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4 Reasons to Make a Down Payment on a Car Loan

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Besides being a very good idea in general, making a car loan down payment is often a must when it comes to getting an auto loan with bad credit. If you’re dealing with poor credit, a car loan down payment is usually a requirement. We’ve got four reasons to be thankful for that.

1. Down Payments Make Getting Approved Easier

4 Reasons to Make an Auto Loan Down PaymentWhen you have lower credit, it can be more difficult to qualify for an auto loan based on your credit score alone. For this reason, lenders look at your ability, stability, and willingness to take on a car loan.

For auto lenders, a down payment shows that you’re willing to invest your own money in your loan. This is known as having skin in the game. It’s been proven that people who put their money down on a big expenditure like a car loan are more likely to pay it off successfully.

Another reason an approval may come more easily with a down payment, especially if you make on that’s larger than required, is that the more you put down, the less you’re borrowing. It’s typically easier to get approved for a more modest loan as a bad credit borrower.

2. A Down Payment Lowers Your Monthly Payment

Since a down payment makes your overall loan amount lower, it also lowers your monthly payment amount. There are usually two ways to lower your monthly payment when you’re negotiating with a dealer: extend your loan term, or make a larger down payment.

Extending your loan term may sound like a good idea, but it actually increases the overall amount of your loan. The longer you owe for, the more interest charges accrue, which can rally drive up the total cost.

Making a larger down payment, on the other hand, lowers your overall loan amount from the start. This allows you to see the savings in your monthly payment without the consequence of racking up extra interest charges.

3. You Pay Less in Interest Charges

If you have a low credit score, you’re likely to qualify for an auto loan with a higher interest rate. This means even more money owed in the long run. Interest is the price of borrowing money to get the money you need. Most loans have interest, and the interest rate you qualify for is mainly based on your credit score.

Interest is added daily based on the principal balance of your car loan, so the more you owe the more you pay. When you make a down payment, you’re lowering the overall amount that you’re borrowing, which means less for interest charges to accrue on.

To save even more money, you can make a larger than required down payment, make larger than required monthly payments, and pay off your loan that much faster.

4. Lessens Your Chance of Negative Equity

When you first drive a vehicle off a dealer’s lot, it loses value immediately. This is because cars are depreciating assets. They lose value over time, and it doesn’t stop. This also means that at some point soon after you take out an auto loan, you could end up owing more for the vehicle you’re driving than it’s worth. This is known as having negative equity, and it’s not the position you want to be in for long, if at all.

The more more you put down on a car loan, the less of a chance of depreciation overtaking your equity. This is important, because if you want to sell your vehicle or get into something else, having equity makes things easier. To sell a car that you’re financing, you need to pay off the entire loan amount. But if you can’t get an offer large enough to cover your whole loan balance, you’ll have to pay that difference out of pocket.

Additional Benefits and Requirements of Down Payments

A down payment can do everything we’ve listed and more! When you’re approved for an auto loan, you may be able to qualify for a lower interest rate or different loan terms if you make a larger payment up front. The amount required for a car loan varies by lender and your situation.

Typically, subprime lenders that assist bad credit borrowers always require a down payment. The minimum down payment amount is usually around $1,000 or 10% of the vehicle’s selling price. Sometimes, it’s whatever is less, and trade-ins with equity can help meet the requirement as well.

Ready for Your Chance at a Car Loan?

Now that you know how important it can be to make a down payment on your next auto loan, you need to find the right dealership. Not all dealers are signed up with the lenders that can work with bad credit circumstances. And, those that are don’t typically stand out from the crowd.

You don’t have to spend time and money searching for a dealership that can assist you, as we know where they are! Auto Credit Express works with a nationwide network of special finance dealers! To get started on your road toward a car loan, fill out our auto loan request form. It’s fast, free, and there’s never any obligation!

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Is it OK to Refinance a Vehicle Multiple Times?

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There’s no limit on how many times you can refinance your car loan, but it may not be a good idea to do it more than once. We cover how refinancing works, and some advice on refinancing your auto loan multiple times.

Refinancing an Auto Loan More Than Once

It certainly is possible to refinance your car loan more than once, since there’s no rule that says otherwise. However, whether or not it’s a good idea to refinance multiple times depends on how you do it. And, you may not qualify for refinancing again once you’ve already done it.

Most of the time, borrowers refinance their car loans to get a lower monthly payment. This is done by either lowering your interest rate or lengthening your loan term (sometimes both). Qualifying for a lower interest rate is a great way to save money on your loan, but simply extending your loan term generally isn’t a good idea without qualifying for a lower interest rate.

