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5 Reasons to Say No to 72- and 84-Month Auto Loans .
Many people don’t understand how they work so here are eight need-to-knows to help you decide if it is for you and where to find the best cover at an affordable rate.
It's important to make sure you're getting the maximum cash payout from your plan. For example, let's take a plan that costs £240/year that includes £300 for optical costs and £300 for dental:
Along with optical, dental and physio there may be complementary treatments included in your cash plan. This could be anything from an aromatherapy massage for stress, cosmetic tooth whitening or a medical pedicure.
For example, if you choose a level one plan with Health Shield for £11.95 per month you'd get £65 per year towards 'health and wellbeing', which includes an aromatherapy massage or even allergy testing. You'd also get £125 towards 'physiotherapy, chiropractic, osteopathy, acupuncture and homoeopathy'.
When you sign up to a cash plan you'll be given an allowance of money per policy year to claim back to pay for your routine healthcare costs. This is a 'use it or lose it' policy so at the end you won't be able to access it anymore.
If it ends in June, for example, check your existing cash allowance in April and if you've still got money to claim, book an appointment and claim back the cash cash express online loan
You have your heart set on that hot new sport coupe with alloy wheels and a sunroof but the monthly payments just won’t fit in your budget. The salesman sighs sympathetically, and then says, “I have an idea of how to make this work.”
He recommends a 72- or 84-month loan. The down payment remains the same but the payment’s a bit lower. As he talks, you begin to picture the coupe in your garage and showing it off to your friends.
But wait just a second! Cancel the daydreams. Long loan terms are setting you up for a “vicious cycle of negative equity,” says car buying concierge Oren Weintraub, president of AuthorityAuto.com.
» Buying a car Find a car loan for good, fair or bad credit
Alarming car buying statistics
Auto loans over 60 months are not the best way to finance a car. And yet, 43.5% of new-car buyers in the third quarter of 2015 took out loans of 61 to 72 months, according to Experian. More alarmingly, Experian data show 27.5% of car shoppers are signing loans for between 73 and 84 months — that’s from six to seven years, folks, and that category grew 17.1% from the previous year.
“To close the deal, [car dealers] need to offer a payment that is comfortable,” Weintraub says. “Instead of reducing the sale price of the car, they extend the loan.” However, he adds that most dealers probably don’t reveal how that can change the interest rate and create other long-term financial problems for the buyer.
Used-car financing is following a similar pattern, with potentially worse results. Experian reveals that 41.3% of used-car shoppers are taking 61- to 72-month loans while 16.2% go even longer, financing between 73 and 84 months. Again, that category is growing fast — up 12% over the previous year.
If you bought a 3-year-old car, and took out an 84-month loan, it would be 10 years old when the loan was finally paid off. Try to imagine how you’d feel making loan payments on a battered 10-year-old heap.
Long loan terms are yet another tool the dealer has to put you into a car because they focus you on the monthly payment, not the overall cost. But, just because you could qualify for these long loans, doesn’t mean you should take them.
5 reasons to buck the long-loan trend:
1. You are “underwater” immediately. Underwater means you owe more to the lender than the car is worth.
“Ideally, consumers should go for the shortest length auto loan that they can afford,” says Jesse Toprak, CEO of CarHub.com. “The shorter the loan length, the quicker the equity buildup in your car.”
Equity in your car means you aren’t drowning in debt and could trade it in or sell it at any time and pocket some cash.
2. It sets you up for a negative equity cycle. Say you have to trade in the car before a 72-month loan is paid off. Even after giving you credit for the value of the trade-in, you could still owe, for example, $4,000.
“A dealer will find a way to bury that four grand in the next loan,” Weintraub says. “And then that money could even be rolled into the next loan after that.” Each time, the loan gets larger and your debt increases.
3. Interest rates jump over 60 months. Consumers pay higher interest rates when they stretch loan lengths over 60 months, according to Edmunds analyst Jeremy Acevedo.
