When the Car is Not Yet Fully Paid

Another reason why you should get a brand new car instead of used car - outstanding loan or unpaid bills. Imagine buying a second-hand car and years into the ownership, you find out that the previous owner has not yet paid the car in full and you are left to foot the bill.

Some car owners approach car dealers to trade the car that they already own with a new one. If there is still an outstanding balance on the car loan, the car dealer volunteers to pay for it and then proceeds to resell it. Given the current global crisis and the fact that some auto dealers are closing down, car dealers have left the new owner, who expects the car to be have been full-paid by its previous owner, to foot the bill.

According Consumers for Auto Reliability and Safety president, Rosemary Shahan, “It’s devastating for people when it happens because they have two car payments and they can’t afford them. Their credit is destroyed for no fault of their own because the dealer defaulted.” In the United States of America, for example, there has been an increase in complaints among consumers in Washington, Florida, and Iowa. Such complaints might even increase, given the global economic crises and the recession.

It is difficult for car owners who find out that the previous owners of the cars that they have bought still have outstanding loans. They can end up paying a huge amount on loans that they never knew existed. Such an amount can definitely put a strain on their respective budgets. As if difficulty with meeting the payments and keeping creditors at bay aren’t enough, the delay in payments will affect their credit score. What was previously a good credit rating will become a negative one. This is what happens when you are not fully aware of the car’s history.

There is some hope because some groups have decided to take action to protect the rights of the consumers. Some states also have programs that would oblige the car dealers to pay consumers through insurance bonds. However, this is not the case in some areas. So car owners have no choice but to file a case and hope for the best - a small amount of payment or a chance to rebuild their credit rating.

If there is any hope for owners of pre-owned vehicles, it is the fact that more groups and government officials are looking into this and taking steps to avoid such problems. Meanwhile, if you intend to purchase a car, make sure that you check the vehicle’s history and title. Ensure that there are no oustanding liens on the vehicle that you intend to purchase.

Types of Home Loans

If you are looking into purchasing a house, you might also look into several types of home loans offered by different banks and companies. Of course, you will get varying offers and options, depending on the bank and on your own credit report. Usually, if you have a good credit score, you will receive a very good deal. Companies would like to make sure that you will make your monthly payments on time, so they look into your credit history.

So now that you have decided to look into several deals regarding home loans, you might find the information overwhelming. Information overload, as most people call it. The interest rates and consequently, the total amount due in your monthly billing statements.

One type of home loan, the standard variable home loan, does not have a fixed rate throughout the life of the loan. This varying interest rate is a good thing, because if the interest rates go down, the payments also become lower. This type of home loan is considered as the most popular one in Australia. In addition to varying interest rates, the bank may also throw in other features and offers.

Another type of home loan, the discount variable loan (or also known as the honeymoon and introductory loans) offers a discount in interest rates for a limited period, which is usually 12 months. During this time, you get a lower interest rate and total monthly payment. After that period, you get the regular or the standard rate.

As its name implies, fixed rate loans have fixed interest rates, usually for as long as a year up until 20 years. Borrowers often prefer this type of loan because they know how much their payments would be for the duration of the loan.

For those who have combination and split loans, they can opt to have certain portions of their loan to have variable interest rates and fixed rates. On the other hand, those who have home equity line of credit loans have secured their loans by having their houses as collateral. The interest rate for such loans are usually lower than other loan types.

Individuals who are self-employed or who lack certain documents, such as financial reports, can opt to get a low-documentation or no documentation loan. This loan requires the loan holder to accomplish a form that declares the annual or monthly income. Such loans usually have high interest rates.

If you have bad credit rating and intend to start over, you can get a non-conforming loan to rebuild your credit score. This will not hide any negative information from your credit report, but it will help you establish a better credit rating.

And last is the No Deposit loan. For this type of loan, you can get a loan for as much as 106% of the property’s equity. As its name implies, you can immediately make your purchase without having to worry about the deposit.