Thursday, October 6, 2011

5 Important Reminders for Car Loan Takers

In this post, we'll talk about five important things that borrowers should remember especially when managing car loans.

What You Should Keep in Mind

• Your payment habits can have a huge impact on your credit history. Keep in mind that your credit activities are being monitored and reported to the three major credit bureaus. This means that being delinquent on your loan payments - which usually involves skipping or defaulting on your payments, as well as paying your financial obligations late - can have an immediate and huge impact on your credit history.

So, to maintain your excellent credit score you need to always keep up with your payments. If you find it difficult to remember your due dates then, it would be best to set-up personal reminders in your electronic gadgets. Better yet, sign up for automatic payment arrangements with your bank. After all, with such arrangement, you won't have to worry about your financial obligations anymore as your bank will be the one managing your monthly dues, on your behalf.

• Want lower payments? Then settle your bills on time and in full. Always remember that payment delinquency will not just pull your score down. It can also cost you a great deal of money, in the form of huge interest charges, late payment penalties, and other related fines. So, if you wish to keep your credit payments at a minimum, you should resolve to make prudent and complete loan payments, each month.

• Stay true to the terms and conditions of your car loan. Borrowers are often penalized with pesky fees and charges for not complying with the terms and conditions of their credit agreement. This means that if you wish not to incur any additional charges, you should resolve to always abide by the rules set by your lender.

One thing that can help you in this matter is to review the fine print of your loan, once in a while. That way, you can remind yourself of the deferred payment arrangement, the penalties that will apply should you decide to pay off your loan before the agreed-upon date, and other relevant stipulations that are imposed on your credit program.

• Save receipts and proofs of payment. Don't throw away financial documents, especially receipts and proofs of payment. After all, you might need them to dispute incorrect payment records that you will discover in your credit report.

And keep in mind that you shouldn't enclose original copies of your receipts to your credit dispute letter. Instead, obtain scanned or photocopies of each document and attach them to your letter. That way, you can still make extra copies of the original proofs of payment, just in case you need to send follow-up letters to the three major credit bureaus.

• Managing multiple car loans is a big NO-NO! It might be tempting to apply for multiple auto loans, especially if you have a good credit rating. However, you should remember that you lose points from your credit score, every time your credit file gets pulled out in response to a credit application. So, it might be best to content yourself with what you have. And pay off your existing credit account first, before you decide to apply for and take out a new one.

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