Aug 27 2014

Is Your Car Loan Too Expensive?

As the US economy recovers from the recession, many lenders have eased financing standards, resulting in an increase in loans available to consumers with poor credit. The earliest and strongest recovery came in the auto market, and while a bump in subprime used-car lending has triggered some murmuring of a bubble, it appears to be more a resurgence of a market that was tightly restricted during the recession.

These are obviously consumers that need transportation, and theres a lot of options out there for them, said Melinda Zabritski, senior director of automotive credit for Experian Automotive.

More Loans for the Credit Challenged

Deep subprime used auto loans (those given to consumers with a VantageScore between 300 and 549) have made up more and more of the market in the last few years: In the beginning of 2008, deep subprime borrowers made up 21% of used auto loans, but in the first quarter of 2013, that share was at a low of 16.17%. It grew to 19.6% this year.

Meanwhile, the 30-day delinquency rate (14.26% of deep subprime loans) is lower than it was in 2006 (14.61%), when Experian first started publicly reporting the data, and much lower than last year (15.24%) and in 2012 (15.3%), Across all risk tiers, delinquency rates have hit historic lows recently, according to data drawn from Experian-Oliver Wyman Intelligence Reports and Experians IntelliView tool.

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How Much Will Bad Credit Cost You?

At the same time, access isnt everything: Borrowers with poor credit may find it easier to get a used car loan these days, but theyre paying more for it. Interest rates have generally climbed, as have the amounts financed, but when you look at the deep subprime borrowers, the story is a little different. Consumers with bad credit are financing less than they were last year (down to an average of $14,014 from $14,094 in 2013) and are paying a lot more for it.

Lenders are exceedingly cautious with credit-poor drivers: The average interest rate on a used car for these borrowers was 18.62% at the start of 2014, which is much lower than the average 14.53% rate for the next risk tier up (subprime borrowers with scores between 550 and 619). The next cutoff is even more extreme, with middle-tier, nonprime borrowers getting an average 8.31% on their used-car loans. All of these rates are up from 2013, but deep subprime borrowers saw the largest jump. (On the other end of the spectrum, prime consumers had used auto loans with interest rates averaging 5.13%, up from 2013, and borrowers with top credit scores receive an average rate of 3.5%, down from 2013).

Say you take out a $14,000 car loan with a 60-month term. The difference between a subprime borrower and a deep subprime borrower could amount to about $1,800 of savings over the life of the loan — thats a significant difference, and thats just for a consumer with poor credit, rather than terrible credit. The better your credit standing, the more you can potentially save.

If youre looking for a better deal on your used car loan, look at your credit first. A few score points could make a huge difference in what you pay for transportation.

The loans end up being priced higher to account for the very high default rate, Zabritski said. People with bad credit tend to fall behind on payments more than people who have better credit scores, so if you dont want that risk label and the associated costs, you need to make some changes.

Theres not much you can do if you need a car right now, but thats why planning ahead, monitoring your credit and following a plan to build or maintain good credit can help you save money in the long run. If youre thinking of buying a car and are curious how your credit may affect how much it costs you, you can look at your free credit data using Credit.com. Sometimes it just takes small changes to give your scores a boost, which can make a huge difference to your bottom line.

More on Auto Loans:

  • Are There Car Loans for People With Bad Credit?
  • What to Do If You Cant Make Your Car Payments
  • Top 5 Worst Car Buying Mistakes

Image: Barry Austin Photography

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Aug 26 2014

Understanding Your Bad Credit

Car shoppers with less than perfect credit need to understand that there are many consumers out there in the same situation

Making Sense of Poor Credit Auto Financing

The economy continues its recovery. A sure sign of that fact is that, according to statistics from Automotive News, car sales have nearly reached pre-recession levels while the latest Equifax National Consumer Credit Report finds that the total balance of auto loans through the first six months of 2014 reached a record high.

Despite this, at Auto Credit Express we still find that many people in need of transportation with credit issues that range from minor blemishes to bankruptcy believe that, in the aftermath of the great recession, lenders will refuse to extend them credit for anything – especially a car.

Youre Not Alone with Poor Credit

But take it from us; if youve experienced credit issues in the past, youre not alone. The problem, however, is that in the world of credit there are few lenders that are willing to step up and offer auto loan financing to someone with poor or damaged credit without a co-signer (which is how the majority of first-time borrowers get started).

