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Used Vehicles and Bad Credit Borrowers: Smart Car Shopping

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When you’ve got less than perfect credit, going for a used car is a smarter decision than seeking that brand-new vehicle. Not to mention, used cars are becoming the preferred choice for borrowers across the credit score spectrum.

Used Cars Becoming More Popular

Used Cars and Bad Credit Borrowers: Smart ShoppingYou don’t have to settle for the clunker in the back of a used vehicle lot – but now may not be the time to finance the most expensive car, either. When you’re struggling with poor credit, reliability and good loan terms should be at the front of your mind.

More specifically, you should choose a reliable vehicle that’s going to last, and one that you can comfortably afford each month without breaking the bank. It seems obvious, everyone wants a reliable car! But one of the main goals you should focus on with your bad credit auto loan is repairing your credit for future purchases.

Not only does having a high credit score improve your chances of getting approved for new credit later, it can also save you money. Having a good credit score means a higher chance of qualifying for the lowest interest rates and the best car loan deals offered.

However, you have to start somewhere. And a reliable used vehicle with a bad credit auto loan could be the ticket.

Recently, even good credit borrowers are increasingly going for used cars. The data shows used vehicle purchases are on the rise across all credit scores. While everyone was locked indoors during statewide shutdowns due to COVID-19, dealers began shifting their focus from new cars to used ones, and they’ve started showcasing their certified pre-owned vehicles.

Worried About Getting a Used Vehicle? Try a CPO Car

If a used car seems risky to you, check out a certified pre-owned (CPO) vehicle. A CPO auto loan can be seen as the middle ground between new and used, and it can be a good option for borrowers who want a newer car without the hefty price tag.

CPO vehicles are inspected by a manufacturer-certified mechanic, cleaned, and come with some type of warranty. Many CPO cars are also just coming off-lease, and usually have lower mileage. Since a CPO’s selling price is generally cheaper than financing a brand-new one, borrowers who are looking for reliability are starting to turn toward the certified option for the most bang for their buck.

If you work with a bad credit auto lender (or subprime lender) and you qualify for financing, you may be able to get into a CPO vehicle. Subprime lenders operate through a dealership’s special finance department, so bad credit borrowers who meet the requirements could qualify.

In general, CPOs tend to be more expensive than regular used cars, since they come with more perks. If you don’t quite meet the requirements of a CPO vehicle, opting for a used car is still a smarter financial choice for borrowers with questionable credit scores.

Subprime Lenders and Improved Approval Chances

When you apply with a bad credit auto lender, they determine what monthly payment you qualify for based on your individual information. This is done by looking at many aspects of your credit and financial life: credit history, income, living situation, expenses, overall stability as a borrower, and more.

Once the subprime lenders determine how much vehicle you can afford, they tell the dealer. You then work together to find a car that fits the monthly payment you qualify for. Getting your monthly payment to a lower amount can be easy if you simply extend the loan term, but you should choose a used vehicle that’s reliable, while keeping your loan term as short as you can.

After you narrow down some car choices, you’re going to need a down payment. This can vary, but subprime lenders typically require borrowers to have at least $1,000 or 10% of the vehicle’s selling price. The more expensive the car, chances are, the more you’re going to have to put down to get into that vehicle. Poor credit borrowers are usually required to put money down to prove to the lender that they’ve got skin in the game, and down payments improve your chances of getting approved.

Meeting the down payment requirement gets easier when you go for a cheaper car – another reason why many bad credit borrowers opt for used vehicles. On top of all this, bad credit borrowers are more likely to get approved for used cars anyway, due to the lower sticker price.

Repairing Your Credit With an Auto Loan

If you work with a subprime lender, the auto loan itself could give you the chance to repair your credit. Subprime car loans are reported to the credit agencies, and with on-time payments, you can rebuild your credit. However, if you go for a long auto loan or one with high payments, you could be putting yourself in the hot seat, and risk damaging your credit.

Since borrowers with lower credit scores don’t normally qualify for the lowest interest rates, you could also end up paying more for that expensive new vehicle than what it’s actually worth.

