Car Financing for Any Budget

The need for everyone to own a vehicle today had never been great.Commutes to work are longer than ever and who can forget the taxi cab service we offer for our children shuffling them to and from school, sporting events and other after school activities. The good news is that everyone has an opportunity to get out there and get car financing that meets any budget, regardless of your credit history. Not everyone can purchase a vehicle on the cash basis, in fact, very few can. Fortunately, there are many lenders out there offering very aggressive pricing and administering loose underwriting guidelines where nearly everyone will qualify for car financing, and do so at very attractive rates.

Different from years past, lenders are finally looking to lend again.  Many lenders have softened the lending guidelines to allow nearly everyone to qualify for an auto loan today. To identify the best car loan for you, you need to locate a vehicle that will meet your budget. Do research and determine what vehicles fall within that budget and then determine the actual equipment you want on the vehicle. From there you will need to determine how much down payment you can afford to put down on the vehicle and then you have all the necessary tools to determine the price range you need to stay in. There are many online tools to helps determine monthly payments, rates and terms that are available.

Don’t go into this process with expectations of driving a Cadillac on the Chevrolet budget. It is not worth affecting your credit by getting into something you really cannot afford. Remember that there are many factors that determine your monthly payments from term, down payment and most importantly credit score. The lower your credit score the higher the interest you will be required to pay and in most cases, more down payment you will need to put down on the vehicle in order to obtain financing.

You should explore your options online with an online lender who offers car loans. Even if you have recently purchased a vehicle and think you paid too much, you can explore an auto refinance loan option. This allows you to refinance an existing loan and lower your existing payment with very little hassle and in most cases, it can be done in just a few minutes. Remember the factors above and you will be on the road to savings in no time.

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Car Refinance Misconceptions You Should Know

When it comes to the world of car refinance, there are several misconceptions about refinancing that you should know. Refinancing a home has been around for years but many consumers do not realize that you can refinance a car loan the very same way but in a fraction of the time. Car refinancing can save you a considerable amount of money over the life of the loan and reduce those big car payments that are haunting you.


The first misconception is that you have to have perfect credit in order to qualify for a car refinance. Well that is just not true. Even if your credit is less than perfect, you can still qualify to lower your monthly payments with a car refinance loan. It does not matter what type of credit history you have, getting a car refinance loan has never been easier.


The second misconception is that you have to “start over” with a loan when you choose to refinance. That too, is incorrect. With OpenRoad Lending, you determine the term you want and from there, we will do the rest. Is your goal to reduce your monthly payments or simply reduce the amount of interest you pay on the car loan. The answer to that question will determine the path you should travel. You can keep the term the same as the remaining term left on your existing car loan or stretch it out and make a big impact on those payments… it’s up to you.


Finally, the biggest misconception of all is that by reducing your APR by one percent, your monthly payments are going to drop drastically. Well, reducing your current APR will make a difference in your monthly payments, however, extending term will make the biggest impact in your monthly payments.


Refinancing a car loan is an easy way to start reducing your monthly expenses and put more money in your pocket. Check out the useful tools available online at OpenRoad Lending where you can find car refinance payment calculators to determine just what your payments will be on your new loan and important information about your credit.

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Car Loans for Bad Credit – What Options Exist

Car Loans for Bad Credit – What Options Exist

Millions of Americans make the purchase of a new or used car every year. Some people are well enough off that they can lay down the entire payment of a car outright.  This is rare, however, and most people need to secure some form of financing for their car.  This automatically means that you will be paying interest on your loan because no lender will extend credit for free. Acquiring financing for your new or used car can be tricky, particularly if you are looking for a poor credit car loan which could be caused by defaulting on other debts or having recurring late payments.  In the eyes of a potential lender, customers with this kind of history are considered a risk.  However, if you are looking for a bad credit car loan, there may still be a few options for you.

