What Is the Average Used Car Loan Rate?

average-used-car-loan-rate

Article originally published July 13th, 2016. Updated October 30th, 2018.

More people are opting to lease their new set of wheels instead of purchasing them, according to Q2 2018 data from Experian.

The number of auto loans grew to an all-time high, with leasing surpassed 30% of all new consumer vehicle sales. But the interest rates consumers are getting on these loans has stayed low, especially for used cars. In fact, Experian reported that average loan rates saw some increases, but still remain historically low.

Loan rates for a new car in Q2 of 2018 were 5.76%, up from 5.20% a year prior. Franchise used rates are 8.28% (down from 7.88% in Q2 2017), while independently used rates are 11.87% (down only 0.17% from Q2 2018).

The Experian Automotive scoring deems prime consumers as those with scores of 661 to 850, nonprime users with scores of 601 to 660, and subprime users as those with scores of 300 to 600. Consumers on all risk tiers are increasingly choosing to lease over purchasing cars, according to the report.

The number of prime consumers choosing used vehicles increased from 55.61% in Q2 2016 to 55.79% in Q2 2018. The number of nonprime and subprime consumers also saw increases, from 21.75% to 22.05% and decreases of 25.71% to 25.05%, respectively.

Experian reported that the increased number of prime consumers choosing used vehicles resulted in “score increases, greater percentages of used financing in the prime risk tier and lower average used rates.”

Getting a Car Loan

If you’re thinking about buying a used car and taking out an auto loan to do it, it’s a good idea to review your credit first. Having a good credit score can help you qualify for better terms and conditions on your financing. (To find out where your credit stands, you can see two of your credit scores for free, updated every 14 days, on Credit.com.)

And when you’re figuring out how much you can afford, remember to consider not only how much your monthly car payment will be but also how much the loan will cost you in the end, by considering the interest rate and length of the loan term. (The longer the loan term, the more interest you will pay.)

If you aren’t happy with what you see, don’t worry — you may be able to improve your credit scores by paying down any big credit card balances, disputing errors and limiting credit inquiries until your score has had time to rebound.

Gather All Documentation

When attempting to get a used car loan, you will want to gather all the necessary documentation including the following:

  • Your Driver’s License
  • Proof of all of your income- this can be a paycheck stub or even a tax return
  • A utility or phone bill to prove your residency
  • Your social security number so they can run your credit check

These days, you can often apply for the used car loan right online or even by phone which makes it the process that much easier and accessible.

Start With Your Own Banking Institution

It is always a good idea to start with your own bank or credit union for financing because you have already established history and relationship with them. Typically, you will be able to find the absolute best rates and more favorable terms if you go through your own bank.

They will also be able to advise you on all the options that are available to you as you begin the journey toward car ownership.

Shop for the Best Rates

You never want to settle on the first rate you are given; don’t be afraid to shop around to see if you can find something better than the typical auto loan rates. You will find the best auto loan rates if you have good credit. Additionally, if you apply for multiple loans within a 14 day period, it will only count as one hard inquiry so that you can find the best rate possible.

What is the Average Used Car Loan Rate?

Typically, you will find that the car loan rate on a used car is going to be a bit higher than the rates you would find with a newer car. For example, good credit car loans can see an interest rate as low as 3.9% for a newer model and a little more than 5% for its older version.

Average Auto Loan Rates by Credit Score

The following are the average rates you may find for a used car loan that carries a 60-month repayment term based on a range of different FICO Scores.

With a credit score between 500 and 589, you may be looking at interest rates on the loan as high as 16%. A bad credit score also makes it a lot harder to get approved for the car loan initially as well.

A credit score in between 590 and 619 will typically see the 15% mark, and the percentages get lower from here with the lowest coming in at 4.39% with a credit score between a 720 and 850.

A longer loan term will usually mean you will have a lower monthly payment, but you will also accrue more in interest with a longer loan term.

Bottom Line

When determining the average used car loan rate and the amount of interest you may have to pay on a loan, you will want to check all three of your credit reports, examine your credit score and credit history and determine what steps you can take to improve your credit, so you can qualify for a lower interest rate.

Again, if you bank with a credit union, always start there first because the lender will already be able to see if you are high risk or not. Car buyers should always take their time, do their research, and tackle the work of fixing their credit prior to obtaining a loan for a car. It is always best to shop smarter and save money in the long run.

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Source: credit.com

Does Renters Insurance Cover Storm Damage?

Your apartment comes with precautions like smoke and carbon dioxide detectors and alarm systems. But what about extreme weather events and natural disasters?

