Category: Budgeting & Saving

Categories
Budgeting & Saving

How to Fix Bad Credit?

Wondering how to fix my credit myself? Or how to fix bad credit? There’s no doubt that living in the modern world requires credit. Yes, you can live without a credit card and survive on cash or cashback debit cards.

I know because I did it for over two years as I paid off credit card debt. But what I really wanted to do was improve my credit score immediately.

However, when you are ready to buy a house, you’ll need to get your credit straightened out. In this post I’ll discuss getting a credit repair service as well as what steps you need to take if you decide you want to fix your credit score yourself. You might even be able to fix your credit in just 6 months.

These steps are so easy. Perfect guide for do it yourself credit repair.

Related articles from our approved partners:

  • Three Tips to Get Approved for Better Loans at Better Rates
  • Free Credit Consultation – Includes Credit Report Summary & Score
  • Save $50 off Credit Repair Service

How Can I Fix Bad Credit Myself? – 6 MonthCredit Repair Guide

First, watch this video from my friend Dominique over at Your Finances Simplified. He’s going to tell you exactly how to fix your credit.

Watched the video? Good.
Feeling overwhelmed at the next steps?
Yep. I understand.
Let’s take this step by step.

Take a deep breath. People think that having bad credit is the worse thing that can happen. But just calm down. You are taking the first steps which puts you on the right track.

Remember, it’s just money.

No one is going to die. Take control and get back in the driver’s seat!

Fix 1: Check Bad Credit

The first thing you’ll need is your creditor information. Get the most recent credit card statements, loan balances, and installment loan reports along with addresses and phone numbers. I recommend printing everything old-school style. It’s going to come in handy later.

Fix 2: Get a Free Credit Report

Then, take a second to get your free credit report from AnnualCreditReport.com. Each year you are able to pull your credit report for free from the three providers Experian, Equifax, and Transunion.

Optional: Get Your Free Credit Score

You can check an approximation of your credit score for free at Credit Sesame one of our approved partners, but if you are trying to fix your credit, you probably already know your credit score looks a little like this….

bad credit personified

But that’s ok. We’re going to put you on the good foot.

Fix 3: Review your credit report for errors (highlight each error).

You’re getting ready to take charge and stop being a victim. Most people don’t even realize what they could get removed from their credit just because of errors.

What should you look for?

Wait a minute. So, you’re telling me you didn’t watch the video above?

Scroll back up for me right quick and you’ll find out exactly what you should look for.

Or keep reading…

Dispute incorrect names, addresses, SSN, and date of birth via the certified mail.

You will need supporting documentation and letters. You will have to write a dispute letter and include the specifics of the inaccuracies. You want to dispute inaccurate, erroneous, outdated, misleading, and unverifiable information in your credit reports.

Tired of being harassed by your creditors? Maybe you’d prefer that someone else handle all of this for you?

In that case, you might was to work with a credit repair company to improve your credit.

Are you ready to…

  • Remove bankruptcies to rebuild credit?
  • Permanently delete foreclosures and repossessions?
  • Erase debts that were in collection?
  • Completely get credit cards under control?
  • Get approved for loans?
  • Get the best financing on cars and homes?

In that case, check out our partner Lexington Law for more details on how they can help you clean up your credit report.

Finally, fixing your credit permanently also means creating good habits and getting out of debt.

How getting out of debt is like the MTV show, I Used to Be Fat.

I used to watch this TV show on MTV called I Used to Be Fat. The show documents young adults, usually high school seniors and high school graduates who want to lose weight before they start college. Each episode features a different teen. I absolutely LOVE this show. I like seeing the determination and perseverance of these kids, they are really focused on their goals. Most of them thought about quitting along the way but each one makes it to the end and they usually reach their goal.

I was thinking the other day about how the TV show is very similar to a battle with debt. When you’re in debt, it can feel like you’re carrying around a second person, experiencing frugal fatigue, or that you have a spare tire of bills around your waist. I know because I’m working on getting out of debt myself. I realized that there are 3 major points we can learn from the MTV show I Used to Be Fat when trying to take control of our debt.
debt

Improve Your Credit Step 1 – Give Yourself a Deadline

Before the teens even begin a weight loss program, their coach/personal trainer gives them a large tear off number calendar to place on their wall. It has the total number of days until their program completion date, and every day they rip off the next number.

