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General Motors will once again have its own in-house financing unit beginning Friday, when the auto giant closes on its $3.5 billion purchase of AmeriCredit (ACF). The new unit, to be renamed General Motors Financial, will allow the automaker to offer consumers more financing and leasing options, GM said in a written statement.

"This acquisition allows GM to offer an enhanced range of solutions for our customers and dealers, and establishes an important strategic capability for GM," said Chief Financial Officer Chris Liddell.

AmeriCredit shareholders voted to approve the purchase at a meeting Wednesday at the company's headquarters in Fort Worth, Texas.

Having an in-house financing arm gives GM greater control over the loan and lease deals it can offer consumers, including nonprime loans, in which AmeriCredit specializes. That greater flexibility, combined with desirable products, could help the automaker regain some of its declining share of the domestic auto market -- and aid in attracting investor interest to its planned initial public offering in November.

"When you own somebody, you can tell them what to do," Former GM CEO Edward Whitacre told The Detroit News last month. Whitacre said further that the deal would boost the automaker's public offering. "It strengthens the IPO because it shows we have a credit organization just like Ford Motor (F) and Toyota Motor (TM)."

GM Will Keep Working With GMAC/Ally

GM once owned GMAC, but sold its stake in the finance arm for $7.4 billion three years ago to raise cash. GMAC, now known as Ally Financial, still supplies loans to GM, as well as to Chrysler Group.

GM's purchase of AmeriCredit was a swift one. The all-cash transaction, which values each share of AmeriCredit at $24.50, was just announced in July. The companies have been working together since September 2009, when they began a program to offer nonprime loans, allowing GM to significantly boost sales to customers with less-than-stellar credit.

In its statement Wednesday, GM said "key partners," including Ally Financial, will continue to provide financial products, such as dealer financing and financing for prime customers.

In the second quarter, Ally financed 36% of GM's new retail sales in the U.S. and Canada, up from 28% last year, the Detroit Free Press reported. Ally also financed 86% of dealers' new-vehicle inventory at the end of June, in line with the 85% it financed a year earlier.

GM sought earlier this year to reacquire Ally, but the lender declined GM's overtures, leading to the automaker's decision to purchase AmeriCredit.

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How To Get A Loan For A Car

Want a cheap car loan? How does free sound?

Believe it or not, more and more car buyers are being offered 0% interest loans, many with terms as long as 60 months.

Thanks to record-low interest rates, the financing arms of automakers like Toyota (TM) and Ford (F) are able to offer 0% financing to some buyers of selected models, and cheap financing to almost everyone else -- even to folks with less-than-perfect credit.

A not-so-surprising result: Auto sales in the U.S. have been on the rise.

So-So Economy Not Stopping Car Buyers

While auto sales still haven't quite recovered to the levels that were routine before the 2008 economic crisis, new car and truck sales have continued to rise, despite an economy that's still just so-so.

Through August, U.S. sales of "light vehicles" -- cars, SUVs, and pickups -- were up 19.9% over last year. Some automakers have seen even bigger gains: Volkswagen's (VLKAY) sales were up almost 37%, Chrysler's almost 26%.

In fact, the pace of new-vehicle sales is at its highest level since the U.S. government's "Cash for Clunkers" program drove a sharp (but temporary) rise in the summer of 2009.

What's driving those fat gains? Overall slow-but-sure improvements in the economy have surely helped, but cheap -- and easier -- financing has made a big difference.

Easy Credit

It's getting somewhat easier to get loans of all kinds, but the availability of auto loans is improving faster than in some other categories of financing, like mortgages. That's because auto loans tend to have a lower default rate: People who depend on their cars to get to work make an extra effort to stay current on payments.

Most of the major automakers own financing companies. And those "captive financing" operations have made low-cost loans a staple of many car companies' "incentive" offerings. Incentives, which include both cheap-financing and the "cash back" deals often advertised on TV, are typically used by car manufacturers to boost sales of slower-moving models or adjust a new model's pricing relative to its competitors.

On top of offering low-cost loans, those financing operations are often more willing than your local bank to lend to folks with less-than-perfect credit.

Sales of new vehicles to buyers with "Tier B" credit, the industry's term for those with credit scores between 650 and 679, have risen 26% this year, according to a Bloomberg report.

A Good Time to Take Advantage

Here's what it means for consumers: If you need a new car, and you're not planning on paying cash for it, the low cost of financing means that this is a good time to buy.

For instance, on a $25,000 60-month loan, the difference between a 4.5% interest rate and no interest at all is about $50 a month, or roughly $3,000 over the course of the loan.

Not all automakers are offering 0% financing, but more and more are: In addition to Toyota and Ford, Chrysler, General Motors (GM), and Nissan (NSANY) have had 0% offers on some models recently, according to Edmunds.

Of course, not everybody will qualify for 0% financing, and even the automakers that offer it are only making it available on selected models. But no matter what kind of car or truck you're buying, financing is cheaper -- and for most, easier to get -- than it has been in a long time.

How To Get A Loan For A Car

What Is A Good Interest Rate On A Car Loan

Americans have set another record. It's not a good one, though.

U.S. consumer debt hit an all-time high in October, with borrowing rising by $14.2 billion over September levels, to total $2.75 trillion. But there's a little silver lining in the news: Most of the gain -- 76 percent of it -- came from auto loans and student loans. Only 24 percent reflected a rise in credit card borrowing. That's worth noting, because all debt is not equal.

The bright side
Some debt is not only good, but critical. Without the ability to take out mortgages, for example, most people couldn't afford to buy their own homes. Without student loans, many couldn't afford the educations that can help them earn more throughout their lives. Even car loans have their place.

Better still, these types of loans typically carry relatively low interest rates, at least compared with credit cards. In recent years, of course, interest rates have been near record lows, taking much of the sting out of some of these debts. Consider that the prime rate, which influences many interest rates, has recently been 3.25 percent, but was as high as 11.5 percent in 1989, 13 percent in 1984, and 20 percent in 1980.

The dark side
Then there are other kinds of debt that are more problematic. Even in our current environment of ultra-low interest rates, when a 30-year fixed-rate mortgage features rates of 3.5 percent, the average interest rate on credit cards is about 15 percent. Those mired deep in credit card debt are fighting a tough battle as they try to pay off what they owe while also paying steep sums in interest. A $20,000 debt that's charged 15 percent in interest will eat up a whopping $3,000 annually.

That's the problem with high-interest rate debt: If you don't manage to keep up with your payments, it can snowball, making a bad situation much worse.

So as you consider your overall debt picture, be mindful of taking on these other troublesome kinds of debt:

Borrowing from a 401(k) account is one way to get your hands on money that you want or need, but you can be short-changing your future. All the time that that money is out of the account, it's not growing for you.
Taking out a home equity loan can also be a regrettable move, especially if you use the money to pay off credit card debt. Yes, you can end up with lower rates and payments, but the loan might be stretched out so long that you still end up paying too much. And while credit card debt is unsecured, home equity loans are secured by... your home.
Investors with brokerage accounts can borrow money "on margin" and invest with it. The upside is that you get to invest more money overall. The downside is that you pay for the privilege, and your gains have to exceed your interest cost in order for you to come out ahead. Using margin amplifies your gains, but also your losses. At the Charles Schwab brokerage, recent margin interest rates were 8.5 percent for those with a debit balance of up to $25,000, and 8 percent for balances between $25,000 and $50,000. Considering that the average long-term return for the U.S. stock market has been around 9 percent to 10 percent, with many periods below that, investing on margin is clearly risky.

As you go through life, borrowing now and then in order to buy a home or car, go to school, fix up your house, or just buy a new TV, be smart about it. Avoid all high-interest rate debt, and pay any you have pronto. And only take on low-rate debt when it really makes sense and you can afford it.

What Is A Good Interest Rate On A Car Loan

Mustang Ford Autotrader

Buying a car brings on the stress no matter how you slice it -- especially if you wind up slicing a lemon.