Is it OK to Refinance a Car Multiple Times?This is especially true if you refinance to a longer loan term more than once. Extending your auto loan multiple times draws out how long you have a car payment, which increases your interest charges. Auto loans are typically simple interest loans, so your interest charges add up based on your auto loan balance.

If you always extend your loan, you’re always going to rack up more interest charges – the higher your interest rate, the more you pay. This can lead to years of paying off the same vehicle and possibly paying more for it than it’s worth. If you’ve already refinanced your car and extended your loan term, then doing it again means paying more for the same vehicle.

Qualifying for Auto Refinancing Multiple Times

The most difficult part of getting approved for refinancing can be having a vehicle that qualifies. Most refinance lenders require that the vehicle be less than 10 years old and have less than 100,000 miles on it. If your vehicle is older, and/or you drive a lot, refinancing may not be possible – it only gets harder as time goes on and the vehicle depreciates.

If you’ve qualified for refinancing in the past and want to try again, it could be more difficult the second time around. A lender may see that you’ve already refinanced your auto loan and may be hesitant to approve you again. Refinancing the same car loan multiple times could be a sign of overextension – your auto loan may be too big for you to chew and they may take notice.

If you’re not sure that refinancing your vehicle for the second time is possible or you’re concerned you don’t qualify, trading in the car for a more manageable loan could be the next step.

Trading In a Challenging Auto Loan

A very common way to upgrade a vehicle or get a more manageable car loan payment is by trading it in for something more affordable. Most dealerships accept trade-ins, and the money you receive from a dealer could be applied to your next vehicle’s down payment to lower the selling price.

For a trade-in to help you with your next car purchase, it needs to have equity. Equity is when you owe less on the loan than what the vehicle is worth. The actual cash value (ACV) of your trade-in is determined by the dealer after they appraise your vehicle. You can’t find the ACV ahead of time, but you can look up estimated values on websites such as Kelley Blue Book or NADAguides. Once you have an estimated value of your vehicle, compare it to your current loan balance to find out if there’s equity in your car.

If you find that your loan balance is higher than a possible trade-in value, you have negative equity – also called being upside-down. An auto loan in a negative equity position doesn’t help you lower the selling price of your next vehicle.

Additionally, it can be harder to remove the lien from the title in this position, because you have to finish paying your loan before you can trade-in your car. Without equity, you have to come up with the money to pay your lender out of pocket. Often you can combine cash with trade-in equity to come up with the amount you need. However, if you’re unable to do this, you may be able to roll over the negative equity onto your next loan.

Finding a dealership that can take your trade-in may be somewhat easy, even if it requires a little legwork. As we mentioned, most dealers accept trade-ins, and they prep them to be resold on their lots. It’s a good idea to call around to dealerships in your area and get some estimates over the phone, and we recommend calling at least one franchised dealership that sells your vehicle’s make, since you may get a higher offer from them.

Finding a Resources for Your Situation

Finding a lender that can refinance your car loan might prove difficult, especially if you’ve already refinanced before. If you’d like some more resources and information on refinancing a car loan, we want to help you find those here.

Even if most dealerships do accept trade-ins, you may not always be able to work with their lenders. It’s not always easy locating a dealership that can assist with bad credit situations, and qualifying for refinancing can be hard with poor credit, too.

There are dealers that are signed up with bad credit lenders, but they don’t always stick out from the crowd. Here at Auto Credit Express, we aim to make it easier for borrowers to find dealerships that specialize in helping those with poor credit. To get matched to a dealer in your area with the lender resources for tough credit situations, fill out our free auto loan request form.

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Can E Transfer Payday Loans Help Me Out of My Financial Slump?

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Whether we like it or not, there are going to be times in everybody’s lives when they need access to quick money, and for some folks, it is not going to be as easy to get their hands on that money as it will be for others. Unfortunately, the lending and credit industries are very much predicated on having a great credit score for them to work with you. 

If you’re facing some unexpected situation in life and need to get your hands on cash fast, but don’t have the very best credit score, don’t panic. Believe it or not, there are great options available to you that you can take advantage of with some research, no matter what kind of credit score you might have. 

What is being referred to here? E transfer payday loans are becoming a great way for people to gain access to low income e transfer payday loans , right when you need it. All it takes is finding the right lender for you and knowing just how much money you need. 

How Does it Work?

