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Trouble in paradise: Bald Head Island Council objects to private-to-public ferry sale

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Though a price tag is yet to be determined for the multi-million dollar ferry system, the Bald Head Island Transportation Authority is working to acquire the system's privately-owned assets. (Port City Daily photo/Johanna Ferebee)
The Bald Head Island Transportation Authority is working to acquire the system’s privately-owned assets, valued at $47 million. (Port City Daily photo/Johanna F. Still)

BALD HEAD ISLAND — A week after the Bald Head Transportation Authority met and a majority approved moving forward with purchasing the island’s ferry system for $47 million, the island’s political leaders drafted a letter to the state treasurer, opposing the sale as it currently stands.

The authority is mandated by legislation to purchase the system, owned by Bald Head Island Limited LLC. Though there’s no deadline baked into the law that created the authority, its organization has been in effect since 2017. Last week’s move to apply for revenue bond approval marks its most significant step yet.

Related: Deep Dive: Inside the three-year, unique, $47 million private-public Bald Head Island ferry transaction

Village political leaders, namely mayor Andrew Sayre and pro-tem Michael Brown, continue to oppose the deal in its current form.

The village cites projected increases to ferry fees, allegedly one-sided consulting documents, the authority’s apparent lack of an official credit rating, and concerns about overpaying for the system as major issues necessary to address before moving forward with the sale.

Village dissent

In a Tuesday letter addressed to State Treasurer Dale Folwell — signed off by the entire village council — the village urged the Local Government Commission (LGC) to reconsider approving the deal. The LGC is scheduled to review and consider approving the revenue bond issuance on Jan. 4, with a closing anticipated in early February.

At the core of the village’s letter is the claim the deal isn’t ripe for approval, and adequate due diligence has not yet been undertaken. Authority Chair Susan Rabon disagrees.

“This authority is following the statute, going through the process. We’re trying to do what we were told to do,” she said. “The statute says this authority shall purchase the system. We’ve been working on this and have done a whole lot of due diligence, more due diligence than most deals — from what I’m being told, out in the market — for three years now.”

The Asset Purchase Agreement passed the Bald Head Island Transportation Authority 7-4 on Dec. 8, with all four dissenting votes cast by Bald Head Island residents: Mayor Sayre, Pro-tem Brown, Dr. Rex Cowdry (a department of transportation appointee), and Claude Pope (a village appointee).

A motion to forward the authority’s application to the LGC passed 8-3, with Pope casting a vote in favor (he did so because he felt he had no option but to accept it, according to the village’s letter, but he continues to have concerns regarding the bond issuance).

By Wednesday, the authority met again to approve its LGC application. This time, given new LGC feedback, the authority approved forwarding the motion with one change: adding a do-not-exceed bond figure of $59 million (the original application stated $56 million). This motion passed 9-2, with the approval of island resident Cowdry.

Recently, Mayor Sayre has publicly stated he is interested in a different governance structure for the ferry system altogether. While the letter is comprehensive in its critique of the deal, it does not address the authority’s governing structure.

None of the four island trustees could be reached for comment; Brown redirected inquiries to the island’s spokesperson, Carin Faulkner. Faulkner explained village staff is not in the position to endorse or not endorse the letter; staff serves at the behest of council.

Rating without credit history

As the state’s only maritime authority and a brand new government entity, the private-to-public ferry deal is unique. Unlike other state-maintained ferry systems, organized under the N.C. Department of Transportation, BHITA would regulate itself under its own legislation.

State Treasurer Folwell said he was unfamiliar with the deal until his team heard a preliminary proposal of it last week. Folwell visited the island for the first time Thursday, after the mayor invited him for a tour.

A key issue in the letter is BHITA’s bond rating. As a brand new entity, the authority has no experience paying off debts. On paper, the authority’s bond rating is not yet confirmed. Folwell could not immediately confirm whether it is typical for the LGC to approve bond financing for an unrated entity.

“We have to anticipate if this were to happen again, what precedent are we creating?” he said.

Like individuals with good or bad credit, BHITA’s bond rating will impact how much debt it will need to cover the cost of the sale to account for interest. The better the rating, the lower the debt — and vice versa.

A lack of credit history makes rating BHITA complicated but not impossible.

“The modeling assumes an interest rate, but we will not know whether that assumption is reasonable until we receive the indicative bond ratings, possibly before next week’s meeting of the Authority, and can determine whether our debt is likely to be investment grade or non-investment grade,” the letter states, attributing the concerns to Cowdry.

Investment-grade bonds are issued to entities with high ratings; non-investment grade bonds, also referred to as “junk bonds,” are issued to riskier entities.