From betting on a good price for your old car and scrimping dough for the down payment to picking out the make and model that best fits your family and lifestyle, you've got a lot to think about ... and a lot to watch out for. That "great price" you're getting for your old car may be nullified by inflated costs on the new one, or draconian loan terms, one of the sleaziest car-sales tactics in the book.
Indeed, consumer advocates say Americans often let their guard down too early and get taken for a ride when it comes to their car loan. Not ready to get the raw end of the deal? Read on to find out what you need to know to protect yourself from landing in a bad loan pothole.

Chris Kukla, senior counsel for government affairs at the Center for Responsible Lending, stresses that dealerships don't just make money on the car itself. "The dealer's going to try to sell you on a whole other host of products. The finance office is responsible for about 50% of dealer profits," Kukla says, so don't let your guard down when you sit down to sign the contract.

"They sell credit insurance, extended warranties, vehicle service contracts, security systems, tire and wheel protection and gap coverage," Kukla explains. "If you finance through the dealer, you're going to have to face that gauntlet."

These ancillary products are always pitched as ways to "protect" your new investment; dealerships bank on the fact that customers will feel so mentally worn out from the buying process that they'll think, "Gee, that sounds like a smart move." In reality, says Kukla, it's only a smart move for them.

Though recent legislation has cracked down on sneaky lending practices when it comes to mortgage loans and credit cards, auto dealers banded together and lobbied Congress for exemption from the new rules -- selling Washington on the idea as only car salesmen can.

"It's particularly unfortunate that the auto dealers were exempted," says Steve Verdier, executive vice president and director of congressional affairs at the Independent Community Bankers of America, who calls this a "Wild West" situation. "There really was no substantive justification for that at all from a consumer standpoint," he says. Patrick Keefe, spokesman for Credit Union National Association, confirmed to WalletPop that it's a buyer-beware market out there when it comes to car loans.

As a result, auto financing takes place without a lot of the oversight many Americans just assume is part of any financial transaction. Dealerships can -- and do -- mark up the rates they get from banks, and get to pocket the difference between the bank's rate and what you pay. "Car dealers can increase your rate, and they're under no obligation to tell you the markup exists," warns Kukla. Your best bet, he says, is to shop around so you know what the current rates are, then get approved for a loan on your own.

In my recent experience, that's exactly how things played out. My husband and I were looking for a new car, and the one we'd picked out didn't have any special financing incentives, so we did plenty of legwork to make sure we got the best rate we could find. Although the dealership assured us we could finance through them and get the same rates as by shopping around, we shopped around anyway, calling or visiting a handful of local bank and credit union branches in the two weeks leading up to the day when we decided to get the car. (We didn't share this schedule with the dealership, though, since we still wanted to haggle and didn't want to tip our hand too early.) We secured what we thought was a very good rate, lower than anything else we'd seen, at a credit union near our home.

We'd also figured out how much we wanted to pay for the car and how much we'd need to finance -- so we had a good sense of how much we'd need to borrow when we met with the loan officer at the credit union. After we got approved, we went back to the dealership and hammered out the purchase price of the car. Then the salesman ushered us into the financing office. Sure enough, we were subject to sales pitches for obscure kinds of insurance, extended warranties and applications of rust inhibitors and the like.

I switched my brain onto autopilot and said "no" numerous times. Then the finance guy (maybe I should refer to him as a salesman, too) ran our credit and came back with a handful of APRs, but the credit union one we'd found was nearly two percentage points lower, including the quarter-point discount we got by agreeing to have the payment taken out of our credit union savings account each month.

Two percentage points on the price of a new car adds up to a significant chunk of change over the life of the loan, and we were very glad we hadn't just taken what the dealership offered. We were lucky in that both of our credit scores were pretty good, so we had access to traditional financing. According to Kukla, Americans who don't have access to these channels and are forced to go through the dealer if they want to finance a vehicle are much more vulnerable to being victimized.

Kukla says one of the most common scams is what's referred to as "yo-yo financing."

What happens here is a dealer will give you the car to take home, assure you verbally that you'll get a particular interest rate but claim they need a day or two to finalize that rate. The contract will have a blank spot by the interest rate or use the word "conditional." A day or two later, the dealership calls the customer back and tells them they need to come into the dealership. Then they tell the customer that they can't get the promised financing and they have to pay a much higher interest rate if they want to keep the vehicle. Many people feel intimidated and trapped by this, so they agree to the higher rate.

Our experts all say: Never take a vehicle based on an incomplete or conditional contract.

Kathleen Keest, senior policy counsel at the Center for Responsible Lending and a former staffer with the Iowa Attorney General, says cars on the lot without prices signal another red flag. Keest says some shady dealers will suss out, through careful questioning, how much money you have and make that the starting point for negotiations. "The choice is based on your money capacity, not your car needs," she says. Often, she adds, dealers will use sneaky, even illegal tricks to pull your credit before you even start talking price. Knowing your financial situation gives them a leg up. If, for instance, they see you have blemished credit, they may feel bold enough to stick you with a higher interest rate if they believe you can't get financing at a bank or credit union.

To find out more about those tricks -- and how to avoid them -- WalletPop spoke with Thomas Domonoske, a lawyer with the Legal Aid Justice Center in Charlottesville, Va. First of all, Domonoske says, don't sign anything until you're ready to negotiate terms. Even if the dealer says a form is purely informational or will be used to enter you into a contest, there could be fine print in there that authorizes them to pull your credit report. Keep the conversation focused on the price of the vehicle, and don't talk about financing until after you've nailed down how much you're going to pay for it.

Also, while credit reporting agencies ideally like to have your name, address and Social Security number to provide a report, dealerships don't need all that info to get a tentative picture of your finances. "If they ask to see your driver's license, you've given them enough information," warns Domonoske. If you want to test-drive the vehicle, do so after you've hashed out the price. (After all, car dealers know that if you become emotionally attached to a vehicle, even in the slightest, you negotiate from a weaker hand.)

"The best way to buy a car is to negotiate one number and one number only," Domonoske advises. "How many dollars do I have to give you to drive the car off the lot?" If all you talk about is the price of the car, the dealer will have no way to illegally access your credit. Finally, Domonoske says, "Don't answer [if they ask you] 'How much can you afford?' That has nothing to do with how much the car dealer is willing to sell that car for."

Mustang Ford Autotrader

How Hard Is It To Get A Car Loan With Bad Credit

Back in August, the USDA released its annual report on the cost of raising a child. This year's big, scary number? $245,000.

Well, now we have an even bigger, scarier number: $279,000.

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That, according to a new tool produced by Credit.com, is how much you can expect to pay in interest on all the loans you take over the course of your life -- more than a quarter of a million dollars lost in the name of auto loans, credit cards and a mortgage.

That number is based on a host of assumptions. It assumes you'll take out a single 30-year mortgage on an average-priced home, with 20 percent down; that you'll own nine cars in your lifetime and take out auto loans for all of them; and that you'll carry a little over $2,000 in revolving credit card debt. With a fair credit score, the credit card balance will cost you over $13,000 in interest payments, the cars will cost you about $40,000, and the mortgage will run you in the neighborhood of $226,000 in interest.

Naturally, many of those assumptions may not apply to you.

No Car Yet, but a More Expensive House Is Likely

For instance, I live in New York, so I'm not buying a car anytime soon; my best guess is that I'll only wind up buying four new cars over my lifetime. I also studiously avoid carrying a balance on my credit cards, so at least for the moment I don't need to worry about those interest payments. Finally, my credit score is somewhere between good and excellent, so I'll be getting better rates on the loans I do take out.

On the other hand, if I buy a home in New York I'll likely be paying much more than the national average, and much more interest overall, especially if I'm not able to muster much in the way of a down payment.

Since everyone's financial situation is different, the site's "Lifetime Cost of Debt" tool allows you to adjust those assumptions to fit your own reality. If you fill in your credit score range and then adjust variables like the down payment on your home and your average credit card balance, the tool will spit out your own approximate lifetime interest cost. (For what it's worth, my own lifetime estimated cost of debt wound up being above the national average, underlining the outsized role a mortgage plays in the calculation.)

