When considering taking on the debt of a car loan, you should ask yourself how much you can really afford, and if it is really necessary to have a new car. You can get a used car loan for less than a new one, and although the interest rate on the auto loan will be slightly higher than that on a new car loan, you will still be saving yourself money.You can get a used car loan through a bank, a credit union, the dealership, or any other traditional auto loan companies. Most places that offer new car loans will also offer used car loans. You can even shop online to get the best deal on a auto loan without leaving your home.It has gotten so expensive lately that more and more people are turning to the used auto loan market, as this way they can get a car that is new for them, without putting themselves in debt over their heads. It is also smarter to let someone else take the brunt of the depreciation of the car, so that when you take it over it has already lost the majority of money that it is going to.There are more and more cars out there to choose from as well. Those who are a little more well off will find themselves trading in cars to get something new, much sooner than most of us would. There are also those that went for the new car loan and got in over their heads and their cars ended up repossessed. It has become much easier for someone to get a used car loan for a car that has barely been driven.

As a rule, and has been reported, many Latinos have problems when they come to this country in understanding how car loans, or even mortgages work. Some of it is due to the language barrier, some of it is that they don�t understand our money system. However, some people have taken advantage of their ignorance and have made an already stressful situation for them even worse.Enter �Universidad Financiera� which was started by a Hispanic to try and educate those coming to this country so that they don�t get taken advantage of when applying for a car loan. The site that Daniel Marcos created is called and he is in the process of collecting one of the largest gatherings of personal finance articles in Spanish so that people can learn to understand.The site gives information on how to apply for car loans, as well as how to manage finances. Marcos believes that credit ratings should be considered something that helps individuals get ahead in life, not something that can be an obstacle to those that do not understand. Eventually, he will be offering the articles in English as well.The university will tell them what the right questions are to ask when applying for a car loan or mortgage, how to handle things using a ITIN, how to handle any credit they may currently have, and other topics that they will find useful. They will also offer finance products catering to the Hispanic community, including auto loans, credit cards, student loans, etc.

Let’s say you went out and bought a new or used car, and now you are paying fairly high interest rates on your auto loan for whatever reason. A good way to bring down your auto loan payment is to refinance it. Refinancing your auto loan can substantially help you in reducing your monthly payment. Sometimes you may have had bad credit when you first applied for the auto loan, or perhaps you didn�t know what interest rate you were paying for the auto loan � this happens a lot. Or maybe you purchased the used car when they were running some sort of special, and now the deals that are out there for auto loans are even better than what you have now. No matter what your situation, refinancing can help.You can go online or to a bank, it depends on how you want to try and find the new auto loan. Looking for the auto loan online will be substantially easier, if not only for the fact that you can do it as soon as you finish reading this article. Get together your personal information such as social security number, address, driver’s license, etc. If you have a pretty good credit rating and a steady source of income, you will be approved in no time.For those of you who had bad credit to begin with, paying on your current auto loan for a year or so will substantially improve your credit score. You apply on line, and they send you a check. Pretty simple. You will not be able, as a rule, to get more money than what the car is worth, so keep that in mind if you are upside down in your current auto loan. Do your research and find the auto loan that is best for you, and offers the best terms and the best interest rate  for they are not the same thing.

The executive director of Columbia University’s financial aid department has been suspended for allegedly profiting from stock options he acquired from a loan company his department recommended to students as a “preferred lender,” according to officials at the office of the Attorney General for New York. David Charlow, the senior associate dean for student affairs at Columbia University, allegedly netted $100,000 by selling 7,500 stock options and 2,500 stock warrants granted to him by the Education Lending Group, officials said. The Education Lending Group subsidiary, Student Loan Xpress, is one of Columbia’s preferred lenders for student loans.   It was selected as a lender in the same year that Mr. Charlow received his stock options, according to the attorney general’s office and Security and Exchange Commission filings that were made in conjunction with the company’s public offering “The AG’s office is investigating potentially improper stock grants by certain student loan companies to college financial aid officers as part of its widening investigation into conflicts of interest in the college loan industry., the AG’s office issued subpoenas to Student Loan Xpress Inc. and CIT Group Inc. in connection with this investigation. the Attorney General issued a subpoena to Columbia University,” a spokesperson for the attorney general’s office said. In an e-mail response to ABC News, Robert Hornsby, the director of media relations for Columbia University, said, “As a result of the attention generated by the Attorney General’s investigation, we learned that untila financial aid administrator at Columbia College and the Fu Foundation School of Engineering and Applied Science had a financial interest in one of our preferred lenders.  We promptly began an investigation, placed the officer on leave pending a full review and notified the Attorney General. Columbia did not receive the initial letters of inquiry sent by the Attorney General in early February. The University Office of Student Services is reviewing all the recommendations contained in the Attorney General’s March letter to New York educational institutions and we fully support the Code of Conduct proposed by the Attorney General. Pending the completion of the Attorney General’s and our investigations, we have no further comment on this matter at this time.”

