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You’ve probably heard of “buyer’s remorse” — that sense of regret people experience after making a big purchase like a car. What you don’t hear so much about is borrower’s remorse, which is the dissatisfaction that car buyers sometimes feel when they realize the financing they got through the dealer is costing them more than they thought.

Even the toughest hagglers can miss things when they hit the dealership’s business office and begin negotiating loan terms. But that doesn’t mean you can’t pump the brakes, pull over, and try again. Refinancing a car loan certainly isn’t for everyone, but it could be a potential option as long as you understand how to refinance a car and what the implications are.

When Refinancing a Car Loan Might Make Sense

Refinancing a car loan is the process of getting a new loan that essentially replaces the existing loan. The process involves filing a new loan application, and lenders will generally evaluate potential borrowers based on factors like their credit score and history to determine their new loan terms and interest rate.

Generally, borrowers refinance to secure a better interest rate or more favorable terms. For example, a lower interest can help borrowers pay less in interest over the life of the loan. Sometimes, borrowers may extend their repayment term to secure lower monthly payments. This can make the loan payments more affordable on a monthly basis, though ultimately it makes the loan more expensive in the long run.

Now that you know you can refinance a car loan, let’s take a look at when doing so might make sense.

Recommended: Pros and Cons of Car Refinancing

You Think You Can Do Better Than That Dealer-Sourced Loan

When you finance your car through a dealer, it can feel as though you’re going through some mysterious selection process. After the fact, you may realize that you could’ve found a better deal on your loan. Or, you might just come to hate working with your current lender. In either case, it might make sense to look into refinancing your car loan.

Your Overall Financial Position Has Improved

Perhaps your car loan was offered to you at a time when your finances weren’t as solid as they are now. Maybe you’ve since gotten a better job, paid off some debts, or have been working on making consistent payments on debts. Borrowers who have seen improvement in their financial situation or credit score may want to consider refinancing.

In that scenario, you may be able to qualify for a personal loan at a better interest rate than your original auto loan. This could lead to savings on interest, potentially lowering your monthly payments. With SoFi’s personal loan calculator, you can compare what you’re currently paying to the estimated payments you might have with a new loan.

Interest Rates Have Improved Since You Borrowed the Original Loan

Another reason to consider refinancing a car loan is if interest rates have changed since you originally bought the car. Interest rates on auto loans are influenced by benchmark rates, like those set by the Federal Reserve.

If the Federal Reserve rate is low, interest rates for borrowers may also be lower. But as the Federal Reserve rate increases, the cost of borrowing money is also likely to increase.

An Alternative to Car Loan Refinancing: Personal Loans

In some situations, you might consider taking out a personal loan to pay off your auto loan rather than refinancing. In fact, debt consolidation is one of the common uses for personal loans. This option might make sense if you have an older car or a model or mileage that disqualifies you from refinancing, or if you’re underwater on your loan.

With an unsecured personal loan, which is the main type of personal loan you’ll come across, you can apply for the remaining amount of the car loan. Just keep in mind that lenders have minimum loan amounts — for example, SoFi’s minimum personal loan amount is $5,000 (and more in some states, due to legal requirements).

To decide if this option makes sense, you’ll want to see if you get your personal loan approved for a better interest rate than your auto loan. Because auto loans are secured (meaning they’re backed by collateral — in this case, your car) they tend to have lower rates than unsecured loans, though not always, depending on your financial specifics.

The Takeaway

Refinancing a car loan may make sense for borrowers who can secure a better interest rate or otherwise more preferable terms than they have on their existing car loan. If a borrower’s financial situation has improved, or if benchmark interest rates have fallen, they may consider looking into refinancing options.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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You’ve champagne-toasted to your engagement, basked in post-engagement bliss, and happily researched the latest table decor trends on Pinterest.

It’s easy to get lost in the excitement of your wedding and focus on the fun parts, like trying on dresses. But before you get too far into planning, it’s a good idea to take a breath and crunch a few numbers.

In addition to being a joyous occasion, a wedding can also be a significant expense. While the price tag can vary widely depending on the level of luxury you go for and where you live, the median cost of a wedding is $10,000, according to a recent SoFi survey.

Besides the basic expenses like the dress, venue, catering, and rings, there are also lots of unexpected wedding costs, both small and large. And those can really add up. Being aware of these costs can help you plan ahead and save for your dream wedding.

