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What is a disposition fee?

When your car lease ends, you may think you’re even with the dealer.

But you’ll often find you still owe money because of what’s called a disposition fee. This fee, which typically runs $300 to $400, covers the dealer’s costs of putting the vehicle back onto the market to sell as a used car.

We’ll take a look at how the disposition fee works, what you can do to avoid it and how it fits into the overall cost of an auto lease.

Not sure whether to lease or buy? Explore Auto Loan Options

What is a lease disposition fee?

A car lease is a financial arrangement that lets you effectively “rent” a car from a dealership or auto manufacturer, usually for a few years. The disposition fee is a fee that may be charged when the lease ends.

So how exactly does the disposition fee factor into a lease? When you think about leasing a car, you’ll probably consider any potential “down payment” fee — called a capitalized cost reduction — that comes at the beginning of lease. And you’ll definitely consider your monthly lease payment. But what about the fees you may pay at the end of your lease?

Unlike other fees, the disposition fee isn’t typically paid before your lease starts or as part of the monthly payments. Instead, this fee, sometimes called a “turn-in fee,” gets charged at the end of the lease. The fee usually runs a few hundred dollars, and it offsets some of the costs associated with putting a used car back on the market, such as vehicle cleaning, inspection fees, storage fees and other administrative costs.

You’re not alone if the disposition fee feels like a “gotcha” fee to you. If you’re focused on upfront fees and monthly payments when you sign your lease contract, you may not realize that you’ll owe some money when your lease ends.

Do I have to pay the disposition fee?

The disposition fee should be noted in your lease contract. When you return your vehicle, the leasing company may deduct the disposition fee from any security deposit you may have paid at the beginning of your lease. If you didn’t pay a security deposit, you’ll have to come up with the cash to pay the fee out of pocket.

But there are ways you may be able to avoid paying this fee.

Not sure whether to lease or buy? Explore Auto Loan Options

Tips for leasing your next car

If you want to lease your next vehicle, here are some tips to help you navigate the process.

Understand your contract

A lease contract doesn’t just outline your monthly payments. It should note any fees, too. Some of the fees have confusing names like acquisition fees, money factor and capital cost reductions.

Take time to read and understand your contract before you sign it. If you don’t understand something in the contract, ask the salesperson, but do your own research as well.

How to lease a car

Focus on the whole cost of the lease, not just the monthly payment

Leasing will usually give you a lower monthly payment than if you take out an auto loan to buy a similar car, but with a lease you won’t build any equity or ownership. And a low monthly payment may sound like a good idea, but the monthly cost of leasing doesn’t cover everything. Consider both your upfront costs and your lease-end costs when negotiating your lease.

You may be able to negotiate the following parts of your deal:

Keep the car in good repair

You may be assessed a fee if the car has excessive wear and tear when you turn it in at lease-end. To avoid this charge, change your oil on time and keep up with the required maintenance schedule. You may also want to have your car detailed before you turn it in.

Examples of excessive wear and tear include a dented car body, broken glass or missing car parts.


Bottom line

If you’re nearing the end of your lease, review your lease agreement to see if you’ll be on the hook for a disposition fee. If you are, talk to your dealer about any options for a fee waiver and see if any of them make sense for you.

Not sure whether to lease or buy? Explore Auto Loan Options

Affirm review: Personal loans for online and retail purchases

Pros Cons
Some retailers offer 0% APR No refunds for interest paid on returned items
No late, service or prepayment fees Interest rates may be higher than credit card rates, depending on your credit
Fixed payments available Down payment may be required
Find a personal loan that works for me Shop for Loans Now

What you need to know about an Affirm personal loan

Affirm is an online tool that lets retailers and other sites offer installment loans for your purchases before you check out. You’ll find it on popular sites like Expedia, Warby Parker and Wayfair. Affirm markets itself as an alternative to credit cards, because it provides fixed monthly payments if you want to spread out a large purchase.

If available, you can use Affirm as a payment method when you check out on a retailer’s website or app.

Here are some other highlights of Affirm personal loans.

Down payment may be required

You won’t necessarily be offered a loan for the full amount you request. If this is the case, you may be required to make a down payment with a debit card to fund the rest of your purchase. You won’t be able to change the down payment amount and you’ll need to pay it when you confirm your loan. This could be an issue if you’re strapped for cash.

Interest rates may be higher than credit cards

While some Affirm merchants offer no-interest loans, others may charge an interest rate that’s higher than the average credit card annual percentage rate, or APR. You should compare rates first to see if a loan makes sense or if using an existing credit card is a better option.

Are no-interest loans too good to be true?

No refunds for interest paid on returned items

You can get a refund for up to a year after you place an order. But Affirm won’t refund any interest you’ve already paid if you decide to return an item.

Avoid common fees

Affirm doesn’t charge late fees, service fees or a prepayment penalty if you want to pay off your loan early. Just remember that if you make a late payment, you’ll still owe interest on your purchase. But there is a finance charge based on your interest rate and your credit.

A closer look at Affirm personal loans

If you’re considering an Affirm loan, here are a few other things you should know.

Who an Affirm personal loan is good for

If you qualify for 0% APR, using Affirm may be a cost-effective option to make a large purchase. But before you apply for any type of loan, you should always consider if you have room in your budget to pay off your debt.

If you’re new to credit and don’t have a credit card, or you have a credit limit that’s lower than your purchase amount, Affirm may be able to help you finance your purchase.

How to apply with Affirm

There are three ways to apply with Affirm: at a partner store, in the app or online. You can check your eligibility through its prequalification process, which won’t affect your credit scores. To apply, you’ll need to provide the following information:

Affirm will send a confirmation code to your mobile phone to confirm your identity. In some cases, you may be asked to submit a photo ID or confirm your income.

Once you get your confirmation code, you’ll need to enter it on your application. If you’re approved, Affirm can notify you within seconds of the loan amount you’re approved for, the interest rate and loan terms (either three, six or 12 months). If you decide to accept Affirm’s loan offer, click “Confirm Loan.”

After you’ve made your purchase, you’ll get monthly reminders about your upcoming payments. Your first payment will be due 30 days from the date Affirm processes your order.

Not sure an Affirm personal loan is right for you? Consider these alternatives.

Find a personal loan that works for me Shop for Loans Now

Hyundai Motor Finance auto loan review: Special incentive programs

Pros Cons
Offers special incentives and financing programs Doesn’t offer refinance loans
Allows online applications You must lease or buy a vehicle from a participating Hyundai dealer
Offers vehicle-protection products and discounted auto insurance rates
Find an auto loan that works for me Explore Auto Loans Now

What you need to know about Hyundai Motor Finance auto loans

If you’re looking to buy or lease a Hyundai, like an Elantra, Santa Fe or other model, Hyundai Motor Finance may be a good option for you. Here are some key details to know about HMF.

Limited loan offerings

Hyundai Motor Finance offers loans and leases on Hyundai vehicles. The lender doesn’t offer refinance loans, making it a poor choice if you want to buy a used non-Hyundai vehicle or refinance your current car loan.

Dealership limitations

Hyundai Motor Finance only works with participating Hyundai dealers, which can be tough if there aren’t any such dealers in your area or you want a wider vehicle selection. But if you do decide to apply with HMF, it offers competitive APRs — as low as 0% for qualified applicants on certain cars and financing options.

Keep in mind that while Hyundai Motor Company owns Kia Motors, Hyundai Motor Finance and Kia Motors Finance are two separate companies. So you won’t be able to apply for a loan with HMF for a Kia vehicle.

Credit Karma Guide to 0% APR on Auto Loans

Online credit applications

You can apply for a loan online and should receive a credit decision within minutes. If approved, you’ll get a certificate that you can take to the Hyundai dealer you selected on your application. The certificate is valid for 30 days. Note that the dealer may request more information to finalize the decision.

Take note that not all Hyundai dealers participate in the online-application program. If your local dealer doesn’t, you’ll need to fill out a paper application in person or choose another dealer that offers online applications. And if you’re interested in a specific certified pre-owned Hyundai vehicle, you may need to apply at the dealership.

Robust incentive programs

Hyundai Motor Finance offers several special financing programs that may make it easier to afford your next car.

A closer look at Hyundai Motor Finance auto loans

Here are some other details about HMF to consider as you compare the lender with other options.

Is a Hyundai Motor Finance auto loan right for you?

Because HMF offers auto loans and leases only on Hyundais through participating dealers, the lender isn’t an option for other vehicle leases and purchases. But if you’re planning to buy or lease an eligible Hyundai and qualify for one of the lender’s special promotions or financing deals, it may be worth considering.

How to apply for a loan from Hyundai Motor Finance

You can fill out a paper application at your local Hyundai dealer or apply for credit online through the Hyundai USA or Hyundai Motor Finance websites. Here are the steps to apply online.

  1. Enter your ZIP code and the make and model of the vehicle you want to buy or lease.
  2. A dealer will be chosen for you based on your location, but you can change to a different one during the application process.
  3. Provide your name, phone number and email address, and the same information for any additional applicants, if you have one.
  4. Share your address, housing status, date of birth and Social Security number.
  5. Enter your employment and income information.
  6. Review your application and the terms and conditions, and if you want to move forward click “Submit.”

HMF will check your credit and can provide a decision within minutes. If you’re approved, you’ll get a certificate that you can take to your chosen dealership to complete the financing process. Sometimes the dealer may request additional information from you before finalizing a credit decision.

Not sure if Hyundai Motor Finance is right for you? Consider these alternatives.

If you’re not planning to buy a Hyundai or you want to compare HMF to other lenders, here are a couple to consider.

Find an auto loan that works for me Explore Auto Loans Now

Regions Bank personal loans review: Range of loan options

Pros Cons
Range of personal loan options Loans available in only 15 states
Ability to apply for prequalification with unsecured loan For applicants who don’t have solid credit, it’s probably tough to qualify
Quick application process and funding Maximum unsecured loan amount of $35,000 for online applicants
Find a personal loan that works for me Shop for Loans Now

What you need to know about Regions Bank personal loans

Regions Bank has more than 1,400 branches throughout the South, Midwest and Texas. It offers a wide range of personal banking services, including checking and savings accounts, credit cards and mortgages.

Range of loan options

Regions Bank offers three types of fixed-rate personal loans.

Secured and unsecured personal loans: What’s the difference?

Ability to apply for prequalification

For unsecured loans, Regions Bank partners with Avant to offer you the ability to apply for prequalification online. If you prequalify, you can see potential loan offers, including estimated rates and terms, that you might qualify for — without your credit scores taking a hit. And even if Regions doesn’t give you a prequalification offer, Avant might.

Keep in mind that prequalifying for any type of loan doesn’t mean you’ve been approved for that loan. If you’re prequalified and choose a loan offer, you’ll still need to complete a formal application for the lender to review and decide whether you’ve been approved for a loan and at what terms.

Solid credit is key

According to a Regions Bank representative, the bank considers your credit history, monthly income and debt-to-income ratio. The bank doesn’t publish credit score requirements on its website, but in May 2019 the rep we spoke to noted that it typically looks for FICO® scores of 680 or higher.

Fast loan application process and funding

A Regions Bank rep said the bank aims for same-day approvals or decisions within 24 hours if it needs extra paperwork to process your loan application. Regions customers may receive funds on the same business day they’re approved. If you aren’t a Regions Bank member, funding may take one to three business days if you’re approved for a loan, depending on your bank’s deposit schedule.

Regions Bank personal loan details

Here are some additional things to know about Regions Bank loans.

Who a Regions Bank personal loan is good for

A Regions Bank rep said an unsecured personal loan might be ideal if you have good or excellent credit and want the possibility of same-day approval and funding, the ability to prequalify and see possible loan offers.

A deposit secured loan from Regions might be good for someone with a Regions bank account who wants to borrow a small amount of money — you could borrow as little as $250 with a loan secured by your savings or money market account.

But if you don’t live in one of the states that Regions Bank serves, you’ll need to look elsewhere — you can only close on secured loans at a branch.

How to apply with Regions Bank

You can apply for either a secured or unsecured loan online through the Regions Bank website. But you’ll need to close a secured loan in person, at a Regions Bank branch.

To apply for prequalification for an unsecured loan, you’ll be directed to Avant’s website and asked to provide the following information:

After you’ve filled in these details, you can submit the form and see if you prequalify. If you do, you’ll be able to see the estimated loan rates you might qualify for. From there, you can choose whether to continue the loan application process.

Not sure a Regions Bank personal loan is right for you? Consider these alternatives.

If you’re not sure that a Regions loan is right for you — or you don’t live in one of the 15 states the bank serves — here are two other options to consider.

Find a personal loan that works for me Shop for Loans Now

Should I get a motorcycle lease?

Motorcycle leases are similar to car leases. You’ll make monthly payments over a period of time for the right to ride the bike of your choice.

But motorcycle leases aren’t as common as auto leases. You won’t find a leasing program at many dealerships you visit. For example, even within the Harley-Davidson franchise, you may find leasing offered in one shop but not in another.

You may be able to qualify for a motorcycle lease even if your credit isn’t great. But the trade-off may be a high interest rate or large down-payment requirement. For these reasons, leasing may not be the best choice for everyone.

Hop on to learn if a motorcycle lease is right for you.

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What is a motorcycle lease?

Similar to an auto lease, a motorcycle lease lets you drive the vehicle without buying it. At the end of the lease, you may renew the lease, return the bike, buy the bike or trade it in for another one.

Motorcycle lease terms typically range from 18 months to 60 months, and you’ll often have the option to lease either a new or a used motorcycle.

Here are some other important details you should know about motorcycle leasing.

Motorcycle loans vs. leases

Motorcycle leases and motorcycle loans both have their pros and cons. Let’s compare the two options.

Availability

Motorcycle leases aren’t as widely available as motorcycle loans, so you may not be able to lease directly from a dealership. For example, Honda, Harley-Davidson, Ducati and BMW all offer motorcycle loans. Of these four, only Harley-Davidson offers motorcycle leasing — but not in all locations.

Credit requirements

You may be able to get approved for a motorcycle lease even if you have rough credit. While that’s also possible with motorcycle loans, beware of “buy-here, pay-here” loans, which often come with high interest rates and unfavorable loan terms.

Overall cost

Motorcycle leases may be more expensive than motorcycle loans. If you have good credit, it may make more sense for you to finance a motorcycle since you may qualify for a lower interest rate than if you leased a bike.

Also, remember that at the end of your lease, you won’t own the motorcycle. You’ll have to renew your lease, lease another bike, buy one or find alternate transportation.

Is a motorcycle lease right for you?

A motorcycle lease may not be right for everyone. If you can afford to buy a motorcycle outright or have solid credit, buying may save you money compared to leasing.

But motorcycle leasing may be a good option in these two scenarios.

You have credit challenges

If you’re working on building or rebuilding your credit, leasing could be a good option. You may want to think of a motorcycle lease as a second chance loan. The drawbacks are that you may pay a high interest rate and be required to make a large down payment.

You drive a lot and want a different bike every few years

Leasing can be a particularly good option if you plan on putting a lot of miles on a bike and prefer to drive a new one every few years. You can often find lease programs with no mileage restrictions.

Alternatives to motorcycle leasing

Besides loans and leases, there are a couple of additional motorcycle-financing options to consider.

Balloon financing

Balloon-financing programs are offered directly by some motorcycle dealers. With this option, you only make payments on part of the bike’s total amount you financed — then you’ll owe one large balloon payment at the end of the contract. As a result, your monthly payment ends up being lower — until the balloon payment is due.

Keep in mind that these programs usually require solid credit for approval, so not everyone will qualify for this type of financing.

Short-term rental

If you only need a motorcycle for a few days or weeks, a short-term rental could be a good option. You can also use this opportunity to try out a few different motorcycles before committing to buy or lease.

Two options for short-term rentals are EagleRider, the exclusive provider of Harley-Davidson rentals in the U.S., and Riders Share, a motorcycle-sharing program that’s similar to Airbnb for homes.


Bottom line

Whether a motorcycle lease is right for you ultimately depends on your personal situation, especially as it applies to your credit and your driving behavior.

Before you decide to lease, think about your needs and create a budget. That will help you understand if a motorcycle lease fits your lifestyle and finances, or if you need to take a different financing route instead.

What’s on my vehicle records? See My Vehicle Records Now

What is the standard deduction for 2019?

Standard deductions grew substantially in 2018, but they’re only increasing slightly for the 2019 tax year.

The standard deduction is a specific dollar amount by which you’re allowed to reduce your taxable income — which in turn could lower your tax obligation. If you’re not eligible to take the standard deduction, or you think you have allowable deductions that will total more than your standard deduction amount, you could choose to itemize deductions instead.

