Cosigning Conundrums & Solutions

The common question running through a first time car buyer’s mind: �Is it possible for an eighteen year old to purchase a car when the cosigning parent has a bad credit history?� Bad credit score, zero credit history and inadequate information about auto loans can compel you to think that having a cosigner is the only way out. A cosigner can drastically improve your chances of getting approval for an auto loan. However, purchasing a car is still possible in times when you cannot find a cosigner. Moreover, breaking some common conundrums about cosigning can provide a great deal of clarity in order to obtain the auto loan for your dream car.

Buying a Car without a Cosigner: Unravel the Mysteries

Buying a car without having a cosigner can be a tricky task. Many car buyers are ignorant about what happens when one doesn’t have a cosigner. Do not make an ill-informed buying decision. Learn which cosigning conundrums keep us from buying a car and what are the solutions to break them?

1) Conundrum: Without a cosigner, I am bound to pay high interest rates.

Solution: A huge down payment is the ultimate evidence of your credit worthiness. A lump-sum amount at the beginning of the auto loan term will put you in a good position to bargain for good interest rates. Additionally, putting money down reduces the amount of your monthly payments. Remember that more the down payment, the lower will be your future auto loan payments. Once you put a good amount of down payment, the approval for the auto loan will not require a cosigner.

2) Conundrum: I need an exceptional income record for obtaining auto loan without cosigner.

Solution: If you have suffered from bad credit in the past, your creditworthiness is assessed by your current income. The amount of monthly income along with the stability of the employment plays a huge role in determining your reliability. A minimum monthly income of $1,500 is considered ideal for getting an approval without a cosigner. However, the minimum income requirements vary from lender to lender. Therefore, make sure you keep regular track of your income pay stubs and use it as leverage to obtain an auto loan without a cosigner.

3) Conundrum: If I don’t have a cosigner, I cannot buy a new car.

Solution: When you do not have a cosigner, it may seem that new cars are out of reach. But, it is far from truth. A used car with a low price tag looks less risky to a lender. However, your options do not end there. With a strong FICO score and regular efforts to build a strong credit, you can purchase a new car even without a cosigner. In order to improve your credit score, build a good debt to income ratio, keep your credit utilization low and make timely payments. Once you have a good credit score, you can purchase a new, more reliable and updated car.

It is common to think about all the support you can get while applying for an auto loan, a cosigner being one of them. However, it is possible to obtain an auto loan even without a cosigner. With the rightly calculated moves, your dream of obtaining a new car will not require the pillar of support in the form of a cosigner.

Second Chance Auto Loans

Everyone with a bad credit score knows well that Murphy’s Law acts a major obstacle while buying a car. Everything that can go wrong will go wrong. And, the main reason behind it is the terrible credit score. Lenders will reject your loan application. And, if anyone offers you an auto loan, you will have to suffer with high interest rates. So, what should a bad credit car buyer do? Refrain from buying a car for his entire life? Are loan sharks the only resort for making a car purchase with bad credit?

Don’t despair; here’s something to help you out!

With the increase in online auto financing company, the competition among lenders has increased. It has led to easy availability of second chance auto loans. The loan program is ideal for car buyers with credit issues. So, if you are in bankruptcy, or you have a subprime credit score, do not worry. There are a few lenders out there, who can help you make a fast car purchase.

Second Chance Auto Loans: How to get one?

The number of lenders offering second chance auto loans has increased. But, if the lender doesn’t find you financially stable, your auto loan may get rejected. So, learn two important tips for getting the loan. It will help you to buy the car and improve your credit score as well. Get ready to seal the deal.

1. Focus on your Income: Tell the Truth

Most car buyers do not report their total income to the IRS. It may help you to save money on your tax. But, remember that if you do not report your income, it will not reflect in your yearly income statements. Lenders consider your income listed on W-2 form or they go for the tax returns to check it. So, even if your bank records show the additional income, lenders will not consider it for calculating your debt to income ratio. It can prove to be negative for you as low income and bad credit are the two things that lenders try to stay away from.

2. Curb your Expenses: Buy an Affordable Car

When you credit score is below prime, you need to be ready for high interest rates. Lenders will consider your loan application risky and demand high interest rates for it. But, high interest rates do not mean that you have to keep making huge monthly payments for the loan term. Choose an affordable car, preferably a used car, to lower the total cost. You can even think of buying a demo car or a discontinued car model to reduce the price. Remember that second chance auto loans can be your ticket to better interest rates if you make regular monthly payments. So, stay in budget and compromise on an affordable car.

When you are applying for a second chance auto loan, you need to focus on two things: 1) Your income and 2) Your expenses i.e. your car budget. By maximizing your income and presenting a clear picture of your financials, the lender will be able to understand your situation in a better way. Also, it will give you a perspective on choosing a car within your budget.

Take time in understanding your financial situation and make a practical choice. Remember second chance auto loans can buy you a car as well as pull you out of the abyss of bad credit score. So, next time, you seek an auto financing company for buying a car, work out the details to get the best deal.

Learn The Most Important Thing While Buying A Car

For many of us, buying a car is a way of fulfilling a life-long dream. Even though a car purchase is a common phenomenon, many make mistakes and end up paying with their credit scores. When dealing with the four-wheeled beauty, you must be diligent and strive to get the best deal. No matter what you do, there is one important thing that you cannot miss while buying a car.

Research: The Key to buying a Car with Bad Credit

If you have a bad credit history or any other problem that makes your credit application weak, the game changes for you. In an ideal world, the lender and the dealer should treat you as they treat a good credit borrower. You should be able to buy a car of your choice and obtain affordable interest rates. However, the real world is cruel and you will face discrimination on the basis of your credit score. If your credit score is below 580, lenders will consider you as a risky credit seeker and ask you to bring a down payment and a cosigner. So, how to come out as a winner and buy your favorite car with bad credit?

If you are unable to buy a car quickly, you need to research. Knowledge is power. And, when you do not have an upper hand while buying a car, you need all the knowledge in the world to secure the best deal.

Do you really want a Car?

When you are buying a car, it is important to take a hard look at your financial situation. Can you afford to buy a car? Will monthly payments put a burden on you? If you need a car to commute, it is essential that you cut down on your expenses to ensure regular monthly payments.

Spend time in selecting a Car

Thinking of buying a car and selecting a car are two different things. Do not settle for a used car because you cannot afford a new one. Search for discontinued car models in your area so that you can get your hands on a new car at a reduced rate.

Visit more than One Dealer

Never deal with the first dealer you visit. Even if you are in a hurry to buy a car, make sure that you visit at least three dealerships. Learn the different car options available at the different lots. Talk to the salesmen and negotiate an affordable price for the car. Also, search online and learn about auto auctions to get the best deal on a used car.

It’s Time for Auto Loan Research

If you do not make a right auto loan decision, it will pinch you every time you make the payments. So, find an auto financing company who works with bad credit car buyers. Ask questions about their loan process. If you are a member of a credit union, you can seek financing from them.

Do not worry about getting negative hits on your credit score. Fair Isaac Corporation understands that one cannot obtain an auto loan without rate shopping. If you find an auto loan within 30 days, the different inquiries will not have a negative impact on your credit score. So, do not worry about working with different lenders to find the best deal.

The Bottom Line

When you credit score is not excellent, you need to spend more time in research so that you do not end up paying more. Do not make a hasty car buying decision. Spend ample time in researching a car model as well as the lender. Remember that the time you spend now will leave you stress-free forever.

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
�PAN card
�Aadhaar Card

Age Proof (Anyone from the Following)

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

Address Proof (Anyone from the following)

�Driving license
�Voter ID
�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)