Be Prepared for the Problems in Used Car Financing With Solutions Before You Start

Financing properly is more important in financing a used car than when buying a new car. Most problems that occur in buying a used car are due to there being a problem connected with the financing. Getting the used car financing worked out properly is the key to a successful used car purchase.

Most buyers aren’t aware of how important the paper work is to making the deal a successful one or a failure. They view it as paperwork that should be completed as quickly as possible so they can drive away in their new car.

To start with, it’s very important to get the deal agreed upon by the salesman to be put in writing in the contract. This often involves determining monthly auto loan payments based on an interest rate. Sometimes, the interest rate a customer qualifies for is inflated so the dealership can make extra profit.

This headache can easily be avoided by obtaining independent vehicle financing before going to the dealership. This means the consumer can proceed as a “cash buyer” and negotiate only the price of the car. Car salesmen prefer customers to be “monthly payment” buyers because, in this way, it is easier to obscure the total cost of the vehicle.

Independent car financing can be obtained from a bank, credit union or on-line lender. With the popularity of the internet, applying for used car refinance is proving to be simple and very easy to do. Many on line lenders respond very quickly – sometimes as short as 15 minutes by email or telephone. If the application is approved, the borrower is given a credit limit at an established interest rate. Sometimes a blank bank check is issued with no obligation to use it.

“For the majority of consumers, even if you know you have good credit, there is a little apprehension and tension around applying,” one lender said. “So instead of going into a dealership and giving them your information and being sent to the coffee machine to wait for an answer, you can apply on-line, 24/7.”

Most people familiar with how used car dealerships operate confirm that obtaining independent car financing is beneficial to most consumers. .

The most common problems that have a negative impact on a person trying to finance a used car –and their solutions – to ensure that things go smoothly are the following:

Problem #1: Many consumers don’t know what their credit rating is when they apply for an auto loan. The strength of their credit score largely determines what kind of interest rate they will receive. Therefore, it’s critical to make sure your credit report is in the best shape possible before shopping for a car.

SOLUTION: Order a copy of your credit report and look for items that may stand in the way of you getting a good rate. Correct any issues or errors promptly. Are all of your lines of credit in good standing? Are there any signs of identity theft? The credit bureaus will tell you how to correct errors when they send you the report. The following numbers and Web site addresses will assist you in checking your credit.

Why They Want You to Have Bad Credit

HOW MUCH DOES DAMAGED CREDIT COST YOU?

Example 1. $25,000 Auto Loan 5 Years (60 Months)

Perfect Credit- Rate=10% Payment = $531.18 Cost of Bad Credit= $0.00
Fair Credit- Rate=14% Payment = $581.71 Cost of Bad Credit= $3031.18
Poor Credit- Rate=20% Payment = $662.35 Cost of Bad Credit= $7870.82

BAD CREDIT AUTO LOANS ARE NOTHING COMPARED TO MORTGAGE LOANS

Example 2. Mortgage Loan $100,000 30 Years (360 Months)

Perfect Credit- Rate 6% Payment $599.66 Cost of Bad Credit $0.00
Fair Credit- Rate 9% Payment $804.83 Cost of Bad Credit $73,861.12
Poor Credit- Rate 14% Payment $1028.62 Cost of Bad Credit $154,425.60

HOW LONG IT TAKES TO REPAY A LOAN

Example 3. $500 Credit card balance at minimum payment of $10 per month

Interest rate 16% Number of months to payoff debt 83. Interest you will pay over time $329.42
Interest rate 19% Number of months to payoff debt 94. Interest you will pay over time $431.08
Interest rate 21% Number of months to payoff debt 120. Interest you will pay over time $698.50
Interest rate 23% Number of months to payoff debt 168. Interest you will pay over time $1,174.36

WHY THE CREDIT REPORTING AGENCIES WANT YOU TO HAVE BAD CREDIT

The Credit Reporting Agencies (CRA’s) want you to have negative and derogatory items on your credit report because the worse your credit is, the more money they make.

