Archive for the ‘Auto Loans & Financing News’ Category
You want a car, and you want it now. But the fact of the matter is, it's worth spending a little time considering your car financing options. On paper, a loan may seem like it will solve all of your problems, but if you don't read the fine print or be realistic about the terms you'll have to stick with, an auto loan can cause you even more financial stress.
Studies show that many people across the country are optimistically biting off more than they can chew. According to credit bureau Experian, in June 2015 the average length of new auto loans reached a record 67 months, or a little more than 5.5 years, reported USA Today. Some 29.5 percent of loans had terms between 73 and 84 months, which is also a record high and a jump from 24.9 percent the year prior.
Don't get stuck in a loan that seems to never end and that you can't afford. Fortunately, knowledge is power, so here are a few common car loan mistakes that you should watch out for.
Consider comprehensive costs
The amount of the monthly payments isn't the only thing you should pay attention to during the loan-negotiating process – you also need to factor in other costs like interest, noted Money Talks News. Failing to see the whole picture and little hidden costs causes many buyers to sign up for a loan that they really can't afford. The source recommended following the 20/4/10 rule when considering a loan plan. Your down payment should be at least 20 percent, you should agree to finance the car for a maximum of four years and monthly vehicle expenses – these include interest, insurance and principle – shouldn't be more than 10 percent of your gross income. By approaching a loan with this strategy, you can make sure the plan is more comfortably within your means.
Think about cheaper alternatives
Don't run from cheaper vehicles because they don't have the glitz and glamour of fancier late models – the important thing is that you need a car to get around, not show off, and besides, there are many stylish options that can still fit in your price range. If the car you're drooling over is only affordable for you if you pay it off over six or seven years, then you should probably readjust your expectations and go down a level on the price range you're searching in, explained Time magazine. Go back to basics and think about the most important features you need in your vehicle – a cheaper car with four-wheel drive in a snowy climate should win out over a late-model SUV with a built-in DVD player and surround sound system.
Get your add-ons elsewhere
When your making a final agreement on a car loan, it can be tempting to just say yes to every little add-on that seemed to worm its way in there, like paint sealant or an extended warranty. However, think carefully before giving the green light to these extras, since they can disproportionately inflate your loan payments, according to Bankrate. The source notes that a National Automobile Dealers Association study found that 37 percent of the average gross profits made in new and used car sales came from the finance and insurance office by way of "aftermarket add-ons." While there are good deals to be had with these add-ons, it's worth taking the time to research what the out-of-market price would be for each item, since sometimes you can find items priced at a discount compared to what they would be worth as part of your financing plan.
You've done your research and you're headed to the dealership, hopefully to return home in a sleek and sporty certified pre-owned vehicle. But while everything is going great on the lot, things take a turn when it's time for the dreaded credit check. Your palms sweat, your heart races and you worry that your dreams of car ownership will be dashed to bits with one quick credit check.
If this is a situation you've been in, you aren't alone. In fact, bad credit is a common part of American life – according to the Washington Post, 56 percent of Americans have a subprime credit score. The bad news is a low credit score can impact your spending potential, especially for major purchases like a car. The good news is that a poor credit rating doesn't have to be a financial death sentence.
Even with subprime credit, you aren't completely cut off from loans, car financing or other credit-dependent financial considerations. In fact, with hard work, patience and discipline, it's possible for you to claw your way back from the depths of Bad Credit Purgatory. Here are a few helpful habits to raise your credit.
1. Pay your bills on time
It may lack the satisfying punch of a quick-fix solution, but the fact remains that paying your bills consistently and on time is still far and away the most reliable way to raise your credit. The reasons for this should be fairly obvious – failing to pay your credit card bills, no matter how minor, indicates that lending money to you is a risky move, and will make you instantly less appealing to any potential creditors. If you have any outstanding credit card balances consider scheduling an automatic deposit from your checking account every month so you're sure never to miss a payment deadline.
2. Minimize your credit usage
This may be one of the more difficult lifestyle changes to make. After all, you have the credit available, why wouldn't you use it? What credit card companies don't tell you is that using too much of your credit in a given month can have a negative impact on your score – even if you pay your bill on time every month. According to Forbes, your credit use ratio shouldn't exceed 30 percent of your available borrowing capacity. If you're really trying to fast-track your way to better credit, the source indicated that keeping your credit use ratio around 10 percent can have even more beneficial effects on your score.
3. Consolidate your credit
You may be thinking that your credit situation isn't that bad, since you only have a relatively minor amount of outstanding debt to your name. But what you may not realize is that the amount of debt you're carrying is only half the story. Creditors are also interested in how many different lines of credit you have open. That means that maintaining tiny balances across a handful of cards is much more detrimental to your credit score than carrying a much larger one on a single card. Determine exactly how many credit lines you have open, and quickly pay them down or consolidate the outstanding debt under one banner.
