MONEY

Craigslist Car Scams and How to Avoid Them

July 16, 2015 by admin Leave a Comment

Craig Newmark launched the website that bears his name in 1995. Since then, Craigslist has turned the classified ad market upside down, draining billions of dollars from newspaper coffers while saving consumers a mint.

However, consumers have also lost plenty of money through Craigslist, typically falling for one scam or another that has extracted hundreds, sometimes thousands of dollars from them. Here’s a sample of the Craigslist car scams that have been perpetuated and how best to avoid each one.

Craigslist Car Scam No. 1 — Out of area buyers. The Craigslist people confirm that nearly all scams can be avoided if people would only deal locally. One particular car scam has it where an individual promises to ship a vehicle to the buyer and doesn’t follow through. Further, that individual asks to have payment wired to them before the car is sent. Under this scenario you will get neither the car nor your cash back.

Craigslist Car Scam No. 2 — A deal that is simply too good to be true. Most used cars are priced according to Kelley Blue Book or NADA Car Guide values. When shopping for a car, find out the make, model, model year, trim level and mileage. Then, plug that information into the KBB or NADA sites and you should find a figure that’s close to the published value. Anything that is priced much less should raise your suspicions — it might have been in an accident, damaged by a flood or the odometer may have been rolled back.

Craigslist Car Scam No. 3 — VIN cloning. Every vehicle built over the past six decades has a vehicle identification number or VIN. You can find the VIN on the dashboard and usually on the driver side door post. Other locations include in front of the engine block, in the rear wheel well and underneath the spare tire. These numbers must match wherever they are found. Even so, you should order a vehicle history report to uncover possible VIN cloning where a number from one car has been transposed to another vehicle. (Here is an excellent article that details the limits and sometimes the pitfalls with vehicle history reports — Limitations and Problems with Carfax or any Vehicle History Report).

Craigslist Car Scam No. 4 — Payment problems. The best transaction when buying or selling a car is cash. As long as the bills are legitimate, the transaction can be completed without a problem. But problems will arise if a cashier or certified check is used — both types of checks along with money orders can be forged. If the buyer doesn’t have cash on him, then go with him to his bank and have him withdraw the full amount and hand those bills to you.

Craigslist Car Scam No. 5 — Payment cheating. Another payment scam involves sending money via prepaid debit card. Here, the seller may say that the car is in storage and can be released once payment has been sent via a prepaid debit card, such as MoneyPak. With MoneyPak, all you have to do is give the seller the card numbers and that money can be removed at once. Again, avoid any kind of transaction that is conducted remotely or one that doesn’t insist on cash.

Craigslist Car Scam Rehash

We’ve only looked at the more common scams associated with Craigslist. Please don’t take this article as a slam against, Craigslist. Instead, it should underscore that the site is extremely popular and where the crowds are, the scammers will most certainly follow.

Lastly, never give out your personal financial information when dealing with anyone through Craigslist. That means keeping your bank account, Social Security Number, Paypal account, and other information private. Share even a tidbit of information and the savvier among the shysters will find a way to purloin your hard-earned funds.

Consumer Car Loans Reach Record Lengths

June 8, 2015 by admin 3 Comments

Hyundai Sonata

New car loan terms are longer than ever before.

Earlier this month, Experian Automotive announced that the average length of both used and new car loans had increased by one month to 62 and 67 months, respectively. These loan term averages are at record levels, but consumers are eagerly embracing the extended loan terms.

Indeed, Experian noted that 29.5 percent of all new car loans are for 73 to 84 months, representing an 18.6 percent year-over-year increase against the first quarter of 2014. Moreover, used car loans for the same lengthened term and period were up by 14.2 percent, representing 16 percent of all such loans.

Negative Equity Implications

Despite the increasing shift to longer term car loans, Experian’s senior director of automotive finance, Melinda Zabritski, downplayed worries that such loans might have an adverse affect on consumers. “Most longer-term loans help consumers keep monthly payments manageable, while allowing them to purchase the vehicles they need without having to break the bank. However, it is critical for consumers to understand that if they take a long-term loan, they need to keep the car longer or could face negative equity should they choose to trade it in after only a few years,” explained Zabritski.

Experian noted that the average amount financed for new car loans has also set a record. In the first quarter of 2014, consumers financed an average of $27,612. But that amount rose by $1,099 to $28,711 one year later. Monthly payments increased too, rising from $474 to $488.

As a point of comparison, used car debt is coming in lower, at least $10,000 below new car indebtedness. However, those obligation levels are on the rise, increasing from $17,929 to $18,213. Furthermore, the median interest rate for used car loans was 9.17 percent compared to 4.71 percent for new car loans.

