Bankruptcy Doesn’t Have to Be the End of Your Credit Life

After your bankruptcy has finally been discharged the courts and you have your discharge papers in hand, what next? How do you begin to rebuild your credit? The first thing to remember is what led you to your bankruptcy to begin with. You don't certainly don't want to end up in the same financial situation again. The next step is to begin to rebuild your credit, but where do you start?

Credit Report

Order your credit report from the three credit bureaus (TransUnion, Equifax and Experian) to learn exactly what's on your credit report and why. You will need to order a report from each as they don't always contain the same information. The Fair Credit Reporting Act guarantees every consumer the right to one free credit report from each of the three credit reporting agencies, every year. You can order yours at http://www.annualcreditreport.com/ These free reports won't include a credit score however, for those you will have to pay, about $8 for just your score or $16 for a full report with your score. When a person requests his or her credit report, it is listed as a "soft inquiry" and doesn't count against your score.

To begin you have to be educated about your credit rating. Your rating may be low, but don't despair, knowing is much better than being misinformed. If you never monitor your credit report, you'll never know what's there, and believe me; you need to know if there is information that doesn't belong, information that could be bringing down your score. You have the right to have anything that is incorrect reinvestigated and removed. That's the first step, get your credit reports cleaned up so that they reflect accurate information. Once again this is a right afforded by The Fair Credit Reporting Act. You can find specific information on these rights, and instructions on how to take advantage of them, as well as a sample dispute letter in my new book, "The Insider's Secrets". You'll find ordering information, other helpful articles and links on our website, The Insider's Secrets.

Pay Your Bills

Many people might think, "I've got a bankruptcy, my credits ruined and it doesn't matter." This isn't true, it does matter. Rebuilding your credit after bankruptcy is not all that difficult and you may be able to do it faster than you may think. There are lenders out there that specialize in this credit niche. But you must pay your bills, all your bills, on time, all the time. Don't take on any obligations or debt that you cannot repay based on the terms you agreed to. This is the first step to rebuilding your credit.

Applying For Credit

You should never apply for any credit that you don't really need, that's especially true now. Don't go around haphazardly applying for loans or credit just to get a signup prize or too add one more credit card to your wallet. Every inquiry to your credit report, except for those "soft inquiries" we mentioned earlier, will lower your credit score even further. That's the last thing you need right now.

Remember, applying for a loan at one place may generate many inquiries. Many businesses will submit your credit application to many different lenders generating additional and unnecessary inquiries. Each one lowering your score.

Get A Credit Card

What do you mean get a credit card? That's what got me into this mess in the first place. Not true, you got yourself into this mess and not the credit card. It maybe the fact that you misused it, or had an unfortunate situation, but it wasn't the card itself. There are many types of cards and you will qualify for more than a few. What is the best credit card after bankruptcy? At this point it will most likely be a secured card but that's ok.

You need to begin to get some positive information on your credit report. If you want to rebuild your credit after a bankruptcy, get a credit card even if you are required to secure it with savings. Getting this card isn't so you can go on a spending spree. Remember how you got here. Use your new card conservatively and pay of the balance at the end of each billing cycle. If you can't do that don't use it.

Get a Car Loan

You've got to be joking? First a credit card now a car loan? If you want to rebuild your credit you can do it. You have to get as much positive information on your credit report as you can. Get a car loan. You may need to save up a little money to use for a down payment but you will qualify for a car loan with many lenders, right after your discharge. Of course there will be other factors involved, like employment, debt-to-income ratio and your ability to repay your new debt.

Remember the part about paying your bills on time all the time. Start small; get something you are certain you can afford to make the payments on. Do not go to a buy here pay here dealer. They generally don't report to the bureaus. There are dealers that use lenders that specialize in making loans to people with less than perfect credit. Some even offer guaranteed approval. Find one and buy a car you can afford. Be up front with the dealer about your situation, this will make buying a car a lot easier in the long run. Make certain that the lender they use reports to the bureaus.
Don't worry about the rate; it's going to be high. Probably the state usury maximum but your timely payments will reflect positively on your credit report. If you can make extra payments go ahead and do it. You don't have to marry this loan; you just have to date it for awhile. You should be able to refinance after a year's worth of timely payments. Pay your car of early if you can. Then, and only then trade it in and do it again. Follow these steps and you're well on your way to reestablishing yourself.

