache is functioning normally

Vehicles are expensive. For many people, a car or truck is the biggest purchase they’ll ever make other than a home. And monthly car payments reflect that fact.

As the price of cars rises, those monthly payments are getting higher. In fact, around 15% of people who financed a new car — and 5% of people who financed a used car — in the latter part of 2022 are paying $1,000 or more per month on those loans. So, it’s no surprise some individuals are struggling to make their car loan payments every month.

Whether you ended up with a larger payment than you planned or a drop in income is making your vehicle loan hard to keep up with, you aren’t alone. And you do have options. Find out how you can shed the responsibility of a car payment by using the tips below to transfer the car loan to another person.

In This Piece

Can Someone Take Over My Car Payments?

It’s unlikely that someone can simply step in and take over your car payments as the new owner of a vehicle. In most cases, car loans aren’t transferable. That means you can’t simply sign the loan over to someone else and call it done.

In theory, you could let someone drive your car and make the payments. However, the car—and the responsibility for it—still belongs to you. You might need to keep insurance on it, and if the person doesn’t pay the loan payments as you agreed, the fallout happens on your credit report, not theirs. In potentially rare cases, your car loan might be transferable. Check your loan contract to find out if this is the case.

How to Transfer a Car Loan to Another Person

What happens in those cases where a car loan is transferable? If you want to pass your car and loan along to someone else, you must do so by working through your lender. The potential new loan holder must fill out an application with your lender and meet criteria before you sign your title over.

The steps to transfer a car loan to another person will vary slightly depending on the lender. However, you can expect a process similar to the one described below.

  1. Determine whether your loan contract allows for the loan to be assumed by or transferred to someone else. Start with your contract, but you can also call your lender to find out. 
  2. Get next steps from your lender for the process, if it’s allowed. Ask about fees associated with a car loan transfer, and make sure you know exactly what the assumption criteria are for new loan holders. 
  3. Have the new loan holder follow the required steps to apply for a car loan with the lender. If the individual desires to take over the payments with similar rates and terms, they’ll need to meet the required creditworthiness for the loan. 
  4. After the new loan holder is approved, the title can be modified. Your lender may help with this process, or you may need to go to your state’s Department of Motor Vehicles to have the title transferred. Be sure to transfer the title as soon as possible to avoid the potential for future liability.
  5. Don’t forget that the new loan holder will need to show proof of auto insurance. 

How Does Transferring a Car Loan Affect Credit Scores?

When you transfer your car loan, you technically close that account. It gets reported to the credit bureaus as a closed account, which can impact your credit. Specifically, it changes both your credit mix and credit age—both factors in how your credit score is calculated. Because of this, you might see a temporary drop in your credit score when closing an account.

The impact can be even more serious if you fall behind on your car payments before you transfer the loan. Payment history is the biggest factor in your credit score. So, falling behind by a month or more on your auto loan can cause a substantial drop in your score.

Other Options Instead of Transferring a Car Loan   

Transferring a car loan can be difficult and isn’t always possible. Whether you want to keep your vehicle or simply need a more practical way out of the loan, there are other options. 

Refinancing

In some situations, it’s the loan and not the car that’s unaffordable. For example, say you originally applied for the car loan when you only had fair credit. Now you have good credit and might qualify for better rates and terms, which could lower your monthly payment. 

In this case, refinancing your loan so it better fits your budget might be an option. Compare refinancing options now.

Sell Your Vehicle

Another way to shed the financial burden associated with your car or truck is to sell it. If you can sell the vehicle for more than you owe on it, you might even end up with some extra cash in your pocket.

Voluntary Repossession

If you fail to make your vehicle loan payments long enough, the bank will repossess the car. That means it takes the vehicle and sells it to try to recoup its losses. Before you get to this point, though, you have a series of late payments tanking your credit.

In cases where you know you’re unable to catch up on payments, you might talk to your lender proactively. You can voluntarily surrender the vehicle to avoid the unpleasant forced repossession process. However, this still shows up on your credit report as a serious negative mark. And if the lender can’t sell the vehicle for what you owe, you might have to pay the difference.  

Refinance With a Cosigner

Another way to keep your car while also making the loan payments more affordable is to refinance the loan with a cosigner. If the cosigner has good or excellent credit, you might get a lower interest rate and/or longer terms—both of which can reduce your monthly payment.

Can a Cosigner Take Over a Car Loan?

If you don’t pay the loan as agreed, the lender looks to the cosigner to make good on the loan. However, the cosigner can’t just decide they want to be the primary borrower, take over the loan and take ownership of the car. They’d still have to go through proper processes with the lender to refinance or transfer the loan, and you’d need to be involved. 

Bottom Line

You generally can’t slide your auto loan booklet over to a friend and assume the matter is handled. However, if you can’t pay your monthly car payment, you may have some options. Research those options and speak to your lender as soon as possible to avoid potential financial hardship.

Source: credit.com

Apache is functioning normally

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.

Paying off your car loan can lower your credit score, but the effects are usually temporary.

Are you thinking about paying off your car loan early? Whether to free up your budget or have the satisfaction of one less monthly bill, many consumers expect doing so will boost their credit score. Surprisingly, the opposite can occur—paying off a car loan early can cause a dip in your credit score.

