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Strategies When Shopping for an Auto Loan

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If you have good credit, bad credit, or no credit, you should approach the car shopping process with as much strategy as possible. Just winging a large purchase like a vehicle could mean paying more than you need to. We’ve got five steps to make it easier to navigate the car buying waters.

1. Documents You Need for an Auto Loan

When you’re preparing for your next vehicle, it can be an exciting time! But, it can also lead to some stress if you’re not sure where to start.

One of the first steps to get ready for an auto loan is preparing your documents. Lenders are largely concerned with your ability to repay the car loan, so you need proof of income.

This typically means bringing your computer-generated check stubs that show your minimum monthly and year-to-date income. If you’re a contractor or freelancer (or earn another source of income that isn’t W-2), then be prepared to bring copies of the last two or three years of your tax returns.

Other common items lenders may ask you to bring in are:

  • Recent utility bill in your name to prove your residence
  • Cell phone bill that proves you have a working contract landline or cell phone
  • List of five to eight personal references with complete contact information
  • Possibly a down payment, depending on the vehicle price and your credit score

Once you have your documents gathered and ready to go, you can head to a lender or dealership with confidence, and with as few trips as possible. However, if you have a unique credit situation, such as bankruptcy, the lender may ask for more documents. A quick call to a lender or dealer could let you know what they tend to ask borrowers to bring for the auto loan application.

For a down payment requirement, which many borrowers wonder about, whether or not you need one usually depends on the selling price of the car you’re looking to buy and your credit score. As a general rule, if you’re purchasing a used vehicle, it’s a good idea to aim for 10% down. For new cars, the old adage is to have 20% down to combat negative equity risks, but that’s becoming increasingly harder to do these days due to the rising prices of new vehicles.

If your credit score is poor, expect a lender to ask for a down payment. Bad credit auto lenders generally ask their borrowers to have at least $1,000 or 10% of the vehicle’s selling price.

2. Budgeting for a Car Loan

Strategies When Shopping for a Car LoanIf you know that your credit score needs work, you can start saving for a down payment and taking a look at your monthly expenses. Take time to figure out how much disposable income you have available each month that can cover the car payment and the cost of auto insurance. In fact, lenders do this to determine your ability to take on a car loan.

To get an idea of how much you can afford, you can use the debt to income (DTI) ratio. Simply add together all of your current monthly bills, excluding utilities, and divide them by your minimum monthly gross income. You should also factor in a vehicle payment that you want to aim for, and $100 for auto insurance (this is what lenders use as an estimate when they determine your DTI ratio).

Here a quick example:

  • Gross monthly income: $2,500
  • Monthly obligations: $800
  • Estimated car and insurance payment added together: $350
  • Debt to income ratio: $1,150 / $2,500 = 0.46, or a 46% DTI ratio

In the example, this imaginary borrower has a DTI ratio of 46%, which just makes the cutoff for most bad credit auto lenders. If more than half of your monthly income needs to be used to pay for your regular bills and vehicle expenses, then lenders may turn you away for financing. However, if you’re under the 45% to 50% mark, then you’re usually in the clear!

You can use our auto loan calculator to see how much vehicle you can afford, and play around with down payment amounts.

3. Rate Shopping for the Best Deal

When you’re on the prowl for your next car, you may be tempted to apply with multiple lenders and look for the best deal – and that’s great! It’s actually a smart strategy when you’re looking to finance anything. If you’re worried about hurting your credit score because of multiple credit pulls, don’t be!

The credit bureaus understand that when you apply for new credit a few times in a short window, you’re looking for the best rates. This is called rate shopping. When you apply for the same type of new credit (like an auto loan) a few times within two weeks, only one hard inquiry lowers your credit score.

If you’re not sure what route to take for your next vehicle, then plan out what lenders you want to apply with and do it in a short window. This way, you can get those hard pulls out of the way, decrease the impact on your credit reports, and compare loan terms from different lenders to pick the best one for you.

4. Choosing the Right Auto Lender

Finding the right lender for your credit situation starts with knowing what your credit score is, and what your credit reports are saying about you.

Your credit reports act as a comprehensive history of how you’ve handled repaying credit, so lenders look at them with a fine-tooth comb. Before you head out and apply, review your own credit reports and see where you stand. You can request your credit reports for free from www.annualcreditreport.com.

For borrowers with good credit scores, they tend to have more lending options. This can mean heading to a direct lender from a bank or credit union, or possibly checking out the captive lenders of automakers. Direct and captive car lenders usually have high credit score requirements.

