Bad Credit Car Buyers Benefit

Buying a car and arranging for an auto loan go hand in hand. Whether it is your first car or your fifth car, you will require an auto loan at some point. While arranging for an auto loan, your credit score becomes the yardstick to measure your credit worthiness. A bad credit rating means auto loan rejection. However, there is a way out. Three major credit rating companies, namely, Equifax, Experian and TransUnion have decided to eliminate and exclude certain customer information from the credit reports. And, it will have a positive impact on your credit score.

The New Regime: What’s in it for Bad Credit Car Buyers?

1) Upsurge in Credit Scores

The new change relates to all civil debts and many tax liens. Civil debts and tax liens are enlisted under �Public Records Section’ of the credit report as they are unpaid tax bills. Unless there is elaboration of information, the credit bureaus will remove the debts and liens from one’s credit score. As a result, those who suffer from a bad credit score will see a hike in their score by approximately 20 points.

2) Higher Probability of Approval

The elimination of the civil debts and tax liens will increase your credit score. As a result, the chances of obtaining an auto loan will improve for bad credit car buyers. The new credit policy is implemented from 1st of July, 2017. Make sure that you have revised your credit report in order to get a better shot at getting approval for an auto loan.

3) Favorable Interest Rates

Lenders charge bad credit car buyers with high interest rates due to a damaged credit history. However, once your credit score increases, the interest rates will decrease. Therefore, the new credit regime will help bad credit car buyers to obtain an auto loan with favorable interest rates.

4) Improved Car Choices

The car choices for a credit challenged individual are limited. Lenders are comfortable to lend out money for a used car. However, the increase in the credit score due to the new regime can bring multiple car choices for a buyer. A bad credit car buyer with an increased credit score can avail an auto loan for a new car as well as a used car. Thus, a bad credit car buyer will have multiple car options to choose from.

Any change in any system causes panic. As a result, lenders will become cautious in approving future auto loans. Additionally, the cut off rates for credit approval may take a hike. However, the 1st July credit change will largely benefit bad credit car buyers. The increase in your credit score will be a means to improve your credit-worthiness in the eyes of your lender. Considering the new changes, the imperative step would be to know your current credit score and grab every opportunity to improve it. An improved credit score will be an easy way to avail an auto loan for your next dream car.

A Boon For People Who Need Instant Money

Loans have gradually become an important aspect of our lives. A few decades ago, an individual who would want to borrow a personal loan would have to go through a complicated procedure to avail it. However, with a host of financial companies which came into existence about a decade ago, the concept of borrowing a personal loan has been revolutionised. The financial institutions have explored the possibilities and have come up with much more flexible loans to help cater the needs of people.

What are Personal Loans?

Personal loans are an unsecured form of loans which involve quick sanctioning and easy payout. However, the most intriguing part about a personal loan is that a collateral is not required. Personal loans often include borrowing of an amount to fulfil the needs pertaining to medical, education, gadgets, travel, vehicles, etc. However, you are free to utilise a personal loan the way you want.

What Must you Consider While Borrowing a Personal Loan?

When talking about a personal loan, it is essential that you take three factors into consideration – personal loan amount, tenor and the rate of interest. These three aspects go hand in hand. The amount that you borrow, the tenor that you choose and the rate of interest that you are provided with determines the EMI that you will pay

A personal loan is a great way to overcome shortcomings. It is a boon if you are falling short of the required amount to fulfil your need. There are several ways in which you can utilise a personal loan to its fullest. Here are a few requirements in which you can optimally use personal loans: Financing home renovation: There are many people who want to remodel their home. However, la

Financing Home Renovation: There are many people who want to remodel their home. However, lack of funds is the major obstacle that comes their way. There might be a special occasion where renovating a house is pretty much in culture, under such a scenario you can opt for a personal loan for house renovation. Apart from that even if you wish to add details, put a new roof, or build an extra room; a personal loan will come in handy.

