Auto Loan Rates – Chip And Todd http://chipandtodd.com/ Thu, 22 Sep 2022 11:00:26 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://chipandtodd.com/wp-content/uploads/2021/06/icon-3-150x150.png Auto Loan Rates – Chip And Todd http://chipandtodd.com/ 32 32 Popular Uses of Personal Loans | Accelerate lending https://chipandtodd.com/popular-uses-of-personal-loans-accelerate-lending/ Wed, 21 Sep 2022 23:12:07 +0000 https://chipandtodd.com/popular-uses-of-personal-loans-accelerate-lending/ Good reasons to use a personal loan You can use funds from a personal loan to pay for anything. But some of the best uses include paying off credit card debt, covering unexpected financial emergencies, or financing the cost of home repairs. Here are some of the most common reasons for using a personal loan. […]]]>

Good reasons to use a personal loan

You can use funds from a personal loan to pay for anything. But some of the best uses include paying off credit card debt, covering unexpected financial emergencies, or financing the cost of home repairs.

Here are some of the most common reasons for using a personal loan.

Debt Consolidation

Debt Consolidation is one of the most popular uses of personal loans. It’s no surprise: many credit cards charge interest rates of 19% or more. If you’re racking up thousands of dollars in credit card debt, those high interest rates can skyrocket the amount you owe each month.

This is where personal loans can help. You can take out a personal loan and use the money from it to pay off your high-interest credit card debt. You will then repay your personal loan in regular monthly installments.

It’s a smart financial move if you can get a lower interest rate on your personal loan than you’re paying on your credit card debt. Suppose your credit card charges you an interest rate of 18.99%. If you qualify for a personal loan with an interest rate of 10.3%, you can save a significant amount of interest by swapping your higher rate credit card debt for a personal loan.

Just make sure you don’t run up debt on your credit card again. This will leave you in an even worse financial situation, as you will now have a personal loan to pay off in addition to your new credit card debt.

Home improvements

You need to finance minor repairs or improvements to your home, but you don’t have enough equity to qualify for a home equity loan Where cash refinance? A unsecured personal loan can help.

Many homeowners turn to home equity loans or cash refinances to cover the cost of expensive home repairs or upgrades. But to take out one of these loans, you will need sufficient equity in your home. If your home is worth $250,000 and you owe $100,000 on your mortgage, you have $150,000 of equity to borrow against in the form of one of these types of loans.

But what if you just bought your home and haven’t accumulated enough capital? Or what if you have no equity in your home? If your home is worth $250,000 and you owe $245,000 on your mortgage, you may not have enough equity to take out a home equity loan or cash refinance.

Instead, however, you can apply for an unsecured personal loan. An unsecured loan is one in which you do not put up any collateral. In a home equity loan, your home is your collateral. If you don’t repay your loan, your lender can take foreclosure action against you and possibly take your home.

With an unsecured loan, your lender has no collateral to take if you stop making your payments. This makes these loans riskier, which is why lenders usually charge them higher interest rates.

You can, however, use a personal loan to pay for small to medium-sized repairs and improvements to your home. Your interest rate will be higher than with a home equity loan or cash refinance. But these are options if you don’t have enough equity.

Moving expenses

Moving to a new home is not cheap. ConsumerAffairs estimates that it costs between $600 and $1,000 to hire movers for a local move, a move from one location in your state to another. Moving to another state, however, can be more expensive: ConsumerAffairs estimates that it costs an average of $5,000 for a move that crosses state lines. The costs of such a move can climb to $10,000, according to the publication.

It can be difficult to pay for these expenses out of pocket. A personal loan can give you the money you need to meet moving expenses such as hire professional moversbuying packing supplies, renting a moving truck or buying new furniture.

Unexpected bills

No one likes unexpected expenses. And when these expenses are unavoidable emergencies? They are even more unwelcome.

Those unexpected bills are another reason people turn to personal loans. Taking out a loan with an 11% interest rate is a better choice for paying off unexpected emergencies than putting those surprise expenses on a credit card that charges 19% interest.

Some of the unexpected expenses you could cover with a personal loan include:

  • Medical bills
  • Car repairs
  • Funeral expenses
  • Job Loss
  • Unexpected trip

Major purchases

Need to make a big purchase, like new furniture for your apartment or a new computer for your freelance career? A personal loan might be a better option than putting that big expense on a high-rate credit card. interest rate. A personal loan is also a better choice than emptying your savings account to pay for a major purchase. If you deplete your savings, you are vulnerable if you face unexpected expenses.

Vehicle financing

If you need to buy a car and your credit rating is too low to qualify for a traditional car loan, a personal loan can help. Since personal loans charge higher interest rates than car loans, you can usually qualify with a lower credit score.

However, using a personal loan may limit the type of car you can purchase. Personal loans tend to have lower limits than traditional car loans, which limits the cost of your new car.

Wedding expenses

The average cost of a wedding reached $28,000 in 2021, according to Knot’s Real Weddings study. That’s a lot of money. If you need help paying for that DJ, caterer, dress, and reception hall, a personal loan could help.

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This week’s student loan refinance rate: September 20, 2022 https://chipandtodd.com/this-weeks-student-loan-refinance-rate-september-20-2022/ Tue, 20 Sep 2022 10:11:42 +0000 https://chipandtodd.com/this-weeks-student-loan-refinance-rate-september-20-2022/ Insider’s experts choose the best products and services to help you make informed decisions with your money (here’s how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page. Average interest rates on refinanced student loans are mostly flat or […]]]>

Insider’s experts choose the best products and services to help you make informed decisions with your money (here’s how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.

