This Brooklyn Grandmother Fought Back Against a Shady Used Car Dealer and Won

Rhoda Branch, 52, lost thousands of dollars and her mobility when a used car dealer took her for a ride. But with the help of a consumer protection group, she fought back — and won.

This story is Part II of a MagnifyMoney investigation into the risky business of subprime auto lending. Read Part I here

Rhoda Branche’s rocky road began with Superstorm Sandy in 2012. After the hurricane totaled her car, she turned to Giuffre Motors in Brooklyn to shop for a new vehicle.

“They said they would help me,” recalled Rhoda. “They were very friendly – and then they just starting pushing the papers through.”

She said the dealership promised her $4,000 in incentives to buy a used 2004 Volvo SUV – and offered to arrange a loan for her.

According to a copy of the contract obtained by MagnifyMoney, the incentives were missing from the sales contract Rhoda signed. The financing was no bargain either – a subprime loan with an annual interest rate of 23.5%.  Subprime customers are typically high-risk borrowers who pay more in finance charges because of poor credit histories.

Worst of all, Rhoda’s $13,000 SUV would soon stop running. Instead of repairs, the dealership gave her the runaround.

“It was a vehicle that shouldn’t be on the road,” Rhoda said. “They just said the vehicle was fine. It looks good on the outside, but it was a lemon.”

In desperation, she took the Volvo to other mechanics and spent $3,000 from her own pocket, but the SUV kept breaking down. As a last straw, she surrendered the title of ownership to the finance company that held her loan.

Without a car, it often takes Rhoda two buses, a subway ride, and 90 minutes to travel nine miles from her apartment in Coney Island, N.Y., to a hospital where she frequently seeks treatment.

“I have to take public transportation,” said Rhoda, who suffers from injuries that required operations on both knees. “It is very time-consuming. It causes a lot of pain. I have pains all over my body because I had surgery.”

Not the Only One

“Many sellers of cars to people with subprime credit sell you junk. And they know they’re selling you junk,” said Remar Sutton, a former car dealer turned consumer advocate. He wrote about the tricks of the used car trade in his book, “Don’t Get Taken Every Time.”

“They sell you a car they know you cannot pay for, or they know will break down, and they repossess it because you can’t pay for it or it breaks down,” said Sutton. “And then they sell it again.”

Rhoda did not know she was the latest in a long line of customers who were victims of the dealership’s unethical sales tactics.

The New York attorney general sued Giuffre in 2010 on behalf of 42 customers who claimed they were cheated. In Kings County Supreme Court, a judge ordered the dealership to pay more than a half-million dollars in fines and restitution for its illegal business practices.

Giuffre had “a common practice of strong-arm sales methods and unethical conduct,” wrote Judge Bernard Graham in his 2011 decision. “The list of grievances is extensive and unsettling.”

Rhoda was one of at least one dozen consumers who filed complaints against Giuffre with New York City’s Department of Consumer Affairs. Under pressure from the DCA, Giuffre agreed to pay $180,000 in fines plus $100,000 into a restitution fund as part of a consent order in April 2014, nine months after Rhoda’s complaint.

From the settlement, Rhoda confirmed she received roughly $4,600 in restitution. And two months after the consent order, Kings County Civil Court dismissed a $5,000 claim against Rhoda by a finance company that tried to collect the unpaid amount of her car loan.

Owner John Giuffre could not be reached for comment. His lawyer did not respond to MagnifyMoney’s interview requests.

As a result of the DCA consent order, Giuffre was forced out of the car business in New York City. His last dealership closed in December 2014; its doors and windows remain boarded shut. But consumers have plenty of reasons to remain cautious.

“There are, unfortunately, thousands of companies in America that will deliberately sell you cars that they know are going to break down,” said Sutton.

Rhonda hopes she can afford to buy another car someday. But she’s afraid of being ripped off again.

“Now I’m very skeptical going to other places because I remember what I went through,” she lamented. “I don’t know what dealership I should trust when I’m ready to buy another vehicle.”

How to Buy a Used Car Without Being Cheated

Shop for financing before you look for a vehicle: The subprime interest rate a credit union can offer may be half of what a car dealer charges you. Don’t assume that your poor credit history means you won’t have a shot at getting a loan from a reputable lender. It’s perfectly fine to get your own financing outside of a dealer — and, as our story shows, it’s often much more affordable. To make matters better, if you come in with a verified offer from another lender, the dealer has an incentive to try to beat their offer.

Check your credit score yourself: Don’t take a dealer’s word on it when it comes to your credit. Your score may be good enough to qualify for a better rate on a loan elsewhere, but the dealer may not want you to know that.  You can check your credit score on a number of sites for free, including the Discover Scorecard. And again, if you shop around for rates before you go to the dealer, you will know exactly what rates you deserve — and when they are offering you a bad deal.

Buy a car that works: Bring a mechanic or a knowledgeable friend to check it out before you decide. You can also check the vehicle’s background by getting a vehicle history report through resources such as the National Motor Vehicle Title Information System, CARFAX, and AutoCheck.

Buy a car you can afford: If a dealer makes promises, be sure to get it in writing. Go in with a firm idea of what kind of car you want and how much you can afford to pay.

And slow down: Never sign a contract in a hurry. Dealers may be friendly, but they’re not really your friend. To double-check a dealer’s reputability, check out their reviews and rating on the Better Business Bureau website.

Additional reporting by Mandi Woodruff

The post This Brooklyn Grandmother Fought Back Against a Shady Used Car Dealer and Won appeared first on MagnifyMoney.

