Category Archives: Buying & Selling

Auto Loans vs Car Title Loans: What’s the Difference

Auto loans and car title loans may sound similar, but they are two different things. An auto loan is a loan you get to buy a car. A car title loan is a short-term, high-interest loan that uses your vehicle title as collateral. It’s not used to buy a new car, and could actually lead to you losing your car. Here we’ll dive into the key differences between auto loans and car title loans, and explain when you might want to choose one over the other.

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What is an auto loan?

You want to buy a car, but you don’t have enough cash on hand to pay for the car outright. An auto loan is a lump sum of money that’s loaned to you for the sole purpose of buying a new or used car. You pay for the car with the auto loan and then repay the loan, with interest, over an agreed upon number of months.

How much is the typical car loan? According to Experian, the average new vehicle loan hit a record high of $31,099 in 2018, and $19,589 for a used auto loan. The national average for U.S. auto loan interest rates is 4.21% (for a 60 month loan), adds ValuePenguin.

Auto loan terms are getting progressively longer, too. New car loan terms are up to 69 months or more, reports Experian, and the average used vehicle loan has a term of just over 64 months.

If you miss too many payments or don’t pay back your car loan, the car will be repossessed and sold at auction. If the car isn’t sold for enough money to cover your loan, then the financing company may come back to you to collect the outstanding balance, warns Sapling. Your credit score will also take a pretty sizeable hit.

What is a car title loan?

A car title loan is a small, short-term loan that comes with a high interest rate that uses your vehicle as collateral. It has nothing to do with buying a new car. A car title loan usually has to be paid back within 15 or 30 days and can come with a super high interest rate. Car title loans are on the smaller side, like $100 to $5,500, but some lenders offer amounts of $10,000 or more. A car title loan is also called a pink slip loan, title pledge, or title pawn.

Car title loans sound simple enough, right? But you want to approach them with caution.

“The Federal Trade Commission (FTC), the nation’s consumer protection agency, advises you to put on the brakes and understand the costs of a car title loan.”

That’s what it says on the FTC’s website — verbatim — because a car title loan puts you at risk of losing your means of transportation. If you don’t pay the car title loan back in the 15 or 30 day term, then the lender might roll your loan into a new one (with plenty of fees tacked on) or repossess your vehicle. Lose your vehicle and you lose the freedom to go where you want to go, when you want to go.

Car title loans are not only risky, but they’re also expensive. Lenders charge an average of 25% per month to finance a car title loan, reports the FTC. Do the math and the costs can really add up! Here’s an example from the FTC:

If you borrow $500 for 30 days, you could have to pay, on average, $125 plus the original $500 loan amount — $625 plus additional fees — within 30 days of taking out the loan.

It might surprise you to learn, though, that car title loans generally don’t affect your credit score. Most title loan lenders don’t check your credit when you apply for a title loan and paying off a car title loan on time won’t boost your credit score. However, a car title loan will be reported to credit bureaus in the case of vehicle repossession. That has the potential to knock your credit score down, notes the Fiscal Tiger.

Auto Loans vs. Car Title Loans Comparison Chart

Auto Loan Car Title Loan
What is it? A loan that’s specifically used to buy a car A small loan that uses your car as collateral
Who gets it? Someone who wants to buy a new or used car Someone who needs a small amount of cash, fast
Other names for it Car loan, auto loan, vehicle financing Pink slip loan, title pledge, title pawn
What happens if you don’t pay back Your car is repossessed Might roll the old loan into a new loan, or your car could be reposessessed
Average amount $31,099 for a new car loan and $19,589 for a used car loan $100-$5,500
Average Term 60 to 70 months 15 or 30 days
Average interest rate 4.21% (on 60 month loans) 25%

Shop myAutoloan for a car loan today

Now that you’ve compared auto loans and car title loans, which one is right for you? If you’re ready for an auto loan, NOT a car title loan, then apply through myAutoloan to review up to four loans. We’re here to help connect you with your best financing option, not just any financing!

Key Challenges That College Students Face When Buying a Car

While some college students can rely entirely on public transportation, others don’t have that option. Some students need a car to make the daily campus commute or take their stuff home for the holidays.

While a personal vehicle might be necessary, it’s not easy to manage the expense of buying a car. This is especially true if you’re applying for a new auto loan with little to no credit history and limited income. Finding the right car deal can be tough. Here are a few challenges to consider.