Historically, most filers take the standard deduction.

Let’s take a look at what the new standard deduction amounts are, why they’ve changed, and factors to consider when deciding whether to take the standard deduction or itemize your deductions on your 2019 federal income tax return (due in 2020).

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2019 standard deduction amounts

Here are the new standard deduction amounts for 2019.

Filing status 2019 standard deduction Increase from 2018
Married filing jointly $24,400 $400
Married filing separately $12,200 $200
Single $12,200 $200
Head of household $18,350 $350

Usually, the IRS allows additional standard deduction amounts for taxpayers who are blind or age 65 or older. Your standard deduction amount may also be much lower if someone else claims you as a dependent on their return — your parents, for example, if you’re still a college student.

It’s important to note that if you opt to claim the standard deduction, you’ll use the numbers in the above chart when you file your 2019 tax return in 2020. If you’re still working on your 2018 tax return (if you got a filing extension for Oct. 15 instead of April 15), you’ll still use the slightly lower 2018 standard deduction amounts, not the 2019 numbers.

Tax deduction vs. tax credit: What’s the difference?

Why do standard deduction amounts change from year to year?

Every year, the IRS revises many tax-related amounts in order to account for inflation. This year’s revisions included the standard deduction. Other things the IRS also revised for 2019 in order to account for inflation include the following:

Advantages and disadvantages of the standard deduction

As a way to reduce your taxable income, the standard deduction has a lot going for it.

On the flip side, depending on your situation, you may qualify for certain other deductions that you normally can’t claim if you take the standard deduction. For example, if you itemize your deductions, you may be able to take the deductions below.

It’s important to note that deductions generally have limitations on how much you can deduct. But if all your expenses that are eligible for deduction add up to more than the standard deduction amount for your filing status, you may be able to lower your tax obligation more by itemizing.

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Which is best? Standard deduction or itemizing?

Each person’s tax situation is unique, and the best way to decide if the standard deduction or itemizing is better for you might be to run the numbers both ways. Online tax preparation and filing services can help you crunch the numbers. For example, Credit Karma Tax® allows users to easily see the difference between the two options.

Because the standard deduction has increased so much now, many more people may find the standard deduction works best for them. Still, if you’re on the fence and think your deduction expenses may add up to more than your standard deduction, it may be worth doing the math to see if you’ll get a lower federal tax bill by itemizing.


Bottom line

Now that the standard deduction has been raised (and raised again, with the 2019 inflation adjustments), there’s even more incentive to take the simple route for reducing your taxable income. But remember to do the math. Just because something is simpler doesn’t necessarily mean it will help you save money.

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When is the tax extension deadline?

Getting an extension to file your federal income tax return isn’t a “set-it-and-forget-it” kind of thing. You need to stay on top of the tax extension deadline so you can be sure to file your return on time.

When is the tax extension deadline and is it the same for everyone? What do you need to do to prepare for it and what might happen if you miss it?

Here’s some information you need to know if you got an extension to file your federal income tax return.

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When is the tax extension deadline?

During the 2019 filing season (for your 2018 federal income tax return), the IRS expected approximately 14.6 million people would request an extension to file their taxes — the largest number of requests received in a year, an IRS spokesman told the New York Times.

Getting a filing extension basically means you’re allowed to file your federal tax return after the Tax Day deadline, which is usually April 15 for most filers. You can request an extension by …

If you qualify for the six-month extension it typically gives you until Oct. 15 to file your tax return. But any tax you owe is still due by the original filing deadline, which is usually April 15 for most taxpayers. A six-month extension of time to file is not an extension of time to pay.

And remember, an extension of time to file your federal return is not necessarily an extension of time to file your state return, too. If you feel you need more time to file a state return, check with your state’s tax authority to determine how to request an extension.

Some special cases

Although April 15 is the tax deadline for most U.S. taxpayers, some may get extra time due to certain circumstances, such as being affected by a federally recognized disaster or serving in the military in a combat zone. For example, people affected by severe storms and flooding in Iowa on March 12, 2019 have until July 31, 2019 to file and pay their 2018 federal income taxes.

What should I do now that I’ve got my extension?

Although your six-month extension gives you until Oct. 15 to file, there’s no reason why you can’t file sooner if you have everything you need. You may still be able to file electronically, too. For example, if you received an extension of time to file, Credit Karma Tax® can help you prepare and e-file your federal return by the Oct. 15 extension deadline.

What if I owe more than I thought?

If, after preparing your tax return ahead of the extension deadline, you discover that you underestimated and underpaid your tax obligation, you could end up owing interest and possibly a penalty on the unpaid balance.

What if I miss the tax extension deadline?

If you got a six-month extension, try not to miss the Oct. 15 due date. Missing it could trigger a failure to file or late filing penalty.

Learn more about IRS penalties

What if I didn’t request an extension?

The IRS says your extension was automatic if …

In this case, according to the IRS you didn’t need to do anything else to get an extension to file your taxes.

But if you didn’t file, didn’t request an extension and didn’t pay all or part of the tax you owed, you could face penalties for late filing and late payment. If you were owed a tax refund, you won’t face a late-filing penalty for your federal return, since this penalty is a percentage of tax owed.

Can I get an extension after April 15?

Probably not. April 15 is typically the deadline for paying any tax you owe and requesting a filing extension. Missing payment or filing deadlines typically results in interest and penalties.

In some situations, you may be able to get penalties waived if you can show reasonable cause for why you missed a deadline. Situations that may constitute reasonable cause include fire or natural disaster, death, serious illness, incapacitation or the unavoidable absence of a taxpayer or a member of the taxpayer’s immediate family.

The IRS weighs all the facts and circumstances of each situation to determine if a taxpayer had reasonable cause to miss a filing or payment deadline.


Bottom line

If you got an extension of time to file your federal income tax return, you bought yourself some breathing room. But if you received a filing extension and you’re required to file a return, the IRS expects you to file by Tax Day or the extension deadline. And any tax you owe is due on Tax Day, not on the extended filing deadline.

If you received a six-month extension, be sure to file your federal return before the October deadline. Missing the extension deadline could have negative consequences, such as facing penalties.

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Mastercard planning True Name cards for LGBTQIA+ community

Imagine a quick trip to the neighborhood grocery store to grab a few essentials, or sitting down to a nice dinner with friends — but then being unable or feeling uncomfortable to pay because the name on your card doesn’t reflect who you are. Mastercard wants to help fix this problem for its LGBTQIA+ customers.

This week Mastercard unveiled plans for True Name™ cards. Working with its partners, Mastercard said it committed to developing a product designed to show customers’ chosen names on their cards without the need for a legal name change — a milestone in the industry.

The application and verification process will depend on the card issuer. Under the proposed True Name program, applicants would be able to choose the name they wanted to display on their card. This could alleviate the discomfort customers might feel when using their cards.

Want to know more?

What’s prompting this change?

For many in the LGBTQIA+ community, the name on their debit card, prepaid card or credit card may not reflect their true identity — but instead the name and gender they were assigned at birth. This can cause problems for people when they go to pay with these cards.

According to Mastercard, 32% of those who have provided an ID with a name or gender that didn’t match how they presented have had negative experiences such as being harassed or denied service. The card issuer is hoping to alleviate this problem for its customers.

What happens next?

There’s no definitive word yet on how long the process to implement True Name cards will take or when they might be issued, although an article from The Washington Post says Mastercard plans to have the program in place by 2020.

If you have concerns about how you’re being treated by financial institutions, the Consumer Financial Protection Bureau has resources on how to protect against credit discrimination.

Toyota Financial Services auto loan review: Special financing programs

Pros Cons
Offers various special financing programs Limited loan offerings
 You can apply for preapproval online Only Toyotas five years or newer qualify for used-car financing
Willing to consider borrowers with limited credit histories You must purchase or lease the vehicle from a participating dealer
Find an auto loan that works for me Explore Auto Loans Now

What you need to know about Toyota Financial Services auto loans

Toyota Financial Services — a part of Toyota Motor Corp. — offers auto loans for new and used Toyota vehicles through Toyota Motor Credit Corp. and leases through Toyota Lease Trust. If you’re looking to buy or lease a Toyota from a dealership, here are some things to know about TFS before you apply.

Limited loan offerings

Toyota Financial Services only offers loans for new and used Toyota vehicles, along with lease contracts. If you want to refinance your auto loan, you’ll need to consider other lenders.

Vehicle and dealership limitations

Toyota Financial Services allows you to apply for preapproval on its website or at the dealership. But not just any Toyota will qualify. Loans are available only for vehicles from the most recent five model years, and you have to buy or lease your car from a participating dealership, which can limit your ability to shop around.

You can search for participating dealerships in your area through Toyota’s website.

And remember, prequalifying for a loan doesn’t mean you’re approved — it just gives you an idea of whether you might be approved and what your rates might be if you are.

Lender will consider people who have a limited credit history

It can be tough to get approved for an auto loan or lease on your own if you have a limited credit history. But with TFS, you may be able to qualify without a co-applicant. Here are some of the eligibility requirements to get financing.

If you don’t meet one or more of these requirements, you can still apply with a co-applicant with good credit, which may be able to help you get a loan. Also, keep in mind that loans are limited up to $25,000 with this program.

Despite the company’s willingness to consider people who have a limited credit history, the weighted average FICO® score of Toyota Financial Services’ customers who got loans and lease financing in 2018 was 735, according to its February 2019 investor presentation.

Special financing programs

In addition to considering people with limited credit, TFS provides special programs for recent college graduates, military members and repeat customers.

The lender may also feature special offers and rebate programs on new vehicles, depending on the model and dealer.

A closer look at Toyota Financial Services auto loans

Here are some other details about TFS to consider when comparing it with other lenders.

Is a Toyota Financial Services auto loan right for you?

Because Toyota Financial Services offers loans only on Toyota vehicles through participating dealerships, many people won’t ever come in contact with the company.

But if you do, TFS may be a good choice if you want a new or late-model used car and are having a hard time getting approved with other lenders because of a limited credit history. It can also help save you time by giving you the chance to apply for preapproval online, so you don’t have to go through a lengthy process at the dealership.

Finally, TFS may be a good choice if you qualify for one of its special programs for repeat customers, college graduates or military members and their families.

How to apply for a loan from Toyota Financial Services

You can apply for auto loan or lease preapproval through a participating Toyota dealer or online.

1. Click on “Apply for Credit” at toyotafinancial.com.

2. Enter your ZIP code and select the vehicle you want.

3. Indicate whether you want to buy or lease.

4. Provide your name, email address, address and housing information, Social Security number, date of birth, education, income and employment information. If you have a co-applicant, you’ll need to provide the same information for that person.

5. Select a participating dealer in your area.

6. Enter your desired loan term, down payment amount and trade-in information, if applicable.

7. If you agree to the terms and conditions and submit your application, it will result in a hard credit inquiry.

You’ll get a credit decision via email. If you’re preapproved, you’ll receive a preapproval certificate that you can take to a participating dealer to begin the purchase or leasing process.

Not sure if Toyota Financial Services is right for you? Consider these alternatives.

If you’re on the fence about whether to work with TFS, here are a couple of other lenders to consider.

Find an auto loan that works for me Explore Auto Loans Now

What is a flat tax on income?

A flat income tax rate could simplify the tax system — but it could also put an unfair burden on lower-income taxpayers.

The U.S. is no stranger to a flat tax — the country has enacted a flat federal income tax twice in its history. Nine states currently have a flat tax rate on all income and two additional states have a flat tax on interest and dividend income only. And with the current tax code as complicated as it is, some politicians have called for a new federal flat income tax.

But while a flat tax system may appear simpler than a progressive one, it would also likely have some downsides that could make things more difficult for certain taxpayers. Read on to learn more about how a flat-rate income tax works and how it might affect you.

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What is a flat tax?

As the name suggests, a flat tax is a single tax rate assessed on all taxpayers, regardless of their income levels. For example, Social Security and Medicare taxes are flat taxes, charging 12.4% and 2.9%, respectively. For both taxes, the rate is split between employers and employees.

The current progressive system

The U.S. federal income tax, however, follows a progressive tax system. In the current tax code, the federal income tax rate increases along with taxable income. The idea is that high-income taxpayers have a greater ability to pay than low-income taxpayers.

For the 2019 tax year, the tax code has seven tax rates — 10%, 12%, 22%, 24%, 32%, 35% and 37%. Each rate corresponds to a tax bracket.

A flat tax rate eliminates the need for a tax rate schedule and tax brackets, which could make it easier for taxpayers to calculate their taxes owed and file their returns.

States with flat taxes

As of 2019, 11 U.S. states have some type of flat income tax rate.

State Flat tax rate
Colorado 4.63%
Illinois 4.95%
Indiana 3.23%
Kentucky 5%
Massachusetts 5.05%
Michigan 4.25%
New Hampshire 5%
North Carolina 5.25%
Pennsylvania 3.07%
Tennessee 2%
Utah 4.95%

Note that both New Hampshire and Tennessee tax interest and dividend income only, and not W-2 wages. In Tennessee, the tax will decrease to 1% in 2020 then be fully repealed in 2021. And in Illinois, the question of whether to retain the current flat tax system or replace it with a graduated income tax system will go before the state’s voters on the November 2020 ballot.

How to file state tax returns for free

Why is this important?

The U.S. has had a flat tax rate twice in its history. The first federal income tax was put into place in 1861, and it was a flat tax. At the time, the government was looking for ways to raise money for the Civil War. The tax was repealed in 1872. Then Congress enacted a flat federal income tax again in 1894, though it was repealed a year later when the U.S. Supreme Court ruled it unconstitutional.

A handful of presidential candidates have proposed in recent years to replace the current progressive federal income tax system with a flat tax. As of May 2019, there are proposed bills in both the Senate and House of Representatives calling for tax reform that would replace the current progressive system with a flat tax system.

While it’s unclear how far those tax proposals will go in Congress, the conversation still continues on whether a federal flat income tax is right for the U.S. By understanding both the benefits and drawbacks, you can have a better idea of where you stand on a flat tax and how it can impact your tax burden if it ever happens.

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Pros and cons of a flat tax system

As with many potential changes to the tax code, a flat tax rate comes with both advantages and disadvantages.

Pros

Proponents of a flat tax typically cite some benefits of the IRS switching away from its current progressive tax system. For one thing, flat tax supporters argue the system would be fairer because everyone would pay the same rate.

Some who support a flat tax argue that it could also promote economic growth because taxpayers would be incentivized to earn and invest more money.

To provide for low-income earners, some proposals have called for an exemption amount that isn’t taxable. If, for example, the exemption amount is $35,000 and your income is $50,000, you’d only pay a flat tax on $15,000 — the amount by which your income exceeds the exemption amount. And if your income is below the exemption amount, you won’t pay anything at all.

Some flat tax proposals include closing certain tax loopholes for individuals and business owners to simplify the tax code further.

Cons

A progressive personal income tax can help equalize wealth in a country by taking a larger share from high-income groups and effectively giving a tax break to low-income groups.

But that doesn’t work with a flat income tax rate. In this scenario, any tax revenue the IRS loses through a lower rate on high-income earners must be made up by low-income earners.

In 1992, the Congressional Budget Office simulated the effect a flat tax would have on the after-tax income of American families. The CBO found a flat tax would increase the after-tax income of the highest earners by nearly 7% and decrease the after-tax income of the lowest earners by nearly 22%.

How could this affect my taxes?

As with any aspect of the tax code, the effects of a flat tax on your federal income tax obligation would depend on a number of factors. For example, a 15% flat income tax could provide for a cheaper tax bill for a high-income earner with a marginal tax rate of 22%.

But if you’re a low-income earner with a federal tax rate of 10%, a 15% flat tax could increase your federal tax bill.

In addition to your income and effective tax rate under the current progressive system, other variables include exemption amounts, deductions, credits and others. In other words, a flat tax isn’t as straightforward as you might think, and it could take a lot of number-crunching to find out how it would affect you personally.


Bottom line

According to the Brookings institute, total federal revenues, adjusted for inflation, fell from fiscal year 2017 to fiscal year 2018 – the first year the Tax Cuts and Jobs Act of 2017 took full effect. If the federal government looks for ways to offset any loss of tax revenue, a flat income tax might not be entirely out of the question – especially since the U.S. has had one in the past.

It’s important to understand both the positive and negative potential impact a flat tax could have on you and the people around you. As you compare both a progressive and flat tax system with your situation in mind, you can get a good idea of whether it could increase or reduce your tax bill each year.

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U.S. states with the most and least debt

Total debt per capita in the U.S. was $48,800 at the end of 2017, according to the Federal Reserve Bank of New York. The state or region where people hold the most debt is Washington, D.C. — while the state with the lowest debt is West Virginia.

