Change has to start somewhere, and for many people that change is easier to make if the starting point has some meaning. It can be a birthday, an anniversary, or any other date with some symbolic weight. Most commonly, people choose the beginning of the new year.
If you’re looking for some New Year’s resolutions that will truly change your life, consider adjusting your financial strategy. Here are five things you can do in 2021 to take your money game to the next level.
Interest rates are at near-historic lows, which makes this the perfect time to refinance your debt. Refinancing means switching your loans from your current lender to a new lender in order to take advantage of a lower interest rate. Refinancing can save you thousands of dollars, depending on the original interest rate and total balance.
Â For example, letâs say you have a $200,000 30-year mortgage with a 5% interest rate, and you refinance to a 3% interest rate. Your monthly payment will be $244 lower, and youâll save $31,173 in total interest over the life of the loan.Â
You can refinance auto loans, personal loans, and even student loans. However, if you have federal student loans, you may want to hold off on refinancing. Refinancing a federal student loan converts it into a private student loan. This means youâll give up extra perks and benefits like income-driven repayment plans and deferment and forbearance options.
Transfer Credit Card Debt
If you have credit card debt, you can pay less interest by transferring the balance to a new card with 0% APR on balance transfers. These special discounts usually last between 12 to 18 months, during which time you wonât be charged interest on the credit card balance.
For instance, letâs say you have a $5,000 balance on a card with a 17% APR. If you only make the minimum payments, youâll pay $1,223.61 in total interest. If you transfer that balance to a card with 0% APR for 12 months and repay the balance in that time, you wonât pay any interest.
There is often a small fee associated with balance transfers, around 3% of balance transfers. For example, if you transfer $5,000, youâll pay a $150 fee. That still leaves a net savings of $1,073.61 in the scenario outlined above.
Decrease Your Fixed Expenses
One of the best things to do for your budget in 2021 is to decrease fixed expenses like your car insurance, internet, cable, and cell phone. Call those providers and try to negotiate a lower rate.
Â Go through your transactions for the past few months and write down all the recurring subscriptions like Netflix, Amazon Prime, and DoorDash. Then, group them into categories like âfrequently use,â âsporadically useâ and ârarely useâ. Consider canceling anything you rarely use.
Â See if you can get a better deal on your most popular subscriptions. For example, if you and your significant other both pay for Spotify Premium, get a Spotify Duo account instead, and save yourself $83.88 a year.
Open a Better Bank Account
Most people are missing out on an easy way to earn money through your bank account. You could be leaving hundreds of dollars on the table if you still have a traditional savings account.
According to the FDIC, the current average interest rate on a savings account is 0.05%. Many high-yield savings accounts offer rates between .40% and .60%.Â
Letâs say you have $10,000 in a savings account with .05% interest. After one year, youâll have earned $5.04 in interest. If you moved that amount to a high-yield savings account with .5% interest, you would earn $49.92 in interest over that same time period.
If you’re not investing for retirement yet, this might be the most important financial resolution you can make. Thanks to the power of compound interest, you can start investing now and see huge growth by the time youâre ready to retire.
IRAs and 401(k)s are the two main retirement accounts. Anyone can open an IRA, while only those who have access to an employer-sponsored 401(k) can open one.
Â If you’re not sure how to invest in your retirement account, consider hiring a qualified financial planner through the National Association of Personal Financial Advisors (NAPFA).
If youâre not ready to work with a financial planner, you can use a robo advisor like Betterment or Wealthfront, which will create a portfolio based on your age, income, and expected retirement age. Robo advisors have low fees and are designed to help beginner investors.
How to Keep Financial Resolutions
First, start small. Pick one habit to change at a time. If you try to accomplish five goals at once, you’ll burn out quickly and give up.Â
When you decide on a resolution, break it up into smaller, more manageable tasks. For example, if your goal is to talk to a financial planner about investing, break it down into the following steps:
1) Research financial planners through NAPFA
2) Send introductory emails to three financial planners
3) Choose the one that seems like the best fit
4) Schedule a consultation
Give yourself a deadline to accomplish each of these tasks, and ask a friend to hold you accountable.
Another tip is to tie your resolutions to a bigger goal. Like dieting or starting a new exercise plan, changing your financial habits is hard. If you’re used to grabbing lunch with your co-workers every day, bringing leftovers from home instead will seem like a huge change.
The key is to imagine the future version of yourself who will benefit from the changes you make today. If your goal is to open and contribute to a retirement account, imagine yourself as a senior citizen living comfortably.
When youâre tempted to skip this monthâs retirement contribution to buy concert tickets, think about your future self, what youâd want for them and how they would appreciate your sacrifice. It can also help to remember some of the financial mistakes you’ve made in the past, and how much easier your life would be right now if you had made a different choice.
The post The 5 Best Financial New Year’s Resolutions appeared first on MintLife Blog.
Annaâs email requesting help with her finances began with a unique confession.
âFarnoosh, my money problem garners little sympathy,â the 32-year-old wrote. âMy issue is that I make too much of it.â
Now, THIS is interesting, I thought. I immediately followed up with many questions.
Hereâs what I learned through our conversation:
The Denver-based Mint user earns $220,000 per year as an engineer. Annaâs also benefited from years of big bonuses and her net worth, not including her home equity, is close to a million dollars.
After paying taxes and health benefits and maxing out her 401(k), Anna takes home between $8,000 and $10,000 each month. Her expenses mainly consist of a $1,200 mortgage payment, car insurance, gas, food and utilities, amounting to maybe a few thousand dollars per month.
The rest either goes into savings where she stashes about $5,000 to $10,000 for unexpected expenses or into a brokerage account where she has roughly $800,000 invested. A wealth management firm manages that portfolio and charges, she says, an annual 1% fee.
Anna has no consumer debt, besides her mortgage, which amounts to about $338,000. Itâs a 30-year fixed rate loan with a 2.85% interest rate. The home has appreciated in recent years with about $100,000 in equity (including Annaâs initial 20% down payment).
So, what is the problem, exactly?
âMy big worry is that I don’t have the habits to manage money well,â Anna told me. Her sizeable bank balance has her feeling financially free, although she worries about getting carried away with spending sometimes.
âWhen I see money in my bank account I rationalize that âyea, that vacation is doable. I donât hold back on the things that may seem frivolous,ââ she says. But It seems she wants more financial grounding and to be able to evaluate expenditures and price tags more critically.
Annaâs situation may be unique, but I think relatable in the sense that we all would like to feel more thoughtful with how we spend, save and invest. And while some may do well with earning money, it should not be assumed that they can also manage that money well.
I applaud Anna for wanting to be sure that, even with an impressive net worth, she is actually making wise financial decisions.
Hereâs my advice.
Take a Deep Breath
No need to panic when spending on things and experiences that you enjoy. From what I can tell Annaâs prioritizing the serious financial stuff first like contributing the max to her 401(k) and saving all of her annual bonuses in a brokerage account. She has no credit card debt and pays all her bills on time. Thatâs terrific.
Sometimes we just want to hear that weâre on the right track with our money and I have a very simple way to measure this:
If you manage each paycheck by saving, investing and paying all your bills first, then by all means, youâre entitled to have fun with whatever is left without any fear or regret. Am I right?
If youâve done the good work of taking care of your future with your money, then donât hesitate treating yourself and others with the remaining funds today. Splurge away and enjoy your hard-earned money. And remember to enjoy the moment.
Ditch Your Money Managers
I do think Anna could find a better home for her investments.
Paying one percent of her managed assets to this firm may not seem that high of an annual fee. But when you think about Annaâs balance of $800,000, thatâs $8,000 this year. What about next year and the decades after that as she contributes more to the account? That fee, compounded over the next 30 years, will amount to – conservatively – over one million dollars. Ouch.
