Poor Credit Affects Auto and Home Insurance

The majority of consumers know that their credit history is affected by their payments on homes or cars, but only a few understand that it actually affects their insurance policies. Most companies that offer auto and home insurance use credit score as a factor in deciding whether to give out or renew an insurance policy, and the cost of premiums.

In the perspective of insurance companies, there is a relationship between credit scores claims. That is, more claims are filed by drivers and homeowners with bad credit histories than those with good credit histories.

Especially under the Fair Credit Reporting Act, insurers must inform their customers when something in their credit report rejects them of insurance, affects their rates to go up, or alters their coverage one way or another.

According to Bob Hartwig, president of the Insurance Information Institute in New York, low credit scores having a correlation with higher losses are supported by facts and are undeniable. In fact, using consumer credit has made it possible for insurers to price the risk of policies in a more accurate way. Moreover, it has also enable insurers to correctly price policies for risky drivers.

However, consumer advocates disagree with using credit reports in pricing insurance policies. According to them, the practice is unfavorable to those with low incomes and is unjust to those whose credit score might low due to difficulties like sickness, unemployment or divorce.

In addition, consumer advocates approximate that roughly one third of consumers know that insurance companies use their credit reports. Birny Birnbaum, executive director for the Center for Economic Justice, said that insurers do not take actions to inform consumers that their credit reports are being used.

All of these concerns show the significance of accurate credit reports. While errors and problems with credit reports can affect many aspects consumers’ lives, the greatest impact is in insurance.

Online Low Interest Rate Auto Loans for Poor Credit Ratings

At present, it is much easier to get an auto loan with low interest rates even though with poor credit ratings. There a lot of online car finance services that asks you to fill in an online car loan application form and the rest will be processed by a local expert. Because these kinds of services have a network of specialized lenders across America, you have a higher chance of getting an auto loan even with a poor credit rating.

However, interest rates might be significantly higher. There are some factors that might help lower these interest rates.

Auto-Financed provides online professional services to lead borrowers in looking at different bad credit auto financing options and help them choose the one that suits their current financial status, without considering credit histories.

The majority of lenders that focus in offering auto loans for those with poor credit histories will require either a huge amount as deposit or require a cosigner to lower the interest rates. While lenders are aware of the risks that accompany transacting with borrowers with poor credit, there are still some lenders who might not ask for a huge deposit or a cosigner. The automotive finance service you choose will help you find the perfect lender for you.

In addition, you can also find a low interest rate auto loan with poor credit by getting free non-obligatory proposals from various lenders. Then, you need compare them using either a car loan calculator online or a comparison website. However, the process can be a bit laborious because you need to check if each proposal charges other fees.

Auto-Financed could vigorously help you to get approved right away for online auto loans with low interest rates, bad or no credit checks, with or without a deposit or cosigner. Moreover, you will more likely obtain a solution that is within your means and will suit your specific financial status.

A Merry May for Auto Dealers

More and more Americans are getting their hands on brand new sizzling cars because of the current automobile friendly status of the industry. Since it has been easier for consumers to get their hands on automobile loans and the price of gasoline has dramatically decreased in the past weeks, it was a whole lot easier for car dealers to sell.

The  industry has sold over 1.3 million automobiles on the month of May. This has increased by 26 percent compared to the sales in April of this year. This has been the best month for the industry since 2008.

Analysts were surprised with the trend of the auto industry last month. Since the sales of these car dealers were often interdependent with the confidence ratio of consumers and market stocks, and May was a very difficult year for the national market for it was in the worse state that it has ever been since 2010. The confidence of consumers in numbers is also very low for the month.

In an interview, Mr. Jesse Toprak the vice president of the TrueCar.com in market intelligence shares his amusement in the turn of events as well. He says their company expected a very bad business month for May, but the complete opposite happened. He however, predicts a decrease in sales this June since unemployment is rising in an alarming rate. He also predicts a better market after the Presidential Elections.