To determine which state’s residents has the most debt in the nation, we ranked states by their debt-to-income ratios — that is, each state’s total debt per capita divided by residents’ median incomes. In general, the higher the ratio, the harder it might be for residents in a state to pay down their debt.

Looking at debt-to-income ratio versus total debt alone can give a more complete debt picture for each state’s residents because it measures residents’ ability to manage their debt, not just their total debt load. (Learn about our methodology.)

See below for states where residents have the most — and least — debt as determined by their debt-to-income ratios, along with a look at how the debt burden breaks down in each state.

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Key findings

Residents of Washington, D.C. have the highest debt-to-income ratio at 1.09, meaning that overall people in D.C. have 9% more debt than their income can cover. This area also has the highest total debt per capita at $84,380, according to the Federal Reserve Bank of New York.
West Virginia has the lowest debt-to-income ratio, at 0.65, meaning that overall West Virginians make about 35% more money than they owe. This state also has the least total debt per capita at $28,790, according to the Federal Reserve Bank of New York.
In states with the highest debt-to-income ratios, mortgage debt makes up a much higher percentage of residents’ total debt compared to other forms of debt.
In states with the lowest debt-to-income ratios, residents have a higher percentage of credit card debt compared to residents in states with the highest DTI.
Overall, Washington, D.C. has more than 3x more total debt per capita than West Virginia.

States where residents have the most and least debt

The map below shows total debt per capita in each state, based on data from the New York Federal Reserve at the end of 2017. Washington, D.C. has the highest debt per capita at $84,380, followed by Hawaii with $71,170 and California with $70,100 in total debt per capita.

A graph that shows a map of the U.S. breaks down total debt per capita, showing that Washington, D.C. has the most debt and West Virginia has the least.

Total debt per capita is only part of the picture, though. If people are making more than enough money to cover all that debt, then the actual debt burden for residents in that state isn’t all that bad. For example, Maryland’s total debt per capita is $70,010 — the fourth highest in the nation — but that state’s median income is also higher than any other state, according to the U.S. Census Bureau’s 2017 5-Year American Community Survey, making the debt-to-income ratio 0.89. Therefore, the debt burden is not as heavy.

That’s why looking at debt-to-income ratio can give us a much better understanding of each state’s debt — it not only captures a state’s residents’ total debt, but also residents’ ability to manage that debt with the income they have.

Here are the 10 states in the nation with the highest debt-to-income ratios:

10 states where residents have the most debt, ranked by DTI

Rank State (including D.C.) Total debt per capita Median individual income Debt-to-income ratio
1. Washington, D.C. $84,380 $77,649 1.09
2. Colorado $68,450 $65,458 1.05
3. California $70,100 $67,169 1.04
4. Arizona $51,300 $53,510 0.96
5. Hawaii $71,170 $74,923 0.95
6. Virginia $65,050 $68,766 0.95
7. Washington $62,560 $66,174 0.95
8. Oregon $53,020 $56,119 0.94
9. Nevada $50,320 $55,434 0.91
10. Idaho $46,270 $50,985 0.91

Sources: Federal Reserve Bank of New York, U.S. Census Bureau

A line graph visually represents income vs. debt in the states with the highest debt-to-income ratios

In other states, median income outweighs total debt per capita — meaning that, in theory, residents there have a lighter overall debt burden. West Virginia is the state with the lowest debt, according to New York Federal Reserve data, with a total debt per capita of $28,790. It also has the lowest debt burden.

Here’s how the states rank when you look at those with the lowest debt-to-income ratios:

10 states where residents have the least debt, ranked by DTI

Rank State Total debt per capita Median individual income Debt-to-income ratio
1. West Virginia $28,790 $44,061 0.65
2. Kansas $37,320 $55,477 0.67
3. Oklahoma $33,890 $49,767 0.68
4. Iowa $38,920 $56,570 0.69
5. North Dakota $42,230 $61,285 0.69
6. Wisconsin $39,120 $56,759 0.69
7. Nebraska $39,400 $56,675 0.70
8. Ohio $37,160 $52,407 0.71
9. Indiana $37,210 $52,182 0.71
10. Michigan $37,640 $52,668 0.71

Sources: Federal Reserve Bank of New York, U.S. Census Bureau

A line graph visually represents income vs. debt in the states with the lowest debt-to-income ratios

What’s the debt breakdown in states with the most and least debt?

Not all debt is created equally. For example, mortgage loans can make up a large portion of a person’s overall debt, but it’s considered good debt as long as you get a mortgage that’s within your means. On the other hand, revolving debt — like credit cards or auto loans — can be considered a bad form of debt.

We found that states where residents have the most debt tend to have a higher percentage of mortgage debt, while states where residents have the lowest debt were more likely to index higher on other types of debt, such as auto loans, credit cards and student loans.

For example, according to the Federal Reserve Bank of New York, Washington, D.C.’s average mortgage debt was $62,080 at the end of 2017, or 74% of total debt for people who live there.  By comparison, West Virginia, the state with the least debt, spent less on mortgage debt in Q4 2017 — just 53%.

At the same time, 16% of West Virginians’ debt was for auto loans, four times as much as in Washington, DC, where auto loans were just 4% of total debt.

Two pie charts breakdown total debt in Washington, D.C. and West Virginia


Tips to pay down debt

No matter where you live or what type of debt you have, paying it down can be tough. If you’re having trouble managing your debt, you’re not alone. Here are a few things to try:

Create a budget and stick to it

Planning and writing down a monthly budget can be key to getting on top of your debts. Just be realistic about your spending habits and limitations, and revisit and adjust your budget as needed.

Consolidate your debt

This can help if you’re juggling multiple payments on several high interest loans, like credit cards. One way to consolidate all that debt is by taking out a personal loan, which can come with lower interest rates than credit cards. But keep in mind that this type of loan generally only makes sense if you’re able to get a lower interest rate on your loan than you’re paying across your existing debts.

You can also consolidate your high-interest debt using a balance transfer credit card. These types of cards often offer an introductory 0% interest rate for balance transfers during a promotional period, allowing you to put more money toward paying down your principal and less toward interest.

Consider all your options as you look for the right solution for your situation.

Cut small expenses

Think about those streaming services like Spotify, Netflix or Hulu. Are there any mobile apps or other monthly subscriptions you don’t need? If you only use them occasionally, you might want to cancel.

Canceling a single monthly subscription of $10.99 could save you around $132 over the course of a year, freeing up more money to pay down debt. You might also consider free weekend activities instead of big dinners or outings, or other cost-cutting ideas.

These expenses might seem small, but they can add up over time. You might be surprised how much financial breathing room you can create for yourself by cutting them out of your budget.  


Methodology

To determine which states have the highest and lowest debt, we examined the New York Federal Reserve’s total debt per capita data from Q4 2017, the most up-to-date data available. To calculate debt-to-income ratio, we divided the total debt per capita for each state by the median individual income in each state as determined by the U.S. Census Bureau’s 2017 5-Year American Community Survey.

Eloan personal loan review: No prepayment or origination fees

Pros Cons
Ability to apply for prequalification with soft credit inquiry Potentially high interest rates
No prepayment, application or origination fees Low maximum loan amount
Considers applicants with a variety of credit histories Not available in Massachusetts
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What you need to know about an Eloan personal loan

Eloan, a division of Banco Popular de Puerto Rico, is an online lender offering unsecured personal loans in the U.S. Its loans can be used for a variety of purposes, including paying for medical expenses, home improvements and debt consolidation. If you’re thinking about applying for a personal loan through Eloan, here are a few things to consider.

Application for prequalification available

Some personal loan lenders require you to complete a formal loan application — which results in a hard credit inquiry and can lower your credit scores by a few points — to get your financing terms. But Eloan has a simple prequalification application that lets you see whether you might qualify for a loan and what your estimated rate might be without affecting your credit scores.

Just remember, prequalification doesn’t guarantee approval for a loan, or at what terms — you’d have to submit a formal application for that.

No prepayment, application or origination fees

Lenders sometimes charge application or origination fees, which can eat into your loan funds before you even receive them. And some charge prepayment fees, too, which penalize you for paying down debt too quickly. Eloan doesn’t charge prepayment penalty, application or origination fees.

Willing to work with different types of credit

Eloan doesn’t publish its loan eligibility requirements, including minimum credit scores, on its website. But it does note that it’s willing to work with applicants who have different types of credit histories. Eloan also considers multiple factors when making loan decisions, including debt-to-income ratio, repayment history and credit scores. And Eloan also notes that applicants with higher credit scores tend to have the highest approval rate.

Eloan has a rate and payment calculator on its website that shows monthly payment estimates for people with credit scores ranging from fair to excellent, which suggests you don’t need perfect credit to qualify for a loan.

Learn more about credit score ranges

Potentially high interest rates

If you have excellent credit, you may qualify for the lowest rates Eloan offers, which are on par with many other lenders’ starting annual percentage rates.

But Eloan’s interest rates for those with fair credit are much higher than the highest rates offered by some other lenders. So be sure to shop around, especially if you can only qualify for Eloan’s highest rates.

Eloan personal loan details

If you’re considering applying for a loan with Eloan, here are some additional details to know.

Who an Eloan personal loan is good for

Eloan might be a good fit if you need money quickly, are comfortable with an online application experience and want the ability to check potential interest rates without affecting your credit scores.

Because there are no origination or application fees, an Eloan personal loan could also be a good choice for debt consolidation.

How to apply with Eloan

All loan applications must be submitted through the Eloan website, eloan.com. The first step in the application process is to apply for prequalification by providing some basic information about yourself.

If you decide to apply for a loan from Eloan, you’ll need to continue your application and may need to provide documentation to verify the information you provided.

Not sure if Eloan is right for you? Consider these alternatives.

If you want to explore other loan options before deciding whether a personal loan from Eloan is right for you, take a look at these lenders.

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Sallie Mae will soon offer credit cards: Here’s what to know

Credit Karma’s editors and writers want to help you stay on top of credit card news. The information below is accurate to the best of our knowledge when posted. Heads up: Credit card terms are subject to change, and the terms outlined below may not be current after the date of publication.

Sallie Mae, a company generally known for student loans, is getting into the credit card business.

Sallie Mae will soon be offering three new credit cards geared toward students and recent graduates, including one that offers cash back incentives for paying your bill on time. Here are some of the key features of these zero-annual-fee cards.

Sallie Mae is currently hosting a waitlist for people interested in applying for the new cards.

Want to know more?

Are these new cards worth it?

If you’re in the market for a cash back card, there are certainly other cards out there that offer higher cash back rewards.

But if you’re a student looking to begin building credit history, the Sallie Mae IgniteSM card could be a good option because it incentivizes on-time payments.

If instead you’ve got student loan debt to pay off, the Sallie Mae AccelerateSM card could be a good option, because it offers an incentive for paying your student loans, with a cash back bonus each time you use rewards for loan payments.

What should you keep in mind?

As with any credit card, if you carry a balance on your Sallie Mae card from month to month, you’ll be charged interest. So if you’re thinking about applying for any of Sallie Mae’s credit cards, you’ll want to pay your balance in full and on time each month to avoid interest charges. And make sure you budget for expenses like your student loan payments before making any purchases just to earn credit card rewards.

How to negotiate a car lease

Negotiating a car lease can be similar to negotiating a car loan in some ways — but with different terminology and standards.

Learning how to negotiate a car lease isn’t necessarily difficult. But if you haven’t leased a vehicle before, you may not know all the language used during the leasing process, or which parts of your leasing deal are up for discussion when you arrive at the dealership.

We’ll walk you through some of our top tips for how to negotiate a car lease, to help you drive off the lot feeling as if you made an informed decision.

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4 tips for negotiating the best price on a car lease

Negotiating is an art. To negotiate successfully, you need to be educated about the process and how to get the best deal.

1. Know the terminology

The terminology used in the car-leasing process is different from the terminology involved in buying a car. Here are some important terms to brush up on before you head to the dealership.

Learn how to lease a car

2. Research prices and deals

Before heading to the dealership, it’s good to research any lease deals that may be available for the models you’re interested in. Look for manufacturer incentives and advertised specials as a starting point for your negotiations.

Make sure you look into the typical sales price for the cars you want. Although you aren’t buying a new car, you can negotiate the price of the car just the same. The lower you negotiate the price, the less depreciation you may have to pay for over the life of the lease if all other terms remain the same. That may mean a lower monthly lease payment, too.

Should you lease or buy? What to consider when shopping for your next car

3. Shop multiple dealerships

It’s a good idea to shop around at multiple car dealerships, compare prices and deals on the car you want to lease.

You can try to make dealers compete for your business by shopping your best offer around to see if another dealership can beat it. You can then decide if you like that offer or want to keep car shopping. Always be ready to walk away if you don’t find a deal that you can afford.

4. Be open to other car models to find the best deal

Just like when you buy a car, dealerships may have an incentive to offload certain cars on their lot. If you’re open to leasing more than one specific make or model, you can take advantage of these opportunities to potentially score a sweet deal on your lease.

Car lease terms to negotiate

When you’re ready to negotiate, there are certain common items you should consider up for discussion on your lease.

Capitalized cost

The capitalized cost, sometimes called cap cost, is a good place to start negotiating. You’ll want this number to be as low as possible since this affects your monthly payments. Research what the vehicle actually costs the dealer through a site like Consumer Reports to get a better idea for a potential price range.

You may also be able to reduce this charge by applying a down payment or trade-in vehicle as part of the deal. This is also known as a capital cost reduction.

Rent charge or money factor

Some dealers may say the rent charge — also known as the money factor — isn’t negotiable. Other dealers may mark up the rent charge to improve profit. The key is making sure this number is reasonable based on current interest rates and what other dealers are offering. If it isn’t, consider taking your business elsewhere.

You can calculate your annual percentage rate, or APR, by dividing the rent charge by 2,400.

Mileage allowance

When you lease a car, you’re typically allowed to drive a certain number of miles throughout the course of your lease term. Driving your leased car more than the mileage limit usually results in a per-mile fee.

Look closely at the mileage allowance in your lease — which is often 12,000 or 15,000 miles per year. If you anticipate driving more than that, negotiate extra mileage upfront. It may be cheaper to pay for more miles now than pay the per-mile fee later.

FAST FACTS

What leasing terms aren’t usually negotiable?

Some factors of a lease typically aren’t negotiable. The residual value, or value of the car at the end of the lease, is usually set by independent car-value experts.

Another thing that you can’t usually negotiate is the lease-acquisition fee. This fee covers the leasing company’s costs to set up the leasing transaction.

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Bottom line

The process of negotiating a car lease can be pretty straightforward. But should you consider leasing a car? If the price is right and you like to drive the latest car models, leasing may make financial sense for you.

Even so, you may be better off financially if you purchase a reliable used car and drive it for 10 years or more.

What’s my car worth? See My Car’s Estimated Value Now

Bad credit? Things to know about personal loans from direct lenders

Shopping for a personal loan with bad credit can be especially challenging — but you do have options.

You could apply for a loan through a direct lender, a loan aggregator or a peer-to-peer lending network.

These lenders may be able to provide unsecured loans, which are loans not guaranteed by any assets or collateral. And while it’s possible to get loans from these sources without perfect credit, you may not be able to get the most favorable loan terms.

Direct lenders, loan aggregators and peer-to-peer lending networks work differently, so you need to weigh the pros and cons of each of these loan providers and carefully compare offers to get the best deal for you.

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3 types of lenders to consider

Let’s review how direct lenders, loan aggregators and peer-to-peer lending networks operate when you apply for an installment loan.

1. Direct lenders

Direct lenders issue loans directly, and so the money you receive — if you’re approved for a loan — comes from the lender.

Types of direct lenders include local, national and online banks, credit unions and even the federal government. Direct lenders review your loan application and — if you’re approved — lend you funds.

Lenders may consider applicants with bad credit to be riskier borrowers, so some direct lenders may be unwilling to lend these applicants money. But there are direct lenders that offer bad credit loans, so you still have some options — just be aware that they may charge higher interest rates.

When you apply for a loan with a direct lender, you’ll find out the terms that only this particular lender is offering. To compare loan terms, you’d need to apply with multiple direct lenders to see what each has to offer. Many direct lenders allow you to submit your information to get a rate quote without a hard credit inquiry, which means it’s possible to shop around without hurting your credit.

2. Loan aggregators

Loan aggregators don’t directly lend money to approved applicants. Instead they serve as an intermediary for online loans. They take your loan application and connect you with different lenders within their network that might approve you for a loan based on your application. Because loan aggregators handle the legwork of finding potential lenders for you, comparison shopping through an aggregator can be faster and easier.

