"After mortgages, auto financing is the most expensive loan most Americans carry. And in this uncertain economy, more consumers are finding they are unable to repay their auto loans due to unforeseen financial circumstances. In fact, auto repossession is at a 10 year high, according to economists. Furthermore, due to the housing crisis, auto loan lenders are tightening consumer credit standards.
Personal finance expert and director of Citi’s Office of Financial Education, DARA DUGUAY, offers the following advice to help consumers understand the commitment they are making when financing a car and to minimize any unexpected issues that may arise:
1. Calculate the Total Cost of Car Ownership. Make sure the loan you obtain is well within your means to pay. This means figuring out the cost of auto ownership – which is more than just the price of the car. Be sure to budget for related costs such as insurance, gas, registration fees and maintenance.
2. A Car Loan is a Contract. The inability to make timely payments can damage your credit rating or trigger even more dire consequences, such as repossession.
3. Downsize, Not Supersize. Though that SUV may have caught your eye, additional costs for gasoline, insurance, parking, even car washes incurred for a larger vehicle may steer you toward a more fuel-efficient car.
4. Keep In Touch. As soon as you face any financial difficulties, let your creditor know, so that you can explain your situation and work out a repayment schedule.
5. Repossession Does Not Relieve You Of Your Obligation to Pay for the Car.
A creditor or assignee may take the vehicle in full satisfaction of the credit agreement or may sell the vehicle and apply the proceeds from the sale to the outstanding balance on the credit agreement. If the vehicle is sold for less than what is owed, you may be responsible for the difference.
6. Getting through the bump in the road. If necessary, seek the services of a non-profit credit counseling agency that may be able to mediate between you and your lender.
For more tips on smart car shopping and auto financing, visit Avoiding Car Repossession, the latest video in the Wallet Wisdom video series by Citi’s Office of Financial Education at http://www.citigroup.com/citi/financialeducation/videos.htm"
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4 comments:
Sharon,
Thanks for the post from Citi, It's great information that most people don't realize.
Very helpful, I'll pass this on.
Neil
Used Cars For Sale In Ottawa
these are good tips for those drivers who are careless in their driving and maintaining. and also it tells that if you cant afford to buy a car and still want to buy it by taking a loan you must know your limits to pay.
great blog! great stuff!
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