According to Kelley Blue Book, the average price for a light vehicle in the United States was almost $38,000 in March 2020. Of course, the sticker price will depend on whether you want a small economy car, a luxury midsize sedan, an SUV or something in between. But the total you pay for a vehicle also depends on a number of other factors if you’re taking out a car loan.
Get the 4-1-1 on financing a car so you can make the best decision for your next vehicle purchase.
Decide Whether to Finance a Car
Whether or not you should finance your next vehicle purchase is a personal decision. Most people finance because they don’t have an extra $20,000 to $50,000 they want to part with. But if you have the cash, paying for the car outright is the most economical way to purchase it.
For most people, deciding whether to finance a car comes down to a few considerations:
Do you need the vehicle enough to warrant making a monthly payment on it for several years?
Is the deal, including the interest rate, appropriate?
Factors to Consider When Financing a Car
Obviously, the first thing to consider is whether you can afford the vehicle. But to understand that, you need to consider a few factors.
Total purchase price. Total purchase price is the biggest impact on how much you’ll pay for the car. It includes the price of the car plus any add-ons that you’re financing. Depending on the state and your own preferences, that might include extra options on the vehicle, taxes and other fees and warranty coverage.
Interest rate, or APR. The interest rate is typically the second biggest factor in how much you’ll pay overall for a car you finance. APR sounds complex, but the most important thing is that the higher it is, the more you pay over time. Consider a $30,000 car loan for five years with an interest rate of 6%—you pay a total of $34,799 for the vehicle. That same loan with a rate of 9% means you pay $37,365 for the car.
The terms. A loan term refers to the length of time you have to pay off the loan. The longer you extend terms, the less your monthly payment is. But the faster you pay off the loan, the less interest you pay overall. Edmunds notes that the current average for car loans is 72 months, or six years, but it recommends no more than five years for those who can make the payments work.
It’s important to consider the practical side of your vehicle purchase. If you take out a car loan for eight years, is your car going to still be in good working order by the time you get to the last few years? If you’re not careful, you could be making a large monthly payment while you’re also paying for car repairs on an older car.
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You can buy a car anytime if you have the cash for the purchase. If you have no credit or bad credit, your options for financing a car might be limited. But that doesn’t mean it’s impossible to get a car loan without credit.
Many banks and lenders are willing to work with people with limited credit histories. Your interest rate will likely be higher than someone with excellent credit can command, though. And you might be limited on how much you can borrow, so you probably shouldn’t start looking at luxury SUVs. One tip for increasing your chances is to put as much cash down as you can when you buy the car.
If you can’t get a car loan on your own, you might consider a cosigner. There are pros and cons to asking someone else to sign on your loan, but it can get you into the credit game when the door is otherwise barred.
Personal Loans v. Car Loans: Which One Is Better?
Many people wonder if they should use a personal loan to buy a car or if there is really any difference between these types of financing. While technically a car loan is a loan you take out personally, it’s not the same thing as a personal loan.
Personal loans are usually unsecured loans offered over relatively short-term periods. The funds you get from a personal loan can typically be used for a variety of purposes and, in some cases, that might include buying a car. There are some great reasons to use a personal loan to buy a car:
If you’re buying a car from a private seller, a personal loan can hasten the process.
Traditional auto loans typically require full coverage insurance for the vehicle. A personal loan and liability insurance may be less expensive.
Lenders typically aren’t interested in financing cars that aren’t in driving shape, so if you’re buying a project car to work on in your garage during your downtime, a personal loan may be the better option.
But personal loans aren’t necessarily tied to the car like an auto loan is. That means the lender doesn’t necessarily have the ability to repossess the car if you stop paying the loan. Since that increases the risk for the lender, they may charge a higher interest rate on the loan than you’d find with a traditional auto loan. Personal loans typically have shorter terms and lower limits than auto loans as well, potentially making it more difficult for you to afford a car using a personal loan.
Steps You Should Follow When Financing a Car
Before you jump in and apply for that car loan, review these six steps you should take first.
1. Check your credit to understand whether you are likely to be approved for a loan. Your credit also plays a huge role in your interest rate. If your credit is too low and your interest rate would be prohibitively high, it might be better to wait until you can build or repair your credit before you get an auto loan. Sign up for ExtraCredit to see 28 of your FICO scores from all three credit bureaus.
2. Research auto loan options to find the ones that are right for you. Avoid applying too many times, as these hard inquiries can drag your credit score down with hard inquiries. The average auto loan interest rate is 27% on 60-month loans (as of April 13, 2020).
3. Get your trade-in appraised. The dealership might give you money toward your trade-in. That reduces the price of the car you purchase, which reduces how much you need to borrow. A few thousand dollars can mean a more affordable loan or even the difference between being approved or not.
4. Get prequalified for a loan online. While most dealers will help you apply for a loan, you’re in a better buying position if you walk into the dealership with funding ready to go. Plus, if you’re prequalified, you have a good idea what you can get approved for, so there are fewer surprises.
5. Buy from a trusted dealer. Unfortunately, there are dealerships and other sellers that prey on people who need a car badly. They may charge high interest or sell you a car that’s not worth the money you pay. No matter your financial situation, always try to work with a dealership that you can trust.
6. Talk to your car insurance company. Different cars will carry different car insurance premiums. Make a call to your insurance company prior to the sale to discuss potential rate changes so you’re not surprised by a higher premium after the fact.
Next to buying a home, buying a car is one of the biggest financial decisions you’ll make in your life, and you’ll likely do it more than once. Make sure you understand the ins and outs of financing a car before you start the process.
Owning a car comes with costs that go beyond getting an auto loan or needing to insure your vehicle. Maintenance and repair costs can add up, and it’s essential to be prepared for those financially. In 2021, for example, individuals in the United States spent more than $194 billion on vehicle maintenance and repair. Find out about some of the most common car repairs below, including what they cost.
10 Common Car Repairs and What They Cost
This list of car repairs isn’t comprehensive. However, it includes some of the most repaired or replaced items on vehicles.
Replacing an Oxygen Sensor
Oxygen sensors check the exhaust from a vehicle’s engine to see how much oxygen is in it. Most modern cars have O2 sensors before and after the catalytic converter. Your check engine light can come on when the sensors aren’t working right.
While a rogue O2 sensor may not be an immediate emergency, if it isn’t functioning correctly, it can lead to fuel intake and other issues with the engine. The cost of replacing O2 sensors varies depending on which sensors need replacing and the make and model of your car. On average, you can expect this repair to cost $150 to $500.
Replacing a Catalytic Converter
Catalytic converters control the emissions expelled by vehicle exhaust. They’re required on most new cars. A damaged or broken catalytic converter causes your check engine light to illuminate. If your catalytic converter isn’t working, your vehicle might not pass state inspection requirements where applicable.
In most cases, a catalytic converter replacement doesn’t require much labor. However, the parts can be expensive. The job can cost $900 to $3,500 on average, depending on the make and model of your car and where you get the work done.
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Brake jobs are common because your brakes and rotors wear down over time. Expect to pay $200 to $500 for a brake service or repair job. If you need a complete brake job, which includes replacement of brakes, calipers, pads and rotors, the cost can average $200 to $800, depending on the quality of the parts, the make and model of your vehicle and where you get the work done.
Tightening or Replacing a Fuel Cap
The cap you take on and off when filling your car with fuel is a critical component. It’s supposed to provide a true seal that keeps the fumes and evaporation of fuel inside the tank. You might need a new one when your fuel cap goes missing or doesn’t create a tight seal. On average, the parts and labor for such a replacement range from around $97 to $102.
Thermostat Replacement
A thermostat in a car measures the temperature in the cooling system and helps ensure the right amount of coolant is being cycled through the engine. That regulation can’t occur if the thermostat is broken, which can lead to issues with an overheating engine. The cost of repairing or replacing a car thermostat is $140 to $300—typically much less than you’d pay for engine damage.
Replacing Ignition Coils
The ignition coils take power from your car’s battery and magnify it enough to cause the spark necessary to ignite the fuel and get your engine running. Bad ignition coils can mean your car doesn’t start. If you need to replace an ignition coil, expect to pay $200 to $300 on average.
