Can I lower my car payments by trading for a less expensive car — trade down?
Yes — maybe.
But whether it’s a good thing to do will depend on your particular circumstances. Let’s take a look.
If you want to trade your car for a cheaper car, it probably means you are finding it difficult to afford payments on the car you now have. Or you simply want to trade down to have a little extra money each month by lowering your payments.
Let’s look at the two different possible situations, one of which will probably match your own situation.
You are “upside down” on your current loan. That is, you currently owe more on your loan than your car is worth as a trade-in vehicle. You can determine how upside down you are by first asking your bank or loan company to give you your loan payoff balance. Then compare that amount to the actual trade-in value of your car (see www.kbb.com and www.nadaguides.com). The difference in the two amounts will tell you how much you are behind in your loan (“negative equity”).
Continue reading Can I trade my car for a cheaper car?
How to Buy a Car With Zero Money Down
We often hear the questions, “How can I buy a car with zero down payment?”, ” Is it possible to get a car with no money down?”, or “How much down payment will I have to make for this car?”
There are a number of ways to acquire a new or used car without making a down payment, or making a minimal down payment. Let’s take a look.
New car without down payment
Most new-car purchases require a down payment but here are four cases where it is possible to escape that requirement:
1. You get a highly discounted purchase price such that the loan-to-value (LTV) ratio is 100% or less — that is, the loan you need is equal to, or less than, the value of the vehicle. Most loan companies set a new car’s value at sticker price. So, when you negotiate a lower price, you reduce the requirement for a down payment — assuming your credit score, income, and income-to-debt ratio are acceptable.
Continue reading How to Buy Car With No Down Payment
Should I buy a car with high mileage? How many miles are too much?
We frequently hear these questions from people looking for used cars for sale.
Generally, 15,000 miles a year is considered an “average” number of miles per year. So a car that is 5 years old would have about 75,000 miles to be considered “average.” Anything significantly more, and a car is considered to be “high mileage.” Anything significantly less, and it’s a “low mileage” car.
What does it mean if a car has high mileage?
Does it mean you should avoid cars with “high” mileage? Or that low mileage is always better?
Are cars with high mileage a bigger risk? Will they break down sooner?
Not necessarily, to all these questions.
In the last decade or so cars have become much more reliable than years ago when a car was looked at as junk when it reached 100,000 miles. Not so anymore.
Many modern cars with 100K-150K miles are in great condition and will easily go another 100K.
However, if a car has not been maintained properly and has been driven hard or previously wrecked, it can be junk with only 30K miles on the odometer.
Continue reading How many miles are too much for a used car?
There are literally hundreds of web sites on which you can find used cars for sale — and I emphasize the word “find.”
However, there are very few sites that allow you to actually purchase the cars you find, and fewer still that will deliver the cars for free, provide a warranty, and offer a return policy.
There is one that I like and can highly recommend — Vroom.
Let’s look at the reasons we think this is arguably the best used car buying site out there — and the safest.
- Shop 1000s of late-model, low-mileage vehicles: Teslas to Toyotas, Jeeps to Jaguars, and everything in-between
- Vroom only sells cars with clean titles that have never been in an accident. Every Vroom car is inspected multiple times for safety, mechanical, and aesthetic issues.
- Free AutoCheck vehicle history report
- They don’t haggle on price—they just set the price real low. 8% lower than the market, on average.
- Free 90 day, 6000 mile warranty
- Full year of 24/7 roadside assistance coverage
- 30+ banking and finance partners compete over who gets to finance you. Rates start at just 2.49%.
- Complete your purchase from home without ever having to visit the car dealership — free delivery to your home or office.
- Free vehicle returns for 7 days or 250 miles
And here are some numbers that show that they are for real and worth considering for your next car purchase:
- Generated over $1B in revenue in 2016 selling over 50,000 vehicles
- 250,000+ happy customers
- 3,000+ cars and trucks in stock across 400+ makes and models
- 110 acres of vehicle reconditioning facilities
The Internet has always provided a great way to research cars, see reviews, and find them for sale but it’s been only recently that it’s also become a good risk-free way to actually purchase vehicles, take care of the paperwork, and have your car delivered to your driveway — all without your having to leave your home or office.
You owe it to yourself to check out this fantastic way to buy your next used car online at Vroom.
Still concerned about risk ? Let’s just be reminded of the following:
- Reputable company and good business history
- Great online support
- Full inspection and free AutoCheck reports
- Clean titles
- Roadside assistance
- Limited warranty
- Return policy
Give Vroom a try. You won’t regret it.