4. Double check the fine print
Few things would be more annoying than suffering a low credit score only to find out later that your rating was so low largely due to an administrative error, unfortunately, it does happen. Something as simple as your credit limit being reported as higher than it actually is can slowly erode your rating without you even realizing it. Similarly, if your limit is higher than what is currently reported, it can make it look as though you consistently max out your cards each month, which can also damage your score.
"A history of "good credit" can do wonders for your credit score."
5. Acquire "good" credit
Many people struggling with a low credit score have been told that the best way to approach the situation is to hide the credit cards and leave them hidden for good. It's true – you don't want to keep racking up debt while you're trying to pay down old balances. But don't be so quick to discard credit options altogether. In fact, demonstrating a history of "good credit" – reasonable amounts that you consistently pay down on time – can do wonders for your credit score. Consider taking out a low-limit card, and then use it strictly to pay for things like your phone bill, transit pass or other fixed monthly expenses. You won't have to change your spending habits, and you'll be building up your credit in the process.
When you're ready to purchase a used car, head to NJ State Auto Auction. Even if you have bed credit, the in-house finance team can help you secure a loan for one of the hundreds of Carfax-certified vehicles available.
Having a car is a great way to maintain your independence and flexibility – to travel that is. But buying a car can be a real hassle, and if you don't make wise decisions when it comes to getting a car loan, you'll spend a great deal of time living under the weight of your debt and risk damaging your credit. Start by doing the right thing and becoming an informed car buyer – these eight tips will get point you in the right direction.
- Know what you can afford
Before you do anything else, calculate your budget to see how much you can really afford to spend on a car. Go into the dealer with big dreams and no idea what kind of budget you're working with and you'll wind up driving a prince's chariot on a pauper's salary. Consumer Reports recommended paying no more than 36 percent of your gross income on debts. In other words, find out what 36 percent of your annual gross income is. Add up all of your monthly debts – insurance, rent, bills, food and credit cards – for the year and subtract that from your 36 percent. What you have left is an approximation of what you can potentially spend on car payments annually. Don't forget to look into additional costs associated with a new vehicle, like registration fees, changes in insurance and any taxes you might have to pay on it.
- Make a down payment
This cannot be stressed enough, so we'll say it again – make a down payment. The more money you can drop on a car up front, the better. A solid down payment will lower your monthly payments, lower the interest rate and leave you owing less overall. Obviously you don't want to break the bank trying to make a down payment, but if you can hold off as long as possible and save up a solid cash pile, do it. You should try to make your down payment between 15 and 20 percent of the total cost of the vehicle, according to Consumer Reports.
"Get your credit score before doing anything else."
Know your credit score
Get your credit score before you even think about applying for a loan. Your credit score determines your interest rate, and if you leave it up to the lender to determine your credit rating, you might be getting the short end of the stick. Also, if you find out early on that you have poor credit score, you can take the time to figure out how best to bring your score up before you start looking for the perfect used car.
- But, don't fear your credit score
Contrary to popular belief, your credit score isn't everything – and how "bad" or "good" it is may depend on the eye of the beholder. Bankrate reported that many lenders may look closer at your credit history than the actual score. While a low score might rule you out for a house loan, the same score might work just fine for an auto loan if your history indicates that you're building decent credit.
- Negotiate the purchasing price
Rather than negotiating the monthly payment, insist on lowering the overall purchasing price instead. It may mean you have to pay a little more per month, depending on how you negotiate it, but the lower the purchasing price, the less you owe altogether. You should also avoid vehicles with upgrades and add-ons that have driven up the value, especially those that you can afford to purchase later on, as they will only increase the loan amount.
- The shorter the loan, the better
According to Consumer Reports, longer loans cost more than shorter ones. The catch is that longer loans usually mean lower monthly payments, but that extends the total cost of the interest. You'll pay more in interest over five years than in three. Also, longer loans usually carry higher interest rates anyway, so that will increase the total amount you're spending as well. A shorter loan may mean you're paying a little more per month, but if you can afford the higher payments, the interest rate will be lower and you'll be paying less in the long run -you'll also have the satisfaction of paying off the loan in a shorter amount of time.
- Don't end up upside down
"Upside down," in loan terms, occurs when your vehicle is worth less than you owe on it. You need to try and ensure that this does not happen to you. If you go to trade in your car before you've paid the loan off, and it's worth less than what you owe, you end up with negative equity. If something terrible happens and your car is totaled, but the value is less than what you owe, the insurance payout will only cover the value of the vehicle and you'll be stuck paying off a car you no longer have while attempting to buy a replacement. One of the ways you can avoid this is to make sure you have a down payment when you purchase a used car – it will help add equity to the car before you even start paying the loan, according to Consumer Reports. This is also another good reason to negotiate a shorter loan term – your monthly payments will accrue more equity in a shorter time than if they are spread out over a longer loan period.
