Your auto loan is likely to be your biggest monthly payment other than your mortgage or rent payment. Because of this, you should make sure you have the best possible loan terms for your financial situation. Decreasing your interest rate by just one percentage point can save you a thousand dollars, or more, as you repay the auto loan. In many cases, refinancing is a simple process that is well worth your while. When to refinance an auto loan Decrease in market interest rates: If interest rates on auto loans, in general, have gone down since you took out your loan, refinancing can be a wise choice for you. You can lock in today’s lower interest rate and stop paying the higher rate you had agreed to when you initially bought your car. Increased credit score: Borrowing money is tough when you have a low credit score. If you manage to qualify, lenders will charge you higher interest rates on credit cards, mortgages, and auto loans. If you got your auto loan several years ago when your credit score was low but you have been making all the payments on time, you may be surprised to learn how much your score has improved. You can use your new and improved credit score to qualify for lower interest rates on a refinanced auto loan. Barely making payments: Refinancing can sometimes be a good idea if your financial situation has deteriorated since you bought the car. If you find you are barely making the monthly payments, refinancing with a longer loan term can decrease the monthly payment amount. This gives you some wiggle room in your budget to help you stay on track with making each payment on time and protecting your credit score. However, be aware that a longer loan term typically means you will pay more in total interest over the life of the loan. Lease purchase conversion: Many leases have the option to convert to purchase agreements when the lease expires. However, the terms on these loans may not be the best, especially because you got your lease several years ago. It may pay to refinance the amount you need to borrow to purchase your car after the lease expires. Tips for a smooth auto loan refinance You should always check to make sure your current auto loan does not have a prepayment penalty. If it does, you will only want to refinance if you are going to save more money than you pay in the penalty. Even worse than a prepayment penalty is a precomputed loan, where you are obligated to pay the full interest amount even if you pay off the loan early. In this situation, you will never save money by refinancing. Once you have decided you are going to refinance, start by shopping for interest rates. Your local bank and credit union often provide competitive rates, especially if you already have accounts open with them. Don’t forget to also call your current lender to ask if they can lower your interest rate. When you are ready to refinance with a particular lender, make sure you understand all the terms of your loan agreement. You should know what your monthly payment amount is, what day of the month it is due, how to make your payment, and when your auto loan will be completely paid off. Once you are comfortable with all of those details, it is time to sign the paperwork and finish the process of refinancing your auto loan.

Refinancing an Auto Loan

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Whether your goal is to refinance your home or you are trying to sell it, a high appraisal is the desired outcome. While there are some things related to your appraisal that are beyond your control, there are a few things you can do to help the appraiser see a higher value in your home. However, first, you need to understand a little more about the appraisal process. How the Appraisal Process Works An appraisal can be quite disconcerting. You are essentially paying someone to come into your home and tell you how much they believe your home is worth. You love your home and have made great improvements over the years. However, it is important to keep the emotional connection you have with your home out of the picture and approach your home appraisal objectively. These are a few of the things appraisers are looking at that will impact the appraised value. Part of the process of standardizing the process involves a checklist appraisers use to help determine values. This creates a level playing field for all homeowners with some things that are assigned specific values. This does not mean that there is no room left for interpretation by appraisers, which is why it is important to make sure your home is presented in its best possible light to boost the appraisal value. Top Factors Driving Value There remain many aspects that are still somewhat subjective. With that in mind, these are a few things you can do to help the appraisal see added value in your home. Improve its curb appeal. First impressions matter in both selling your home and appraising it. You want to present the best possible image of your home to the appraiser. Spruce up the lawn. Make sure you cut the grass, trim the trees and properly prune shrubbery, so the property presents an optimal first impression. Choose updates wisely. When updating your home with an appraisal in mind, experts recommend choosing projects that offer the best return on investment. These includes projects like the following: If you have plans to update a kitchen or bathroom, go small with these for maximum impact on a small budget. Another area of concern for updates involved the location of the updates. Updates to the basement of the home have a lesser impact on appraisers than updates to the attic. Finishing a basement does not increase the overall square footage of your home while converting an attic into a bedroom does. The difference in the numbers is that attic renovations recover 73 percent of the costs in the appraisal while basement renovations only recover 66 percent of the costs on average. Document updates. This is more important than you may realize since some updates have a more visual effect than others. Updates like new roofs, electric system upgrades, and even updates to the heating or air conditioning in the home are not aesthetic improvements, but can offer significant increases in appraisal values. Offer the appraiser before and after photographs along with copies of receipts and other documentation regarding the upgrades. Clean everything. Consider a professional cleaning of the home, carpets, and everything in between. You want to make sure the house looks and smells clean, and a little extra help never hurts – especially for pet owners. Carpet and upholstery cleaning can help clear the air of pet smells you do not even notice in your home. Consider kenneling your pets. You want the appraiser as calm and comfortable in your home as possible. If he is nervous around dogs or allergic to cats, it is best if they are not there while he is working on your home appraisal. Handling a Low Appraisal While you’ve put much blood, sweat, tears, elbow grease, and love into your home, those things do not always translate into dollars and cents for appraisers. They have a cold, unfeeling checklist to guide them. If you get a lower than hoped for, or necessary, appraisal, you do have a few options ahead of you. If you are selling your home, you can work with the buyer by lowering your asking price, or having them increase the cash component of their offer. You might have to split the difference and meet in the middle. If your goal is to refinance your home, you’ll have to do one of three things.
  1. Accept the presented offer even though it is less than you would have liked.

