Co-Buyer Verses Co-Signer

Many new car loans require a co-signer, especially if the buyer has no credit history or has poor credit history. A co-signer is required in cases where lenders feel the buyer is too big a risk. They want a backup plan in the form of someone who agrees to foot the bill if the buyer does not make good on the loan. The buyer must still meet minimum income requirements for the loan, and the co-signer’s income is not involved.

In contrast, a co-buyer is actually a buyer too. Most often, co-buyers are spouses. They could also be closely related individuals who reside at the same residence or even business partners. Co-buyers can combine their income in order to qualify for the loan, and they are both responsible for monthly payments.

Debt Ratio

Many people do not realize that debt ratio is an important factor in whether or not new car loans will be approved. If you already owe more than your income indicates you can pay, a bank is less willing to take a risk on you. You can calculate your debt ratio by adding up all your monthly bills. Divide this amount by your monthly pay. For example, if you need $1,500 per month to pay your debt and you make $3,000, you have a debt ratio of 1/2, or 50 percent.

GAP Insurance

This insurance covers any amount you still owe on new car loans that is not paid off by the insurance company in the event you total the car. For example, if the car is worth $8,000 and you still owe $10,000, the insurance will only pay what it is worth. Assuming you have a $500 deductible, GAP insurance means you pay $500 instead of $2,500. Some GAP policies even cover the deductible. It is important to note that GAP insurance comes from a third party vendor, not the dealership or the bank.

Loan to Value

The LTV is the ratio of how much you are borrowing to the actual value of the vehicle. Obviously, you would not want to pay more for a car than it is worth. With new car loans, however, there are fees, taxes and other items that may cause the total financed to be above the value. You could also affect the LTV by trading in a car with negative equity. The lower an LTV, the better chances are that you can find a lender.

By understanding some terminology about new car loans, you are in a better position to read and understand your loan paperwork. This means you can spot issues and ask the right questions to promote savings.

Debt to Income

The first step in determining how much of a car loan you can afford is to look at your debt to income ratio. In fact, a bank will look at this as well before they offer financing. Your ratio is determined by taking the amount of money necessary to make payment on existing debt each month and dividing it by the amount of your monthly wages or income. For example, if you need $1,000 to pay your mortgage, a student loan and a credit card and you make $3,000 each month, your ratio is 1/3 or approximately 33 percent. The ratio allowed before a bank will not provide you a loan depends on the bank, your credit history and other factors.

Calculating Actual Expenses

On paper in the above scenario, it looks like you have $2,000 each month left over after bills. However, that only includes your recorded debt. You also probably have to pay utilities, phone charges, insurance and other items each month. In addition, you must spend some portion of your income for groceries, clothing and incidentals. In order to determine how much you can afford for a car loan, you need to calculate your actual expenses. Assume you also have $500 in monthly bills from various sources, you spend $200 on groceries, $150 on fuel, $100 on clothing and $100 on entertainment. That is another $1,050 per month, leaving you with $950 after regular expenses.

Leave a Buffer Zone

Here is where many people run into trouble. After the above calculations, they determine they can afford anything up to $950 per month to pay a car loan. Most people will not go into the dealership intending to spend that much, of course. They may set a goal of $350. Once taxes and other things are added, they may end up with a monthly payment of $400. That leaves $550, which may seem like a great buffer. Depending on your situation, that sort of buffer may allow you to save some money, cover unexpected items and have a bit left over. When you decide how big your buffer should be, however, you need to keep the unexpected in mind.

In the end, how much car loan payment you can handle is a personal decision. Taking the time to organize your finances will allow you to gather all the knowledge and data you need to make the right call for your situation.

Numerous Offers for Change

When you apply for an auto loan at MyAutoLoan.com, you will receive up to four offers from various lenders. You can choose to accept any or none of the offers, so you do not lose anything with the application. In fact, you only stand to gain. If any of the offers include lower interest rates than you have with CitiFinancial Auto or your current lender, you can save hundreds or thousands of dollars over the life of the loan. Since it only takes a few minutes to complete the application process, that is like making a couple thousand dollars an hour. Talk about a way to get your finances in order and get out of debt faster.

