Lalit Aggarwal | ApproveNow

Repair Bad Credit By Taking Over Lease Payments

Leasing a car has its advantages, and a few downsides. However, if your credit is subpar qualifying can be a problem.

Before you give up and resign yourself to public transportation, there could be another option.

You might be able to take over someone’s existing lease payments and have the vehicle in your name. This way, you can have reliable transportation anytime you need it and get credit for making the lease payments on time.

Benefits and Disadvantages of Taking Over an Auto Lease

Before you decide that this is the right financial move for you, there are a few factors to consider. While a “take-over auto lease” can help rebuild poor credit, there can also be pitfalls. Knowing all the facts will ensure that you don’t end up hurting your credit, instead of helping it.

Upside to auto leasing

You can trade in your vehicle every few years for a newer model. This can apply to the person that took over the loan, but a credit check will be required. If you make all the payments on time, and keep the vehicle for a few years, there is a chance your credit will have improved enough to be approved.
Auto leases can be handled by the dealership or Buy Here Pay Here lot where credit requirements are often less strict than at a bank or credit union. This is not always the case, but the same benefit often still applies.
Most car leases come with “bumper to bumper” warranties from the dealership at a lower price than if you would have purchased the vehicle outright.
If the vehicle you leased turns into a “lemon”, you can have it replaced at the dealership with little to no hassle.
Sales tax is often lower on an auto lease compared to buying the vehicle.

Downside to auto leasing

A set mileage can included in the lease contract. If you go over it, fees often apply. These can add up depending on how often and the distance you drive.
The dealership often gets to retain the vehicle’s blue book value when you are ready to trade it in. When you purchase an auto, you still retain its value and this can be used towards your next vehicle.
When you assume a lease you might not have all the benefits that were included with the original leaser. This can include charges for mileage if they are over what the initial auto lease contract specified.

Taking over a lease can help you get behind the wheel. If you’ve decided that this is the right decision for you, there are a few steps you need to follow.

How to Assume a Vehicle Lease

If you want to take over someone’s car lease, there is a little more involved than just making the payments. You could just continue to pay on the original title holder’s lease but this is problematic. Not only is it illegal, you won’t be acknowledged for making the monthly payments on time. This means that your credit won’t benefit, only the original vehicle owner’s will. Everything from the vehicle title to the insurance will stay in someone else’s name.

Vehicle lease swapping, as it is often called, starts with understanding exactly what this entails.

What is a vehicle lease?

If you’ve ever rented a car, then you already have a good idea of what a lease is. A contract is signed with the lender; bank, credit union or dealership to drive the vehicle for a preset amount of time. Most leases are for 12, 24 or even 36 months. One can also be requested that it is shorter or longer depending on needs and finances. Yearly mileage will be restricted to prevent the vehicle’s value from depreciating, usually between 12,000 to 15,000. It is possible to raise the mileage restrictions but this usually results in higher monthly payments.

What is lease-swapping?

When you take over someone’s car lease it basically involves transferring the paperwork from their name to yours. Now, you are responsible legally for the remaining payments and vehicle maintenance. You will still have to abide by the mileage restrictions but you can drive the automobile for the remainder of the lease. If you want to renew the lease or get a new vehicle, you will have to meet the lender’s credit score requirements. For most lenders it is a FICO score of 620 or higher. Making the monthly payments on time can help raise your credit score, though it can take several months before it is reflected on any of your reports.

If you are ready to take over a car lease and repair your credit, here’s what you need to do.

Find out your credit score

You can find out what your credit score is for free, and without incurring any loss of points, with your bank or CreditKarma.com. If it is below 620, don’t give up, you might still be able to take over a car lease. The vehicle might be an older model but it still gets you on the road and a start to “upping” your credit rating.

Print out your credit report

There are three credit reporting agencies, Experian, TransUnion and Equifax. Each will issue one free credit report per year. You will need this when you sit down with the potential lender. Even if your report is dismal or almost non-existent there is still a chance that you can assume the lease, especially at a Buy Here Pay Here dealership.

You will also want to have documents that show proof of address and income.

The next step is to fill out the paperwork and wait to be approved.

Before You Take Over the Car Lease

If you have been approved by the lender, don’t sign the contract immediately. There are a few things that you are responsible for doing when you are assuming a car lease.

You will want to be sure that you understand all the requirements and are able to be meet them. This especially applies to the mileage and monthly payments.
Look to see if the lease and vehicle warranty end on the same date. In some cases the warranty ends before the “new” lease. If this is the case, you need to negotiate new terms before signing. It will save you money in the long run.
Once you’ve selected a vehicle, have it inspected by a licensed mechanic. The one you select, if not supplied by the lending company, should be ASE certified.
Double check to ensure you are getting the “best deal”. Sometimes Buy Here Pay Here lots are less expensive than traditional dealerships.
Find out the vehicle’s history, even if you are taking over the lease from a friend or family member. You don’t want any unpleasant surprises after you have taken responsibility for the payments. A good source to check is CarFax.com.
Know if there are any fees when the lease ends if you decide not to renew or select another vehicle. For some lenders, this is a common clause and the fee can be high.

Should You Assume the Lease of Someone You Know?

This is a common question, and the answer often depends on the vehicle and the individual. It might seem easier to take over the lease of someone you know but you still have to follow the same steps with the original lending company, and this includes a credit check.

What you should be paying attention to is the vehicle and if it fits your lifestyle and most importantly budget. If not, your best choice is to visit a car dealership and see what they have to offer. Since your credit isn’t the best, you probably won’t be able to assume the lease of a newer, fully loaded vehicle but an older model might be available without all the “bells and whistles”.

Once you’ve established a history of timely payments, then you can start discussing upgrading when the lease has ended.