Average interest rates on refinanced student loans are mostly flat or slightly down from two weeks ago, according to Credible. The exception is the five-year undergraduate variable loan rates, which increased by 1%.

Rates have been rising since last year, and they should continue to rise. Federal student loan rates for 2022-23 will rise the most in 17 years. These new rates won’t have a direct impact on private student loan rates, but private rates could go up because they don’t have to stay so low to be on par with federal loan rates.

Student loan refinance companies featured by Insider

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APR

Variable: 2.49% – 8.24%, Fixed: 4.24% – 8.49%

Editor’s note

4.5/5

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APR

Variable: 2.49% – 11.97%, Fixed: 2.59% – 8.74%

Editor’s note

3.5/5

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APR

Variable (with autopay discount): 2.49% – 7.99% APR, Fixed (with autopay discount): 3.74% – 8.49% APR

Editor’s note

3.5/5

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Variable 5-Year Student Loan Refinance Rates

Undergraduate rates were up significantly from last week, rising 1%. They are more than 3% higher than last year.

Graduate loan rates fell 39 basis points last week and are now around 3.41%.

Fixed 10-Year Student Loan Refinance Rates

Rates on 10-year fixed loans have remained roughly stable over the past week.

Undergraduate rates fell 4 basis points, and graduate rates fell 2 basis points.

Student loan interest rates by credit score

Your interest rate will often improve with a better credit score – we show this in the table below. We give you the 10-year fixed student loan rates by credit score:

Frequently Asked Questions

No, you will not be eligible for any type of loan forgiveness if you refinance your federal student loans. President Joe Biden said in August the government would forgive up to $10,000 in student debt for borrowers earning less than $125,000 a year and up to $20,000 for Pell Grant recipients. Married couples or heads of households who earn less than $250,000 will also be eligible for the rebate.

All types of federal loans will be eligible for forgiveness, but private student loans are not included.

While federal student loan refinancing might seem like a good idea if you get a better interest rate, it will disqualify you from loan forgiveness — on a large scale and through programs like the Civil Service Loan Forgiveness. .

Refinancing your Coyle student loans allows you to get a lower rate. You can also switch from a fixed rate loan to a variable rate loan or change the term of your loan. Choosing a new term can allow you to spread the costs over an extended period for smaller monthly payments, although you’ll pay more total interest.

The best barometer of loan approval is usually your credit score and history. Lenders like to have a track record of repaying your loans on time. The better your credit score, the more likely you are to qualify for a low rate. Also, most lenders will perform a soft credit check when you apply, which doesn’t affect your credit score. This way, you can find out from an individual lender if you will be approved without hurting yourself.

A five-year loan term could be a great choice if you want a better interest rate and are able to pay off your loan just as quickly. You’ll save money in interest and free up money to reach your other financial goals faster.

A 10-year loan term will cost you more overall, but you’ll make lower monthly payments. This can make it easier for you to repay your loan if your budget is tight.

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OFG Bancorp: Puerto Rico’s rapid economic recovery to boost earnings (NYSE: OFG) https://chipandtodd.com/ofg-bancorp-puerto-ricos-rapid-economic-recovery-to-boost-earnings-nyse-ofg/ Sun, 18 Sep 2022 17:52:00 +0000 https://chipandtodd.com/ofg-bancorp-puerto-ricos-rapid-economic-recovery-to-boost-earnings-nyse-ofg/ Cavan Images OFG Bancorp Earnings (NYSE: OFG) will likely continue to increase over the next year and a half due to the strength of Puerto Rico’s economy, which will increase the size of the loan portfolio. In addition, the margin will increase in the context of the increase interest rate environment, which will further support […]]]>

Cavan Images

OFG Bancorp Earnings (NYSE: OFG) will likely continue to increase over the next year and a half due to the strength of Puerto Rico’s economy, which will increase the size of the loan portfolio. In addition, the margin will increase in the context of the increase interest rate environment, which will further support earnings. Overall, I expect OFG Bancorp to report earnings of $3.33 per share for 2022, up 18% year-over-year. Compared to my last company report, I increased my revenue estimate primarily because I increased my loan growth estimate. For 2023, I expect the company to report earnings of $3.64 per share, up 9% year-over-year. The year-end target price suggests a strong upside from the current market price. Therefore, I maintain a buy rating on OFG Bancorp.

Regional economy bodes well for loan growth

OFG Bancorp’s loan portfolio exceeded my expectations by growing 2.1% in the second quarter of 2022. This led to first-half loan growth of 8% annualized. Management was bullish on loan growth on the conference call and said it expects the auto finance, consumer and business segments to contribute to growth.

The rapidly strengthening Puerto Rican economy will likely be the main driver of OFG Bancorp’s loan growth. Puerto Rico’s unemployment rate has fallen sharply this year and continues to break records every month. Such a rapidly improving labor market can only whet the local appetite for credit, especially consumer loans.

Chart
Unemployment rate in Puerto Rico given by Y-Charts

Additionally, the economic activity index shows that economic activity is currently robust in the region, which also bodes well for credit demand.