Your landlord’s insurance may only cover the building structure. But you’ve done your due diligence and signed up for renters insurance, insurance coverage that protects you and your belongings inside your rental.

But depending on the natural disaster, your policy could not be exhaustive enough and provide you with enough coverage. Sure, a tornado may be included, but not a big flood or landslide.

According to esurance, the average renter owns about $20,000 in personal property. That’s a lot of valuables, many of which are unable to be replaced.

Learn more about what kind of storm damage renters insurance covers — and what it doesn’t — and how to make sure you’re covered. If you’re not sure about your coverage, don’t hesitate to reach out to your insurance agent.

You’re covered for these

Most renters insurance policies cover damage from hail, lighting, windstorms, wildfires and the weight (think ceiling/roof) of ice, snow and sleet.

These perils, as they’re called by the insurance company, are often covered and you may receive a reimbursement to replace your damaged items.

If the wind breaks a window and your living room furniture gets ruined from the hurricane-force winds, you may be covered under your policy.

When speaking to your agent, depending on how bad the storm damage is, make sure that your policy covers alternative housing while repairs are ongoing. Your renters insurance may pay for you to stay at a hotel in the meantime.

You’re not covered for flood damage

Nearly 41 million Americans currently live in flood zones. But renters insurance does not cover flood damage, just water damage caused by appliances.

If there’s a high risk of floods in your area, consider an umbrella flood policy to protect yourself and your belongings. First, use the FEMA Flood Map to identify your area and its risk of flood.

If you need protection, the National Flood Insurance Program, a community program insurance policy, offers access to participating flood insurance providers. Before signing, ask how soon until the policy goes into effect — 30 days is the standard.

The flood policy will help you return your property to pre-flood conditions, according to FEMA.

flooding

Or earth movement

Half of U.S. residents are at risk for damage from an earthquake, according to the United States Geological Survey’s (USGS). Most people think of California and the Pacific Northwest. But there are many spots around the country that exhibit earthquakes with enough magnitude to cause damage. Just last December, scientists recorded a 4.4 earthquake in Tennessee.

Earth movement doesn’t only include earthquakes, but also landslides and volcanic eruption. None of these events are included in your renters insurance coverage.

Depending on your home’s location, you may consider buying an additional policy for earthquake, landslide or earth movement protection. According to USAA, there are grants available in California to discount the price of earthquake insurance.

For landslides, an additional policy is required. It’s based on the property’s slope, house value, closeness to nearby mountains and hills and frequency of landslides. It’s expensive so be sure that your home needs it before pulling the trigger.

Choosing reimbursement

The main issue will be replacing your valuables after the storm damage. When looking for the best policy for you, talk to your agent about the benefit of replacement cost coverage vs. actual cash value coverage.

Depending on your items, one may be better than the other. Replacement reimbursement gives you the value amount for the item as if it was purchased today. The actual cash value is the depreciated value of it before the damage occurred.

How can your property manager help?

After the incident, follow up with your landlord or property manager to confirm the timeline of repairs. If the storm damaged the outside of the structure and deemed your home less than optimal for living, inquire about reimbursement for alternative living costs.

Inventory all damaged belongings once it’s safe to do so after the storm. Let your landlord know that you’re coordinating as well with your renter’s insurance. You’ll be glad that you have an up-to-date policy to help you get back on your feet during this scary time.

The post Does Renters Insurance Cover Storm Damage? appeared first on Apartment Living Tips – Apartment Tips from ApartmentGuide.com.

Source: apartmentguide.com

5 Steps for Getting a Car Loan

This Article was Updated July 5, 2018

When you are looking to buy a vehicle, the first thing you should do is apply for a preapproved loan. The loan process can seem daunting, but it’s easier than you think and getting preapproval prior to going to the car dealer may help alleviate a lot of frustration along the way.

Here are five steps for getting a car loan.

  1. Check Your Credit
  2. Know Your Budget
  3. Determine How Much You Can Afford
  4. Get Preapproved
  5. Go Shopping

1. Check Your Credit

Before you shop for a loan, check your credit report. The better your credit, the cheaper it is to borrow money and secure auto financing. With a higher credit score and a better credit history, you may be entitled to lower loan interest rates, and you may also qualify for lower auto insurance premiums.

Review your credit report to look for unusual activity. Dispute errors such as incorrect balances or late payments on your credit report. If you have a lower credit score and would like to give it a bit of a boost before car shopping, pay off credit card balances or smaller loans.