There are also several online sites that cater to lease swapping and they might be able to match you with a vehicle that is right for you.

Lease Swapping Could Be Right for You

There is no denying, it can be difficult to get a vehicle with little or bad credit. Being turned down repeatedly due to low credit scores can be embarrassing and disheartening.

While the chances of you driving off the lot in a new car are slim, assuming the lease of an older vehicle might be the chance you need to start rebuilding credit and get you a dependable ride so you can easily get to where you need to be.

Take your time selecting a vehicle and don’t give up if you are turned down by the first lender.

Chances are, if you have your paperwork in order, someone will be willing to take a slight risk on you. It might be at a Buy Here Pay Here lot and there is nothing wrong with that. You might find that you’re glad you did.

Best Time To Buy A Car With Bad Credit

If your credit is subpar, you might think that it is impossible to be approved for a car loan. Even some Buy Here Pay Here lots might have already turned you down.

While there are steps you can take to improve your chances for approval, there is something you might not have considered. WHEN you shop for a vehicle can also affect how likely your loan application will be approved.

When Should I Buy A Car?

Shopping for a vehicle with bad credit can be a frustrating and even embarrassing experience. However, if you’ve decided that “now” is the right time to buy a car it is important that you know when to shop.

Weekdays

It might be more convenient to browse dealerships and BHPY lots on the weekend, but this is a time you’ll want to avoid. Other potential buyers, with higher credit scores, usually end up with the best deals. Dealerships are also less likely to approve your loan, when they already have customers applying with a lower default risk.

If you don’t need to purchase a vehicle “right away”, you might want to wait until the last week of the month.

Auto dealers are often trying to meet end of the month sales totals, which could increase your chances of driving off in a new vehicle.

Labor Day

This is one of the best times to buy a car, even if your credit is less than perfect. While you probably won’t be approved for a brand-new vehicle, you could drive off in last year’s model.

Labor Day is typically when the new model year vehicles arrive, and dealerships need to make space for them. Your subpar credit might exclude you from some of the low financing deals, but you could have a better chance of being approved.

One tip to improve your chances is to bring a down payment or co-signer.

Christmas and New Year’s

According to Edmunds, vehicles are often discounted up to 6.1 percent in December. This can mean significant savings for consumers. Dealerships are hoping to meet their year end sales goals, along with clearing out older models.

You can also find great deals during Black Friday, but your credit might prevent you from buying a new model.

How to Buy the Right Car

Now that you when to buy an automobile, how do you know it’s the right one? To ensure that you aren’t “talked” into the wrong car by an overeager salesperson, here are a few tips.

Have a set budget

Do Not go into a car dealership without knowing exactly what you can afford. The last thing you want is to have a repossession on your credit report due to an inability to make the monthly payments.

Most financial experts recommend spending no more than 25 percent of their average monthly income.

This should include all costs associated with the vehicle including payments, maintenance, gas and insurance. Edumonds.com or Kelley Blue Book can help you determine an estimate.

Narrow down your choices

Research any makes and models you are interested in, before heading to the car lot. Not only will this significantly shorten your shopping time, it will help prevent you from choosing the wrong vehicle. Try to pick models that are listed at least 5 percent below your budget. This way you will still be able to afford upkeep, insurance and gas.

Know the vehicle’s price

This can be especially important at Buy Here Pay Here lots. There are some unscrupulous ones that raise the sticker price before placing it “on sale”. Kelley Blue Book will be an invaluable resource in helping to ensure that you get the best deal on the automobile.

Pay attention to all the advertised deals

Whether your car shopping on Labor Day or at the end of the year, pay attention to the deals that advertised. Car lots are competing for your business, often even if you have bad credit.

Don’t take the first deal offered, unless you are sure it is the best one.

Don’t rush the test drive

If the dealership won’t allow a test drive, Do Not accept any offers. Chances are the vehicle is a “lemon”. You want to take your time on the test drive. It is important that you get a feel for how the vehicle handles and rides. Play with the various functions, and make sure that this is something that you’ll want to drive every day.

Besides, some problems don’t become apparent until the engine has a chance to warm-up.

Negotiate the best deal

Don’t be afraid to negotiate, even if you have a low FICO score. There is always the chance that you can get a better deal on the vehicle. If another BHPH dealership has a similar model at a better price or offers a lower interest rate, see if you can’t get the same deal on the vehicle you really want.

Buy with Confidence

You can shop for a vehicle with confidence, even with poor credit.

Along with having the necessary paperwork, down payment and possibly a co-signer, you also know the best time to buy an automobile. You might have to wait a little longer than anticipated to find the best deal. It will also require some research and financial planning.

In the end you will be glad that you did, when you are finally driving a vehicle that fits your needs and budget.

Can Store Credit Cards Help Repair Credit Scores?

Are you thinking about using store credit cards to help boost your credit score?

Opening a merchant charge account is usually quick and easy. You often receive discounts on your first purchase, just for applying. While paying the monthly balances can help rebuild your credit, these cards can also hurt it.

Advantages of Store Charge Cards

There are several advantages that often come with merchant credit cards, and make them an attractive option for many consumers.

Exclusive offers and discounts

The initial discount offered, when you sign-up, is one of the main reasons consumers open store credit accounts. These can average from 15 up to 30 percent, depending on the item. On some large purchases, this can result in significant savings.

A survey by credit.com found that over 28 percent of shoppers applied for an in-store charge card at the counter, before completing their purchase.

Some retailers also offer ongoing discounts to their cardholders throughout the year.

Easy access to credit

When you are trying to rebuild your credit, getting approved for a traditional line of credit is difficult. Retailers often do not have the same criteria for approval, especially since their cards come with a spending limit.