This Woman Fell Into a Used Car Loan Trap — Now She’s Fighting Back

Mary McDuffie, 31, was sued by an auto financing company after she stopped making payments on a used car that had mechanical issues. Now the mother of four, who said she was misled by the company, is fighting their claims in court.

This story is the first in a two-part series on the risky business of buying a car from a used dealer.

In the summer of 2013, Mary McDuffie Morton, 31, needed money to buy a car. At the time, the recently divorced mother of four had a poor credit history. So she was excited to hear she could get a subprime loan at a used auto dealership in Bronx, N.Y.

“It [seemed] too good to be true,” Mary recalls. “As long you have a job, you’re approved. It’s like wow, OK, I’m guaranteed approval.”

Nationwide, customers like Mary owe more than a quarter-billion dollars in high-interest, high-risk subprime auto loans. A recent report by Moody’s Investor’s Service found that Santander Consumer USA Holdings Inc., a major originator of subprime auto loans, has been slacking when it comes to verifying the income reported by loan applicants, according to Bloomberg. This can make it easier for car buyers to take on more debt than they can afford to repay.

But big banks aren’t the biggest problem in auto lending. About three-fourths of subprime auto loans do not originate in banks or credit unions. Instead, they are often signed at car lots like the one in Bronx, N.Y., where Mary was lured by the promise of easy credit.

In many cases, those customers are taken for a ride by predatory dealerships and finance companies alike.

“Their main job is not to care for you. It’s to care for their pocketbook, and that’s all they’re there for,” says Remar Sutton, a former car dealer turned consumer advocate.

“How many of you have seen the ads that say, ‘No credit, bad credit, no worries, we’re the credit fixer’? That is not why those ads are running. Those ads are running because they know if you think you have bad credit, you will pay anything for a car, and they’ll knock a homerun on you,” warns Sutton.

That’s what happened to Mary. To buy a used 2003 GMC Envoy XL, the dealer told her she needed to first borrow roughly $7,000.

“The dealership told me they were going to shop around for lenders for me – and they were going to call one and get back to me,” Mary says.

The dealer selected Dependable Credit Corp. of Yonkers, N.Y.. The interest rate on Mary’s loan was a whopping 24.9% – just one-tenth of a point below the threshold of criminal usury in New York State.

Mary signed the contract, despite an interest rate so high that it was nearly illegal.

“I was scared that if I didn’t go along with that deal, I wouldn’t get a car, ” she says.

The Secret Bonus

Like many lenders that work with auto dealers, to get business from dealers, Dependable offers them a secret bonus. It’s called a “Dealer Reserve Advance,” and it can add an extra two points of interest to the consumer’s loan. The dealer keeps 70% of it as a reward for making the referral to the finance company.

“When you go into that dealership, do you think they’re going to point you in the direction of a cheap loan? Of course not. They’re going to send you to the finance source that will pay them cash up front on the loan,” says Sutton.

Dependable executives did not respond to multiple requests for an interview or comment.

On its website, the finance company claims it does business with 250 used car dealers in seven states – Massachusetts, Connecticut, Pennsylvania, New Jersey, Delaware, Maryland, and New York – and has financed more than $200 million in loans.

“They’re in hundreds of dealerships because they’re making millions of dollars because people who are poor, people who are worried about their credit, are being taken advantage of by that business,” says Sutton, a co-founder of FoolProof, a nonprofit website devoted to consumer education.

Mary said the vehicle she purchased had mechanical problems that the dealer refused to fix. Sensing that she was being cheated, the former Bronx resident refused to make loan payments until she received a title proving she owned the car.

“They sold me a lemon,” complains Mary. “I knew that the deal was just a big scam.”

A Long Fight in Court

Dependable repossessed the Envoy when Mary’s payments were five weeks delinquent. By the time she received the title, the car was gone – and she was thousands of dollars in debt.

According to records obtained by MagnifyMoney, the finance company sold the vehicle to an undisclosed owner for $4,200 – a price that was $5,000 less than what Mary paid just four months earlier.

Then Dependable sued her in Bronx County Civil Court for a bill packed with extra charges. The tally includes nearly $1,200 in repairs by Westchester Auto Center and more than $1,700 in storage fees charged by Saw Mill River Realty.

The three businesses are located at the same address. State records show that all three share the same chief executive.

Dependable continues to charge Mary 24.9% interest on a loan for a car it repossessed and sold to someone else three years ago. Last year, the company told the court Mary owes nearly $11,000.

“Unfortunately, most places that want to make you a subprime loan simply want to make more money on you,” says Sutton.

With the help of a legal aid group, Mary is countersuing. She alleges she was cheated through deception and illegal business practices by the finance company and the dealer.

In a counterclaim filed by Mary’s attorney, Shanna Tallarico with the New York Legal Assistance Group, in October 2016, Mary claims that the dealer also required her to trade in her 2004 Cadillac CTS in order to purchase the used Envoy.  The dealership agreed to give her just $1,900 for the vehicle, citing “a significant problem with the Cadillac’s engine,” according to Mary’s counterclaim. Days later, she claims the dealership listed that same Cadillac for sale for $9,999. Efforts to reach the dealer for comment were unsuccessful.

Efforts to reach the dealer for comment were unsuccessful. Mary’s case is still pending, Tallarico says.

“I felt like I had just thrown money in the garbage,” says Mary. “The whole experience was a waste of money.”