Credit scores called FICO scores (FICO stands for Fair Isaac Company, the company that developed the credit scoring model) are between 300 and 850. There is no credit score below 300.

Let’s say that you are applying for a car loan and you have a FICO score of 825. This is considered to be excellent credit that presents no risk to the lender. The lender will pull one credit report from each of the CRA’s for about $4 each. Each credit reporting agency, Equifax, Experian and Trans Union will send your credit information to the lender and each CRA will make four dollars. You will get your car loan immediately.

Now let’s say that your credit score is only 525. The dealer will start looking for lenders who will make a loan to someone with a risky, low credit score. The lower the FICO score, the riskier the loan becomes and the harder it is to get. The dealer may have to try as many as 20 lenders to find one who will make the loan. Each of the 20 lenders will pull your credit reports and pay $4 each, so each of the Credit Reporting Agencies will now make $80. They make $4 if you have good credit and they can make as much as $80 if you have bad credit. Do they want you to have bad credit? You bet they do.

They gather and report information about everyone they can and sell that information to potential creditors. They get their information from creditors, public records, criminal records, hearsay and anywhere else they can. The worse it is for you, the better it is for them. It is in their best interest for you to have bad credit.

Experts estimate that 79% of the adult public has at least one false, misleading, inaccurate, negative item on their credit report.

Information Supplied by Creditors

Creditors can inadvertently transpose a social security number or account number on your file and send false information to one or more CRA’s. The CRA’s computer database will simply list it under your name and payment history. There are no checks or safeguards in place to verify the accuracy of the information being recorded and distributed about you.

Information Supplied by Criminal Records

Criminal records stay on your credit report for life. There is no expiration time limit as there is for bankruptcy, foreclosure, late pays, charge-off’s etc. The reason criminal records are permanently kept in credit reports, is because they expose mistakes you have made and speak about your judgment and character and whether you are a responsible individual.

Information Supplied by Public Records.

Public records can cause misinformation to appear on your credit report. If the house you live in has ever been in foreclosure, even if you were not the owner at the time of the action, your name may be associated with the foreclosure. Will the Credit Reporting Agencies volunteer to remove this false information from your credit report? Absolutely not.

You have to prove to them that it was not you. It is in the Credit Reporting Agencies’ best interest for negative and derogatory information to be on your credit report. It is up to YOU to monitor the information that they sell and distribute about you.

If you have a fairly common name, it is quite likely that someone else’s credit information is mixed with yours. You could be paying increased payments and higher interest for someone else’s mistakes. If your name is Smith and you live on Main Street, you had better be keeping an eye on your credit reports.

Mistakes on tax records and false information supplied by public officials can show up on your credit report.

For example: If you go to the public bankruptcy records on the PACER website and search for the last name “Smith” in the state of Utah, you will find over 5,500 listings and many of those names will be exactly the same. Some will be in or near the same geographical area. This can result in bad credit for these people whether they actually have justifiable derogatory credit, criminal or public information. They will be cross linked with someone else and the victims will never know until they are denied credit.

They may have you listed as having lived at an address you never occupied. That incorrect address may have a name listed which is similar to yours. Nevertheless, someone else’s bad credit information can show up on your credit report.

Again, if you have a common name, the CRA may have listed false information about you. It is a good idea to look up your name in the telephone book, on Google, anywho.com and similar people search websites to see just how common your name is in your state, county city, town and zip code. The more names you find which are similar to yours, the closer you need to look at your credit report.

The CRA’s often ignore a middle initial. For example: If you are John J. Smith in Capitol Heights, MD. 20743 and there is a John A, Smith in the same 20743 zip code, you may be subject to someone else’s bad credit.

COMMON MISTAKES MADE BY CRA’s

Account you didn’t open, showing identity theft
Debt(s) discharged in bankruptcy, but still showing a balance
Wrong name, wrong address(es) or wrong account numbers, wrong Social Security (SSID)#
Never late, but shown as late
Paid and closed account shown as open and unpaid
Re-aged account
Unauthorized inquiries with no permissible purpose

The “Big Three” CRA’s have victimized many consumers with false credit reports. These cases include mixed credit files, identity theft cases, re-aged collections, public records mixed, and numerous other reporting ills.

