Category Archives: Life Expenses

Prescreened Credit and Insurance Offers

By Barbara Parrott McGinity, LMSW

If you are like me, you get lots of different, unsolicited offers in the mail nearly every day. New credit card offers, loans, insurance, and they often say you are “prequalified” and have been “pre-screened.” The following is information is from the Federal Trade Commission about what these offers mean and how you stop the receiving them in the mail.
What is a “prescreened” offer of credit?
Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer. Prescreened offers — sometimes called “preapproved” offers — are based on information in your credit report that indicates you meet criteria set by the company.

How does prescreening work?
Prescreening works in one of two ways:
• a creditor or insurer establishes criteria, like a minimum credit score, and asks a consumer reporting company for a list of people in the company’s database who meet the criteria; or
• a creditor or insurer provides a list of potential customers to a consumer reporting company and asks the company to identify people on the list who meet certain criteria.

Can I reduce the number of unsolicited credit and insurance offers I get?
If you decide that you don’t want to receive prescreened offers, you have two choices: You can opt out of receiving them for five years or opt out of receiving them permanently.
• To opt out for five years: Call toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visit http://www.optoutprescreen.com. The phone number and website are operated by the major consumer reporting companies.
• To opt out permanently: Begin the permanent Opt-Out process online at http://www.optoutprescreen.com. To complete your request, you must return the signed Permanent Opt-Out Election form, which will be provided after you initiate your online request.
When you call or visit the website, you’ll be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential and will be used only to process your request to opt out.
If you don’t have access to the Internet, you may send a written request to permanently opt out to each of the major consumer reporting companies listed here:
Experian, Opt Out, P.O. Box 919, Allen, TX 75013
TransUnion, Name Removal Option, P.O. Box 505, Woodlyn, PA 19094
Equifax, Inc., Options, P.O. Box 740123, Atlanta, GA 30374-0123
Innovis Consumer Assistance, P.O. Box 495,Pittsburgh, PA 15230-0495
Make sure your request includes your home telephone number, name, Social Security number, and date of birth.

Why would someone opt out — or not?
Some people prefer not to receive these kinds of offers in the mail, especially if they are not in the market for a new credit card or insurance policy. This reduces the mailbox clutter. But please remember, some companies send offers that are not based on prescreening, and your federal opt-out right will NOT stop those kinds of solicitations.

If I decide to opt out, how long will it be before I stop getting prescreened offers?
Requests to opt out are processed within five days, but it may take up to 60 days before you stop receiving prescreened offers.

Will calling 1-888-5-OPTOUT or visiting http://www.optoutprescreen.com stop all unsolicited offers of credit and insurance?
Calling the opt-out line or visiting the website will stop the prescreened solicitations that are based on lists from the major consumer reporting companies. You may continue to get solicitations for credit and insurance based on lists from other sources. For example, opting out won’t end solicitations from local merchants, religious and charitable associations, professional and alumni associations, and companies with which you already conduct business. To stop mail from groups like these — as well as mail addressed to “occupant” or “resident” — you must contact each source directly.

What other opt-out programs should I know about?
The Direct Marketing Association’s (DMA) Mail Preference Service (MPS) lets you opt out of receiving unsolicited commercial mail from many national companies for five years. When you register with this service, your name will be put on a “delete” file and made available to direct-mail marketers and organizations. This will reduce most of your unsolicited mail. However, your registration will not stop mailings from organizations that do not use the DMA’s Mail Preference Service. To register with DMA’s Mail Preference Service, go towww.dmachoice.org, or mail your request with a $1 processing fee to:
DMAchoice
Direct Marketing Association
P.O. Box 643
Carmel, NY 10512

The DMA also has an Email Preference Service (eMPS) to help you reduce unsolicited commercial emails. To opt out of receiving unsolicited commercial email from DMA members, visit http://www.dmachoice.org. Registration is free and good for six years.

Some people have told me they “just throw” the offers away and do not want to take the time to “opt out.” Just remember, these offers can be stolen by mail box thieves and they can then steal your offer and your identity.

