Opening the Hood on Auto Credit Scores

You’ve accessed your credit scores in preparation for buying a vehicle. You’ve done everything in your power to get your scores as high as possible. Then you sit down with your lender only to be told they use something called “auto credit scores.” No need to get flustered. While there are a few key differences, auto credit scores are pretty similar to general credit scores. Once you know the ways they vary from your general credit scores, you can quickly understand how to master yours.

What’s different?
Auto credit scores normally put greater emphasis on:

• Whether or not you’ve had an auto loan or lease in the past (having at least one is better)
• Payment on vehicle loans or leases (missed payments are bad)
• Settlement for less than the amount owed on an auto loan or lease (bad)
• Auto loan or lease sent to collections (bad)
• Repossession of a vehicle (bad)

How do I know which kind of score is being used?
As with any type of loan application, your best method is to simply ask the lender what type of score they will be using to consider your application. In the vast majority of cases, a lender will use an auto credit score for an auto loan or lease.

How do I get my auto credit score and report?
Before you run off to the internet trying to get your auto credit reports, know that the information used to compile auto credit scores comes from the information that is already in your regular credit reports from Equifax, Experian and TransUnion. You can get those for free once a year by calling 877-322-8228 or visiting www.annualcreditreport.com. Odds are that you won’t be able to get a copy of your auto credit report unless it is provided by a lender.

Depending on which score your lender is using, you may not actually be able to access your auto credit score either. This isn’t as bad as it sounds, though. If you can access your general credit score, such as the highly popular FICO scores, you should have a good idea of what your auto score will look like. In most cases, the general credit scores give you a good approximation of what your auto scores will look like.

How do I address my auto score?
To put it simply, always pay your vehicle loans or leases on time and avoid at all costs negative outcomes like collections or repossessions. Since auto scores do also consider other types of credit you have used – like credit cards or mortgages – it’s wise to pay those on time too. In addition, credit scores usually favor those who:

• Keep balances low on revolving accounts, like credit cards or personal lines of credit
• Keep revolving accounts open for an extended period of time
• Have a diversity of types of credit
• Limit their applications for new credit

Auto credit scores aren’t terribly complicated for the most part. Just keep in mind are that if you miss payments or fail to meet your obligations with vehicle leases or loans, doing so will bring down your score and may mean paying more to have access to a vehicle in the future.

Snow Tires: Are They Worth It?

The dog days of summer probably don’t having you contemplating your vehicle’s winter driving needs, but maybe they should. After all, fall is when older model snow tires typically go on sale as newer versions hit stores. A great deal can be had if you are willing to pick up last year’s latest and greatest. But it begs the question: Is it really money saved or is it money wasted?

Argument for
Winter tires have been shown to make driving safer in snowy or icy conditions. The money you don’t have to pay for a fender bender or higher insurance rates makes the expense worth it.

Argument against
A new set of four new snow tires can be around $1,000. The expense isn’t worth it, especially since safe driving can prevent most accidents.

Argument for
While the price may feel high in the short-term, using snow tires can double the life of your regular tires, thus keeping down your overall tire cost.

Argument against
Buying winter tires means constantly having to store at least one set of tires.

Argument for
Your insurance company may give you a rate discount for using snow tires.

Argument against
Having to repeatedly change tires gets expensive and puts unnecessary wear and tear on the rubber.

Argument for
If you can’t afford four snow tires, you can always get two for the back wheels. While an imperfect solution, it will still improve your winter driving safety.

Argument against
Snow tires wear quickly on cleared roads, meaning you are paying extra money to wear down your tires when there is no snow or ice.

As with most spending decisions, the final choice on snow tires comes down to what you want to prioritize. By identifying which of the above factors is most important to you, it’s possible to make the right call for your situation and needs.

Could you Save with a Car Share Program?

If you live in an urban setting and own a vehicle, chances are you spend either more money or more time or both than you would like to on transportation-related issues. If you are exploring ways to have a happier relationship with your wheels, a car share program might be worth taking a look at. These programs, which allow you to reserve online a car parked at a location near you, could save you quite a bit of money depending on your situation. You could truly see big savings if you:

Pay a lot for parking currently
City parking spots can run into the hundreds of dollars per month. Yes, there are definitely some advantages of having your own car nearby, but imagine paying ZERO for storing a vehicle and still having a ride close to you.

