Car Loans for College Students

From Carrie Reeder

Online Auto Financing

Almost every college student needs wheels. Unfortunately, getting a car loan isn’t always easy. Traditional banks and credit unions are usually not very eager to give car loans to college students, who may not have a great deal of income or credit. Thank goodness for online lenders!

Car Loans Online

Online lenders are one of the good things that have come with modern times. The competition between online lenders is fierce. Interest rates are lower than ever and even if your credit score isn’t perfect, you can still get a car loan that has reasonable loan terms.

If you are a college student who is looking for a car loan online, remember to use primarily vehicle loan companies that will help you compare quotes and offers from more than one lender.

This will help you get the lowest interest rate and best loan terms possible.

When applying for a car loan online, it is also important to make sure that you answer all of the questions on your loan application honestly and accurately. This will help the lender give you quote that you can rely on.

Applying for a Car Loan

Before applying for a car loan, you should determine how much you can afford to spend. College is stressful enough; you don’t want to have to waste time worrying about how you are going to make you car payment. Consider the following expenses to come up with a payment amount that you can afford:

• Car Loan Payment
• Car Insurance
• Fuel
• Car Maintenance (oil changes, tune-ups, etc.)

If you need help with the calculations, many online lenders provide loan calculators that can tally the numbers quickly. The lender may also be able to determine an amount that you can afford based on your income and other monthly expenses.

Source: http://businessmajors.about.com/od/studentresources/a/CarLoans.htm

Top 3 Auto Finance Companies for College Students

From Carrie Reeder

If you are looking for an auto finance company online, remember to use primarily vehicle loan companies that will help you compare quotes and offers from more than one lender. This will help you get the lowest interest rate and best loan terms possible.

Below is a list of the top auto finance companies for college students. I highly recommend these reputable lenders.

1. Auto Purchase Loans

Auto Purchase Loans is a very solid and reputable auto finance company. They offer loans to people who have good credit, bad credit, or no credit. Interest rates begin as low as 3.9 percent.

Top Picks

2. 1-800-Auto-Yes

Even if you have no credit or severe credit problems, this auto finance company can approve you for a car loan. With 1-800-Auto-Yes, you can have an answer within a few minutes, or at most, a few hours. If you have been turned down for a car loan before, this company may be able to help.

Top Picks

3. Credit.com

Credit.com is a trusted source of financing for people with good credit, no credit, and bad credit. To qualify for a car loan, the loan request must be between $7,500 and $50,000, and you must have a minimum income of $1,800. Interest rates begin as low as 3.9 percent.

Top Picks

What Makes a Used Car Loan Different?

Many consumers find financing a used car difficult. Their problems are only compounded when the used car is more than five years old, or a unique make or model.

Compared to “new car” financing, “used car” financing may as well be a completely different ballgame. Car values are different, interest rates are higher, and down payments increase with vehicle age.

When a new car is manufactured and delivered to the retailer, a value is assigned to the vehicle. This is called the “MSRP” (Manufacturer’s Suggested Retail Price) as seen on the Monroney Sticker. By law, the price is the same nationwide. This means a Honda Accord sold in New York has the same MSRP as a Honda Accord sold in Hawaii.

With the exception of a few options or colors, the vehicles are essentially identical, and "valued" at the same amount of money.

Banks, and leasing companies, can use the MSRP to establish values for new car loans without having to appraise (determine in the individual value) every new car. In effect, the new car becomes the “collateral” against the outstanding balance.

Used cars are a bit different. Even though two used cars may appear outwardly identical, their mileage and physical condition may make their values different by thousands of dollars. Establishing a used car value is not as simple as reading the asking price. Used cars must be professionally appraised for proper value.

Even with a professional appraisal, to error on the conservative side (and protect their investments) many banks and leasing companies will require larger down payments, or higher interest rates, on their used car loans. These may be significantly higher than those found on new car loans.

How much higher the interest rate or down payment is going to be is also determined by your personal credit score

Know Your Credit Score

The willingness of a bank or financial institution to lend money, and the interest rate paid on the loan, is directly related to your credit score .