As financial aid award letters arrive in the mailboxes of next years’ college freshmen, two top-tiered colleges have agreed to make financial settlements as a result of a law enforcement probe into practices, which, authorities say, enriched schools while deceiving students into thinking they got the best interest rates for their student loans.New York University (NYU), University of Pennsylvania (Penn) and four other colleges have reached a settlement with New York Attorney General Andrew Cuomo as a result of Cuomo’s probe into the so-called “preferred lender” lists, the attorney general’s office said. According to Cuomo, those lists give the impression they include lenders that will give students the best rates when in fact the lists often are made up by lenders that offer the best “sweeteners” — cash and other incentives — to universities and their personnel.NYU agreed to return $1.4 million to students while Penn agreed to $1.6 million. As for the other four colleges, who agreed to settle rather than face possible litigation, Syracuse University agreed to return $164,084, St. John’s University $80,553, Fordham University $13,840 and Long Island University $2,435.St. Lawrence University also signed a settlement with no money attached to it.All six colleges also agreed to abide by a new “College Code of Conduct,” which prohibits revenue sharing and the acceptance of more than nominal gifts and tips by college employees. It also requires the colleges to clearly explain their preferred lender criteria and prohibits lender personnel from staffing a financial aid office.

The country’s largest mortgage finance company, HDFC, may reduce lending rates if the central bank does not tighten rates or resort to a monetary squeeze by hiking the cash reserve ratio (CRR). The company has already seen a decline in borrowing costs in July and is waiting to see whether the decline in rates will be sustained before reducing lending rates. Although interest rates have gone up during the first quarter of 2006-07, liquidity generated by forex inflows has helped bring down rates in the money markets. Towards July, interest rates have eased and borrowing costs have come down for institutional borrowers. Some banks, which had hiked their lending rates in the fourth quarter of last year, said they would bring down home loan rates. “We have seen a reduction in borrowing costs in July. If the decline in rates is sustained, we may bring down lending rates,” HDFC chairman Deepak Parekh said. He, however, added that there was a possibility of a hike in CRR by the Reserve Bank of India this month-end to absorb surplus liquidity. If this happens, rates may not come down, he said. HDFC’s profits are expected to see substantial upside in the second quarter on account of exceptional items. HDFC would gain close to Rs 311 crore from the sale of its stake in Intelenet to Blackstone. In the second quarter, HDFC will also finalise a non-life partner to whom it will sell 74% stake in HDFC Chubb General Insurance at a premium. The second quarter would also see Rs 3,114 crore of capital coming in following the preferential allotment of equity shares to Carlyle Group through CMP Asia and Citigroup Strategic Holdings Mauritius.

Public sector lender Corporation Bank has reduced interest rates on floating home loan rates by a quarter per cent for loans with a tenure of five to 15 years. For housing loan with limits up to and inclusive of Rs 20 lakhs, the interest rate is reduced from 10.50 per cent per annum to 10.25 per cent per annum, A Mohan Rao, General Manager, said in a statement here today. The interest rates on loans with limits and above Rs 20 lakhs stands revised from 11.50 per cent per annum to 11.25 per cent per annum, he said. The revision is applicable to the floating rate Corp Home Loans to be initially disbursed on or after July 23, he said. Corporation Bank is the first bank to revise its interest rates on housing loan, he said.

A Common question that is asked around the coffee machine these days is — should I prepay my home loan? The trigger for this question is quite obvious. Most home loan borrowers in the last five years have taken floating rate loans and banks have increased interest rates on these loans three to four times in the last one year itself. Many, who thought they were fortunate to have got a floating rate loan at 7% in 2003, are now finding that their sense of ‘luck’ was misplaced. Banks are now charging them around 11.50% interest rate. If the loan was for Rs 10 lakh and the original tenure of the loan was 20 years, the increased rates would change the EMI from Rs 7,753 to more than Rs 10,000, or if one were to keep the EMI amount same, then the tenure would increase by more than 10 years. Typically, banks would let the tenure increase to a maximum of 25 to 30 years.

What are your options?