Don’t use your car that frequently
One of the advantages of buying a car is that eventually you may have no monthly payment once you own it outright. However, if you are currently just using your car to make a few trips to the grocery and big box stores a month, can you really justify making a car payment of hundreds of dollars every four weeks?

Have high insurance costs
Any comparison between owning and sharing a vehicle will include evaluating all the expenses associated with each option. You definitely should not forget to include insurance costs in the equation for owning. If for whatever reason your insurance costs are high, consider the alternative of sharing and thus paying nothing each month in this category.

Don’t do a lot of long-distance trips
You may tell yourself that you want to hold onto your car so you can make those spontaneous weekend getaways. But consider how often you really do that. If you make longer trips infrequently, it may make more sense to use a car share program for week-to-week trips and then renting a vehicle when you want to do a longer trip. It helps to do a realistic forecast of your vehicle use for the foreseeable future and then incorporating that into your decision-making process.

Spend a lot on repairs or maintenance
Using your own car to make lots of quick, short trips around the city puts a lot of wear on it. With a car share program, you don’t have to worry about paying for any of the upkeep. This can take a lot of stress out of your life if you worry with each giant pothole you hit.

Shell out for a lot of taxi rides
Do you find yourself using cabs a lot to run errands or do your shopping? Track how much you spend on taxis by requesting a receipt each time you pay for a ride. At the end of the month, total how much you have spent. Then compare this to what you would have spent with a car share program. You may find that the latter is the better option.

Remember that going with a car share program could also have the benefit of putting some extra cash in your pocket if you are able to sell your current vehicle. You also don’t have to worry about paying for or renewing vehicle registration or parking stickers. Many vehicle sharing programs also pay any local tolls for you.

Many car share websites have calculators that allow you to enter a little information about your automotive habits and then get a cost estimate for using their program. This can make it easy to crunch the numbers and see if making the switch makes sense for you.

Creating a Vehicle Service Log

With a small investment of time, a little sheet of paper can help you realize hundreds more dollars when it comes time to sell your vehicle. A vehicle history log, or maintenance record, takes you very little effort to keep, but can make all the difference to a potential buyer who wants to know that a car they are considering purchasing has been taken care of.

Why you need it
You may look like the sweet, innocent boy/girl next door type, but someone buying your car has no idea whether you treated your vehicle like a beloved family member or if you waited until the dashboard maintenance lights were lit up like a Christmas tree to head to the mechanic’s  shop. You can put the potential purchaser of your vehicle at ease – and probably squeeze out a significant amount of money in price negotiations – if you have a well-kept record of how you doted over your car. Additionally, some warranties require you to provide proof that you have maintained your car up to the expected standards.

How to start one
You can buy small booklets online that were specifically created to be vehicle service logs, but you don’t necessarily have to shell out money to start one. Many cars come with owner’s manuals that contain a log within the pages of the manual. Or you can just use paper you have around the house. If you are of more of a high-tech mindset, there are also a number of apps that will allow you to keep a log on your mobile device.

What to record
It’s best to record all types of maintenance, repairs or replacements the car undergoes. You should definitely include things like:

• Oil change
• Tire rotation
• Tires replaced
• Brakes replaced
• Air filter replaced
• Alignment work
• Suspension work (shocks and struts)
• Air conditioning enhanced
• Belts or chains replaced
• State inspections performed
• Repairs made as a result of an accident

When in doubt, write it down. It can’t hurt to have a record of the ways you have made your vehicle better.

How to record it
Each entry in the log should include:

• Specific description of what was done
• Cost (for rectifying with receipts later if necessary)
• Date
• Mileage on the vehicle at the time
• Shop that performed the work (or if you did the work yourself)
• Your initials

Where to keep it
It’s usually best to stash that little baby in your glove box, along with a pen for making your entries. It’s pretty simple to remember to make a few post-maintenance jottings when it’s only an arms-length away. It’s a good idea to make copies periodically and store them where you keep important paper inside your home. If you are using a mobile device, make sure you back up your information regularly so that you don’t lose your records if the device goes missing.

What else to do
It certainly doesn’t hurt to keep receipts from oil changes, repairs, or other upkeep to the vehicle. Keeping a written record is great, but some buyers may want a little more proof. Keep the receipts with your important documents at home. You’re probably best off to start a new folder dedicated to your vehicle maintenance.

Of course it also helps if you actually perform regular maintenance on the vehicle! Otherwise, you have nothing to report.