Change for Friendlier Service

There are some companies who seem to spark many customer reviews online. CitiFinancial Auto is one of those companies. While these lenders may work fine for many people, they may not be working for you. If you are dissatisfied with the customer service of your current lender, it may be time for a change. If you have experienced any payment issues or billing mistakes and the company did not resolve the issue, it may also be time for a change. Many people who are not happy with the service or policies of their vehicle loan provider often think they are stuck until they can pay off the loan. This is not true, because there are plenty of companies willing to accept your business. Lenders like CitiFinancial Auto are not doing you favor by lending you money. They are making money on the deal just like any service company.

How to Make the Change

There are two ways you can get away from a lender without affecting your credit score in a negative fashion. The first way is to pay off the loan with cash. Although this will cut ties with the lender and reduce your debt, it is not always practical. If you do not have enough money to pay off the loan with cash, you can pay it off with money borrowed from another lender in an auto loan refinance. By visiting MyAutoLoan.com and completing a credit application, you take the first step toward making that change. Once you receive the offers, you can choose any lender you want. For the best results, you can research each lender online to ensure they do offer the level of customer service you are looking for.

You never have to stick with a lender such as CitiFinancial if you are unhappy with service or loan terms. You can always complete an application through MyAutoLoan.com to see what your other options are.

1.  Do not max out your credit cards or any other lines of credit. The ratio of debt to credit limit affects your credit score in a big way. A recent run on credit also looks suspicious to some banks. It makes it look like you are in the midst of financial distress and may be a high investment risk. If you do use your credit cards to pay for something like a vacation or large appliance, try to pay them down before seeking a car finance loan.

2. Do not miss payments on other debt obligations or allow accounts to reach the point of collection. Pay all bills in a timely manner and work with companies to develop a satisfactory resolution if issues do occur. Late payments can drop your credit score quickly.

3. Do not apply to dozens of institutions when the first four or five offers did not meet your needs. Every time you complete an application, there is a hit on your credit report. Each hit can reduce your credit score by several points, making it even harder to get a loan. If you want to shop around for a loan, consider applying with an online service like MyAutoLoan.com. You complete one application and receive several loan offers.

4.  Do not provide your personal information to companies you are not familiar with or have not researched. This is especially important online. Make sure you are entering your information on a secure server and the company in question spells out their privacy policy. Any time you are completing an application online for a car finance loan, ensure the site address in your browser begins with “https.” Some sites online are scams, seeking to steal your identity.

5. Do not enter a car dealership without preparing. You should have at least some idea about what vehicle you are looking for and how much they sell for in various places. You should also be prepared with information for financial purposes. If you have not received a pre-approved car finance loan offer, you should at least have your financial information with you for application purposes.

By avoiding some common notions about car finance loans, you can increase your chances for obtaining financing for your new car purchase. In addition to doing all the things financial experts advise before getting a loan, you should also avoid behavior that will make you look like a risky investment. Following these do nots will put you in a stronger position when completing a credit application and bargaining over a vehicle.

Riding the Interest Wave

During 2008, the average instant rate for someone with excellent credit who was buying a new car on 60-month terms was around 6.5 percent. Some people were able to obtain lower rates and others did take advantage of occasional temporary zero percent offers. However, some people saw even higher rates and subprime borrowers struggled to win approval for auto finance loans. In late 2011, however, the average rate for an excellent buyer dropped to a bit under 4 percent.

Bank Verses Credit Union

Regardless of your credit history, if you are looking to finance a vehicle purchase in the current environment, you may want to consider a credit union loan. In 2011, the average interest rates across all types of loans and for all types of buyers was about a percentage point lower at credit unions than banks.

Shopping Interest Rates

Not all financial institutions have reacted to the recovering economy in the same way. Many lenders have kept restrictive requirements, making it harder to get auto finance approval from them than with competitors. This is why it is important to shop around for the best interest rate. At the same time, you do not want to put in multiple applications during a short time period. Half a dozen or more pings on your credit report will lower your FICO score, making it less likely you will get the rate you are looking for.

If you want to shop for interest rates and auto finance options without completing credit applications with multiple lenders, you can consider the solution offered by MyAutoLoan.com.  With MyAutoLoan.com, you complete a single application that is reviewed by multiple lenders. Lenders who are willing to offer you an auto finance solution send a proposal through the website. You can review the offers and decide which one is right for you. This means you can see interest rates from multiple lenders easily and without spending a great deal of time on the process.

New Verses Used

In the current market, borrows with excellent credit ratings have no issues obtaining financing. Excellent is a score of 680 or higher. Those with subprime credit, or a score of 619 or below, may find the search for auto finance approval a bit more difficult. Many lenders are requiring 20 percent down on new car financing for these buyers. This means a $20,000 car loan would require a down payment of $4,000. Experts state data for car loans throughout the past year seems to indicate that those with subprime credit situations will likely have more luck in the used car market.