What About Student Loans?

The tool is slickly designed and fairly intuitive, though it does have one notable shortcoming: It doesn't account for student loans. With an average student loan debt load of more than $29,000, that's an extra $11,000 in interest payments to consider (assuming a 10-year repayment and a 6.8 percent interest rate).

Even with that omission, the tool does a great job of putting into perspective something that few Americans have perspective on.

"We tend to think of credit in terms of monthly payments, whether they're affordable," says Credit.com's Gerri Detweiler. "But over a lifetime those costs add up. "

A Poor Score Will Cost You -- a Lot

It also provides some good perspective on the importance of your credit score. A slider lets you see how the lifetime cost of debt changes as you bounce between credit score ranges, and the difference is striking. At a fair credit score, a New Jersey resident will pay about $384,000 for her mortgage, credit card debt and auto loans. But adjust it upwards to "excellent," and the cost drops to $302,000. It's even more striking in the other direction: Move it down to "poor," and the lifetime cost of debt shoots up $486,000. Just going to from fair to poor costs you a cool hundred grand.

If anything, then, using the tool really drives home the importance of understanding how credit scores work. There are a lot of misconceptions about credit scoring out there, from the persistent myth that you need to carry a balance to establish credit to the notion that it takes a financial disaster like bankruptcy to hurt your score. These misunderstandings can cost you thousands.

Credit scoring is complicated, and it's not hard to miss a single payment or get tripped up by some obscure rule. Maybe if more people knew just how much money was on the line, they'd be a little more conscientious about it.

How Hard Is It To Get A Car Loan With Bad Credit

Auto Trader

Americans have set another record. It's not a good one, though.

U.S. consumer debt hit an all-time high in October, with borrowing rising by $14.2 billion over September levels, to total $2.75 trillion. But there's a little silver lining in the news: Most of the gain -- 76 percent of it -- came from auto loans and student loans. Only 24 percent reflected a rise in credit card borrowing. That's worth noting, because all debt is not equal.

The bright side
Some debt is not only good, but critical. Without the ability to take out mortgages, for example, most people couldn't afford to buy their own homes. Without student loans, many couldn't afford the educations that can help them earn more throughout their lives. Even car loans have their place.

Better still, these types of loans typically carry relatively low interest rates, at least compared with credit cards. In recent years, of course, interest rates have been near record lows, taking much of the sting out of some of these debts. Consider that the prime rate, which influences many interest rates, has recently been 3.25 percent, but was as high as 11.5 percent in 1989, 13 percent in 1984, and 20 percent in 1980.

The dark side
Then there are other kinds of debt that are more problematic. Even in our current environment of ultra-low interest rates, when a 30-year fixed-rate mortgage features rates of 3.5 percent, the average interest rate on credit cards is about 15 percent. Those mired deep in credit card debt are fighting a tough battle as they try to pay off what they owe while also paying steep sums in interest. A $20,000 debt that's charged 15 percent in interest will eat up a whopping $3,000 annually.

That's the problem with high-interest rate debt: If you don't manage to keep up with your payments, it can snowball, making a bad situation much worse.

So as you consider your overall debt picture, be mindful of taking on these other troublesome kinds of debt:

Borrowing from a 401(k) account is one way to get your hands on money that you want or need, but you can be short-changing your future. All the time that that money is out of the account, it's not growing for you.
Taking out a home equity loan can also be a regrettable move, especially if you use the money to pay off credit card debt. Yes, you can end up with lower rates and payments, but the loan might be stretched out so long that you still end up paying too much. And while credit card debt is unsecured, home equity loans are secured by... your home.
Investors with brokerage accounts can borrow money "on margin" and invest with it. The upside is that you get to invest more money overall. The downside is that you pay for the privilege, and your gains have to exceed your interest cost in order for you to come out ahead. Using margin amplifies your gains, but also your losses. At the Charles Schwab brokerage, recent margin interest rates were 8.5 percent for those with a debit balance of up to $25,000, and 8 percent for balances between $25,000 and $50,000. Considering that the average long-term return for the U.S. stock market has been around 9 percent to 10 percent, with many periods below that, investing on margin is clearly risky.

As you go through life, borrowing now and then in order to buy a home or car, go to school, fix up your house, or just buy a new TV, be smart about it. Avoid all high-interest rate debt, and pay any you have pronto. And only take on low-rate debt when it really makes sense and you can afford it.

Auto Trader

AutotraderCa Classic

The savings rate in America is dismal, and it's heading in the wrong direction. According to the latest data from the Bureau of Economic Analysis, the personal savings rate in America is 4.5 percent, down from 5.6 percent the previous year.

But do you know what's the greatest hindrance to you increasing your savings? You. Your brain is the biggest thing holding you back from saving more, and one of the best ways to combat this is to trick yourself. You have to make savings a game. Here are five sneaky ways to do so.

1. Take the 52-Week Challenge and Increase Savings Weekly

The 52-week savings challenge helps you save more money without even realizing it. Starting with the first week of January, save $1 in a piggy bank or savings account of your choosing.

For every week, you increase your savings based on the corresponding number of that week. For example, during the second week of January you'll save $2 for that week. The third week you will save $3 in your piggy bank. And now you have $1, $2 and $3 for total of $6 saved over the first three weeks.

By December, you'll be saving $49, $50, $51 and $52. And at the end of one year, you will have saved $1,378.

Even though the year has already started, it's not too late to start the 52-week challenge. You won't have to add much money to your piggy bank for the initial few weeks.

There is a great 52-week challenge worksheet from Jeff Rose, a certified financial planner, on his website, Good Financial Cents.

2. Set Aside Your Savings from the Grocery Store

Every time I buy something at the grocery store, the cashier hands me my receipt and tells me how much I saved during my trip. The savings, of course, come from using my loyalty card.

My mother-in-law and father-in-law have a great system for their grocery loyalty cards. They take the amount listed on the bottom of their receipt that they saved with their loyalty card, and they put that in the savings account or piggy bank.

It's money that you would've spent anyway if you had been shopping without your loyalty card. And it is a fast way to build up your savings without even realizing that you're doing so.

3. Only Use Folding Money, and Drop the Change in a Coin Jar

Not only do my wife and I balance our family's monthly budget with a credit card, but we also do not spend coins. Instead we make as many cash purchases as we can by using only bills.
At the end of each day, we take all of the change that we've accumulated and put it in a coin jar. My coin jar sits on top of my dresser, where it reminds me to put my change in it.

You'd be surprised how much money you can save that way. My wife routinely saves more than $500 a year in change.

4. Find Debit Cards that Round Up Your Purchases

There are a host of credit cards and debit cards on the market today. You can find cards that provide you reward points, frequent flyer miles, double miles, membership in elite clubs, and the list goes on and on.

One interesting type of debit card rounds up your purchases to the nearest dollar. Your bank then deposits the amount rounded up into a savings account. At Bank of America, the programs called Keep the Change. Using such programs, your painless savings can quickly add up to a couple hundred dollars or more over the course of a year.

5. Keep Making 'Payments' After You Pay Off a Loan

What do you do after you have paid off your car loan? What should you do with cash you've dedicated to your mortgage payment after you own the deed to your house? Keep making the payment to yourself, of course, and put the same amount of money into a savings account.

What you want to avoid is lifestyle creep. You'll never know that it is missing from your budget. You already have it factored into your monthly spending. Simply keep making those payments to yourself.

Saving money doesn't have to be a long, laborious endeavor. It doesn't have to be a pain. In fact, you will have better success if you can make it a game.

Americans are not saving enough money. We are underfunding our retirement accounts and have inadequate emergency funds. But it doesn't have to be that way. We do not have to be victims. We can trick ourselves into saving more.

AutotraderCa Classic

OnlineautotitleloansNet

Millions of homeowners have garnered huge savings in recent years from one simple move: refinancing their mortgages. Now, the refinancing craze has spread to an unexpected industry: car loans.