GMC Sierra Denali

Longer loan terms mean affording trucks such as this GMC Sierra Denali.

Consumers with excellent credit routinely qualify for the best loan terms. To be sure, those low teaser rates offered by the car manufacturer’s financing arms are reserved only for people with the highest credit scores.

And with an average credit score of 713 for the new car loans financed during the first quarter of this year, that number is about 100 points lower than consumers with excellent credit, underscoring the higher average interest rate. Used car loan borrowers came in even lower, with a median 643 credit score. That’s not far above the 620 credit score that some consider subprime.

Underwater and Sinking Fast

Not everyone is convinced that the trend to longer loan terms is a good one.

For instance, Paul Kirkbride, SVP of CU Solutions at CU Direct noted that there are certain financial implications consumers should keep in mind. Specifically, they may find themselves underwater (i.e., owing more on their car than what it is worth) as vehicles depreciate an average of 13 percent annually according to NADA.

Said Kirkbride, “If a borrower didn’t make a down payment and selected a longer term, the risk is the borrower will possibly need to roll negative equity from one car loan into another when they trade in the car, or worse, should the borrower need to sell the car, they’ll have to come up with the difference to pay off the loan.”

He also pointed out that credit unions typically work with people who have the financial means and creditworthiness to afford such loans. Such consumers usually choose the extended loans for convenience purposes.

2013 Buick Encore

Interest rates for late model used cars average above 9 percent.

Looming and Costly Repair Costs

Ed Snyder, President of Oaktree Financial Advisors foresees a problem that consumers may overlook. In particular, he points out that repair costs tend to mount as a car ages.

“If you take a longer loan, like 72 months, you are going to rack up some miles by the time your loan is paid off. If you average 15,000 miles per year you’ll be closing in on 90,000 miles – and that’s on a new car. If you buy a used car you’d have even more miles on it at that point. This is certainly at the mileage and age where your car could need some expensive repairs. It could easily need some work on the air conditioning or new tires or other repairs. You’ll have to foot that bill on top of the car payment that you still have,” said Snyder.

The longer term new and used car loans may eventually have an adverse impact on new car sales down the line as well. Said Snyder, “These longer loan lengths could end up meaning fewer cars sold in the future as people are forced to hang onto their cars longer since they are still paying on them.”

Credit and Car Loans

Astute consumers can and should keep tabs on their credit by obtaining copies of their three credit reports. Those reports, assembled by Trans Union, Experian and Equifax are available for free once annually at AnnualCreditReport.com. Information in these reports can affect credit scores, a three-digit number that is sold separately.

Shopping around for a car loan, putting more money down and choosing a shorter loan length can reduce your monthly payments as well as curtail your overall costs. Explore your options before committing to a car loan that you may have for the next six, seven or eight years.

Credit Clean Up Before You Buy Your Next Car

February 25, 2014 by admin 2 Comments

You are ready to buy your next car and have set your eyes on something new. Sure, you know that new cars lose a lot of value during the first year of car ownership, but you have a long-term ownership strategy in place and plan to drive your next car until it gives up the ghost.

Paying cash for a new car is the ideal way to go, but with the average price of a new vehicle now topping $32,000, few of us have that much money available. Likely, you’ll join the overwhelming majority of people that will put some money down and finance their purchase with a 48, 60- or 72-month auto loan.

Before you seek new credit, the following points should be considered.

Obtain Your Credit Score

Your credit score is a three-digit number that has a huge impact on not just the loan terms, but on whether you receive loan approval or not. Your score is based on your credit history including your personal credit reports compiled by Experian, Equifax, and TransUnion, the three consumer reporting bureaus.

Your credit score should be above 700 to enjoy favorable loan terms. Some creditors require a score of at least 740 before giving you their best loan rate. You can get a free monthly credit score by signing up with Credit Sesame or you can pay for your credit score by visiting MyFico.com. The higher the score the better for you: you can save hundreds of dollars in interest costs if your rate is low.

Establish a Budget

Here is where a lot of people run into trouble: they set their eyes on a vehicle they want, but cannot afford. Before you begin shopping for a new vehicle you need to determine how much of a loan payment you can swing.

One of the best approaches here is to use an affordability calculator such as one provided by Edmunds.com please go here. Once you determine a payment amount you will have to figure out if you have enough money to make the monthly payment, pay for your car insurance, registration, taxes, fees, and in some states property taxes.

Trade In or Private Sale

Ideally, your car dealer will fall in love with your trade and offer you big bucks for your vehicle. The reality is usually something far different: your trade won’t come close to the value you think that it would fetch if you were to sell the vehicle yourself.

