If you’re buying a house and are in a fortunate position to receive a gift to go toward your down payment, you’ll want to understand how a mortgage lender views that money.

The good news is that you’ll typically be able to use gifts for a down payment as long as the funds meet certain requirements. Those requirements include being accompanied by a formal gift letter for the mortgage to document the funds or equity.

The letter needs to indicate that the money is a gift and not actually a loan you must pay back. Plus, it must indicate that you can prove where the money is coming from.

Let’s dig into what a gift letter for a mortgage is and what the letter should include. We’ll also cover a few differences between cash gifts and gifts of equity and the potential tax implications of putting a gift toward the purchase of a new home.

• What a gift letter and why is it required?
• How do you write a mortgage gift letter?
• Do you pay taxes on mortgage gifts you receive?
• What is a gift of equity?

What is a gift letter and why is it required?

A gift letter for a mortgage is a written document that clearly indicates that you’re receiving a gift for a down payment of your home, or a gift of equity. It’s one of the documents you’ll need (where applicable) when applying for a mortgage.

A gift letter helps prove that the money or equity isn’t actually a loan in disguise.

Funds that come from gifts may be used to pay for all or part of a down payment on a home and — depending on the loan — the closing costs.

Depending on the loan, there are rules that may govern who can provide these gifts of cash or equity. According to guidelines from the U.S. Department of Housing and Urban Development, gift funds of cash for an FHA loan can come from a family member, your employer, a labor union, a charitable organization or a close friend.

For Fannie Mae–backed mortgages, gift funds can only come from certain relatives or domestic partners. For Freddie Mac–backed loans, gift funds can come from either a relative or unrelated person as long as they meet the eligibility requirements.

For a VA loan or USDA loan, a gift can come from anyone as long as they’re not affiliated with the real estate agent, developer, builder or any other party who might have a financial interest in the transaction.

If you’re a potential homeowner, a down payment assistance program might also be available from a governmental agency or public program that provides financial assistance to help with this major purchase.

How do you write a mortgage gift letter?

When writing a gift letter, you’ll need to have it signed and dated by you, the borrower, and the person or party offering the gift for your mortgage.

Plus, it needs to include the following information:

• The gifter’s name, physical address and telephone number
• The gifter’s relationship to the borrower
• The dollar amount of the gift
• The date the funds were transferred
• A statement that clearly expresses that no repayment is necessary nor required

Plus, your lender might require documentation showing the funds were indeed sent and received. Different programs may have different requirements.

Do you pay taxes on mortgage gifts you receive?

If someone gifts you down payment funds, they might owe a federal gift tax. The donor typically pays a gift tax, not the recipient.

But there’s a yearly amount that’s excluded from reporting a gift tax. In 2023, the IRS capped this exclusion at $17,000 per recipient.

Tax laws are always subject to change, so consider consulting a tax professional or the IRS official website to learn what the rules are for the current tax year.

What is a gift of equity?

A gift of equity is different than a cash gift. A gift of equity is what you get when someone sells you a house for less than its current appraised value as a gift.

For example, say a house is worth $350,000, but it’s sold to you for $300,000. In that case, the gift of equity is $50,000.

When you draft a gift letter in such cases, you may be required to provide the following details in order for the letter itself to be acceptable to the lender:

• Donor name and contact information
• Donor relationship to the buyer
• Cash value of the equity
• A “no repayment required” statement from the donor
• Donor signature

Your lender may require additional documentation. Before you draft the letter, ask what other information may be needed.

Pros

• Potential to get funds quickly
• Applicants with less-than-perfect credit may qualify

Cons

• For most states, CreditNinja offers little upfront info on costs, except that they’re “high”
• Nonrefundable origination fees typically apply and can be extremely high, in some cases making up most of the cost of the loan
• Info about qualification and application process is vague

What you need to know about a CreditNinja personal loan

CreditNinja is a Chicago-based online lender offering high-cost personal loans — in some cases, you could end up paying double (or more) the amount you borrow, no matter how quickly you pay off the loan.

These fixed-rate, unsecured loans come in amounts up to $5,000 — but the minimum and maximum available to you will depend in part on the state you live in.

APRs are ‘high’

CreditNinja warns that its APRs are “high,” but you’ll have to dig through the website to get any other crumbs of info on rates and fees.

In CreditNinja’s state disclosures, linked at the bottom of its website, you can select from a list of states on a dropdown list to try to find specifics on costs. Where info is provided for certain states, APRs are well into triple digits.

It makes sense that CreditNinja loans can’t be offered to members of the military. For the protection of active service members, the Military Lending Act doesn’t allow lenders to offer loans with APRs above 36% to military borrowers.

Funds may be quickly available

It’s possible to get funds from your CreditNinja loan within the same business day or the following day after approval — a big help if you’re in a financial pinch and need cash quickly. But a number of factors can delay your funding, and depending on your bank, there may be a wait before you can access your cash.