In the United States, a credit score is a numeric value between 350 and 850 that is placed on your ability to repay loans. An average credit score is about 650. If your credit score is “high” (above 700) you will be fortunate to borrow money with a low interest rate without restrictions. If your credit score is “low” (below 600), financial institutions will consider you more of a risk—and lend you money at higher interest rates and with more restrictions (including a larger down payment).

The credit score itself is a complex mathematical algorithm based on your repayment history, available credit, outstanding balances, and some formula only known to the credit companies.

Raising your credit score is not an overnight process, but your score will go up month after month if your bills are paid on time, and outstanding debts are paid down. There are several companies who can help you raise your credit score for a fee—just keep in mind they cannot legally remove correct information (sorry, they cannot “erase” bad credit).

Checking your personal credit score is easy. The large credit-reporting companies in the United States include Equifax, TransUnion, and Experian. You can visit their sites directly to ask for a credit report. It is also common for consumers to visit a third-party company, such as FreeCreditReport.com, or CreditReport.com. Many of these will report all three credit scores, for a minimal fee.

An excellent online consumer resource about credit repair is found on this Federal Trade Commission site.

Where to Find Used Car Financing

If you are like most consumers, you won’t be paying for your used car with cash. This means you will be financing your purchase (loan or lease).

Before you walk into any auto sales transaction, it is always best to be “pre-qualified” (this means that a bank or financial institution has run your credit and “approved” you for an auto loan or lease). It is a simple process that costs nothing, and it will save you money in the long run.

First, contact your local bank or credit union first. You have an established relationship with them, and pre-qualifying for a loan will be easiest with someone who knows you. Tell them what kind of car you will be buying, or the price range that you are considering. Fill out a credit application, and most can pre-qualify you in hours.

If you do not wish to go through your local bank, you can try one of the many online financial institutions such as E-Loans or Capital One who will lend money for a used vehicle. Shop around for rates, as they will vary based on the company and your personal credit scores.

You can also have a used car retailer arrange to finance the vehicle for you. At first glance, this may appear to be the most expensive option (their finance department will mark-up the loan rate to make money on it); you can often negotiate a lower interest rate on the spot especially if you can show them you were pre-approved with a better rate.

The best way to finance a used vehicle is with knowledge. Know your credit score, know your financing options, and know what you are signing yourself into. Armed with this knowledge, financing your next used vehicle can be as pleasant as driving it home.

Source: http://usedcars.about.com/od/usedcarfinancing/ss/FiancingIntro.htm

Financing A New Car? Know Your Options.

Financing A New Car? Know Your Options.

