Car Choice Comes Last for Bad Credit Buyers

Here at LivAuto auto loan, we often receive comments from consumers who are looking for their next car. Typically, people who are looking for an auto loan tend to pick out a car first and look for financing second. This process may work for someone with good to great credit, but for many people—especially those with bad credit—the process works differently.

 

Take this customer who recently wrote to us about finding a vehicle:

“I'm looking for a dark purple car would love to get Camaro but I would be willing to get a different model like Impala or even an SUV but I can't afford a new one…”

To be clear, we are not a car finder or a finance company. We help people with bad credit get connected to local special finance dealers who can help people get the vehicles they need.

Why the Bad Credit Process is Different

Wanting a particular car is one thing, but when you have damaged credit, it's more important to get what you need—or what you can afford—rather than trying to find the exact car you want. This is due to the fact that when you are looking for financing with bad credit, you first have to get an approval from a subprime lender.

Subprime financing is typically needed when you have a credit score around 640 or lower. This type of auto loan is done through indirect lenders who work with special finance dealerships. Not all dealers have subprime lenders, so choosing the right one to meet your needs is important. Once you have found a dealer with a sub prime finance department, you will need to sit down with the special finance manager, fill out an application and submit the necessary documents.

You will need to provide:

  • A valid driver’s license or state ID.
  • Proof of income – your most recent check stub.
  • Proof of residence – a current utility bill in your name.
  • Proof of a working phone – a landline or cell phone from a national carrier, in your name.
  • Six to eight complete references – including names, addresses, and phone numbers.

Once you have completed this process, the dealer will transmit your application and documentation to the lender. The lender will either approve or deny your loan request. If you are approved, the lender will transmit a “payment call” to the special finance manager with the program you qualify for along with any additional requirements.

Choosing Your Vehicle

Once the lender has approved your auto loan request, the dealer will present you with a list of eligible vehicles that you qualify for, based on the information from the lender. Then, you can test drive them and choose the one you like that best fits what you need.

The good news is your choice of vehicles will typically be restricted to those that are less than 10 years old and with less than 100,000 miles. It is also good to note that your loan term can vary depending on vehicle mileage and model year.

As you can see, when you are dealing with subprime financing, choosing a vehicle comes at the end of the buying process, rather than the traditional loan process where you choose your vehicle first, then get financed.

When Should I Refinance My Car?

Each auto refinance deal is different, so the timing of when you should refinance your car loan depends on when it makes the most sense for you. Still, most people refinance their car loans when 1) their credit has improved, 2) they need to lower their monthly payments, 3) national interest rates have changed, or 4) they would like to remove (or add) someone as a co-signer on their loan.

Let’s look at each scenario.

YOUR CREDIT HAS IMPROVED

If your credit has improved since you bought your car, then a lender will probably agree to refinance your current loan to one with a lower interest rate.

Usually, to save money over the course of your loan, all you need is to lower your interest rate by one percent or so (learn more about how car loan interest works here). However, if your credit has truly improved, you may be able to lower your interest rate by much more.

Keep in mind that your credit is more than your credit score. Lenders usually look at an applicant’s entire credit report(s) when considering a loan application. To learn more about how lenders may review your credit history, read the Four C’s of Credit.

You have a legal right under the Fair Credit Reporting Act to view your credit reports from each of the three nationwide credit bureaus every 12 months for free. Visit annualcreditreport.com or call 1-877-322-8228 to request your free report(s). Please note, annualcreditreport.com is the only website authorized to give you your legally mandated free report. Other websites exist that offer free credit reports or free credit scores, but some (not necessarily all) may try to get you to pay for your credit information. Visit this page from the Federal Trade Commission for more information on accessing your free credit reports.

 

Is Auto Loan Refinancing Is Right For You?

Refinancing may help you…

  • Lower your interest rate
  • Decrease your monthly payment
  • Remove someone from your car loan

YOU NEED LOWER MONTHLY PAYMENTS

One of most common reasons that people to refinance is to lower their monthly payments. Auto refinancing can be a great way to cut back on monthly expenses, but you need to be careful that refinancing, for this reason, makes sense for you.