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Problems Faced By College Students

There are a number of challenges faced by those looking to buy their first car, including steep interest rates, intimidating loan plans, and a lack of cash for the initial payment. Hefty upfront costs and monthly payments for the foreseeable future will look pretty unappealing for college students already operating in the red.

High Interest Rates

Many students have either just begun building credit or have no credit history. When they search for a starter car, they’ll likely run into trouble when trying to secure an auto loan. Loans with decent interest rates usually require good to great credit, so most college students may be offered auto loans with higher interest rates.

Realistically, a student earning a meager wage at a part-time campus job may not have the means to easily pay off an auto loan on schedule. Not only does this cost more, but falling behind on expensive payments may damage an already vulnerable credit score. Check out this rate calculator tool to see what rates are possible with your credit.

Long Repayment Terms

Students who have poor credit or a limited history may also be forced to opt for lengthier repayment terms. It may not be obvious at first, but this is a significant cost factor. When you choose to repay over a longer period, the overall cost of the loan will go up.

Interest will have more time to accrue as you slowly pay down the balance. Simply put, it’ll cost you more in terms of interest. Additionally, the idea of borrowing for an extended amount of time on a depreciating asset can be a major turnoff to students who are looking to buy. Here’s a payment calculator to help you understand what monthly payment to expect from different repayment terms.

Low Cash For A Deposit

Another potential barrier to buying a car is the initial down payment. Most college students lack the cash for a large deposit, which means they may face higher interest rates and loan costs. Why is the down payment important? You get a better deal on a car loan when you can pay more upfront, but that’s not always an option for students early in their asset-buying careers.

How To Solve These Problems

By now it’s fairly evident that college students lack in two car-buying requirements: cash and credit. How can you solve the problems that are both the problem and the solution? You want shorter repayment terms and low interest rates, but you don’t have cash on-hand for a deposit that would make this possible.

Luckily, college students can take steps to improve their financials, which will improve their chances of getting a lower rate or qualifying for a loan in the first place. While these aren’t the only tips to consider, here are several basic tactics for prepping your credit profile for an auto loan.

Start Building Credit

For starters, you can take small measures to begin building a trustworthy credit score. You may want to apply for a credit card thatcaters specifically to students. For many, a credit card is the starting point to credit building. Student credit cards generally require average-to-good credit, and these card providers understand that students who have no experience with credit need to get started.

If you secure a credit card, be sure to consistently pay off your balance. Wiping the slate clean each and every month without fail may prove to your lender that you’re a responsible borrower. Your overall credit score should improve through proper debt management. With a higher score, you are more likely to receive loan offers with lower interest rates and better repayment options.

Budget Like Your Car Depends On It

Another way to improve the car-buying outlook is to take a closer look at yourbudgeting habits. Saving is king when it comes to purchasing major assets. Consider what you earn and spend each month, and decide where you might be able to cut back on and store away. If you have cash left over at the end of the month, set that aside. Use a long lens, remind yourself that your goal is a car, and you’ll force yourself to forego some miscellaneous purchases.

For those who find it tough to keep money management in perspective, budget apps may help you to break down and better organize your spending choices. Some personal finance apps are invaluable tools for students who need a bit of guidance, and they establish positive habits that will come into play when bigger purchases such as a first home crop up down the road.

Consider Shopping for a Used Car

There’s no shame in going used. Previously owned cars tend to be much cheaper than new options. You could get to the point of purchase sooner, whether you’re paying fully in cash or taking out a used car loan. If you’re short on cash, then you may want to think about an auto loan.

If you shop around for different auto loan options, then you may be able to find an even better deal for a used car. myAutoloan is always a great option. According to Lendedu, myAutoloan is one of the top choices, especially when it comes to finding affordable rates in a short amount of time.

Used car dealers offer an enormous selection of vehicles, and you’re bound to find a dependable ride, whatever your needs might be. So don’t shy away from the pre-owned route; it’s often the best choice for students!

By Andrew, a Content Associate from Lendedu – a website that helps consumers with their finances. Andrew bought his first car, a 2000 Mazda Protégé, in high school; he heavily relied on the “Budget Like Your Car Depends On It” and “Consider Shopping for a Used Car” tactics to make that happen!

