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Ten Questions to Ask When Leasing a Car

02/20/2023 12:51
Leasing a car is a great option for many people, but when it comes to actually signing a lease, it can be a bit confusing. With so many terms and variables, it’s easy to get overwhelmed and forget to ask the right questions. But it’s important to make sure that you fully understand the lease before you sign anything. Here are ten questions you need to ask when leasing a car.#1. Is leasing a car the right choice for me?The first question you should ask yourself is “should I lease a car?” Leasing a car has many benefits, but it is not for everyone. Leasing a car may be a good choice for you if:You like getting a new car every few years.You don’t want to worry about selling your car when you want a new one.You don’t like working on your car.You don’t drive a lot and can comply with mileage limits.You are a business owner and want to maximize tax deductions.Leasing a car usually means that you will have lower monthly payments as well. But leasing a car has some drawbacks and can be too limiting for some people. When you lease, you will have to:Stick to a mileage limit.Avoid excessive wear and tear.Go to a certified mechanic.Leasing also means that you will not build equity on your payments. So before you lease a car, be sure to ask “should I lease or buy a car?”#2. Is there money due upfront?When leasing a car there may or may not be money due up front. Some offers will specify that there is no money due upfront, but these offers usually mean that the monthly payments will be more. Most leases require an initial payment (also referred to as an “initial rental”). This is different from a deposit, as deposits are refundable and this initial payment is not. This money helps cover your leasing fees and will reduce your total monthly payments.#3. What is the lease term?Dealers will have different lease terms for you to select. Leases are most commonly 24 or 36 months, but you may be able to find longer or shorter leases. The longer a lease term is, the lower your monthly payments will be. But if you are choosing to lease a car because you want to have more flexibility in getting a new car when you want to, a 24 month lease will be better.#4. What is the residual value?Residual value is the expected value of the car at the end of the lease term. This number is determined upfront and is determine by three factors:The capitalized cost (the sale price of the car).The lease term.The residual lease value percentage.The residual lease value percentage is based on the expected depreciation of your car. This percentage will vary based on the car’s make and model. A typical 36 month lease will have a residual value around 50%, but these can be as high as 60% or as low as 40%. The residual value is an important part of your lease for two main reasons.It will determine what the monthly payments on your leased car will be.It will determine what the buyout price of your car will be at the end of the lease term.While you cannot negotiate the residual value per se, you can negotiate on the capitalized cost of the vehicle. You should research what the market value of your lease car is before agreeing to anything. Having a realistic and accurate capitalized cost will help you get an accurate and fair residual value.#5. What is the money factor?The money factor of a lease is essentially the interest rate of the lease. Also referred to as the lease value, it will be based on the capitalized cost, residual value, lease term, and your credit score. The money factor is expressed as a decimal number, not as a typical percentage that we are used to seeing with interest rates. You can multiply this number by 2400 to get an approximate APR for comparison’s sake. A money factor of .0025 and below is considered to be a good money factor, which is roughly equivalent to a 6% interest rate.To get a lower money factor, there are two major factors you can control: your credit score and the car you are leasing. Having a good credit score is essential to securing a good money factor. If your credit score is particularly low, you may have a hard time getting approved for a lease. Leases are generally more difficult to get approval for than financing. The car that you are leasing is incredibly important to the money factor you will be offered. Selecting a car that has a higher residual value will also help secure a good money factor. A high residual value means that there won't be a lot of depreciation on the car, meaning you will have lower payments.#6. What are my options when the lease is over?When your lease is over, you will typically have three options. You can end your lease entirely, turn in your vehicle for a new lease, or you can purchase your leased car. If your lease allows for a car lease buyout, the price of the buyout will be listed in your contact. The car lease buyout price is the residual value of the car plus any taxes and fees associated with the purchase. Turning in your vehicle for a new vehicle may be right for you if you love leasing and want to continue doing so. You didn’t find the mileage limits or usage restrictions limiting and love getting a new car every few years, you should consider simply leasing a new car.Turning in your car and walking away may be right for you if you hated leasing and found it too restrictive, and don’t necessarily need a car right now. Buying your leased car is a great option for many people for a number of reasons. Consider a car lease buyout if:You love your car and don’t want to give it up.You went over your mileage limit and will owe a lot in fees.You have significant wear and tear and will owe a lot in fees.The residual value of the car is less than the market value.Buying your leased car and selling it privately is a great option if you can get a good deal on your car but don’t care to actually keep your car. You can get a car lease buyout loan to assist you with this.#7. What is the mileage limit?Every lease will have a mileage limit, and if you go over that limit you will owe extra in fees. Mileage limits are typically between 12,000 and 15,000 miles per year. For every mile you go over, you will have to pay a fee, which can range from $.15 to $.25 per mile. Before agreeing to anything, be sure that you can abide by the mileage limit.#8. Will there be a wear and tear assessment?When a lease is returned the car dealer will usually do an assessment to determine the condition of the car. You should find out beforehand what is considered excessive wear and tear. Dealers typically consider the following to fall under the category of excessive wear and tear:Large dentsCracks in glassStains on the upholsteryTears in the upholstery Poor-quality repairsDealers will allow a certain amount of wear and tear, but if dents, dings, scratches and stains are too large and noticeable, you will be charged a fee. #9. Can I get out of the lease early?You should know what your options are if you decide you want to end your lease early. Maybe you hate your new car, maybe you are having trouble making your monthly payments, or maybe you just hate leasing and wish to go another direction. Whatever the reason is, ending a lease early can be very expensive and may even damage your credit, so be sure you know what the process is beforehand.#10. What payments are due at the end of the lease?You should know exactly how much you will owe at the end of your lease. Your contract should outline what fees will be due and what other expenses you can expect. You should also ask what will happen to your security deposit. In most cases this money will be returned to you if your car is in good condition. Note that a security deposit is separate from a down payment, which is non refundable.Those are the ten questions you need to ask when leasing a new car.If you have a leased car that you are interested in purchasing, Auto Approve can help! We can help connect you to the perfect lender for your car lease buyout loan and even help you apply. Buying out your lease is easy when you have Auto Approve in your corner. Contact Auto Approve today to get your free quote!GET A QUOTE IN 60 SECONDS
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What Qualifies Me to Refinance My Car?