"Compare interest rates with as many lenders as possible."
Don't just go into this blind and settle for the first deal that sounds good. Compare interest rates with as many banks, credit unions and other lenders as possible to find the best rate for your used car loan. This includes online lenders – most of which have calculators on their websites that will help you figure out what you're really getting into, according to DMV.org. Remember, most rates are competitive, so the more information you have about rates, the more you can negotiate with lenders. Dealerships, such as New Jersey State Auto Auction, also have on-site financing available, and often at a rate that competes with local banks. Bankrate recommended focusing on lenders that specifically deal in auto loans, as they will interpret your application differently than a lender that deals in a broad range of financing.
The bottom line is that the more prepared you are for buying a car, the better. If you find yourself on a budget, a used model is probably the way to go, as you can find amazing deals on used cars if you're willing to put in the shopping effort. What's more, New Jersey Auto Auction has a wide selection of vehicles and a financing department that is more than willing to help you find a good deal. Just keep these eight tips in mind when you're working out the details, and you're likely to come out on top.
April 15 can be a hectic day for any American. Whether you've waited until the last minute to file your taxes or only needed to double-check that you left your signature in all of the right places, Tax Day may be stressful. However, it can also be a happy day for some, as many people are expecting tax refunds in the near future.
The Internal Revenue Service reported that it refunds about $217 billion to Americans each year. That averages out to approximately $2,815 for 2015, according to Yahoo Autos, which is a considerable boost to some bank accounts. While a few people may want to save these funds, others have a laundry list of spending options, which could include vehicle-related investments.
"Use your tax refund on a car."
It doesn't matter if you're ready to shop for a vehicle or have already completed a purchase – the windfall can be a huge asset in your life as an owner. Here are five ways you can use your tax refund on a car.
1. Make it a down payment
If you get a big chunk of change back from the government, it could be the ideal amount to use toward a down payment on a vehicle. This could be a huge step toward affording the car you want, as a larger down payment reduces the amount you have to borrow and therefore decreases your monthly payments. If you manage to find great deals on used cars, your refund could even make up a large portion of the price!
2. Care for a recent purchase
Maybe you've recently bought a used car at a facility like NJ State Auto. While the quality of the vehicles on the lot are impressive, they still need to be cared for to maintain their nature. Use your tax refund to pay for standard servicing and maintenance. This will make sure your used car runs like new and stays safe on the roads.
"Let your tax refund help improve your credit score."
3. Improve your credit
Do you feel like your credit history is holding you back from getting behind the wheel of the car you want? Let your tax refund help improve your credit score. Use these funds to pay back outstanding debts that may be hurting your profile. Making significant payments or even paying off a loan in full is a great way to boost your score and show you can be a trusted borrower.
If you have limited debt but still want to improve your score, your tax refund can be applied in a few different ways. Consider reserving some of the money for your regular utility bills. These will soon be evaluated when measuring a credit score, so you'll want to ensure you aren't falling behind on payments. Having cash in your bank account also allows you to improve credit smartly with the use of credit cards. Feel free to make significant purchases using plastic, but repay the debt immediately using your refund. This will boost a credit score without putting you in a huge hole.
4. Pay an auto loan
Auto loans are becoming one of the most popular – and affordable – ways of procuring a car. If you've already used this financing option or are planning to, consider saving some of your refund as a cushion for payments. You can either get ahead on these loans or simply have a backup in case a nasty financial surprise pops up in another aspect of life.
"Don't let financial concerns hold you back from top-quality rides."
5. Shop with confidence
If nothing else, you'll be able to browse through the wide selection of used cars at New Jersey State Auto Auction with peace of mind. The lot is home to hundreds of Carfax-certified cars, trucks and vans, and many of these options could serve as the perfect investment for you. Don't let financial concerns hold you back from top-quality rides. You can let your tax refund help defray the impact a purchase has on your bank account without sacrificing on the roads.
It's a fact of life: Cars are expensive. So are houses, higher education, furniture, electronics – the list goes on. With so many expenses to consider day in and day out, it's easy to see how many people wind up with debt that eventually hurts their credit score. Even if you manage to pay off most of the borrowed money, a missed payment or major purchase can have a significant impact on your credit. That influences how you're set up for the future and could even play role in deciding what type of car you wind up driving for the next several years.
Are you underwhelmed by your credit score? Here are five tips that could help you boost this number without giving up your dream car.
1. Plan to improve your score
The first thing you should be doing is looking for ways to improve your credit score. However, this process takes time, and it's a long-term commitment that may require some flexibility as life's little surprises pop up. Do some digging into secured credit cards or similar reputable options that are designed to build credit while keeping you on a budget. You'll be able to form positive habits, such as paying off your balance and keeping track of spending, without diving into more debt. This plan should also take into account any larger purchases you may need to make in the near future. Try to save up some money for a bigger down payment on something like a used car.