It is a good idea, when you are paying off debt, to set a deadline for your debt-free date, like 6 months. Setting a deadline is a way of making your goal specific. Every time you look at that calendar or see that date it will push your brain consciously and subconsciously to make it to your ultimate goal, to reduce spending and get out of debt.

Improve Your Credit Step 2 – Check in Regularly with a Coach

Every week, the kids had a weigh in. Their personal trainer was making sure that they were on track with how much weight they were supposed to be losing at each stage in the process. Sometimes they were attempting to lose one pound a day! I never thought that was possible or healthy, but most of the teens actually accomplished it under the supervision of their coach.

If you really want to prioritize your goal of becoming debt free then you really have to give yourself check points. You can enlist the help of a friend or even a debt counselor to help you along the way. Having a good support system can make all the difference.

Improve Your Credit Step 3 – Get Rid of Old Habits and Create New Ones

When one of the teens was at a restaurant with her friends, she ordered a lean meal instead of the greasy french fries that her friends had. The personal trainer also taught her how to cook healthier meals so that she would be able to maintain her new lifestyle change.

Becoming debt-free is not a one-time goal. It has to be a lifestyle change. When I decided to start getting out of debt, I had to first evaluate why I was in debt in the first place. I had to eliminate my habit of impulse spending and replace that habit with a good habit. Now I impulse buy stocks and my portfolio loves it! It’s not easy to change a habit that took years to cultivate, but with a good support system, it is entirely possible.

Are you ready to make a change?

Some of you may be thinking, I’m still young, so why should I care about my credit score? Lots of people have debt and less than stellar credit, but they’re still enjoying a cushy lifestyle. As long as I’m able to buy the things that I want, why should I be concerned? The answer is simple. Life is easier when you have good credit.

Take a look at it this way. Landlords, employers, and lenders need to determine whether they can trust you, and they look at your credit score as an indicator of your financial reputation. You may not think credit affects you greatly, but it does. When you ruin your financial reputation (a.k.a. credit score), it will take you a long time to restore it.

Poor credit affects your ability to rent, buy a car, get a home loan, and even open up accounts. Creditors don’t want to work with people with bad credit because the risk of not getting paid is very high. How can they trust that you will pay them back if you haven’t even paid others? If you’ve already tarnished your credit, here are some tips to help you fix your credit score and reestablish your life.

Improve Your Credit Step 4 – Make Your Payments on Time

This may sound trivial, but we all know that money can be tight, and skipping payments on one bill can help pay for other expenses. But, timely payments are the biggest factor affecting your credit score. Keep a budget, and make sure you have sufficient funds to make your credit card and loan payments on time.

Improve Your Credit Step 5 – Consider Getting a Secured Credit Card

Obviously, it will be very hard to get a regular credit card if you have bad credit. If you don’t qualify for a credit card, you can get a secured card instead. This is when the bank gives you a credit line equal to the deposit you make. If used wisely, a secured card can help nurse your poor credit to better health.

Improve Your Credit Step 4 – Add an Installment Loan

You can improve your score quickly if you show that you can be responsible for both major kinds of credit: revolving (credit cards) and installment (mortgages, auto, student loans, etc.). If you don’t have an installment loan and feel you are ready to handle one, consider adding a small personal loan. Stay away from expensive finance companies and “teaser” deals, and use a company that reports the loan to all three credit bureaus.

Improve Your Credit Step 5 – Avoid the Minimum Payment Trap

Credit cards come with high interest rates. We all know how our $2,000 computer ended up costing $8,168 because we only made the minimum payments at 20% on our credit card. Ouch, that hurts! Keep constant payments on your credit card (and don’t run them up again) and your balances will drop.