Can I trade my car if I have bad credit?
It’s like the answer to a lot of other questions, it depends.
It depends on how bad your credit is, what dealer you want to use, where you’ll look for financing, and the status of the existing loan on your trade vehicle.
Let’s take a look at how it might work.
I need a new car, and have a car to trade, but my credit is not good. How does it work?
In this case, it’s good that you have a vehicle to trade because it can be used as a down payment on a new vehicle loan — assuming you are not “upside down” and have some equity to use as trade credit.
Continue reading Trading Car With Bad Credit – Explained
Car Financing Explained
If you can’t pay cash when you buy your new or used car, you will need a loan, commonly known as “financing.”
Auto financing can come from a number of sources — banks, credit unions, online loan companies, finance companies associated with car manufacturers, or even from certain types of used-car dealers.
f you are buying a brand new car from a new-car dealer, he arranges your loan for you (if you haven’t already arranged one for yourself) with his “captive” finance company. A “captive” finance company is one that is owned by a car manufacturer and used by dealers who sell that manufacturer’s vehicles. Examples would be Ford Credit, Honda Financial Services, and Porsche Financial Services.
If you car buying a used car from a dealer, he may have a number of finance sources that he works with to arrange customer car loans. These may include local banks, large national banks, or national finance companies.
Continue reading How Does Car Financing Work?
How to buy a car from a private party, not from a dealer
When you buy a used from a private party individual instead of a dealer, things are a little different in the buying process. It’s a good idea to take extra caution especially with regards to exchanging money and title.
Since an individual seller can’t arrange financing for you if you need a loan, as a dealer can, you’ll be responsible for getting your own financing at a bank or credit union, or at an online finance source.
What’s different when you buy a car from an individual?
Advantages of private car purchase from an individual
• Possibly better purchase price than dealer retail price
• Individual sellers tend to be more flexible on price and negotiating
• Individual sellers tend to be more agreeable to buyer inspections and test drives
• No sales tax (in some states) on private car sales
Continue reading Buying Used Car from an Individual – Explained
How and where to get a used-car loan
There are a number of options available to used-car buyers in need of financing:
Dealer Loan – If you buy your car from a dealer, he will arrange your financing with a bank or loan company that he works with. Dealers don’t provide loans and financing themselves, it’s always done through a bank or finance company — except for “buy-here-pay-here” dealers that we’ll discuss below. See our article, How Does Car Financing Work.
Bank or Credit Union Loan – You can arrange your own auto financing with your own bank, credit union, or an online loan company. If you are buying your car from an individual (“private-party”), this is the way you will get a loan. It’s best to make application to your financing source before you buy so that you’ll know exactly how much money you are able to borrow.
Online Auto Loan – You can also finance your car purchase – from dealer or individual – with a loan from an online auto loan company such as Auto Credit Express.
Continue reading Car Loans and Financing Explained
Can a Dealer Take Back a Car After Papers Are Signed? Is it Legal?
The short answer to the above questions are Yes and Yes.
It’s a fairly common situation.
You buy a car from a dealer who arranges a loan, you sign the papers, possibly make a down payment and/or trade an old vehicle, and you drive away — thinking the deal is done.
You may have received the impression from the dealer that your loan was approved, which is presumably why you were allowed to drive away in your new car.
However, most dealers don’t provide or approve loans (except for buy-here-pay-here used car dealers). They use outside banks or finance companies. One of the papers you signed was a loan application, not a loan approval or grant.
Continue reading Dealer Wants Car Back – Legal or Not?
Having bad credit can cause difficulties when buying a new or used car if you need a loan.
However, most people with a low credit score have options that will allow them to get the car they want.
About your credit history and why it is important
Just to be clear, anyone who has ever had a loan, mortgage, or credit card has a credit history file. That file is a detailed report of every loan or account a person has had. It shows account details, credit amount, current status and balance, and payment history. If there have been late payments, missed payments, repossessions, bankruptcies, or foreclosures, those are also in the file. Negative information in the file can remain there for up to 10 years.
When you apply for an auto loan, the lender (dealer, finance company, bank, or credit union) will check your credit history to determine your credit worthiness — which is a measure of how likely, or unlikely, you are to keep your promise to repay your loan — based on your past performance.
However, car dealers and finance institutions don’t take the trouble to read your detailed credit report. Instead, they look at your credit score, which is a numerical rating that summarizes your entire credit history.
Continue reading Bad Credit Car Loan – Options