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    Car Buying Decisions: Do I Need GAP Insurance?

    Last updated 3 days ago

    What is GAP?

    Guaranteed Asset Protection, sometimes called GAP Insurance, is a protection package that covers the difference between the actual car value and your loan balance in the event that your vehicle is declared a total loss by your insurance provider.

    In other words, if your brand new car is declared a “total loss” in the first year of ownership and you owe more than your insurance provider is willing to cover for the loss, your GAP policy will pay off the remaining balance (up to a certain amount; check with your GAP provider for details).

    How Does GAP Work?

    Let’s take the above example and assume that 9 months into ownership, the vehicle is stolen and not recovered. Your insurance company would likely declare the vehicle a total loss. After some number crunching on their end, they will decide what the car’s “Actual Value” is, and they will send a check to your lienholder (the lender financing the vehicle) for that amount. If that amount isn’t enough to pay off your loan, you will owe the lender the remaining balance.

    For example, if your loan balance is $18,000, but your car’s actual value is $14,000 (the amount your insurance provider will cover), you will owe the lender $4,000 in order to satisfy the loan.

    Do I Need GAP?

    It depends! Ultimately it is your decision, but considering these factors beforehand may help you assess whether or not it’s right for your situation:

    • Did you put money down when you bought it? Whether you bought a new or used vehicle, having a down payment helps close the “gap” between the actual value and what you owe. Consider these two scenarios (for illustrative purposes only) – the “gap” is much more severe and lasts longer in the scenario with no down payment.

    • Did you opt for the longer loan term (and smaller monthly payment)? It may be tempting to opt for the lowest monthly payment, but doing so typically means your loan term is longer. Stretching your loan out over more than the typical 5 years increases the “gap” between loan balance and vehicle value even more.
    • Did you borrow more than the purchase price? Whether it was the extra features, add-ons, or even negative equity from your previous car, rolling extra money into your car loan can have a dramatic effect on the “gap” between your loan balance and vehicle value. Consider shopping several GAP options that offer the right amount of coverage for your situation.
    • Have you refinanced your loan since you bought the vehicle? GAP policies follow the original loan policy, so if you’ve refinanced your vehicle since then and are still upside down, purchasing a new GAP policy may be wise.
    • Did you roll tax, title, license, and other fees into your loan? Many car buyers opt to roll their back-end fees into the loan balance, but doing this increases the "gap" between the loan balance and the vehicle value early on. If you do this, consider also rolling in a Guaranteed Asset Protection package from Amplify.

    Where Do I Buy GAP?

    GAP is typically purchased at the time you finance the vehicle, but you can purchase it at any time after the fact. You can buy it through your lender, the car dealership, or even your car insurance provider, all of whom offer different levels of coverage for varying price ranges.

    Amplify Credit Union’s Guaranteed Asset Protection (GAP) is a one-time fee of $350 and covers “gaps” up to $7,500 for the life of the loan. Visit goamplify.com for more information about Amplify, or check out all of our Auto Loan Protection Packages!

    Inheritability of Vehicles in Texas

    Last updated 7 days ago

    by Jamie Lovell

    Amplify Credit Union

    We all have a love affair (or maybe a love-hate relationship) with our cars. Given how much time we spend in them between errands, commutes, and road trips, it’s no wonder we grow so fond of them.

    Whether an auto is a classic, special edition, or even a plain vanilla car, you may be surprised to learn how much the vehicle means to family and loved ones following the death of the vehicle’s owner.

    So what happens to a car in the state of Texas when the owner passes away? Well, it depends.

    Are loan payments still being made on the vehicle? If there is a loan secured by the car, find out what the lender’s rules are in these situations. Because Texas is a community property state, a surviving spouse may be held responsible for the debt, regardless of whether the spouse is listed on the vehicle title or even on the car loan. Regardless of what is or isn’t specified in the will, the state of Texas will only transfer vehicle ownership to the heir or heirs of an estate once the loan has been paid off and satisfied.

    *Bonus tip – If the vehicle owner opted for Credit Life insurance coverage when they signed the loan papers, it will likely pay off or cancel any remaining balance on the loan, making the transfer easy. Check with the lender for details.

    How is ownership transferred once the title is owned free and clear?

    In Texas, the DMV uses form VTR-262 Affidavit of Heirship. Supporting documents differ depending on whether or not the estate is probated. Check with the TXDMV website for a list of needed documents.

    Ultimately, seeking advice on estate planning can help mitigate potential complexities that surviving family members or heirs may be faced with, and it will allow you to clearly define who you want to inherit your beloved car.

    Cash-Out Vehicle Refinances

    Last updated 14 days ago

    by Tony Kountoupis

    Amplify Credit Union

    Have you ever thought to yourself “How can I combine my monthly payments into one loan?”  Most of us have, but when we ponder this we often come to the same conclusions:

    • I could do a balance transfer to a new credit card with a 0% for 6-12 months depending on the offer.  This is a great option but it’s a temporary fix because once the 0% goes away the interest rate will go up significantly. Also, most credit cards charge a balance transfer fee!
    • I could go to my financial institution and ask for an unsecured loan so that I can make just one payment instead of several.  Hopefully the rate on the consolidation loan will be lower than your current interest rate, but it can still affect your credit rating to carry a large amount of unsecured debt.
    • I could look into a Home Equity loan.  This product will offer a lower rate but this only works if you’re a homeowner and you have equity available in your homestead.  And while you will likely get a better rate on a Home Equity loan, that process can be time consuming and sometimes requires you to pay closing costs.

    What many people don’t realize is that some financial institutions will allow you to use the equity in your car.  This is a great option for many borrowers because there is almost always a lower interest rate offered on an auto loan vs. a personal loan or credit card. 

