Auto Refinancing to Help Save More Money

Always focus on the front windshield and not the rearview mirror.

~~Colin Powell

When you think “refinancing,” there are probably two basic scenarios that come to mind. One is the possibility of refinancing your mortgage to lower your house payment or secure temporary cash to invest in home repair or improvements without adding to your monthly debt. The other is an overall debt consolidation of some sort – taking out one large personal loan to pay off credit cards and other debts in exchange for a single, lower monthly payment and hopefully a better interest rate and more manageable terms.

These are both completely valid refinancing scenarios and have proven useful to many people in many different situations. But they’re not the only time you might consider refinancing. Besides, you may have a great interest rate on your home and it would be counterproductive to rock that boat. You may have your monthly bills under control and don’t need to get too carried away with how you’re handling them.

But how are those car payments looking these days? Are you wishing you’d managed to negotiate a better price or lower interest rate? Regretting taking on that second or third payment before the first one was completely paid off? Maybe your financial situation has changed and you need to lower your monthly payments. Maybe your credit rating has improved and you qualify for a better interest rate or other terms now. Or maybe you took advantage of some sort of promotional dealer financing that looked great for the first few months and then the small print kicked in and it suddenly didn’t look so great anymore.

Auto refinancing is a valid option whatever your situation. It’s not for everyone in every situation, but it’s worth looking at long enough to decide whether or not it’s right for you right now.

The car has become an article of dress without which we feel uncertain, unclad, and incomplete in the urban compound.

~~Marshall McLuhan

How Do I Shop For Auto Refinancing?

Shopping for auto refinancing is not all that different from shopping auto lenders before you buy a vehicle to begin with. You’re going to look for lenders willing to listen to your needs, offer flexible terms and competitive auto loan rates, and make things convenient for you, the customer.

Just like when you borrowed the first time, your credit rating and credit history will be major factors in determining what sort of terms you can secure. Auto lenders will often more heavily weight your history with auto payments specifically when calculating your credit score. They’re less concerned with what you might owe the hospital or the apartment complex you lived in last year than whether or not you have a strong track record of making your car or truck payments.

The same is true for auto refinancing. Your overall credit rating matters, but your history of car or truck payments matters a little bit more.

Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?

~~George Carlin

Just like borrowing the first time, you’ll want to take some time before applying to calculate what you can reasonably afford. Although in most cases auto refinancing is intended to reduce monthly debt rather than take on more, extending the life of the loan might mean paying more in the long term. Or, there may be refinancing fees or other charges up front to consider, even if overall you’ll save by making the change.

Finally, gather your documentation ahead of time to simplify the process. All the usual items – proof of income and employment, any outstanding debts or assets, etc. You’ll also want records of the auto loan or loans you wish to refinance. What did each vehicle cost? What were the terms? How much have you paid? What’s the balance on each loan? Having this information prepared and ready helps keep things moving and might even help persuade the lender that you’re a bit more reliable than most.

You never know.

Americans will put up with anything provided it doesn’t block traffic.

~~Dan Rather

Why Consider Online Refinancing?

It’s probably no surprise to you that we’re pretty big fans of online lending and online auto refinancing. You may not know exactly why, however.

There’s certainly nothing wrong with talking to your local bank or credit union. If they offer you the best rates and favorable terms, that’s awesome – go for it. They sometimes run specials or go the extra mile to try to bring in new customers in hopes you’ll do the rest of your banking with them as well. Just like with any loan or other financial decision, check out all of your options before committing!

Let’s look at some of the reasons online auto loan shopping and refinancing might be the best option for you.

Flexibility with Auto Refinancing (or Anything Else)

Many online lenders are able to offer more flexible terms and often better interest rates because they were designed to be nimble. They may have low overhead, no nice brick buildings near the mall with fancy lobbies and public restrooms to maintain. A number of them specialize in specific types of loans or customers, meaning they don’t have to be all things to all people.

An online lender who deals primarily in auto financing or auto refinancing and who specializes in customers with limited credit or poor credit is able to focus all of their resources, training, knowledge, and creativity into that segment of the financial world. Of course they can do it more efficiently and flexibly – it’s literally the focus of what they do. It might be ALL they do.

Willing to Compete for Your Business

That also means they want your business. It’s not like there are other customers or other types of banking they’d rather be doing, but they have to be nice to you because you’re there. You’re the customer, and they know you can go anywhere you want – including banks, credit unions, or other online lenders. That means that online lenders are more likely to compete for your business. They want you to be happy now and down the road so that next time you need a loan, you’ll be more likely to start with them.

Isn’t that how healthy competition and capitalism is supposed to work? Making things better for the consumer? Sure, we should be realistic. Not all of us are going to qualify for the premium rates or the maximum amount. Sometimes we’ll have to accept certain fees or slightly higher interest in order to move forward.

But let’s not be so quick to act like everyone who makes us a loan is doing us a huge personal favor, or like we’re doing something wrong by asking for it. Loans come with interest and fees, which we’re going to pay. That’s how lenders make their money. We’re paying for the right to use that money and pay it back over time, but in years past, anyone with less-than-perfect credit or with a below-average income was expected to almost… grovel before a loan officer somewhere, as if we were seeking charity or forgiveness for a personal wrong.

I may be exaggerating a bit, but the point is that it’s about time lenders treated borrowers as equal players in the game, whatever our credit history. So yes, that’s something I particularly like about online lenders. They simply tend to be better at this part of things.

No offense to your brother-in-law at the credit union or anything. I’m sure he’s nice, too.

The Convenience of Online Auto Refinancing

Finally, it’s simply SO convenient to auto finance (or auto refinance) online. You don’t have to dress up or get to any particular office at any particular time. There’s no waiting in the lobby reading old magazines and no sitting across the desk from a guy in a suit who asks you way too many questions then types for a long time without telling you what’s happening. Online auto refinancing can be handled on your schedule, at your pace, and on your terms. Very often, the money is in your account within 24 hours.

Don’t confuse reputable online lenders with the sort of sketchy payday loan storefronts you pass next to the liquor store or any of those “quickie cash” signs flashing outside the gas station with the bars in the window. Of course the same sorts of iffy operations exist online – it’s the internet. That’s why we here at Loanry go to great lengths to maintain a curated database of legit lenders and what they do – so we can connect you to those most likely to meet your needs.

What you work out with them from there, of course, is entirely up to you.

The American really loves nothing but his automobile: not his wife, his child, his country, nor even his bank account first… but his motor-car. Because the automobile has become our national sex symbol. We cannot really enjoy anything unless we can go up an alley for it.

~~William Faulkner

Where Should I Start With Refinancing an Auto Loan?

Before contacting lenders, look at your current vehicle payment(s) as part of your overall budget. How much are you bringing in each month, and how much is going out? Just as importantly, where is it going? If you don’t have a fairly detailed household budget, you should make one. I’ve belabored this point elsewhere, so I won’t badger you about it too much right now, but let’s be honest – you really shouldn’t even be talking about auto refinancing or any other kind of major financial decision unless you have a pretty good handle on your exact fiscal situation now and for the foreseeable future.

