You know the feeling…the first few weeks in a new job and everyone speaks in what feels like a foreign language jumbled together with secret codes and random letters that obviously mean something super important.
I don’t know about you, but I HATE the feeling of being the person in the room who doesn’t know what is going on. I tell myself over and over and over again, “You’ve got to fake it ‘till you make it.”
Everyone else seems so comfortable and capable, and the topics seem complicated and overwhelming. My style is to sit back and observe quietly, take a lot of notes, and say to myself that, if these dorks learned it, I certainly can too.
Of course, once you learn it, you realize that they are no smarter than you at all. It is all just lingo, acronyms, jargon, and other short-hand ways of conveying information. WTF? Ha! Perfect example!
Your car is likely the second most expensive thing you own, and probably not something you buy with any regularity. So, it is a big decision and a big deal. Adding acronyms and unfamiliar terms into such an important transaction can be intimidating and frustrating.
If you are thinking of refinancing your car, I don’t want you to feel like I did. Information is power. So, I thought I would share with you a few of the things I learned when I started working in the auto finance biz.
APR –Annual Percentage Rate: The cost of the interest paid by the borrower (YOU) per year. It is always stated as a percentage, such as “6.99% APR” meaning, you will pay 6.99% of the current loan amount each year you are paying off your loan.
ATF – Amount to Finance: The amount of money that you are borrowing to buy your vehicle.
Backend: (Does that word make anyone else giggle?) Backend items are additional add-ons like insurance, maintenance contracts, accessories, extended service contracts or warranties, etc.
Cash Back Refi: A type of refinancing that allows you to use the equity you have in your vehicle to get cash back while refinancing your car loan. In other words, when you refinance, you pull money out of the equity you have in your vehicle to use for something else like; maybe you have a credit card you want to pay off or unexpected expenses like medical bills, wedding costs, legal fees, etc.
DTI – Debt-to-Income Ratio: The percentage when you divide your monthly payments by your monthly gross income. So, if you make $3,000/month and you have $1,500 in payments each month, your DTI is 50%, meaning it takes 50% of your monthly income to make your payments.
FICO Score: A score based on your credit and payment history, and calculated by a credit bureau agency used by potential lenders to help determine your ability to make payments. The better your FICO score, the more likely you are to be approved for a loan. Your FICO score isn’t the only factor though. So, if you have bad credit, the terms might be different, but many people can still get a loan.
Finance Charge: The total amount of interest that is paid over the full term of the vehicle loan. If your loan is the whole enchilada, the interest is the enchilada sauce. To calculate how much of your payment is going towards interest (the sauce) and how much towards principal (the enchilada) throughout your loan term, you can find an “amortization” calculator here.
GAP: Coverage for the difference between what is owed on your vehicle and what the vehicle is worth if it is totaled in an accident or stolen and not recovered. It is different from, and in addition to, regular insurance coverage.
MSRP a.k.a. Sticker Price: An acronym/term for “Manufacturer’s Suggested Retail Price.” This is the retail price as determined by the manufacturer.
NADA, Book, or Kelley Blue Book Value: The retail value of your car set by one of the vehicle valuation guides (NADA-National Automobile Dealers Association, or Kelly Blue Book Value).
LTV – Loan-to-Value Ratio: The percentage of your loan amount to a vehicle’s value. For example, if a car is worth 25,000 and the loan is for 20,000, your LTV would be 80% (20,000 ÷ 25,000).
PTI – Payment-to-Income Ratio: The percentage of your income that an auto loan payment will require. For example, if your monthly income is $2,000 and your loan payment is $500, Your PTI is 25% ($500 ÷ $2,000).
POI – Proof of Income: Paystubs, employment verifications, bank statements, and other items that prove your income.
POR – Proof of Residence: Utility bills, driver license, lease agreement or any other documentation that displays proof of where you live.
Refinancing: Financing an existing car loan with a new loan. Refinancing happens when a borrower wants to lower their monthly payment or interest rate, change their auto loan term (length of loan period), or pull some cash out of their equity. The new loan pays off the old loan and creates a new loan, with new terms, and a new lender.
