Money Management

Don’t borrow more than necessary for your next vehicle. 

Buying a car is an expensive purchase, and one that many people need to borrow the funds for in order to afford. A large monthly car loan payment can unfortunately have consequences, leaving you with less money to put in savings or spend on other necessities.

The good news is, you can get a cheap car loan if you take a few very specific steps to do it. Here’s a six-step plan to make a low-cost loan happen for you.

1. Use the Costco auto program

The Costco auto program is a feature that members can benefit from — and it can provide so much savings that it’s even worth becoming a Costco member to take advantage of.

Costco partners with dealers who are trained in its program processes and who agree to offer preset competitive pricing. Since Costco works with multiple dealers, you can also get price offerings from many in the program.

In fact, one Ascent staffer who took advantage of this program recently had multiple dealers competing for their attention through this program and ended up being able to get a car for below the MSRP.

2. Shop around with different dealers

There’s no reason to commit to working with a specific dealer if you’re looking for the lowest price car. In fact, playing different dealers off each other can be essential if you want the lowest price vehicle — which, in turn, enables you to borrow less and get the cheapest possible car loan.

If one dealer makes you an offer, see if you can get another to beat its price. By doing this a few times with different dealers, you can make sure you get a rock-bottom price on your new wheels.

3. Get the maximum value for your trade-in

If you have a vehicle trade-in, getting the highest price for it will further reduce the amount you must borrow and make your car loan cost even less.

The used car market has been very competitive lately, so look up what your vehicle is worth before you go to the dealer so you don’t accept a lowball offer. You can start negotiations off on your terms with knowledge of just how valuable your vehicle is.

A clean vehicle also shows better and is likely to fetch you a higher price, so it may be worth paying to have your vehicle detailed before you go to the dealer to negotiate.

4. Negotiate your drive-off price, not your monthly payment

Many dealers try to get you to focus on the monthly payment you’ll pay for your vehicle, rather than the total cost. Focusing on this is a big mistake as dealers can use tricks like stretching out your payoff time over a long period to make your loan look cheaper.

Instead of negotiating based on the monthly payments you’ll incur, get each dealer to give you a drive-off price inclusive of costs and fees. This makes it easier to see what the best deal is and to assess whether the price is within your budget.

5. Compare your options for car loans

In addition to shopping around for the best price on the car, you’ll also want to shop around for the best price on your loan. Different lenders may have widely different interest rates and fees.

Many people assume the dealer will provide the best financing, but that’s not always the case. Get some quotes online from credit unions, local banks, and national lenders so you can see all of your borrowing options.

6. Be prepared to walk away

Finally, if you really want the best deal, be prepared to walk away if you aren’t offered a fair value for your trade-in or a good purchase price for the vehicle you have your eye on. There are always other cars out there, and dealers will be a lot more willing to work to earn your business if they know you’re willing to leave the negotiating table.

If you follow these six steps, you can hopefully get a great price on a car and a great rate on a car loan so you end up with the cheapest possible car loan you can get.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Fetch. The Motley Fool has a disclosure policy.

 Read More 

I’m better off keeping those accounts open. 

These days, I make the bulk of my purchase on two or three credit cards. But I have more cards than that in my name. In fact, several credit cards of mine are ones I’ve had for many years. I don’t tend to use them, however, because their rewards programs aren’t so great.

One of my older credit cards, for example, only offers 1% cash back on purchases across the board. By contrast, one of the cards I use regularly offers 4% back on gas fill-ups.

You might assume that if I have credit cards I don’t use, it makes sense to just cancel them. But here’s why going that route may not serve me well.

I don’t want to damage my credit score

While my credit score isn’t perfect, it’s in pretty good shape. But I know that if I cancel my older credit cards, I’ll end up dragging my score down.

See, FICO Score (the most commonly used credit score) is comprised of five components, each of which is weighted differently:

Payment history: 35%Credit utilization/amounts owed: 30%Length of credit history: 15%New credit cards: 10%Credit mix: 10%

I make a point to pay my bills on time, so I’m not worried about my payment history. I also have relatively low credit card balances relative to my total spending limit, and I make a point to pay off my cards in full each month. So credit utilization isn’t a concern for me, either.

I also know that I happen to have a healthy credit mix (since I have a mortgage loan as well as credit cards). And I always make sure not to apply for too many new credit cards at once.

Meanwhile, the length of my credit history is pretty decent since I have some older credit cards. But if I were to close those accounts, it would shorten the length of my credit history, thereby dragging my score down in the process.

And that’s why I’m better off keeping those credit cards open. Since they don’t charge an annual fee, I’m not losing out financially by hanging onto them. All they’re really doing is taking up space in my safe, which isn’t a big deal at all.

Think twice before you close an old credit card

You may end up in a similar situation to mine where you have an old credit card or two that no longer serves your needs. Before you rush to close your accounts, think about how they might impact the length of your credit history.

Another thing to consider is those cards might also lend to a higher total spending limit, which could help you keep your credit utilization down. In my situation, that’s not really something I think about, because my total credit limit across my various cards is way more than I could imagine spending at once. And those older cards of mine happen to have lower spending limits, since I never bothered trying to increase them. But that’s yet another reason not to rush to close an old credit card account.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

Personal loans are unsecured, but there are still consequences to not paying one back. 