Unfortunately for a great many consumers with either limited of troubled credit, finding a co-signer is easier said then done.

How We Can Help

The good news is that here at Auto Credit Express weve spent the past two decades helping borrowers with limited as well as troubled credit backgrounds. Were familiar with the ins and outs of the credit repair process and weve helped thousands of consumers get back on the road to better credit through our nationwide network of experienced new car dealers.

The Bottom Line

Consumers with damaged credit need to know that theyre really not alone and that there are lenders out there willing to work with them – they just have to know where to find them which is where we come in.

Auto Credit Express matches consumers that have experienced car credit issues with dealers that can offer them their best opportunities for car loan approvals.

So if youre ready to establish your auto credit, you can begin now by filling out our online auto loan application.

Aug 26 2014

Car Loan Refinance with Poor Credit

Refinancing an auto loan can often lower the monthly payment but a recent survey from RateWatch shows many buyers are unaware of this option

Auto Loan Refinancing

Here at Auto Credit Express we realize that car buyers with bad credit that are currently financing a vehicle sometimes find that by refinancing through another lender can lower their loan payments and free up additional cash. We were reminded of this recently when RateWatch released the results of a new survey it conducted entitled Auto Lending: Todays Customer.

According to RateWatch, a great many borrowers either overlook or are not interested in refinancing their car loans as the survey found that:

  • 27% of respondents did not know that refinancing their auto loan was an option.
  • 59% of respondents knew that refinancing was an option but chose not to refinance.
  • Those ages 30-44 were most likely to be aware of auto refinancing options, but only 20% had taken advantage of them.
  • Those who have owned their vehicle for 5 or more years were most likely to have known refinancing was an option and follow through with a refinance. More than half of those who have owned their vehicles for less than 5 years were not aware refinancing was an option.

But at the same time, credit-challenged consumers considering this option should know that the circumstances have to be just right to accomplish this. When it comes to borrowers who are reestablishing credit, just because they want to refinance doesnt necessarily mean theyll qualify.

Thats because this type of loan is typically available only if a borrowers FICO scores are good although it can sometimes happen if the loan is in good standing, payments have been made regularly and theres enough of a history (timely payments on their current loan for anywhere from 18 to 36 months) on which to make a loan decision.

Refinance advantages

Advantages to refinancing an auto loan include:

  • Lower monthly payments resulting from a better interest rate something that can also reduce overall interest costs
  • Lower monthly payments resulting from extending the existing loan term for example, if the current loan term has 24 to 36 months remaining on it, refinancing can add an additional 12 months (possibly more) to the loan term. Although this extends the payoff date (and typically increases the overall interest costs), a lower payment can free up money for utility bills and other essentials. It also can reduce the possibility of late or even missed auto loan payments
  • Refinancing can also help raise a borrowers FICO scores by making it easier to make timely monthly loan payments

The Bottom Line

Although many borrowers are unaware of the advantages of auto loan refinancing, consumers with low credit scores need to realize that they may not qualify for this loan option, especially if their loan is fairly recent.

One other tip: Auto Credit Express helps buyers with damaged credit find those dealers that can offer them their best opportunities for a car loan approval. So if youre ready now, you can begin the process by filling out our online auto loan application.

Aug 25 2014

Indian Trail man faces insurance fraud charge

State insurance officials have accused an Indian Trail man of staging a vehicle theft and then filing a fraudulent claim.

Jamarr Taj Matthews, 32, was charged with one count each of insurance fraud and obtaining property by false pretenses, according to the NC Department of Insurance.

Investigators accuse Matthews of intentionally abandoning his vehicle July 1 in Charlotte, reporting the vehicle stolen four days later, and then filing a claim with Nationwide Insurance. Authorities said Nationwide paid $380 for a rental car, before state insurance officials and Charlotte-Mecklenburg police launched an investigation.

Matthews was arrested Monday, and state insurance officials said he faces additional charges from Charlotte-Mecklenburg police.

The NC Department of Insurance said an estimated 10 cents of every dollar paid in insurance premiums goes toward the payment of fraudulent claims. State officials have made more than 1,000 arrests since 2009, with more than 500 convictions and 200 pending cases.