Stips: Short for stipulations, these are items that are required by a lender to fund a loan. May include proof of income, proof of residence, registration, proof of insurance or any additional information the lender may feel is necessary to approve your loan.
Term: The number of monthly payments on a loan. Car loans range from 24 to 84 months, with 60 months being average.
Total Cost: The cost of a lease agreement or car loan, including, the price of the car, all fees, add-ons, taxes, and interest charges.
Upside-down: When the balance owed on a vehicle is more than the current value of that vehicle (no bueno).
Now you have all the info you need so you won’t have to fake it ‘till you make it!
Did you know that you can have your own personal concierge to help you through the whole process? You can! Contact RefiJet at 800.260.5355. You will be so glad you did.
*Talk to you later
For most of the country, the trees haven’t had leaves for months, the old snow is black and dirty, the grass is dead and, I don’t know about you, but I am really tired of freezing my bumper off!
But, the light at the end of a very long tunnel of hope is in sight. The days are getting a little longer, football season is over, and I think the best way to get to the finish line of a long winter is to start making plans for the warm, long, sunny days ahead.
I haven’t really been a “ROAD TRIP!!!” kinda gal since before my children learned how to talk. But, now that they are grown and have other people with whom to share every single thing that comes to their mind, I am seriously reconsidering the concept.
It seems clear to me that the two most important decisions to be made about a long car ride are 1. what you will listen to while driving, and 2. what snacks to take along. I’ve inadvertently become fascinated with people’s choices about these two things, and have decided that a lot can be deduced about a person based on their answers. So began my complex, scientifically-sound study.
I asked my husband, mom, son, daughter, ex-husband, best friend, business partner and a random LinkedIn connection: if they could only choose ONE cd and ONE snack for a long car trip, what would they be? A few of the answers were predictable, some were surprising, and others were flat-out disturbing.
My random LinkedIn connection said he would listen to a biography of the life of Winston Churchill. I don’t even think we got to the snack part because, nothing worth eating pairs well with that answer.
My mom’s answers were “Sirius radio and trail mix.” I didn’t realize she had such severe commitment issues. I pointed out to her that she had kind of missed the point of the exercise. She said that if she were with me, she would listen to anything I chose. So, I am assigning her the podcast “My Dad Wrote A Porno.” If you haven’t heard it, it is hysterically disturbing and entertaining. A guy and his two besties read aloud a chapter at a time of the cringe-worthy, pornographic book his father wrote. It is lol funny in a skeezy way—Enjoy! You’re welcome.
Ironically, my ex chose the soundtrack from Purple Rain, which I love. But, his answer brought me back to the summer of ‘84 and a college road-trip…a 20+ hour road trip! Just prior to the trip, we had seen Purple Rain in the movie theater and immediately purchased the soundtrack cassette tape—dating myself, yes I know.
Anyhoo, I loved this tape! We listened to it over and over, mile after mile. After about 10 hours, he pulled it out of the tape deck and held it out of the sunroof, teasing that he was going to drop it so he did not have to listen to it anymore. I told him his short little life would be over if he did and, from the corner of my eye saw that the cassette had been unwinding down the highway and the tape was trailing and flapping behind us like a sad, black ribbon of loss. So, no way does he get to choose Purple Rain! He owes me Purple Rain!
My husband’s answers were the most disturbing of all. He said Les Mis and…wait for it…you ready?…dehydrated apples. WTF? I mean, I love Les Mis, but what kind of monster would choose dehydrated apples from all the snack choices in the world? I am sad to admit that we have had a serious setback in our relationship, but are seeing a therapist twice a week and trying to somehow move forward.
As part of our therapy, we’re going to take a road trip together. He can bring Les Mis and I have chosen a 70’s mix with a little Run DMC, Salt-n-Pepa, Sugarhill Gang, Earth, Wind & Fire, Tone Loc, and Midnight Star. Ooooo, I am gonna be singing and jumping around like one of those crazy older ladies at a Bar Mitzvah when she hears her favorite song.
We will NOT be bringing dehydrated apples. We will have kettle corn and crunchy cheetohs like normal people!
What would you choose? Let us know in the comments section below.
