Guest Post by Shane MC

Tips on Credit and Buying a Car by Shane MC

Tell my audience about yourself. What made you want to start your website helping people with bad credit?
I started my website to help people with bad credit and prevent them from making the same mistakes I did because I got into debt when I went to college. By the time I was a senior I had 13 credit cards and graduated with $19,000 in credit card debt. I lost my job and was unable to make the minimum payments which ignited by financial crisis.

What products/services does your company provide?
My company provides one-on-one credit and financial counseling and financial literacy education to K-12, college students and adults.

Please name some quick and easy ways for a person to improve their credit even if they’ve recently been through a divorce or some type of financial calamity?
Some quick and easy ways for a person to improve their credit are:

Pay old debt such as judgments, liens, repossessions, and collection accounts first then focus on all other debt

Keep credit card balances at 20% or less of the credit limit

Pay bills before the due date

Don’t close older accounts

Get a secured credit card and ensure the payment history is reported to the credit bureaus

Don’t open more than one new account every 1-2 years

When shopping around for a loan or credit get price quotes within 2-4 week period which counts as only one inquiry

When a person walks into a car dealership what are some credit questions you recommend that consumer ask the salesman or finance manager?

I recommend asking these questions before you let the salesman pull your credit report.

What is the minimum credit score needed for approval?

What information or documents do you need to furnish to receive financing?

What payment options are available?

What is the interest rate?

What fees are charged in addition to the price?

What deals, rebates, discounts, perks such as good credit are available on financing and down payment?
What are the terms of the loan?

What kind of car do you qualify for?

Are there any prepayment penalties?

If you buy from a dealer than caters to people with bad credit or an independent dealer ask if your payment history will be reported to the credit bureaus.

What is the late payment policy?

Is there a grace period?

What is the buy rate?

How long does the Credit Restoration process take?
The credit restoration process can take anywhere from 30 days to years depending on a person’s income, how much debt they owe and how much they can afford to pay towards their debt each month. It usually takes 45 days to fix errors on your credit report. On average a person should see an improvement in their credit score within 120 days.

If a person can’t purchase a vehicle in cash, what’s the ideal down payment you recommend they have? Does a larger down payment mean a shorter loan and APR?

• Have at least a 20% down payment unless you’re buying an older car then put down 10%. The 20% payment is usually enough to cover the car’s first year depreciation so that if your car is totaled or stolen you don’t owe more than the car is worth. However if the interest rate is over 7%, wait until you can save more for a larger down payment. This prevents you from being upside down on your loan.
• A larger down payment means a lower monthly payment but does not necessarily mean a lower APR. APR is determined by your credit score so even though you put 20% down if you have bad credit you can still have a high APR.
• Zero down payment is the best option for a lease because if you put a down payment and the car is stolen or totaled you lose the down payment.

Besides hefreemanenterprises.com what are some of websites/blogs you would recommend our visitors visit while trying to improve their credit?

http://hefreemanenterprises.blogspot.com
http://www.bankrate.com
http://www.ftc.gov
http://www.myfico.com

http://bhphprices.com/articles/interview-with-credit-expert-harrine-freeman-of-h-e-freeman-enterprises/ 

My Car Purchase Journey

                                                                

On July 14, 2012 I awoke at 4:00am to a loud crash. My first thought was someone was in a car accident and was injured.  I ran outside and saw several of my neighbors outside.  I ran to the next block because one neighbor stated was yelling on the phone at the police requesting a squad car because his car had been hit.  I walked back up the street and another neighbor stated her car had been hit. 

Then I looked and realized my car had been hit too – actually it was demolished.  Both front tires flat, the car was pushed on the sidewalk, the front bumper and front light were totally crushed, the left driver’s side was crashed and there was damaged underneath the car from being pushed up on the sidewalk.  

Needless to say I was speechless and in shock. My neighbor called the police and stated she saw what happened.  Some kids stole a car and lost control on the wet pavement from the rain earlier and hit my car then hit my neighbor’s car across the street, then hit my other’s neighbor’s car in the next block.  They jumped out of the car and ran leaving the car running and their loud music blasting. 

I felt a loss because I had my car for 12 ½ years. We had been through a lot together.  I waited outside for almost 2 hours with my other neighbors waiting for the police to arrive at the scene and provided all of my information for the police report. 

I then went in my house and called my insurance company.  There were very helpful and I was provided with a rental car for 2 ½ weeks. I didn’t wasn’t ready to buy a new car yet so I continued to rent a car for the next 3 weeks.  During that time I asked my Facebook friends for advice on what car to buy.  I got several options. I did tons of research and narrowed it down to 2 choices.  I purchased a Hyundai Accent GLS standard no frills just basics last week. I am not in love with the car yet.  Hopefully it will grow on me.  I still miss my old car.  It had at least another 2-3 years of life left.  