Can you tell I’m giving you a very serious “I hope you’re taking me seriously about this part” look right now?

Next, take advantage of our auto loan calculator to see just how much you could save (or not) by refinancing. It’s often helpful to have a general idea of what sorts of numbers you’re talking, particularly when comparing interest rates or factoring in upfront charges.

Cars are the ultimate symbol of freedom, independence, and individualism. They offer the freedom to “go anywhere,” whenever it suits and with whom one chooses.

~~Sarah Redshaw

Other Considerations

Remember that while you’re probably not dealing with down payments or trade-ins when you’re looking at auto refinancing, there are still other factors besides interest rate which impact the total cost of the loan. Perhaps the most overlooked, despite being one of the biggest, is the length of the loan.

Stretching out the number of months over which you repay what you’ve borrowed certainly lowers your monthly payments. Over time, however, you’re paying much more in interest – not because the rate is higher, but because it’s being calculated over a longer length of time.

NPR recently did a piece on the growing popularity of seven-year car loans:

A seven-year car loan means lower monthly payments than a three- or five-year loan… A third of all new car loans now have terms longer than six years, according to the credit reporting company Experian. That’s more than three times as big a share of the loan market as a decade ago.

Hey, at least you’re not alone, right?

But while these loans are popular, they’re probably not the best personal finance move…  Longer-term loans usually have higher interest rates — and you’re paying longer…

And if you want to sell your existing car — maybe you have another child and need a minivan — with a seven-year loan you are much more likely to be stuck still owing a lot more than the car is worth.

Sometimes this sort of compromise is necessary in order to manage your many obligations. If so, that’s fine. Monthly payments matter, and it’s better to pay a little more over the long term than risk not being able to make your payments on time every month. Just be aware of the trade-off so the decision you’re making is an informed one.

On the other hand, the article goes on to explain that much of the time, the issue isn’t rising car prices. It’s that buyers want more car or truck than they could otherwise afford. In other words, many times, the issue isn’t need so much as greed.

You can know or not know how a car runs and still enjoy riding in a car.

~~David Byrne

Anything Else I Should Watch For when Refinancing?

Pay attention to any refinancing fees or other upfront charges. Make sure you know what sorts of charges are involved if you’re late on a payment (we never plan on being late, but it’s still best to know). Ask also about the lender’s policies regarding overpayment or early pay-offs. Some companies love it when you pay extra or pay back the loan early; others not so much.

Obviously, if you’re looking at auto refinancing, you probably already have one or more auto loans which you negotiated, or at least considered while someone else laid out the details, at some point in the past. You apparently signed the dotted lines, because you’re here now considering reworking them a bit.

That said, some of us manage to get pretty deep in the process without fully understanding all of the details (and not just when it comes to auto loans). If you’re considering refinancing but still have questions about how you got here in the first place, it’s probably not a bad idea to revisit a few auto loan basics before moving along any further.

Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.

~~Ogden Nash

Once You’ve Refinanced

Now that you’ve rebooted your loan, there are a few pitfalls to avoid. I’m sure YOU won’t be tempted by any of them, but other folks sometimes are, so I feel obligated to cover them.

The first is that if your auto refinancing went well, your monthly payments have probably gone down. And before long, your credit rating may start to go up. That means you’ll soon have the option of spending more than you have been on other things. Or taking on more debt now that you’re not so buried as you were only a few short months ago. You may be offered some pretty sweet terms on new credit cards or some pretty special deals on another vehicle.

I hope you’ll allow me to be blunt.

Dude. Just don’t even. You’re doing so well – why go backwards now? That big-ticket item you want to charge and that new debt you want to take on are like tequila and Jello shots for a recovering alcoholic. They’re chocolate pecan pie and Double Stuff Oreos in the second week of your diet.

I’m not suggesting you deny yourself life’s essentials, or that you can never charge again. But keep thinking big picture. You want to be free of excessive debt. You want to have options when it really matters. And you want access to low-interest funds on reasonable terms when it’s time to pay for that wedding, those medical bills, that vacation, those repairs, that remodeling. Fiscal responsibility isn’t about making sure you stay miserable and deprived – it’s about being intentional and making sure that what you’re CHOOSING is actually moving you closer to what you actually WANT.

It’s not about my rules or what I’d buy. It’s about why you’re working so hard to begin with. And it’s about where you want to be in six months, and in two years, and at retirement.

If you think nobody cares if you’re alive, try missing a couple of car payments.

~~Earl Wilson

Fresh Starts and Timely Payments

The other thing to avoid is getting careless with your wonderful new refinancing loan. Whether you got a great auto refinancing deal thanks to your good credit or whether you had to accept a few fees and a slightly less impressive interest rate because you have poor credit, you are now going forward one way or the other. Your credit history and credit rating will get better or worse based on how you repay this loan (they rarely stay the same).

If you realize you’re going to be late, contact the lender before the due date. That doesn’t make it OK, but calling is always better than not calling. If you realize you can’t make the full payment, make part of a payment. That doesn’t make it “not late,” but paying some is almost always better than paying none.

Ideally, of course, you make the payments on time. Every time. Wherever you started, you’d be surprised how quickly your credit improves when you do this. That is, in fact, the whole idea.

Told my girl that I’ll have to forget her – rather buy me a new carburetor. So she made tracks saying, “This is the end, now.” Cars don’t talk back – they’re just four-wheeled friends now. I’m in love with my car.

~~Queen

Did You Know?

  • More Americans are borrowing money to purchase a vehicle than ever before. There were over 27 million new auto loans in 2018. And it looks like 2019 will top that by the time the year has wrapped up.
  • The average debt for that car or truck (new OR used) is going up as well. (Hence the seven and eight-year loans we mentioned above.)
  • Home mortgages account for the biggest chunk of personal debt, which isn’t particularly surprising. Over two-thirds of the money we owe is for our homes.
  • Student loans account for another 12%, making them a hot political topic all by themselves. Some major candidates are suggesting college and other post-secondary education should be free or far more affordable for anyone who wants it. (So far no one has suggested the same thing about cars or trucks.)
  • Auto loans come in a close third, just ahead of credit card debt. Nearly 10% of our total debt is for a car or truck of some sort.
  • Over the past decade, auto loans for borrowers with credit scores of 620 or less (generally considered “poor”) have risen, although the number has leveled out in the past year or two. The same is true of scores in the 620 – 659 range (“fair” credit) and those between 660 – 719 (“good” credit). Borrowers with a credit score between 720 – 759 (“excellent” credit), however, continue to grow as a percentage of total borrowing, as do those at the top of the credit history food chain with scores of 760 or above (“please have my babies” credit).
  • Despite the fact that so many people are behind on so many things, the average credit score in the U.S. is gradually increasing. (Isn’t America wonderful and strange at the same time?) In 2018, more than 21% of Americans were considered to have an exceptional FICO Score, an increase of 5.6 percentage points from the average in 2005.
  • The total amount owed by Americans on their personal vehicles is over $1 trillion at the moment, and the number of those getting behind on their payments is rising. Around 6.5% of vehicle loans are currently 90 days or more late.
  • The credit scores demanded by auto lenders and the interest rates they’re charging are going up. A higher credit score means better terms and a higher limit, but that in turn means more debt.