How to Buy a Used Car Without Being Cheated

Shop for financing before you look for a vehicle: The subprime interest rate a credit union can offer may be half of what a car dealer charges you. Don’t assume that your poor credit history means you won’t have a shot at getting a loan from a reputable lender. It’s perfectly fine to get your own financing outside of a dealer — and, as our story shows, it’s often much more affordable. To make matters better, if you come in with a verified offer from another lender, the dealer has an incentive to try to beat their offer.

Check your credit score yourself. Don’t take a dealer’s word on it when it comes to your credit. Your score may be good enough to qualify for a better rate on a loan elsewhere, but the dealer may not want you to know that. You can check your credit score on a number of sites for free, including the Discover Scorecard. And again, if you shop around for rates before you go to the dealer you will know exactly what rates you deserve — and when they are offering you a bad deal.

Buy a car that works: Bring a mechanic or a knowledgeable friend to check it out before you decide. You can also check the vehicle’s background by getting a vehicle history report through resources such as the National Motor Vehicle Title Information System, CARFAX, and AutoCheck.

Buy a car you can afford: If a dealer makes promises, be sure to get it in writing. Go in with a firm idea of what kind of car you want and how much you can afford to pay.

And slow down: Never sign a contract in a hurry. Dealers may be friendly, but they’re not really your friend. To double check a dealer’s reputability, check out their reviews and rating on the Better Business Bureau.

Additional reporting by Mandi Woodruff

The post This Woman Fell Into a Used Car Loan Trap — Now She’s Fighting Back appeared first on MagnifyMoney.

A Quick Guide to How Much Car You Can Really Afford

how-much-car

If you’re planning a car purchase, and even if you’re in the middle of financing your car, a few tips from financial experts can help you save money (and hopefully guard against becoming “underwater” on your loan).

Paying off a car is, of course, a highly individual process dependent on many different personal factors like credit score (you can view two of your credit scores, updated every 14 days, for free on Credit.com), financing rate, down payment, and how much you can afford to pay each month.

When budgeting, it’s also critical to consider expenses such as your auto insurance premium, gas, and maintenance into the total cost of ownership of your vehicle.

Still, there are some general guidelines that most people can follow:

  • Financing: Experts The Zebra spoke to said they recommend auto loans not exceed 10% (for just the loan) to 20% (for the loan plus related expenses like gas and insurance) of a consumer’s gross monthly income.
  • Timeline: You should take the shortest term you can afford for two reasons: Shorter terms come with lower interest rates and they allow vehicle equity to build faster, Bob Harwood, vice president of Carloan.com in Richmond, Virginia, said. Experts cited four or five years as the ideal balance of affordable monthly payments and reasonable total interest. If you have to spread your payments out over six years (72 months) or more to get monthly payments you can afford, you might want to consider a less expensive car.

“Your goal as a consumer is to decide what works best for your monthly budget so you can decrease the long-term expense,” banker Deric Poldberg from American National Bank in Omaha, Nebraska, said.

Hypothetical Financing

The Zebra asked three financial experts from around the country for their input about what type of loan over what time period a person living in Texas making $50,000 a year (the average statewide income) should expect to pay for a 2016 Honda CR-V LX (one of the most popular cars in the U.S.) for $23,000 (a little below the MSRP).

The Verdict(s): You’ll pay between $400 and $500 per month, depending on your credit and how quickly you can/wish to pay the vehicle back. Here are three ways of getting there:

  • Per Poldberg: “For this customer, the interest rate is going to be between 4.79% – 5.49% based on the U.S. average credit score (687). Because most people finance their vehicles for five years, that would lock our customer into a rate of 4.99% for 60 months, making the monthly payment $433.93. During the term of the loan the customer would end up paying an extra $3,035.97 in interest, bringing the total out-of-pocket expense to $26,035.97. Financing your vehicle for the least amount of time possible will save hundreds or even thousands of dollars in the long run, but often people just want a lower monthly payment and disregard the long-term cost of the loan. If you financed that same CR-V for the maximum 75-month term, you’d end up paying $3,820.11 in interest (quite a bit more). But most consumers just look at the low monthly payment of $357.60 and think it’s a better deal.
  • Per Rob Jupille, president of RTJ Financial in Santa Monica, California: “Assuming a relatively ‘normal’ level of other debt, when doing a budget, generally target your auto loan to be in the neighborhood of 10% of gross pay (excluding other auto-related costs like gas, maintenance, insurance, etc.) and put at least 20% down to reduce the likelihood of being ‘upside down’ on your loan. This way, you’d look for a monthly car payment not exceeding $400 and we’d recommend shopping for a combination of interest rate and term to stay within that number.”
  • Per Harwood: “Considering that your monthly car expense (including insurance, gas, etc.) should be no more than 20% of your take home pay, we can assume that an annual income of $50,000 translates to about $3,300 in take-home pay monthly after taxes. Budgeting around $250 for secondary auto expenses leaves room for a payment of around $450. For a consumer with decent credit, the $23,000 financed over 60 months at an interest rate of 6.9% lands the payment at $454 per month. (Of course, everyone should pay off their car loan as quickly as they can, but this is a realistically affordable scenario.)”

The bottom line: For a smart financing deal, pay the most you can for the shortest amount of time and after you’ve paid off your car loan, keep saving for your next car – or for a “rainy day.”

Image: Squaredpixels

The post A Quick Guide to How Much Car You Can Really Afford appeared first on Credit.com.