Payment for a wedding ceremony: Almost every individual dreams of a perfect wedding. Especially women, who plan and think about it a lot. Not just the kids but even their parents are keen on the occasion. Most of the parents start saving from the early days. However, such is the cost of marriage in today’s time that savings cannot fulfil the requirements. Thus, borrowing a personal loan does a lot of good under this scenario.

Credit score: A personal loan helps in improving a credit score tremendously. There are various bodies, most prominently, CIBIL which calculates a credit score. A good credit score will help you avail tremendous amount of benefits whereas a bad credit score can hurt your chances of availing any form of a loan. In a personal loan, when you repay your loan on time, your financial credibility with the lender improves significantly.

Paying debts endured on cards: A personal loan is usually borrowed to pay off debts on credit and debit cards. A personal loan might require you to pay a high rate of interest as the nature of the loan is unsecured. However, it is much less than the one you are being charged on your credit/debit cards. Borrowing of a personal loan to clear debts is a very good idea.

These are few options regarding how you can make the optimal use of a personal loan. Apart from these options, you can even use it for investment purpose to make a considerable profit.

Buying A Car With Your Spouse

Buying a Car with your Better Half: Deal with Bitter Questions

Buying a car involves making several decisions. You have to consider the type of car that you want to buy. But, before saying �I do’ to buying a car with your spouse, you will have to ask each other a few hard questions.

>>What size of car will suit your needs? Also, decide on who will be driving the car most of the time. It will help you to narrow down your options.

>>If you are going to expand your family in the near future, you must consider a kid-friendly car such as a minivan or an SUV.

>>Consider the budget of the car. Will both of you contribute towards the monthly car payments? Are your incomes adequate to manage the car payments along with other debt obligations?

>>Will you be able to manage a down payment? Usually, young couples have hard time getting together money after an extravagant wedding. So, consider your financial situation before visiting a dealership lot.

>>The D-word is often off-the-table for young married couples. However you must remember that in a situation of divorce, a co-buyer will be responsible for the car even if he/she doesn’t use it. Also, division of assets can be a problem when you own a car with your spouse.

A Co-Buyer or a Co-Signer: The Big Auto Loan Question

Discussing the size of the car and the budget are simpler things compared to the big question of auto loan. It is not necessary for your spouse to have a good credit score. A few late payments in the past may have rendered a stain on your credit report as well. You need to discuss your financial situation and credit score before buying a car.

If you are a co-buyer, both of you will be the owners of the car. When you are a co-owner of a property, you and your spouse are responsible for the ownership of the car as well as the auto loan. The lender will review your credit score and your partner’s score to judge your joint auto loan application.

When you become a co-signer for the auto loan, you will only be responsible for the auto loan. You will have no ownership rights. It means the lender will not consider your personal income for approving the loan. But, remember that as a co-signer, the lender will require you to have a good financial standing as you will have to make payments if your spouse is unable to make them.

How to make a Decision?

Who has a Stable Financial Situation?

If your partner earns a good income and has an impeccable credit score, he/she will be able to increase your credit worthiness. The lender will consider his/her income to ascertain the loan amount. It will also help you in lowering the interest rate. With a stellar credit application, the lender may be tempted to provide you with a high LTV. So, when your spouse has a stable financial situation, you can ask him/her to become a co-buyer.

When both of you have average credit scores, sit with a loan officer to make a decision regarding the primary borrower. After considering your incomes, debts and credit scores, you will be able to make a secure decision.

When is going solo the Best Option?

In a real-life scenario, marriage doesn’t always mean being equal. One of you may have significant credit card debt. It is possible that you may still be paying your student loan. There is a possibility that your partner is just starting his/her career and doesn’t possess a good credit score. In such a situation, you have to think twice before making a decision.

If you think that your spouse is not financially responsible, it is best to buy the car on your own. Also, many spouses feel more confident when they have financial autonomy. So, think hard and do not be afraid to ask uncomfortable financial questions. Buying a car is a big responsibility. And, if you are not sure about taking the plunge, it is best that you become the sole owner of the car.

The Numbers Say Go For A Used Car

Are you thinking of buying a car? Is your decision tilting towards buying a new car? Before you head out to make a purchase, do give a thought to the other option. Buying a pre-owned car may not make for an appealing choice; but makes sense financially.