That doesnât even factor in the expense ratios for each mutual fund thatâs in her portfolio.
If all Anna seeks is investment assistance, she may be better suited stationing her money with an automated wealth platform or robo-advisor where her money is largely invested in low-fee index funds or exchange-traded funds (ETF) and the portfolio management fee is typically 0.50% or less.
Of course, breaking up with your financial advisor is not always so simple. Itâs especially hard for Anna, as she equated her money managers to âfather figures.â
If I were Anna, I would just explain to my advisors over email something like, “I want be more conservativeâ¯withâ¯my money and that includes being extra mindful of the various fees that I’m paying. To that end, Iâve decided to manage my money more independently. Iâm sure you can understand. I appreciateâ¯yourâ¯help over the years. Please let me know next steps.”
Planners know the drill and are used to having clients end relationships.â¯ Stay strong. Nobody can really argue with the fact that saving money is a good thing!
Establish Short and Long Term Goals
Anna wants to spend and save with more conviction. I think having some concrete, tangible goals can help.
For example, she shared that sheâd like to get married, have a family and own two homes â one near her office downtown and another in the mountains as a getaway.
So, the next step is to understand what these goals cost. What are, say, the going prices on a vacation home in her state? How much might she want to stash in a separate account for the future down payment on this property? Knowing the underlying costs of her goals can better direct how much to spend elsewhere.
Next time sheâs planning a vacation, she may be more inclined to price compare or hunt down better deals, as opposed to just judge whether the trip is financially âdoableâ by the amount of money in her bank account. Now sheâll have the image of that second home and its costs and will make a more informed choice.
Contribute to a Cause
Last but not least, when you feel you make more than enough, like Anna does, this is a great opportunity to be extra charitable. If sheâs seeking a way to give her money more meaning and feel purposeful in her financial life, this is a truly wonderful way to go about it. Discover a cause that youâre passionate about and make an impact as a volunteer and donor.
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at firstname.lastname@example.org (please note âMint Blogâ in the subject line).
Farnoosh Torabi is Americaâs leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, sheâs become our favorite go-to money expert and friend.
The post Mint Money Audit: Managing Money When You Make Enough appeared first on MintLife Blog.
Everyone knows that raising kids can put a serious squeeze on your budget. Beyond covering day-to-day living expenses, there are all of those extras to considerâsports, after-school activities, braces, a first car. Oh, and don’t forget about college.
Add caring for elderly parents to the mix, and balancing your financial and family obligations could become even more difficult.
“It can be an emotional and financial roller coaster, being pushed and pulled in multiple directions at the same time,” says financial life planner and author Michael F. Kay.
The “sandwich generation”âwhich describes people that are raising children and taking care of aging parentsâis growing as Baby Boomers continue to age.
According to the Center for Retirement Research at Boston College, 17 percent of adult children serve as caregivers for their parents at some point in their lives. Aside from a time commitment, you may also be committing part of your budget to caregiving expenses like food, medications and doctor’s appointments.
When you’re caught in the caregiving crunch, you might be wondering: How do I take care of my parents and kids without going broke?
The answer lies in how you approach budgeting and saving. These money strategies for the sandwich generation and budgeting tips for the sandwich generation can help you balance your financial and family priorities:
Communicate with parents
Quentara Costa, a certified financial planner and founder of investment advisory service POWWOW, LLC, served as caregiver for her father, who was diagnosed with Alzheimer’s disease, while also managing a career and starting a family. That experience taught her two very important budgeting tips for the sandwich generation.
First, communication is key, and a money strategy for the sandwich generation is to talk with your parents about what they need in terms of care. “It should all start with a frank discussion and plan, preferably prior to any significant health crisis,” Costa says.
Second, run the numbers so you have a realistic understanding of caregiving costs, including how much parents will cover financially and what you can afford to contribute.
17 percent of adult children serve as caregivers for their parents at some point in their lives.
Involve kids in financial discussions
While you’re talking over expectations with your parents, take time to do the same with your kids. Caregiving for your parents may be part of the discussion, but these talks can also be an opportunity for you and your children to talk about your family’s bigger financial picture.
With younger kids, for example, that might involve talking about how an allowance can be earned and used. You could teach kids about money using a savings account and discuss the difference between needs and wants. These lessons can help lay a solid money foundation as they as move into their tween and teen years when discussions might become more complex.
If your teen is on the verge of getting their driver’s license, for example, their expectation might be that you’ll help them buy a car or help with insurance and registration costs. Communicating about who will be contributing to these types of large expenses is a good money strategy for the sandwich generation.
The same goes for college, which can easily be one of the biggest expenses for parents and important when learning how to budget for the sandwich generation. If your budget as a caregiver can’t also accommodate full college tuition, your kids need to know that early on to help with their educational choices.
Talking over expectationsâyours and theirsâcan help you determine which schools are within reach financially, what scholarship or grant options may be available and whether your student is able to contribute to their education costs through work-study or a part-time job.
Consider the impact of caregiving on your income
When thinking about how to budget for the sandwich generation, consider that caring for aging parents can directly affect your earning potential if you have to cut back on the number of hours you work. The impact to your income will be more significant if you are the primary caregiver and not leveraging other care options, such as an in-home nurse, senior care facility or help from another adult child.
Costa says taking time away from work can be difficult if you’re the primary breadwinner or if your family is dual-income dependent. Losing some or all of your income, even temporarily, could make it challenging to meet your everyday expenses.
“Very rarely do I recommend putting caregiving ahead of the client’s own cash reserve and retirement.”
When you’re facing a reduced income, how to budget for the sandwich generation is really about getting clear on needs versus wants. Start with a thorough spending review.
Are there expenses you might be able to reduce or eliminate while you’re providing care? How much do you need to earn each month to maintain your family’s standard of living? Keeping your family’s needs in focus and shaping your budget around them is a money strategy for the sandwich generation that can keep you from overextending yourself financially.
“Protect your capital from poor decisions made from emotions,” financial life planner Kay says. “It’s too easy when you’re stretched beyond reason to make in-the-heat-of-the-moment decisions that ultimately are not in anyone’s best interest.”
Keep saving in sight
One of the most important money strategies for the sandwich generation is continuing to save for short- and long-term financial goals.
“Very rarely do I recommend putting caregiving ahead of the client’s own cash reserve and retirement,” financial planner Costa says. “While the intention to put others before ourselves is noble, you may actually be pulling the next generation backwards due to your lack of self-planning.”
Sunny skies are the right time to save for a rainy day.
Start an emergency fund with no minimum balance.
Discover Bank, Member FDIC
Making regular contributions to your 401(k), an individual retirement account or an IRA CD should still be a priority. Adding to your emergency savings each monthâeven if you have to reduce the amount you normally save to fit new caregiving expenses into your budgetâcan help prepare you for unexpected expenses or the occasional cash flow shortfall. Contributing to a 529 college savings plan or a Coverdell ESA is a budgeting tip for the sandwich generation that can help you build a cushion for your children once they’re ready for college life.
When you are learning how to budget for the sandwich generation, don’t forget about your children’s savings goals. If there’s something specific they want to save for, help them figure out how much they need to save and a timeline for reaching their goal.
A big part of learning how to budget for the sandwich generation is finding resources you can leverage to help balance your family commitments. In the case of aging parents, there may be state or federal programs that can help with the cost of care.
Remember to also loop in your siblings or other family members when researching budgeting tips for the sandwich generation. If you have siblings or relatives, engage them in an open discussion about what they can contribute, financially or in terms of caregiving assistance, to your parents. Getting them involved and asking them to share some of the load can help you balance caregiving for parents while still making sure that you and your family’s financial outlook remains bright.