Summary

Filing Chapter 7 or 13 is not the end of the world, it only seems like it. You can recover but you must be patient. You didn't get here overnight and you can't fix it overnight. If you follow these steps you will be on your way. I've seen consumers with a one or two year old discharge achieve a score of 700 and above. I've also seen people right back in the situation of needing to file bankruptcy again, in the same amount of time. It will take some effort on your part and a little time to rebuild your credit after a bankruptcy, but it can be done, and more easily than you might think. Be careful, be practical and you will find yourself back in the credit game in no time at all.

You can find more help with "understanding your credit and credit scores" in our new book, The Insider's Secrets.

You will find ordering information for The Insider's Secrets and our other products and services, as well as helpful articles and links to many websites at http://www.theinsiderssecrets.net/

Just a Few Credit Card Myths

They might sound sensible, but believing a credit card myth can cost you a lot of money in fees and hurt your credit rating.

Here are some of the most pervasive credit card myths to watch out for:

Writing 'See ID' on the back of your cards will stop a credit card thief.

The Reasoning: The "Ask for ID" or "See ID" prompt reminds salespeople to confirm that the name on the credit card matches that of the person holding it. And why write your signature in that little white space when it could be copied and used on checks, legal forms or other documents? There are even reports of law enforcement personnel recommending this precaution.

The Truth: An unsigned credit card is invalid, technically, according to the agreements that card issuers have with retailers. Moreover, many clerks don't even check for signatures at all, meaning that they're unlikely to see "See ID" on the back of your card, even if it is there.

If you do give a clerk an unsigned card or one with "See ID" written instead, they're supposed to have you sign the back of the card and check the signature against your driver's license or passport. This may trip up the fraudster a bit -- after all, a thief is unlikely to be able to mimic your signature on command -- but that's only if the cashier bothers to take the time to compare that signature to the one on the driver's license.

So what about the liability issue? Does writing "See ID" absolve you if the card is taken and used? No, because no matter what's on the back, you're only liable for up to $50 charged when a card is stolen, and some companies waive that for their cardholders," Writing 'Ask for ID' might encourage a retailer to ask for your ID, but it has no legal bearing.

There's no credit limit on your American Express card, so you can buy anything you want.

The Reasoning: Years of powerful advertising from American Express have probably left at least one of their messages in your mind: "No preset spending limit." So when the Am Ex card arrives in the mail, you can activate it and buy plane tickets to Rio -- or your own Gulfstream jet to take you there, right? After all, there's no limit on your account.

The Truth: Am Ex has changed; it no longer issues only charge cards -- the type that allow you to rack up a lot of debt, as long as you pay off the entire debt every month. They issue credit cards, too, which allow you to carry a balance.

In addition, when you inspect the marketing info from American Express, the phrase "no preset spending limit" usually comes with an asterisk. In the fine print, you'll find wording to the effect that this "... does not mean unlimited spending. Your purchases are approved based on a variety of factors, including current spending patterns, your payment history, credit record and financial resources known to us."

There is no preset spending limit. It's dynamic. It can change based on your financial situation and how you use the card. In other words, if you don't already make high-dollar purchases with your credit cards, expect Am Ex to question why you're suddenly buying a $3,500 designer suit when you stated on your application that you earned just $30,000 a year. The best thing to do when you're going to make a purchase that's out of the ordinary for you is call and let them know, so you can discuss the details.

You might need one of each of the big cards in your wallet.

The Reasoning: People do wonder if the place they're going will take the card(s) they have. The rivalry between American Express and Visa has perpetuated this for years, as evidenced by TV spots for Visa that showed flashy restaurants and exclusive hotspots "... that don't take American Express."

Some places are picky: Go to a Sam's Club, and you can only use Discover and its own branded card, while rival Costco only accepts American Express.

The Truth: If you have two of the big four, you're not likely to have any problems, and millions of people just get by with one. It's much simpler.

Although their advertising can make you want all these great cards, it's probably not great financial sense to have them all. Remember: All those cards with your name on it don't make you rich and powerful, and in the end, you could become poor because of them.

You can boost your credit score by paying more than you owe.

The Reasoning: Paying more than you owe does temporarily bump up the amount of available credit on your card. It's also true that using a smaller percentage of the credit available in your accounts -- known in the industry as keeping a "low utilization ratio" -- helps your credit score. Lastly, it's thought that early credit scoring models may have given people a boost when they paid a personal or car loan a month early, so some may think that the same thing would apply to their credit card accounts.