Plunging interest rates have been bad news for savers, but borrowers couldn't be happier. Mortgage rates have dropped around 3 percentage points from their levels just four years ago. That has translated into hundreds or even thousands of dollars in monthly savings on mortgages.

But the idea of refinancing a car loan never even occurs to many borrowers. After all, with many owners choosing to buy new vehicles even before their loans are paid off, it's often easier just to take advantage of financing deals from new-car dealers. Moreover, cars typically lose their value so quickly that the loans turn upside down -- meaning that the outstanding loan is more than the car is worth, making refinancing a tough proposition.

Still, the practice is growing in popularity. A recent SmartMoney article cited figures that showed auto refinancing applications have risen by about 30% from year-ago levels. Even a modest drop in interest rate can create real savings, and unlike mortgage refinancing, the costs of getting a car loan refinanced are low. That lets borrowers reach the breakeven point on a refinance easily.

Should You Do It?

If you have a car loan with a fairly high interest rate, you have nothing to lose by attempting take advantage of low rates by refinancing. Doing so could cut your monthly payment significantly.

But beware of catches and gimmicks. If you try to refinance through a dealer, don't fall for sales pitches trying to sell you unrelated products like warranty protection. Instead, emphasize your value to the dealer, not just with this transaction but with the promise of future business. That way, you'll hopefully get the best deal you possibly can.

OnlineautotitleloansNet

How To Get A Car Loan With No Credit History

A new car is one of the biggest wealth drains for you and your family. Use these two simple yet powerful tips to take control of this expensive item.

Think in the Long Term (for Models)

Buy the car you want -- but only after it's at least two years old, and three would be better. By doing this, you automatically save hundreds of thousands of dollars over your lifetime.

When I was 23, I wanted to buy a nice four-door sedan, and I was drawn to the Cadillac STS. The new model had a base price of more $50,000, and with any kind of little extras the sticker was almost $55,000. I was doing very well at a young age, but I wasn't doing that well to blow 50 grand on a new car.

I was thumbing through my local paper (yes, this was before the Internet changed everything) and saw an ad for a 2? year old Cadillac STS for $19,500. The car had less than 40,000 miles on it and came with an extended warranty to 90,000 miles. It was gorgeous, shiny and just serviced.

It was an attractive price since the first owner was eating the depreciation.

According to www.Edmunds.com, the average car will lose 11 percent of its value the second you roll it off the lot and an additional 15 percent to 20 percent the first year you own it. The second-year depreciation (loss) is another 15 percent, for a loss of at least 45 percent over the first two years.

Depreciation is usually calculated off of the base price, not the extras. This could be the sport package that raises the price $10,000 but only gives you $2,000 back after the first year or two. So it's quite possible to find beautiful cars with manufacturer warranties still in place and pay 35 percent to 50 percent less than the first owner did when purchased new.

I drove that car for four years, had very few out-of-pocket repairs, and sold it for $3,500.

So what kind of deal could you get today? When I was young, one of the dream cars was a Ferrari Testarossa, and its price was around $200,000. You can buy one now for around $50,000, and most don't have that many miles on them because they're babied by the owners.

Think in the Short Term (for Loans)

If you finance your auto purchase, you can save a lot of money by keeping the term to no more than 36 months. This builds equity in the car faster and saves on interest.

This might be difficult because the monthly payment is higher than if you finance over six years, and it's higher than a monthly lease. If you finance $25,000 at 5 percent interest for three years, your monthly payment will be $749.27, and your total payout will be $26,974. If you extend that loan out to six years, your monthly payment drops to $402.62, but your total payout rises to $28,989. That's $2,015 more out of your pocket to own the car.

Assuming you buy the car with a small down payment, by financing it for six years, your loan pay-down is going at a much slower pace than the depreciation on the vehicle, creating an "underwater" situation on the car almost from the get-go. During the three-year program, you're paying down the car faster than it's depreciating, giving you options if you have to sell the vehicle.

If you truly can't afford that three-year payment, take out a five-year option and send a little extra every month toward the principal to pay it off sooner.

Leasing a newer model looks attractive because the monthly payment is less, but you might not want to do that. I'll explain why next week, when I offer several other ways to save loads of money when purchasing an automobile.

How To Get A Car Loan With No Credit History

Loans For Bad Credit

That car that's supposed to provide you with the freedom to get you where you want to go may also be one of the many chains tying you down to a job you'd rather ditch. That's because -- over the course of a lifetime -- the average person will spend more than three years at work just to pay for their various sets of wheels.

The folks at eBay Deals recently released a "Trading Time" calculator that lets you figure out how long you have to work to pay for various expenses. It's an eye-opener.

Over a 50-year working lifetime, the typical person will work 157 weeks to generate the cash needed to pay for his or her cars. Then, add in another 50 weeks of work to cover car insurance. Those figures are based on the weekly median gross income. Yours may be higher or lower, of course.

If that doesn't seem like a lot to you, then think about this: You work even longer to pay for your vehicles because you need to figure in taxes and the interest on your car loans. And don't forget all the time in that vehicle commuting or shuttling your kids around.

According to the Trading Time calculator, other major expenses that keep you chained to your desk may include shoes (17 weeks), phone bills (60 weeks) and even toilet paper (two weeks).

Whether you love your job, hate it or or fall somewhere in between, it's helpful to think about the things you spend money on in terms of the amount of time you have to spend working to pay for them. Only you can decide what's really worth it.

Can You Get Back Some of Your Time?

Of course you may have no choice but to drive, and in that case, you may want to look for ways to try to reduce your costs. For example, can you drive a slightly used car instead of a new one? Keep your vehicle longer? Settle for a more economical model?

Another way to cut costs is to improve your credit. With a better credit score, you will qualify for a lower interest rate, which can mean significant savings over the life of the loan. You can see your credit scores for free at Credit.com to determine whether your credit is good. Ideally, you want to review it at least a month before you plan to shop for a vehicle in order to address any issues you uncover. (Give yourself more lead time if your credit isn't great. Here's a guide to help you rebuild your credit. )

Here's an example of the savings you may achieve by boosting your credit. As of June 4, the lowest quoted rate for a $20,000 50-month auto loan with excellent credit on Credit.com is 1.99 percent. That translates into a monthly payment of $411. But for someone with poor credit, the rate jumps to 14.99 percent or a monthly payment of $540.

Loans For Bad Credit

Will I Get Approved For A Car Loan

Want a cheap car loan? How does free sound?

Believe it or not, more and more car buyers are being offered 0% interest loans, many with terms as long as 60 months.

Thanks to record-low interest rates, the financing arms of automakers like Toyota (TM) and Ford (F) are able to offer 0% financing to some buyers of selected models, and cheap financing to almost everyone else -- even to folks with less-than-perfect credit.

A not-so-surprising result: Auto sales in the U.S. have been on the rise.

So-So Economy Not Stopping Car Buyers

While auto sales still haven't quite recovered to the levels that were routine before the 2008 economic crisis, new car and truck sales have continued to rise, despite an economy that's still just so-so.

Through August, U.S. sales of "light vehicles" -- cars, SUVs, and pickups -- were up 19.9% over last year. Some automakers have seen even bigger gains: Volkswagen's (VLKAY) sales were up almost 37%, Chrysler's almost 26%.

In fact, the pace of new-vehicle sales is at its highest level since the U.S. government's "Cash for Clunkers" program drove a sharp (but temporary) rise in the summer of 2009.

What's driving those fat gains? Overall slow-but-sure improvements in the economy have surely helped, but cheap -- and easier -- financing has made a big difference.

Easy Credit

It's getting somewhat easier to get loans of all kinds, but the availability of auto loans is improving faster than in some other categories of financing, like mortgages. That's because auto loans tend to have a lower default rate: People who depend on their cars to get to work make an extra effort to stay current on payments.

