Strategies to Avoid Car Repossession

Is Car Repossession a Reality for you?

Do your car loan payments keep you awake at night? Are you threatened by repossession of your car? If you are finding it difficult to manage your payments, you are not alone. There are thousands of Americans who are suffering from the same problem.

Why should you avoid Car Repossession?

You may think that there is no other option than to let the lender take away your car. But, it is important that you leave no stone unturned in avoiding car repossession because of the following reasons:

>> You will not have a car to drive after car repossession

>> It stays on your credit report for seven years

>> People with car repossession do not get car loans easily

>> You will have to pay the balance due on your loan after car repossession

>> Lenders may sue you for the costs associated with repossession of a vehicle.

What Strategies should be followed to avoid Car Repossession?

Car repossession is bad because it has catastrophic complications. So, it is essential that you avoid it with the help of the following strategies:

Make a Few Payments

No lender will repossess your car even when there is a chance of getting back a part of his investment. So, it is important that you make a few payments. It will help you in avoiding car repossession.

Do not worry if unemployment and lack of job opportunities have caused a terrible cash crunch. You can raise money by selling a few of your belongings such as jewellery, extra furniture and other appliances.

Apply for Deferment

Lenders want to do business and earn money. They lose money when they repossess a car because of the following reasons:

a. They have to undertake unnecessary paperwork

b. They have to bear the repossession costs

c. They are unable to generate enough money by selling the car at an auction

d. They still have to recover the balance due on the loan from you.

So, whenever you face the possibility of car repossession, work with your lender. There are chances that he may provide you a deferment of a month or two. The time period is enough to find a new job.

Opt for Loan Restructure

If you can manage a smaller monthly payment, you can ask the lender to restructure your loan. He will extend the loan term and reduce your monthly payment amount. You should not worry about the high amount of interest that you will pay after loan restructure because you can refinance the loan in future.

Sell the Car

If your family has more than one car, you sell your car and share the other car/s with your family members. It will help you avoid the bad credit ratings that accompany repossession.

Remember that selling your car is an option only when your car has equity in it. If you owe more to the lender than the car’s current value, you won’t be able to repay the lender.

Ask for Help

A friend in need is a friend indeed!

If you cannot sell your car or make smaller payments, ask a friend or a family member to help you make payments. If someone agrees to assume the responsibility, you can transfer the title to his name.

Being in a financial crunch can be distressing, but do not lose hope. By employing the strategies mentioned in this guide, you can work your way out of this terrible situation.

Why Financing Your Car Loan at a Credit Union Is a Smart Choice

When you’re buying a new or used car, people typically go straight to the local dealership. While dealerships make their own financing programs sound especially attractive, it’s always to your benefit to shop around for the best auto loan rates-starting with local credit unions. Here are some reasons why you’ll find better auto loan rates and more personalized service at a credit union.

You have a much better chance of getting your loan approved if you have second-rate credit or have had some credit problems in the past. They will more likely listen to your personal story over a traditional commercial bank.

A credit union is different than a traditional bank or other lending institution. They offer loans and other financial services to people through a cooperative membership and it is much more than just a place to house a checking or savings account. They show their members financial interest as a high priority and they are not in business to sell their members anything just to inflate loan volumes. Best of all, their profits go back to their members in the form of lower rates on other products and services like savings and loans. There are 377 credit unions in California with over 1550 local offices. Overall, throughout the country, they save their members approximately $8 billion a year in fees, dividends, etc.

Most credit unions offer better rates to their members or other financial institutions. Especially the banks available through the local car dealerships. Whether you have a large or small down payment for your new or used car, they can educate you on the best possible deals for your auto loan. According to the latest report from Informa, the average rate on a $30,000 new car loan from a bank is 4.16% and from a credit union is 2.82%; which is a 32% reduction in rate and equates to a savings of $1,100 over the life of the car loan.

As a member you have access to educational resources. Almost every credit union has a member or resource center where members can educate themselves about financing options and how to evaluate the value of their vehicle purchase. If you are an inexperienced car buyer you can turn to them for an unbiased opinion. Most importantly, they can show you how to calculate the real value of the car you want to purchase, not just what the dealer tells you, which will ultimately affect your final decision.

Enjoy a member-centered approach. Since loan decisions are made by a local volunteer board rather than a corporate office, members have a more personal experience. This local approach gives you the opportunity to discuss your loan options, discuss flexible repayment choices, as well as review your entire financial situation with your personal loan representative. This type of personal interaction takes away the pressure of applying and locking in your financing and you can be assured they are working with your best interest in mind.

A car loan is helpful. But a good car loan can make a dramatic difference in your life. Financing your next vehicle with your local credit union can save you money, reduce worries and minimize hassles. They specialize in good car loans that fit your specific requirements.

Factors To Consider Before Getting A Car Loan

Unless you will be paying full for the car you are considering of buying, you will surely need a car loan. However, with plenty of competing auto loan products in the market today, how will you choose the best? Well, experts have indeed provides some tips so you can get the best auto loan.

Things To Consider Before Making Your Final Choice

Interest rates for every car loan product – Basically, there are 2 types of interest rates applied for car loans. First is the fixed interest rate wherein rates are calculated every month depending on the total amount the client borrowed. Second is the reducing balance interest rate wherein rates are computed monthly basing it from the amount the client currently owes the bank. In some other banks, profit rate usually is computed by dividing the markup profit by the purchase cost.

Payment plan in every loan product – It is very crucial for a possible borrower to evaluate such payment plan as this allows the borrower to plan financially during the duration of the loan. In some countries, the maximum period for a loan is fixed at 6 years. There are also other banks offering borrowers the option to pay lesser amounts monthly and settle the remainder in bulk.