	by Andrea Rock
When you're in the market for a car, one of the smartest moves you can make is to do the same kind of comparison shopping for financing as you would for the vehicle itself. Doing your homework to scout out the best financing deal can save you hundreds of dollars. Below, we explain the pluses and minuses of the most common options: Getting a Loan from a Bank or Credit Union Before setting foot in a dealer's show room, check out the average auto loan rates in your area and know which banks offer the best rates. The gap between lowest and highest auto loan rates easily can be two percentage points, so it's definitely worth shopping around. Though it may not seem like a lot, one percentage point could mean savings of a couple hundred dollars over the life of a typical auto loan. For even lower rates, look into a credit union. They often offer interest rates up to one percentage point less than prevailing bank rates. The Credit Union National Association website can help you find out if you are eligible for credit union membership through your employer, a professional organization, your community or as relative of a military veteran. Once you have found a lender to work with, be sure to get pre-approved for your loan before you hit the showroom. There is enough work to be done negotiating the best price for your car without having to worry about finance negotiations. Pre-approval also gives you a realistic view on how much you car you can afford before you tempt yourself with those showroom gems. Your minimum down payment can range from zero to 25% of your vehicle's purchase price. The average term for auto loans is between four and five years, and some lenders even allow you to stretch your loan over seven years. There's no sense in having to pay for a car you no longer own, so don't get loan whose term exceeds the number of years you plan on owning the car. Also be aware that while taking a longer term loan cuts your monthly payments, it sharply increases your total interest costs. Dealer Financing Auto dealers usually offer their own financing arrangements, which many consumers take advantage of simply for the convenience of one-stop shopping. If you decide to take this route, don't discuss any financing arrangements until you and the dealer agree in writing upon a purchase price for your car. "If you tell a salesperson what your goal is for a monthly car payment, it's easy to get bamboozled by all of the numbers they'll throw at you and lose sight of the hard realities: how much you're paying for the car and what interest rate you're being charged," says Keith Gumbinger, vice president of HSH Associates, a financial reporting firm in Butler, N.J. Case in point: one of Gumbinger's co-workers told a car dealer she wanted to pay no more than $200 a month on her car loan, so the dealer gave her a financing package that did just that, but at an interest rate she later discovered amounted to 22% annually, versus the going rate at the time of 8.5%. Home Equity Loan If you are a home owner, you may be living in your best loan option. Home equity loans and lines of credit allow you to borrow against your home equity (the amount of the current value of your home minus the principal owed on your mortgage). Unlike other loans, the interest you pay on these loans is tax-deductible. Be sure to include all of the loan fees when doing your math for home equity loans and lines of credit, high fees could wipe out your tax savings. Above all, remember you are putting your house on the line with a home equity loan, missing payments could mean losing your house. Leasing Leasing has become an increasingly popular alternative to buying a car on credit, especially for those who prefer to drive a new vehicle every two to three years and who accept perpetual monthly car payments as an inevitable part of life. To determine whether leasing may be right for you, consider the following list of pros and cons: PROS You may be able to drive your otherwise unaffordable dream car. Up front fees typically are no more than $2,000, even for luxury vehicles with sticker prices of $40,000 or more. Monthly payments are often lower than what you'd pay under a conventional auto loan. You never have to bother with selling your car or haggling with a dealer over trade-in value. If you use your car for business, you can reap greater tax benefits because you deduct both interest costs as well as depreciation when you lease. CONS You don't own your car at the end of the lease. However, depending on what leasing terms you negotiate, you may have the option to buy the car at a pre-set price that ends up being lower than the true market value of the car when the lease ends. Excessive wear and tear and driving the car beyond the mileage limit (generally 15,000 miles per year) can result in additional costs when you turn in the car. If you move and want to end your lease early, you'll pay a penalty that could be as high as six months' worth of payments.

The Key To Building A Good Credit History

The Keys To Building a Good Credit History

Bad credit can keep you from buying a home, financing your education, and even from getting a job. This is why it’s so important to build a good credit history.

Starting with your first credit card, everything you do that involves credit becomes part of your credit history. To have a good credit history, you have to use credit responsibly. But what counts as using credit responsibly?

Charge only what you can afford to pay. When you get into the habit of charging only what you can afford, it lets future lenders and creditors know that you are a responsible borrower. It will be easier for you to borrow when you show that you know how to only borrow what you are able to pay back. In addition, only charging what you can afford to pay keeps you safe from debt.

Use only a small amount of the credit you have.

Maxing out your credit cards – or even coming close – is one of the most irresponsible ways of using credit. Lenders know that borrowers who max out their cards often have difficulty repaying what they’ve borrowed. Chances are that you can’t afford to pay off a maxed out credit card balance. Staying below 50% of your credit limit is wise, below 30% is best.

Start with only one credit card. Many first-time credit card users accumulate a collection of credit cards within their first few years of using credit. Don’t do this. The more credit you have, the more you’ll end up using. Learn how to be responsible with credit before you apply for additional credit cards.

Pay your balance in full and on-time. If you’re only charging what you can afford to pay, this won’t be a problem. Paying off your balance each month shows that you’re capable of paying off your balances. Since a large part of your includes timeliness of your payments, paying your balances on time improves your credit.

Carry a balance the right way. Having a credit card balance isn’t bad as long as you do it the right way. Make more than the minimum payment each month to pay off your balance as quickly as possible. Don’t fall behind on your payments and continue to keep your balance at a reasonable level. If you follow these principles, carrying a balance won’t hurt your credit.

10 Things You Can Do Today To Improve Your Credit

Blemished credit is both stressful and costly, but it’s not the end. As hopeless as the situation might seem, bad credit won’t last forever. There are things you can do right now to begin repairing your credit.

1. Stop using your credit cards

In a bad credit situation, one of the worst things you can do is continue accumulating debt by making credit card purchases. Put your credit cards away until you have more control of the situation.