Online application

You can apply using CreditNinja’s online application and check eligibility in minutes. This can give you an idea of how much you might qualify for, as well as the loan terms and rates.

You’ll need to give your name, address, Social Security number, date of birth and other identifying info. CreditNinja’s site says it will then do a soft credit check to verify your eligibility for a loan, meaning it won’t affect your credit scores.

There’s no further info on CreditNinja’s website about the next part of the process, which can typically include a hard credit inquiry to verify your information — followed by a final loan offer that may have different terms than you saw based on your initial application.

Not available in all states

CreditNinja’s personal loans are available in a handful of states in the U.S., including Alabama, California, Delaware, Florida, Idaho, Louisiana, Mississippi, Missouri, New Mexico, North Dakota, South Carolina, Texas, Utah and Wisconsin.

A closer look at a CreditNinja personal loan   

When you’re shopping for a personal loan, comparing loans can give you the best shot at finding the best offer available to you. Here are some key things to know about CreditNinja loans:

• Third-party lenders — CreditNinja will process your loan application and disburse funds. But whether you’ll receive a loan offer directly from CreditNinja or from a third-party bank or lender may depend on the state you live in.
• Origination fees — While CreditNinja personal loans are advertised as having no hidden fees, they typically come with origination fees. An origination fee is a charge that some lenders assess for things like underwriting and processing the loan application, and it’s often deducted from your loan funds. At CreditNinja, that fee can soar into triple digits — and it’s nonrefundable. That means you can’t escape the high cost even by paying your loan off quickly, as you might do to avoid a high interest rate.
• Little info on rates and costs — CreditNinja states only that the interest rate offered to you for a loan will be determined by “many factors” including your credit scores, income, state law and your credit history. From the lender’s state disclosures page, you can find some specific info for some states, revealing triple-digit rates and fees.
• Funding via direct deposit — You’ll need a checking account to get a loan and access the money.

Who is a CreditNinja loan good for?

CreditNinja markets to people who need money right away, but this lender is not transparent about its rates and fees — and the costs that it does reveal for some states are exceptionally high. There are other so called “bad-credit” lenders that might offer you more in terms of clear cost info and more reasonable fees or APRs.

How to apply with CreditNinja

You can apply for a CreditNinja personal loan entirely online. If you have questions about the application process, you can talk to a customer service rep or send an email.

To be eligible for a loan, you’ll need to be at least 18 years old, have a Social Security number and a checking account. Applicants from Alabama and Nebraska need to be at least 19 years old to qualify.

The process requires you to create an account and submit personal information that includes an email, your address, date of birth and other details.

Not sure if CreditNinja is right for you? Consider these alternatives.

• Personify: Personify offers personal loans to people with less-than-perfect credit.
• Possible Finance: If you need to borrow only a small amount, Possible Finance considers credit that isn’t spotless and offers short-term loans.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Pros

• Provides a cash advance before paydaynOffers a secure way to pay billsnAbility to send and receive money

Cons

• Can only access up to 50% of your paychecknFees may apply depending on where you have funds depositednFull benefits are available only if your employer participates

What you need to know about a Payactiv personal loan

Payactiv in 2012 created earned wage access, a service that allows workers to get an advance on their paychecks between pay periods. Payactiv is the Consumer Financial Protection Bureau’s first approved EWA provider.

If you’re considering using Payactiv, here are a few things to know.

An easy way to get a payday advance

If your employer is enrolled in the Payactiv EWA program, you’ll be able to access funds from your paycheck up to two days in advance (four days in advance if you’re a government employee). Plus, you’ll be able to review your current earnings on the app and see how many hours you’ve worked

But even if your employer isn’t enrolled in Payactiv, you still might be able to receive some of your paycheck up to two days ahead of payday.

Can only tap into 50% of your paycheck

If you’re enrolled in Payactiv through work, you may be able to access up to half of your earnings before payday, but the exact amount will be set by your employer.

Watch out for fees 

While Payactiv touts no minimum card balance requirement, no activation fees and no monthly maintenance fees, there may be other fees depending on how you get and use your cash. It’s free to load money onto a Payactiv card, but if you want to transfer funds to your bank, pick it up at Walmart, spend it with Uber or Amazon or use the bill pay feature, you can expect to pay additional fees.