The Dec. 15 letter claims indicative bond ratings have not yet been received. The following day, the authority accepted a motion to review its third indicative bond rating. These preliminary ratings are confidential, Rabon explained.

“Before we would go to market we would know what the rating situation would be,” she said. “The point being is, it’s not that we don’t want to know or we won’t know those ratings. We’re in that process. And before we would go before the LGC, we would know that answer.”

Village leaders cite changing models and an apparent lack of information provided to village trustees as another reason to postpone the bond issuance. They point to a negotiating subcommittee, which worked out the transaction, that has no island residents on it.

Rabon said all trustees have had access to all information necessary to review the deal.

“As you move forward with your due diligence, it gets stale if you let it sit too long,” she said.

Pricing

BHITA has contracted and produced nearly a dozen consulting reports to prepare for the sale. It has paid (or has agreements in place to reimburse post-sale) its consultants with financing by Bald Head Island Limited. It’s funneled through at least six grant payments from the village, totaling at least $365,000.

The village — or any other public entity — has not contributed any funding to finance the deal.

“Many of the financial and performance projections are coming from Limited, as Seller, not from an independent study or industry expert,” the letter states. “We are concerned that the buyer has relied too much on the seller for information without seeking neutral appraisals and assessments on many items.”

Citing necessary operational improvements that have not been accounted for, the village argues the $47 million purchase price may be too high.

“This could lead to overpayment for a system that needs improvements,” the letter states. “The purchase price appears to assume that improvements have been made or are included, which are not.”

Chad Paul, CEO of Limited, calls it inaccurate that claims of the materials being studied aren’t independent. “We have provided independent, third-party, audited financial statements going back to 2014,” he confirmed.

In a concern attributed to Pro-tem Brown, the letter cites projected ferry rate increases set to kick in July 1, raising rates 17% from $23 to $27. Barge rates are projected to increase by 9%, from $55 to $60 per 6 feet, according to the letter.

“The facts are this: The ferry and the tram have been regulated since 1993,” Paul said. “Since 1993, there has been one increase on the ferry and the tram.”

In 27 years, the ferry fee has increased once, in 2011 from $15 to $23. “Price increases have not even kept pace with inflation,” he said.

Countering the letter’s point that the public or trustees have not been adequately briefed on the subject, Paul points to a preponderance of public input opportunities provided along the way. The village, the City of Southport, and Brunswick County all unanimously endorsed the legislation before it was signed into law.

According to Faulkner, village political leaders may choose to further address their concerns in the future.

“The LGC is not merely approving a bond issuance in this instance, its actions would immediately affect thousands of individuals and businesses
who depend upon the transportation system as their sole means of access to Bald Head Island and who have been provided no insight or input into the transaction,” the letter states.

Read the full letter below:

Village Council letter to LGC by Johanna Ferebee Still on Scribd


Send tips and comments to Johanna Ferebee Still at johanna@localdailymedia.com

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Are No Down Payment Auto Loans Bad?

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Qualifying for a zero-down car deal likely means having good credit and qualifying income. However, if you’re a bad credit borrower, you’d be hard-pressed to qualify for an auto loan without a down payment. Besides – down payments are typically a great idea for borrowers across all credit ranges!

Is Zero Down a Bad Idea?

Opting for a zero-down car loan isn’t a bad thing – but with a lower credit score, it’s not likely to happen. Most bad credit auto lenders require at least $1,000 down or that you bring at least 10% of the vehicle’s selling price to the table. Down payments are a requirement of most subprime (bad credit) lenders, and it’s often called having “skin in the game.”

Are No Down Payment Car Loans Bad?Research shows that borrowers with skin in the game are more likely to complete a car loan. To a lender, a borrower that brings a down payment to a deal is more likely to make their payments, complete the loan, and avoid default. It also means a higher likelihood of qualifying for the auto loan.

Down payments can widen your vehicle choices since they allow you to get into more expensive cars that are outside your preapproval amount. If you’re approved for a $15,000 auto loan, but can’t find anything for your situation, adding a larger down payment amount may open up more vehicle choices. In this scenario, if you have your heart set on an $18,000 vehicle, coming in with a $3,000 down payment could put it in your price range.

More Down Payment Benefits

Auto loans are typically simple interest loans, meaning you’re charged interest on the principal of your loan. If you combine a large loan amount, a high interest rate, and a long term, it can mean paying more than your vehicle is worth.

Remember this:

High loan amount + High interest rate + Long loan term = Paying more interest charges. A down payment can combat this, and help save you money.

For borrowers with poor credit, a high interest rate could mean paying more for your auto loan – but a down payment can soften the blow.