Staggering Statistics

One-quarter of all credit reports contain errors serious enough to result in people being denied credit, access to favorable loan rates, and-in some cases-jobs, according to a report issued Thursday by a consumer group.

The group, the U.S. Public Interest Research Group (PIRG), criticized “the big credit bureaus and big business” for tolerating “big mistakes in credit reports.”

“Those mistakes ruin the financial reputations of hardworking Americans,” said Ed Mierzwinski, PIRG’s consumer program director.

• Credit files are updated 4.5 billion times each month by the Credit Reporting Agencies and mistakes happen

• Twenty-five percent (25%) of the credit reports contained errors serious enough to result in the denial of credit

• Seventy-nine percent (79%) of the credit reports contained mistakes of some kind

• Fifty-four percent (54%) of the credit reports contained personal demographic identifying information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect

• Thirty percent (30%) of the credit reports contained credit accounts that had been closed by the consumer but incorrectly remained listed as open and unpaid.

Where to get your free credit reports

[http://www.annualcreditreports.com]

Beware of many of the advertised “free credit reports” with a catchy tune that you hear on the radio and TV. In many cases all you get is a “Tri-Merge” report that is almost useless. You will get tons of email spam soon after.

Will Pulling My Own Credit Report Lower My Credit Score?

No, getting your own report is considered a “soft” inquiry because you are not applying for credit. Applying for an auto loan, credit card or mortgage is a “hard” inquiry and becomes part of your credit history.

Look at your reports very closely and check for wrong addresses, wrong Social Security Number (SSID) wrong account numbers, closed accounts that are showing as open and any other mistakes. Verify that all accounts listed are yours. Look for unauthorized inquiries into your credit that have no permissible purpose. Those need to be removed from your credit report.

If you find errors, do not use their “convenient online dispute” process. This speeds up the debt verification process for them. Any disputes you make are to be done only by certified mail.

WHAT CAN BAD CREDIT AFFECT?

A poor credit rating can affect auto loans, mortgage loans, credit card rates, automobile and other forms of insurance rates, your employment and other aspects of daily life.

BEWARE OF JUNK DEBT BUYERS

Junk Debt Buyers (or JDB’s) will buy an old debt from many years ago for pennies on the dollar and attempt to collect the full amount of the debt from you. They will buy debt from a creditor that was charged off as many as 20 years ago or longer, that is no longer even listed on your credit report. Junk Debt Buyers are scavengers and bottom feeders. They will call and try to intimidate, harass and embarrass you in an attempt to collect that debt. They will send you threatening letters known in the industry as “dunning letters.”

There are several important points to remember concerning Junk Debt Buyers.

1. In most cases, if the Statute of Limitations has passed and you cannot be sued for the debt, no matter what the collection agent tells you on the phone or in a letter. If you are sued, an expired Statute of Limitations is the best defense.

2. Debt reporting and the Statute of Limitations are based on the Date of Last Activity (DOLA). If you make a payment toward this debt, the Statute of Limitations is violated and this debt can be placed on your credit report, where it will remain for seven years, and you can be sued for this debt. Never make any payments on an old debt that is outside the Statute of Limitations.

3. Junk Debt Buyers will deliberately re-age your debt, falsely reporting to the CRA’s that
there has been activity on the account, thus re-setting the date of last activity. Make them prove it.

Statute of Limitations on Debts

The Statute of Limitations for credit purposes limits the amount of time that you can be sued for a debt. There are two important locations for the Statute of Limitations. The first is the state you live in and the second is the state where the creditor is located. The application you signed to apply for the credit may have a Choice of Law clause which names the state where the creditor is located as the state where the Statute of Limitation applies. If there is no such clause or your state law does not allow such clauses, then the Statute of Limitations applies in your state.

Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, “handshake agreement”). Remember a verbal contract is legal, but much more difficult to prove in court. Unless an oral debt was recorded or made in front of witnesses who are able and willing to testify, I wouldn’t worry about being sued.