It only takes a few moments to record the work you’ve had done to your vehicle. Even if you add up all the seconds you spend over the years writing down your service history, you’re still likely to get paid over $100 per hour for your work!

Possible Refi Downsides

Refinancing your mortgage into a lower interest rate, lower monthly payment, or other more favorable terms sounds wonderful. If you qualify, it could save you significant money over the life of the loan or ease your burden on a monthly basis. But before you charge headlong into the process, be aware that there can be some not-so-rosy aspects to refinancing.

Fees
The normal range of fees for a refinance is 3-6% of the amount you are refinancing. Once you have a grasp on the fees involved, calculate how long it will take you to recoup that money through your refinance savings. A refinance calculator can help with crunching the numbers. If the number of years before real savings are realized is measured in decades, it probably isn’t worth it to do the refi.

An oft-quoted “rule of thumb” is that at normal refinance fee levels, you will need to save at least 1% off your current mortgage interest rate to make the refinance worthwhile money-wise.

Prepayment penalties
One expense area that is often overlooked by those who refinance is prepayment penalties. When you refinance your mortgage, you are essentially having a lender “pay off” your initial mortgage. When calculating what it will cost to execute the refinance, be sure to include any prepayment penalties in your assessment. These can normally be found in the Truth in Lending statement from your mortgage lender.

Riskier loan
Normally, refinance loans are recourse loans. This means that if you fail to make payments and are forced to sell the home, you need to be able to cover the amount owed on the loan or the lender can seize other assets of yours. If your current mortgage is a non-recourse loan, you take on additional risk by turning it into a recourse product.

PMI
Because of the constantly changing housing market, you could refinance your home at a time when your equity position (how much you owe on the mortgage vs. what the home is worth) falls below 20%. If this is the case, you will need to pay private mortgage insurance (PMI) on the new loan. This is an added expense that would need to be factored into your decision if this applied to your situation.

Less freedom
Once you refinance, you enter into a phase of trying to make back in lower interest the money you spent in fees. It can take a few years to recoup this money. If you need to sell the home during this period, you actually lose money on the deal. This may lead you to feel like you are “chained” to your home.

Despite the possibility for big savings, a refinance isn’t to be entered into lightly. Shop around and read refinance good faith estimates from lenders to make sure you understand all the terms.

Post-Car Accident Checklist

No one wants to think about being in an automobile accident. But whether it is a fender bender or a real smash-up, having the steps you need to take laid out for you can make the process of moving forward much easier. Put this action guide in your car’s glove box. Hopefully you will never need it, but take comfort in knowing it’s there if you do.

• Drive your car to a safe place if you can.
• Turn off the engine and turn on the hazard lights. Leave the hood in the raised position.
• Take a few deep breaths.
• Call the police and provide them with your location and an explanation of what happened.
• Check yourself for injuries. In the adrenaline of the situation, you may not realize right away that you need medical attention.
• Call 911 if medical attention is needed, either for you or another person.
• Only leave your car if/when it is safe to do so.
• Do not admit fault for the accident to anyone. It is best if you only discuss the details of what caused the accident with the police, and later, your insurance agent.
• Exchange information with other drivers involved. Get names, addresses, driver’s license numbers, phone numbers, email addresses, employer information, insurance company names, policy numbers, VIN numbers, license plate numbers and vehicle makes/models.
• Get names and contact numbers of witnesses.
• Document the scene as much as possible with photos and videos. Take pictures of the other people involved in the accident, along with the entirety of the physical scene of the crash.
• Make sketches of the situation before, during and after the accident.
• Write down your take on what caused the accident and what transpired. Include date, time, weather and locations. If another driver has admitted fault, write down the quote as accurately as you can.
• Ask the police how you can get a copy of the police report.
• Write down the name and badge number of the police officer(s).
• If no police come to the scene of the accident call the local police to learn how to fill out an accident report.
• Call a tow truck.
• Start a folder of information relating to the accident. Document all conversations you have from here on out and keep records of all paperwork.
• Consult with legal counsel experienced in handling auto accidents.
• Report your claim to your insurance company. Have handy your insurance policy information, the police report and your documentation from the scene.
• Ask the insurance company representative for a detailed breakdown of what will and won’t be covered by your policy in this matter.
• Arrange for repairs if applicable.
• Secure a rental vehicle.
• Schedule a doctor’s appointment if you haven’t had medical attention yet.