"Pay all bills for a small boost to your credit."
2. Pay your bills
It may sound simple or self-explanatory, but making a concentrated effort to pay all of your bills on time can go a long way toward improving your credit history. The Huffington Post reported that FICO plans to incorporate utility bills into credit scores. That's good news for people who pay these bills on time but may not have or want access to credit cards. Whether it's gas, electric, telecommunication or some other service, make sure you're meeting these deadlines for a small boost to your reputation.
3. Don't discount auto loans
Just because you have a subprime credit score doesn't mean a manageable loan is out of reach. There are facilities that can secure you credit approval and get you situated with a used car loan. At New Jersey State Auto Auction, the on-site financing department guarantees approval for prospective buyers. The team of experts is also well-equipped to answer your questions, assist with complicated paperwork and cut through the red tape that is typically associated with loans.
"It's important to stay focused on the bottom line."
4. Keep an eye on the bottom line
Costs can quickly grow once you take interest rates, car repairs and maintenance into account. That's why it's important to stay focused on the bottom line. Longer loans may lead to smaller monthly payments, for example, but you could find you're paying much more in interest. You'll have to decide what the best course of action is for you and your unique situation, but do the legwork to stay informed and make educated decisions.
5. Have your materials ready
If you've decided to invest in a used car and have a general idea of how you want to finance the vehicle, it's time to make sure you have everything you need to make this a reality. Gather together personal references, proof of address and insurance, identification materials and recent credit reports. Many of these materials are required by the facility you're working with, while others may just be good to have in case you need to make yourself a better loan candidate. Simply collecting these documents could be helpful, however. Consider your credit report: By obtaining a free copy of this official report and looking over the details, you'll be in a good position to find errors, clarify those mistakes and create an effective plan for the future.
It doesn't take a genius to realize that cars are expensive. Even the best deals on used cars can cost thousands of dollars, which means many people are left needing some help to make ends meet. Luckily, there are plenty of financing options for prospective drivers – as long as they aren't afraid of commitment.
The need for longer loans
Many people are using long-term loans to pay for vehicles. These contracts frequently extend for 60 months or more, which allows borrowers to keep monthly payments low even if there's a high total sum. Although some may be concerned about being saddled with a loan for this extended period, more are willing to make this sacrifice in exchange for special features and upgrades available on certain models.
"Consumers are demanding a lot more technology in their vehicles, infotainment technologies," Ed Kim, an analyst with AutoPacific, told NPR. "There's also a lot more safety features that are in vehicles right now. Emissions and efficiency technology that are in vehicles right now, that are making vehicles cost a lot more."
The thought of having a loan for years is daunting for some, but in today's economic landscape, many people view it as the norm. A spokesperson for Experian Automotive told NPR that these agreements often make sense for drivers on tight budgets and are specifically chosen for the benefits they provide.
Understanding the basics
Cars.com noted that people tend to "payment shop" with car loans more than any other product. That means most drivers are willing to look around for the right deal and make some concessions to find the right balance of car quality and payments. However, anyone who wants to do this must come to terms with a few simple facts.
For example, interest rates on long-term loans tend to be higher than those associated with shorter agreements. While the individual payments remain affordable, the total amount of interest paid will likely be greater. This fact turns some people off from longer loans, but for others, it's merely a necessary part of securing the perfect used car.
The right facility makes all the difference
If there's still more you want to learn or if you're ready to commit to a vehicle, then you need to head to the right facility. Consider starting your journey at NJ State Auto Auction. Our lot contains hundreds of Carfax-certified used cars, trucks and vans that are just waiting for the right owner, and you can get behind the wheel quickly and easily with the help of an auto loan.
We even have an in-house financing department, which is composed of individuals ready and able to secure you the best possible loan. They can even answer any remaining questions you may have about long-term loans. With guaranteed credit approval and same-day processing, these experts will have you driving off the lot with your dream car in no time.
Many people need auto loans to complete the purchase of a used car. That's especially true for subprime buyers, or those who may not have credit scores as high as they would like. While many of these drivers may initially think a quality vehicle is outside of their budget, the prevalence of subprime auto loans changes the landscape.
Auto bubble won't burst, says study
LendingTree, an online loan marketplace, recently released a study detailing the state of auto financing in the U.S. According to the report, the average credit score for people with car loans increased by 10 points throughout 2014, even as the number of subprime loans grew. Although the sheer volume of outstanding loans is increasing, lenders are still being careful about who gets these financing options – which ultimately means the so-called "auto bubble" isn't going to burst.
"Our data does not substantiate the likelihood of an upcoming crisis," said Rick Finch, the general manager of LendingTree Autos. "While the current concern over subprime auto loans that end up defaulting is reminiscent of the mortgage meltdown stemming from mortgage backed securities, the defaults are being monitored and controlled by the lending market. Although auto backed securities increasingly contain subprime loans, loan defaults are not rising at a rate that signal imminent danger."
