Mistakes to Avoid When Getting a Car Loan

 

Many people look towards getting a car with enthusiasm. However, outright automobile costs can be inhibitive. With auto financing, you can simplify and hasten this process. Moreover, you need to perform due diligence and read in-between the lines to find the loopholes. Below are the major mistakes to avoid when getting a car loan. 

1.    Narrowing Your Financing Options 

Do you know the number of financing options available to you? It goes beyond dealerships and bank loans, even bad credit payday loans. For instance, you can approach credit unions, digital dealerships, or specialized financial agencies. It is imperative to keep your options open for lower interests and better deals. 

2.    Ignorance of Your Credit Rating 

Your credit rating gives a clear picture of your spending habits and financial attitudes. Banks and dealerships tend to check your credit scores first to ascertain your suitability. Besides that, you need to know your financial capacity and debt-to-income ratio (DTI) to negotiate a commensurate deal.

3.    Leaving Your Budget to Chance 

Several people get excited about getting a car without creating a reasonable budget first. Dealers have various financing structures, which may confuse you. However, if you are clear about your budget size, you become confident while getting a car loan. Also, determine beforehand your potential down payment. 

4.    Minimal Research on Available Rates 

It pays to research the different car loan options available to you before leaving your house. Armed with this information, you are in a better position to spot good and bad deals. When the interest rate goes beyond 20%, you need to pay more attention to the terms. 

5.    Choosing an Extended Repayment Duration 

Most times, you have to choose between a higher monthly due and a longer payment duration. If you chose the first option, then you can wrap up your car loan quickly. However, the second option allows you to pay lower rates for an extended period, leading to a substantial interest rate.

6.    Rushing to Close A Deal 

Only you can protect your economic interest because the lender protects his or hers alone. You need to be patient while going for a car loan. Often, it takes several hours to find and select a favorable option. Hence, do not rush to sign the papers until you understand all the terms.

7.    Fear of Walking Away If the Need Arises 

The best businesspersons know when to stop the negotiation and walk away. Having created a budget and repayment plan beforehand, you can determine when a deal is going south. Always remember that there is no deal until you sign. 

8.    Piling Additional Costs 

Dealers seek to extract maximum value from every deal they make. Thus, they recommend enticing services that raise your overall costs. For instance, warranties, insurance packages, and extended contracts are additional charges that you can incur unknowingly. Although they sound cool, consider your budget and repayment strategy. 

9.    Reluctance to Negotiate Lower Rates 

If you are less prepared to negotiate a better deal, dealers tend to hike their prices. When you consider your down payment, it should affect your payback duration and annual percentage rate. Moreover, if you fail to carry out due diligence, you might be at the receiving end of a greedy lender. 

10.         Failure to Confirm First Repayment Date 

Keep proper documentation of your car loan details, especially the date and amount of your first repayment. It is normal to forget these details, but savvy owners do not. Moreover, check in with the lender before leaving. 

Conclusion 

It is common to find potential car owners who fail to cross their ‘t’s and dot their ‘i’s before approaching a lender. The pitfalls highlighted above represent the mistakes to avoid when getting a car loan. 

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10 Personal Finance Apps for Adults and Teens

Making, managing, and multiplying money is the core message of financial literacy courses. If you know more, then you can make better decisions concerning your finances. Since schools merely touch the fringes, mobile applications can bridge this knowledge gap. Moreover, we have discussed ten personal finance apps for adults and teens in this article.

1.    Toshl Finance

This app provides a robust budgeting platform for all your needs. Apart from creating a 24-hour, 7-day, or 30-day budget, you can personalize the duration to reflect your preferences. As you execute the allowances, you can see your progress in real-time. Also, you can fill in your expenses based on their categories. 

2.    Famzoo 

Famzoo provides a collaborative interface for parents and teens to monitor and manage transactions. It comes with a prepaid card. After releasing funds into the teen’s account, you can track his or her expenses and balance. Moreover, it prevents reckless spending, which might prompt overdraft fees. 

3.    Greenlight 

With Greenlight debit card, parents can select the stores where their teens can transact business. It teaches teens to think through their needs before swiping their cards. If you need additional funds, it has a request feature. Besides, you can attach pictures to make your request more convincing. 

4.    Mvelopes 

Mvelopes whets your savings appetite with its unique, digital “envelope” feature. For each of your goals, you can create a different envelope. That way, it gives meaning to your savings by breaking your money into chunks. Also, it makes it easier to monitor your progress. Although the app is free, there are in-app advertisements. 

5.    Truebill

It is common for people to subscribe to services but not maximize such payments. With Truebill, you can eliminate these extra charges by moving to a commensurate plan. Its exciting features include automated funds management, subscription analysis, and bill negotiation. For instance, you can bargain for better payment packages on the app.  