On a personal note, while I have not taken this step because I like to see what is coming to people, my husband did register. He seldom gets any offers, but I do.

FTC Warns about Auto Loan Modification Scams

This information can be found at http://www.ftc.gov

Chances are you rely on your car or truck to get you where you need to go. But if you’re late with your car payments, your vehicle could be taken away from you.

If you’re having trouble paying your car loan and you’re worried about having your vehicle repossessed, you may think that doing business with companies that claim they can reduce your monthly car loan or lease payment can help you avoid repossession. These companies might charge fees of several hundred dollars up front, tout their relationships with consumers’ lenders, and bolster their claims to be able to significantly lower your monthly payments with glowing testimonials from “satisfied” customers. Some say that if they can’t make a deal with your lender, they’ll refund your money.

The promises may sound like a way to get out from under. But the Federal Trade Commission (FTC), the nation’s consumer protection agency, says it’s smooth talk by scam artists who are out to take your money and provide nothing in return. In fact, the FTC recently sued companies that made claims like these, but failed to deliver the auto loan modifications they promised or honor the refund policies they “guaranteed.” What’s more, in many instances, the companies never even contacted any lenders.

The victims of these auto loan modification scams tell the same story: After paying a fee for the promise of a loan modification, nothing was done to secure the results that were promised. The scam artists often compounded the problem by telling their clients to stop making their car payments while the companies claimed to be in negotiations with lenders. Some victims learned that the companies hadn’t done anything only after their lender contacted them about repossessing their vehicle. In some instances, the scam artists demanded additional fees to continue working on their client’s cases.

These scams may sound familiar. Some scam artists have taken a page from the mortgage loan modification fraud playbook, moving from trying to dupe homeowners in distress to preying on drivers who can’t make their car payments. The fraud is the same: people pay in advance for a service that is either never performed, or not performed as promised.

If You’re Behind On Your Car Payments

If you are having trouble making your car payments, contact your lender directly to discuss your options as early as you can. The longer you wait to call, the fewer options you will have. Typical auto loan modifications involve either deferring missed payments to the end of the loan or extending the loan term to reduce monthly payments. That choice actually increases the total amount you pay in interest, even with a lower interest rate. Creditors rarely reduce the amount of the principal or the interest rate in an auto loan modification.

If Your Vehicle Is Repossessed

If you don’t – or can’t – make timely payments on your vehicle, your creditor may have the right to repossess your car without going to court or telling you in advance. Your creditor also may be able to sell your contract to a third party, called an assignee, who may have the same right to seize your car as the original creditor.

Reporting Fraud

If there’s a possibility that you’ve been ripped off by an auto loan modification fraudster, file a complaint with the Federal Trade Commission and your state Attorney General.

Car Buying: Wheeling & Dealing

So, you’re looking for a new ride and asking yourself:
• New or used?
• Car or truck?
• Options, features?
Whatever you decide, doing your homework FIRST is a must before you go and shell out big bucks. You want to compare the different products and prices out on the market.

NEW vs. USED
According to Autotrader.com, “For most people, we think it makes more sense to buy used, but there are some exceptions. Here are four questions to help you be a smarter consumer and navigate the new-used decision-making process:

Do you have a down payment or a trade-in with equity?
If your credit is good, you may have less problem buying new with little or no down payment than buying used. These are typically in the form of rebates, cash incentives and discounted financing. Financing a used car will almost always require money down, whether in cash or a trade-in with equity.

Is there a good reason you, rather than someone else, should take the huge new-car depreciation hit?
Because a new car loses between 20-30% of its value the moment it rolls off the dealer’s lot, buying used can be smarter. Some cars can depreciate up to 50% in the first three years.

Depreciation has little effect on owners who drive a car until the wheels fall off. After more than a decade or two, that old beater won’t be worth much in terms of trade-in or resale value any way.

