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Exclusive: More Than 1,600 Californians Evicted During Pandemic

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Jamie Burson sits on the bed of her motel room in Farfield on August 4, 2020. Burson, who has been living between her car and motels since being evicted in April, said she feels unsafe at the motel and planned to move again later later that day. - ANNE WERNIKOFF FOR CALMATTERS

  • Anne Wernikoff for CalMatters
  • Jamie Burson sits on the bed of her motel room in Farfield on August 4, 2020. Burson, who has been living between her car and motels since being evicted in April, said she feels unsafe at the motel and planned to move again later later that day.

Like any parent, Jamie Burson didn’t want her 11-year-old son to discover how frightened she really was about the novel coronavirus. But it’s hard to mask anxiety when you’re living and sleeping together in the same car.

After Burson was evicted from her two bedroom apartment in Vacaville the second week of April, she heeded Gov. Gavin Newsom’s order to shelter in place by cooping up in a two-door sedan near her Walmart job. With school campuses shuttered, her son propped his school-issued laptop on top of the glovebox and attended class in the same passenger seat he slept in.

It helped that he could occasionally spend a night at a relative’s or friend’s house, although Burson hesitated to ask to sleep there herself, partly out of fear of spreading the virus to friends and family.

“I was scared because of how many people were dying on a daily basis,” said Burson, who was evicted for a late February rent payment. “Made me feel like mankind was going to go extinct. I’ve never lived to see any type of disease take people out the way this one has.”

More than 1,600 California households like Burson’s have been evicted since Newsom declared a statewide state of emergency March 4, according to data CalMatters obtained via public record requests from more than 40 California sheriffs’ departments. Nearly a third of those evictions took place after Newsom’s March 19 shelter-in-place order, and more than 400 since Newsom issued a self-described March 27 “eviction moratorium.”

The 1,600 evictions are likely a significant undercount of how many renters have been forced to leave their homes since the pandemic struck, as both court-sanctioned and informal evictions often do not show up on the sheriffs’ lockout lists obtained by CalMatters. Additionally, sheriffs’ departments in 14 counties did not respond to data requests; more than 14 million Californians live in those counties, including Los Angeles County with 10 million residents.

Newsom’s moratorium — which tenant groups criticized as belated and inadequate — focused on delaying eviction cases related to financial hardship from the pandemic until May 31. An April 6 emergency rule passed by the Judicial Council, the governing body for the state court system, went further, halting nearly all eviction court proceedings in California.

But neither Newsom’s executive orders nor the Judicial Council rule addressed a major subset of eviction cases: tenants like Burson who already lost in court, often for missed rent payments in February or March, and were simply waiting on sheriffs’ deputies to lock them out. Federal eviction moratoria also did not stop these evictions.

As state lawmakers scramble to find a solution for a looming “eviction wave” when courts reopen as early as this month, tenant groups and public health experts warn that the loophole in state protections continues to endanger renters who may become homeless or move into unsafe and overcrowded housing.

Just last week, the Los Angeles County Sheriff’s Department resumed serving its backlog of nearly 1,000 scheduled eviction lockouts, even as the county remains on a state watchlist for surging coronavirus cases. When performing eviction lockouts in the past few months, San Bernardino County sheriff’s deputies encountered two separate households where tenants claimed they were quarantining because of COVID-19, according to a sheriff’s spokesperson. Those households were allowed to complete their quarantine before being evicted.

“(These evictions) could have been prevented, and it really is distressing to hear that this many people have been evicted when we have these shelter-in-place orders,” said Madeline Howard, senior staff attorney at the Western Center on Law and Poverty, which has lobbied for tighter eviction protections during the pandemic.

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Jamie Burson sits on the bed of her motel room in Farfield on August 4, 2020. Burson, who has been homeless since being evicted in April, says she spends all of her time in her room with the curtains closed. - ANNE WERNIKOFF FOR CALMATTERS

  • Anne Wernikoff for CalMatters
  • Jamie Burson sits on the bed of her motel room in Farfield on August 4, 2020. Burson, who has been homeless since being evicted in April, says she spends all of her time in her room with the curtains closed.

