March 5, 2016
Everything You Need to Know about Co-signing a Loan
Co-signing a loan may be a requirement by the lender when giving loan. This is the act agreeing to pay the debt if the borrower fails. Individuals with good credit score are often asked by their friend or a family member to co-sign. Although, you are willing to help; you must also be aware of its multifarious aspects. This article will focus on both the faces of co- signing the loan and help you make an informed decision.
What a co-signer is liable of:
When cosign a loan, he or she is pledged to pay the debt in-case the borrower defaults. Moreover, the cosigner is liable to pay the extra amount including late fees and collection money. The creditor has the right to collect the debt from the cosigner without even approaching the borrower (depending on the law of the state). Plus, they can sue or even seize salary.
So, make sure you can afford the amount and are willing to accept the responsibility.
Why would someone consider co-signing a loan?
You might want to co-sign a loan for your son and buy him his first car. You might also want to cosign someone’s education loan! The fact that, credit rejection is common; especially for people with low credit score; you can help them by cosigning a loan. This will help increase their credit score and credit history, as well as get them the transportation or education they need.
Things to Consider:
- Make sure that you can afford the debt amount
- Defaulting may get you sued or lose credit rating
- It may keep you from getting other loans
- Before cosigning, ask your creditor to quote the effective amount you will owe
- You could negotiate and limit your obligations to just the principal and not include the additional charges
- You must take the copies of all essential papers after cosigning
- Know your co-signer rights
Risks of Co-signing a Loan:
Co-signing a loan comes with a lot of risk, like increasing the DTI (debt-to-income) ratio. As a cosigner is an integral part of the loan; he/she must address the loan closing documents. The loan is reflected in the credit report and the monthly payment goes to the DTI ratio. Moreover, as the amount you owe is 30 percentage of the FICO score, hence lowers the credit score. More, is the debt amount, lower will be the credit score. Keep the DTI ratio below 36 percentage.
By co-signing, you are accepting the responsibility and are tied to it until the balance is paid off. There is no escaping once done. However, in certain cases like with student loan, you can avail release from being cosigner.
The bottom line is, if the needs of the borrower outweighs you personal preference, you should choose to cosign the agreement. However, it is advisable to judge you friends trustworthiness wisely. It might not be noble, but this may save you later.
October 25, 2015
How to Buy a Car: Here’s What you Need to Know
Now that you are moving out of your comfort zone and actually willing to buy a car on your own; you will be needing a lot of help. Today, people make decisions hastily, unknown and unprepared about the many nuisances of making a deal. Eventually, most end-up buying a car they didn’t want and possibly at a higher price than they should have.
However, to make things easier, this article will focus on streamlining the complete car buying process in-to easy steps and help you land on a position to make an informed decision.
Choose the Car You Need!
You will find hundreds of make and design; each better than the other! But, you need to choose the model beforehand. Pick a car that fits your needs, lifestyle and budget. Narrow down you list to under five. Also consider the number of seats, size, performance, comfort, head-room and leg-room. Do a thorough research on the Internet, read blogs, review. You could go for a side-by-side comparison.
Know What You can Afford:
Soon after you choose your dream car, its affordability may start to get blur. Its many financing options will make things confusing or even worse. A wise man should figure this intricacies way before going for the purchase. He/She must be honest with the budget, needs and choose only the ones within the price range. Take into account you current car; its exchange value or sell value; calculate your down-payment; what you can afford to pay every month as well as for what duration. Don’t become greedy or impulsive; keep an open mind!
First, check your credit rating! If have a good rating, you are more likely to find a number of beneficial financing deals; like, getting a zero-percent interest finances. On the other hand, if you have a bad credit rate, you may wish to consider trying a buy here pay here car dealership which offers special financing options for those who can’t get financing elsewhere. So, make up your mind and choose the financing that fits your situation best.
You might be lured into buying an extended warranty; however, be wise because the type of contract vary greatly based on the company.
Insurance for Car:
Car insurance is essential, sometimes mandatory according to some laws in the state. For sports cars, turbocharged, supercharged and four-wheel drive vehicles, the insurance rate is higher, typically because of larger engines. Check rates with your insurance before making your purchase and if possible negotiate the price; you will save a lot.
