The company is harnessing the buying power of Filipino Americans to bring down the purchase price of their cars.
Karbayan is a newly hatched auto brokerage and buying service licensed in California with a one-of-a-kind buying program designed to level-up the car buying experience, and the savings for its customers. It's program is a cross between a Buyers Club and a Car Buying Program. Karbayan pools its users’ collective buying power, enabling them to negotiate much lower prices (often below invoice) than are generally available to single-unit buyers.
The program is designed to give users access to group discounts and exclusive savings of up to $3,000 on popular brands like Toyota, Honda, Nissan, Mercedes, and Lexus.
"We leverage our long-standing relationships with select dealers, some we've been doing business with for almost two decades, to create a winning outcome for our Filipino clients", the company's founder said.
Users only need to register using an email address to pre-order a vehicle and get a quote, with no obligation to purchase. Under the program, registered users will have access to low, pre-negotiated fleet pricing, special finance programs, and professional auto buying/brokering services which come with additional services of a professional negotiator and optional vehicle delivery, to name a few. Other benefits include free consultations, credit clinics, and free deal reviews to prevent buyers from overpaying.
When used with its Car Buying or Brokering services, users can skip the lengthy research (going from website to website and dealer to dealer), eliminate the endless negotiations, forget the dealership stress we’ve all come to detest, and most important, never again wonder if they paid too much.
“By empowering members with critical services and information prior to purchase, Karbayan aims to create a better car buying experience from start to finish,” the company says.
Like us on Facebook (@KarbayanLA).
Using smartphone apps can really help you save at the gas pump – sometimes more than $0.20 per gallon. Several apps are not only available for the iPhone, but also for the Android, Blackberry, Windows phone, and others as well.
Apps Available for Multiple Smartphones:
In recent years, we've seen a rise in the number of people with negative equity in their cars. According to Edmunds.com, in 2012, only about 23 percent of cars traded in were worth less than what was owed on them. In the last quarter of 2017, 32.5 percent of traded-in vehicles had negative equity. It's also important to note that the amount of negative equity has also increased, up from $4,500 in 2015 to $5,100 in 2017.
How does negative equity happen? How to avoid it?
1. Depreciation. A new car loses 25% of its value in its first year. This means that after the first 12 months, you already owe more than the car is worth, offset only by the amount of down payment you made. Tip: make a more substantial down payment.
2. Paying too much for your car. Many car buyers are "payment shoppers" for whom a good deal is all about the monthly payment, without keeping an eye on the actual price of the vehicle. You may consider a payment to be affordable, but in reality you paid $2,000 to $4,000 more for the car over MSRP. Tip: Negotiate base on price and shoot for an amount less than MSRP.
3. Carry-overs of past negative equity. In California, we like to change cars every three years or so, and dealers/finance companies make it easy by giving us the option to carry over negative equity to the new car loan. This'll put the buyer in a state of negative equity from Day One! The bad news is, it'll only get larger as the car depreciates.
It plays out like this: You owe $18,000 but your car is worth $15,000 as a trade. You still owe the negative equity of $3,000. You have to pay that $3,000 out of pocket to make the trade happen, but lucky you, because the dealer gives you the option of carrying over that amount to the new loan. In effect, the lender will finance the $3,000 negative equity for approximately $50-$60 a month ( $20 per thousand financed) on top of your new car payments. Tip: Stick to your car until what you owe is equal to what it is worth, which could be a lot longer than you want, but you'll come out with a clean slate and start a new loan free of past balances. Also, paying the balance out of pocket, increasing the amount of your down payment, or selling our car to a private party.
I mentioned earlier that one way to offset depreciation is to make a larger down payment (20% or more is recommended). This will also achieve a couple of things: 1) You"ll get a better (lower) interest rate, 2) you'll have lower monthly payments, and 3) you could pay off the car sooner.
Another way is to buy or lease a vehicle with a large rebate. Nissan offered a $10,000 rebate for their Titan XD during the end-of-model-year clearance last year. The Ford Focus came with a rebate of up to $5,500, as did Volvo's XC60 and X90. These makes and models may not have made your top three list, but consider what wonders their rebates could do for your overall situation.
Final Word of Advice: Try not to get into an endless cycle of negative equity carry-overs. If you're already in it, make a plan to get out.
It costs money to borrow money. The price tag for borrowing money over time is known as the APR (annual percentage rate), also known as the interest rate, finance charge, or the cost of money.
Unlike the price of a car which is negotiated with a dealer regardless of credit, the APR is determined by a lender based on your financial history -- your repayment record, the amount of debt you currently have, your down payment (if any), the term of the loan (how long it will take you to repay the lender), and in some instances, the vehicle itself, whether the manufacturer is offering low APRs to sell more of certain models.
Your Credit Score
Most people know that the higher the credit score, the lower the interest rate you'll get. That works in the opposite direction the lower the credit score (the higher the APR). While the APR can be negotiated, your negotiating power will depend on your score.
To give you an idea what APRs correspond to FICO* scores, here is a chart from FICO* of the national averages as of October of 2017. The average in your state may vary.
Credit Srore Range APR
720 - 850 3.719%
690 - 719 5.071%
660 - 689 7.139%
620 - 659 9.882%
590 - 619 14.135%
500 - 589 15.297%
A good DTI (Debt-to-Income) ration can lower your APR. Lenders use DTIs to estimate your ability to repay the loan. Your DTI is simply your monthly debt obligations (including loans, utilities, rent, credit cards, etc) divided by your monthly income. If you currently have very little left at the end of the month after paying these obligations, a new auto loan could bring you to the tipping point -- a risk that a lender protects against by charging a higher interest rate. Some ways to improve your DTI would be to pay off some credit cards or pay down some loans.
Your Down Payment
Making a sizable down payment on your auto loan can also get you a lower APR. By putting more down, you become a lower-risk borrower because you have your own money in the car and therefore less likely to default. You are also less likely to owe more on the car than it's worth.
The Loan Term
These days it is quite common for dealers and lenders to offer long term car loans up to 72 months ( 6 years) or more. What most people don't realize is, long term financing will cost more than short term financing. The reason: 1) It takes longer for the lender to be paid back its principal, and 2) You have more time to default (a lot can happen in 5-6 years!). A short loan term means that a lender gets its principal back quicker. For that, you'll be rewarded with a lower APR.
Buying a new car will get you a better interest rate that a used vehicle. A lender can easily determine the value of a new car, but a used car's value will vary widely based on mileage, age, wear-and-tear, and maintenance. A used car is likely to be a riskier loan, so the lender compensates by charging a higher interest rate.
Also, manufacturers frequently offer low APRs to incentivize buyers to take home certain models as part of their sales push for the month, the quarter, or the year's end.
There is no such thing as equal opportunity lending! Just because interest rates are at an all-time low, doesn't mean you'll get the lowest, or even a low rate. Remember that lenders will work with you, but only within the parameters set forth by their analytics based on your payment record, income, debt load, and credit score.
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