3 Things to Understand When Purchasing a Car on Bad Credit

If you want to buy a car but you have a bad credit, expect the dealer to require you a downpayment. But, if you know how, you can purchase a car without shelling out any money. You just need to understand a few things:

1.) The reasons why a down payment is required
The usual reason why a downpayment is needed is that it brings in additional profit to the sale. Aside from this, it is also needed in order to bring down the entire amount that will be financed for the approval of the lender. If you know the real reason why your lender is seeking for a downpayment from you, then you can work your way to lowering the amount or minimizing it completely.

2.) Your financing options are not limited
Even if you have bad credit, you are not limited to seek your financing from a car dealership. Many people think this way that is why they do not dare try seeking for bank loans. Moreover, settling for car dealership financing is the main cause of unnecessary expense because of the unreasonable finance charges. To avoid this, try traditional loans or other means to obtain cash for your car. You will never know if a bank or other lender will reject or approve you. You might as well try because you may be in for a surprise.

3.) Car dealerships increase their car prices
Everyone knows this and so must you. Not only do they mark up the prices of the car they are selling. They also do this for the interest rate they charge with it. If you seek financing from them, they will give your application to a lender. Then, the lender will give you an offer at a certain rate. Since you have a bad credit, the dealership will increase the interest rate by an average of 3%. The additional rate goes to the dealership as profit. This is not yet accounting for the revenue they already get from the sale of the car without the interest.

Bottom line, you can buy the car that you want without the need to give a downpayment or even despite of your credit standing. You only have to seek for other loan alternatives aside from car dealership financing.

Financial Options Aside from Taking a Payday Loan

When you are just beginning with your life as an adult, you have to make the right decisions financially. A lot of people embark in the real world without having the right financial knowledge. Because of this, they end up making the wrong decisions that have a long term effect on their life. Some of these include being trapped in debt caused by taking out certain loans that becomes too difficult to pay. To avoid suffering in the long run because of your poor financial choices, you have to know your financial options that will not put your financial status in danger. Here are some of them.

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1.) Credit Union Loans- this is a small, short term loan offered by your local credit union if you are a member.

2.) Small Bank Loans- this is a small loan offered by traditional bank lenders.

3.) Cash advance from employers- some employers provide this loan. You can ask them to give you your paycheck in advance instead of seeking for a payday loan that will charge you with high fees and interest.

4.) Borrow from friends and family- Do not allow your pride to stop you from borrowing money from close family and friends. But, when you do obtain assistance from them, know your limits and set your expectations straight so that you will not end up destroying your relationships.

5.) Start an emergency fund- You must start building up your savings to reach an amount that can pay up for your six months worth of expenses. This is what you call your emergency fund. If you do not have this now, start it. This will help you avoid taking out any type of loan in the future.

6.) Use your credit card for emergency only- If you have a credit card to turn to, you do not need to obtain a loan just to pay for emergency expenses. Use your card for emergencies or only if you know that you can repay the balance of your card as soon as possible. Doing this will not only help you prevent payday loans, it will also allow you to maintain a good credit rating that is truly beneficial for your financial future.

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Business Aspects to Consider in a Financial Review

If you are a business owner, your company is as important as your health. Because of this, it is also essential that you conduct a regular review with a reliable banker of your company’s financial situation as religiously as you visit the doctor for medical consultation.

Reviews of your business’ finances are important for your company especially with the constant changes and developments in a business. This will ensure that your business has the right services and products for your customers. It will also help you making the decision to take a new loan or credit line for expansion. It is also beneficial before making repairs or buying new equipment. Business improvements are a great way to keep attracting both new and old customers.

But, what are some of the aspects that you must look at when conducting a financial review? Here are the main ones:

1. Loans and Credit Lines
Regardless if your business needs a new loan or not, it is still best to ask the bank of the different loan types and credit lines they can offer. Find out if there are loans specifically for purchasing equipment, real estate, leases or construction. Also, if you own a small business, you may want to find out if it provides Small Business Association loans because this can free up cash flow if you are eligible. Establishing a credit line is also a good business practice.

2. Convenience Banking
Determine if the bank has an online banking system that is easy to use, safe and convenient. Also, find out if the bank’s system can meet your business’ daily banking transactions. Familiarize yourself with the website to know the types of programs they provide.

