What is an Auto Loan Prepayment Penalty?

The sooner you pay off a car loan, the less interest you pay, right? Exactly! It pays to pay off a loan sooner, which is why you want to watch out for auto loan prepayment penalties.

When you set up a loan with a lender, they may try to include a prepayment penalty within the loan. This means if you pay off the loan early, you have to pay a fee for doing so. The idea behind this is the lender still makes money off of you. The lender makes money on the interest that you pay, so if you pay off your loan sooner than later, they lose out on that interest.

Let’s look at an example, if you have a 48 month loan, but you pay it off in 36 months. This means the lender misses out on 12 months of interest. If you signed an auto loan including a prepayment penalty, however, you owe them that fee, so they don’t lose out as much.

The moral of the story is to know exactly what you are signing. Watch out for prepayment penalties or anything else that could result in you paying more money than you have to. Make sure you do research into the loan and the lender to make sure it is a good fit for you. If you have any questions, you can reach out to us and we can advise you on your auto lending needs!

Cash Income Car Loans

Are you in a situation where you have a predominately cash income, but you still need to get a loan to buy a car? You aren’t the only one. There are many people in this situation and there are some solutions.

If you get paid under the table or in cash without receiving a W-2, you have no proof of income. You are still required by law to report your income for taxes. If you don’t, you may have problems getting a loan. Most lenders do not require proof of income to qualify for a car loan. However, if you have subprime credit, lenders like to take a look at your income.

Looking to the future, your best option is probably to submit a W-2 to show your income as well as reporting any additional income on a 1099-Misc. This will show lenders that you have the income you need in order to make your loan payments.

If you need a car now, you may want to look into buying a used vehicle. If you have saved up to make a large down payment on a vehicle, you may be able to afford a nice used vehicle with the down payment money.

It is important to look into and research your options before you make a decision. Buying a car is an important financial decision, so you will want to make sure you have considered all the possibilities before you decide.

Also, don’t hesitate to reach out to us, so we can help you with your financing needs. We may just have the perfect option for your financial situation. Our goal is to help people get the financing they need, so reach out and see how we can help you!

Buying a Car with No Credit

lease a car with bad creditYou are looking into buying a new car, but you don’t have credit. Maybe you are a recent college graduate or you simply haven’t had the chance to build up a credit history. What do you do?

The good news is you still have some options to get financing. Some lenders have special programs or offers for recent college graduates that you can look into and take advantage of. Regardless, you should look at the steps below to make financing your car with no credit a little easier.

Check Your Credit Report – Even if you don’t have any credit cards or you don’t have much for credit accounts, there may be something that has gone toward your credit. Check your score to see where you are at for lenders. Also, make sure there are no errors on your credit report.

Make a Large Down Payment – If you don’t have a credit score, that doesn’t mean you can’t make your payments, it means lenders have no way of knowing if you can or not. Therefore, if you save enough money to make a significant down payment, they will be more likely to take you on.

Buy Certified Pre-Owned – A Certified Pre-Owned car is a lot like a new car because it has undergone evaluation and it has been placed on warranty again. If you had your heart set on a new car because of the warranty and reliability, a Certified Pre-Owned vehicle is just as good, and it can be easier to get financing on a used car.

Get a Cosigner – This is an option if you can’t find good financing. A co-signer is extra insurance for the lender because a co-signer agrees to make the payments if you are unable to do so. However, it is important to take cosigning seriously because the weight of your loan will fall on them if you are unable to pay for some reason.

At Louisiana Approval, we would be happy to work with you to find a financing option that works best for you. Whether you have bad credit or no credit, we would love to hear from you and see if we can help you get that new set of wheels. Reach out to us, and we can help you navigate your financing situation.

The Process of Buying a Car

It’s time to get a new car. Now what? Buying a car may seem like a straightforward process, but there are some steps you don’t want to forget.

Narrow in on the Type of Vehicle You Want

Do you need a car or an SUV? Do you want a truck or a minivan? This is the first decision you have to make. Here is it important to think about your lifestyle and what you need. Maybe you need plenty of room to pack gear to go on trips, so a SUV may be the perfect vehicle for you. Maybe you will just use this vehicle to commute to work, so a small car with good fuel efficiency will do the job just fine. Think about what type of vehicle you want and then you can move on to deciding what brand.