    It doesn’t have to be for debt consolidation either.  Maybe you realize that you have a large expense or purchase that would normally prompt you to apply for an unsecured loan or open a new credit card.  I have personally known people who have used the equity in their autos to pay for unexpected medical and dental bills, home repair, auto repair, furniture purchases, or even vacation funds.

    You can look up the blue book value online at the website for the NADA price guide www.nada.com .  This will give you an idea of the available equity in your auto. 

    You’ll want to make sure that your financial institution will allow this type of request and how much equity they will allow you to take out.  Assuming they have this product available then you just need to go through the normal auto loan application process.  The other things to keep in mind is that most auto loans require that you carry full coverage insurance and if ownership is changing on the title then there can be additional tax, title, and license so don’t be afraid to ask questions when inquiring about this process.

    So when you’re in need of funds and weighing out your options, consider borrowing against the auto that you already own; or refinancing your current auto loan for some additional cash out.  It’s a great way to borrow at a lower rate and save on finance charges.

    Get Your Car Ready to Sell or Trade In

    Last updated 23 days ago

    Tons of websites offer great advice for preparing your car for a sale or trade-in. If the goal is to get the best offer, you'll want to make sure your car is in tiptop shape!

    1. Research the market to understand how to price your vehicle and how quickly you can expect to sell it. Edmunds.com reports that family sedans are constantly in demand by those needing basic, affordable transportation, while collector cars generally take longer to sell and can be difficult to price. Online classifieds are a good starting place for your pricing research.
    2. Price your car competitively. Once you've researched the local online classifieds, then check the Edmunds.com True Market Value, or check Kelly Blue Book (kbb.com) for a comparison. Once you've decided how much you'd like to get for your car, price it slightly higher to allow room for negotiation.
    3. Improve your car's "curb appeal". Edmunds.com reports that most people decide whether to buy your car within the first few seconds of seeing it. Consider having a professional detailer work on your car, and make small repairs rather than selling "as is". Have your vehicle's maintenance records ready for prospective buyers, and run a carfax.com report to prove you have clear title.
    4. Decide where to advertise your car. Consider options like craigslist, classified ads in your local newspaper, putting a sign in your car window, and even eBay. Double-check your ad for accuracy. Once you've placed the ad, be sure you're available to take calls and return email inquiries promptly.
    5. Craft an ad that gives the total picture. List your car's year, make, model, color, and any features that make it stand out from the competition. You can also use phrases like "must sell" to indicate you're willing to sell at a deep discount. If you're willing to negotiate, indicate the "asking price" or include "OBO". If you're set on the amount you must receive for your car, list the price as "firm".
    6. Prepare to Show Your Car. Are you uncomfortable having strangers come to your home? Arrange a neutral meeting place, like a grocery store parking lot. Be ready to show maintenance records or your mechanic's report. Finally, Edmunds.com recommends you trust your intuition if you have doubts about a potential buyer.
    7. Sharpen Your Negotiating Skills. Potential buyers will likely try to bargain. You may want to hold fast to your price at first. If your car doesn't sell, then consider meeting a potential buyer halfway. If the buyer says "take it or leave it", Edmunds.com says the only way to know if they're serious is to turn down the offer, and take the risk that the buyer won't return.
    8. Seal the Deal. Most sellers request payment in cash or by cashier's check. Once you have the money, make a note of the odometer reading and then transfer title to the new owner. In Texas, you must submit a vehicle transfer notification within 30 days to limit your liability. This can be done online. Don't forget to contact your insurance agent and cancel your insurance policy on the vehicle.

    Car Buying Decisions: Tips for Buying a Car from a Private Seller

    Last updated 1 month ago

    Buying a used car from an individual instead of a dealer can save you dealer markup. But if there are problems with the car, you won't have the same recourse. Take these steps to make sure you know what you're buying.

    Questions to Ask the Seller

    • How long have you owned the car?
    • Why are you selling it?
    • Can I review the vehicle's repair and maintenance records? If the seller doesn't have the records, ask for the name of the mechanic or shop that works on the car so you can review the records there. If the seller tells you he maintained the car himself, so there are no records, you can have your own mechanic examine the car. Auto P.I. is a company in Austin that specializes in pre-purchase inspections, and offers a discount to Amplify members.
    • How has the car been driven? Was it used for errands around town, a daily commute in traffic, long road trips? Has it been sitting, un-driven, for a while?
    • Is the seller an auto dealer? Is the title issued in the seller's name? If you think a seller may be an unlicensed dealer, be extremely cautious. These individuals often peddle cars with serious mechanical problems.

    Do Your Homework

    If something is too good to be true, it probably is. Ask if the car has a salvaged title. If it does, walk away immediately. A salvaged title means the vehicle has been badly damaged at some point and is usually uninsurable.

    Investigate on your own. Don't rely solely on the seller's answers. They want to sell and may skew their responses or just not know if something has failed if the vehicle has been sitting for a while. To be safe, use these techniques to make sure you know the truth about the car you want to buy:

    • Have a reputable mechanic inspect your vehicle.
    • Obtain a Vehicle History Report at www.carfax.com. If you have a smartphone you can do this within minutes. Or you can tell the seller you're interested but you need to check the VIN and do it when you get home. A CARFAX report can’t tell you everything about a vehicle, but it does check for vehicle registration, title information, and service and repair history.

    Secure Your Financing Before You Shop

    Before you start shopping for a used car, get pre-approved for an Amplify Auto Loan. If you settle your financing before you start shopping, you'll start out ahead of the game. You'll know exactly what you can spend and can't be talked up and the seller will be more likely to negotiate with someone who already has their money ready to go.

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