Down payments can help protect you from negative equity, too. Negative equity is when you owe more on the auto loan than what the car is valued at. Vehicles are depreciating assets, meaning they lose value over time, and that never stops.

Negative equity causes problems for borrowers when it’s time to sell the vehicle. If you owe thousands more on the loan than what you can sell the car for, you may not be able to sell the car. You must pay off the loan before you can transfer vehicle ownership.

If you finance a vehicle for $10,000, that car may not be worth $10,000 in a year. Most used vehicles lose around 10% to 15% of their value each year. Brand new vehicles can see around a 20% drop in value within the first 12 months of ownership! Having a down payment can help keep your auto loan in an equity position, which means you’re likely to have fewer issues selling the car if you need to.

How Much Should Save for a Down Payment?

Your down payment requirement largely depends on your credit score and the size of the loan you’re applying for. Like we mentioned, saving at least $1,000 is probably a good starting point if your credit score is less than perfect. But if the vehicle you want is expensive, it could mean having to shell out more cash than that to qualify for the loan.

How much you need to save can also depend on your monthly budget. If you want a specific vehicle but the monthly payments are too high, you can put more cash down to lower your payment and make the loan work for your situation. You can use our auto loan calculator to estimate how much you may need to put down to get your car payment where you want.

You also don’t need cold, hard cash to meet a down payment requirement. Trade-ins with equity can completely satisfy a down payment requirement if there’s enough value, or you can use a combination of cash and your trade-in. If you have a car you’d like to trade in, research its estimated value on sites such as NADAguides and Kelley Blue Book so you can see what a dealer may offer.

The bottom line with down payments is you should save as much as you comfortably can afford. Even if you qualify for a zero-down car loan, putting cash down on your next auto loan is only going to bring you benefits in the long run.

Where Can I Find Bad Credit Car Loans?

If your income or credit score isn’t quite up to snuff, then you can expect to need some cash down to qualify for vehicle financing. You may also need to work with the right auto lender to get the vehicle financing you need.

With a lower credit score, not only are you faced with a down payment requirement but also the struggle of having to find an auto lender that can work with poor credit. Most traditional auto lenders prefer borrowers with good credit. If your credit score is rough around the edges, then applying for vehicle financing through a special finance dealership could be the way to go.

Special finance dealerships are signed up with subprime lenders. These lenders specialize in assisting borrowers with credit challenges and look at more than your credit reports and score. They do require a down payment, but they can often work around tough credit circumstances.

At Auto Credit Express, we’ve amassed a nationwide network of special finance dealerships and we want to help you find one in your local area. To get matched to a dealer near you that has bad credit lending options, fill out our free auto loan request form.

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19 Auto Loans For Bad Credit Drivers (2021)

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Bad credit auto loans with reasonable interest rates can be difficult to find. While it may be hard to secure an auto loan with poor credit, it’s not impossible. Many auto lenders specialize in providing auto loans for bad credit drivers.

In this review, we’ll list several auto loan providers that offer loans for drivers with low credit, no credit, and bankruptcies. We’ll also provide tips for how to apply for a loan when you have bad credit and how to improve your credit score. While the lowest rates with the best auto loan providers may not be available to those with poor credit, a low credit score doesn’t mean a reasonable car loan is impossible to find. 

You can see bad credit auto loan offers from multiple lenders using AutoCreditExpress.com.

 

In this article:

Can You Get A Car Loan With Horrible Credit?

Yes. Even with horrible credit, it is possible to get a car loan. It usually helps if you have a steady income and/or have someone with good credit cosign your loan.

It may be difficult to find a bad credit car loan with a low interest rate if your credit score is under 600. When you look for auto financing, seek out lenders that offer prequalification. Prequalification allows you to see interest rate offers without the loan company performing a hard credit check. A hard credit check can further hurt your credit score.

Be prepared to face higher interest rates if you have poor credit. However, you can reduce the amount of interest you will pay on a bad credit auto loan if you place a bigger down payment or request a shorter loan payoff period.

 


 

19 Auto Loans For Bad Credit Drivers

The list below names 19 auto loan providers that offer loans to drivers with bankruptcies and/or poor FICO credit scores. Several of the companies listed below even specialize in bad credit auto loans. Which lender will work best for you depends on your specific circumstances, but this list is a good place to begin your search.

Don’t hesitate to submit loan applications to companies that allow you to prequalify without a hard credit check. You should only agree to a hard credit check once you plan to accept the loan offer (and after comparing prequalification offers).