If your credit score is low, don’t fret. A lower score won’t prevent you from getting a loan. But depending on your score, you may end up paying a higher interest rate. If you have a low credit score and want to shoot for lower interest rates, take some time to improve your credit score before you apply for loans or attempt to secure any other auto financing.

2. Know Your Budget

Having a budget and knowing how much of a car payment you can afford is essential. You want to be sure your car payment fits in line with your other financial goals. Yes, you may be able to cover $400 a month, but that amount may take away from your monthly savings goal.

If you don’t already have a budget, start with your monthly income after taxes and subtract your usual monthly expenses and how much you plan to put in savings each month. For bills that don’t come every month, such as Amazon Prime or Xbox Live, take the yearly charge and divide it by 12. Then add the result to your monthly budget. If you’re worried, you spend too much each month, find simple ways to whittle your budget down.

You’ll also want to plan ahead for new car costs, such as vehicle registration and auto insurance, and regular car maintenance, such as oil changes and basic repairs. By knowing your budget and what to expect, you can easily see how much room you have for a car payment.

3. Determine How Much You Can Afford

Once you understand where you are financially, you can decide on a reasonable monthly car payment. For many, a good rule of thumb is to not spend more than 10% of your take-home income on a vehicle. In other words, if you make $60,000 after taxes a year, you shouldn’t spend more than $500 per month on car payments. But depending on your budget, you may be better off with a lower payment.

With a payment in mind, you can use an auto loan calculator to figure out the largest loan you can afford. Simply enter in the monthly payment you’d like, the interest rate, and the loan period. And remember that making a larger down payment can reduce your monthly payment. You can also use an auto loan calculator to break down a total loan amount into monthly payments.

You’ll also want to think about how long you’d like to pay off your loan. Car loan terms are normally three, four, five, or six years long. With a longer loan period, you’ll have lower monthly payments. But beware—a lengthy car loan term can have a negative effect on your finances. First, you’ll spend more on the total price of the vehicle by paying more interest. Second, you may be upside down on the loan for a larger chunk of time, meaning you owe more than the car is actually worth.

4. Get Preapproved

Before you ever set foot on a car lot, you’ll want to be preapproved for a car loan. Research potential loans and then compare the terms, lengths of time, and interest rates to find the best deal. A great place to shop for a car loan is at your local bank or credit union. But don’t stop there—look online too. The loan with the best terms, interest rate, and loan amount will be the one you want to get preapproved for. Just know that preapproved loans only last for a certain amount of time, so it’s best to get preapproved when you’re nearly ready to shop for a car.

However, when you apply, the lender will run a credit check—which will lower your credit score slightly—so you’ll want to keep all your loan applications within a 14-day period. That way, the many credit checks will only show as one inquiry instead of multiple ones.

When you’re preapproved, the lender decides if you’re eligible and how much you’re eligible for. They’ll also tell you what interest rate you qualify for, so you’ll know what you have to work with before you even walk into a dealership. But keep in mind that preapproved loans aren’t the same as final auto loans. Depending on the car you buy, your final loan could be less than what you were preapproved for.

In most cases, if you secure a pre-approved loan, you shouldn’t have any problems getting a final loan. But being preapproved doesn’t mean you’ll automatically receive a loan when the time comes. Factors such as the info you provided or whether or not the lender agrees on the value of the car can affect the final loan approval. It’s never a deal until it’s a done deal.

If you can’t get preapproved, don’t abandon all hope. You could also try making a larger down payment to reduce the amount you are borrowing, or you could ask someone to cosign on the loan. If you ask someone to cosign, take it seriously. By doing so, you are asking them to put their credit on the line for you and repay the loan if you can’t.

When co-signing a car loan, they do not acquire any rights to the vehicle. They are simply stating that they have agreed to become obligated to repay the total amount of the loan if you were to default or found that you were unable to pay.

Co-signing a car loan is more like an additional form of insurance (or reassurance) for the lender that the debt will be paid no matter what.

Usually, a person with bad credit or less-than-perfect credit may require the assistance of a co-signer for their auto financing and loan.

5. Go Shopping

Now you’re ready to look for a new ride. Put in a little time for research and find cars that are known to be reliable and fit into your budget. You’ll also want to consider size, color, gas mileage, and extra features. Use resources like Consumer Reports to read reviews and get an idea of which cars may be best for you.