Most of the major automakers own financing companies. And those "captive financing" operations have made low-cost loans a staple of many car companies' "incentive" offerings. Incentives, which include both cheap-financing and the "cash back" deals often advertised on TV, are typically used by car manufacturers to boost sales of slower-moving models or adjust a new model's pricing relative to its competitors.

On top of offering low-cost loans, those financing operations are often more willing than your local bank to lend to folks with less-than-perfect credit.

Sales of new vehicles to buyers with "Tier B" credit, the industry's term for those with credit scores between 650 and 679, have risen 26% this year, according to a Bloomberg report.

A Good Time to Take Advantage

Here's what it means for consumers: If you need a new car, and you're not planning on paying cash for it, the low cost of financing means that this is a good time to buy.

For instance, on a $25,000 60-month loan, the difference between a 4.5% interest rate and no interest at all is about $50 a month, or roughly $3,000 over the course of the loan.

Not all automakers are offering 0% financing, but more and more are: In addition to Toyota and Ford, Chrysler, General Motors (GM), and Nissan (NSANY) have had 0% offers on some models recently, according to Edmunds.

Of course, not everybody will qualify for 0% financing, and even the automakers that offer it are only making it available on selected models. But no matter what kind of car or truck you're buying, financing is cheaper -- and for most, easier to get -- than it has been in a long time.

Will I Get Approved For A Car Loan

Unemployed Car Loans

TV ads promising extra money each month through an auto loan modification may be tempting, but be wary of scams, warns the Delaware chapter of the Better Business Bureau.

"Auto loan modification companies are following in the footsteps of unscrupulous mortgage modification companies which have long targeted struggling families who are just trying to stay above water," Delaware chapter president Christine Sauers said. "Some companies may make it look like they are tossing out a life preserver, but they end up pulling many borrowers deeper underwater."

Manheim, an international reseller of vehicles, says in its used car report that 1.9 million vehicles were repossessed in 2009; it expects that rate to drop slightly in 2010.

BBB has complaints nationwide against one Florida-based company, Auto Relief Group. Some consumers allege they paid hundreds of dollars in upfront fees to get their monthly payments reduced, but that didn't happen. That same company has been sued by the Florida attorney general's office.

Before you enlist the services of an auto loan modification company, the BBB recommends that you:

Start with the lender and see if a more convenient payment plan is available.
Check out the company with the local BBB chapter which can tell you if there are any complaints, government actions or lawsuits against the business.
Ask about advance fees. Some states don't allow companies to charge upfront fees for financial services and requiring money first should be a red flag even if the company offers a money-back guarantee.
Get the deal in writing and make sure the company tells you what its services are and its terms including refund policies.

Unemployed Car Loans

Bad Credit Auto Financing

Want a cheap car loan? How does free sound?

Believe it or not, more and more car buyers are being offered 0% interest loans, many with terms as long as 60 months.

Thanks to record-low interest rates, the financing arms of automakers like Toyota (TM) and Ford (F) are able to offer 0% financing to some buyers of selected models, and cheap financing to almost everyone else -- even to folks with less-than-perfect credit.

A not-so-surprising result: Auto sales in the U.S. have been on the rise.

So-So Economy Not Stopping Car Buyers

While auto sales still haven't quite recovered to the levels that were routine before the 2008 economic crisis, new car and truck sales have continued to rise, despite an economy that's still just so-so.

Through August, U.S. sales of "light vehicles" -- cars, SUVs, and pickups -- were up 19.9% over last year. Some automakers have seen even bigger gains: Volkswagen's (VLKAY) sales were up almost 37%, Chrysler's almost 26%.

In fact, the pace of new-vehicle sales is at its highest level since the U.S. government's "Cash for Clunkers" program drove a sharp (but temporary) rise in the summer of 2009.

What's driving those fat gains? Overall slow-but-sure improvements in the economy have surely helped, but cheap -- and easier -- financing has made a big difference.

Easy Credit

It's getting somewhat easier to get loans of all kinds, but the availability of auto loans is improving faster than in some other categories of financing, like mortgages. That's because auto loans tend to have a lower default rate: People who depend on their cars to get to work make an extra effort to stay current on payments.

Most of the major automakers own financing companies. And those "captive financing" operations have made low-cost loans a staple of many car companies' "incentive" offerings. Incentives, which include both cheap-financing and the "cash back" deals often advertised on TV, are typically used by car manufacturers to boost sales of slower-moving models or adjust a new model's pricing relative to its competitors.

On top of offering low-cost loans, those financing operations are often more willing than your local bank to lend to folks with less-than-perfect credit.

Sales of new vehicles to buyers with "Tier B" credit, the industry's term for those with credit scores between 650 and 679, have risen 26% this year, according to a Bloomberg report.

A Good Time to Take Advantage

Here's what it means for consumers: If you need a new car, and you're not planning on paying cash for it, the low cost of financing means that this is a good time to buy.

For instance, on a $25,000 60-month loan, the difference between a 4.5% interest rate and no interest at all is about $50 a month, or roughly $3,000 over the course of the loan.

Not all automakers are offering 0% financing, but more and more are: In addition to Toyota and Ford, Chrysler, General Motors (GM), and Nissan (NSANY) have had 0% offers on some models recently, according to Edmunds.

Of course, not everybody will qualify for 0% financing, and even the automakers that offer it are only making it available on selected models. But no matter what kind of car or truck you're buying, financing is cheaper -- and for most, easier to get -- than it has been in a long time.

Bad Credit Auto Financing

Car Loan No Money Down Bad Credit

Buying a car brings on the stress no matter how you slice it -- especially if you wind up slicing a lemon.

From betting on a good price for your old car and scrimping dough for the down payment to picking out the make and model that best fits your family and lifestyle, you've got a lot to think about ... and a lot to watch out for. That "great price" you're getting for your old car may be nullified by inflated costs on the new one, or draconian loan terms, one of the sleaziest car-sales tactics in the book.
Indeed, consumer advocates say Americans often let their guard down too early and get taken for a ride when it comes to their car loan. Not ready to get the raw end of the deal? Read on to find out what you need to know to protect yourself from landing in a bad loan pothole.

Chris Kukla, senior counsel for government affairs at the Center for Responsible Lending, stresses that dealerships don't just make money on the car itself. "The dealer's going to try to sell you on a whole other host of products. The finance office is responsible for about 50% of dealer profits," Kukla says, so don't let your guard down when you sit down to sign the contract.

"They sell credit insurance, extended warranties, vehicle service contracts, security systems, tire and wheel protection and gap coverage," Kukla explains. "If you finance through the dealer, you're going to have to face that gauntlet."

These ancillary products are always pitched as ways to "protect" your new investment; dealerships bank on the fact that customers will feel so mentally worn out from the buying process that they'll think, "Gee, that sounds like a smart move." In reality, says Kukla, it's only a smart move for them.

Though recent legislation has cracked down on sneaky lending practices when it comes to mortgage loans and credit cards, auto dealers banded together and lobbied Congress for exemption from the new rules -- selling Washington on the idea as only car salesmen can.

"It's particularly unfortunate that the auto dealers were exempted," says Steve Verdier, executive vice president and director of congressional affairs at the Independent Community Bankers of America, who calls this a "Wild West" situation. "There really was no substantive justification for that at all from a consumer standpoint," he says. Patrick Keefe, spokesman for Credit Union National Association, confirmed to WalletPop that it's a buyer-beware market out there when it comes to car loans.

As a result, auto financing takes place without a lot of the oversight many Americans just assume is part of any financial transaction. Dealerships can -- and do -- mark up the rates they get from banks, and get to pocket the difference between the bank's rate and what you pay. "Car dealers can increase your rate, and they're under no obligation to tell you the markup exists," warns Kukla. Your best bet, he says, is to shop around so you know what the current rates are, then get approved for a loan on your own.

