Car, Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Personal Goals, Saving

High Car Payments Can Drive You Over the Edge

car

High Car Payments

It is an all too common story. Many people struggling with debt can trace the beginning of their debt problems to a new car purchase – a big monthly payment, financed for too long. Some households even have two vehicles with large payments in the $400 to $500 range. With the budget maxed out, you can see how this type of financial burden could lead to a crisis. It’s easy to start falling behind on your budget and ultimately turning to credit cards, cash advances or loans to make up where your cash flow is lacking.

Test Drive the Monthly Payment

You may think you’re getting a steal of a deal on that new SUV or speedster. After all, the dealer said he’d take $2,000 off the sticker price – how could you pass that one up! You know the saying: Buyer beware. Be aware of what you can afford, and go into the purchase with a plan. Find a comfortable monthly payment that allows room in your budget for maintenance, and possible gas and insurance increases. You want a vehicle that improves your lifestyle, not one that enslaves you to a high monthly expense.

Car Payment Facts

  • Monthly payment

Financial experts recommend spending no more than 15% of your monthly take-home pay on a car payment. If your budget is tight, a more conservative figure like 8% would be appropriate. Even though a lender may approve you for more than you have budgeted, you don’t need to spend it. Consider the future effects of your decision and your other lifestyle and financial goals. Balance is key to budgeting.

  • Term of the loan

According to the Federal Reserve, the average auto loan term has been creeping up over the years. In 1998, the typical car loan was a 4-year term, and now, lenders commonly offer 6-year terms. It certainly lowers your monthly payment and may help you reach the 8% you budgeted for. However, it doesn’t come free of charge. Obviously, you’ll pay a lot more than you signed for because of the increase in overall interest. And, if you want or need to sell, chances are you’ll owe more than what the car is worth. It takes longer to build equity with a long-term loan. Consider what you can afford monthly and base a purchase on a four year loan. This doesn’t have to mean less car. Shopping used cars in your price range can offer a fleet of options.

  • Interest

Do some investigating and shop around for the best interest rate before negotiating a purchase with a dealer. Check other dealerships and financial institutions. Dealerships and financial institutions often run promotions, offering incentives like lower interest rates, zero down and cash back. Also, if you can afford to send in payments above your monthly payment, it will pay down your premium faster, save on the overall interest and shorten the life of your loan.

  • Pleasure

Don’t buy a vehicle that you don’t like or are embarrassed to drive. It is important that you are happy with your purchase for more reasons than simply the cost. The best car deal is one that you can afford, meets your lifestyle needs and that you enjoy driving.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

    Full Name (required)

    Email (required)

    Are you a current client of Christian Credit Counselors? (required)

    Type the code below in the text box. (required)
    captcha


     

    ​Read More
    Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Investing, Money Management, Personal Goals, Saving

    Making Money Matters Manageable in Your Marriage

    Mutual Money Management moneymarriage

    Is it love or money that makes the world go round? It’s both…Make money work for your marriage, not against it.  You need tips on strengthening your marriage through mutual management of your money.  This can be done and can even be fun!  Keep reading to find out how.

    Financial Honesty

    Have open, honest and non-confrontational discussions about your finances.  Set aside a regular time to talk about where you are, where you want to be and how you will get there…together.

    Budgeting and Strategic Spending

    Make budgeting a positive and fun project, rather than a chore.  Don’t view a budget as a way to plan spending out of your life.  News Flash: While you are alive, you will never stop spending money.  And, the ultimate goal is not to spend less, but to spend strategically and find ways to increase your income to continue to meet your financial goals.  Plan in the things you want and enjoy and work together to achieve them.

    Money Habits

    Be aware of your spouses habits and tendencies when it comes to finances.  Don’t eye one another to find fault, but look for opportunities to step in and offer encouragement or a listening ear.  Fear can lead people to hold onto finances tightly, or spend impulsively.  Find ways to help build faith and trust into each other, and encouraging one another daily.

    Reward Sacrifice

    Regardless of the roles you’ve decided upon in the area of finance, you are both working towards your mutual goals.  Look for opportunities to reward your spouse for their hard work.  Have they been making personal sacrifices to stay within the budget?  Acknowledge that in a way that will tell him or her: Thank you. I love you. I’m proud of you. I’m glad we are on the same team.

    Learn from Financial Freedom

    Get around other couples who are walking in financial freedom and learn from them.  Look for couples who are seasoned and successful in the area of mutual finance, and allow them to mentor you as a couple. They have been where you are and have insight into your success.

    The Three L’s

    Love much. Live well. Laugh often.  Always remember the love you have for your spouse.  Keep that as a forethought, prizing it more highly than anything money can buy.

    Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

      Full Name (required)

      Email (required)

      Are you a current client of Christian Credit Counselors? (required)

      Type the code below in the text box. (required)
      captcha


       

      ​Read More
      Credit Cards

      The Credit Card Act – Facts You need to Know

      The Credit Card Act

      The Credit Card Act was signed into law in 2009 under President Barack Obama. The act set up several provisions aimed at limiting how credit card companies can charge consumers. In July 2011, the Consumer Financial Protection Bureau (CFPB) opened as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

      The Card Act helped curb the practices that made banks wealthy and consumers were going to be satisfied. But when it was put into practice, there were still complaints. Especially from stay-at-home moms and dads; under the current provisions, they cannot obtain a credit card because creditors only take individual income into consideration, not household income. Complaints such as these needed a venue to be expressed and Tuesday, the CFPB unveiled its online credit card complaint database for all consumers.

      “By making our data publicly available, initially in the area of credit cards, we hope to improve the transparency and efficiency of this essential consumer market,” Richard Cordray, director of the CFPB, said in a statement.

      How the Consumer Financial Protection Bureau Works

      The function of the bureau is to acquire all consumer complaints and create new regulations from the information gathered. Complaints received are put in categories and from there, companies can respond to a consumer in one of four ways. Consumers can expect to receive a refund, an explanation, a correction or change in account terms, or have the case closed. Companies have up to 15 days to respond and a total of 60 days to close a complaint.

      With this new database, complaints made are now viewable by everyone. According to the Government Executive website, the bureau received 45,630 complaints between July 21, 2011, and June 1, 2012. With this new information readily available, consumers can view which companies to steer clear of.

      Shame on Capital One

      Currently, the bank topping the list with the most complaints is Capital One. This move by the CFPB could lead credit card companies to change their policies, benefitting consumers. The next step will be to see the new regulations added to the Credit Card Act in response to complaints received.

      Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

        Full Name (required)

        Email (required)

        Are you a current client of Christian Credit Counselors? (required)

        Type the code below in the text box. (required)
        captcha


         

        ​Read More
        Christian Credit Counselors, Debit & Your Credit Score, Money Management

        Credit Reports – The Knowledge You need to Know

        Improving Your Credit Score

        The best way to improve your credit score is to improve your knowledge on credit reports.  There are three major credit bureaus that put together your credit report: Equifax, TransUnion, and Experian.  Although the information they gather is yours, you do not own it, these agencies own your information.  They have collected the information and they give you the right to view it.  You can view your credit report for free on www.anualcreditreport.com.  You can view one or all three, depending what you need it for.  Your credit score will be between 500 and 840, anything over 700 is a good score.

        How your score is tabulated is unknown, but what makes up your credit score is no secret.  Some of the items that are calculated into your credit score are employment, department store credit card(s), credit card(s), installment loan(s), collection item(s), and inquiries.

        Department Store Credit Card Accounts

        For department store credit card accounts they look at highest credit allowed, balance, and date opened.  The rating scale on this account is R1 to R9 with R9 being the worst.  The R stands for revolving, and it tracks how well you pay.  A similar scale is used for installment loans, I1 to I9, where I9 means the account is in collection.  On this scale, I7 means they took back the collateral.  For example, on a car loan I7 means the car was repossessed.  All accounts, department store credit cards, credit cards, installment loans, etc., have a twenty four month window.  If you fall behind and make a late payment on any account, you must make twenty three on time payments to get the late payment to drop off.  Inquiries made on your account have a very small effect.  If you are shopping for a new car, the inquiries made by the dealerships have no significant effect on your score.  However, if you have fifteen inquiries in one month it will cause a big impact because it appears you are desperate for credit and this raises a big flag.

        This information is sold to banks by the credit bureaus; this is how they make money.  With this information banks look at who is a credit risk, will pay over a long period of time, and earn them the most money.  For example, banks look at bankruptcy filers to offer them a credit card with high interest.  Also, the bank is attracted to those who recently purchased a home because most of them will make big purchases like furniture, home improvements, etc.

        Managing Your Money

        There are some simple rules that will help you better manage your money and increase your credit score.  Prioritize your bills, and pay your bills immediately.  As stated by the President and CEO of Christian Credit Counselors, Greg McTaggart, “the longer you have that credit card, the more they make off of you.”  Think of your purchases.  Do not just focus on the present, focus on what you will need 4 to 8 years from now.  Poor planning leads to impulse buying, pre-schedule bills, balance check book, and have cushion for savings and emergencies.  To avoid fraudulent activity on your credit report, do not give out your information generously.  Check your report annually and dispute any irregularities with the credit bureau.

        Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

          Full Name (required)

          Email (required)

          Are you a current client of Christian Credit Counselors? (required)

          Type the code below in the text box. (required)
          captcha


           

          ​Read More