Too late now for New Year’s resolutions! Which is a great relief for me as I have not exercised once and I am currently eating kettle corn and drinking wine—just to hold me over until dinner, which will include pasta of some kind and more wine…or maybe gin. Life is short, don’t judge.
Anyway, it is much more satisfying to talk about other people’s problems, like my pet peeves regarding other drivers. They’ll probably not be the ones you might guess, but I hope you will give them some thought.
Remember that we have no idea what is happening in someone else’s life. They could be coming home from a funeral, visiting someone at the hospital, going through a painful breakup, worried about their kid, or so many other possibilities. The last thing they need is for you to honk, flip them off, tail them, give them the stink-eye as you pass them, scream obscenities, etc.
The moral of the story: just chill! Life’s hard enough. Besides, when you get really angry with other drivers, it usually because of something else going on in your own life—most of which can be, at least temporarily, alleviated with pasta, pizza, ice cream, and other empty carbs. Do it. It will make the roads a kinder, gentler place.
If you are like most people, buying a car brings with it the worry of paying the loan. The loan you choose is a big decision because it determines the amount of your monthly payments, your interest rate, and the term–which is how long you have to pay off the loan.
But, is it permanent?
It doesn’t have to be!
Did you know that, just like a home loan, an auto loan can be refinanced to improve terms such as monthly payment amount, interest rate, and/or length of loan?
DON’T DEFAULT! If you’re finding it really hard to make your monthly payments and you’re afraid you might default, this is the time to act. No matter your circumstances or current credit, defaulting is the worst-case scenario. You credit could be irrevocably damaged and take years to recover.
Check your score! If it has improved, you are much more likely to get a new loan with a lower payment and better terms, including a lower interest rate!
If you want to go from leasing to owning the car, refinancing is an easy way to make the transition and could lower your payment at the same time.
Unexpected expenses, whether they are personal, home, family, auto, major and minor, etc., come whether you can afford them or not. If you want to take cash out against your vehicle’s equity to meet unexpected expenses, refinancing your loan is something to seriously consider.
You can use this to your benefit. You see, when the economy is bad, fewer people take out loans. When this happens, lenders are anxious to get new customers and willing to offer better deals on new loans. This includes people with bad credit.
What if you have bad credit?
If you are struggling to make your payments and end up missing payments or paying them late, it could make your credit score even worse.
And, defaulting on your loan could be a disaster! If you already have a low credit score, it can take many years to recover.
If you have bad credit, it is a really smart idea and a great time to look at refinancing! It is really simple:
Your ability to qualify for a loan and the interest rate will take into account factors such as your previous payment history and your credit score. But, even with bad credit, there’s a good chance of getting approved for a new loan. Find out more information about refinancing with bad credit here.
Your credit score is used by lenders to evaluate the risk involved in lending money to you. Your credit score tells them your payment history for any loans and credit cards, and if you have been reported as delinquent by any businesses like your cable, phone, electricity, etc. Your score is a key factor in the type of deal for which you qualify, so you want to make sure your credit report is accurate. If you see an incorrect late payment or other entry, get in touch with both your bank and the business or lender. The bank can give you the right documents you will need to provide as well as clarifying the error with the credit bureau to get it corrected.
If you check your credit report and find that you have a low credit score, there are still loans available and it is worth it to see what loans you might qualify for that can lower your monthly payment.
Refinancing is actually very simple! You transfer your current outstanding amount to a new loan with better payment terms which can include better terms, such as:
If you have multiple payments each month and have trouble managing them, then this could be a great option for you. This method allows you to merge multiple loans and debts into a single, consolidated loan and, usually, with a lower monthly payment.
If you are able to get a lower interest rate or longer terms, you could have
Consolidating your debt can potentially save you money each month AND simplify your finances by having only a single payment.
If you are able to make a significant payment towards your principal, your new loan amount will be smaller and the amount of interest you will pay will decrease because the loan will be paid off sooner. When you refinance this way, you can reduce the amount of your monthly payment and, you might even be able to get a lower interest rate for the remainder of the loan! If you can get a lower rate, it just brings your costs down that much more.