Various loan companies offer deals with higher interest rates for those with poor credit.  This apparent backwards thinking is the lender’s way of ensuring they will still make money from a borrower even if they default on their debt later on.  However, if you take the time to search out lenders that are willing to work with your current credit situation, you may be able to obtain a more favorable rate on your loan.  By taking out a bad credit car loan and diligently making payments on it, you will be on your way to improving your credit score.

A litter further down the road, if your diligence pays off and you see a significantly improved credit score, you may be eligible for refinancing options that will allow you to secure a far more desirable interest rate.  The largest setback of a bad credit car loan is that it often requires a hefty down payment and runs for a longer term than standard loans, meaning you will end up paying much more for the car than it is actually worth.  This is why refinancing a year or two after opening the original bad credit auto loan is beneficial to you.

Another way to ensure you are approved for a bad credit car loan is if you have a co-signer help you obtain your financing.  The co-signer should have good credit and otherwise qualify for the loan.  This is risky for the co-signer, so be sure you do everything within your power to not let them down.  Seek out affordable cars so your loan amount can be less, helping you pay it off more quickly and with less interest.

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Credit Scores Fall to New Los

The credit scores of millions more Americans are sinking to new lows.

 

Data published by FICO show that 25.5% of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.  Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery. This includes credit for large ticket items like a mortgage, car loan or refinance car loan.

 

FICO’s latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO’s 300-to-850 scale weren’t as volatile. Historically, just 15% of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com.

 

More are likely to join their ranks. It can take several months before payment missteps actually drive down a credit score. The Labor Department says about 26 million people are out of work or underemployed, and millions more face foreclosure, which alone can chop 150 points off an individual’s score. Once the damage is done, it could be years before this group can restore their scores, even if they had strong credit histories in the past.

 

On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years. At least in part, this reflects that more individuals have cut spending and paid down debt in response to the recession. Their ranks now stand at 17.9%, which is notably above the historical average of 13%, though down from 18.7% in April 2008 before the market meltdown.

 

There’s also been a notable shift in the important range of people with moderate credit, those with scores between 650 and 699. The new data shows that this group comprised 11.9% of scores. This is down only marginally from 12% in 2008, but reflects a drop of roughly 5.3 million people from its historical average of 15%.

 

If you are in the market for a new or used car or in the market to lower your existing car loan payments, go online to OpenRoad Lending. There you can find informative information about car financing and refinancing.

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How to Get and Keep a Good Credit Score

Consumers are always asking how they can improve on their credit scores and how do those with good scores keep them that way is such a turbulent economy.Yahoo.com published this great information about what those with good credit do right to keep it that way. There are really only five distinct categories that effect your overall credit rating. Below goes into the details of each. It is worth sharing:

Here are the two things that account for two-thirds of your credit score:

Your Payment History: Having a long history of making payments on time on all types of credit accounts including car loans is one of the most important items lenders consider before approving you for a loan.

Owed versus Available Credit: This compares the amount you owe versus the total amount of credit available. Your credit score can be lower when you use more than 50 percent of your available credit for each account. That’s because when you are close to maxing out on all of your credit limits, lenders see you as a higher risk and more likely to make late payments in the near future.

There are three other factors that account for about a third of your credit score:

Length of Credit History: In general, a credit report containing a list of accounts opened for at least ten years or more will help your credit score. The score considers your oldest active account and the average age of all accounts.

New Credit: Opening several new credit accounts in a short period of time can lower your credit score. Also multiple credit report inquiries may be seen as risky credit behavior on the near horizon, and can therefore lower your credit score. But “soft credit inquiries”, which include requests made by you, an employer or by a lender who “pre-screens” or “pre-approves”, have little or no impact. Also, multiple inquiries by automobile and mortgage lenders over a 30-day period count as just one inquiry, so shopping the lenders to get the best car loan rate should not hurt your score.

Type of Credit You Use: Your mix of credit cards, retail accounts, finance company loans and mortgage loans is considered.