Personal loans have become an increasingly popular way to borrow money. As of 2021’s fourth quarter, U.S. personal loan balances sat at $167 billion, according to TransUnion. By the fourth quarter of 2022, that figure had grown to $222 billion.

A big reason personal loans are so often used to borrow is that they’re very flexible. When you take out a personal loan, you can use the proceeds for any purpose. And you also don’t need to put up a specific asset as collateral when you take out a personal loan.

Rather, personal loans are unsecured. This means lenders don’t have the same recourse in the event of non-payment as lenders that give out secured loans, like mortgage lenders.

But still, the consequences of not repaying a personal loan can be pretty severe. And while you generally won’t lose your home if you stop paying a personal loan, you might run into difficulties with selling yours.

When you don’t repay your debt

When you stop making payments on a personal loan, your lender can, eventually, take you to court to try to get repaid. If a judgment is entered against you, your lender may be able to garnish your wages to get repaid. Your lender might also be allowed to put a lien on your home.

A lien is basically a legal claim to your property. This doesn’t mean that your lender can take your home from you. Rather, what will generally happen is that if there’s a lien on your property and you try to sell it, you won’t be allowed to until your debt is paid off.

Don’t ignore a personal loan you can’t repay

Even if you don’t reach the point of having your wages garnished or having a lien placed on your home for not repaying your personal loan, failing to make payments could mean having your credit score take a massive hit. Once that happens, it could become very difficult to get approved for another loan.

So, let’s say your credit score plunges and a few months later, your car dies and you need to buy a new one. In that scenario, you might really struggle to get approved for an auto loan.

If you’ve fallen on hard times or your circumstances have changed so that you can no longer pay your personal loan, your first move should be to reach out to your lender and discuss the matter at hand. Your lender’s goal is to get repaid, and they might be willing to work with you to make that happen in time. Your lender might, for example, allow you to reduce your monthly loan payments and repay your balance over a longer time frame.

You might also, in some cases, be able to get your lender to agree to a lower payoff amount than what you actually owe. If your ability to hold down a job is compromised, for example, due to illness or injury, that might prompt your lender to agree to a settlement.

Either way, it’s important to talk things through with your lender the moment you realize you can’t make a personal loan payment. Even though you may not be at risk of losing your home for not paying, there’s still a host of negative consequences you might face.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

What’s not to like about buying high-quality items at low prices? 

Making a weekly trip to Aldi is practically a family tradition in many American households. For Aldi fans, the idea of shopping in a no-frills grocery store makes sense — particularly if it saves them money. A dive into Aldi’s history turns up some surprising facts, including the following.

1. Mom started it all

While brothers Karl and Theo Albrecht are credited with starting the Aldi grocery chain in 1946, it was actually their mother, Anna Albrecht, who opened the first shop in 1913 in the German city of Essen.

2. Two grocery chains, one name

The Albrecht brothers may have worked together to get the chain up and running in the 1940s, but by 1960 they decided they could no longer work together, and split off into two companies. Those chains were called Aldi Nord (Aldi North) and Aldi Sud (Aldi South). The companies offer many of the same products and look so much alike that it’s difficult to distinguish one from the other.

3. Still family owned

Karl and Theo are both deceased, but both halves of the Aldi empire are still run by their family.

4. Aldi owns Trader Joe’s

Aldi Nord owns Trader Joe’s, having purchased the grocery chain in 1979. Though Trader Joe’s may feel like the ultimate American shopping experience, its owners are still located in Germany.

5. Wednesday is “the day”

Wednesday may be the best day to shop at your local Aldi store. Employees say that Aldi restocks on that day and fills its shelves with limited-edition finds.

6. “D” stands for “discontinued”

If you find an Aldi product sign on which someone has written the letter “D,” you know that the item in question is about to disappear from the shelves. If it’s a product you especially enjoy, make it a point to stock up.

7. You can pay less for bread

Aldi marks its bread and other baked goods down a few days before their expiration dates. That’s the time to take advantage of rock-bottom prices on the carbs you love.

8. Aldi offers one of the most generous refund policies around

With the exception of alcohol and a few other items, Aldi not only accepts returns, but they will replace the unsatisfactory product and refund your money. That’s money in your bank account and a better version of the item you originally purchased.

9. The reason for “renting” a shopping cart is no mystery

If you’ve always believed that Aldi charges a quarter per shopping cart because they’re afraid that people may steal them, you’ve been misled. Customers pay a quarter for a cart and then the quarter is returned when the cart goes back to the corral. Aldi does this to encourage shoppers to return carts to the proper spot. The policy saves Aldi money by reducing the need for employees to gather carts from the parking lot.

10. Aldi is all about offering healthier food options

The chain has mandated that all Aldi brands be free of MSG, artificial coloring, and hydrogenated oils. So you know that if you pick up a store brand, you’re getting a healthier version. As a bonus, you’re left with a little extra money each week that can be slipped into your savings account or used for another purpose.

If you’ve always thought of Aldi as a low-budget grocery chain, now may be the time to rethink that position. In reality, it may just be ahead of its time.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Dana George has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

 Read More