Make a Change for Better Service

If you went to a restaurant and the wait staff was extremely rude or the food was served cold, you probably would not return the next night. Even if you were willing to give the place a second chance, if the problems were repeated, you would take your appetite and money elsewhere. It may be possible to do the same with your vehicle financing. Although stellar credit will make car loan refinancing easier, you may be able to find another lender even if your credit is only fair. Begin by looking online for reputable lenders who are willing to refinance vehicle loans.

Make a Change to Save Money

Sometimes, individuals purchase a vehicle at a higher than desired interest rate due to poor credit history. Some people go ahead with the interest rate because they need the car for work or other purposes and cannot afford to be without a vehicle. If you were in such a situation, but have corrected your finances over time, you may be able to command a better interest rate. Instead of sticking with the current loan structure, check out options for refinancing. Something as small as half a percentage point in interest could save hundreds or thousands of dollars over the life of the loan. When dealing with a high interest financial arrangement, the sooner you make a change for the better, the more you save.

Make a Change to Optimize Your Budget

If you are on a tight budget or financial plan, the day your car payment is due each month can make a huge different. For example, if the car payment and mortgage are due in the same week, it might be hard to stretch your paycheck during that time. Some banks will work with you to change the due date for your loan, but others are not willing to do so. If you need a change in payment date or loan structure, you might consider car loan refinancing as a way to optimize your budget. You should only make such a move if you can secure a loan that will not cost more in fees or interest, however.

Car loan refinancing is a great way to correct past financial mistakes or get ahead with current debt. When done properly, refinancing can save money or provide a way to pay off bills faster. You should only refinance your automobile loan through reputable banks or online lenders and should never use credit cards to refinance your vehicle loans.

Should you want to purchase a used car and wish to have it financed, but do not know where or how to go about it, then this info is for you.  Where do you find financing for a used car loan?  In most cases getting any used vehicles financed will involve paying higher interest rates than any new car loan.  Also having any used car financed could involve a higher rate down payment, but that also varies depending upon your credit score. 

When you are ready to get a used (previously owned) car financed from a dealership then first you will want to choose a certified pre-owned auto that will be on site and available from the dealers car lot.  Then begin with some negotiating for the price and purchase of this used automobile long before ever getting yourself involved with any arrangements for the financing.  In some cases when a sales person is trying to let you know just what kind of monthly payments it is that you are wanting, he or she will take that information and use it to manipulate the terms of the financing equation so this way you will be stuck paying more than is needed for the car.  That’s just how the car buying game is, but you can eliminate that if you use an on line lender and get more than one quote online.

You can get yourself plenty of used car quotes, right over the internet, before you ever start making any deals towards the purchase of a used car.  When you are online be sure to check the terms of the used car loan and also the rate of the interest at one of the many websites that will offer you this kind of information. This will help you eliminate some of the games that get played at the dealership.  Going online for financing will result in you getting some of the best rates available via direct to consumer financing and could help you get the best sales price for your used car.  Start looking around for some alternative financing for a used car loan should you be planning on purchasing a used (previously owned) car.  Many of the lenders will offer a lower interest rate for newer cars than used cars. Finally be sure to know just what your credit score is whenever you are ready to discuss any financing options.

 Remember, the higher your credit score, the lower the rates.  Should you have a score above 680, you should be able to get very fair terms in regard to any financing of a used vehicle, via your online source.  Good luck and good shopping.

Tips and Tools:
Car Buying Tips  

Auto Loan Calculator

Tips to Improve Your Credit

30 Second Video

What is an Auto Refinancing Loan?

Auto loan refinancing is nothing more than replacing the existing auto loan with a new one with a lower interest rate, so that lowers the monthly payments.  An auto refinance loan alters the original loan terms and conditions, and you get the new rates and payment plan according to your credit and ability to repay.  Thus, an auto refinancing is loan is the new loan that you take out in order to unwind the previous loan terms.  You can get an auto refinance loan either with the same lender with whom you have the loan or can try getting one from a new lender.  Obviously, you will want to shop around.

Why should you refinance?  Some reasons why you should refinance your auto loan are:

Want to make lower monthly payment:

You should refinance in order to lower the monthly payments if you are facing problems in keeping up your auto loan payments. If you get an auto refinancing loan with lower interest rate the monthly payments that you will have to make gets reduced too.