So, why not sell your car instead of trading it in? Well, for many people, the trade-in is their down payment or a significant part of it. They have to trade it in or they wont have enough money for a new car. If you’re able to use cash as your down payment, then you have more flexibility here. Sell your car privately and you’ll end up with more money.

Claim All Incentives

Car manufacturers love to entice consumers with a great deal. Generally, no one pays the sticker price for any car on the dealers lot unless it is a speciality or exotic model. Typically, you can shave thousands of dollars off of the sticker price, walking away with a decent deal.

Beyond the general discounts, you may be eligible for other incentives, but only if you ask for them. Some manufacturers offer loyalty rebates, applying upwards of $1,000 toward the price of a car if you bring repeat business. Other incentives include rebates for military personnel, recent college graduates, retirees, and so on. Find out what incentives apply to you.

Lease or Loan?

You have been thinking about taking out a loan, figuring that the rates will be good. They should be good and at least no where near the rates that are being charged on some dubious websites. You can still find zero percent or very low rate financing, but keep in mind that by taking those loans you may give up a valuable rebate.

Another option for consumers is to opt for a lease. Sure, you will only have the car for a few years (usually three) and then will need to give it back or purchase it at lease end. And, you will need to abide by the lease terms or pay extra for mileage overages or wear and tear.

What leasing does is make it possible for consumers to get behind the wheel of the car that they really want. Monthly lease payments are generally much lower than finance payments, making that unattainable vehicle affordable. Just keep in mind that when the lease term ends you wont have a vehicle to show for it you’ll either have to lease again or buy another vehicle.

New Car Deal

No new car purchase should be done apart from careful and thorough research. It is easy to be swept up in emotion when buying a car, but those feelings will cost you. Once you settle on a car you like and can afford, then get quotes from three or four dealers to find the package that is right for you.

Money Saving Strategies for Auto Loan Shopping

September 18, 2013 by admin 1 Comment

If you are shopping for a new car, more than likely you will take out an auto loan. Such loans are common to 90 percent of new car buyers, individuals that do not have enough cash on hand to afford a purchase. Auto loan rates vary and can cost you hundreds of extra dollars if you jump in without thinking. Employ several money saving strategies when shopping for an auto loan.

Don’t break the bank to buy your next car.

Shop for a Loan

Loan rates vary and one lender may offer a half-percent lower than the next. You won’t know this unless you compare offers from at least three lenders. Better yet, consider five or six lenders including your own bank or credit union.

Know that loan rates change based on the length of the loan. For instance, a 48-month auto loan will typically have a lower rate than a 60-month loan. At 72 months, your rate will be higher. Go with the shortest term loan you can manage.

Put More Money Down

Lenders want borrowers to have skin in the game. Although it is possible to swing a “no money down” loan, you will pay for it with a higher interest rate.

When you have money to put down, including much more than the customary five to 20 percent down, then you can ask for a lower interest rate. If you do not get it from one lender, then go on to the next.

Fix Your Credit

Know that advertised auto loan rates are for customers with excellent credit. That means you need to have a credit score of at least 720 to 750 to get the best rate. Lower credit scores mean a higher interest rate.

If your credit is low, especially if it is in subprime territory, then your interest rate will reflect your bad credit. At this point, you night want to put off applying for a loan until your credit improves. Pay your bills on time, clean up your credit reports and avoid opening up new accounts until after you receive your auto loan.

Rebate Versus Loan Rate

So, should you take the generous rebate or should you go with the low-rate dealer financing? That’s both a question and a dilemma customers face and often do not know how to resolve. You can figure out what option is best for you by inputting your information on the Bankrate.com finance calculator.

The best deal for you may be to go with your own financing company and keep the rebate. That rebate or cash back offer can be used toward your down payment, supplementing the contribution you planned to make. For instance, if you planned to put $3,000 down and the rebate is for $2,000, then you only need to finance $20,000 for your $25,000 new car purchase.

Avoid the Extras

When you are preparing to sign your auto loan contract, pay special attention to the fees charged. Everything should be put in writing and fees should not be added after the fact.

Some of the fees you can expect to pay are destination, property tax and your state sales tax. What you may also discover are special dealer prep, department of motor vehicle license delivery and undercoating charges. Such “junk” fees should be eliminated before you sign your sales purchase agreement.

Related Reading — What Your Dealer Won’t Tell You About Car Financing

5 Smart Car Buying Tips for Consumers

September 11, 2013 by admin Leave a Comment

Car buying tips for today’s consumers.

