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How Long Does a Voluntary Repo Stay on My Credit Reports?

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A voluntary repossession can remain on your credit reports for up to seven years, which is also the same amount of time an “involuntary” repo remains. However, a voluntary repo can still have benefits long-term and could mean less headache for you in the future.

Impact of Repossession on Your Credit

Repossession, voluntary or not, sticks around for up to seven years, and it can drastically lower your credit score. The exact loss of points is dependent on your current credit history and score, but you could lose around 100 points or more after a repo is reported.

One of the harshest side effects of having a recent repossession on your credit reports is that most subprime and traditional auto lenders typically don’t approve you for financing for up to 12 months after it’s reported. After a year has passed, your lending opportunities start to open back up again, provided you haven’t had any other major delinquencies reported.

The good news is all things on your credit reports lose some of their potency over time. With each passing year, that repossession has less impact on your overall credit score.

But, if a voluntary repo sticks around for the same amount of time as a traditional repossession, why not just wait for the repo man and keep the car as long as possible?

Benefits of a Voluntary Repossession

How Long Does a Voluntary Repossession Stay on My Credit Reports?There are four main benefits to surrendering your car compared to waiting for the recovery company to tow it away:

  1. Control – A voluntary repossession gives you control. You can notify your lender that you’re voluntarily returning the vehicle to the dealership, remove your repossessions, and plan your next steps on your own time.
  2. Convenience – If you wait for the recovery company to pick up your car, they could come pretty much anytime or anywhere: your workplace, your home, or even while you’re out shopping. If the recovery company picks up your vehicle with your personal belongings in it, you must find a time to go to where the vehicle is being stored and recover your possessions, since they aren’t obligated to send them to you.
  3. Save money – Another benefit to surrendering your car yourself is that you don’t have to pay the lender the recovery company fees. When a lender hires a repo company, you’re responsible for paying the bill. If you skip this step, it’s one less fee to worry about.
  4. Looks better – When it comes to your future credit opportunities, a voluntary repossession can look better to future auto lenders than a traditional one. It could be viewed as accepting the fact that you could no longer keep the car, and instead of waiting for a repo company to come, you took control over the situation instead of dragging out the process.

What Are My Auto Loan Options After Repossession?

As we mentioned earlier, most auto lenders don’t consider borrowers financing if they have a repossession that’s less than a year old. However, there are dealerships that may be willing to work with you.

Buy here pay here (BHPH) dealership may skip the credit check, meaning your recent repo wouldn’t impact your eligibility for a car loan. Often, the biggest factors in a BHPH dealer’s eyes are your income, identity, and down payment size.

BHPH dealers use in-house financing, so they handle all car buying and financing themselves. In terms of vehicle options, used cars are what you’re limited to.

You may be wondering what the “catch” is with a dealer that doesn’t check your credit – and you’d be right to wonder it. Auto lenders check credit scores to see your borrowing history and use it to assign your interest rates on loans.

BHPH dealers that skip the credit check typically assign higher than average interest rates to make up for the fact that they don’t examine your credit history or score. You may also have to plan for a 20% down payment at a BHPH dealership, which is another way to make up for the lack of a credit check.

While BHPH dealerships can have some downsides, if you can’t afford to purchase a vehicle with cash, these dealers could be your answer to a car while you wait for the repossession to loosen its grip on your credit score.

Before You Surrender…

If you’re on the fringe of voluntarily surrendering your car, we recommend calling your auto lender. Believe it or not, lenders typically want to avoid repossession as well. Some lenders offer deferment programs or opportunities to cure the car loan. Contact your lender before you return your car to see if there is another path, and the sooner you act, the better your chances are for getting a favorable outcome.

If your lender can’t help, and you don’t want the vehicle anymore, it may be time to trade it in for something else. And if you’re worried about poor credit getting in the way of your auto loan opportunities, then work with us at Auto Credit Express. We’ve cultivated a nationwide network of special finance dealerships that assist borrowers in many tough credit situations, and we want to help you, too.

Fill out our free auto loan request form, and we’ll look for a local dealer that’s equipped to handle bad credit. There’s never a fee or obligation, so get started right away.

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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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