Stay away from the New; Go for the Used Cars

Who doesn’t love the new car smell? You may have set your eyes on a new car but here’s why you should head to the used car section at the dealership.

Buying a New Car becomes Expensive every Year

Even though there are several affordable car models, buying a new car and keeping it is becoming expensive year over year. Obtaining an auto loan for buying a new car is resulting in higher monthly payments than before. According to Experian’s Q1 2017 data, a sub-prime borrower spends $519 on a new car loan. And, if he seeks a used car loan, it comes down to $385. So, it makes sense to buy a used car.

Loan Terms are getting Longer

Lenders charge high interest rates from sub-prime borrowers. But, they try to cover the high rates with longer loan terms. If you wish to buy a new car with super-prime credit, the lenders will offer a loan term of 62 months. And the term is 72 months for deep subprime car borrowers. For a used car borrower with deep-subprime, the term is 65 months. Remember that used cars are less costly which means you will make smaller monthly payments over the years. But, when you buy a new car with a long term, you end up paying more in the form of interest.

The Risk of Negative Equity

Constant rise in monthly payments and long loan terms spell a recipe for disaster. A new car loses value as soon as you leave the dealership lot. And, the lenders direct initial payments towards the interest amount. It means the amount you owe to the lender becomes higher than the value of your car. Being in an upside down loan situation is very risky proposition. If the car is totaled for some reason, you will have to pay the difference between the insurance money and the pending loan amount. So, consider choosing a used car because of its low value and low depreciation rate.

Let your Brain take the Lead!

Buying a car is an emotional experience. You may adore a brand. You may have set your heart on a certain car model. But, remember that a car is the second biggest purchase of your life. If you listen to your heart and disregard cognitive thinking, you will face bad credit score and unpaid debts in the future. So, consider your financial condition, credit score, and cash availability before buying a new car. If you think that higher monthly payments will put an unnecessary burden on your financial condition, go for a used car. Listen to your brain and make a practical decision.

Buying A Car With Low Down Payment

When you select a car at the dealership lot, you will face the inevitable question of the down payment. Putting money down and buying a car is an age-old tradition. It gives the lender a chance to witness your financial condition and allows you to lower the loan burden. In an ideal scenario, it is best to make as much down payment as possible. But, we do not live an ideal world. So, what should you do when you do not have enough money for your dream car?

Can you buy a Car with Low Down Payment?

Buying a car feels like being on a trial. The lender considers your credit score, payment history, monthly income and several others aspects of your life before approving the loan. And, when you can only afford low down payment, it can cause trouble. But, do not think that having no access to cash means putting an end to your car dream. There’s one thing that can change the game. Have you heard about LTV?

A loan-to-value ratio is the percentage of the loan amount in relation to the total cost of car. The higher the LTV, the lower will be the down payment. It means that if the lender approves you for a higher LTV, the need for making a large down payment becomes redundant. So, how can you get the lender approve you for a large loan amount?

C = Credit Score must look Good

It is the most common suggestion for obtaining any type of credit. It seems easy for the one who tells it, but difficult for the one who has to follow it. But, do not worry because you have help from the July 1, 2017 credit rule. If you have incomplete tax liens and inaccurate civil debts listed on your credit report, the credit bureaus will remove it. It can lead to a rise in your credit score. Even you can contribute to the rise by paying off a few debts.

C= Cost of Car should be Low

A low down payment becomes easy when the cost of car is low. If you do not have sufficient cash to make a down payment of at least ten percent of the cost, you can choose an inexpensive car. It will convert the inadequate down payment into one that’s just right for the lender. Settle for a used car. Avoid buying expensive add-ons from the dealer to keep the cost in check. Also, you can use your old car for trade-in and eliminate the need for down payment.