Mass Air Flow Sensor Replacement
The mass air flow sensor keeps track of how much air enters certain parts of your engine. Your car needs to know this to allow the right amount of fuel to flow into the engine. If the mass air flow sensor doesn’t work, your check engine light may illuminate, and you may also notice symptoms such as misfires, a rough-running engine, black smoke in the exhaust and engine issues on idle. The cost to replace this part is usually less than $300.
Replacing Spark Plug Wires and Spark Plugs
Spark plugs and wires are necessary to start your vehicle. Sometimes, you can easily replace these parts to save a bit of money. The cost for parts is $125 to $150. If you pay for professional service, expect the cost to be between $190 and $235 in total.
Replacing Evaporative Emissions Purge Control Valve
The purge valve keeps fuel vapors from being released into the air. It’s a required part of vehicle emissions systems. The cost of replacing this part ranges from around $160 to $180.
Replacing Evaporative Emissions Purge Solenoid
Purging solenoids are parts involved in the same process as the purge control valve. You can expect to pay $150 to $300 to get these parts replaced.
Prepare for Car Ownership and Repairs Financially
Owning a car is a significant investment, and it’s important to be prepared for paying your car payment and covering unexpected expenses.
Start by understanding what you need to finance a car, including what’s a good credit score to buy a car. Then you can shop around for an auto loan that meets your needs.
Once you have a car, create a budget and set money aside for emergency needs. You can also work on your credit to ensure you have access to credit cards and loans if you need temporary help with a major unexpected expense.
More on Auto Loans:
Article updated. Originally published April 19th, 2016.
This article originally appeared on The Financially Independent Millennial and was republished with permission.
When consumers purchase a car, there are several things to think about. While the primary process has been handled entirely with test drives and dealerships or private sellers, it’s up to you to continue further down the checklist to get the most out of a used car.
People might think that there’s nothing left to do after buying a car, but don’t forget to take the steps needed to keep a used car on track.
1. Get the Car Insured
When you buy a car, the first thing to always do is to get insurance before leaving the car lot. Getting into an accident just after leaving is a terrifying possibility after spending hard-earned money on a car, even if it’s a used car. Either way, it’s an investment, and buyers need to protect themselves.
It’s a good idea to call around before purchasing the car model you have in mind to get a quote. If that didn’t happen before, getting the best car insurance must be the top priority to get taken care of once a vehicle is purchased. Some dealerships require buyers to have insurance before leaving, so being ready with insurance is imperative for a good experience.
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2. Check for Existing Recalls
Recalls happen in brand-new and used vehicles as technology changes over time. Sometimes, manufacturers will send out information for a recall because of a necessary update, too. Certain recalls can also affect driver or passenger safety, so recalls cannot be ignored.
After the purchase is complete, buyers can find information about recalls from the National Highway Traffic Safety Administration. Get the vehicle identification number or VIN from the car to complete a search. It’s also a good idea to check for recalls multiple times a year because new recalls are released periodically.
3. Transfer the Title
If a car is purchased from a dealership, the dealership typically handles the title transfer. The title is the official document that proves ownership, so if you buy privately, it’s critical to get this taken care of as soon as possible after purchase.
When purchasing from a private seller, buyers need to verify liens do not exist from the previous owner. If there are, those need to be handled immediately. Buyers need proof that the seller has documents that prove any loans have been paid as required. If a buyer has any questions about transferring a title, the DMV needs to be contacted for state-specific answers.
4. Get the Car Registered
Once a car has been purchased, it must be registered with the DMV soon after. Car dealers will typically handle getting the vehicle registered in the buyer’s name, but it’s different when working with a private seller. Private sellers should provide documentation to the buyer to show to the DMV to get the registration done.
Some of the documents needed include the bill of sale showing the purchase price, the title that has been signed over by the previous owner, the VIN, proof of insurance, odometer reading, sales tax if applicable, and evidence of passed inspections. Buyers also need to contact the local DMV to find out if any further documents are required.
5. Find a Trusted Mechanic
Finding a mechanic can be challenging, which is one reason that buyers may prefer to purchase from a well-respected dealership. Dealerships have mechanics on staff that are responsible for conducting an inspection and doing any preventative maintenance before the purchase.
Private sellers are different, and buyers need to be aware of getting a used car with issues. Ideally, the vehicle should be checked before purchase, but it needs to have a thorough inspection done when that’s not possible. When in need of a trusted mechanic, buyers should research reviews and request recommendations from local groups to get an idea of who to trust.
6. Schedule Any Necessary Repairs
Once the mechanic has had a chance to complete an inspection, it may be recommended to replace spark plugs, belts, or any frayed wires, along with any other issues. There may also be cosmetic issues that may need to be dealt with if the buyer deems these repairs are essential.
Some repairs may be more critical than others, so depending on what the mechanic says, there may be a list that needs to be followed. It’s possible that the new owner might need to prioritize repairs to get things done over time. If that turns out to be the case, working out a schedule with a trusted mechanic will be a great way to get things done.
7. Read the Owner’s Manual
It’s a good idea to read the owner’s manual to get to know your newly purchased vehicle inside and out. It may not be full of entertaining reading, but knowing what the lights on the dashboard mean can be helpful should they come on. Buyers can also read about any potential existing warranties that might still apply to the car.
Getting to know more about the car is helpful because new owners can learn about what to expect regarding the engine and other internal components of the vehicle. It also gives the owner a chance to become familiar with some of the more specific details about different parts of the car.
8. Create a Maintenance Schedule
Using the manual, buyers can also get to know what the regular maintenance schedule is for the car. Each manual contains a suggested maintenance schedule, so a buyer knows what to expect and plan for in the future. Sticking with the recommended schedule can help in saving money over time, too.
Maintenance is a crucial part of being a responsible car owner. That includes keeping an eye on the wear and tear of tires, keeping up with oil changes, and getting regular tune-ups. Finding a trusted mechanic is essential in keeping car maintenance from becoming overwhelming.
9. Consider an Extended Warranty
When purchasing a used car, buyers may also want to consider a used car warranty. There are many different options available for warranties that range from expensive repairs to bumper-to-bumper coverage. Buyers should still do research to figure out the best options available.
Keep in mind that some warranties appear to be scams, so researching is vital in making the best selection. Buyers should also check for any specific fine print regarding repairs and coverage. Some warranties are only effective at particular mechanics, so those might be ones to steer clear from.
10. Get Familiar with Features
Once the car is ready to go, buyers need to familiarize themselves with the car’s features. Learning what all of the buttons do is vital because the last thing anyone wants to deal with is trying to figure out how to open the gas tank at an inopportune time. Knowing how to program the dashboard is helpful, too, to enjoy driving to the perfect soundtrack.
Features go beyond the buttons, though, and include levers for seats and the position of latches if installing a car seat is an essential aspect of the car. Finding out where all of the power outlets are is also important so owners can charge their gadgets as needed.
A Few Last Words on What to Do after Purchasing a Used Car
There’s a lot to think about after purchasing a used car. Getting car insurance and title transfers are essential to getting started. Finding out about recalls is critical to keeping the car safe for drivers and passengers. Once registration is complete, it’s time to get the car inspected by a trusted mechanic.
After that, it’s all about creating a schedule for repairs or maintenance to get the most out of a newly purchased car. Getting familiar with the features is also essential to feel comfortable with a new car, even if it’s a used car, because it will be new to you.
Once all of the necessary tasks are done, it’s time to get down to the fun stuff, like finding the accessories that reflect your personality. Adding some exciting goodies to a vehicle should be a part of what it means to have a new car. Taking care of it with regular car washes and giving the car some character is the icing on the cake. When everything is squared away, it’s time to take a drive and enjoy your new car experience.
Good credit requires responsible financial management over a period of time. However, there are some tactics you can try that help build your credit as fast as possible, if not exactly overnight. Find out more about these tips below.
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Add Rent and Utility Payments
Your credit report and score are meant to help demonstrate whether you can manage money responsibly. But not every bill you manage gets reported to the credit bureaus.
Most landlords don’t send payment information to the credit bureaus, for example. And utility providers usually only report when you’ve defaulted on a bill. If you’re looking for how to increase your credit score quickly, getting these timely payments added to your report can be a good idea.
ExtraCredit lets you link rent and utility payments as trade lines to be reported to the credit bureaus. You can access this perk via the service’s Build It function to establish your credit by increasing your history of timely payments.
