Category Archives: Credit & Auto Loans

When NOT to Cosign an Auto Loan

To cosign, or not to cosign. That is the question. While cosigning an auto loan for a friend or family member can help them get a car they might not be able to afford on their own, you could be taking on undue risk. As the cosigner, you’re agreeing to pay the amount due and perform all the agreements stated on the contract if the borrower fails to meet contractual obligations. You’re on the hook for the loan payments if the other person stops making them for any reason. Even if they die.

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As the cosigner, you’re essentially the loan company’s Plan B.

Sometimes, the risks of cosigning for someone don’t outweigh the rewards, even if the person is your [insert relationship here!]. Here’s when you should think twice about cosigning an auto loan.

Think twice about cosigning a loan when…

You’re planning on making a major purchase soon.

Considering renovating your home, buying an investment property, or purchasing anything that might require credit? Then be careful. Being a cosigner could ding your credit in two ways.

First, if the other person fails to make their auto loan payments on time, your credit could be damaged right along with theirs.

But let’s say they never miss an auto loan payment. There’s another risk to consider, too.

Cosigning an auto loan will increase your debt-to-income ratio, which is the percentage of your debt payments in relation to your income. Any auto loan you cosign for will show on your credit report, even if the financed car isn’t yours and you never get to drive it. New lenders will review your debt-to-income ratio when you apply for financing, and they might not be too excited when they learn you could be on the hook for someone else’s auto loan.

“Because you’re liable for [the loan’s] balance in the event of a default, being a cosigner can decrease your ability to get new credit,” says Money Crashers.

It doesn’t matter if the other person makes their payments on time. “Cosigning a loan can also lower your credit score because the amounts you owe makes up 30% of your FICO score,” adds Money Crashers.

According to Smart Assets, a debt-to-income ratio of 36% is generally accepted as good. The closer you get to 36%, the more your credit score could drop and the more hesitant a potential lender might be. Keep your debt-to-income ratio low for less stress and more credit opportunities.

Your relationship with the borrower is rocky.

You may feel tempted to cosign for a loved one to show them you care, to help them out of a tough time, or because you feel guilty for things that happened in the past. These feelings are completely normal and understandable.

Keep in mind, however, that cosigning a loan could make your relationship worse, not better. When you turn a personal relationship into a financial relationship, you put a lot of undue stress on the personal relationship.

“You’re putting your relationship in real jeopardy,” Megan McArdle, business and economics editor for The Atlantic, told NPR.

McArdle explains, “If you become this person’s primary creditor, which is what’s going to happen if they default, that really damages the relationship. And even if you don’t, you know, as Dave Ramsey, the financial guru, likes to say, Thanksgiving dinner tastes different when your father-in-law is asking – is looking at you across the table and wondering why you couldn’t pay off your car loan and yet you have a TV or whatever. Keeping those kinds of decisions outside the family, outside of relationships is usually better for everyone in the long run.”

There are libraries of information about the psychology of money, and especially around money and family. Don’t put your most important relationships at risk by cosigning a loan.

Remember that cosigning a loan means:

  • You’ll be responsible for the loan.
  • Your credit could take a hit.
  • You’ll have difficulty financing your own purchases.

Are these risks you’re ready to take?

You can help in another way.

Having a friend or family member cosign is one way many drivers are able to get car loans with little to no credit, but it’s not the only way. You can help a loved one get behind the wheel of a new or used car by:

  • Helping them build better credit. Can you help them set a budget, stick to it, and improve their own credit situation? It might not take as long as you think. Teach your loved one how to build their own credit and you’ll be doing them a favor for years to come.
  • Gifting them money for a bigger down payment. Making a bigger down payment means they’ll need to borrow less, and this could make a car loan easier to get with poor or no credit.
  • Comparing auto financing options. Their first option might not be the best financing option, especially if they’re trying to get a car loan with minimal credit. Different lenders offer different loan terms and interest rates. Encourage them to shop around. Another lender may not require a cosigner!