Car loans almost always use simple interest, which means the charges stack up daily. The more you owe and the longer you owe, the more you pay in interest charges. Some bad credit borrowers find themselves with double-digit interest rates, which can end up being very expensive on a loan for a new vehicle.

Additionally, due to the higher selling price of new cars, many borrowers find themselves stretching their auto loan terms to the max, taking out 84-month loans, or sometimes higher, just to afford the monthly payment. Again, long loan terms can spell disaster for a bad credit borrower who’s more likely to only qualify for a high interest rate.

Not to mention, who wants to be stuck with a monthly payment for eight or more years for the same vehicle? Shorter loan terms save you more in interest charges, and a cheaper car means a lower monthly payment, too.

Ready to Find Your Next Used Vehicle?

Overall, a bad credit borrower needs to choose a sensible vehicle that’s reasonably priced, and go for auto loan terms that they can afford long term. Car loans are big commitments, often between five to sometimes eight years long. If you go for a new vehicle with a high monthly payment that rides the edge of your budget, you could end up damaging your credit if something happens. Focus on repairing your credit now, so you can save more cash and qualify for better deals later. Credit repair is a long-term game – play wisely!

If you’re ready to get into your next auto loan, start your car shopping journey right now with Auto Credit Express. We’ve got a nationwide network of dealerships with special finance departments that are equipped to work with bad credit borrowers. To get matched to a dealer in your local area at no cost, complete our auto loan request form.

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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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Loans Bad Credit Online – Loans Online – Yes, You Can Refinance a Car loan. Should You? | News | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Online – Yes, You Can Refinance a Car loan. Should You? | News | Fintech Zoom


Cars.com illustration by Paul Dolan

Record low interest rates have given many homeowners refinancing fever, with mortgage refi up 51% in mid-February from a year ago, according to the Mortgage Bankers Association. That fever might be contagious, causing you to wonder about refinancing your car loan for similar reasons: getting a lower rate that offers a quicker payback or a lower monthly payment. 

Related: How to Calculate a Car Payment

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Could you refinance? Quite likely. Unlike with some mortgages, it’s rare that your current loan will have a prepayment penalty or a fee for paying it off early. Also, unlike mortgages, it’s rare for an auto refinance to have significant upfront costs for the new loan. 

Refinancing is “pretty quick and pretty easy to do,” said Phil Reed, an automotive columnist at financial advice site Fintech Zoom. He added that typically, not a lot of documentation is required: There’s “no reason not to if you think you can get a better rate.”

But that’s the question. 

“For a successful refi of an auto loan, you have to meaningfully lower the rate and not extend your loan term,” said Greg McBride, senior vice president and chief financial analyst for personal finance site Fintech Zoom.

It might be tough to find a significantly lower refi rate for a couple of reasons. First, auto loan rates have been low for a while, so most people already have a pretty good rate for their situation. Second, when you refinance a new-car loan, you’re now borrowing on a used car. While the gap on interest rates has narrowed in recent years, used-car loans still have higher rates than new-car loans. 

“You have to move the rate a lot more to generate meaningful savings,” McBride said. On an initial loan of $25,000, he added, “8% to 7% saves less than 10 bucks a month, [while] 8% to 4%, now you’re saving $28 a month.”

And it’s tempting to save more per month by extending the loan term, to add a year or two to your payback. Bad idea, say the experts: Even at a lower rate, paying interest for more months could mean you’ll actually spend more to pay off your car in the long run. The smart financial choice is to keep your payment level and pay the car off faster. 

“If you’re getting a better rate, you should shorten the loan, but that’s a hard thing to tell people,” Reed said.

These Are the Best Refi Candidates

All that said, some people definitely should be looking at a refinance. The prime candidates are people who have significantly improved their credit score — their creditworthiness as rated by the major credit reporting companies (Equifax, Experian and TransUnion) — since taking on a relatively high rate for their current auto loan.

“If you’ve improved your credit, if you were in a corner before and you ended up paying an above-market rate, that’s the classic example” of a good refi candidate, McBride said.