  2. Point out potential errors in the appraisal in hopes of raising the proposed value. Bring facts, figures, and comparable home values in the neighborhood to the table when doing so and present a compelling argument.

  3. Make further changes to your home and get another appraisal.
A low appraisal is not the end of the world, and the advice above can help you have a better than average appraisal experience, though there are no guarantees when it comes to the business of home appraisals.

Maximizing a Home Appraisal

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In some cases, your son or daughter, relative or friend may have difficulty obtaining a car or student loan or apartment rental because they lack sufficient credit history or have had credit troubles in the past. They may come to you and request that you cosign their loan or rental application, guaranteeing the lender or renter that you will repay the loan if the primary borrower is unable to do so. As a cosigner, you will be asked to complete all of the loan paperwork alongside the primary borrower. As part of the process, the lender will likely check your credit history as well and approve you as a cosigner. When you are asked to cosign a loan, you should understand the risks that you are taking. Questions to ask as you decide whether or not to cosign
  1. How financially trustworthy is the primary borrower? Perhaps the person asking you to cosign is a young adult with no prior credit history, but who has a good job and is financially responsible. Cosigning with this borrower can be a great way to help him or her get their first loan and start building positive credit history. On the other extreme, the person asking you to cosign may be behind on all her debt payments and is trying to get a debt consolidation loan. In this situation, remember that the primary borrower’s past financial difficulties are likely to continue into the future.

  2. Can I afford to pay this loan in full? If the primary borrower stops making payments, the lender will try to collect from you. In most cases, you will still be legally responsible for paying the loan even if the primary borrower declares bankruptcy, is permanently disabled, or dies. Do not cosign unless you are able and willing to take over the payments for the loan.

  3. How important is my credit score to my financial future? All account activity from a cosigned loan appears on your credit report, just as if you were the one who took out the loan. If the primary borrower misses a payment, this missed payment will decrease your credit score. Also, lenders include the loan’s monthly payment when calculating your debt-to-income ratio for a mortgage. If you plan to get a new loan yourself in the future, cosigning can be risky.

  4. How does this particular lender communicate with cosigners? Often you will not learn that the primary borrower is late on payments until the lender calls you to collect a big debt. However, some lenders are willing to be in closer communication. For example, they may agree to notify you whenever the primary borrower is late on a payment. This allows you to contact the primary borrower yourself, learn what is going on, and make a plan to get back on track.
Handling a default on a cosigned loan If you discover the loan you cosigned is in default, which is when the primary borrower is not making payments, first contact the borrower and ask what is going on. Perhaps they forgot to make payments, so your call can provide a quick fix. Often, though, the borrower is having financial difficulties and is not able to make payments. In this case, you need to take action to protect your credit score from further damage. Contact the lender to learn how far behind the primary borrower is and what the lender can do to help. Some lenders will issue a forbearance, which allows the borrower to temporarily stop making payments, especially when dealing with major setbacks like unemployment. Other lenders will forgive late fees if you immediately pay the missed payments. It is difficult to get out from a cosigned loan once it is in default. Consider asking the primary borrower to refinance the debt on her own or with a different cosigner. If the cosigned loan is for a car, another option is to have the primary borrower sell the car to repay the loan. Consider bankruptcy only as a last resort, and be aware that both you and the primary borrower would need to separately declare bankruptcy to get you both out from under the loan.