Auto Loan Provider

Minimum Credit Score Required

Minimum Annual Income Required

Clearlane580$21,600
Auto Approve580$18,000
myAutoloan.com575$21,000
RateGenius550Not specified
Tresl500Not specified
Prestige FinancialNo minimum credit$27,000
VroomNo minimum credit$21,600
Auto Credit ExpressNo minimum credit$18,000
Capital OneNo minimum credit$18,000
CarvanaNo minimum credit$4,00
New RoadsNo minimum creditNot specified
Credit Acceptance CorpNo minimum creditNot specified
DrivetimeNo minimum creditNot specified
AutopayNo minimum creditNot specified
LightstreamNo minimum creditNot specified
CarmaxNo minimum creditNot specified
CarZingNo minimum creditNot specified
ByriderNo minimum creditNot specified
RoadLoansNo minimum creditNot specified
 

 


 

Applying For A Bad Credit Auto Loan

Applying for auto financing used to take place primarily in banks or at the car dealership. Today, most companies have online applications, making it easy to request and compare several auto loans at a time. You can also use a service like AutoCreditExpress.com, which lets you see personalized loan offers from multiple lenders at once. However, it’s still a good idea to apply for your auto loan at your local bank or credit union in addition to searching online.

Look for companies that offer a preapproval process that does not require a hard credit check. What this means is that you will self-report your FICO score and income information to the lender. You will then be made a provisional auto loan offer. This is not an official offer, and your terms may not be finalized until after a hard credit check. Do not submit to a hard credit check unless you are fairly confident you will accept the loan offer. You want to limit the number of hard credit checks as much as possible.

While applying, you will likely need to supply potential lenders with information such as:

  • Personal details like your name, address, age, and Social Security number
  • Gross annual income information
  • Vehicle information like model, age, mileage, and vehicle identification number (VIN)

Before you finalize your auto loan, you may also be required to supply copies of your:

  • Driver’s license
  • Recent pay stubs
  • Personal references

Your credit score is the most important factor that determines your auto loan interest rate. The tables below show the average auto loan rates by credit score for new and used car purchases, according to a 2020 Experian State of the Auto Finance Market report.

Average Auto Loan Rates For New Car Purchases
Credit ScoreAverage Auto Loan Rate
300 – 50013.97%
501 – 60011.33%
601 – 6607.14%
661 – 7804.21%
781 – 8503.24%
 
Average Auto Loan Rates For Used Car Purchases
Credit ScoreAverage Auto Loan Rate
300 – 50020.67%
501 – 60017.78%
601 – 66011.41%
661 – 7806.05%
781 – 8504.08%
 

As you can see from the tables above, auto loan interest rates increase steeply for borrowers with credit scores of 660 and below. You will also notice that interest rates for new car purchases tend to be lower than those for used car purchases. However, if money is tight, you may still save more by purchasing a used car, though you will pay a higher interest rate.

The best way to get a lower interest rate if you have poor credit is to add a cosigner with good credit to your loan. A cosigner is someone who accepts responsibility for the loan and will be on the hook with collections if you miss any payments.

While it may not lower your interest rate, placing a larger down payment or opting for a higher monthly payment can help you save money on a bad credit auto loan. A shorter loan term may also reduce overall costs. The more quickly you pay off your auto loan, the less interest you will ultimately accumulate.

 


 

Tips For Improving Your Credit Score

A good credit score is vital to saving money and has benefits beyond a low interest rate on your auto loan. In several states, your credit history may also be used to determine your auto insurance premium. If you have bad credit, you should work to improve it as soon as possible. However, raising your credit score cannot be accomplished overnight.

Some ways to improve your credit score include:

  • Open a credit card: Don’t let your credit balance get too high, and pay off your bill in full each month. This shows lenders that you are dependable and can be trusted to make your loan payments.
  • Increase your credit limits: The amount of credit you’re using affects your score. For example, if you had a credit card with a limit of $1,000 and had a balance of $500, you’d be using 50 percent of your credit. However, if you asked your bank to increase your limit to $2,000, you’d only be using 25 percent of your credit. This can raise your score.
  • Debt consolidation: Try to consolidate your debts into one place with the lowest interest rates possible.
  • Pay down existing debt: This will save you money in the long run and help your credit score.
  • Wait: Certain negative factors will fall off your report after a number of years. Hard credit checks stop affecting your score after two years. Late payments, collections, and bankruptcies fall off your report after seven years.
  • Credit monitoring: Many of the major credit bureaus, such as Experian, Transunion, and Equifax, offer credit monitoring and tools for improving your credit. Take advantage of these programs.
  • Check your report: Request a copy of your own credit report and look for errors or outstanding debts you may have forgotten about.