Improve Your Credit Step 6 – Use Your Credit Cards Lightly and Check Your Limits

Even if you pay your bills on time and in full each month, having big balances can hurt your score. Try to limit charges to 30% or less of your card’s limit. Lenders typically like to see a big gap between how much you’re charging and your available credit limit.

Improve Your Credit Step 7 – Keep Old Credit Cards

Don’t close out old credit cards. The longer your credit history, the better. Leave the accounts open but once you pay them off, stop using them. Closed accounts tend to bring down your score.

Improve Your Credit Step 8 – Suspend Credit Inquiries

The more credit inquiries you have, the more your credit score drops. Fix your credit and wait a while before allowing your credit to be pulled again.

Improve Your Credit Step 9 – Get a Goodwill Adjustment

If you have been responsible about paying your credit cards on time, the lender may agree to erase a late payment from your credit history. For more troubled accounts, communicate with your lender about possible options to erase previous delinquencies. If the lender agrees, it will improve your overall record.

Improve Your Credit Step 10 – Check Your Credit Report for Errors

You can check your credit report without negative scoring (once per year, for free) with the three credit bureaus at AnnualCreditReport.com. Make sure to look for any mistakes that could be hurting your score. If you see something wrong, make the effort to have it corrected.

Improve Your Credit Step 11 – Seek Professional Help

If you are overwhelmed with debt and don’t feel you can handle the problem on your own, consider working with a professional debt relief agent. They can help you explore your options and give you guidance on this post

It’s very easy to ruin your credit, but it takes time to build it back up. No matter how bad your credit is, you can take steps to make it better.

Sometimes we mishandle our budget, and we spend more than we should. (You know that you shouldn’t have bought that expensive flat screen TV). And, sometimes we end up in tough financial situations because of things beyond our control. Whether you have experienced job loss, illness, or another type of financial disruption, it’s important to know that you can turn things around.

It may not be easy, but step by step, you will be able to fix your financial situation. Just don’t delay facing the issue. The longer you wait, the harder it is for you to recover.

Categories
Budgeting & Saving

How to Stay Organized as a Busy College Student

Glossy college brochures show students hanging out on the quad, playing Frisbee, and staying up all night to watch movies with friends. It seems like college students have endless free time, right? Nope! With 80% of students working while attending school, and school course loads taking up approximately 12-15 hours a week, free time is rare. Add in labs, homework, and student organizations, and you start to realize college doesn’t offer up as much freedom as you may think.

However, there are certain ways a busy college student can stay organized and get everything done. With a little organizational skills, you can set up your schedule to work efficiently for you. Who knows… maybe you’ll even get some time for Frisbee!

As a Busy College Student, You Need to Study Smart

Your primary focus in college is to graduate. Therefore, studying is your number one priority. This doesn’t mean you have to spend all day studying. Think of studying in terms of quality, not quantity.

Keep your study time efficiently organized by using a planner. That may sound nerdy but nerds get good grades. A planner can be physical or digital. Make sure to keep it up-to-date.

If you’re most alert in the morning, create an early morning study block. If you’re a night owl, dedicate some late night time for studying. Listen to your body and study when it’s most alert.

Studying is your number one priority. It leads to graduation. Graduation leads to a job. A job leads to fulfillment (and money!).

Set Up Your Space Efficiently

A cluttered desk is a cluttered mind. A messy room is a stressful room. A busy college student doesn’t have time for wading through clutter. At the beginning of the school year, set up your room to maximize space:

  • Put things you use often, like a backpack, purse, jacket, or keys, out where you can see them. Buy plastic hooks you can hang on the wall for these items. Hang them up as soon as you get in the room.
  • Group like items together. This means keeping your shower stuff all in one area, like on hooks inside your closet.
  • Put away your clothes. I know, it sounds like something your parents might say, but seriously: put away your clothes. You’ll do yourself a favor. By organizing your clothes in ways that make sense, you’ll save yourself a ton of time in the morning. This is awesome because you’ll be able to sleep later. That’s because you won’t have to spend all morning searching for a clean outfit!