But your loan application will still have to be reviewed and approved by the actual lender. There’s no guarantee of approval, and the lender you choose may have certain borrowing conditions you’ll have to meet, which could include having an account with the lender.

While a loan aggregator’s wide pool of lenders could mean more options for you, it’s important you use a trusted loan aggregator service. The Federal Trade Commission advises consumers to use caution when sharing personal information online.

3. Peer-to-peer lending networks

Peer-to-peer lending networks also serve as intermediaries between lenders and applicants, but they connect borrowers with investors rather than financial institutions.

Peer-to-peer lending networks — commonly referred to as P2P lending — connect would-be borrowers with investors willing to consider different levels of risk. This could make it easier for people with less-than-perfect credit to get a loan from a P2P lender than from a direct lender. But be aware: You’ll likely pay a higher APR for a P2P loan if your credit is poor.

It’s important to comparison shop and fully understand the loan terms offered.

A word about prequalification

When you apply for any type of credit, a lender may want to run a credit check and look at your credit scores and credit history. There are two types of inquiries: Hard and soft.

A hard inquiry can occur when a lender looks at your file after you apply for credit, and it can affect your credit scores. A soft inquiry can occur when you apply for prequalification through a lender or aggregator. This type of review of your credit files doesn’t negatively affect your credit scores.

When you’re shopping for a loan with bad credit, it may make sense to look for lenders that offer you the opportunity to apply for prequalification, rather than lenders that will initiate a hard inquiry when you apply. And remember, getting prequalified doesn’t mean you’re actually approved for a loan. It just gives you an idea about whether you might be qualified and what your loan rates could be.

Be wary of personal loans with no credit check

Bottom line

When looking for a personal loan — which is a type of installment loan — direct lenders that market loans to those with bad credit might be worth considering. You’ll know exactly what lender you’re dealing with. Plus, a direct lender may offer a lower interest rate if the personal loan is secured, meaning it requires that you secure it with collateral.

Unfortunately, some direct lenders offering reasonable loan terms may be less willing to make personal loans to borrowers with imperfect credit, so it may be more difficult to get approved. Working with a loan source that allows you to apply for prequalification can help you avoid the hard inquiries that come with submitting a formal application.

And be wary of direct lenders that market to borrowers with poor credit. They could be payday loan providers that charge extremely high interest rates (the equivalent of 400% or more in some cases). It’s almost always better to seek alternatives to a payday loan than risk such high interest rates and other high fees.

Each type of lender — direct, aggregator and peer-to-peer — has advantages and disadvantages. It’s important to understand how each lender works and the terms and conditions of any offers they make before you commit to a personal loan.

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Repaying a loan early? The Rule of 78 could cost you.

Small differences in interest rates can have a big impact on how much interest you pay over the life of a loan.

And you probably think repaying a loan early will reduce the amount of interest you pay on the money you’ve borrowed. But if your lender uses the Rule of 78 method — also known as the “Sum of the Digits” method — to calculate how much interest to refund to you when you pay off a loan early, you still could end up paying more interest than you expected.

There’s good news, though. Federal law restricts the conditions under which a lender can use the Rule of 78 to calculate an interest refund, and some states prohibit its use altogether.

Let’s look at how interest works, what the Rule of 78 is, where the rule came from and when you might encounter it.


Loan interest basics

When you repay a loan, a portion of your monthly payments goes toward repaying the principal (the amount you borrowed) and a portion toward interest (the lender’s fee on the money you borrowed).

Lenders can use the simple interest method for calculating your interest payments. With this method, your loan balance starts off with only the principal you borrowed. Interest is calculated based on your loan balance between payment dates. If you repay your loan before the end of the loan term, you’ll pay less in interest.

Or, lenders can follow the Rule of 78, which relies on calculating interest in advance. If your loan interest is calculated beforehand, your balance includes both the principal you borrowed and all the interest you’ll be expected to pay over the life of the loan — assuming you repay it according to the loan terms. Interest charges are calculated according to a preset schedule, and not according to what you actually owe as you repay the loan.

Learn more about loan principal

What is the Rule of 78?

The Rule of 78 is a method of calculating how much precalculated interest a lender refunds to a borrower who pays off a loan early. This calculation method almost always works in the lender’s favor, allowing them to keep more money in their pockets when refunding loan interest.

The Rule of 78 is designed so that borrowers pay the same interest charges over the life of a loan as they would with a loan that uses the simple interest method. But because of some mathematical quirks, you end up paying a greater share of the interest upfront. That means if you pay off the loan early, you’ll end up paying more overall for a Rule of 78 loan compared with a simple-interest loan.

Origins of the Rule of 78

The Rule of 78 dates to the Great Depression era, when people generally took out small loans with low interest rates and short terms. Just like today, sometimes people paid off their loans early and didn’t expect to pay the full amount of interest charges. Lenders, on the other hand, wanted borrowers to pay the full amount of precalculated interest.

In 1935, the Indiana state legislature ruled that people who pay off their loans early don’t need to pay the full amount of interest. The formula contained in this law was the Rule of 78.

How Rule of 78 loan interest is calculated

So how do Rule of 78 calculations work?

First, you add up all the digits for the number of months in the loan. For a 12-month loan, that number is 78 (1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12 = 78). Next, you reverse the order of the number of months. So, the first month of the loan would be assigned the number 12 (for the last month of the year), then the second month would be assigned the number 11 (for the 11th month of the year), and so on.

Then, you divide that assigned number (which would be 12 for the first month of the loan, for example) by 78 to calculate what percentage of the total interest you’d pay in that month. Finally, to calculate what that monthly interest charge is, you multiply that percentage by the total interest charge over the life of the loan to see how much interest is paid in that month alone.

Here’s an example using a loan with a $500 interest charge over the life of the loan.

Month Numerator Denominator Percentage of total interest Monthly interest
1 12 78 15.4% $77.00
2 11 78 14.1% $70.50
3 10 78 12.8% $64.00
4 9 78 11.5% $57.50
5 8 78 10.3% $51.50
6 7 78 9.0% $45.00
7 6 78 7.7% $38.50
8 5 78 6.4% $32.00
9 4 78 5.1% $25.50
10 3 78 3.8% $19.00
11 2 78 2.6% $13.00
12 1 78 1.3% $6.50
Total 100.0% $500.00

Rule of 78 vs. simple interest

When you pay off a loan early, federal law requires a lender to refund to you any unearned portion of interest that you paid.

If a lender uses the Rule of 78 to calculate how much to refund you, they can actually keep more of your prepaid interest than if they used the more common simple interest method of calculation.

Here’s an example.

Let’s say you need to take out a 12-month loan in January for $6,000 to pay for home repairs. If the interest rate on that loan is 5%, you’ll have to pay almost $164 in interest over the course of the year, regardless of whether the lender uses the Rule of 78 method or the simple interest method.

  Monthly interest payment
Month Rule of 78 method Simple interest method Difference
January $25.18 $25.00 $0.18
February $23.08 $22.96 $0.12
March $20.98 $20.92 $0.06
April $18.89 $18.87 $0.02
May $16.79 $16.80 -$0.01
June $14.69 $14.73 -$0.04
July $12.59 $12.66 -$0.07
August $10.49 $10.57 -$0.08
September $8.39 $8.47 -$0.08
October $6.30 $6.37 -$0.07
November $4.20 $4.25 -$0.05
December $2.10 $2.13 -$0.03

You can see from this example that while the difference isn’t huge, the earlier interest payments calculated using the Rule of 78 loan are higher than those calculated using the simple interest loan. If you were to pay off your loan in March, for example, you’ll have paid 36 cents more ($0.18 + $0.12 + $0.06 = $0.36) to the lender with the Rule of 78 loan versus the simple interest loan.

For the most part, these differences are small. But the longer the loan term extends and the higher the interest rate, the bigger the difference you’ll see between the two methods.

When you might encounter the Rule of 78

Although the Rule of 78 allows lenders to keep more prepaid interest — even when a borrower pays off a loan early — they can’t use this on a whim. There are rules governing when a lender can apply the Rule of 78.

Federal law generally stipulates that in some cases — like mortgage refinances and other types of consumer loans with precalculated interest — lenders can’t apply the Rule of 78 to loans with repayment periods of longer than 61 months.

Some states prohibit use of the Rule of 78, while others allow lenders to apply it to loans shorter than 61 months.

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Bottom line

If your loan is for longer than 61 months — or shorter, but you don’t plan to pay it off early — you may not need to worry about the Rule of 78.

But if your loan is for a shorter term (personal loans can be) or you plan to repay it early, it’s important to understand how your interest is calculated — using either the simple interest or precalculated method. If your loan has precalculated interest and you pay it off early, you could wind up getting less of your prepaid interest refunded.

With any loan product, it’s essential to do your homework before signing on the dotted line. Be sure you’re working with a reputable lender and that you understand all the loan terms, including what happens if you pay off the loan early.

What is a prepayment penalty?

ACE Elite™ Visa® Prepaid Debit Card review: Should you keep it up your sleeve?

 

Pros Cons
Some fees waived with direct deposit More than 25 potential fees, including a monthly fee
Interest-bearing savings feature No quick way to manually reload money for free
Faster access to paychecks for some cardholders through direct deposit  
High load limits  

What you need to know about the ACE Elite™ Visa® Prepaid Debit Card

The ACE Elite™ Visa® Prepaid Debit Card offers a handful of useful features, but it comes with a long list of fees that are common among prepaid debit cards and hard to avoid.

Loading and withdrawal costs depend on location

The ACE Elite™ Visa® Prepaid Debit Card offers several options for loading your card with automatic or online transfers. This card comes with a high load-limit of up to $15,000 per 30-day period, or $7,500 per day, via direct deposits, online transfers from another ACE Elite card, and certain mobile check deposits. Better yet, all these options charge no fee when you reload.

But you may pay a fee up to $3.95 to reload at other retailers within the network of NetSpend, the company that manages ACE Elite’s cards. If you need to load cash onto a card often, this one might not be your best bet.

And cash withdrawals come with limits — up to $940 per day from an ATM or $5,000 a day at a bank counter — plus a $2.50 fee per transaction. Cardholders who receive direct deposit can withdraw up to $100 per day for free at more than 950 ACE Cash Express locations nationwide.

Before getting a card, it might be useful to check ACE’s location finder to see which locations are the most accessible to you. If you can’t use one of the locations that doesn’t charge fees for loading and withdrawals, you might be better off with another card. 

Additional benefits with direct deposit

Enrolling in direct deposit comes with several benefits. There’s no fee to use it, and it can even help cut the card’s monthly membership fee from $9.95 to $5 when you use direct deposit to receive at least $500 per month.

Direct deposit can also help you get paycheck or government benefits deposited to the card up to two days earlier than your regular pay day. Your employer will need to participate in the program, but this feature can help if bills are due and you’re trying to bridge the gap between paychecks.

A closer look at this card’s fees

There’s no fee to get an ACE Elite™ Visa® Prepaid Debit Card online, but once you have it, you’ll see plenty of additional charges.

This card might saddle you with more than 25 fees, including a monthly fee of $9.95, which is reduced to $5 if you link direct deposit. You could opt for a Pay-As-You-Go plan with no monthly fee instead, but you’ll pay a fee on every transaction if you do.

We’ve listed some notable fees below. But you should read the cardholder agreement to find out about all the potential fees you might pay with this card, how these fees work and when they might apply to you.

ATM fees

Balance inquiry fee

Card-replacement fee

Inactivity fee

Monthly fee

Purchase and transaction fees

Reload fees

Other features of the ACE Elite™ Visa® Prepaid Debit Card

Earn interest on savings

Cardholders can open a savings account with ACE that earns 5% annual percentage yield, or APY, on balances up to $1,000, which is handy if you don’t have a traditional savings account.

If you’re able to keep $1,000 in the account, you’ll earn $50 in interest after a year. But any amount above $1,000 earns a less-impressive 0.50%.

If you’d like to use this feature and you have more than $1,000 to save, you might want to consider maximizing the interest on your first $1,000 with the ACE Elite card and then open a higher-yielding savings account for the rest.

A chance for cash back

The ACE Elite Visa® Prepaid Debit Card is part of the NetSpend payment network, which offers cash back rewards on certain types of purchases with your card via their Payback Rewards feature. But the same offers don’t appear for everyone, and you’ll need to activate specific offers before you receive rewards for those purchases.

You should also keep in mind that these cash rewards might not balance out the fees you pay on those same purchases (or on the money you’ll have to reload to build your account back up). If you’re looking for a way to get rewards on purchases you already know you need to make, then Payback Rewards can be a nice feature. But they’re probably not worth it if you find yourself going beyond your budget just because you’re earning rewards.

Who is this card good for?

The ACE Elite™ Visa® Prepaid Debit Card could be a good fit for people who can avoid the more expensive monthly fee by receiving direct deposits of at least $500 every month and can take advantage of some of the cheaper options for loading and withdrawing money from the card.

For instance, if you plan to reload the card at a retailer in the NetSpend network, make sure you have easy access to one of the locations where you don’t have to pay loading and withdrawal fees.

While ACE doesn’t require a credit check, which is appealing to many prepaid cardholders, you’ll still need to supply personal details when you apply. These include your name, address, date of birth and government ID number, and the card issuer may also ask to see your driver’s license.

Not sure this is the card for you? Consider these alternatives.

We’ve taken a hard look at some of the other prepaid debit cards out there so you can compare their fees and other important features.

We also recommend considering these other options.

Certified pre-owned cars: What to know

Used cars for sale can be broadly divided into two groups: Those that are certified and those that aren’t. There can be a world of difference between the two.

Certified pre-owned cars may come with thorough reconditioning to make them look as new as possible, some sort of warranty and extras like roadside assistance. They can also be significantly more expensive than used cars that are not sold as part of a certified pre-owned program.

But each manufacturer or dealer can have a different definition of what constitutes a certified pre-owned vehicle. So if you’re thinking about buying a certified pre-owned car, it’s important to know what your particular dealer or the car’s manufacturer means by “certified.”

Here’s what to keep in mind if you’re shopping for a certified pre-owned car.


What is a certified pre-owned car?

You can generally take “certified pre-owned” to mean that a car is being sold through a dealership or manufacturer program that sets certain standards for its used vehicles for sale.

Many certified pre-owned programs require their cars to pass some sort of detailed inspection and to be under a certain age, with limited mileage. Audi, for example, requires cars to pass a “300+-point” inspection, and to be 5 years old or less, with fewer than 60,000 miles.

No history of major damage is another common requirement. Certified pre-owned cars may also come with extended warranty protection and, in some cases, extras like roadside assistance.

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Manufacturer-backed vs. dealer-backed certified pre-owned cars

Some certified used vehicles are manufacturer-backed and others are backed by a dealer.

Manufacturer-backed certified pre-owned

With manufacturer-backed certified pre-owned programs, each manufacturer has its own specific requirements, although they may be similar to one another. For example, Honda requires its certified pre-owned vehicles to pass a 182-point inspection (compared to Audi’s 300+-point inspection), and restricts the program to vehicles under 6 years old (compared to Audi’s cutoff age of 5).

Manufacturer-backed certified pre-owned cars are often sold by the automaker’s franchised dealers. For example, you can buy a certified pre-owned Ford truck through a Ford dealership that sells new Ford vehicles.

Dealer-backed certified pre-owned

With dealer-backed certified programs, the scope of the inspection and any other requirements are determined by the dealer and not the manufacturer. This means that the thoroughness of these inspections may vary more widely, since they’re not subject to any one manufacturer’s standards.

Dealer-backed certified program vehicles don’t include a manufacturer-backed warranty, though they may have a dealer-backed warranty.

Possible benefits of buying certified pre-owned

Certified pre-owned car programs may offer …

Extended warranty protection

Reliability can be a huge question mark (and big financial risk) with used cars. Some certified pre-owned cars come with a warranty that can help protect the owner from having to pay out of pocket for certain repairs. For manufacturer-backed warranties, the coverage may specify that you get repairs done at a manufacturer franchised dealership. But be sure to read the details of your warranty to understand which repairs are covered — warranties vary in length and specifics depending on the manufacturer or dealership.

Reconditioning

Sellers recognize that people shopping for a certified pre-owned car want a vehicle that performs well and looks as new as possible. As part of their inspection, technicians may examine and repair exterior components of the car — such as paint, glass, door molding and window trim — to try to achieve this result.

Useful perks

Certified pre-owned vehicles may come with extra perks, such as free roadside assistance, complimentary satellite radio for a limited time or money toward a car rental if your vehicle needs repairs.

Promotional offers

As with new cars, some manufacturers offer special promotions on certified pre-owned vehicles if you finance through the dealership. These promotions may include cash back or an intro low annual percentage rate, or APR. Keep in mind that these offers may only be available to borrowers with strong credit.