Aug 25 2014

CORONA: Police seek help catching car, credit card thief

Police are asking for the publics help identifying a man who stole a car and credit cards from someones garage in Corona.

The suspect walked into a garage at about 5 pm Aug. 8 at a home in the 2900 block of Breezy Meadow Circle and stole the vehicle. Police located it at the Crossings at Corona shopping center, where the victims credit card was used at several stores, a Corona Police Department news release said.

The thief was described as a bald white or Latino man last seen wearing a dark shirt, khaki shorts and black shoes. Officials asked anybody with information to call the police department at 951-736-2330 and press 3.

For more breaking news updates follow the author of this article on Twitter @PeterSurowski and like him on Facebook.

Aug 24 2014

How to escape the medical care debt trap

Even a medical debt of as little as $100 is likely to be referred to collection, and that alone can lower a credit score by 80 or more points. The Federal Reserve estimates that about 1 in 6 credit reports in the US contain a medical debt collection, and that nearly 17 million American adults have received a lower credit rating because of high medical bills.

Even when medical collections are paid or settled, they are not removed from your credit reports. They remain there for seven years from the date the original debt went into default. A new study released by the Consumer Financial Protection Bureau found that both paid and unpaid medical debt unfairly penalized a consumers credit rating.

Aug 24 2014

Credit Union Kills Auto Loan Campaign After Driving Car Dealers Furious

They say never bite the hand that feeds you. But that seems to be what Space Coast Credit Union did with an auto lending campaign attacking interest rate markups charged by dealerships. The credit union had to do a big U-turn after the auto industry protested, with some car dealers decrying the marketing initiative as a smear campaign.

Few consumers are aware of rate markups. A rate markup (sometimes referred to as buy-ups or dealer reserves) occurs when a car buyer arranges for bank or credit union financing at the dealership, and the rate they get is marked up. It is a fairly common practice, encouraged by the indirect lending policies of both banks and credit unions, but some people feel these markups are kickbacks to car dealers.

The fact remains that most consumers have never heard of rate markups, and dont know what they are.

Space Coast Credit Union doesnt engage in rate markups, instead choosing to compensate its dealer partners using a flat fee. So they decided to create a consumer awareness and advocacy campaign calling attention to the issue. According to the credit union, rate markups average around 2.5% and gouge consumers for hundreds of millions of dollars. Space Coast wanted to get the word out, figuring they could grow their auto loan portfolio.

The credit unions strategy made sense, and it sounds reasonable enough: build a marketing campaign that exploits and leverages a relevant competitive advantage. But

Aug 24 2014

Company that collected on payday loans settles with NY AG

COMMACK, NY (Legal Newsline) New York Attorney General Eric Schneiderman reached a settlement on Friday with a New York debt collection firm that allegedly collected on predatory payday loans.

A company called NCEP LLC allegedly placed consumer debts with Forster Garbus for collection. The debts included payday loans, which are illegal in New York because the interest rates far exceed the maximum of 16 percent allowed under state law for most lenders not licensed in New York. Payday loans can have interest rates ranging from 100 percent to more than 650 percent.

Aug 23 2014

Why You Should Avoid Payday Loans

Payday loans have become a life-line for many American families strapped for cash. Payday loans are basically high-interest, high-risk, short-term loans largely made to sub-prime borrowers who dont have any other means of obtaining much needed funds.

According to research figures released by the Pew Charitable Trust in 2012, 12 million American adults depended on payday loans in 2010 to make ends meet while figures will most certainly have further risen until 2014.

In 2010, the average borrower took out eight loans per year with a loan size of $375 each and paid a whopping $520 on interest.

Payday loan companies providers clearly take advantage of cash-hungry, vulnerable consumers who need quick cash and are desperate enough to turn to these financing companies.

Aug 23 2014

Capitec – Today’s stocks pick within the un-secured lenders sector

Capitec is a full retail bank. It was established in March 2001 by the team at PSG, and listed on the JSE in 2002. It has a market cap of R25.5 billion, a PE of 12.3 and a dividend yield of 2.4%. Guest Syd Vianello Independent retail analyst and resident expert Byron Lotter from Vestact have selected Capitec as todays stocks pick within the un-secured lenders sector.