Nov 28
adminAuto Loan Amazement, Auto Loan Rate, Auto Refinancing, Bad Credit, Car Payment, Car Payments, Declaring Bankruptcy, Finance Company, Frontier Pickup, Interest Rate, Loan Refinancing, Nissan, Nissan Frontier, Nissan Pickup, Pickup Truck, Rate People, Refinance Auto, Refinance Loan, Surprise, Time In My Life
Are your car payments too high? Would you like to lower your car payments? I’m going to explain a little trick to you that is so simple and so effective, that just about anyone can get a lower monthly car payment on the car that they’re already driving, without having to refinance their auto loan!
The reason that this works so effectively is because of something that is called a dealer add-on rate. Most people are not aware the dealerships can actually increase your interest rate and that they make money on that. That topic is for another article, however that is the reason that this technique works and is very effective.
In 1998, I had a Nissan frontier pickup truck that was financed at a rate of 16.8%. The reason the rate was so high, was because I have bad credit and was going through a very tough time in my life. After having made payments on the vehicle for two years, I found myself in a worse position and was looking at the prospect of declaring bankruptcy. With not too many options on the table, I picked up the phone and I called my finance company that my truck was financed with. Being about 30 days late at the time on my truck payment, I told them that I was looking at the prospect of declaring bankruptcy and was wondering if there was any way that they could refinanced my vehicle to lower my monthly car payment.
Much to my surprise, by simply making that phone call my interest rate was reduced down to 12%. This lowered my truck payment by $73 per month. I thought well, if this worked with this finance company, I might give it a try and call about the car that I have financed with another company. To my amazement again, my interest rate was lowered from 11%, down to 9%. This saved me even more money each month.
So, before you set out trying to find another finance company to refinance your current auto loan, you may want to give this a try. Just call up your finance company and tell them that you’re having a hard time paying your bills and that you want to avoid having to declare bankruptcy. You may be pleasantly surprised at the response.
Sep 03
adminHpi Check Apples To Apples, Bank, Borrowing Money, Business, Business Financing, Business Owners, Capital Assets, Check, Duration, Equipment Finance, Expansion Project, Finance Companies, Finance Company, Finance World, Financing, Fixed Deposits, Good Reason, Interest Rate, Interest Rates, Multiple Services, Point Of Reference, Reality, Reality Check, Secure Place, Set In Stone
Business owners and managers want to compare equipment finance companies to their bank and for a good reason; a bank is a company’s first point of reference when borrowing money or financing equipment or an expansion project. A bank is the most obvious place to start and a secure place to store your money and use their multiple services. But what a bank does not do well, both historically because of their structure and the recent tightening of the credit market, is offer business financing for capital assets (equipment). Yet many people get confused when looking for an equipment loan because they are not seeing the whole picture; this is a case where you definitely want to compare apples to apples to get the best results.
Here are a few points to compare; these are not set in stone but based on years of experience, these trends apply a majority of the time.
1) Total Dollars Financed – banks normally require that you keep a balance of 20% or 30% of the equipment loan amount on deposit.
This means they are only financing 70% or 80% of your equipment costs because you have to keep a certain amount of YOUR money in a fixed account for the duration of the loan. In contrast, an equipment finance company will cover 100% of the equipment including all “soft” costs and will only request a one or two month prepayment. No fixed deposits required.
2) Soft Costs – banks also will normally not cover “soft” costs like labor, warrantees, consulting and installation which means these costs come out of your pocket. An equipment finance company will cover 100% of the equipment price including “soft” costs and some projects can be financed with 100% “soft” costs which no bank would ever consider.
3) Interest Rates – this is the most popular question in the finance world; what’s my rate? If the bank requires 30% deposit in a fixed account then that automatically raises a 5% interest rate to a 20% rate.
Now people will argue that you get that deposited money back at the end of the term but that is money which you do not have access to and has an opportunity cost associated with it. Equipment finance companies target their financing rates between 3-5% for cities and 7-9% for commercial financing which is a real fixed rate and not under-stated as the bank rates can be thus independent finance company rates are very competitive with “true” bank rates.