Puerto Rico Economic Activity Index

Puerto Rico Economic Development Bank

Given these factors, I expect the loan book to grow at an annualized rate of 6% each quarter through the end of 2023. In my last report on OFG Bancorp, I estimated loan growth to 5.0% for 2022. I have now revised my estimated growth loan up to 7.2% due to the second quarter performance as well as the faster than expected speed of economic improvement.

I expect growth in other balance sheet items to follow loan growth. Equity book value growth, in particular, will be much lower due to pressures from unrealized losses on available-for-sale securities. As interest rates rose, the market value of these securities fell, resulting in large unrealized losses that flowed directly to equity without affecting the income statement. The tangible book value per share has already fallen from $19.1 at the end of December 2021 to $18.86 at the end of June 2022.

The 75 basis point hike in the federal funds rate in July will put further pressure on the book value of equity. Additionally, I expect another 75 basis point hike in the fed funds rate for the rest of the year. On the other hand, retained earnings will increase the book value of equity. The following table shows my balance sheet estimates.

EX18 FY19 FY20 FY21 FY22E FY23E
Financial situation
Net loans 4,432 6,642 6,501 6,329 6,784 7,201
Net loan growth 9.3% 49.9% (2.1)% (2.6)% 7.2% 6.1%
Other productive assets 1,285 1,095 459 896 1,767 1,774
Deposits 4,908 7,699 8,416 8,603 9,211 9,585
Total responsibilities 5,583 8,252 8,740 8,831 9,415 9,790
Common Equity 908 953 994 1,069 1,078 1,216
Book value per share ($) 17.7 18.4 19.3 21.3 22.3 25.1
Tangible BVPS ($) 15.9 15.7 16.7 19.1 19.9 22.7

Source: SEC Filings, Author’s Estimates

(In millions of dollars, unless otherwise indicated)

Sticky deposit costs to allow for margin expansion

OFG Bancorp’s net interest margin has grown rapidly this year, primarily due to rising interest rates.

Net interest margin OFG Bancorp

Presentation of 2nd quarter 2022 results

The margin has jumped this year despite a two to three month lag between a rate hike and its aftermath, as mentioned in the conference call. The high sensitivity of the margin to rates is explained not only by floating rate loans, but also by a deposit mix which is heavily composed of non-interest bearing deposits. These deposits represented 60.5% of total deposits at the end of June 2022. Non-interest bearing deposits will keep the average cost of deposits rising in a rising rate environment.

The results of management’s interest rate sensitivity analysis showed that a 200 basis point increase in interest rates can increase net interest income by 5.14% year-over-year.

OFG Bancorp Interest Rate Sensitivity Analysis

Filing 2Q 2022 10-Q

Given these factors, I expect the margin to increase by 15 basis points in the second half of 2022 and then remain unchanged in 2023.

Increase in provision expense estimate

Non-performing loans represented 1.81% of total loans, while provisions represented 2.36% of total loans at end-June 2022. Puerto Rico’s economy signals a future improvement in credit quality. Therefore, I do not expect much pressure on the provisioning of the existing loan portfolio. However, the loan additions mentioned above will require additional provisioning for expected loan losses.

Overall, I expect net provision expense to be approximately 0.4% of total loans (annualized) in each quarter through the end of 2023. In comparison, net provision expense was an average of 1.4% of total loans over the past five years. In my last report on OFG Bancorp, I estimated a net provision charge of $17 million for 2022. I have now increased my provision charge estimate to $22 million for this year, primarily because I increased my loan growth estimate.

Profits are expected to increase by 18%

Planned loan additions and margin expansion are likely to be the main drivers of earnings growth over the next year and a half. On the other hand, higher provision charges will likely limit earnings growth. Overall, I expect OFG Bancorp to report earnings of $3.33 per share for 2022, up 18% year-over-year. For 2023, I expect earnings to grow another 9% to $3.64 per share. The following table shows my income statement estimates.

EX18 FY19 FY20 FY21 FY22E FY23E
income statement
Net interest income 316 323 408 407 468 518
Allowance for loan losses 56 97 93 0 22 28
Non-interest income 80 82 124 133 133 133
Non-interest charges 207 233 345 326 345 367
Net income – Common Sh. 78 47 68 145 161 176
BPA – Diluted ($) 1.52 0.92 1.32 2.81 3.33 3.64

Source: SEC Filings, Author’s Estimates

(In millions of dollars, unless otherwise indicated)

In my last report on OFG Bancorp, I estimated earnings at $3.07 per share for 2022. I have now revised my earnings estimate upwards, mainly because I increased the growth estimate of my loan.

Actual earnings may differ materially from estimates due to the risks and uncertainties associated with inflation and, therefore, the timing and magnitude of interest rate increases. Also, a deeper or longer than expected recession may increase the expected loan loss provisioning beyond my estimates.

Maintain a buy rating

OFG Bancorp offers a dividend yield of 2.9% at the current quarterly dividend rate of $0.20 per share. Earnings and dividend estimates suggest a payout ratio of 22% for 2023, which is the same as the average for the past five years. Therefore, I do not expect an increase in the level of dividends.

I use historical price/tangible accounting (“P/TB”) and price/earnings (“P/E”) multiples to value OFG Bancorp. The stock has traded at an average P/TB ratio of 1.17 in the past, as shown below.