Can you get a car loan with bad credit?

What to watch out for with certified pre-owned cars

Higher prices

Certified pre-owned cars tend to cost more than used cars that aren’t sold through a certified pre-owned program. Some of the higher cost is due to expenses associated with the inspection, any repairs and warranty protection, which are typically folded into the price. Depending on the car, a certified pre-owned vehicle can cost a few hundred to a few thousand dollars more than a car of the same make, model and condition that is not certified.

Another cost to consider: Even if a certified pre-owned program says a car has been inspected, it’s recommended that you still have the car inspected by an independent mechanic before you buy. That can cost around $100.

Stock is limited to newer models

Many certified pre-owned vehicle programs limit their vehicles to newer models. For example, a vehicle must be less than 6 years old to qualify for Ford’s certified pre-owned program. And, like Audi, Chrysler certified pre-owned vehicles can be no more than 5 years old. If you’re looking to do your budget a favor by purchasing an older used vehicle, you may find your certified pre-owned choices are limited.

How much car can you afford?

Bottom line

Shoppers may shy away from used cars out of fear they might not be reliable. Certified pre-owned car programs are designed to soothe these concerns.

Just remember: While many certified pre-owned cars could be in great shape, they’re not brand new — and certified pre-owned eligibility requirements, inspections, possible warranties and perks vary from manufacturer to manufacturer and dealer to dealer.

Take the time to understand your chosen automaker’s or dealership’s standards for certified pre-owned vehicles and read the fine print. This will help you set realistic expectations for your purchase.

How to buy a used car

TD Bank personal loans review: Secured and unsecured options

Pros Cons
Allows five or more co-applicants Available in only 15 states and Washington, D.C.
No origination or prepayment penalty fees on unsecured loans Unsecured loans require minimum credit scores of 660
Competitive interest rates on unsecured loans Must go into a bank branch to sign loan agreement
Find a personal loan that works for me Shop for Loans Now

What you need to know about a TD Bank personal loan

TD Bank — one of the 10 largest banks in the U.S., according to the Federal Reserve — offers secured and unsecured personal loans in amounts of up to $50,000.

Different loan options

TD Bank offers three types of personal loans.

Competitive rates

TD Bank offers competitive fixed interest rates on its unsecured loans, based on factors including your credit, desired loan amount and where you live. And you’ll get a 0.25% rate discount on your unsecured loans if you set up automatic payments from a personal TD Bank checking or savings account.

Limited fees

TD Bank doesn’t charge prepayment penalties or origination fees on its unsecured loans. If you make a late payment, a fee of 5% of the minimum payment due or $10 (whichever is less) applies.

Secured loans come with a $50 origination fee, but there’s no late payment fee or prepayment penalty.

Personal loan details

Here are a few additional things to know about TD Bank personal loans.

Who a TD Bank personal loan is good for

A TD Bank unsecured loan may be good for someone with fair or better credit who wants to borrow a large amount for home improvements or debt consolidation.

A TD Express Loan might be ideal if you’re facing a financial emergency and need fast cash.

Lastly, a secured loan from TD Bank might be a good option if you want to build your credit. TD Bank doesn’t specify a minimum credit score requirement for its secured loans, though you must use your money in an eligible TD Bank account as collateral to secure the loan.

If you want an unsecured loan and your credit scores are below 660, or you live in a state where TD Bank doesn’t offer personal loans, you’ll need to consider other lenders.

Learn more about credit score ranges

How to apply with TD Bank

You can apply for a TD Bank personal loan online, over the phone or at a branch. If you apply online, you must select a branch location where you’d like to sign your loan agreement.

Regardless of how you apply, you’ll need to provide this information during the application process.

Once you submit your personal loan application, a TD Bank lending specialist should contact you with a decision within one business day.

Not sure if TD Bank is right for you? Consider these alternatives.

Find a personal loan that works for me Shop for Loans Now

A personal loan after bankruptcy: Is it possible?

You can use a personal loan for almost anything, and the money can help you when you’re in a financial bind. But if you recently declared bankruptcy, it could be difficult to qualify for a new loan at a low interest rate.

At some point, you might need to take out a personal loan — maybe to maintain or repair your home or car. Getting a personal loan after bankruptcy may be difficult, but it’s not necessarily impossible. Some lenders offer no-credit-check loans, but those often have ultra-high interest rates or fees that can lead to a debt trap.

Bankruptcy might have wiped out some of your debt or allowed you to get on a more-affordable monthly payment plan with your creditors, and it’s sometimes the best financial option available. But you may still have debts to pay, like student loans or tax debt, and your daily bills will still be due.

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Bankruptcy and your credit

Chapter 7 or Chapter 13 bankruptcy are the two types of bankruptcy people most often file to deal with their unsecured consumer debt, like credit card debt or personal loans.

Declaring bankruptcy can be tough on your credit, at least in terms of scoring. And after filing for bankruptcy, your credit reports may be limited to a score range of 300 to 800.

A bankruptcy can remain on your credit reports for up to 10 years after the filing date. But Chapter 13 bankruptcies may drop off your credit reports after seven years if you’ve completed the payment plan.

If you were behind on payments before you declared bankruptcy, an account may drop off your credit reports seven years after the first late payment that led to a default (or discharge via bankruptcy). This means some of your discharged accounts might drop off before the bankruptcy.

Is a personal loan possible after declaring bankruptcy?

Following a bankruptcy, your credit scores could fall below a lender’s minimum score requirements for loan approval. And even if your credit recovers, lenders may be able to see the bankruptcy on your credit reports for up to 10 years, depending on the type of bankruptcy you filed.

If you do get approved for a personal loan after filing for bankruptcy, you may face less-than-favorable loan terms and pay relatively high interest rates, too.

Your chances of getting approved for a personal loan might also increase the longer it’s been since you declared bankruptcy, since its impact on your credit scores can diminish. You may be able to help the process along by taking out a credit-builder loan or secured credit card — both are designed to help people build or rebuild credit by allowing them to build a positive payment history.

Comparing lenders may be especially important as you look for a personal loan, and you may want to start with credit unions, community banks and online lenders. Some of these organizations may focus on smaller personal loans or low-credit borrowers.

Another option may be to ask a friend or family member with good credit to co-sign your loan. While this option can make the other person responsible for the debt and could even challenge some personal relationships, it may be one of the few ways to qualify for a decent rate or large loan amount.

Watch out for loans with ultra-high rates or fees

When you’re looking for a loan with poor credit, you may have some options, but not all of them will be good ones.

Some lenders promise loans without a credit check and guarantee approval and immediate payouts, regardless of your payment history. But these loans typically come with higher interest rates, costs and risks than traditional personal loans. “No credit check” loans may have high fees or a high annual percentage rate, or APR, and you could wind up with new debt that you can’t afford to repay.

These types of lenders may advertise or offer …

These lenders won’t always advertise the APR for the loans they offer. Instead, they may charge flat-rate fees that can make it difficult to compare your options. So you might find that you’re paying the equivalent of triple-digit APRs — as high as 400% in some cases. In contrast, the average credit card APR in February 2019 was 15.09%, according to Federal Reserve data.

While you may be able to get approved for one of these loans, you might have difficulty repaying the loan on top of your other bills. You could find yourself deeper in debt, and behind on bills — which can hurt your credit. And keep in mind that you won’t be able to declare bankruptcy again, because there’s a required eight-year waiting period for Chapter 7 bankruptcies (it’s two years for Chapter 13).

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Bottom line

Declaring bankruptcy may be the best option in some situations, but it will also hurt your credit for years to come. If you need a personal loan after bankruptcy, you may have to accept a higher rate or find a co-signer. If you can wait and focus on building your credit before applying for a loan, that may be the better option.

5 ways to build credit after a bankruptcy

4 reasons getting a bank loan for bad credit may be tough

Bank loans for bad credit are expensive and hard to come by.

Banks may think they’re taking on more risk when they lend to people who have struggled with credit. And so having poor credit can mean facing higher interest rates on personal loan offers.

Here are some things to keep in mind if you’re considering bank loans for bad credit, and some options to consider if you can’t get a personal loan from a bank.

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Banks and personal loans

A bank loan is a lump sum of money that a bank lends you with the agreement you’ll pay it back over a set time frame, with interest. Some bank loans have specific purposes, like mortgages or auto loans. Personal loans differ from mortgages and vehicle loans in several ways.

Typically, personal loans can be used for any purpose. Personal loans from banks can be for amounts as little as $1,000 or as much as $100,000. Funding can be quick — you may even be able to get the money in two to three business days. And your loan term and loan amount will vary based on the lender and your credit history.

There are two types of personal loans: unsecured loans, which don’t require collateral to secure the loan, and secured loans, which require collateral like a savings account or CD.

Banks generally have minimum income and credit-score requirements for unsecured loans. Some may also require you to have an account with them. Annual percentage rates, or APRs, typically range from about 6% to 25%. Banks typically offer higher APRs if you have low credit scores.

But every lender will have its own loan application requirements and criteria for what it considers an acceptable credit score and credit history. That’s why it’s important to shop for different loan offers when looking for bank loans for bad credit.

4 reasons it may be tough to get a bank loan for bad credit

Getting a personal loan from a bank has its benefits and drawbacks. But it might be challenging to get a personal bank loan with bad credit.

1. Not all banks offer personal loans

Depending on where you keep a checking or savings account, you may be able to apply for a personal loan at your bank. Some banks offer discounts for people who bank with them and it can be convenient to keep all your accounts in one place.

But some big financial institutions, like Bank of America and Chase Bank, don’t offer personal loans. Visit your local bank branch or check its website to see what it offers. You may have to look elsewhere for a personal loan.

2. Banks tend to have strict credit guidelines

Banks that do offer personal loans may require you to have a credit score in the “good” to “excellent” ranges. Credit scores typically range from 300 to 850. According to FICO’s credit-scoring models, credit scores of 670 to 739 are considered “good.” Within these models, scores higher than that range are considered “very good” or “excellent.” But remember, every lender will have its own loan application requirements and criteria for what it considers an acceptable credit score and credit history.

Learn more about credit score ranges

Banks offer the lower interest rates to people with higher credit scores.

Here’s what that looks like on a monthly payment. Let’s say a person with excellent credit is approved for a $5,000 personal loan with a 6% APR and a three-year term, and a person with fair or poor credit is approved for a loan with the same terms — but with a 25% APR. The person with excellent credit will pay $152 each month ($476 total in interest over the life of the loan). But the person with fair or poor credit will pay $199 a month ($2,157 total in interest).

3. Banks may have annual income requirements

Banks want to know you have the resources to pay back a personal loan. To get an idea of your financial situation, they may set minimum income requirements and ask for proof of income. If you apply for a loan and don’t meet these standards, you might not qualify for it.

4. Some banks may require collateral

Your bank may offer both secured and unsecured personal loans, but poor credit may only qualify you for a secured loan. Once you’ve secured a loan with collateral, typically a savings account or CD, you may not have access to those funds until the loan is paid in full. But you’ll usually continue earning interest on the funds in your savings account or CD while the account is securing the loan.

Try applying for prequalification

If you’re not sure whether you would qualify for good terms, applying for prequalification for a personal loan can give you a sense of whether you might be approved without affecting your credit. After you provide a info about your income and monthly debt obligations, lenders review that information and perform a soft credit inquiry. This won’t negatively impact your credit reports or scores. You can apply for prequalification at several banks to compare APRs, term lengths and any fees, such as origination fees.

To get an idea of the terms you might qualify for, you can check your credit scores for free at AnnualCreditReport.com, where you can get a free report from each of the three main credit bureaus once a year. You can also check your credit scores at two of the three main consumer credit bureaus at Credit Karma, too.

FAST FACTS

How to spot a bad credit loan scam

Having poor credit could put you in a vulnerable position when searching for a loan. But you don’t have to accept just any offer — especially if it looks risky. Watch for these red flags when it comes to a bank loan with bad credit.

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Alternatives to personal loans

Borrowers with low credit scores may struggle to get a personal loan from a bank. But before turning to high-cost alternatives like payday loans, consider these options first.


Bottom line

Getting a bank loan for bad credit can be tough. Not every bank offers personal loans, and the ones that do may have credit and income standards. And if you don’t qualify for an unsecured personal loan, the bank may ask you to secure the loan with collateral. But you still have options: Ask someone to co-sign your loan or consider applying at a credit union or online lender. You may even a score balance transfer credit card for a better deal.

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IRA loans: Is borrowing from my IRA possible?

If you need cash and have money in your IRA, you may be interested in an IRA loan.

Unfortunately, there’s no such thing as an IRA loan, whether you have a traditional or a Roth account. While 401(k) accounts and other employer-sponsored retirement plans can allow participants to borrow and repay a loan over time, individual retirement arrangements, or IRAs, aren’t set up this way.

In fact, you can face IRS penalties if you withdraw funds from your IRA before age 59½. Under certain exceptions though, you may be able to withdraw money without paying a penalty.

But just because you can take money out of your IRA doesn’t necessarily mean you should. In addition to the potential costs, there are risks and some significant disadvantages.

Let’s look at the options, pros, cons and risks, so that you can make an informed choice about whether to borrow from your IRA.

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Options for accessing IRA funds

Short-term rollovers

If you need a very short-term loan from your IRA and can pay back the money quickly — within 60 days or less — you may be able to access the funds with an IRA rollover.

Rollovers are often used to move money from a 401(k) or IRA to a new retirement account, like when you want to move to a different broker or consolidate multiple IRAs into one. With a rollover, you take the money out of your IRA and have 60 days to put it into another qualifying retirement account.

The IRS recognizes that people can change their minds about moving money between retirement accounts after they’ve taken a withdrawal from an existing IRA. So you’re also allowed to return withdrawn money right back into the same IRA instead of into a new one. If you do an indirect rollover — meaning the distributed money comes to you first instead of going directly from one IRA to another — you could potentially use the money for 60 days without penalty.

This approach has some significant risks and drawbacks, though. Here are a few.

Withdrawals for specific needs

While you’re generally subject to a 10% penalty for early withdrawals from an IRA if you take money out before age 59½, there are some exceptions to this rule.

You’ll have to pay ordinary income tax on your distribution but can avoid the 10% penalty. Here are some of these exceptions.

Roth IRA withdrawals

Roth accounts work differently than traditional IRAs. When you deposit money into a Roth account, you make contributions with after-tax dollars. If you wait until retirement age and meet certain requirements, like having the account open no less than five years before withdrawals, you can take out money tax-free.

If you need to access funds from a Roth IRA prior to age 59½, you can withdraw the amount you put into the IRA without paying taxes or incurring penalties. This makes it possible to access money you put into your Roth IRA account anytime you need it. And if you withdraw funds from a Roth IRA before the tax-filing deadline of the same year you made the contributions, then they won’t count toward your contribution cap for the year.

But you have to be careful not to withdraw any earnings. If you withdraw money your investments earned, you’ll be subject to the 10% penalty unless you fall into one of the following exemptions:

Drawbacks of IRA withdrawals

Although you can access the money in a traditional or Roth IRA, doing so often isn’t a good idea. There are two primary reasons why you don’t want to raid your IRA.

How can early 401(k) withdrawals affect your finances

Bottom line

Taking money out of your IRA, whether as a withdrawal or an indirect rollover that you plan to repay in 60 days, is a risky endeavor because of the potential taxes and penalties. Plus the loss of growth opportunity from the withdrawn funds could mean you face financial shortfalls as a senior.

Perhaps there’s a reason why there’s no such thing as an IRA loan — taking money out of a retirement account is borrowing against your own future financial security. Given the risks and disadvantages, raiding your IRA should be a last resort only after you’ve exhausted all other options.

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BB&T auto loans review: Multiple loan options but limited availability

Pros Cons
Range of loan options Must apply in person
No minimum or maximum loan amount Available in limited number of states
No origination or prepayment penalty fees Vehicles generally must be no more than 10 years old
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What you need to know about BB&T auto loans

Branch Banking and Trust Company is one of the largest financial-services holding companies in the U.S. and offers a range of financial services. The company has more than 1,800 financial centers across 15 states and Washington, D.C. BB&T offers direct auto loans through its branches and indirect loans through car dealerships.

If you’re considering applying for a BB&T auto loan, here are some things to know.

Variety of loan options

Whether you’re shopping for a new car at a dealership, have your eye on your neighbor’s used car or want to refinance, BB&T offers a variety of auto finance options, including …

Applications must be submitted in person

To apply for an auto loan from BB&T, you must visit a branch to complete an application. According to David White, VP of Corporate Communications at BB&T, once you’ve completed your application, you’ll typically get a decision in less than 10 minutes, unless the bank needs more information.