You can check your current score with the big credit companies through one site. Federal law entitles you to one free report each year. However, during the COVID-19 pandemic and through April 2021, the companies are offering free weekly reports at the same site. If you need to improve your credit score, plenty of advice exists on how to do that, including this piece at Fintech Zoom

A second group due for a refi would be consumers who arranged financing through a dealer and ended up paying more for the loan than they should have. This can happen when the dealer arranging the loan gets a rate quote for the buyer from a lender and then marks up the loan to a higher rate for the service. Many lenders allow this hidden markup, an extra profit for the dealer at the expense of the buyer.

“Perhaps they were taken advantage of in a dealership,” said Reed, who noted that shoppers with mid-tier credit are most vulnerable to this. Federal settlements also indicate the possibility of higher risk for minority buyers. Reed says it’s easy to happen to car buyers. 

“Your head is spinning when you’re in the [dealership’s] finance office,” he said. “And a lot [of] people are very, very vulnerable talking about credit.”

The danger is one reason the experts and the Consumer Finance Protection Bureau all recommend shopping around for loans ahead of time and getting preapproved for financing before you go to a dealership.

Not-So-Good Candidates for a Refi

If you took a long new-car loan and you’re currently underwater — meaning you owe more than the current value of the vehicle — a refi is not likely the answer. Even if you find a willing lender, your collateral for the loan (i.e., your vehicle) is worth less than the amount you want to borrow. 

If you find someone, you’re not gonna get a great rate,” McBride said.

A refi is also a risky option if you are struggling to make your payments. 

“Getting a lower payment is a possible strategy if your only option is missing loan payments,” Reed said, but it’s a risk. “You can lose your car and damage your credit and end up with no options. That’s a downward spiral.” 

Before trying to refinance, McBride advises contacting your current lender for help. “Payment forbearance is extremely common,” he said. “Go to your existing lender for payment relief if you’re experiencing financial distress. Working with your lender won’t work against your credit.”

More From Cars.com:

How to Decide — and What to Watch Out For

  • Shop around: Contact at least three lenders for rate quotes, starting with your current lender. Most lenders will do what’s called a “soft credit check” to evaluate you as a potential borrower and estimate your loan rate. Your rate will not be final, however, until you formally apply, have a full credit check (known as a “hard” check) and get a new loan offer to sign. 

“Be prepared for the end result to be higher than [the] original quote after a credit check,” Reed said. But the lender “should explain” the reasoning, which could include a credit issue or even a change in the value of the vehicle.

  • Guard your social security number: Getting an initial estimate should not require a lot of your information.

“Be wary of any company that is taking a social security number, both for security and also because it lets them [check] your credit out of your control,” Reed said. “Be clear on whether or not they are doing a ‘hard’ credit check, which requires an SSN” and can affect your credit rating.

  • Calculate the benefit: Cars.com offers a loan calculator you can use to compare your current interest rate and months remaining on the loan with any new rate quote. You can see what you might save per month. You should also calculate and compare the total interest you’d pay over the life of the loan, which might convince you to keep the same payment and shorten the loan. Along with banks, credit unions and other lender sites, the finance sites also list potential refi lenders.
  • Shop around, but move quickly: Multiple loan applications over an extended period can be a red flag for credit agencies. Each actual application will trigger a full credit check. 

“Don’t drag your feet doing several lenders over a few months,” McBride said. He added that you will not be penalized for shopping around, however, if the multiple applications are all within a “compact time frame” of 30 to 45 days. “All those are counted as one application.”

  • Read the loan offer and check it twice: Don’t sign until you know the details. 

“You need to make sure that what you get in the mail matches what you arranged online,” Reed said. “You run the possibility of them inserting something in the loan document you are not aware of. You could be signing something that is not right. They could put a service contract or a warranty in it, or put fees in that they rename as something else, saying ‘everybody charges that.’”

Related Video:

Cars.com’s Editorial department is your source for automotive news and reviews. In line with Cars.com’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of Cars.com’s advertising, sales and sponsored content departments.


Loans Bad Credit Online – Loans Online – Yes, You Can Refinance a Car loan. Should You? | News | Fintech Zoom

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