If you need to purchase an item that you can’t afford at the time, a card offered by the retailer might be the best option.

Help rebuild credit

Retail charge accounts can help you raise a low score, but only if the activity is reported to the main three credit bureaus. (Experian, Equifax and TransUnion)

To rebuild your credit with an in-store line of credit, you Must make every monthly payment on time. Failing to do so, will cause your score to drop. The missed or past due payment can also stay on your credit report for up to seven years.

Disadvantages of Retail Charge Cards

These cards might seem like an ideal way to start repairing your credit, but they can come with a few disadvantages. Knowing what they are, before applying, can prevent you from potentially lowering your score even further.

High interest rates

Surveys conducted by CreditCards.com found that the average interest on major retail cards was 25 percent, and 16 percent on ones issued by a bank.

This is a significant difference, especially if the balance due isn’t paid in full.

If you only make the minimum payment each month the accrued interest could cause the final cost of your purchase to double, even with the initial “signup” discount.

Limited places of use

You can find some retail cards that are part of the Visa or Mastercard network. These can be used anywhere the logoed cards are accepted. Usually, you will only be able to use it in the store that issued it. This limits what you can use the card for.

Referred to as “close-loop cards”, applying for one might only be beneficial if you make frequent purchases at that store.

Few rewards

Typically, there are a few rewards and incentives offered after the first discount. The only drawback is that they usually must be used at that store. If you are a frequent shopper, it might be financially worth it.

If not, you might want to consider applying for a secured credit card.

Credit limits are lower

Credit utilization is an important part of your score, especially if you are trying to rebuild it.

Financial experts recommend keeping a usage rate below 30 percent on all types of credit cards.

This can be difficult when it has a low limit. If the card has a $1,000 limit and your balance due is $500, the utilization rate is 50 percent. This can cause your score to drop, instead of raising it.

Cards with higher limits can have a lower rate of utilization, but they can also be harder to get if your score is subpar.

Repairing Your Score with a Retail Credit Card

Retail charge cards can help you rebuild your credit, if you know how to use it. These simple tips will ensure that you don’t overspend, and they can even show you how to add a few points to your FICO score.

Don’t overspend

Just because you now have a line of credit at your favorite store, doesn’t mean you can buy everything you want.

Stick with your normal spending patterns.

Only use the card for items you need or were already planning to buy. This way, you can take advantage of the discounts and still be able to pay the monthly balance.

Pay the balances off

It is crucial to make the monthly payments on time, late and missed ones will hurt your score. Whenever possible, pay off the total balance. This way you’ll avoid the high interest rates.

While making the minimum monthly payments can will help build a credit history, interest will be added until the total amount due is paid off. Over time, it can quickly add up.

Regularly use the card

You don’t want to run-up the card’s balance, but you still want to use it often. Frequent use combined with on-time payments can boost your score, and build a strong history. If the card isn’t used, eventually it will be marked as “inactive”. This won’t hurt your score, but it also doesn’t help it.

Pay attention to your credit utilization

This rate is an important part of your overall score. It is used to determine “creditworthiness”, and will be affected by the use of your retail card.

Credit utilization rates are calculated by how much available credit you’ve used, divided by the limits. Optimally, you want a usage rate below 30 percent. This can be difficult if the retail credit card has a low limit and you’re carrying a high balance.

You’ll want to keep this is mind, every time you use an in-store credit card.

In-Store Credit Cards Can Be Worth It

There are drawbacks to retail charge cards, but they also have several advantages. They can help you make necessary purchases not affordable with your available funds, save money and even repair poor credit scores.

If not used responsibly, they can also cost money with high interest rates. They can even cause your score to drop several points.

Before you succumb to the pressure at the register and apply for a retail credit card, consider how it will affect you financially. If you decide that it is something that will help you, then these lines of credit will be worth it for you. When used responsibly, they can even help you rebuild your credit.

How To Avoid Credit Card Fraud

Credit card fraud is probably one of the last things on your mind.

Unfortunately, this is a mistake since this white-collar crime is on the rise.

Whether you are trying to rebuild your credit or keep your “good” score, closely monitoring your finances is something that should be done automatically.

5 Common Types of Credit Card Fraud

Watching for discrepancies in account balances and on statements will alert you if any fraudulent charges have been made. However, you can take steps to prevent the theft from ever happening.

The first, and most important one is to be aware of some of the common types of credit fraud.

Knowing what to look for will help keep your credit safe.

Be wary when you are shopping online. Since you need to enter in your payment information to place your order, it can be easy for thieves to steal your card number. If you Do Not see a lock icon or other indication that it is a secure and valid site, take your business to another online retailer.
Your card information, including PIN # is vulnerable at any gas station. Criminals can place a small device on the gas pump, which will collect the data from every transaction. Taking the time to “pay inside” and Not at the pump can save you the hassle of trying to straighten out your finances.
A study conducted by NASDAQ found that even though mobile users account for only 14 percent of the sales made online, they are responsible for 21 percent of the reported fraudulent activity. Make sure that all security updates for your mobile device have been installed, and double check that you are dealing with a reputable distributer.
If you love to do your online shopping between 2 am and 6 am, your risk of credit card fraud increases. This is because merchants and banking officials are less likely to notice any abnormal transactions, which makes it the ideal time for criminals to try and steal your information. NASDAQ also found that the risk for fraud increases 200 percent Christmas Eve and Christmas Day.
Never give your information out over the phone, even to a recognized charity. Almost every charitable outfit has a webpage, email, phone number or physical address where you can safely send your donation to. This is considered the “season of giving”, and thieves like to take advantage of this.

Tips on Preventing Credit Fraud

Along with avoiding scams and keeping an eye on your balances, there are a few other things you can do to protect your cards and credit score.