Pay Down Debt
Paying down debt is potentially one of the best things you can do for your credit. That’s because when you pay down revolving credit, you reduce your credit utilization, which has a big impact on your credit score.
It’s also helpful to pay down debt if you’ve fallen behind or have collection accounts on your credit report. Catching up past-due accounts and keeping up with them reflects positively on your score and can help you boost your credit.
Keep Utilization Low
Revolving credit includes credit cards, lines of credit and home equity lines of credit. Your credit utilization is a ratio of your total revolving credit balance compared to your total revolving credit limit.
For example, imagine you have two revolving credit accounts:
A credit card with a credit limit of $5,000 and a balance of $2,000
A line of credit with a limit of $5,000 and a balance of $1,000
You would have a total credit limit of $10,000 and a total balance of $3,000. That’s a credit utilization of 30%.
Credit utilization accounts for around 30% of your credit score. Keeping your credit utilization as low as possible—ideally below 30%—helps positively impact your scores.
Pay Bills on Time
Always pay all your bills on time. This is less a tip for boosting your credit overnight and more a tip on how not to wreck your credit overnight. One or two slips that lead to you paying bills 30 days or more past due can drastically and negatively impact your credit score.
Get a Secured Credit Card
A secured credit card is a card designed to help those with fair, poor, or bad credit build credit for the future. Getting one can help you boost your score.
Getting a credit card—and using it responsibly—can be a great way to boost your credit without actually going into debt. It might seem like a contradiction, but remember that a credit card doesn’t automatically mean debt. If you pay your balance off each month, you’re never in debt.
But you do still get some of the potential credit-boosting benefits of holding a credit card. The first is that your credit mix may be improved. Creditors like to see that you can manage multiple types of credit, and your credit score benefits when you have both installment and revolving credit.
Having a credit card also lets you address your credit utilization. If you have a credit card and you pay off the balance every month, you’ll have a lower credit utilization with a responsible payment history, which is good for your credit.
Get a Credit Builder Loan
If you already have a credit card, your credit mix might be suffering from the lack of an installment loan. Any type of installment loan—from a car loan to a personal loan—might benefit your credit score if you make your payments regularly and on time.
But for those who don’t have the credit history or score for a traditional installment loan, a savings-secured or credit-builder loan might be a good option. These loans often require deposits or savings accounts that you get back when you’re done paying for the loan, so they’re not loans designed specifically to provide for a financial need. They’re for the purpose of getting an installment loan and positive payment history on your report.
Become an Authorized User
If you don’t feel ready for your own credit card or can’t qualify for one, see if a family member will add you as an authorized user to their credit card account. Many banks and issuers report account activity to both the cardholder’s and authorized user’s credit report.
You do need to make sure you consider this option carefully. First, make sure the person you ask is responsible with their bills. If they pay their credit card bill late, you could end up with negative marks on your report.
Second, make sure the credit card company reports on authorized users. If the information doesn’t get added to your credit report, it can’t have an impact on your credit score.
Dispute Errors on Your Credit Report
Inaccurate items, such as a late payment reported when you never missed a payment, could unfairly bring your score down. Reviewing your reports and challenging errors may help improve your score. You can get a free credit report from each of the three bureaus every year at AnnualCreditReport.com. These are also available weekly for a limited time due to COVID-19.
In addition to rent and utility reporting, ExtraCredit shows you 28 of your FICO® scores and your credit reports from all three credit bureaus. You can check what’s showing up on your reports and what’s affecting your credit scores so you can follow up as necessary.
If you do find an error on your credit report during your investigation, be sure to challenge the accuracy of the error. Under law, you have a right to a credit report that’s fair and free of errors, so if information can’t be proved by the reporter, the credit bureaus may have to remove it.
Set Up Credit Monitoring Account
Invest in credit monitoring to take a proactive approach to protecting your score. By understanding exactly what’s going on with your report, you can address errors quickly and learn how your own actions impact your score. That helps you make potentially score-boosting decisions in the future.
Credit.com’s free Credit Report Card provides a snapshot of your credit report, with information about how you’re doing in the five critical areas for your score. Knowing how you’re doing can help you pinpoint areas that might need some help.
Don’t Close Accounts
This is another tip to keep from dragging down your credit score almost overnight. Keep credit cards and other revolving accounts open if you can, even if you aren’t using them. They can help reduce your credit utilization and increase your credit age, both of which are good for your score.
How Is Credit Score Calculated?
Understanding how your credit score is calculated helps you make good decisions that can boost your score. Credit scores are based on five factors:
Payment history, which is whether you pay your bills on time regularly
Credit utilization, which is how much of your open credit you’ve used
Credit age, which is the average age of your open accounts as well as how long you’ve had credit
Credit mix, which indicates you have a healthy mix of revolving and installment accounts
New credit, i.e., hard inquiries, which refers to whether a lot of lenders are checking your credit to evaluate you for loans
How Often Does Your Credit Score Update?
Credit scores typically update at least monthly, but big changes to your financial situation can boost your score or drive it down more quickly. It really depends on how often your various creditors report this information to the credit bureaus.
Work on Your Credit Now
It’s never a bad time to start working on your credit. Start by signing up for ExtraCredit so you’re in the know about your credit scores and reports and can make educated decisions to build your credit.
Okay, so you’re tired of puttering along in that same 1996 Honda Civic with which you picked up your Homecoming date during your senior year of high school. How do you even begin? No doubt, you’ll have questions to ask when buying a used car. Well, first, you need to narrow it down to which car you want, what options you want/can live without, your budget, etc. Once you’ve gotten that down and have taken a few cards for a spin, it’s time to get down to business.
I bought my first car just about ten years ago and have bought and sold seven cars within that time frame. Except for one, I made a profit off every single one of them. For example, My INFINITI G37 just stole my heart. I got such a good deal on it (I bought it for $4,700 under dealer internet price) that I made the conscious decision to take a loss by keeping it longer and thus having to deal with depreciation.
However, it never needed any maintenance for the six years I had it other than $40 oil changes periodically. So, considering all costs (parking, annual registration, gas, car insurance, and depreciation), the car probably cost me $150 per month over those six years. That’s well below what some friends spent on the luxury of ride-sharing.
What to Ask When Buying a New Car
When you’re ready to buy a used car, you want to come armed with questions. Ensure you’re informed, and then you come across as a knowledgeable buyer and ward off any unscrupulous sales tactics.
#7. When Is the Best Time to Buy a Used Car?
We’ve all seen those charts on the best time to buy everything from winter apparel to laptops. But did you know there is a sweet spot for buying cars, as well? Buying towards the end of the month and even the end of the year is your best bet. Why? Because dealerships have quotas to meet, salespeople are hungry to get one last commission for their paycheck.
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As far as the end of the month, most dealerships close the books, project that month’s sales amounts, and try to move inventory to keep the interest fresh. You may know that when new models come out and leases get returned, the used car market is usually more flexible, which means more selection and a better price for you.
If you’re daring, go into the dealership on a Sunday evening during unpleasant weather when they’re hungry to meet quotas. If you’re paying cash, and you’re there with money in hand, they’re much more likely to get you a good deal. Make sure you come with evidence of comparable models elsewhere.
#6. Why Is Buying Used Better Than New?
While many people justify their decision to buy new as having a more reliable vehicle and spending less on repairs than an older car, cars have markedly improved their dependability over the last 10-15 years.
Plus, many online tools help you with price transparency, find service records, and owner/expert reviews. You’ll find anything you want to know about the car you’re considering over the last decade.
According to a recent report, new cars lose up to 20% of their value after the first year. And then they depreciate more than HALF their value after five years. On a $32,000 car, that’s almost a $7,000 hit after just a year of driving! On the other hand, you can easily buy a car that’s just a few years old and let someone else take the depreciation hit.
Besides houses, cars are generally the most expensive purchases you’ll make. Buying used enables you to strategically get a reliable vehicle that can last you years without breaking the bank. My neighbor once bought a 4-year-old Honda Accord for $12,000 and still drives it ten years and 90,000 miles on the odometer later!
#5. Why Is Buying Better Than Leasing?
According to Consumer Reports’ comparison for buying versus leasing, the average cost of a new car has now topped $38,000. You might think to yourself, “I don’t have $38,000 laying around!” Well, take a step back and a deep breath, realizing this is average. Meaning, you can easily find cars for less than this amount. Plus, just another reason to look at a mint used car!