Unclear authority

Burson now stays in a one-bedroom motel room in Fairfield, paid for by a temporary Solano County homelessness program. She’s unsure where she’ll live once the program ends this week.

Jamie Burson sits on the bed of her motel room in Farfield on August 4, 2020. Burson, who has been living between her car and motels since being evicted in April, says she feels unsafe at the motel and spends all of her time in her room with the curtains closed. Photo by Anne Wernikoff for CalMatters

She was evicted because of a late February rent payment, lost the eviction lawsuit by default when she says she misunderstood how to respond within the legally required five-day window, and was given until early April to vacate the property. She left before she thought law enforcement was scheduled to lock her out.

While she understands that it was technically within her landlord’s right to kick her out, she wonders why the eviction wasn’t postponed.

“Why wasn’t everything set aside, period?” said Burson, who had been living in the Vacaville apartment more than a year.

ROEM Development Corporation, owner of the apartment complex from which Burson was evicted, and FPI Management, the building’s property management company, did not respond to requests for comment.

Upon being informed by CalMatters that Burson was no longer occupying the apartment, Todd Rothbard, the landlord attorney who represented ROEM in the eviction lawsuit, said his firm would consider no longer contesting a legal motion Burson had filed to remove the eviction from her record. Evictions stay on tenant records for seven years, and can make it very difficult for renters to find another place to live.

But although Rothbard sympathizes with some tenants, he pushed back on the notion that Burson should not have been evicted in the first place.

“Life can be hard,” Rothbard said. “To the extent people need help, it’s nice to see when society is able to provide help. But it is somewhat unfair to say to a landlord who is in business ‘Hey, it’s now your obligation to support this person.’ Because it’s not.”

Rothbard also said Newsom and the Judicial Council have already overstepped their constitutional powers by the eviction protections they’ve mandated. Instructing sheriffs to not perform eviction lockouts would likely be challenged in court.

Some constitutional law experts say it’s at best unclear what is and isn’t within Newsom’s power when it comes to “enforcing writs” in eviction cases — legalese for court orders to sheriffs’ departments to perform lockouts. Separation of powers between the court system and the executive branch complicate his authority.

“While a governor possesses broad authority under the Emergency Services Act to respond to the pandemic, directing county sheriffs to disobey or slow-walk lawful court orders is beyond a governor’s emergency powers,” said Stephen Duvernay, a senior research fellow at UC Berkeley’s California Constitution Center.

But pro-tenant attorneys disagree, arguing Newsom has remarkable powers during public emergencies — powers they urged the governor to deploy in early March as the first reports of hospitalizations and deaths mounted.

Navneet Grewal, litigation counsel for Disability Rights California, said that there was nothing legally restraining Newsom from ordering sheriffs to stop performing evictions for cases that pre-dated the pandemic. Newsom had included such a provision in one of his executive orders, although it only applied to cases where tenants could demonstrate financial hardship because of the virus.

“I think part of the unique thing here really is that there is no precedent of the situation that we’re in,” Grewal said. “There’s clearly a lot of broad powers to deal with emergencies; we just haven’t had an emergency like this in our lifetime.”

The Newsom administration declined multiple requests for comment.

Tenant groups also approached Attorney General Xavier Becerra to intervene.

“The reports of ongoing evictions in communities across the state and in the midst of the public health crisis are profoundly troubling,” Becerra’s press office said in an emailed statement. “Our office does not have the authority to direct Sheriffs to refuse to comply with lawful orders issued by Courts hearing eviction cases.”

But pro-tenant lawyers say Becerra is constitutionally empowered to oversee how local law enforcement executes court orders.

“I think the attorney general seems to have some priorities that are focused on dealing with the Trump administration, which are obviously very important,” Howard said. “But some of these very important issues are not getting addressed.”

Sheriff choices

On the morning of March 19, Sgt. Lydia Montoya anxiously awaited an announcement from the governor. She had heard news reports that a shelter-in-place order was coming.

The civil unit she oversees at the Kings County Sheriff’s Department had performed three evictions already that day, which they believed they were legally obligated to carry out. But Montoya and other officers in the department harbored concerns about the potential health risks — to the community and the deputies themselves — of pushing renters onto the street.