Some of these tips are common sense, and others you might not have thought of before.

Practice Basic Security

It can seem like everyone is offering you a charge account, and if you find one with a great interest rate you want to keep your new line of credit safe.

Immediately sign the back of the new card.
Never keep your PIN # with the card.
Take advantage of paperless statements.
Make monthly payments online.

Current Personal Information

If your address, phone number or email changes it is important that you update your information, especially if your statements are mailed. It also ensures that the bank can easily reach you, if they notice any suspicious activity with your accounts. The sooner you stop any fraudulent activity, the easier it will be to resolve the discrepancies.

Receipts

Watch what you do with your receipts. Don’t leave them laying on check-out counters or in shopping carts and baskets. Shred any that you don’t need, and safely file the ones that should be kept. Double checking your receipts against your statements will help ensure that you won’t be paying for any additional charges.

Use Secure Networks and Devices

One of the best ways to protect your credit cards is to always use a secure network and device when shopping online. Here are a few tips to help keep your charge cards safe.

Equip your laptop, computer or mobile device with a firewall. Always keep it turned on, and change the password frequently.
Install all updates whenever prompted.
Upload security software.

Use Safe Websites

Online shopping is extremely convenient, and it can also put your information at risk. Only shop at sites that are established, and can be easily contacted if there is an issue. A good tip to remember, is to look for sites that have “https” at the start of their web address. The “s” indicates that the site is secured.

Never Share Your Passwords

Your passwords should always be kept private and securely stored. Never divulge them, especially online or over the phone. Change them regularly, and try to avoid using common family names, addresses or birthdays. The best passwords will contain a mix of letters and numbers.

Immediately Report Lost Cards

Credit cards do get lost and if it happens to you, report it immediately! This also applies if you notice any fraudulent activity. The longer it takes for you to report lost or stolen credit cards, the harder it will be for you to dispute any charges that aren’t yours.

Checking your accounts frequently, instead of waiting for your monthly statements, will ensure that you are always on top of any activity.

You Don’t Have to Be a Victim

Just by following these simple tips, and being aware of your surroundings, you can protect yourself from credit card fraud. Keep track of any and all charges on your accounts, use secure networks and never give anyone your passwords.

This will help you avoid becoming a victim, so you can shop with confidence throughout the year.

Protecting Your Credit Score During The Holidays

If your credit score is the last thing on your mind, you’re not alone.

During the hectic holiday season few consumers give it a second thought. This makes it easy for them to hurt it without realizing it.

There are steps you can take to ensure your credit doesn’t take a hit, so you can relax and enjoy this festive season.

Why Protecting Your Credit Matters?

There are several reasons why it’s important to keep your credit score in mind over the holidays. You don’t want to start the new year off learning that it has drop several points.

Lower scores will make it harder for you to get loan approval, for everything from vehicles to mortgages and credit cards. If your application is approved, you will be paying higher interest rates. Even though it only took a few weeks for it to drop, consumers often find that it can takes years to repair.

How to Keep Your Credit Score from Falling

Want to protect your FICO score and credit history? Here are a few steps that will help you keep it safe.

Don’t open any new lines of credit.

The holidays are a time for presents, vacations and festive gatherings. This also means you will probably be spending more money. It might be tempting to apply for a new credit card, but doing so will hurt your score. Every time you fill out a credit card application, an inquiry is made.

The loss of a few points is temporary, but it can still impact you financially. You might find it more difficult to be approved for a low interest loan. How many points you lose, and how long it takes to recover, will depend on the average age of your other accounts or financial history.

Try to keep balances low.

One of the main factors that determines your credit score is the total amount of your debt. This includes credit card balances. Scores often drop when card holders are close to reaching their limit.

According to an Experian survey, 31 percent of holiday shoppers maxed out their credit cards.

Consumer Education Manager for Experian, Sandra Bernardo, recommends using 25 percent or less of your available credit. Budgeting for the season ahead of time, will help you avoid running up your credit card debt.

Don’t take out a personal loan.

Personal loans might be a smarter decision financially. They come with fixed interest rates that are lower than ones offered by credit cards. You also know the date the last repayment will be due, and exactly how much you can spend.

Even though these loans do have advantages, there is a downside. You are opening another line of credit, and this can affect your score. There will be an inquiry into your history, and this temporary dip could last for several months. If other lines of credit are already maxed out, adding a new one will add to your debt total. This is also factored into your credit score.

Avoid payday loans.

Rowe Price, a global investment management firm, noted that 11 percent of parents surveyed took out a payday loan during the holidays. The one advantage of these loans, is that they do not appear on your credit history.

However, there are several downsides. Interest rates are higher, and repayments are typically due weekly. Failure to keep up with your payments usually send your account to a collections bureau. This will appear on your credit report, and it can take up to seven years before it is removed.

Pay bills on time.

It’s easy to forget due dates for bills during the busy holidays. This is one thing that you don’t want to do.

35 percent of your FICO score is your payment history.

Even one late or missing payment can cause it to drop.

Setting up automatic payments is the best way to make sure your bills are always paid on time. This does mean that you will have to pay attention to your bank account balance to ensure there are enough funds to cover the payments.

Avoid holiday scams.

Unfortunately, the holidays come with plenty of scams. Falling for one can have a devastating effect on your credit. The best advice to follow is “if the deal sounds too good to be true, it probably is.” Do not give out any personal information over the phone or in response to an email.

Emails advertising significant savings from retailers, if you fill out a short online form, is one of the most common holiday scams. Once they have your name, birthdate and social security number, it is easy for them to assume your identity. Phone calls from charities asking for a donation is another favorite ploy with scammers.

Keep an eye on your credit report.