Accidents are traumatic enough in themselves. You don’t need the extra stress that can come with trying to figure it all out as you go. Keep this list with you can follow it the best you can in the minutes, hours and days following the crash.

What To Include In Your Used Car Ad

Buyer confidence is maybe the biggest obstacle in selling a used car on your own. Anyone looking to buy a pre-owned vehicle can go to a used car lot and get a car that has been checked over by the company’s mechanic. They can also get a very nice list of the car’s pertinent details and maybe even a warranty.

When writing the ad for your used car – whether it is online or in a print publication – you need to overcome those dealer advantages by providing your potential buyers with a plethora of information about your vehicle. Be sure to include:

• Year
• Make
• Model
• Transmission (automatic or manual)
• Color
• Body style (sedan, sports car, truck, etc.)
• Any optional add-ons you ordered for the car originally
• Any modifications you have made to the vehicle
• Miles per gallon city and highway
• Odometer mileage
• Maintenance history
• Any warranties still in effect
• Dates when last state-mandated tests were performed (such as emissions test)
• Repairs that have been made
• Repairs that still need to be made
• Audio features of car (CD changer, speakers, etc.)
• Car navigation system (if applicable)
• Car security features
• Age of tires
• What number owner you are (original, 2nd, etc.)
• Why you are selling
• Blue book price
• Your asking price
• Your contact information
• When you are available to show the car
• What forms of payment you will accept (cash, money order, cashier’s check)

You can also help potential buyers overcome fears by offering a test drive, a copy of a vehicle history report, or a vehicle inspection report from a qualified mechanic. Remember to include any other positives about your vehicle’s history that you can. For example, if you drove the car mostly in rural or suburban areas, put that information in your ad. Many people like to buy a vehicle that hasn’t been subjected to the wear and tear of city driving.

Don’t skimp on the photos either. The more you can show a buyer that your car doesn’t have one wheel already in the junk yard, the more likely you are to get inquiries and get your vehicle sold quickly.

Car Selling Checklist

Selling a vehicle can be a fun experience. Yes, you read that right. You can actually enjoy the process of preparing, marketing and closing the deal on your automobile. The best way to make sure you have a good time finding your car’s next owner is to make sure you understand the entire process, from starting line to finish. Use the step-by-step guide below to put yourself on the winner’s stand.

• Create a “Car Sale” folder to organize your information.
• Make sure you have access to all the specifications for your vehicle for you ad and for future questions. If you don’t have the owner’s manual for the car, search for the information online. Most carmakers provide online manuals.
• Make a list of the extra amenities for your vehicle, either those that you ordered or added on yourself.
• Obtain a vehicle history report.
• Take attractive photos of your vehicle to lure in buyers.
• Assemble the vehicle maintenance history.
• Compile a list of any active warranties.
• Research at Autos.Yahoo, AutoTrader, KBB, Edmunds, and Cars for prices for similar vehicles. Also check local newspapers and Craigslist for prices in your area.
• Set an asking price for the car and also a low price.
• Clean and declutter the car inside and out.
• Have routine maintenance performed, like an oil change or tire pressure check.
• Consider having a reputable and well-known mechanic’s shop in your community inspect the car and issue a report on its condition.
• Have any state-required checks, like smog, performed.
• Make any needed repairs.
• Check your state’s DMV website to make sure you understand the rules governing transfer of vehicle ownership.
• Download the bill of sale, release of liability and transfer of ownership forms from the DMV’s website or visit your local branch to get paper copies.
• Advertise online at one of the above-mentioned car-selling sites, or via Craigslist or eBay. Also get the word out in print, via social media and by word-of-mouth.
• Set aside specific time slots in your schedule when you can show the car.
• Respond quickly and politely to inquiries.
• For safety purposes, meet potential buyers in a public place and always try to have someone with you if possible. If you can’t have someone with you, inform a friend or family member of where you will be.
• Before allowing a test drive, make sure the potential buyer has a valid license and insurance.
• Be open to allowing a potential buyer to have his/her own mechanic inspect the vehicle.
• Make plans to pay off any balance due on the car, either on your own before the sale or by completing the transaction at your financial institution so that the title can be transferred to the new owner.
• It’s also a good idea to conduct the final monetary transaction at a financial institution so that the potential buyer doesn’t have to carry cash. A cashier’s check, money order, or escrow service are acceptable alternatives to cash.
• Do not accept personal checks.
• If the above is not an option, you can provide the buyer with a temporary operating permit by taking the bill of sale to the DMV.
• Complete all forms required by your state’s DMV.
• Make sure the bill of sale states that the car is sold as-is.
• Make a copy of the all forms involved in the transaction.
• Mail copies to the DMV via certified mail any forms that must be registered with them.
• Sign the title over to the new owner (A new title will be issued and sent to the new owner). Follow the procedure for transfer of the title outlined on your state’s DMV website.
• Once the transaction is complete, record the odometer mileage on the release of liability form.
• Remove all your personal items from the vehicle.
• Remove the license plates from the vehicle if this is required in your state.
• Hand over the keys, title, maintenance records and any active warranties.
• Cancel your insurance for the vehicle.