When Newsom issued the shelter-in-place order that afternoon, Montoya believed she had the legal justification she needed to stop evicting people. Conferring with a county attorney and the publicly elected sheriff, the department decided to stop performing eviction lockouts except in emergency cases that threatened public health and safety. Six evictions on their calendar have been indefinitely postponed. If the shelter-in-place order had come a day earlier, so would the three performed the morning of the 19th.

“The (shelter-in-place) order implies that it is a public safety issue to have people out and about,” said Montoya, who also supplied her deputies with handmade masks before her department acquired personal protective equipment. “And certainly evicting people, them out and about looking for rentals or whatnot, or making them homeless, is not in line with his shelter-in-place order.”

But not every California sheriff’s department shared Kings County’s interpretation of the governor’s executive order. Without clear guidance from the state, individual sheriffs’ departments were left to choose whether to continue with evictions already on their lockout calendars.

Many did just that. According to data obtained by CalMatters, three counties in the Inland Empire and Central Valley led the pack: San Bernardino, with 135 evictions since shelter-in-place; Riverside, with 93; and Kern County, with 68.

“It was a combination of considerations looking at both sides, obviously with the stay-at-home orders as well as the other side of the actual landlords and the people that own the property and their ability to make rent, pay bills and things like that,” said Adam Plugge, a commander at the Kern County Sheriff’s Office that oversees its eviction unit.

After Kern County sheriff’s deputies paused lockouts in late March, Plugge said his department fielded phone calls and emails from frustrated landlords and attorneys, including those referred his way from local elected officials. The lockouts resumed in April.

Plugge said that an explicit directive from the state would have avoided considerable confusion.

“It would have made decisions a lot easier to decide whether or not something could be done, and I think it would have been clearer for the public as well going forward in any shape, fashion or form,” Plugge said.

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Portrait of Ernie Bull and Mary Wildman in Eureka, Calif. on August 7, 2020. Despite the coronavirus pandemic, Bull and Wildman were evicted from their home in July and have been homeless for over a month. - ALEXANDRA HOOTNICK FOR CALMATTERS

  • Alexandra Hootnick for CalMatters
  • Portrait of Ernie Bull and Mary Wildman in Eureka, Calif. on August 7, 2020. Despite the coronavirus pandemic, Bull and Wildman were evicted from their home in July and have been homeless for over a month.


Evicting without masks

On July 1, deputies from the Humboldt County Sheriff’s Department showed up at 7886 Myrtle Avenue in Eureka to tell Ernie Bull and Mary Wildman the two had to leave.

Bull, 59, had lost a dispute with his step-brother about who should inherit the property he had been living at with his late father and step-mother. Bull said he missed a key court date because he accidentally dialed into the wrong Zoom number for a remote court hearing. Humboldt County Superior Court stopped in-person hearings because of coronavirus.

A group of Wildman’s friends were there to help them with the move. While some of their friends wore masks, Bull and Wildman didn’t — and neither did the sheriff’s deputies who came to evict them.

“If we can socially distance 6 feet away, then we’re not going to wear a mask,” said Lt. Mike Fridley, who oversees the department’s eviction unit.

While he couldn’t speak to the specifics of Bull and Wildman’s eviction, Fridley said that his deputies carry masks with them, and can put them on at their own discretion. Wearing masks makes it difficult for the deputies to use their radios, he said.

Like most sheriffs’ departments, Humboldt County deputies typically perform multiple lockouts on the same day at different addresses. On the day they evicted Bull and Wildman, three other addresses were scheduled for lockouts, according to sheriff’s department documents.

Asked if he believed there was a health risk in performing multiple evictions on the same day, Fridley said “I wouldn’t see any more risk than five people going to the cashier’s line in Costco.”

Dr. Margot Kushel, director at the UCSF Center for Vulnerable Populations, said she knows of no documented case of sheriffs’ deputies spreading coronavirus through eviction lockouts. But she does fear a “nightmare scenario.”

“If you had a situation where there was a group of deputies going into different people’s households in a highly charged atmosphere, where people might be upset and might be yelling, I think you could potentially have risks for both the deputies going in and for the households being evicted,” Kushel said.

Other sheriffs’ departments interviewed for this story say they require deputies to wear protective gear while performing lockouts.