The Truth: Even though you may be below zero on an account, it's assumed that's a temporary situation, whether you've got a credit of $100 or $1,000, it still shows as a zero balance for scoring purposes.

Using your debit card wisely can help your credit score.

The Reasoning: Debit and credit cards look alike, both bearing Visa, MasterCard or other logos. They're treated virtually the same by retailers. Thus, both should have an impact on credit scoring.

The Truth: Having a bank account with a debit card and maintaining it properly shows that you're a responsible consumer, but it is not taken into account in credit scoring models.

Retailers can set a minimum amount you can charge on a credit card when you buy something from them.

The Reasoning: In a small store or restaurant, it's not uncommon to find a sign that says, "$5 minimum for credit card purchases." If this wasn't allowed by the credit card companies, surely they'd crack down on it.

The Truth: Retailers who set minimum charges are breaking their agreements with the card companies. Because retailers pay interchange fees -- which vary, but average about 2 percent of the sale -- plus possible transaction fees on each credit card purchase, it's easy to see why a store owner would want to discourage lots of small credit card sales. But when they do so, they risk losing their ability to accept cards. You're allowed to charge any amount on your card, even a penny. The problem is that the retailer wants you to charge enough to make it worth his while.

If you need to use a card for a small transaction that's against store policy, you can object, although you may be invited to take your business elsewhere. The other thing to do is contact the credit card company. They want to know about retailers who do this as it violates their contracts with them."

If you go over your credit limit and pay it back before the due date, you'll be fine.

The Reasoning: Lots of people go over their credit limits. After all, credit card companies don't want to embarrass you and lose you as a customer, so they rarely decline your purchase. As long as you're a good customer and you keep the overage reasonable, they won't hit you with an over-the-limit fee.

The Truth: It's true that credit card companies don't want to decline your purchase when you go over your limit. And if you're buying something that puts you a few dollars or more over the top, there's a good chance they'll give you the green light. But remember, every time you pass that credit limit, even for a short period, you could give the issuer a reason to boost your interest rate to penalty rate levels -- sometimes more than 30 percent.

You've also triggered one of those nasty fees that can eat up your account. Taken over time, those fees can add up and hinder your ability to draw down your debt. It just makes sense for the company. They know you don't want to have the card declined, so they quietly penalize you the $30 or $40 over-limit fee.

To avoid it, try calling before your purchase to see if they can give you at least a little increase in your credit line.

Understanding these common myths will help you protect your credit and possibly save you a ton of money in credit card charges. You can visit our website, http://www.theinsiderssecrets.net/ too find other articles and web links that will give you helpful tips on personal finances, credit, car buying and financing.

Do You remember the Last Time You Decided to Buy Yourself a Car

Once the decision to buy a new car has been made there are a number of other important decisions to be made. Making good decisions will help ensure that you don't make some of the most common car buying mistakes.

With that decision came other decisions, like what car to buy? How much can I afford to spend? How much of a monthly payment can I afford, and should I look for a new car or a used one?

While it's nice to dream about finally getting the car that you've always wanted, you also have to be careful not to get to swept up by your desires and ignore the realities that come with making such an important decision.

There are some significant factors that have to be addressed once you've decided it's time to buy. First of all remember this; in most cases, a vehicle will be one of the most expensive purchases we will ever make. Keeping this simple fact in mind will help make sure that you don't make a mistake in your buying process.

If you're like the rest of us you've made a mistake or two when buying a car. Let's look at the common mistakes that people make when choosing, buying and financing a car.

Ignoring other alternatives: We all have our own preferences. Usually, even before we set out for the dealerships, we have painted a picture in our minds of what our dream car should be. We might even have a particular vehicle in mind already. What's not good about this is that we may be closing the door to other, more appropriate or practical options, like wanting a sports car when a family van is the real need. You must to learn to consider other available choices.

No research or not enough: In our excitement, we sometimes fail to check the advantages and disadvantages of the different vehicles we have chosen to consider. Before heading out to the dealership, you should determine what features are important, what about safety, economy, insurance, etc.?

Basing your decision on monthly payment: Dealers would like for all consumers to make their buying decisions using monthly payment as the primary buying criteria. This is almost assuredly the best way to ensure that you pay way too much for your new car. Always negotiate as a cash buyer. Work out your budget in advance and stick to it. Don't let the dealer be your financial advisor, he doesn't have your best interests in mind. If you can't afford the payment or have to make promises of deferred down payments, don't buy. Remember also that cars depreciate quickly, new cars more so than used, so a three-year loan might be a wiser financial decision than a five-year loan, even though the monthly payments are sure to be higher.

