Category Archives: Auto Loans

Shopping For An Auto Loan?

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It is obviously a better idea to pay cash for a car purchase. But that’s not a viable option for many. They are comfortable with partly payment to the lending house as part of their loan payoff scheme. If you are shopping for an auto loan, it is important to consider the best deals only. Being driven by wrong belief, many potential borrowers never swivel their attention from working it out at the car dealership. This way, they only miss on chances to get a better rate, a plenty of which are for grab. Some think about rolling their old car loans into a new one, which may not be a better idea always.

Go with the following flow to know how you can shop around the best auto loans:

First, decide which car make you want to buy. If you are looking for a luxury ride, it means pouring of the more liquid fund. For any rational buyer and borrower, the choice should be a function of his/her affordability. Ideally, an auto loan should be paid in 3-5 years and that could give you a peace of mind. You can take out more money if you can afford. However, borrowing more than requirements never makes a good sense even if you can afford it.

Approach your local credit union if it will pre-approve you on your auto loan. The credit union is likely to get you the best rate. You can also place a call to your current or local bank or meet the authority in person to know what it charges for an auto loan. The loan is likely to come up with the lowest interest rate if you already have a draft for automatic payment from your account. Also, inquire if your bank has other discounts to offer. Take time while shopping for an auto loan as you need to get quotes from different institutors and go through details of the offers. Make sure to compare the rate as charged by the credit union and your bank with that of a car dealership, it is the ideal way to make the best choice.

Wherever your auto loan is sourced from, you will be asked to submit your income details along with residence proof and credit scores. If your lender does not require these during pre-approval stage, then you may need to submit them while signing the deal. However, the unscrupulous lending houses won’t ask for these but you must avoid them at any cost; otherwise, you are more likely to discover hidden charges at the time of pay-off.

If you already have an old car, sell it off instead of ‘trade in’. It will bridge a gap between the required and received by a good extent. Also, make it sure not to merge your new loan with the existing one. You will be sagging under a burden that is heavier than your loan’s worth.

Once you are done through your car selection, you should ask the loan officer regarding how to proceed. This often involves enquiring about a car dealership. Once the procedural work is complete, the dealership will hand the title over to you. The title comes with a note mentioning the lien on it. When the title is changed in your name, it will be mailed to the institution where you have sourced your loan from.

4 Factors That Will Increase Your Chances of Getting a Car Loan

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Are you looking to buy a new or second hand car? Don’t have enough cash? Then you are most likely looking at other ways to finance your purchase such as a car loan. The following tips are basically key elements that will help you get approved for car finance, these elements are not isolated from each other, they all pay a role in the overall formula:

Deposit

There more money you put down as a deposit, the less you will have to borrow and the less you will have to pay back. If you can afford 25% of the value of your vehicle, your chances of being approved for car finance are significantly high. Needless to say it will also depend if you are buying a new or second hand vehicle and what the resale value of that car might be.

Credit Rating

Your credit rating is probably going to be the most important piece of information that lenders will look at which will help them determine whether you are eligible for a car loan or not. In the UK your credit score goes from 0 to 1000 and falls into the following categories:

Very poor: 0 – 560

Poor: 561 – 720

Fair: 721 – 880

Good: 881 – 960

Excellent: 961 – 999

There are many factors which help determine your credit score, such as if you are on the electoral roll, if you have lived at a permanent address for more than 3 years, if you have any outstanding debts or defaulted on any payments, how frequently you have applied for loans and if you have been rejected or not, and many others. Generally speaking the more stable you are financially, and more credit card bills or loans that you pay off in time will help boost your credit rating.

Amount Borrowed

The amount borrowed is of course one of the main factors which can make or break your application for a car loan. It isn’t as straightforward as it seems, it’s not just a case of ‘the less borrow, the more likely you will get approved’. Car finance brokers are looking to make money and profits, so they aren’t particularly focused on lending small amounts and charging low interest rates. Ideally they would like to be in a position where they can lend large amounts as this will generate more profits for them!

There are other elements that they will take into account when looking to finance your car, such as your credit rating and history, the amount you choose to borrow, how much deposit can you provide, the time-span you plan to pay it back in, and needless to say which car you choose to purchase. All of these elements play a role in their risk and profitability formulas that lenders will use to determine if you are eligible or not.

If you’re looking to borrow larger amounts, you must be in a position to provide a decent deposit (over 10% of vehicle cost), have a clean credit history and be purchasing a car which offers good re-sale commerciality. Lenders look into the re-sale value of a vehicle in case they have to repossess the car and sell it at auctions or elsewhere to gain their money back.

Value of the Car

The value of the car you plan on purchasing will have a significant importance on the outcome of your finance application. Lenders usually appreciate capital protection when lending money to someone who plans to buy goods such as cars, as it guarantees them some security in case you fail to make the repayments.

They don’t just take into account the value of your desired vehicle, needless to say, the other factors such as your initial deposit, credit history and monthly repayments will play a big role in determining your outcome.

For example, if you are looking to buy a brand new Mini Cooper, which has a strong market value and is popular by demand, and you have a 25% deposit, the chances of getting car finance will be pretty good. On the flipside, if you are looking to buy a second hand, unpopular car model (lets say a Hyundai Atos for example), and you have less than 10% deposit, lenders aren’t going to be so willing to finance that purchase as it offers them less security.

Benefits of the Refinance Auto Loan

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Refinancing of auto loans reduces the interest rate to a comfortable range. This makes it clear why majority of the people with outstanding loans opt for refinancing plan. Even if you have no immediate financial plan, still taking out a car refinancing loan will benefit you in multiple ways. If you are still wondering how it can do so, go through the article to get a clear and complete picture of the whole matter.

What Is Meant by Refinancing?

Refinancing refers to a process whereupon you can negotiate with the lenders regarding the terms of loan and procedures of repayment. In other words, it is about renewing the terms and conditions of existing loan you are obliged to pay. The primal objective of going with auto loan refinancing is to avail lower interest rate in order to make the volume of schedule payment as smaller as possible.

How You Can Proceed with Auto Loan Refinancing?

Auto refinancing loan is provided only to the qualified applicants. So what needs first is to assess if you are an ideal candidate to obtain the loan or not. What type of auto financing did you initially qualify for? If the loan comes with high interest and the rate oscillates according to economic condition, refinancing is a good idea for you. This is because; refinancing will help you make lesser payment due to drop in interest rate. Not only that, you will get to enjoy other facilities that come with flexible interest rate. All these will allow for easy adjustment of payable in your budget chart. Whatever happens in economy, it won’t have any impact on payable scheduled amount. The idea also works better for those seeking a new loan as they will get to avail favorable terms such as deduction for early payoffs.

Has your credit score improved substantially in recent years? If yes, then refinancing is a sound solution for you. Those with bad credit history get a sub-optimal rate in times of car loan borrowing. However, if they manage to improve their credit status, they can get to enjoy more favorable terms and conditions through loan refinancing. Refinancing makes a good choice for the borrowers with high to average credit standing.  However, if you have a poor credit score, it is less likely that your application for refinancing will be granted.

Though refinancing is a good choice for obtaining lower interest rate along with extended payment facility and bonus for early repayment, the cost associated with it must not be overlooked. If the benefits from auto loan refinancing outsmart the cost borne for the same, going with the option will result into a significant amount of saving. If a lender offers the terms and rate that will affect your regular payout in the most positive way, it is worth a consideration.

Car loan refinancing is a serious decision that must not be taken without considering some important criteria. Always weigh the expenses and benefits; this will give you an idea of how much you will be left with. If amount of saving is estimated to be significant, refinancing of car loan is a worthy decision.