The post Budgeting Tips for the Sandwich Generation: How to Care for Kids and Parents appeared first on Discover Bank – Banking Topics Blog.
If you have bad credit and need a car loan, there are some challenges when compared to obtaining a standard car loan. However, pick your head up because there are a handful of great lenders that specifically tailor their programs to people with bad credit. We researched the landscape of lenders that can help you get a car loan even if you have a below-average credit score.
Based on our study, OneMain Financial and LightStream are two of the top lenders offering bad credit card loans. This is due to factors including loan options, requirements to qualify, and interest rates offered. Of course, we offer in-depth reviews of all the top lenders who offer bad credit car loans further down in this piece.
Apply now with our top pick: OneMain Financial
In this guide we also help you understand the factors that go into selecting the right auto lender, and how to get the best rate you can.
Most Important Factors for Bad Credit Car Loans
If youâre in the market for a bad credit car loan, there are a plethora of factors to consider and compare. Here are the main loan details we looked at in our study, and the ones you should prioritize as you select the best car loan for your needs.
Check your credit score. And understand what is in your credit report.
FICO scores under 579 is considered ‘poor’. But you may need a bad credit loan with a score as high as 669.
Interest rates and fees matter. These can make a huge difference in how much you pay for an auto loan each month.
Compare loan terms. Consider your repayment timeline and compare lenders with this in mind.
Getting prequalified online can help. Some lenders, including ones that made our ranking, let you get prequalified for a loan online without a hard inquiry on your credit report.
Watch out for loan restrictions. Some lenders impose restrictions on what car you can purchase. Keep this in mind to avoid unpleasant surprises later.
The Best Bad Credit Car Loans of 2021
The best bad credit car loans make it easy for consumers to qualify for the financing they need. The following lenders made our list due to their superior loan offerings, excellent customer service, and reputation in this industry.
Car Loan Company
Best for Flexibility
Best Personal Loan Option
Best Loan for Bad Credit and No Credit
Best Loan Comparison Site
Best Big Bank Loan for Bad Credit
Best for Fast Funding
Why Some Lenders Didn’t Make the Cut
While the lenders we are profiling are the best of the best, there are plenty of bad credit car loans that didnât quite make the cut. We didnât include any lenders that only offer auto loan refinancing, for example, since we know many people need a car loan in order to purchase a new or used car or truck. We also stayed away from bad credit car loans that charge outrageous fees for consumers with the lowest credit scores.
Bad Credit Auto Loan Reviews
We listed the top companies we selected in our study above, but we also aim to provide readers with more insights and details on each. The reviews below highlight the highlights of each lender that made our list, plus our take on who they might be best for.
OneMain Financial: Best for Flexibility
OneMain Financial offers personal loans and auto loans with interest rates that range from 18.00% to 35.99%. You can repay your auto loan in 24, 36, 48, or 60 months, and you can use this lender to borrow up to $20,000 for a new or used car. You can apply for your auto loan online and from the comfort of your own home, and itâs possible to get approved within a matter of minutes.
While OneMain Financial doesnât list a minimum credit score requirement, itâs believed they will approve consumers with scores as low as 600. You should also note that auto loans from OneMain Financial come with an origination fee of up to 5% of your loan amount.
Sign Up With OneMain Financial Today
Why This Lender Made Our List: OneMain Financial offers a lot of flexibility in terms of your loan terms, including the option to repay your auto loan over five years. OneMain Financial also has pretty decent reviews from users for a bad credit lender, and they have an A+ rating with the Better Business Bureau.
Potential Downsides to Be Aware Of: OneMain Financial charges some pretty high rates for its bad credit loans, and donât forget that you may need to pay an origination fee that is up to 5% of your loan amount. Their loans are also capped at $20,000, which means this lender wonât work for everyone.
Who Itâs Best For: This lender is best for consumers with really poor credit who need auto financing but canât get approved for a better loan.
Upgrade: Best Personal Loan Option
Upgrade is an online lender that offers personal loans with fixed interest rates, fixed monthly payments, and a fixed repayment timeline. You can borrow up to $50,000 in an unsecured loan, which means you wonât actually use the car you purchase as collateral for the loan.
You can repay the money you borrow over 36 to 60 months, which makes it possible for you to tweak your loan offer to secure a monthly payment you can afford. Upgrade has a minimum credit score requirement of 620 to qualify, although theyâll consider additional factors such as your income and employment history.
Sign Up With Upgrade Today
Why This Lender Made Our List: Upgrade lets you âcheck your rateâ online without a hard inquiry on your credit report. This makes it easy to shop around and compare this loan offer to others without having to fill out a full loan application. Also note that Upgrade has an A+ rating with the BBB.
Potential Downsides to Be Aware Of: Upgrade charges APRs as high as 35.89% for consumers with the worst credit, and an origination fee of up to 6% of your loan amount might also apply.
Who Itâs Best For: Upgrade is best for consumers with decent credit who need to borrow a larger loan amount. This loan is also best for anyone who wants an auto loan that isnât secured by their vehicle.
AutoCreditExpress.com: Best Loan for Bad Credit and No Credit
AutoCreditExpress.com is an online platform that lets consumers with bad credit and even no credit get the financing they need. Once you fill out some basic loan information, youâll be connected with a lender who can offer you financing as well as a dealership in your area. From there, youâll head to the local dealership and pull the pieces of your auto loan together, including the purchase price of the car you want.
Sign Up With Autocreditexpress.com Today
Why This Lender Made Our List: AutoCreditExpress.com has an A+ rating with the Better Business Bureau. This platform also makes it possible for consumers with no credit at all to finance a car, which is a welcome relief for people who are building credit for the first time.
Potential Downsides to Be Aware Of: This website is a loan platform but they donât offer loans directly to consumers. This means you wonât have any idea on rates and terms until you fill out an application and get connected with a lender.
Who Itâs Best For: This loan is best for consumers with no credit or minimal credit history who cannot get approved for a loan elsewhere.
MyAutoLoan.com: Best Loan Comparison Site
MyAutoLoan.com is a loan comparison site that makes it easy to compare up to four auto loan offers in a matter of minutes. You can use this website to apply for a new auto loan, but you can also utilize it to consider refinancing offers for an auto loan you already have. You can also use funds from this platform to purchase a car from a dealer or from a private seller.
Sign Up With MyAutoLoan.com Today
Why This Lender Made Our List: Comparing auto loans in terms of their terms, rates, and fees is the best way to save money and wind up with the best deal. Since MyAutoLoan.com is a loan comparison site, they make it easy to shop around and compare competing offers.
Potential Downsides to Be Aware Of: Loan comparison sites connect you with other lenders who have their own loan terms and minimum requirements for approval. Make sure you know and understand all the details of loans youâre considering before you sign on the dotted line.
Who Itâs Best For: MyAutoLoan.com is best for consumers who want to do all their auto loan shopping with a single website.
Capital One: Best Big Bank Loan for Bad Credit
Capital One offers online auto loan financing in conjunction with a program called Auto NavigatorÂ®. This program lets you get prequalified for an auto loan online, then work with a participating dealer to coordinate a loan for the car you want. Capital One also lets you search available vehicles at participating dealerships before you apply for financing, making it easy to figure out how much you might need to borrow ahead of time.
Sign Up With Capital One Today
Why This Lender Made Our List: Capital One offers the huge benefit of letting you get prequalified online without a hard inquiry to your credit report. Capital One is also a reputable bank with a long history, which should give borrowers some comfort. They have an A+ rating with the BBB and plenty of decent reviews from consumers.