C = Cosigner can be your Savior

When in doubt, seek help! You can use a cosigner to convince the lender of regular payments. Once he sees you as a less risky investment, he may approve you for a larger loan amount. Remember to choose a cosigner with a good credit score so that the lender can rest his doubts about receiving back his money. Choose someone who will be capable of making monthly payments, if you fail to do so. If getting a cosigner is becoming a bit of a problem, you can ask any of your parents or your partner to become a co-applicant on the loan. Their credit score will strengthen your loan application and enable the lender to see you as a worthy borrower.

Buying a car with low down payment is not possible for everyone. But, if you work hard to increase LTV, you will have no trouble in buying a car. So, before you head down to the dealership lot, work out the details and make sure that you get approval for a higher loan amount.

Home Loans Preferable Over Cash Payments

The choice of deciding the home of your dreams must not be the one you make in haste. A lot of research and thinking is put into searching for a home. Many times, a decision was taken in haste proves to be dreadful in the long run. You don’t want to fall prey to the same. People nowadays fall into a think tank when it comes to the payment procedure of a home they want to purchase. Should it be a cash payment? Should it be a Home Loan? These are the two important questions that linger in the minds of the buyer.

There are several aspects that need to be considered in Cash Payment v/s Home Loan. They both have their pros and cons and thus analysis of the same will help us get a better understanding of the same. We shall study the advantage and disadvantage of each one of them to see which option is the best one – Using your savings for your home purchase or borrowing a Home Loan from the bank?

Advantages of Cash Payment:

When you are making a cash payment nobody will ask you about your credit history. You simply aren’t answerable to anyone as you decide to use your lifelong savings to buy the home. Savings are risk-free. Savings are the amounts made up over the course of years and decades. Savings are risk-free. There is no leveraging in cash payment. You’re the sole owner and there are no leverages. With cash payment, you also have the chance to get a discounted amount as the amount is being paid in cash. Finally, you aren’t indebted to anyone. Thus you are stress-free when it comes to the ownership of the home and its dues. Those are rest-assured.

Advantages of Home Loan:

There’s a sense of accomplishment in Home Loans. It’s strange but it’s true. Banks help you achieve your dreams through Home Loans. You can not only buy but even furnish the home of your dreams with Home Loans. Moreover one can avail tax benefit with the help of a Home Loan. A bank loan will help you increase your liquidity. Thus these are basic advantages of Cash Payment v/s Home Loan. Let’s discuss the disadvantages now:

Disadvantages of Cash Payment:

There is low liquidity. A compromise is a must when it comes to cash payments. For instance, if you want to buy a house along with a car and the assets have been liquidated you will be required to compromise now. You aren’t leveraged in terms of cash payments. Under cash payments, real estate is not easily convertible. These are the disadvantages of cash payment. Moreover paying with cash rules out the other form of investment.

Disadvantages of Home Loans:

The amount of rate of interest charged is stressful. The tenure for which you are required to pay the loan is long. You are more likely to fail in case your ability to repay the loan is hindering. Mortgage approval is not realistic for many of us as we do not possess ample amount of property or assets.

Thus these were the advantages as well the disadvantages of Cash Payment v/s Home Loan. You can decide which one is better based on Pros and Cons Cash Payment v/s Home Loan. We can say that there are noticeable benefits in both of them. And the number of drawbacks are less as compared to the advantages. Thus housing sector is ultimately the beneficiary in the Cash Payment v/s Home Loan discussion.

Required Documents For Home Loan

Own home is only a single place where we feel comfortable, safe and independent. Everyone has a hope their own house but due to the fund arrangement, this dream seems impossible.
But nowadays getting a home loan is quite easy and convenient. You just need to follow few necessary steps and submitting fair documents to your lender. With proper documentation, you can get your home loan in few days.