In my recent experience, that's exactly how things played out. My husband and I were looking for a new car, and the one we'd picked out didn't have any special financing incentives, so we did plenty of legwork to make sure we got the best rate we could find. Although the dealership assured us we could finance through them and get the same rates as by shopping around, we shopped around anyway, calling or visiting a handful of local bank and credit union branches in the two weeks leading up to the day when we decided to get the car. (We didn't share this schedule with the dealership, though, since we still wanted to haggle and didn't want to tip our hand too early.) We secured what we thought was a very good rate, lower than anything else we'd seen, at a credit union near our home.

We'd also figured out how much we wanted to pay for the car and how much we'd need to finance -- so we had a good sense of how much we'd need to borrow when we met with the loan officer at the credit union. After we got approved, we went back to the dealership and hammered out the purchase price of the car. Then the salesman ushered us into the financing office. Sure enough, we were subject to sales pitches for obscure kinds of insurance, extended warranties and applications of rust inhibitors and the like.

I switched my brain onto autopilot and said "no" numerous times. Then the finance guy (maybe I should refer to him as a salesman, too) ran our credit and came back with a handful of APRs, but the credit union one we'd found was nearly two percentage points lower, including the quarter-point discount we got by agreeing to have the payment taken out of our credit union savings account each month.

Two percentage points on the price of a new car adds up to a significant chunk of change over the life of the loan, and we were very glad we hadn't just taken what the dealership offered. We were lucky in that both of our credit scores were pretty good, so we had access to traditional financing. According to Kukla, Americans who don't have access to these channels and are forced to go through the dealer if they want to finance a vehicle are much more vulnerable to being victimized.

Kukla says one of the most common scams is what's referred to as "yo-yo financing."

What happens here is a dealer will give you the car to take home, assure you verbally that you'll get a particular interest rate but claim they need a day or two to finalize that rate. The contract will have a blank spot by the interest rate or use the word "conditional." A day or two later, the dealership calls the customer back and tells them they need to come into the dealership. Then they tell the customer that they can't get the promised financing and they have to pay a much higher interest rate if they want to keep the vehicle. Many people feel intimidated and trapped by this, so they agree to the higher rate.

Our experts all say: Never take a vehicle based on an incomplete or conditional contract.

Kathleen Keest, senior policy counsel at the Center for Responsible Lending and a former staffer with the Iowa Attorney General, says cars on the lot without prices signal another red flag. Keest says some shady dealers will suss out, through careful questioning, how much money you have and make that the starting point for negotiations. "The choice is based on your money capacity, not your car needs," she says. Often, she adds, dealers will use sneaky, even illegal tricks to pull your credit before you even start talking price. Knowing your financial situation gives them a leg up. If, for instance, they see you have blemished credit, they may feel bold enough to stick you with a higher interest rate if they believe you can't get financing at a bank or credit union.

To find out more about those tricks -- and how to avoid them -- WalletPop spoke with Thomas Domonoske, a lawyer with the Legal Aid Justice Center in Charlottesville, Va. First of all, Domonoske says, don't sign anything until you're ready to negotiate terms. Even if the dealer says a form is purely informational or will be used to enter you into a contest, there could be fine print in there that authorizes them to pull your credit report. Keep the conversation focused on the price of the vehicle, and don't talk about financing until after you've nailed down how much you're going to pay for it.

Also, while credit reporting agencies ideally like to have your name, address and Social Security number to provide a report, dealerships don't need all that info to get a tentative picture of your finances. "If they ask to see your driver's license, you've given them enough information," warns Domonoske. If you want to test-drive the vehicle, do so after you've hashed out the price. (After all, car dealers know that if you become emotionally attached to a vehicle, even in the slightest, you negotiate from a weaker hand.)

"The best way to buy a car is to negotiate one number and one number only," Domonoske advises. "How many dollars do I have to give you to drive the car off the lot?" If all you talk about is the price of the car, the dealer will have no way to illegally access your credit. Finally, Domonoske says, "Don't answer [if they ask you] 'How much can you afford?' That has nothing to do with how much the car dealer is willing to sell that car for."

Car Loan No Money Down Bad Credit

Zero Down Payment Car

Once you lose your home in foreclosure, the logic goes, you are kicked to the curb financially. Popular wisdom says that nobody will lend you a dime, let you co-sign on your son's college loan, finance a new car or issue you a new credit card. And certainly nobody will again loan you money to buy another house. Well, let's bust that myth today.

While the typical FHA and Freddie Mac-backed loans can take 48 months or longer to forgive you your financial indiscretions, Michigan loan broker Jeff Tufford of Monarch Mortgage Consulting just got Greg Bailey a 4.5% 30-year fixed rate loan on a new home in Fenton, Mich. just 18 months after Bailey lost his house in a foreclosure.Bailey, a master plumber, had had solid credit before his foreclosure and had mitigating circumstances for falling behind in his payments: His wife got the house in their divorce and although his name was still on the loan, he said he was unaware that she had fallen behind in making payments. Bailey, 42, kept up with all his bills, made all his payments on time, and he continued to hold his job. He was able to restore his credit rating quickly to the magic number of 620. At 620, you get to play ball again. It was that simple. He bought a new house for $85,000 and was able to get a 30-year fixed-rate loan at 4.5% interest for $93,000 that rolled all the closing costs into it.

Greg Bailey in front of his new houseWhile Bailey's case indeed happened, it is clearly the exception, not the rule.

Laurie Giles, attorney and author of the "What Now?" series of financial guides, says that even up to a year ago, a foreclosure was a financial black eye that didn't heal for up to seven years. Now, she says, things are different. Mitigating factors -- the loss of a job, a death in the family, divorce -- in the foreclosure are looked at, as is how the borrower has handled his money post-foreclosure.

"The market simply has had to respond differently because of the sheer number of people in this situation," Giles said. "There is just no way it can hurt for seven years."

The key, she said, is convincing lenders that you didn't just cavalierly walk away from your mortgage obligation, and that you have rebuilt your finances in a responsible way: saving up, living within your means, paying bills on time.

But don't kid yourself: Life post-foreclosure can mean life without credit. Foreclosure affects everything. You likely can't even rent a car unless you pay cash. It impacts your auto insurance (you will pay a higher rate), and may even be a red flag to potential employers who check your credit.

Giles suggests that people in the foreclosure pipeline keep current on their credit cards. You won't be able to open a new credit card account once you foreclose, but you can keep the ones you have -- assuming you aren't overextended there too.

Forget getting a car loan -- auto loans generally require a higher credit score than mortgage loans -- and you won't likely be putting away any major appliances on lay-away at Sears. If your child is looking for a government-backed college loan, your foreclosure could easily get in the way.

None of this comes as news to Los Angeles film-maker Kenny Golde. He lost his home in foreclosure last April, after three attempted loan modifications. He had owned it for five years. He managed to pay off his $200,000 in credit card debt and is now renting a home. His credit score plummeted but he already owned his car and hasn't had to try and use his credit score for anything since the foreclosure.

The biggest lesson he says he learned was how to "let go of the emotional side of financial troubles -- the fear, stress, guilt and shame that comes from missing credit card payments or losing a home."

He turned the experience into a book called The Do-It-Yourself Bailout, and now coaches others on how to move past the experience emotionally.

Jason Biro, founder of Saving Your American Dream, a group that provides counseling and aid to those suffering from housing hardships, adds this idea to the mix for those who are navigating the post-foreclosure waters.

"Consider a lease purchase," he said. A lease purchase is a contract that includes the option of buying the home you are renting at a later date at a predetermined agreed-upon price. Each month, a portion of your rent is applied toward the sale price.

Another option is to find a seller willing to hold a loan for you when the banks won't. An uphill quest, for sure, but remember that most sellers today are eager to move on just as much as you are. You might find one more sympathetic than the institutional lender -- and at least you can plead your case that you've financially reformed to someone without hours on hold.

Zero Down Payment Car

Auto Loan Pre Approval Online

That car that's supposed to provide you with the freedom to get you where you want to go may also be one of the many chains tying you down to a job you'd rather ditch. That's because -- over the course of a lifetime -- the average person will spend more than three years at work just to pay for their various sets of wheels.