Conclusion

Auto refinancing isn’t the answer for everyone, but it’s worth looking at and something we don’t always consider. Our hope at Loanry is that whatever you decide about your car or truck payments, it will be part of your larger journey towards financial security and informed personal money management.

We’re happy to help you find the right loan and connect you to some great online lenders. Let’s not downplay the power of getting some of that auto debt under control. Or re-negotiating some of those terms and rates.

Even a successful refinancing isn’t always enough all by itself to turn today’s struggle into long-term, ongoing success. That’s why at Goalry we offer a range of financial blogs, online tools, and personal organizational services. We care about your debt, but we also care about helping you create and maintain a useful budget. And appropriately invest your wealth, and manage your personal or small business taxes, and…

Well, you get the idea.

There aren’t always easy answers. We certainly aren’t trying to do everything for you or even tell you what to do in all situations. We just have this crazy idea that life is complicated enough, and personal finance doesn’t have to be. It at least doesn’t have to be as hard as it sometimes seems.

New Car Loans to Get You Moving

Buying a new car can be such an exciting time. The best thing about getting a new car is the smell. There is nothing like sitting in your new car for the first time and inhaling the smell of leather. It probably has so many new gadgets and features that you need to spend some time learning all about your new car. There are so many options available on the car market, it is hard to narrow it down to just one. There are some downsides to new cars and that is the new car loans.

All You Need to Know When Using an Auto Loan to Buy a New Car

Before you get super excited about your new car and start taking cars for a test drive, you must have a basic understanding of auto loan details. I know these are the details that no one really wants to spend time learning. However, it is important to learn some key facts about them. Auto loan shopping is a little different from shopping for a personal loan.

There are a few different sources from which you can obtain an auto loan. You can get financing, or a loan, directly from the car dealership, or a traditional bank, or a credit union. Or you could even borrow money from family or friends. You make a promise to repay the lender with regular payments, usually monthly. The lender charges you interest as a fee for allowing you to borrow the money. The lender selects the interest rate and it is based on your credit score. The better your credit is the lower your interest rates tend to be. It is important for you to shop car loan rates so that you can find the best one for you.

Auto loans are considered secured loans because the car you are buying becomes collateral for your loan. If you do not make your payments, the lender may take ownership of your car. You do not actually own the car until you pay off the loan. Most lenders require you to have full coverage auto insurance. They want to make sure you have full protection in case you are in an accident.

Can I Get A New Car with a Loan from a Car Dealership?

Just about every dealership has a finance department through which you can obtain a car loan. Most of the time when you finance a car through a dealership, the carmaker is who is actually financing the loan. For example, if you are interested in purchasing a Mazda CX 9, it is Mazda that is doing the financing. When you use the dealer to finance new car loans, it often makes the process easier for you. When you go through the dealership to get your auto loan, you do not have to do a lot of searching for the right loan. Often, the dealer has several different loans available and will give you their best offer, or give you a few from which to select.

The dealership handles all of the financing for you, so you really do not have to do anything, but sit there. Unfortunately, you may have to sit for many hours while waiting for all of the paperwork to process. While you may have to wait in the dealership for quite some time, all of the processing is finished in just one day. You also have the benefit of already knowing what type of vehicle you want and how much it will cost. There are a few other advantages to obtaining a car loan from a car dealership. Some of those benefits are special promotions that only the dealership can offer. Obtaining a loan through the dealership may also allow you to negotiate a better rate for the interest or a lower overall price for the vehicle.

Can I Negotiate An Auto Loan?

There are many car buyers that negotiate new car loans. There are some aspects of a car loan that you can negotiate and there are others that cannot be negotiated. It is key that you understand the difference. You can negotiate the interest rate and the terms of the loan. The terms of the loan indicate the overall length of the loan and may shorten the period that you are paying for the loan. When you shorten the period that you are paying for the loan, it decreases the amount of interest that you pay. You can also negotiate any warranties or upgrades for the vehicle. If you are trading in another car, you can negotiate the trade-in value, so you might be able to get more for the car you are trading in.

You cannot negotiate registration fees or taxes. These are set by the state so they cannot be changed. Remember, you do not know what kind of rate you can get for your auto loan until you ask. The lender may not give you the best offer upfront because they want to make money. You should always do comparison shopping when you can.

How Do Car Loan Payments Work?

There are a few things you should also know about car payments. The most important thing to know about new car loans is that you must be able to afford it. The lender is not giving you the money for your car as a gift. You must make regular payments. Those payments may be monthly or bi weekly. Most lenders will automatically debit your bank account for the money. If you pay bi weekly, you make half the monthly payment every two weeks.

You end up paying off the car about four months earlier because there are two months where you may three payments. Basically, if you pay monthly, you make 12 payments of $958 (using the example above). At the end of the year, you end of paying $11,496. If you make bi weekly payments, you make 26 payments of 479, which means you pay $12,454 at the end of the year. This way, you pay off your car sooner.

If you do not make your car payments, the lender will repossess your car. Your car is collateral for your loan and that means if you do not pay, they take your car. Do not think for one second that the lender will not come get your car. Ok, well, the lender will not, but someone working for the lender will. Not only will they take your car from you, but it will have a negative impact on your credit score. The bottom line is to make sure you can make those car payments. You do not want to find yourself in that situation.

Can I Decrease The Amount Of My Auto Loan?

There are always ways to decrease the amount of money you borrow for new car loans. You should make sure your credit is in good shape before you borrow any money. The better your credit score is, the lower your interest rate is going to be. The lower your interest rate means a smaller monthly payment.

Pay attention to how much money you borrow. If you only need a couple thousand dollars, then you should try to save the money instead of borrowing it. Small loans amounts tend to come with high interest. You can usually pay off a small loan quickly and the lender does not make as much on a small loan, so they charge more in interest.

You may want to consider buying a cheaper car. Cars often have a high price tags. Do you really need a luxury car that is going to cost you a lot of money? You should look at used cars to see if you can find one that will suit your needs. With a little research, you may be able to find a used car that has low mileage and was really want cared for by the owner.

Keep this in mind when you are deciding how much you are willing to pay each month for a car. The car only loses value; few cars increase in value once you buy them. You will never make back the money you spend on a car.

Can I Pay Off My Car Loan Faster?