Because of how car loan interest works, you have two ways to lower your monthly payments with a new loan. You can get a lower interest rate, you can extend your loan term, or you can do both.

So, if you refinance to a lower interest rate and keep the same loan term length, you would lower your monthly payments.

Or if you simply extend your loan term and keep your old interest rate, you will also lower your monthly payments. However, generally speaking, the longer your car loan term length, the more interest charge you will pay in total over the course of your loan.

The reason longer term lengths may cost you more over the life of your loan is that you pay an interest charge each month on the loan balance you have yet to pay. The longer you take to pay down your car loan, the more you pay interest on the loan balance you still owe. Still, it is possible to extend your loan term, lower your monthly payment, and pay less in total for your car. If you lower your interest rate sufficiently, a longer loan term length may not result in you paying more for your car.

Finding the balance between how much you pay per month versus how much you pay cumulatively over the course of a loan can be tricky. The important thing is that you understand how interest rates and loan term lengths affect how much your car loan costs so that you can make an informed decision about your refinancing goals.

INTEREST RATES CHANGE

If interest rates fall across the economy, then you have a better chance of refinancing to a lower interest rate because lenders will generally lower their interest rates to compete.

However, it is not easy to accurately predict future interest rates. The Federal Reserve plays a role in setting interest rates but so do various economic forces, making interest rate prediction extremely difficult. The only sure thing is that interest rates will fluctuate. So, waiting for interest rates to fall may or may not be worth it.

Furthermore, just because falling interest rates can help borrowers does not mean that rising interest rates should discourage you from refinancing. If your credit has improved since you financed your car, refinancing may help you reduce your monthly payments and interest charges no matter what the prevailing interest rates are.

YOU WOULD LIKE TO REMOVE (OR ADD) SOMEONE AS A CO-SIGNER ON YOUR LOAN

Not everyone seeks to refinance solely for financial reasons. Sometimes, more personal reasons motivate people to refinance, such as the ending of a relationship.

If you have a co-signer on your current loan that you wish to remove for whatever reason, then refinancing is a solution. When you refinance, you essentially replace your old loan with a new one, meaning you can remove a co-signer from (and/or add someone to) your car loan.

SUMMARY

People refinance their cars for many reasons, and if you refinance, you will probably do so for a combination of reasons unique to you. Still, most people refinance to save money or to handle a personal matter. The important thing is that you understand how auto refinancing works so that you can decide if and when it is right for you.

5 Times When You’re More Likely to Get in a Car Accident

Accidents, collisions, and fender-benders. No matter what you call them, they happen a lot and could affect your auto insurance rate. In Canada, about 335 police-reported collisions happen a day, and while you should always take care when behind the wheel, there are times, or conditions when collisions are more likely to happen.

1. Summer months

Most drivers might think that they’re more likely to get into a collision when conditions are wintery, but the reality is there are more collisions in July than any other month, followed by October and August.

2. Frantic Fridays

Maybe it’s because we’re all in a rush to get home to kick off our weekend, but for many, our, weekends start off on the wrong foot. Almost 17 per cent of all police-reported collisions in Canada happen on Fridays; no other day comes close.

3. The evening rush

Hands down, the evening rush hour (starting at 3 p.m. and ending at 6 p.m.) has the most collisions. This three hour period of the day accounts for 25 per cent of all collisions that happen over the course of the day.

4. Intersections are tricky

Intersections, even with working traffic signals, controls, or signs, prove tricky for drivers because half of all collisions happen at an intersection.

5. Sunny days make drivers gloomy

At 70 per cent, collisions are overwhelmingly more likely to happen on days that are clear and sunny, compared to days when it’s raining, snowing or when visibility is limited due to fog or drifting snow.

Car collisions and your car insurance

Take care, stay safe, and drive carefully to keep your car insurance premiums in check because a collision where you are at fault (even if it is only partially at fault) can be costly. An at-fault collision can increase your premiums as much as 50 per cent. Don’t let an at-fault accident increase your rates. Drive safe and avoid driver distractions to keep your premiums low.

Is Auto Loan Refinancing Right for You?

