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Saying “No” to Long Auto Loan Terms When You Have Bad Credit

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A bad credit score typically means a higher auto loan interest rate, which is exactly why you should opt for the shortest loan term you can afford!

The Cost of Long Loan Terms

Saying “No” to Long Auto Loan Terms When You Have Bad CreditUnless you qualify for a 0% interest rate new car deal, you’re going to be paying interest charges during your loan term. The higher your interest rate and the longer the loan, the more you’re going to be paying in interest charges.

Auto loans are almost always simple interest loans, meaning you’re charged interest on the remaining balance of the loan. The faster you pay off the vehicle, the less you’re charged in interest. This is why it’s in every borrower’s best “interest” to choose the shortest loan term they can afford.

People with bad credit or no credit typically qualify for higher interest rates. If you get a high interest rate, it may mean that your credit history isn’t the best. Having no credit isn’t a bad thing, necessarily, but it can make you a higher risk as a borrower. If you’re a bad credit borrower with a rocky credit history, it means you’re likely to need a subprime lender to get financed, and you’re going to need to work at repairing your credit history.

Car loans can be a great way to build or rebuild your credit if you stay current on the payments. Plus, having a stronger credit history can help you qualify for lower interest rates in the future. Right now, though, there are ways to help offset the higher interest charges you’re likely to face.

Length of Your Loan Term

It may be tempting to go with the longest loan term possible, and we don’t blame you. The longer the loan term, the smaller the monthly payment. It’s easy to choose this option because it frees up more income each month. But you may not see the negative impact of a long loan term at first glance.

To help illustrate the effects of a long loan term, let’s use this example:

  • Auto loan amount: $10,000
  • Interest rate: 12%
  • Loan term: 84 months

With this loan, you’d end up paying $4,829 in interest, and a total of $14,829 for the car, although you only financed for $10,000. The interest charges in this example equal nearly half of the amount you originally financed.

Now, let’s shorten that loan term:

  • Auto loan amount: $10,000
  • Interest rate: 12%
  • Loan term: 60 months

With a loan term of 60 months, you’d end up paying $3,346 in interest, and a total of $13,346 for the vehicle. Just by shortening the loan term, you’d be saving $1,483 – about six car payments!

While the longer loan term means paying $46 less each month for your vehicle, it costs you well over a thousand dollars over the course of the loan. When you’re financing anything, you have to think long term – and stretching your loan to the max can mean spending extra cash over the life of the loan.

Down Payments and Interest Charges

If you don’t want to extend your loan term but you’re looking to lower your monthly payment, a down payment can mean big savings in interest charges and car payments. Also, a trade-in with equity is a great way to lower the amount you’re financing and can help you meet the down payment requirement of bad credit auto lenders.

Using that same example as above, now let’s add a down payment:

  • Auto loan amount: $10,000
  • Interest rate: 12%
  • Loan term: 60 months
  • Down payment/trade-in equity: $2,000

With cash down, the loan amount drops to $8,000, your monthly car payment would be $178, and the total interest you’d pay is $2,678. Combine a down payment and a more favorable loan term, and you’re looking at a lot of savings!

Bad Credit Car Loans

While having bad credit means you’re likely to only qualify for a higher interest rate, this doesn’t mean you have to settle for an enormous car payment or pay thousands extra in interest charges.

Stretching the length of your loan term is very tempting – but it costs you more. Additionally, the longer the loan term, the more vehicle payments you have to worry about. The quicker you pay off the car, the less you spend upside down on the loan, and the sooner you’re going to have one less bill to pay each month.

If you’re a bad credit borrower and you’re looking for your next auto loan, we want to help with that. Here at Auto Credit Express, we know the ins and outs of car financing because we have a nationwide network of dealerships that work with borrowers in many types of credit situations. Start here with us and complete our free auto loan request form, and we’ll look for a dealer in your area with bad credit lending options.

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Bad Credit

ASK THE MONEY LADY: What you need to know about protecting your credit score | Regional-Lifestyles | Lifestyles

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Dear Greg,

Most people never want to share their social insurance number for fear of a hit to their credit bureau, but unfortunately, you may find it a necessity when asked by your lender, who now needs to ensure identity due to increased consumer fraud.