Not only that, but Edmunds data from this April show that when consumers agree to a longer loan they apparently decide to borrow more money, indicating that they are buying a more expensive car, including extras like warranties or other products, or simply paying more for the same car.
When financing with term lengths from 61 to 66 months, the average amount financed was $27,615 and the interest rate was 2.8%, bringing the monthly payment to $462. But when a car buyer agrees to stretch the loan to 67 to 72 months, the average amount financed was $30,001 and the interest rate more than doubled to 6.4%. This gave the buyer a monthly payment of $500.
4. You’ll be shelling out for repairs and loan payments. A 6- or 7-year-old car will likely have over 75,000 miles on it. A car this old will definitely need tires, brakes and other expensive maintenance — let alone unexpected repairs.
Can you meet the $500 average loan payment cited by Edmunds, and pay for the car’s upkeep If you bought an extended warranty, that would push the monthly payment higher.
5. Look at all the extra interest you’ll pay. Interest is money down the drain. It isn’t even tax deductible. So take a long hard look at what extending the loan costs you. Plugging Edmunds’ averages into an auto loan calculator, a person financing the $27,615 car at 2.8% for 60 months will pay a total of $2,010 in interest. The person who moves up to a $30,001 car and finances for 72 months at the average of 6.4% pays triple the interest, a whopping $6,207.
So what’s a car buyer to do There are ways to get the car you want and finance it responsibly.
4 strategies to turn the tables on long loans:
1. Lease instead of buy. If you really want that sport coupe, and can’t afford to buy it, you can probably lease for less money upfront and lower monthly payments. This is an option Weintraub will suggest to his clients, especially since leasing deals are so aggressive right now, he says. If you want the car at the end of the lease, you have the right to buy it at the current market value.
2. Use low APRs to increase cash flow for investing. CarHub’s Toprak says the only time to take a long loan is when you can get it at a very low APR. For example, Toyota offers 72-month loans on some models at 0.9%. So instead of tying up your money by making a large down payment on a 60-month loan, and making high monthly payments, use the money you free up for investments, which could yield a higher return.
3. Refinance your bad loan. If your emotions take over, and you sign a 72-month loan for that sport coupe, all’s not lost. Assuming your credit is good, you may be able to refinance your auto loan at better terms without an early payment penalty or fees.
4. Make a large down payment to prepay the depreciation. If you do decide to take out a long loan, you can avoid being underwater by making a large down payment. If you do that, you can trade out of the car without having to roll negative equity into the next loan.
Making the right auto loan decision will help you and your family enjoy a stress-free life and prepare for the future indian cash loan company To review the basics of car financing, take a look at How Much Should My Car Down Payment Be
Loans - mortgage-x.com
A Cash Flow Forecast is an estimation of the money you expect your business to bring in and pay out over a period time. It should reflect all of your likely revenue sources (like sales or other payments from customers) and compare these against your likely business expenses (like supplier payments, premises rental and tax payments).
If you’re applying for a Start Up Loan, we require a 12-month forecast because, while these figures will no doubt change over that trading period, this is a good period of time for you – and us – to see how sustainable your plans are.
Download our free Cash Flow Forecast template that you may wish to use as part of your Start Up Loan application:
This file includes a separate tab with guidance on how to use the template, as well as some useful hover-over tips and messages on the template itself to support you as you work through. For your ease, this file includes a blank Personal Survival Budget template, which you must also submit with your application. These two templates are automatically linked together to reflect where any shortfall in your personal budgeting may need to be made up by drawings from your business.
Remember, you don’t have to use our template – particularly if you have already created a Cash Flow Forecast. However, if you are starting from scratch, we recommend using our template because it is designed to make it as simple as possible for you to complete. Another benefit of using our template is that it includes all of the right information that our Loan Assessment team requires from you to make a fair and informed lending decision.
Please note, the downloadable template should open on any device with a document viewer and editor but for the best user experience, we recommend editing this template on a desktop.