BB&T only does business in certain states

To apply for a loan, you need to do so at a BB&T location in one of the states where BB&T does business. BB&T branches are located in Washington, D.C., and in 15 states: Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia.

A closer look at BB&T auto loans

When trying to decide if a BB&T auto loan is right for you, there are a few more things to consider, like the fact that BB&T has no minimum or maximum loan amounts. Here are some additional details, per White, on auto loans from BB&T.

Who a BB&T auto loan is good for

BB&T could be a good option for someone who wants a shorter loan term of 12 months or a longer term of up to 75 months, though a longer loan term means you’ll pay more interest on the loan.

A BB&T loan could also be good for someone who doesn’t have the cash on hand to make a down payment. Just remember that a down payment could result in a lower cost of auto financing with BB&T. So waiting to save up for a down payment before purchasing is a good idea if you want to save money in the long run.

White wouldn’t comment on any credit score requirements for BB&T’s direct loans. But the company notes on its website that while it has no minimum FICO® credit score requirements for the loans it provides through dealerships, it offers “prime and near-prime” financing. Prime credit scores are considered 661 to 780, according to credit bureau Experian — but keep in mind that BB&T may define prime differently.

Learn more: Your guide to credit score ranges

Even if you have good credit and meet BB&T’s other requirements, you’ll need to apply in Washington, D.C., or one of the 15 states where BB&T does business to get an auto loan with the bank.

How to apply for a loan from BB&T

To apply for a BB&T loan, you must visit a local BB&T branch and apply in person. As part of the application process, according to White, you’ll need to provide the following information:

You’ll typically receive a decision in fewer than 10 minutes. Keep in mind that your application will result in a hard inquiry on your credit reports, which could negatively affect your credit scores.

Auto loan alternatives to consider

If you aren’t sure if a BB&T loan is right for you, here are some other lenders to consider.

Find an auto loan that works for me Explore Auto Loans Now

NetCredit personal loans review: High interest rates for small loans

Pros Cons
Potentially fast funding High interest rates
No prepayment penalty There may be an origination fee, depending on where you live
Prequalification tool Not available in all states
Find a personal loan that works for me Shop for Loans Now

What you need to know about a NetCredit personal loan

NetCredit is a Chicago-based branch of Enova International Inc. It focuses on small personal loans for people who are “underserved” by traditional lenders. NetCredit is an online lender that caters to people who may not qualify for traditional lending through banks or other large, traditional lenders. The company will evaluate your larger financial picture, considering more than just your credit scores.

If approved, you can borrow between $1,000 and $10,000. NetCredit can deposit your loan funds into your bank account quickly, usually within a couple of business days.

High interest rates

NetCredit’s annual percentage rates, or APRs, tend to be higher than those offered by many other personal loan lenders. Depending on your finances and where you live, the APR you’re offered may even reach triple digits. Even NetCredit’s lowest rates are high compared to some other lenders.

When you’re considering a loan from NetCredit, it’s important to keep in mind that the National Consumer Law Center considers 36% to be the upper limit of an affordable interest rate.

A mixed bag of fees

NetCredit doesn’t charge application or nonsufficient funds fees. It also won’t charge you a prepayment penalty if you want to pay off your loan early.

But you may be charged an origination fee, depending on where you live. This fee covers the cost of the application process and is deducted from your total loan proceeds.

And if you miss a payment, you may get hit with a late fee, which also varies by state.

Loans for less-than-perfect credit

NetCredit uses its own underwriting model designed to consider financial factors beyond credit scores. According to NetCredit, “your eligibility and customized personal loan offer will be determined by looking at your broader financial picture — not just your credit score.”

But according to the company’s annual report from 2018 filed with the SEC, many of its loans go to people with credit scores that are “near prime.”

Learn more about credit score ranges

While you may be eligible for a NetCredit loan even if you have bad credit or fair credit, it’s important to consider other options. For example, think about using a credit card you already have, since the average credit card interest rate is lower than the lowest rates NetCredit offers.

A closer look at NetCredit personal loans

Here’s what else you should know about a loan from NetCredit.

Who a NetCredit loan is good for

NetCredit offers smaller loan amounts, so this lender may be good for you if you need an emergency loan for car repairs or another unexpected bill. If you don’t qualify for other traditional loans, NetCredit is a viable lending option to consider.

If you’re approved, your loan might be deposited into your bank account within one business day.

A NetCredit personal loan may also be a good fit if you plan to pay off your loan early, since there’s no prepayment penalty. With NetCredit’s high interest rates, paying off your loan early can also help you save money on interest.

If you have good credit, you’re better off considering other lenders if you want a personal loan — you may be more likely to qualify for a loan with lower interest rates than NetCredit offers.

How to apply with NetCredit

If you want to apply for a NetCredit loan, you can first see if you prequalify. NetCredit will run a soft inquiry that won’t affect your credit scores. Note that prequalification isn’t a guarantee of approval and you may be offered different terms after completing a full application with NetCredit.

You can apply for a NetCredit personal loan directly from its website. The entire application process should only take a few minutes to complete.

Here’s what you can expect from the application process.

1. Set up an account. You’ll provide NetCredit with some basic information, including your address, desired loan amount, phone number and the purpose of the loan. Then, you’ll create an account using your email and selecting a password. If your state isn’t eligible, the application process will stop there.

2. Add income info. If your state is eligible, you’ll provide your income, date of birth, Social Security number and employment information.

3. Check your eligibility. If you qualify, NetCredit will provide various loan term options to choose from. If you’re not happy with the term options, you can select the “Modify Loan Details” button to adjust your personal loan offer within the available options.

4. Select a loan offer. If you’re satisfied with the personal loan offer, you can choose the loan and repayment terms that fit your budget and financial goals.

5. Sign the contract and wait for the final loan approval. Once you’ve OK’d your loan details, NetCredit will request your signature on a contract. If you move forward, NetCredit will perform a hard inquiry on your credit to verify that all of your information is accurate, which may affect your credit scores.

If a NetCredit personal loan isn’t right for you, consider these alternatives

Find a personal loan that works for me Shop for Loans Now

Chase rolls out its first credit card for students

Credit Karma’s editors and writers want to help you stay on top of credit card news. The information below is accurate to the best of our knowledge when posted. Heads up: Credit card terms are subject to change, and the terms outlined below may not be current after the date of publication.

Chase is now offering its first-ever credit card for students, the Chase Freedom® Student card.

Here are some of the key features.

While you could get more lucrative rewards from other student cards, the Chase Freedom® Student card is still a good option for students, given it has no annual fee and a flat APR that’s on the lower side compared to some other student cards.

But there’s a catch. For now, you can only apply for this card in a Chase bank branch. 

Want to know more?

Is the Chase Freedom® Student card worth it?

The Chase Freedom® Student card is a solid option for students looking to build credit before graduating and entering the real world. And the requirement to apply in person could encourage parents and their students to have a conversation around credit use.

Of course, if you can’t get to a Chase branch, you won’t be able to apply for the card unless and until Chase allows applications some other way (online, by phone or by mail, for example).

If you’re not able to make it into a Chase bank branch, there are other student-focused cash back credit cards to consider. Some even have better rewards, like the Journey® Student Rewards from Capital One®, which offers 1% cash back plus an extra 0.25% each month you pay on time, and the Discover it® Student Cash Back card, which offers 5% cash back in quarterly rotating categories.

What should you keep in mind?

Chase has built some features into this student-focused card that are designed to reward cardholders for forming healthy credit habits — things like a credit limit increase with timely payments and an annual cash back reward for making on-time payments consistently.

But as with any credit card, you’ll get charged interest if you carry a balance from month to month.

If you’re thinking about Chase Freedom® Student as a way to build your credit, you’ll want to pay any balance on time and in full each month to avoid interest charges. Another key rule to set for yourself: Don’t make any purchases that aren’t in your budget just for the cash back rewards.

Finally, if you do apply for this card, make sure you read all the terms carefully and know your rights as a cardholder, such as the right to opt out of Chase’s new binding arbitration rule.

How to apply for a personal loan using Credit Karma

When you need a personal loan for credit card debt consolidation, home improvements or other purposes, where do you go? Do you take the time to shop around — or are you focused on getting money right away?

More than 21% of borrowers do no research at all before applying for a personal loan, and 52% didn’t use preapprovals to compare rates and fees from multiple lenders, according to a survey by U.S. News.

But comparison shopping is a good idea when you’re making a big financial commitment like taking out a loan. And online lenders have made applying for a personal loan fast and convenient.

Rather than shopping around for personal loans by going directly to multiple lenders, you can use Credit Karma to research and compare personal loan offers all in one place.

Here’s how to comparison shop — and apply — for a personal loan using Credit Karma with your lender of choice.

Want to prequalify for a loan? See if I’m Prequalified Now

1. Check your credit

Before starting the application process for any kind of loan, it’s a good idea to review your credit.

Credit history and credit scores are among the financial factors lenders will generally consider when reviewing your loan application. Your credit history can affect whether a lender will approve you for a loan and the interest rate it offers you. Good credit health can typically make it easier to get a loan and a favorable interest rate.

You can use the Credit Karma app to check your Equifax® and TransUnion® credit reports for free. You’ll need to sign up for an account to use the app and get your credit scores, but it’s always free to join.

Lenders may also consider your debt-to-income-ratio when considering you for a loan — which is the total of all the debt payments you must make each month divided by your gross monthly income. This ratio helps lenders understand how well you’ll be able to manage repayment if they give you a personal loan.

2. Apply for prequalification

Once you’ve checked your credit, you’re ready to apply for prequalification.

Prequalification is an application process where a lender reviews the information you’ve shared, and gives you a loan offer that you might qualify for. When you get prequalified, the lender will typically pull a soft credit inquiry, which won’t affect your credit scores.

While getting prequalified doesn’t mean you’re approved for a loan, it helps you to understand whether you’re likely to be approved and the loan terms you may qualify for. If you decide you want to pursue an offer you’re prequalified for, you’ll still need to submit a formal application directly with the lender — that will then make a hard inquiry into your credit, which can affect your credit scores.

Learn more about hard and soft credit inquiries

To get started, you’ll need to log into your Credit Karma account (or create one if you don’t have one already). Once you’re logged in, you’ll provide some information.

You can also search loan options without getting prequalified.

Want to prequalify for a loan? See if I’m Prequalified Now

3. Compare loan offers

Once you submit your information, you’ll receive a list of loan offers that you prequalify for. This information will include …

Again, it’s important to remember that these are potential offers and tentative rates and terms. You’ll get definitive information about the loan a lender’s willing to offer you only after you formally apply directly with the lender.

Applying for prequalification through Credit Karma makes it easy to compare loan options, review details and choose the one that works best for you.

If you don’t prequalify for any loans from Credit Karma’s lender network, the website will show you other loan options that might work for you.

Things to consider

When you’re reviewing your loan options, be sure to compare …

All of these factors can affect the total cost of your personal loan.

4. Apply

Once you comparison shop and choose an offer, you can complete your loan application.

Remember, prequalification doesn’t guarantee that you’ll be approved for a loan. You’ll still need to submit additional information to the lender in order to complete your application.

The lender will tell you exactly what you need to submit. Some information might include …

Finalizing your loan approval will result in a hard credit inquiry — this may affect your credit scores, but shouldn’t do any long-term damage.

Step 5: Close on your personal loan

Once you’ve submitted your loan application, the lender will review it, decide whether to approve you for the loan, and send you final loan documents if you’re approved. These documents typically detail the terms of your loan, including the interest rate, length of the loan, the loan amount, and your monthly payments.

Once you’ve reviewed the details, you’ll sign the documents and your funds will be deposited into your account. With online lenders this can happen quickly, sometimes in as little as a day.


Bottom line

With so many lenders offering personal loans, it’s in your best interest to shop around and find a lender that will offer you the best terms. People who shop and apply for personal loans online have the highest levels of overall satisfaction among personal loan borrowers, and the majority say they completely understand their loan applications, according to a J.D. Power consumer survey.

Credit Karma makes it easy to compare offers from multiple lenders online and find a personal loan that fits your needs.

Want to prequalify for a loan? See if I’m Prequalified Now

Review: The Plum Card® from American Express

Pros Cons
Ability to add employee cards High annual fee: $0 intro, $250 after first year
Early-payment discount No welcome bonus
Deferred payments No rewards program
No foreign transaction fee

From our partner
The Plum Card® from American Express

The Plum Card® from American Express

From cardholders in the last year


What you should know about The Plum Card® from American Express

The Plum Card® from American Express is probably going to be different from most other cards in your wallet. It’s a charge card, which means it doesn’t come with a preset spending limit. That doesn’t mean you have access to unlimited spending, but it does mean that your spending can be more flexible than with a credit card.

Another feature of a charge card is that you typically can’t carry a balance month to month, instead having to pay your monthly balances off in full. But that’s not exactly the case with The Plum Card® from American Express. Here are three distinct features that make it different from a typical charge card.

1. Deferred balance payments

Waiting to get paid before you can pay your bills? The Plum Card® from American Express can help ease your cash flow pain with its Extra Days to Pay feature. If you pay at least the minimum payment by the due date — along with any previously deferred balances — you can defer the remainder of your new balance to the next statement without accruing interest on the balance.

What does that actually look like? Say you charged $5,000 in your first month. To be eligible for payment deferral, you’d need to pay the minimum payment due of $500 (10% of your new balance) by the due date. The remaining $4,500 won’t accrue interest as long as you pay it off by the next statement due date.

Say you charge another $2,000 next month. To be eligible to defer the $2,000 payment, you’d need to pay $4,700. That’s the minimum payment due of $200 for the new month, plus the entire deferred balance from the previous month of $4,500.

The Extra Days to Pay feature can effectively give you an extra 30 days interest-free in order to make your payment.

2. Early-payment discount

The Plum Card® from American Express doesn’t come with a welcome bonus or rewards, but it does offer a discount for early payments. Make a payment of at least your minimum amount due within the 10 days prior to the statement closing date, and you’ll get a 1.5% discount credited in your next statement.

Note: It’s not clear if you can pay off the card even earlier than 10 days and still get the discount. If you’d like to do that, reach out to American Express customer service to find out if they’ll honor the discount for even earlier payments.

3. Free employee cards

If you’re ready to grow your business, this card lets you add employee cards for no extra fee. Early payments made on these purchases can also qualify for the early-payment discount. And you can set up limits on the employee cards online or over the phone.

Looking for a business credit card? Compare Business Credit Cards Now

What else you should know

There are a few other things you should make note of.

Who this card is good for

The most unique feature of The Plum Card® from American Express is the Extra Days to Pay option. If your business has short-term cash flow issues that mean you usually carry a balance on your credit card — and pay interest — this feature could help save you money.

Some business credit cards charge an APR of over 15%. Imagine, for example, that you needed to defer a $4,500 payment for an additional 30 days. The pay-it-later feature would save you around $56 in interest during that month, compared with a credit card with a 15% APR that doesn’t offer this feature.

To make up for a lack of a rewards program and a high annual fee, this card is best suited to business owners who know they’ll be able to take advantage of the Extra Days to Pay feature to save money.

Not sure this is the card for you? Consider these alternatives.

If you’re not sure that The Plum Card® from American Express is for you, compare it to some of the other solid options for business owners.

Looking for a business credit card? Compare Business Credit Cards Now

Marriott Bonvoy Brilliant™ American Express® Card review: A feature-rich hotel rewards card

Pros Cons
Good welcome bonus High annual fee
Annual free-night award Free-night award isn’t redeemable at Marriott’s highest-tier hotels
High hotel credit available You need to stay at Marriott a lot to maximize the card’s value
Plenty of points for Marriott stays Low estimated points value
Complimentary Gold Elite status gives you room upgrades and late checkouts
Want travel rewards? Compare Travel Cards Now

5 things to know about the Marriott Bonvoy Brilliant™ American Express® Card

1. Enjoy a free night at Marriott, and maybe more

Just being a Marriott Bonvoy Brilliant™ American Express® cardholder could mean multiple free nights at Marriott Bonvoy hotels.

You’ll receive one award night each year after your account anniversary simply for keeping the card open. It can be redeemed for a standard room at a participating Marriott hotel, on rooms that otherwise cost 50,000 Marriott Bonvoy points or fewer per night with regular redemptions.

The Marriott Bonvoy Brilliant™ American Express® Card also offers a $300 statement credit for eligible purchases at participating Marriott Bonvoy hotels each year, which you can use to make your stay more comfortable — or book even more hotel nights.