Failing to properly test drive: Always take a thorough test drive before buying any car. Make sure to test the car under the same conditions you experience in your normal, everyday, life. If the salesperson objects, insist or find a different dealer. Take it out on the freeway, check the cruise control, take it up a hill and be sure to test all the features and equipment. I've seen people buy a car without ever testing the power windows, Air conditioning or worse yet, the Moon Roof. If the Moon Roof doesn't work, expect to spend at least $1000 to have it repaired. A thorough test drive allows you to get a feel for the car, and determine if it really is the right car for you. You might also have questions regarding the history and maintenance of the car, some of which may arise during the test drive.

Buying the extras: There are some things you simply can't avoid, like sales tax and state licensing fees. Dealers may try to get you to purchase warranties, credit insurance and other products.

If you buy a new car, dealers may try to talk you into purchasing treatments and accessories, like undercoating, rust proofing and stain-proofing the upholstery. They're not necessary on most cars. In fact, some new car warranties can be inadvertently voided by the application of some of these products. In most instances, you can even do these things yourself, and at much cheaper costs. Learn to distinguish what is needed and what is not when purchasing your car.

Extending the warranty on a new car is only worth considering if you plan on keeping the vehicle beyond the warranty term provided by the factory. If you finance a warranty, you'll be paying interest on it as well. It might be better to wait until the factory warranty has expired, then purchase a used car warranty.

Used car warranties are a good idea given the expense of repairs on modern cars. You should know that these warranties are negotiable, and in many cases provide higher profits for the dealer than the cars themselves.

If you can afford the car of your dreams, then go for it. Getting the best price, financing at the best terms and rates you qualify for, budgeting and setting a limit on how much you can afford to spend on a car are important though. This is especially true in a down economy such as the one we find ourselves in now. There is help with all of these questions and concerns.

You can find a complete and comprehensive guide to every aspect of the car buying and financing process in my new book, "The Insider's Secrets". Our website, http://www.theinsiderssecrets.net/ is a great source for information, with our helpful articles and links pages. You'll find ordering information on all of our time saving, stress relieving and money saving products and services as well. Take advantage of the information, tools, tactics and techniques we provide will save you thousands of your hard earned dollars, precious time and undue stress, each and every time you buy a car.

Keeping these ideas in mind will pay off immeasurably by helping you avoid some of the common car buying mistakes. Good luck in all of your future car purchases.

The Surprising Costs of Automobile Ownership

The actual costs of owning an automobile depend, to some extent, on where you live. Generally, owning a car is more expensive in a city; where you may need to pay for parking and face higher insurance premiums – and less expensive in a suburban or rural area. But you may be surprised to know that the average US household spends almost 20% of its total income on car related expenses. So where does the money go?

Fuel

Obviously, your car needs fuel to operate. And while hybrid cars, which use both gasoline and electric power, are becoming popular, gas could be a major item in your budget, depending on the type of vehicle, how far and how often you plan to drive.

Maintenance

You should also consider maintenance – which generally includes the cost of new tires, oil changes, car washes, engine tune-ups – and repairs. It's wise to budget about $30 (or 0.10% of the median new car price of $25,500) per month in regular maintenance for a new vehicle and about $50 per month for one more than 3 years old. Repair costs, while low on a new car, can easily run into the thousands on older cars.

Insurance Costs

Next, you need insurance. In fact, in most states you can't register your vehicle without proof of insurance coverage. Insurance costs vary dramatically according to your area, age, driving record, number of drivers who will be driving the vehicle, the distances driven and other factors. The amount of your deductible and the type of insurance coverage (bodily injury, property damage, medical payments, comprehensive, collision, emergency roadside service, car rental expenses, etc.) you elect will also impact the cost of your insurance premiums. You can ask a local insurance agent how much you might have to pay to insure the car you're considering. You can also get free insurance estimates on the internet.

Lost Value

One significant, yet often overlooked, cost of auto ownership is depreciation, or loss of value. A new car typically loses about 35% to 40% of its value within the first three years – starting the day you drive it home. After that, most cars' depreciation rates level out to about 7% to 10% per year. While you won't actually pay out of pocket for depreciation, this loss of value is a cost of ownership because what you own is worth much less than you paid for it. For that reason, you may still wish to research vehicle average residual values before you buy a car – often, a little extra cost upfront (both your time and money spent) may save you money in the long run.