Leases can be appealing because they enable the consumer to drive a new car for a monthly lease payment. Lenders are happy to collect the interest! And then, you return the vehicle at the end of the lease without worrying about maintenance or repairs. Leasing is ideal for people who like to have the newest car (and can afford it) or deduct leasing expenses like realtors. And yes, if you’re wondering about this question, you can lease a used car as well. However, there are mileage limits, and if you lose your job or have a child, you typically can’t just hand the keys back without penalty.
Buying a car means you can drive it freely and have something of value that you can sell when the need arises. With leasing a vehicle, you typically have to either return it, have nothing at the end of the lease, or pay off the car at an agreed-upon amount when you lease the vehicle. For these reasons, buying a car is the best option for most people.
#4. How Many Miles Should a Used Car Have?
Congratulations, we’ve convinced you to buy used! Well, hopefully, you’re empowered to ask questions and find and buy a quality used car, over lining the dealership’s pockets with a new one. Mileage is an essential factor to consider, and the lower mileage, the better. Think about it, cars don’t run forever. So, there’s a cap on mileage before the vehicle is pretty much worthless. (though if you want to see some impressive machines with millions, yes millions of miles, check out this car.)
Most people drive about 10-12,000 miles per year. And with ever-changing technology, it might be best to keep it under 100,000 if you plan to keep the car for a while. After 100,000 miles, more expensive servicing like timing belt change, transmission replacement, and electrical repairs come along.
Consumers who question a used car’s value can turn to The Kelley blue book as an excellent resource when buying or selling. I have found that buying cars with low-mileage, i.e., under 30,000, is the sweet spot if you can snag a good deal because it still feels new. These cars usually come with the balance of a new or extended warranty and yet have decent value locked in. Bonus points if you flip it a year later for a profit as I did!
#3. What Are the Benefits of Buying a Used Car from a Dealer?
You can compare buying a certified pre-owned (aka used car) from a dealer instead of a private party to purchasing a laptop from the store versus a seller on Amazon. You typically get more hand-holding and a concierge process with inspection of the car, service and registration assistance, etc. Yet, that comes with a price.
Buying a used car from a dealer means there’s no question: they have to stand behind that car and not sell you a lemon because their reputation lies on that. So, peace of mind is a big plus when it comes to buying from a dealer. Also, you can typically find more variety in what you want and have someone reach out to you when they get something closer to what you’re looking for. You can also negotiate free service for a year, a multi-point inspection, printouts of service records, and things like replacing the tires at a reduced cost. Moreover, suppose haggling, negotiations, or dealing with salespeople make your stomach churn. In that case, you can always pay a slight premium for peace of mind by using a service like Carvana or Carmax.
Buying from a dealer can also help you make sure you get your title and tag done correctly. One thing to look out for is some dealerships charge a Dealer or “Document Preparation” fee, which can be hundreds of dollars in some states. Be sure to understand what value they’re providing for that fee and where it goes. Few waive them and even charge their employees that fee.
#2. What Are the Benefits of Buying a Used Car Privately?
How do you save the MOST amount of money when buying a car? Well, you buy a pre-owned vehicle that already got whacked with depreciation and cut out the middleman. By middleman, I mean the dealership.
Now, you read about the perks of buying through a dealer and all the peace of mind it brings. So, why bother dealing with the hassle and uncertainty of a private party? Well, the significant cost savings, of course! There’s no dealer doc prep fee, no markups to pay for payroll or overhead, and no burdensome certification process. Buying a used car privately gives you the best chance of getting a great deal if you ask the right questions.
In simpler times, a handshake and trust were all we had to go off before things like CARFAX reports and AutoCheck. When you find a private seller, you can find out the vehicle history. For example, if they were the original owner, who drove the car, why they bought it, and how it’s been treated over the years. Also, you’ll have to make sure they have the title free and clear. Otherwise, you’ll want to go to the bank and have them call the company that holds the title to make sure the loan gets paid off before any other money changes hands.
#1. What Are the Best Ways to Find a Used Car?
Now how do you go about finding a used car? There are many more online tools at our disposal than ever before. Do you remember the times when you would flip to the classified section of the newspaper to find boxes of 6 point font describing a car for sale? Or you saw a car parked on the road with a “For Sale” sign? How times have changed.
Now, you can easily find any car you want online, know everything about it, see high-resolution pictures of its every angle. And you don’t even have to limit yourself to your geographic area!
The thing to know is most private-party sellers will usually try to sell their car for free or cheaply. So, be sure to start your search by scanning Craigslist, Cars.com, and Facebook Marketplace.
Expand Your Search
Now, if you’re looking to expand your search across the state or nation, check out cars.com, Cargurus.com, and Truecar.com. All of these sites provide decent vehicle descriptions and history, such as accident reports.
Cars.com has a very user-friendly interface and easy navigation filters for color, features, cloth/leather, etc. It also has a price analysis tool to let you know if that particular car is a “good” or “great price” as compared to other vehicles for sale.
CarGurus is also user-friendly and has a similar price comparison tool. Also, it’s got a cool little “negotiation” section in the description. It tells you how long the car has been on the market and its different price changes. It can give you a glimpse of how motivated the dealer is to get rid of the vehicle. I love CarGurus because it answers the most basic questions I’d ask about the used car I’m thinking about buying.
Finally, TrueCar has a unique pricing analytics report that will tell you what you can expect to pay based on what similar vehicles have sold for. They also can offer a unique “personalized offer” on a car, which might be lower than other sites, in exchange for inputting your contact information. It might be an easy trade to shave a few hundred off your car purchase!
Final Thoughts about Buying A Used Car
Consumers looking to buy a used car certainly have to ask a lot more questions than when buying new. But, the extra work will save them thousands in unnecessary depreciation. The key is to do your homework and get the car inspected. That way, you’ll come out ahead by knowing the car’s history. And don’t be afraid (ever) to walk away from a bad deal!
Bankruptcy can happen to anyone—despite their best efforts. And while most people understand that bankruptcy is generally bad for them, many don’t realize the details of how it can impact you. Read below to find out what happens to your credit score after bankruptcy and what you can do to repair your credit afterward.
What Happens to Your Credit Score after Bankruptcy?
After bankruptcy, your credit score can plummet. It will have a devastating impact on your credit health. The exact effects will vary, depending on your credit score and other factors. But according to top scoring model FICO, filing for bankruptcy can send a good credit score of 700 or above plummeting by at least 200 points. If your score is a bit lower—around 680—you can lose between 130 and 150 points.
That said, people with good to exceptional credit scores will see the most notable impact of bankruptcy. If your credit score is already fair or poor—below 670—you may not see large point drops. Yet, the end result will often still be a very low credit score. You simply don’t have as many points to lose to fall to that very poor rating.
Additionally, lenders may hesitate to lend to you if there is a bankruptcy on your credit report.
Do All Bankruptcies Have Equal Impact?
The type of bankruptcy you file and the amount of debt you need to get rid of have varying effects on your credit score.
What Happens to Your Credit Score after Chapter 7 and Chapter 13?
Consumers and small business owners usually choose from two types of bankruptcy filings—7 and 13. These are chapters in the federal bankruptcy code.
Chapter 7: This option is designed to liquidate, or sell off, your non-exempt assets or valuable property. The proceeds are used to discharge, or wipe out, your debt. In most cases, debtors don’t have enough non-exempt assets to repay their debt. But the court discharges those bills anyway. Chapter 7 is reported on your credit report for up to 10 years.
Chapter 13: With this option, you can discharge some of your debt, like medical bills. Meanwhile, you can also partially repay other debts—like a home mortgage or car loan—over a three to five-year period. The three major credit bureaus include Chapter 13 bankruptcy on your report for up to seven years.
Of the two options, Chapter 7 has the more negative impact on your creditors. That’s because you make no repayments. So, financial institutions view you as a higher credit risk. Your score may take a bigger hit with Chapter 7 because of this negative impression.
With Chapter 13, you’re making good on some or all your debt. So, it isn’t reported on your credit report for as long as Chapter 7. Also, you may give future lenders a bit more of a desirable impression of your credit worthiness due to this payment history. This can translate to a slightly more beneficial outcome for your credit rating.