Potential Downsides to Be Aware Of: You should be aware that Capital One auto loans only work at participating dealers, so you may be limited in terms of available cars to choose from.
Who Itâs Best For: Capital One auto loans are best for consumers who find a car they want to buy at one of the participating lenders that works with this program.
LightStream: Best for Fast Funding
LightStream offers online loans for a variety of purposes, including auto financing. Their auto loans for consumers with excellent credit start at just 3.99% with autopay, and even their loans for consumers with lower credit scores only run as high as 16.79% with autopay.
You can apply for your LightStream loan online and get approved in a matter of minutes. This lender can also send your funds as soon as the same business day you apply.
A minimum credit score of 660 is required for loan approval, although other factors like your work history and income are considered.
Sign Up With LightStream Today
Why This Lender Made Our List: LightStream offers auto loans with exceptional terms, and thatâs even true for consumers with less than perfect credit. You can also get your loan funded as soon as the same business day you apply, which is crucial if you need auto financing so you can get back on the road.
Potential Downsides to Be Aware Of: With a minimum credit score requirement of 660, these loans wonât work for consumers with the lowest credit scores.
Who Itâs Best For: LightStream is best for people with decent credit who need to get auto loan financing as quickly as possible.
What You Need To Know When Applying For A Car Loan With Bad Credit
Interest rates and fees matter.
If you think your interest rate and loan fees wonât make a big difference in your monthly payment, think again. The reality is that rates and fees can make a huge difference in how much you pay for an auto loan each month. Consider this: A $10,000 loan with an APR of 35.89% will require you to pay $361 per month for five years. The same loan amount at 21.99% APR will only set you back $276 per month. At 9.99%, you would pay only $212 per month for five years. The bottom line: Make sure to compare auto loans for bad credit so you wind up with the lowest possible APR you can qualify for.
Take steps to improve your credit score before you apply.
Itâs not always possible to wait to apply for a car loan, but you may be able to secure a lower interest rate and better loan terms if you can improve your credit score before you borrow money. The most important steps you can take to improve your score include paying all your bills early or on time, as well as paying down debt in order to decrease your credit utilization. You should also refrain from opening or closing too many credit card accounts in order to avoid new inquiries on your credit report and maintain the longest average length of your credit history possible.
Compare loan terms.
Some lenders let you borrow money for up to 84 months, while others let you repay your loan over 36 or 60 months at most. If you need to repay your loan over a longer timeline in order to secure an affordable monthly payment, make sure to compare lenders based on this factor. If youâre having trouble figuring out how much can you can afford, gauging affordability based on the monthly payments you can handle can also help in that effort.
Getting prequalified online can help.
Some lenders, including ones that made our ranking, let you get prequalified for a loan online without a hard inquiry on your credit report. This makes it considerably easier to compare rates and shop around without formally applying for an auto loan. Getting prequalified with more than one lender can also help you determine which one might offer the lowest rate without having to fill out a full loan application.
Watch out for loan restrictions.
As you compare the lenders on this list, keep in mind that not all lenders extend loans for any car you want. Some only let you finance cars with participating lenders in their network, which can drastically limit your options and make it impossible to purchase a car from a private seller. If you hope to purchase a car from someone you know or a website like craigslist.org, you may want to consider reaching out to your personal bank or a credit union you have a relationship with.
Bad credit car loans donât have to be forever.
Finally, you should know that a car loan for bad credit doesnât have to last forever. You may need to borrow money for a car right now regardless of the interest rate and terms you can qualify for, but it may be possible to refinance your loan into a better loan product later on. This is especially true if you focus on improving your credit score right away, and if you use your auto loan as an opportunity to prove your creditworthiness.
How to Get the Best Rate
1. Check your credit score.
Your credit score is one of the most important defining factors that dictate loan costs. Before you apply for an auto loan, it can help you check your credit score to see where you stand. Your score may not be as bad as you realize, but it could also be worse than you ever imagined. Either way, it helps to know this important information before you start shopping for an auto loan.
2. Improve your credit over time.
If your credit score needs work, youâll want to take steps to start improving it right away. The most important steps you can take to boost your credit score include paying all your bills early or on time and paying down debt to decrease your credit utilization. Also, make sure youâre not opening or closing too many credit accounts within a short amount of time.
3. Check your credit reports.
Use the website AnnualCreditReport.com to get a free copy of your credit reports from all three credit bureaus. Once you have this information, check over your credit reports for errors. If you find false information that might be hurting your score, take the steps to have the incorrect information removed.
4. Compare loan offers from at least three lenders.
A crucial step to get the best rate involves shopping around and comparing loan offers from at least three different lenders. This is important since lenders with different criteria might offer a lower APR or better terms than others.
5. Be flexible with repayment terms.
Also consider a few different loan terms provided you can afford the monthly payment with each. Some auto lenders offer better rates for shorter terms, which can help you save money if you can afford to repay your loan over 24 or 36 months instead of 60+.
How We Chose the Best Auto Loans
The lenders on our list werenât plucked out of thin air. In fact, the team behind this guide spent hours comparing auto lenders based on a wide range of criteria. Hereâs everything we considered when comparing the best bad credit car loans of 2021:
Interest Rates and Loan Terms: Our team looked for loans that offer reasonable rates and terms for consumers with poor credit. While higher APRs are typically charged to consumers with a low credit score, we only considered lenders that offer sensible rates that donât seem out of line for the auto loan market.
Ratings and Reviews: We gave preference to lenders who have decent reviews online, either through Consumer Affairs, Trustpilot, or another third party website. We also gave higher marks to lenders who have a positive rating with the Better Business Bureau (BBB).
Online Availability: Lenders who offer full loan details online were definitely given top priority in our ranking, and lenders who let you get prequalified online without a hard inquiry on your credit report were given the most points in this category. But since not everyone wants to apply for a loan online, we also included some lenders that let you apply over the phone.
Approval Requirements: Finally, we looked for lenders that extend credit to consumers with low credit scores in the first place. Not all lenders offer specific information on approval requirements, but we did our best to sort out lenders that only accept borrowers with good or excellent credit.
Summary: Best Bad Credit Card Loans of 2021
Best for Flexibility: OneMain Financial
Best Personal Loan Option: Upgrade
Best Loan for Bad Credit and No credit: AutoCreditExpress.com
Best Loan Comparison Site: MyAutoLoan.com
Best Big Bank Loan for Bad Credit: CapitalOne
Best for Fast Funding: LightStream
The post What Are the Best Car Loans When You Have Bad Credit? appeared first on Good Financial CentsÂ®.
Not everyoneâs career path is a 40+ year marathon working full time until you can finally come up for air in your golden years.
Sometimes you need a little break along the way.
Taking time away from the workforce â whether itâs to travel, take care of loved ones, learn a new skill or whatever â can be a beneficial thing. But money â or the lack thereof â is what stops many people from even considering it.
With some significant planning and budgeting, however, itâs possible to make your career break dreams a reality. Here are five steps you should take when budgeting for a career break.
5 Steps for Career Break Budgeting
1. Think About What Your Career Break Will Look Like
People take career breaks for a number of reasons. Take some time to reflect on why you are planning time away from the workforce and what you intend to do.
When thinking about what your new day-to-day will look like, try to get as detailed as possible. Hone in on aspects that will affect you financially.
How long will your break last? When would you like it to start? Will you be staying at home or traveling the world? What adventures would you like to experience?
While itâs nice to dream about your best life ever, youâve got to be practical too. Ranking what you want to do with your newfound free time will be helpful if you have to cut your list down to fit what you can afford.
2. Explore What Your Costs Will Be During Your Break
After youâve fantasized what your work break will look like, itâs time to focus on the numbers. Youâve got to know what your expenses will be in order to determine whether your plans are realistic.
