How to get the Best Rates for an Auto Loan
If you need a new car, you probably need an auto loan. Therefore, before you go car shopping you should do your auto loan research so you can get a good interest rate. Generally the better your credit score is, the lower your interest rate will be.
If you have a good credit history, you will probably not have any problems getting the auto loan you need. However, without a good credit history you might have some difficulties getting an interest rate you can afford. The lack of a good credit score does not mean that you are somehow irresponsible. Everyone has the occasional financial set-back. Unfortunately, lenders do not know you personally and need to rely on your credit score to determine whether or not they should lend you money.
Therefore, you should first find out whether or not you have a good credit score. If you have a good credit rating, above 700, you can walk into a dealership with confidence. If your rate is not as high as you would like, you will be able to take steps to compensate for your poor credit rating.
You can get your credit report free once every year, but your credit report does not contain your actual credit rating. There are two ways you can get your numerical credit rating. The first is to pay a company to send it to you. The second way is to sign up with a company that offers you a free credit score. You will need to sign up for a trial of their credit services in order to receive your score. Make sure that you cancel your membership before the trial period that you have. Otherwise, you might be charged.
If your credit rating is below 700, try and raise it before you buy a car. Work on servicing and paying down any debt you have. Make payments on time or early. Within a year, you should see a marked improvement in your credit score. If you have never taken on any debt, such as an auto loan or credit card, credit agencies have no credit score for you. This is also called a “thin file” and means that there is not enough credit history to review. A non-existent credit score can look just as bad as a low credit. Apply for a credit card and use it, making your payments on time each month. Go to your banker or credit union and obtain a small personal loan. The amount can be $1,000 so the point is to pay it on time, and payoff. This will let lenders know that you are responsible when dealing with your debts.
Sometimes, however, you just cannot wait to buy a new car. Your old car might have been in an accident and you need a car to get to and from your job. If you do not have time to improve your credit score, consider asking a trusted friend or family member to be a cosigner. Make sure that you can make the payments before you ask a friend to co-sign for you. For many individuals, getting an auto loan is the most stressful part of the car buying experience. Want to reduce some of the stress? Search online for a real lender, or someone that you can see is really in the auto lending business and apply. Better yet, if you can get multiple quotes from auto finance companies like myAutoloan.com, you can compare and save time and frustration that you would have to go through at the dealer. Fortunately, if you do your research in advance you will be fully prepared for the auto loan process.
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