Written Contract: You agree to pay on a loan under the terms written in a document, which you and your debtor have signed.

Promissory Note: You agree to pay on a loan by way of a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is a good example of a promissory note.

Open-ended Accounts: Are revolving lines of credit with varying balances. The best example is a credit card account. Note: a credit card is ALWAYS an open account. This was established under the Truth-in-Lending Act:

When does the Statute of Limitations begin?

It begins six months after you made the last payment or the DOLA (Date of Last Activity) on the account.

Many people will be intimidated by collection agents threatening legal action and make payments even after the Statute of Limitations has expired. This is the worst thing they could do.

• The date of the payment updates the DOLA, violates the Statute of Limitations and will reset the clock at the Credit Reporting Agencies. Items can stay on your credit report for 7 years. If it is year 6 and you make a payment, this late account will now stay on your credit report for another 7 years!

• Do not agree to pay for items which have been discharged in bankruptcy, regardless of what a collection agent may say.

Bad Credit? You Can Still Buy a Car!

Especially during these tough times, there are a lot of people that need reliable transportation and can afford a payment, but are being turned down because of bad credit. More people are losing their homes, getting behind on their payments, or just maxing out credit cards because the money isn’t coming in like it was a short while ago. There are options out there for you there are just a few things you need to keep in mind. This is in no way a complete list, just a few tips that will help you get the the mess that is financing a car in the current credit market.

1. Down payment matters. Not only does down payment go a long way in keeping your payment affordable, it lowers the amount financed which makes banks more likely to consider your loan. If they have a $20,000 car, and are financing $22,000 (after tax and DMV fees) that doesn’t look very good to them. Put a $5000 down payment in there and all of a sudden the bank sees just a $17,000 loan on a $20,000 car, that looks much better to them.

2. Debt: If you’ve never made a late payment in your life that’s great, but there are a lot of us right now who have zero late payments, but our bills are 70, 80 even 90% of our monthly income. Banks are paying special attention to this now. Don’t expect more than what you can realistically afford without stretching.

3. Credit Score: Now this is a multi-post topic itself but if you had a 600 credit score 2 or 3 years ago, banks will look at it like they did a 500 score then. Banks are tightening up, so know what you are walking into. Dealerships want to sell you a car, so even if you don’t have great credit they will do everything they can. You do need to be prepared though. Check a couple credit unions or banks (capitol one, etc.) and see what they have to offer. DO NOT just check with a bunch of dealerships. 3 dealership visits can equal anywhere from 3-15 inquiries on your credit, which will lower your score even more.

How to Successfully Capitalize on Special Finance Leads?

In a highly competitive market, it is very difficult to generate quality special finance lead by the dealers. The process results in unnecessary wastage of time, energy, and money. In spite of spending a lump sum amount on advertisement and on running PPC campaigns in Google, still a dealer fails to produce the desired number of leads to meet the monthly target. Dealers who cannot generate their own leads depend on the professional lead providers to supplement the flow of new sale opportunities.

All providers produce new sale opportunities through their own marketing efforts. They usually have a couple of websites for an effective auto lead generation. Through advanced adverts offline and online and use of social media, the highest quality of leads are generated in real time. Pay-Per-Click (PPC) campaigns are used extensively to generate as many leads as possible.

When sending the leads to the dealer client, the professional lead generators ensure they are sending only the best quality leads. A team of efficient professionals works to separate the good quality leads from the bad ones. Usually a provider uses a lead tracking software to track the number of leads coming from different sources from websites, landing pages, blogs, advertisements, etc.

Bad quality leads are generated when so-called potential car buyers don’t respond to calls being made from the lead generating company’s office or for that matter don’t reply to the emails sent at least 48 hours ago. Such sets of people are termed as ineffective leads and the list containing the personal details of such individuals are not sent to the dealer. Effective leads are those that respond instantly to a call or an email and show a genuine interest to buy a car.