02/16/2023 21:37
If you are interested in refinancing your car loan, you may be wondering if you qualify. Lenders vary in their specific requirements for car loan refinancing, but in general they will look at your credit history, your car, and your existing loan. Here’s how to know if you qualify for car loan refinancing.What determines if you can refinance your car?To qualify for car loan refinancing, lenders will consider a number of factors surrounding your financial health, your car, and your loan. Your Credit ScorePerhaps the most important factor that lenders consider is your credit score. Lenders in the United States practice what’s called “risk based pricing”, which means that the riskier you are considered as a candidate, the more you will pay in interest. Your credit score is one of the top indications of how risky you are as a borrower. A good credit score tells lenders that you make full and consistent payments and can manage your money across multiple accounts.Credit scores are broken down into five categories:800 to 850: Excellent740 to 799: Very good670 to 739: Good580 to 669: Fair300 to 579: PoorIf you have excellent credit, you will most likely be approved for car loan refinancing and will be offered one of the best interest rates possible. If you have a good credit, you will also most likely be approved and offered a pretty good interest rate. As your credit score falls further down the ladder, the harder it will be to get approved and the higher the interest you are offered will be. Qualifying for car loan refinance is highly dependent on your credit score.Your VehicleAnother major factor that will determine if you qualify for refinancing is the age and condition of your car. Lenders want to be sure that the asset they are financing has value, so they typically require that the vehicle is less than 10 years old. They will also require that there are not too many miles on your car. Less than 100,000 miles is best, but some lenders will allow you to refinance a car with 125,000-150,000 miles. Your Current LoanLenders will also take a close look at your existing loan. If there is not a lot of time left on your loan they may feel that it is not worth it for them to refinance it, as they will not make much money off of the interest as the loan nears the end.They will also look to see that you have been making consistent payments on your existing loan. Seeing on time and full payments will prove that you are a good candidate and should qualify for a loan.While the new lender doesn’t care about the prepayment penalties, you certainly should. Certain car loans will have prepayment penalties if you decide to pay off your loan early. This is to offset any money they will lose in interest. While this doesn’t necessarily affect if you qualify for refinance, you should pay careful attention to these fees in your contract to determine whether or not refinancing your car loan is worth it. If your prepayment penalties outweigh your savings, it’s best to not pursue car loan refinance.What does your credit need to be to refinance a car?In order to qualify for car loan refinance, a good credit score is important. It is recommended to have a credit score of above 700 in order to qualify for refinance. If your score is below 700, it is not impossible to refinance your loan. But you may be paying a much higher interest rate and ultimately it might not be worth it to you.It is a good idea to make sure your credit score is in great shape before you apply for refinancing. Here are some of the best ways you can improve your score:Request higher credit limits on your accounts. This will decrease your credit utilization ratio and boost your score.Make consistent, on time, and full payments (sign up for autopay if you can). Your payment history is the biggest contributor to your credit score so this will help a good deal.Review your credit report for errors. Correcting any mistakes on your report can help give your score a boost (and save you from further problems down the road).Pay down your debts. Reducing your debts can help to improve your credit utilization ratio.Do not open other new accounts. Opening new accounts will cause a dip in your score.How can I refinance my car loan?Refinancing your car loan is easy, especially when you use Auto Approve. Auto Approve specializes in car loan refinance, so our agents are qualified to help you determine not only if you qualify for refinance, but can help guide you through the process. Here’s how you can refinance your car with Auto Approve.Step 1. Get a free quoteTo start the refinancing process, you can start by getting a free quote. You don’t even need to provide your social security number. Simply fill out your name and estimated credit score and we can help determine your initial eligibility. Within minutes you will have several quotes. Step 2. Work with an agentBy filling out some additional information, our agents can help you determine what offers will work best for you. Step 3. ApplyOur agents will assist you in filling out the application paperwork and ensuring that you have all of the necessary paperwork. Once you receive your offer, your rate will be locked for 30 days while you make your decision.Step 4. SignIf you decide to move forward, you simply sign electronically and Auto Approve will take care of the rest! Your agent will ensure that your old loan is paid in full and they even handle the DMV paperwork so you don’t have to.Step 5. Start savingOnce you sign the paperwork, you will have 45 days until your first payment is due (and you can immediately see the difference in your monthly payments!) Refinancing with Auto Approve is just that easy!That’s how you can determine if you qualify for car loan refinancing (and how you can refinance easily with Auto Approve).If you are wondering if you qualify for car loan refinance, take a look at your credit score, your vehicle, and your existing loan. Auto Approve can help you determine if you qualify and assist you with the application process if you do qualify. So get in touch with Auto Approve today to start saving money!GET A QUOTE IN 60 SECONDS
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Tax Season 2023: What You Need to Know

02/15/2023 15:12
It’s everyone’s favorite time of year: tax season! And while we aren’t exactly jumping for joy that it’s time to buckle down and go through our finances for the past year, we do recognize how important it is. So let’s chat about the 2023 tax season, from dates and deadlines to changes in side hustle payments.Here’s everything you need to know about filing your 2022 taxes in tax season 2023.What are some changes in this 2023 tax season?2023 Tax Season DatesThe IRS started accepting returns for the 2023 tax season on January 23, 2023. Nearly 170 million returns are expected to be filed this year. The tax filing deadline is April 18, 2023. It is not on April 15, as it usually is, because April 15 is a Saturday. Instead they have extended it to the following Tuesday. 1099-K ReportingThere has been a lot of confusion surrounding the new requirement for third party payment platforms (such as Venmo and Paypal) to provide 1099-Ks for all people earning over $600 in payments for side hustles and gigs. Due to the confusing and controversial nature of this new law, this rule has been delayed. As a result you may not receive a 1099-K from these companies.The IRS still emphasizes that you need to report all taxable income on your federal tax return whether you receive a 1099 or not.EV Tax CreditIf you bought an electric vehicle in 2022, there are some changes to the EV tax credit. The Inflation Reduction Act allows for a tax credit up to $7500 on qualifying new electric vehicles and a lower credit on qualifying used electric vehicles. These new vehicles have a higher standard of “clean”.If you purchased your vehicle before the Act was signed into law on August 16, 2022 you can take advantage of the previous EV tax credit. You must provide a signed sales contract.If you purchased your vehicle after August 16, 2022, the old rules apply but your vehicle must have its final assembly in the United States.Itemized Charitable DeductionsFor the past few years taxpayers have been allowed to claim an “above the line” deduction of up to $600 for their charitable deductions. This is now reverting and you must itemize deductions once again. The adjusted gross income ceiling on cash contributions is also returning to 60%.Special PaymentsIf you received a type of special payment from the government, such as an inflation relief check or 2022 special rebate, the IRS has announced that it will not be treated as taxable income. There was confusion about this early on and the IRS originally told taxpayers in 21 states to hold off on filing until they reached their decision. But on February 10th they released this statement:“During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island.”If you are wondering about a specific rebate you received, it’s best to consult a tax professional.What can you expect from your 2022 tax return?The IRS is warning people that their refund may be less than it was in previous years. This is due to a number of changes between last year and this year.The standard deduction is higher. In 2022 the standard deduction for a single filer was $12,950 and $25,900 for a married couple filing jointly. In 2023 this has increased to $13,850 for a single filer and $27,700 for a married couple filing jointly. This means that it will be harder for people to claim charitable contributions.The Child Tax Credit is returning to $2,000 from $3,600 per child. This increase was intended as a relief during the pandemic and has now reverted to its normal amount.The Earned Income Tax Credit has lapsed. Last year taxpayers claiming the EITC who had no children received $1,500. This will reduce in 2022 to $500.How to File your 2023 TaxesStep 1. Determine if you need to file.If you had income tax withheld from your paychecks, made estimated tax payments, or qualify for certain tax credits, you most likely should file taxes. Ultimately your filing status will depend on your age, income, and whether or not someone else can claim you as a dependent.Step 2. Choose how you will file your taxes.You have three options when it comes to how to file your taxes. You can use IRS Form 1040 or Form 1040-SR to fill out your taxes manually and mail them in. This is not a recommended method.You can use tax software such as H&R Block or TurboTax to electronically fill out your taxes and submit them. This is a great option for most people who do not have a complicated financial situation.You can hire a tax professional to file your taxes on your behalf. This is a great option if you have your own side business or operate a lot of accounts.Step 3. Gather your documents.Perhaps the most time consuming part of filing your taxes is gathering all of the necessary documents. Here are some of the most common documentation you will need:Social Security Numbers. You will need the Social Security numbers for yourself, your spouse, and any dependents (if applicable).W-2 form. This form will come from your employer and tells how much you earned in the past year as well as how much you already paid in taxes. 