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Posts Tagged ‘Negative Equity’

Showing ur Credibility

0 March 4th, 2011

Traditionally, the companies mentioned earlier do not even contact or go through the lien holder. The seller still remains liable for the payments, whether or not an application is submitted. This arrangement allows the owner to monitor his own payments so he is actually more secure, as is the lien holder.
The companies contend that under the Uniform Commercial Code, Article 9. Section 311, the owner of a vehicle has the right to assign his property regardless of provisions in the original purchase contract by the lien holder (which might claim such a transaction to be in default).
The lender will always hold the original owner primarily liable for payments. Even though the payments are submitted by the buyer, the lender will still acknowledge the seller as the driver and owner of the vehicle. This is because the assignment agreement is between the assignee/buyer and assignor/owner, and not between the assignee/buyer and the lender.
When you have identified several cars that you have an interest in, you are ready to make the initial contact with the owner. Throughout this conversation your goal will be to find out if the owner is in a negative equity position (or upside down) on their vehicle. Best results are obtained if the owner is just asking for what he owes on the car. Be sure to project a professional telephone personality.
You will typically have to make twenty or more phone calls to find a vehicle owner willing to assign his vehicle. One very important thing to remember, be persistent keep calling. There are thousands of desperate people needing to get out of their vehicles in every area of the country. It’s also a good idea to call the owner back a week or so after your first contact. The longer he sees that he can’t sell his vehicle, the more eager he will be to work with you.
The owner will normally want the car out of his name. His credit is riding on your making the payments. You will need to show him that he is secure and protected in dealing with you. When meeting face to face, it is extremely important that you present yourself in a professional manner. Treat this meeting as you would a job interview. This person is essentially giving his approval of you to assume his investment.
Once you have seen the car and feel that it is what you want, you are ready to make a proposal. Explain to the owner that you earn more than enough income to afford this car payment, but you cannot get financing from a bank because of some credit problems that you had in the past or because you dont have enough credit.
Tell the owner strengths about yourself that show your stability and credibility. That should include:

The length of time youve resided in your house or in the area
The length of your current employment
Your job description or job title
Home ownership if applicable
The reason for your credit problem
If you paid back past creditors
What your income level is with bonuses, future pay raises or possibly a job promotion

Describe what makes you a good risk. Let the owner know that you are building his equity in this vehicle, until you pay it off. The more payments you make, the less will be owed on it.
Give him a copy of your credit report, personal references and a copy of your driver’s license. Allow him to verify your employment and that you make your rent or mortgage payments on time.
Show them a copy of the suggested Assignment Agreement which we will give to you at the end of the book. You want to make them feel as comfortable as possible when dealing with you and having an agreement such as this could give them that security. This agreement would be a legal and binding contract with the two of you, so having it ready is a huge advantage for both of you.
Once you have satisfied all the owner’s questions, and have subdued all fears, you need to get a commitment. If the owner will not commit and wants to think about it, find out when the due date is for the next payment. The closer he gets to the next payment, the more flexible he will become.
If the owner remains undecided, you may try offering him concessions. You could offer to make a whole payment or two payments in advance. He may request some kind of security deposit, which would be held for damages. At this point, be creative and willing to empathize with the owner’s concerns.

Buying a Car Can Turn You Upside Down

0 July 9th, 2010

It’s expensive buying a car and it only gets more so as time goes on. Over time, the price of new cars has increased faster than the rate of inflation. This isn’t entirely due to greed on the part of automakers; cars are also more complicated and useful than they used to be. Sure, they were cheaper in the 1960’s, but they didn’t include air conditioning, air bags and video systems. Convenience and safety comes at a price.

With the increase in price comes an increase in the length of time people are taking to pay off their cars. Few people pay cash; most people take out loans and pay over time. The average car loan, which used to be repaid over a period of three years, now averages about six years in duration. That’s a long time to pay for a car, especially if you have no plans to own it for that long.

Taking six years to pay for a car has its advantages, as the payments are lower than they would be over a shorter loan term. Such a long loan does have a significant disadvantage, though – you can find yourself in a negative equity, or “upside down”, situation. This can be a serious problem – if you should total the car in an accident, your insurance company will only pay you the value of the car, and not the amount you still owe.

A buyer is described as being upside down when he or she owes more on a car loan than the car is worth. It’s easy to find yourself in an upside situation, and it can occur under any of the following circumstances:

Insufficient down payment – Cars depreciate as much as 25% the minute you drive them off of the lot. If you haven’t provided enough of a down payment to cover that depreciation, you may find yourself upside down immediately.

Trading in too often – Buyers like to trade cars in and roll their outstanding balance into a new loan. These unpaid debts can contribute to negative equity.

Too long a loan – Five and six year loans often lead to negative equity. You can often avoid it by keeping the length of loans to three years or less.

In order to avoid a potential problem in the event of an accident, you should contact your insurance provider to make sure that you have “gap insurance.” Gap insurance will make sure that you are protected should you have an accident while in an upside down situation. Without gap insurance, you may find yourself still making car payments even though you no longer have a car. That is the last thing any car owner wants.