12 Cars That Depreciate Quickly (& Are Good to Buy Used)

cars-that-depreciate-quickly

If you’re in the market for a new car, you may be tempted to drive a brand-new one off the lot. After all, many manufacturers are already releasing their feature-packed 2017 models, and the weather hasn’t even turned cold yet.

But, before you do, consider this: A new study by iSeeCars.com, an automotive data and research company, found that buying a new car is not always going to get you the best bang for your buck. In fact, the company discovered that purchasing some cars that are just a year old can provide consumers with substantial savings.

“Most people know new cars depreciate the most in the first year and that different cars have different depreciation rates, but we wanted to determine which used cars experienced the largest price drops compared to their new models,” Phong Ly, the CEO of iSeeCars.com, said in a press release.

To establish the savings, iSeeCars.com analyzed the more than 14 million cars sold from August 1, 2015 and July 31, 2016, excluding models with fewer than 250 new and 250 used cars sold. The average asking prices of year-old cars were compared to those of new cars from the same model, according to the release, with the difference in price expressed as a percentage of the new model average price. This percentage was then compared to the overall percentage difference across all models.

Using this data, iSeeCars.com researchers found that the average price difference between a new car and a lightly used car was 21.2%, ranging from $6,099 to $19,966 in savings. (Note: For this study, a lightly used car is defined as a vehicle from the 2014-2015 model years with mileage within 20% of 13,476, the average annual miles traveled in the U.S., according to the Department of Transportation.)

But it isn’t all cars — iSeeCars.com established a dozen cars that offer the best value when purchased lightly used instead of brand new, with price differences between 31.2% and 34.6% — at least 1.5 times more than the overall average. Below are those 12 cars.

1. FIAT 500L

Price Difference: $8,096 less
Percentage Price Difference: -34.6%

2. Lincoln MKS

Price Difference: $16,039 less
Percentage Price Difference: -34.5%

3. Volvo S60

Price Difference: $14,204 less
Percentage Price Difference: -34.4%

4. Kia Cadenza

Price Difference: $12,940 less
Percentage Price Difference: -34.3%

5. Mercedes C250

Price Difference: $15,247 less
Percentage Price Difference: -34.3%

6. Nissan Maxima

Price Difference: $12,469 less
Percentage Price Difference: -34.0%

7. Lincoln MKS + MKZ Hybrid

Price Difference: $14,177 less
Percentage Price Difference: -33.8%

8. Jaguar XF

Price Difference: $19,966 less
Percentage Price Difference: -32.3%

9. FIAT 500

Price Difference: $11,106 less
Percentage Price Difference: -31.9%

10. Cadillac ATS

Price Difference: $6,099 less
Percentage Price Difference: -31.8%

11. Chrysler 300

Price Difference: $13,351 less
Percentage Price: -31.7%

12. Buick Regal

Price Difference: $11,525 less
Percentage Price Difference: -31.2%

If you’re considering purchasing a new car — whether it’s straight from the manufacturer or simply new to you — it’s a good idea to make checking your credit part of your shopping process. Knowing where your credit stands can help you get an idea of what terms and conditions you may qualify for with your auto loan. You can see two of your credit scores for free, updated every 14 days, on Credit.com.

Image: AdrianHancu

The post 12 Cars That Depreciate Quickly (& Are Good to Buy Used) appeared first on Credit.com.

The ‘Leftover’ Cars You Can Buy for Less This Year

car-for-less

Labor Day weekend has long been a big week for car sales, but according to Edmunds.com, you may be able to save really big if you look into leftovers — that is, outgoing 2016 models scheduled to be phased out or redesigned for 2017.

Per the car shopping site, dealers will be looking to get rid of these vehicles at steep discounts (think thousands of dollars) as they try to clear out their lots to make room for shiny, new 2017 models. And you don’t need to feel too behind the times for buying a car that’s last year’s news.

“Even though these vehicles are being redesigned or going away altogether, they still have the same great technology and performance that you’d find in most new cars, but at a much better value,” Ron Montoya, senior consumer advice editor for Edmunds.com, said in a press release. “Bargain hunters are strongly encouraged to consider these vehicles.”

Edmunds identified nine vehicles in particular that are going at a good price relative to their MSRP, based off of the Price Promise deals listed on its site. Note: Some of the discounts are regional, so it’s still a good idea to comparison shop for car deals in your area. And it’s best to avoid buying a car outside of your budget just because you can get a good discount.

With that in mind, here are the five most lucrative leftover vehicles.

1. 2016 Mercedes-Benz E-Class Sedan

Edmunds spotted a number of deals for $7,000 to $10,000 off the soon-to-redesigned luxury sedan’s $71,175 MSRP.

2. 2016 Hyundai Genesis Sedan

Up for rebranding as the Genesis G80, this sedan is going for $3,000 to $5,500 less than its $49,800 MSRP in certain areas.

3. 2016 Buick LaCrosse

Edmunds is seeing deals for as much as $6,200 off the $38,982 MSRP on the entry-level full-size sedan getting a redesign in 2017.

4. 2016 Cadillac SRX

The luxury SUV is going for $8,000 off its $56,380 MSRP, once the incentives are factored in. It’s being replaced by the 2017 Cadillac XT5.

5. 2016 Subaru Impreza Sedan

Scheduled for a 2017 redesign, the 2016 Impreza is going for $900 to $1,100 less than its $22,052 MSRP. But, according to Edmunds, San Franciscans can get the real deal — saving as much as $2,300.