Whether you’re paying for your own wedding, or getting help from loved ones, having realistic budget can help ensure that your wedding doesn’t wreak havoc on your finances.

1. Bachelor and Bachelorette Parties

Since these events happen in advance of the wedding, it’s easy to forget to include them in your initial budget. But planning for these festivities is crucial, since they can come with a hefty price tag.

Guests spend an average of $1,500 on these parties, according to Savings.com. When travel is involved, the cost can go up even more. For instance, those who flew to an international bachelor or bachelorette destination spent about $2,000 in total.

Sometimes the host and guests will opt to cover the cost of accommodations and activities for the bride and groom, but that’s far from guaranteed.

And even if your costs are partially covered, you may still need to chip in for your airfare, meals, and incidentals.

Recommended: The Costs of Being in Someone’s Wedding

2. Marriage License

In the whirlwind of wedding planning, it can be easy to forget about some of the more technical steps of getting married.

You’ll need to apply for a marriage license, of course, typically with the relevant county clerk’s office. Some states have a fixed fee, while others vary by county or city. The fees can range from about $10 to $115.

3. Insurance

You know that you’ll need to pay for a wedding venue, but you may not be aware that many of them require you to also purchase insurance. These policies typically cover damage to the venue or injuries to guests or vendors.

Some wedding insurance policies also reimburse you if something goes wrong, such as a venue becoming unavailable or a vendor not showing up. Wedding insurance costs range from about $125 to $550 for basic coverage, but the price can be higher for more expensive events.

Recommended: Smart Short-Term Financial Goals to Set for Yourself

4. Postage

If you’re mailing correspondence to your guests, don’t forget that you’ll need stamps, too. These can add up when you consider that you may need them for save the date cards, invitations, RSVP envelopes, and thank you cards.

A postcard stamp costs $0.48, and a First-Class Forever Stamp for an envelope costs $0.63. Let’s say your save the date is a postcard and your invitations, RSVPs, and thank you notes use envelopes. Mailing these items to 150 guests in the U.S. could cost more than $300.

5. Alterations

The perfect wedding-day outfit requires not only paying for a dress and a tuxedo or suit, but also likely shelling out for alterations.

Some stores and custom tailors include the cost of alterations in the price of the garment, but others don’t. For a wedding dress, changes such as hemming the gown, adding lace or beading, or taking it in can cost anywhere from $200 to $800 or more.

6. Beauty Treatments

You’ll want to look your best on your big day, and that likely requires spending some cash. Hair and makeup for brides costs $250 on average, and some stylists charge extra for a trial. If you’re paying for your bridesmaids to get hair and makeup done as well, the cost could also be around $170 per person for both services on average.

Brides may also choose other beauty treatments, such as facials (with an average cost of $50 to $100) and manicures and pedicures (the average cost ranges from $45 to $80). Body art, like mehendi for Indian brides, can cost hundreds of dollars.

The groom may also choose to pay for services like a haircut (an average cost of $30) and professional shave (about $15 to $50).

7. Gifts

You are probably expecting to receive gifts from your guests, but don’t forget that you may want to give some out, too.

It’s customary to give thoughtful thank you gifts to your wedding party, with especially nice presents going to the maid of honor and best man. Expect to spend $75 to $100 for each bridesmaid or groomsman.

You may also want to give tokens of appreciation to your parents and grandparents, particularly if they helped pay for the wedding. If you have friends who helped out, perhaps by doing a reading at the ceremony or serving as an officiant, you may want to thank them with a gift as well. And you’ll also want to give a gift to any children participating in your day, such as a flower girl or ring bearer.

Last but not least, it can be meaningful to exchange gifts with your new husband or wife. By including these significant items in your budget, or by exploring the option of a wedding loan to help cover them, you can make sure you can afford them when the time comes.

8. Wedding Weekend Events

Your initial wedding budget may not have included other gatherings you’re hosting, such as the rehearsal dinner, welcome drinks, or a brunch.

Depending on the number of guests, all of these events can cost a pretty penny. The average cost of a rehearsal dinner is around $2,400, while brunches can start at $22 per person.

9. Lodging and Transportation

You’ll probably be paying for a hotel for one or more nights if your wedding isn’t in your hometown, or if you just want to stay somewhere special.

You also likely won’t want to drive yourselves around on the big day. If that’s the case, factor in the cost of a limo or fancy bus to get you to and from the wedding locations. The average cost of a wedding limo is $75 to $150 an hour.