Do Your Research

When it comes down to choosing between Chevrolet or Ford or any brand, you will want to do your research. Look at the vehicle each brand offers and search their sites for warranty information, extra features and price ranges. Knowledge is power, so be sure to take this step seriously and really find some good information.

Find the Dealership for You

One you have narrowed down to your brand, you will want to find a good dealership. Searching the stock online is a good way to know if the dealership has the car you are looking for. You can also stop by to check out a dealership in person

Look Into Financing Options

Need to get your car financed? Contact us, we can help! No matter what your credit situation is, we want to work with you to try to find a financing option that fits your needs. We can get you the auto loan you deserve, so you can get the vehicle you need.

Go Get Your Vehicle

Make sure you have all the information you need to buy a car like your driver’s license and proof of insurance (check out everything you need to bring here), then head down to the dealership to purchase your vehicle.

We know buying a new vehicle can be a stressful process, especially if you don’t have the best credit, but we are here to help make that process easier. If you have any questions or concerns, reach out to us and we can help!

Why Buy Used Cars?

There are certain advantages to buying used cars, just like there are advantages to buying new cars. What you decide is up to you and your lifestyle, but check out a few of the reasons to buy a used car below!

Advantages to Buying a Used Car

Value – A car loses value the second you drive it off the car lot, and it loses value quickly. Buying even just a slightly used vehicle can save you a lot of money.

Dependability – You may think this is a reason to buy a new car, but actually the majority of cars last longer than they used to. Even if your car is a couple years old when you buy it, it still has many good years left. Technology is getting better so cars are lasting longer. That means you can still get dependability even with a used car.

Insurance Costs – Your car insurance costs will be less with a used car. Your insurance payments are in many ways dependent on the value of the car; if you have a more expensive new car, your costs will be higher than a used car.

When looking into a car, you will want to decide whether you want new or used. The key to answering that question is to know where your priorities lie. Above are the advantages to buying used, and if you want to spend less money, buying a used vehicle may be the option for you.

Consider your options carefully and do your research before you decide to buy a car. Also, whether you want to buy a used car or a new car, we can help you with financing options. Contact us to learn more.

When is the Best Time to Buy a Car?

Timing is everything—especially when you are buying a car. There are good times and bad times to buy a car, but when is the best time to buy a car? And when is the worst? Let’s find out!

Best Times to Buy a Car

The end. The end is a great time to buy a car whether that be the end of the month, the end of the day, the end of the quarter or even the end of the model year.

At the end of the month, car sales personnel are supposed to hit certain quotas of cars sold, so they really want your sale to hit their numbers. This is also the same situation as the end of the quarter.

The end of the day is also a good time to buy because these salespeople don’t have as much time to do tough negotiations.

The end of the model year is a great time to buy because dealers are wanting to get rid of the old model year to make room for the incoming one. They really want to clear away their lot so they have room for the new. This could be a great time to get low prices and deals.

Holidays can also be good times to buy a car because dealerships have good sales and they offer big savings.

Worst Times to Buy a Car

The worst time to buy a car is when the vehicle is in high demand. In that case, you will be competing with everyone and the dealer has the upper hand because they can set a lofty price for the vehicle, knowing people will pay more.

Another bad time to buy is following recent credit inquires. If you have several credit checks within a short amount of time that will actually hurt your credit score and your financing options.

There are good times and bad times to buy a car. Take into consideration some of the best times to buy a car listed above and make sure you do your research before going in to buy. Happy shopping!

What is Gap Insurance?

Sometimes the amount of different kinds of insurance can seem overwhelming and unnecessary. For example, if you have recently purchased a new car, you may have been asked about gap insurance.

What is gap insurance and is it worth your money?

When you first buy a new car and drive it off the lot, the value of the car depreciates very quickly, but your auto insurance won’t cover your car completely. That means you owe more money on the car than you have insurance for it.

If you were to get into a car accident right after buying a new car, you may not have the money or the insurance to cover it. That is where gap insurance comes in. Now, no one ever thinks they will get in a car collision, but accidents happen. Gap insurance covers you in a situation where there is a gap between the amount you owe on your car and the amount it is worth.