If your credit score isn’t so hot, then you may need to look into subprime lenders for a higher chance of getting an auto loan approval. Subprime lenders work with borrowers who have credit issues or unique credit situations, and they’re signed up with special finance dealerships. To apply with a subprime lender, you find a special finance dealer and the finance manager sends your application to one or more subprime lenders to see if you qualify.

5. Finding the Right Car Dealership

A big decision in the car buying process is choosing where you want to buy your next vehicle. For borrowers that can go through direct auto lenders, you can usually take a preapproval anywhere and shop like a cash buyer.

For borrowers who need special financing, you have to find a dealership that’s signed up with subprime lenders.

Finding a special finance dealer isn’t always easy, since they can be hard to pick out from the crowd. However, here at Auto Credit Express, we’ve made that process easier by connecting bad credit borrowers to dealerships in their area with bad credit lending resources.

To get matched to a dealer that can work with your credit situation, fill out our free car loan request form. It’s completely online, secure, and there’s never an obligation to buy anything. Start the search for your next vehicle today!

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Bad Credit Credit Cards – Loans Bad Credit Online – Euronext News Today – Euronext News Today – Elliptic Labs AI Virtual Proximity Sensor INNER BEAUTY® Shipping on Xiaomi’s Top-Selling Redmi Note 10 and Note 10s Smartphones | Fintech Zoom | Fintech Zoom | Fintech Zoom | Fintech Zoom

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Euronext News Today – Elliptic Labs AI Virtual Proximity Sensor INNER BEAUTY® Shipping on Xiaomi’s Top-Selling Redmi Note 10 and Note 10s Smartphones

OSLO, Norway–(BUSINESS WIRE)–Elliptic Labs (EuroNext Growth: ELABS.OL), the first company to utilize software to replace infrared hardware sensors in smartphones, is announcing another design launch with Xiaomi (HKSE: 1810.HK), the world’s third largest smartphone manufacturer. Powering both Xiaomi’s top selling Redmi Note 10 (Qualcomm Snapdrdagon 678 chipset) and Note 10s (Mediatek Helio G95 chipset) smartphones with the software-only AI Virtual Smart Sensor Platform, Elliptic Labs’ AI Virtual Proximity Sensor INNER BEAUTY enables the Redmi Note 10 Series elegant bezel-less designs. Starting with the initial Redmi Note launched in 2014, the Redmi Note series has now shipped over 200 million units globally across its lifetime. Elliptic Labs has previously announced the contract win related to this launch.

“The versatility and value of Elliptic Labs’ AI Virtual Smart Sensor Platform has been demonstrated repeatedly by Xiaomi’s adoption throughout its smartphone portfolio,” shared Elliptic Labs’ CEO Laila Danielsen. “The latest Xiaomi product line to benefit from the AI Virtual Proximity Sensor is the Redmi Note series, which has been recognized as one of the best selling smartphones models in the industry. Powering Xiaomi’s broad range of phones, from the flagship Mi 11 to the mass-volume and best selling Redmi Note line, truly shows the AI Virtual Smart Sensor Platform’s powerful capabilities to apply any device’s existing hardware sensors to create meaningful and high-performance experiences.”

About Elliptic Labs

Elliptic Labs is headquartered in Norway with presence in the USA, China, South-Korea, Taipei, and Japan. Founded in 2006 as a research spin-off from Norway’s Oslo University, Elliptic Labs filed its IPO with the Euronext Growth Market in October, 2020. Elliptic Labs is now a global enterprise targeting the smartphone, laptop, IoT, and automotive markets. The Company’s patented AI software combines ultrasound and sensor-fusion algorithms to deliver intuitive 3D gesture, proximity, and presence sensing experiences. Its scalable AI Virtual Smart Sensor Platform creates software-only sensors that are sustainable, eco-friendly, and already deployed in over 150 million devices. Elliptic Labs is the only software company in the market that has delivered detection capabilities using AI software, ultrasound and sensor-fusion deployed at scale. Elliptic Labs’ technology and IP are developed in Norway and solely owned by the Company.

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Judge Says Navient Misled Student Loan Borrowers—What This Means For Your Student Loans

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Navien
NAVI
t, the nation’s largest student loan servicer, just got some bad news.

Here’s what you need to know — and what it means for your student loans.

Student Loans

According to a Washington state judge, Navient — which manages $300 billion of private and federal student loans for 12 million student loan borrowers — deceived borrowers and their cosigners who sought to be released from their student loans. According to Washington Attorney General Bob Ferguson, the judge’s order issued yesterday says that:

  1. Deceptive Practices: Navient engaged in deceptive practices regarding its cosigner release policy;
  2. Consumer Protection: Navient violated the Consumer Protection Act;
  3. Cosigners: Navient promoted co-signer release for private student loans, but misrepresented the way Navient implemented the program; and
  4. Cosigner Release: Navient didn’t disclose that it’s difficult to get a cosigner release.