Neither Bull nor Wildman — who has kidney problems — have shown symptoms of the coronavirus since the eviction. Wildman has been staying at a friend’s place, while Bull has slept outside.

“I want to stay away from people. I’m scared,” said Bull. “I gotta admit, I’m scared.”

Landlord costs

Of course, keeping tenants in a unit for multiple months while they can’t pay rent has a cost. For Karen Clark, that cost is $10,000 — and the fear of falling behind on her mortgage.

Clark, who owns and lives in a triplex in walking distance from the University of Southern California, rents one of her units to a single father and his twin teenage daughters. She was charging $2,400 for the unit — a deal she said was well below market value for the three-bed, three-bath home near downtown Los Angeles.

“I just really liked them and I wanted to help them,” said Clark, who preferred the stability of renting to families instead of students.

Her tenant began to fall behind in his rent payments last fall when his catering business began to decline, according to Clark. Then COVID-19 hit this spring — evaporating most of what remained of her tenant’s income and, along with it, the rent.

Clark said she had seriously considered evicting the tenant in March, but never filed the necessary paperwork with a court. Now those courts are closed to new eviction cases, and Clark said she has been digging into her savings to pay for utilities and other costs. She has explored forbearance options on her mortgage, but was scared of the prospect of a lump-sum payment due at the end of the forbearance period.

“I don’t know what to do,” said Clark, who has kept her job working at City National Bank during the pandemic. “I’ve got to get my cash back. I went through some of my savings, now I’m robbing other bills. It’s just not gonna give forever.”

Clark helps financially support her son and grandchild in Oregon, and rents her other unit to her daughter and son-in-law. When courts resume eviction proceedings, she plans on filing.

Stopgap measures

While sheriffs’ departments across the state continue evictions for cases that pre-date the pandemic, Newsom and state lawmakers are scrambling to head off what experts say is a looming “eviction wave” of tenants who have lost their income because of COVID-19.

A U.C. Berkeley analysis found that as of June, nearly 1 million renter heads of households in California lost their job because of COVID-19.

Two proposals to compensate landlords and prevent more evictions are making their way through the Legislature, but both face daunting questions about how they’ll actually work.

California State Supreme Court Chief Justice Tani Cantil-Sakauye, who chairs the state Judicial Council, said the state court system could resume eviction proceedings as early as Aug. 14th. If tenants contest them, proceedings can take weeks. Because supplemental federal unemployment benefits of $600 per week expired last month, tenants groups fear swelling ranks of renters unable to afford a roof over their heads.

Unless the state intervenes or a new round of federal support is extended, 24-year old Gabriella Aldana is one of those at-risk renters, and could be evicted for the second time since the virus hit California.

click to enlarge
Gabriella Aldana, 24, rests on the front porch of the house she rents in Riverside on August 7, 2020. Aldana has been moving houses since she and her two children were evicted from an apartment on March 26 and expects to be evicted from her current house if the federal unemployment boost isn’t approved and distributed before September 1. - NIGEL DUARA FOR CALMATTERS

  • Nigel Duara for CalMatters
  • Gabriella Aldana, 24, rests on the front porch of the house she rents in Riverside on August 7, 2020. Aldana has been moving houses since she and her two children were evicted from an apartment on March 26 and expects to be evicted from her current house if the federal unemployment boost isn’t approved and distributed before September 1.

Just before 10 a.m. on March 26, three Riverside County Sheriff’s deputies banged on Aldana’s front door. None of the deputies wore a mask, she said, and they told her she had to leave the premises with her two children, ages 6 and 3. The family was permitted to take only what they could carry.

Aldana, then two months pregnant, and her two children piled what they could into her 2013 Honda Accord and drove off into a pandemic at a time when public health officials didn’t know much about the virus.

She left her job at Walmart, she said, over fears of infecting her daughters or complicating her own pregnancy. The night of her eviction, she stayed in a hotel, then moved in for a few days with her parents. She eventually found a studio apartment for the April for $1170. After that, they moved into a two-bedroom duplex in downtown Riverside. The new place is beyond their current means, but also the only place that would accept Aldana, who said she has bad credit.