"Lenders are more accepting of subprime borrowers."
Loans are growing, but so is safety
Some borrowers may hesitate after hearing the total sum of auto-related debt. According to The Fiscal Times, Americans currently have $886 billion in outstanding car loans, which is almost 23 percent higher than it was two years ago. Although the numbers sound daunting, all of this growth is good news for potential buyers. Lenders are more accepting subprime borrowers, connecting them with loans that get them behind the wheel.
There are also many opportunities for borrowers to save money over the course of their car ownership. The Fiscal Times noted that interest rates are low, at least compared to recent history, and gas prices are declining compared to the past few years as well.
Finding a perfect match
This steady market makes it the ideal time to buy used cars, even if you need the help of an auto loan to make it happen. Check out the wide selection of used cars at New Jersey State Auto Auction. Not only does this lot have hundreds of Carfax-certified vehicles, but it also boasts an in-house financing department that can help you secure the loan you need to afford a car.
One of the biggest expenses related to car ownership is insurance costs. Drivers need to be protected on the roads, and insurance is the only surefire way to keep you covered. Unfortunately, this necessary policy can be quite expensive, and if your credit score is worse than you'd like, it could cost you even more.
The truth about credit scores
Credit scores play a role in your insurance rates. But credit history is just one of many factors that impact insurance premiums, along with your driving record, location and other financial details. Esurance noted that many companies use credit-based scores to evaluate how likely you are to have an insurance claim in the future. Numerous studies have shown that this figure is relatively accurate when it comes to predicting your risk for an accident and the following claim, so it makes sense for providers to consider this when deciding on insurance premiums.
Of course, insurance is only the tip of the iceberg when it comes to how a credit score impacts the bottom line. Your history will influence the type of auto loan you qualify for and what your interest rates are. You can improve your credit score in an attempt to make these other expenses more palatable, but it's going to be a slow process. Focus on making payments on time and eliminating debts as you can. In the end, this effort may even be beneficial to your insurance rates.
Put your best foot forward
Because your credit score does matter when it comes to car insurance, you're going to want to put yourself in the best position possible before buying a used car. However, drastically improving a credit score can take a lot of time. If you need to get behind the wheel quickly, you may have to look to other resources that will help you save. That's where New Jersey State Auto Auction can help.
This auction lot is home to hundreds of Carfax-certified used cars, and many of these options are available at low costs. People with less-than-ideal credit scores can find affordable vehicles with the help of the on-site financing department. The team of experts can get you guaranteed credit approval regardless of your credit history, securing you the loan you need to afford a used car.
You may know that you want or need to buy a used car, but figuring out how to afford the purchase isn't as easy. There are many options for drivers to consider, with things like interest rates, monthly payments and insurance premiums playing a role.
One of the biggest financial factors drivers must consider is the term of the auto loan. Not only does this determine how long you'll be paying off debts, but it also has a significant impact on the bottom line. If you're ready to get behind the wheel of a used car but need a little support in the form of auto loans, make sure you're considering whether a long-term option is right for you.
When it's the right move
Taking out a long-term loan has some advantages. The main benefit is that you'll be able to keep monthly payments down. This is ideal for people who may be sticking to a strict budget, as each month will have smaller payments than those associated with shorter loans. Subprime borrowers may be particularly drawn to long-term auto loans. They can take advantage of the smaller payments without sacrificing the quality of the vehicle, allowing them to stay safe on the roads.
When it's time to rethink
However, just because a long-term loan may lead to manageable monthly payments doesn't mean it's the best bet for you. USA Today noted that longer loans usually use higher interest rates, which increases the bottom line for most borrowers. So while monthly payments may be lower, the total sum paid at the end of the experience is higher. Anyone concerned about this figure and how it impacts them should think twice before signing off on a long loan.
Similarly, people who don't want to be tied to one car for an extended period of time will want to capitalize on shorter loan terms. That allows them to quickly pay off debt and have the freedom to move on to other used cars.
Discuss your options
Regardless of what you think is right, make sure you're taking the time to talk over your options with a professional. The team of experts at NJ State Auto, for example, can help you sort out the pros and cons of each offer, ultimately choosing the deal that makes the most financial sense.
People of all ages may need a little support when it comes to buying used cars. After all, it's a big investment, and it often requires assistance in the form of loans and special financing options. Millennials are just one group using these methods to get behind the wheel.
Young people are buying cars
One common myth is that young people, referred to as millennials, are not interested in making big purchases. While it's true that these consumers may have different shopping habits than their predecessors, they are still looking to get behind the wheel. In fact, a recent study from TransUnion found that people born after 1981 are among the fastest-growing groups of drivers.