There are quite a few ways to pay off new car loans faster. Cars are expensive and as a result, most car loans take six to seven years to pay. Lenders have increased the amount of time they allow you to repay because of how much they cost. When you are considering new car loans, keep these ideas in mind. I mentioned above that you can make your car payments bi weekly instead of once a month. Even if your loan is supposed to be repaid once a month, you can make two payments a month as long as you pay the full amount by the due date. If you make payments bi-weekly, it allows you to pay two more payments per year and save about $2,000 a year in interest.

You can also round up your monthly payment each time you make it. In the earlier example, the monthly car payment is $958.33. You can easily round that payment up to $1000 and you will save money on interest over the entire year. And you could save several thousands dollars over the course of a year. You can also make a large payment at least once in the year. Continue to make your monthly, but also make one large payment to help pay off your loan sooner. This can speed up the length of time you will pay off the loan.

Some lenders may allow you to skip one or two payments in each year, but do not do it. It increases the length of time it takes for you to pay off the loan. In addition, the interest increases during those months that you are not making monthly payments.

What Is Interest And Why Does It Matter?

The shortest answer is: interest is a fee given to you by the lender for allowing you to borrow money for new car loans. The higher the interest rate is on your loan means you pay more money per month. Your interest rate is dictated by your credit score. The lower your credit score is, the higher your interest rate will be. There are a few more things that you should know about interest. The actual amount you borrow is called the principle. The lender adds the interest rate on top of the amount you borrow. Lenders add interest at a higher interest rate to loans they consider high risk, such as to those who have bad credit. Loans that are lower risk are given a lower interest rate.

To highlight this, I will give you some numbers as an example. These are only examples, not real offers:

You want to borrow $40,000 for a car (it is a really nice car). And you have great credit, so the lender adds 5 percent interest. You would like the payments to be a little lower, so you opt for a 48 month, or 4 year, repayment period. 5 percent of the $40,000 you borrowed is $2,000. Remember, the principal amount is $40,000 + $2,000 interest = $42,000 you are borrowing. Your monthly payments are $875 (remember it is a really nice car). That is $42,000 divided by 48 months.

The same exact situation except with bad credit looks like this… you are borrowing $40,000 but your credit is bad and that adds 15 percent interest to your loan. 15 percent interest equals $6,000. So, you have a principle of $40,000 + $6,000 interest = $46,000 total. Your monthly payments are $958.33. That increases your monthly payment more than $83 per month.

You can see how quickly the payment jumps up when you have poor credit. I used an extreme example with a $40,000 car. The difference would be smaller if the total of the car was less.

Can I Use A Credit Card To Buy A Car?

You can use your credit card to purchase a car instead of new car loans, most of the time. Some dealerships may have some restrictions on using credit cards. They may let you use a credit card to purchase additional items or services for your car, but they may not let you buy a car. When you use a credit card to make a purchase, there is a fee for it. The dealership has to pay the 1 to 3 percent fee. Some dealerships do not want to pay that fee. They can make more money if you finance the car through them, so they require you to finance the car.

If you can find a credit card offering you a special promotion of 0 percent interest for a specified amount of time, a credit card might be a good idea. It is only a good idea if you can pay off the credit card before the time period ends. Otherwise, you could be charged for all of the interest. It could be a really large amount to put on your credit card and could cause you to have high payments, which may be higher than new car loans. And it could also negatively impact your credit score as it increases the balance you are carrying on your card. It also increases your debt to income ratio. You should really carefully consider if using a credit card is the best idea for you. Just because you are able to do so, does not mean you really should.

Should I Budget For My Car?

It is always a good idea to create a budget, not just for new car loans, but in general. A budget gives you an accurate idea of your income and your expenses. Many of us have no concept of how much money we spend each month. We do not even realize where we are spending most of our money. The best way to determine those things is to create a budget.

I know few of us really want to create a budget. It can be time-consuming. It can also be an eye opener for you when you realize how much money you spend each month. However, it also can be the greatest gift that you give yourself. It puts you in the driver’s seat and gives you control of your finances. While it may be challenging to start, ultimately it is the best thing you can do. It teaches you where you need to make cuts in your spending. You also learn what is most important to you and what you are willing to compromise. If you want to create a detailed budget, that can certainly take some time. You can create a quick start budget for yourself to give you an idea of where you should make cuts.

You can list all of your monthly income in one column and list your monthly expenses in a separate column. Then you add both columns and subtract your expenses from your income. Hopefully, you have a positive number. If not, you definitely need to make spending cuts.

Can I Save Money To Buy A Car?

You can absolutely save money to buy a car. You should already have a plan for saving. If you want to save money for a car, it should be additional savings. It should not be your only savings. While it may be better to pay cash for a car instead of taking on a loan, it is not smart to take all of your savings to pay for a car. You do not want to leave yourself without any savings. In that case, it makes more sense to obtain a loan.

However, if you want to create a separate savings budget to purchase a car, there are most likely places you can make changes in your budget. You should look for quick and easy places where you can make changes. Look for places where you are spending money for items that you are not using. Many of us have that gym membership that we are not using. If you have one, too, that you are not using, cancel it. You should cancel it right now. That is a complete waste of money. It is an easy way to find some savings.

The money that you would pay for the gym, immediately begin putting in a separate account. Now, you can look for other areas where you are spending money for items you do not use. Do you pay for any subscription services? If so, do you really need them? Do you need to receive them as often as you do? Do you have a stockpile of whatever items you have automatically shipped because you really do not need them as often as they come? It may be better if you take control of your subscriptions. This way you order them and pay for them only when you need them, instead of when they are shipped.

Conclusion

When considering new car loans, it is important that you know how to shop for a car loan. It is also important that you find the right one for you. The right one is the one that you can afford to repay. It is a really nice feeling to get a new car. It fills you with a sense of pride to sit in your new car. However, you must remember that a new car comes with a new car payment. There is nothing worse than the feeling of having your new car taken away from you. Before you consider what car you want, consider the car payment. The first step you should take is making sure your car payment fits into your budget.

Used Car Loans with a Green Light Approach

If you shop for your auto loan when buying a used car, it puts you in a better negotiation position and can save you the money over the life of your loan.

Need to Know Information about Used Car Loans

There are different things you need to keep in mind before you apply for used car loans.

Interest Rates

The interest rate you get will depend on your income and credit score, the length of the loan, and the vehicle. If you have a loan and make consistent payments and your credit score improves then you could also refinance your used car loan to get a better rate.

Loan Terms

Some lenders will offer loans for up to 84 months. It’s best to pay off a car loan as soon as you can since cars, whether they are used or not, depreciate quickly. Owing more on the loan than your car is worth means that you are under water, which can be a bad financial situation. The best interest rates are also available on shorter loan terms. It’s recommended that you have a 36-month loan for used cars.

Hard vs. Soft Credit Pull

Some lenders will do a soft pull on your credit to get you prequalified for the loan. This won’t do damage to your credit score but it also doesn’t mean that you are guaranteed approval or will get the quoted rate. Other providers will run a full credit check. A full credit check temporarily lowers your credit score by a few points. Even with a hard credit check, the interest rate could still differ from what you were quoted. A hard pull is required before the loan is finalized.

