How to Get an Auto Loan
The first step in purchasing a car is typically applying for an auto loan. There are a number of financing options available to someone who is looking for a loan to buy a car. The options vary depending on credit history, credit score, and the overall financial status of the individual. For people with poor credit, getting an auto loan can be a challenge. Getting a low rate auto loan for these people is even more difficult. For this reason there are a number of car dealers which specialize in giving an auto loan, bad credit, or not. Most of the time, depending on just how bad the credit score is, the loan will come with very high interest rates attached to it. The following things should be considered when looking into financing, applying for a loan, and auto loan rates.
Pre-Approval
One good way to see what a person’s chances of getting an auto loan is for them to try getting pre-approved. There are a number of online sites that cater to people looking for instant approval for all sorts of loans, including auto loans. In addition, getting a pre-approval will save some of the leg work involved in getting the right car. Once a person knows what they are dealing with in terms of financing, they can make a much better choice as far as setting realistic goals for car shopping, as well as financing. If a person’s credit score is not sufficient to receive a low interest auto loan, they will almost always be denied for a conventional auto loan. At that point, a new strategy will need to be taken.
Bad Credit Auto Loans
Most of the major car lots that sell new cars will not even touch a person who does not have a high enough credit score. These car dealerships usually have very strict guidelines in terms of loan qualifications. With that being said there are big sales and specials that some of the car dealers often run in which they will guarantee getting someone into a car, regardless of their credit. The thing to know about these loans is that they are not going to be as attractive as the loans people with excellent credit will be offered. Not only is the interest rate usually quite high on bad credit auto loans but there are also a number of other factors. The first of which is the actual amount of money one can be approved for. Bad credit auto loans are normally only offered up to a certain amount. This may limit the choices as far as what type of car can be purchased.
Auto Loan Refinance
If a person is forced to take a less than desirable, high interest auto loan, there is something he/she can do to realize a lower interest rate, on certain occasions. Auto loan refinancing is not something that many people even know exists. In fact whenever a person hears the term “refinance”, they are automatically inclined to think of a home mortgage. Fortunately, refinancing is not limited to mortgages or personal loans. Auto loans can be refinanced after a certain period of time. Generally speaking, the best time to refinance an auto loan is after a person has had any improvements to his/her credit score. Most people would be surprised to know how much having just the slightest improvement in credit can lower the interest on a loan. In fact, this is a very viable option for someone who has been paying an extremely high car payment. If a person is not sure what interest rate they have been paying, a simple auto loan calculator is all that is needed to figure it out.
Applying for an auto loan does not have to be stressful or intimidating. The key to finding the right auto loan is in weighing all options that are available, as well as paying close attention to terms and interest rates. An important rule of thumb to keep in mind when shopping for the right auto loan is that many times, if something should seem too good to be true, it often is.