This type of insurance isn’t for everyone, but it is helpful for certain people. If you fit any of the following conditions, you may want to look into gap insurance. If you have:

  • Leased a vehicle
  • Financed your vehicle for 60 months or more
  • Paid less than a 20% down payment

There are other situations in which you could benefit from gap insurance, but those are a good place to start. Consider your situation carefully and decide if this type of insurance is for you.

What Makes Up A Credit Score?

There are many websites that advertise giving you your credit score for free. That’s great because knowing your credit score is important. However, it is also important to know what makes up your credit score.

Your credit score affects your ability to get loans and financing for houses, cars and other big purchases; the better your credit score, the better options you have for financing. In order to improve your credit score, it is important to know what goes into it.

A FICO score is a commonly used type of credit score. FICO creates a credit score made up of 5 factors. These factors include: Payment History, Credit Utilization, Length of Credit History, New Credit and Credit Mix.

Payment History makes up 35% of your credit score and it consists of how well you have paid off previous debts. This is probably the most important category because they use past behavior as a good indication of future behavior. That makes making payments on time and in full very important.

Credit Utilization is 30% of your score and it is based on the amount of credit that has been borrowed. People that often max out credit cards are not a good sign for future borrowing.

Length of Credit History is the third category and it accounts for 15% of the score. This piece looks at how long each credit account has been open and the length of time since the most recent account action. That means if you are new to having credit, you credit score will automatically be a little bit lower; it will take a little time to build up a good history.

New Credit takes up 10% of your score. This is how many new lines of credit you have opened up recently. You don’t want to try to open up too many at the same time because it could indicate you aren’t handling credit responsibly.

Credit Mix also takes up 10%. For this part of the score, they want you to have a variety of types of loans. A good mix you have handled different types of loans well.

It is important to know what makes up your credit score. To improve your score don’t borrow too much, and make your payments on time. If possible, you will also want a variety of types of credit and you will want to have a longer credit history.

What Do I Do If I Can’t Make My Car Payments?

iStock_000008128631SmallSometimes unexpected situations in life come up, and your finances are not where you thought they were. Whether you have recently been laid off, had trouble with the stock market, or you have had unexpected expenses recently and you’re not able to make your car payments, there are solutions to your problem.

The first thing you will want to do is go to your lender and tell them about the situation. You should go to them right away rather than waiting until you are consistently missing payments. One option for you and your lender is to compare what you owe on the car to the Ture Market Value. In this situation, depending on how much you owe, you could sell the car to pay off the loan.

Other options for you are the possible deferment of a payment for 30 days. If your money situation is something that you will recover from quickly, a 30 day deferment may be all you need, and a lender may be willing to help you out with that if you explain the situation.

Another option if you can’t make your payments is to lower your payments. This would mean you would have to have a higher interest rate on a loan with a longer term. Even with the higher interest rate, you would be making lower payments every month.

There are many different options for you if you are struggling to may your car payments. However, it is key to do your research and communicate with people as soon as you can. The longer you don’t make payments, the harder it will be to get where you need to be. Stay informed and involved and you will be on the path to financial success.

How Does Buying a Car Affect My Taxes?

what hurts your credit scoreIf you have bought a new car in the last year, there are some situations in which you may be able to list that on your taxes. You may be able to deduct some of your car from your taxes.

If you use your car partially or full-time for business, you can use that as a tax deduction. Whether you own your own business or your employer sends you driving to visit clients, make deliveries or go on sales calls in your personal vehicle, you can claim fuel and maintenance costs for your vehicle.

You bought a vehicle, if you use that vehicle solely for business, you can deduct its entire cost. However, if you use the car for both business and personal use, and you aren’t reimbursed by your company for the business use, you will want to put that cost on your taxes. However, you can only deduct the cost for when you used it for business.

If you have questions or concerns, we recommend you consult an accountant. It doesn’t matter if you do your taxes yourself or someone else does them for you; it won’t hurt to ask questions of an expert to make sure you are getting what you need. Also, make sure to save any paperwork related to your car, so you can share it with a tax expert.