If you donât already budget your income and track your expenses, nowâs the time to start. Your budget will give you a good idea of how much you spend on essentials and where you can cut costs as you save up for leave.
Research all the additional costs you expect to incur during your break. If youâre taking extended parental leave after the birth of a child, youâll be dealing with a ton of new baby-related expenses. If youâre taking time off to travel, youâve got to pay for transportation and lodging.
The length of your break will also be a big factor here. Obviously, the longer youâre away from the workforce, the more money youâll need saved up.
FROM THE BUDGETING FORUM
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3. Set Up a Sinking Fund to Cover Expenses on Your Break
If you havenât heard the term âsinking fund,â thatâs just personal-finance speak for a stash of savings that you regularly contribute to over time to break up a big expense.
Once youâve estimated the overall expenses for your leave, divide that by how many months you have left to come up with your target monthly savings goal.
Switch to a bare-bones budget or try these other ways to save money fast so you can free up cash to add to your sinking fund.
If you already have existing savings you want to use to fund your career break, that will cut down on how much youâll need to put aside each month â just make sure you donât touch your emergency fund!
Your emergency savings should only be used on an actual emergency â like if you get into a car accident or Fido needs to be rushed to the pet hospital. Being away from work wonât make you immune to emergencies, so do not plan to use your emergency fund to tide you through your break.
In fact, before you focus on building up your sinking fund, you ought to have adequate savings in an emergency fund first.
4. Explore Opportunities to Make Money On Your Break
If youâre able to make money while youâre away from work, youâll be less financially burdened. You wonât have to save up as much or worry about burning through your entire savings.
The first income stream you should explore is your current job. Taking a career break doesnât necessarily mean calling it quits where you work now.
Depending on what type of leave youâre taking, your job may be protected and you might be able to continue collecting your salary â or a percentage of your current pay.
The Family and Medical Leave Act (FMLA) provides eligible workers with up to 12 weeks of leave after the birth or adoption of a child, to deal with a serious health condition or to care for an ill or injured family member. While this type of leave is unpaid, youâll continue to be covered under their workplace health insurance plan and there may be the possibility of coupling this leave with short-term disability pay.
President Joe Bidenâs proposed coronavirus stimulus package includes extending the expired paid time off policies for sick workers and those needing to care for family members due to COVID-19.
Find out if your employer offers any other paid leave programs â whether thatâs parental leave, unlimited PTO or sabbaticals. According to the Society for Human Resource Managementâs 2019 Employee Benefits Survey, 27% of employers offered paid parental leave, 6% offered unlimited paid leave and 5% offered a paid sabbatical program.
Another 11% of employers surveyed offered an unpaid sabbatical program. While unpaid leave isnât as ideal as paid leave, it gives you peace of mind that youâll have a job to come back to after your break.
Other options to make money during your leave include picking up a side gig, bringing in passive income, renting out rooms (or your entire place) on Airbnb or selling your belongings.
If you need to pick up a little work while youâre on a career break, just make sure it doesnât conflict with the reason you needed to take leave in the first place.
5. Develop a Re-Entry Plan
You need to plan for all aspects of your career break â including your transition back to the workforce.
Your budget needs to not only cover your expenses while youâre backpacking through Europe or nursing your elderly mother back to health. Youâve got to add a cushion for that period at the end where youâre actively seeking your next gig.
While data from the U.S. Bureau of Labor Statistics shows the average length of unemployment is about 23 weeks, how long itâll take you to find new work will vary depending on your industry and the position youâre seeking.
Plan to keep up with contacts in your field and engage in relevant volunteer work or continued education while youâre away to improve your chances of quickly finding a new job.
If your savings run low toward the end of your leave, donât brush off finding a bridge job â a temporary role to help you pay the bills while you search for better opportunities.
A resume gap isnât the kiss of death it used to be. You can even craft a way to include side gigs on your resume.
A career break should provide you with freedom to pursue something outside of your typical work life. You donât want that freedom to drag you deeper into debt or put you in a worse financial position if you can avoid it.
Do your best to budget for more time than youâll need so you can enjoy your career break stress free.
Nicole Dow is a senior writer at The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authorâs alone, and have not been reviewed, approved or otherwise endorsed by the issuer.
If left unchecked, extensive amounts of credit card debt can cripple your finances. The good news is there are many ways to handle debt, though each requires a dedicated effort on your part. But if you can manage to consolidate credit card debt, you will reduce your burden relatively quickly. In the process, youâll avoid the exorbitant interest rates that accompany most credit cards. Below we take a look at some of the most effective techniques you can use to make this goal a reality.
Find Out Your Credit Score
Before you can work on improving your credit and minimizing your debt, you have to know where you currently stand.
Many credit card issuers allow cardholders to see their FICOÂ® credit score free of charge once a month, so check out if any of your cards include that free credit score. The three major credit bureaus â TransUnion, Experian and Equifax â also give out free annual credit reports. If thatâs not enough, websites like Credit Karmaâ¢ and Credit Sesame provide a free look at your credit score and reports as well.
It is vital to review your credit report with a fine-tooth comb to ensure the accuracy of the information. If you find errors be sure to let the credit bureau in question know so the issue can be eradicated as soon as possible.
Zero Interest Balance Transfer Cards
Although it might seem counterintuitive to apply for another credit card to lessen your debt, a zero interest balance transfer card could really help. These cards typically include an introductory 0% balance transfer Annual Percentage Rate (APR) for six months or more. This ultimately allows you to move debt from one account to another without incurring more interest. However, once the introductory offer concludes, any leftover balances will revert to your base APR.
These offers arenât totally free, though. Most cards also charge a balance transfer fee thatâs usually between 3% and 5% of the transfer. Even with this initial payment, you will almost always still save money over leaving your debt where it stands currently.
If you want to consolidate credit card debt, here are three different balance transfer credit cards you could apply for, with varying introductory interest rates and transfer fees:
Balance Transfer Credit Cards Card Intro Balance Transfer APR Balance Transfer Fee Chase Slate 0% APR for first 15 months; then 16.49% to 25.24% Variable APR, depending on your creditworthiness No fee for first 60 days; then $5 or 5% of each transfer, whichever is greater Citi Double Cash Card 0% introductory APR for 18 months from date of first transfer when transfers are completed within 4 months from date of account opening; then 15.49% to 25.49% Variable APR, depending on your creditworthiness $5 or 3% of each transfer, whichever is greater BankAmericardÂ® credit card 0% APR for first 15 billing cycles; then 14.49% to 24.49% Variable APR, depending on your creditworthiness No fee for first 60 days; then $10 or 3% of each transfer, whichever is greater Take Out a Personal Loan
The thought of taking out another loan probably doesnât sound too appetizing to consolidate credit card debt. But a personal debt consolidation loan is one of the speediest ways to rid yourself of credit card debt. More specifically, you can use it to pay off most or all of your debt in one lump sum. That way, your payments are all merged into a single account with your lender.
The APR and length of the offered loan and the minimum credit score needed for approval are the main factors that should go into your final decision on a lender. By concentrating on these three components of the loan, you can map out what your monthly payments will be. As a result, you can more easily implement them into your financial life.
Applying for a personal consolidation loan can have a detrimental effect on your credit. Unfortunately, most institutions will run a hard credit check on you prior to approval. However, many online lenders donât do this, which might ease your mind depending on the severity of your debt situation.