What Bankruptcy Debt Discharges Do to Your Credit
The number of debts and amount you discharge also impact your bankruptcy credit score. Defaulting on several accounts with large balances has more effect than low debt elimination. Your credit history may also play a role if you have positive accounts as well as negative ones. Whether the ratio between these accounts is high or low can make some difference in your score.
Overall, these factors don’t carry much weight for your credit score after bankruptcy, though. The bankruptcy itself and how recently you filed are the most important things that credit agencies and lenders consider. No matter how high your credit score was before a bankruptcy, there will be a noticeable drop immediately after filing. But over time, the impact lessens.
Though Chapter 7 stays on your report for up to 10 years, the debt you discharge may go away sooner. That’s because most negative accounts fall off your report seven years or so after any final payment or activity. But some Chapter 13 debts may show up on your report after the bankruptcy drops off. That’s due to the three to five year repayment time frame. The seven-year period doesn’t start until the account becomes inactive.
How Soon Can You Improve Your Credit Score after Bankruptcy?
Some people mistakenly believe that getting rid of a debt will help their credit rating. So, they think their credit score might increase after bankruptcy discharge. Unfortunately, making regular debt payments is the only method that could improve your credit. But, you can still start working on raising your credit score immediately after a bankruptcy.
Your score won’t go up right away. But the sooner you get started on good credit habits, the sooner the impact will show on your report.
Your low post-bankruptcy credit score doesn’t mean you can’t get some forms of credit. However, it will be more difficult and the terms will likely be expensive. Your best option is a secured credit card. Responsible use and timely payments can help you down the road to a better credit score.
How to Rebuild Your Credit Score after Bankruptcy
While the details of your bankruptcy may remain on your credit report for up to 10 years, this doesn’t mean you have to wait that long to rebuild your credit. There are steps you can take to restore your credit score after bankruptcy.
Over time, your credit score will start to rise if you’re handling credit responsibly. In fact, you may notice an increase in your credit score in as little as 18 months. This increase may be enough to help you obtain some forms of credit, such as a credit card or auto loan, even with bankruptcy on your credit report.
Here’s a look at several steps you can take to start rebuilding your credit score after bankruptcy.
1. Check and Monitor Your Credit Report and Score
It’s important to check and monitor your credit report and score after a bankruptcy. Start by requesting a free copy of your credit report from the three major credit bureaus. Next, check to make sure all the information listed is correct. For example, make sure every account included in your bankruptcy now reports a zero balance. Once you make this initial assessment of your credit report, use a service, such as Credit.com’s Free Credit Score, to regularly monitor your credit.
2. Dispute Any Inaccuracies
If you find any inaccuracies on your credit report, be sure to file a dispute with the credit reporting agency. This includes any accounts under your bankruptcy that don’t show a zero balance. The credit dispute process can take 30 to 45 days to complete, but it’s an important step to take. In many cases, you can complete the dispute process yourself, but you can also seek help from a reputable credit repair service company if necessary.
3. Make On-Time Payments
If you’ve had a bankruptcy, it’s more important than ever to be sure you’re making on-time payments. Building a history of on-time payments can help restore your credit score and show lenders you’ve taken control of your finances. If you haven’t done so already, create a budget to help manage your money. This step can ensure you always have enough funds available to pay your bills on time and help you set up an emergency fund.
4. Make Your Phone and Utility Payments Count
You may not realize it, but your phone and utility payments aren’t usually included in your credit report. Even if you pay these bills on time every month, it won’t impact your credit score. After bankruptcy, you need to make sure you get credit for every positive step you take.
Fortunately, there are services available, such as Credit.com’s ExtraCredit®, that help you report these payments to your credit report. Be sure to sign up for one of these programs as soon as possible.
5. Pay Down Debt
If you have any credit accounts that weren’t part of your bankruptcy, make sure you continue to repay these loans as quickly as possible. Do your best to pay off at least 70% of this outstanding balance to bring your credit utilization rate under 30%. For larger credit accounts, such as student loans, paying off 70% right away may not be possible. In these cases, making your regular monthly payments is enough to start rebuilding your credit score after bankruptcy.
6. Obtain a Secured Credit Card
Once you start rebuilding your credit, you may qualify for a secured credit card. This type of credit card requires you to put down some type of security, typically cash. Regularly using this credit card and making on-time payments is a good way to start repairing your credit. After a year or so of making on-time credit card payments, you may qualify for an unsecured credit card.
7. Control Spending
If out-of-control spending led to your bankruptcy issues, take the time to get control of your spending. Set a strict budget that allows you to pay all your bills plus set some money aside each month for savings. Once you start rebuilding your credit, resist the urge to open too many credit accounts. Instead, only open credit accounts that fit your budget.
8. Apply for a Credit-Building Loan
You can also consider taking out a credit-building loan. Typically, these are smaller loans for amounts such as $500 or $1,000, and they come with a set repayment schedule. These loans are specifically designed to help rebuild your credit. You may find credit-building loans available at smaller community banks and credit unions.
Start Improving Your Credit after Bankruptcy Today
To eventually raise your credit score after Chapter 7 or Chapter 13, you must stay aware and alert about your credit usage. Check your credit with Credit.com’s free credit report card. This provides you with a point of reference as you start rebuilding your credit.
Stay on top of your credit usage and how it’s reflected on your credit report. Access convenient tools that allow you to do this quickly and easily. Be smart and responsible with your finances. Then check on how your efforts are paying off with timely credit score monitoring.
Depending on your contract, a bank or dealership could revoke your loan even after you’ve signed a contract.
Whether or not a bank can revoke an auto loan depends on the contract you have with them. If you’ve financed your new car at the dealership, they could also deny your financing after you’ve driven the car off the lot.
Find out more about how this could happen, what other issues you should watch for, and how you might deal with it.
In This Piece
Can You Be Denied a Car Loan After Purchase?
You can be denied a car loan after you’ve purchased it. It’s unlikely that a bank will do so, but it’s more common for a dealership to revoke a loan if you’ve financed through them.
Banks
If you got your loan through the bank directly, it’s rare to have your loan revoked after you’ve purchased your car. Banks may be able to revoke your car loan if your contract had language that protects the bank’s right to do so. Always read the fine print on auto loans. It’s more likely that there has been some sort of mistake, and you should contact your bank immediately to discuss your options.
Dealerships
If you got financing at the dealership, however, you could discover later that the financing has not gone through and you must return the car. This is typically because car dealerships don’t finance loans themselves: after you purchase the car, the dealership sells your loan to a finance company or bank to maintain. After reviewing your application, the bank may require a larger down payment or different terms. And if the dealership is unable to find a bank willing to fund your loan, you may be required to return the car. This is called a “spot delivery” and it’s not always clear to buyers that they haven’t officially been approved for a loan.
Get matched with a personal
loan that’s right for you today.
Review your contract carefully for a “seller’s right to cancel” clause before signing anything. The dealership will attempt to sell your contact to a finance company or bank, and they typically have a certain number of days to do so—after which they may cancel your contract.
Why Would a Car Loan Be Denied After You Signed All Papers?
Even if a dealership has preapproved you for a loan, the lender has the final say. They’ll take a closer look at your application and credit profile than the dealership likely did, and they may find a few reasons to deny you a car loan.
Poor credit or no credit is a common reason for loans to be denied. Take a look at your credit score before going to the dealership so you have a better sense of your credit strength. ExtraCredit shows you 28 of your FICO® scores, including those most commonly looked at by auto lenders.
Incorrect information on your application may lead lenders to deny your loan. Make sure you fill out your application completely and accurately.
Too much debt can make lenders nervous. Make sure that you have enough discretionary income to make your new car payments before attempting to apply for a new loan.
What Can You Do if You’re Denied a Car Loan after the Fact?
If the bank legally revokes the loan, you’ll probably receive a letter asking you to bring the car back to the dealership. The dealership is now out a sale it may have already marked in the finalized column. So, your salesman and the dealership finance department might be keen to help you take care of the problem by finding financing elsewhere.
But before you do that, it’s a good idea to take a few steps.
Read your contract. Make sure the bank is within its rights.
Contact the lender and ask why the loan was revoked. It might be a misunderstanding or clerical error you can easily resolve. And if it’s something bigger, you need to know about it before you apply for more financing.