A closer look at a Payactiv

• Multiple ways to receive funds — If you have Payactiv through work, you can have your cash transferred to your bank account or a Payactiv card. You could also opt to pick up your money at Walmart. Or you can use the cash to cover an Uber ride or pay for an Amazon order. If you enroll in Payactiv on your own, you’ll get your money on a Payactiv Visa debit card.
• Send and receive money — Payactiv offers the ability to send and receive money with fellow Payactiv users. To use this feature, add your friend or family member’s phone number, and you can send and receive cash straight away.
• Secure bill payment — You can use the money in your Payactiv account to pay bills directly from the app. It’s worth noting that this service could cost you $1 a day, but it’s capped at $5 a pay period.
• Financial insights — With the mobile app you can get financial advice, budgeting tools, tips on saving and a way to track your spending.
• Get company information — If you’re enrolled through your company, you can use the app to check for open shifts and ask to pick up hours, receive company announcements and chat with your team members.
• No credit check — Payactiv isn’t technically a lender, so applying to use the service won’t trigger a credit check.

Who is Payactiv good for?

Using Payactiv to get an advance on your paycheck can help you cover an emergency expense without having to resort to payday loans, which are known to be risky.

But if you find yourself needing to borrow cash against your paycheck regularly, it may be a good idea to take a closer look at your finances and work on making a monthly budget to keep your spending on track.

How to apply with Payactiv

You can apply for a Payactiv account online. To sign up and must be 18 years old and need to provide some personal information, including the following:

• Name
• Phone number
• Email

If you sign up through your employer, Payactiv generally will interact with company’s payroll and time attendance system. Your employer may also need to share your name and employee ID, along with your information about when you clock in and clock out.

Not sure if Payactiv is right for you? Consider these alternatives.

• Earnin: Earnin lets you tap into up to $500 of your earnings two days ahead of payday. 
• Dave: Dave is a cash advance app that offers up to $200 as a paycheck advance and can help you build up your credit history.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Pros

• Ability to prequalify and check your ratenCompetitive rates for people with strong creditnNo application or origination fees

Cons

• Only starting rate is disclosednMust become a credit union member to receive funding

What you need to know about a PenFed personal loan

Founded in 1935, Pentagon Federal Credit Union is the second largest credit union in the country. PenFed provides financial services to two million members across the United States, as well as Guam, Puerto Rico and Okinawa. In addition to personal loans, PenFed offers its members checking and savings accounts, IRAs, credit cards and auto loans, along with mortgages and home equity loans.

PenFed’s personal loans can be used for a variety of purposes, including debt consolidation, home improvement projects, vehicle repair expenses, or medical and dental costs. You can even use the loans for other big purchases like paying for a wedding. Its loans are unsecured and available in amounts from $600 to $35,000. Terms range from 12 months to 60 months.

Competitive interest rates for people with strong credit

People with strong credit may be able to qualify for a lower annual percentage rate, which PenFed offers to people with “excellent borrower credit history.” But PenFed isn’t transparent about its full APR range — it only discloses the lowest rate it offers. That makes it difficult to gauge how truly competitive its rates are if your credit isn’t in strong shape. You’ll have to apply for prequalification first to find out your potential rate.

Must be a member to receive a personal loan

If you’re not already a member of PenFed Credit Union, you can still apply for a personal loan. But if you’re approved and want to move forward with the loan, you’ll have to become a member.

Membership is open to everyone, and it only takes a few minutes to join. You can sign up as part of your loan application process, join through an association employment or military affiliation, or apply online. To join, you’ll have to open a savings account with a minimum deposit of $5. Members have access to a range of discounts, including savings on tax preparation costs, home insurance and car rentals.

Prequalify without hurting your credit

When you start your application online using the “Check Your Rate” feature, you can see your loan options without affecting your credit score. But keep in mind that once you do decide to apply, you’ll be asked to authorize a hard credit inquiry — and your approval, along with the terms you were preapproved for, isn’t guaranteed.

A closer look at a PenFed personal loan

Comparing lenders is a good idea when you’re shopping around for the best personal loan to fit your financial situation. Here are a few more details you should consider when deciding if a PenFed personal loan is right for you.

• You can apply with a co-borrower — If your credit isn’t great, you may want to consider applying with a co-borrower to help secure approval — and a lower interest rate.
• Potential to get your loan quickly — Once approved, you can stop by a local PenFed branch to pick up your check or have the money sent overnight — but you’ll pay a fee to have it expedited.
• Late payment fees may apply — You may be charged a $30 fee for a returned payment and a $29 late fee if you’re behind on a payment.
• No start-up fees or prepayment penalties — It doesn’t cost anything to apply for a PenFed personal loan, and there no origination fees. And if you decide to pay off your loan early, you won’t be hit with a penalty.

Who is a PenFed loan good for?

A PenFed personal loan may be a good fit for people with strong credit who are looking to borrow money to help pay for debt consolidation, home improvements, medical costs or other expenses up to $35,000. With starting loan amounts at just $600, it’s a particularly good option for people who only need a little bit of money and want to avoid high-interest options like payday loans.

If you don’t have great credit, you can consider applying for a PenFed personal loan with a co-borrower. Just keep in mind that if you decide to apply with a co-borrower, you’ll both be on the hook for the life of the loan.