3. Managing Treasury
You must review financial statements with your banker to know the possible improvements that you can do with your business and to find out where you can save money. You may also want to check the kinds of treasury management services the bank provides like remote deposit, check imaging, fraud prevention or lock box.

4. Business Relationship with Bank
Finally, evaluate your relationship with the bank. Ask yourself if the bank knows your goals and understands your business. Think about the type of relationship you have with the bank if you can consider it as a good one. Assess if you can trust them with your business. Choose a banker that gives time to know your business and understand it thoroughly.

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A comparative, state by state study by the Investor Education Foundation of the Financial Industry Regulatory Authority was conducted to find out the financial behavior of people across the 50 US states.

About 28,000 people participated in the study. They were asked several questions related to five major financial issues. The results showed three cities with the most financially responsible residents. The three cities are New York, New Jersey and New Hampshire. Contrary to the satisfactory financial capability of these three cities, Oklahoma, South Dakota, Texas and Kentucky residents are struggling to budget their money.

The result of the study is very helpful according to most experts. According to Gail Cunningham of the National Foundation for Credit Counseling, the experience of recession serves as a wake-up call for most consumers to reflect and change their financial habits. This study can serve as a guide for many people in the way they manage their finances.

The differences in financial attitude among people from different states may be attributed to several factors. According to the Financial Literacy Center’s director Annamaria Lusardi, the state’s economy which includes the local housing market and rate of unemployment is a factor. Another is the lack of financial knowledge and literacy says Rick Ketchum, CEO of FINRA Foundation. Financial literacy in New Hampshire, Minnesota and South Dakota is higher than those living in the cities of Kentucky, Arkansas and Tennessee. Ketchum further adds that aside from these, there are other factors in play that can mislead people to make uncalculated investments and expensive loans.

Other factors considered in the study that highly influence financial behavior are age and gender differences. Results showed that younger people have a tendency to depend on payday loans and tax advance refunds instead of bank loans. Most of the young ones also lack emergency funds. This is not a surprising finding but this is very alarming. The young group must start their careers without having too much credit card and student loan debt to be able to achieve a good credit, maintain a satisfactory financial standing and practice the right financial behavior.

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Many people are able to receive bad credit personal loans after bankruptcy, often as soon as 30 days following the discharge of the bankruptcy. Many companies have actually found a pretty good market offering these loans to their clients.

You see companies are willing to do this knowing that a person cannot claim bankruptcy for a minimum of seven years following the bankruptcy discharge.

This opens a new market where some lenders will take a chance of people with a bad credit rating knowing they have legal recourse to recoup the amount of the loan.

Although most traditional lenders simply will not grant bad credit personal loans after bankruptcy there are numerous lenders that fight over the market.

At the time of writing to my knowledge there are no laws in place to stop people from taking on these loans, even though people are required to go to counseling lessons they are not actually forced to follow-up on everything they are told.

Once the bankrupt individual has discharged his bankruptcy he or she should be free to go after a bad credit personal loan when they feel the time is right.

We all know that bankruptcy records are totally public and this very often causes people a lot of embarrassment and difficulties in getting by. For this reason people are often in a rush to get back on their feet and many feel that a personal loan after bankruptcy is the answer.

Some people are maybe a little bit too desperate and find themselves repeatedly having to file a bankruptcy in a continuous seven-year cycle. I’m afraid the new bankruptcy law has not managed to put an end to this.

The absence of a law against bad credit personal loans

While many laws exist over who can offer bad credit personal loans after bankruptcy and the interest rates charged for them, there are no laws governing who can apply for them.

Many folks take out these loans despite the well-known fact that they come with very high rates, even folks who have been through multiple bankruptcies in the past still very often take them out.

It is the norm for lenders in this industry not to require collateral for the loan. The truth of the matter is that because of the legal recourse available which can include Wade garnishment, even when the loan goes into default the lender stands to make a profit.

You see when someone defaults on one of these loans a court ordered repayment is commonly granted right away for however much the loan comes to, plus all costs involved with the collection of the loan.

Either way you are strongly advised to consult your lawyer on anything relating to this as bankruptcy and these kinds of loans are to be taken very seriously, also like in all markets there are scams to be avoided so you must check out any deal you are interested in very closely.