1099 forms. These forms show that some entity or person who is not your employer paid you money. These may include returns on interest (Form 1099-INT) and returns on dividends (Form 1099-DIV).Retirement account contributions. Retirement contributions are typically recorded on Form 5498.Property taxes and mortgage interest. Your mortgage company should provide you with Form 1098 (if you paid over $600 in interest throughout the year).State and local taxes. Keep track of any taxes you have paid throughout the year.Charitable donations. Any money or goods that you donated to a tax-exempt organization, such as a charity, can be deducted from your adjusted gross income.Educational expenses. Tuition, fees, books, room and board, and other necessary expenses such as transportation may be deducted.Unreimbursed medical bills. The IRS will allow you to deduct preventative care, treatment, surgeries, dental care, vision care, visits to psychologists and psychiatrists, and prescription medications. You may also deduct appliances such as glasses, contacts, false teeth and hearing aids, and travel for medical care.Freelance expenses. If you are self employed you may deduct work related expenses.Last year’s federal and state tax returns.Step 4. File on TimeThe deadline for filing in 2023 is Tuesday, April 18. If you are unable to file on time for some reason, be sure to request an extension. You can usually get a six month extension which allows you to file until October. But keep in mind that if you owe money you will be responsible for additional interest and fees.Step 5. Settle UpMost of the time you will either owe money to the IRS or the IRS will owe you money. If you owe money to the IRS there are a number of ways you can make your payment.Electronic Funds Withdrawal (EFW)IRS Direct PayDebit CardCredit CardThe Electronic Federal Tax Payment System (EFTPS)Wire TransferCheck or Money OrderCashMobile (IRSToGo)If you are having trouble paying the total amount you owe, you may also set up an installment plan. You will have to pay interest and fees until the full amount is paid. There is a short term payment plan and a long term payment plan.If the IRS owes you money, you can collect your refund via direct deposit (which is the fastest way). You can also request a paper check be sent to you. Refunds are typically sent out within 21 days of filing, but additional review may be required. Filing electronically and having the refund sent to your direct deposit is the fastest way to get your 2022 tax refund. You can track your refund status online.That’s everything you need to know about filing your 2022 taxes during the 2023 tax season.Tax time can be confusing, but staying organized and prepared can help you file your taxes with ease. It’s also a great time to sit down and thoroughly review your budget to see how your income and expenses are lining up.If your financial review shows that you are overpaying on your monthly car payments, Auto Approve can help! Refinancing your car loan can save you a lot of money (and with very little effort!) To find out if you qualify for car loan refinancing, get a free quote today!GET A QUOTE IN 60 SECONDS
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What is a Good Loan-to-Value Ratio for a Car?

02/14/2023 18:58
There are a lot of terms when it comes to getting a loan. But of all of the terms you may be unfamiliar with, loan-to-value ratio is an important term you should get to know.Here’s what you need to know about loan-to-value ratios (and how to know if you have a good ratio).What is loan-to-value?A loan-to-value ratio compares the amount that you want to borrow to the value of the asset you are purchasing. Lenders look at loan-to-value ratios for all secured loans (such as car loans and mortgages). These ratios tell lenders how much of a risk the loan is. Secured loans mean that there is collateral that ensures the loan. If you should default on payments, the lender has the right to physically take your collateral and sell it to recoup their losses. If your collateral is not worth as much as you owe, the lender will not be able to make back their money.Loan-to-value ratios are calculated by dividing the amount of the loan by the appraised value of the asset.LTV= Amount of Loan / Value of AssetFor example, let’s say you want to purchase a car that is $35,000. You are making a down payment of $7,000 and you will have to pay a 7% sales tax and $500 in fees. Your total loan amount will be as follows:Car Price - Down Payment + Sales Tax + Fees = Loan Amount$35,000 - $7,000 + $2,450 + $500 = $30,950To calculate the loan to value ratio you divide that by the value of the asset.LTV= Amount of Loan / Value of AssetLTV= $30,950 / $35,000LTV= 88%How does LTV affect interest rates?The lower your LTV is, the less of a risk your loan is. Lenders in the United States use what’s called “risk based pricing” when it comes to assessing interest rates. In other words, the riskier your loan is, the higher the interest rate will be. A loan can be designated as risky for any of the following reasons:You don’t have a good credit scoreYou don’t have a good repayment historyYou don’t have a good employment historyYour debt to income ratio is highYour loan term is too longYour down payment is not large enoughThe loan-to-value ratio on your vehicle is high If your loan is viewed as risky, chances are you will be offered high interest rates. How can a loan-to-value ratio be higher than 100?So how can your total loan amount be for more than the price of the asset you are buying? There are a few ways that this can happen.#1. You don’t pay anything upfront.Not making a down payment puts you at a severe disadvantage from the start. Not only do you need to take a loan out for the total cost of the car, but you need to pay for the taxes and fees. This can easily add a few thousand dollars to your price tag. Let’s look at the above example, assuming there was no down payment.Car Price + Sales Tax + Fees = Loan Amount$35,000 + $2,450 + $500 = $37,950LTV= Amount of Loan / Value of AssetLTV= $37,950 / $35,000LTV= 108%Lenders do expect this to some extent, which is why you can typically get approved for a loan with up to a 125% loan-to-value ratio. Some lenders will even go above 125%.#2. You have a car with a high rate of depreciation.All cars depreciate at different rates. Depreciation is based on a number of factors, including:Your car makeYour car modelYour car yearThe mileageThe paint colorThe wear and tear on your carAnd other factorsIf your car depreciates at a faster rate, it is possible that your depreciation will outpace your payments (especially if you did not put down a down payment, or didn’t put down a large enough down payment). Your loan-to-value ratio changes throughout the course of your loan, so it is possible that your LTV can increase to an uncomfortably high level.#3. You owe money on another car.If you already have a car loan where you owe money, you may have the chance to roll that negative equity into your new car loan. So if you owe $5,000 on a previous loan, you may roll that into your new loan. Your new car may be $30,000, but you will have a loan for $35,000.How do loan-to-value ratios affect refinance?If your loan-to-value ratio is too high, you may have a harder time with a car loan refinance. But generally if your LTV is lower than 100% it is considered a good loan-to-value ratio and you will be able to refinance your car loan.How to lower your loan-to-value ratioThere are a few tips to ensure that your loan-to-value ratio isn’t too high. Choosing the right car in the first place is especially important.Tip #1. Pick a car that is within your budget.It’s important for so many reasons to pick a car that is within your budget in the first place. This means that you will have the money to not only make a down payment, but you will not have trouble consistently making your monthly payments.In general, it is a good idea to ensure that you pay no more than 15% of your monthly take home pay on your car payment. Your transportation expenses should not total more than 20% of your total pay. This means gas, parking, insurance, tolls, maintenance, and your car payment should be less than 20%.Tip #2. Pick a car that doesn’t have a high depreciation rate.Certain cars depreciate at a faster rate than others, even if all else remains the same. Two cars that are the same age and have the same mileage and wear and tear will still have different depreciation