Car Dealer Fees: What You Can Avoid & What You Can’t

You’re about to get a great deal on a new car. The sales person agreed to your number. Yay! But then you see the final paperwork. And the fees just keep piling up. Do you have to pay the doc fee? For VIN etching? And what’s a destination charge? All of a sudden, it doesn’t feel like you’re getting such a great deal after all. You feel swindled.

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Follow along as we explain various car dealer fees and how you can avoid certain ones.

Car Dealer Fees – Explained

Car Dealer Fee What It Is Can You Avoid It?
Destination Charge Cost to transport the car from the manufacturer to the dealership No
Title and Registration Fee Cost to establish you as the vehicle’s owner and the get the vehicle properly registered in your state No
Documentation/Doc Fee Cost to process your documents and paperwork at the dealership No
State Sales Tax Charge levied by state government No
Advertising Fee Fee passed through from the manufacturer to help pay for promoting the car Maybe
VIN Etching Fee Fee to have the VIN etched into the car’s windows Yes
Dealer Financing Markup An amount of money the car dealer adds on to dealership financing, either through the interest rate or on top of other ancillary products Yes

What’s a Destination Charge?

A destination charge is a fee that’s set by the automaker. It covers the cost to transport the vehicle from the factory to the dealership, and it’ll be listed on the car’s window sticker.

You generally have to pay the destination charge. BUT (and this is a big BUT), Consumer Reports notes that some dealerships get sneaky and tack on things that sound like destination charges but really aren’t.

“If you see additional ‘pre-delivery inspection,’ ‘delivery,’ ‘destination,’ or ‘dealer prep’ charges, you should refuse to pay them,” says Consumer Reports.

What’s a Title and Registration Fee?

The title and registration fee pay for your vehicle to be properly titled and registered in the state. Most dealerships have agreements with the state’s Department of Motor Vehicles so you can take care of the title and registration at the dealership, without have to visit the DMV. Some dealerships will issue you temporary tags. Others will provide you with permanent license plates. The title and registration fee is set by the state and is not negotiable.

What’s a Doc Fee for Cars?

A doc fee, or documentation fee, is a fee that’s charged to cover the cost of processing a vehicle’s paperwork. It helps pay for the dealership staff you probably don’t see, like the people who handle money and set up the title and registration with the DMV.

Most states don’t put a cap on doc fees, but some states do. Find your state on this list of average dealer documentation fees by state. Dealerships in states that don’t regulate doc fees have been known to charge doc fees of several hundred dollars.

So, do you have to pay doc fees? According to Auto Trader, the answer is yes and no. What you want to focus on is negotiating the bottom-line number.

“If you’re prepared to pay a certain amount of money with tax for a car, you should ask the dealer to deal in his bottom-line or out-the-door price — a price that includes the doc fee… That way, you’re not haggling over the exact dollar amount of fees and taxes… Instead, you’re focused on the price you pay overall, and if the dealer wants to include a doc fee in that price, then so be it.”

What’s a State Sales Tax?

The word “tax” should tip you off here. Can you think back to a time when you’ve been able to avoid paying taxes of any kind? (Except tax-free weekend if your state participates in that program!) Sales tax is not negotiable.

You’ll need to pay sales tax when buying a vehicle. You may have to pay tax on the full amount, or the purchase price minus a trade-in. If you’re buying a car out of state, you’ll pay sales tax when you register the vehicle in your home state. Sales tax varies by state. Check out this list to view car taxes by state.

What’s an Advertising Fee?

Auto manufacturers will add a charge to each car that’s delivered to the dealership to help pay for a brand’s national advertising — think newspaper, radio, magazine, and TV ads.

According to U.S. News and World Report, “Some dealers will try to get customers to pay twice: first, as part of the invoice, and then again as a separate fee when the purchase is finalized.” Watch out for a duplicate advertising fee — it’s one car dealer fee you can avoid.

What’s a VIN Etching Fee?

This car dealer fee is exactly what it sounds like. You can pay to have the vehicle identification number etched into the car’s windows. It’s an anti-theft measure and while highly recommended by insurance companies and the police, VIN etching is something you can do at home or through your local police department at a much lower price. DIY kits on Amazon start at about $17. You can expect to pay $200 or more at the dealership. VIN etching is optional and you do not need to pay this fee when buying a car.