6.    Digit

Just as impulse spending occurs, Digit facilitates impulsive savings. With its automated savings feature, you can top up your savings multiple times a week. It recommends a savings range after considering your gross income, total budget, expenses, and desires. Meanwhile, it covers the cost of an overdraft, if it ever happens. 

7.    Personal Capital

As a teen, it might be challenging to determine your net worth. However, with Personal Capital, it is simple. It allows you to incorporate your bank account, credit and debit cards, and investment portfolios. From its dashboard, you get an accurate picture of your net worth instantly.

8.    You Need A Budget (YNAB)

From its name, you can depict its purpose. It is a comprehensive budget app for adults and teens. With YNAB, it becomes easy to plan your income, determine your expenses, and set a due date for each. It has a savings feature to support your financial goals. 

9.    Mint

For people desirous of being in charge of their financial destiny, Mint is your financial assistant. It is a one-stop-shop for your income, expenses, budgets, and investment options. It uses your earning and spending patterns to recommend investment opportunities. Besides, it is available on both the Play Store and App Store. 

10.         Acorns Spend

Acorns Spend is a personal finance platform that encourages and empowers people to invest in selected portfolios. It rounds up payments from connected credit and debit cards while investing the remainder. For instance, if you pay $3.50 for an item from a linked card, it rounds it off to $4.00 and invests the remaining $0.50 in an investment you have chosen earlier. 

Conclusion 

Financial literacy is essential for adults and teens who want to build wealth or relieve their debt burdens. The personal finance apps discussed above will give you the requisite head start.

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Everything You Need To Know About Mortgage Refinancing

 

Mortgage refinancing may sound convincing since lenders and government bodies advertise it often. However, that should not be the only standard for making a decision. It is advisable to analyze the offer for your peculiar situation. Besides, you may find out that it is not worth it. Hence, we have itemized some essential considerations before you grab the offer. 

1.    Clarify your Credit Rating 

Lenders take a cursory look at your credit timeline, current income, and your debt position before settling on a rate. Generally, if your credit rating is too low, you may not qualify for competitive refinancing prices. However, you may compare different partners for lower lending rates.

2.    Understand the Current Value of Your Home 

Before you can refinance your mortgage, you need to have some realized equity on the building. Besides, home values are constantly changing with the prevailing economic situation. If your house has zero or minimal equity, you might not qualify for refinancing. Meanwhile, a 20% equity gives you a good starting point.

3.    Crosscheck the Repayment Duration 

There are three major mortgage repayment plans, covering 10, 15, and 30 years. With the first option, you pay a higher monthly due and smaller interest over a reduced period. That way, you can become debt-free quickly. Meanwhile, with the last option, you have the smallest monthly payment. However, over the long term, the interest amount becomes substantial. 

4.    Find Out the Breakeven Period 

Concerning mortgage refinancing, your breakeven period is the duration it takes to recoup your upfront investment. Once you reach the breakeven point, your monthly savings is all yours. For instance, if it takes 24 months of saving $150 to cover closing costs of $3600, it confines you to the house until the time expires. Therefore, check if your current budget can accommodate it.

5.    Identify the Insurance Policy on Your Mortgage 

If you pay over 20% of your original mortgage fees, you are free from private mortgage insurance (PMI). However, it is mandatory for anyone paying lesser equity. Also, if your home value reduced before refinancing, PMI becomes unavoidable. If your current mortgage includes insurance, it will have little effect on you. Thus, check with your lender whether your refinancing eliminates PMI or not.

6.    Negotiate Better Closing Costs 

You can expect to pay closing costs between 2 and 6 percent of the mortgage. If you are financially buoyant, you can pay the upfront fees immediately. However, if you are cash-strapped, you can incorporate it into the new mortgage. In some situations, lenders either bear the cost of mortgage refinancing or reduce it substantially. Therefore, endeavor to strike a better deal.

7.    Know the Percentage of Your Income That Services Debt 

The debt-to-income ratio (DTI for short) refers to the percentage of your total monthly income that services your debts. The majority of lenders would prefer your DTI is under 30%. Besides, the higher your DTI, the smaller your disposable income. Moreover, if you have other debts asides from your mortgage, it becomes more challenging to qualify for refinancing. Consider offsetting some debts to increase your disposable income.

8.    Understand Your Tax Policy 

Some homeowners deflate their income tax value by deducting the interest on their mortgage. Refinancing may allow you to pay even a lower amount. However, you should expect to pay higher interest in the initial years only, after which it reduces drastically. Besides, if you incorporate the closing fees into the principal, your tax deduction will increase.

Conclusion 

As highlighted above, mortgage refinancing is not a walk in the park. Conduct a thorough analysis to ascertain its suitability for you. Moreover, you can consult lenders for holistic answers to your concerns. If you choose to go ahead with it, the points discussed above will be of help. 

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