rates. Depreciation is based on what something is worth as it ages, and certain cars are more desirable as used cars than others when they are used. Luxury cars tend to top the list with the highest depreciation rates. The top 10 cars with the highest depreciation rates in 2022 according to iSeeCars are:BMW 7 Series: Depreciation rate of 56.9%Maserati Ghibli: Depreciation rate of 56.3%Jaguar XF: Depreciation rate of 54%Infiniti QX80: Depreciation rate of 52.6%Cadillac Escalade ESV: Depreciation rate of 52.3%Mercedes-Benz S-Class: Depreciation rate of 51.9%Lincoln Navigator: Depreciation rate of 51.9%Audi A6: Depreciation rate of 51.5%Volvo S90: Depreciation rate of 51.4%Ford Expedition: Depreciation rate of 50.7%First time buyers tend to have higher expectations for technology and add ons, and these features are typically not valued as much by used car buyers. Choosing a car that has a low depreciation rate is a great way to combat a high LTV. Jeeps, Hondas, Toyotas, and Subarus tend to have lower depreciation rates. Even though some of these models may not be as flashy as other cars on the market, they are solid and reliable cars that people will continue to buy used.Tip #3. Skip the add ons.A car can very quickly go from being within your budget to being out of your budget relatively quickly. Upgrades and add ons can quickly add thousands to your car’s price tag, and that means thousands more that you will have to finance. Instead of saying yes to every upgrade presented, try to make a list of what is truly important to you. Do you go camping a lot? Then roof racks and all weather mats are probably a good investment. Do you really care about the sound quality and entertainment? Then the better sound system might be a good choice. But chances are there are more than a few upgrades you can pass on completely.Tip #4. Make a down payment.This is less of a tip and more of a rule. You should always make a down payment when purchasing a new car. If you do not make a down payment, you will immediately have negative equity. Depreciation begins the second you drive your new car off the lot, meaning your car will lose value immediately while your loan will be for the original total amount. Making a down payment combats depreciation and will help keep your loan from becoming underwater.Tip #5. Don’t pick a long repayment period.Long repayment periods mean that your monthly payments will be lower. And this in turn means that it will take longer to pay back your loan. During that time, your LTV ratio can easily increase and become less desirable. That’s everything you need to know about loan-to-value ratios.It’s important to understand how loan-to-value ratios work and why they are important. Getting a low LTV ratio in the first place depends largely on selecting the right car and loan in the first place. If you are interested in refinancing your car loan, try to pay down your loan so that your LTV ratio is 100% or less. This will help you to secure the best interest rate and the best terms. If you are interested in refinancing your car loan, contact Auto Approve today to get your free quote!GET A QUOTE IN 60 SECONDS
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Cosigning vs. Co-borrowing: What's the Difference?

02/09/2023 02:37
These words are very common in the word of finance, and they are sometimes mistakenly used interchangeably. But there is actually a very big difference between a cosigner and a co-borrower, so it’s important to distinguish between them.Let’s talk about the difference between cosigning and co-borrowing.What is a cosigner?A cosigner is someone who agrees to be legally responsible for a loan if the original borrower defaults on the payments. Cosigners essentially give the lenders a guarantee that someone else will be responsible for the payments should the loan agreement not work out as intended.Cosigners can be found on apartment rental agreements, personal loans, mortgages–really any type of loan or rental agreement. If a borrower is young and has yet to establish credit it is common for a parent or loved one to step in and cosign until the borrower has built up their credit. If a borrower is just getting out of a bad situation such as a bankruptcy a cosigner may be able to help them get back on their feet. Many car lenders have the following requirements for a first time car loan:You must have a monthly income of at least $1,600.You must make a down payment of at least 20%.You must have a credit score of at least 680.You must have established credit and not have a credit utilization ratio that is higher than 50%.Lenders may require proof of a stable work history in addition to this. If you are a first time car buyer, these may seem like difficult requirements. Lender’s will therefore allow you to get a loan if you provide a cosigner.There are a few requirements to become a cosigner on an auto loan:They must be willing to cosign and accept the responsibility of repayment if necessary.They must have good credit, generally above 700.They must prove they have a stable income that can pay for the loan if it defaults.They must prove their residence.They must prove their employment.Lenders will consider all of this information in conjunction with the original borrower’s application materials when determining whether or not to approve the loan. Becoming a cosigner is a huge responsibility. You should only cosign a loan for someone you love and trust. It is all too common for financial relationships to put a strain on personal relationships, so it’s very important to communicate with your loved one if you decide to cosign with them.What is a co-borrower?A co-borrower on the other hand is someone who is applying for the same loan with you. You are agreeing to equal share in responsibility of the loan and of the asset. Your co-borrower’s name will appear next to yours on the loan and on the title of the car. Your finances will be looked at with equal weight. A co-borrower is a good idea if you want to own your car with someone, such as your husband or wife. They will have equal ownership, which may be perfect for you. Is it good to have a cosigner?In general, cosigning a loan is a very big deal and it is a decision that should not be taken lightly. But if you are having trouble getting approved for a car loan, asking a loved one might be your only option. Having a cosigner will help you in the following ways:You will be offered a better interest rateYou will have some time to build creditYou will have someone to help guide you and give you adviceBut being a cosigner for someone else doesn’t really have a lot of benefits for the other person, and asking someone to cosign a loan is a big deal. They are on the hook financially for your loan.Insurers in some instances will hold the cosigner responsible for claims.It can be a strain on personal relationships.Before asking someone to take on this responsibility, ask yourself if you really need the loan (i.e. do you really need to buy a new car). If you are trying to build credit and are confident that you will not default, then you should take the following steps to prepare for cosigning. Prepare ahead of time before you ask them to cosign. Gather your financial information so that you can answer any questions they may have.Schedule a meeting to ask them and discuss in detail. Having a meaningful and honest conversation ahead of time is important. Make sure they are aware of what being a cosigner means.Get a plan in place for repayment. This will help assure them that you can pay back your loan.Don’t expect an answer right away. Give them time to think about what you are asking. If your cosigner agrees, it’s important that you keep them in the loop on whatever is happening with your loan. If you need help with a payment or have a problem, be transparent with them. How can I remove a cosigner?If you have a cosigner, you may be wondering if it’s possible to remove them. Generally there are three options to get untangled from a cosigner:Ask for a cosigner release.In certain situations a lender may allow you to simply release the cosigner from the loan. This is not typical, but it can happen in certain situations. Read your loan agreement carefully to determine if this is an option.Sell the car.You can also simply sell the car and get a fresh start. This is a good option if the arrangement doesn’t seem to be going well and you have not been able to improve your credit enough to refinance the loan in your own name.Refinance your loan.The best way to remove a cosigner is to refinance your loan. When you refinance you are starting over with a new loan, so your new lender will pay off your old lender. If you have worked to improve your credit, you may be able to find a car loan with a good interest rate and repayment plan. Working with a company that specializes in refinancing can help you navigate these waters.That’s everything you need to know about cosigning and co-borrowing.Both cosigning and co-borrowing are very serious financial relationships, although they differ on what they actually are. Both relationships should be taken seriously and a lot of thought should be put into the decision beforehand.Refinancing your loan is a great way to either add or remove a cosigner or co-borrower. If you are looking to make a change on your car loan, contact Auto Approve today.GET A QUOTE IN 60 SECONDS
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The Smart Way to Buy Your Leased Car

02/08/2023 12:08