These top tips will definitely get things moving. You should also talk to your friends, family members and neighbors to get real insights on local dealers. It will help a lot if you talk to someone who is experienced.
In Summary, how to buy a car is as much research as anything else. Do your homework and check out all your options.
September 23, 2015
Explaining Doc Fees in Detail
Doc Fee? When it comes to buying a new or a used car, the price tag that you see kept on the top of it is not the only amount you have to pay to own it. A host of other charges applies as soon as you agree to own that piece of automobile such as licensee fee, title fee, sales tax, and various others. Dealers often add many other kinds of charges and this increases the selling price to several hundred dollars extra to what was initially agreed on. Hence, the final out-of-the-door prices that you are going to pay can be anything. These additional charges are often referred to as “doc fee” or “documentation fees” and it is highly suggested to determine them prior to making the full payment.
What is a Doc Fee?
Although the introductory paragraph might have given you a glimpse of doc fee, here is a complete explanation of what it actually is and what are its capacities.
A doc fee, also known as documentation fee, conveyance fee, or document fee – is the additional fee charged by car dealers for processing the vehicle’s paperwork. The fee covers the cost of all the big and small documents that get evaluated in the process such as the DMV, registration, preparation fees, VIN etching, etc.
Is it legal? How can you know it is not fraudulent?
In most of the cases, the doc fee is not regulated by the dealer, but by the government. The dealers make a profit from the car that they sell to you at its selling price. Whatever money you are paying additional for the paperwork of the vehicle goes to the several departments of the government. However, if you are in a place where the state government does not regulate the fees, the dealer can hit any price on you.
Is it negotiable?
Generally, the doc fee is not negotiable. Only the selling price of the new or used car that you are going to purchase is negotiable. The doc fees are generally capped by Government and dealers are not allowed to make any changes to it. For those areas where dealers are regulating the fees, they might be negotiable.
Is it necessary to pay them?
The answer is a definite ‘yes’. The documents include the legal certificates and registration copies of the car that makes you eligible to own or drive it. You must ensure that all kinds of taxes, fees, and prices are paid before you take it out on the road. Because, if you get caught driving the vehicle with no or incomplete documents, you might have to pay a hefty fine.
Therefore, while purchasing the car, always ask the dealer for its overall price. This will include the selling price of the car, doc fees, sales tax, and other charges. Make sure with the dealer that no new fee crops up later that will modify the price. In case it does, you always have the option of shifting to some other honest dealer.
April 20, 2015
Understanding a Vehicle Purchase Contract
When reading through any type of contract, whether it’s a legally binding contract or not, it is important that you grasp the concepts that are being presented through the use of the contract. In order to properly understand a contract, there are certain terms that you will need to be familiar with in order to ensure that you understand what you are agreeing to. There are many basic terms that are used in contracts that are legally binding, and these terms are perhaps the most important part of the contract, which means that the line that one of the following terms is included in should always be given special attention. This article will cover the basic terms that are used often in contracts that you will encounter.
Acceptance – Acceptance is the agreement to any terms listed in the contract. Until acceptance has been given, any terms in the contract can be taken back.
Conditions – Conditions of a contract are the basic terms of a contract that will be agreed to. When conditions are given, the individual signing the contract will read the conditions and either accept them or deny them.
Exemption Clauses– Exemption Clauses are terms of a contract that protect the party from liability in the terms of specified outcomes that may happen. Exemption Clauses are often included in a contract in order to ensure that the individual signing the contract cannot place blame for any negative outcome on the party writing the clauses.
Express Terms – Express Terms are the terms and conditions that are specifically stated in the contract.
Jurisdiction – Jurisdiction usually states the state or country in which the legal laws will be placed on the terms of the contract.
Liability – Liability is defined as the legal obligation of a party to cover any damages or blame that happens during the period in which the contract is effective.
Subject to Contract – Usually, this term will be used by any parties who are involved in the writing and signing of a contract. This term means that the discussion that is currently being held does not concern the overall acceptance of a contract.
Void – A contract becomes void when the individual or party who has accepted the terms of the contract can no longer abide by the terms listed in the contract.
Warranty – Warranties are defined as promises that are laid out in a contract, but are not on the same level as conditions. When a warranty is given, the party creating the contract is liable for damages to the individual or item listed in the contract.