The best way to protect your score is to monitor it. You can check it for free through the online site, Credit Karma. Most banks also offer credit monitoring tools at no cost, if you have an account with them. You are entitled to three free credit reports a year from the credit reporting bureaus; Equifax, Experian and TransUnion.

Monitoring your report allows you to catch any mistakes and petition to correct them. It also allows you to watch for any signs that your identity might have been stolen.

Protect Your Credit and Enjoy the Holidays

The holidays are a busy time of year, and can quickly become expensive. This doesn’t mean that your credit score has to suffer. Have a budget in mind that includes surprise expenses, do not open new lines or credit and monitor your score.

With a little financial planning and attention, you can have a merry holiday and keep your credit score in tack.

Holiday Car Buying With Bad Credit

Promises of instant approval, no down payments and low interest rates make it almost impossible to ignore car dealership holiday ads.

Especially, if you have bad credit. While, this might sound like the solution you need to put yourself behind the wheel. It is important to find out if holiday car buying deals will hurt or help you financially.

3 Reasons to Buy a Vehicle During the Holidays

If your auto loan application has been turned down due to a poor or no credit, the end of the year might be the best time to try again.

Automobile sales are typically down in November and December.
Buy Here Pay Here and traditional dealerships are struggling to meet sales goals.
Car lots are trying to get rid of old models to make room for new inventory.

All this combined, often means that they are more inclined to take a risk on buyers with less than perfect credit.

Depending on your FICO score, you might even be able to work out a deal that includes less money down or a lower interest rate.

If you have a trade-in, it can increase your chances of approval.

How Holiday Car Deals can Hurt You

Even with the incentives and advantages, buying a car over the holidays can hurt your credit if you’re not careful. Some pitfalls that you’ll want to avoid include,

Purchasing a vehicle you can’t afford. Just because you were approved for a new car, doesn’t mean you have to accept it. Will you be able to make the higher payments on time? What about your other financial responsibilities? It can be tempting to “treat yourself”, but choosing an older, less expensive model can ensure your credit doesn’t take a hit.
Not reading the fine print. Not all dealerships fully explain the loan agreement. This could be financially devastating. Be sure to read the entire loan agreement, especially concerning interest rates. The last thing you want is to be surprised when it suddenly increases.
Loan agreements that let you skip a month. A month without a car loan payment might sound great, but it can hurt you. The skipped payment will be tacked onto the end of the loan or it could be added to the following month, which means the amount due just doubled.

Before You Go to the Dealership

There are a few steps you can take to ensure you get the best deal on a car loan.

Pre-approved Auto Loans

If it is possible, having pre-approved financing will limit your risk of signing for an auto loan that could hurt your credit. Your credit history and other factors will play a role in determining your chances for pre-approval, but it is worth it to take the time and apply.

Know What You Need

It will be harder for a salesperson to talk you into a vehicle you really can’t afford, if you know exactly what you need. Think about the type. Do you need a sedan, pick-up or is a compact car enough. You also want to consider mileage and model year. Knowing before you go is important, whether you’ve been pre-approved or are looking for a deal.

Questions About Holiday Auto Deals

Considering buying a car this holiday season, but aren’t sure if it is good financially? The answers to these commonly asked questions might help you make the right decision.

Are there different types of deals?

Some incentives often offered at Buy Here Pay Here lots include,

Cutting prices on all vehicles. In some cases, by as much as 10 percent. This can put many makes and models in your price range.
Rebates are frequently offered by the manufacturer. The only downside is that it is usually only on newer models. Auto buyers with low credit scores often find it difficult to get loan approval.
Dealerships often offer lower interest rates on auto financing. Sometimes, regardless of past credit.

Can I save money on holiday auto deals?

It is possible to save money when you buy a car during the holidays. Your credit score will determine how much, and what deals you qualify for. Older model vehicles will often be your only choice, but if the price has been reduced, this could be the ideal time to buy.

Will all vehicles be on sale?

When it comes to most used and older models, they will probably be on sale. It is up to the discretion of the dealership. New vehicles typically won’t be reduced, unless the car lot has a high inventory.

Can I get low interest rates with my bad credit score?

Some BHPY auto loans might approve you for a low interest auto loan, but traditional dealerships probably won’t. If you want to increase your chances of approval, a co-signer or larger down payment can help.

Will insurance premiums be less expensive too?

Unfortunately, the cost of auto insurance does not change because you bought a vehicle during the holidays. It will still be based on make and model, along with mileage. Your driving record will also be factored in. The cost of insuring your new car should be considered, before you buy.

Celebrate with a Holiday Car Deal

The holidays can be the perfect time to buy a vehicle, but you do want to be careful.

Know what you want, and can afford. Carefully read the loan agreement, and don’t be afraid to ask for a better deal. Even though your credit history may exclude you for some offers, there are still plenty of dealerships that will be willing to work with you. Who knows, maybe this holiday season you’ll be able to get the vehicle you need.

Bad Credit? Consider Online Auto Loans

Is your poor credit score making it difficult for you to get a low interest auto loan? Are you having trouble even getting approved?

If you have subpar credit finding a traditional lender to approve your car loan application, without high interest rates, can be frustrating and time consuming.

Banks, credit unions and Buy Here Pay Here lots are not your only financing option. You can search and apply for a bad credit auto loan online. While this might be the answer you needed, there are a few things you should know before you “sign on the dotted line”.

What are Online Car Loans?

An online automobile loan is similar to one you get from a traditional lender. The main difference is that everything is usually handled from your computer. The same information is still required with your loan application,

Valid driver’s license
Proof of income and residence
Current utility bill
Credit history

You might also be required to show proof of insurance. The lender you are applying with will provide you with a complete list of the necessary documents. The advantage to having this information before you start, is it can speed up the answer from the online lender.