How to apply with PenFed

You can start a personal loan application online using PenFed’s “Check Your Rate” tool. If you prequalify, you’ll have the option to select from a few offers. To apply you’ll need to provide some basic personal information, including your name, address, annual income, Social Security number and housing payment information. You’ll also have to specify the reason for the loan, the terms you want and how much money you’re looking to borrow.

Not sure if PenFed is right for you? Consider these alternatives.

• OneMain Financial: If you have less-than-perfect credit, a personal loan from OneMain Financial might be worth exploring.
• LightStream: A personal loan from LightStream is a good option to consider if you have strong credit.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Updated July 22, 2024

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Jackie Lam

Pros

• Check potential rates without hurting credit scores
• Small loan amounts available

Cons

• Rates are relatively high
• May have to close your loan in person
• May only qualify for a secured loan

What you need to know about a Republic Finance personal loan

Republic Finance is a lender that offers personal loans. Founded in 1952, it has branch locations in six states. The company offers personal loans for things like vacations, major purchases and emergencies.

Republic Finance offers fixed-rate personal loans in amounts starting at $2,000. You may qualify for an unsecured or secured personal loan. Its secured loans, which it calls auto-secured loans, require you to put up an insured car that’s in your name as collateral.

Relatively high rates

Republic’s personal loan rates and fees vary by state. If you need emergency cash, its APRs are better than those of a typical payday loan, but they’re still relatively high. If you have strong credit, you’re better off looking elsewhere.

Another good option is to consider a payday alternative loan from a federal credit union.

Since Republic’s rates and loan availability vary based on your location, your best bet is to reach out to someone at a nearby branch to get your questions answered and see what options may be available to you.

You may be able to qualify with lower credit scores

If you’ve got some blemishes on your credit, Republic Finance may still lend to you. Lenders typically look at factors such your credit history, debt-to-income ratio and income to see if you qualify, and what terms and rates you might be eligible for.

Republic lets you check your potential rate with a prequalification application that won’t hurt your credit scores. Just remember that a prequalified offer isn’t a guarantee of approval and terms — your final offer could be different once you formally apply.

May have to close your loan in person

If you only qualify for a secured personal loan, Republic Finance requires you to visit a local branch to complete your loan application and collect your funds. While the company now offers curbside loan closing, it’s certainly a hassle if you’d prefer to stay at home.

A closer look at Republic Finance personal loans

If you’re thinking about applying for a Republic Finance personal loan, here are some more things to consider.

• Online funding not always available — You can start a prequalification application online, but you may not qualify to submit a full application online. If you only qualify for a secured loan, you’ll have to finish the process at a branch.
• Several payment options — If you’re approved for a loan, Republic lets you submit repayments several ways: online, over the phone or at a branch.
• Personal service — If you like talking to a person, you can visit a branch location near you or call to talk to a representative.

Who is a Republic Finance personal loan good for?

If your credit history has some problem spots and you’re comfortable taking on a loan with a relatively high interest rate, a Republic Finance personal loan might be worth considering.

Plus, if you prefer to talk to a human and don’t mind going to a physical location to apply or complete the loan application process, Republic Finance could be a fit as well.

But proceed with caution if you only qualify for an auto-secured loan. Pledging your vehicle as collateral means you could lose your car if you fall behind on payments. Consider other options first, like using an existing credit card or applying for a payday alternative loan from a credit union.

How to apply with Republic Finance

You can start a Republic Finance loan application online by seeing if you prequalify. But keep in mind that only people who qualify for unsecured loans can complete the application online. Otherwise you have to visit a branch to complete the process for your final offer and acceptance.

One of the major draws of a personal loan is that it can be used in a number of ways, but you’ll want to make sure the terms and rates are a good fit for what you need. It’s important to do your homework and comb through the fine print.

Not sure if Republic Finance is right for you? Consider these alternatives.

• Oportun: Oportun also offers small loans and the ability to prequalify.
• Earnin: If you’re looking for a payday loan alternative that doesn’t require fees, the Earnin app is worth considering for small cash advances.

Updated December 19, 2023

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Jackie Lam

Pros

• Borrow up to $50,000
• Ability to prequalify and check rates
• Get cash as soon as the next day

Cons

• Not available in all states
• Late fees apply
• Not for business or education

What you need to know about a TD Bank personal loan

Based in New Jersey, TD Bank has more than 1,100 East Coast locations and offers unsecured personal loans along with a range of other financial services, including checking accounts, savings accounts, credit cards and mortgage loans. 

Loan amounts up to $50,000

TD Bank offers personal loans in amounts as little as $2,000, but it offers loans up to $50,000. Rates are fixed and terms range from 36 months to 60 months.