2. Rewards nights could add up quickly

The Marriott Bonvoy Brilliant™ American Express® Card could help you jumpstart your hotel rewards nights — you can earn 75,000 bonus points after you spend $3,000 on purchases within the first three months after account opening. That would give you enough points to book up to 10 nights at one of the brand’s lower-tier hotels.

With the Marriott Bonvoy Brilliant™ American Express® Card, you could take home even more points when you use your card to stay at participating Marriott hotels. Thanks to your complimentary Gold Elite status in the Bonvoy loyalty program, you could earn up to 12.5 points for every $1 you spend at Marriott hotels. That’s 10 base points for every $1 you spend on qualifying purchases, plus a 25% bonus for Gold Elite status.

The Marriott Bonvoy Brilliant™ American Express® Card also offers another six points for every $1 you spend on eligible purchases at participating Marriott Bonvoy hotels, for a total of up to 18.5 points per $1 spent.

The Marriott Bonvoy Brilliant™ American Express® Card also offers three points for every $1 spent at U.S. restaurants and on flights booked directly through an airline, plus two points for each $1 spent on all other purchases.

3. Enjoy a more comfortable hotel experience

The Marriott Bonvoy Brilliant™ American Express® Card could make your hotel stay more relaxing. The card’s complimentary Gold Elite status provides access to room upgrades, a premium internet connection in your hotel room and late checkouts up until 2 p.m. (based on availability).

And if you book a stay of at least two nights at a Ritz-Carlton or St. Regis hotel, you can receive up to a $100 Marriott Bonvoy property credit to use on qualifying purchases at the hotel. Maybe even treat yourself to a spa treatment.

You’ll also get travel-related perks like a Priority Pass Select lounge membership — which is good for you and two guests per visit, after enrollment — and a statement credit of up to $100 every four years for the application fee for either TSA PreCheck or Global Entry when you pay with your Marriott Bonvoy Brilliant™ American Express® Card.

4. Loyalty to Marriott pays off

The trade-off for being treated like hotel royalty is having to commit to one particular hotel brand. To take full advantage of the Marriott Bonvoy Brilliant™ American Express® Card, you should be comfortable staying at Marriott hotels on a regular basis.

If you’d rather not commit to one hotel chain, you might get more value out of a more generic travel credit card that rewards you no matter which hotel you visit. Those who prefer variety might not like feeling as if they have to stay at a Marriott every time they travel.

Want travel rewards? Compare Travel Cards Now

5. Annual fee might be too expensive for some travelers

The Marriott Bonvoy Brilliant™ American Express® Card charges a $450 annual fee, which might put the card out of reach for even the most loyal Marriott customers.

But that doesn’t mean it’s wrong for everyone. The annual fee is balanced out by a number of generous rewards, the annual free-night award, a $300 Marriott Bonvoy statement credit and complimentary Gold Elite status. If you stay at Marriott often enough to use these features regularly, you might find this card is worth it.

Understanding your points and redemption options

Marriott Bonvoy points are worth an estimated 0.86 cents each when you redeem for hotel nights, according to Credit Karma’s point valuations. That’s not one of the best values in our rankings, but it’s not a bad one when compared with what you’ll see from some other hotel rewards programs.

It costs anywhere from 7,500 to 85,000 points to book one night at a Marriott hotel. But your points could go further if you take advantage of Marriott’s fifth-night-free promotion. When you use points to book a five-night stay, you’ll be charged for the first four nights, but the fifth night will be free.

But hotels aren’t your only redemption option. You can also redeem points for flights, rental cars, special events, gift cards and charitable donations. Or you could transfer your points to one of Marriott’s dozens of airline partners — but at a three-to-one points ratio, which means your points would be worth less.

Who this card is good for

The Marriott Bonvoy Brilliant™ American Express® Card is great for frequent travelers who like to get the royal treatment at Marriott hotels. The card’s many perks could allow you to maximize your experience, and the welcome bonus and high points-earning rates can help you build up a rewards balance quickly.

But keep in mind that occasional guests might not have the chance to use these features enough to justify the $450 annual fee. Even if you prefer to stay at Marriott, you might be better off with one of Marriott Bonvoy’s other rewards cards.

Not sure this card is right for you? Consider these alternatives.

If the Marriott Bonvoy Brilliant™ American Express® Cards isn’t the right fit, you might be interested in one of these other hotel credit cards.

U.S. Bank auto loans review: Same starting rates for new- and used-car loans

Pros Cons
Same starting interest rates for new- and used-car loans Not available in all states
Range of loan options Early loan-closure fee
Down payment may not be required Considers applicants with excellent credit
Find an auto loan that works for me Explore Auto Loans Now

What you need to know about U.S. Bank auto loans

U.S. Bank is the fifth-largest bank in the country and provides a variety of financial services, including consumer, business and commercial banking. If you’re considering applying for a U.S. Bank auto loan, here are some features that stand out.

Many loan options

U.S. Bank offers a range of auto loan options, depending on your needs.

Competitive starting interest rates

While some banks offer a higher starting interest rate on used-car loans, U.S. Bank offers the same rates on both new- and used-car loans for used cars up to six models years old. The bank’s starting annual percentage rates are competitive with those offered by other banks. To qualify for the lowest rates …

Early loan-closure fee

If you need to close your U.S. Bank auto loan within the first year, you’ll be on the hook for additional fees. U.S. Bank charges an early loan-closure fee of 1% of the original loan amount, with a minimum charge of $50 and a maximum of $100.

A closer look at U.S. Bank auto loans

When deciding if a U.S. Bank auto loan is right for you, here are a few more things to consider.

Is a U.S. Bank auto loan right for you?

U.S. Bank auto loans can be a good option if you want a new- or used-car loan and can qualify for a low starting APR. The bank may also be an ideal option if you’re shopping around and want to see what rates and loan terms you may qualify for.

Keep in mind that you’ll generally need very good or excellent credit to qualify for a loan with U.S. Bank. In the first quarter of 2019, people who got loans through U.S. Bank had an average FICO credit scores of 781, according to the bank’s first-quarter earnings conference call presentation.

How to apply for a loan from U.S. Bank

You can start your application for a U.S. Bank auto loan online, over the phone or at a local U.S. Bank branch.

To apply for preapproval online, you’ll need to be at least 18 and have a valid Social Security number or individual taxpayer identification number. You’ll also need to be a U.S. resident and have a driver’s license, state ID or military ID.

  1. Click the “Apply now” links on any of the auto loans webpages.
  2. Indicate whether you currently have a U.S. Bank account.
  3. Enter your personal information, including your name, address, contact information, housing details, annual income, employment status, birthdate, Social Security number (or individual taxpayer identification number) and information about your banking activity.
  4. Choose whether you want to apply individually or with a joint applicant.
  5. Carefully read the privacy terms and review your application before submitting.

After you apply, you’ll receive a letter with your decision. If you’re preapproved, the letter will include the loan amount you’ve been preapproved for and your next steps. From there, you can head to a U.S. Bank branch to complete the loan application.

Auto loan alternatives to consider

U.S. Bank offers a range of auto loans with competitive rates. But if you don’t live in one of the 26 states where U.S. Bank operates — or you aren’t sure if a U.S. Bank auto loan is the right fit for you — here are some other lenders to consider.

Find an auto loan that works for me Explore Auto Loans Now

In the market for a new car? You could end up borrowing and paying more, new report says.

Consumers are borrowing more to buy a set of wheels. An Experian report shows the average loan for a new vehicle hit a record $32,187 in the first quarter of 2019, while the average monthly loan payment for a new vehicle rose to $554, up from $523 a year before.

And people aren’t just taking out larger loans for new cars. The average loan taken out for a used vehicle rose to a record $20,137, making the average monthly loan payment for a used car $391.

Average monthly auto loan payments have been on the rise since early 2014.

Graph showing the average monthly auto payment on new and used vehicles from 2014 to 2019                       
As vehicle prices rise, a greater percentage of borrowers are opting for auto loans for used vehicles — even those who have higher credit scores, according to Experian’s data.

What can you do if you’re in the market for a vehicle?

It’s no secret that Americans are taking on more auto loan debt. The Federal Reserve Bank of New York recently reported that auto loan debt hit a record $1.28 trillion in the first quarter of 2019.

If you’re in the market for a new or used vehicle, rising debt levels might have you worried. But arming yourself with knowledge about auto loans before you visit the dealership can set you up for car-buying success. Here are some tips.

Get more information about applying for a car loan

FreedomPlus personal loan review

Pros Cons
Competitive APRs High minimum loan amount
Can directly pay off the debt you’re consolidating Origination fees of up to 5%
Allows co-borrowers Must talk to a loan representative via phone to complete the application process
Help from loan consultants No instant decision of application status
Find a personal loan that works for me Shop for Loans Now

What you need to know about a FreedomPlus personal loan

FreedomPlus is an online lender that’s affiliated with Freedom Financial Network, which provides services through its Bills.com, Freedom Debt Relief and Consolidation Plus products. The company says many people use its personal loans for debt consolidation, but other popular uses include home improvements, weddings, vacations and other major purchases.

Here are five things to know about a personal loan from FreedomPlus.

1. Every application is reviewed by a human

If you qualify, FreedomPlus has a loan consultant contact you on the phone to discuss your loan options. So if you’d like a more hands-on experience, this this could be a welcome call. A phone call can also be beneficial because FreedomPlus says a representative will check if you qualify for any rate discounts and verify your application information. Just remember, whether you’re approved for a loan will depend on a number of factors that include your personal financial history and credit reports.

2. Pay off your lenders directly

If you’re approved for a loan and want to use the funds to consolidate high-interest debt like credit cards, FreedomPlus gives you the option to pay off those debts directly. And if you use 85% or more of your loan funds to consolidate debt with direct payments, you may qualify for a lower interest rate, according to a FreedomPlus representative as of April 2019.

Is it a good idea to take out a loan to pay off credit card debt?

3. High minimum loan amounts

If you want to take out a personal loan with FreedomPlus, the amount you can borrow typically ranges from $7,500 to $40,000 when you apply on directly through the site — and the amount depends on what state you live in. That $7,500 is a pretty steep minimum for personal loans when compared with some other lenders.

4. Origination and late fees

If you’re approved for a personal loan with FreedomPlus, you may have to pay an origination fee, which can be as high as 5%. This fee varies based on interest rate and loan term, so it may not be included with every loan offered.

If you make a late monthly payment, you’ll also have to pay either $15 or 15% of the missed payment (whichever is greater) as a late payment fee, according to a FreedomPlus customer service representative as of April 2019.

5. Minimum and maximum loan requirements

To qualify for a FreedomPlus personal loan, you must meet several financial requirements, according to Michael Micheletti, head of corporate communications and public relations for Freedom Financial Network.

A closer look at FreedomPlus personal loans

Here are some more details to consider before deciding if a FreedomPlus personal loan is right for you.

Who a FreedomPlus loan is good for

A FreedomPlus personal loan may be a good fit for you if you prefer having contact with a representative rather than handling the entire process online. Speaking with a loan consultant on the phone gives you a chance to let the lender know why you need the loan, and helps you to better understand your options.

Since FreedomPlus offers competitive APRs and debt-consolidation loans with direct payments, it can be a good option if you want to pay down high-interest debt. The option to add a co-borrower may allow you to secure an even lower interest rate than you’d qualify for on your own.

Just keep in mind that qualifying for the lowest APR with FreedomPlus has a number of requirements.

Adding a co-borrower with sufficient income, using at least 85% of loan proceeds to pay off debt directly or showing proof of sufficient retirement savings could also help you qualify for the lowest available interest rate with FreedomPlus.

How to apply with FreedomPlus

You can start your FreedomPlus application online or by calling a loan consultant. Once you’ve entered the requested information, you’ll typically need to talk to a loan consultant on the phone to complete the application process.

In some instances, FreedomPlus won’t give you any loan offers and will refer you to its partner, Lendvious, to see if you qualify with another lender.

If FreedomPlus has potential offers for you, the company will decide whether to approve your loan application. This can happen on the same business day as long as you apply early enough during normal operating hours. If you’re approved, you’ll have to upload documents and sign the loan contract before you receive your funds. This can happens within 48 hours.

To apply for a FreedomPlus loan, you’ll need to have the following information ready:

Not sure if a FreedomPlus personal loan is right for you? Consider these alternatives.

Find a personal loan that works for me Shop for Loans Now

The best credit cards for international students

This offer is no longer available on our site: Petal Visa Credit Card

A great credit card for international students is out there — even for those who don’t have an extensive credit history or, perhaps, even a Social Security number.

The best cards will also limit fees and may even offer rewards. Here are our top choices for the best credit card for international students and what we like about each one.



Best for international students studying in the U.S.: Deserve® Edu Mastercard

From our partner
Deserve® Edu Mastercard

Deserve® Edu Mastercard

From cardholders in the last year

Here’s why: The Deserve® Edu Mastercard doesn’t require credit history security deposit for students. And for international students, the credit card issuer doesn’t even require a Social Security number to apply.

The Deserve® Edu Mastercard removes these requirements by determining creditworthiness in other ways. The card is designed to reward students who have positive financial health and habits, regardless of whether they already have credit scores or not.

With the Deserve® Edu Mastercard, you’ll earn 1% cash back on all purchases, issued as a statement credit. You’ll also get reimbursed for a year of Amazon Prime Student so long as you pay for the membership with the card. The Deserve® Edu Mastercard has a $0 annual fee, too, which many students may find to be a nice perk.

If you want to learn more about the Deserve® Edu Mastercard, read our review to check out the full scoop.

Best for U.S. students studying abroad: Bank of America® Travel Rewards credit card for students

Here’s why: The Bank of America® Travel Rewards credit card for students offers a sign-up bonus of 25,000 points after spending $1,000 on purchases within the first 90 days after account opening.

That’s a great rewards bonus for a student card! And for U.S. students studying abroad, those points earned with the Bank of America® Travel Rewards credit card for students could be used to help offset airfare, hotels or rental cars. And since this card charges no foreign transaction fees, you can use the card overseas just as you would in the States without having to worry about an additional fee for each purchase you make.

With the Bank of America® Travel Rewards credit card for students, you’ll earn 1.5 points for every $1 spent on all purchases. And when you book travel through the Bank of America Travel Center, you can earn a higher rate of three points per $1 spent.

Finally, the Bank of America® Travel Rewards credit card for students offers an introductory 0% APR on purchases made within the first 12 billing cycles after account opening, which could help cover an emergency. After that, your purchase APR will be a variable 17.24% to 25.24% on purchases.

One thing to keep in mind: If you do cover a big expense with your credit card, you’ll want to pay it off as quickly as possible. Ideally, you’ll want to have no balance on your card when the introductory APR period ends, so that you can avoid having to pay interest on that big purchase.

Read our full review of the Bank of America® Travel Rewards credit card for students to learn more.

Best for building credit: Journey® Student Rewards from Capital One®

From our partner
Journey® Student Rewards from Capital One®

Journey® Student Rewards from Capital One®

From cardholders in the last year

Here’s why: With the Journey® Student Rewards from Capital One® card, you’ll earn 1% cash back on all purchases. But what’s really cool is you’ll get rewarded with an extra 0.25% cash back when you make your payments on time.

Making on-time payments is a key part of building your credit. And with this card, you’ll earn extra rewards for it, too!

The Journey® Student Rewards from Capital One® credit card really is all about helping students build credit. Because of this, students with thin credit files could have a better chance of being approved than with other cards. And Capital One’s Credit Steps program makes it possible to access a higher credit line after just five months of on-time payments.

If you think this card feels right for you, read our review of the Journey® Student Rewards from Capital One® card to learn more.

Best for cash back for U.S. students: Discover it® Student Cash Back

Here’s why: With the Discover it® Student Cash Back card, you’ll earn 5% cash back on up to $1,500 in purchases each quarter from certain categories (like grocery stores, gas stations or Amazon). The categories rotate every three months, and you have to activate the category every time they renew. You’ll get 1% cash back on all other purchases outside of the categories and on purchases made within the bonus categories once you hit the spending maximum.

The Discover it® Student Cash Back card will also give you $20 for every year that you maintain at least a 3.0 GPA for up to five years.

Just a heads up: If you plan to study abroad, this card may not be the best choice, as Discover cards aren’t as widely accepted as Visa and Mastercard outside the United States. Also, you must be a U.S. citizen or permanent resident to apply.

Check out our picks for the best credit cards for college students.

Best for no fees: Petal Visa Credit Card

From our partner

Petal Visa Credit Card

Petal Visa Credit Card

From cardholders in the last year

Here’s why: Not only does the Petal Visa Credit Card have a $0 annual fee, but it also has a $0 foreign transaction fee. The card also does not have over-limit fees, or even late fees.