Once you have narrowed down the car you are interested in, investigate how much it’s worth, so you aren’t accidentally duped. Sites such as Kelley Blue Book or Edmunds can help you figure out the going rate for your ideal car. After you’re armed with this information, compare prices at different car dealerships in your area. And don’t forget to check dealer incentives and rebates to get the best possible price.

By following these steps, you’ll be ready to make the best financial decision when getting a car loan. Even if you aren’t ready to buy a car right now, it doesn’t hurt to be prepared. Start by acquiring a free copy of your credit summary.

It is always a good idea to pull your credit reports each year, so you can make sure they are as accurate as they should be. If you find any mistakes, be sure to dispute them with the proper credit bureau. Remember, each credit report may differ, so it is best to acquire all three.
If you want to know what your credit is before purchasing a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

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What Items Should You Put in a Fire Safe Box

If a fire happens, will your important documents stay safe?

Apartment dwellers need to be proactive about protecting critical information in case of a fire. Plenty of us have gone digital when it comes to storage of personal information, but certain items still need to come in hard copies. And some things, other than papers, also need a tangible safe place.

The safety deposit box at the local bank is still an option. However, bank hours aren’t always aligned with yours. If you want to go the digital route, look for companies that specialize in the storage of critical data. You can access your info directly from your phone, tablet or Amazon’s Alexa device. But if you prefer to go more old school — you need to think about protecting your valuables that are difficult to replace.

What will you need easy access to when you’re in an emergency fire crisis? Your list will probably look like this: an original birth certificate, social security card, insurance papers and car titles and other original docs. You could also include spare keys, passports and irreplaceable items like heirloom jewelry. A fireproof safe box will give you peace of mind. And, it will act as a security measure should a fire occur.

Are all fire safe boxes the same?

Did you know that not all fire safe boxes are alike? For example, standard fireproof safes protect your valuables against intense heat and smoke damage for periods of up to 120 minutes, according to Western Safe, while others can withstand the heat for longer. So, what’s the best type of fireproof box? Experts say it all depends on what you intend to store.

You should look for a fire safe box that has emergency override keys so you can open it up even if you forget the passcode. The keys are also good if the batteries run out on the keypad.

To help you know what things to keep in a fire safe box in your apartment, we’ve organized a list. These items make good sense to safeguard against fire:

  • Critical documents: Store your checking and savings account bank books, birth certificates, social security cards, wills and passports in a fire safe box. If you need to get out at a moment’s notice, these important documents will be safe and accessible.
  • Digital media: Your digital must-haves include USB sticks, memory cards and CDs. These items are your physical back-up. And this is especially true if you don’t want your most private data to live on remote servers.
  • Insurance policies: Talk to your insurance company about your renters insurance following the fire. Having access right away to your policy will help you to take action post-fire.
  • Cash: Life today is debit and credit card-driven. But it’s also smart to keep a stash of small bills on hand. If an emergency calls for quick cash, you’ll be glad you thought ahead and put some aside.
  • Other valuables: Remember to organize a file with essential information. Include emergency numbers of family members. Have your prescriptions, who your family doctor is and contact info for your pet’s vet, too.

apartment fire

Do your homework

Before purchasing a fire safe box, be sure to research what’s on the market. You’ll be surprised to find a range of choices. You can even select from fireproof safes that you can bolt to the ground or wall. Is the fire safe box waterproof? If not, be sure to protect all contents by storing them in plastic.

An official fire rating from the Underwriters Laboratory comes with all safes, according to Haven Life. The rating lets you know what temperature the fire safe box will stay inside during a fire. It will also let you know how long it will stay at that temperature.

Look for fire safe boxes that are either 125 degrees Fahrenheit or 325-degrees safe. They typically come with up to three hours’ worth of protection. Spruce reports that some fire safe boxes can withstand fires with temperatures up to 1,550 degrees Fahrenheit for 30 minutes.

Does size matter?

Fire safe boxes are compact to mid-size and come in a range to meet your needs. You can find options with a capacity of 0.17 cubic feet and weighing in at just 14 pounds. Or, one that weighs a little less than 28 pounds and can store flat 8-1/2-by-11-inch, letter-sized documents.

Extra-large capacity fire boxes can hold much more. They can weigh more than 100 pounds and measure more than 1-1/2-feet on each side. But the size is worth it because it gives your stuff a greater chance of surviving a disaster, according to Wirecutter. The site recommends a fire safe box the size of a mini-fridge that weighs in at 56 pounds.

Choose a fire safe box that has all the protective features and benefits to keep your important documents safe. In the long run, the investment could prove to be a wise one.

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Source: apartmentguide.com