If you initially take out a bad credit auto loan but later improve your credit score, be sure to consider auto loan refinancing. This involves taking a new loan with better interest rates to pay off the existing loan. You may want to refinance your auto loan after your credit score moves above 660 and 780.

To start comparing auto loans for bad credit from multiple lenders, visit AutoCreditExpress.com.

 

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Is it OK to Refinance a Vehicle Multiple Times?

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There’s no limit on how many times you can refinance your car loan, but it may not be a good idea to do it more than once. We cover how refinancing works, and some advice on refinancing your auto loan multiple times.

Refinancing an Auto Loan More Than Once

It certainly is possible to refinance your car loan more than once, since there’s no rule that says otherwise. However, whether or not it’s a good idea to refinance multiple times depends on how you do it. And, you may not qualify for refinancing again once you’ve already done it.

Most of the time, borrowers refinance their car loans to get a lower monthly payment. This is done by either lowering your interest rate or lengthening your loan term (sometimes both). Qualifying for a lower interest rate is a great way to save money on your loan, but simply extending your loan term generally isn’t a good idea without qualifying for a lower interest rate.

Is it OK to Refinance a Car Multiple Times?This is especially true if you refinance to a longer loan term more than once. Extending your auto loan multiple times draws out how long you have a car payment, which increases your interest charges. Auto loans are typically simple interest loans, so your interest charges add up based on your auto loan balance.

If you always extend your loan, you’re always going to rack up more interest charges – the higher your interest rate, the more you pay. This can lead to years of paying off the same vehicle and possibly paying more for it than it’s worth. If you’ve already refinanced your car and extended your loan term, then doing it again means paying more for the same vehicle.

Qualifying for Auto Refinancing Multiple Times

The most difficult part of getting approved for refinancing can be having a vehicle that qualifies. Most refinance lenders require that the vehicle be less than 10 years old and have less than 100,000 miles on it. If your vehicle is older, and/or you drive a lot, refinancing may not be possible – it only gets harder as time goes on and the vehicle depreciates.

If you’ve qualified for refinancing in the past and want to try again, it could be more difficult the second time around. A lender may see that you’ve already refinanced your auto loan and may be hesitant to approve you again. Refinancing the same car loan multiple times could be a sign of overextension – your auto loan may be too big for you to chew and they may take notice.

If you’re not sure that refinancing your vehicle for the second time is possible or you’re concerned you don’t qualify, trading in the car for a more manageable loan could be the next step.

Trading In a Challenging Auto Loan

A very common way to upgrade a vehicle or get a more manageable car loan payment is by trading it in for something more affordable. Most dealerships accept trade-ins, and the money you receive from a dealer could be applied to your next vehicle’s down payment to lower the selling price.

For a trade-in to help you with your next car purchase, it needs to have equity. Equity is when you owe less on the loan than what the vehicle is worth. The actual cash value (ACV) of your trade-in is determined by the dealer after they appraise your vehicle. You can’t find the ACV ahead of time, but you can look up estimated values on websites such as Kelley Blue Book or NADAguides. Once you have an estimated value of your vehicle, compare it to your current loan balance to find out if there’s equity in your car.

If you find that your loan balance is higher than a possible trade-in value, you have negative equity – also called being upside-down. An auto loan in a negative equity position doesn’t help you lower the selling price of your next vehicle.

Additionally, it can be harder to remove the lien from the title in this position, because you have to finish paying your loan before you can trade-in your car. Without equity, you have to come up with the money to pay your lender out of pocket. Often you can combine cash with trade-in equity to come up with the amount you need. However, if you’re unable to do this, you may be able to roll over the negative equity onto your next loan.

Finding a dealership that can take your trade-in may be somewhat easy, even if it requires a little legwork. As we mentioned, most dealers accept trade-ins, and they prep them to be resold on their lots. It’s a good idea to call around to dealerships in your area and get some estimates over the phone, and we recommend calling at least one franchised dealership that sells your vehicle’s make, since you may get a higher offer from them.

Finding a Resources for Your Situation

Finding a lender that can refinance your car loan might prove difficult, especially if you’ve already refinanced before. If you’d like some more resources and information on refinancing a car loan, we want to help you find those here.

Even if most dealerships do accept trade-ins, you may not always be able to work with their lenders. It’s not always easy locating a dealership that can assist with bad credit situations, and qualifying for refinancing can be hard with poor credit, too.

There are dealers that are signed up with bad credit lenders, but they don’t always stick out from the crowd. Here at Auto Credit Express, we aim to make it easier for borrowers to find dealerships that specialize in helping those with poor credit. To get matched to a dealer in your area with the lender resources for tough credit situations, fill out our free auto loan request form.

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