4) Process Speed – banks often take weeks to review and approve a finance request while independent finance companies normally only take a few days and can work much more quickly. Finance underwriters only review business financing while a bank has other types of requests clogging their channel.
Banks also have many more levels of approval and review to pass while independent finance companies normally only have two, underwriting and credit committee. Even with complicated deals, the finance company’s process is always faster.
5) Guarantee – banks require, as a standard part of their documentation, a blanket lien on all assets, both personal and business assets are used as guarantee against default on the loan. Your business assets, your home, your car, and your boat can all be on the line when entering into a bank transaction. This may also be the case with an equipment financing company but if your business operation is solvent then only your business will be listed as collateral and not your personal assets; this is known as a “corp only” approval.
6) Monitoring – banks require yearly “re-qualifying” of all their business accounts which means on the anniversary date of your loan each year, you must submit requested financial documents to assure the bank that everything is going well and nothing has affected your business in a negative way. Finance companies do not require anything during the term of the loan or finance as long as the monthly payments are made on time. Nobody will be checking into your business or policing what you do.
When comparing your bank financing to an independent equipment finance company, you have to make sure you are evaluating all the key parameters, not just one. Clearly, the fine print and terms of the transaction are more important than the big numbers. Banks work well within their space but have proven time and again not to be as flexible or solution-oriented as an independent finance company which solely focuses on business lending can be.
Feb 01
adminAuto Loan Auto Consumers, Auto Loan, Automobile Dealerships, Automobile Loan, Bloodsuckers, Car Loan, Car Payment, Compromise, Consumer Banks, Drastic Measures, Economy, Finance Companies, Finance Company, Hard Time, Loan Modification, Money, Multitude, Truth, Vehicle Loan, Vehicle Repossession
If you are falling behind on your car payment, chances are good that you have at least heard tell of the concept of the vehicle loan modification or other modifications of an automobile loan. The concept of modifying an existing loan is certainly not new, but has come into a new light as the economy continues to crumble. With more and more individuals having a hard time keeping up with their bills, it is not the least bit surprising that so many finance companies, banks and automobile dealerships are concerned with the ability of their consumers to make their payments. By going out of their way and allowing modification of existing auto loan, consumers can be made to feel more secure in their situation and a compromise can be reached in order to keep from repossessing a vehicle.
While it is easy to think of banks and finance companies as heartless bloodsuckers, the truth is, they have no interest in repossessing your vehicle. When a bank repossesses a vehicle or any other financed product, they have to deal with the task of reselling it. Banks are not in the business of selling anything, banks are in the business of loaning money. Whatever money that they have loaned you in order to purchase a vehicle, they need to recoup. By making a vehicle loan modification and working with the consumer, banks and automobile dealerships can help everyone involved and keep from repossessing a vehicle. Naturally, the bank has no interest in taking your vehicle back, as they would simply have to sell it again. This is the last thing that the bank or finance company wants to deal with, as they would much rather just let you keep the vehicle and make some type of modification of the existing automobile loan in order to prevent such drastic measures as a vehicle repossession.
While it might seem obvious at first that the individual might want to keep from having their vehicle repossessed, there are a multitude of reasons that make it almost critical to avoid a repossession. First and foremost, a repossession stays on your credit for seven long years. Nobody in their right mind wants to sabotage their credit in this manner and would very likely do almost anything to avoid having these types of problems. By working on a modification of loan with the bank or lending company, a compromise can be reached that can allow the individual to keep their vehicle and avoid losing their investment. But not only will a repossession damage the owners credit, they also lose every penny that they put down as well as any recurring monthly payments that they have kept current. Losing all of this in one blow is hard for many consumers to come back from, and a vehicle loan modification can make all the difference in the world for these individuals who are having problems staying on top of their bills.
In many cases, a vehicle loan modification is the only option for those who are under water in their car payment.
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