Restrictions

There are some lenders that only work with a certain network of dealers. Other lenders don’t lend money when you are buying a used car from a private seller. Lenders can also exclude some types, makes, or models of a car for your used car loans.

Why Preapproval Is Necessary for Used Car Loans

Preapproval for used car loans can help you with the negotiation process and get you in a car quickly. With preapproval, you can avoid the favorite tactic of a car salesman: the monthly payment. If you are negotiating based on the monthly payment, it can be easy to lose sight of the real price of the car. However, when you are preapproved, you are a cash buyer. This means you can concentrate on negotiating the price of the car instead of having to mentally juggle many different figures.

Negotiating the best deal for your car can help you cover any fees and taxes. If you are at a dealership, the finance manager may try to beat the interest rate of your preapproved loan. If the interest rate is lower and the terms are the same, you can take the loan. However, you want to review the contract carefully before signing. There is the risk that the finance manager could juggle numbers in the dealership’s favor instead of yours.

Where to Shop for Used Car Loans

The auto finance business is large and there are hundreds of different institutions making billions of dollars on used car loans every year. This means it can be hard to determine the right place to find a used car loans. The largest lenders are the big national banks but it’s important to remember there are other options out there.

Banks

Banks will usually have conservative and very specific loan polices. Some banks may only cater to borrowers with a better credit standing. These institutions are then offering some competitive loan rates. The offerings with banks vary and some banks are more willing than others to give loans to people with bad credit.

You likely already have a good relationship with at least one bank so your local branch can be a good place to start. Many banks also have websites that make it easy to check current rates. When you visit the branch, it can be a good way to avoid any misunderstanding and mistakes and it could result in you getting a better offer.

Credit Unions

These lenders do operate a little bit differently than banks but have lower operating costs than banks. Many credit unions will only lend money to their members. However, some also make loans to other people that may not have accounts with them. You may get lower interest rates, better and more personalized service, and have an easy loan application process.

Online Lenders

Online can be a very convenient way to borrow money and it’s much easier to find competitive rates. As a precaution, you should check the Better Business Bureau rating for every lender before you file an application online. You can apply to different lenders at once without it having an impact on your credit score. You also can get more competitive rates than traditional banks. However, it can be hard to reach a person for assistance and you can be bombarded with calls and emails from different lenders. You can also look at our selection of lenders here on Loanry.

Finance Companies

Finance companies used to be more popular in the past. These companies only make loans and don’t offer many of the other products that are typically offered by financial institutions, including checking accounts. Instead, these companies borrow money for banks and then lend to you. Many finance companies cater to niche customers in the auto loan market, such as those with bad credit.

Dealerships

Dealers will typically work with the financial group of the automaker, along with banks and other sources. Shoppers with offers from some of the other sources can negotiate the dealer’s initial loan quote into something more attractive, which is why it’s necessary to do research. Getting your financing from the dealership is convenient since you are already there. However, the interest rate can be higher in order for the dealer to make a profit and may only be available to those with great credit scores.

How to Get an Auto Loan

If you are going to borrow money for a car purchase, it’s important to shop around in order to get the best possible rate.

How Much You Can Spend

The first step when learning how to get an auto loan is to determine how much you can afford to spend. Ideally, you want to pay off the car within three years since this can cut down on the interest you will pay and help prevent you from becoming underwater. You may qualify to borrow more money in order to purchase a nicer car but this doesn’t mean that you should do so. Just because you can afford the payment doesn’t mean that it makes financial sense to do so. You don’t want to be unable to afford your payments.

Start Auto Shopping

Start with banks and credit unions to see what the interest rates are. It’s important that you do a lot of research in this step. You should also look at other ways to save on your loan. This can include setting up automatic payments or switching banks in order to qualify for a lower interest rate.

Be Prepared with Your Financial Information

When you are going through the preapproval process, you could be required to provide proof of your income. If you aren’t required to do this during this stage then you will be required to do this when you sign the loan. Some companies are stricter about the preapproval process than others. If you are not able to save up for an auto loan then you need to save up and purchase the car with cash, which will limit your options.

Start Shopping for a Car

Once you have been preapproved then the fun part of shopping for a car begins. Take the time to look for the best car available and you shouldn’t be afraid to negotiate a lower price. If you are able to secure your own financing then you have leverage sine you aren’t depending on the dealership for financing. When shopping for a car, you could be tempted to trade in your old car. It may be better financially if you sell your old car and apply the funds to a new down payment. You shouldn’t roll any current car loan into a new one. This causes you to be upside down on your new car.

Other Tips for an Auto Loan and Car Shopping

When shopping for used car loans, there are some other tips to keep in mind to save you money. Buying a car is not an investment. Even if you shop for a used car, you are still taking a loss as it depreciates. When not relying on dealership financing, you should negotiate as much as possible. This can save you a lot of money. You should have the used car checked by a mechanic before you purchase it.

This is even more important if you don’t know anything about cars. This prevents you from buying a car that will need a lot of repairs or has already been in a serious accident. Be ready to have car insurance as soon as you are purchasing the car. If you already have insurance, you can add the new car to your existing policy. If you don’t have an existing policy then you need to set up one.

You don’t want to finance the fees and extras. It can be easy to roll any fees into the financing but this is a bad idea. And it can make your loan exceed the value of your car and then puts you in financial trouble should anything happen to your car. Also, it adds to the true cost of the items you are adding. For example, if your dealer tells you that a paint protection package adds just $15 a month to the payment, unless you do the math you won’t realize it can cost you $1,080 plus interest on a six-year loan.

Many lenders will be willing to loan you the money for six or even eight years and this can give you a lower payment. It’s also a risky financial move. Long car loans usually have higher interest rates and can be more expensive in the long run. Even if you do qualify for this then you risk having the car‘s depreciation outpace the rate you are paying it back.

Why Does Used Car Financing Cost More?

When you start shopping for a used car and financing you will see that it typically comes with higher interest rates and shorter loan terms than you find on new car loans. There are also restrictions on the value of the vehicle and the age. The reason for this is the risk of the loan. Lenders have found that there is more risk when they lend money on used cars. The additional costs that lenders face means higher interest rates.

The short term and other restrictions can lower the likelihood that the lenders take a major loss. Depending on the car you choose, some lenders can treat it as a new car. Vehicles that have lower miles or aren’t very old will be treated this way. Some lenders also offer new car interest rates for any manufacturer-certified used cars.

Comparing Used Car Loans

When comparing options for used car loans, it’s very tempting to just look at the monthly payment. This is not the only thing you should be focusing on in order to determine if it’s a good offer or not. Some lenders have variable rate loans but most borrowers will seek fixed loans.