To avoid defaulting on loan: 

In order to avoid defaulting on your auto loan, you can get an auto refinance loan.  As you refinance your loan, the payments get lowered and so you need not fear of defaulting on the loan.

Need extra money: 

If you want to save extra money and if the interest rate on auto loans is lower than that of your current loan, you can refinance.

Improving your credit rating: 

With refinancing, you can even improve your credit rating as you make your regular payments according o the new payment plan.

Investing your money in a car is perhaps the second most expensive and important investment.  However, you generally need to have good credit in order to get approved for a loan.  In case you don’t have good credit and you want to improve your credit, you can get a loan from some lenders but the interest rate on these loans will generally be higher in comparison to other loans.

Look for a lending site that will help you find someone to finance your used car.  These lenders probably have multiple lending partners with most lenders being well known financial institutions.  You will not get as many lenders begging to give you a loan, because your low credit rating means that you are viewed as a risk, but you will be able to find something.  Getting two offers is better than arguing with a F&I guy at the dealership.    Sometimes you have to take what you can get so that you can get yourself out of your jam and rebuild.  Here is a good source to improve your credit.   Tips to Improve Your Credit

Finding auto loans for used cars can be a crazy and unpleseant experience.  There are many websites out there that are willing to sell your information the moment that you type it in.  It is important to use a trusted website when comparing rates for lenders when buying a used car. There are only a very few websites that are a great resource to help you find the best deal possible when buying a used car.  Most are lead buying sites that sell off your information to a lead generation network.  Anytime you see a site that says “100% Approved” or “98% funded”, it should raise the hair on the back of your neck.  Don’t be fooled.  Legitimate sites have their address on them so that you know where they are originating – others are coming out of China, India, Pakistan and Europe. 

These sites look real but frankly, you get the short end when you apply.  With most lending sites, you will get one loan offer or a decline.  There is one site, myAutoloan.com,  that get’s you up to four loan offers and lets you choose which one is best for you.  It’s really pretty cool to get even two auto loan offers since all you have to do is pick the cheapest one!   These are direct loans so there is no markups – look closely, as you can tell which sites are real and others that are simply to good to be true.  (They aren’t) By comparative shopping for an online auto loan Lender, borrowers can save thousands of dollars over the course of the loan, don’t have to deal with the finance game at the dealership and become both empowered and “like a cash buyer”.  By using the internet you can save yourself thousands of dollars on your next used car purchase!

Tips and Tools:
Car Buying Tips
Auto Loan Calculator

It is significantly important to maintain a steady job with the same employer for a minimum of six months.   Many lenders want you to have 1 year or more – so in this crazy lending market, with more regulations in store for the banks, figure more is better.  So just to reinforce what is taking place in the market, in some cases, 1 years of employment is required but having a steady job is the key.  This will provide proof to the auto refinance company that a steady income is present. Without a reliable source of income, there is no security in knowing how monthly payments will be made each month and thus, a turn down is highly probable.

It is crucial to do as much research and investigating as you can before choosing a company to refinance with.  First of all, the initial lender (the company you are using now) will not refinance an auto loan that was processed through their establishment.  Why?  Because it is not to their advantage to lower your interest rate so they will say no.  They already have the borrower trapped with high interest, so it would be a bad business move for them to decrease their own profits by lowering the APR on one of their own loans.  There may be many options to choose from locally, but there are even more available companies online.  Through diligently searching and comparison of rates, the borrower should be able to find a company that holds the ability to satisfy the desired monthly payment.

When seeking low interest rates, the most valuable component is being well-educated and knowledgeable in the credit score/history that you obtain.  Some of these services are really worth it if you want to get ahead in the borrowing game.  Car dealers often look for the opportunity to take advantage of people that are not aware of their own credit scores.  This lack of knowledge allows a few dealers to add an additional increase to the APR, while telling the buyer that it is due to bad marks that showed up on their credit check (whether there are bad marks or not).  The embarrassment and lack of knowledge/questioning makes it hard for the purchaser to argue the facts with the dealer, allowing the less than fair rates to follow throughout the entire term of the auto loan.  Just so that you know, working directly with a lender is the best way to get the lowest car loan rates possible.