These loans are available through a wide variety of financial institutions, including banks, online lenders and credit unions. Here are a few examples of some of the most common debt consolidation lenders:
Common Debt Consolidation Lenders Banks Wells Fargo, U.S. Bank, Fifth Third Bank Online Lenders Lending Club, Prosper, Best Egg Credit Unions Navy Federal Credit Union, Unify Financial Credit Union, Affinity Federal Credit Union Auto or Home Equity Loan
If you own assets like a home or car, you can take out a lump-sum loan based on the equity you hold in them to consolidate credit card debt. This is a great way to reuse money you paid toward an existing loan to take care of your debt. When paying back your auto or home equity loan, youâll usually pay in fixed amounts at a relatively low interest rate. Even if this rate isnât great, itâs likely much better than any offer youâd receive from a card issuer.
Equity loans are technically a second mortgage or loan, meaning your house or car will become the loanâs collateral. That means you could lose your house or car if you cannot keep up with your equity loan payments.
Create a Budget
To build a budget, you first need to figure out your approximate monthly net income. Donât forget to take into account taxes when youâre doing this.
You can then start subtracting your variable and fixed expenses that are expected for the upcoming month. This is where you will likely be able to identify where youâre overspending, whether itâs on food, entertainment or travel. Once youâve completed this, you can begin cutting back where you need to. Then, use your surplus cash to pay off your debt one month at a time.
It shouldnât matter if youâre dealing with substantial credit card debt or not. A monthly spending budget should always be a part of how you manage your finances. While this is likely the slowest way to eliminate debt, itâs also the most financially sound. At its core, it attempts to fix the problem without taking funding from an outside source. This should leave very little financial strife in the aftermath of paying off your debt.
Professional Debt Counseling
Perhaps since youâve found yourself in serious debt, you feel like you want professional help getting out of it. Well the National Foundation for Credit CounselingÂ® (NFCCÂ®) is available for just that reason. The NFCCÂ® has member offices all around the U.S. that are certified in helping you consolidate credit card debt.
These counselors wonât only address your current financial issues and debt. Theyâll also work to create a plan that will help you avoid this situation again in the future.
Agencies that are accredited by the NFCCÂ® will have it clearly displayed on their website or at their offices. If youâre not sure where to look, the foundation created an agency locator thatâll help you find a counselor nearby.
Borrow From Your Retirement
Taking money early from your employer-sponsored retirement account obviously isnât ideal. Thatâs means borrowing from your retirement is a last-ditch alternative. But if your credit card debt has become such a handicap that itâs affecting all other facets of your life, it is a viable option to consolidate credit card debt.
Because you are technically loaning money to yourself, this will not show up on your credit report. Major tax and penalty charges await anyone who has trouble making payments on these loans though. To make matters worse, if you quit your job or are fired, youâre typically only given 60 days to finish paying it off to avoid incurring a penalty.
Tips To Consolidate Credit Card Debt
If you take the time to come up with a budget, donât let it go to waste. While you might find it tough to stick to, especially if youâre trying to cut back, it is the best way to manage your money correctly. Even if a budget becomes habit, stay vigilant with where your money is being spent.
Although a financial advisor will cost money, he or she might be able to help you keep your finances in check while ultimately helping you plan for the future as well. However, if this isnât an option for you financially, stay on track with your NFCCÂ® debt counselorâs plan.
There are so many ways to gain access to your credit score that thereâs virtually no excuse for not knowing it. It doesnât matter if you do it through one of the top three credit bureaus, FICOÂ® or one of your card issuers. Just remember to pay attention to those ever-important three digits as often as possible.
Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authorâs alone, and have not been reviewed, approved or otherwise endorsed by the issuer.
Heading off to college is exciting. Really exciting. You finally have freedom! You’re out on your own for the very first time, managing your studies, managing your social life and… managing your finances.
Despite being a big part of your newfound independence, personal finance is a subject you probably won’t find on your course schedule. If you didn’t take a personal finance class in high school and never had money lessons from your parents, you may not know how to manage a checking account as a college student.
“College students have very different needs for their checking account than their parents or other adults,” says Tommy Martin, CEO of Clear Path Financial Planning and a finance blogger at TommyMartin.com. If you live in a different city during the school year than you do during winter and summer breaks, for example, you may be after a bank for which location doesn’t matter.
Ok, so how do I manage my checking account in college, you ask? First, don’t get overwhelmed. Learning how to manage money while in college and getting a handle on checking account basics is simpler than you might think (oh, and the skills will serve you for years to come). Second, you can kick off your checking account education with these tips for managing a checking account in college:
1. Compare checking accounts before signing up
While your college life may center around your school campus, you should consider venturing off-campus to pick the right checking account for your lifestyle.
“Students typically sign up with a bank that’s on campus or close to campus,” says Sahil Vakil, a financial planner and president of MYRA Wealth in New Jersey. However, the nearest bank might not be the one that best fits your needs, he adds.
Instead of picking a bank based solely on proximity, consider all of your options, including banks with off-campus locations and online-only banks.
Martin agrees, saying that learning how to manage money while in college means considering all of your banking options rather than “automatically enrolling or choosing the official school bank just because it has the school logo on it.” There are other ways to show your school pride, after all.
2. Learn about checking account fees and rewards
Vakil and Martin both say a tip for managing a checking account in college is to consider an account’s fees before signing up. Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time. When you are choosing a checking account in college, consider fees for:
Monthly maintenance (essentially keeping your account open)
Minimum balance (not maintaining one)
Online bill pay
Replacement debit cards
Martin says a checking account with no minimum balance requirement or minimum number of transactions could be a good fit for students. “It allows them to focus on their education” instead of worrying about incurring penalties, he says. “Even a $5 fee on a checking account with $60 in it can be devastating.”
Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time.
Martin also suggests finding an account that has a large network of no-fee ATMs located across the country to better manage your checking account as a college student. “Especially if you’re going to a school in a different state, the local bank from home might wind up costing you a lot in terms of ATM fees,” he says. If your parents plan to wire you money, find an account that doesn’t charge incoming wire fees, Martin adds.
While fees should be a focus when you are learning how to manage money while in college, don’t forget about incentives. You may be able to find a checking account that actually helps you grow your balance by paying interest or offering a cash back rewards program.
“If you have to pay for books or supplies, at least you can get some cash back and use it for a free dinner,” Martin says. Discover Cashback Debit, for example, offers 1% cash back on up to $3,000 in debit card purchases each month.1
Luckily, you don’t need to take Banking 101 to figure out your funds, and tech makes tracking your balance and account activity easier than ever. Most banks let you log in to your account online (don’t get distracted in class!), and with a bank’s mobile app you can transfer money to friends, pay bills, deposit checks and check your balanceâall while you’re on the go.
Knowing your balance at all times is a tip for managing a checking account in college because it can help you avoid overdrafts and insufficient funds fees. It can also help you forecast your income and expenses to ensure you’ll have enough money to cover future costs. Surpriseâthat’s budgeting!
There’s no one-size-fits-all budgeting program or system, though. You can go old-school and track your budget on a printed-out budget sheet, or you can go tech-savvy with a budgeting and spending app. “What’s best for you is the one you’re actually going to use,” Martin says.
If you learn how to manage money while in college and make a practice of maintaining your budget, the habit will follow you after graduation.
âCollege students have very different needs for their checking account than their parents or other adults.â
4. Secure your account
One of Vakil’s tips for managing a checking account in college is to make sure your account stays secure. Create a unique account name and password that you use only for your checking account, and never share your credentials.
Vakil says you can also enable two-factor authentication if your bank offers it and you’re looking for another way to improve the management of your checking account as a college student. “This additional layer of protection safeguards your sensitive financial data and strengthens the security of your account by requiring two methods of verifying your identity.”
For example, if you log in to your account from a new device, you may be sent a text message with a code that you’ll need to enter to access your account.