Instead of looking at monthly payments, you want to look at the total cost of the car, including the total of all the payments during the loan and the amount you have to pay upfront with fees. You can use a used car loan calculator to help you figure this out. Here is an example. If you are buying a three-year-old SUV for $25,000 and have $5,000 for the down payment, this means you need a loan for $20,000.

The best offer you can find is a five-year auto loan at a 6% annual percentage rate. Using the calculator, you see that the monthly payment is $387. You then multiply that by 60 since that is the number of months you will be paying. This means the total cost is $28,220. If you choose a three-year loan with a 4.5% interest rate, this increases your payments to $595 a month but then the total cost is only $26,420. This can save you more money if you are able to work that payment into your budget.

Working with the Dealer on Your Used Car Purchase

When you have financing in place, you then need to start shopping for the car. Buying a used car can involve some more steps than when you are buying new. You want to make sure to get a vehicle history report. If the dealer resists your efforts for this then you should walk away from the deal.

Car salespeople usually try to merge the price of the car, trade-in, and financing into one transaction. When they bundle the deal, it can allow them to move savings and costs from one part of the deal to another. This confuses you about whether you are getting a good deal or not. For example, they could be able to give you a great trade-in deal but then they are boosting the cost of the car you are buying. You want to keep each transaction separate to focus on the price of the vehicle you are considering. Be polite but firm throughout the negotiation process. You want to get the best deal you can but they want to earn profit. Keep in mind that you may only buy a car every few years but they do this every day.

You are more likely to get a good deal on a used car if you make a larger down payment. Putting money down reduces the amount you have to finance and this gives you lower monthly payments or a shorter loan term. It can lower your loan-to-value ratio, which shows how much the car is worth in proportion to how much you owe on it. The lower the number, the more likely you are to get a better deal. A substantial down payment reduces the possibility that you will owe more than the car is worth.

Watch out for yo-yo financing. Dealers let you take the car home with the financing paperwork set. Then you get a call from the dealer saying that the financing fell through and then you need to sign different papers. Those new papers cost more than what you negotiated earlier. Sometimes there can be legitimate problems with financing but many times the dealership knows all along that you don’t qualify. You get to take the car home so you get attached and then are willing to pay the higher cost.

Working with a Private Party for Your Used Car Purchase

When you going to purchase a used car from a private party, you have no choice but to get financing from a credit union or a bank since you won’t be able to use dealership financing. It’s important that you get a vehicle history report since some lenders offer them as a benefit of you using their auto financing. Unlike when you work with a dealer, you have to do the paperwork yourself and ensure that you transfer the title to your financial institution. Some private sellers can accept peer-to-peer financing and take the third-party lender out of the picture. This auto financing is actually pretty rare so you shouldn’t count on it.

Getting an Auto Loan with Bad Credit

If you don’t have the best credit, there is still the possibility that you can get bad credit auto loans.

It helps to know your credit score before you begin the auto loan shopping process. There may be factors that you aren’t able to address immediately, such as making late payments, but there may be factors that you can fix quickly, such as an error on your report.

If you need auto loans with bad credit, you need to research as much as possible so you aren’t caught off guard when the time comes. Research should include key terms and the APR. When buying a used car, you should also know the Kelley Blue Book value of the car you are interested in.

You can’t limit yourself to just one lender. There are a variety of different lenders that give used car loans for bad credit. Each one wants your business. Even two candidates that have the same credit scores may not be the same for the lender. For example, you may have a better chance then someone with the same score but with no credit history. It’s important to do your research but you don’t want to wait too long. Lenders running a hard credit check will hurt your score. It’s best to visit three different lenders in a 14-day period in order for there to be minimal impact on your score.

Avoid borrowing from subprime lenders. These lenders are going to be a sure bet if you are wondering how you can get a loan with bad credit. Since these lenders cater to customers with low credit scores. It seems like these lenders will make the car buying process stress free and easy. However, these loans come with sky-high interest rates and won’t really do much to improve your credit score.

Many of these loans can also use your vehicle as collateral. If you fail to make payments then you can lose your car. You should only be considering subprime lenders if you aren’t able to find other financing options. It’s best to work on your credit score and save up some cash instead of going through subprime lenders.

You can ask a friend or relative to go with you and consider a co-signer. Even if you don’t want to consider a co-signer, bringing someone you trust to help negotiate can help inspire confidence. Confidence, along with know-how, can also lead to favorable loan terms. If someone does co-sign for you, remember that they will be responsible should you default on your payments. Be sure that you can make payments before taking on a co-signer, otherwise you risk damaging your personal relationship with that individual.

Nonprime buyers can be more likely to see lending contracts with no essential services and goods. Other costs, such as car insurance, can also increase up for nonprime buyers. Don’t allow loans to be contingent on getting any extras, such as after-market services or extended warranties. You also don’t want the loan to be contingent on car insurance, even though you do need it. You are better off for shopping for that separately.

While it may be tougher to get a loan, there are options available for you and you can consider the refinance process later on after credit improves.

Getting a Car Loan with Bad Credit: Money Speed Bump

Should You Refinance Your Used Car Loan?

There can be a number of reasons why it makes sense for you to refinance your auto loan.

Your Credit Has Gotten Better

When you first got your car, maybe your credit wasn’t great. However, consistent and on-time payments improve your credit. So, if you were on-time every time, you may have a better credit score right now, so you can get a lower interest rate. This lowers your monthly payment and saves you money in interest over the life of the loan.

A Dealer Marked Up the Interest Rate

If you got your existing loan at the dealer then the car dealer may have increased the interest rate. So basically, you could have gotten a better deal elsewhere. This happens often when shoppers don’t check their credit score or what rate they qualify for before getting a car. There is a good chance you can undo this damage by refinancing.

You Aren’t Able to Keep Up with Payments

Maybe you bought your car for too much or overestimated your ability to pay off your current loan. You could also be suddenly facing an unexpected financial challenge. By refinancing, you are able to extend the length of the loan, which can lower payments. Don’t take this step too lightly. If you do extend the term of the loan then you pay more in interest. However, it could be better than damaging your credit by not keeping up with payments or facing repossession of your car.

Interest Rates Dropped

Interest rates can fall for a variety of different reasons, including regulatory changes, increased competition in the market, or changing economic climates. If rates are lower now then when you first got your loan, refinancing could help you save on interest and allow you to pay off your loan sooner.

Final Thoughts

Getting used car loans doesn’t have to be a complicated process. There are certain things you need to remember before you get used car loans. But the process can work just like other loans. Auto loan shopping is one of the most important things you can do in order to ensure you are getting a favorable rate and the best terms. There are many different options for where you should go for used car loans and there are even options for those with bad credit. There is also the possibility to refinance in the future.

How Do Car Payments Work: Follow This Lane

So you think you might want to buy a car? The thought of buying a car sounds exciting to me, well I should say the thought of having a new car is exciting to me. The thought of actually going through the process of buying the car makes me feel sick to my stomach. I am not exaggerating. It truly makes me feel like I have a rock in my stomach. The process takes so long. I cannot tell you how many times I have spent my whole day at a car dealership. With the technology of today, it just should not take that long.

