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The Basics of Buying a Car

October 15, 2016

Aside from mortgage or rent, a car payment may be your next-largest monthly expense. Whether this is your first or fifth car purchase, shopping for a car and determining how to finance it can be overwhelming. Follow these steps to ensure that you are getting the best deal when it comes to vehicles:

  1. Determine What You Can Afford

When taking any large financial step, such as buying a car, the first stage of the process is to consider your finances and calculate a practical amount to spend on a monthly car payment. Generally, experts recommend that you should spend no more than 15 to 20 percent of your total budget on all automobile expenses (including a car payment, car insurance, gas, and regular maintenance). One factor that is important to take into consideration is that the sticker price of a car is not all you will be expected to pay — you must also account for sales tax, title and registration fees, extended warranties, and any other fee you may incur. Edmunds.com’s affordability calculator is a great resource for determining how much you can afford — it even has a section to enter your zip code to find the rates and pricing in your area.

  1. Get Preapproved

If you plan to finance some or all of your vehicle purchase, you may be able to take advantage of savings before stepping foot in a dealership by getting approved for a low-interest rate with a local bank or credit union. First-time car buyers may unknowingly offset any savings gained during the negotiating process by agreeing to an unnecessarily high-interest rate on a loan in the dealership’s finance office. Since interest rates affect both the amount you pay each month and the total cost of your loan, comparing interest rates on new or used car loans in advance can result in legitimate savings in your budget.

  1. Shop Around

Once you have calculated what you can afford to spend on a car, you want to make sure that you get the most car for your money. Make a list of factors that are important to you like fuel efficiency, mileage, year, make/model, size, etc. — and start shopping. Websites like AutoTrader.com offer customizable online car shopping based on your budget and important factors. Shopping online may be a better way to look for cars instead of bouncing around from dealership to dealership. It can save time, and if you are shopping on a tight budget, you will not be tempted by the more expensive vehicles on the car lot.

Some financial experts state that buying a new car (especially using credit) is a terrible investment. This is due to the notion that a brand new car is worth an estimated 30 percent less the second after you drive it off the lot. However, if it is a car you plan to drive for as long as possible, this may not bother you. Plus, you may find solace in the idea that one else has driven your new car and no hidden issues exist. While there are many pros and cons of choosing a used car versus a new one, it is important to note that a used car will typically save you money and help you get the most out of your allocated car budget. However, keep in mind that used cars usually carry higher interest rates, depending on your credit score. Check out this post to learn how to build or raise your credit score, which may help you get a lower interest rate.

  1. Negotiate a Deal

What many car buyers, especially first-time buyers, do not know is that it is possible to lower the price of a car by negotiating. Once you have found a few cars within your price range, do some research on what the cars are actually worth. For new cars, look to Edmunds.com, and for used cars, try KBB.com to determine the market value of the cars you are interested in. From there, set a price to negotiate for — try asking for $500 to $1000 less than market value for new cars or 5 percent less for a used car. According to Jason Lancaster, a former car salesman/manager, there is one fundamental tactic when negotiating: stay firm with your price and politely decline counteroffers. If they do not initially accept your offer, leave your phone number with them. They will call you back if they decide your price is feasible for them to sell you the car. If you want to call back and follow up on your offer, the most opportune times are the end of the month and the end of the day on Saturdays and Sundays. At these times, managers and salespeople are under more pressure to sell and may be more likely to accept your offer.

Get the Most for Your Money

Above all, your number one priority is to stay within your budget and purchase a car at a price you can afford (if you like — or love — the car, even better. Just make sure it is safe and can get you where you need to be.) To stay within your budget, you need to calculate a price and stick to it, take the time to shop around and negotiate a deal with your salesperson. Who knows — you may be able to purchase a car for less than what you have budgeted and have more money left over to save.

 

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2019-10-14
Motivating your student to apply for scholarships

Do you find your child lacking motivation when it comes to finding grants and scholarships? While some students are intrinsically motivated and will search out and apply for scholarships on their own, other students may need a little encouragement in order to accomplish these tasks. While it can be frustrating, it's important to remember that this is likely the first time your child has had to navigate financial waters. Because of that, we're sharing some simple ways you can motivate your child to apply for scholarships before and during their college years.

Discuss college costs and finances with your child.

Your student may not fully understand how much college can cost. Hold an honest discussion with your child where you review the costs of their top college choices, how much money (if any) you will be able to contribute, the significance of
creating a college budget, the realities of student loans, etc. While they may be more focused on which clubs they'll join and their newfound freedom, helping them understand the importance of financial help can make their college year much more enjoyable.

Share scholarship success stories.

Sometimes, all it takes to motivate your student to apply for scholarships is sharing how their peers are reducing the cost of college. Ask other parents which scholarships their child was able to secure, and even let your child know the lump sum their friend was able to save. Take note of the steps each student performed in order to obtain the scholarships and go over with your student ways they can implement strategies into their application process.

Assist with developing a scholarship organization plan.