Fortunately, the impact is usually short-term and may not happen to every consumer. This is because other factors and variables can affect your overall credit score. While paying off debt is a good strategy for improving your credit, doing so for a car loan doesn’t necessarily work the same way.

Keep reading to learn more about a car loan’s correlation to your credit score and everything you should know before deciding to pay it off.

In This Piece:

Why Do Credit Scores Drop After Paying Off Car Loans?

Paying off debt is indeed a strategy to build credit, so it makes sense that some people would think it’s the right move for car loans. Anytime your credit history changes, such as information updates or a newly opened/closed account, your credit score can change.

In the case of paying off your car loan early, it will equate to closing an account. One less account shifts your credit utilization and your credit history age. These changes may lower your credit score, depending on a range of factors.

It can be disappointing to see your score drop if you’ve worked hard to establish good credit, especially if you’re balancing between the poor and fair credit threshold.

In the next section, we’ll explain how car loans affect credit utilization and other variables that affect your overall score.

How Car Loans Impact Your Credit Score

Before choosing any type of loan, it’s important to know how credit scoring works. Your credit score takes several factors into consideration, such as making the payments on time and how long you’ve been doing so. Credit bureaus monitor and compute this data using the following weighted system for each variable:

  • History of payments: Making consecutive, on-time payments on loans and credit cards makes up 35% of your credit score. Timely payments are good for building credit; late or missed payments will hurt it. Paying off a car loan early closes the account completely, which may work against your positive payment history.
  • Credit Utilization: The ratio of the amount you owe to the total credit limit of your accounts, factoring in how much you owe on your car loan. This ratio accounts for 30% of your credit score. Paying a loan off early changes your utilization ratio.
  • Credit History: The age/length of time you’ve had open credit accounts, from your oldest reported account to the most recent, and the average age of them all. Credit age makes up 15% of your credit score. Once a car loan is paid in full, the account will “fall off” and change the average age of your overall credit—impacting your score.
  • Type of Accounts: Your range of credit accounts or “credit mix” accounts for 10% of your credit score. This shows creditors you’re responsible and works in favor of your score calculation. Car loans are installment loans, which are different from credit cards (revolving credit).
  • Number of Hard Inquiries: This shows the amount of times you’ve tried to apply for a new credit card/open a new line of credit, which accounts for 10% of your credit score. Creditors pay attention to this to determine your risk level.

Reasons to Keep a Car Loan Open

There are certain situations where keeping debt is beneficial. For example, having a mix of open and active accounts with a strong history of on-time payments is good for your credit score. It also shows creditors you’re responsible with loans, should you apply for another in the future.

In the following circumstances, paying off a car loan early can hurt your credit score:

Prepayment Penalties

Prepayment penalties are fees you’ll owe if you pay off your car loan before the term ends. Some lenders include these types of penalties in the car loan as a way to still earn interest if the client decided to pay it off early. Prepayment penalties will account for a percentage of the car loan amount, which could cost you more than you’d have paid in interest.

Make sure you check the loan agreement for any prepayment penalties beforehand. Should you decide to pay off the car loan early, you know what to expect.

Lack in Emergency Funds

Do you have enough money in emergency savings to cover car issues and unpredictable expenses that may arise? If not, you may want to delay paying off that car loan. A good rule of thumb is to save at least $100 monthly for car maintenance, repairs, and other expenses. You can leverage your car loan term by setting aside money during each payment.

Low Interest

Making timely payments on a low interest rate car loan is less expensive than those with high rates or an outstanding credit card balance. In this case, keeping the account open helps maintain a good credit mix and history, which is beneficial for your credit score. 

When It Makes Sense to Pay Off a Car Loan Early

Sometimes, the trade-off of a temporary credit hit is long-term benefits. For example, if you plan on selling the car, paying off the balance to have the vehicle title beforehand can make the process easier.

Here are other scenarios when paying off your car loan early is typically a good decision:

To Save Money

Depending on your financial situation, closing an installment account means one less bill to worry about, especially when trying to save more cash each month. Paying off a car loan early makes sense if you plan to build up a rainy-day fund or to put extra money toward paying off collections and other debt.

To Lower Debt-to-Income Ratio

Since the credit utilization ratio is a high-weighting factor of your credit score, paying off debt to lower the utilization is essentially a smart move.

If your car loan accounts for a large portion of your debt, it makes sense to pay it off. Your score may drop initially when the account closes but should bump up your credit score shortly after.

To Avoid High Interest Rates

You’ll pay a lot more in interest over the course of a long-term car loan, such as in installments that are six or more years. Additionally, even average-length terms with high interest rates will do the same. If there is no prepayment penalty, paying off your car loan early is a good way to reduce the amount of interest over time.

How to Decide

When considering paying off your car loan early, think about whether or not the benefits of doing so will outweigh the score drop. Is your score fairly high and in good standing? If so, dropping a few points won’t change much. On the other hand, understand that paying off a car loan early may work against your credit score, depending on the variables above.

Instead, review your financial goals and look into other ways that will help raise your score. This consists of keeping a good mix of credit accounts, limiting new inquiries, and making all your other payments on time.

Additionally, you can use credit monitoring services like ExtraCredit® that help you track your credit scores and any changes in your credit history.

Find the tools to help you work toward your financial goals and earn rewards on select offers along the way by signing up today.

Source: credit.com