When you refinance your loan, it takes awhile for your application to be processed and your new loan to go into effect (up to 60 days in some cases). Since your first payment is not due until then, you very well could end up not having to make a car payment for one or even two months!
The best news is that:
You are the customer!
You have choices!
And, YOU are in the drivers’ seat!
If you are ready to go, not sure where to start, or want to figure out what the best choice is for you, Contact RefiJet for assistance from your very own personal concierge who’ll guide you through the entire process and get you the best deal, for FREE. There are absolutely no RefiJet fee charged to the customer for this service.
One could easily make a timeline of their life by the cars they’ve driven. We remember life by experiences, many of which involve our cars. Family vacations, first dates, driving away after your wedding, bringing home a new baby, driving home from divorce court, more first dates, etc.
I learned to drive in my parent’s 1970-something AMC Hornet Sportabout, lovingly referred to as “Horny” in our house. It was a puke-yellow color with wide wood paneling along the sides. I spent so many miles and hours in that car sharing the back seat with my two sisters who, I truly believed, if they touched me one more time, my head would explode. But maybe that wouldn’t be so bad, because at least the car ride would be over.
My mom kept a little red corduroy pillow in the car at all times. She would put it behind her back when she drove so she could reach the pedals. I can still picture her with the pillow and sitting up super straight to be able to see over the steering wheel. I wished and wished upon every star and birthday candle that I would grow enough by the time I could drive that I would not have to use that pillow. I did. No pillow, and sitting in a seat where no one touched you. My life was forever changed.
My first car was a used 1982 Ford Mustang. Whatever vision of a Mustang popped into your head, it was not that Mustang. It was brown, really brown, the color of…, let’s just say it was not a pretty shade of brown. The body style didn’t resemble the Mustangs of the past. It was kind of like there had been some sort of secret tryst with a Pinto and out came my car. Ugly as it was, it was MINE. I was 19 and free.
My new car buzz was quickly killed when I went to pick up my license plates and, I kid you not, they said PMS 812. PMS! I was horrified and it became an on-going joke for all of the years I had the car.
In those days, with the car also came a thick payment booklet. I had a monthly payment of $99 for about three years. Every month, I would tear off a sheet on the perforated line and send it in with my payment. At first, it seemed like I would be paying it forever but, after a while, it started to get noticeably thinner and thinner. I will never forget the feeling of making that last payment, and then receiving the title to my car in the mail. It felt like the biggest achievement I had ever experienced.
People don’t have payment books any more, but I wish for every young adult the feeling of accomplishment, pride, and confidence when that last check or that last electronic payment has been sent. My parents always said that anything that is really hard to do builds character. It really irritated me at the time, but it is actually 100% the truth.
The Honda Accord was next because it was supposed to be a really safe car and a baby was coming. Then the Honda Odyssey minivan because another baby was coming. After that, a couple of SUV’s with third rows for car pools, hauling sports gear, and driving safely in the snow.
Once the kids were gone, I had a couple of smaller SUVs. I was not ready to give up the feeling of being up high and in a big car, but forgoing the third row and not having stray food wrappers, fries, and water bottles under every seat was a sweet sensation.
I recently bought my first sedan in more than two decades, a 2018 Audi A3. I love this car. The price was something of a stretch and I have my monthly payments again. But, it is mine. No one else drives it or rides in it with any regularity. It is all about me. Secretly, I’ve named her “Syd” because, growing up, I always wished my name was Sydney. Syd reminds me that I can make things happen. I can wish for something and then go out there and find a way to make it happen.
It may be a little different when I get to that last payment again, but it will certainly still be sweet.
I wonder what my next car will be and how it will represent where I will be in my life. Hope it’s not a Pinto…or a Hearse.
You may have bad credit but…if lower interest rates, better payment terms, affordable monthly payments, or the possibility of putting off your next car payment for a month or two sound good to you, then you should definitely keep reading and find out more about auto refinance!
There are many factors that contribute to bad credit. Maybe you had a job change or loss that impacted your ability to pay your bills, made some bad financial choices, or underestimated your ability to afford a payment. Even lack of credit can give you a low credit score, like only having one credit card, or just not having enough time to build your credit history.