Leasing guides can be a good source of residual values, whether you plan to lease or not. Ask your bank or look on the internet, lease guides such as the ALG guide are readily available.

You can find much more information on every aspect of the car buying and financing process in my book, "The Insider's Secrets" and on our website, www.TheInsidersSecrets.net. In addition to ordering information on all of our time saving, stress reducing and money saving products and services, you'll find many helpful articles and links to lenders, appraisers, credit reporting agencies, fuel economy, debt management and more.

Credit Reporting: Do You Know Your Rights?

If you've ever been turned down for a credit card then you've probably received this nice letter in the mail;

Dear Consumer

Thank you for applying for a credit account with SO and SO Finance Company. After carefully reviewing your application, we are sorry to advise you that we cannot open an account for you at this time.

"Our credit decision was based in whole or in part on information obtained from the consumer reporting agencies listed below. You have a right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer reporting agencies. The reporting agencies played no part in our decision and are unable to supply specific reasons why we have denied credit to you. You also have the right to a free copy of your report from the reporting agencies, if you request it no later than 60 days after you receive this notice. In addition, if you find that any information contained in the report you receive is inaccurate or incomplete, you have the right to dispute the matter with the reporting agencies. We have received credit information from: Equifax Credit Reporting Agency"

Sincerely,

The highlighted paragraph in quotations is mandated by the Fair Credit Reporting Act (FCRA) of 1970, and that paragraph should appear, nearly word for word, in every credit denial letter you ever get.

The FCRA was established, among a host of reasons, to provide consumers with a way to make credit reporting agencies accountable for the information they compile and sell on each and every one of us.

Credit reporting agencies are NOT government agencies. They ARE profitable corporations, controlled and regulated by this important legislation, and they make their money selling your credit file to anybody who requests, and pays for one.

Credit reports are used to determine your credit worthiness, car insurance rates, interest rates, etc. Credit reporting agencies also compile and report public information i.e.; bankruptcies, tax liens, judgments, collections, bounced checks, etc.

All of this information as well as any reporting, closed and current credit accounts, payment history, open balances, monthly payment, any credit inquiries, current and prior addresses, current and prior employment, any alias' or surnames ever used, is contained in your credit report.

Any incorrect or fraudulent information is there as well.

You are responsible for bringing these mistakes or frauds to their attention. Credit reporting agencies are competitive and do not share information with each other. One report could be very different from another. If you do find items that you wish to dispute you must do so with each of the three agencies. You have the right, under the FCRA, to dispute any information reported by these agencies.

Under the FCRA, credit reporting agencies have a legal duty to correct or confirm any and all of this information and data, and in a timely manner.

Before you dispute anything, you should know your rights under the FCRA.

They are:

• The right to have your dispute investigated; The bureaus must investigate your dispute, usually within 30 days, by contacting the creditor, collection agency, or any other "information provider" that supplied the data in question. Any information provider contacted in this way must launch its own investigation and report its results back to the bureau.

There is a major exception to the 30-day rule however. If the credit bureaus decide that your dispute is "frivolous" they can tell you so, and refuse to investigate. This tends to happen if you repeatedly demand investigations of information that has already been verified. It is best to dispute each account separately and wait a time before disputing accounts that have been previously investigated and verified.

• The right to have the erroneous information corrected; If the provider says the information is indeed inaccurate, it is required to notify not just the bureau that originally contacted it, but all the other major credit bureaus as well, so that the error can be fixed or the item deleted. If the provider can't verify the information, the information must be deleted from your credit report
  
• The bureaus can, however, reinsert deleted information or undo the correction down the road if the provider later verifies that the original item was, in fact, complete and correct.
  
• The right to a written response; after completing its investigation, the bureau must give you a written report of its findings and, if the investigation changed anything on your file, a free copy of your credit report.

Furthermore, if the bureau later restores any information that was deleted and/or changed, it must notify you in writing and provide you with the name, address, and phone number of the information provider.

• The right to have a statement included in your file; If the dispute isn't resolved to your satisfaction, you are entitled to have up to a 100 word statement inserted into your credit report explaining your side of the story. These statements, however, have no effect on your credit score.
  