Refinancing your auto loan means replacing your existing loan with a new one from a different lender. Your current loan gets paid off by the new lender and you start making monthly payments, hopefully, smaller ones, on the new loan.

If you think your credit has improved since you bought your car, you should look into auto loan refinancing. There’s a good chance you can lower your interest rate and end up with a smaller monthly payment. You might also be able to shave some time off the loan, or go the other way and extend the term of the loan if you’re having trouble making your monthly payment.

What’s the catch? There isn’t much of one: It takes some time, and your credit profile might take a slight hit when you apply for the new loan. However, know two important things:

  1. Most auto loans don’t have a prepayment penalty so refinancing won’t cost you anything.
  2. Submitting an application for refinancing has no application fees, and the funds become available quickly, often within a day.

Why you might want to refinance

The prospect of paying less interest or lowering your monthly payments are the main reasons to consider refinancing. Let’s say your current auto loan has a 10% interest rate, and you’ve been making payments for a year or so. Chances are, your credit has improved and you could now qualify for a lower interest rate, which could lower your monthly payments. If you simply went to your current lender and asked it to lower your rate, it would probably say no. After all, you signed a contract at a certain interest rate and the lender wants its money.

Lucky for you, in today’s competitive market, plenty of other lenders are eager to get your business. When you refinance, you simply go to another bank, credit union or online lender and show it how much you still owe, called the balance of the loan. It pays off your existing balance and creates a new loan; and you start sending your monthly payments to the new lender.

If you meet the requirements, refinancing your car loan for a smaller payment could allow you to put more into savings, investing or a home improvement project. Or you may be able to pay off your car sooner. All of these options are better than pouring your money down the drain by paying more interest than you need to on a car loan.

When refinancing your car loan makes sense

Refinancing your auto loan could be the right move for reasons other than your improved credit. Even if you’re satisfied with your current loan, it doesn’t hurt to see if you can save money on interest. It makes sense if:

Interest rates have dropped. Interest rates fall for a variety of reasons: a changing economic climate, increased competition in the banking industry, even regulatory changes. If interest rates are lower now than when you first got your car loan, refinancing is likely to lower your rate and could help you pay the loan off sooner. Or, it could save you money on interest. It only takes a few minutes to apply for refinancing and see if a new lender — a bank, credit union or online lender — will offer you a lower interest rate.

A car dealer marked up your interest rate. When you got your existing loan, the car dealer might have charged you a higher interest rate than you could have qualified for somewhere else. This often happens to shoppers who don’t check their credit score before buying a car. They are persuaded to take the dealership’s loan because they didn’t shop around for the best interest rates. But you can undo the damage by refinancing and getting a new loan at a lower interest rate.

You can’t keep up with payments. Maybe you got overexcited at the dealership and bought a car that’s really too expensive for you. You might be struggling to keep up with payments. Or maybe you’re facing unexpected financial challenges because of a job change or other circumstances. By refinancing your car loan, you can take more time to pay it off, and this will lower your payments. You should think carefully before taking this course of action: If you extend the loan term, you’ll pay more in interest over the life of the loan. That’s not optimal — but it’s better than damaging your credit by missing payments.

What is Full Coverage? Understanding your Car and Auto Insurance Policy

 

Do you know what the term "full Coverage" actually means when it comes to your Car or Auto Insurance policy? 
The truth is that "full Coverage" is a very loose term that does not have an exact definition. Insurance companies do not offer a full Coverage option for you to pick. The term full coverage is generally associated with comprehensive coverage and collision coverage but can be interpreted many ways.

State Minimum Requirements

Every state in the U.S. has the ability to set its own state minimum requirements for auto insurance. In the State of Florida, The state minimum requirements include 10,000 per person and 20,000 per accident for bodily injury liability and 10,000 in Personal Injury Protection.

Comprehensive
Physical damage for all the things that can happen to your vehicle other than a collision is covered by comprehensive coverage. Full coverage cannot be possible without comprehensive coverage.

