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After Bankruptcy: A Clean Slate for an Auto Loan



After you’ve been discharged from bankruptcy, your finances are likely in a better place than they were before – your credit score is another story. With a low credit score, you may think you’re out of luck when it comes to auto financing, but there are car loans for borrowers who have recently completed a bankruptcy. If you’re ready to take on your next auto loan, read on!

The Bankruptcy Aftermath

Post-Bankruptcy: A Clean Slate for Auto FinancingDepending on how you filed for bankruptcy, your credit reports could be reflecting it for either seven or 10 years.

If you filed for Chapter 13, odds are you already have a few years of that bankruptcy being reported on your credit reports, since it starts being reported the day that you file. A Chapter 13 bankruptcy filing lasts for either three or five years, which means once you’re discharged, the bankruptcy is only going to be reported for another four years, maximum.

Chapter 7 bankruptcy, however, could be on your reports for up to 10 years. While the process of a Chapter 7 bankruptcy is very quick (typically only a few months), the lasting effect on your credit reports could impact new credit consideration for nearly a decade.

Just because you filed for bankruptcy and it hurt your credit score doesn’t mean that you won’t be able to get a car loan. It can be a red flag for some lenders, but you’ve still got options!

Light at the End of the Bankruptcy Tunnel

If you just got out of bankruptcy, your credit is probably a little worse for wear. On the plus side, completing a bankruptcy takes work, and it also shows that you’re willing to put some things on hold to get your finances back in order.

Being discharged from bankruptcy usually means that you have a clean slate ahead of you, making auto lenders more likely to consider you for financing than if your debt was overwhelming, which is good news even though your credit score has taken some damage.

There are bankruptcy car lenders that specifically work with borrowers in these situations, called subprime lenders.

Subprime Auto Loans for Bankruptcy Borrowers

Subprime simply means “bad credit” in credit-speak. Many traditional lenders may not consider you for financing with a bankruptcy showing on your credit reports, but subprime lenders look at many aspects of your financial health alongside your credit reports.

With that in mind, you can usually get into a subprime auto loan rather quickly after your bankruptcy has been discharged, even if the discharge hasn’t appeared on your credit reports quite yet. If you have your discharge papers handy, you can apply for a car loan soon after your Chapter 7 or Chapter 13 bankruptcy is completed.

Once you receive a copy of your discharge documents or the discharge is reported on your credit reports, you can start looking for a dealership that’s signed up with subprime lenders. These are called special finance dealers. You’re going to have to meet the lender’s requirements, which could vary depending on your lender. However, most tend to carry similar requirements.

Here are some common stipulations by subprime auto lenders:

  • Income – Have a minimum monthly income of around $1,500 to $2,500, pre-tax, proven with recent computer-generated check stubs that show year-to-date income.
  • Work history – Held the same job for around six months to a year, without large gaps between jobs for around three years.
  • Living stability – Lived in the same area for at least one year, proven with a recent utility bill in your name or recent bank statement.
  • Down payment – At least $1,000 or 10% of the vehicle’s selling price; a trade-in with equity can also help meet this requirement.
  • Working phone – Must have a working cell phone or landline in your name, no prepaid phones.
  • List of references – A prepared list of around five to eight personal references with complete contact information (name, address, phone, etc.).
  • Driver’s license – Must be valid and has your current address; it can’t be revoked, expired, or suspended.

Once you have these items gathered, you’re halfway to being considered for a car loan by a subprime lender! Sometimes, knowing where to start is the hardest part of preparing for an auto loan, especially if your credit isn’t the greatest.

After you have all your information verified by the special finance manager and the subprime lender, you’re told what car payment you qualify for. From there, you choose a vehicle that fits the monthly payment.

One of the biggest advantages of getting a subprime auto loan after bankruptcy is that these loans are reported to the credit bureaus, which means a chance for credit repair. If you file for bankruptcy, it often wreaks havoc on your credit reports, but with on-time payments on your car loan, you can work to rebuild your credit score to its previous glory – or gain the illustrious credit score you’ve always wanted.

Finding a Subprime Auto Loan

Getting into a subprime auto loan means finding a dealership that’s in contact with subprime lenders, and it can be hard to tell which ones are signed up with them. That’s where we at Auto Credit Express want to help!

We have a nationwide network of dealers that are equipped to work with bankruptcy borrowers, and we can look for a dealership in your area at no cost, with no obligation. To get started, fill out our car loan request form and we’ll get to work finding a local dealer with the lending options you need.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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