Auto Loans for The Car of Your Dreams
When it comes time to
buy a new car, few have little choice but to get an auto loan. This can be a
daunting task but armed with the right information, you can keep yourself
from getting trapped into an auto loan that can end up being a burden in
more ways than one. Knowing what you want and what you can realistically get
before you apply for a car loan means you control a situation that easily
gets out of control for those who choose to walk into an auto loan
unprepared.
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Know Your Credit Score
A
majority of people think merely reading the ads in the newspaper and
figuring out how much they can afford for a car payment is the first thing
to do when making a new car purchase. Although figuring what your budget
will afford is a very good thing to do, when it comes to getting the car
loan that will even make the payments a reality, there is something else
that needs to be done. The first thing that does need to happen is a little
bit of research- but the research needs to be about you. You may think you
know all there is to know about yourself but do you know the most important
thing when it comes to getting an auto loan? It’s your credit score. This
number helps determine whether you will be approved for an auto loan that
lets you go home in a new car. (It’s also a safety measure for when
unscrupulous salespeople try to tell you your score is too low for their low
financing car loan program and thereby unnecessarily fixing you with high
interest rates!) There are three credit agencies:
TransUnion,
Experian and
Equifax. There are many sites online that will give you gain access to your
score from all three agencies for a fee. Your credit score will help you to
identify not only whether you will be able obtain an auto loan but if there
will be high interest rates attached to it!
Check Online Auto Loan Rates
When it’s time to finance a vehicle, don’t rely exclusively on the
dealership for an auto loan. The 0% financing they offer is only for
‘qualified buyers’, which a majority of us aren’t. Not only is your bank or
credit union probably a better choice for a car loan but there are some very
reputable sources such as
This Car Loan Provider
for online auto loans
that also have really great rates. Online lenders not only tend to have
better loan rates but the loans are easier to apply for. You can also find
‘car loan calculator’ tools online that will help you figure out what car
payments will be with different interest rates. Then you can see for
yourself what the auto loan is truly going to cost you at different interest
rates. Knowing what you can afford will help you pick out the car loan that
is right for you and keep you from being swindled into an auto loan you
can’t afford!
Applying for an Auto Loan
Despite ads and dealerships that guarantee approval for auto loans, it is
widely advised that any one person with a credit score of 600 or under
should wait to apply for an auto loan until they can up their score to
around 680 in order to get good (or at least better) interest rates. All
credit card balances need to be in good standing and the longer you have
been at your current residence, the better. The same goes for being with an
employer. All these things will make lenders more comfortable with providing
you with an auto loan. Upon receiving your credit report from the credit
agencies, make sure all information in the report is correct and remove any
mistakes or discrepancies by contacting the creditor who made the error.
Doing this will improve your credit score and increase your chances for
getting a decent auto loan with decent rates.
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Applying for Auto Loans with Bad Credit
Banks, credit unions and other loan resources make their money from the
interest rates on the auto loan. As far as they see it, the lower the credit
score, the higher the risk that the loan will not be repaid. The higher the
risk, the higher the interest rates. While some dealerships may offer a
lower monthly payment for your car loan than your bank, this usually has to
do with the number of months that the auto loan will be for. The longer the
term of the loan, the lower the payments will be. However, depending on the
interest rates of the car loan, this can mean you end up paying more for the
car in the long run. Try not to focus so much on getting a low monthly
payment; that way, 4 years down the road you won’t still be paying off a car
loan and owing more than the car is worth! You may also be asked to get
someone with better credit to co-sign for your auto loan. This is a risky
move. Many do not want to co-sign for a loan when it is common knowledge
that the co-signer can be held responsible for payments should the loan be
defaulted on. The best bet for not-so-good credit is really an
online lender.
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