This is the first time that a judge ruled that Navient violated a consumer protection law since a state attorney general or consumer protection agency sued Navient. For context, a cosigner is a family member, spouse or other individual who assumes equal financial responsibility for your student loans when you have a limited credit history or bad credit. Often, the cosigner has strong credit and income, which can not only help you get approved for student loans, but also can help you get a lower interest rate. The goal of a cosigner release is for you to demonstrate enough financial responsibility through student loan repayment that your student loan servicer will release your cosigner from any further financial responsibility. Once you make multiple, on-time, consecutive student loan payments (typically for 12 to 48 months), your student loan servicer can release your cosigner. However, Ferguson says this didn’t necessarily happen, particularly for student loan borrowers who paid their student loans in advance. For example, Ferguson alleges that:

  • Even if you made on-time, consecutive student loan payments with Navient, you may not have gotten a cosigner release.
  • Let’s assume your monthly student loan payment is $100.
  • If you make a one-time, lump-sum payment of $500, the next four months would show a $0 student loan bill.
  • Let’s then assume you didn’t make any student loan payments during the next four months.
  • Even though you didn’t owe any student loan payments during months two through five, Navient didn’t count that lump-sum payment from month one as five monthly payments of $100.
  • As a result, even though your student loan account was current and paid in advance, Navient said your failure to pay each month (even with a $0 balance) would not count as consecutive monthly payments toward a cosigner release.

Ferguson’s point is that Navient didn’t disclose to student loan borrowers that failing to make a payment every month — even if you paid student loans in advance — would disqualify you from meeting the requirement to make consecutive payments and you would have to start over before you could be eligible for a cosigner release. Navient, which spun off from Sallie Mae, has since changed this policy and now counts a lump-sum student loan payment as sufficient for multiple student loan payments.

The lawsuit against Navient, which dates to 2017, isn’t over. Ferguson also alleges that Navient engaged in deceptive practices in servicing and collecting student loans as well originating risky subprime student loans to borrowers who attended for-profit colleges. Ferguson alleges that Navient misapplied student loan payments and improperly directed distressed student loan borrowers into student loan forbearance instead of income-driven repayment plans, the latter of which would have been more favorable to borrowers.

“We believe our disclosure was clear and fairly applied under Washington state law,” Paul Hartwick, a Navient spokesman, told Marketwatch. “Navient’s focus has been, and continues to be, assisting student loan borrowers to successfully repay their loans.”


What This Means For Your Student Loans

Washington State’s lawsuit against Navient is scheduled for trial in April 2022. While this order grants partial summary judgment, there are no monetary judgments at this juncture. This lawsuit should be a good reminder to check your student loans, understand your student loan payment options, and double check that your student loan payments have been applied correctly. If you have questions about your student loans, your student loan servicer typically is a good resource. In addition to managing your student loan payments, your student loan servicer can answer questions about various student loan repayment options. This includes question about income-driven repayment, student loan forbearance and cosigner release. However, you should conduct independent research to make sure you’re fully informed about all your options. Why? Your student loan servicer may not have all the answers, or they may not have the optimal solution for your unique goals and circumstances. Multiple state attorneys general, as well as the Consumer Financial Protection Bureau (CFPB), have sued Navient based on similar allegations. If you have an issue with your student loan servicer, you can contact the CFPB — Office of Student Loan Ombudsman, the U.S. Department of Education / Federal Student Aid, the Federal Trade Commission (FTC), your state attorney general, or your state’s department of education.

As you navigate student loan repayment, here are some potential options to consider:


Student Loans: Related Reading

17 million won’t get stimulus checks—expect the same for student loan cancellation

Student loan cancellation excluded from new stimulus package

Student loan cancellation less likely if stimulus checks get cut

Bernie Sanders: Let’s cancel student loans without Republicans

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Loans Bad Credit Online – Loans Bad Credit Online – Loans Bad Credit Online – Bad Credit Credit Cards – Consumers Paid Down Credit Cards Again! By Most Ever. But Cash-Out Refis Spiked to Highest since 2005/6 Peaks. What Gives? | Fintech Zoom | Fintech Zoom | Fintech Zoom | Fintech Zoom

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Bad Credit Credit Cards – Consumers Paid Down Credit Cards Again! By Most Ever. But Cash-Out Refis Spiked to Highest since 2005/6 Peaks. What Gives?