• The right to sue; If a creditor or collection agency violates these rights -- by continuing to report inaccurate, unsubstantiated information, for example or failing to respond to your dispute -- you can sue the creditor or agency in state or federal court.

When it comes to collections, you have another important right as outlined in the Fair Debt Collection Practices Act: (FDCPA)

• The right to have a collection account validated; this process, as outlined in the FDCPA, is quite different from the "verification"
  process referred to above.

When a credit bureau asks a creditor to "verify" information, the investigation that follows can be pretty cursory.


The creditor reviews its records and any information supplied by the consumer and then decides whether it, the creditor, was right or wrong.

When a collection agency is asked to validate a debt, by contrast, the process can get pretty involved. The collector must prove that the debt is your responsibility, and also that they have the legal right to collect it from you.

Furthermore, the collector has to cease all collection activity until they provide this evidence to you.

If the agency can't validate the debt, it must end its attempts to collect on the debt and stop reporting the collections account to the credit bureaus.

To validate a debt, the collector must present documentation, obtained from the original creditor, proving that you do indeed owe the money.

Eventually, erroneous and false information will be deleted and even some correctly reporting negative credit information might be deleted as well. You might lose positive information as well.

The Secret to Negotiating a Great Car Deal

There are a lot of things to consider when you're shopping for a car, not the least of which is the price. Other things to consider would include the year, make and model. Do you want a new car or a used car? Will you pay cash or finance? Will you purchase or lease. Should you buy from a dealer or a private party? These are all relevant and important questions, but regardless of the answer to any of these queries, there is a bigger, more important issue to be considered. How will I know that I got the best price? How will I know if I left money on the table? I will try to answer these questions here but in order to get the most complete information you can read "The Insider's Secrets".

There are a number of ways to answer these questions. If you're going to buy a new car, it's a matter of deciding what brand and model best suits your needs. I can't help you much with those decisions but I can help you with figuring out what a fair price should be.

New card dealers of every make are desperate to move inventory; the most affordable will likely be leftover, prior year models. The value to you is threefold;

• First and most obvious is the fact that these vehicles have been sitting on the lot for too long and, in most cases, accruing flooring charges, costs that have eaten away at any potential profits. Any dealer with a supply of these vehicles will be highly motivated to get them off their books and off their lots. Salespeople will know that commissions on these vehicles are likely to be lower than on the fresher inventory and simply quit presenting these vehicles to their customers. The dealer's only defense is to offer large "mini's" on these vehicles. "Mini's" are, higher than average, set commissions that will inspire and motivate sales staff to show these vehicles. Once again, these large minimum commissions are an expense that eats away at the potential profits. The dealer has an even baser need to move these vehicles off the lot; space. The dealer has only so much space for inventory and will need to make room for the incoming, new models. The new models are the ones that occupy all of the manufacturer's advertising budget and provide the consumer rebates and incentives that bring customers onto the lot.

• Secondly; Manufactures want to deliver new inventory to their dealer base and these vehicles are taking up room, not only physically but on flooring lines of credit as well. As an added stimulus for dealers to move these vehicles off the lot, they offer secret rebates. These rebates are referred to as "dealer cash" and in some cases can be thousands of dollars, depending on the cost of the vehicle. The higher the invoice cost, the higher the rebate. In many cases the "dealer cash" will exceed the rebates that were available to consumers. This dealer cash is necessary because most of the consumer rebates and incentives will have long ago expired. If you are aware of these rebates it is very likely that you can negotiate from the invoice rather than the Manufacturer's Suggested Retail Price (MSRP). Once you have the invoice amount you simply deduct every penny of any rebate available, including the dealer cash. There are sources for this information; Edmunds.com and Intellichoice.com occasionally give this information. Automotive News displays all available rebates, both consumer and dealer. You will have to buy a subscription to Automotive News or you can simply go to your public library, usually the main branch, and find it in the resource section.

• Finally; Manufacturer's increase their costs to dealers with each new model year. The MSRP's of the newer models increases as well. A fresh model year vehicle may have no significant changes to the previous year's model, yet you will pay more for essentially the same car. Dealers will try harder to maintain profit margins on the newest, hottest and most popular inventory. Advertised consumer rebates and incentives will make the newer models seem like a better deal. Dealers and local auto dealer associations will focus their advertising campaigns on the newest models as well.

If a used vehicle is your choice, you will be well served to research the market values of whichever make and model you choose.