When it comes to applying for college scholarships, it pays to be organized. From deadlines to account passwords to application requirements, your student will have a multitude of details to remember. Developing a scholarship organization plan will help deter your child from becoming overwhelmed, which in turn will motivate them to complete applications. Share these organization tips with your child to make the process of applying for scholarships a little easier.

Provide incentives.

Using extrinsic motivators, such as rewards, can prod your student into action. Just as you may have bribed your toddler during the toilet training phase, that same concept should work with your teenager. Consider making a deal with your child that if she applies for a certain amount of scholarships, then you will provide half of the money so she can purchase that new phone or outfit for which she has been saving up money.

Give your child a free pass.

Most teens would gladly give up their household chores to complete other tasks, even if the task involves academics. Allow your child a free pass on chores if they use that time to search out and complete scholarship applications.

Set realistic goals.

If you expect or nag your child to spend most of her free time looking for scholarship leads and filling out applications, no wonder they aren't motivated. Work with your student to set realistic goals for the number of hours spent each week on the scholarship application process.

Acknowledge and encourage your child’s efforts.

Positive encouragement can work wonders to increase your child’s motivation. By letting your child know that you have seen and appreciate their efforts to apply for scholarships, you are giving them the confidence they need to continue applying for more. For more information about scholarships, be sure to read the scholarships and grants from our friends at eCampus Tours. Your teen can also perform a free scholarship search by clicking here.   Note: Links to other websites are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site. SouthEast Bank does not control the content of these sites.
Couple sitting at table on the computer
2019-10-11
5 Financial Tips for After You Refinance Student Loans

The process of refinancing student loans can be like studying for finals: you prepare for weeks, the stress keeps you up at night, and once the big day finally passes, you feel a huge sense of relief. You might even go out with friends to celebrate. But like college, you can’t just forget what you learned. You have to apply that knowledge to the next step.    When it comes to refinancing student loans, the next step is to continue honing your financial savviness. Find other ways to reduce and quickly pay off debts so you can start spending money on the things you want, instead of the things you need! Below are five tips to consider after refinancing student loans. 

Pay Down Other Debts

Take the extra amount you paid toward that student loan and apply it to other debts. With a $50,000 loan at an 8% interest rate, you could owe approximately $480/month for 15 years. Your total interest over the life of the loan is $36,000. But if you’re able to reduce that interest rate to just 6%, your monthly payment drops to $420/month and the total interest paid is $26,000. What could you do with an extra $60/month? What could you do with an extra $10,000 over 10 years? A lot.    Consider all the types of debt and ongoing expenses you have that you could apply that $10,000 toward:
  • Credit cards
  • Car loans
  • Home loans
  • Medical bills
  • Childcare
  • Cell phone bills
  • Utility bills
  You can also opt to keep that extra money aimed at your loan. Refinancing student loans often establishes terms with no prepayment penalties. So paying off loans faster can alleviate the burden of debt. This can take many forms, including:
  • Make an extra payment: In addition to your minimum monthly payment (12 payments a year), consider an extra payment every few months. In the example above, if you save $60/month on your refinanced student loan, you will have enough money for a whole extra payment every 7 months, with no additional work done on your part. Just a little saving!
  • Pay more than the minimum: If you don’t want to worry about orchestrating extra payments, overpay during each regular monthly payment. By going above and beyond the minimum payment, you’ll keep from accruing as much interest on your principal balance. Going back to our example again, if you were to keep that extra $60 applied to your monthly payment of $420 (for a total of $480), you could pay off your loan 2–3 years earlier at a savings of $5,000. It might seem tempting to use that extra $60 as play money right now, but $5,000 could be an even bigger play day in the future!
  • Make single lump-sum payments: Use your tax return, annual bonus, or an inheritance to make lump-sum payments toward the principal balance on your refinanced student loan. Again, the mindset here is to pay off that loan as fast and comfortably as you can.  

Negotiate Other Bills or Debts

Don’t stop while you’re on a roll. Once you secure better terms for your loan, find other ways to lower your bills. Use that financial savvy you picked up refinancing student loans, and negotiate with other debt collectors. This negotiation isn’t limited to loans—you can often get better rates with your cable and internet provider too.    You also likely have a dozen or more automatic monthly payments coming out of your checking account or linked to a credit card. Some banks or apps like
Truebill® and Trim® can help you find and cancel subscriptions that are unused or that you forgot you signed up for in the first place. What started as $60/month saved could possibly turn into $150/month after canceling unused subscriptions. 

Consolidate Credit Card Debt

You can consolidate loans, but did you know you can also consolidate credit card debt? If you have multiple cards that you owe money on, you can roll those cards into a single loan. Depending on your credit score and other factors, a consolidated loan can have lower interest or a lower, more achievable payment. You could also take out a personal loan with a lower rate to pay off cards directly with the credit card company.

Keep At It

Refinancing only sounds like the hard part. The real challenge comes after you sign the papers. Getting a new interest rate and a new loan term won’t save you money if you don’t make on-time payments and pay off your loan according to those new terms. Adult life has a lot more things on its to-do list. Set up automatic payments so you don’t risk forgetting. At the very least,   set monthly reminders in your calendar app to write a check or manually process your payment. 