Beware of the Dealer Financing Markup (the Fee You Don’t See)

The car dealer fees we’ve reviewed thus far are ones you can typically see clearly outlined in your final paperwork. There’s another fee, however, that could remain “hidden” — the dealer financing markup.

Data released for “2018 show that consumers paid an average of $1,791 in undisclosed fees and markups, a 5% increase from 2017 and a 71% increase since 2010,” reports Outside Financial via PR Newswire.

Why is this? Car dealer fees have become increasingly transparent, with outlets like Consumer Reports and even myAutoloan raising awareness about fees you can avoid and those you can’t. In response, “dealers have increasingly relied on loan markups to grow profitability.

Dealer markups on auto loans are one major car dealer fee you can avoid.

Jon Friedland, CEO of Outside Financial, estimates that in 2018, “By shopping for car loan packages before they go to the dealership to buy their cars, consumers could have saved $1,000 in hidden fees and markups on each of these loans.”
Reading about car dealer fees may make you feel like you’re at the mercy of the dealership — but you’re not. When you’re a cash buyer, you can be in control from the moment you set foot on the lot. Take the advice of Outside Financial and get to know your financing options ahead of time. Don’t fall victim to hidden markups on dealer financing. Start the process with myAutoloan. Submit one application and see up to four financing offers in minutes.

7 Steps to Buy Your First Motorcycle

You’re new to motorcycles. You’ve only driven a bike a few times, but when you did, it was exhilarating. You can’t wait to own a motorcycle of your own and now, you’re finally ready. But is buying a motorcycle the same as buying a car? Where do you start? We may have “auto” in our name, but we know motorcycles, too. Follow these seven steps to successfully (and safely) buy your first motorcycle.

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How to Buy a Motorcycle

1. Learn how to ride.

It doesn’t make much sense to buy a car if you don’t know how to drive. The same can be said for buying a motorcycle. Plus, some states require official motorcycle training in order for you to get a bike license.

It doesn’t matter whether you have a driver’s license or not, or how long you’ve driven a car. Driving a motorcycle requires different skills than driving a car. Motorcycling is equal parts fun and dangerous. Completing a motorcycle training course will help you gain the skills you need to maximize the fun part and minimize the dangerous part.

A course will also give you the opportunity to try out different bike styles and connect with people in the industry who can give you pointers on how to buy a motorcycle in your area and where to find the best deal.

Start with the Motorcycle Safety Foundation. It’s an internationally recognized rider training program and can connect you with courses near you.

2. Decide between a dealer or private seller, new or used.

So, you learned how to ride and you passed a motorcycle training course. Congratulations! Are you comfortable buying a motorcycle from a private seller, or would you rather buy through an official dealer?

Where you’re comfortable buying a bike will also play into whether you’re going to buy a new or used motorcycle. Dealers are likely to have both types of bikes in-stock. Go with a private seller and you’ll be buying used. Consider these pros and cons.

Buying a New Motorcycle vs. a Used Motorcycle
New Motorcycle Used Motorcycle
Price More expensive Less expensive
Condition Perfect, plus has the latest features; probably comes with a warranty May need some service and could be missing latest technology; no warranty
Experience A reliable dealer has reviews, a website, and you can verify their business history and the bike history You can’t be sure who you’re buying the bike from or where the bike has been if you purchase from a private seller, and you may be uncomfortable meeting a stranger

3. Finance the motorcycle.

Once you know whether you plan on buying a new or used motorcycle from a dealer, or a used motorcycle from a private seller, you’ll want to secure financing. This part is pretty similar to buying a car! Getting pre-approved for financing beforehand has many advantages. As NerdWallet notes:

  • You’ll be made aware of credit problems ahead of time (and potentially fix them).
  • You can play with the loan terms and pick the terms that fit your needs.
  • You can show the salesperson that you’re an informed and serious buyer.
  • Pre-approval strengthens your negotiating power.
  • Pre-approval could encourage a dealer to counter with a lower interest rate.

But don’t rev your engine for the first motorcycle loan option that comes your way. Compare all of the financing options available to you using a service like myAutoloan. Fill out one application and we’ll present you with up to four motorcycle financing options so you can select your best rate.