If you’d like to check out what these e-transfer payday loans could do for you, it is not going to be difficult for you to get started. You see, there are hundreds, if not thousands, of payday lending websites ready to serve people looking to get started with a loan of their own. 

You will need to make sure you have some important information and paperwork together, including: 

  • Your government issued ID so you can easily verify your identity with the lender. 
  • Your banking information so your payday loan can be sent to you quickly if approved. 
  • Your income information so your lender will be able to make an accurate loan decision based on your income, and not your credit. 

When you have all of this information together and ready to go, you will need to start looking up payday lending websites to find the best one for you. You should thoroughly read any information presented on the lender’s website, and make sure you are familiar with their policies, percentage rates, and any other fees before you apply for a loan with the lender. 

If you think you are in agreement with all of the information presented on the lender’s site, all you will need to do is fill out the loan form telling the lender how much you would like to borrow, and then sit back and wait for your loan decision to show up in your e-mail. 

How Long Does it Take?

Loan decisions on e-transfer payday loans typically don’t take very long at all to show up in your inbox. You can usually expect to have your loan decision from your chosen lender in anywhere from a few minutes to a few hours, depending on what time you apply for your loan. 

If your payday loan is approved, it shouldn’t take more than one business day for your money to show up in your bank account. Once it’s there, you’re free to spend it however you’d like. Just make sure you thoroughly go over your loan agreement with a fine-tooth comb so you know when the expected repayment date is so you can be sure to pay the whole loan off on time. 

Who Are These Loans Meant For?

Truthfully, these types of loans are meant for anyone who needs quick money now, though they will usually be used more often by folks with bad credit or even no credit. While folks with good credit can easily gain access to local lenders and establish lines of credit, these things are not as simple for folks with bad credit, who local lenders and banks usually won’t work with. 

E-transfer payday loans, on the other hand, allow anyone to have a shot at getting their hands on the money they need, no matter what their credit score may or may not be. The most important part in getting one of these kinds of loans is simply making sure you are able to fully pay it off by the due date, because some payday loans can actually affect your credit score if the lender reports to credit bureaus. Pay it off in a timely fashion, and it may even give your credit score a boost!

A Good Option For You?

If you are someone who deals with bad credit or no credit at all, don’t let that deter you from applying for the loan you want when you need money quickly. With enough research and some looking around, you will be able to find an e-transfer payday lender that’s right for you.


The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect those of BK Reader.

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Ask the Fool: All about stock multiples

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A: It’s a ratio of two measures of a company. One of the most common multiples is the price-to-earnings (P/E) ratio, which is the stock’s current price divided by its earnings per share. Imagine Scruffy’s Chicken Shack (ticker: BUKBUK), trading at $80 per share. If it earned $4 per share over the past year, its P/E is 20 (80 divided by 4). It’s trading at a P/E ratio of 20.

There are also price-to-sales multiples, book-value multiples, cash-flow multiples and more. It can be helpful to compare a company’s multiples with those of its peers, to see whether its stock appears to be undervalued or overvalued. Nike, for example, recently sported a P/E ratio that was over 82, while Adidas’ was not quite 41. That suggests that Adidas is more attractively priced, though of course you’d want to assess many more factors.

Q: What’s the difference between a private company and a public one? – C.B., Bozeman, Mont.

A: Public companies have shares of stock available to trade on the open markets. They’re required to file quarterly earnings reports with the Securities and Exchange Commission, detailing revenue, expenses, debt loads, cash levels, taxes, income or losses – and much more. These reports are publicly available.

MORE FROM MOTELY FOOL

Privately held companies are not public – meaning average investors can’t buy shares of them. They also don’t have to reveal much about their operations and financial health. According to Forbes, the 100 biggest private companies in America include Koch Industries, Cargill, Deloitte, PricewaterhouseCoopers, Publix, Mars, H-E-B, Pilot Flying J, Enterprise Holdings (parent of the car-rental company), Bechtel, Cox Enterprises, Fidelity Investments, Bloomberg, SC Johnson, McKinsey & Company, Staples and Amway.

Fool’s School

Prepare for disasters: It’s fine to prepare for unlikely disasters, perhaps by buying earthquake insurance in a low-risk region, or keeping garlic on you in case of vampire attack. But be sure that you’re preparing for more likely disasters, too, such as these:

Having a bad credit score: A bad credit score will doom you to high interest rates when you’re looking to borrow money, such as for a home or car. Start beefing up your score by paying down your debts and paying bills on time.