• KBB.com and Edmunds.com will help you with market values but it is important to remember that these companies primary source of revenue are the auto manufacturers and Dealer's. The information is a good place to start but shouldn't be your entire source of information.

• Magazines like Auto Trader and websites like cars.com and craigslist are filled with ads from private parties and dealers alike and while you won't be able to determine the real market value by looking at the ads themselves, you can call the sellers and ask what they actually got for the listed vehicle. You should be able to ask about the condition and compare mileage and equipment. Make the necessary adjustments with an educated estimate and you should be able to determine what any vehicle you are looking to buy, sell or trade is really worth.

Cash or Finance, Purchase or Lease; whichever way you choose to pay is up to you. You can find reasons for and against each in my book "The Insider's Secrets", but regardless of the answer to any of these questions the SECRET to negotiating a great deal is the same. ALWAYS negotiate as a cash buyer. NEVER reveal that you have a trade until you have the dealer's best price. If you intend to finance or lease, don't tell the dealer, let the dealer think that when it comes time to complete the transaction you will be paying cash (writing a check is the same thing). Dealers will always try to negotiate by your monthly payment and you cannot afford to play that game. The most profit is made on consumers who negotiate based on monthly payment. Once you've got the dealers best price on the vehicle you've decided is the one for you, reveal your payment method. NOT BEFORE. If you are planning to finance, know what your budget is before you ever set foot in the dealership. It is always best to have your financing in place, but that isn't always possible. The truth is that less than 60% of consumers have the credit necessary to get themselves pre-approved. Some of you are going to need the dealers help with financing.

My best advice for anybody considering the purchase or lease of a new or used vehicle and regardless of whether you intend to pay cash or finance is to read my book "The Insider's Secrets". I am a 30 year veteran of the automobile business and I am an expert on every aspect of the vehicle buying and financing process. You can find helpful information and links too many helpful websites as well as ordering information at http://www.theinsiderssecrets.net/.

Do you really understand the difference between leasing and buying? I'll bet you don't!

Are you planning to buy a new or used car? If so, you should understand the real differences between a conventionally financed loan and a lease. Regardless of whether you plan to buy a new car or a used one, leasing can be a very viable option, as long as you understand the difference

In general, leases are more likely suited to buyers who trade more often, drive fewer miles, take very good care of their vehicles (you will be accountable for excess mileage and condition) and have no desire to hold a clear title to the car they drive. (You can own the vehicle at lease end by paying or refinancing the residual)

Leasing enables you to drive a new vehicle more often or a vehicle you couldn’t normally afford. You’re not actually buying the vehicle; you’re renting it and paying for the use, not the vehicle itself. You can decide whether you want to own the vehicle at lease end.

Any questions about leasing should start with; is it an open or closed end lease? The only lease to consider is a closed end lease. Closed end leases make the leasing company responsible for the residual. Open end leases leave the consumer responsible. Aside from that important difference, leasing is just another way of paying for the use of your vehicle. In most leases the drive off fees are less than a conventional down payment.

Standard “drive off” fees would be the 1st months lease payment, title fees and a security deposit. (Usually equal to 1 month’s lease payment) If your credit is good enough the security deposit can be waived.

You can put money down but it won’t usually be a requirement, unless you’re stretching to qualify for a payment. Trade in equity can be used as cap reduction or you can get a check from the dealer. In either case cap reduction has no affect on the residual.

You can trade-in your leased car just as if you had financed conventionally at any time during the lease term. (There may be early termination charges)

Manufacturers love leasing because of something called “trade cycle management”. Studies have shown that consumers, who lease, will be back in the market for a new car sooner, are more likely to be brand loyal, and more likely to keep leasing.

Most manufacturer leases also require any payoff requests be made to the originating dealer; this allows the leasing company to provide the dealer with yet another benefit; Talking to the dealer provides him with a timely opportunity to recapture your business.

Lease terms can be shorter than purchase terms with similar monthly payments. Lease payments cover the portion of the vehicle expected to be used (depreciated) during the lease term, plus a rent charge, taxes and fees. This anticipated depreciation is the non-residualized portion of the lease.

The residualized portion is predetermined by the lease company (as a percentage of the MSRP) and is meant to imply the future market value of the vehicle. If, for example, the leasing company, using the vehicle and term of your lease as factors, dictated a residual percentage of 37%, you would make payments on the remaining, non-residualized, 63%. You should have no responsibility for the residualized portion of the lease. Your capitalized cost (purchase price) would be the total of the residualized and non-residualized portions.