Can you afford to maintain and repair a used car?
No matter how well a car has been cared for, at 30,000 plus miles, some bits and parts are going to naturally wear out; consequently, maintenance and replacement costs will be higher for a used car than a new one. Unlike depreciation, repairs and maintenance are hard costs that must be addressed as they arise. These are costs you will need to budget in. Do you have the discipline to do that?

If you buy a nearly new used car, you may inherit some portion of the new-car warranty providing some protection for a few months or even a couple of years. Many car companies now provide powertrain warranties for five, six or even ten years. But be sure to check the automaker’s rules on transferring the warranty before you buy.

Can you cope with the time a used car spends in the shop?
Not only does a used car cost more to keep operating, but it will likely spend more time in the shop. It may only be a day here and there, but could be a week or more for bigger repairs.

On average, new cars spend less time in the shop. Moreover some manufacturers or dealers offer loaner cars during routine maintenance visits while a car is under warranty. [Keep in mind new vehicles have fewer repair problems, so paying extra for an extended warranty is usually unnecessary.]

Once you answer these questions for yourself, you will figure out whether it makes more sense for you to buy a new or used car.”

OTHER CONSIDERATIONS
A used vehicle will usually cost less and you may be able to buy it without financing which would save you in interest charges. And, if you pay cash for the vehicle, you can get by with liability insurance; however, your vehicle will not be covered against damage, loss or theft. If you do finance it, the lender will require you to purchase full coverage insurance (expensive) which drives up the cost.

But, responsibly managing your loan can help you to build your credit history which will help you qualify for other types of credit.

STEP ONE: Needs vs. Wants
Determine what you really need then go on to what you want and prioritize those extra perks.

Time needed: Consider how long you need the vehicle. Are you planning to use this vehicle for a short period, say a year or two, or is this something you plan to use for a long time?

Purpose: Is this vehicle just going to be used locally, to and from school and work? How far is that? Or, are you planning to drive cross-country to visit family and friends on a regular basis?

Type, size, style, features: Do you need a car or truck? 2-door or 4-door? Two-seater or minivan? Identify the features you need vs. what you want – in Houston, A/C is a must but heated seats probably not so much.

Money: Carefully evaluate how much you can spend. Be realistic about what you can afford to pay monthly on your vehicle (don’t forget insurance). Include fuel type and consumption – you don’t want to get stuck with vehicle that only uses premium and gets 8 miles a gallon! And remember, the cost of repairing foreign or antique cars could be high.

Model: Once you have decided on a type of vehicle, you should check out different makes, models (Ford vs. Toyota vs. Nissan vs. Chevy, etc.) and features included.
Some websites like MSN Autos (see below) will allow you to “build” your vehicle using the dealers’ cost for options so you can get a good estimate of what you will pay.

Reviews: Look up information ratings and recalls.
– Natl. Highway Safety & Transportation Agency: http://www.nhtsa.dot.gov
– Edmunds: http://www.edmunds.com
– Kelly Blue Book: http://www.kbb.com
– MSN Autos: http://www.autos.msn.com

STEP TWO: Where to buy?
If you’re not rolling in the dough, you may want to consider a used car. But, where can you find quality used vehicles?

Used Car Superstores: these offer a high-tech, no-haggle way of buying a used car and some will have limited warranties and possibly financing options. BUT, used car financing is usually pretty pricy because of high interest rates.

Car Rental Agencies: often they will offer 1 or 2-year old vehicles with less than 25,000 miles on them. Good records are kept on these vehicles and it is possible to get a limited warranty. Wear and tear varies and can be heavy due to the number of different drivers.

Banks & Loan Companies: in order to collect on unpaid loans, these companies sell repossessed vehicles. The type of vehicles and their condition varies greatly, but it is possible to get a good price.

Private Owners: individuals often sell their vehicles in classified ads. It is possible to get a well-maintained car cheaper than you could at the dealership. If you go to a private owner make sure to get proof of legal ownership before you hand over any money and try to get the maintenance and repair records, too.