While this age group may be buying cars, they still need some help. Many are using auto loans to swing a purchase. TransUnion noted that the total outstanding auto loan balance for millennials grew 23 percent in the past year. Individual loan balances also increased 4 percent, reaching an average of $18,678.
"The growth in millennials' auto-loan originations dispels the common myth that millennials are not buying cars," said Jason Laky, senior vice president and automotive business leader for TransUnion, in a company statement. "The growing average-loan balances for millennials, combined with stable delinquency rates, indicate that we are still in the midst of a strong auto-lending environment."
Appealing to millennials
What are millennials looking for in used cars? For starters, they want a wide selection. These young people are often on the hunt for something that fits their specific needs, so being able to browse through many options for the right automobile is a priority. They also want to work with people who are going to be honest. Most millennials value transparency, and they will take their business to a facility that's going to provide them with the best deals and less red tape.
Luckily, many of these drivers can find just what they're looking for at New Jersey State Auto Auction. In addition to the hundreds of Carfax-certified used cars the lot boasts, it also has an easy-to-understand auction process and plenty of financing resources. Drivers of any age can appreciate these features and take advantage of them on their way to a purchase.
Used cars can be an incredibly smart investment, but drivers need to be able to find a deal they're comfortable with. After all, not all buyers can afford to throw down a wad of cash and drive off the lot without any future payments – in fact, very few people can do this. That's why securing a manageable loan is so important.
Most drivers need financing options
Experian Automotive recently conducted a study exploring how many people needed a bit of financial help affording their next purchase. According to the report, more than half of used cars purchased in the fourth quarter of 2014 – about 55.2 percent – were bought with the help of financing. Not only is that a record high, but the average loan amount increased as well. Experian noted that this figure grew $437 to $18,411.
Additionally, the report stated that loan terms for used vehicles also increased, reaching an average of 62 months. That's in spite of the fact that the average credit score for buyers climbed about two points to 648. All of this information gives prospective buyers a lot to think about, as they'll have to find a plan that balances loan length, interest rates and total monthly payments.
"As more consumers lean on financing, it's important for them to consider all of the factors involved, including monthly payments, interest rates and loan terms," said Melinda Zabritski, Experian's senior director of automotive finance. "These insights will enable them to have a better understanding of their potential payment obligation and take the appropriate action in order to make the vehicle fit within their monthly budget and more easily meet payment terms throughout the life of the loan."
How to find the right deal
It may take time for you to select the financing option that's right for you. However, you can speed up the process with the help of NJ State Auto Auction. This lot boasts hundreds of Carfax-certified used cars for sale, but the real value may be in its on-site financing department. This team can help you get credit approval quickly, and you can even start the process online to save time. Many of these experts have experience dealing with extreme situations and tight budgets, so you'll be in capable hands – and may find yourself behind the wheel of a used car sooner rather than later.
There are many reasons why your credit score may be less than stellar. For many people, the hit to their credit history may be the result of a divorce. With legal fees to pay and a new home to outfit, you've likely been spending a lot of money, and you may even be trying to balance these expenses with past debts. All of this activity can wreak havoc on your credit, putting you in a tough position when shopping for used cars.
Luckily, you aren't out of options when it comes to securing auto financing and getting behind the wheel. Focus on these areas when you're trying to get your finances aligned after a divorce.
Explain the circumstances
One of the most basic things you can do is explain to the seller or lender why you're in a certain situation. Edmunds.com recommended studying your credit history to see if there are any dips or problematic areas you can account for in a discussion. The source also stated that credit scores aren't the only factor considered when finalizing the terms of a loan, so be sure to provide an explanation of your current situation.
"If you understand the details of your credit history before speaking with a lender, you'll be able to make a stronger case for your qualifications as a borrower," said Emma Johnson, a personal finance expert. "Worst case scenario, if you are forced to accept a loan with a high interest rate, you can always refinance or buy another vehicle under better terms in a few years when you are back on your feet and your credit has improved."
Cover your financial bases
When you're heading in to meet with the financing department at NJ State Auto, you should have certain monetary concerns covered. For example, make sure you carry proof of your income from after the divorce. You may have to explain your new financial situation, and having evidence makes your job much easier. It could be beneficial to budget for a larger down payment as well, as this could make you a more attractive candidate.
You should also take a look back at your debts to determine if there are any steps you can take to separate yourself from the loans. Identify any debts that are the responsibility of your ex-partner, and consider working with him or her to remove your name from these sums. Similarly, you need to take your name off the title and insurance of your old vehicle, which will get you ready to make a purchase.
It's no secret that some people need help affording a used car. Few drivers have enough cash to cover the full cost of a vehicle, so most turn to financing options such as auto loans to help them get behind the wheel. You don't have to have a sparkling credit history to get these loans, either, as more subprime borrowers are getting opportunities to do so.