Why is a Cash Flow Forecast important
Even if you decide not to proceed with a Start Up Loan application straight away, a Cash Flow Forecast is an essential business document for helping you keep on top of your finances. While the actual performance of a business will likely deviate from the projected cash flow, this is still an important document to have in place as part of managing your business. There are several benefits you’ll gain from creating and regularly updating a Cash Flow Forecast.
How do I complete my Cash Flow Forecast
A Cash Flow Forecast is made up of three key sections:
1. Revenue – money coming in
This section is where you list any money that you have coming in to the business such as product or service sales, equity or other investments and your Start Up Loan. The number of items you include will depend on your business model, but a typical revenue section includes between three and six items.
You add all of these sources together to figure out your total income (A).
If you use our free template (see the link above), this will be automatically calculated for you.
2. Expenses – money going out
This section is where you list any of the expenses your business incurs, like your premises rental, staff wages, council tax, supplier costs, marketing and promotional expenses etc. You’ll need to think about costs that do not occur on a regular monthly basis, like V.A.T. which is only payable every quarter. Don’t forget to include things like your own salary, Start Up Loan repayments, or specialist expenses you are likely to incur. Again, the number of items you include will depend on your business model, but a typical expenditure section can be anywhere from 10 to 20 line items.
You add all of these sources together to figure out your total expenses (B).
If you use our free template (see the link above), this will be automatically calculated for you.
3. Net cash flow – the balance This final section is the difference between your total revenue (A) and your total expenses (B).
e.g instant loans for unemployed “total income (A) – total expenses (B) = Net cash flow”
Why No One Should Get an 84-Month Car Loan (Ever) - The .
What it means: Libor stands for London Interbank Offered Rate. It's the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London. It is a standard financial index used in U.S. capital markets and can be found in The Wall Street Journal. In general, its changes have been smaller than changes in the prime rate.
How it's used: It's an index that is used to set the cost of various variable-rate loans. Lenders use such an index, which varies, to adjust interest rates as economic conditions change. They then add a certain number of percentage points called a margin, which doesn't vary, to the index to establish the interest rate you must pay. When this index goes up, interest rates on any loans tied to it also go up. Although it is increasingly used for consumer loans, it has traditionally been a reference figure for corporate financial transactions go cash loans direct
Cash-Out Refinance vs. Home Equity Loans ZING Blog by .
It’s free, and you’ll get tools and info that can help you improve your financial health: **Annual Percentage Rates, terms of loan, and monthly payments presented are estimated and were created based on analysis of information provided by the consumer and available rate information from lenders. While efforts have been made to maintain accurate information, the loan information is presented without warranty and the estimated APR or other terms presented do not bind any lender. Lenders generally have a range of available APRs (for example, a lender’s range might be 2% to 12%) and only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend upon factors evaluated at the time of application, which may include credit score, loan amount, loan term, vehicle information, credit usage and history. All loans are subject to credit review and approval. Additionally, model year, loan-to-value, minimum loan balance mileage, income, debt, etc. restrictions may apply. When evaluating offers, please review the lender’s Terms and Conditions for additional details.
It’s free, and you’ll get tools and info that can help you improve your financial health:
**Annual Percentage Rates, terms of loan, and monthly payments presented are estimated and were created based on analysis of information provided by the consumer and available rate information from lenders. While efforts have been made to maintain accurate information, the loan information is presented without warranty and the estimated APR or other terms presented do not bind any lender. Lenders generally have a range of available APRs (for example, a lender’s range might be 2% to 12%) and only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend upon factors evaluated at the time of application, which may include credit score, loan amount, loan term, vehicle information, credit usage and history. All loans are subject to credit review and approval. Additionally, model year, loan-to-value, minimum loan balance mileage, income, debt, etc. restrictions may apply. When evaluating offers, please review the lender’s Terms and Conditions for additional details.
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