They’re not the same consumers.

By Wolf Richter for WOLF STREET.

There is no monolithic American consumer. Each does their own thing. And the folks with credit card debts and other revolving credit such as personal loans – all of it high-interest rate debt – paid them down by record amounts in January, possibly using their stimulus money to do so.

And in the opposite direction, the folks who own homes have been extracting cash from their homes via cash-out refinancing their mortgages at a clip in Q4 not seen since the peak of the good old days before the housing bust in 2005 and 2006, and at record low mortgage rates while they lasted. But those two groups may not be the same people.

Paying down credit cards and other revolving credit. In January, consumers paid down their credit card balances by 3.6% from December and by 11.9% year-over-year, not seasonally adjusted, to $940 billion, according to the Federal Reserve Friday afternoon. It was the biggest year-over-year decline in the history of credit card data going back to the 1970s and blew by the year-over-year declines during the Financial Crisis:

There were only two periods in credit card history when balances dropped on a year-over-year basis, and for two very different reasons: First, during the Financial Crisis when consumers defaulted on their credit cards; and second, during the Pandemic when the government sent hundreds of billions of dollars in waves of stimulus payments to consumers, and some of this money was used to pay down credit card debts.

January is the hangover month after the holiday binge-spending-and-borrowing, and credit card balances (not seasonally adjusted) tend to drop from December as people are beginning to grapple with the consequences of their binge. Between 2013 and 2020, the decline in credit card balances from December to January averaged 2.4%. This year in January, credit card balances dropped by 3.6% from the already lowest December levels since 2016.

In dollar terms, credit card balances fell by $35 billion in January, not seasonally adjusted (red line), to $940 billion, having plunged by $153 billion from the peak in December 2019; and seasonally adjusted (green line) they fell by $10 billion in January, to $965 billion, having plunged by $128 billion from the peak in December 2019.

The cumulative two-year plunge during the Financial Crisis was larger than the drop during the first 10 months of the Pandemic. But the next stimulus packages is being put together in Congress, likely producing further drops in the future:

In the opposite direction: Cash-out Refis.

Historically low mortgages in the fourth quarter triggered a historic mortgage refi boom that exceeded the peaks before the housing bust. Amid this historic refi boom was a near-historic cash-out refi boom. According to a New York Fed report two weeks ago, the amount that homeowners extracted from their homes  in Q4 spiked to $63 billion, with borrowers on average extracting $27,000 from their homes (chart via New York Fed):

Homeowners used the proceeds from the cash-out refis to fund consumption and “investment opportunities, including home improvements,” as the New York Fed said.

So on one hand, consumers are paying down their expensive credit cards and other revolving credit; and on the other hand, consumers are borrowing a lot more against their homes.

It is possible that some folks with cash-out refis also have credit card debt and are using the proceeds from the cash-out refis to pay down their credit card debts, using historically cheap mortgage debt to pay down expensive revolving debt, and that would make a lot of sense.

But it is also possible that there is little overlap between these two groups – between those who paid down their credit cards, and those who increased their mortgage debts via cash-out refis.

In other words, it’s possible that people with credit card debts paid them down with their stimulus checks, but they may not own a home, or cannot do a cash-out refi because their credit score is too low, or because they don’t have enough equity in their home, or because their mortgage is in forbearance and/or delinquent – over 17% of FHA mortgages are delinquent, including those that were delinquent before they entered into forbearance.

So the theory that most of the cash-out refis were used to pay down expensive credit card debts doesn’t hold water. These are different consumers. As the New York Fed pointed out, the cash-out refis were mostly used to fund consumption or home improvements, such as a new deck and hot tub, which has been back-ordered because of the surge in demand, or speculative investments in what were then seemingly forever booming financial markets.

Suddenly rising mortgage rates to tango with refi boom.

Mortgage rates bottomed out in early January and have risen since then. The average 30-year fixed mortgage rate, according to the Freddy Mac benchmark index, increased from 2.65% in early January to 3.02% on average during the week ended Wednesday.  Since then, mortgage rates have further risen, which is not reflected in the data yet:

Mortgage rates remain ultra-low by historical standards, but they’re a little higher than they were two months ago – and there has now been a lot of hand-wringing in the financial markets about them, and folks have been clamoring for the Fed to do something to push down those mortgage rates, which has not been forthcoming at all.

But the more mortgage rates rise, the harder it is to make cash-out refis work. So while some consumers are creating a little extra room on their credit card for future consumption, other consumers will find cash-out refis to fund consumption more expensive and difficult to do.

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