Auto loan balances continue to grow
Experian Automotive recently released its latest report, the State of the Automotive Finance Market, which detailed the loan landscape in the fourth quarter of 2014. According to the data, the total outstanding balance on all loans reached $886 billion at the end of last year. That's the highest mark ever recorded.
Some of that growth can be attributed to an increase in subprime loans. The volume of both subprime and deep-subprime loans grew, despite the fact that the total market share for the two segments declined from the same time last year, the report found.
"Whenever there is an uptick in the number of loans to sub-prime and deep sub-prime customers, there is the potential for a 'sky is falling' type of reaction," said Melinda Zabritski, Experian's director of automotive finance. "The reality is we are looking at a remarkably stable automotive-loan market, in part because consumers are continuing to stay on top of their payments."
Although subprime borrowers are still taking out their fair share of auto loans, the delinquency rate hasn't grown – a good sign that these drivers are paying back their debts. According to Experian, 30-day delinquencies grew only slightly to 2.62 percent from 2.61 percent, while 60-day delinquencies fell from 0.73 percent to 0.72 percent.
This stability may encourage lenders to keep offering deals to subprime buyers. It also shows that the loans are good for borrowers as well, with these individuals able to make monthly payments and stick to a repayment plan.
Even if you don't have the best credit history, you can find opportunities to buy used cars with the help of auto financing. The financing department at NJ State Auto is ready and able to assist you in taking advantage of these deals. Its experts can get you same-day credit approval no matter what your background is, allowing you to show up, select a vehicle and drive off the lot in a timely manner.
Everyone needs to start building credit at some point. The trick is to find the right time and attack the problem with the most effective strategy – and that can be tough. You don't want to wait too long to start a credit history, but you also shouldn't take the leap before you're ready to make regular payments. Here are a few tips that can get your credit building started on the right foot.
1. Stick to just one credit card
You should refrain from opening up too many credit accounts in the beginning. Start with one card and make a concentrated effort to have a sparkling record. Once you hit a year of success, you can think about adding a second card – preferably one with a better interest rate, now that your score has likely improved.
2. Don't reach your credit limit
It may be tempting to put a ton of purchases on a new credit card. You might even come close to hitting the maximum limit. However, this will only hurt your score. Try to start by making smaller, more manageable purchases with the card and paying them off in full as soon as possible. As your credit limit goes up, you'll be in a better position to close on bigger buys.
3. Monitor your score
You have the right to check your credit score twice per year without cost. One of the major credit bureaus can provide you with the full report so you can scope out mistakes and track your progress. This also ensures you'll spot any errors before they become a problem.
4. Be patient when possible
Major changes aren't going to happen overnight. You must be dedicated to the cause and really make an effort to make smart financial decisions – otherwise, you may be doing more harm than good. Hold off on major purchases until your credit score puts you in a good position.
If you have to buy something big, such as a used car, make sure you head to a facility that will help you out. New Jersey State Auto Auction may be just the place. The financing department can assist you in securing guaranteed credit approval and finding an auto loan that won't put a damper on your wallet.
Credit scores and reports are an important part of securing auto loans. Lenders need to be aware of your history so they can come up with terms regarding interest rates, loan length and other details. This is all fairly straightforward, but things can get complicated when mistakes are made in the process.
Mistakes on a credit report may have severe implications on your future finances, so you need to make sure all data is correct before signing off on a loan. Here are three steps to follow to ensure your report is accurate – even if it means contesting and fixing some errors.
1. Get your report
The first thing you have to do is get a copy of your credit report. Then you can look over your score and the factors that may be negatively impacting it. Any errors should be circled and clearly marked. Be sure to create your own copies for records as well. It's also important to get copies of your report from a few different credit bureaus, especially if you notice a mistake. The organizations may have different scores or errors that need to be remedied.
2. Gather evidence
Once you identify a problem, it's up to you to collect proof of the error. You'll need to put together a dispute letter that follows the proper guidelines and support your claims with evidence. Again, be sure you're making copies of everything so you have backup in case something goes wrong. You should also send everything to the organization with certified mail, as a receipt can be sent to you upon the package's arrival.
3. Be patient
Then you wait. Credit report disputes usually take about 30 days to be settled, but if you haven't heard back within six to eight weeks, contact the organization again. Should the bureau recognize the mistake, it will fix the report, send you an updated history and let other providers know about the error.
When you need a car to get to work and complete other responsibilities, all of this necessary waiting can be tough. Luckily, the entire process doesn't have to be dragged out across weeks. At NJ State Auto Auction, the financing department offers guaranteed credit approval and same-day purchasing options, allowing drivers to get behind the wheel quickly.
In today's world, even used cars are expensive. While you may be grateful for the high quality and longevity of these vehicles, the corresponding price tag is not as welcome. In fact, the expensive nature of used cars is forcing many people to turn to financing options such as auto loans. This is nothing new, but it's still important for would-be motorists to brush up on their knowledge and know the basics of financing.