If you share a room, it will be harder to control your roommate’s mess. However, by keeping your own space clean, you’ll be able to get what you need done. Maybe your roommate will adopt your time-saving methods.

Take Advantage of Breaks

The best way to stay organized as a busy college student is to take advantage of breaks throughout the day.  If you have 2 hours between class and your job, run a load of laundry. You’ll likely have a free washer and dryer available in the middle of the day. That will save time on the weekend when everyone is arguing over the washing machines.

Have an hour between lunch and your next class? Grab a friend who’s in the same class as you and have a quick study session. You can help each other. You both get a free tutor.

If you work a relaxed on-campus job, use the quiet time to review your class notes. When I worked at my school’s library, I was able to read a book in between helping patrons. I brought whatever book we were reading in English class.

Capturing free time during the day is a fantastic idea. It may even lead to wide-open weekends. That can lead to way more college fun!

Crib Notes:

Staying organized as a busy college student doesn’t have take up much time.

Establish good study habits. Create a living space conducive to living and studying. Use your free time efficiently. These 3 tips will lead to graduation and a fulfilling life thereafter.

Good luck and have fun!

Originally posted 2015-10-12 10:00:03.

Categories
Budgeting & Saving

National Coffee Day: How Much Do YOU Pay for Coffee a Week (And How You Can Cut That Cost in Half)

In celebration of National Coffee Day, celebrated on September 29 this year, let’s talk delicious, hot (or iced!) coffee! Coffee is one of America’s favorite beverages, with it coming in only behind water as a drink of choice.  More than 75% of Americans drink some type of coffee, from lattes to cappuccinos to plain coffee.

According to the Huffington Post, the average American drinks 2.1 cups of coffee a day. We spend an average of $3.28 per drink, a number that has increased annually since 2013.

While it seems like we all celebrate national coffee day pretty regularly, it’s worth estimating how much you pay for coffee in a week. Let’s face it, unless you’re dedicated to brewing only the most basic coffee at home every day, you’re likely spending money on coffee out. That money adds up! Here’s how you can cut your coffee consumption costs in half – and still get your caffeine fix.

Estimate Your Average Coffee Expenses

If you’re curious to see how much you spend on coffee regularly, USA Today has a nifty coffee calculator that tells you how much you spend monthly, annually, and over the course of 30 years on your coffee habit. For example, if you go to Starbucks for 2 cups of coffee a day, the calculator predicts you’ll spend $126 a month. That’s approximately $31 on coffee a week!

Of course, your expenses may vary widely. Not every day is national coffee day, so it’s likely some days you’ll make coffee at home or possibly skip it entirely. According to the USA Today Coffee Calculator, if you make 2 cups of coffee at home every day, you’ll spend $4.80 a month – basically a dollar a week on coffee.

Being aware of your regular coffee expenses will go a long way toward understanding where your money goes weekly. Here are additional ways to continue cutting those expenses, especially if you’re one of those people who has more than 2 cups of coffee daily!

Brew At Home

As the USA Today calculator shows us, you’re better off overall if you make coffee at home. The best part of brewing at home is you can be more creative in your coffee flavor choices. Every day can be experimental national coffee day when you have your own coffee machine!

By brewing at home, you can try different types of coffee (not just Starbucks – there are many coffee brands out there with very distinct and tasty flavors!), flavors, and sizes. The “tall” size you get at Starbucks may be more affordable, but you can brew yourself a giant cup at home for less than half the price.

Plan Ahead

One reason why many of us purchase coffee is lack of time. Have you ever been rushing out the door only to realize you desperately need coffee, so you swing by the drive thru on your way to work? You can cut down on these unplanned coffee runs by planning ahead.

There are a few easy steps to planning ahead. When you go grocery shopping, make sure you’ve stocked up on coffee grounds, or pods if you use a single-brew machine, flavored syrups, creamer, or half-and-half. By having everything on hand at home, you’ll be less likely to make an excuse of running to the coffee shop.

The morning you get up, stumble over to the coffee machine, put in your coffee of choice, and press “on” or “start”. Then get ready like you normally do while your coffee brews. You can even have everything pre-measured the night before, so it’s ready for you to just press “start”!