If you are in the market for a new car, there are several things for you to keep in mind as you begin to shop for one. Comparison shopping is, of course, essential — you want to ensure that the vehicle you buy is the right one for you and that you can get it for the best possible price. Whether you are shopping for a new Ford, a Cadillac, or one of the dozens of other brands, there are some commonalities in the car buying experience. Read on to learn about five smart car buying tips to consider before you make your new car purchase decision.

1. Your needs and your needs alone — What type of vehicle are you shopping for? Likely, you already have something in mind, a vehicle that is within your budget and meets your needs. Your car buying needs can include a number of things such as the number of doors, engine and transmission choices, technological features, in-cabin amenities and towing capacity. Rank your “must haves” to find a vehicle that comes closest to meeting your requirements.

2. Brand loyalty or something new — Today’s car shopping consumers are willing to try different brands as vehicles from emerging manufacturers such as Kia and Hyundai are quite competitive. You may be a diehard Toyota or Honda owner, but you may want to benchmark your car from others in your segment. For example, if you own a Honda Accord, there are other models in your segment that might offer more car for the money including the Nissan Altima, Hyundai’s Sonata and the Ford Fusion. You may be brand loyal, but it does not hurt to know what competitors are offering as you shop for a new car. Read Consumer Reports and Auto Trends Magazine for information about today’s top models and car buying tips.

3. Your insurance premiums — How often do you shop for car insurance before you make a new car purchase. Likely, you do not. This can be a mistake as you may end up buying a car with much higher insurance costs than a competing model. Insurance companies make use of Insurance Institute for Highway Safety ratings when setting premiums. Cars that score highest or are ranked a “top safety pick” should have lower insurance rates.

4. Trim levels and packages — The longer you plan to keep your car, the more likely you will want one that offers the amenities that are important to you. A base model may come fairly well equipped, but if you plan to keep it for five, seven or even 10 years, then can you live without some of the amenities people want today such as a navigation system, a rearview camera and important safety features such as collision avoidance? These goodies will cost you more, but are often reduced in price if you choose a higher trim level or buy a technological or convenience package. Besides, better-equipped cars have a higher resale value and your insurance premiums might come in lower if your car comes equipped with certain safety features.

5. Consider a leftover model — Whenever a new model comes out, dealers are eager to push out older vehicles. This is all the more important when a model change is made. For example, the 2013 Ford Fusion is all-new, the second generation of this popular model. If you want the new model, then go ahead and buy it. If that isn’t important to you, then a leftover model can save you some money. Dealers receive incentives from manufacturers to push older models off of dealer lots, giving you more room to negotiate a better deal.

Car Buying Considerations

The Internet is your friend when it comes to new car shopping. Visit more than one dealer site to inspect inventory. Reach out to salespeople via email to get more information, but don’t make face-to-face contact until you are satisfied that a deal works for you. By all means, test drive your new car — you need to be completely satisfied that it will deliver to you years of satisfying driving.

See Also — 5 Year-End Car Buying Tips

How to Dispute an Auto Insurance Claim Payout

April 27, 2013 by admin 2 Comments

Getting in a car accident is a hassle enough, but when your auto insurer fights you over its claim payout, it can be just like getting injured all over again.

Claim Payout Dispute

As a consumer, you have every right to question your claim payout, but you to exercise both patience and resolve as you address this problem. For a minor accident, you may find that it is simply not worth disputing with your car insurance company. For a major accident, fighting back may spell the difference between getting a new car or being stuck with the one you’re currently driving.

insurance claim payout Let’s take a look at several steps you can take to win your claim payout battle:

1. Review your insurance policy. Yes, car insurance people make mistakes. No, you’re not immune from making mistakes yourself.

The first step is to review your policy to learn what is covered and what is not. You may not be aware that you have a $1,000 deductible instead of the usual $500 deductible, thus the lower claim payout check. Your insurer spells out the claims procedure, explaining how long it takes for claims to be made and how long you have to challenge the claim payout.

2. Contact a third party. Your insurer sends an in-house appraiser to review your car’s damages, thus that appraiser’s findings are usually final. But, not always.

You may be allowed to use your own claim adjuster, an individual that works for you, to file his own claim amount. Your insurer will then review the findings from both adjusters and may give you more money based on the latter’s findings.

3. Mediate or arbitrate your claim payout. You can sue your insurance company in a bid to obtain a better claim out, but keep in mind that you will have to go to court. A court case can drag out, while mediation or arbitration can be handled swiftly. Moreover, you need not be present to handle this — your lawyer can do it for you.

Mediation and arbitration keep you out of the court and can be resolved amicably between the two parties. On the other hand, a lawsuit may create a hostile atmosphere and take longer to resolve. Contact your attorney about your legal options.