If you are lucky, you know what it’s like to truly love a car. A car that you don’t want to give up, a car that’s really been there for you. But what do you do if that car happens to be a leased car? How are you supposed to give up a car like that?Well the good news is you don’t. In fact, most leases prepare for this and will allow you to buy your leased car at the end of the term. But what’s the best way to do this? Is there a smart way to buy your leased car?Let’s talk about the best way you can buy your leased car.What is the best thing to do at the end of a car lease?At the end of a car lease you have three options. You can return your lease for a new lease, you can return your lease and walk away, or you can purchase your leased car. Return your car for a new lease.This is a great option if you are ready for a new set of wheels and like the ease of leasing. As long as you have not gone over the mileage limits and do not have excessive wear and tear, you can get a new lease easily. Return your car and walk away.You are under no obligation to keep leasing if you decide it’s not right for you. Maybe you like owning your car so that it is truly yours. Maybe you don’t like abiding by all of the rules. Whatever the reason is, leasing is not for everyone. And that’s why it might be a good idea for you to return your car and walk away.Purchase your leased car.At the end of the lease you will be able to purchase your car (in most cases anyway). There are a few reasons why this might be your best option:You like your leased car and don’t want to part with it.You have gone over the allowed mileage and will owe a lot in fees.You have excessive wear and tear and will owe a lot in fees.Your car is worth more than the purchase price.If any of the above apply to you, it might be worth considering purchasing your leased car.Can I get a loan to buy my leased car?What if you love your leased car but don’t have the cash to buy it? Enter the car lease buyout loan. These loans can help you to purchase your car from the leasing company.To get a car lease buyout loan you will need to make sure your credit score is in good shape and that you are a desirable loan candidate. Contacting a company that specializes in car lease buyout loans can help ensure that you will get the best loan possible. To prepare yourself for your loan application, here are some of our top tips:Request a copy of your credit report to ensure everything is correct.Request higher credit limits to your accounts to boost your credit score.Resist opening any other new accounts during this time.Be sure you are paying all of your bills on time and in full (especially your car lease payment).Gather documents you will need for your applications, including proof of employment, proof of insurance, identifying documents, and your current lease agreementIt is typically more difficult to get approved for a lease than it is for financing. Chances are if you were approved for a lease you will have a good chance getting approved for financing. But it is always a good idea to try to get your score in its best shape possible before applying for a loan. The best interest rates and terms are reserved for those with excellent credit scores.How does it work if you want to buy your leased car?So, how do you buy your leased car? It’s actually really easy, just follow our steps below.Step 1: Determine the buyout price.Your car lease buyout price will be listed in your leasing agreement. The price will be the residual value (which is predetermined and listed in your leasing contract) plus any taxes and fees. If you are unsure about the exact price you can reach out to the leasing company to get a total. The residual value is based on the expected depreciation over the life of your lease.Step 2: Evaluate your car’s value.You will next need to determine what your car is worth. The best way to do this is to use a website such as Edmunds or Kelley Blue Book. These sites will look at your car’s make, model, year, mileage, and overall condition to determine the market value.If your car is worth more than the purchase price it is definitely worth considering a loan buyout. You can always sell your car privately and keep the profit if you aren’t crazy about your car.If on the other hand the purchase price is much higher than what the car is worth, it’s not a good idea to purchase the car. You may not get approved for a loan in the first place, and you would be better off buying the car used somewhere else.But if you decide that it is a good idea to purchase your car and the numbers add up, you can start shopping around for financing deals.Step 3: Apply for financing.If you decide to get a loan it is imperative that you do your homework and shop around. You can even use a company that specializes in car lease buyouts. They can help you find the perfect loan for your situation and even help you with the pesky paperwork. You should apply with 3-5 different lenders to give yourself the best chance at getting a loan with good terms. Be sure to apply for these loans within the same two week window so that they will count as one hard inquiry on your credit report. When the offers come in you should compare the following:The interest rateThe repayment periodThe prepayment penaltiesThe customer satisfaction ratings (look online for these)All other fees and termsPay careful attention to the fine print in these contracts. Additional fees and prepayment penalties may affect your ability to refinance in the future.Step 4: Sign and drive.When you find the loan that’s right for you, you can sign on the dotted line and finally own the car you love (well, almost). The lender will send a check to the leasing company and they will hold the title until you complete your payments. And that’s it!What’s the smartest way to buy my leased car?The smartest way to buy your leased car is to use a company that specializes in car lease buyouts, like Auto Approve. While the above process isn’t too complicated, it’s always good to have an advocate on your side that can help guide you through the buyout process. Auto Approve doesn’t charge you fees or mark up your loan (meaning there’s no downside to using Auto Approve).Auto Approve will help you pick the right lenders, apply, and choose the loan that is best for you. After you decide which loan is right for you, Auto Approve will even help you with all of the finalizing paperwork (including the pesky DMV papers). Buying out your lease with Auto Approve will also allow you to bundle GAP insurance and a vehicle protection plan with your monthly payments so that you can fully protect the car you love. And these added benefits can really help you. GAP insurance acts as a bridge between your loan and your car insurance payout. If you are in an accident and your insurance will not cover the total that is left on your loan, GAP insurance will kick in so you are not on the hook for the difference. Vehicle protection plans can help protect you from, well, life. These plans can help cover a lot of problems that can pop up, such as engine trouble, transmission problems, suspension issues, etc. On top of that, an Auto Approve vehicle protection plan comes with 24/7 roadside assistance, rental car reimbursement, and your choice of certified mechanic.But you don’t have to just take our word for it. We have a 96% would recommend rating on LendingTree and a 4.7 out of 5 star rating on TrustPilot that tells you just how satisfied our customers are. The smart way to buy your leased car is to get a car lease buyout loan through Auto Approve.When it comes to buying your leased car the smart way, the answer is simple. So if you have a leased car that you aren’t ready to part with, contact Auto Approve today! Our experts are ready to help keep you in the car you love. Get your free quote today to get started!GET A QUOTE IN 60 SECONDS
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When to Refinance a Car and When to Wait

02/07/2023 18:27
Refinancing a car is a bit of a game when it comes to timing. You get the most bang for your buck when the stars align, but if it’s not meant to be it can be a waste of time. So how do you know when the time is right to refinance, and when the time is not right?Let’s talk about when you should refinance your car and when you should wait.When should you refinance a car loan?Why refinance? Car loan refinancing has a lot of benefits, but the biggest benefit is that it can save you money. But in order to save money, the timing must be right. Here are a few signs that you might benefit from car loan refinance.Your credit score has improved.Your credit score is the number one thing lenders look at when determining your eligibility for a car loan refinance. It will also help them to determine what interest rate you should be offered. Credit scores give lenders a good indication of how likely you are to repay a loan. A high credit score tells lenders that:You make on time paymentsYou are not in too much debt You can manage making payments across multiple varying accountsThe better your score is, the better the interest rate you are offered will be. If your credit score was so-so when you initially financed, the interest rate that you were offered might not be ideal. But if you have worked to improve your credit there is a good chance you will qualify for a better interest rate. There are many reasons why your credit score may have improved in the past few years:You made full and on time payments to your accountsYou paid off some debtYour debt to income ratio improved (either due to decreased debt or increased income)A negative event expired (such as a bankruptcy)You have a better mix of creditIf you are considering car loan refinance, it’s a good idea to get a copy of your credit report and look for any errors. Correcting any errors can improve your score a good deal. Reviewing your report can also give you an idea of what areas you can improve on. But if your score is higher than it was when you initially financed, refinancing might be worth it.The market rates have decreased.Another way you can secure a lower interest rate on your car loan is if the market rates have decreased since you initially financed your car. The car market has been all over the place in the past