She has survived on unemployment benefits and, especially, the $600 weekly federal unemployment boost.

If the federal unemployment boost isn’t renewed by late August, Aldana and her children will likely once more be evicted. Even if she gets one of the jobs she’s interviewed for recently, her monthly take-home pay after taxes would be about $1,600. Her rent is $1,595.

“I have some savings to cover some of (rent) next month, I might look for a roommate if the job doesn’t come through and the (federal unemployment benefits) goes away,” Aldana said. “I have to start looking for all of that because now it’s just me.”

Ben Christopher contributed to this article.

This article is part of The California Divide, a collaboration among newsrooms examining income inequity and economic survival in California.

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Is The No Credit Check Loan The Best Option For You? | Branded Voices

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If you need extra cash and have considered applying for a loan even with a bad credit score, you might have already heard about the no credit check loan.

Image by Bermix Studio 

Many people opt for a no credit check loan as their last resort. Like any other loan options, a no credit check loan has its pros and cons. Knowing if this is the best option for you allows you to go consider both its advantages and disadvantages. 

But is it your best option? Is there another way to acquire cash without looking into your credit record?

The Advantages

Here are the other advantages of a no-credit loan:

No Credit Checks

You are considering this loan option because the lender will not bother to check your credit report. It doesn’t matter whether you have a good or a bad credit score as long as you are eligible and can comply with their requirements. 

This benefit is one reason why this loan option attracts many borrowers, especially those who don’t have an impressive credit score and those who are still building their credit records.

Other loan options will require you to provide a good reason why you are acquiring the loan. 

For example, lenders will ask you how you will use the loaned money aside from knowing your capability to repay the money you owe.  But with the no credit check loan, lenders will ask you this kind of question during your application. 

The Disadvantages 

Just like any other options available out there for you, a no credit check loan also has its disadvantages. These things may be huge factors for some consumers, while to others, they’re just minor inconveniences you need to deal with. 

Higher Interest Rates

One of the most common and obvious disadvantages of a no credit check loan is its higher interest rate. Since the lenders will not bother looking at your credit history and rating, they will impose a higher interest rate on your loan. 

The higher interest rates imposed are due to risks they take in lending you their money without even knowing if you can pay it back. This is a common rule for all lenders who offer a no credit check loan. 

Required a Minimum Loan Amount 

If you only need a small amount, a no credit check loan may not be the best option for you. Lenders require a minimum loan amount when you apply for a no credit check loan. Most personal loans with no credit check will require you to loan a higher amount than other loan options such as payday loans and single-payment loans. 

May Require A Collateral

Lenders may require you to have collateral as an assurance for the money you are borrowing from them. It is also to secure their part if ever you cannot pay back the cash you borrowed from them. If you default on your loan, the lender will forfeit the collateral. Collateral can be in the form of any valuable assets such as a house, vehicles, and jewelry.

Quick Process 

Another positive thing when acquiring a personal loan with no credit check is the speedy process. You can get the money in just a few minutes or hours as long as you comply with all of their requirements and are eligible for the loan.

Reminders Before Applying for This Loan 

There are things that you should watch out for when opting for this loan type, especially if you do it online, such as:

  • Watch Out For Fake Lenders

This is the risk associated with a no credit check loan. Some criminals use this to lure their victims for phishing and identity theft. Make sure that you choose a legitimate lender and never give out personal information prematurely. It is best to ask someone you trust for a recommendation or for help with securing a loan from a trusted lender.

  • Prepare The Requirements Ahead Of Time 

It is best to prepare all the requirements before applying for the loan to help you acquire the money quickly. Check your chosen lender’s website or print ads for a list of requirements they will need. 

Even though this loan option does not require a credit check, it does not mean you are guaranteed approval. If the lender finds out that you are not eligible for a loan, your application will be denied. 

Takeaway

Asking yourself if a specific loan option is good for you is one of the proper ways to assess if you should apply for it or not. This practice should be observed in applying for no credit check loans and other loan types available. Remember, not all loans are suitable for you. One loan may work better for others but may not work the same for you. Hence, be prudent and choose the loan option that suits best with your financial needs.

