HERE ARE SOME AUTO LOAN SHOPPING TIPS FOR SUBPRIME BORROWERS

Nobody’s credit is perfect. Well, almost nobody’s.

If you are even close to the top FICO score of 850, you probably don’t have to worry much about whether you can get a car loan, how much you can borrow or what interest rate you’ll get.

But if you are among the approximately 25 million new- and used-car buyers last year considered nonprime (601-660), subprime (501-600) or deep subprime (below 500), based on data from Experian Automotive, there’s a good chance your experience will be different. Especially if you’re among around 14 million subprime borrowers who acquired new and used-car loans in 2014.

Any way you slice and dice the numbers, there are a lot of people feeling the same pain. That’s why we’re here to offer some auto loan shopping tips for subprime borrowers:

Know your credit score because it’s the first piece of information a lender seeks. “It’s the best tool to determine your credit status and the interest rate for which you qualify,” says AutoTrader.com.

Prepare for your purchase in advance by cleaning up your credit where possible, including errors on reports from the three major credit-reporting bureaus, Experian, TransUnion and Equifax.

Know how much vehicle you can afford by using the 20/4/10 rule – 20 percent down payment with four-year term and annual payments of no more than 10 percent of your gross income.

Save for a down payment because you probably will need one. Many lenders will require at least a 10 percent down payment or $1,000, whichever is greater, reports Edmunds.com.

Apply for a loan before heading to the dealership from an online lender such as RoadLoans.com (Santander Consumer USA), or ask your dealer to get a quote from Santander Auto Finance, which lends to borrowers across the credit spectrum through more than 15,000 dealers nationally.

Get your paperwork in order, such as proof of income and residency and a record of on-time payments. The greater your stability and reliability the more likely a lender will see you as an acceptable risk.

Pick the right car within your price range (see 20/4/10 rule above) – newer vs. older, lower mileage vs. higher mileage, etc. – because it may be more likely to get lender approval.

Millions of subprime borrowers received loans last year, and millions more will receive loans in 2015. The only question is whether you will take the steps necessary to be one of them.

QUESTIONS TO ASK BEFORE PURCHASING A HOME

Buying a home often seems like a daunting task as you search for that perfect property and get yourmortgage preapproval lined up. However, it’s important to consider your decision and make sure you’re asking the right questions about your potential purchase.

What Is the Home’s True Value?
Generally, the top question when purchasing a home is what the house is worth. It is not always easy to decipher the true value of a home, but your real estate agent can provide you with the value of comparable properties. These are properties that have sold recently in the same neighborhood, or a similar one, and have comparable amenities and size. These values can help you decide whether the house is worth its current selling price.

How Long Has the Property Been on the Market?

Ask your agent how long the property has been listed and how quickly similar houses have been selling in recent months. If a property has been on the market for more than the average amount of time, it’s possible that it’s overpriced.

How Flexible Is the Seller’s Price?
Whether you’re a first-time homebuyer or an investor, you probably want to get the most for your money. You also don’t want to price yourself out of the transaction with a low offer. Get around this by asking your agent to find out how flexible the seller is on the price.

Is the Seller Willing to Help With Closing Costs?
If the price isn’t negotiable, another question to ask is if they are willing to help with closing costs. If they are, be ready to close right away, as this readiness appeals to motivated sellers who are looking to relocate quickly.

Has an Inspection Been Completed?

You’ll want to ask about the condition of the property and find out if an inspection has been done. If it has, request a copy of the inspector’s report. If there hasn’t been an inspection, make sure to line up your own. It’s important to find out whether the house is on a flood plain, if the owner has all appliance and mechanical system paperwork, and if there are foreclosures in the nearby area.

Is the House a Short Sale?

If so, make sure to find out if the seller’s lender has approved the listing price, and discuss the process with your real estate agent because short sales have more requirements than standard home sales

TAX DOLLARS AND SENSE: THE ADVANTAGES OF HOME OWNERSHIP

Make the leap from renting to owning your own home, and a whole new world opens up for you. Now you can finally install that killer surround sound system you’ve always craved, or perfectly customize your kitchen to suit your culinary needs. Decorate how you want, live the way you like, all without having to ask permission. No more temptation to make improvements to someone else’s investment at your own expense. Now the investment is yours, and as such, there are also quite a few financial reasons you’ll be smiling too.

For one thing, home ownership means you aren’t just throwing your money away on rent each month, but are investing it in the equity of your own home. With so many great, low-interest mortgagesavailable at Bank of Internet USA, this has never been easier. But many of the fiscal advantages of home ownership are also due to the reductions in your tax burden*. Let’s review the specific advantages.

Tax Deductions vs Tax Credits

There are two basic ways to pay less in taxes: credits and deductions. A credit is like a coupon that deducts a certain amount of money from what you owe at tax time. For example, an $800 tax credit would mean your bill would go down by $800. A tax deduction reduces the amount of your adjusted gross income, which in turn reduces your tax liability. Here’s how: if you’re in the 25% tax bracket, your tax liability will be reduced by 25% of the total claimed deduction. So if you claim a $2,000 deduction, you can expect your tax liability to drop by about $500*.