The importance of car loans
According to NPR, the number of people using car loans to get behind the wheel is reaching an all-time high. It's expected to remain relatively steady throughout 2015. That should be good news for many prospective buyers, as the average cost of used cars has been increasing, which makes auto loans necessary.
"The ability to provide auto financing – be it prime or nonprime – is very important for our economy and for the health of our citizens in keeping people employed and money coming in," Jack Tracey, of the National Automotive Finance Agency, told NPR. "Not everybody can get on a bus and go to a job. Most people in the country need to have transportation."
Popularity is surging
Many lenders are prepared to continue growing auto loans in 2015. Automotive News reported that, while organizations are being cautious, they are still ready to provide loans for prime and subprime borrowers. The key will be to remain disciplined and provide options that benefit everyone. For example, many people agree to longer-term loans because it lowers monthly payments. These can be advantageous for lenders as well, as they can offer different interest rates and appeal to a wider range of people.
Finding the right option
Although subprime auto loans are popular, it can still be tough for drivers to find a financing option that works for them. This is especially true for anyone who may be in a difficult financial situation or those who aren't familiar with car loans. The financing department at NJ State Auto can be a huge advantage if this is the case. A team of experts is available to help drivers secure credit approval and sort through all of the potential loan options. As a bonus, this entire process can be done quickly, allowing you to get behind the wheel in a timely manner.
Anyone who has ever borrowed money has likely been concerned about paying it back. It doesn't matter if it's $5 from a friend or thousands from a huge company – the odds are you have some sort of plan to make up the amount. Unfortunately for borrowers, some lenders are more forgiving about repayments than others, and those large organizations are usually the most ruthless of all. But people who take out car loans may soon have some wiggle room when it comes to working off these debts.
Protecting borrowers at every turn
Currently, some cars have what's known as a "kill switch." These devices have the ability to shut down a vehicle remotely, which often gives lenders the power to locate the car and even disable it if payments are missed. There's even a chance the switch is added to a loan agreement. However, usage could soon change in New Jersey. Local officials from the Assembly Consumer Affairs Committee recently pushed out a bill that would ban the use of kill switches, according to NJ.com.
"No one should have their car disabled because they missed a payment by a day or two," said the bill sponsor, Assemblyman Paul Moriarty (D – Washington Township) in a statement. "These devices are akin to having a predatory debt collector riding in the car with the borrower, ready to strike at the slightest mistake. It's incredibly unsafe and unnecessary. We need this bill to protect the safety and privacy of consumers."
Not only do the politicians believe these devices are unethical, but they also argue that they're incredibly unsafe. Cars could be shut down in the middle of traffic or leave drivers stranded in an unfamiliar location, according to the source. Eliminating their use will keep all motorists safe while also removing a layer of stress facing many borrowers.
Prevent problems with the right loan
Borrowers can increase the likelihood of on-time payments by signing off on a loan that makes sense for them. That's exactly what they'll find at NJ State Auto Auction. The lot has an on-site financing department that can work with buyers to find the right agreement for all parties involved. They also offer guaranteed credit approval and have many options for people who may not have the best credit history.
It's no surprise that some people need help affording a used car. In today's world, these high-quality options can be costly – unless drivers know where to look. Searching through auto auctions and taking advantage of opportunities to submit low bids can be a huge boon to motorists, particularly those who are facing a tight budget. But those aren't the only options. Auto financing provides all kinds of drivers with ways to afford a purchase, and as long as motorists know some of the basics regarding loans, they can put themselves in a position to get behind the wheel quickly and economically.
Subprime loans are still growing
CNN Money reported that subprime auto loans are increasing in popularity. Currently, these subprime deals make up 30 percent of all car loans, with billions of dollars owed by borrowers. The news source noted that only 0.71 percent of these loans are in default, which is slightly higher than earlier in 2014, but that's not a sign of concern for experts. That fact may scare some, but the market is still in a good place, which is great news for future buyers. They should continue to have opportunities to secure loans and purchase a quality used car.
Drivers must make smart decisions
Although subprime loans are experiencing a surge in popularity, it's important for drivers to understand all of the ins and outs before signing a deal. They should have a clear idea of how much they're going to be expected to pay back each month, as well as how that figure fits into a budget including gas expenses, repair costs and more. You also must take a long look at interest rates. Subprime borrowers often face higher rates and longer loan terms, which ultimately results in a bigger bottom line. Try to negotiate your way to lower numbers and a more budget-friendly final cost.
Find help with financial matters
With big decisions looming and piles of paperwork to complete, there's a lot to consider when shopping for a used car. That's why many people reach out for help from financing experts like those at NJ State Auto Auction. This team of professionals offers guaranteed credit approval and is able to assist you in securing a loan you can manage. All you need to bring is a few forms of identification and proof of your address, and then this team can help you do the rest.