How to Avoid Car Financing Pitfalls

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If you are considering the purchase of your first car or even your next vehicle if you're not a first time car buyer, you may be concerned about the prospect of financing your vehicle. This concern is not totally unfounded. There are numerous pitfalls that can occur when financing a new vehicle, especially if you plan to use dealership financing. In order to avoid running into these problems, and possibly stalling your purchase read the tips below.

First, understand exactly how important your credit score is to your auto loan application. Even when working with a dealership loan department, be aware that your credit history will be run and your credit score will have a major impact on your ability to obtain an auto loan as well as the terms you are offered. Ideally, it is best to stay on top of things and get an idea of the condition of your credit history yourself before you even step foot into the dealership. Look to make sure there are no errors on there that could be dragging down your score. If your credit score is not in great condition and it is not due to errors, consider delaying the purchase of a vehicle until you can clean it up by paying down some other debts and improving your bill payment schedule; both of which will help to raise your credit score. Remember, a low credit score can prevent you from getting a better interest rate as well as the loan itself.

Many people make a list before they go shopping to ensure they won't spend more than they intended. A similar technique can help to ensure you won't spend more than you can afford while car shopping. Make a list of what you're looking for in a vehicle, the features that are important to you and set a price range you can afford to spend. Keep in mind that you should not plan to spend more than 20% of your monthly income.

Take the time to do your research and understand current interest rates as well as the price range for the features you have determined are important to you. This will help you to be better educated and less likely to be taken advantage of when it comes time to discuss terms of the loan.

Be aware of your options. Find out whether any rebates or special offers are available for the cars that interest you.

Never, ever sign anything unless you have gone over the purchase contract with a fine tooth comb. Far too often, extraneous charges will be tacked on that may not be really necessary. If you're not sure of the reason for a charge, ask before you agree to pay it.

Don't allow yourself to be pressured into anything. If you need more time to think, take it. Walk out of the dealership, think about it and make your decision on your own time. Salesmen are excellent at driving up the pressure and creating an inflated sense of 'time is of the essence' but that doesn't mean you have to fall for it.

By doing your research ahead of time, knowing what you want and what you can afford to pay for it while maintaining a cool head you will be in a better position to purchase the car you want without running into any pitfalls that could cost you big in the long run.

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Mortgages - What Do You Need to Know?

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A mortgage is a method of using property (real or personal) as security for the payment of a debt. Mortgage fees have been rising of late as providers reduce their headline annual percentage rates to attract new business. In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. In many countries it is normal for home purchases to be funded by a mortgage.

Part of a successful home purchase includes finding the best possible home loan. On a home purchase, the process of transferring ownership from the seller to the buyer, the disbursement of funds from the buyer and the lender to the seller, and the execution of all the documents associated with the sale and the loan. The federal government has a number of programs available to help prospective buyers purchase homes. Even with good credit, most borrowers will have a hard time borrowing 100 percent of the purchase price today. Make sure you fully understand the mortgage process by checking out what to Know When Shopping for a Mortgage to Purchase a Home.

Typically, creditors are banks, insurers or other financial institutions that make loans available for the purpose of real estate purchase. In some jurisdictions, mortgage loans are non-recourse loans: if the funds recouped from sale of the mortgaged property are insufficient to cover the outstanding debt, the lender may not have recourse to the borrower after foreclosure. If the loan is sold, the originator replenishes its funds and can make more loans to other homebuyers. There is a network of sub-prime lenders, mortgage brokers, warehouse lenders and investment bankers who make possible the delivery of loans to sub-prime borrowers. With most loans you pay off the interest on the loan before you pay off the principal (or the actual amount you borrowed).

It is common for home mortgage transactions to include an escrow agreement where the borrower adds a specified amount for taxes and hazard insurance to the regular monthly mortgage payment. The money goes into an escrow account out of which the lender pays the taxes and insurance when they come due. You can also get insurance to protect your income or just your mortgage payments if you become ill or disabled, or lose your job.

Get familiar with the language and fundamental terminology you'll encounter when getting a mortgage loan. You can get free independent advice about mortgage difficulties from several organizations. And if you're a first time home buyer, you need to know the mortgage basics and what to expect with your first home loan. With today's real estate market, it's important to find a mortgage loan that's ideal for you, your finances, and your future home.