Check your rates with prequalification

TD Bank offers prequalification so you can check what your loan rates may be before you apply. And since it’s only a soft credit check, it won’t impact your credit score. But if you do decide to move forward with a loan after checking your rates, you can expect a hard credit inquiry, which could impact your credit scores. Note that prequalifcation isn’t a guarantee of approval, and you may be offered different terms after completing a full application.

Receive funds as soon as the next day

You might be able to get approved for a TD personal loan on the same day you apply. And if you’re approved by 4:30 p.m. Eastern time, your loan might be funded as early as the next business day. Depending on your bank, it could still take a few days for the cash to be available in your account. 

Not available in all states

TD Bank primarily serves people living on the East Coast in Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia and Washington, D.C. If you don’t live in one of these places, you won’t be able to get a TD Bank personal loan. 

Mind the late fees

While you won’t have to worry about origination, application fees or prepayment penalties, should you be late on a payment, there’s a 5% charge on the minimum payment amount, or $10 — whichever is less. This is only after the grace period ends, which is just over two weeks. 

A closer look at a TD Bank personal loan 

If you’re considering a TD Bank personal loan, here are a few more things to keep in mind before you apply. 

• Looks beyond credit scores — TD Bank doesn’t post a minimum requirement for credit scores and accepts applications of all credit levels. Other considerations during their application process may include your debt-to-credit ratio, your overall credit health and repayment history. 
• Loans cannot be used for business or education purposes — While there’s quite a bit of flexibility in how you can use the cash from a TD Bank personal loan, you won’t be able to use the money for business-related purposes or to pay for education. 
• No collateral required — TD Bank’s personal loan is unsecured, so you won’t be required to put up any of your own assets, such as your car or home, as collateral to get the loan. 
• Can help build credit — Since TD Bank reports your payment history each month to the three main credit bureaus — Equifax, Experian and TransUnion — paying on time can help you build a positive payment history and might give your credit a boost.  
• Only available in English — TD Bank does not offer its personal loan or any other services in languages other than English.

Who is a TD Bank personal loan good for?

A personal loan from TD Bank could be a good fit if you live in one of the states served by TD Bank and are looking for a personal loan from a traditional lender to help you pay for expenses such as debt consolidation or a home remodel. 

But if you need to borrow more than $50,000 or plan to use the money to cover business or education expenses, you’ll have to look elsewhere. 

How to apply with TD Bank

You can apply for a TD Bank personal loan online and will need to provide some personal information, including …

• Name
• Email
• Address
• Date of birth
• Social Security number
• Employment history
• Income
• Personal living expenses

You’ll also be asked about the purpose of the loan and will need to consent to a credit check as part of the application process. 

Not sure if TD Bank is right for you? Consider this alternative.

• Upstart: Upstart is an online lender that offers the ability to prequalify.

If you’re in the market for a used car, you’ll probably want to know what — if anything — might be covered by a warranty in case you need repairs in the future.

New cars typically come with manufacturer warranties. But if you’re buying a used vehicle, it’s crucial to check if there’s some sort of warranty and what it might cover. You’ll want to examine any warranty closely to see whether it’s worth the extra cost, if it’s one you’d have to purchase separately.

When we refer to “used car warranties,” we simply mean any kind of warranty you might get for a used car — whether it’s backed by a manufacturer or dealer.

Buckle up as we examine some important things to know about used car warranties.

1. Look at the Buyers Guide for warranty details
2. Check if the manufacturer’s warranty still applies
3. Read the details of the warranty coverage
4. Are extended warranties worth it?
5. Explore the alternatives

1. Look at the Buyers Guide for warranty details

Information about any used car warranty should be available in what’s called a “Buyers Guide.” Dealers are required by the Federal Trade Commission, or FTC, to display this in used cars that are for sale. You can usually find the Buyers Guide displayed on the car’s window.

The Buyers Guide says whether a vehicle comes with a warranty or is being sold “as is.” Buying an as-is car means that if you run into any issues or your vehicle needs repairs after driving it off the lot, you’re likely out of luck. If the car does come with a warranty, the Buyers Guide should include the percentage of repair costs the dealer is required to pay as part of the warranty — if it’s required to pay for any of the repairs at all.

A number of states restrict what vehicles may be sold as is or have different rules around these types of sales. For instance, if a used car is selling above a certain price, an as-is sale might not be allowed — and some states require different disclosures on the Buyers Guide for an as-is sale.

Here are some states with different restrictions and rules around as-is sales.

You can look up your state attorney general’s office and contact them to find out what as-is sale rules apply in your state.

Here are a couple of other things to keep in mind about Buyers Guides.

The Buyers Guide is king …

If the Buyers Guide from the dealership says your car is covered by a warranty but your contract says the sale is as-is, the dealer must honor the terms in the Buyers Guide. What’s stated in the Buyers Guide trumps anything that might be contradictory in your contract related to warranty coverage.

… unless the seller is a private party.