Looking to Buy This Labor Day?

Of course, it can pay to do your research and comparison shop before hitting a dealership, no matter what area you’re in or what car you’re looking to buy. It’s a good idea to think about your monthly payments versus price, so you know exactly what the car is going to cost you over the life of the loan — and you don’t overextend yourself.

Also, it can help to check your credit, since a good score will help you qualify for the best financing opportunities and save you on interest. You can do so by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month at Credit.com.

Image: Ridofranz

The post The ‘Leftover’ Cars You Can Buy for Less This Year appeared first on Credit.com.

This Bank Is Raffling Off a Year of Loan Payments

suntrust_sweepstakes_2016

Struggling to make your loan payments? SunTrust Banks has a new offer designed to give a few lucky borrowers some breathing room.

As part of its Year onUp Sweepstakes, the Atlanta-based bank will award 25 people “the amount of their monthly mortgage, auto loan or student loan payments for an entire year, up to a certain value,” according to a press release.

The top five winners will receive the amount of their monthly mortgage payment for one year (capped at $1,500 per month), 10 winners will receive the amount of their monthly auto loan payment for one year (capped at $500 per month) and 10 winners will receive the amount of their monthly student loan payment for one year (capped at $500 per month).

The contest can be entered at on the bank’s Year onUp Sweepstakes website. and is open to customers and non-customers alike. No purchase is necessary to enter or win, per the terms and conditions on the site. Entry must be received by noon, Aug. 31, 2016, and winners will be chosen on or about Sept. 1, 2016.

To enter, you must fill out the online registration form by providing your complete name, date of birth, email address and your Twitter and/or Instagram handle.

The contest comes at a time when many Americans are carrying heavy debt loads. Total outstanding student loan debt now dwarfs total credit card debt. Even outstanding car loans have increased from $905 billion last year to more than $1 trillion in the first quarter of 2016. And 24% of home loans approved by six of the largest U.S. banks in 2015 were jumbo, up from 21% the year prior, according to The Wall Street Journal.

Of course, it’s a not a good idea to simply hope that winning a raffle will help you pay back what you owe.(And you may want to read the terms and conditions of any contest you are considering carefully to be sure it’s a fit for you.)

If you’re carrying a significant debt load, consider making a game plan to pay it off quickly. Making on-time payments on any debt is a great asset to have on a credit report, since payment history is one of the key criteria credit agencies use to determine your credit score(s). Your credit utilization, or the amount of debt you owe versus your combined credit limits, also counts heavily toward your credit scores (30%), so keeping your account balances, particularly on credit cards, low or paying them off entirely can help your credit scores immensely.

You can read our primer on getting out of debt here and see where your credit scores currently stand by viewing two of your free credit scores, updated each month, for free on Credit.com.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

More Money-Saving Reads:

Image: dmbaker

The post This Bank Is Raffling Off a Year of Loan Payments appeared first on Credit.com.

3 Steps to Take After You Caused a Car Accident

Loss Adjuster Inspecting Car Involved In Accident and taking pictures

If you’re a driver, it is likely that over your lifetime you will be in a car accident. Hopefully, that accident only involves injuries to your car and not to you.

The next time you find yourself in a car accident and you’re the offender, follow the tips below.

1. Evaluate the accident scene

Immediately after an accident you should evaluate the accident scene. This means you should pull over right away and call the police. Put your hazard lights on and keep in mind your environment. Be very careful if cars are driving around you that you’re safely to the side. Make sure you’re okay and everyone you’re with is okay. Take note of any injuries that you or anyone else has.

After you’re safe, call the police. Whether the accident is big or small, it’s important that you call the police to the scene right away so there’s a record of the accident.

Approach the person you hit and exchange contact information with him. Get his name, address, and phone number. If you can see his identification, that’s even better, because you can confirm his identity. If there are any witnesses at the scene, you should also get their contact information, too. The more information you have, the better.  This may be done by you directly, or it may be done by the police. If it is done by the police, make sure that you get the information from the police officer, so you have record of it personally.

Take photos of the accident scene, including your vehicle, the vehicle of the person you hit, and any additional photos that could be relevant (like photos of the entire scene to show the exact space and geography of where the accident took place). If shooting a video is possible, consider recording the scene. The more documentation you have, the less opportunity there is for dispute over the scene itself.

2. Watch what you say (don’t admit fault)

While you are evaluating the accident scene and speaking with anyone other than the police, do not talk about how the accident happened or who was at fault. Do not admit that you were at fault and do not make monetary offers to the person you hit. It is tempting to apologize during a highly stressful situation, like a car accident, but it’s to your benefit that you do not say sorry or that it was your fault. Doing this could put you at risk for additional legal liability. Even if you think or know you are at fault, do not admit it.

It’s equally as important not to discuss how you’re feeling. If you say you are completely fine and later you discover you’re injured, it will be harder to prove with statements that you made saying you weren’t injured after the accident. The bottom line is that you should be very careful with what you say at the scene of the accident. Less is more.

When you are speaking with the police, be very clear about what you know happened. If you don’t remember or can’t recall exactly, then say that (don’t try to fill in the blanks).

3. Complete follow up actions after the accident

After you leave the accident scene there are follow up actions you need to take. If you are injured, seek medical attention right away. Even if you don’t start to feel pain until the following day, or some other time after the accident, make sure you get the proper attention you need.