Your credit score ignores your age, salary and occupation. It also does not take into account financial gifts, support you receive, or your financial assets. For this reason, credit scores are less important for borrowers who seek loans that take these factors into account.

If you want to take action to increase your credit score, then take a look at folks with the highest credit scores. About 13 percent of folks have credit scores of 800 or higher. If you look at their credit profile, they have:

four to six credit card accounts
no late payments in the past seven years
at least one installment loan — a mortgage or a car loan — with excellent payment history
an average of 10 years credit history per account and a few accounts with 20 years of good history
a low number of credit inquiries (fewer than three in the past six months)
no bankruptcies, foreclosures, charge-offs or collections
debt levels at no more than 35 percent of their overall credit limits per account
The Bottom Line: Having a long history of making all payments on time, using the right mix of credit, and not maxing out on available credit are the keys to a having a great credit score.

And, to help with future financial happenstances, it could be helpful to do some research about accounting online.

If you are looking to for a refinance car loan to lower your existing payments or a car loan for that new or used car purchase you are about to make, look no further than OpenRoad Lending. You can find an easy application and have a loan decision back within minutes of applying.

Saving cash today is easier than it was in the past. Rates of interest are low and you can reduce your monthly payments by refinancing your car or truck. Auto refinancing will help you have a better monthly interest rate, improve the overall terms in which you repay your loan, and at very low or minimal fees. Most auto refinance loans are available for you to move the loan entirely to a different lender. Nevertheless the savings accumulate quickly. You should use the additional money to repay other debt or make a long awaited purchase. You will be surprised at how a small interest reduction will save you over the life of the loan.

In case you are paying on your vehicle loan a rate of interest which is absurd by today’s standards, automobile loan refinancing could be the road to suit your needs. Even with a bad credit score, you can get a better rate mainly because rates are lower today compared to where they were just recently, for poor credit. A good general guideline will be the 1% rule. With rates at the level they are now you should be able to save at least 1% from the rate you are paying now. Some customer are cutting their current auto loan rates in half. Even 1% may well not appear to be a lot, but over the long haul, it could make thousands of dollars difference.

The original loan must be with a different lender compared to the one you might be working together with for an auto refinance. Most lenders require you to have a mileage lower than 80,000 on the car or truck you are refinancing. Most all lenders will not do a car refinance loan on commercial vehicles, motorcycles, or business use cars. The auto refinance terms on the car are based on the number of car loan payments you have remaining to pay and the overall valuation on the vehicle you are refinancing. Most auto refinance companies will require a loan balance of at least $10,000 and usually will not do a refinance loan for more than $50,000.

The whole process of auto loan refinancing resembles that of a refinance you might do on your house. Do your research and find the lender that best suits you. Most companies are now offering refinancing options online and that is the easiest method to complete. No longer do you have to go into a bank or local credit union. Some companies allow you to complete the entire auto refinance process online in the comfort of your own home or place of work. Find the best deal. You might look for better rates of interest, low or no fees, and other benefits. Lenders may also offer gap coverage, which can be additional protection on your motor insurance. In just a few clicks you could be savings thousands of dollars on your car loan. Don’t you think you owe it to yourself to give it a try?

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Common Finance Terms

Common Finance Terms 

We believe it is important for you to understand the “lender talk.” At OpenRoad Lending, we ensure that our customers know exactly what is going on, what to expect throughout the car financing process, and what we offer in the most simplest of car loan terms.

  • Accrued Interest

    Interest that builds on the unpaid balance of the loan that generally lowers as a person makes loan payments on time. Interest is applied (earned) each day in most lending systems, and between when it is earned and paid (when a person makes his or her payment) is the amount of interest accrued.  So, if a person has a loan with a $10,000 balance and an interest rate of 6%, every day the lender earns interest of $1.64 ($10,000 multiplied by 6% divided by 365 days in a year).  By the time the person makes the payment in 30 days, a month’s interest has been accrued.  If a person were to pay off the loan 15 days into the month, the payoff amount would include the amount of earned or accrued interest, which would be $24.60 ($1.64 multiplied by 15 days).