Chart
OFG price at tangible book value given by Y-Charts

Multiplying the average P/TB multiple by the expected tangible book value per share of $19.9 yields a price target of $23.2 for the end of 2022. This price target implies a decline of 15.0% compared to the closing price on September 16. The following table shows the sensitivity of the target price to the P/TB ratio.

Multiple P/TB 0.97x 1.07x 1.17x 1.27x 1.37x
TBVPS – Dec 2022 ($) 19.9 19.9 19.9 19.9 19.9
Target price ($) 19.3 21.2 23.2 25.2 27.2
Market price ($) 27.3 27.3 27.3 27.3 27.3
Up/(down) (29.5)% (22.2)% (15.0)% (7.7)% (0.4)%
Source: Author’s estimates

The stock has traded at an average P/E ratio of around 14.4x in the past, as shown below.

Chart
OFG PE report given by Y-Charts

Multiplying the average P/E multiple by the expected earnings per share of $3.33 yields a target price of $47.7 for the end of 2022. This price target implies a 74.8% upside from at the closing price on September 16. The following table shows the sensitivity of the target price to the P/E ratio.

Multiple P/E 12.4x 13.4x 14.4x 15.4x 16.4x
EPS – 2022 ($) 3.33 3.33 3.33 3.33 3.33
Target price ($) 41.1 44.4 47.7 51.1 54.4
Market price ($) 27.3 27.3 27.3 27.3 27.3
Up/(down) 50.4% 62.6% 74.8% 86.9% 99.1%
Source: Author’s estimates

Equal weighting of target prices from both valuation methods gives a combined result target price of $35.5, implying a 29.9% upside from the current market price. Adding the forward dividend yield gives an expected total return of 32.4%. Therefore, I maintain a buy rating on OFG Bancorp.

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Higher prices and tariffs holding back car sales https://chipandtodd.com/higher-prices-and-tariffs-holding-back-car-sales/ Thu, 15 Sep 2022 20:33:10 +0000 https://chipandtodd.com/higher-prices-and-tariffs-holding-back-car-sales/ Cox Automotive reported on Thursday that used car sales slipped in August, following a report earlier this month that new car sales were flat. This time it’s not just inventory. Cox Automotive said the slowdown was beginning to reflect higher payments caused by both higher prices and higher interest rates. Cox Automotive estimated that the […]]]>

Cox Automotive reported on Thursday that used car sales slipped in August, following a report earlier this month that new car sales were flat.

This time it’s not just inventory. Cox Automotive said the slowdown was beginning to reflect higher payments caused by both higher prices and higher interest rates.

Cox Automotive estimated that the total used vehicle sales in August, there were nearly 3.1 million units, down 11.4% from August 2021. The seasonally adjusted annual rate (SAAR), or pace of sales, is estimated at nearly 36.2 million, down from last August’s level of 40.8 million and below July’s revised pace of 38.3 million. .

“Higher prices and higher interest rates are slowing sales in the used market,” said Cox Automotive chief economist Charles Chesbrough. “Used vehicle sales will face increasing headwinds throughout 2022 as rising interest rates continue to dampen economic activity.”

Although figures for credit union auto loan production were not available, balances reported by CUNA showed that credit unions held about twice as many used car loans as new cars. Together, they accounted for about a third of total credit union lending.

The latest data from CUNA was for July, and showed used car loans totaled $300.8 billion as of July 31, up 18.5% from a year earlier and 1. 4% compared to June. New auto loans rose 17.3% to $167.7 billion from a year earlier and 1.9% from a month earlier.

Cox said retail sales of used vehicles, which exclude retail sales, fell to 19.1 million in August from July’s revised level of 20.2 million. They were down 11.4% from a year ago.

Year-to-date, the total second-hand market is currently on track to end the year down more than 12% from the 40.6 million recorded in 2021.

The U.S. Bureau of Economic Analysis reported Sept. 2 that SAAR for new cars and light trucks was 13.2 million in August, up from 13.3 million in July and up from 13.1 million in August. 2021.

Cox Automotive reported Thursday that the U.S. supply of available unsold new vehicles stood at 1.23 million units at the end of August, up 31% from a year earlier. In mid-2021, the global shortage of computer chips began to limit production.

“Available supply is at its highest level in our data since June 2021,” Chesbrough said. “Yet it is well below historic levels. Production simply cannot yet catch up with demand.

Cox Automotive also reported on Thursday that new vehicle affordability fell again in August as new vehicle prices set new records and auto loan rates hit a more than 10-year high.

The average new car transaction price set another record in August: $48,301, up $222, or 0.5%, from July, and up $4,712, or 10.8% , compared to August 2021.

Cox Automotive said it expects prices to remain high due to continued strong demand, low inventory and record incentives. Additionally, luxury vehicles accounted for a record 18% of new-vehicle sales, as automakers continued to favor computer chips available to high-margin premium models over entry-level vehicles.

Incentives fell slightly in August compared to July and remain low at just 2.3% of the average transaction price. A year ago, incentives averaged 5.5% of prices paid.

Cox Automotive estimated that more than half of buyers will need to spend 42.6 weeks of their salary to buy the average new vehicle in August, up from a median of 42.2 weeks in July and up 14% from the last year.

While median income rose 0.4% from July to August, all other factors played against affordability. Along with higher prices and weaker incentives, interest rates also increased by an average of 37 basis points.

As a result of these moves, the estimated typical monthly payment increased by 1.4% to $743.