You Don’t Need a Fancy Machine

While it’s really handy to have a coffee machine you can set, so it automatically brews coffee for you at the time you choose, you don’t have to spend a ton of money on a fancy coffee machine. Keurigs are nice, handy, and easy to use, but they’re not your only choice.

Mr. Coffee is an excellent brand that makes coffee machines you can pre-set, ones for single-serve cups of coffee, and smaller sizes that fit easily in an apartment or in an office cubicle. If you simply can get up early enough to brew your own coffee at home, consider a smaller, affordable coffee pot you can use at work! None of those machines should cost you more than $30, and if you can’t afford one now, you can always ask a loved one to buy it for you on national coffee day!

Make Educated Coffee Choices

Even after purchasing your own home machine and brewing coffee there, sometimes you just can’t help going to Starbucks and buying a cup of coffee. It happens! However, you can save money by making the right coffee choices.

Instead of purchasing a grande latte from Starbucks, approximately $4, consider other coffee choices. Could you purchase a grande plain coffee, approximately $2.50, and add your own flavoring, creamer, etc.? If you’re willing to try different types of coffee, or bring your own creamer or syrups from home, you can save money by buying a plain coffee and adding to it.

Splurge When You Have Coupons or Freebies

Many coffee chains offer perks to regular customers. If you’re a regular Starbucks customer, for instance, you can download the Starbucks app and redeem rewards for free or half-priced coffees and meals. On days you’re offered these perks, it’s like a national coffee day celebration for you! Take advantage of these rewards by indulging in your coffee fix.

Use your rewards or discounts to purchase a large size of your favorite coffee, or to get your regular-sized coffee at half-price. This is a great chance for you to get your grande latte for $2 instead of the regular $4+.

 

By brewing at home, making educated choices, planning ahead, using the right machine, and taking advantage of freebies, you can cut your coffee expenses in half quickly. It may take some getting used to, especially if it’s a habit for you to visit the drive-thru every morning, but think of the savings. If you cut out just one Starbucks visit every day, you’ll save an estimated $766 in one year. Now that’s something to celebrate National Coffee Day over!

Originally posted 2015-09-28 10:00:59.

Categories
Budgeting & Saving

Which is Better? Credit Union or Traditional Bank?

When it comes to choosing a bank, you may become stuck between settling with a traditional bank and a neighborhood credit union. On the surface, banks and credit unions are quite similar. They both offer checking and savings accounts, loans and other financial products. However, there are quite a few important differences.

This post will show you how they’re different. Then you’ll know which one is right for you!

The Main Differences

Generally speaking, a bank is a business that holds onto your money and creates a profit by investing the money or loaning it out to others. The bank also makes money by charging you with account fees and ATM fees.

Credit unions are member-focused institutions that operate as non-profits. A checking account is commonly known as a ‘share draft’ because when you deposit money at a credit union, you’re actually buying shares of the company. With a credit union, instead of being a customer, you’re a partial owner.

Credit unions generally offer the same services as a bank. On top of that, there is also a greater sense of community. It’s also common to find lower interest rates for loans. Basically, credit unions are known for friendly faces and low rates.

[Tweet “Banks v. Credit Unions = Convenience v. Savings”]

Traditional Banks are Convenient

Traditional banks are on almost every corner, making it accessing your cash an easy feat. If you’re traveling or just need cash quickly and have a major bank like Wells Fargo, Bank of America, or JPMorgan Chase, you won’t have to go far to find a branch. You can even utilize their various different ATM locations when the bank is closed.

Most traditional banks also offer convenient tools like online banking and mobile apps so you can track and manage your account on the go. Large banks have the client-base necessary to create these conveniences. Expect smooth online operations at big banks.

The one downside with large traditional banks is that they can be very impersonal. You may be subject to long lines. You may never get the same teller twice.

