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
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%
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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