Inquire about the processing fees up front – As a possible borrower, it is very crucial for you to ask about such so that you will be aware of all of the cost associated with the car loan. Lots of banks indeed allow borrowers to extend the duration of the loan. But in case you want to settle your loan as soon as possible, ask if you must pay an early settlement fee.

Necessary documents that must be submitted – Potential borrowers are oftentimes required to submit salary certificates, copies of their passports, and banks statements. Some banks might even require them to submit at least 3 local references with or without a copy of a utility bill. Be reminded that documentation as well as vetting requirements varies from one bank to the other. If you have all of these documents and requirements at hand, your loan application might become a lot easier and faster.

Perks included in the loan product – To entice as many potential borrowers as possible, there are lots of banks that offer added benefits – from credit and debit cards to free registration and extended warranties. Although some of these bundled offers might seem very appealing to you, be cautious about the possible added costs attached to it.

How to Deal With An Auto Loan After Divorce

Divorce is not only emotionally difficult for you but it is also difficult for your financial condition. How?

When a marriage ends, individuals split assets and go separate ways. But, what happens to liabilities such as an auto loan?

In an ideal world, both the individuals assume the responsibility of the debts they created and part ways. Unfortunately, the reality is different. So, take care of debts after a divorce.

The Legal Liability of an Auto Loan

Do not believe that just because the divorce agreement holds your former spouse responsible for the auto loan, he/she will make regular payments. It is plausible that he/she may not make payments.

You must remember that the divorce agreement is separate from your loan contract. Lenders do not give importance to the divorce agreement. Your former spouse may be responsible for the loan in the eyes of a court. But, if you applied for a joint auto loan, lenders will hold you accountable for the loan as well.

How to manage an Auto Loan after Divorce?

It is important to remember that your marriage may be history, but a loan will continue to affect your present and future. Here’s how you can manage your auto loan and save your credit score from plummeting.

1. Get rid of the Loan

After a divorce, the best way to manage an auto loan is to get rid of it. If your former spouse is responsible for making payments, the loan should be in his/her name only.

But, remember that no lender will remove your name from the loan contract because of your changed marital status. So, your former spouse will have to refinance the loan and complete the loan process individually.

2. Get rid of the Car

If you are worried about refinancing the loan, you can sell the car and pay off the lender. It is possible that an upside down loan situation may force you to pay money to the lender, but it is important to understand that a loss today is better than constant tension forever.

3. Make sure the Lender gets paid

If your former spouse is responsible for the loan and both of you decide against selling the car, you will have to make sure that he/she makes the payments regularly.

If your former spouse doesn’t make payments, contact your attorney. It is possible that you will have to make a couple of payments to avoid any negative impact on your credit score. So, keep aside a part of your income for it.

Taking care of your auto loan might be the last thing on your mind. But, it is important to understand that your marriage is over and not your auto loan. If you don’t manage it effectively, you may ruin your credit score forever.

Car Finance Tips for People With Bad Credit

If you want to buy a car, you may have realised that:

>> You have some bad credit as a result of some issues in the past that are listed in your credit file; and

>> Your local bank branch has determined that you are not eligible for a car loan.

Do not worry. You are still eligible for a car loan because lenders/credit providers do provide second chance to people with bad credit. However, you will need to:

>> Show the lender/credit provider that you have improved your credit history; and

>> Have a reasonable explanation for any defaults listed in your credit file.

When you have bad credit, you need to put in extra efforts and ensure the lender/credit provider of regular payments. Here are five important tips that you should consider and which may benefit you:

1. Take the Time to Clean Up Your Credit File

This is the most obvious tip, which you can do on your own before applying for a car finance. Following are a few ways of cleaning up your credit file:

If you have any issues on your file that can be paid, you should pay them off as quickly as you can.

>> If you have any bad credit listings that you are disputing with a creditor, you should address these issues as quickly as possible and try to come to some resolution with the creditor.

>> If you cannot come to a final resolution, you should get some assistance from an intermediary that can mediate for you such as the industry ombudsman or a solicitor.

2. Provide a Reasonable Explanation of any Adverse Credit History

If you have any adverse credit history listed in your file, the lenders/credit providers will require you to provide a reasonable explanation as to why you obtained the adverse credit history, and they will need to be satisfied with your explanation.

3. Speak to a Qualified Professional

It is wise to speak to a professionally qualified finance broker as he/she:

>> Deals with a number of lenders/credit providers on a regular daily basis, and he/she should know the credit policy requirements and guidelines of each and every lender/credit provider;

>> Can advise you of the “steps” you can take to rectify your credit history, and also the “time frames” required to be undertaken by you; and

>> Can advise you and show you ways of demonstrating your stable financial condition to the lender/credit provider.

4. Wait for Your Bad Credit to be Automatically Removed from Your Credit File

When you have paid and settled any outstanding/unpaid matters appearing on your credit file, they will drop off your credit file automatically. You may consider applying for a car loan after they are removed from your credit file.

5. Be Careful and Don’t Apply for too many Loans

Remember, you should only place credit enquiries on your credit file that are necessary. It is because every time you apply for any type of credit, the lenders/credit providers are required to place an enquiry on your credit file. So, when they review your credit file, they will be able to see all the credit enquiries you have made. Also, you may even find yourself being listed as a bad credit client due to several enquiries made on your credit file.

Un-discharged from Bankruptcy

If you are currently un-discharged from a bankruptcy or a Part IX debt agreement, it would be almost impossible to obtain a car loan. In such a situation, you will need to have your bankruptcy or Part IX debt agreement discharged. Also, you will have to wait for a couple of months (minimum 12 months) before applying for a car loan.