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Nissan Auto launches $1 billion automotive ABS https://chipandtodd.com/nissan-auto-launches-1-billion-automotive-abs/ Thu, 15 Sep 2022 02:11:00 +0000 https://chipandtodd.com/nissan-auto-launches-1-billion-automotive-abs/ A pool of prime fixed-rate auto loan receivables will underwrite the latest transaction from the Nissan Auto Receivables Owner Trust, a transaction that is expected to issue approximately $1 billion in Class A notes. The Series 2022-B transaction could increase the size of the deal to $1.25 billion, according to S&P Global Ratings, which plans […]]]>

A pool of prime fixed-rate auto loan receivables will underwrite the latest transaction from the Nissan Auto Receivables Owner Trust, a transaction that is expected to issue approximately $1 billion in Class A notes.

The Series 2022-B transaction could increase the size of the deal to $1.25 billion, according to S&P Global Ratings, which plans to assign ratings to all four categories of notes in the deal.

The deal features a number of structural and collateral changes from previous agreements, including in the overcollateralization levels of the yield supplement, S&P said. The yield surcharge overcollateralization discount rate was 8.25%, an increase from 5.50%, the rating agency said. Initially, the YSOA amount increased to 11.89% of the unadjusted collateral balance from 8.79%.

Wells Fargo Securities is the primary underwriter of the deal, which will repay the notes under a sequential payment mechanism that will result in increased credit enhancement for the senior notes as the pool repays. The notes will also benefit from an overcollateralization of 4.00%, taking the form of non-interest bearing certificates.

The Series 2022-B Notes also benefit from a fully funded non-amortizing reserve fund which will equal 0.25% of the initial pool balance.

S&P intends to assign ratings of “A-1+” to the $215 million A-1 notes; “AAA” on classes A-2 and A-3, which will both issue $354 million in notes; and “AAA” on the $75.8 million A-4 notes.

The agreement also included some changes in the composition of the guarantee. On a weighted average (WA) basis, seasoning decreased to about 10 months from 11 months prior. Among loans with an original term of more than 72 months, the FICO score was 730, compared to 744, on a WA basis. Additionally, the percentage of scores with FICO scores of 660-700 increased to around 7.4% from 6.2%. Overall, the collateral has a WA FICO score of 782, the rating agency said.

Electric vehicles represent 7.4% of the fleet, compared to 5.0% compared to NAROT 2022-A.

The warranty pool contains some 52,005 claims, mainly cars (31.0%) and crossovers (49.4%). They have an average running balance of $22,735 and a weighted average APR of 2.39.

Almost all of the vehicles in the warranty pool, 92.39%, are new, while 7.61% are like new; none of the cars linked to the underlying loans are used.

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Should you take out a personal loan or a car loan to pay off your car? https://chipandtodd.com/should-you-take-out-a-personal-loan-or-a-car-loan-to-pay-off-your-car/ Mon, 12 Sep 2022 21:03:59 +0000 https://chipandtodd.com/should-you-take-out-a-personal-loan-or-a-car-loan-to-pay-off-your-car/ If you’re looking for a new car but don’t have enough money to buy it up front, you’re probably considering taking out a loan to help finance your purchase. Depending on your situation, a car loan or a personal loan could each be an ideal financing option. Personal loans and auto loans are considered installment […]]]>

If you’re looking for a new car but don’t have enough money to buy it up front, you’re probably considering taking out a loan to help finance your purchase. Depending on your situation, a car loan or a personal loan could each be an ideal financing option.

Personal loans and auto loans are considered installment loans, which means you will make fixed monthly payments over a period of time. That said, there are several key differences between the two types of loan products that are worth knowing.

Below, Select breaks down everything you need to know about using a personal loan versus an auto loan to buy a car, taking a closer look at how interest rates, eligibility requirements and loan terms vary between the two.

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Personal Loans vs Auto Loans

The most obvious difference between personal loans and auto loans is that personal loans can be used to finance any type of purchase, whether it’s wedding expenses, home repairs or a new car. Personal loans can also be funded by lenders, credit unions and banks. If you want more flexibility when it comes to using the money to finance, a personal loan is a good choice.

Auto loans, on the other hand, can only be used to purchase a vehicle and are usually funded by a bank, credit union, or other lender. You can also go through a car dealership, who will usually partner with other lenders to give you a loan, although this can be a more expensive option. Auto loans also require a down payment, or a percentage of the loan’s value, and a larger down payment on a loan means having less principal to pay back later.

Another major difference between them is that personal loans are unsecured loans whereas car loans are considered as secured loans. In other words, car loans are backed by collateral – in this case, the car – while personal loans are not backed by anything. If you have decided to opt for an auto loan, a lender can seize your car if you are in default. However, if you fail to make the payments on a personal loan, your credit score will suffer and the lender could take legal action, which could eventually lead to them seizing your assets, including your car.

Since personal loans are mostly unsecured, they require you to have a higher credit score to qualify. Generally, you will need to have a good credit score, or a score above 670, to qualify. However, some lenders give personal loans to people with bad credit, although these types of loans carry higher interest rates.

If you have good credit, there are many personal loans available with lower interest rates and no late fees, prepayment penalties or origination fees. Select ranked LightStream Personal Loans, PenFed Personal Loans and Discover personal loans among the best personal lenders.