The folks at eBay Deals recently released a "Trading Time" calculator that lets you figure out how long you have to work to pay for various expenses. It's an eye-opener.

Over a 50-year working lifetime, the typical person will work 157 weeks to generate the cash needed to pay for his or her cars. Then, add in another 50 weeks of work to cover car insurance. Those figures are based on the weekly median gross income. Yours may be higher or lower, of course.

If that doesn't seem like a lot to you, then think about this: You work even longer to pay for your vehicles because you need to figure in taxes and the interest on your car loans. And don't forget all the time in that vehicle commuting or shuttling your kids around.

According to the Trading Time calculator, other major expenses that keep you chained to your desk may include shoes (17 weeks), phone bills (60 weeks) and even toilet paper (two weeks).

Whether you love your job, hate it or or fall somewhere in between, it's helpful to think about the things you spend money on in terms of the amount of time you have to spend working to pay for them. Only you can decide what's really worth it.

Can You Get Back Some of Your Time?

Of course you may have no choice but to drive, and in that case, you may want to look for ways to try to reduce your costs. For example, can you drive a slightly used car instead of a new one? Keep your vehicle longer? Settle for a more economical model?

Another way to cut costs is to improve your credit. With a better credit score, you will qualify for a lower interest rate, which can mean significant savings over the life of the loan. You can see your credit scores for free at Credit.com to determine whether your credit is good. Ideally, you want to review it at least a month before you plan to shop for a vehicle in order to address any issues you uncover. (Give yourself more lead time if your credit isn't great. Here's a guide to help you rebuild your credit. )

Here's an example of the savings you may achieve by boosting your credit. As of June 4, the lowest quoted rate for a $20,000 50-month auto loan with excellent credit on Credit.com is 1.99 percent. That translates into a monthly payment of $411. But for someone with poor credit, the rate jumps to 14.99 percent or a monthly payment of $540.

Auto Loan Pre Approval Online

Pre Approved Car Loan

Want a cheap car loan? How does free sound?

Believe it or not, more and more car buyers are being offered 0% interest loans, many with terms as long as 60 months.

Thanks to record-low interest rates, the financing arms of automakers like Toyota (TM) and Ford (F) are able to offer 0% financing to some buyers of selected models, and cheap financing to almost everyone else -- even to folks with less-than-perfect credit.

A not-so-surprising result: Auto sales in the U.S. have been on the rise.

So-So Economy Not Stopping Car Buyers

While auto sales still haven't quite recovered to the levels that were routine before the 2008 economic crisis, new car and truck sales have continued to rise, despite an economy that's still just so-so.

Through August, U.S. sales of "light vehicles" -- cars, SUVs, and pickups -- were up 19.9% over last year. Some automakers have seen even bigger gains: Volkswagen's (VLKAY) sales were up almost 37%, Chrysler's almost 26%.

In fact, the pace of new-vehicle sales is at its highest level since the U.S. government's "Cash for Clunkers" program drove a sharp (but temporary) rise in the summer of 2009.

What's driving those fat gains? Overall slow-but-sure improvements in the economy have surely helped, but cheap -- and easier -- financing has made a big difference.

Easy Credit

It's getting somewhat easier to get loans of all kinds, but the availability of auto loans is improving faster than in some other categories of financing, like mortgages. That's because auto loans tend to have a lower default rate: People who depend on their cars to get to work make an extra effort to stay current on payments.

Most of the major automakers own financing companies. And those "captive financing" operations have made low-cost loans a staple of many car companies' "incentive" offerings. Incentives, which include both cheap-financing and the "cash back" deals often advertised on TV, are typically used by car manufacturers to boost sales of slower-moving models or adjust a new model's pricing relative to its competitors.

On top of offering low-cost loans, those financing operations are often more willing than your local bank to lend to folks with less-than-perfect credit.

Sales of new vehicles to buyers with "Tier B" credit, the industry's term for those with credit scores between 650 and 679, have risen 26% this year, according to a Bloomberg report.

A Good Time to Take Advantage

Here's what it means for consumers: If you need a new car, and you're not planning on paying cash for it, the low cost of financing means that this is a good time to buy.

For instance, on a $25,000 60-month loan, the difference between a 4.5% interest rate and no interest at all is about $50 a month, or roughly $3,000 over the course of the loan.

Not all automakers are offering 0% financing, but more and more are: In addition to Toyota and Ford, Chrysler, General Motors (GM), and Nissan (NSANY) have had 0% offers on some models recently, according to Edmunds.

Of course, not everybody will qualify for 0% financing, and even the automakers that offer it are only making it available on selected models. But no matter what kind of car or truck you're buying, financing is cheaper -- and for most, easier to get -- than it has been in a long time.

Pre Approved Car Loan

Clc Auto Loan

The fallout from the 2008 financial crisis still plagues would-be borrowers. Banks are still being pretty stingy about extending credit these days. Credit cards aren't nearly as easy to get as they were a few years ago. And ordinary folks are finding that only borrowers with high credit scores are being considered for a mortgage.

But there's one big exception, and it may be having a big effect on the economy: auto loans.

U.S. auto sales haven't yet returned to their pre-recession highs, but they've been surprisingly strong. Total sales of "light vehicles" -- cars, pickups, and SUVs -- were up 14.8% in the first half of 2012, and they're still picking up steam.

But what's driving it? After all, unemployment remains high, and many people who are employed have seen their earnings decline. Lots of folks have seen their credit ratings dented. It can't be easy for all those people to be buying new cars, can it?

Maybe it can be that easy for those with roughed-up credit to buy a car.

Subprime Loans Driving Auto Sales

It turns out that auto lending is one place where the banks are willing to be a little loose -- maybe even more than a little relaxed about lending standards.

New auto loans from banks totaled $47.5 billion in the first quarter of 2012. According to credit bureau Equifax, that's a seven-year high. Automotive finance companies added another $52.5 billion, says Equifax, up 49% from three years ago.

A lot of those loans are subprime loans.

A recent report from financial data firm Experian shows that the percentage of new auto loans going to subprime borrowers -- people with credit scores below about 680 -- has increased significantly in the last year, just as auto sales have taken off.

Some automakers are benefiting more from this than others. The Detroit News reported recently that Chrysler, whose sales were up a whopping 30% in the first half of 2012, has a special relationship with an arm of Spanish bank Santander (SAN) that specializes in subprime lending. That, experts say, has probably been a key contributor to Chrysler's recent success.

Is It Time to Worry?

Not necessarily. For one thing, default rates on auto loans are lower than they have been in years -- even as the percentage of loans going to subprime borrowers has risen. And defaults on auto loans tend to be less common than defaults on mortgages in general, probably because it's so easy for a lender to repossess a car -- and so hard for many people to get by without one.

And finally, this rise in subprime lending may just be a feature of the times we live in.

Many people had top-notch credit for years but because of the tough economy, have seen their credit dinged by unavoidable circumstances. Now that they're back on their feet, those people are probably still pretty good candidates for a loan. If banks are now starting to see that, it's probably a good thing.

At the time of publication, Motley Fool contributor John Rosevear owned shares of Ford and General Motors. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors and have recommended creating a synthetic long position in Ford.

Clc Auto Loan

Cash Back Car Loan

TV ads promising extra money each month through an auto loan modification may be tempting, but be wary of scams, warns the Delaware chapter of the Better Business Bureau.

"Auto loan modification companies are following in the footsteps of unscrupulous mortgage modification companies which have long targeted struggling families who are just trying to stay above water," Delaware chapter president Christine Sauers said. "Some companies may make it look like they are tossing out a life preserver, but they end up pulling many borrowers deeper underwater."

Manheim, an international reseller of vehicles, says in its used car report that 1.9 million vehicles were repossessed in 2009; it expects that rate to drop slightly in 2010.

BBB has complaints nationwide against one Florida-based company, Auto Relief Group. Some consumers allege they paid hundreds of dollars in upfront fees to get their monthly payments reduced, but that didn't happen. That same company has been sued by the Florida attorney general's office.