Consider consulting legal counsel. If you don’t think the bank is within its rights under the contract or you think you might be a victim of a spot delivery scam, reach out to a lawyer for help.
How to Avoid This Issue
One of the best ways to avoid this issue and not worry about your loan being revoked after the fact is to get preapproved for a car loan on your own before you visit the dealership. You can apply for car loans online and get approved for a certain amount. Then, when you arrive at the dealership, you’re armed with buying power you can count on.
Before you apply for a car loan, consider signing up for ExtraCredit to get details about your credit history and score and where you stand in all the important categories.
Learning how to build credit can help if you have a bad credit score or want to improve your current score. You can start by getting a secured credit card, becoming an authorized user, or getting a cosigner on a loan.
If you have bad credit due to derogatory marks, those marks can stay on your credit report for up to seven to ten years, depending on the type of mark. A low credit score leads to higher interest rates, larger deposits, and a low approval rate for loans and lines of credit. Those just beginning to build their credit will have similar challenges, but there are ways to build or work to repair your credit score.
By learning ways to build credit, you will not only improve your financial health, but it can reduce your stress around finances as well. In this article, we go over 12 tips that can help regardless of your specific credit situation.
Table of contents:
Get Added as an Authorized User
Try a Secured Credit Card
Find a Cosigner
Report Utilities and Bills
Get a Credit-Builder Loan
Pay Your Bills on Time
Regularly Check Your Credit Scores and Reports
Dispute Errors on Your Credit Report
Pay Off Collections
Open New Lines of Credit
Request a Credit Limit Increase
Have a Good Credit Mix
1. Get Added as an Authorized User
Becoming an authorized user is one of the most popular ways to build your credit score because you benefit from someone else’s good, established credit history. Also known as “piggybacking,” becoming an authorized user is when someone adds you to their credit card account.
The odds of approval on a credit application are lower if you have a low or bad credit score, so this is a way to start building credit and improve your ability to get your own card later. When you’re an authorized user, the card company will also report the payment history for your credit report when the primary account holder uses and makes payments on their credit card.
You can have a friend or family member add you as an authorized user. While this can be a great way to build credit, it’s useful to know that this can also negatively affect your or the other person’s credit should either of you miss payments or over utilize the credit line.
2. Try a Secured Credit Card
A secured credit card is a type of credit card that most people can acquire through their bank regardless of their credit score. The primary challenge of getting a credit card with a low credit score is that your credit score is one of the wayslenders evaluate risk. If you don’t have a credit history to show that you know how to manage credit or have derogatory marks on your report, credit card companies may be reluctant to loan you money via a credit card.
Secured credit cards are different because rather than borrowing from a financial institution, you borrow from yourself. You do this by depositing money into the credit card account, which becomes your credit limit. For example, if you opened a secured credit card with a $500 deposit, you will have a $500 credit limit. As you use the card and make regular payments, these will be reported to the credit bureaus to help build your credit history and potentially help improve your score.
3. Find a Cosigner
Similar to becoming an authorized user, you can benefit from a cosigner with a good credit score. On your own, you may not receive approval on a personal loan or car loan. When you have a cosigner with a good credit score, the lender sees loaning to you as less of a risk because the cosigner is also attached to the loan.
Although a cosigner can help with the loan approval process, like becoming an authorized user, your credit can also affect that of your cosigner, so it’s important to make full and on-time payments.
4. Report Utilities and Bills
When learning how to build credit, many people don’t realize that most utilities and bills are not reported to the three major credit bureaus. Fortunately, you can purchase services that will report your utilities and bills. Services like Credit.com’s ExtraCredit® subscription help build credit history for people with no credit history or low credit scores.
5. Get a Credit-Builder Loan
Credit-builder loans do just what you think they do—they are loans that help you build credit. Unlike typical loans, where you fill out an application and receive the funds, credit-builder loans are a sort of savings program. When a bank or financial institution provides you with a credit-builder loan, the funds go into an account, and you make payments on the amount. As you make your payments, the lender reports them to the credit bureaus to help build credit history and potentially improve your score with your on-time payments.
Many credit-building programs have higher interest rates than traditional loans due to the higher risk, but they can help your score in the long term. Once you pay the credit-builder loan off with interest, you receive the full loan amount.
6. Pay Your Bills on Time
If you already have lines of credit or loans, paying your bills on time is one of the best ways to continue building your credit score. Your payment history is 35% of your FICO® credit score, which is why paying your bills on time is helpful.
One of the best ways to ensure you never miss a payment is to set up automatic payments for the minimum amount on your credit cards and bills. You can always make additional payments, but when the money comes out of your bank account automatically, you no longer have to worry about forgetting a payment.
7. Regularly Check Your Credit Scores and Reports
A great habit for building credit or trying to maintain a good credit score is to check your credit score and report regularly. Unlike a car experiencing mechanical issues, there are no warning lights or alarms that go off when your credit score drops or a negative mark appears on your report.
Checking your scores and reports lets you know if there are any issues sooner rather than later. It can also help you stay motivated as you work to build your score as you see the number start to rise.
Although your credit report doesn’t notify you about changes automatically, Credit.com’s ExtraCredit® offers credit monitoring as part of the subscription service. Credit.com also offers a free service whereyou also get your free credit report card to analyze your current score for issues that need your attention.
8. Dispute Errors on Your Credit Report
If you regularly check your credit score and credit report, you may find errors. Sometimes, bill and credit card companies don’t properly report your payments, which can hurt your credit. Credit card fraud and identity theft are also more common than you may think, and this can also cause your credit score to drop. Should you find errors on your credit report, it’s your right to challenge them. To file a formal dispute, you need to write a dispute letter showing documentation of payments and other information to the creditor reporting the error. If you have other potential errors, you can request a verification of the reporting from the credit bureaus. They will investigate then respond with the results, typically within 30 to 45 days.
9. Pay Off Collections
As you now know, derogatory marks on your credit report can have a negative impact on your credit score. When someone doesn’t pay their bills, the account becomes delinquent and a collection agency could buy it. You can find the information about the collection agency on your credit report and then contact them to pay off the debt.
In some cases, a collection agency will let you settle the debt for a fraction of what you owe. When you agree to pay off or settle the debt, you can ask for a pay-for-delete letter. After you pay off a collection agency, the derogatory mark can stay on your credit report for years. A pay-for-delete letter is an agreement that the collection agency will have the collection item removed from your report once you pay it. Get this agreement in writing!
Before negotiating with a collection agency, it’s helpful to also know your debt collection rights.
10. Open New Lines of Credit
For those with an established credit score, a good way to continue improving your credit score is to open new lines of credit. In addition to your payment history, credit utilization is the second-most important factor for your credit score. Your credit utilization is worth 30% of your FICO credit score, and new lines of credit can help keep your utilization low as long as you don’t use them.
Credit utilization is the amount you owe compared to your overall credit limit, and ideally, your utilization should be under 30%. For example, if you have five credit cards with a combined $5,000 credit limit and owe $2,500, your utilization is at 50%. If you open up a new line of credit for an additional $5,000, raising your total limit to $10,000, your utilization is now only 25% if you owe $2,500.
11. Request a Credit Limit Increase
If you don’t want to open new lines of credit but still want to build your credit, you can request a credit increase from your credit card company. This accomplishes the same thing with regard to credit utilization as opening new lines of credit. If you have a good payment history with your credit card company, they are more likely to increase your credit limit, lowering your utilization rate.
12. Have a Good Credit Mix
Your credit mix shows that you can handle multiple types of credit. The two primary credit types are installment and revolving credit. Revolving credit is a line of credit that allows you to spend up to the credit limit, make payments, and then use the credit again. Some common forms of revolving credit include:
Credit cards
Personal lines of credit
Home equity lines of credit (HELOC)
Installment loans are lines of credit that give you an amount you pay down to $0 over time, and then the account closes. Examples of installment loans include:
Auto loans
Home loans
Student loans
Personal loans
Check Your Credit and Start Building It Today
Checking and monitoring your credit scores and credit reports is the key to building your credit and maintaining a positive score. As you continue to build your credit, you may begin to save money on interest rates and have additional financial freedom as you can access more opportunities.
If you want to begin your credit-building journey, Credit.com’s ExtraCredit subscription offers credit monitoring, bill reporting, personalized credit and loan recommendations, and more. You can also access your free credit score and free credit report card through Credit.com today.