It’s important to note that the residual is a percentage of the “MSRP” (manufacturer suggested retail price) and has nothing to do with the capitalized cost. In some cases, especially with factory sub-vented leases, the dealer is allowed to increase the residual base by adding certain invoice items, like “value added equipment packages”. Be sure to ask your F&I person to confirm that the residual is maximized to get the lowest payment. Even if you know that you will purchase the vehicle at lease end you want the highest residual possible as that amount is NOT financed and DOES NOT accrue finance charges, whereas you DO pay finance charges on EVERY penny that is not residualized.

Don’t let the terminology of leasing confuse you:

• The purchase price is called the capitalized cost, or cap cost.

• Down payment is called capitalized cost reduction.

• The balance financed is called the adjusted capitalized cost

• The residual base is the “MSRP” of the car, plus any allowed add-ons. (the number your residual is calculated from, regardless of the price you have negotiated)

• The residual is the cars estimated value at the end of the lease (set by the leasing company) (this is the portion of the car that you don’t pay for)

• The finance charge is called the rent charge.

The cap cost, just like a purchase price is subject to negotiation. Don’t discuss leasing until you have the dealers best price.

The lease term will affect not only the monthly payment but the residual as well. The shorter the term, the higher the residual. The longer the term, the lower the residual.

The residual is meant to imply the vehicles value at lease end, and since the age and mileage of the vehicle affects the value, it makes sense that longer terms would result in lower residuals. And vice versa.

Most leases limit the number of miles you can drive (12,000 - 15,000 per year) however you can purchase extra miles up front (you pay for extra mileage up front by allowing a lower residual & resulting higher payment, and there are no refunds if you don't use up your prepaid mileage allotment.) or pay for exceeding the limit when you turn the vehicle in. (usually 15 – 18 cents per mile)

You are also accountable for any damages beyond normal wear & tear. Any excess wear charge is determined at the time the vehicle is returned to the dealer. But there is a way to avoid these penalties:

Mileage penalties and/or wear & tear charges only apply if you are returning the vehicle to the lease company.

Mileage and/or wear & tear charges can be avoided by trading, buying or selling the vehicle. Your lease documents should disclose any penalties or fees

It generally takes better than average credit to lease. Some leases use a conventional interest rate but many use a money factor (rent charge). Money factors can be marked up by the dealer just like an interest rate (some lease companies allow for markups as high as 8%).

Dealers often make more money marking up the money factor than they do leasing the car. A money factor can look like a really low number, something like .00375. That seems really low, but when converted to an effective interest rate, it may not seem like such a good deal. Multiply the money factor by 2400 and you should get a good idea of the true cost of the lease. A money factor of .00375 converts to an interest rate of about 9%. Not all leases are required to disclose the money factor so make sure you ask for it.

Some lease companies require that you carry a higher level of liability insurance protection. Check with your insurance company to see how your rates will be affected.

At the end of your lease term you have a number of options.

A: Walk away: If the vehicle has been determined to be worth less than the residual amount (the amount necessary to pay off the lease company and own the vehicle) you simply notify the lease company and return the vehicle to the dealer. It was the lease company that set this residual and you have no obligation for it. You might have wear & tear charges or excess mileage charges to pay,

B: Trade or sell: If the vehicle has been determined to be worth more than the residual amount, you have equity. You can capture this equity by trading or selling the vehicle, with the residual being your payoff. Mileage and wear & tear charges are voided in this scenario.

C: Purchase: Pay the residual and any closing costs or finance the residual and keep making payments. Your payments should still be low as you've already paid off a portion of the original cap cost.

Here are some online sources for lease and residual information. Keep in mind that most manufacturer backed leases (sub-vented) use their own residual guides, but should still be pretty close to those found in the ALG guide.

LEASING GUIDES (you can find residual percentages here)

Automotive Lease Guide
Federal Reserve Board
LeaseSource

Intellichioce

You might also want to check out a website called Swapalease.com. This is a company that specializes in lease transfers. They offer the option to buy or sell a leased vehicle. Swapalease.com will help to find a buyer for the leased vehicle, enabling the lessee to walk away and avoid any mileage or wear and tear penalties.

You can find many more secrets, tips, tools and techniques to help you save thousands of your hard earned dollars each and every time you buy a car at The Insiders Secrets.