Many people don’t know that refinancing their auto loan is even an option for people with bad credit. The truth is, a new loan could actually make your car payment more affordable and help you get on the path to improving your credit.
Whatever the reasons for your credit score, the most important thing is to know your options, and RefiJet is here to help you find the answers.
If you do have bad credit, some lenders and banks see you as a poor investment and a high risk. Different lenders have different criteria when it comes to payment history and credit score requirements.
The good news is that there are specific loans that are designed to help people with bad credit obtain or refinance a car loan. They are called subprime lending programs and they actually have requirements that many customers with bad credit can meet!
RefiJet can help you find the best option for you. Bad credit is one of the most common reasons consumers come to RefiJet . Helping people like you refinance their auto loans is their specialty. They work with many different lenders and banks, know how to find options that might work better for you, and will guide you through the whole process quickly and efficiently.
1) Lower your car payments
Refinancing your car can mean a lower interest rate and/or increasing the length of time to repay your loan. Both translate to lower monthly payments, which can make a significant difference when it comes to your monthly budget.
Bonus: when your car payment is affordable, it drastically reduces the likelihood of missing any of your future payments. When you don’t miss payment, it can help improve your credit score!
2) Improve your credit rating
A subprime loan is for people with bad credit and low FICO scores. For many people, it is the only way to get financing for a large purchase like a car when most other lenders will decline the applications.
Typically, a subprime loan has a higher interest rate because the loan carries more risk for the lender. But the good news is, when you make your payments consistently, a subprime loan can help people with bad credit improve their credit ratings and FICO scores. The higher your credit score goes, the higher the likelihood of being approved for a lower interest rate on a future loan.
If you already have a subprime auto loan, we may have good news for you. In fact, if you paid all your payments consistently for the past year, your FICO score may have gone up! If it is 600 or higher, you may very well qualify for a new loan at a lower interest rate!
3) Build up your stash
Hopefully, refinancing your auto loan will allow you to put a little more money in your savings. Unexpected expenses, whether they are personal, home, family, auto, major and minor, etc., come whether you can afford them or not. Having a little more savings makes an enormous difference.
4) Take a break from your car payments
When you refinance your loan, it takes awhile for your application to be processed and your new loan to go into effect (up to 60 days in some cases). Since your first payment is not due until then, you very well could end up not having to make a car payment for one or even two months!
5) Take out some cash
If you want to take cash out against your vehicle’s equity to meet unexpected expenses like medical emergencies, losing your job etc., then refinancing your loan is something to seriously consider.
6) Own your car
If you want to go from leasing to owning the car, refinancing is a great way to make the transition.
Check it out! You have nothing to lose and a lot to gain!
With RefiJet, you will have your own personal concierge to make the entire process painless, paperless, and as effortless as possible. Find out more about the best way to refinance your auto loan HERE.
By who? Me. Just now. Because who doesn’t like cool car stuff? And, from a great gadget under 20 bucks, to something awesomely extravagant, there truly is something for everyone! Our car is like our second home and, for some of us, even a treasured friend. This holiday season, let’s pamper it, make it more fun to drive, and keep ourselves a little safer too. There are a lot of products out there but, here are a few of my favs:
There are many kinds of people in the world, but you have to give props to the ones who keep their car clean all the time. You know, the ones who go to the car wash before they even go to the bathroom after a road trip. The person who, when you get in their car and there is a dried leaf on the car mat says, “Sorry my car is such a mess.” If you know this person, here is a must-have: Meguiar’s G55032SP Complete Car Care Kit: about $65 bucks and you can care for just about every surface inside and outside of your car.
WeatherTech Floor Mats: These puppies are laser-measured for a perfect fit. WeatherTech.com: Not cheap, but they will make mud, water, dirt, etc. a breeze to clean up no matter what kind of shenanigans you get yourself into.