Cosigning a Loan

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When people hear the word “debt,” they often think of it as a bad thing or associate negative connotations with it. The truth is, some debt can be good. So, how do you differentiate good debt from bad debt? The difference does not necessarily refer to the amount of money you owe, but rather the reason you owe. Good Debt Definition The general dividing factor is whether the debt is something that will add value to your financial position over time or reduce it. Good debt is debt that can help you improve your financial position in one way or another. For instance, the following are prime examples of what are considered to be good debt: If you make wise purchasing decisions when buying homes or real estate, over time, the expectation is that real estate will gain value. Buying low in areas where you anticipate market growth allows you to sell high at a later date, once the value of property in the area grows. Education is an investment in yourself that is expected to pay off in higher paying jobs in the future. Taking out a student loan to pay for college often equates to higher lifetime earnings. Borrowing money to expand a business, buy new equipment, or hire new employees to meet growth are all viewed as good reasons to incur debt. Most everyone who takes out a business loan expects the loan to generate positive economic value for themselves and their business. Bad Debt Definition Bad debt, on the other hand, is a debt incurred to purchase items that will depreciate or lose value over time. This accounts for a large amount of consumer debt. The following types of debt are considered to be bad debt. In the case of auto loans, depreciation attacks fast and hard. According to Edmunds, you lose nine percent of a new car’s value the moment you drive off the lot. By the end of the first year of ownership, the value drops to 81 percent of the purchase price. By the end of the second year of ownership, it is only worth 69 percent of the purchase price. By the fifth year, the car is worth less than half of the purchase price. Credit card and other types of revolving debt work in much the same way. By the time you leave the store, most items have lost some in value. Moreover, using credit cards for consumables, like dining out, entertainment, and vacations, adds no long-term value. What can you take away from this? If you have debt, seek to pay off bad debt first. Then reassess your finances and look for ways to avoid bad debt in the future by paying in cash or saving for big purchases. Reserve credit for items that will add value over time instead of those that will lose it.

Good Debt, Bad Debt

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Your phone contains sensitive information about you, your finances, and your family. It is critical to protect this information from falling into the wrong hands. As the owner, there are several one-time changes you can make and ongoing habits you should learn to keep your mobile phone secure. Setting up Security on Your Mobile Phone The first and most important thing you should do to protect your mobile phone is to set up a lock screen with a password, PIN, or pattern. That way, if your phone is stolen or you lose it, all of the information on the phone will not be automatically available to whoever has it. Adjust your phone’s settings so it locks just a minute or two after being used. If you delay the locking process, you risk having it fall into the wrong hands before it is locked. Even if you have the best intentions, the chances are that at some point, your phone will become separated from you. Make it easier to recover if it is lost by activating a tool to locate your phone remotely. Also, you want a feature on the lock screen that allows someone who finds your phone to have sufficient contact information to get in touch with you. If you store particularly sensitive information on your phone, consider signing up for a service that allows you to wipe your phone remotely if needed. Best Practices for Mobile Phone Security Update your software whenever a new operating system or fixes to your current one are available. The updates often address security loopholes, so it is important for you to have the latest version to give your phone the best possible protection. It is also a good idea to update apps, particularly banking apps, whenever they release new versions. Only download apps from trusted sources, and pay attention to the permissions that apps request. For example, you may notice that an app requires access to your complete browsing history, GPS location, and all of your text messages. Unless the app has good reasons to have this information and you fully trust the developer, you probably want to avoid it. Use caution on unsecured Wi-Fi networks. Do not allow your phone to connect automatically to any available open network, and when you do connect, pay attention to what websites you visit and apps you use over that connection. Any information you send or receive is vulnerable to interception, so save your banking for a secured network. Log out after making purchases, and don’t store passwords on your phone. If someone can get past your lock screen, you do not want them to have open access to all of your accounts. They could run up some serious bills if your login is active on shopping sites with stored credit or debit card information. Pitfalls to Avoid Don’t use the same PIN or password on your lock screen that you use elsewhere. You unlock your phone all the time, and if someone is watching, you do not want them to have information that he or she could then use to hack into your other accounts. While it may be tempting just to use the same PIN as your ATM card, that is not a number you want to have floating around. Remember that your address is not a very secure PIN either. Don’t recycle or trade in your phone without fully wiping it. You may think that you do not have to worry about security once the phone is not yours, but traces of information on the phone could be enough to leave you vulnerable. Complete a full wipe and reset the internal memory to factory settings before letting the phone go.