  • Adjusted Capitalized Cost

    The total price of vehicle being leased after any manufacturer rebates, discounts, the cost of down payment, and dealer profit. Capitalized cost is the leasing term for the amount financed, or lease balance.

  • Amortization

    The gradually reducing of a loan by an individual paying monthly loan amounts to cover the principal and interest within a scheduled time period. While an individual’s monthly payments are the same each month, a different amount goes to interest and principal.  Interest is based on the loan balance, so in the beginning when an individual’s loan balance is the highest, more of the payment will be allocated to interest.  For example, if the individual signed an auto loan for $15,000 to finance the purchase of a used car with a term of 72 months and an interest rate of 9%, his or her monthly payments will be $270.38 and his or her first monthly payment will be $112.5 in interest and $157.88 in principal that will reduce the loan balance.  The last payment will almost entirely be principal because the balance is almost zero.

  • Annuity

    A flow of fixed payments made over a specific time period.

  • APR

    “Annual Percentage Rate” is the yearly interest rate on a loan including fees.

  • Assignment

    Transferring of a loan between lender to lender.

  • Balloon payment

    A large lump sum payment deferred till the end of the loan or lease term to help reduce the monthly payment amount. The payments are lower because the loan does not fully amortize the full loan amount, only the difference between the original loan amount and the amount of the balloon payment.  The interest cost will be higher because there is a higher balance outstanding throughout the term of the loan.

  • Bankruptcy

    When an individual files for bankruptcy, his or her assets are turned over to a trustee to pay off the remaining debt. The protocol for bankruptcy varies state to state. Bankruptcy can be a chapter 7, where the listed debts are wiped out, or chapter 13, where the trustee reschedules the amount of debt payments and may reduce the amount of the debt.  There is a period between when the bankruptcy is filed and when it takes effect or ‘discharged.’  Most auto lenders will not lend during this period of time, and the majority of auto lenders will require at least 12 months after the bankruptcy discharge before providing a loan that is often associated with the key word bad credit auto loans.

  • Base Price

    The cost of a vehicle that comes with the basics in standard equipment, warranty, and shipping charges.

  • Bill of Sale

    A document provided by the seller (or dealer) that shows the name of the car buyer and the purchase price of the vehicle for the purpose of calculating taxes.

  • Buy-Here, Pay-Here

    Just like it sounds, buy-here, pay-here is when the selling dealer also provides the financing along with the car purchase.

  • Car Finance

    Also known as vehicle or auto finance, refers to borrowing money for the purpose of purchasing a car.

  • Certificate of Title

    A legal document issued by the state that shows the registered new owner’s name, address, and if there is a loan, the lien holder or lender’s name and address. Different states have different policies; however, in many states, the lender retains the original certificate of title until the loan has been paid.

  • Co-signer

    An individual that signs onto a loan with the borrower (the car buyer), and who is responsible for making loan payments if the borrower does not.

  • Credit

    The ability of an individual to borrow money, which is based on their financial history’s depth (the oldest loan), breadth (how many loans and credit accounts), high credit (the largest loan he or she has had experience with), and performance (if the has individual paid on time, and if he or she hasn’t, the severity of the delinquency which may include judgments and liens).  Most lenders offering car loans will want to see someone with credit history of at least 3 years, and a high credit of at least $5,000.  The other areas reviewed for most auto loans are employment (income and time on the job), and down payment (the more the better for credit).