A credit score is a good source that can be used to determine when it is best to refinance.  A person can begin watching their credit score for a few months before applying for a refinance loan, using an increase in their score as a cue to start applying for a new auto loan.  A couple points can make a very large difference in the rate that is given, and can save thousands of dollars by the end of the loan term.

Making car payments on time and paying off a couple of credit cards before trying to get an auto refinance loan will also provide more options for a person seeking to do a refinance loan. On-time monthly car payments are a necessity for a majority of companies that work with refinancing loans.  This shows the integrity of the auto loan seeker.  Credit cards can be a positive influence on credit scores, but too many credit cards with high balances will provide negative feedback. Even a few extra payments on credit card balances can make a noticeable difference on a credit score.

A car loan refinance can allow affordable monthly payments, along with saving a person thousands of dollars by the end of their car loan term.  This is a smart move for those who cannot afford their car loan payments in today’s uncertain economy.  The extra money that is given to the bank/financial establishment could be used for paying other bills, or even enjoying extra luxuries.  Finding a new source for an auto loan may take an excessive amount of time and energy, but the benefits can make a significant difference in the quality of life that is achieved.

myAutoloan.com for auto refinancing loan information
 Handy tools: auto loan calculator -

You may find that you have to qualify for some of the best interest rates and pay back terms that are being offered, but it’s worth checking them out.  The difference between a few percentage points in interest could turn out to be a substantial amount of money.  If you know the exact make and model of car you’d like, check out all of your options on it.

When you compare rates of auto loans you should take into consideration all of the financial terms and make sure you understand exactly how the auto loan works.  If things sound complicated to you, be sure to ask for clarification.  Once you sign a contract, you will be legally bound to it.

You may want to compare auto loan rates by visiting a few dealerships, banks, and other lending institutions in person.  It might save you some leg work if you do it over the phone, and to speed things up considerably, you might want to try searching for the best deal for your car loan over the internet.   Use the tools to understand monthly payments, and how much you want to borrow by checking out the auto loan payment calculator.   We don’t mean to brag but may we suggest a great place to get updated and get the current auto loan rates – myAutoloan.com

An online search will let you narrow down the region you’re looking in and you can also zoom in on the make and model of car.  If you are interested in financing your auto loan, try myAutoloan.com – This will let you compare multiple offers from national lenders.  You may also want to concentrate your search a little further and could perhaps choose a 100-mile radius where to compare auto loan rates. 

Whatever you choose to do, just gather information until you are ready to move forward.  By getting approved before you start shopping dealerships you become a cash buyer and it’s so much easier to negotiate price when you know where you need to be on price.  Happy shopping.

So how much are we really talking about here? For example, let’s say you bought a new car in the summer of 2008.  Just for this example, let’s say there were a few blips on your credit report that lowered your score and so the dealer told you that your auto loan would be 11 percent on a 60 month loan for a $24,000 car. Your monthly payments are $500.

Now let’s say that you look for a car loan refinance and you find an actual finance company that will do the application and approval process all online.  There are big differences in licensed finance companies and websites that promise to refinance and just sell off your information.  But that’s another story, for now, you have determined that the website is legitimate and actually works for you to get you refinanced.  That’s great because, as we identified earlier, rates are now at the lowest point in years.  If you want to lower your payments, do another 60 month loan.
 
If you want to lower the overall cost of the loan, refinance the balance that you owe on the car and do so in the fewest amount of months that you can, as long as you can handle the monthly payments. You could refinance the balance of your car loan and lower your payments to about $350 a month. 

How?  Because ideally, you have not only improved your credit, but you have been offered a very competitive interest rate and that could translate into a savings of nearly $6,000 over the life of the loan.

We could run a number of scenarios but one quick way to check out rates and payments is to use an auto refinance calculator to estimate payments and loan costs.  Other examples could well be more dramatic. In some cases, a new-car buyer could wind up with an auto loan based on an 18-percent interest rate. By refinancing at a competitive rate, the monthly payments would be slashed, and all it takes is about 10 minutes to fill out the application.

Regardless, you could save some cash by investigating the possibility of an auto refinance loan and get the New Year off to a great start.  Good luck and good financing.

Curious about the amount of money you can borrow?

These calculators are provided to you as a convenience tool and the calculations are estimates based on your assumptions. These calculations are not guaranteed for any particular loan and we have no obligation to match these terms.

Your actual payment or loan amount may differ depending upon the actual term, Annual Percentage Rate, fees (if applicable), principal amount of the loan, and date to first payment.