If you need a vehicle as quickly as possible, have this info on hand before you start searching for an online lender with low interest rates.

Advantages of Internet Auto Loans

There are several advantages to applying for a vehicle loan online that include not having to leave your house. This means that you don’t have to haggle over interest rates and fees with a banker or auto dealer or face being turned down in person.

If your loan application is rejected due to your poor FICO score, it is a little less embarrassing online than in person.

Some of the other benefits of shopping online for a bad credit auto loan include,

Easy to get multiple quotes. Instead of visiting or calling several lenders to compare financing options, you can see multiple companies online at once. Take a couple of hours to fill out and submit the short forms, and soon you’ll receive the lenders answers and offers. Shopping around will help ensure you get the best interest rate, in spite of your bad credit.
Helpful tools. If your credit is less than perfect or you’re not sure what you can afford, many internet auto loan companies have helpful tools and information on their websites. You can find details about specific bad credit vehicle loans, along with tools that will help you create a budget. See, before you buy, exactly what you can afford so your credit doesn’t take a ding when the auto loan payments are too high.
Access to auto loan brokers. An auto loan broker is essentially a third party that works to connect drivers with potential lenders. They do not approve loan applications, only connect you with the best financial companies depending on your resources. They can save you a lot of time, searching for lenders yourself, and have the experience and connections that consumers often don’t have. Applying with the right lenders will increase your chances for approval.
Potentially lower interest rates. This may be the best benefit to internet auto loans. Even if you have bad credit, you still have a good chance of securing a vehicle loan with lower interest rates than you typically get from traditional lenders. This doesn’t mean that you a guaranteed a great rate, only that your chances are significantly improved. This is also why it is important to shop around and compare multiple quotes.

Disadvantages of Online Vehicle Loans

While getting your vehicle loan online does have its advantages, there are a few disadvantages that you should be aware of.

Can be difficult to get additional information. If the information you’re looking for isn’t on the site, contacting some potential online lending companies can be difficult. It also might not get any easier after you’ve signed the loan contract. If problems do arise, it can damage your credit and lead to other financial issues.
Provide personal information. When you apply for a vehicle loan online, you will be required to submit some personal information. With the increase in data breaches, even with a credit reporting agency, this should cause you some concern.
Could be a potential scam. If you do your research and don’t provide your financial information to every internet lending site you land on, you’re chances of being caught in a scam are relatively low. Going through an online auto loan broker can also help you avoid potential scams. You do need to be cautious and read the fine print, before submitting any information. Unfortunately, there are some online lending companies that will sell your data to other businesses.

Get a Vehicle with an Internet Auto Loan

Bad FICO scores and thin credit histories don’t necessarily mean that you can’t get a low interest car loan. It also doesn’t have to be harder to get approved, if you explore all your options. This includes looking online.

Do your homework and read all the details before providing any personal information. Wait until you have multiple offers, before filing out the loan forms. This way, not only are your protecting yourself from fraud and scammers but also ensuring that you get the best interest rate possible. When in doubt, don’t be afraid to go through a third-party auto loan broker.

Simply following these tips can help you get a car loan that you can afford.

Getting A Bad Credit Auto Loan After A Repossession

Your vehicle was just repossessed. Now you’re wondering if you’ll be able to get financing again. You’ll be glad to know that the answer is often “yes”.

While it is true that a vehicle repossession will hurt your credit score, it also doesn’t mean that you won’t be able to get approval for another car loan.

Even with a vehicle repossession, you might still be able to get a bad credit auto loan.

There are some steps you can take that will not only get you started towards improving your FICO score, but also put you back in the driver’s seat again.

9 Tips on Getting Financing After a Repossession

Before you sink into despair, bemoaning the loss of your vehicle and wondering how you’ll ever be able to get approval, there are a few things you can do. Thankfully, many financial institutions and bad credit auto dealers are willing to work with consumers that have a less than perfect FICO score and this should give you some relief that the situation is not hopeless.

Find out why the vehicle was repossessed.

Missed payments are the most common reasons for vehicle repossessions, but it’s not the only one. If you’ve made every payment on time, and your car was stilled towed away, it is important that you call the lender immediately. Some leasing agreements require that you carry a certain amount of insurance on the vehicle. Failure to do so can result in repossession.

Ask if you can get the car back.

Banks, credit unions and even Buy Here Pay Here lots do not want to lose money on vehicle loans. This is good news for you, since they are often willing to work with their lenders. If you’ve lost your vehicle due to lack of insurance, it is easier to get it back. Usually, all that’s necessary if for you to show proof of insurance and pay a fee.

However, if the repossession is the result of missed payments getting it back will be a little more difficult.

In some scenarios, you will be required to repay the auto loan in full. There will also be repossession charges. BHPH dealerships will often reinstate the terms of the original loan, but the repossession often stays on your credit report. The new payments will also be reflected in your credit history, which can negate some of the damage a repossession can have on your score.

Before you start trying to get your vehicle back, there are a few questions you should think about.

Will you be able to afford the fees, fines and monthly payments, along with the cost of insurance?
Is public transportation or a car pool a viable option?
Are you already thinking about declaring bankruptcy?

If you aren’t sure if you’ll be able to keep up with the payments and vehicle maintenance, it might be better to consider taking advantage of public transportation until you are financially stable. Declaring bankruptcy, before the automobile is auctioned off, can help you keep the car and work out a new payment plan. The downside to this is that a bankruptcy can stay on your credit report for several years.

Understand your rights.