As a rule, it is always advisable to pre-pay any loan, including home loan, if you have spare cash. The only exception to this would be if the borrower has taken fixed loan at a rate lower than the prevailing interest rates, or if the borrower enjoys substantial additional tax benefit in respect of principal under Section 80 C. One needs to work out the pros and cons under these exceptions before taking a final decision. A common misunderstanding that sometimes trips a prepayment decision is the fact that the principal amount outstanding has not fallen substantially, even after making EMI payments for three to four years. In the earlier example of Rs 10 lakh, if the borrower decides to prepay at the end of fourth year, the outstanding principal is still nearly Rs 9 lakh. This is because the borrower is paying back a higher proportion of interest in the initial EMIs. The interest component could be anywhere near 80% in the initial months. Interest component comes down and principal component increases as a proportion of the EMI as the loan tenure matures. This often leads to a common mistake of assuming that it is better not to prepay, say, after half way through the loan tenure, because the interest component is low now. But the fact is that the interest outgo as a percentage (which is what the interest rate is) on outstanding principal is the same whether it is after the 24th month or after the 120th month. Since interest rate on home loans is calculated using reducing balance method, the interest rate is always calculated on the remaining outstanding principal. As the remaining outstanding principal will be lower after 120 months compared to after 24 months, the interest amount which needs to be apportioned across the remaining tenure would also be lower, resulting in lower interest amount component. But the interest rate on the remaining principal would be the same at both the time period. So the decision to repay one’s home loan should not be driven by the stage of your loan tenure but by prevailing interest rate and availability of cash with you.

The National Housing Bank (NHB) is keeping a close watch on the possible defaults that could take place due to rise in equated monthly instalments (EMIs) on home loan borrowers. Though there is not much concern on housing finance companies, but in the case of housing loans provided by banks. Industry estimates suggest that about 85-90% of home loan borrowers have taken loans on a floating-rate basis. Lenders like Housing Development Finance Corporation (HDFC), ICICI Bank and State Bank of India (SBI) also have about 90% of their existing home loan customers on the floating-rate basis. Last year, housing finance regulator NHB released a study projecting that 93.5% of the home loans borrowers had used the floating-rate mechanism. He said that the regulator is currently studying the data to assess the impact on the hike in EMIs on defaults. . Similarly, the government, on its part, has been keen that the impact of high interest rates should somehow be softened on small-and-medium borrowers. Union finance minister P Chidambaram had asked chief executives of public sector banks to protect the interests of borrowers in the Rs 8-10-lakh category to the extent possible. The last fiscal witnessed a steep surge in interest rates. For example, in case of HDFC, floating rates for home loans had gone up to 11.25% from 8.5% in the beginning of FY07. Officials say that various housing finance companies say that in case a borrower is well below the retirement age, the loan period gets extended while the EMI remains constant. However, customers may well opt for a higher EMI without changing the loan tenure. A customer may also prepay part of the loan to keep the EMI and tenure unchanged. However, there is an increasing fear of defaults in case the tenors are extended for customers. Some of the banks are reluctant to increase the repayment period beyond 20 years. Every 0.5 percentage point rise in home loan rates translates into a higher EMI of around Rs 32 per one lakh for a 20-year loan. Likewise, customers would need to pay an additional Rs 30 per one lakh for a 15-year loan, Rs 28 per lakh for a 10-year loan and Rs 26 per lakh for a 5-year loan.

Congress is poised to make big changes to the government programs tapped by millions of students to pay for college. The biggest of these for students: a cap on what low-income borrowers have to pay back each month on their federal student loans. A measure passed by the Senate last week and one by the House earlier this month come in response to growing concerns about student debt. About two in three recent college graduates have loan debt, and over the past decade, the average amount has grown 50 percent faster than inflation.Meanwhile, just over the last two years interest rates have risen enough to more than double the total interest some borrowers will eventually have to repay on their loans.But the moves in Congress also reflect a more nuanced picture of student borrowing. The median debt for students pursuing a bachelor’s degree is about $20,000. That’s a lot, but it’s a level experts consider manageable for most students, considering how much more college graduates eventually earn.The real concern is the growing number of students piling up significantly higher debts than the average. That trend has an indirect cost even for non-borrowers: discouraged by high monthly payments, talented people decide not to pursue careers in relatively low-paying but critical public service jobs like teaching.The idea of limiting monthly payments for those with low incomes dates back a half-century to conservative economist Milton Friedman. Other countries like the United Kingdom and Australia have adopted it. But in the U.S., it’s gained traction only in part of fractured network of federal aid programs, notably direct lending.There are also scattered programs of outright loan forgiveness, targeting groups such as teachers and child-care providers in low-income communities.Now, the Democrat-controlled Congress is on the verge of significantly expanding the number of student borrowers who could get a break. Congress has endorsed expanding loan repayment to anyone under an income threshold, not just those who borrowed under the government’s direct lending program. The change would expand the option to participants in the full range of federal loan programs, including about 10 million undergraduates with Stafford loans.