Claim Considerations

It isn’t your insurance company’s wish to drag out your insurance claim or claim payout request. Settling this matter outside of court is important too as your insurer must pay for legal representation. Document your dealings with your insurance company and, if you can prove that damage was substantially more than what the insurer says that it was, then offer copies of your findings to prove your viewpoint.

See Also — Hail Damage and Your Car Insurance

7 Practical Ways to Save Money

December 18, 2012 by Jenny Willis 2 Comments

Save money on gasoline, insurance, entertainment…and life!

We all want to save money, but finding practical ways to do so can be a bit of a challenge. The money we save today can cover tomorrows expenses, perhaps paying for a new car down the road or funding your child’s education. Saving money does not have to be a painful proposition you can employ a multi-prong approach that will not leave you feeling squeezed, but can help you feel at least a little bit richer.

seven 1. Gasoline — You have been fueling your car with premium gasoline for years, but does it really need the higher grade to run efficiently? Chances are it does not. Check your owners manual and find the recommended grade of gasoline for your vehicle. If regular grade is recommended then use that use a higher grade only if such fuel is required.

2. Commuting — Your costs for getting back and forth to work can add up. With gasoline prices flirting with $4 per gallon, alternatives should be employed. Buying a new car will cost you, instead share your commuting costs by carpooling. If carpooling is impractical, ask your boss about telecommuting, even if that is for only one day a week. Some businesses have gotten into the mix by allowing employees to work four 10-hour days instead of five 8-hour days.

3. Credit Cards — If you owe money on your credit cards, your interest rate alone can sink your budget. Before you begin a savings plan, you should tackle your debt, paying it off as soon as possible. Where your savings accounts may yield an interest rate of one or two percent, your credit card can quite easily charge your 12, 15, even 18 percent. Consolidate your credit card bills to a lower interest rate credit card too, if possible. Then pay down your consolidated debt as quickly as possible.

4. Food — How much does your family spend on food each week? Probably a lot more than you think. According to the USDA, a family of four with pre-teen children in the home spend $236.30 per week on average. Thats more than $1,000 per month and over $12,000 per year! Clipping coupons is an obvious place to start, but your choice of grocer can make a big difference too. If you join a warehouse club such as Sam’s, Costco or BJs, you can easily shave off 10 percent to more than 30 percent from your food bill. You can also reduce your costs by avoiding prepared foods and by growing at least some of your fruits and vegetables in your own garden.

5. Entertainment — You do not want to be a killjoy when it comes to entertainment. After all, it is our leisurely pursuits that add value to our lives and can bring us much pleasure. Your entertainment costs can, however, bust any budget. But, savings can be realized in small ways too as well as in large ones. Consider the following options when cutting your entertainment costs 1) Take in a matinee instead of a primetime feature. Better yet, rent your movies instead. 2) Cut your cable costs by opting for a basic plan. Consider switching to a satellite dish if that option comes in cheaper. 3) Check out books from the library instead of buying them. When buying, choose iTunes or eBooks to pay for new releases. 4) Buy season passes if you attend the same venue frequently throughout the year. This would include a zoo, an amusement park or a golf course. 5) Use coupons when eating out and eat out less often. Home cooked meals take longer to prepare, but are better for you.

6. Utilities — You have cable, your phone and Internet connection, but your costs are greatly inflated because you buy each of these services separately. Combine your utility services to one company and save. Better yet, if you do not need a landline, then lose it use your cell phone to connect with people instead. Choose a cell phone plan that is transparent too various add on costs can drive up the cost of your cell phone service too.

7. Insurance — Life insurance, health insurance, dental insurance, auto insurance and homeowners insurance. Chances are you have more than one provider for these and other insurance plans. However, if you were to bundle your plans, then your insurance costs would be reduced by at least 10 percent. Raise your deductibles and drop insurance coverage that you no longer need such as collision coverage on that 15-year-old sedan in your family fleet.

Building Savings

With the money that you save, you can put into place a savings strategy that help you reach your goals. Do this by marking down your short-, mid- and long-range savings goals.

Your short-range goals may include saving enough money to pay cash for a new sweater or a video game. Your mid-range goals could possibly include setting aside money weekly to have enough funds to take a vacation next summer or a cruise the following winter. Your long-range goals might include saving money for retirement, paying for your grandchild’s education or paying cash for a new car.

Once you have set up your goals, begin to fund these accounts with the money that you save elsewhere. Be reasonable with your goals and you will reach them, perhaps attaining significant savings along the way. Adjust your savings plan on an annual basis as you get raises at work or make more money elsewhere.

See Also — Car Insurance Savings for the New Year