Report the accident to your auto insurance company

Aside from the medical attention, you need to contact your auto insurance company immediately after the car accident and report the accident. As the person who caused the accident, it is your responsibility to report the accident to your insurer. But note that even if the police report puts you at fault, it is your insurance company that will determine whether you’re at fault for insurance purposes. If your insurance company does determine it was your fault, then it is likely that your insurance will be the source of your claim and the victim’s claim. However, your insurance company may fight with the victim’s insurance company or it may decide not to cover the victim’s claims if they are minimal and it’s unclear if you’re at fault. It’s not obvious what will happen because every situation is different. If the insurance company decides you’re at fault, then in most states, your insurance company will handle your medical claims and car repair claims in addition to the victim’s claims.

Keep your own paper trail

Get the name of the agent who is handling your call and who will handle your insurance claim. If you’re given a claim number, make sure to write that down and keep it on file. The more information you document, the better.

Check-in before getting repairs done

Discuss getting your car repaired with your insurance agent. Sometimes, insurers require you to get their permission before getting your car fixed. Be sure to get accurate information from the insurer and note that you can take your car where you want to be repaired – you don’t have to follow the recommendation of the insurance company as to where you take your car. When you get your car fixed, document your repairs and keep your receipts.

Decide if you need to meet with a lawyer

Your final course of action after an accident is to determine whether to pursue legal action or if you need to legally defend yourself based on the victim’s decision. You can meet with an attorney, typically for a consultation at no fee or a very small fee, so do not be deterred from an initial meeting due to fear that it will be expensive. You don’t have to commit to pursuing legal action until after you’ve met with an attorney. So, if you’re unsure about whether to move forward legally, you’re not risking much by meeting with an attorney. The attorney will also be able to advice you on whether your situation is worth pursuing legally.

A Final Note

State law governs the specific rules that will apply to you after you’re in a car accident. Check your state’s laws to determine the specific course of action you need to take. Your insurer should be able to help you with this.

Steps to take if you’re the victim of a car accident. 

The post 3 Steps to Take After You Caused a Car Accident appeared first on MagnifyMoney.

Would You Share a Car With Friends? A New Ford Program Thinks So

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Many people opt to lease their car instead of buy it because of some of the conveniences that can come with this option.

And a new program from Ford could be taking this a step further with its car share program. Ford Credit Link, which is running its pilot program in Austin, Texas, makes it possible for a group of three to six people to share a lease and a car.

“People are already sharing books, homes and a number of things in between,” Margaret Mellott, a spokesperson for Ford Credit said in an email. “This Ford Credit experiment in Austin is asking if the trend toward sharing might apply to sharing the lease of a vehicle by a group of people who may not need a full vehicle lease to meet their mobility needs but who might like to have convenient access to a vehicle when they need or would like to use one.”

The lease is for 24-months, Mellott said.

To take part, “each person in the group must qualify for credit under our consistent credit criteria, and each person is liable for the full amount of the contract,” Mellott said.

The program uses an app that pairs with a vehicle plug-in device the dealership installs in the car. This makes it possible for users to monitor the car, reserve drive time and make car payments.

Even though this program was announced earlier this year, no one has currently signed up to take part. Mellott says their site is seeing a lot of traffic, but claims the lack of participation is because “people seem to be doing their homework as they consider how this might fit their lifestyles.”

Securing an Auto Loan

Doing your homework on a large investment, like an auto loan, is always a good idea. If you’re in the market for a new car, part of your research ahead of time should include checking your credit scores. Doing so will give you an idea of what terms and conditions you may qualify for when taking out a loan. You can do this by viewing two of your credit scores for free, updated each month, on Credit.com.

If your scores aren’t where you’d like them to be, you can work to improve them. You can get your free annual credit report at AnnualCreditReport.com and review the reports for any errors you may need to dispute. You can also take steps like paying down any credit card debt you may have and avoiding new credit inquiries while you work on rebuilding your credit.

[Offer: Denied from a loan? It may be because of a low credit score due to errors on your report. Lexington Law can help you navigate the credit repair process so you can get back on track. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Auto Loans:

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Should I Buy a Used Rental Car?

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Rental cars often get a bad rap. Since drivers are only borrowing the vehicle for a short period of time, conventional wisdom goes that they won’t treat the car very well. So most would think that purchasing a questionably treated rental car is a poor financial decision.

While a privately owned used car might have had to contend with one person’s driving quirks (or at most, one family’s), rental cars are driven by all types of drivers (one a hard braker, the next a fast accelerator, and so on). But some argue those fears are largely unfounded, “Cars are so well engineered these days that it really doesn’t matter,” Philip Reed of Edmunds.com told Kiplinger.

When you’re in the market for a car, and you don’t mind doing a little extra research, you might be surprised to find a former rental car offers savings (even over identical used cars) as well as peace of mind.

Guide for Purchasing a Former Rental Car

Shopping for a used rental car is a lot like shopping for a used car. With rental cars, you’ll still want to remain practical and skeptical, but it’s prudent to take a few additional steps:

  • Determine the fair market value of the car make, model and year and compare it to the rental car company’s price. Kelley Blue Book and Edmunds.com com both have great resources.
  • Before visiting a mechanic, look over the car. Test drive it yourself, look for any signs of body damage both inside and outside the vehicle and listen for unusual noises. And always request a vehicle history report from the seller, or you can choose to run one yourself from places like AutoCheck, Carfax or the federal National Motor Vehicle Title Information System.
  • Be sure to have a pre-purchase inspection done by an independent party so you’ll have an accurate picture of current and future problems. You’ll also want to have a mechanic certify that the car isn’t wearing prematurely.

