Monthly Archives: March 2018

Auto Loans Technology Comes To Your Rescue

Do you remember the time when you had bought your first car? Deciding a car was one difficult thing while getting loan at nominal interest rates seemed even more difficult.

So what has changed in the recent years? What has made us so lazy yet so smart? The answer is technology! Global access to internet and widespread sharing of information has helped us reach the present stage of virtual awareness. You may not physically touch a car but you can know about each and every bolt of the car. You can compare them easily with the help of technology.

In the same way, obtaining auto loans has become a piece of cake. Thanks to the rising use of technology, applying for an auto loan is possible without even moving a single inch from your seat.

How can Technology serve you in applying for an Auto Loan?

According to Interactive Advertising Bureau, 58% of the population regularly researches for a product on internet before buying it. It is a true example of digital awareness among the buyers. If you are applying for an auto loan, look how technology comes to your rescue and helps you save your hard-earned money in the process.

E-Documents

Scan your certificates and identifications along with your signature and save it to an e-vault. Uploading your personal information can help you save a lot of your effort, time and money. Whenever you need them, you can log in the system and retrieve them quickly. It makes applying for auto loans easier. Whenever you want to get auto loans, you need to submit your e-documents without having to refer to your original documents.

Comparison and Calculations

Previously, you had to understand each and every term of the auto loan contract and manually check the interest rates. However, things are different now. You need not waste hours calculating the monthly payments. The internet does it for you within a couple of seconds.

Also, the traditional rule of applying for an auto loan with the dealer is out of the window. The merit of borrowing auto loan over the internet is that you can borrow it from any lender you like. Also, comparing various offers has become easy because of technology.

Flexibility

Time is valuable. In the old days, you had to fix a meeting with the lender and visit his office. Also, you had to negotiate in order to get the best interest rates for your auto loan. While technology has made it possible for you to obtain a loan, it has also made you the owner of your time. There are no time boundaries for applying with the lender. Whether it is night or day, you can apply for an auto loan and get approved.

Technology has made the once ‘unimaginable’ a reality. Today, car buyers are conducting thorough research before making any kind of purchase. It is the reason behind many businesses opening an online store. Technology offers you great comfort and ample choice. So why not use it to save your valuable time, effort and money? Apply for an auto loan with the help of technology and buy your new car.

Being A Cosigner All Risk And No Reward

We all might have experienced a situation where a friend or a family member asks you to become a cosigner. Before saying yes, it is best to know what you are getting into. Typically, when you consider cosigning for an auto loan, you are agreeing to repay the loan amount if the primary borrower stops making payments. While you agree to it, the risks outweigh the benefits. You may consider it as a way of improving your credit score, but do not delve into it before fully understanding the risks associated with it.

Risks associated with Cosigning an Auto Loan

1. Damaged Credit Score

Earning a good credit score requires decent effort. When you become a cosigner, any form of delay or non-payment of the auto loan will reflect on your credit report. Inability of the primary borrower to make the payments can decrease your credit score. Also, your debt-to-income ratio increases when you become a cosigner. Ideally, a debt-to-income ratio should not be higher than 36 percent. Being a cosigner increases your debt against your income. And, your credit score decreases due to increased debt amount. Therefore, if the borrower has a poor credit history, rethink your decision.

2. Enforceable Legal Judgments

When the primary borrower is unable to repay the loan, the lender may take legal action against the cosigner. Also, there is a high probability that you are sued before the primary borrower. It is because you are likely to repay the loan amount fast in order to protect your credit score. In case, the primary borrower is unable to repay the loan, a cosigner’s assets and salary can be in jeopardy as the lender can claim his assets.

3. Reduced Credit Ability

When you are a cosigner, other lenders see you as someone who has already agreed to guarantee a loan. The lenders assume that you are already making monthly payments on the loan you have cosigned for, thereby leaving little money to make payments for a new loan. Thus, a new auto loan approval might become difficult for you.

Does it make sense to become a Cosigner?

While it may not be a financially sound decision to become a cosigner, you can agree to it when you are in a position to afford the risk. If you have a good amount of surplus cash or possess substantial assets to repay the loan amount of the primary borrower, you can think about it. Also, if you will be using the car, it makes sense to say yes.

Cosigning an auto loan may look like a lucrative method to improve your credit score. However, it can mean all risk and no reward when you have to deal with a damaged credit score, enforceable legal judgments and reduced credit ability.

Cosigning an auto loan may look like an easy way to improve your credit score. But, it is not true. Before you jump at the first chance of becoming a cosigner, arm yourself on the know-hows of the risks associated with it. Learn more about how it can mean all risk and no reward if you have to deal with damaged credit score, enforceable legal judgments and reduced credit ability.

Buying A Rent-to-own Car A Feasible Option

A poor credit score can become a lingering nightmare and affect numerous aspects of your life. If you are credit-challenged and wish to purchase a car, getting an auto loan approval may seem like a tedious task. However, rent-to-own cars have gained significant popularity amongst those with a bad credit score. Typically, a rent-to-own car means renting and using the car from a dealership whilst paying a down payment and making weekly payments. Once you have completed the weekly payments of the car, the ownership of the rent-to-own car shifts to you, the buyer. As the dealer requires no significant credit check for the purchase of the car, many credit-challenged individuals turn to rent-to-own cars. Although they may seem like a lucrative option, the disadvantages outweigh the benefits.

What are the Downsides of a Rent-to-Own Car?

1) Expensive Purchase

When the dealer lines up used cars under rent-to-own category, he marks them higher than other cars. As no interest rates are charged on rent-to-own cars, he tries to make a profit through sale of the car. Therefore, purchasing a rent-to-own car means paying more to own a used car with a lower resale value.

2) Frequent Payment Schedule

The payment schedule associated with a rent-to-own car is more frequent as compared to a used car. The dealer requires you to make weekly payments as against the regular monthly payments on a used car. Due to frequent payments, it can become difficult to keep tracks of payments, thereby, attracting the possibility of a late payment fee.

3) No Effect on Credit Score

Regardless of your timely payments, your credit score will not improve due to a rent-to-own car. With the purchase of a regular used car, the ability to increase your credit score is a possibility. However, with the purchase of a rent-to-own car, the payments do not reflect on your credit report and will not help in improving your credit score.

4) Absence of Warranties

There are no warranties on rent-to-own cars. As you use the cars, the probability of a breakdown is higher than a regular used car. Therefore, any repairs, damages and breakdowns are your responsibility as a buyer of a rent-to-own car.

Is there an Alternative Option?

If you do not wish to buy a rent-to-own car, you can still avail a bad credit auto loan to purchase a regular used car. The advantage with purchasing a regular used car is that monthly payments can help you structure your finances and warranties can shield your car from any potential future damages. Thus, purchasing a used car can provide greater benefits in the long run.

A damaged credit score does not necessarily mean that you should opt for a rent-to-own car. The downsides of purchasing the car include expensive purchases, frequent payment schedules, little or no effect on your credit score and absence of warranties. The good news is that purchasing a regular used car with a bad credit auto loan is a suitable alternative.