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Car financing

Theoretically speaking if you have recently filed bankruptcy, you may wonder if its possible to get auto financing again. Believe it or not there are more and more loan companies all the time that have new programs to help finance people with bad credit. If experts are to be believed an auto loan is easier to get car financing for than a personal loan or an unsecured loan because the lender can use the car as collateral against the loan, in case the borrower ever defaults or doesn't make the loan payments.

Below mentioned tips can play a pivotal part in helping you get finance to purchase or refinance a vehicle after a recent bankruptcy.

1. Get Financed To Re-establish Your Credit - There is no hiding the fact that getting a new car loan can help you re-establish your credit when you make your payments on time. As a matter of fact once you have made payments on time for about 6 months or longer, you should be able to refinance your car at a much lower rate. In an ideal scenario as you make your payments on time, your credit score will increase.

2. Buy The Lowest Priced Car You Can -Furthermore it is worthwhile remembering that when car financing after a recent bankruptcy, you can expect to see interest rates as high as 14-19% or more. More often than not it is not wise to buy a car that is more expensive than you need because, initially, you will be paying such a high interest rate on the amount you are borrowing on. On the other side of the coin if you do want a more expensive car, wait until you have made payments on time for a year or two, after your credit rating has increased. After that you should be able to get an interest rate of around 9-10% or less.

3. Get Multiple Offers - According to experts there are many lenders online that will offer you up to 4 offers from one application. Fact remained that most of these loan companies will not even pull your credit with the initial application, they will just ask you to describe your credit. By following this procedure, your credit score will not drop from being pulled too often.

In addition when purchasing a new vehicle, most people dont have enough funds to pay cash and must obtain car financing. Point to be noted in this regard is that after deciding which type of car to buy, the next important step is finding a good lender. While there is no denying that you may have no problem qualifying for car loan financing, it is important to shop around before deciding upon a lender. In simple terms you can do this by either visiting local banks in your area or by researching car loan financing offers online.

On the other side of the coin if you have good credit, you may even want to decide upon a

lender before visiting the car dealership. According to experts this way you can get pre-approved for a set amount of cash. Fact remained that once you have been preapproved, you know how much you have to spend. Theoretically speaking you wont be as tempted to look at cars that are out of your price range. In case if dealers know you have already been approved for a loan, they may be more willing to negotiate a deal. Since it is worthwhile remembering that most salespeople work on commission, they will do their best to accommodate someone who has already been approved for a loan.

Down Payment and Interest Rates

Always remember that your initial down payment will affect what type of car loan financing you receive. The general thumb rule in this regard is the greater your down payment, the lower rate of interest you can expect to be offered. Believe it or not auto lenders will consider you less of a risk if you invest more in the vehicle upfront. There is no hiding the fact that it may be very tempting to apply for car loan financing while a dealership has a no money down offer, but you should be aware that the interest rate terms might be much higher.

Length of Payment Terms

Not so long ago the longest term for car financing was sixty months. At the present moment dealers have started to offer extended payments plans of seventy-two and eighty-four months. In theory this has caused consumers to purchase more expensive vehicles, cars that would generally be out of their price range.

While there is no denying that you may dream of buying a $40,000 dollar SUV, it is probably not a good idea unless you can pay for it within a five year time frame. Point to be noted here is that once the warranty period is over, you are responsible for all repairs. On the other hand people who finance their cars over a seven-year period often end up owing more on the car than it is actually worth.

If experts are to be believed cheap car loans are essentially auto loans that consist of a low rate. Fact remained that for many people, this is a primary concern. In other word low interest rates equal lower monthly payments. Thats why, car financing buyers are able to afford more. On the other hand individuals with a high credit score may qualify for a low rate auto loan. Yet, in an ideal scenario it is possible to obtain a good rate with average or bad credit.

Monitor Your Credit Rating

It is quite pivotal that you do not enter the car buying process blindly. For the most part, it is worth pointing that anyone can qualify for a used or new car loan. As a matter of fact automobiles secure the loan. Because of this, if you default, the lender may repossess the car and resell it. Nonetheless, there is no denying that having a few credit blemishes will result in a higher interest rate.

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