If you’re buying a used car directly from a private party, they’re usually not required to post a Buyers Guide or provide a warranty — it’s possible that there may be implied warranties but you may not want to hang your hat on this. You’d need to sign a written contract providing for what you agree to be covered.

2. Check if the manufacturer’s warranty still applies

There’s a chance that a manufacturer’s warranty still applies when you buy a used vehicle. You may be able to find this under the “systems covered/duration” section of the Buyers Guide.

To reap the benefits of any warranty that’s included, you have to know what’s in it and confirm that it’s transferrable. Ask the dealer for the vehicle’s warranty documents. Once you look over what’s covered, along with other details like the expiration date/mileage, you can reach out to the manufacturer to verify it’s accurate.

A car manufacturer’s warranty often covers a vehicle’s first three years or 36,000 miles, though powertrain warranties may last longer.

3. Read the details of warranty coverage

If your vehicle does come with a used car warranty, the coverage may be limited.

The warranty should give specifics on the vehicle service contract and explain who is legally responsible for the repairs. Look over the fine print to get all the details and make sure all of your questions are answered before you buy your vehicle.

You’ll also want to check who you’re buying the warranty from, since in some instances the dealer may be selling a contract from a third-party warranty company. You can research the company’s auto warranty policies and BBB rating from the Better Business Bureau.

4. Are extended warranties worth it? It depends.

When you purchase a used vehicle, you may have the option to purchase a service contract, also known as an extended warranty. With a service contract, the dealer agrees to perform or pay for certain repairs or services on the car. You can buy the coverage for an extra cost.

Here’s some guidance for gauging whether an extended warranty is worthwhile.

• Transferability — If you’re looking into a service contract, determine first whether any of the original bumper-to-bumper and powertrain warranties are transferable, says Matt DeLorenzo, senior managing editor at Kelley Blue Book. If so, how much time and how many miles are left on that coverage?
• Requirements for who performs repairs — Be sure to read over your service contract carefully before deciding to pay for one. Look for whether the service contract states that you need to have repairs and routine maintenance done at the dealer or not. You’ll want to make sure that the details and requirements of the service contract work for you.
• Cost of warranty versus cost of common repairs — While an extended warranty may give you peace of mind, it can also be expensive, often ranging from $1,000 to $3,000 up front. Once you get a quote from a dealer, figure out how much common repairs cost, and what exactly your warranty covers.
• Vehicle dependability — DeLorenzo recommends considering the quality and dependability ratings of a vehicle. “Cars that are further down the quality rankings might be prone to certain repairs, so it’s best to check out a vehicle’s track record and then determine the type of extra coverage that you might need,” he says.

5. Explore the alternatives

Feeling unsure about getting a used car that doesn’t come with a warranty? Thinking that the cost of a warranty might not be worth it?

Consider these other options.

Put money aside for repairs. If you can stash away some cash, it can help cover whatever might need to be fixed down the road. And if it there’s nothing to repair, you can keep saving the money for your next car or use it for some other need.

Lease a car. If you go this route, your leased car may come with a warranty that covers repairs. In turn, you may not have to worry about being hit with a major unexpected expense. There are pros and cons to leasing a car, but it can be a cost-effective alternative to buying.

Bottom line

When you buy a used car, check carefully to see if a warranty is available and what type of warranty or service contract it is, and what it may cover. If there isn’t one, you’ll want to examine the details closely to see if an extended warranty is the best choice for your financial situation — or if you’ll be able to manage paying for any repairs without a warranty at all.

Updated: July 30, 2024

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Jackie Lam

Pros

• Direct payments for debt consolidation available
• No origination fee
• May receive funding quickly

Cons

• Charges a late fee
• No co-applicants allowed

What you need to know about a Discover personal loan

Probably most well-known for being a major credit card brand, Discover also offers personal loans online. Loan amounts range from $2,500 to $40,000, with repayment terms of three to seven years.

Here’s what to consider if you’re thinking about applying for a personal loan from Discover.

Direct payments for debt consolidation

One of the major draws of a Discover personal loan is that if you’re consolidating your debts, Discover can handle direct payments on your behalf. You can consolidate debt, like your credit card balances, but secured debt — like a mortgage or car loan — can’t be consolidated with a Discover personal loan.

The process is relatively straightforward and simple. During the application process, you list the accounts you’d like Discover to take care of and provide basic account info (account numbers, repayment amounts, payment addresses). Discover will handle the rest.

No origination fee

Origination fees on personal loans can eat into your loan proceeds. Depending on your loan amount, Discover’s no-origination fees policy can save you a solid chunk of change.

If you don’t want to get walloped by fees, Discover could be a good place to look for a personal loan.

Fast funding is possible

Once your application has been approved, Discover says it can make payments to your creditors as soon as the next business day. For the funds to drop quickly into your personal account, your loan application has to be free of errors, the loan must be funded Monday through Friday, and you have to opt into having the funds disbursed into a checking or savings account. If any of these three criteria aren’t checked off, it could take longer.