I am grateful that I am in a position to afford a car note and car insurance.  I purchased Gap Insurance in the event my car is totaled.  If I owe more than the car is worth the gap insurance pays the difference plus an additional $1,000 from my credit union towards the purchase or a new car as long as the loan is not paid. If my loan is paid and I get in an accident or my car is stolen I still get $1,000 towards the purchase of a new car.  Here are 12 things to consider when buying a new car:

1. Do Research.  Review consumer reports magazines and website such as Kelly Blue Book, CarMax, Edmunds, and Cars.com.  Use price quotes from online websites to get dealers to match the price or beat it.
   Review your budget.  Review your budget to see how much car you can afford.  Consider insurance, maintenance, repairs and the cost of filling up the tank.  Your transportation costs should be no more than 15% of your total monthly income. 
2. Repairs. Go to small repair shops and negotiate to get a better deal on services.
3. Move Closer.  Consider moving to the city or a downtown area to eliminate the need for having a car.  Consider getting a job that is closer to a downtown area or train station.
4. Set a Price.  Set a maximum price you are willing to pay and can afford without a burden.  Don’t go above this price.
5. Research Lenders. Start with your credit union first.  If you don’t bank with a credit union go to your local branch and apply for a loan. Dealer financing should be a last resort. Be aware of tricks and scams to adjust the price to get you in the car.
6. Ask. About dealer incentives, rebates and discounts.
7. Negotiate.  Don’t accept the first price offered to you.  If you are a woman take your husband, boyfriend, male sibling, friend or neighbor with you to assist with negotiating. Don't fall into the trap of temptation.
8. Offer Cash. Offer a down payment to reduce the total cost of the loan and prevent you from being upside on your purchase due to the additional fees such as delivery charges, taxes, title and registration.  Consider paying in cash to gain more negotiating power.
9. Penalty. Some dealers charge a termination penalty fee if you pay off the loan early. This is a tactic to keep you in debt and help the dealer make money. Request that this clause be removed from your loan paperwork. 
10. Previous Year Models.   Look for models from the previous year or models that have been eliminated or will be soon to get a better deal.
11. Warranty. Ask about a car's warranty.  If the automaker files bankruptcy your warranty may no longer be valid which will instantly increase the cost of getting your car repaired. 
12. Trade in.  Don't trade in your old car. You will get a better deal by selling your car to CarMax, Craigslist, eBay or the newspaper.  You may be able to set a higher selling price than what will be offered by the dealer. Use Kelly Blue Book to determine your car’s value.  Consider the dealer trade-in as a last resort. 

How to Overcome the Sting of Buying a New Car

There are many expenses people have to pay but one expense that is frequently overlooked or not thought about is car repairs due to road conditions.  In many states when it snows or rains the conditions of the roads get worse and it seems to take forever for them to be repaired.  According to the Federal Highway Administration in 2010, 45% or 150,000 miles of the roads in the US were not in good condition and 12% or 71,000 of the bridges were in poor condition. 

Deficient road conditions cost U.S. drivers $67 billion a year in car repairs and operating costs or an average cost of $335 per driver. The federal gas tax has remained unchanged at 18.4 cents per gallon since 1993 and has not been adjusted for inflation. Revenue from the federal gas tax is used to pay for road repairs. Studies show the damage being done to roads from lack of maintenance is costing drivers more than actually paying a slightly higher tax for gas. The states with the worst road conditions are: Kentucky, Alabama, Pennsylvania, New Jersey, Hawaii, Arkansas, West Virginia, Oklahoma, North Carolina and Louisiana. Some cities with the worst roads are Houston, Philadelphia, Atlanta, Detroit, Queens, and Washington DC.

According to the annual CarMD Car Health Index if you live in the West from Alaska to Wyoming you will pay more per year for car maintenance.  The states with the highest car repair costs are: Alaska, Oregon, Colorado, California and Idaho.  The states with the lowest car repair costs Mississippi, DC, Vermont, Indiana and Montana.

According to Consumer Report.org average car maintenance and repair costs are 4% of ownership costs over five years.  According to a study by the Automotive Aftermarket Industry Association (AAIA) car repairs cost an average 34% more at car dealerships than at independent repair shops. Car repairs for parts and labor averaged 34.3% more at dealerships, foreign repairs averaged 36.8% more at dealerships and domestic repairs averaged 31.5% dealerships.

The cost to repair a car after hitting a pothole, a bump, a water sewer cover, unlevel roads, debris, etc. can be as high as thousands of dollars.  According to The Road Information Program, the annual average repair cost per car due to potholes and bad pavement is estimated at $402.  According to the Post-Journal wheel balancing: $10-$20 per wheel. Wheel replacement can range from $50-$500, suspension from range from $1230-$2,000, shock/strut replacement can range from $150 to $1,200 and a wheel alignment can range from $90 - $150 per wheel. The average cost to fix an axle is $350.

Hitting a pothole can result in suspension, wheel, and undercarriage and tire damage.  Check to see if pothole damage is covered under car insurance before paying out of pocket for the repairs because the deductible which in some cases may be less than the cost of the repair.  Here are some tips regarding potholes:

1.  If you hit a pothole stop as soon as possible for a quick check of your car including tires and wheels.
2.  If you hit a pothole, document where it is, size and depth if known and take a picture.
3.  Report potholes to the county, local or state highway authority.
4.  Listen for sounds of damage such as “clonking sounds from the steering and suspension, a slight pull to the left or right in the steering, the steering wheel not centering properly when the car is travelling in a straight line or braking feeling uneven or the steering wheel or entire car vibrating.
5.  If you hit a pothole, take your car to a repair shop as soon as possible to verify if there is any damage.
6.  Keep all receipts from damage repair to support a car insurance claim.
7. Stay alert for potholes or other road damage and conditions.  Use extra caution during rain, snow and road construction. Debris in the roads such as gravel and stones on the road might indicate the presence of a pothole.