How to Decide if a Rental Car is Right for You

Here is our take on buying a rental car, with good, old fashioned pros and cons.

Pros:

  • Rental car companies keep close tabs on their fleets, making repairs when necessary and sticking to maintenance schedules.
  • Lower-than-market price options are (usually) available because rental car companies buy vehicles in volume so their resale prices can be lower.
  • Most used rentals for sale are only one or two years old, so most of their warranties are still at least partially in effect.
  • If you’re buying from a rental company, they’ll provide a third-party vehicle history report (usually for free).
  • The purchasing experience should be simple. If you buy from a rental car company, most sales are negotiation-free, which can be a relief for people who don’t like to haggle (something experts recommend doing on every new and used car lot).
  • Certain large rental companies, such as Avis, Enterprise and Hertz, have fixed pricing, financing and a wide inventory listed on their websites.
  • Some rental car companies let you take the car for several days on an extended test drive: “Rent2Buy at Hertz and the Ultimate Test Drive at Avis/Budget let you browse the fleet online, pick the model that you want, and take it for an extended test-drive (up to three days) from many of their rental locations. During the car’s tryout, you can have a mechanic look at it, if you like,” writes Kiplinger. Enterprise, they add, doesn’t let you take it for a multi-day test drive, but they’ll buy it back within seven days if you’re not happy.
  • Not all rental cars finished with their hustling days go on to be sold through the rental company’s sales division: only the best-maintained cars are sold to consumers while the rest, writes Kiplinger, go to auction or elsewhere (good news for buyers).

Cons:

  • While you can find a good range of options, from budget to luxury vehicles, with a rental company, the cars are often base models with fewer amenities and advanced safety features, and you can’t upgrade.
  • The stigma of lots of people having driven your car is real, as is the fear that those strangers didn’t care as well for the vehicle as a private owner might have.
  • Many former rental cars have more scratches and interior damage than privately owned used cars.
  • You can’t know what every driver did with your car, and you might not ever know the full history.

Where You Can Buy A Used Rental Car

The major car rental companies in the U.S. also have sales divisions. You can purchase used rental cars from:

  • Budget
  • Avis
  • Enterprise
  • Hertz

Additionally, CarMax has former rental cars for sale, as does Autotrader.com.

How Much You Can Save

Used rental cars aren’t the absolute lowest prices out there — they aren’t as cheap as what you might find at auction, for instance (though cars bought at auction are definitely riskier buys, on a whole), but you can still get a great deal. Edmunds.com compared prices on a rental agency’s used car lot and found them to be very competitive with dealer retail prices.

“That’s still the case today,” writes Edmunds.com

“We compared prices for that automotive commodity, the Toyota Camry, at Hertz, Avis/Budget and Enterprise,” writes Kiplinger. “As a benchmark, we used the Kelley Blue Book Fair Purchase Price — what you might expect to pay a dealer — for a good-condition 2014 LE model with about 25,000 miles on it, which in late April was $17,716.

The lowest price was at Hertz, where our Camry went for $16,000. It was $17,600 at Avis/Budget and $17,999 at Enterprise. Prices for some other vehicles we checked, including the Hyundai Elantra, Mercedes C250 Sport sedan, Nissan Rogue and Ford Expedition, in a variety of trim levels, also showed savings—sometimes slim, sometimes huge. The Elantra at Hertz had 35,000 miles and was 15% below the KBB Fair Purchase Price.”

True Stories: ‘I Bought a Rental Car’

Deidre Woollard, from Los Angeles, bought a former rental car. It had 30,000 miles on it and opted for the complete extended warranty. “It seemed pricey at the time but turned out to be worth it because approximately six months later the car had a breakdown on the highway. It turned out to be a cracked engine block and was covered by the warranty,” Woollard says. “The car went on to live many more happy years until it was totaled when rear-ended in a crash. I would buy a rental car again, but I would get the warranty too.”

Nedalee Thomas, from Orange County, California, purchased a car from a dealer a few years ago and was told it had been a rental car. The car was two years old and had 22,000 miles on it. The dealer told Thomas the car would get 19 miles to the gallon, but Thomas never got more than 11, which she found quite disappointing. The biggest issue, though, was with the structure of the car. “The car had apparently been in an accident and would never stay in alignment,” which, she says, caused greater wear on the tires so she had to replace them more frequently.

To really know how much you can save, you’ll have to comparison shop between rental car sellers, used car dealers, and private owners (if you like)–and always get a third-party vehicle report before purchase. While a former rental car might not end up being the best option for everyone, they have a lot of pluses and are certainly worth consideration.

If you’re shopping around for the best auto loan, it’s a good idea to keep your credit score in mind. Many credit scoring models will count all auto-financing inquiries within a specific period, usually about 14 days, as one inquiry, which will have less impact on your credit score (check out how inquiries affect your credit score here). And it’s important to keep on eye on your credit before, during and after you apply. You can view two of your credit scores for free every 30 days on Credit.com.

More on Auto Loans:

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Lease or Buy: The Definitive Guide for Car Buyers

6 Credit Cards That Can Get You Into a New Car

Americans love a good rivalry: Yankees versus Red Sox, Coke versus Pepsi, and most of all, leasing versus buying.

Leasing a car is sizzling hot right now. New data show one out of every three new cars is leased. And leasing may very well rule the future, as it shot up 46% over the last five years among millennial new car buyers. To those who think leasing is always a terrible deal, this is a travesty. To leasing fans, it’s vindication.