Before you enlist the services of an auto loan modification company, the BBB recommends that you:

Start with the lender and see if a more convenient payment plan is available.
Check out the company with the local BBB chapter which can tell you if there are any complaints, government actions or lawsuits against the business.
Ask about advance fees. Some states don't allow companies to charge upfront fees for financial services and requiring money first should be a red flag even if the company offers a money-back guarantee.
Get the deal in writing and make sure the company tells you what its services are and its terms including refund policies.

Cash Back Car Loan

Getting Approved For A Car Loan

The ongoing debate surrounding America's looming debt ceiling is big news inside the Beltway and in the press, but for many of us, even the phrase "debt ceiling" sounds too far removed from daily life to be of much interest. But ignoring this latest political battle would be a mistake: How the government handles the nation's debt limit will directly affect our personal finances in all sorts of important ways.

Before we dive into how all this could hit your wallet, here's a quick refresher course on the issue. Like every other country on Earth, America borrows money to pay for its services. But legally, there's a limit to how much money the federal government can borrow. Congress holds the purse strings: If more borrowing is needed, they have to approve it. Every time we've bumped up against that ceiling in the past, the legislative branch has simply increased the nation's credit limit.

Our problem right now is that the United States is only a few billion dollars from reaching its $14.294 trillion debt limit, and our elected officials aren't ready pick the simplest choice, the one that past Congresses have made. This time: There's debate. Should they raise the debt ceiling in order to borrow more money? Or do they hold the line and start either defaulting on our debts or stop paying for other government outlays -- military and civil service salaries, for example? Do they cut federal spending, and if so, to which programs? Or do they raise taxes?

Yes, our taxes are tied to the debt ceiling. As long as our country is under its debt limit, it can easily borrow money by selling Treasury bonds. As Stan Collender, a partner at Qorvis Communications, explains, "given that the government currently only raises taxes to cover 60% of what it spends, being able to borrow means that the services people depend on from the government continue." If America hits its debt ceiling, that option would be off the table. In such a scenario, the government would have to raise taxes to fund the shortfall, cut services, reduce its payroll, or do all three.

An Expensive Gamble on Many Levels

But individual Americans also will be directly affected by this when it comes to our own consumer debt. As noted before, America raises money by selling debt in the from of Treasury bonds, the government's version of an IOU. Someone -- you, me, China, my grandma, China, a college endowment, a hedge fund, China (yes, China buys a lot of them) -- purchases a T-bill, and the American government promises to redeem the bond at some later date, paying the buyer back with a bit of interest.

As long as bond buyers feel confident that America will always be willing and able to repay them, they tolerate low interest rates. Zero risk, small reward. But if the world starts to get nervous about America's ability to repay, the markets will demand a higher interest rate on our bonds before they're willing to buy them -- and because the nation relies on borrowing for cash flow even during good times, if Uncle Sam can't find buyers for those bonds at low rates, it will have to offer higher ones. Because it's our tax dollars that are used to pay that interest, higher interest rates eventually will have to covered by us in the form of higher taxes.

And what might make bond buyers edgy and demanding? The possibility that the government might default -- not pay all of its borrowers back -- which is precisely what could happen if we hit the debt ceiling.

So, America inches toward its debt limit, and bond rates start going up. The interest rates on our car loans, our mortgage loans, our student loans, and our credit cards, to name a few, are tied to bond rates. So if bond rates increase, the interest rates on our personal debt also goes up.

Beware of Falling Dollars

As if increased taxes and higher interest rates isn't bad enough, we could also see an increase in the cost of numerous everyday items, including gas, clothes, electronics, and anything else produced overseas. If the United States starts looking like it can't repay its debts, the value of the American dollar decreases. If the dollar weakens, foreign goods become more expensive.

This is, of course, all speculative at this point.

"We don't know what will happen because this hasn't happened before," says Collender. "But if the debt ceiling isn't raised and the government runs out of cash, at some point the president may decide he has to stop doing certain things, like paying government contractors, for example. That may not sound like such a big deal, but it is if someone in your family, or someone you know, is working for that contractor, or for the supplier of that contractor, or if that contractor is a big employer in your neighborhood or your state."

It also matters because all the parts of our economy are intricately intertwined, like a woven basket where each reed relies upon the next for support. Say the government postpones payments to a contractor. That contractor may decide to hold off on that new ad campaign it had planned to launch. Now, people working in the advertising industry, and maybe the newspapers and television channels that rely on advertising dollars, start to feel the pinch, and so those people decide to start saving more and spending less, in case the economy takes a downturn. Because consumers are now spending less money, stores start seeing a decrease in sales, and respond by reducing employees' hours or even engaging in outright layoffs. And it spirals downward from there.

None of this is very encouraging, which is all the more reason we need to stay alert to how our Congressional representatives handle the debt ceiling issue.

You can learn more about it at the government's TreasuryDirect website, which is surprisingly straightforward and even offers you the opportunity to "make a contribution to reduce the debt." Initially I thought that was funny, as it seems like such a mismatch to ask a single person to toss in a few bucks towards a multitrillion dollar debt. But then I realized it's not such a bad idea. After all, we have to start somewhere.

Getting Approved For A Car Loan

Same Day Loans Canada

A new car is one of the biggest wealth drains for you and your family. Use these two simple yet powerful tips to take control of this expensive item.

Think in the Long Term (for Models)

Buy the car you want -- but only after it's at least two years old, and three would be better. By doing this, you automatically save hundreds of thousands of dollars over your lifetime.

When I was 23, I wanted to buy a nice four-door sedan, and I was drawn to the Cadillac STS. The new model had a base price of more $50,000, and with any kind of little extras the sticker was almost $55,000. I was doing very well at a young age, but I wasn't doing that well to blow 50 grand on a new car.

I was thumbing through my local paper (yes, this was before the Internet changed everything) and saw an ad for a 2? year old Cadillac STS for $19,500. The car had less than 40,000 miles on it and came with an extended warranty to 90,000 miles. It was gorgeous, shiny and just serviced.

It was an attractive price since the first owner was eating the depreciation.

According to www.Edmunds.com, the average car will lose 11 percent of its value the second you roll it off the lot and an additional 15 percent to 20 percent the first year you own it. The second-year depreciation (loss) is another 15 percent, for a loss of at least 45 percent over the first two years.

Depreciation is usually calculated off of the base price, not the extras. This could be the sport package that raises the price $10,000 but only gives you $2,000 back after the first year or two. So it's quite possible to find beautiful cars with manufacturer warranties still in place and pay 35 percent to 50 percent less than the first owner did when purchased new.

I drove that car for four years, had very few out-of-pocket repairs, and sold it for $3,500.

So what kind of deal could you get today? When I was young, one of the dream cars was a Ferrari Testarossa, and its price was around $200,000. You can buy one now for around $50,000, and most don't have that many miles on them because they're babied by the owners.

Think in the Short Term (for Loans)

If you finance your auto purchase, you can save a lot of money by keeping the term to no more than 36 months. This builds equity in the car faster and saves on interest.

This might be difficult because the monthly payment is higher than if you finance over six years, and it's higher than a monthly lease. If you finance $25,000 at 5 percent interest for three years, your monthly payment will be $749.27, and your total payout will be $26,974. If you extend that loan out to six years, your monthly payment drops to $402.62, but your total payout rises to $28,989. That's $2,015 more out of your pocket to own the car.

Assuming you buy the car with a small down payment, by financing it for six years, your loan pay-down is going at a much slower pace than the depreciation on the vehicle, creating an "underwater" situation on the car almost from the get-go. During the three-year program, you're paying down the car faster than it's depreciating, giving you options if you have to sell the vehicle.

If you truly can't afford that three-year payment, take out a five-year option and send a little extra every month toward the principal to pay it off sooner.

Leasing a newer model looks attractive because the monthly payment is less, but you might not want to do that. I'll explain why next week, when I offer several other ways to save loads of money when purchasing an automobile.

Same Day Loans Canada