If you apply for credit at a bank, open a bank account or finance a vehicle, chances are you will need to disclose your social insurance number (SIN).

Many people still believe that they should never agree to an inquiry or give out their SIN number too many times to obtain credit. They think their credit will either become damaged or their credit bureau rating and score will go down. This is sometimes not true – so to help you out, Greg, I’m going to dispel all the myths and also let you know what the banks are looking for.

There are two major credit bureau companies that all financial institutions and merchants use today. They are Equifax and TransCanada Union – agencies that rank and provide an overall score to each person who uses credit.

The system for measuring hits to your credit score is indeed intuitive, meaning it measures and evaluates the type of merchant and inquiry. So, it knows if you are shopping around. If you have several inquiries from different banks because you are rate shopping for a mortgage, you will usually not see any decline in your score, (however, these inquiries must be contained within a 30-day period).

It’s the same thing when you are shopping for a vehicle – multiple hits to your credit bureau from car dealers will not alter the score if contained within 30 days.

But, on the other hand, if you are truly shopping and going to different stores, applying for multiple credit cards, personal and retail loans, or buying items on deferred payment plans, then yes, this will drop your score regardless of the 30-day limit.

Protect your credit

First and foremost, you want to protect your credit. This is the foundation of all lending and is the only way for lenders to judge your creditworthiness for the future. If you always pay your bills on time and have never declared bankruptcy, chances are you will have good credit.

But if you are the opposite, and your credit score is too low, you may find it very difficult to get future credit. Your credit bureau score can range from 300 to 900.

As a general guideline, banks and A-Lenders are looking for clients with scores above 680 and will generally automatically decline applications with scores under 600. Credit card companies are a little more lenient and will go down as low as 530, with auto declines for scores under 500.

Here are some tips to improve your credit and maintain a good rating:

1. Pay your bills two to three days before they are due. Paying them on the due date (especially through online banking) will make you one to two days late. This is recorded on your credit bureau and will definitely lower your score without you knowing it.

2. Do not carry balances on credit cards or personal loans month over month. This means your credit is revolving and will automatically drop your score.

3. Resist the urge to have a lot of open credit cards, even if they have zero balances.

4. You must have some credit. If you had previous bad credit and now are just using cash, you are essentially handcuffing your future. Without re-establishing good credit, the banks will decline you every time.

5. Property taxes and support payments in arrears can also drop your score once they are reported.

6. Mortgage and vehicle payments in arrears once reported (which usually happens after 60 days), are a major hit to your score. Please try to avoid this.

I have heard in the past that some merchants or banks do soft hits to your credit. Please do not get fooled by this. There is no such thing as a “soft hit” or a “hard hit” to your credit bureau. If they have your verbal consent, (even if they don’t have your SIN number) when they adjudicate a consumer credit request, they will hit your credit and it will adjust your score.

Good luck and best wishes,

Christine Ibbotson


Written by Christine Ibbotson, author of four finance books, including the Canadian best-selling book, “How to Retire Debt-Free & Wealthy.” Go to www.askthemoneylady.ca or send a question to i[email protected]

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Bad Credit Credit Cards – Bad Credit Credit Cards – ‘My refund has been sent to a credit card that I cancelled’ – your rights to lost money | Fintech Zoom | Fintech Zoom

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Bad Credit Credit Cards – Bad Credit Credit Cards – ‘My refund has been sent to a credit card that I cancelled’ – your rights to lost money | Fintech Zoom

Bad Credit Credit Cards – ‘My refund has been sent to a credit card that I cancelled’ – your rights to lost money

Thanks to Covid, traders have been processing significant numbers of refunds due to events, such as holidays and weddings, being cancelled.

In many cases, these refunds have been sent back to the credit cards used to pay for the purchase – but this has caused a new problem to emerge in relation to card purchases.

When a trader provides a refund, it usually goes back via the same method as the original payment. So if you pay by credit card, the refund is sent back to that card.