  • Credit Bureau

    There are three large credit bureaus in the US, Experian, Equifax, and TransUnion.  They all operate in basically the same way.  Before a person opens a loan, lenders, utility companies, credit card companies, mortgage companies, and other providers of credit will report to the bureau about how much the loan is for, what the term of the loan is, and what type of loan it is.  After a person opens the loan, the lender will send a file to the credit bureaus monthly that reports if he or she has been making payments on time or if he or she is late.  Over time, all of the credit related activity is received by the bureaus to create a credit history file.  When a person fills out an application for credit, he or she is most likely giving the prospective lender the ability to access his or her credit file that way the lender can make a determination of credit worthiness.

  • Credit Profile

    A report that shows an individual’s borrowing.

  • Credit Score

    A number calculated by a credit bureau’s formula that summarizes a person’s credit profile. Credit scores help determine a person’s creditworthiness to lenders.

  • Debt

    In regards to auto loans, refers to money owed to lender.

  • Default

    An individual fails to meet the terms of the loan established between the borrower and the lender.

  • Delinquency

    An individual fails to make monthly payments by a due date negotiated between the borrower and the lender.

  • Depreciation

    The reduction of an asset’s (car’s) cost over time due to wear and tear, use, destruction, and/or obsoleteness. This is a significant cost of the car, and not all cars depreciate at the same rate.

  • Early Termination fee

    A standard dollar amount applied by lenders to penalize individuals that cancel their lease before the term has ended.

  • Equity

    The positive difference between the car value and the outstanding loan balance. Negative equity is when the loan balance is more than the value of the car.

  • F&I

    Abbreviation for “Finance & Insurance” department of a car dealership where the dealers try to sell car loan financing, insurance, and other products to the car buyer.

  • Fixed rate

    The rate of interest remains the same throughout the loan term without any influence from the base rate.

  • Franchised Dealer

    An automobile dealer that is licensed (franchised) to see a certain type of new vehicle based on the brand, such as Chevrolet, Ford, Honda, etc.

  • GAP Insurance

    “Guaranteed Asset Protection” is a form of insurance that covers the borrower when his or her car is totaled or stolen, and the borrower’s primary insurance company only covers the cost of the vehicle, not the loan balance. For example, if a person’s car is stolen and the insurance company says they will pay for the replacement value of the car, but its replacement value is less than the loan outstanding, the GAP insurance policy would pay the difference. If the stolen car’s replacement value is $15,000 and the loan balance is $21,000, the GAP policy would pay the difference, or $6,000. Also, there can be restrictions on the amount paid by the GAP policy.

  • Gross Income

    An individual’s income (wages, investments, etc) before taxes and expenses.

  • Independent Dealer

    A person who does not have a franchise to sell new cars from one or more of the new car manufacturers, but generally sells used cars. Some independent dealers are owned by a franchised dealer.

  • Interest

    A percentage charge collected by the lender for the loan.

  • Invoice Price

    The price the dealer paid the manufacturer to obtain the vehicle, generally lower than the MSRP, or “Manufacturer’s Suggested Retail Price.” The difference between the invoice amount and the negotiated price of the car is the dealer’s profit, unless the manufacturer has a special dealer rebate. If there is a dealer rebate or incentive, the dealer’s cost of the vehicle being sold can be below the invoice amount.

  • Lease

    A contract that allows a person to use a vehicle for a fixed period of time and therefore only pays the depreciating value for the vehicle during that time it is in use, plus the interest cost that is based on a money factor that converts to an interest rate equivalent. At the end of the term lease, the car is either returned to the lender or bought by the borrower at a depreciated value.

  • Lien

    A loan secured with an asset (car) for the lender. This is another way for a lender to feel secure in getting the loan paid back. Since the car is collateral, the lien borrower cannot sell the car without one hundred percent of the proceeds going to the lender who holds the title.

  • Lien holder

    A lender securing a loan with a lien. The lien holder has the right to sell the borrower’s property (or car) if he or she fails to meet the terms of the loan contract such as not paying on time or defaulting on the loan.

  • Loan

    A sum of money that is given from one person, the lender, to another, the borrower, for a certain amount of time. During this amount of time, the borrower will be responsible to pay back the lender in full and with interest.