Plus, keep in mind that the exact timing of when you receive your funds depends on your bank.

If you hope to receive funds quickly, carefully comb through your application to make sure everything is filled out accurately, double check your bank account numbers, and include an email address in case there are any questions about your application.

Late fees might be charged

While Discover has no origination fee, if you have trouble making an on-time payment on your loan, you may get dinged with a $39 late fee. 

If you face a temporary financial hardship, Discover does have repayment assistance programs that might be able to offer you options to help alleviate that stress.

Generally speaking, you can avoid late fees if your monthly payments are manageable. When you apply for a personal loan and sign up for a term and amount, make sure you do the math and assess whether you can comfortably afford to take out a loan. If you suspect you might feel stretched, it’s probably a good idea to rethink the loan amount.

A closer look at Discover personal loans  

If you’re mulling over whether to get a personal loan from Discover, here some other details to think about.

• Minimum age — To qualify for a loan from Discover, you must be at least 18 years of age.
• Income requirements — You’ll also need to have a minimum income of at least $25,000 to be eligible for a loan.
• No prepayment penalties — If you pay off your loan ahead of schedule, you won’t get hit with prepayment penalties.
• No co-signers allowed — Discover doesn’t permit co-applicants on your personal loan. If you want to apply with another person, take a look at lenders that allow co-signers.

Who is a Discover loan good for?

Since Discover can handle payments to creditors for you, a Discover personal loan is a solid option for debt consolidation. It also may be a good fit if you need funds quickly.

Keep in mind that the better your credit, the better terms and rates you’ll probably be able to qualify for. Discover’s personal loan rates are competitive, but you’ll likely need at least fair credit to qualify.

And remember if you think you’ll need a co-signer to be approved for a loan, you’ll have to consider other options.

How to apply for a Discover personal loan

If you are at least 18 years of age and have an annual income of at least $25,000, you may qualify for a Discover personal loan. (But keep in mind that these are only minimum qualifications.)

Discover’s personal loan application can be completed online or over the phone. To start your application, you can apply for prequalification for a personal loan to check your potential rate, which won’t affect your credit scores.

If you go forward with an official application, you’ll face a hard credit inquiry and your terms and final rate may differ from your estimate.

You’ll be asked to provide some personal information to complete your application, including the following:

• Employment history
• Income
• Details about your creditors, such as balances and account numbers
• Bank account numbers

To speed up the process and minimize errors, you’ll want to have this information on hand when you apply. 

Not sure if a Discover personal loan is right for you? Consider this alternative.

• Payoff: Payoff, which is geared toward people who want to pay off credit card debt, offers a prequalification option.

When you’re trying to choose the best mortgage lender, it’s important to remember that one size does not fit all.

So how do you find the right one for you? The homebuying process can seem overwhelming. For most people, it’s the biggest financial purchase of their lives. You’ll want to take stock of your financial situation and loan options, and then compare lenders to see who offers the most-attractive potential rates and terms.

Here are the steps to choosing the best mortgage:

• Step 1: Assess your financial situation
• Step 2: Consider loan options
• Step 3: Ask the lender about loan costs and fees
• Step 4: Compare lenders and estimates

Step 1: Assess your financial situation

How much house do you need? What down payment can you afford to make? How will a mortgage payment affect your monthly budget? These are issues to think about when taking stock of your finances. Having a thorough understanding of your own situation can help you ask lenders more-informed questions when the time is right.

You’ll also want to think about where you want to live and then research property taxes and homeowners’ insurance expenses. These costs are typically included in calculations of your monthly mortgage payments and can vary depending on location.      

Keep in mind that some costs of your loan will depend on your choices and finances. For example, you’ll typically have to pay for private mortgage insurance, or PMI.

Whether your mortgage has a fixed interest rate or adjustable rate can also affect how much interest you’ll pay during the life of the loan.

Step 2: Consider loan options

There are some basic factors to discuss with a lender when comparing loan options: the type of loan, the interest rate and the loan term.

Loan types

You may be able to choose from conventional loans, FHA loans or other types of government-backed home loans. You’ll want to ask lenders about the specific features you want from your mortgage — such as a low down payment, the ability to finance certain closing costs — and how the following mortgage loan types might work best with your needs.    

• Conventional loans — These mortgages typically aren’t part of a specific government program, and can be conforming loans (at or below the county loan limit) or “jumbo” loans that exceed those limits.          
• FHA loans — These mortgages are insured by the Federal Housing Administration. They allow for smaller down payments and are worth considering for people with shakier credit. FHA loans typically include a lender’s origination fee as part of the closing costs, as well as an upfront mortgage insurance premium.    
• VA loans — These loans can be a strong option for people who qualify. They typically require no down payment, though they have a VA loan funding fee.
• USDA loans — This may be an option if you live in a rural area and meet certain household income requirements. USDA loans may be available to people with low-to-moderate incomes, and zero-down options may be available.      