The topic of car leasing brings out a lot of emotion in drivers. Many people think leasing is non-sensical because after making payments for three years, consumers own nothing. But, in reality, that’s an inaccurate assessment and whether or not you should lease depends — not only on the driver’s needs but on those of the auto industry. Sometimes car makers offer incentives that make leasing attractive. So those who dismiss leasing outright could be missing out.

The truth is, leasing is more expensive than buying most of the time. The average American keeps a new car for six-and-a-half years, but a 2012 survey found Americans intend to keep their cars for up to 10 years. In either case, buying will probably be cheaper than leasing because when you buy a car, the monthly payments will eventually stop. Pay off a car loan, you keep the car; pay off the lease, you just get another. So the longer you intend to keep a car, in general, the better it seems to buy.

Yet even this equation comes with a hitch. My four-year-old Toyota Rav4 needed a new transmission recently. But as a high-mileage driver, I was out of warranty, and worst of all, out of luck. My repair bill was $5,000 (although Toyota kicked in $1,000 when I complained).

The advantage renters have is like the advantage renters have over mortgage holders — no surprise repair bills. As long as drivers stay within mileage limits, whatever happens to the car will generally be covered under warranty. As one reader on my website put it, “I’ve been leasing for about 10 years now. No unpredictable repair shocks to my wallet because I’m always driving a new car.”

Of course, mileage caps are another factor in the lease vs. buy dilemma. Those with long commutes or who like to travel generally shouldn’t lease because leases tend to limit drivers to about 1,000 miles per month. Exceeding the limit is expensive and can cost from 10 to 30 cents per mile. Also, watching your miles every week is a drag. Imagine turning down a road trip because of your mileage cap. This is especially critical, as dealers have been sweetening lease deals lately with even more complex, i.e., lower, mileage caps.

One factor often cited as a reason to buy is equity. It’s usually stated like this: “With buying, you own something of value after you pay off the loan. With leasing, you have nothing at the end.” But that’s just part of the story. Cars are terrible assets; they lose value quickly and in unpredictable ways. In the end, I find most five- or six-year-old cars are worth a few thousand dollars as trade-ins.

Online auto valuation sites may say your car is worth more, but what matters is what you walk away with. Used car sales are so clunky, it’s silly to use those lease vs. buy calculators and feel vindicated you saved $982 on a vehicle you owned for five years. You may have given that value back to the dealer when you received wholesale value instead of street value.

In the end, people want — and need — reliable transportation, so you can see why leasing’s attractive.

When Leasing Can Beat Buying

Less sales tax: You don’t pay sales tax on the full price of the car but on the value of the car used during the lease. (If you buy the car at the end of the lease for its established ‘residual value,’ you’ll pay the rest of the sales tax.)

Tax perks: For some folks, leasing is a much easier tax write-off.

Luxury: You’ll probably be driving around in a nice new car every three years.

It feels cheaper: Monthly and down payments will probably be lower.

No repair surprises: Fear of big repair costs will definitely be lower.

Buy ‘used’ for less: Particularly low-mile drivers may get a bargain at the end of the lease by buying the car at residual value. (Sometimes, but rarely, is this cheaper than buying the car in the first place.)

When Buying Can Beat Leasing 

End-of-lease risks: What happens when the lease ends? “Wear and tear” damages can turn a good deal bad quickly. And the dealer pretty much has the upper hand. You generally have no bargaining power, unless you’re about to buy or lease another car.

Inflexibility: Young people seem attracted to leases because they feel flexible. But leasing is often less so because it’s much harder to get out of a lease than sell a car (even a car with a loan balance). What happens if you take a job where you can’t have a car? Leaseholders can get really burned.

Miles: A thousand miles per month may sound like a lot to you today, but what if your company moves 35 miles away months from now? Mileage limits can be pretty oppressive, especially in a world of unknowns. The average 20-something holds 7.2 jobs before age 29.

Overall cost: Leasing is more expensive than buying, even with a loan. But here’s a simple way to look at it: Both are methods of financing a car. With leasing, since you’re paying less upfront, you’re borrowing more longer. So, of course, it costs more. Another way to look at it: With leasing, rather than making a down payment upfront, you can make a down payment three years into having the car (buying for its ‘residual value’). That essentially means you’re borrowing more longer.

As with all generalizations, these concepts may be more or less true based on your unique car deal. Remember, everything is negotiable at a dealership: upfront costs; monthly payment; residual value; ‘money factor’ (leasing speak for interest rate). Even mileage is negotiable since you can buy extra miles upfront for less than you’d pay after three years. It’s possible to lower leasing risks through negotiation or car-maker incentives. If so, leasing may be right for you. (A good credit score can give you more bargaining power on auto financing. You can see where your credit currently stands by viewing your two free credit scores, updated each month, on Credit.com.)

The Bottom Line

Leasing is a bit too much like the Eagles’ song “Hotel California” for my taste. Once you check in, it’s pretty hard to check out. Renters turn in cars and get new leases, and they tend to do so at the same dealerships, for the reasons mentioned above. You’ll never escape the monthly car payment. And worse, perhaps you’ll get a good lease deal today, but three years from now, leases could fall out of favor and you’d be stuck.

In the end, leasing is a seductive but generally a bad plan for saving money. But for folks who care less about money and more about having a new car every three years, don’t drive often and lose sleep over repair bill risks, it can make sense.

More on Auto Loans:

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