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The Essence of the Emergency Banking Relief Act

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Franklin D. Roosevelt, the former President of the United States of America was the driving force of the enactment of the Emergency Banking Act or also known as the Emergency Banking Relief Act during the era of Great Depression. Emergency banking Relief Act was passed on March 9th of 1933. This act has created a plan that would terminate the services of those banking institutions that cannot satisfy their clients' needs any longer as far as banking is concerned while giving chance for those banks that has enough funds to resume and to undergo new changes in their organization. On the 5th day of March, 1933, just one day after President Roosevelt took the seat of presidency, he ordered a special meeting of Congress wherein a 4-day bank suspension is to be implemented to provide enough time for the federal inspectors to declare those banks that has the capacity to operate again. The federal inspectors are the only official governments who are allowed to declare if a particular financial institution is financially stable or not.

The Emergency Banking Relief Act has granted the Treasury Secretary the power to seize the gold of the private civilians in the return for a corresponding amount of paper money which will be subjected to later reduction of its value in connection to the gold. Though this bill has an immense significance, it was rather passed too quickly that most of the congressmen did not have the time to read it. Most of them only had the chance to know about the bill when it was read to them by the clerk of the congress. Some congressmen were against to the fast passage of this bill; however, it was still passed. After 10 months of the bill's enactment, 5,000 banking institutions have passed the federal inspection and were ordered to resume their services and operation. Majority of banks promptly reopened and the trust of the people on the banking institution was re-established.

However, this bill was only a transient solution to a more problematic situation. In the following year, the 1933 Banking Act was later passed which provides more stable and long-lasting resolution to the banking problems; this includes the creation of FDIC or the Federal Deposit insurance Company. FDIC is a government organization that helps secure the money of the depositors. In order for the depositors to be eligible for this, their deposit should not be less than 100,000 and their bank should be a member of FDIC. President Roosevelt was first against to the idea of establishing FDIC; he argues that this kind of insurance will only give protection to the irresponsible banking institutions but soon conceded when he saw that the support of the Congressmen was overwhelming. Roosevelt's fear came to a realization when he appointed Leo Crowley- a banker from Wisconsin, in 1934 to head FDIC. He learned that Crowley was using FDIC to hide his money fraud activities. Crowley's embezzlement was only made public in 1996.

The enactment of Emergency Banking Relief Act in 1933 has helped many private banks to re-establish their businesses in the middle of disastrous years of Depression Era which made the clients to lose hope in the banking industry.

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Poor Credit Home Mortgage Loans - The Role of the FICO Score

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If you have bad credit history and are looking to get a home mortgage loan, then chances are you are going to need to know all about how the FICO credit scoring system works.

FICO - Fair ISAAC & Company - is the leading credit reporting agency that lenders turn to when it comes time to credit scoring your home loan mortgage application; so if you do have bad credit history, these guys will know.

The formula used by FICO cannot be disclosed because of a decision made by U.S. Congress. There are some things generally known about FICO which that could help you understand why and how you can get approved:

1. The higher your FICO score, the better chance you have of getting that home mortgage loan. Also, the higher your score, the more room you have to negotiate a lower interest rate.

2. If you have a FICO score lower than 500, there is very little chance you'll be getting a mortgage home loan.

That said, if you have a score of:

500 - 600 you should be able to get a home mortgage loan, provided you are willing to make a down payment.

600 - 640 You should get a 100% home loan financing. Thats right, with no money down.

640 - 700 You should be able to be approved for a 125% home mortgage loan.
700+ You're in the drivers seat! You should be able to get an excellent rate with excellent terms.

3. FICO depends on each credit report, so before you apply for a home mortgage loan, if you have bad credit history, get a copy of your credit report and make sure there is nothing on there that shouldn't be there. If there is, get it changed before you apply for the home mortgage loan.

4. Wait until after you have purchased or refinanced your home before you buy anything additional on credit. More loans or higher balances can have a dramatic effect on your mortgage approval, regardless of whether or not you had over a 600 FICO score before you bought on credit.

5. Remember, the FICO score is only a part of your home mortgage loan application, so if at first you don't succeed in getting your home loan mortgage, don't give up. Some lenders may still be willing to lend to you!

People with bad credit often don't understand how the credit scoring system works. It is beneficial to find out more about it when looking to get a home loan with less than perfect credit to bad credit or when dealing with sub prime mortgage lenders.

To view our list of recommended bad credit mortgage lenders online, visit this page: Recommended Bad
Credit Mortgage Lenders

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