But there are other analysts that believe the economic phenomenon will not be a problem at all. Ken Czubay the sales chief of Ford in the United States, believe that the auto industry’s good fortune will continue to be good despite the loss of jobs of consumers.

Toyota currently leads the industry sales with a 87 percent increase in their sales since last year. Honda follows with a wooping 48 percent increase. Both these industries were greatly affected last year because of the massive earthquake that hit their factories in Japan.Chryster also saw a 30 percent increase, Volkswagen at 28 percent and Nissan at 21 percent. Other companies that reported increase in sales are Hyundai, Ford and General Motors Co.

Sellers continue to have a positive feeling in their sales in the coming months. Among the reasons why sellers are unperturbed by a decrease in sales are first, the continuing demand of consumers for cars. Second, the continuing productions of makers of quality eye catching cars that continue to attract buys all over the country. Finally, the easier access to car loans even to people with a bad credit history.

Four Tips to Get the Best Auto Loan on Poor Credit

If you have a poor credit, it does not necessarily mean right away that you cannot purchase a car or get an auto loan. Just like other things, the degree of “poor credit” can differ from one person to another. For instance, if your credit score is in the middle or the average, a few lenders may still consider giving you a loan, but others who have a different measure will probably consider it a risky action.

According to senior consumer advice editor of Edmunds.com, Phil Reed, since several auto loans have a rate of 18 percent and 20 percent, it is important to look around different lenders. Moreover, Jack Tracey, executive director of National Automotive Finance Association, agreed that looking around is important.

Tracey added that it was more difficult to get a nonprime auto loan in the early months of this year and in the latter months of the previous year. The following are four tips in looking for the best subprime auto loan.

First, consumer attorney Yvonne Rosmarin said to have a companion when looking around. Besides having another set of eyes and ears, your companion can also act uninterested or doubtful of the loan terms.

Second, according to Van Alst, get a loan with the lowest annual percentage rate and short period of time.

Third, senior researcher for the Center for Responsible Lending, Josh Frank, said that there are lending contracts packed with unnecessary goods and services and nonprime buyers usually come across these. Frank added to never let the loan be subject on buying add-ons, like extended warranties, after-market services, or insurance.

Fourth, when financing through a dealer, check that the terms are final and not conditional. In some cases, buyers are informed after days or weeks that their monthly payments or deposit has become higher. Based on an April 2009 survey conducted by the Center for Responsible Lending, one in every 22 buyers or one in every nine buyers with poor credit is a victim of this so-called yo-yo sale.

Chances of Getting an Auto Loan Become Higher

For those consumers who have poor credit and planning to get an auto loan, Experian Automotive’s report last May 29, 2012 will be good news for you.

According to the report, average credit scores for customers purchasing a car have declined close to prerecession levels. Moreover, Experian’s director of automotive credit, Melinda Zabritski, said that there has been more promising situations for auto loans during quarter one of the current year. Some of the positive indications for the market include a decrease in the average credit scores, lower interest rates and extension of loan terms.

Zabritski added that the reports indicates automotive lending is back to being healthy as it was since the time of recession in the year 2008. Borrowers have been making payments for their loans on time and the percentage of dollars might reach its lowest point after six years. As a result of these, terms have been extended and lower rates have been offered by lenders.

The reduction of the credit pipeline has been beneficial for all, from customers to lenders to automotive dealers.

The most encouraging indications for those consumer who had problems with credit before is that nonprime, subprime, and deep-subprime car loan buyers were up by 11.4 percent during quarter one of the year 2012.

For those who have low credit scores, here are some tips you can follow to increase your probability of getting approved for a loan.

First, check the information in your credit reports from the three credit reporting agencies whether it is accurate or there are some erroneous information.

Second, be aware of your three FICO score because you are required to pay for them.

Third, choose a car loan which has a reasonable price and has a monthly payment of not more than 10 percent or 15 percent of your gross monthly income.

Fourth, pay a huge amount as cash down payment, preferably 15 percent or more, because your chances of loan approval will be higher.