If you’re providing transportation for guests as well, expect the amount you spend on transportation to go up significantly.

10. Rentals

More likely than not, your wedding venue and caterer won’t provide everything you need. You’ll typically need to pay extra to rent linens, flatware, and glassware. You may also want to rent other items, such as heating lamps, a cake stand, string lights, candles, or a photobooth. These items can add hundreds of extra dollars to your costs.

Financing Your Wedding

So how do you afford all the wedding expenses — both the ones you plan for and the hidden ones that crop up? Here are some ideas for financing your dream wedding.

Budgeting and Saving

The first step is to a make a budget, but you’ll want to be sure to avoid some common budgeting mistakes. Add up all the anticipated wedding expenses, including the lesser-known charges above. Then, you and your partner-to-be can track your monthly expenses and income and see how much you have left over to save each month.

If that isn’t enough to get to your goal, see if you can find ways to reduce living expenses or earn extra cash. SoFi, a complementary tool for SoFi members, can help you track your spending and cashflow in real time against a set budget, to help prevent you from going over — and help you save for the big day.

Trimming Expenses

If your wedding budget is more than you can afford, you may be able to find ways to lower some of the costs. For example, perhaps a friend can officiate instead of paying a professional.

Family and friends may be able to help you create DIY paper goods, bouquets, and centerpieces. Or you could send digital Save the Dates and invitations, rather than paying for printing and postage. Some couples even self-cater their weddings. There are a number of creative ways to save money.

Personal Loans

Along with saving and cutting costs, a wedding loan, which is a type of personal loan, could help finance your wedding. With SoFi, eligible borrowers may qualify for loans with interest rates that are generally lower than the interest rates charged by credit cards.

Personal loans are flexible and may be used for almost any purpose, so they can help you cover wedding expenses that come up. It takes just a few minutes to apply online, and these loans have fast funding and flexible repayment options.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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If you’re considering a small business loan, it’s important to familiarize yourself with the different types of small business loan fees. In addition to interest rates, fees can impact how much a small business loan ultimately costs.

Lenders charge fees on small business loans to cover a variety of costs, like loan application and origination, check processing, and underwriting, and you could also face fees for late payment or prepayment. Which types of fees apply will vary depending on which lender you use and the type of loan you get. But knowing what to look out for can help as you compare loans in an attempt to minimize how much your small business loan costs overall.

Why Choose a Small Business Loan?

No matter how fantastic an idea may be, in most cases, it can’t become an actual business without the working capital to get it off the ground. If you’re not yet ready to pitch investors and don’t have the personal funds to bootstrap your business, you may want to learn about how a small business loan can help you turn your business idea into a reality.

Of course, small business loans are for more than just startups. Whether you’re looking to hire more employees, purchase more equipment or inventory, or just scale your idea from your bedroom to a co-working space, small business loans can provide the capital to make it happen.

Some reasons a small business loan may be right for you include if:

•   You want to build business credit, potentially allowing you to qualify for larger loans in the future.

•   You want to scale your business.

•   You want to make your business more efficient with new equipment.

•   You want to purchase more inventory.

•   You want to hire and train more employees.

Before taking out a small business loan though, it’s important to ensure you have the financial foundation to manage your loan debt.

Small Business Loan Rates and Fees

Here are some common fees associated with small business loans.

Application Fee

Lenders incur certain fees when processing your application (e.g., credit checks and property appraisals). This fee covers those costs, and it will apply regardless of whether your application is approved.

Origination Fee

Lenders charge origination fees to cover their administrative costs, such as phone calls, emails, and interviews necessary to finalize a small business loan. The amount of this fee varies from lender to lender.

Check Processing Fee

If you make your loan payments via check, you may be charged a fee to cover the time and labor it takes to process a check. You may want to keep this in mind when deciding how you’ll make your loan payments.

Guaranty Fee

If you’re taking out a loan through the Small Business Administration (SBA), you’ll likely have to pay a guaranty fee. While the SBA guarantees loans, it doesn’t make loans, and thus generally assesses this SBA loan fee for its involvement.

Late Payment Fee

Like many loans, small business loans typically charge a fee when you make a late payment. You’ll want to ensure you set up a plan to make your loan payments on time to avoid this fee.

Underwriting Fee

The process of underwriting can be tedious — your lender needs to comb through your business’ finances and review market research and historical trends. The underwriting fee covers the cost of performing this task. It could either be charged as a percentage of the loan amount or a flat fee.