A medical collection on your credit report can be a concern when you begin the process of qualifying for a mortgage. Medical debt is still debt, which means that it can raise your debt-to-income ratio the same as a car loan. The closer you get to 43% (aka the magic DTI cut-off point), the less likely you are to be approved for a mortgage.
More than 35 million adults struggle with unpaid medical debt, according to NerdWallet, and while the debt doesn’t impact your credit score as much as it did before FICO 9 changes, the debt can cause problems when applying for a mortgage. You have three strategies for handling medical collections, depending on how far the debt has gone into the collections process.
Negotiate With the Medical Provider Before Collections
The best option to avoid medical debt hindering your ability to get the mortgage or rate you want is preventing the bill from going to collections entirely. Many medical providers are agreeable to payment plans set over a specified period, such as splitting your payments over a year or paying a certain percentage of your bill each month. Call to discuss your options.
Ask About Financial Assistance
For high-cost medical bills, such as those associated with an emergency surgery, the hospital may have financing programs in place for assistance. The hospital may forgive the medical debt, have grants or other programs in place to cut down your overall bill, or allow you to pay a fixed monthly cost to prevent the bill from going into collections.
Pay Medical Collections
Once your medical bills go to collections, your primary recourse is to reach out to the collection agency and arrange to pay off the debt. Be careful, though. The statute of limitations on medical debt is 3 to 6 years, depending on the state you live in. If you’re near the end, collection agencies may double down on their efforts to make you take verbal credit for the debt or to make a small payment, either of which will reset the clock.
Even if you’re not nearing the end of your liability, you can likely negotiate a payment that’s substantially less than the original medical debt. This is because collection agencies purchase your debt for pennies on the dollar, assuming they’ll be able to collect at least part of the debt. If you can offer them a lump sum, they may write off the rest instead of waiting around for monthly payments. Just make sure you get any settlement in writing.
Medical debt impacts millions of Americans, but it doesn’t have to stand in the way of home ownership. Even if you don’t pay your medical bills directly to your provider or hospital, you can reach out to collectors to resolve the debt before you start searching for a mortgage.
Are you looking to learn how to find a free car? Cars are expensive. There’s no doubt about that. Is it possible to get free cars? Getting a free car may sound too good to be true, but it’s possible for people who meet certain requirements, which we will talk about below. In this article,…
Are you looking to learn how to find a free car?
Cars are expensive.
There’s no doubt about that.
Is it possible to get free cars?
Getting a free car may sound too good to be true, but it’s possible for people who meet certain requirements, which we will talk about below. In this article, I’ll show you how to get a free car through different ways, from charity donations to assistance programs, and more.
I understand that there are so many people who would benefit from a more affordable transportation option. After all, a car can be essential to landing a job, getting to work, helping you pick up and drop off your children at childcare (so that you can work!), getting groceries, and so much more.
Low-income families, single parents, individuals with disabilities, veterans and their families, and so many others may particularly benefit from getting free vehicles to improve their quality of life.
Whether it’s making it easier to get to work, taking the kids to school and childcare, or simply attending important appointments, acquiring a free car can have a significant impact on your daily life.
Related content:
Why do free cars exist?
Free cars exist to help people who need transportation.
There are many organizations whose sole purpose is to help you get a free car because they know how much it can change a person’s life.
Below are some organizations that may help you find a free car:
Nonprofit Organizations— Some nonprofit organizations give away cars for free to those who need one. They work with local partners and households and accept donations of old cars and used cars, which are then fixed up and given to those who need them. These organizations usually target specific groups of people, such as low-income families, working families, single parents, military families, or disabled individuals, who may find it hard to afford a car on their own.
Churches and Private Charities— Churches and private charities may offer car help in your community as well. They usually work on a smaller scale, providing help to local residents experiencing hardships and may just give out a free car here and there. These organizations often rely on donations from members of the community and local businesses, and they require applicants to demonstrate a genuine need for a vehicle. You may need to contact local churches and charities directly to learn more about how to get a car for free.
People donate their used cars all the time. Their reasons may be either because they have no use for the car, they want to avoid the hassle of selling a car, for tax breaks, or they want to help others.
Who can benefit from free cars?
There are many people who can benefit from a free car, such as:
Low-income families— If your family is struggling with money and you are finding it hard to afford your bills, you might be eligible to receive a free car if you can show your need to an organization.
Single mothers and single parents — Single moms and parents need transportation so that they can get to work and also be able to bring their children to childcare. Not having a car can make this much more difficult.
Domestic violence victims — Having reliable transportation can be important for the safety and well-being of domestic violence victims. Some organizations have experience providing a free car in this situation and understand the need for privacy.
Disabled individuals — If you have a disability, you might be eligible to receive a free car to help you get around and be more independent.
Veterans and military families — Veterans and military families can also benefit from free car programs. There are organizations dedicated to providing assistance to those with a military background, to repay them for their service and sacrifices.
Victims of natural disasters — If you have experienced loss from a natural disaster, then you may benefit from many charitable free car organizations.
Of course, there are many more people who could benefit from finding affordable transportation as well. This is not a full list of those who might need a free vehicle.
Now, you do want to be cautious with getting a free car. If you are receiving government assistance, such as housing assistance, welfare, or food stamps, then accepting a free car may be considered income and it can affect your benefits. This is something that you will definitely want to think about as you do not want to lose these benefits.
How To Get A Free Car
There are organizations that help you get a car when you need a free vehicle. And there are other ways to find a free car as well. Below are some of the options that you may want to look into:
1. 1-800-Charity Cars
1-800-Charity Cars (also known as Free Charity Cars) is a nonprofit organization that provides free vehicles to eligible people, including domestic violence victims, the medically needy, victims of natural disasters, veterans and military families, and families transitioning from public assistance to work. It was the first charity of its kind in the nation.
This is the original free charity cars organization and they have given away over $70,000,000 in cars (over 9,000 cars) nationwide since they started the organization in 1996.
To apply, you will need to meet their eligibility criteria and submit an application on their website. Some of their eligibility requirements include being over the age of 18, being a resident of the U.S., having a valid driver’s license, being at or below 200% of the Federal Poverty Level, and having a genuine need for a vehicle.
This is a good place to start if you need a free car and you’re wondering where can I get a donated car for free.
2. Vehicles for Change
Vehicles for Change was started in 1999 and has given out over 7,500 cars to low-income families for little to no cost.
This organization helps residents in the states of Maryland and Northern Virginia. Cars are repaired and restored by people seeking workforce training as auto mechanics.
Donated vehicles are provided to families in need who meet their eligibility requirements. Eligible applicants must have a verifiable job offer or be working at least 30 hours per week, have no DUIs, and have a valid driver’s license to begin the application process.
3. Good News Garage
Good News Garage is a car donation program to look into if you’re trying to find a free car. They provide refurbished free cars for low-income families that meet their eligibility requirements. They give out around 200 cars to families in need each year and have provided around 5,500 cars since starting in 1996.
This organization is available for those in need who live in the New England area of Massachusetts, Vermont, and New Hampshire.
Good News Garage also has a transportation program. If you need to get to a job or get your children to childcare, then their program Ready To Go may be able to help you with this as well.
4. Online Car Donation
OnlineCarDonation.org is another platform that donates refurbished vehicles to needy individuals and families.
Online Car Donation gives free cars to people such as those with physical challenges, families living in homeless shelters, military families, and more.
You can apply by filling out their application form on their website and providing the required documents to prove your eligibility.
After you submit your application for a free car, if you are chosen, you will be contacted within 30 days. If you do not hear back within that time frame, their website says you can apply again as applications are only valid for 30 days.
5. With Causes Charitable Network
The WithCauses.org Network helps individuals and families in need by providing resources and assistance, which includes help getting a free car. The eligibility requirements may vary, so visit their website to find out if you qualify and how to apply.
6. Salvation Army free car program
The Salvation Army offers a free car program for eligible candidates.
They mainly focus on helping domestic violence victims, families in dire financial situations, and the homeless. Visit your local Salvation Army branch to inquire about their car donation program and how to apply.
7. Cars 4 Heroes
Cars4Heroes donates free cars to first responders, military veterans, and their families who are in need of transportation.
Cars 4 Heroes was started in 1996, and the organization currently gives away over 300 cars a year in the Kansas City, Kansas, metro area.