4. Get motorcycle insurance quotes.

Just like you need auto insurance to stay legal when driving a car, you also need motorcycle insurance when you drive a motorcycle. Get insurance quotes beforehand to see how rates vary by insurance company and motorcycle type. Your financing company will probably require that you buy a certain amount of insurance, too.

Motorcycle insurance costs can vary greatly depending on the type of bike and its accessories. You might be looking at two bikes that have the same sticker price, but one costs hundreds of dollars more to insure each year. An insurance quote can help you avoid surprises and help you make a good buying decision. Start with a quote from one of our insurance partners.

5. Browse bikes, but don’t expect a test drive.

Go online or to the dealer of your choice to start browsing bikes. Unlike buying a car, motorcycle test drives are not standard. There are far too many safety and insurance concerns.

If you’re an experienced rider with the driver’s license endorsement and training to back it up, you can probably schedule/request a test drive at a larger dealership like Harley-Davidson or Kawasaki. But you might encounter some roadblocks as a new rider. Your best bet is to research demo days in your area and sign up for ride time. You can also attend motorcycle rallies, shows, and races, as most major manufacturers will send demo fleets to these events.

6. Buy the right safety gear.

There’s tons of steel, glass, and plastic surrounding you when you drive a car. If you collide with something, an airbag will go off to cushion the impact. A motorcycle has none of these safety features. There’s nothing but your skin between the road and your organs. Protect your body with the right safety gear.

Best Beginner Motorcycles recommends that all new riders start with at least a motorcycle helmet, leather motorcycle gloves, a motorcycle jacket, motorcycle boots, and motorcycle pants. The Motorcycle Legal Foundation recommends the same, but also additional safety gear like body armor, knee guards, and hearing protection. Check out both websites for thorough recommendations when buying motorcycle gear.

7. Buy a motorcycle!

You learned how to ride, found the bike you want, and secured motorcycle financing. You’re ready to grab your safety gear and buy your first motorcycle. So, do it! Enjoy the open road and listen to Laurence Fishburne when he says, “On a motorcycle, you can’t really think about more than where you are. There’s a freedom that comes with that – from stress, worry, sweating the small stuff.”

Why You Should Consider Buying A Used Car

Buying a car is an exciting process, especially if it will be your first time to own a car. When it comes to purchasing a car, there will surely a lot of decision-making. You first want to decide what kind of transportation you need. Is it a car, SUV, or truck, the model, the color, and most importantly the price. This decision can make a big difference in your life over the next several years. Let’s talk more about the advantages of buying a used car.

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We live in a generation where the automobile industry is time-tested and has developed advanced technology and quality. Cars today are really good and last a long time. Before we used to think that a car of 100,000 mileage was done, but now cars are running to 200,000 miles.  According to reports, by 2015, the average car driving in USA roads had reached a record of 11.5 years of age. The auto industry experts predict that the number of years will increase by 15% in 2020. But keep in mind that all used cars are not equal. A buyer must do some research before deciding if a used car is in good shape for your transportation needs. Nowadays, you can purchase a three-year-old car and sell it in five years without you needing to do major repairs on it. 

The best thing about buying a used car is that you let someone take the biggest depreciation on the car. This means that you may be able to sell the car for nearly the same amount you paid for it in the next couple of years. And for that, you can still find good financing options because you are not losing the money on depreciation. Another good thing is the insurance rates may be lower on a used car. This may be a significant saving especially for your owners who are paying high insurance rates because of their age. 

There is also a thing called the Certified Pre-Owned (CPO) program offered by the carmakers to make a used-car purchase much less worrisome. CPO enables certified vehicles to get some level of warranty and perks like roadside assistance or a free loan car when your vehicle needs to stay in the shop.  CPO programs vary from manufacturer to manufacturer, but what is important is that these vehicles meet a manufacturer’s established standards. 

If you don’t know much about cars, then asking for a mechanic to look over the car would be an excellent idea.  You should also take a look at the Vehicle History Report to get important information about the car’s past. Shopping for a used car is definitely more affordable than going for the new one. But no matter what you decide, you should do your research and make sure that the car model has been performing well. Yes, there will always be a risk on buying a used car that’s why you need to do your homework before driving home one. 

Author – Edward Cruz is a staff writer for VIPpromocodes.com, a website that provides the latest promotional codes, exclusive sales and offers for all of the top stores in the U.S.