LightStream Personal Loans

  • Annual Percentage Rate (APR)

    3.99% to 19.99%* when you sign up for autopay

  • Purpose of the loan

    Debt consolidation, renovation, car financing, medical expenses, marriage and more

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

PenFed Personal Loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, home improvement, medical bills, car financing and more

  • Loan amounts

  • Terms

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

Discover personal loans

  • Annual Percentage Rate (APR)

  • Purpose of the loan

    Debt consolidation, home improvement, wedding or vacation

  • Loan amounts

  • Terms

    36, 48, 60, 72 and 84 months

  • Credit needed

  • Assembly costs

  • Prepayment penalty

  • Late charge

Something else to consider: Personal loans typically have repayment terms of one to seven years, while car loans typically have repayment periods of two to seven years. If you take out a loan with a longer repayment term, it may have a lower interest rate, but you might end up paying more interest than you would on a loan with a longer repayment term. short and a higher interest rate. Use a loan calculator to determine the cost of your loan.

Both types of loans sometimes come with an origination fee, which is a percentage of the loan amount that you pay the lender for making the loan. Personal loans tend to have slightly higher origination fees, but many lenders offer personal loans without these, such as the three lenders mentioned above, as well as Marcus by Goldman Sachs Personal Loans.

Generally, it is advisable to use an auto loan to finance the purchase of a car, as these types of loans tend to have lower credit score requirements and offer lower interest rates. . According a recent Federal Reserve reportthe average interest rate for a 24 month personal loan in May 2022 was 8.73% while the average interest rate for a 60 month car loan was 4.85%, so there is definitely a difference.

Nevertheless, it is worth looking at what type of conditions you qualify for for both types of loans. Then consider the one with the lowest fees and interest rate, as well as the one with the best repayment period.

At the end of the line

Choosing between a personal loan and an auto loan to pay for a car really comes down to your financial needs. If you’re looking for a loan with a lower interest rate and don’t have the best credit rating, a car loan is a great choice. If, however, you are looking for a loan that you can use for other purposes than buying a car, a personal loan is a good option since you can use this money for a number of expenses.

Check out Select’s in-depth coverage at personal finance, technology and tools, The well-being and more, and follow us on Facebook, instagram and Twitter to stay up to date.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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Auto loans are getting harder to find https://chipandtodd.com/auto-loans-are-getting-harder-to-find/ Fri, 09 Sep 2022 17:38:31 +0000 https://chipandtodd.com/auto-loans-are-getting-harder-to-find/ It is becoming increasingly difficult to qualify for a car loan. Lending tightened in August for the fourth consecutive month. The Dealertrack Credit Availability Index tracks auto loan application data to indicate whether access to auto credit is improving or deteriorating. The index is a product of Kelley Blue Book’s parent company, Cox Automotive. The […]]]>
It is becoming increasingly difficult to qualify for a car loan. Lending tightened in August for the fourth consecutive month.

The Dealertrack Credit Availability Index tracks auto loan application data to indicate whether access to auto credit is improving or deteriorating.

The index is a product of Kelley Blue Book’s parent company, Cox Automotive.

The tightening of standards comes after a period in which it was historically easy to qualify. Auto credit was easier to come by in April than at any time since the index started tracking in 2015.

Most of the factors affecting credit availability moved against car buyers during the month. The approval rating dropped, consumers saw higher rates and lenders demanded higher down payments than they did in July.

Used car lending standards have been tightened more than new car lending standards. Either way, it’s still easier to qualify for a loan today than it was a year ago.

The Federal Reserve has raised interest rates three times in recent months. These measures have had a limited effect on the auto market, as a tight supply of used cars is slowing purchases and keeping prices at record highs, regardless of interest rates.

Despite tightening credit standards, consumer confidence surveys show more Americans said they plan to buy a new vehicle in the next six months than a month ago. This number is still lower than a year ago.

Meanwhile, auto dealers are pessimistic about the near-term future of the market, with a slight majority expecting sales to weaken in the next quarter.

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Here’s what shopping money experts are holding back from doing right now https://chipandtodd.com/heres-what-shopping-money-experts-are-holding-back-from-doing-right-now/ Thu, 08 Sep 2022 20:27:57 +0000 https://chipandtodd.com/heres-what-shopping-money-experts-are-holding-back-from-doing-right-now/ Rising interest rates and record inflation Americans have been experiencing this year are the reason many new purchases, big and small, are being put on the back burner. Not only are the prices of everyday goods much higher, but the cost of borrowing to finance something bigger like a new car is much more expensive […]]]>

Rising interest rates and record inflation Americans have been experiencing this year are the reason many new purchases, big and small, are being put on the back burner. Not only are the prices of everyday goods much higher, but the cost of borrowing to finance something bigger like a new car is much more expensive than it was just a year ago. .

All of this has left many of us with a financial conundrum: should we keep expecting certain purchases right now?

Select went to the experts to see what they were doing themselves in hopes of giving us some better insight. Here’s a look at the kinds of purchases money experts are reluctant to make right now.

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A new car

Jim Droske, president of a credit counseling company Illinois Credit Servicestells us he needs a newer vehicle, but is still waiting given the higher interest rates to finance a new auto loan, as well as the fact that the current auto market is making it difficult for consumers to get a good deal.

“Even though I would get a higher trade-in value for my car, it makes sense to delay buying a vehicle until the supply and demand economy changes to be more favor of me, the consumer,” says Droske.