Anyone who has a kid knows the simmering ire of the dirty shoes kicking the back of your seats. These easy to wipe off kick mats fit nicely over the back of both the driver and passenger seats. For $25, you and the kids have it made with: Oasser Kick Mats Car Seat Back Protectors (2 Pack with Tissue Box, Clear 10″ Ipad Holder, and 3 Large Storage Organizers). Yes, you read that right, iPad holder! I guess today’s families don’t sing 100 Bottles of Beer on the Wall
Car Trunk Organizer by FORTEM: What I like about this one is it has an attached lid. I like my stuff organized and out of sight. It is collapsible, has straps, outside pockets, and a non-slip bottom that is waterproof. I loathe the sound of things rolling around in the back of the car while I drive. Perfect to hold your emergency items, wine, groceries, wine, tools, wine, etc.
Don’t forget Cool Stuff Self-Care! You know, like putting on your own oxygen mask first, so you can then better care for others.
BESTHING 10W Wireless Charger, Wireless Fast Car Mount, Air Vent Phone Holder: After looking at about 500 of these, this is the one that looks the least obtrusive, easiest to use, and has a 5-star rating on Amazon.
A Montsleo Inverted Umbrella: How many times have you had a wet umbrella that you’ve had to take in the car? Who knew you only had to invert the umbrella to keep your car dry. Why didn’t I think of that?
: Do you know that space between your seat and center console? For $17, you will never have to contort your hand to try to fish something out of that black hole again. And, it doesn’t only keep stuff from falling in, it conveniently holds things like your phone, change, receipts, etc.
Yeti Mug – People LOVE these mugs and I need to know why. I want the 20-oz tumbler which keeps drinks hot/cold for 12 hours! Perfect for when you are hiding from the kids.
The Ztylus Stinger can not only charge two devices at once—it could also save your life. Plug it into your 12V port, charge your phone, and in case of emergency, use its blade and glass breaker to cut your seatbelt and break a window. I want everyone I love to have one of these.
APEMAN Dash Cam 1080P FHD DVR Car Driving Recorder (3” LCD Screen 170°Wide Angle, G-Sensor, WDR, Parking Monitor, Loop Recording, Motion Detection) This dash cam is only $45 and has consistent high ratings and customer satisfaction. Plus, anything called APEMAN has to be cool.
As we go into winter, this is a reminder to always keep an emergency kit in your car. Your kit should include:
Wishing you a holiday season full of time spent with people you love, good health, and lots of cool car stuff.
PS: Looking for a great way to buy more cool stuff? Check out refijet.com to see if you could benefit from refinancing your car loan. You might be surprised to see how much you may be able to save on your monthly payment or get better terms on a new loan!
There are many reasons why refinancing your car loan can be a smart financial move. Maybe you think you can lower your interest rate. Or, your financial situation may have changed and having lower monthly payments would help you address other financial obligations. Perhaps you want to add or remove a co-borrower. Maybe some unforeseen circumstance means that having more money in your pocket each month would make a big difference. Whatever the reason, it makes sense to investigate the refinancing option to understand your options.
You probably did some research before you purchased your vehicle. It’s also smart to do some research when you are considering refinancing. Like any financial transaction, it’s important to work with a company that has a strong reputation for top quality customer service, an easy application and contracting process, secure protection of your data, and the ability to offer you multiple options, both for your actual loan and for additional products that can help address potential financial risks associated with your both your vehicle and your loan.
You can do this research by searching major internet sites like Google or Facebook for other customers’ feedback, checking with the Better Business Bureau to make sure that you are dealing with a reputable company, and evaluating reviews and recommendations on third-party refinance websites like Lending Tree. You can also check your credit score (many credit card companies have a free credit score check as part of their service such as Discover and Barclaycard) to see if it has changed since you got your loan, which will give you a good idea if you are likely to qualify for a lower rate or be able to add/subtract a co-borrower.
It’s good to know if the refinance company/lender uses a “hard pull” to check your credit, which shows up on your credit bureau report, or a “soft pull,” which doesn’t. Make sure to research each lender’s fee structure to fully understand if there are any fees associated with the refinancing and, if so, how much. You’ll need to factor those additional fees into your overall financial evaluation of your options.
To process a refinance loan, you need to provide the same type of documentation you provided with your current loan.You are almost always going to need to provide the following documents:
In addition, you might be asked to provide additional documentation such as:
Make sure that you work with a company that gives you a secure way to provide your private information and documents. In some cases, you will be able to securely upload copies of these documents. Some refinance companies/lenders require you to send them in. If a lender asks you to text or email them documents with your personal information, you should request a secure file transfer method like uploading the files directly to a secure website. Text and email may not be secure and therefore could be putting your personal information (and identity) at risk.