Interest rate options

There are two basic types of mortgage interest rates: fixed and adjustable. The right option for you may depend on whether you plan to keep the home for the long term or not. Fixed-rate mortgages are a good choice if you plan to stay in the home a long time.

• Fixed-rate mortgages — These are offered with one rate that stays the same for the duration of the loan term. Fixed-rate mortgages may have a higher interest rate than an adjustable rate mortgage, but fixed-rate loans have more-predictable payments.    
• Adjustable-rate mortgages — An ARM typically has an introductory rate for a fixed period of time, with annual interest rate adjustments over the course of a loan once the introductory rate expires. Your mortgage payments may fluctuate when the rate changes occur, making for a less-predictable mortgage over the term of the loan. Adjustable-rate mortgages may have lower interest and an initial fixed period to start.      
• Hybrid adjustable-rate mortgages — These ARM loans are typically similar to “traditional” adjustable-rate loans but have an important exception. They have the same introductory rate period, but the duration of that rate is longer than a single year. You’ll find lenders offering a variety of options, including 3/1 ARM loans, 5/1, 7/1, etc. (The first number represents the duration of the introductory rate in years; the second number is how long you wait for the adjustment. A 3/1 ARM is one with a three-year fixed rate, with rate adjustments every year following.)          

Loan term    

Loan terms affect how much you pay every month. Your financial situation, needs and overall goals will help you zero in on the best loan term for you.

For instance, if your goal is to save as much interest over the lifetime of the loan as possible (and you’re able to afford higher monthly payments), then a 15-year loan might be a better fit than a 30-year mortgage. But if lower monthly payments are your goal, a 30-year loan might be the better choice.

Check out our home affordability calculator to get some estimates of what may fit in your budget.

Step 3: Ask the lender about loan costs and fees

When comparing lenders, ask about the costs and fees that might affect the cost of your loan — things like closing costs, discount points and prepayment penalties.

Closing costs

Your mortgage lender is required to provide a loan estimate within three business days of receiving your loan application. This form goes over important details about the mortgage, usually including your estimated monthly payment, estimated interest rate and total closing costs for the loan. Those costs may include …

• Down payment
• Appraisal fees
• Pest inspection
• Taxes
• Insurance

Ask a loan officer about these charges to get an estimate of how much you may have to pay on closing day.    

Discount points

Discount points are optional fees you pay upfront to decrease your interest payments over the course of the loan. The amount of the decreased interest rate will vary depending on the lender, the nature of the home loan, and other variables. Typically, you may find reductions at .25% per $1,000, but you’ll need to ask your lender what is offered at that financial institution.    

Generally, the major benefit of buying discount points is to save money over the term of your mortgage. Doing so may be a good idea if it’s in line with your financial goals but you should consider your situation.

For example, it might not be the best idea to pay for points to lower your interest payments if …

• You don’t intend to stay in your home for the long haul.
• You’re planning to refinance down the line.
• You simply don’t have enough money saved at the time of closing, which is when you need to pay for those discount points.

Prepayment penalties

Ask the lender and be sure to read the fine print about any prepayment penalties on your loan. A prepayment penalty may apply if you refinance the loan before the loan term is up, or when you otherwise pay off the loan ahead of schedule.

Loans without a prepayment penalty are a good choice if you think you may refinance the loan at some point.

Step 4: Compare lenders and estimates

Once you’ve assessed your mortgage needs and have an idea about the type of loan you’re looking for, start shopping around for a lender. You may want to look at online marketplaces that can help you compare.

• Interest rates and annual percentage rate
• Closing costs
• Lender fees
• Discount points and prepayment penalties          

Getting multiple offers may give you negotiating power and help you better understand your options. When you compare lenders and their offers side by side, you can see which loan amounts, APR, rates and terms are the best fit for your situation.

You can also calculate the difference in your mortgage and monthly payments between fixed-rate loans versus adjustable-rate loans, and don’t forget to take a close look at lender fees for both options.

When shopping for lenders, ask to speak with a loan representative to help you better understand that bank’s process and get answers. The more transparent a lender is, the better. Is the lender responsive when you have questions? Will it work with you based on your needs?

Try to compare several financial institutions. Compare your potential options based on transparency, responsiveness, and the best rates and terms.

What’s next?

Choosing a mortgage lender is a complex decision. Although the basic interest rate your lender offers is important, you should also consider the APR, closing costs, lender fees and your personal plans, such as how long you plan on staying in your house.

It usually pays to shop around: Mortgage terms vary from lender to lender, with differing rates, terms and transparency. By comparing several before you decide, you’ll give yourself a better chance to make an informed decision about the lender you choose.