Before going to approach a home loan lender, it’s very important to gather all required documents for Home loan application and its successful approval. Bank and NBFCs ask for the following documents before sanctioning the Home loan. Let’s have a look:

Identity Proof (Anyone from the following)

�Driving license
�Voter ID
�Passport
�PAN card
�Aadhaar Card
�NREGA Card

Age Proof (Anyone from the Following)

�Driving License
�Passport
�PAN card
�Birth Certificate
�10th standard Mark sheet

Address Proof (Anyone from the following)

�Driving license
�Voter ID
�Passport
�Ration card
�Utility bill � Telephone, Electricity, Water, Gas, Postpaid Mobile (minimum 2 months old)
�Letter from any recognized Government authority verifying the residence address of the customer
�Letter from your Employer (in case no other proof is available)
�Bank Statements / Passbook / Other Government documents such as post office Passbook
�Property or Municipal tax receipt
�Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address
�Documents issued by Government departments of foreign jurisdictions and letter issued by Foreign Embassy or Mission in India

Income proof

Income proof and property proof vary for salaried individuals and self-employed individuals.

Self Employed/Businessmen

�A brief introduction to your business/profession
�Balance sheet, profit and loss account statement of income
�Proof of income tax returns for the last 3 years certified by a CA
�Receipts of advance tax payments made (if any)
�A photocopy of Registration Certificate of establishment under Shops and Establishments Act/Factories Act
�Certificate of Practice for professionals such as doctors
�Proof of investments (FD Certificates, Shares, any other fixed asset)

Safe And Reliable Personal Vehicle

If you are like tens of thousands of other potential car buyers across the country, you are probably thinking of used car finance. You are surrounded by tons and tons of used cars everywhere yet when it comes to driving a personal vehicle you are left with an old clunker. Getting a good, safe and reliable personal vehicle may not be so difficult after all, if online service providers have anything to do with it. Buying a used car usually turns out to be a boon in disguise for many. They get to ride a plush, comfy, expensive make and model simply because of its highly depreciated value.

Potential car buyers are getting wider options easier than ever before due to the technological development of the web, easy access to the internet and online assessment tools. Online service providers like CarLoanApproval give them an opportunity to connect with plenty of specialized and experienced lender and dealers willing to work with them. These car buyers can look forward to best used car loan with a hassle free car buying experience having any type of credit status. Many of the online auto finance companies, lenders, dealers or service providers have a simplified application to approval process. The way to enter this process is through simple and quick 1-minute online application form. Once you submit this form, all those lender and dealers specified by requirements will send you instant free online quotes with a request to contact them.

Buying a car without auto finance is possible only to the select few. Even the wealthy prefer to buy their expensive brands with car financing instead of paying out cash. Is it a wonder then that you and me are looking for used auto loans so we can drive a new car instead of an old clunker. Online auto loan calculator tools allow potential car buyers to know what safe amounts they can invest for car price, interest rates, auto loan amount, auto loan term in months and an affordable monthly car payment. Car loans could be ideally affordable if for only 36 months. But auto loan terms of 72-84 months are also commonly found nowadays. If you are considering keeping your monthly car payments to bare minimum it could help.

However, there could be a relation between your auto loan term and interest rates longer the loans term the higher your interest rate might be. In addition to this, a down payment amount can play an important role too. If you can put down anywhere between 5-20 per cent of car price, it could reduce your interest rates and monthly car payments significantly. Remember, the more you invest the less you need to spend on insurance and interest. 2nd chance auto finance is of special help to potential car buyers with less than perfect credit. Car loans are a great way to build credit. If by some misfortune your credit scores have taken a downturn, a second chance auto loan gives you opportunity to improve scores. Just stick to making regular and on time monthly car payments and everything will be as fine as before.

The Income Factor While Buying A Car

The paycheck of your income is spent over a number of things ranging from household items to your monthly payments and dues. When you purchase a car, the gross monthly income becomes a key factor in order to ascertain your creditworthiness. Income provides a clear gateway to the lender to evaluate your plan of repaying the auto loan. Asking the right questions can help you gain clarity on how income can play a huge role in buying a car. A question we frequently struggle with is: Is income influential or irrelevant to the decision of purchasing a car?

Buying a Car: Is your Income important?

So, which income-related questions should you ask yourself as you ascertain the purchase of your car?

Q1) Can I leverage my strong debt-to-income ratio in order to obtain a new car?