5. Keep an eye out for debit card holds
No matter where you bank, a merchant may place a hold on funds in your checking account when you use your debit card. Generally, a hold is placed for travel-related purchasesâsuch as at rental car companies, hotels and gas stationsâand used by merchants to protect against fraud and errors.
“Holds on a debit card can make it tricky for you to manage your finances,” Vakil says. For example, “when you rent a car, the car rental company might put a $500 hold on your account. If the balance in your account was $550, now you can only use another $50.”
Being aware of holds can be particularly important if you are managing a checking account as a college student and tend to have a low account balance.
If a merchant will be placing a hold, it will generally post a sign to notify customers. The hold will typically be removed after the funds are transferred to the merchant from your financial institution, typically within three to four days.
Knowing when a hold will be placed, the amount of the hold and how much money you have in your checking account can help you manage your checking account as a college student by avoiding overdrafts and missed bill payments due to insufficient funds.
6. Don’t let one mistake throw you off track
If you can learn how to manage a checking account as a college student, and more generally, how to manage money while in college, you can lay the groundwork for a solid financial future. Checking account mistakes may occasionally happen (oops, I didn’t budget enough for that spring break trip), but don’t let them discourage you to the point of apathy. Instead, try to continually expand your knowledge and practice healthy financial habits.
1Â ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as VenmoÂ® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.
The post 6 Tips for Successfully Managing a Checking Account in College appeared first on Discover Bank – Banking Topics Blog.
The number of auto loans grewÂ to an all-time high, with leasing surpassed 30% of all new consumer vehicle sales. But the interest ratesÂ consumers are gettingÂ on these loans has stayedÂ low, especially for used cars.Â In fact, Experian reported that average loan rates saw some increases, but still remain historically low.
Loan rates for a new car in Q2 of 2018 were 5.76%, up from 5.20% a year prior. Franchise used rates are 8.28% (down from 7.88% in Q2 2017), whileÂ independently used rates are 11.87% (down only 0.17% from Q2 2018).
The Experian Automotive scoring deems prime consumers as those with scores of 661 to 850, nonprime users with scores of 601 to 660, andÂ subprime usersÂ as those with scores of 300 to 600. Consumers on all risk tiers are increasingly choosing to lease over purchasing cars, according to the report.
The number of prime consumers choosing used vehicles increased from 55.61% in Q2 2016 to 55.79% in Q2 2018. The number ofÂ nonprime and subprime consumers also saw increases, from 21.75% to 22.05% and decreases of 25.71% to 25.05%, respectively.
Experian reported that the increased number of prime consumers choosing used vehicles resulted in âscore increases, greater percentages of used financing in the prime risk tier and lower average used rates.â
Getting a Car Loan
If youâre thinking about buying a used car and taking out an auto loan to do it,Â itâs a good idea to review your credit first. Having aÂ good credit scoreÂ can help you qualify for better terms and conditions on your financing. (To find out where your credit stands, you canÂ see two of your credit scores for free, updated every 14 days, on Credit.com.)
And when youâre figuring out how much you can afford, remember to consider not only how much your monthlyÂ car paymentÂ will be but also how much the loan will cost you in the end, by considering the interest rate and length of the loan term. (The longer the loan term, the more interest you will pay.)
If you arenât happy with what you see, donât worry â you may be able toÂ improve your credit scoresÂ by paying down any big credit card balances,Â disputing errorsÂ and limiting credit inquiries until your score has had time to rebound.
Gather All Documentation
When attempting to get a used car loan, you will want to gather all the necessary documentation including the following:
Your Driverâs License
Proof of all of your income- this can be a paycheck stub or even a tax return
A utility or phone bill to prove your residency
Your social security number so they can run your credit check
These days, you can often apply for the used car loan right online or even by phone which makes it the process that much easier and accessible.
Start With Your Own Banking Institution
It is always a good idea to start with your own bank or credit union for financing because you have already established history and relationship with them. Typically, you will be able to find the absolute best rates and more favorable terms if you go through your own bank.
They will also be able to advise you on all the options that are available to you as you begin the journey toward car ownership.
Shop for the Best Rates
You never want to settle on the first rate you are given; donât be afraid to shop around to see if you can find something better than the typical auto loan rates. You will find the best auto loan rates if you have good credit. Additionally, if you apply for multiple loans within a 14 day period, it will only count as one hard inquiry so that you can find the best rate possible.
What is the Average Used Car Loan Rate?
Typically, you will find that the car loan rate on a used car is going to be a bit higher than the rates you would find with a newer car. For example, good credit car loans can see an interest rate as low as 3.9% for a newer model and a little more than 5% for its older version.
Average Auto Loan Rates by Credit Score
The following are the average rates you may find for a used car loan that carries a 60-month repayment term based on a range of different FICO Scores.
With a credit score between 500 and 589, you may be looking at interest rates on the loan as high as 16%. A bad credit score also makes it a lot harder to get approved for the car loan initially as well.
A credit score in between 590 and 619 will typically see the 15% mark, and the percentages get lower from here with the lowest coming in at 4.39% with a credit score between a 720 and 850.
A longer loan term will usually mean you will have a lower monthly payment, but you will also accrue more in interest with a longer loan term.
When determining the average used car loan rate and the amount of interest you may have to pay on a loan, you will want to check all three of your credit reports, examine your credit score and credit history and determine what steps you can take to improve your credit, so you can qualify for a lower interest rate.
Again, if you bank with a credit union, always start there first because the lender will already be able to see if you are high risk or not. Car buyers should always take their time, do their research, and tackle the work of fixing their credit prior to obtaining a loan for a car. It is always best to shop smarter and save money in the long run.
Shelter Insurance is a mutual insurance company that was founded in 1946 and operates out of Columbia, Missouri. This highly-rated, award-winning insurance company offers a wealth of insurance products across the states of Colorado, Iowa, Arkansas, Kansas, Kentucky, Indiana, Illinois, Mississippi, Missouri, Nebraska, Ohio, Nevada, Oklahoma, Tennessee, and Louisiana.
In this Shelter Insurance review, we’ll look at insurance policies, coverage options, customer satisfaction, liability cover, and more, before seeing how Shelter compares to other leading insurance companies.
Shelter Car Insurance Coverage Options
Shelter is a leading auto insurance company in Missouri and other serviced states. It isn’t always the cheapest (more on that below) but it does provide a wealth of coverage options, including:
Liability coverage is the most basic, bare-bones insurance type and one that is required in most states. Liability insurance covers bodily insurance (per person and per accident) and property damage. It essentially covers you for the damage you do to another driver and their property during a car accident.
An optional form of auto insurance that covers you for damage done to your own vehicle, regardless of who was at fault. If you have collision coverage on your auto policy, you will get a payout when you hit a guardrail, wall, tree or building.
However, it’s one of the most expensive add-ons and a lot of the damage you do to your own vehicle may not be severe enough to warrant paying the deductible.
With comprehensive coverage, you will be covered for many of the things that collision insurance doesn’t cover. For instance, it provides protection against vandalism and damage from extreme weather events. It also covers you in the event of an animal collision, which is surprisingly not covered by collision insurance.
Personal Injury Protection
With PIP insurance, you will be covered for some of the personal losses you incur due to an injury sustained in a car accident. For instance, if you’re hit by another driver and suffer severe injuries that cause you to miss work, PIP will pay for the money you lose. It will also cover the money needed to cover traveling for doctor and hospital appointments, as well as childcare costs.
By adding medical payments cover onto your policy you will be protected against hefty medical bills resulting from a car accident. This option is required in just a few states but the coverage limits are often set very low.