Since you’re here…

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Learn to avoid these credit card habits before you regret making costly mistakes

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Picture used for illustrative purposes only. Many still decide to confront bad credit card habits only after they are thousands of dirhams in debt.
Image Credit: Reuters

Dubai: Many still decide to confront bad credit card habits only after they are thousands of dirhams in debt. Here we discuss some lessons many regretted not learning before making mistakes that proved costly.

Although credit cards offer convenience, security, and rewards, overspending with a credit card and the interest and fees can bury you financially. So it’s important to know whether you possess such habits in the first place.

Four questions to ask yourself first

If you don’t know whether you have a bad credit card habit here are four questions to ask yourself to find out. If the answer to any of the below is yes, you are inching towards a credit card debtpile.

1. Do you pay only interest fees or minimum payments when you send in your credit card payment?

2. Have you ever paid your credit card late because you didn’t have the money for the payment?

3. Do you use your credit card when you don’t have enough cash?

4. When your issuer raises your credit limit, do you spend more because you can?

Bad credit card habits

While common mistakes include habitually paying your credit card late and taking out costly cash advances on your credit card, here are some uncommon-yet-dire mistakes that may slip under any user’s radar.

Habit #1: Missing out unauthorised or fraudulent charges

Keep in mind that one of the main benefits to reading your credit card statement is, it is one of the best ways to catch unauthorised charges and billing errors.

Don’t check your credit card statement for your balance and payment information, review the entire statement to verify your account activity.

By routinely checking your online or physical statement, you can also find out well before hand if your credit limit was lowered since you last checked – as it can change because of your credit habits or your credit history.

Habit #2: Paying only the minimum can cost you dearly

It is evidently easier to make the minimum payment and this is a habit credit card companies profit from as well.

Although paying just the minimum is more convenient than to figure how much extra you can pay towards your outstanding credit card bill, keep in mind that when you’re making only the minimum payment, you’re not making much progress toward paying off your credit card bill.

Moreover, unless you have a very low balance or a zero per cent interest promotion, you’re probably paying much more in finance charges than you have to.

Habit #3: Using your credit card more than your debit card

While it’s recommended you use your credit card to amass cashback rewards or points and also pay off your credit card balance every month, you shouldn’t opt to use your credit card over your debit card, if those aren’t the reasons why you would go about using them.

Your debit card is your direct access to the funds you should use for everyday purchases, like groceries, gas, clothing, and other expenses. If you use your credit card, it should be a decision with a plan for paying off what you’re charging on the card.

Habit #4: If you are transferring balances just to avoid payments

Although promotions like balance transfers are a widely recommended strategy to pay off a high-interest rate balance on your credit card, matter experts reveal that if you’re in the habit of pursuing such promotions to avoid paying payments on your credit card, this leads to amassing long-term debts.

Financial planners reiterate that many don’t realise that balance transfers typically have fees that will increase your overall balance if you’re never making payments toward the transfer. Moreover, if you’re making purchases on the card with such a promotion, the problem gets bigger.

Expert tips to take control of these credit card habits

Lesson #1: Pay your credit card in full each month

The best way to keep your credit utilisation ratio low and avoid costly interest charges is to pay your credit card balance in full each month – which also means you also don’t incur any large due.

It’s effective to control spending by not spending more than you can comfortably pay down each month, as this helps you reduce the likelihood of developing long-running credit card debt.

If you want to take in one step further, setting a monthly spending limit that’s well within your budget increases the chances that you’ll actually be able to zero out your monthly balance and avoid interest charges.

Lesson #2: Keep your credit utilisation ratio low

What it means by ‘credit utilisation ratio’ is essentially the link between your credit card balances and your aggregate spending limit. For example, a Dh2,000 balance on a credit card with a Dh5,000 credit limit equates to a 40 per cent credit utilisation ratio.

As a rule of thumb, your credit utilisation ratio shouldn’t exceed 40 per cent, and keep in mind that high ratios may adversely impact your credit score.

Financial advisors recommend aiming for a 30 per cent credit utilisation ratio, as that gives you some leeway to cover urgent one-off expenses, which can come unexpectedly as a result of maybe losing your job during the ongoing pandemic.