Car buying seems to be the one thing that has not gotten faster with time. These feelings begin before I even think about the car payments. For me, car buying is a tense and uncomfortable situation. It does not have to be that way. You can be prepared. And you can have your loan in order. You can get in and out of the dealership in a few hours, instead of being there all day. Continue reading to learn some of the tips I have picked up over the years about car buying and car payments.

What Is An Auto Loan?

An auto loan is sort of like a personal loan, but at the same time, it is not. Like a personal loan, you can get an auto loan through a credit union or a bank. Unlike a personal loan, you can also get an auto loan through the car dealership. When you get the loan through the car dealership, sometimes they have their own finance group and it is through them, like Honda. Other times, the car dealership uses a lending source other than themselves. It completely depends on the dealership.

An auto loan is considered a secured loan because the car you are buying becomes collateral. This means that if for whatever reason, you do not pay the loan, the lender can, and certainly will, take possession of the car. The lender technically owns the car until the time you pay off the loan. When you pay it off, you get the title and it becomes yours.

A point to consider when you obtain an auto loan is the lender makes you have full coverage auto insurance. They really do not give you a choice in the matter. If you want a loan through them, you must have full coverage. They want to make sure the car is fully protected in the event of an accident. After all, the lender has a vested interest in what happens to the car as long as you making car payments to them.

If you have a good credit score, you will receive a lower interest rate. Since the car is collateral, the lender is not taking as big of a risk by lending you money. Auto loan repayment schedules are often longer than a typical personal loan. You can take up to seven years, or longer, to pay back some auto loans. This may help to reduce the amount you pay each month. However, that also means you are paying the loan for seven years and therefore stuck with the vehicle.

How Do I Make My Payments?

This could depend on a number of different factors. The main factor being the lender. The lender often dictates how and when you make your car payments. Some lenders want to debit your car payments directly from your bank account. If you are someone like me, this is a great plan. I prefer to have the money come out of my account automatically so that I do not have to do anything. I put a reminder on my phone a couple of days in advance to remind me the money is coming out of my account. This way I can double check my account to make sure the money is there and I am all set.

Now, if you are someone that never has money in their bank account, this might not work for you. I know several people that move most of their money to an interest savings account and pay for everything with a credit card. When it comes time to pay the bill, they move the amount of money they need from their savings to the checking and pay one bill, the credit card bill. This way they are always earning interest on what is in their savings account. They only pay one bill from their savings account. They feel this is a safer way to pay for things. Everything is paid with the credit card. It works for them and it seems like a good system for them. It is not for everyone.

However, this means that they rarely have any money in their checking account. Some bills, or loans cannot be paid with a credit card, so this bill may have to come directly from a bank account. It really depends on the lender. These are details you should determine before you sign any paperwork or agree to any type of loan.

How Does Interest Impact My Payment?

The simple answer is simple, the higher your interest rate means the higher your car payments. The opposite of that is also true, which is the lower your interest rate means the lower your car payments. Your credit score drives your interest rate. You should understand a few things about interest rates first. The amount you want to borrow is called the principle. Lenders added the interest rate on top of the principle amount you borrow. Lenders that see loans as a lower risk are given a lower interest rate. It is better to get good credit auto loans so you can have a lower interest rate.

I will use numbers to illustrate this (keep in mind these are just estimates, not actual numbers):

You want to borrow $30,000 for a car. Due to your good credit, the lender adds 10 percent interest. You lower payments, so you pick a 48 month, or 4 year, repayment period. 10 percent of the $30,000 you borrowed is $3,000. The principle amount is $30,000 + $3,000 interest = $33,000 you are borrowing. Your monthly payments are $687.50. That is $33,000 divided by 48 months.

Now, the same car with bad credit: You are still borrowing $30,000 but your credit is bad, so the lender adds 20 percent interest to your loan. 20 percent interest is really high and equals $6,000. So, you have a principle of $30,000 + $6,000 interest = $36,000 total. Your monthly payments are $750.00. That increases your monthly payment by about $63 per month. For a $30,000 car, you are paying over $700 per month.

Can I Use A Credit Card?

You most likely can use a credit card to buy a car and then you would not have any car payments. Depending on the dealership, they may have some restrictions on using a credit card. They may not let you use a credit card to purchase a car. There is a fee issued to the dealership by the credit card company when you use a credit card. The fee is 1 percent to 3 percent. The dealership may not want to pay that fee. Also the  dealership makes money when you finance a car through them instead of paying for it in full.

A car is expensive, so if you use a credit card, you are putting a lot of debt on it. If your credit card has a high interest rate, you may not be able to afford to pay the balance. In this case, you could receive hefty interest charges. Those credit card charges may be higher than if you applied for an auto loan. If you have a credit card offering 0 percent interest with enough available credit, it could be a good idea to use a credit card. If you cannot pay off the credit card before the special interest ends, you could get all of those interest charges.

Can I Pay Cash?

Well, you certainly could pay for a new car in cash. This would prevent you from making car payments. It may not be the best way to buy a car. You must take a few things into consideration. One is that a car is going to depreciate as soon as you drive it off the car lot. It could end up that if you finance the entire amount of the car because you do not have a down payment, at some point you owe more on the car than it is worth. For this reason, it may make better sense to pay cash for the car so that you own it outright.

However, if you have enough money to pay cash for the car, better use of the money might be to put it in an account where it can earn interest and grow. You could take out a loan and pay the monthly payments with the amount you have in a savings account. However, what might make the most sense is if you take half of the money and put it as a down payment for the vehicle. This way you are only financing half of the cost of the car. The car value is still more than what you owe and you are able to put some money in a savings account and let it gain interest. This also keeps your car payments low.

How Do I Know If I Can Afford An Auto Loan Payment?

This is a fairly important question. It is really important to know if you can pay the monthly car payments before you agree to the loan. You are putting yourself in a terrible position if you do not verify this first. Honestly, the best way to know if you can afford to repay the loan is to look at your budget. What? You do not have a budget. Is that what you just muttered under your breath? My first response is why not? My second response is you should get on that. All joking (not really) aside, you really should have a budget. It is the best way to understand your financial picture and in this case, know if you can afford to pay back a loan.

If you do not have a budget, you can quickly put one together. A quick way to do this is list all your income in one column. Then list all your expenses in a separate column. Add up all of your expenses and subtract it from your income. Hopefully you have a positive number. If you have a negative number, you should stop here. Buying a car is not for you right now. Perhaps you should consider cutting some of your expenses before you buy a car.

Once you figure out your budget, you can use an online auto loan estimator. This helps you determine how much an auto loan will cost you each month. You can input the vehicle amount, the interest, and the length of the loan. Also, you can adjust these numbers and see how they change your monthly payment amount. You can compare this number to what your budget is telling you that you can afford. Hopefully this number is not more than what you can afford. If so, do not buy this car. Find a cheaper one.

