Tag Archives: credit

Do I Need A Co-Signer?

Who needs a co-signer for a car loan? How does it work?

need a co-signer for car loanNew or first-time car buyers are often surprised at being turned down for a car loan because they have no credit history, which unfortunately has about the same effect as having bad credit. Getting a co-signer might be the answer.

Lenders want to see that a borrower has a good record with previous loans and credit cards. Without a history of credit, a borrower represents a risk to lenders. If they don’t know a borrower’s history, they take the low road and assume the worst.

It’s a familiar “catch-22″ situation in that you can’t get a loan to establish credit without already having credit. So what is the answer?

What is the answer?

The most common solution is to have someone “co-sign” your loan contract. Typically, it’s family member who has a good credit score. A co-signer plays no part in the loan unless the primary borrower fails to make payments. In that case, the loan company would have the right to seek payment from the co-signer.

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How to Buy a Car with Bad Credit

buy car with bad creditBuying a car with a low credit score?

Having bad credit means that sometime in your past, possibly as far back as seven or ten years, you have had missed or late loan payments, repossessed property or cars, or have declared bankruptcy. You may also have an excessive number of credit cards with high balances. These factors are included in your credit history reports that come from three credit reporting agencies: Transunion, Experian, and Equifax.

Your entire credit history is summarized in a single number, called your credit score.

Your credit score determines if you’ll get approved for a car loan, how much you’ll in interest, how much down payment you’ll pay, and even how much you’ll pay for auto insurance.

Continue reading How to Buy a Car with Bad Credit

What is a Credit Report?

credit reportHow do I get my credit reports and my credit score?

Whenever you apply for any type of credit or financing, a credit report is pulled from at least one of the three major credit bureaus. While there are hundreds of smaller credit bureaus around the country, virtually every credit bureau is affiliated with Trans Union, Experian, or Equifax.

These credit bureaus collect and maintain information on the vast majority of Americans, but they are not affiliated with the government in any way. The credit bureaus are for-profit corporations that sell your personal information for money.

The credit bureaus receive your personal information through the same lenders who grant you credit. They have agreements with each of these credit grantors that require the credit grantor to inform the credit bureaus of everything that occurs in your relationship with the credit grantor. If you make a payment late, the negative credit listing is quickly reported to at least one of the three major credit bureaus and is added to your credit history.

How to Buy a Car With No Credit?

Is it possible to get a car loan and buy a car with no credit?

The answer? Yes, under some conditions. Let’s explain.

It is a common situation, especially with young people who have never had a loan, never had credit cards, or never borrowed money for a car. Without a history of prior loans and payments, there is no credit history and no credit score, which is the number that represents credit rating.

In fact it is not quite sufficient to simply have a good credit score to get a car loan — or any loan. You may also need to have an established steady income (a job) and no excessive debts. You should have no recent bankruptcies or auto repossessions, which you wouldn’t be likely to have anyway if you have no credit.

So how is it possible to buy a car with a loan when you have no credit record and no credit score? Continue reading How to Buy a Car With No Credit?

Is THIS a Good First Car?

cheap auto insuranceI regularly answer people’s car buying and selling questions on Yahoo Answers (My user name is TiggyWiggy, my cat’s name) and one of the most frequent questions that comes up several times a day is, “Is this a good first car for a teen?”  And in the details, they’ll state what car they are talking about. It might be anything from a 1980s Oldsmobile with 200,000 miles, to a brand new high priced luxury car, to a big SUV, a high-powered sports car, or a 1960s muscle car.

More often than not, the car they like is NOT a good first car. I sometimes think they know that, but they are looking for some opinions otherwise. Often, they are in disagreement with sensible parents who are opposing their poor choice.

Here are some of the kinds of vehicles asked about:

Old inexpensive used car, unknown condition, high mileage

Many old cars, even with high mileage, can be in excellent first cars. However, most old cars have problems, some serious (and expensive), some not so serious.  And no car, even a reliable brand such as Honda and Toyota, are exempt from problems when they begin to age. The only way to know whether such a car is a good first car is to have a professional mechanic inspect it before the purchase. It’s not a good practice to rely on the word of a seller in determining a car’s condition. Not that sellers are all dishonest, but sellers and dealers often don’t know the real condition of the cars they sell.

Continue reading Is THIS a Good First Car?