several years, so this will very much depend on when you actually financed.You want to pay off your loan early.Sure, there are ways to pay off your loan early without refinancing. But if you do refinance your loan you can save money while doing so. When you shorten your repayment period lenders will often give you a lower interest rate which can save you a significant amount of money. If you couple this with a better credit score, it can mean a significantly lower interest rate. A shorter period also means you will be paying interest for less time, so you can save a lot of money in the long run.You are having trouble making your monthly payments.Even if you might not necessarily qualify for a lower interest rate, refinancing might still be a good idea for your finances. When you refinance your loan you can change your repayment period. If you are having trouble making monthly payments, lengthening your repayment period can spread out your repayment over more time and thus reduce your monthly payments a good deal (we are talking hundreds of dollars per month). While you will end up paying more over the life of the loan, this can still be a good move for you. Loosening up extra money every month can allow you to allocate that money to other payments, which may be important to you and help your overall financial health.When should you not refinance a car loan?Just as there are times when refinancing your car is a great idea, there are also times when refinancing does not make sense. If any of the following apply to you, it might not be a good time to refinance.You have an older car.If your car is older or has a lot of miles on it, chances are you will have a hard time refinancing your loan. Cars that are ten years old (or older) or have more than 100,000 miles on them are less likely to be approved for refinancing. Your loan is underwater.If your car loan is underwater, you will have a very hard time refinancing it. This means that you owe more on your car than your car is worth. A car loan can become underwater if you do not put a large enough down payment on your car initially and/or make minimum payments on your account. Certain types of cars have a higher rate of depreciation, so simply having a car with a high depreciation rate can mean your loan can end up underwater.Your loan is less than six months old.If your loan is less than six months old it is a good idea to wait a little longer before you refinance. While there is no strict rule on how long you can wait to refinance your loan (you generally only need to wait as long as it takes for the paperwork to go through), experts recommend waiting at least six months to a year. This will give your credit score a chance to bounce back from the hard inquiry and give you a chance to establish that you are making consistent payments. This can lead to a better interest rate and better terms for your refinance. Your loan has less than two years left on it.If your loan has less than two years left on it you may have trouble getting approved, or it may simply not be worth it to you. Car loan payments are designed so that you pay the bulk of the interest upfront. The nearer you are to the end of your loan period, the less you will actually save on interest as your payments will primarily be going towards the principal (this is called an amortized loan). The earlier you refinance the more you will be able to save on interest payments.You have a lot of prepayment penalties.Some car loans come with hefty prepayment penalties. These fees might outweigh any benefits of refining, so do the math before you commit to moving forward.How can I refinance my car loan?If it seems like now is a good time to refinance your car loan, contacting a company that specializes in refinancing is the best option for most people. Using a company that specializes in refinancing, like Auto Approve, makes the application process super fast and easy. They can also help you decide which loan is the best for you. Step One: Gather your information.The first step to refinancing is gathering all of your information. You will need the following information to get the process started:Current loan information. You will need the name of your current lender, your account number, and your payoff amount. It’s good to have the contract handy to compare specific terms as well. Personal information. You will need identification, proof of employment, proof of residence, and your contact information.Vehicle information. You will need your car’s VIN, make, model, year, and mileage.Step Two: Research and ApplyYou should aim to apply with 3-5 different lenders for your refinance. Read online reviews, ask friends and family, and determine which lenders might be a good match for you. Consider a mix of traditional banks, credit unions, and online lenders. When you narrow your list down you can apply.Step Three: Compare and SignWhen your offers come in, be sure to compare all of the terms. Look at the interest rates, the repayment period, the prepayment penalties, and all of the other terms. When you decide on a loan, you can simply sing and start saving. Your new lender will most likely handle paying off the old loan (but be sure to double check this). If you use Auto Approve for your refinance, they can help you with this entire process. From selecting which lenders to apply with to determining the best fit for you, our experts are your advocate for the refinancing process. That’s how you can determine if it’s a good time to refinance your car (and how to decide if you should wait).Refinancing can help you to save a lot of money, but only if the time is right. Our experts at Auto Approve can help you determine if you qualify and can help guide you through the process. Get your free quote to find out if now is the right time for you!GET A QUOTE IN 60 SECONDS
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Car Lease Dictionary: The Terms You Should Know

02/03/2023 15:47
If you’ve never leased a car before, it can feel a bit confusing. It can sound like they are speaking a different language at the dealership and if you are unfamiliar with the terms, it can be a turn off. But when you know what the lingo is, it is easier to understand how leasing works and if you are getting a good lease deal.Here are all of the car lease terms you should know before you shop for a new car. Acquisition FeeThis covers the expenses of arranging the loan, such as obtaining your credit report and verifying that you have insurance.Adjusted Capitalized CostThe amount that the lease payments are based on. It is essentially the cost of the car minus any down payment, plus any fees.Base Monthly PaymentYour lease payment will be based on the amount of depreciation that will occur over your lease period. Taxes and fees may be added onto this for your total monthly lease payment.Capitalized CostThe cost of the new car. This is also called the gross capitalized cost. You can (and should) negotiate this price as it is what your monthly payments will be based on.Capitalized Cost ReductionThe amount of money you put down at the beginning of your lease. It is similar to a down payment.Car Lease BuyoutWhen you purchase your car at the end of the lease period.Car Lease Buyout LoanA car loan that will help you to purchase your lease car.Car Lease Buyout PriceThe price that you can purchase your leased car for. It is the residual value of the car plus any taxes or fees.Closed End LeaseThe lessee will not have to pay the difference if the actual value of the car at the end of the lease differs from what is in the contract. This is how most leases work. Consumer Leasing ActThis act, which took effect on January 1, 1998, requires lessors to disclose all leasing costs. Credit ReportYour personal financial history. This keeps track of what accounts you have open, your payment history with each account, and the balance you have on each account. These reports are created by the three major credit bureaus: TransUnion, Equifax,and Experian. Lessors will request a copy of your credit report to determine if you are a good candidate for a lease. Credit ScoreA three digit number that is calculated based on your financial history to indicate your creditworthiness. The numbers range from 300 to 850, and the higher your score is the more creditworthy you are considered. You typically need to have a good credit score to be able to lease a car.Dealer Preparation FeeA fee that may be charged to cover preparing the car to be leased. It usually covers washing the car and filling it up with gas. It can often be negotiated down or eliminated from the lease.DepreciationThe car’s decrease in value over the life of the lease. The depreciation of the car is what you are actually making payments on. It is the difference between capitalized cost and residual value.Disposition FeeThe cost of preparing the car for sale at the end of lease. This is a nonnegotiable fee so that the car may be cleaned, serviced, and prepared for sale as a certified pre owned car.Early TerminationReturning the lease before the agreed upon end date. There is usually a fee for ending the lease at an earlier Excess Mileage FeeA per-mile fee that is charged if you go over the mileage limit that is stated in your contract. This can vary from $.10 per mile to $.30 per mile depending on your lease agreement.Excessive Wear-and-Tear FeeIf there is damage to the car that is above what is expected with daily use, you may be charged a fee. Excessive wear and tear may include the following:Broken or missing parts of the carDents, scratches, or other damages to the body panels or trimCracked glassCuts, tears, and stains on the upholsteryExcessively worn tires (often 1/8" tread at the shallowest point)Poor-quality repairs Lease agreements usually list out what is considered excessive wear and tear. Fees will vary based on the cost to repair