Prepayment Fee

Some lenders charge you for paying your loan off too early. They may do this for a variety of reasons, but one might be because they lose money in interest charges when you pay your loan principal before it’s due. This is an important fee to be aware of when mapping out your payment plan.

Additional Funding Options

If these fees don’t sit well with you, there are other options to consider that may make funding your business more accessible to you.

Family and Friends

Many people start their business with family loans, which is essentially money borrowed from family and friends. Using these individuals as initial investors can help you stay out of commercial debt, meaning that you can wait to apply for a small business loan when you might need to borrow a larger sum.

However, going into business with loved ones could be a risk. It might sour the relationship if things go south.

Crowdfunding

A number of small businesses have successfully been funded through sites like Kickstarter, GoFundMe, and Indiegogo. A great idea with a strong marketing plan could generate enough excitement and financial support to get things going.

Keep in mind that crowdfunding sites generally require a percentage of the funding received. Additionally, there could be a risk of idea theft or plagiarism by putting your idea out there early.

Credit Card

You could turn to credit cards as a quick route to getting capital for your business without a lengthy application process. However, interest rates may be high. Further, carrying significant credit card debt could potentially impact your credit score, affecting your future chances of qualifying for loans.

Recommended: Comparing Personal Loans vs. Business Loans

The Takeaway

Small business loans can charge a variety of fees, including application fees, origination fees, underwriting fees, guaranty fees, and others. Some are avoidable, such as bypassing check processing fees by opting for another payment method, or steering clear of late fees through consistent on-time payments. Which fees will apply will ultimately depend on the lender and loan type, but fees can play a role in how much a small business loan ultimately costs.

As you explore your options for funds, you might also look into a personal loan. While you cannot use a personal loan for business expenses, it could help you to consolidate high-interest credit card debt you might have incurred, for instance. SoFi personal loans offer low, fixed rates, and allow you to borrow up to $100,000.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Option assignment happens when the owner of an options contract elects to exercise their puts or calls. That means they wish to trade the underlying security at the strike price which requires the options contract seller to fulfill their obligation.

While relatively few options contracts are ever exercised, options writers must be aware of assignment risk. Options assignment requires buying or selling the underlying security at the strike price.

As with all options trading, it’s important to know and understand all the key risks. American-style options can be exercised at any time before expiration, which means sellers might be faced with option assignment whenever they hold a short position. Option assignment is also more likely as expiration nears.

What Is Option Assignment?

Writers/sellers of option contracts assume the obligation to buy or sell shares to satisfy the terms of the options contract. Buyers/holders of options contracts purchase the option to exercise these options under the terms of the options contract.

Option assignment is the process of matching an exercised option with a writer of an option. In the rules laid out in a basic options trading guide, the individual short an options contract is obligated to fulfill their duty by either purchasing or selling a specific number of shares of the underlying stock should the holder choose to exercise their option.

The option contract owner, also called a holder, has the right but not the obligation to buy (in the case of a call option) or sell (in the case of a put) a predetermined number of shares at a strike price. It is only when the option contract holder elects to exercise, that option assignment happens. The individual short the options must then abide by the contract’s provisions.

How Does Option Assignment Work?

Option assignment works when the seller completes the terms outlined in an options contract after the call or put contract owner chooses to exercise. By selling an option, you issue the buyer the right to own a certain number of shares of stock at a predetermined price in the future. Any option strategy that has a short leg, such as a bull put credit spread, has assignment risk.

Call options offer the owner the right but not the obligation to buy stock while put options give the holder the right but not the obligation to sell shares. The call option seller, on the other hand, would potentially be required to buy stock in order to sell it to the call option owner.

Writers of bond options also face assignment risk.

A Peek Under the Hood

The mechanics of this process can seem unclear since there are so many options contracts traded, and it’s hard to determine who is on the other side of your trade.

Options trade through exchanges, and since they are standardized contracts, the exchange is essentially the counterparty. The entity in charge of facilitating exercises and assignments in the U.S. is the Options Clearing Corporation (OCC). Option assignment rules are followed, and the OCC ensures a fair process.

An options assignment happens when the holder exercises a contract. The OCC then randomly allocates this assignment to brokerage firms that have account holders who are short that contract. The brokerage firms then use their own rules and processes to allocate the assignment to a specific holder.

The two parties to the assignment are not required to be the same two parties that entered into the original options contract.

Can You Know If a Position Will Be Assigned?