Collision
The collision is the coverage that gives you the broadest coverage and is always included in full coverage auto insurance. Collision coverage ensures your vehicle will be covered regardless of what causes the damage. Collision covers damage for all accidents and since collision cannot be purchased without comprehensive coverage anything other than an accident will still be covered.

Additional Coverage that is not necessarily included with Full Coverage 
Towing
Car Rental Coverage
Uninsured Motorist

To be sure you are fully protected from every scenario it is a good idea to talk with your agent and ask him to explain what your policy covers and what optional coverages are available.

Auto Security: Do Feds Have Our Back?

Consumers should be aware of the possibility of a hacker attack on their cars. We now know that what used to be considered a movie scenario — remote hacking — could be done.

The current reality is that, while a variety of connectivity technologies have been transfused into cars, the equal and opposite security measures are yet to be deployed.

Surely, car hacking is the last thing automakers want to mention as they push the connected cars into the vast consumer disconnect. But government watchdogs in both the U.S. and the U.K. are working to get ahead of the curve and let the public know that they are concerned.

"Whether we're turning vehicles into WiFi-connected hotspots or equipping them with millions of lines of code to become fully automated, it is important that they are protected against cyber-attacks," said Martin Callanan, a minister in the Department for Transport at the British government.

He said this last week when the U.K. agency issued new guidelines, requiring manufacturers of Internet-connected vehicles to put in place tougher cyber protections to ensure a stronger shield against hackers.

It isn’t just the U.K. The National Highway Traffic Safety Administration (NHTSA) in the United States also issued last fall the federal guidance to the automotive industry for improving motor vehicle cybersecurity.

Questions to ask
So should we all sleep well, confident that the feds have our back?

Not so fast, Gracie.

Questions that come to my mind include:
1. Do the guidelines issued by NHTSA and British Department of Transportation have any teeth for security enforcement? 
2. More important, have they gone far enough to suggest effective cybersecurity measures for cars?
3. What are the differences in the proposals of the two separate governments?

As Roger Lanctot, director automotive connected mobility in the global automotive practice at Strategy Analytics, told us, “All of the work and guidance today is advisory vs. compulsory in nature.” Things will become real, in his opinion, “when financial and liability consequences are in fact defined.”

Sources of vulnerability in connected cars are many. Lanctot listed: “diagnostic ports, hobbyist/enthusiasts, dealers, suppliers/supply chain, criminals and terrorists to say nothing of incompetence, bugs, and the management of multiple onboard systems crossing domains with different development standards.”

Facing so many areas inside cars that must be protected as cars morph into always-on computing devices, it isn’t easy to come up with comprehensive guidelines. And yet, “Regulators need to demonstrate they are doing something,” said Lanctot.

How do security experts see the development of government guidelines?

Gene Carter, vice president of products at OnBoard Security, for example, believes that “both the U.K. and NHTSA guidance documents included basic security tenets.”

He explained such measures should be followed by any company connecting hardware or software to the web — including security by design, defense in depth, principles of least privilege, etc.  In Carter’s opinion, however, these are basics. “I would hope that the automakers have learned enough from the IT world’s experiences, and they [should be] already doing those essential things.”

A few experts, including Carter, pointed out that the U.K.’s guidance does not go far enough in the area of software updates after a vulnerability is discovered.

Why Staying with Your Car Insurance Company Can Be a Good Thing

You’ve probably seen tips on other insurance blogs or heard advice through auto insurers directly about how important it is to shop around for quotes. While this is a strong practice to allow yourself access to the best rates for your car make, age, and driving history, it isn’t always the best idea. For some people, staying with the same auto insurer for an extended period of time has been the most cost-effective, practical solution for their circumstances.

What many people don’t think about when deciding to switch auto insurance companies is the quality of the services, not just the quantity of cash they’ll save. Just because a car insurance company is offering cheaper rates than your current insurance policy doesn’t mean it’s a better policy. Before you switch to a different insurance company that offers you a lower quote than the insurer you’re currently dealing with, make sure you weigh the options. Staying with your current car insurance company can be a positive decision.