the damage.GAP CoverageGAP stands for Guaranteed Auto Protection. This is an optional insurance that will cover the difference between the money you owe on your lease and what your insurance company will reimburse. Hard InquiryA formal request of your credit history from a lessor. When a lessor considers approving a car lease for you, they will request a copy of your credit report to review. This request will actually show up on your credit report and will cause a temporary ding on your credit score. Hard inquiries cannot be made without your permission.IndemnityA section in the lease contract that absolves the lessor from charges that are incurred by the lessee. The car is technically owned by the lessor, so this section shifts the responsibility of damage from the lessor to the lessee (i.e. parking and traffic tickets). Lease InceptionThe beginning of the lease’s term.LesseeThe person who is leasing the car.LessorThe company that arranges for the car to be leased.Lease TermThe length of your lease, typically 24-36 months.Mileage AllowanceThe amount of miles you are allowed to drive on your leased car. Mileage allowances help the lessors to control the amount of depreciation that will occur over the life of the lease. Allowances tend to be between 10,000 and 15,000 per year. Any overages will result in mileage fees.Money FactorThe number that determines the interest you will pay on the lease. These numbers are expressed as small decimals, but multiplying the money factor by 2400 will give you an approximate interest rate that will be more recognizable to you.Open End LeaseOpen End leases require you to pay the difference between the residual value and the actual value of the car if there is a difference at the end of the lease period. These leases are uncommon and you should not accept one. Proof of EmploymentA statement or document that shows you are employed. This proof may be a paystub, a letter from your employer, or a W2. This shows the lessor that you can make your lease payments.Proof of InsuranceLessors require that you have insurance on your leased car. They typically require comprehensive and collision coverage. Many lessors will also require higher bodily injury liability limits, such as $100,000 per person and $300,000 per accident. To show that you have insurance coverage the lessor will usually require a copy of your insurance policy that states the amount of coverage.Proof of ResidenceYou will need to show where you actually live as part of the leasing process. This cannot be a PO box. Lessors want to know where the car will physically be parked if they need to seize it because you have defaulted on your lease.Purchase OptionThe right to buy your leased car at the end of the lease period.Residual ValueThe leased car’s anticipated value at the end of the lease period. The residual value is non-negotiable and is based on the value of the car and the projected depreciation over the life of the lease. If the actual value of the car at the end of the lease period differs from the residual value, it doesn’t matter. The residual value is binding.Sales TaxYou will have to pay sales tax on your leased car, although states vary on when you will actually pay them. Most states add sales tax onto the monthly base payment.Security DepositMoney that you must pay upfront to cover either a default on the lease or to offset additional money you owe at the end of the lease.Soft InquiryThis allows lessors to review your credit score and part of your credit report without it counting as a hard inquiry. Also known as a soft pull, this is common when getting preapproved for a loan. Soft inquiries do not affect your credit score and your approval is not required for this.SubventionWhen the car manufacturer subsidizes the cost of a vehicle to encourage leasing. This typically happens if a car is not selling fast enough.Those are the car leasing terms you should know before you set out to get a new car.Leasing a new car can feel daunting, but a little research can help you feel confident in your car leasing journey. If you already have a leased car and are interested in buying it, Auto Approve can help! We can help you secure a car lease buyout loan so you can finally own the car you love. So don’t wait to make your car yours! GET A QUOTE IN 60 SECONDS
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8 Steps to Choosing the Right Car

02/02/2023 01:07
We don’t get new cars all the time, so when the time finally rolls around to pick one it is incredibly exciting. But with so many makes, models, and options available to you it can be hard to know where to start. Getting organized and prioritizing your needs is a great place to start, so we are here to help.Here are 8 steps to finding the perfect car for you.Step 1: Determine what you need.The first step when purchasing a car is to determine what you need. There are so many cars on the market with so many features, so you need to prioritize what you will be using your car for and what you need. Here are some questions to ask yourself:Will I be commuting long distances and need good fuel economy? Do I live in an area where I need four wheel drive or all wheel drive?What features are important to me? Do I need a backup camera? Leather seats? All weather mats? Make a list of your must-have features. Then, make a list of features that you would like to have but that aren’t totally necessary.Is this going to be the family car? Do I need to fit multiple passengers and have the best safety features?Do I need a lot of cargo space? How important is trunk space or towing capacity?These questions can help point you towards the type of car you should be considering and give you an idea of where to start. Step 2: Determine what you can spend.The next major factor in the car you choose is your budget. If you are planning on purchasing a car upfront with cash, this answer will probably be pretty straightforward. But if you are like most of us you will need to lease or finance your car. You will ultimately need to determine two things:What down payment can I afford?What monthly payment can I afford?Look at your monthly budget to see how much you can swing every month. There is a general rule that you should not spend more than 20% of your monthly income on transportation expenses (this includes gas, tolls, maintenance, parking, insurance, etc) and you should not spend more than 15% of your monthly income on your car payment. Play around with numbers and your budget to see what you can comfortably afford. You don’t want to put yourself in a position where you are struggling month to month to make your payments. It’s better to underestimate the amount that you can spend every month instead of overestimating.Step 3: Determine if you want a new car or a used car.Think about if you want a new car or a used car. Keep in mind that getting a used car doesn’t mean that you are buying a beater car. You can get a certified pre-owned car that is in great condition with a significantly lower price tag. And most times you will still have the option to finance it. But with a lower price tag comes more wear and tear, an unknown history, and more maintenance costs. A new car allows you to skip the questionable past and the wear and tear, but as a trade off you are paying a good amount more as your car will experience instant depreciation.Step 4: Determine if you are going to lease or buy.When it comes to new cars, you have the option to either lease or buy. There are pros and cons to both, so it will depend on how you plan to use the car and what your preference is. Leasing a car might be a good option if:You want to get a new car every few yearsYou are on a tighter budget and still want a nicer carYou don’t care to work on your car or customize your carYou can stay within the mileage restraints of the lease periodOn the other hand, buying a car might be a good option if:You like to work on your car and customize itYou want the freedom to keep your car and sell it whenever you wantYou drive a lot and will not be able to keep within the mileage restraintsYou want the equity of ownershipLeasing is generally cheaper than financing, so if you are on a tighter budget leasing might be the right choice for you. You can always buy your leased car if you end up loving it.Step 5: Determine what car size and car type is right for you.Now is the time to determine what type of car you need. You already know what features are important to you and how you plan on using the car, so now you get to narrow down what type of car is right for you. Here are the major contenders:SedanCoupeHatchbackSports CarLuxurySUVMinivanVanTruckElectric or HybridAgain, look at how you will be using your car. If you have a family, a minivan or SUV will probably make more sense than a coupe. If you are looking for a nicer ride with all the bells and whistles, a luxury car or sports car is more up your alley. Is gas mileage important? An electric car or coupe is the way to go. Step 6: Determine what brand is right for you.Once you know what type of car you need, you can start narrowing down what brand you should look at. There are lots of brands with different price points and different pros and cons. Most people have a preference off the bat of what brands they like and what brands they want to steer clear from. When researching brands, be sure to consider the following:Who is well known for making the type of car I want? For example, a Subaru is a great option for a rugged SUV, while a Kia is a great option for an affordable sedan.What brand fits in my budget?What do the reviews say? Are people happy with their cars from the brand you are interested in?Is this brand known for safety?Your budget and the type of car you are interested in should help you to narrow this brand list down significantly. Talking to friends and family and reading online reviews can help