Types of Home Ownership Deductions

The most significant tax advantages of home ownership come from tax deductions. They include:

• Mortgage Deductions: Once you buy a home, you can begin to deduct your mortgage interest*. For many people this results in significant savings, because depending on how your loan is structured, interest may be a large component of your monthly payment. There are some exceptions, for example the maximum you can deduct is $1 million yearly, but in many cases, you can even deduct late fees if they are accrued*.
• Point Deductions: When you buy a home, you can claim the points (origination fees) on your loan*, even if it’s the seller who paid them. Origination fees of 1% or more are not uncommon so, again, this could mean another considerable deduction for that first year of home ownership.
• Property Tax Deductions: Another significant portion of your mortgage is what you pay in property taxes. This, too, is deductible on both your primary residence, as well as a vacation home*.
• Home Equity Line Deductions: If you have a home equity loan or line of credit, the interest on that can be deducted*. This is especially beneficial to those who want to transfer high-interest-rate credit card debt to an attractive low-interest home equity loan, and take advantage of the tax break as well as the rate reduction*.
• The Capital Gains Exclusion: If you buy a home and live in it as your primary residence for at least two years, you are eligible for a capital gains exclusion. This means that when you sell, you can keep profits of up to $250,000 ($500,000 if you’re married) without owing any capital gains tax*.
• Private Mortgage Insurance (PMI): Lenders ask that borrowers who put down less than 20% also pay for Private Mortgage Insurance (PMI). If you took out a loan in 2007 or later, and your adjusted gross income is less than $50,000 (single), or $100,000 (married), this PMI is also deductible*.

In addition to location, location and location, money is one of the biggest considerations when buying a home. But the price of the property and whether or not the mortgage comes with a low interest rate are not the only financial considerations here. Remember to account for the tax advantages of home ownership as well before figuring out your bottom line*. And when you’re ready to find some of the lowest interest rates in the industry, a Bank of Internet USA Mortgage Consultant will be on hand to help walk you through every step of the mortgage process.

6 STEP GUIDE- HOW TO GET A BUSINESS LOAN

Money is the lifeline of any business, so whether you’re starting a business or running an existing one, securing financing is a major factor, especially for small businesses.  Many budding entrepreneurs find the task daunting and don’t even know where to begin.

Here’s a simple yet practical guide on how to go about preparing to apply for a small business loan.

1.    What criteria do banks look for in making small business loans?

Different banks or lending institutions may have different standards, but in general, in order to consider your application for a small business loan, banks will require:

• The loan must be for a sound business purpose. For SBA-guaranteed loans, the business must be eligible based on size, use of loan proceeds and the nature of the business (no lending, speculating, passive investment, pyramid sales, gambling, etc.)
• You and your partner(s) are of good character, have experience and good personal and/or business credit history
• Ability to pay back the loan- reasonable to strong collateral (personal and business assets) is very important. SBA expects the loan to be fully secured, but we will not decline a request to guaranty a loan if the only unfavorable factor is insufficient collateral. And of course, owners must have personal equity investment in the business/skin in the game.

2.    What information will you need?

Different lenders may require more or fewer documents, but in general, you will need:

• Personal and business credit history
• Personal and business financial statements for existing and startup businesses and as well as a projected financial statements
• Strong, detailed business plan (including personal information such as bios, education, etc.)
• Cash flow projections for at least a year, and
• Personal guaranties from all principal owners of the business

3.    How can you set yourself up from the beginning to make the process easier? (i.e. accounting systems, etc.)

Be prepared; be thorough; be truthful.

• Choose your lending institution carefully. Larger banks tend to shy away from small loans as they are less profitable and take the same amount of underwriting and servicing. That doesn’t mean large banks do not make small loans; it is just more difficult.
• Approach banks or lending institutions you have worked with or are a customer of
• Explore community banks and Credit Unions
• Talk to a lending officer and find out exactly what documentation they require
• Be thorough, bring everything they ask. Many loan applications are denied or face unnecessary hurdles because of incomplete applications.

Even before you start gathering and organizing the information required by lenders to consider your application, you should educate yourself regarding business loans so you can understand and discuss intelligently with the lending officers when the time comes.

4.    What is the typical size of a small business loan?

Small businesses come in many sizes, from a start-up of a one-person company to hundreds of employees, and their financial needs vary accordingly, so “typical” also varies. That said, in the banking industry the median small business loan is about $130,000 – $140,000 with highest around $250,000. SBA small business loans range from about $5,000 (microloans) to $5 million (largest guaranteed) with the average loan around $371,000.

5.    How can you get financing to start a business since many banks want to fund growth?

Start-ups are probably the most difficult ventures when it comes to securing financing. Many start-up businesses seek financing from family, friends and credit cards.  If the credit is sound, the business plan strong and you have enough personal resources to invest and collateral to guarantee, smaller, community banks and  other community financial institutions and Credit Unions may consider lending you money.

Your best bet by far is SBA assistance. Begin by visiting SBA’s website , where you will find a wealth of information not only on how to secure a small business loan but equally importantly, other services and training opportunities to help you succeed.

6.    Are there associations that can help?

SBA works closely with a large network of partners that leverage SBA resources and are just one phone call away and ready to provide extensive help.

• SBA District/Branch Offices– at least one in every state
• SCORE– (approximately 300 chapters nationwide)
• SBDCs – Small Business Development Centers; (approximately 900 locations nationwide; associated with higher education institutions (colleges and universities)
• WBCs- Women’s Business Centers (approximately 100 educational centers nationwide)