There is a misconception amongst many dealers that the providers send a lead’s personal details to multiple dealers. The lead generating companies have teams that check whether the same leads are being sent to more than one dealership or not. Cross checking of leads received should also be done on the dealer’s part to reject duplicate leads.

The reason for the huge popularity of the external lead generators lie in the fact that they guarantee the generation of maximum high quality leads. Once people fill up an online inquiry form to learn more about a dealer and the auto loan application and approval procedure, the generator instantly starts following up with those people. Through regular communication and responding to the queries of potential car buyers, special finance lead can be generated successfully.

Experienced service providers spend all their time in doing quality research on the type of target audience a dealer wants to have. The providers will use the latest, innovative marketing strategies to create a long lasting impression in the minds of the people. One of the best chances to increase visibility is to have a strong presence in various social media web platforms for maximum auto lead generation. Through maintenance of social media accounts and regular posting of interesting articles, relevant news, photos, and videos on Facebook, Twitter, LinkedIn, Google+, and so on grabbing the attention of potential car buyers can be increased to a large extent.

Matthew S Barredo is an expert researcher of special finance lead. He has over 7 years of experience in the genre of finance auto lead and the same. In this article, he has tried to educate the readers about choosing an ideal car lead generating company and auto lead generation for steady sales and profit.

Top 10 iPhone Apps for Personal Finance

There are many applications for the iPhone that give users the ability to make personal financing easier than ever. While solving one pain-in-the-neck issue, it creates another – which app to buy? Because of the popularity of these headache-reducing apps, there is an overwhelming amount of options available in the App Store. Deciphering which app is the best available is almost impossible. Add in the fact that so many aren’t free, and choosing the right one the first time around could save time and money. Before downloading anything, it’s important to know if the functionality of the app (money transferring, budget tracking, etc.) fits your needs. Provided is a list of ten apps including the price and primary function that can make tracking personal finances much easier.

Mint – There are tons of finance apps available that focus on budget tracking. Few are as popular as Mint, which allows users to manage multiple financial accounts from one simple user interface. With user-friendly features and no price tag, there is little wonder why this app has so many users.

Loan Shark – Dealing with loans is never a pleasant experience. The Loan Shark app helps ease some of the pain endured while handling loans without having to pay anything. It simplifies the process of calculating loans by a great deal and also has many features including a full amortization table, a one-tap extra payment option, and a “favorites” feature.

MoneyStrands – This app is another free option for tracking your budget. With features like alerts, analysis, security, and support, it is one to compare to Mint.

PageOnce – Planning long-term investments can be easy to put off. This app also assists in budgeting your current finances like MoneyStrands and Mint, but really excels in planning for the future. It gives you the ability to look at your 401k, IRA, and stocks all at the same time, while not costing you a cent.

Toshl – Toshl incorporates cloud computing into every day financing with this free app. The cloud feature allows users to automatically sync their mobile movements online. Additionally, there is a premium upgrade ($19.95/year) that allows users to export to Excel, PDF, or Google Docs among other features.

MoneyBook – MoneyBook is another addition to the long line of apps for budgeting. This one, however, comes at a price. Promoted as “Finance with Flair,” the app costs $2.99 and is loaded with features to make financing easier.

SplashMoney – At $4.99, what differentiates this from the free apps is its ability to connect wirelessly to most online bank accounts.

Square – The price is right for this free app that makes credit card purchases simpler than ever. By signing up, Square, Inc. will provide a credit card reader that can be attached directly to the iPhone. Once connected, users have the ability to swipe all major credit cards with only a 2.75% charge per swipe.

PayPal – Ebay-owned PayPal provides users a secure, simple way to send or receive money wirelessly.

General Banking – The bulk of major banks have available apps for free. These provide easy-access to any and all bank accounts in a secure fashion.

This is only a small example of the many, many apps that can help make financing easier. With the continuous release of new applications and updates to old ones, banking from your iPhone will continue to simplify; finding the app for doing so may not. This list is a great place to start looking.

For more information about iPhone application development, visit Magenic Technologies who have been providing innovative custom software development to meet unique business challenges for some of the most recognized companies and organizations in the nation.