You can fill out their application form on their website and provide the required documentation to be considered for a free car.
8. Local church
Your local churches or other religious institutions may have programs that provide free vehicles to families that need help getting a car.
You may want to contact your nearby churches to find out if they have any car donation programs and how to apply or if they have eligibility requirements. They may know someone that they can connect you with to help you get a free car.
9. Check Facebook Marketplace and Craigslist
Many people often give away their cars or sell them at low prices on platforms like Facebook Marketplace and Craigslist.
If I was wondering about free cars near me, then I’d browse through these websites regularly to find out if anything is available. The search can be customized by entering your budget and location to see if anything suitable turns up.
10. Find a job that gives you a free car
There are jobs that may give you a free car as well, in case none of the above options works for you.
Some job positions that may come with a company car include sales representatives, district managers, or regional directors who spend a lot of time traveling between different offices.
To start your search for jobs that give you a car to take home, you can look for job postings with phrases like “company car provided” or “full-time vehicle provided.” Job websites such as Indeed, LinkedIn, and Glassdoor make it simpler to find such job listings by using specific keywords, so you may try searching for those. I did a quick search and was able to pull up jobs easily by typing those phrases into the keyword search bar.
Some employers might offer a car allowance instead of providing a free car. In this case, you would receive a monthly stipend to use toward your vehicle expenses. This would offset some of your car expenses, such as monthly payments or maintenance.
Also, if you know someone who currently has a company car, you can try asking them for tips and advice. They might even refer you to open positions at their workplace, and this can help you get a job with a free car as well.
11. Look for a free dealer donation
Dealer donations are a little more difficult of an option, as car dealers are in the business of making money, not giving away all of their cars that make them that money.
But, it doesn’t hurt to try if you have the time to write a letter and reach out to a car dealership.
To obtain a car dealer donation of a free used car, you’ll want to start by seeing what local dealerships are in your area. You can research their involvement in charitable activities to see if they even give out free cars (maybe do a simple search of the dealership’s name plus the term “free car” or something like that), as this will show you that they are open to the idea of donating a vehicle to those in need of a free car.
Once you have a list of local dealers to reach out to, there are ways to get a free car from a dealership. You can write a letter talking about your situation and reasons for requesting a donated car. You should talk about your struggles and the positive impact the donation will have on your life (such as, what a donated car will help you do).
When writing your letter for a free dealer donation, here are some things to think about:
Write the letter to the dealership’s owner or general manager, as they will likely have the authority to approve a car donation or be able to talk to someone who does have that authority.
Explain your situation fully and provide the specific reasons why you need a car.
Talk about how a car donation would improve your life and allow you to overcome challenges or achieve goals.
Provide information on any relevant programs or resources, such as a community organization or nonprofit, that may support your request for a free car.
After you have written your letter, submit it to the dealership. You may do this by sending it to the physical mailing address of the person, their email address, or perhaps even handing your letter to them in person.
Here are answers to common questions you may have about finding a free car:
What are other transportation options if I can’t find a free car?
There may be a long waiting period if you are applying for a donated car. If you are not able to find a free vehicle, then you may need to look into other options to get around town. Here are some ideas on how to get around if you don’t have a car of your own:
Public Transportation— If you live in a place with public transportation, then this option is something to look into. One great thing about public transportation is that you won’t have to pay to maintain a vehicle or repair anything. Of course, public transportation sometimes takes longer and may not be widely available to you (unfortunately, there are many towns in the U.S. that do not have great public transportation options), and that is something to think about. Also, more and more cities offer public transportation at no charge. You may have to apply for a special card to get this free service, or it may be available to everyone. It’s worth asking around about because it can save you hundreds of dollars a month.
Carpooling — Carpooling is an option to think about if you are unable to find a free car, especially for people who live in areas with limited public transportation. Car owners may be looking for riders so that the expense of ownership is offset a bit. You’ll need to share the cost of expenses, such as gas, tolls, parking, and wear and tear. You may be able to share rides with coworkers, friends, or neighbors. To save money, you could offer to trade babysitting, gardening, or home repairs for the ride. Also, check out carpooling apps that apply to your local area.
Rideshare Services — Now, rideshare most likely won’t be the most affordable option, but sometimes you don’t have a choice. Rideshare services, such as Uber and Lyft, may be able to get you to where you need to go if you don’t have any other options. To save money, use an app that compares rideshare companies and finds you the cheapest price. And, as far as your work commute, it’s good to know that some companies offer rideshare services as a benefit to their employees and will pay for the full cost or part of it.
How can I find free cars given away near me?
Yes, you can find free cars given away near you. There are many local organizations that may be able to help you out. You can research the various charity programs in your area and see if you meet their eligibility requirements for a free car.
Many charities, such as Charity Cars, provide free vehicles to people in need. These organizations often target specific groups of people, like veterans or victims of domestic violence.
Next, reach out to local branches of organizations like the Salvation Army or Goodwill Industries. These organizations may also auction off donated cars at affordable prices. Reach out to your nearest branch to learn more about available vehicles and to find out if they hold any auctions.
Another option is Online Car Donation, which aims to provide free cars to as many people in need as possible. Fill out their application to see if a reliable used car is available for you. They also offer trucks, vans, and sometimes even modified vehicles for individuals with disabilities.
Remember to be patient but also to keep trying, as it can sometimes take time to find the right opportunity for a free car. And, many times your application is only good for 30 days, so keep in mind that you may have to submit it over and over again.
Is Free Charity Cars legit?
Yes, Free Charity Cars is a legitimate organization that connects eligible people with free vehicles. They have high ratings and many endorsements.
How to get a car if you can’t get a free one?
If you’re not able to get a free car, you do have some other options, such as learning how to get a cheap car and learning the best way to get a car loan with a low interest rate.
Here are my tips for finding a cheap car:
Shop around for cars that are affordable to you: Many organizations offering a free car may also give you the option of purchasing a refurbished vehicle from them at a much lower cost than elsewhere. Otherwise, check out your local dealerships, online car-selling platforms, and even Craigslist to find the best deals on reliable cars in your area. Don’t limit yourself to just one site; shop around and be patient until you find a car that fits your budget.
Buy a used car: Buying a used car rather than a brand new one can save you money. Pre-owned vehicles tend to be more affordable and can still offer reliable transportation.
Negotiate for the best price: Don’t be afraid to negotiate the price of the car with the car seller or dealership. They may be able to lower the price, especially if you can show them that similar cars are around for cheaper prices elsewhere.
Check your credit score: Before applying for a car loan, make sure that you know your credit score. A better credit score increases your chances of getting a lower interest rate on your car loan. If you can, I recommend you take the steps to improve your credit score (even while searching for a free car) in case you need to apply for a car loan.
You can learn more about building up your credit score at Everything You Need To Know About How To Build Credit.
Shop around for car loans: Just as you should shop around for the best car deal, you should do the same for car loans. Different lenders may offer different interest rates and loan terms.
Choose a shorter loan term: While a shorter car loan term means higher monthly payments, you’ll pay less in interest overall, making the car less expensive over the years.
There are plenty of options for finding cars that may not be entirely free but are still affordable to you.
Related content: Save Money With These Top Tips For Buying A Car
How To Get A Free Car — Summary
I hope you enjoyed today’s article on how to get a free car.
If you need a car but cannot afford one, there are several ways to possibly get a free car. Many programs and organizations exist to help people get a free car, especially if you belong to certain categories, such as low-income families, veterans, domestic violence victims, or those transitioning from public assistance.
Remember, you do want to be cautious with getting a free car as well. If you are receiving government assistance, such as housing assistance, welfare, or food stamps, then accepting a free car may be considered income, and it can affect your benefits.
To find free cars near you, it’s important to explore local nonprofit organizations, as well as community centers, churches, or social services agencies that may have information about free car programs or resources in your area. Some jobs come with a company car that you can take home.
Here are some potential resources to assist you in getting a free car:
Local nonprofit organizations
Online car donation websites
Community centers and churches
Social services agencies
Remember that just because you meet the eligibility requirements for a free car and apply for one, it does not mean that you will succeed. There are many people who would like to receive a free vehicle as well. However, you can increase your chances of getting a free car if you can show that you have a need and you have a story to share (since people personally review the applications to see who needs the car the most).