Keeping Your Mobile Phone Secure

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According to Forbes, considerably more people are embarrassed to admit their credit scores than their weight (30 percent compared to 12 percent). With about a third of Americans qualifying as obese, this news is quite shocking. The good news for these Americans is that it is not difficult to improve your credit score. However, you need to know where to begin. Things to Do Now Boosting your FICO score is not an overnight process. It will take time and a little bit of effort on your part. The hardest part, though, is getting started. These are things you can do today that will help improve this important score. Impact of Payment History Your payment history is important. If you have missed payments in the past, get current and stay that way. Even paying a few days late can have a big impact on your credit history according to myFICO, who also reports that payment history accounts for 35 percent of your credit score calculations. Impact of Amounts Owed It is not the amount owed that is the problem so much as the amount owed compared to what credit you have available. The impact of your debt will vary greatly according to income and other items on your credit history. However, if you owe a great deal and have little available credit, that can have a negative impact on your FICO score – especially if the bulk of your credit owed is in the form of revolving credit accounts like credit cards. You can make relatively easy improvements to this particular score by paying down your debt and keeping balances on your credit cards low. You do not necessarily want to close accounts – especially older accounts as they have a positive stabilizing impact on your credit score. You should also avoid the temptation to open a lot of new accounts in an attempt to have a higher available balance as this raises red flags in its own right. Impact of the Length of Credit History It is better to seek to build your credit history slowly and over time. Don’t go all in after opening your first credit account. At the same time, don’t close older accounts the first time something shiny and new comes along. Those older accounts show that you’ve developing long-term relationships with creditors and that’s a great thing for your FICO score. Impact of the Types of Credit There are two essential types of credit. Asset building credit, is generally referred to as good credit. This credit is used to: Revolving credit accounts for pretty much everything else. This includes: from These things are considered bad credit. You definitely want more good credit than bad in your credit history. This shows a habit of living within your means and making investments in your future. Even if you’re paying your bad credit in a timely manner, it appears better on your score to have a lower amount of this type of credit. Impact of New Credit When it comes to your credit score, new credit is always somewhat suspect. There is no history with this type of credit so it cannot really be part of the equation. It becomes even more suspect when there is a large amount of new credit applied for and/or received all at once. In fact, Bankrate recommends paying off (not closing) all credit cards that have low balances and stick with one or two cards as your main credit cards. Opening new lines of credit speaks against that strategy for keeping your credit score higher. Small changes like these can have a huge impact on your credit. If you have trouble making timely payments, consider setting up a calendar of payments each month and automating the process as much as possible so that your FICO score can thrive.

