Minnesota consumers who think that missing a car payment ever now and then is okay should think again. Failing to stay current with auto loans is bad for consumers in several ways. First, late car payments are reported to the credit bureaus. These records then show up on consumer credit reports and cause credit scores to drop. If a car owner is late with several payments, their credit score could plummet. So, the next time they need to take out an auto loan to buy a vehicle, their interest rate will be higher, which will make their next car more expensive. In the worst cases, Minnesota drivers struggling to make their car payments become so delinquent that their vehicles are repossessed. Repossession causes serious damage to credit scores, costs a lot of money to consumers, and makes it very hard to finance future car purchases.
Why there are Enough Minnesota Consumers Missing Car Payments to Cause Concern
According to recent data, indirect auto loan delinquencies rose to 1.83% in 2016, and these delinquencies are still on the rise. Indirect auto loans are arranged by a third party, such as a car dealer. On the other hand, direct car loans – loans that come directly from a bank or credit union – rose to 1.03%. Even though delinquencies are rising, finance experts aren’t panicking yet, because these rates still fall below historical averages. However, there are signs that Minnesota consumers should be a little concerned.
It cannot be denied that both new and used vehicles are getting more expensive. Edmunds.com reports that the average price of a new car is around $35,000, and the average loan on a used car runs about $21,000. Because vehicles are so pricey, a lot of Minnesota car buyers are opting for longer term loans. This, unfortunately, makes it more likely that they will default on these auto loans. Why? With long term auto loans, it’s easy for buyers to get “upside down” in their vehicles. This means that they owe more on their vehicles than they are worth. When Minnesotans are upside-down in their cars, it is much harder for them to sell the vehicles if and when they run into financial hardship.
Numbers and statistics can be boring. However, it might be helpful for Minnesota consumers to realize that auto loan delinquencies are a real problem for a significant number of car buyers. Also, Minnesota drivers looking to purchase a car might make more careful buying decisions. Namely, they won’t commit to overly expensive vehicles that could destroy their budgets down the road.
How Credit Repair can help Minnesota Consumers get a Better Deal on their Next Auto Loan
When you’re looking for auto financing, your credit score matters. A higher credit score will earn you a better interest rate, which will help make your car payments more manageable. Any Minnesota consumer considering a car purchase should check their credit reports and credit score. By going over your credit reports, you’ll be able to get a better understanding as to why your credit score is either high or low. Reviewing your credit reports from TransUnion, Experian, and Equifax will also give you a chance to catch errors on your credit reports that might be bringing your credit score down.
Therefore, you shouldn’t even think of buying a vehicle until you’ve visited www.annualcreditreport.com and requested free copies of your credit reports from all three major reporting bureaus. By federal law, you’re entitled to do this every 12 months. To see your credit score, you can pay a small fee to any one of the credit bureaus or MyFICO.com. You can get a free educational credit score by signing up with CrediKarma.com. Here, “educational” means that they are not the credit scores normally checked by lenders. However, these credit scores will give you a rough estimate of where you stand with your credit.
If you find errors on any of your credit reports, you should immediately write dispute letters to the appropriate credit bureau(s). Don’t want to deal with the credit bureaus on your own? That’s understandable. Luckily, Minnesotans can get FREE legal help with the disputing process from Minnesota Credit Lawyers.
The Free and Legal way to Get Better Credit
Don’t let errors on your credit reports bring your credit score down. At Minnesota Credit Lawyers, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? The law allows us to collect our fees and costs from the defendants in any successful action. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (888)293-2882 or sending him a message through our contact page.