You won’t know exactly the type of refinance loan for which you will qualify unless you actually apply. With RefiJet, for example, you can provide some basic information by phone, then find out within minutes the options for which you qualify while only using a “soft pull”, which doesn’t show up on your credit report.
When comparing your options, it’s optimal to consider how well the refinance loan itself will meet your needs, but also to consider other aspects of the transaction:
At RefiJet, we pride ourselves in providing a fast, simple, reliable, safe and customer-focused process to help you find the best refinance loan to meet your needs. We will explain everything to you as we go and can complete the process within a couple of phone calls. We check your credit through a soft pull, so nothing will show up on your credit bureau report or affect your credit score. We will fill out the forms for you to save your valuable time, and we provide secure methods for the transfer of your data both to and from us as well as to and from the lender.
We would certainly encourage you to explore your refinance options with RefiJet at 1.800.260.5355 or go to www.RefiJet.com, but even if you don’t, please use this checklist to make sure that you are getting the best deal for you and that your personal information stays secure.
The first question you really need to ask yourself is whether or not you really “need” a new car as opposed to just “wanting” it. The difference between “need” and “want” helps determine how much you are willing to spend. As an example, you might “need” a way to get back and forth to work. The leather interior and upgraded stereo are more likely something that you “want”. Additionally, if you already have a working vehicle that you’ve kept in good condition, you might not “need” a new car.
A car is generally a depreciating asset, which means its value goes down over time. The biggest amount of depreciation takes place in the first two or three years of a car’s life. In fact, an average car will lose approximately 20% of its value in the first year and another 15% of its original value over years two and three. Keep the value of the vehicle (and how much it has depreciated) in mind as you think about whether it is better to get a new car or if it is better to budget for maintenance and repairs (and whatever is left on your loan payments).
Of course, if your car loan is paid off, then making a loan payment isn’t part of the equation! This doesn’t necessarily mean that you must go out and get a new car. If you’ve kept the car in good condition, kept up on its maintenance and have reasonably low mileage (for its age), why not consider delaying it a little and saving the payments you would have made?
If you need the car urgently, you don’t have much flexibility. This means that any cash you’ll need up front (for example, a down payment) will need to be available quickly as well. If, however, the purchase isn’t urgent, you’ll have more time to save which can either make the savings process less difficult or allow you to save more prior to purchasing the car. The more you can pay up front, the lower your payments are likely to be.
Additionally, you might be able to wait for dealer incentives (cash back, promotional interest rates, etc.) to become available as well. It is important to think about the timing rationally. It is easy to get excited about getting a new car, but it is important to be realistic about what you can afford and when you will be able to afford it. In other words, choosing the timing of buying the car can affect the total cost of buying the car.
It depends on the type of vehicle you are looking for. A full-size SUV will cost much more than a small economy sedan, of course. The analysts at Kelley Blue Book today reported the estimated average transaction price for light vehicles in the United States was $35,742 in September, 2018 which is 2% higher than September, 2017.
The days of needing to walk into the dealership and speak to a salesperson are behind us. Of course, you can always go talk with a salesperson if that is your thing.
There are many websites that offer a wealth of information about car pricing, costs, dealer promotions and incentives, what other people are paying for the same cars, what the car should cost in your geographic area, and what options are available for the car.
There are some basic things you will definitely want to understand.
Dealer Invoice Price – This is the dealer’s cost for the vehicle only and doesn’t include any of the dealer’s costs for advertising, selling, preparing, displaying or financing the vehicle.
MSRP/Sticker Price (Manufacturer’s Suggested Retail Price) – This is the “list” price and usually will not be the price you should pay for the vehicle.
Fair Purchase Price/Market Value – This is what people in your area are paying for the same vehicle (on average). It doesn’t mean that you can’t get a lower price. Always remember that most things are negotiable.