If you have a friend or family member asking you to cosign a loan with them, there’s a chance they simply haven’t done their research. Have they compared all available loan options? Have they researched how to qualify for an auto loan? We can help. Encourage your loved one to try myAutoloan, where we present applicants with up to four auto loan offers at once. We even work with applicants who have bad credit… which could help keep you out of a bad cosigning situation.

5 Best Cars for People Who Really, Really Love Their Dogs

You only eat at dog-friendly restaurants. You have a tattoo of your pup’s paw prints somewhere on your body. Your bumper sticker proudly proclaims that you just want to drink wine and hang out with your dog.

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We get it. You’re a dog person. We’re dog people, too. That’s why we compiled this list of awesome, dog-approved vehicles. These dog-friendly cars will make it easier for you and Fido to travel together in comfort and style.

You’ll notice that while these vehicles are all different makes and models, dog-friendly cars tend to have a handful of things in common.

The best dog-friendly cars all have:

  • Great, versatile cargo space: Seats can fold flat or easily be removed for maximum storage and space for a dog crate.
  • Low floors: Low floors make it easy for your dog to hop into the car, no matter their age or size.
  • Built-in window shades: Tinted windows or built-in shades can help your dog avoid direct sunlight and stay cooler on long car trips.
  • Easy to clean interiors: $%*# happens. Literally. Parents and pet lovers know this to be true firsthand. An interior that’s easy to hose down and vacuum out is a godsend when a long car ride turns into a long day at the car wash.
  • Little space between seats: The less nooks and crannies there are, the less places you have to worry about cleaning up dog hair and losing rouge treats!

5 Best Cars for Dogs & Dog Parents

#1: Kia Soul

The Kia Soul is top choice among dog lovers and even musicians. Its massive, easy-to-clean cargo area makes it easy for you to transport almost anythingGreat Dane or full drum kit. The Soul’s body sits low to the ground, so even if you do have to help an ol’ dog climb in, you won’t have to lift for long. It can easily accommodate a medium-sized crate. One drawback, though? The rear seats fold down, but not completely flat.

Used Kia Souls cost well under $15k. Think $6k to $13k.

#2: Chrysler Pacifica Hybrid

As a general rule of thumb, minivans make great dog cars! Thanks to their wide sliding doors, large rear hatches, and low floors, minivans make it easy to travel with dogs and still leave room for passengers and luggage.  

The Pacifica Hybrid rises to the top of the dog pile with its completely flat floors and convenient seat anchors that make it easy to tie down a dog crate. Safety and comfort? Two paws up for that!

A new Chrysler Pacifica Hybrid will run you close to $40k, but you can find reliable used Pacificas for closer to $30k and with fewer than 50,000 miles.

#3: Subaru Outback

No list of dog-friendly cars would be complete without a Subaru! Subaru loves featuring dogs in their commercials and regularly invests time and money in pet causes around the country. They work with the American Society for the Prevention of Cruelty to Animals® (ASPCA®), The Center for Pet Safety, and Southeastern Guide Dogs. As a company, Subaru is paws-itively passionate for pups and lives out their passion every day!

Drive a Subaru Outback and you can take your dog pretty much anywhere. The Outback’s low height makes it easy for Fido to jump in and out, and the spacious cabin means plenty of room for him and all of his toys and treats. Plus, every Outback comes with all-wheel drive. In an Outback, you can both answer the call of the wild.   

Subaru has an almost cult-like following, so good luck finding a used Subaru Outback. A new Outback costs about $26k.

#4: Honda CR-V

On first glance, the Honda CR-V sits a little higher than the Kia Soul and Subaru Outback. Don’t start sniffing elsewhere just yet. Dogs and people alike adore the CR-V’s spacious cargo area and composed, stable ride. Upgrade to a CR-V EX-L for leather seating, a power liftgate, and additional safety features like automatic emergency braking, lane assist, and adaptive cruise control.

