How Car Shopping Can Lower Your Credit Score

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Congratulations! Your shopping has paid off and you’ve finally found an excellent car at a reasonable price. Now, how do you plan to pay for it?

Dealers will be happy to arrange financing for you. Simply fill out and sign a loan application, and the Finance and Insurance (F&I) manager will immediately begin searching their lender network to find the best deal for you.

Unfortunately, dealers may submit your information to several lenders to acquire that deal – a method known as “shotgunning” – and that has the potential to lower your credit score.

Each lender will run a credit check to see if you qualify for the loan. These checks are more extensive “hard pulls” that slightly drop your credit score – typically less than five points unless you have other risk factors. A high number of hard pulls can give lenders the impression that you’re rapidly expanding your credit, making you a risk in their eyes.

Most scoring systems allow f…

Seniors And Affordable Transportation

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By Eric Olsen, Executive Director HELPS Nonprofit Law Firm

Affordable transportation is often a concern for senior citizens. Some seniors go without basics to make car payments they can’t afford for a car with little or no equity. Others need affordable replacement transportation but don’t have the income to finance a car. What are some options for these seniors?

I am the Executive Director of HELPS, a national charitable nonprofit law firm that educates lower-income seniors on how to maintain their financial independence. We regularly speak with seniors searching for answers to transportation problems. First let’s discuss options for buying a car, then what to do if you have an existing car payment you can’t afford.

Financing a car from a dealer might not be the best option or even possible for a senior with lower income. Dealers generally sell used cars “as …

This Lender Repos 1 In 3 Cars It Finances

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We frequently hear about America’s crushing student loan debt – but auto loans are not far behind. While student loans are approaching $1.5 trillion, outstanding auto loans topped the $1.2 trillion mark in the third quarter of 2017 according to the New York Federal Reserve.

Subprime borrowers (FICO credit scores below 620) hold almost one-quarter of the dollar value of auto loans. Given that level of risk, it’s no surprise that over 4% of auto loans are delinquent by 90 days or more and repossession is a real threat.

Subprime lenders are more likely to repossess autos since they service higher-risk clients. However, Jalopnik reports that one lender – Credit Acceptance – expects to repossess 35% of the cars that it finances every year. It’s difficult to absorb that default rate without charging high interest rates to make up the difference. Borrowers who already have difficulty paying receive rates that make monthly payments even higher – leading to a cycle of def…

6 Steps To Take When Your Car Is Repossessed

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“Dude, Where’s My Car?” may be the name of a lame Ashton Kutcher movie, but it could also be your response as you realize that your car has been repossessed.

Just like a home, a car is not yours until it is fully paid off. The creditor has the right to repossess it under certain circumstances, typically for failure to make payments. The same principle applies to purchased and leased cars.

If your car has been repossessed, what action should you take? We suggest starting with the half-dozen below.

1. Assess Damage – Repo companies have the right to take your car, but not the right to damage your property or use excessive force in the process. Document any property damage or other harm caused by the repo agency. You may be able to take action and get reimbursement for the damage, and potentially even have the car returned to you.

2. Find Out The Reason – If you haven’t been making payments, you know…

Video: The Big Mistake This Instagram Star Made With Her Credit Score

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You learned reading, writing and arithmetic in school, but did you learn anything about credit? Watch award-winning wellness author Nikki Sharp share with MoneyTips Consumer Advocate Kristin Malia the credit score insights she wishes she’d been taught at school.

You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

Interest Rate Acronyms

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APR and APY – are they new texting acronyms? IDK, you say – or rather, you text? (For the benefit of the textually-challenged, IDK means “I don’t know.”) If you think they are texting acronyms, or just “DK” what they are, it’s time to learn.

APR and APY are financial acronyms, short for Annual Percentage Rate and Annual Percentage Yield, respectively. Both are interest rates, but they have a significant difference. APR does not address how interest is compounded – the default is the interest that you earn if you are depositing money, or pay if you are borrowing it – in one year. APY takes into account how often the interest is compounded.

If interest is compounded once per year, there is no difference between APR and APY – interest is added all at one time. However, let’s assume an interest rate is compounded monthly. In that case, the interest payment is divided up into twelve equal increments.

If you are earning interest on a deposit, that adds a sma…