Blemished credit is both stressful and costly, but it’s not the end. As hopeless as the situation might seem, bad credit won’t last forever. There are things you can do right now to begin repairing your credit.

2. Get a copy of your credit report

You can't begin repairing your credit until you know exactly what you need to work on. Obtain a copy of your credit report from each of the three major credit bureaus to find out which accounts need work and which are just fine.

More Info On Ordering Your Credit Report

3. Clean up your credit report.

If your credit report contains incorrect information, you have the right to have it removed. Your credit report will include information about disputing inaccurate information with the credit bureaus.

More Info On Credit Report Disputes

4. Get current on delinquent accounts

Your payment history makes up 35% of your credit score. Getting current on your delinquent accounts will have a great impact on your credit.

5. Don't put in any more credit applications

As long as your credit is in repair mode, you should avoid making any more applications for credit. It's likely that you'll get turned down for credit and the applications will only decrease your credit score.

More Info On How Applications Affect Your Credit

6. Keep accounts with balances open

You might be tempted to close out credit card accounts that have become delinquent, but wait. Before you close any account make sure it won't negatively affect your credit.

More Info On Closing Credit Cards

7. Call your creditors

Right now they're certainly the last people you want to talk to, but you'd be surprised at the help you might receive. Talk to your creditors about your situation. Many of them have temporary hardship programs that will reduce your monthly payments until you can get back on your feet.

8. Pay off your debts

You will have to start paying off your debts to improve your credit situation. If you don't have the money on hand, sell some of your belongings to speed up the process. It will be a sacrifice, but the financial freedom you gain will be worth it.

Making a get-out-of-debt plan

9. Get professional help

Resources, like consumer credit counseling, are available to assist you. If you are overwhelmed by your credit situation, seek professional assistance. You can locate a credit counseling agency through the National Foundation for Credit Counseling.

More Info On Consumer Credit Counseling

10. Be patient

Your credit wasn't damaged overnight, so don't expect it to improve in that amount of time. Continue paying your debts and over time you will see an improvement in your credit.

Before You Get an Auto Loan

It’s always a delight to get the keys to a new car. For most, the only challenge is paying for the car. Unless you have cash in hand, you’ll need some type of auto loan. Follow these six keys to a great auto loan and you can ride around knowing you got the best deal.

Key to a Great Auto Loan #1: Manage Your Credit

One of the first things you should do before applying for an auto loan is review your credit. All US consumers are entitled to a free credit report, so use this resource. Find out if there’s anything you need to fix. Any errors or bad habits could affect your auto loan rate.

Key to a Great Auto Loan #2: Know How Much You Can Spend

Diligent budgeters already know this, but I don’t run into very many diligent budgeters. Track your budget any way you like (Microsoft Money is a good tool or build your own system), and then find out how much your payments might be with the car payment calculator.

Key to a Great Auto Loan #3: Look at the Big Picture

The terms of your auto loan will determine how much you pay now and how much the auto loan costs overall. Remember that a low cost now may not mean low total costs for you in the big picture.

For example, most borrowers choose a low down payment because it’s easy to manage today. However, that choice increases the total cost of your auto loan and usually leaves you ‘upside-down’ (meaning you owe more on the vehicle than it’s worth) for years to come.

Key to a Great Auto Loan #4: Consider Insurance

When you ask various lenders what they’ll offer you, you may find that you need insurance to get the best auto loans. I’m referring to disability insurance and life insurance at this point. The lender is concerned that something could happen to you and you wouldn’t be able to pay them back.

Having insurance might not be a requirement, however you should know all the details if you already are insured.

Key to a Great Auto Loan #5: Shop Around

This is simple but it is often overlooked. The most important point here is that you don’t have to get your auto loan from the dealership. I strongly encourage you to check with a credit union, bank, or online lender. In most cases your car dealer won’t have the best auto loan. By consulting with an alternate lender before stepping onto the lot, you’ll be armed with knowledge of what’s fair -- and you may have some bargaining power.

Key to a Great Auto Loan #6: Avoid Prepayment Penalties

Things change in life and flexibility is important. Your auto loan should also be flexible. Find a lender that will allow you to make extra payments or pay off the loan entirely without any penalties. It’s important to read the fine print – some penalties aren’t called “penalties”.