Honda CR-V prices vary quite a bit depending on mileage and year. For the most part, you can find newer-model used CR-Vs with fewer than 50,000 miles for $15k to $20k.

#5: Volkswagen Atlas

The Atlas doesn’t yet have a reputation among pet parents, but we think it soon will. The perks? A cavernous cargo area plus three rows of versatile seating. The CR-V, Outback, and Soul can’t match that versatility.

The third row of seats even features a 50/50 split so you can secure a dog crate and still keep one of the rear seats for passengers. Atlases are also available with tri-zone automatic temperature control, so passengers and pups alike can stay warm or cool no matter where they’re sitting.  

Volkswagen Atlases are still new to the market. A quick Internet search shows that you can find used models for as low as $25k in some areas.

Buy the car your dog deserves!

Your dog deserves the best. So do you. The pawfect dog-friendly car is waiting for you and your fur baby! Compare up to four used car loan or new car loan offers today and choose the best offer for you, then use your extra cash for some sweet dog treats!

Used Car Loans – Direct to Consumer

Direct to consumer used auto loans can cancel negative equity!

Yes it’s true.  Thinking of buying a used car?  If so, you’re making a smart financial decision.  New vehicles lose 20 to 30 percent of their value the moment a new owner drives them off the lot.  For many people, that means acquiring negative equity on their car loan balances right from the start.  By using a direct lender and buying a good used car, you can avoid this negative equity trap.

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Why Negative Equity Hurts

Negative equity is the amount over a car’s value that a person owes on it.  For example, if Joe owes $30,000 on his brand new car, but after driving it off the lot, it’s worth only $24,000, he has acquired $6,000 in negative equity.  The more Joe drives his new vehicle, the more it depreciates.  Because of this, Joe is going to be difficult for him to ever reduce his negative equity.

Joe may not feel the impact of this negative equity for many years; however, when he eventually goes to trade in the vehicle, he may get a surprise.  If his $6,000 negative equity amount remains even, he may try to trade the vehicle in while owing $10,000, only to discover it is worth $4,000.  He now must cover some of that negative equity or, (upon the purchase of another car), his negative equity hole will grow well beyond $6,000.  Eventually, there will come a day of reckoning, where Joe must cover the whole negative equity amount or be unable to purchase another vehicle.

Why Buying a Used Car Could Help

When you decide to go the used car route, you create much less negative equity at the time of purchase.  If you buy it close to its fair value, you may have some negative equity, but you’re still in pretty good shape.  The smaller amount of negative equity can be more easily covered with a down payment.  Making extra payments on used auto loans is another way to eliminate negative equity.

The Loan Matters

How much interest a consumer pays on their used auto loans makes a huge difference in the amount of negative equity they generate.  By choosing a used vehicle, you’ve made a one smart move.  Make a second smart move by opting for a used car loan that comes direct to consumers, available from money-saving sources like myautoloan.com.

Used car loans direct to consumer saves you the most money because you deal directly with the lender and there are no hidden fees.  When you obtain auto financing through a dealership, the dealer makes profit on the loan by adding percentage points to the interest rate, known as the reserve.  In addition, there may be dealer fees tacked on the loan, which you must finance at the higher interest rate.  Check out a finance calculator to see for yourself.

Adding hundreds or thousands of dollars to an auto loan balance never helped anyone avoid the negative equity trap.  In order to avoid this hassle, obtain used car financing direct from the lender before even setting foot on a car lot.  Having preapproved financing in hand before car shopping not only saves you on the financing, it also gives you negotiating leverage.  Learn more by checking out one of our handy guides.

Direct to consumer used auto loans can also be used for private party purchases. Purchasing from a private party with direct to consumer used car financing provides one of the best ways to prevent negative equity.  By getting both the car and financing much cheaper than possible through a dealer, you create the least amount of negative equity and possibly none at all.