Dealerships: Many car dealerships offer “Certified” used vehicles which usually means it is a late model vehicle, usually with low mileage, that passed a dealer inspection. Prices are usually higher because these cars many times come with a limited warranty and can be financed. Be aware, though, used car loans generally charge the highest interest rates.

Auctions: Government, private, and online vehicle auctions are becoming increasingly popular. Some common things to remember about buying vehicles from auctions are:
a. you will need funds for on-the-spot payment,
b. getting a warranty is rare, and
c. it is unlikely that you will be able to take a car to a mechanic for inspection before you purchase it and you may not even get a test drive!

STEP THREE: Check it out!
It is always wise to carefully inspect a used vehicle before any money changes hands.

History: Several companies provide a report of a vehicle’s repair history using the vehicle identification number (VIN) – just go to a search engine like Yahoo or Google and type in “car history.” You can see if the car is a lemon, a salvaged vehicle or if it has been in a major accident BUT some issues may still go undetected. You should also get a copy of the car’s service record, which can help predict whether the car is likely to perform well for another few years.

Exterior: Walk around and check for rust, blisters or mismatched paint, lights, loose bumpers, misaligned body panels. Make sure all the turn signals and headlights are in good working order. Open and close the doors, windows and trunk– if they don’t close tightly, it could mean the car was in an accident. While walking around, pop the trunk and if there’s a spare tire, remove it – if there is rust in the wheel well, chances are it has been underwater (not good).

Interior: Ensure all the following are in good working order:
• Seat belts – try each one out to make sure they buckle and unbuckle properly.
• A/C, heating, radio, mirrors, hand brake
When checking the upholstery, see if there are any horizontal water marks on seat backs – if so, it is another indication the vehicle may have been flooded.

Inspection: Have a mechanic inspect the vehicle. Take it to a reliable repair shop or auto diagnostic center and have the mechanic give it a once-over. You will have to pay for this service, but the money you invest up front may save you many more dollars down the road. Ask for a written estimate of the costs to repair any problems the mechanic finds, and use that estimate as a bargaining chip when you make your offer.

Make sure the vehicle has a current state inspection sticker otherwise you’re responsible for getting that before you can legally hit the road.

STEP FOUR: Before you sign on the dotted line…
• Take your time to read and understand the entire written agreement, it is legal and binding once you’ve signed it. Ask questions and don’t sign unless you are satisfied with the answers.
• Be sure all blank spaces are filled in, any of the salesperson’s verbal promises are included, and any type of warranty is clearly spelled out.
• If you are required to make a deposit, ask whether it is refundable, and under what circumstances, and make sure the information is also included in the contract.
• Be sure to get a signed statement verifying the mileage at the time of sale. Most state laws require dealers of used cars to provide the buyer with this information in writing.
• Before you buy, know what safety requirements are mandatory in Texas. Older vehicles may not have airbags, child safety seats, seat belts, anti-lock brakes or security systems.
• In Texas, unless it’s spelled out in writing, the vehicle is sold “As Is” meaning any verbal promises or warranties do not have to be honored.
• Also, in Texas, the “Lemon Law” helps consumers to get NEW vehicles repaired or replaced if it has a recurring problem. If you buy a used car, the Lemon Law doesn’t apply.

“WOULD I LIE TO YOU?”
Whether you buy new or used, look out for dishonest salespeople who will do their best to squeeze every last penny out of you. Here are some of typical come-on lines they may try to use:

• “We’re losing our shirt on this deal!” You should have done your homework online and know EXACTLY what they’re making on the deal.
• “The website prices are wrong.” Again, doing your research ahead of time will tell you what you should expect.
• “It’s not exactly what you want but…” They may have something on the lot that’s very close to what you want but it probably includes a lot of extras you didn’t bargain for.
• “This car won’t be here tomorrow…” Then, they’ll try to scare you by giving you the old “now or never” routine – always take ample time to consider any offer.

Use the same common sense you would when you’re making any kind of large purchase and always check out the dealer with the BBB: http://www.bbb.org

For more information, check out our “Resources”