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Credit Repair for Better Interest Rates

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When you’re dealing with bad credit, getting the lowest interest rate you possibly can is key to keeping your car loan affordable. The latest State of the Automotive Finance Market Report, by Experian, shows that interest rates are climbing.

One way to combat rising interest rates is to improve your credit, and we can show you how.

Auto Loan Interest Rates Climbing

In the first quarter of 2021, interest rates were still declining year-over-year, but that trend seems to have turned the corner. In Q2, interest rates climbed nearly half a percent for borrowers with near prime credit, while subprime borrowers saw nearly an entire percentage point raise, increasing the average interest for this tier to 11.03%. Deep subprime borrowers saw interest rates increase just over half a percent, bringing them to 14.59% on average.

Credit Repair for a Better Interest RateExperian Numbers Show Fewer Subprime Loans Made

According to Experian’s State of the Automotive Finance Market for Q2 2021, subprime loans are down to near record lows, only accounting for around 17.18% of the total financing that happened in the last quarter.

This number is the combined total financing that went to borrowers in both the subprime and deep subprime categories. Loans for consumers with near prime credit account for 17.95% of all new loans last quarter.

Credit Repair Tips to Combat Rising Rates

Since loans to borrowers with less than perfect credit are getting harder to come by, improving your credit as much as possible is a great way to help you qualify for the financing you need. And, if you improve your credit score enough, you may be able to qualify for better interest rates than you have on past auto loans.

Here are four quick tips to improving your credit so you can qualify for the lowest interest you can:

  1. Pay all your bills on time, and in full. Payment history makes up the biggest slice of your credit score, so if you can do this, you could begin to see improvement sooner.
  2. Don’t overspend. If you have credit cards that typically carry a balance, make sure that you keep it to a minimum. Your credit starts to dip once your credit utilization ratio reaches 30%. A good rule of thumb is to only put on plastic what you can afford in cash. This way, you’re sure to have enough money to pay your monthly credit card statement in full, instead of paying the minimum due and accruing more interest charges.
  3. Become an authorized user on someone’s credit card. When you do you get the benefit of their good credit score. Remember that shared accounts go both ways in terms of credit score. So if either party starts to slip, both your credit scores drop.
  4. Make sure you’re getting credit for the bills you pay. Some payments you make automatically, such as streaming services, utilities, and even rent, can help boost your credit score if they’re reported to the credit bureaus.

Do You Know Where You Stand?

Knowing where your credit score lies is an important step in getting the car loan you need, and knowing what to prepare for. There are many ways you can get your credit reports and scores for free, usually including your bank or credit union, your credit card company, or an online credit monitoring service.

Right now through April of 2022, you can take advantage of a free service offered by Experian, Equifax, and TransUnion. They’re partnering with the federal government at www.annualcreditreport.com to bring you your credit reports weekly, for free. You’re normally entitled to one free credit report a year from each of the three national credit bureaus, but this was increased due to the need for Americans to monitor their credit in light of the pandemic.

Once you know what’s on your credit reports and where your credit score stands you can see the areas you need to work on to raise your credit. Experian groups consumers into five credit score tiers: super prime, 781-850; prime, 661-780; near prime, 601-660; subprime, 501-600; and deep subprime, 300-500.

Ready for Your Next Car Loan?

If you’re ready to find your next vehicle loan, the good news is that auto loans are a great way to improve your credit, too. Subprime lenders work with borrowers who have less than perfect credit. You may not get the lowest possible interest rate, but you can take steps to make sure you get your lowest interest rate by following our tips, and by working with the right lender.

Here at Auto Credit Express, we want to help with that, too. We know how stressful the car-buying process can be, so we want to help you cut down your search for a dealership that works with special financing. Let us point you in the right direction by connecting you to a dealer that’s signed up with the lenders that can work with you.

It’s fast, free, and there’s never any obligation. Simply fill out our auto loan request form, and we’ll get to work matching you with a dealership.

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Are Sallie Mae Student Loans Federal or Private?

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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

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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

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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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