Boosting Your FICO Score

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Life insurance is one of those things that many people do not want to think about, but that almost everyone needs. Most simply don’t want to think of a world without them in it. They do not want to wonder what will happen to their families or even imagine their families facing life without them. Unfortunately, failing to plan ahead for that possibility can leave their families devastated not only emotionally, but also financially, if they are no longer there to provide for them. Who Needs Life Insurance? Most experts will tell you that if you are financially responsible for someone else – anyone else, you need life insurance. While that is certainly true, that is not the only instance in which life insurance is recommended. For instance, young adults who have careers, but aren’t yet married or romantically involved with another person should consider having a life insurance policies of their own. That way, if something should happen to them, their parents aren’t left with the burden of not only saying goodbye to their child but the financial burden of doing so. Another consideration involves families with children where one partner provides for the family finances. It is conventional wisdom that says the provider needs life insurance coverage. However, the value the non-working family brings to the table has real world dollar value too. Imagine the costs of hiring one person to do the following things: When the “non-working” parent is no longer able to provide these services, it could lead to significant lifestyle changes for the family or considerable financial hardship for the family. In the case of aging or older adults, life insurance is also necessary to help pay for final expenses or to pay off residual medical bills. There are some smaller policies that are easily available to older adults – without medical examinations that are worth considering if you are afraid you will not be able to qualify due to the state of your health. Evaluating Your Needs Once you realize the importance of having life insurance, the next question is: “how much life insurance do I need?” It often depends on your intentions. Some people only really need enough to cover their final expenses and to pay off their debts, so they do not burden that someone else with those debts. If you are young and single and just want to help your parents out, then you may only need enough to cover those debts and final expenses. If on the other hand, you have dependents, you are going to need to take into account a few more considerations. These are a few things to keep in mind when deciding on an appropriate amount. Arriving at a Coverage Amount The good thing about life insurance is that if you invest while you are still young and in reasonable health, it is not all that expensive. Look for plans that lock in rates for as long as possible and avoid the temptation to over-insure yourself or your spouse. The “just right” number will be different from one family to the next and may diminish or increase over time as life changes occur. If you are unsure how much life insurance coverage you need, calculate the appropriate numbers mentioned above (debt, income replacement, and children’s education) and add in between $10,000 to $15,000 to cover final expenses to be on the safe side.

How Much Life Insurance Do You Need?

View Resource How Much Life Insurance Do You Need?
Different factors will determine what you pay for life insurance premiums. This can confuse many individuals when they are trying to understand why their premiums are higher than others. Below are some factors that can impact the cost of life insurance and perhaps take some of the confusion out of it. Factors that Determine your Life Insurance Rates Once you decide on a particular life insurance policy that suits your needs, the next step is learning the factors that will determine if you qualify and how much you will pay for the premium. Your Age The strongest factor many insurance companies start with to determine your rate is your age. Your premium will be lower the younger you are. This is because they assume you have many years of paying on the premium before you pass away. Your Gender The next factor they look at after your age is your gender. There are statistical models that some insurance providers use to approximate your longevity. For instance, on average, women have a life expectancy of about five years longer than men. Therefore, their rates are a bit lower since they are anticipated to live a longer period than men. Smoking Because you put yourself at a higher risk of health problems when you smoke, it is an automatic red flag for most insurance providers. If you smoke, you can even expect to pay as much as twice the premium as non-smokers with the same or comparable coverage. By kicking the habit, you can — and probably will — lower your rates. Your Health and Family History Another essential deciding factor in how much your premiums will be is your medical and family history. If you have any chronic conditions or potential for one, your rates could increase. Also, if you have a family history of certain illnesses, your rate could also be high. Your Current Health Most insurance companies will have you go through a medical examination so they can see if you have any types of health issues that could cause problems in the future. If you are in good health, you will most likely enjoy a lower rate. Your Weight This is also a factor. Since obesity, for instance, can cause health problems and a shorter lifespan, this could affect your premium. Your Occupation Another thing insurance companies look for is if you hold a dangerous job, such as a coal miner, race car driver, or you work in any profession that can cause accidents. Although rare, the insurer might consider some occupations to be too risky due to their high potential of causing an accidental death and might not give you coverage. Your Lifestyle Your lifestyle activities are accounted for as well. If you are a thrill seeker and like to climb mountains, sky dive, or bungee jump off of high bridges, you could end up paying higher rates for life insurance. Thrill seekers are a major concern for many insurance companies since their lifestyle could lead to their early end. The insurance company will weigh in these and other factors to determine what you will pay out in premiums for your policy. The importance that each company weighs on them could be different and will depend on your insurance provider. It is important that you sit down and discuss your lifestyle and other factors with your insurance agent to take out a policy that will best fit your specific needs.