A repo agent cannot damage your property when retrieving the vehicle. For example, if it is in a locked garage the structure cannot be damaged. You are also legally entitled to any personal property left in the vehicle. The lender cannot sell or keep it in an attempt to recoup some of the loan. This does not apply to any upgrades you may have installed on the vehicle. If you believe your rights have been violated in any way, your best course of action is to contact a consumer rights attorney.

Find out if you still owe after the vehicle is sold.

You might be surprised to learn that you can still owe on an auto loan, even after the vehicle has been sold at auction. This is especially true, if it was new when purchased. A deficient balance occurs when the amount the vehicle was auctioned off does not cover the remaining due on the loan in full. Failure to pay off your loan can send it to a collection agency, and this black mark will stay on your credit report for seven years.

Know your credit score.

When you’re ready to apply for financing for a vehicle, after a repossession, it is crucial that you know your credit score. Chances are it will be subprime, but you can still get approval for a bad credit car loan. Knowing your credit score ahead of time will prevent any unpleasant surprises. Just be prepared to pay higher interest rates on the loan.

Start repairing your credit immediately.

The first step is to request a copy of your credit history. You are entitled to one free credit report from each of the three credit bureaus annually. Carefully look over your history to determine what areas you can fix. Pay off any outstanding balances that are in collections, and try to refrain from accumulating any additional debt. If you do find an error, file a dispute with the bureau that issue that report.

Have a down payment.

Once there is a vehicle repossession on your credit report, you will probably be required to have a down payment for your next auto loan. This is usually standard for any vehicle loan approved for consumers with subpar credit. Not only will this dramatically improve your chances for approval, it might even help you get a loan with slightly lower interest rates.

Get all your paperwork together ahead of time.

When you have your documents ready, potential lenders tend to look more favorably on you. This is true, regardless of your credit score. Some of the paperwork banks and BHPH lots often require include,

Valid driver’s license
Proof of insurance
Recent pay stub
Utility bill (in your name)
Federal tax return

Don’t purchase a vehicle you can’t afford.

It is important to think realistically, especially after a vehicle repossession. You don’t want to lose another car due to an inability to make the monthly payments.

Remember to think small. All you really need is basic and reliable transportation.

Recovering From a Repossession is Possible

If you’re vehicle has been repossessed, it is possible to rebuild your credit and get approved for another car loan. You should expect to pay higher interest rates and have a down payment, but if you stay current with your new loan your credit will start to improve.

A vehicle repossession doesn’t have to mean that you’ll never be able to drive a new car, only that it will take some time and hard work before your credit is above subpar.

Understanding The 3 Credit Bureaus

If you want to have a strong credit score, it is important to know how it is generated.

This means understanding how credit reporting agencies work. There are several credit bureaus in the U.S., but most consumers concentrate on the main three: Experian, TransUnion and Equifax. Credit reporting agencies are public, for profit companies, and none are federally owned.

However, the Fair Credit Reporting Act enacted by congress does detail how all these bureaus should operate, which in turn helps to ensure that your credit score is fairly compiled and reported to various lenders.

How Credit Reporting Agencies Work

Credit bureaus are companies that collect information on consumers, and then sell the report to businesses. This can include,

financial institutions
credit card companies

Along with any other business where you might have an account or apply for financing, including Buy Here Pay Here Lots

The type of information gathered can vary slightly depending on the credit reporting agency but most will look for,

Own or rent
Type of job
Payment history
Amount of current debt
Repossession or bankruptcy

The agencies then use this information to create your credit report and score. Since your credit score will affect everything from your chances for approval to interest rates, you want to keep an eye on it.

You are entitled to three free credit reports every 12 months. One from each of the 3 major credit reporting bureaus. Financial experts recommend spacing these reports out, instead of requesting all 3 simultaneously. This will allow you to watch your credit score without having to pay for it. You can request your free credit report at AnnualCreditReport.

It is important to note that the credit bureaus only gather and compile information for verified lenders and other businesses.

They do not make any decisions, this is entirely up to the company that requested your credit report.

Credit Reporting Bureau Differences

All credit bureaus, including Experian, Equifax and TransUnion operate separately, and do not share information with each other. It is also up to your creditors which agency they report to. Some may only report your information to one, while others may send it to all three. This means that your financial history can vary from one credit bureau to another.

Often potential lenders only request one report so it is important that you pay attention to all three.

If you find an error on your credit report you can dispute it. Simply contact the credit bureau that issued the report. It will take some time, but it will be worth it when you see the black mark removed and your credit score rise.

While you do have to contact each credit reporting agency separately regarding errors and security freezes, you only have to alert one if you are placing a fraud alert. Legally, the various agencies must communicate this to each other.

You can contact the credit bureaus at the following,

Experian – www.experian.com
P.O. Box 2104
Allen, TX 75013-0949
1-888-EXPERIAN (397-3742)

Equifax – www.equifax.com
P.O. Box 740241
Atlanta, GA 30374-0241
1-800-685-1111

TransUnion – www.transunion.com
P.O. Box 1000
Chester, PA 19022
1-800-916-8800

What About FICO?

Consumers often mistakenly believe that FICO is both a credit score and reporting agency. This is not true.

The company does create a credit score, but it is based on data they obtained from the reporting agencies. They do not collect any financial information themselves.

FICO scores do range from exceptional to poor, just like credit scores, and are used by lenders to determine their risk in approving your loan.

3 Facts You Need to Know

There are three facts every consumer should know about credit reporting agencies. Knowing what they can and can’t do will make it less frustrating when you are trying to navigate through the system.

Each credit bureau creates its own report and score.

You have three different credit reports and scores. If you want a complete picture of your financial history, you need to know what is contained in each one.

Credit agencies are not legally required to give your score for free.