Credit Unions are Personable

While credit unions may not be located on every corner, they take a more personalized approach and generally get to know their customers. At a credit union you’ll feel more like a member. You’ll have more of a say in what type of service and experience you want to have. When it comes to getting a loan, credit unions will be more lenient and willing to work with you and understand the financial factors that don’t show up on paper.

However, credit unions operate on a smaller scale than traditional banks and run fewer branches with stricter hours of operation. This may be an inconvenience for some people who live far from their credit union or work late hours. Friendly faces are nice but only when you see them!

The Truth about Fees and Interest Rates

Credit unions generally offer fewer fees and better interest rates for savings accounts, hands down. According to a recent report from Wallet Hub, credit unions continue to offer leading interest rates for savings accounts (while still being inferior to online banks) as well lower interest rates for personal loans. Credit unions also have lower checking account fees.

Most traditional banks have a long list of rules and requirements when you open a checking account. It’s important to read the fine print to ensure that you aren’t overpaying by getting charged a monthly fee, multiple withdrawal fee or any outlandish overdraft fees. At a credit union, there is less of a chance that you will get stuck with so many fees because these institutions do not rely largely on fee money for profit as is the case with banks.

Which is Better?

The answer to the age old question of whether you should choose a credit union or a traditional bank is almost always going to be subjective. In the end, it all depends on what you value: saving money or convenience.

If you are looking for convenience, easy access to your money when traveling, superb mobile banking tools and a wide variety of credit card programs, you may prefer to use a traditional bank. Just remember to read the free agreement before signing! If you don’t require the convenience of multiple locations and prefer a more member-focused type of institution with lower fees and better interest rates, you should consider a credit union.

It’s important to do your research and read the fine print before opening an account with either types of institution.

 

Do you prefer a credit union or a traditional bank? Let us know in the comments below!

Originally posted 2015-09-18 10:00:22.

Categories
Budgeting & Saving

Be Late For Something Day: Be Late For Something Today, Anything BUT Your Bills!

So apparently Be Late For Something Day is coming on September 5th. That means you’re officially excused from arriving to work late today!

(Okay, maybe not!)

[Tweet “It’s Be Late For Something Day! What are YOU going to be late for? Hopefully not your bills!”]

However, there are a couple of things that’s totally fine being late for, like arriving fashionably late to an event in a really cute dress, or showing up two minutes late to class so everyone can watch you enter.

But do you know the ONE thing you shouldn’t be late for?

Paying your bills!

[Tweet “You should always, and boy do I mean ALWAYS, pay your bills on time!”]

(Even on a day like today!)

Here are 3 reasons why you should always pay bills on time.

1. Late fees!

It’s bad enough that we have to pay bills, but do you really want to get stuck with paying more than the price of the actual service? If this isn’t enough of a reason to make sure you pay your bills on time, then by all means… keep reading!

2. Increasing Interest Rate

I’m sure you already know that if you don’t pay your bills in full, you’ll be charged interest. What you may not know is that if you continue to pay your bills late, your interest rate may spike. (Like I said before, no one wants to pay more than they really need to, right?)

3. Maintaining A Good Credit Score

I didn’t learn this one until very recently. That’s funny since it’s the most important reason out of the three! Late payments can and WILL hurt your credit score! What makes this devastating is that while fees are usually a one time thing, your credit history stays with you. A mistake stays on your credit score for seven years. Yes, a credit mistake you make in college in likely to haunt you when you’re trying to find a job, buy a house, and start a family.

[Tweet “Hey! Your credit history is really important, so don’t screw it up!”]

(I’m not kidding about this one either.)

Are there any other reasons you have for paying your bills on time?

If so, leave a comment and let me know!

Originally posted 2015-09-09 10:00:34.

Categories
Budgeting & Saving

Car Shopping on a Budget

Time for a new car?

One of the hardest parts about buying a new car is choosing something you can absolutely afford. Persuasive car sales people combined with shiny paint can ruin a person’s budget in a hurry!