Losing your job: As the ongoing pandemic has made clear, unexpected job losses happen, and they can put you in financial peril. Make sure you have an emergency fund stocked with at least several months’ worth of critical living expenses, such as food, housing, utilities, taxes, transportation and so on. It’s also good planning to make yourself more hirable by learning new skills or getting new certifications or degrees.

Needing long-term care: Long-term care is an important issue everyone should consider. If you’re wealthy, you can pay for any care you might need; if you’re poor, you probably won’t be able to pay for it at all. But if you’re in between, consider long-term care insurance. Learn more at LongTermCare.gov.

Not being able to retire: This is a big disaster awaiting millions of people who haven’t socked away enough money to retire on. The best way out of this problem is to read up well in advance, make a plan and act on it. Good strategies include working for a few more years, saving as much as possible in IRAs and 401(k)s, cutting back on spending, taking on a side gig or two and perhaps cashing out a life insurance policy if it’s no longer needed. One of your best moves might be to invest long-term dollars in the stock market, perhaps via a low-fee index fund (such as one that tracks the S&P 500).

My smartest investment

Widened Horizons: My smartest investment ever was leaving my hometown and broadening my horizons. – M.I., online

The Fool responds: That’s a terrific investment indeed. There are countless benefits of traveling: By exposing yourself to other regions and countries, you can get a sense of how other people live – which may help you appreciate just how good you have it compared to billions of others. Getting to know people in other places can help you get over any fears of outsiders or foreigners, and enjoying their hospitality can make you feel like a citizen of the world, not just your state or country. You may even end up making some very good friends around the country or the world.

Trying a wide variety of foods from various cuisines can introduce you to flavors and dishes that become lifelong favorites.

Travel abroad can be greatly enhanced if you take the time to learn the language spoken at your destination – and knowing at least one other language can also be an effective career booster, as lots of companies have (or want to have) international operations and may send employees to other countries.

Travel can boost your self-confidence, as you navigate unfamiliar locations and successfully deal with unexpected events (such as missing a train in Japan). Finally, travel can simply be fun and exciting, and it creates memories to look back on for the rest of your life.

Foolish trivia

Name that company: Back in 1833, two men – a miller and a druggist who grew herbs – decided to make and sell drugs and essential oils. Their company ended up a part of me, along with many others. I got my current name after the 1958 merger between Polak & Schwarz and van Ameringen-Haebler. Today, based in New York City and with a market value recently near $13 billion, I’m a worldwide force in scents, tastes and ingredients. In 2019, I raked in $5.1 billion from about 38,000 customers. I’m merging with DuPont’s Nutrition & Biosciences division. Who am I?

Last week’s trivia answer: I trace my roots back to 1904, when a son of Italian immigrants founded the Bank of Italy in San Francisco, which morphed over time to become the world’s largest commercial bank by the 1930s. I’ve gobbled up lots of companies, including credit card giant MBNA, U.S. Trust, FleetBoston Financial (which traced its roots to 1784) and even Merrill Lynch. Today, based in Charlotte, N.C., I sport a market value recently near $262 billion. I serve about 66 million customers via roughly 4,300 retail financial centers, and about 31 million customers bank with me using mobile devices. Who am I? (Answer: Bank of America)

The Motley Fool take

Tech Dividends: Cisco (Nasdaq: CSCO), the world’s largest producer of networking routers and switches, has posted declining revenue for four straight quarters. Its infrastructure business, which generates over half its revenue, struggled with sluggish network upgrades, competition from rivals, the loss of Chinese contracts during the ongoing trade war and pandemic-related disruptions. Its smaller security business continued growing, but couldn’t offset its other weaknesses.

Cisco’s revenue declined 5% in fiscal 2020, but its adjusted earnings grew 4% as it cut costs and repurchased more shares. Analysts expect both its revenue and earnings to dip by about 1% this year. Those growth rates might seem dismal, but Cisco’s core business should heat up again after the pandemic passes. Warmer relations between the U.S. and China under the Biden administration could stabilize Cisco’s Chinese business, and it might pull customers away from Huawei as the Chinese tech giant struggles with trade blacklists and sanctions. A growing need for cloud and data center upgrades should also spark fresh orders for its routers and switches worldwide.

Cisco’s stock isn’t likely to rally anytime soon, but its low forward-looking price-to-earnings (P/E) ratio of 14 and its recent dividend yield of 3.2% should limit its downside risk. It’s raised its dividend every year following its first payment in 2011, and is likely to keep doing so. Consider Cisco for your long-term portfolio.

Copyright 2021 the Motely Fool
Distributed by Andrews McMeel Syndication

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