The common misconception surrounding cars is that the difference between the incomes of two people determines your auto loan approval. In other words, it is to say that a person with a higher income would be more likely to purchase a new car or get faster auto loan approval. However, a lender ascertains your creditworthiness primarily through your debt-to-income ratio and then through the value of your income. A debt-to-income ratio compares your monthly debts against your income before taxes. Lenders consider a debt-to-income ratio of 36% or lower favorable. Therefore, a strong debt-to-income ratio will put you in a good position to purchase a new car with a long life and low maintenance costs.

Q2) Will I be able to manage the interest rates?

The most effective way to plan the purchase of your car is by assessing the total amount of the auto loan including the interest rate. A winning move to earn you brownie points while negotiating a lower interest rate is to pay a large down payment. The more money you put down, the larger will be your savings in terms of interest rates over the loan term. As you pay a portion of your income in the form of a down payment, it improves your creditworthiness and provides less risk to the lender.

Q3) Can I improve my approval chances with a high credit score?

Along with a good income, a good credit score equally increases your chances to get approval for the auto loan. A good credit score positively displays how well you have managed your finances and credit. A FICO score of 700 or above is ideal for quick approval. You could start by improving your credit score before you set out to purchase your car. A few methods to build your credit score include paying off any pending debts, keeping a low balance on credit cards and becoming a cosigner. As a good credit score can overshadow the situation of a low income, it becomes imperative to get your credit score to an ideal level before purchasing your next car.

Purchasing a car is no longer a luxury but an absolute necessity. So, naturally, while purchasing a car we want to make sure we get the best deal. In order to purchase your dream car, you need to ask yourself the right income-related questions and evaluate your financial standing. Moreover, with the right preparation about debt-to-income ratio and credit score, you can get one step closer to the car of your dreams.

The Mistakes That Come With A Longer Auto Loan Term

Most car buying stories start in a similar fashion. You have your eyes fixated on the new car but the high monthly payments do not match your current budget. The dealer suggests that you opt for a longer term period that reduces your monthly payments. You agree, thereby, falling into the vicious cycle of negative car equity. The common mistake while purchasing a car is ignoring the auto loan term. Additionally, it becomes all the more important to ascertain your loan term when you suffer from bad credit. Avoid making the following mistakes relating to loan term to ensure that your car buying decision is financially sound.

4 Mistakes that you can make with a Long Auto Loan Term

1) Getting into the rut of negative car equity

The longer the term on your auto loan, the more the build-up of negative equity. A shorter term period lessens your overall auto loan amount. Negative car equity is built when you owe the lender more than the current worth of your car. A longer time frame on your auto loan means additional interest amount whereas a short term period builds positive equity and helps you to obtain a higher amount during a trade-in or resale.

2) Paying high interest rates

The interest charged on an auto loan is the additional money you pay, over and above the price of the car. Ideally, it makes sense to opt for a shorter loan term with low interest rates. When you increase the length of the loan term, you are increasing the dollars you spend on the car. Make sure you consider the whole picture and take into account the overall loan amount along with the loan term when you purchase your next car.

3) Receiving a low resale value

A low resale value is reason enough to steer clear of the extra-long auto loans. The time you take to repay the auto loan amount significantly impacts the resale value of the car. The car value starts depreciating the minute you drive it off the dealership lot. In regards to the length of the loan term, a five-year old car is more favorable than a seven-year old car. Therefore, the shorter the loan term, the more resale value you will obtain when you sell the car.

4) Spending on high maintenance costs

Car fatigue is another reason to switch to a shorter loan term. Once you have hit your five-year mark on a car, a trade-in might be right around the corner. The average age of a car during a trade-in is five years. However, if you opt for a 72-month auto loan, the option of trade-in diminishes and your maintenance cost increases. Thus, a shorter term will not only get you a favorable resale value, but will also reduce your car maintenance costs during a trade-in.

The Ideal Solution

Every problem has a solution. A large down payment, opting for a bad credit auto loan and showing strong evidence of your sources of income will assist you when you face a difficult situation. Additionally, keep in mind the impact of negative car equity and high interest rates. Stay determined to repay your auto loan amount within a shorter time and make sure to improve your credit score for a smooth car purchase in the future.