Although Brenton Harrisoncertified financial planner at Henderson Financial Group, says he and his wife have two cars that run well, he admits that as they are both older models they were tempted to upgrade one when the rates were low to “keep up the rhythm of the Joneses”. He has since changed his mind in this new financial environment.

“I can’t think of an ‘asset’ that goes down in value faster than a car,” Harrison says. “And with manufacturing delays, chip shortages and natural price increases due to inflation, any itch I’ve had to buy a new car will remain intact.”

However, one financial expert we spoke to actually managed to score a bargain when she decided to buy her car after its lease ended. Kara Stevens, personal finance blogger at The frugal feminist, had extended her car lease to four years, by which time she only had 8,000 miles on it. As a result, it decided to keep it since the buyout offer was calculated before inflation. “It was a win,” Stevens said.

Home modernization and new construction

In addition to wanting to upgrade a car, Harrison and his wife were also planning several home improvements, including customizing a closet, protecting their back porch, and upgrading several bathroom fixtures. But that was before inflation and now that labor and materials are much more expensive, they decided to wait.

“While we never put off needed repairs, we have paused any home projects that we don’t have to undertake,” Harrison says.

John Ulzheimer, a credit expert formerly of FICO and Equifax, was willing to ignore the rising costs of building materials such as lumber and appliances to build a new home — he can’t, however, exceed the near -doubling of interest rates, so it’s delaying building a house for now.

“Finance a home at more than 5%, when less than a year ago it was considered subprime, is too much to overlook,” Ulzheimer says.

Variable rate loans

Unlike fixed interest rates, variable rates indicate that the interest rate you pay can go up or down at any time. Rates generally fluctuate with the federal funds rate, so in a rising rate environment, potential borrowers generally tend to delay any floating rate financing because it’s likely to soon become more expensive to carry that debt.

Harrison’s case is just one example. “As a business owner, there are times when the investments I need to grow my income — new staff and technology upgrades, etc. — exceed my cash flow capabilities,” he says. For this reason, he typically turns to commercial lines of credit and other variable-interest debt whose payments allow him to buy what he needs and make small monthly payments until income increases.

“As costs and interest rates rise, however, variable-interest debt is one of the first places where these effects can be felt,” says Harrison. “For now, I’m avoiding purchases that I can’t pay for with cash, even if it means temporarily turning down opportunities to grow my business.”

This includes credit cards…

Credit cards are a more common type of loan with variable interest rates that are already high as is. The Federal Reserve rate hike means your credit card debt also becomes more expensive. Although Harrison says he’s taken advantage of 0% APR credit cards in the past – that is, cards that offer an introductory period of 0% interest on new purchases and/or balance transfers – he’s hesitant to sign up yet.

“These companies continue to offer aggressive offers during periods of inflation, hoping that you will still maintain a credit balance after the introductory period expires,” says Harrison. “I avoid the temptation to take out new cards for fear of interest rate inflation if an emergency prevents me from repaying my debt before the end of the offer period.”

Take note that a 0% APR credit card can be beneficial, however, if you know for sure that you will be able to pay off your balance during the introductory period. (In Harrison’s case, it helps to have an emergency fund with money already allocated as a backup in case something goes wrong. Is come so he doesn’t have to dip into his credit card payments.)

The Wells Fargo Reflect® Card, for example, offers no interest for 18 months from account opening on eligible purchases and balance transfers (after, 15.24% to 27.24% variable APR). Cardholders can receive an intro extension APR of up to three months with on-time minimum payments during the introductory and extension periods, bringing the total interest-free period to 21 months. This encourages responsible credit card behavior while giving you more time to pay off your debt.

The idea is that you pay off your balance in total over the first 18 months (or 21, if applicable) so you don’t build up a balance which then – once the introductory period is over – receives variable rate interest. in addition. .

Wells Fargo Reflect® Card

On the Wells Fargo secure site

  • Awards

  • welcome bonus

  • Annual subscription

  • Introduction AVR

    0% intro APR for 18 months from account opening on eligible purchases and balance transfers. Intro Extension APR for up to 3 months with on-time minimum payments during the introductory and extension periods. 15.24% – 27.24% variable APR thereafter; balance transfers made within 120 days qualify for the introductory rate

  • Regular APR

    15.24% – 27.24% Variable APR on purchases and balance transfers

  • Balance Transfer Fee

    3% introductory fee ($5 minimum) for 120 days from account opening, then up to 5% ($5 minimum)

  • Foreign transaction fees

  • Credit needed

If you delay making purchases yourself

If you can, it’s not a bad idea to delay some purchases until the economy is in a more stable position – hey, even the experts do that. And with another expected rate hike coming later in September, it’s definitely important that you pay attention to how much variable interest rate debt you’re taking on right now.

In the meantime, you can benefit from a rising rate environment by setting aside funds that you would otherwise use to make monthly payments on a new car or home renovation. A high-yield online savings account is a good option right now, as banks have responded to Fed rate hikes by paying higher annual percentage yields, or APYs, to their customers.

Take into account LendingClub® Bank High Yield Savings Account, which offers one of the highest returns on your money with an APY of 2.07%, as well as a free ATM card with no ATM fees, no monthly maintenance fees and no minimum balance requirement. You will just need a $100 deposit to open an account.

LendingClub High Yield Savings

LendingClub Bank, NA, Member FDIC

  • Annual Percentage Yield (APY)

  • The minimum balance

    No minimum balance required after $100.00 to open the account

  • Monthly fee

  • Maximum transactions

  • Excessive transaction fees

  • Overdraft fees

  • Offer a current account?