you to make a final decision.Once you’ve determined the brand that is right for you, you should be able to select the perfect model based on your needs, wants, and budget. Picking the exact color and trim level is also very important. Keep in mind that being flexible on these features may help you get the car a little quicker. If you have a lot of special requests you may have to special order the car from the manufacturer which can take several months.Step 7: Determine where you will buy your car.Now that you know what you are looking for, you need to decide where to actually buy it. This is now easier than ever, as you can do an inventory search online on many sites such as Edmunds to find where you can get the exact car you want. You can even plan to have a car shipped to you if you find the perfect car that’s out of state.Even if you buy a car online, it’s a good idea to take your car for a test drive. You can go to most dealerships and go on a commitment free test drive. There might be something that you don’t actually like about the driveability of the car, so it’s a good idea to physically drive it before committing.Step 8: Sign and drive.When you have landed on the perfect car, you need to cross your t’s and dot your i’s. If leasing, you will have to finalize the terms such as the lease period. If you are financing you will need to apply to lenders and compare the offers. Look at the interest rate, loan term, and prepayment penalties. Keep in mind that you can always refinance your car loan in the future so long as the prepayment penalties are not prohibitive. You will also need to decide how much of a down payment you will put down. Experts recommend putting down at least 20% to help protect your car from depreciation. If you end up in a situation where you owe more than your car is worth, it can be a problem down the road. And that’s it! Once you sign the papers and write the check you can drive your car as soon as it is available. That’s how you can choose the perfect new car in just 8 steps.Buying a new car can feel overwhelming, but following these steps can help you choose the perfect car for you and your family. If you already have your perfect car but have a less than perfect car loan, Auto Approve can help! By refinancing your current car loan you can get a better interest rate, better terms, and a loan that works for you. Our experts can help determine if you qualify for refinancing and help guide you through the process. GET A QUOTE IN 60 SECONDS
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Is Now a Good Time to Refinance My Car? Winter 2023

01/31/2023 16:43
Let’s face it: life is expensive right now. Rent, groceries, gas, insurance–the bills never seem to stop. So who couldn’t use a little extra breathing room every month? If you have a car loan, you may have heard that refinancing can help you out a lot. But what exactly is refinancing, and is now the right time to refinance?Here’s why now might be a great time to refinance your car loan (and how you can decide if it’s right for you).What is car loan refinancing?Car loan refinancing is when you pay off your existing car loan with a new car loan. The new loan should have better terms and conditions. Maybe it has a better car loan interest rate (this is the most popular reason for car loan refinancing), maybe it has a different repayment period which will drastically change your monthly payments, or maybe you need to change who is listed on the loan. All of these are great reasons to refinance your car loan.When you refinance a car you apply to different lenders as you may have done when you initially financed your car. You can apply to traditional banks, online lenders, and credit unions. You can also use a car loan refinance service that specializes in refinancing. These companies can help you navigate the process of refinance, helping you select who to apply with and determining the best lender for your situation.Will interest rates go down in 2023?As always, it’s hard to exactly predict what will happen with auto loan rates in 2023. But most experts predict that auto loan rates will not go down, and may tick up a bit more. This has to do with the Fed’s reaction to high inflation.When inflation hits (which has been the case for the past two years) the government steps in to try to correct it. Our inflation situation is due to a number of factors, but supply chain issues is one of the top reasons we are in this situation. There is a lot of demand for products but there is not a lot of supply of those products. And this demand drives prices high. To combat this, the Fed tries to decrease demand in the market. Raising interest makes borrowing money more expensive, and therefore reduces demand.So where do we go from here? The Fed still plans to raise interest rates a few more times throughout 2023, so it’s probable that interest rates will tick up higher in the coming months. Should I refinance my car loan now?If interest rates are increasing, does that mean it’s a bad time to refinance your car? Not necessarily. The truth is it all depends on your situation and why you are looking to refinance. To determine if now is the right time to refinance, ask yourself the following questions.Has my credit score improved since my initial financing?Your credit score is one of the biggest factors that affects the car loan interest rate you will be offered. If your credit score has improved since your initial financing, you may still qualify for a better interest rate. Let’s examine the different interest rates you may be offered based on your credit scores.Let’s look at the average car loan rates for today (from RateGenius). If you have a credit score of 670, you could be offered an interest rate of 8.03% over 36 months. But if you had an excellent credit score of 810, you may be offered an interest rate of 4.67% over 36 months. That goes to show how much of an effect your credit score has on the car loan interest rate you are offered.There are a number of reasons why your credit score may have improved since your initial financing. These factors may include:A negative event expired (such as a bankruptcy)You’ve paid off a significant amount of debtYou have improved the timeliness of your paymentsYou have increased your credit limitsYou have a better mix of credits now You have corrected errors on your credit reportIf your credit score has improved since you initially financed, you can still save a lot of money by refinancing (even if the market rates have increased).Do I need to add or remove a cosigner? If you are looking to refinance your loan because you need to add or remove a cosigner, it might still be a good time for you. Many people initially finance with a cosigner to get approved (if they don’t have much credit history) or to secure a better interest rate.A cosigner lessens the risk that the lender is taking, so you can get a lower rate by having a loved one with good credit sign their name. So if you want to get a better interest rate, you can refinance with a cosigner.On the other hand, if you want to free your loved one from the financial responsibility of your loan, refinancing is the way to go. Be sure to prepare your credit score ahead of time so that you can get the best terms possible.Am I having trouble making my monthly payments?When you refinance your loan you will have the opportunity to change your repayment period. And changing your repayment period can drastically change your monthly payments.If you are having trouble making your monthly payments, lengthening your repayment period can significantly reduce your monthly payments. Because you have a longer time to pay off the principal, your payments can reduce by hundreds every month. You will end up paying more over the life of the loan since you will be paying interest for a longer period, but this may be worth it. You can also refinance to a shorter payment period. This will help you save money over the life of your loan since you will be paying interest for less time. You will also be able to secure a lower interest rate by having a shorter repayment period.That’s how you can decide if now is the right time to refinance your car loan.It’s true that right now isn’t the best time for everyone to refinance their car loan. The market rates are not particularly low, and lower rates don’t seem to be on the immediate horizon.But that doesn’t mean that it’s a bad time to refinance for you! Refinancing is all about your personal situation. If your credit score has improved or you need to adjust your repayment period, refinancing might still be a great option for you.Our experts at Auto Approve can help you decide if the time is right for you. GET A QUOTE IN 60 SECONDS
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*APR and Fees Disclosure: Auto Approve works to find you the best Annual Percentage Rate (APR), which is based on factors like your credit history, vehicle and desired payment terms. Fees to complete your loan refinance vary by state and lender; they generally include admin fees, doc fees, DMV and title. Advertised 6.24% APR based on: 2019 model year or newer vehicle, 730 minimum FICO credit score, and loan term up to 72 months. All loans subject to credit and lender approval.
Auto Approve has an A+ rating with the BBB and is located at 2860 Vicksburg Lane North Plymouth, MN 55447. Auto Approve works to find its customers the best terms and APR, which are based on factors like credit history, vehicle, and desired payment terms. Loan amounts, costs, and fees vary by state and lender; they generally include admin fees, doc fees, DMV, and title fees, depending on the lender and period of repayment. There is no fee to obtain a quote and all refinancing-related costs are included in the amount financed so there are no out-of-pocket costs! For more information, please go to AutoApprove.com.