Finance

Getting A Car Loan With Bad Credit

As a former banker, I know a little bit about dealing with bad credit situations – it is very common. Hardly anyone has a ‘perfect’ score nowadays. Read the below tips I have adapted from a USA based website – they all apply equally well to us in the UK with bad or poor credit!

You can get loan for a new car loan even if you suffer from bad credit. There are a number of dealers and lenders that are willing to finance a car for individuals with troubled credit history. Here are a few tips to help you secure finance for your new car when you have bad credit.

Getting Pre-approved

One of the first things you need to do is to try to get pre-approved for car loan. There are a number of dealerships where you can apply online on their website to get pre-approved. Most of the times, the credit application form is on the front page of the website.

It is also important that you get pre-approved from multiple lenders to ensure that you have the choice to go with a lender with the best financing terms.

Check with Your Bank or Credit Union

You may also check with your credit union or your own bank for loan as you already have a history with them. There are also some specialist lenders that deal with sub-prime loans. You should also check with those lenders.

There is a common myth that one should not make too many applications as that may further damage the credit score. However, that is not the truth.

Lenders know that people fill out multiple loan applications to search for best interest rate. The trick is to apply for loans within a 14 day window as all the applications made during that window count as just one enquiry on the credit report.

Look for local

Local finance firms can sometimes offer better deals and advice than the National suppliers. If you live in Leeds for example, a quick search in Google for ‘Car finance Leeds‘ can offer some great local companies. When I used to live in Stockport I used this car finance Stockport firm.

Be Ready

It is important that you start planning for the loan well in advance. The first thing to do is to get your credit report at least three months before you plan to buy the car. This will provide you enough time to take action on any outstanding items on your credit report.

In addition to the credit report, you should also get other documents ready. For instance, a dealership will need your recent pay stub, a utility bill, a driver license as well as personal references.

Buy What You Can Afford

It is important that you buy a car that you can easily afford. There is no benefit of spending extra money on a car when you already have tight credit. So, even if you get approved for a £22000 car, it is not necessary for you to buy it. Instead, look for a £16,000 car that serves your purpose.

Get a Co-signer

In case you are unable to get approved for an auto loan, getting a cosigner might help. However, it is important to keep in mind that a cosigner is legally responsible for repaying the debt in case the borrower defaults on the loan.

Shop around

You suffer from bad credit but it does not mean that you are at the mercy of dealerships or lenders. You should still shop around for the best price you can get. Also, shop around for lower interest rates.

Car dealerships do not make too much money on sale of new cars as there is a lot of competition. Instead, they want to develop have a long-term relationship so that the buyers can recommend them to their family members and they can sell more cars.

These are some of the tips you need to keep in mind to get approved for an auto loan when you have bad credit.

 

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Finance, Global News

What is a 403b Retirement Plan?

European leaders are calling for better retirement plans for Public Sector workers in the UK. Some proposals are suggesting a ‘403b style’ plan, which they have in America. I’m not convinced, but make your own decision here. I have put together an article detailing exactly what they do with them in the USA. My opinion is we are covered, but there are interesting parts of it we could adopt…

While employees working in a private limited company usually turn towards a 401k retirement plan, there’s a valid option available for employees of public schools, churches and hospitals. This comes in the form of a 403 b retirement plan which offers additional support to recipients in terms of a financially stable retirement option. It is tax deferred and is originally developed for employees who work for public schools, universities, colleges etc. The retirement plan is a suitable option for tax exempt non-profit organizations as well like churches, charity houses and a few hospitals. So what is a 403b retirement plan? The plan is originally known as tax sheltered or tax deferred annuity.

What is a 403b Retirement Plan?

Having similar benefits to a 401k plan, the 403b tax deferred annuity is acceptable for recipients who serve offices part of scientific, educational, public testing safety, charitable purposes. There are a lot of benefits you can obtain from this plan. It allows the recipient to place a portion of their salary into an employer sponsored plan that is later converted to retirement funds. The recipient doesn’t pay taxes on contribution or earnings until the money is withdrawn. This generally occurs once the individual has retired or has a lowered tax bracket. The sooner you start the better it is to build fundamentally strong retirement savings.

Benefits of 403b Retirement Plan

1.The contributions made to a 403b retirement plan are deductible when it comes to federal income tax purposes. The money is placed inside the plan without paying for taxes. This tax reduction is very valuable since it reduces income tax that is paid at the recipient’s least tax bracket. In fact you don’t have to pay taxes on the dividends hence can balance the financial custodies related.

2.If the traditional contribution is made, the tax is then paid in distributions during retirement. But considering people retire when their tax bracket is highly reduced, the expenses during retirement are generally lowered.

3.403b retirement plans offer Roth contributions that aren’t eligible for tax deduction. This means that when money is withdrawn from the Roth part of the retirement plan, such withdrawals aren’t taxable. Roth contributions are generally preferred since they offer tax savings on a long term.

4.One of the best benefits of the 403b proposal is that you can take a loan out of the retirement plan. If you’re just about to buy a home or pay mortgage, then this plan is very apt. However the requirements for the loan are crucial and you cannot miss a single payment on the loan. The employer can also offer matching contributions however this can be done on a pre-tax basis.

5.The contribution limits are higher as compared to IRAs which means the more money you save for the retirement the better equipped you will remain. For example as an employee you can place $16,500 into this plan around 2010 and when you turn 50 years or older, recipients can easily make $5,500 catch up contribution in 2010.

403b Retirement Plans – Withdrawal Effects

An important thing to understand about the 403b retirement plan is that there are strict penalties if money is withdrawn early. Since these plans are made to help recipients save for retirement the kind of penalties you face are –

1.10% penalty if the recipient is younger than 59 1/2 years

2.Income taxes are charged on the total withdrawal

3.20% federal income tax withholding

Technically 403b accounts are subjected to collective or universal availability which means that employees should be legitimate to perform salary-suspended contributions. One of the ideal benefits you can gain from using this retirement plan is that it isn’t costly to administer annual reporting necessities in the form 5500 of the IRS. There is also the option to rollover 403b to IRA, but this can be a little more complex than this article can cover.

It is important to seek professional advice from an expert who understands every asset of the 403b retirement plan. You can easily invest in variable, fixed annuities or mutual funds though you should check with your advisor first. An expert in investment plans will help address all your needs. Retirement objectives can easily be accomplished without facing a single loss once you’ve understood the 403b retirement plan.

Conclusion

Since investments always involve market value risks, you should choose a plan that offers a safer return. This is where the 403b retirement plan is beneficial since it allows the recipient to invest in a fair amount of money that later builds into retirement savings. The bottom line is that if you want to save more on your earnings, you should contribute frequently and early. If you are looking to rollover your 403b to ira while still employed, then you should seek professional advice.

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