  • Offer an ATM card?

An alternative option is the Bask Interest Savings Account, which offers an equally high APY at 2.02% to all savings account holders and particularly stands out to frequent flyers. Savers can also choose to earn American Airlines AAdvantage® miles back instead, at the rate of 1.2 miles for every dollar saved annually. They can then use these miles for flights on American Airlines or one of its 20 partner airlines. Bask also offers no monthly fees and no minimum deposit.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.

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Canara Bank Raises MCLR Rates; How much will EMIs for home loans and car loans increase? Check here https://chipandtodd.com/canara-bank-raises-mclr-rates-how-much-will-emis-for-home-loans-and-car-loans-increase-check-here/ Wed, 07 Sep 2022 08:01:00 +0000 https://chipandtodd.com/canara-bank-raises-mclr-rates-how-much-will-emis-for-home-loans-and-car-loans-increase-check-here/ According to its website, India’s third-largest public sector lender, Canara Bank, has raised its marginal cost of lending rate, or MCLR, on all maturities. The MCLR, a key point for deciding loan interest, was raised by up to 15 basis points, the Punjab National Bank said. The new PNB MCLR tariffs came into effect from […]]]>

According to its website, India’s third-largest public sector lender, Canara Bank, has raised its marginal cost of lending rate, or MCLR, on all maturities. The MCLR, a key point for deciding loan interest, was raised by up to 15 basis points, the Punjab National Bank said. The new PNB MCLR tariffs came into effect from Wednesday 7 September.

Canara Bank’s MCLR rate hike comes more than a month after the Reserve Bank of India raised its repo rates again by 50 basis points, to further calm inflation which has remained above the limit central bank’s 6% upper tolerance. Banks raise or lower their lending rates based on RBI repo rates.

The revised marginal cost of funds-based lending rate (MCLR) across different tenors would take effect from Wednesday, the lender said in a regulatory filing.

The one-year benchmark MCLR will be 7.75% from the current rate of 7.65%. The one-year rate is used to fix most consumer loans such as auto, personal, and home loans.

The one-day and one-month MCLR are up 0.10% each, while the three-month tranche rose 0.15% or 15 basis points to 7.25%. The rise is in line with other peers after RBI raised its key rate last month. Last week, the Punjab National Bank also raised its MCLR rates.

Here is the MCLR by tenor in effect as of September 7, 2022, according to the Canara Bank website:

Overnight: old rate — 6.80%; New rate — 6.90%

One month: old rate — 6.80%; New rate — 6.90%

Three months: old rate — 7.10%; New rate — 7.25%

Six months: old rate — 7.60%; New rate 7.65%

One year: old rate — 7.65%; New rate 7.75%

Following the National Bank of Punjab’s MCLR rate hike, housing, vehicles and personal loans will become more expensive as EMIs increase. However, existing home loan borrowers should note that the EMI will only be reviewed when their loan reset date arrives. The lender will increase or revise the interest rate on borrowers’ home loans based on the MCLR in effect when the reset date arrives. This means that if a person’s home loan is based on the MCLR and the reset date is in December, they will have to pay the increased EMIs from December. Until then, the borrower will pay based on their existing rates.

To control inflation, the Reserve Bank of India (RBI) raised the key repo rate by 50 basis points (bps) in early August. Since May this year, the RBI has raised its repo rates by 140 basis points. Inflation has subsided since then, but remains above the RBI’s upper tolerance limit. The RBI raised the repo rate, at which the central bank lends to banks, by 50 basis points to 5.4%.

Read all Latest business news and recent news here

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How the Community Investment Act Could Impact Auto Loans https://chipandtodd.com/how-the-community-investment-act-could-impact-auto-loans/ Sun, 04 Sep 2022 04:00:00 +0000 https://chipandtodd.com/how-the-community-investment-act-could-impact-auto-loans/ Winslow said there are significant differences between auto loans and mortgages. “The thing is, auto loans are much more like consumer loans than mortgages,” Winslow said. “In the context of mortgages, banks are required to obtain information about a borrower’s race or ethnicity. In the context of auto loans, banks are prohibited from collecting such […]]]>

Winslow said there are significant differences between auto loans and mortgages.

“The thing is, auto loans are much more like consumer loans than mortgages,” Winslow said. “In the context of mortgages, banks are required to obtain information about a borrower’s race or ethnicity. In the context of auto loans, banks are prohibited from collecting such information.”

Eisner said the ARC could not extend its reach to the automotive retail market because of fundamental differences.

“Agencies can’t write a rule that somehow becomes magic [low- and moderate-income] borrowers in more cars. The process just doesn’t work the same way,” Eisner said. “ARC aims for banks to open branches in communities that are under-banked or unbanked, and then grow those banking relationships. But the same thing doesn’t work in the automotive context because the bank can’t open a dealership in an area and the bank can’t control who goes to which dealership.”

As banks brace for potential changes, Eisner suggested they examine their lending habits.

Banks need to assess “where they lend and the economic makeup of their communities where they lend and start making sure they’re not just providing loans but also investments and services,” Eisner said.

Winslow said she believes car loans can be rolled into ARC, under different terms. “When agencies talk about grouping all consumer loans into retail services and products, that’s where auto loans should go, not their own category,” Winslow said.

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