Underinsured and Uninsured Motorist Coverage
Uninsured motorists are a growing problem on America’s roads. If you’re hit by one of these drivers and don’t have collision insurance, you could be left severely out of pocket. But not if you have underinsured/uninsured motorist insurance.
This coverage option will protect you against bodily injury and property damage resulting from an accident with an uninsured or underinsured driver.
Shelter car insurance policies offer optional roadside assistance cover, which gives you up to $100 per claim and covers you for expenses accrued when you are stranded by the roadside.
Roadside assistance is an emergency service designed to help you get back on the road or to tow your car to a nearby garage. It includes everything from lost key replacement to fuel delivery and tire changes.
Rental Car Reimbursement
If your car is stolen or damaged so badly that it needs to spend several days or weeks in a repair shop, rental car reimbursement can help you to stay on the road. It will cover you for the money you spend on rental cars, which means you won’t miss a single important car journey.
Your coverage will be limited to a specific time period and you will not be covered for rentals that extend beyond this period.
A form of life insurance that covers you for accidental deaths, such as car accidents. If you die in an accident, for example, your spouse or family members will receive a payout. There are many more restrictions than you get with term life insurance policies, but the premiums are also much lower.
Disability Income Coverage
PIP can cover you if you suffer serious bodily injuries and miss work as a result, but what happens if you’re forced to miss up to a year of work? That’s where Disability Income Coverage comes in. With Shelter, you will be paid a sum of money every week for up to a year.
If you bought your car on finance and wreck it soon after, the insurance payout may not be enough to cover the losses due to the interest payments and the rapid deprecation that new cars experience. With GAP insurance, you will be covered for that extra amount. As a result, this type of car insurance is often required by auto loan companies.
New Car Replacement
If you have a car that is less than a year old and has fewer than 15,000 miles on the clock, you can apply for the new car replacement program, which gives you a like-for-like replacement. This is an essential addition for anyone driving an expensive new vehicle as the losses could be catastrophic without it.
Other Shelter Insurance Options
Shelter offers multiple additional insurance options, many of which can be bought along with your car insurance, allowing you to save money with a multi-policy discount.
As with Shelter car insurance, we recommend comparing rates to other insurance companies, making sure you’re getting the best coverage for the lowest rates. There are a huge number of insurance companies in the United States offering the same coverage options found at Shelter, and many of them are cheaper:
A homeowners policy from Shelter will protect your property and everything in it. You can get cover for the dwelling, personal property, medical payments, personal liability, living expenses, and more.
Shelter also offers additional coverage options pertaining to electronics, sewer damage, earthquake damage, loss of farming equipment, and more.
If you rent your home, you won’t need property insurance, but you still need to protect your personal property and that’s where renter’s insurance comes. If your flat/house is burgled and you lose expensive items, including heirlooms, jewelry, artwork, and electronics, you will be covered.
With a minimum liability of $1 million, umbrella insurance will step in and provide cover above and beyond what you are offered elsewhere. If you have a lot of personal assets and are worried about being sued above what your liability insurance can pay, this is the policy for you.
A business insurance policy from Shelter will protect your business against property loss, equipment damage, liability claims, and more. This is essential for all businesses and at Shelter you can choose a range of customization options to make sure the policy is perfectly suited to your needs.
Your home insurance policy doesn’t cover you for flood damage and this is true whether you’re with Shelter or not. However, you can add flood insurance to your Shelter insurance policy, with the rates dependent on where you live and how common floods are in your area.
In addition to accidental death cover, Shelter also has term life and whole life insurance policies. These provide payouts to your loved ones in the event of your death.
Your age, activity, medical history, and health will dictate the size of your insurance premiums and your death benefit.
Shelter Car Insurance Cost
We ran some car insurance quotes and found that Shelter was consistently more expensive than providers like GEICO, Allstate, State Farm, and Progressive. In fact, when comparing quotes for young drivers, Shelter car insurance premiums were more than double those offered by GEICO and were also substantially higher than other major carriers.
In many states, including Kentucky and Louisiana, Shelter ranked as one of the most expensive providers. The rates were a little more promising in Missouri, but you’ll probably still get better offers elsewhere.
Regardless of what you think about Shelter Insurance and whether or not you have had good experiences with them in the past, we recommend getting quotes from other providers first.
Of course, it isn’t all about price, but it takes some incredibly impressive customer support and benefits for a $3,000 policy to take precedent over one that costs $1,500 or less, and we’re not convinced Shelter has that level of support or those benefits.
Bottom Line: Shelter Insurance Review
Shelter is a dedicated, capable, and financially strong insurance provider that offers extensive coverage for both drivers and homeowners. It has good reviews from policyholders, has high ratings from AM Best, JD Power and the Better Business Bureau (BBB), and there are very few complaints when compared to other providers.
Shelter serves a number of states and if you reside in one of these, it’s worth getting a quote. Just don’t forget to check other providers and don’t assume Shelter will offer the best rates. In our experience, it’s more likely to be one of the most expensive providers in your state, but you won’t know until you check.
Visit www.ShelterInsurance.com to learn more and to discuss an auto policy and/or home insurance policy with one of their representatives.
Shelter Insurance Review: Car, Home, and More is a post from Pocket Your Dollars.
If you have a car that youâve been driving for a while and youâre ready to trade it in, you might be wondering how to get the best deal. When youâre trading in a car, itâs a good idea to forearm yourself by doing research into your carâs value. Read on for the rest of our tips on how to trade in a car.
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Know What Your Vehicle Is Worth
So you want to trade in a car? Youâll have an easier time of it if you know what the car is worth before you head to the dealership. That way, you can negotiate from a position of strength. The classic resource for evaluating a carâs worth is the Kelley Blue Book but there are plenty of other options online, too. You can also search other vehicles of the same make and model that are for sale or have sold recently and assume that your car is worth roughly the same amount.
When youâre in the research phase, remember to take the condition of the car into account. If your car has dings, scratches or stains, you can safely assume that it will sell for less than the same year, make and model of car in better condition. And itâs always a good idea to clean the interior and exterior of your vehicle before taking it to a dealership to trade in.
Related Article: How Much Should I Spend on a Car?
Once youâve done your research you should have an idea of how much your vehicle is worth. Thatâs the number you can fall back on in negotiations with the appraiser at the dealership. When youâre at the dealership, donât be afraid to mention â or show proof of â the research you did. As when youâre buying a car, youâll probably engage in some back-and-forth negotiation with the folks at the dealership.
The dealership will probably offer you less than what you saw in the Kelley Blue Book or the numbers you got from the National Automobile Dealers Association or Autotrader. You can counter with a higher offer, but remember that, unlike when youâre buying a car, the dealership has more leverage over you. They know you want to unload your car, get your cash and get out of there. The appraiser also takes factors into account that you might not be aware of and canât control. For example, if the dealership already has a lot of mid-size sedans, it might not want to buy yours or might not offer as much for it.
You can get appraisals from different dealerships or companies, or offer your car at an auction or an online auction like eBay. You donât have to go with the first offer you get for the car. If you have the time, feel free to shop around for a better offer. You can also look for dealerships that are offering special promotions, such as a discount on a new car when you trade in an old car.
Related Article: All About Car Loan Amortization
Have a Plan for Your Earnings
Itâs a good idea to have a plan for what youâll do once youâve traded the car in and youâve gotten the money from the dealership. Do you need to buy a new (or used) car or can you do without? Will you use the money you make to pay down student loan debt or credit card debt? Will you bulk up your emergency fund or save for retirement? If you donât make a plan for what to do with the money you earn by trading in your car, you risk spending it on an impulse purchase or on little treats over time. Thatâs fine if you can afford it, but if you have debt or savings goals to meet, itâs a good idea to commit to putting your car trade-in dollars toward those goals.