Tell Your Friends

ELFI offers options for student loans and refinancing student loans. But did you know ELFI also has a referral program1 that can help you make (and save) even more money? Sign up and create a personalized referral link to share with friends or family. When someone refinances using your link, you’ll get a $400 referral bonus check and you and your friend will receive a $100 credit toward the principal balance of an Education Loan Finance loan. There’s no limit on the number of people you can refer. Learn more at elfi.com/referral-program-student-loan-refinance.     Note: Links to other websites are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site. SouthEast Bank does not control the content of these sites.   Terms and conditions apply. Subject to credit approval.   1Subject to credit approval. Program requirements apply. Limit one $400 cash bonus per referral. Offer available to those who are above the age of majority in their state of legal residence who refer new customers who refinance their education loans with Education Loan Finance. The new customer will receive a $100 principal reduction on the new loan within 6-8 weeks of loan disbursement. The referring party will be mailed a $400 cash bonus check within 6-8 weeks after both the loan has been disbursed, and the referring party has provided ELFI with a completed IRS form W-9. Taxes are the sole responsibility of each recipient. A new customer is an individual without an existing Education Loan Finance loan account and who has not held an Education Loan Finance loan account within the past 24 months. Additional terms and conditions apply.
Woman enjoying podcast outdoors on a park bench
2019-09-25
The Best Financial Websites & Podcasts

Navigating the world of personal finance is no easy task. Learning how to manage your money can be difficult, especially as a recent college graduate or young professional. You’re going through so many changes, and the whole world is at your feet, but you also sometimes feel the weight of the world on your shoulders. So don’t let your money become a guessing game. To help you out, we’ve gathered some of our favorite websites and podcasts you can turn to for financial advice.   

NerdWallet

Founded by Tim Chen in 2009, NerdWallet’s mission is to provide clarity for all of life's financial decisions. NerdWallet has grown from a credit cards comparison spreadsheet in 2009 to a go-to source for millions of people when it comes to making financial decisions. NerdWallet's tailored advice, content and tools ensure you're getting more from your money, covering the topics of credit cards, banking, investing, mortgages, loans, insurance, money and even travel.   

The Simple Dollar

Originally founded by a man on a journey to get out of debt, this website has flourished over the past eleven years and become a well-respected source of financial advice. The site provides practical tips for money management. The Simple Dollar’s mission is “providing well-researched, useful content that empowers our readers to make smart financial decisions.” Staying true to that mission, it serves millions of readers and has been featured in major publications, including Forbes, Business Insider, and TIME.   

Suze Orman

New York Times bestselling author & financial expert, Suze Orman, offers advice through a variety of channels, including books, live events, blogs, and podcasts. Her website includes a wide range of resources, from student loans to family and estate planning, and everything in between. More than 1 million followers glean knowledge from her every week on Twitter, where she shares financial tips and links to other work, such as her podcasts and blogs.  

Kiplinger

This Washington, D.C.-based publisher releases more than just personal finance tips. The company creates print and online publications featuring business and economic forecasts, as well. The monthly personal finance magazine shares advice for money management, investment, retirement, taxes, insurance, real estate, auto purchases, health care, travel, and paying for college. According to its website, Kiplinger Magazine was the first magazine that offered money management advice for Americans, so this organization has a long and proud history as a financial resource.  

Your Business, Your Wealth

This podcast is led and hosted by financial advisors with nearly two decades of experience. Its episodes cover a wide range of topics, from insurance, to taxes, to entrepreneurship, to debt, and beyond. In reviews, listeners rave about the way the hosts explain financial concepts that people can apply to their lives. Here’s just one review from an Apple Podcast Listener: The hosts also share inspiration on Twitter  

Radical Personal Finance

Radical Personal Finance aims to not just provide general financial information but to encourage listeners to take actionable steps to improve their finances and lifestyles. The show also strives to equip its listeners with enough information to be able to think critically and make sound decisions for themselves. According to its reviews, listeners enjoy the unique perspectives this podcast brings to the table.     While you may not always agree with everything the podcast hosts say or the blog editors write, listening to a more experienced point of view is always helpful. You can take some of the tips in these blogs and podcasts and immediately apply them to your personal finance routine. Make some of these a daily part of your routine and you’ll find you’re learning more about money than you ever dreamed.    We live in a time when our attention spans are being divided more and more thinly. We wanted to share our favorite podcasts and financing websites because they’re easy to consume on-the-go. There’s no need to set aside time in your busy schedule. These resources are available on the commute to work, during your lunch break or any time you want to sharpen your financial know-how.   If you’re interested in a private student loan or refinancing your student loans, our Personal Loan Advisors are available and would love to speak with you and answer any other questions you may have. Let’s connect.*  
  *Subject to credit approval. Terms and conditions apply.   NOTICE: Third Party Web Sites   Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.