At the end of the day, most people need a reliable car. The process of car shopping on a budget isn’t too difficult. But it does takes heaps of self-control. When shopping for a car, you can remain within your budget by taking the following steps:

Figure out How Much You Can Afford

Create a new budget by listing out all your current expenses. Compare your income and expenses. What you have left over can be used to pay for your car. If you feel you don’t have enough left over, you may have to cut your expenses and prioritize your spending by avoiding costly budget busters.

Consider expenses like fuel, auto insurance and maintenance. If you can only afford $400 per month to spend on a transportation, don’t sign for a $350 car loan. Instead you might, want to spend $200-250 per month on a vehicle and the rest for insurance, fuel and savings for maintenance and repairs. The car itself is only part of the overall transportation costs.

Bankrate has a very helpful tool to help you create a realistic car budget.

Try to Stick with Cash

If you have some savings and don’t want to deal with the burden of having a car note, try to purchase with cash. This may not be possible for everyone, but the earlier you start preparing the better. If you know you want to buy a car or notice that your current car on its last leg, start setting money aside each month. A little each month goes a long ways.

Unless you have $15,000+ lying around, you will most likely need a used car. Luckily, there are plenty of used cars in good condition for as little as $4,000. If you don’t have enough to pay for a car completely with cash, you should still try to save up a large down payment to lease or finance a car.

[Tweet “Cash is king when buying a car!”]

Leasing or Financing?

There has always been a big debate between leasing and financing options. When you finance a car, you pay a down payment and a lender loans you the rest of the money. You then pay it back with interest for a certain amount of time. Once you’ve paid back the entire loan plus interest, you own the car.

With leasing, you pay a fixed amount each month (usually a lower than a monthly payment than with financing) plus interest. When the term is over, you must either renew your lease or return the car. You may also be able to buy the car once the lease expires.

If you can’t pay for a car in cash, financing is the wiser option. Often, when you lease a car, there is a penalty for driving a certain amount of miles so you watch your odometer. Also, there is no point in hustling to pay back your lender and make extra payments with a lease. Doing so won’t get any closer to owning the car.

For the most part, leasing just allows you to drive a nicer, newer car at a lower price for a short amount of time. Buying with cash or financing are the superior alternatives.

Check Your Credit

If you do choose to move forward with financing a vehicle, you’ll need to check your credit first (this link shows you how do check it for free). Your credit score will be key in determining how much money you get approved to finance and your interest rate. If you don’t have good credit, you may run into problems.

Pull your FICO Score several months before you decide to go car shopping. Make sure it’s doing okay. Credit Sesame lets you monitor your credit for free and also lets you see credit scores and reports for TransUnion and Equifax. Make sure to always keep an eye on your credit score in the future. Here’s a way you can keep track of your credit score for free.

It’s important to pay off as much debt as you can before you take on more debt. Try to only use 25% of your credit limit each month. You might also want to wait for some of your old credit inquiries to fall off your report before you add new ones.

Try to increase your score as much as you can. Higher scores mean lower interest rates. Your credit score is your ticket to savings.

If necessary, wait until your credit score climbs before applying for a loan. Even just waiting 3-5 months for a new car may save you hundreds per year in interest. Wealthy people are usually patient people.

Compare Vehicles and Pricing

When you are car shopping on a tight budget, it’s important to focus strictly on your needs and requirements instead of becoming emotionally attached to a car. Logic should trump emotion when car shopping. Always be ready to walk out the door without the car.

To help keep the price down, you should search online for economical used vehicles with low mileage. A car will probably cost less than an SUV or a truck in most cases so keep it simple.

You should also research various makes and models to become more knowledgeable about which type of cars last longest and require the least amount of maintenance. It’s best to be open-minded and compare various types of vehicles before settling on one.

To compare vehicle prices online, use online vehicle pricing and comparison tools like TrueCar or Edmunds. Although not necessary. it’s wise to check Carfax before making an offer. Carfax gives buyers the scoop about how the car has been treated in the past.

Overall, it’s important to thoroughly do your research and stay within your means when buying a new car. All of these steps will make the car buying process easier and cheaper.

 

Are you car shopping? Do you plan to pay with cash, get a lease, or finance?

Originally posted 2015-09-02 10:00:24.