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I have negative equity and poor credit, but desperately need another car. Do I have any options?
If you have poor credit, the key will be being reasonable with your expectations and re-establishing your credit history.
How old is 'too old' when looking at used cars?
Typically people put on 12,000 miles a year on a used vehicle. You should try to stay under 60,000 miles - meaning that you should not really look at a vehicle older than 5 years.
Can I refinance my car after six months?
Generally speaking, no. In most cases, the earliest you can refinance a car loan is 2-3 years after purchase.
I am looking to buy a used car and I recently saw one like I want advertised for sale in the supermarket parking lot.
I wouldn't buy a vehicle off the street. I would prefer to recommend a dealership where you have recourse if there is a problem and you know they will stand behind it.
I am about to purchase a car, how do I get the payments as low as possible?
As you know, the payment is truly a function of how much you finance. That being said - there are 4 things for you to negotiate: 1. Your trade, 2. The price on the new vehicle, 3. The interest rate, 4. And the term of the loan. Change any one of the 4 and your payment will change. The car you want has about 10% mark-up in it. So if you are looking at a $28,000 car, the most you can hope to save is between $2,000 and $2,500 off the car. If it's too much, you have to find a less expensive vehicle.
Someone told me that since I have bad credit, it helps to get a new car put at least $1500 down on it. Is that true?
It depends. It can be easier to get financed on a less expensive used vehicle if your credit is really poor.
Can I trade my car even though I have negative equity?
Yes, if your credit can handle the loan. If you are having trouble getting approved, it can be resolved with either down payment, a co-signer, or choosing a less expensive vehicle.
What does it mean to be upside down?
If you go to www.kbb.com and look up the value of your vehicle (look at average trade-in) you can then see if it is worth as much as you owe. If its worth less, then you will be upside down that amount of money. So if you owe $37,000 and the vehicle is worth $30,000 - then you will be upside down $7,000.
I've been told that I have to take a smaller vehicle for a year to reestablish my credit, then trade it in for a better vehicle. Is that true?
First off, if you take a vehicle, you won't be able to trade it in a year later. Don't listen to that -- it is wrong. You'll have too much negative equity and will be stuck. Any vehicle you get, plan on keeping it for most of the term of the loan. And lower your sights. Your credit cannot justify an expensive vehicle. You'll extend yourself too much. Fix your credit first.
I wanted to trade my car in but I just purchased it about eight months ago.
You probably won't be able to trade so soon. Typically, you should wait until at least half of the loan is paid off.
What is Gap Insurance?
If you are in an accident and your car is totaled, Gap Insurance covers any difference between what your car is worth and the amount you owe a bank if you are financing. It covers that 'gap.'
What is the difference between split limits and combined single limits of liability?
A combined single limit of liability has one limit for both bodily injury and property damage combined. That means if a policy had a limit of $100,000 the maximum amount the policy would pay for the total bodily injury and/or property damage would be $100,000. A split limit liability policy has a separate limit per person and per accident for bodily injury and a per accident limit for property damage. For example, if a policy had a limit of $25,000 on property damage and a $100,000 per person limit on bodily injury, with a $300,000 per accident limit on bodily injury, the maximum amount the policy would pay is: $25,000 for property damage and $300,000 for total bodily injury (not exceeding $100,000 per person).
Is it better to lease or buy?
Leasing is simply a form of financing. You basically are renting the vehicle with an option to buy it. At the end of the term, if you bought the vehicle, you would have paid essentially the same as if you financed the whole amount up front. The only difference is that during the term of the lease, your payment was about 1/2 of the payment if you had bought the vehicle. On the down side - if you lease, you cannot get out of the lease early without either purchasing the vehicle or making the remaining payments.
What is the best way to get the car I want with payments I can afford?
If you are looking for a lower payment, you should look at leasing. If you are looking at buying, your payment will be higher.
I spent a long time negotiating terms with the dealer. Four days later I got a call saying the bank cannot approve the loan and now the dealer wants to renegotiate the contract. Can they do this? What options do I have?
A car deal is typically conditioned on the dealer being able to assign the finance contract to a finance company. In the event they cannot find a company to accept the deal at the originally stated terms, the deal is not complete and the dealer will offer substitute terms to the buyer. The buyer has the option at that point to either return the vehicle or come to agreement with the dealer.
If I make $30,000 a year, how much can I finance?
You can finance up to 1/2 your annual income. So in your case, you could have a loan with an amount financed up to $15,000. If you want to buy a more expensive vehicle - then you have to put that extra money down as down payment.
If I purchased a car and decide I don't want it, is there a certain amount of time that I have to change my mind?
There is no "return policy" for you to change your mind when you buy a vehicle. The only times you can bring a vehicle back is when (1) the dealer agrees to take it back; (2) you have a written agreement with the dealer to take it back - e.g. it's part of their store policy; (3) your financing is not approved; or (4) you purchased the vehicle at an off-site sale like a Tent Sale - in which case you typically have 3 days under a "Door to Door" sales statute that exists in most states.
I have a 2005 Ford Explorer I owe 20,668 it has 48880 miles . I want to trade it in for something else because my payments are 513.91 I want a lower payment what should I do?
The first thing you have to do is find out what the vehicle is worth. That way you will know if you owe more than it's worth or not. Remember, if you owe more than it's worth - that amount is called "negative equity" and must be added to the next loan; which will in turn raise your payment since you'll be financing more. As a quick rule of thumb, your payment will go up $25 a month for every $1,000 you add to the loan.
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