Most people are going to finance their car in some way which means that you’re going to likely have monthly payments. Given that every individual’s financial situation is different, you’re going to need to pick a budget that works for you based on what you can afford. Remember, if you can’t afford it right now and it is not a “need,” it might be worth taking a little bit of time to save enough money to make it affordable. There are also other short-term options (like refinancing your current vehicle) that could help you with your budget.
A common budgeting method is the 50/30/20 budget, which allocates 50% of your monthly income to needs, 30% to wants and 20% to savings. Additionally, some experts say that the total of all of your car-related expenses shouldn’t exceed 20% of your take-home pay.
A good rule of thumb is that it is better to make at least a 20% down payment. The smaller the down payment you make on the car, the greater the risk of your loan becoming “upside down.” Being “upside down” means you owe more on the car than the car is actually worth.
Ultimately, the goal is to get to your desired payment by determining how much you are comfortable borrowing.
One of the ways you can reduce the amount you need to borrow is by selling your current car. You can trade it in, which is selling it to the dealership as part of the new vehicle purchase or you can sell it or you can sell it directly to a private party. Trading it in is generally quicker and easier but will likely sell for a lower price (sometime significantly lower) than by selling it privately. A trade-in also happens at the same time as the new purchase, so you don’t have to worry about being without your old car while waiting for the new car to arrive.
The biggest factors in determining the value of your vehicle are the model, age, mileage and condition. To find out how much your car might be worth, you can use many of the same resources you used to research the new vehicle. Edmunds, Kelly Blue Book and Nada Guides are a good place to start.
The price of the car isn’t the only “car-related expense” that you need to budget for. You’ll need to budget for insurance, finance charges, registration, taxes, fuel costs, routine maintenance (new tires, oil changes, windshield wiper replacements, etc.) and repair bills.
The average cost of insurance is currently $1,427 per year. That price is 6% higher than last year. This cost varies significantly based on several factors .
• Geography: The city and state where you live and drive will impact your rates.
• Vehicle: The type of car you purchase will significantly impact rates. Typically, high-performance/sports cars, turbocharged/supercharged vehicles, cars with bigger engines and four-wheel drive vehicles can cause insurance rates to increase. Other variables like the new car cost, the technology, the safety record and even the likelihood of the car being stolen will affect insurance rates. You can get some good information about vehicle theft rates at nhtsa.gov .
• You: Your age, driving history (accidents, tickets, DUIs, etc.), marital status, and even your education all contribute to your insurance rates.
• Credit Score: The better your credit score, the more likely you will get lower insurance rates.
If you’re buying a new car, your warranty should cover repairing major defects for around three years. It won’t cover repairs from accidents or negligence and it most likely won’t cover maintenance, like oil changes, a new battery, new tires or windshield wiper replacements. With most used cars, you won’t have a warranty and will need to budget for potential repair costs unless you also purchase an Extended Service Contract (ESC), which helps take care of unexpected repairs.
Additionally, if you are taking a loan to purchase the vehicle (new or used), you might also want to purchase Guaranteed Asset Protection (GAP) which minimizes financial risk if the vehicle is in an accident or stolen, covering the difference between what is owed on the vehicle and what it is worth.
Products like GAP Insurance and ESC can help protect your large financial purchase and potentially limit your risk and exposure if something goes wrong.
With the low cost of fuel as recently as 2 years ago, fuel efficiency became less important to consumers. Unfortunately, the cost of fuel didn’t stay low. Gas prices are up to $2.93/gal (for the week of August 13, 2018). That is an increase of 17% in the last year (from $2.49/gal) and a 49% increase from its low of $1.83/gal in February of 2016.
With gas prices at almost $3/gallon, you can save around $1,000/year in gas (based on 15,000 miles/year) by choosing a car that gets 35 mpg rather than an SUV that gets 20 mpg.
When you are prepared and understand the factors that affect the overall cost of buying a car, you can better manage the car deal as well as the overall financial situation.
For Part 2, we are going to make sure you’ve got enough money saved up for your big purchase. We’ll also give you some suggestions for how you can save enough if you don’t already have it.
Finally, in Part 3, we are going to discuss the different way you can pay for the vehicle and the ways to best leverage the lowest price.