  • Luxury Vehicle

    A vehicle that surpasses the Luxury Car Tax Threshold in regards to sale price.

  • Money Factor

    The lease equivalent to an interest rate for a loan.

  • MSRP

    “Manufacturer’s Suggested Retail Price” is the price at which the manufacturer recommends the vehicle be sold at. It is also known as the sticker price, or “Monroney” for the US Senator that created the bill to require the suggested price to be posted on every new vehicle.

  • Principal

    The amount of money borrowed originally from the lender without interest or extra fees applied.

  • Refinance

    When an individual takes out a new loan to pay off and replace the existing loan, usually to get a lower interest rate or to skip a monthly payment.

  • Repossession

    When a vehicle is reclaimed by the creditor, since the borrower defaulted on the loan or did not meet the negotiated requirements of the loan.

  • Residual value

    The value of a used car with the depreciation, mileage, and condition factors included.

  • Secured loan

    A loan in which the borrower pledges an asset (such as a car) as collateral for the loan.

  • Subprime borrower

    A person with bad or limited credit from a lender’s perspective that will have a higher chance of defaulting on his or her loan obligation in comparison to a person with good credit.

  • Term

    The length of the loan or lease contract in regards to time, generally 48, 60, or 72 months.

  • Underwriting

    A process conducted by the lender to verify the borrower’s provided data in order to approve or deny the borrower for the loan.

  • Upside-down

    When the vehicle’s value (usually based on the Kelly Blue Book value) is lower than the outstanding loan balance.

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How Common Mistakes Effect Your Credit Score

 

Do you know what your credit score is? You can bet that any lender about to loan you money does and so should you. In fact, now you can get a free credit report once per year from each of the three major credit reporting agencies. Here is a portion of an article just recently published on Yahoo.

“FICO has just revealed for the first time what effects late payments and other items actually make to your credit score. Did you just max out your credit card? Expect a credit score drop of 10 to 45 points. File for bankruptcy? Your score will plummet by up to 240 points, and your odds of getting credit will nosedive with it. The “damage points” data, unveiled recently by FICO, are part of the most revealing glimpse into the firm’s once-secret — and still mysterious — credit scoring model. The new information discloses how many points borrowers’ scores will drop when they make the most-common mistakes.

In order to show just how badly a drop in your FICO score can hurt your wallet, we spoke with members of the home mortgage, auto and credit card lending industries. We presented hypothetical scenarios of a consumer who decided to apply for a $200,000, 30-year mortgage; a $20,000, five-year auto loan and a credit card. While all the industry insiders stressed that a FICO score isn’t the only factor in determining who gets credit and at what cost (other factors they cited include the borrower’s debt-to-income ratio and whether they have already established a relationship with the lender), they were able to provide an idea of what a borrower who had the following credit scores could expect.

For a Consumer Who Started With a FICO Score of 780: (a) Following a 30-day late payment, the consumer’s car loan rate would jump nearly 3 percent, costing the borrower $26 more each month, (b) Following a debt settlement, the consumer would pay as much as $109 more each month on a home mortgage. For a Consumer Who Started With a FICO Score of 680 (a) Following a 30-day late payment, the consumer would pay $41 more each month for a car loan, (b) Following a 30-day late payment, the consumer would pay as much as $95 more each month on a home mortgage, (c) Following a debt settlement, the consumer would no longer qualify for a credit card.

Those with good or excellent credit — so-called prime borrowers — put more points at risk with each mistake. For example, someone with an average credit score of 680 who pays a bill 30 days late will see a drop of 60 to 80 points. But for someone with an excellent credit score — 780 — that same delinquency can send a FICO score tumbling by 90 to 100 points.”

It is a great read for anyone about to apply for any type of financing. You can access the full article by clicking here (http://finance.yahoo.com/banking-budgeting/article/108239/fICO-reveals-how-common-credit-mistakes-affect-scores?mod=bb-creditreports).

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