Factors That Impact Life Insurance Premiums

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Your home may very well be your most valuable possession. It is important to make sure you protect the investment you’ve made in your home with the right kind of insurance coverage. These insurance tips will help. Getting the Right Coverage It is important to get the right coverage for your home, your family, and the area in which you live. Don’t buy a policy without first knowing what you are getting. In fact, it is a good idea to get quotes from several different companies and explore the differences between the policies you are considering. Remember that all policies are a little different when it comes to coverage. That is why there is such diversity in price from one carrier to the next. Break it down so that you can make an apples to apples comparison. Then take the time to find out if the coverage is enough to meet your comfort levels. Consider working with an independent agency that will show you a range of plans and coverages and walk you through the protections they provide. This allows you to make an informed decision about the insurance policy you ultimately purchase for your home and possessions. Make sure to ask about things like the following before you buy too. Ask about any specific concerns you may have about your home and how well it and your family will be protected by the policies you are selecting. It is always better to know than to find out you do not have certain coverage when you need it. Identify ways to lower insurance premiums. There are many ways you can do this that aren’t very expensive – and some that are. These are a few fixes that can have a big impact on your insurance premiums. Of course, there are bigger investments you can make that will reduce insurance costs, like updating wiring and bringing your home up to current code, but you’ll need to weigh the value of the reduction vs. the costs of the upgrades. Making Sure You are Compensated Correctly for Losses When it comes to filing claims, it is important to file the claim sooner rather than later and to make sure you document everything. We are fortunate today in that almost everyone carries around a smartphone so that photographs and video evidence are easy to document. This will provide evidence of the devastation. However, having photographs and/or videos of valuable items inside the home before the covered disaster helps to provide evidence of ownership if your home is destroyed by fire or tornado. Consider storing documentation offsite in a safety deposit box or online for digital images and video. There are many programs that allow digital storage for these things that can be critical in ensuring your compensation. Photo documentation may not be enough, however, if you have valuable items like antiques, jewelry, and furs. You will need to have special valuable items coverage and an appraisal of the item before the covered event. When you have the right documentation and the right policies, you are much more likely to get the correct compensation for your losses. That is why these things are so important.

Insurance Tips for Homeowners

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Your auto insurance is not only about protecting your car. It is also about protecting the people inside your car, on the road, in other cars, and the property around it. It is also about protecting your financial interests if someone gets injured in an accident in which you are determined to be “at fault.” Finding the right auto insurance can be quite challenging. Especially since most people feel like they need to learn to speak another language to understand what is, and isn’t, covered by their insurance policies. That is why it is so important to ask questions before you buy and always make sure the answers make sense to you. Understand Key Features of Insurance Policies Different auto insurance policies offer different kinds of features. All of them are important to different drivers for different reasons. The following are some of the more common, and desired types of features people want from their auto policies. These features aren’t available through all insurance carriers and you may need to shop around in order to find these exact or very similar features. Identify Which Features are Important for You Most drivers want to find an insurance provider they can feel confident about having and be loyal to for the long haul. Before you do that, though, you need to decide what’s most important to you. Getting the right insurance coverage can make a world of difference for you and your family when it comes to financial security and peace of mind. Little things can be important when accidents occur and can make a big difference in your financial outlook afterward. Make sure you set the stage for a good outcome if you are ever involved in an accident. Comparing Prices and Coverage While it may seem like a simple concept to compare prices from one insurance policy to the next, it is not always so cut and dried. Not all policies are created equal. You’ll need to break down the policy into bite-sized pieces to see what is covered and why the prices are so different. Make sure you take the time to know what the policy offers for the price before choosing the lowest priced policy. Those deeply discounted policies often fail to offer the type of protection and coverage you are expecting for the money. Auto insurance is one of the most important types of insurance coverages to purchase today. It is doubly important to get the coverage and coverage amounts on these policies right to provide invaluable protection. Working with an independent insurance agency can help you do that and more – so that you never need to worry about having the right protection again. Just remember to choose a reputable agency with a history of doing the right things for its policyholders.

Finding the Right Auto Insurance

View Resource Finding the Right Auto Insurance