While it is true that you are entitled to one free credit report annually from each of the three major reporting agencies, they do not have to provide you with your credit score. Most will provide you with it once a year if requested, but they are not legally required to do so. There are some online sites that you can sign-up with that will give your credit score for free, but it is important to ensure that the company is reputable. One often recommended and advertised is Credit Karma.

Know which credit bureau to contact when there’s an issue.

This is especially important, especially as the risk for identity theft keeps increasing.

If you are disputing an error on your credit report, you need to contact the agency that created it.
When you suspect fraud, contact any reporting agency. Legally, they must notify the others as soon as a fraud alert is placed.
Credit freezes requires you to contact each of the three credit reporting agencies separately. It will take a little time, but it will be worth it to prevent any drops in your credit score.

Simply applying these tips can help you protect your credit.

This is important whether you are trying to rebuild it, have a good FICO score or just starting to create a credit history.

Tips To Improve Declining Credit Health

Even if you had an excellent credit score a few years ago, it might not be in the same range anymore.

It is not uncommon for credit scores to fluctuate, especially as your finances change. If your score only moves a few points up or down, there is rarely cause for alarm. However, if you suddenly find that your good credit score is now only in the “fair” range it is time to take some positive actions.

5 Easy Tips to Improve Credit Health

Your credit health can decline for several reasons that can include delinquent payments, over or under use of credit accounts or even if you’ve recently applied for an auto loan.

Multiple inquiries generated by bad credit auto loans are one of the most common reasons for a sudden drop in a FICO score.

The good news is that this will only affect your credit score for a relatively brief period of time, and usually does not factor into a loan approval decision.

If your credit health is declining for other reasons, you don’t have to wait years for your score to improve. There are some quick fixes you can apply to legally repair your credit health.

Apply for a higher credit limit

It only takes a few minutes to apply for a higher line of credit, and this simple step could help raise your FICO score.

Increasing the limits on a charge account can lower credit utilization, which will have a positive effect on your credit scores.

Increasing your credit limit can also have drawbacks, and it is not always the best option for everyone. If you have a subpar credit score or have missed more than one payment in the last three years, your chances of approval are minimal. The inquiry into your credit history by the potential lender could cause your score to drop a few more points. If your bad credit history is due to overspending, increasing the amount you are allowed to charge might not be the best financial decision.

Write an adjustment letter

One overdue payment can send a healthy credit score into decline. It can also take three to seven years to remove it from all your credit reports. Regardless of whether you simply forgot to send it in or experienced a temporary financial setback, your credit history now has a black mark.

This single black mark can affect everything from your ability to get a low interest rate on a car to your chances of being approved for an increased line of credit.

If you have a history of making your payments on time, there is a chance the black mark can legally be removed. You can take the time to write a “goodwill” adjustment letter and request to have the late payment removed from your history by the lender. The letter should include the following details.

Brief explanation of why the payment was late.
Provide proof of your customer loyalty. (years account has been opened).
Describe positive history, before and after the delinquent payment.

There is always a chance that the lender won’t remove the late payment from your credit report, and this is their legal right. If they do deny your request, your only option is to wait until it falls off in a few years.

Pay down credit debt faster

Your credit utilization rate comprises 30 percent of your FICO score, and keeping your monthly debt low can help boost declining credit health.

Paying down your credit card balances every month can have the added benefit of lowering the amount of interest you are paying.

Credit Karma and the other reporting bureaus do recommend keeping your utilization rate under thirty percent. This shows that you know how to use and effectively manage credit. This is also one of the factors that often determines loan approval, and accompanying interest rates. For optimal improvements and to keep your FICO score healthy, financial experts state that your credit usage versus debt ratio should be around 12 percent.

If you have multiple credit cards it is always best to work on paying off the ones with the highest interest rates. It is important to remember to not rely on your other credit cards when paying off balances with higher interest. If you overuse the cards, your credit utilization rate will increase again. This can result in an unhealthy decrease in your credit score.

Transfer balances to low interest credit cards

There are two ways that you can transfer balances to credit cards with lower interest rates. The first method is the easiest, pay off the credit cards with the highest interest rates with ones that are lower. This can make it easier for you to pay more on the balances since less will be going towards interest. The downside to this method is that initially you’ll credit utilization versus debt ratio will increase, and this will affect the health of your FICO score.

If your existing charge cards all come with higher interest rates, you can apply for new lines of credit.

Many lenders offer credit cards with introductory low or no interest rates, typically for one or two years. If your current credit history is healthy enough, applying for a low or zero interest card might be the best option.

It is important to remember that the low or no interest rate only lasts for a specific length of time, before significantly increasing. Financial experts recommend only transferring old balances to new credit cards if you are planning on paying it off in a relatively short amount of time.

Dispute any errors found on credit report

One of the most effective ways to improve your declining credit health, is to dispute any errors on your credit reports.

A single mistake on one can be the difference between a “fair” and “good” credit score.

You are entitled to one free copy of your credit report every 12 months from each of the three agencies. (Equifax, Experian and TransUnion) Each report can vary slightly, which is why it is important to keep up with all 3. Requesting a free copy of your report also won’t impact your credit score.

If any errors are found you will want to report it immediately to the credit reporting agency. Once the process has been started and if it is found to be an error, it will typically be removed from your report in 90 days or less. If the black mark is not found to be an error, you will have to wait until it falls off your report.

There are some credit repair agencies that claim to be able to remove these errors, but it is only a scam. It is illegal to taper with a credit report in any way, unless the change is made by one of the recognized credit reporting bureaus.

Hope for Declining Credit Health

Credit health can decline for multiple reasons, but this doesn’t mean that it has to stay that way.

With a little time and careful financial planning, you can legally boost your credit’s health.

If you have any additional questions or are thinking about applying for another line of credit it is always recommended that you speak with an experienced financial advisor.