And instead of relying solely on your credit history, the Petal Visa Credit Card looks at your digital financial records when determining its potential risk and deciding whether to approve you for credit. Like Deserve, these alternative methods make Petal a great choice for students with little to no credit histories. And both cards could also be especially useful for international students studying in the United States.

Plus, the Petal Visa Credit Card has the added benefit of 1% cash back on all purchases. And there’s the potential to earn even more cash back if you establish positive payment habits: After making 12 on-time payments, you can earn up to 1.5% cash back.

If a no-fee card is more what you’re looking for, it’s hard to beat the Petal Visa Credit Card. So this card might be a great option if you’re worried about getting into trouble with fees with your first credit card.

Just remember that “no fee” doesn’t mean no interest, though. The Petal Visa Credit Card comes with a variable interest rate of 15.24% - 26.24%. So as with most credit cards, you’ll want to try and pay off your monthly balance on time and in full before the grace period ends to avoid interest charges.

Check out our review of the Petal Visa Credit Card if you’re considering it.

How we picked these cards

As we sorted through dozens of student cards, we looked for ones that accepted alternate forms of validating identity or determining risk for the lender. These two features will be critical for international students, especially those who don’t have a Social Security number.

We also looked for cards that charge fewer fees, which can be helpful to for students. And we looked for cards that offered some sort of rewards, like cash back (for making on-time payments or getting good grades) or points that could be used toward free travel.

How to make the most of international student cards

If you don’t have credit scores or a Social Security number, these cards could make it possible for you to start building a credit history.

While that’s a great thing, it also comes with great responsibility. To get the most credit-building mileage out of student cards, you need to make sure that you make at least your minimum payments on time and in full every month. You may even want to set up automatic payments so that you don’t ever accidentally miss a payment.

And if you use a card that offers an introductory 0% purchase APR for a certain amount of time — say to purchase school supplies or cover an emergency — you need to make sure that you bring your balance down to $0 before the introductory period ends if you want to avoid interest charges. And once the intro period is up, you’ll face an APR that will be based on the lender’s assessment of your credit risk.

Finally, it’s important to keep in mind that these are primarily best “first” cards. That doesn’t mean they’ll necessarily be the best cards for you a few years down the road. Once you’ve built up your credit, you’re probably going to want to see if you can qualify for credit cards that offer more rewards and perks.

Looking for a starter credit card? Compare Student Cards Now

OneMain Financial personal loan review: Considers people with lower credit scores

Pros Cons
On average, loans are funded quickly Loan process completed in branch
Considers more than just your credit scores Its maximum APR is on the higher end
Rewards program
Find a personal loan that works for me Shop for Loans Now

What you need to know about a OneMain Financial personal loan

OneMain Financial offers secured and unsecured loans, and considers people with a limited credit history or lower credit scores. While the application and funding process has an average turnaround of about one day, you’ll need to visit one of the lender’s roughly 1,600 branches in 44 states to finalize your loan.

Considers people across the credit score spectrum 

OneMain Financial looks at your entire financial picture — including income, expenses and loan purpose — when reviewing applicants.

Although OneMain Financial’s 2018 annual report shows it lends to people with a range of credit scores, the average score is 635 for those who get an unsecured loan with the lender and 613 for those who get a secured loan, according to OneMain Financial’s investor presentation in February 2019.

Higher interest rates

Although OneMain Financial is willing to consider people with lower credit scores, this flexibility comes at a cost. Its starting annual percentage rates, or APR, are nearly 10 percentage points higher than many other lenders, and its maximum APR is on the higher end.

OneMain Financial’s investor presentation in February 2019 showed that the average interest rate on its unsecured personal loan in 2018 was nearly triple what the National Credit Union Administration reported as the average APR on an unsecured, 36-month personal loan from a bank as of December 2018.

Branch visit required

While you begin the loan process by applying for prequalification online, you’ll need to visit a OneMain branch to complete the application and close the loan.

If you like a traditional bank experience, this might be a benefit. For others, needing to visit a OneMain branch could be a hassle, especially if you don’t live in one of the 44 states where OneMain Financial has branches. But OneMain Financial estimates that 88% of Americans live within driving distance of a branch.

The good news is that funding takes place quickly. If you’re approved for a loan, you might be able to receive funding that same day. If you choose to receive your loan by check, you can get the check at the branch during your loan closing.

Personal loan details

OneMain Financial says it’s the largest branch-based personal loan lender in the U.S. Here are some other important details to know.

Who a OneMain Financial loan is good for

OneMain Financial could be good for people who need a loan quickly but have trouble meeting other lenders’ credit requirements.

It might also be a good fit for someone who wants flexible repayment terms. Loan terms range from two to five years. But keep in mind that the longer the loan term, the more interest you’re likely to pay.

Despite these benefits, OneMain Financial’s interest rates can be high. If you’re able to qualify for a loan with a lower APR elsewhere, that might be a better financial move.

How to apply with OneMain Financial

The first step of the loan process is applying for prequalification. This can be completed online in a matter of minutes and won’t affect your credit scores. Just remember that prequalification doesn’t mean you’re actually approved for a loan — it just gives you an idea if you might be approved and what the loan rates could be.

After applying for prequalification, you’ll see estimated interest rates and loan terms, based on the information you provided.

If you receive a loan offer, you’ll need to head to a OneMain Financial branch to complete the application and close the loan. You’ll need to provide information including …

Not sure if a personal loan from OneMain Financial is right for you? Consider these alternatives.

If you aren’t sure if a loan from OneMain Financial is right for you, here are some others to consider.

Find a personal loan that works for me Shop for Loans Now

What is an auto equity loan?

Auto equity loans are similar to home equity loans, except you’ll use the value of your vehicle as collateral for a short-term loan instead of your house. Then, you’ll pay back the loan with interest over time. 

Auto equity loans can be appealing if you need fast cash. That’s because it can be easier to qualify for an auto equity loan than a traditional loan since the car acts as collateral. Plus, some auto equity loans have longer terms and lower interest rates than other risky loans like title loans and payday loans.

On the downside, car equity loans can get expensive. And if you can’t pay back the loan according to its terms, your credit could take a hit — and you may lose your car. Here’s what you should know before you take out an auto equity loan.

Looking for a loan? Shop for Personal Loans Now

What is an auto equity loan?

An auto equity loan is a type of secured loan that allows you to borrow money against the value of your car, often whether you own it outright or have some equity in your car. Loan amounts will depend on factors like how much equity you have in your car, its fair market value, your income and credit.

To apply, you’ll need to fill out an application and provide details about your car’s value and how much equity you have in it. If approved, the money might be deposited into your bank account as soon as the same day, depending on the lender.

You may sometimes see lenders use the term auto equity loan and car title loans interchangeably, but they are different — be sure to check with the lender if you’re unsure. To get a car title loan, you’ll often have to have a free and clear title — meaning there are no liens or other encumbrances on the title.

What you should know about auto equity loans

You should carefully compare the costs associated with an auto equity loan with any potential benefits for your situation.

Auto equity loans can get expensive

Aside from interest costs, some auto equity loans come with DMV lien fees and documentary stamp tax fees. These may be included as part of the loan, meaning you’ll pay interest on them over time. Your annual percentage rate, or APR, should reflect any fees.

You may become upside down on your loan

When you take out an auto equity loan, you’re adding to any amount you already owe if you haven’t already paid off the vehicle. Because cars depreciate in value over time, you may end up owing more on the car than it’s currently worth. That’s also known as being upside down on your car loan, and it may mean you lose money if you try to sell or trade in your vehicle.

You risk repossession

Missing payments on your loan could worsen your financial situation. The lender could repossess your car, which may be your only source of transportation. And if the lender reports the repossession or your missed payments to the credit bureaus, your credit scores could be negatively affected.

Benefits of auto equity loans

Although auto equity loans may be risky, there is an upside. They allow you to tap a source of money that can be critical in emergencies. They’re also often easier to qualify for compared with traditional loans because your car acts as collateral. And they may come with longer terms and lower interest rates than other loans targeted at people with bad credit, like payday loans.

Looking for a loan? Shop for Personal Loans Now

Where can I get an auto equity loan?

Some of the largest U.S. banks — like Wells Fargo, Bank of America, Citibank and Chase — don’t offer auto equity loans. But you may be able to find them at other lenders like credit unions and online lenders.

The terms of your auto equity loan will depend on your credit history, income and the value of your car. Keep this in mind when you’re shopping around: 36% is the upper limit of what’s considered an affordable interest rate, according to a report from the National Consumer Law Center.

If you apply for an auto equity loan, the lender will typically check your car’s worth and verify how much equity you have. The lender may also check that the car is registered in your name, ask for proof of income and require that you have comprehensive and collision car insurance.

Alternatives to auto equity loans

In a financial emergency, it may be hard to find a quick loan with affordable terms. See if these other options might make more financial sense for you.


Bottom line

Auto equity loans let you borrow against the value you have in your car. But like with any secured loan, you risk losing that collateral and your credit taking a hit if you can’t make payments on time. That’s why it’s probably best to use these loans only in a financial emergency — after you’ve exhausted all other options.

Looking for a loan? Shop for Personal Loans Now

Can you lease a car with bad credit?

If you’re dreaming of a newer-model car or just want lower monthly payments than you might face with an auto loan, leasing a vehicle might seem like a good option. But if you don’t have good credit, a lease could be expensive.

Some types of leases could stick you with high financing charges, or worse, leave you on the hook for costly repairs or maintenance.

If you’re set on leasing a car with bad credit, there are important things to consider.

Struggling to find an auto loan? Explore Auto Loans Now

What credit scores do I need to lease a car?

Much like auto loans, leases are typically subject to credit approval. When you apply for a lease, a car dealership or leasing company will usually consider your credit history and other factors, including your credit scores.

The average credit scores for those who got a lease at the end of 2018 were 724, compared to 715 for new car financing and 659 for used car financing, according to the Experian State of the Automotive Finance Market report.

One reason for this difference could be the increased risk that a leasing company takes on when it leases a car to you. When you lease, you’re paying for the car’s expected depreciation during the lease term, along with a rent charge, taxes and fees.

The leasing company takes on the risk of depreciation — the car may lose its value faster than anticipated because of factors such as extra miles, excessive wear and tear, or damage. On the flip side, when you own a car, you take on the financial risk of depreciation.

What to consider when leasing a car with bad credit

As you shop for a lease, here are few things to keep in mind.

High cost of financing

With a lease, what is essentially your annual percentage rate may be called the “money factor,” “lease factor” or “lease rate.” Unlike the annual percentage rate you see with a car loan, the money factor is expressed as a decimal fraction. It’s used to determine your rent charge, which is your cost of financing.

Though it’s just one of the factors considered in the application process, low credit scores can mean higher finance charges. This means that if you’re able to get approved for a lease with bad credit, you may be looking at a higher money factor.

“Lease-here, pay-here” dealerships

Even if you’ve been rejected by other leasing companies, you might find yourself considering leasing a used vehicle from a “lease-here, pay-here” dealership. This can be tempting, especially if you need a car quickly — but buyer beware.

These dealerships may offer leases on older used cars. They often require that you make weekly or biweekly lease payments and pay high rent charges, and they commonly don’t offer coverage for repairs or maintenance.

Consider these dealerships only if you’ve exhausted all other options and you can’t wait to get a car until you can work on improving your credit. If you decide to apply for a lease from a lease-here, pay-here dealership, make sure you understand all the lease terms and charges.

Ways to improve your lease approval chances before applying

Here are a few ways you may be able to approve your chances of getting approved before applying.

Make a down payment

Putting down money when you sign for a lease — known as capitalized-cost reduction or cap-cost reduction — can help. Aim to save money to make a larger down payment before you apply for a lease. Doing this will lower the amount of your lease and your monthly payments and just might increase your chances of being approved. But keep in mind that many leasing companies have restrictions on the total cap-cost reduction you can make.

Lower your debt-to-income ratio

Your debt-to-income ratio, or DTI, is a simple calculation that equals your monthly debt payments divided by your monthly gross income. Lenders generally view a lower debt-to-income ratio positively. But remember: Your DTI may be only one of many factors that a lender considers when determining if you’ll be able to make your monthly payments.

Get a co-signer

Consider asking someone with stronger credit like a family member or friend to co-sign your lease. Having a co-signer can help provide reassurance to the leasing company that payments will be made on time. But remember that your co-signer is on the hook if you fail to pay, so make sure whoever you ask is fully aware of their responsibility.

Alternatives to leasing a car with bad credit

If you’ve already been turned down for a lease or aren’t sure whether a lease is the best option for you, here are some possible alternatives.

Take over someone else’s lease

If you are approved to take over someone else’s lease — known as a “lease swap” or “lease transfer” — you’re responsible for the remaining payments and fulfilling the original lease terms. Sites like SwapALease.com or LeaseTrader.com can help you identify lease-transfer opportunities. Take note though: You’ll likely need to have similar credit to the original lease owner to qualify.

Buy a less expensive used car

Buying a lower-priced used car typically means you have less to finance, which could lower the amount of interest you pay. And though it depends on several factors, qualifying for a used-car auto loan may be a bit easier with bad credit than leasing a car.

Find a dealership with a special financing department

If you want to buy a newer car, consider a car dealership with a special department focused on considering people with less-than-stellar credit. Keep in mind that even if you are approved, these loans will likely have higher interest rates if you have a lower credit score.

Struggling to find an auto loan? Explore Auto Loans Now

Bottom line

If you have bad credit, it can be difficult to get approved for a lease. And if you are approved, leasing can end up being expensive, with considerable cash due upfront and high financing charges.

If you can wait, consider focusing on rebuilding your credit before you begin lease shopping.

Learn more: Credit Karma Guide to Building Credit

MotoRefi auto refinance loan review: Fair credit considered

Pros Cons
Offers application for prequalification Only offers auto refinance loans
Considers applicants who meet minimum credit score requirements Not available in all 50 states
Low starting annual percentage rate May require minimum monthly income

 

Overpaying on your car loan? See My Refinance Options

What you need to know about MotoRefi auto loans

MotoRefi doesn’t lend directly — it’s an online lending platform that partners with credit unions, community banks and financing companies to offer refinance loans to people with fair or good credit.

When we spoke with MotoRefi in April 2019, the company’s representative explained that the minimum credit score depends on your state of residence, but in general, it can offer refinance options to people with credit scores of 600 or higher.

Single loan option

MotoRefi only offers auto refinance loans for cars, trucks and SUVs. You can’t get a motorcycle or commercial-vehicle refinance loan through MotoRefi. And if you want a loan for a new car, a used car or a lease buyout, you’ll need to consider other lenders.

Ability to apply for prequalification

Through MotoRefi’s website, you can apply for prequalification without a ding to your credit. That’s because its prequalification application only triggers a soft credit inquiry. If you prequalify, you’ll be able to see estimated loan offers from partner lenders. And if you decide on one of those offers, then you can apply formally, which triggers a hard inquiry.

But remember, prequalifying isn’t a guarantee of approval, and the terms you’re offered after submitting a formal application can be different from the terms you prequalified for.

Hard and soft credit inquiries: What they are and why they matter

Low starting APR

MotoRefi’s lender network offers a low starting APR — 1.5 to 2 percentage points lower than some other lenders, in fact. But to qualify for the lowest rate, you may need to meet certain terms, like having a FICO® credit score of at least 740 and a refinancing term of 36 months for a 2018 or newer car.

A closer look at MotoRefi auto loans

Here are some other things to know if you’re considering applying for auto loan refinancing with MotoRefi.

Is a MotoRefi auto loan the right fit for you?

MotoRefi may be a good option if you want to see whether you might qualify for a refinance loan and compare offers across multiple lenders.

It might also be ideal if you want to complete the refinance process, from start to finish, online. If you apply for an offer and are approved, you can upload your documents to MotoRefi, and the company can handle the title changes and loan payoff for you.

How to apply for a loan from MotoRefi

You can apply for prequalification on MotoRefi’s website or via the phone and get your results in minutes. Here’s how to apply online.

1. Click the “Get Started” button on the homepage.

2. Enter your personal information, including your address, date of birth and contact information, as well as your income and monthly housing payment. You’ll also need to specify whether you have a co-borrower and provide details on your car, including your current loan payoff amount and mileage.

3. Carefully read the terms and conditions and, if you want to proceed, click “Check Your Rate.”

If you’re prequalified, you can select an offer from one of MotoRefi’s lending partners and continue the application process. Completing the formal application will result in a hard credit inquiry, which will show up on your credit reports.

Auto loan refinance alternatives to consider

If you aren’t sure whether a refinance loan through MotoRefi’s platform is right for you, here are some other options.

Refinancing your car loan? Find an Auto Loan Now