According to the Options Industry Council (OIC), it’s hard to know when you will be assigned, as it can happen any time up to expiration for American-style options. Many index options, or index futures options, are European-style however.

It may be helpful to know that just 7% of option holders exercise their right, and that percentage has not budged much over the years, according to the OIC.

Can You Do Anything If a Position Is Assigned?

You must meet your option assignment duties once you are assigned. What’s nice, though, is that many brokers handle the process automatically for you. Traders should be prepared to see their account balances fluctuate when an assignment happens. When trading futures options, you might also see a cost of carry with the underlying futures contracts.

What Happens After a Position Is Assigned?

A writer facing an options assignment will be notified through their brokerage firm.

A seller of call options must deliver shares at the strike price and in return receives cash. If the seller wrote covered calls — and therefore owns the shares in their account — their brokerage can simply transfer the shares from one account to the other, and the seller will receive the strike price for each sold share.

If the seller sold naked calls, they will be required to buy shares on the open market to provide them to the options holder, but will also receive the strike price per share. If the seller has pursued a combination options strategy, it might be possible to exercise another option to satisfy the terms of the assigned option.

For someone short puts facing option assignment, they are obligated to buy shares at the exercise price from the holder of the option. If the put seller pursued a cash secured put strategy, they will have the cash in their account to make the purchase. If the seller does not have the cash, they will have to deposit sufficient funds or sell account assets to fund the obligatory assignment purchase.

Option Assignment Example

It helps to run through an options assignment example to grasp how the process works.

Let’s say you were bearish or neutral on the price of XYZ stock over the coming 30 days. You also want to take advantage of what you believe to be high implied volatility of call options on that stock.

After analyzing the option Greeks, you decide to sell $100 strike call options while the shares trade at $95. The option premium you collect is $10.

After three weeks, the stock has jumped to $105, and the short calls are worth $6. You are alerted that you now face a call option assignment. While a small percentage of options contracts are exercised, you are among the few who are chosen to be assigned.

To meet the requirements of option assignment, you must deliver shares to the individual who exercised the call option. You can buy shares in the market or, if you own shares and wrote a covered call, your shares might be called away.

For puts, the purchaser of the option sells (or “puts”) shares to the writer by way of a short position.

Option Assignment and Multi-Leg Strategies

Some of the more complex options trading strategies, like those involving many legs, can face more option assignment risks. If just one leg of a broader trade is assigned, the writer must act. That might involve closing the entire strategy or simply adjusting the other legs to manage risk.

Once an option seller’s position is assigned, the trader must meet the contract’s terms to buy or sell shares of the underlying security, regardless of what other legs the writer has active. That is part of the risk of selling options as part of a multi-leg strategy.

What Does Assignment Mean for Individual Investors?

Options assignment is just another risk to be mindful of when selling puts and calls. While there are plenty of upshots to writing options, such as collecting premium, assignment risk is present. It’s important that you check with your brokerage firm to know their option assignment process and cut-off times. Some firms might have significant costs while others might feature option assignment free trading.

The Takeaway

Option assignment happens to writers of contracts when the owner of puts or calls elects to exercise their right. Options sellers are then required to purchase or deliver shares to the individual exercising. The OCC randomly selects sellers through the option assignment process.

Only option sellers face assignment risk, so you can avoid the risk by only being on the long side of contracts.

If you’re ready to try your hand at trading options online, you can set up an Active Invest account and trade trade options from the SoFi mobile app or through the web platform.

And if you have any questions, SoFi offers educational resources about options to learn more. SoFi doesn’t charge commissions, however other fees do apply, and members have access to complimentary financial advice from a professional.

FAQ

How is option assignment determined?

Option assignment is determined by the OCC which randomly assigns firms that have accounts short options. This only happens once an options contract holder chooses to exercise. While a small portion of options contracts are exercised, traders should understand the risks, particularly as expiration nears, as that is when assignments are more likely.

Are options assigned before or after expiration?

American-style options can be exercised, and thus assigned, any time before expiration. European-style options, however, are only allowed to be exercised during a specific period right before expiration, so options assignment can only happen then. Be sure to know the style of options contract you are selling so that you know your option assignment risk.

What are option assignment fees and how much are they?

Options assignment fees vary by brokerage. These days, trading commissions to fulfill obligations from being short an options contract are generally reasonable. There could be a base options trading fee plus a per contract charge, but some brokers do not have options assignment fees at all.

Photo credit: iStock/nortonrsx

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