However, many people have cancelled credit cards during the pandemic and have therefore found they cannot access the cash.

So what happens to your refund?

Will I get my money back?



If you’ve cancelled the card, the money will be sent to a holding account

The good news is that your refund is safe, as the money will simply be put into a holding ­account by the card provider.

The bad news is that it can take a long time to retrieve the money.

My advice, if you’re waiting for a refund for goods or services you paid for with a card you have now cancelled, tell the trader immediately and ask for the refund to be paid via an alternative method.

Get the latest money advice, news and help straight to your inbox – sign up at mirror.co.uk/email

Positive balance credit card accounts

When a refund is processed back to a card, it can create a positive balance on your account – usually when you have already paid the most recent card bill.

This potentially presents issues as credit cards are not designed to ‘hold’ money in the same way as a current or savings account.

For this reason, consumers are not encouraged to hold positive balances on a credit card.

If your card has a positive balance and you are likely to use it again soon, your next purchases will rectify the situation.

But if you are not planning to use your credit card again in the short-term, ask the card company to transfer the surplus to your ­current account. Do not withdraw the money via an ATM as this may attract fees.

Credit card cash withdrawals

Financial experts warn that you should not get money out from a credit card as it can have a major impact on your credit rating.

This is because there is a very high interest rate attached to withdrawals and companies will flag any withdrawals up, impacting a customer’s credit file.

Bad Credit Credit Cards – ‘My refund has been sent to a credit card that I cancelled’ – your rights to lost money

Bad Credit Credit Cards – Bad Credit Credit Cards – ‘My refund has been sent to a credit card that I cancelled’ – your rights to lost money | Fintech Zoom

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Workout My Credit Solutions Rises as an Authority in Credit Repair and Financial Education

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Quality of life is impacted by numerous factors, and one of its most significant determinants is a person’s financial health. For the most part, financial stability involves the ability to provide for themselves or their family members without putting a significant dent in their wallets. As a concept, financial stability as well as financial freedom is easy to understand but achieving and maintaining it is a whole new story. Today, millions of individuals around the world are struggling with money issues, some of which are caused by the outbreak of COVID-19. However, there are those contending with bad credit, in particular, as a result of ill-informed decisions, mismanagement, and more. Widely acclaimed for the extent to which it helps clients get their credit into shape, Workout My Credit Solutions, LLC has emerged as a go-to venture that is currently making waves in the industry.

Also Read | Top 9 Upcoming Credit Repair Companies

This emerging powerhouse was launched by Nicole Fisher, a 25-year-old serial entrepreneur who has earned recognition for her all-out attitude toward lending people a hand through her initiatives. Highly cognizant of the impact of bad credit on one’s financial health, she started Workout My Credit Solutions in May 2020 and, since then, has been making it possible for clients to get approved for credit cards, mortgage loans, and auto loans, to name a few.

In just a year, the credit repair company has seen impressive growth, reaching remarkable heights due to its consistent delivery of top-notch services. Apart from restoring one’s credit into its former glory, Workout My Credit Solutions also delivers financial education because it believes in the importance of equipping clients with the knowledge they need to handle their money better. It acknowledges the existing gaps in the current educational system where ample attention is not given to arming people with the skills they need to secure a financially stable future. “Our goal is to help clients understand how credit works while they are in the process of getting it fixed,” shares Nicole Fisher.

Also Read | Top 9 Upcoming Credit Repair Companies

Additionally, Workout My Credit Solutions, under the leadership of Nicole Fisher, enables clients to get pre-approved mortgage loans after having their credit repaired by this five-star company. The additional service is strategically designed and incorporated into its inventory of offerings to translate into reality the dreams of those wishing to own a home.

On track to taking center stage, Workout My Credit Solutions has been on the receiving end of excellent reviews from everyone who has come under its wing. It takes pride in the long list of accomplishments it managed to snag under its belt shortly after its establishment and is set to reach the forefront of the industry in the coming years.

With its dedication to pushing people toward financial freedom, Workout My Credit Solutions is bound to remain an impressive force. As it carves a path toward the summit, it plans to continue serving as a leading authority in credit repair and financial education.

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