 

Renewal Discounts

Many insurance companies offer discounts to customers that have been loyal to them for several years. Arbella offers an additional 1% loyalty credit for every year you renew with them. Ameriprise offers discounts to customers that have been loyal to them for three years. While some insurance companies offer discounts when you renew with them, most companies offer more substantial discounts on other fronts.

 

Bundling Discounts

A lot of insurance companies will give you a discount if you bundle your car insurance with your home or life insurance policies. Nationwide, Allstate, Liberty Mutual, State Farm, and other insurance companies offer discounts to people who purchase multiple insurance policies with them. If you have bundled policies and have earned a discount as a result, you may have to prepare yourself for higher rates if you decide to switch insurance companies or forego a policy.

 

Accident Forgiveness

Nationwide, Allstate, Travelers, and dozens of other insurance companies offer accident forgiveness to their clients. Accident forgiveness refers to a park in which customers do not have to pay extra rates after their first at-fault accidents. Most accident forgiveness discounts can only be redeemed after 5 or 6 years of loyalty to the insurer. If you’ve been with the same company for long enough to qualify for this perk (or are close to this threshold), staying with your auto insurance company could be beneficial.

 

Overall Loyalty

As a general benefit from staying with your auto insurance company, you’ll have a better relationship with your insurer. Building trust with an agent creates a positive working relationship. This trust may help you in the long run; if you ever need to file a claim after an accident, this process should be simpler and more successful if you are speaking with an agent you’re very familiar with. If your agent knows your driving habits and history well, he or she will be able to recommend the best coverage for you. Getting acquainted with your insurance company is a huge perk to staying loyal to your insurance company.


If you believe none of these benefits affect you directly right now, you might want to shop around for auto insurance quotes. If one of these perks applies to your current policy, sticking with your current company could be the best option, especially if the quotes you’re seeing aren’t significantly lower than your current rate.

ARE AUTO LOANS THE NEXT BIG BUBBLE?

  

The 2008 recession was caused by speculation in the subprime mortgage market, inflating a bubble in the housing market that eventually lead to its collapse along with the global economy.

It’s 2017 now and the bull market is on record as the second-longest in history. This relentless upward march has made investors nervous, prompting the question: where is the next bubble going to come from and when will it pop?

Wait, what is a bubble?

The term “financial bubble” comes into play anytime a mania surrounds a particular asset, leading to massive price speculation and an eventual crash.

Famous instances of financial bubbles include the Japanese real estate bubble of the late 80s and the Dot-Com Bubble, when the NASDAQ increased 10-fold over a decade, before dropping 80% over two years. During the initial bursting of the Dot-Com Bubble in March 2000, companies were losing between $10 and $30 million a quarter.

Are Auto Loans a bubble?

 

There is the talk of a bubble inflating in the auto loan market.

The overall debt market saw a deleveraging process occur after the recession in 2008. From a peak of about $12.67 trillion, total debt decreased by $2 trillion dollars. As of Q2 2017, total US consumer debt stands at $12.73 trillion.

Put another way, Americans hold $50 billion more debt today than they did before the onset of the 2008 recession that crippled the global economy.

Of the $12.7 trillion in debt held by US households, two-thirds are in the form of housing debt (mortgages). The next largest piece of the pie is in student loans and auto loans (in green) is third, weighing in at $1.13 trillion as of Q1 2017.

What people don’t realize is that car loans are a sizeable piece of household debt but are dwarfed by mortgage loans.

However, there is cause for concern.

 

Auto sales are on an upward trend since 2008, reaching a high of nearly 18 million vehicles sold in March 2017. At the height of the financial crisis, auto sales languished below 10 million. Since the crisis, mortgage loans have leveled off but auto loans have exploded. US consumers are buying cars with a fervor not seen since the early 90’s.

The trouble is: they are increasingly unable to keep up with their car payments. Between 2010 and 2016 car loan delinquencies have more than tripled (0.5% to 2%). Meanwhile, the average amount that car owners are financing has increased as well – rising more than 27% since June 2008 to nearly $30,000 as of December 2016.

Worryingly, subprime auto loans have increased as well and make up more than 20% of all auto loans. That means there is $300 billion in loans going to borrowers considered high-risk.

