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If I voluntarily turn in my car, does it still count as a repossession?

2/21/2022

 
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If you have a car payment every month that is getting harder and harder to pay, you might be considering turning the car into the bank and looking for something you can afford. Maybe you’ve read somewhere that if you give your car to the bank or finance company yourself, it won’t show up as a repossession on your credit report, which will help minimize the damage to your credit score.

Equifax defines repossession as “the seizure of property that usually occurs as a result of nonpayment of a debt.” Since you are voluntarily turning your car in, the bank or lending company doesn’t have to “seize” it, which many people think will eliminate the possibility of a repossession appearing on their credit. Unfortunately, that isn’t the case.


A voluntary repossession is essentially returning the vehicle you can no longer pay for to the lender before the lender has to expend the effort to take it, and by the time you reach this point, you are probably two or more months behind on your payments. That means, your credit has already been damaged as late payments will drop your credit score substantially. By surrendering your vehicle, you are facing the inevitable head on, but that surrender is still considered a repossession. And, though it may be listed as voluntary on your credit report, it still carries the same weight as a regular repossession.


On top of that, once you turn your vehicle in, it will be sold at auction, and if the car doesn’t sell for what you owe on it, that remaining deficiency balance will be your responsibility. So, either voluntary or not, a repossession may cost you much more than just bad credit. 


Consider all your options before making this decision. Wallethub provides a list of steps you can try that might help you achieve a better outcome than just by handing over the keys.
 

5 Tips to Choose a Cheaper Car to Insure

4/18/2021

 
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Expenses with a new car can add up quickly.  Car insurance is one thing that everyone has to have, but there are ways to cut the costs which are based on three things – your personal demographics (gender, age, driving history), where you live, and what type of car you purchase.
Check out our tips below to find a vehicle that will be less expensive to insure.


Check the Safety Ratings of the Vehicle
​
To really save on car insurance, it’s best to purchase a car that has a high safety rating.  Vehicles that have more safety features are more likely to qualify for lower premiums and discounts.  Be sure to look for recalls on any vehicle you are considering, as some insurance companies won’t insure cars that have recalls on them.
 
Safety ratings for cars are easy to find.  Five stars is the highest safety rating, and one is the lowest.  Remember that insurance companies also consider how much damage your vehicle could cause to another car which could increase your liability premium. 
 

Avoid Sports Cars
Any car that has a high performance engine and other speed features are higher to insure.  Insurance companies consider you to be more of a risk on the road, as drivers with sportier cars tend to drive faster and be in more accidents.  Also, sports cars cost more to replace and repair.
 

Avoid Luxury Vehicles
Expensive luxury vehicles always have higher insurance costs.  The very high repair and replacement costs can increase your insurance premiums significantly.  Models such as Rolls Royce, BMW, and Mercedes-Benz have the highest collision and comprehensive insurance losses.
 

​Be Aware of Popular Models among Thieves
How likely it is that your vehicle could be stolen is also plays a role in what you will pay for insurance.  Certain vehicles are more popular among thieves.  In 2019, the five most stolen vehicles were the Honda Civic, full-size Chevy trucks, full-size Ford trucks, the Honda Accord, and the Toyota Camry.
 

Compare Insurance Rates before you Buy
Once you have narrowed down the list of cars you like, contact your insurance company and get insurance quotes on each of them.  Insurance costs can vary by a few hundred dollars a year depending on the vehicle you purchase.  Always shop for insurance the same way you shop for your new car.
 
While researching your next car to buy might be time-consuming, you could save a lot of money in premiums each year.
 
 

Are car dealership special events really special?

3/4/2019

 
Every few months your local dealership probably hits you with wall-to-wall advertising about their latest holiday sales promotion. These ads are all over the TV, radio, billboards, and newspapers and pressure you into a purchase decision by making it seem like the offer is too good to last. The reality is that these deals are no better than a dealership's typical prices on any other day for the most part. 
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​In fact, a lot of dealerships use these holiday opportunities to hire marketing specialists who then help the dealer increase their profit. You might see advertising language that emphasizes financing options or add-ons like prepaid maintenance. Don't buy into the temptation because this is where dealerships make most of their money, and it's an easy way to get a consumer to pay more than they're willing to by making them feel like they're getting a great deal. For example, a dealership may offer something like "pre-delivery inspection," and they can make it seem like it's mandatory, but you can always opt out of paying these bogus charges.

So what should you keep in mind when buying a car?

  • Forget sales and financing offers. Always consider how much money is being added in interest and other fees when it comes to monthly payments.
  • Don't even look at monthly payments – always add up the long-term cost of the car and focus on that number as daunting as it may be. And if that number feels high, remember that monthly payments are designed to make a car seem cheaper than it really us.
  • And when you figure out what you can afford each month, do not forget to calculate your insurance and taxes you will have to pay, especially if your purchase is a newer model vehicle. ​
​To get a good deal on a car, a consumer needs to create their own list without a dealership's input. They should focus on cars known to be reliable, safe, and strong in road tests. It also helps to shop specifically for cars that carry high owner satisfaction rates and ones that don't depreciate quickly. 

Subprime Lending on Cars

8/31/2018

 
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We are almost out of the woods regarding the mortgage debacle, right?  I mean, the banks are stronger.  They aren’t handing out loans to just anyone any more.  They are being responsible, right?  Well sort of. 
 
The banks and investors have moved away from real estate.  Now they are into auto loans.  They have moved from loaning money on something that doesn’t move and will hopefully go up in value to loaning money on something that moves a lot and definitely goes down in value each month.  Banks and lending institutions are moving into sub-prime lending on cars.  That’s right. What they did before with real estate, they are now doing with automobiles.  The banks and lending institutions loan money to lots of sub-prime folk.  They stretch out the loans longer than before.  (It used to be loans were for no more than 5 years (60 months).  Now they are moving towards 72 months and longer.)  These lenders bundle these loans then take them to Wall Street where they are sold as securities.  If the economy falters, what is going to happen with these loans?  What will happen if a bunch of these cars get repossessed? 
 
Take a look at  the Truth About Cars http://www.thetruthaboutcars.com/2013/06/all-is-fine-in-sub-prime-land-says-some-with-a-vested-interest-in-its-success/ citing the Detroit Free Press at  http://www.freep.com/article/20130620/BUSINESS0104/306200121/auto-sales-lending-subprime.  The credit and car folk say there is nothing to worry about.  Can you believe that?  Do you believe that?  People are spending money, yes.  Is it wise?  That remains to be seen.  Have people paid down their debts?  Has the government?  Remember, when the banks started to fail, they went to the government...to us.  We bailed them out.  Now it appears they want to do it again.  What will happen this time? 

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