Selling Your Car Or Trading It In

Upgrading your vehicle is an exciting thought. The not-so-exciting part is figuring out what to do with your current car or truck. Taking a few key factors into consideration will help to take the worry out of your choice.

Know the going rate: Before you can know what is a good deal for a trade-in, you need to know the going rate for your current vehicle. Check out kbb.com to learn what your car or truck is selling for right now.

Bottom line dollars: In almost every case, you will be able to get more money by selling the car yourself. Compare what you learned online about the vehicle’s value with what you are being offered for trade-in.

Getting value quickly and easily: Selling a car on your own can take time. The payoff will usually be better, but it might take weeks to get your vehicle sold. If you are going to buy your next vehicle before you sell your current one, how long will you be able to afford two car payments?

Your next vehicle purchase: If you are going to be buying your next vehicle from a private seller, the idea of trading in your current vehicle is a moot point.

Current vehicle condition: Just because the listed value for your vehicle is $8,000 doesn’t mean that is what you are going to get. Your car or truck might need minor or even major work for you to get that price. Subtract these costs from what you anticipate you will be able to sell your vehicle for when comparing it to the trade-in offer.

Post-transaction issues: When you trade in a vehicle, the dealer has essentially said that they are accepting the car as-is. If you sell your vehicle privately, you need to be aware that the buyer may come back to you with complaints if problems arise. Legal issues could come about if the buyer is dissatisfied.

Possible tax benefits: Some states bestow tax advantages on people who trade in vehicles by only applying sales tax to the difference between the trade-in value and the sales price of the new vehicle you are buying. This out-of-pocket boost might help to make up the difference between the trade-in amount and the price you could get for the vehicle by selling it on your own.

Another option: Some dealers offer the choice of selling your car on consignment through them. Even after the dealer takes commission (usually no more than 10% of the sale price), you will likely still get a higher dollar value than you would by trading in the vehicle. Not all dealerships offer this, but it can be worth looking into if the option is present.

Car transaction will probably be among the biggest dollar amount deals you make in your personal financial life. Carefully weigh the pros and cons of the available options before you commit to one course of action.

Oil Changes Every 3,000 Miles?

How often do you really need to change the oil in your car? Ask a lot of people that question and you will hear the number 3,000 thrown out. But that figure seems to come solely from car maintenance shops and motor oil companies. That’s like asking a fast food restaurant how much hamburger you need in your diet. Changing your oil too much wastes money and has a negative effect on overall resource consumption.

So what information can you trust? Here are a few good sources:

Your owner’s manual
The folks who made your car are going to have a pretty good idea of how to take care of it. While some older vehicles – say those from the 70s – may need fairly frequent oil changes, you’ll find that several more recent makes only suggest oil changes every 10,000 or 15,000 miles. And keep in mind that those 70s owner’s manuals were written at a time before motor oil improvements lead to longer effectiveness.

Your vehicle
Many newer vehicles have a computerized system that uses several factors to analyze when an oil change is needed. Listen to your car if it tells you it needs service. 

Your conditions
The exception to the above guideposts is if your vehicle is forced to perform under “extreme” conditions. This can include stop-and-go driving, lots of idling, operating frequently in temperatures below 10 or above 90 or in extreme dryness or humidity or transporting heavy loads on a regular basis. If you are wondering if you fall into the category of extreme use, you can pay to have an oil analysis performed. For $20 or less, you can send a sample of your oil to a lab to have it tested for viscosity, impurities and other criteria. Yes it is an extra cost, but it can give a good measuring stick for how often you need to change your oil going forward. Spending a little now could save you a lot in the future.