When you add it all up, the evidence does not bode well.But while the automobile debt market may be stretched, it’s not going to cause a financial crisis. The size of the total auto loan market is nowhere near the amount at stake during the housing crisis, and the subprime portion of that market is only about $300 billion.

It would be hard for a collapse in the auto market would not bring down the whole economy – especially when we are not seeing the amount of speculation in securitized debt as we did prior to the financial crisis in 2008. We’re also seeing a downtick in auto sales as of April and May of 2017, suggesting that US consumers are pulling back a little.

The auto loan market is overheating and worth keeping an eye on, but we are not in bubble territory – yet.

Will You Invest In A Chevy Maintenance Process

Invest in Chevy Maintenance Process

Just because you are driving a Chevy unit doesn’t mean that you can just bypass the necessary processes that keep the car’s performance in optimum shape by not performing the manufacturers required Chevy maintenance. Yes, it is true. General Motors, the makers of Chevy automobiles, is considered one of the world’s best when it comes to manufacturing vehicles. If you own a GM product then you should be happy about it. Probably so but you must take note that this American auto firm is investing millions of dollars in order to sustain the conditions of the unit you’re driving.

Why Chevy Maintenance Process Matters

Before plunging into an approach that involves Chevy maintenance, let’s try to keep matters in perspective. So you bought or probably choose a Chevrolet. Why? Backing your decision on why you purchased or acquired one is vital to how you will be able to keep your unit in tip-top for years to come.

If you think GM made a brand that can survive on its own, think again. In June last year, the organization is leading the auto industry with a 16.9% market share across the United States. While that is good news for Chevy owners, there is one troubling aspect in this scenario. GM is only leading by a percentage that barely reached 20%.

When you say the figure does not matter as long as the company is number one, that makes it all the more disturbing. Here’s why. The dominance is simply not there. When an automaker is solidifying its position in the market, it should be on top with around 40% share. The group should be off and be running. If your argument is the fact that there are numerous competitors on the heels of the Chevy, then justifying GM’s market leadership suddenly sounded thin. It means that other auto manufacturers are fast catching up with

General Motors Maintenance Process

Whatever we discuss here will not change the reality that GM is indeed up to the ladder board. Still, you have to come up with something that supports your decision to get a Chevy. If you tell me that the car is durable, fast and safe then I need to point out that, those things are exactly what Ford, Toyota, Nissan, Chrysler, and Honda have in mind all these years. Then why are not these firms enjoying the lead in the auto market?

The Road Ahead
Perhaps one main point that GM has over the rest is its approach to Chevy maintenance. The US firm has instituted a program to reinforce its after-sales campaign. By the time your Chevy has been hitting the road, the company is already thinking of ways to keep you happy whenever you are behind that steering wheel.
So how does GM keeps its Chevy owners satisfied? The answer is best attributed to the presence of sophisticated tools and platforms that will prolong the life of your unit. Within this context, GM’s service centers are ready to address your concerns just in case you drop by to discuss issues hounding your car.

If you think that this program for Chevy owners is unique, you need to be aware of Ford, Toyota, and the rest’s approach when it comes to keeping their respective clients happy. Each and every automaker in the world today is probably doing almost exactly the same thing GM is adhering to. If they don’t, then they get booted out of the industry. It is that simple.
Since we have somehow justified your option to choose a Chevy, perhaps you need to further reinforce your position when it comes to car handling. Be it known that GM wants every penny you’ve spent on their product to be worth it which is why offering services to upgrade or fix your unit is an immediate priority.

For the Long Haul
Here are some facts that back why Chevy maintenance procedures are helpful to your car. Primarily, General Motors are investing heavily in technology-driven platforms. This does not merely mean that new designs or new materials or new tools are being integrated into their products. The global coverage and partnership with other industries are fast strengthening GM’s presence.

For instance, its affiliation with ride-sharing service firm Lyft is boosting GM’s exposure. What it intends to do is to establish networks way beyond its comfort zone. The organization’s decision to develop autonomous vehicles is also a step in the right direction which is why putting up the right pieces around its units including the Chevy further clarifies things that GM is in for the long run.