People who decide to work with a direct lender for their used car loan direct save the most money and have the least negative equity.  When you avoid the depreciation of a new car and the extra financing charges of the dealership financing, you put yourself in a vastly better financial position.  Paying off a negative equity car loan is painful, let’s face it and it can become difficult to do.  To keep negative equity minimized, obtain used car financing direct from one of the lenders at myautoloan.com.  Having a choice is real empowerment!

Financing a Car: How We Help

When You Have Bad Credit

It may seem that financing a vehicle is an activity reserved for people with high credit scores and superior financial situations. While they may have a host of options available when it comes to getting that loan, you are not precluded from a financing plan due to a  low credit score.  Instead of creating a lot of frustration in your vehicle search or purchasing a sub-par vehicle, know that our company helps you to find a competitive vehicle finance loan for the car you want to finance.

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Understand Credit Scores and Vehicle Financing

In order to really understand the process, you should know some more about credit scores and vehicle financing.  Financing a car is essentially taking a loan out on the vehicle, and using the vehicle as security for a lender.  Being able to obtain vehicle financing before you ever go to the dealer is a really smart thing to do.  Getting multiple offers and having a choice of which one you want is even better!  If you have taken out loans in the past, you likely have gone through this process of “Waiting – more waiting – and wait a little more before anyone finally gives you an approval.  The lending entity evaluates your financial situation to determine if you present a risk when taking out a loan.  You just sit and wait.  People who have bad credit scores are sometimes denied loans because they are determined to be a higher risk.  However, www.myAutoloan.com  understands that situation can occur but that these situations do not have to define you.  What if you could get more than one offer, even if your credit is not the best?  What if you could choose a lender that would work with you and is competitive in rates that they offer?  You get where we are going.

Know Where to Turn

Applying for a loan at just any lender might not be the best idea because you may find that you cannot get approved or that you do get approved with extremely high interest rates because of your credit situation.  Filling out multiple applications also take a lot of time and is not efficient.  Instead of taking this potentially damaging path to vehicle financing, apply with one application and know that we have lenders available for people with bad credit.  How great would it be if you could get up to four offers within minutes?  We already know and understand that some individuals are not in the best credit situations, and we have numerous lenders ready to approve and offer you a competitive loan rate that will help you re-establish your credit.  You need not to worry about the fear of rejection – your chances are very good that we can find lenders willing to work with you for vehicle financing.  

Reduce the Fees

Even if you are working on getting your financial situation into better shape and have made progress, you probably don’t want to take any steps backward.  Getting a loan from a car dealership could mean that you end up paying all kinds of additional fees.  Instead of just paying back the loan and the interest, you have numerous fees added on so that the dealership is able to make extra money.  Going through this process is unnecessary when you can get up to four offers for auto financing – Having choice means that you can get a lower rate loan and put that extra money towards bettering your current financial situation.  Our business is not out to make things difficult, and you would see that if you apply.   We want to help you get a vehicle finance plan that works for your financial situation with competitive rates.

See the Options

With most online lenders, you may only receive only one vehicle finance option due to your credit situation, but by working with our company, our goal is to get you up to four offers that provide you with choices.  Think about it – You may receive up to four potential offers!  Then, you can take the time to review the offers to see which one fits best with your needs.  At myAutoloan, we work to provide you with an experience that someone with great credit experiences.  You should have the same great experience by working with us. You deserve to feel as though you are being treated just like everyone else and thus, having a positive experience is something that you can look forward to.

Better Your Credit

Taking out a loan also means that you have the opportunity to better your credit situation.  For example, by paying your monthly payments in full and on time each month, you can see your credit score go up and up.  You might worry that procuring a loan on a car is going to make your credit situation even worse, but it actually improve your credit status and builds your credit score each and every time that you make on time payments.  

If you have bad credit, you don’t need to delay looking for a car loan.  Instead, work with lenders who want to work with you.  Read more about the process and how to make it work for you by checking out this vehicle finance guide.  Good luck and make it happen!