Lesson #3: Setting up customised spending alerts

If controlling your credit card spending is burdening you, it has been widely advised to set up customised spending alerts.

This will let you know when you’ve made an abnormally large payment or exceed a certain balance threshold and you also can pair these data alerts with security alerts to help flag any sham spending patterns.

Lesson #4: Using credit card rewards and points to your advantage

If you have a rewards credit card, you can use it to your advantage. If you have a pure cash back credit card, use any cash rewards you receive to put toward your account balance or directly deposit it into your savings account.

Alternatively, if you have a rewards points credit card, you can use your rewards to buy discounted gift cards to the stores you know, which will help save on future purchases without having to use your credit card.

If not, you could always redeem your reward points for cash redemption to put into savings or towards your account. However, ensure you know when your rewards expire to get the most out of them financially.

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When Can I Get an Auto Loan After a Repo?

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There’s nothing saying you can’t apply for an auto loan immediately after a repo, but the tough part is actually being able to qualify for the loan. Since many auto lenders don’t approve borrowers with a repo that’s less than a year old, you may have to consider in-house financing.

Repossessions and Your Next Car Loan

Unfortunately, most traditional auto lenders don’t work with borrowers that have a recent repo on their credit reports. When we say traditional, we’re referring to lending institutions such as banks, credit unions, online lenders, and the captive lenders of some automakers. These lenders often require a good credit score and clean credit reports.

Where does that leave you? Well, likely in-house financing is the next logical step if you need a car loan after a repossession.

More on In-House Financing

Buy here pay here (BHPH) dealerships use in-house financing. This way of auto financing involves working with the dealer who’s also your lender. There’s no need to find a third-party lender or preapproval – the dealer takes care of all that. This setup can be convenient, and often, borrowers are able to walk away with a vehicle the same day they first set foot on the lot.

Since these dealers may not check your credit reports to determine your eligibility for auto financing, your recent repossession generally isn’t an issue. If you can meet income requirements, prove you have stable work, secure auto insurance, and prove your identity, you might get into a vehicle after a repo with in-house financing.

Here are a few more details on in-house financing:

  • Used cars only – BHPH dealers only offer used vehicles. However, used cars are a good option for bad credit borrowers. They’re almost always less expensive than a brand-new car, and affordable is a good price when you need to get back on your feet after a repo.
  • Anticipate a higher interest rate – Without a credit check, lenders are taking a risk approving a car loan without knowing much about your credit history. To make up for this, they tend to assign higher interest rates. A high interest rate may be considered a good trade-off for an auto loan with bad credit in many cases, especially if you heavily rely on a vehicle to get by.
  • Credit repair may not be an option – If you get an auto loan with a lender that doesn’t check your credit, it’s a possibility that your on-time payments aren’t going to be reported to the credit bureaus. If you want to repair your credit with a car loan, ask the lender about their credit reporting practices before you sign on the dotted line.
  • Down payments are required – Few things are certain in the auto lending world, but one thing you can count on is needing a down payment if your credit is less than perfect. BHPH dealers often require a down payment of up to 20% of the vehicle’s selling price.
  • Prepare your documents – While a BHPH dealer may not check your credit, they’re likely to ask about your income and possibly your work history. You need proof of income to qualify for a car loan, no matter what lender you work with, so prepare at least a month of computer-generated check stubs. If you don’t have W-2 income, have copies of your last two to three years of tax returns.

Looking Forward After a Repo

When Can I Get a Car After a Repo?After one year, your auto loan options open up a little bit more and you’re more likely to qualify for a subprime car loan. Subprime lenders are equipped to assist bad credit borrowers. These lenders offer you a chance for credit repair because they report their loans and work with poor credit borrowers.

If you need a vehicle quickly, a BHPH dealership could be your first step in getting back on the road. Once some time has passed, and your repossession loses some impact on your credit reports, you can try for an auto loan that has the potential to repair your credit.

Here at Auto Credit Express, we know a thing or two about bad credit auto loans, and we have a nationwide network of dealerships that assist bad credit borrowers. We aim to match consumers to dealers in their local area that help with credit challenges. If you’re in need of auto financing, start right now by filling out our free auto loan request form. We’ll look for a dealer in your local area at no cost and with no obligation.

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