Can I Negotiate?

When I was younger, I did not realize things, such as interest rates and car payments, were negotiable. I have since learned that if you are willing to haggle, you just might find yourself a better deal. I have also learned that it is a smart idea to negotiate the terms of my loan. You can negotiate many aspects of your loan, including pre-penalty payment, loan origination fees, and the overall length of the loan, in addition to the interest rate. You are also able to negotiate the warranty and free upgrades. If you are trading in a car, you can negotiate the value of the trade in.

There is a way to negotiate the cost and value of all of these items without being a jerk about it. You do not know what the dealer is willing to give you until you ask. Lenders are not going to give you the best terms outright. Remember, they are in the business to make a profit. The more discounts and deals they give you, the less of a profit they are going to make.

Can I Get An Auto Loan Through A Car Dealer?

Yes, I briefly mentioned early that you can obtain an auto loan through the dealer. Many people often pay for their cars this way. It is a convenient way to get an auto loan. Since you are already at the dealership, you can get the loan there and not have to deal with any other lender. Every time I have bought a car, I did not go into the dealer planning to leave with a new car. It just happened. Since I was not prepared to buy a car, I had not gotten any type of financing for the car. I had to get my financing through the dealer.

This can be a blessing and a curse. It is incredibly convenient to have the car and financing all in one place. Due to its convenience, I never knew if I was really getting the best deal I could find. I did not do an auto loan shopping, so I just took what was offered. Maybe I could have gotten a better deal somewhere else with lower car payments, but I will never know. I cannot go back and change the past, but I know now for any future cars I purchase. You can also learn from my mistakes. Do not take the first option that comes your way. It may be the best deal, but do some research first and find out.

How Does My Credit Impact An Auto Loan?

The short answer is your credit determines your car payments. Of course there is a much longer answer too. Here it is. Unfortunately, your credit impacts just about everything you do in life. It impacts how much you pay for a house, if you even qualify for one. It impacts if you can rent an apartment, or get insurance. In some cases, your credit can prevent you from getting a job. For real, a bad credit score can really hurt your chances at living the life you want.

I will dig a little deeper into credit reports and credit scores to talk about how you can find your credit score and what it means. First, your credit score appears on your credit report. They are not the same thing. People often mistakingly refer to them interchangeably. Your credit report shows a detailed list of all your credit activities. It shows how much debt you have and how you have used it. And it shows how much credit you have been given.

Your payment history, the good, the bad, and the ugly, it shows everything. You cannot hide anything from your credit report. It lists all of your late and missed payments…yes, every single one of them. You can also find information about loans on which you have defaulted. And it shows if you have filed for bankruptcy. It takes a long time to build up a good credit score. But it can plummet quickly with just a few late or missed payments.

A typical credit score ranges anywhere from 350 to 850. Most people have a credit score between 600 to 750. Good credit is between 670 to 800. Anything below 570 is considered bad credit. When you have bad credit, it is much harder to get a good interest rate. You may find it is difficult to be approved for a loan.

What If I Have Bad Credit?

You should prepare yourself now, if you have bad credit, you will have to pay a higher interest charge which means your car payments will be higher. If you already think you have bad credit, there must be some reason why you feel that way. You should pull your credit report. You are entitled to one free copy of your credit report per year.

When you get your credit report, you have a chance to see what your credit score really is. This lets you see what a lender will see to help prepare you for their questions and response. This gives you an accurate picture of your credit score. Maybe what you thought was there really is not. When you know for sure, you are able to make necessary changes. If there are items on your credit report that are incorrect, you can fix them. Just fixing discrepancies could increase your credit score.

It is possible to get auto finance if you have bad credit, however, you may have to work harder for it. You may have to do some research to find the right auto lenders for you. It is important to make sure whatever you loan you take that you can repay it. The worst thing you can do is get a loan that you cannot afford. You just put yourself in a worse place financially. You can check right now whether there is a reputable lender out there who would give you a loan in your situation.

What Is The Process For An Auto Loan?

I have talked a lot about how time consuming it is to buy a car, but I have not told you much about the process itself. Your experience may be a little different from dealer to dealer, but the basic parts remain the same. You can also save yourself time and money by doing some research ahead of going to the dealership. And you can determine if you qualify for a better loan from another lender. You can research exactly what vehicle you want and all the upgrades and features it needs to have. Let us say that you have picked out your exact car and you know that you want to finance it through the dealer.

Most dealers have a finance department that handles the financing right there. The upside to this is someone is always available no matter the time or day. The downside is it may only be one person for the entire dealership, or several dealerships. This is where the time comes in. There is a lot of sitting around for you while you wait. You pick out your exact car and fill out all the loan paperwork. Someone whisks off the car to detail it and check it over one last time. The finance person sits down with you and tells you what he can offer you, including the amount of your car payments. He goes off to work some magic, although it is slow magic. He gets everything processed and hopefully your car is ready to go when you are. That is the basic process of buying a car.

Should I Save The Money?

Saving money is always a good idea. As a general rule of thumb, you should already be saving money. I know someone that saved the money to buy a car and once she bought the car, she took the money she would have spent on a car payment and put it in the bank. When she had enough money to buy a car, she used that money and bought a new car. She did not buy a new car until she had all the money saved. If something happened and she needed a new car before she had enough money saved, she bought the car she could afford with the money saved.

That is one way to handle purchasing a new car. It prevents you from taking out more debt. It prevents you from having to make car payments. If something unexpected happens one month and you cannot afford to save the money, then you do not really lose anything. It may take you a little longer to save, but you are not hurting your credit or your finances. I hate to say there are any downsides here because I do not want to deter any one from saving money.

There are some points to consider. Car prices keep rising, so you have to be careful in the amount you are saving each month to ensure it will be the amount you need. You have to be dedicated to saving the money. Otherwise there may always be something more important that pops up. I think it is an excellent way to save money for a car and certainly could decrease the amount you pay in monthly payments.

Conclusion

I have walked you through the good and the bad of car payments. I do everything I can to avoid car payments, but I realize it is a necessity. Make sure you make smart and informed decisions when it comes to buying your next car.

What Lenders Offer the Best Auto Loan Rates?

Shopping for a car is not something most people enjoy doing. If you are like me, you avoid shopping for a new car at all costs. It is a necessary evil because I need a car to get me from place to place.  Buying a car does not have to cause anxiety. It takes just a little bit of research and education. If you do your homework before entering a car dealership, the process is much easier. Continue reading to find out the ways to make car shopping easier, as well as how to find the best auto loan rates.

What Is An Auto Loan?

When auto loan shopping, it is important to have a good understanding of an auto loan. You may be most familiar with personal loans, but auto loans are slightly different from a regular personal loan. There are a few different ways you can obtain an auto loan. It can be through a car dealership, a bank, or a credit union. Auto loans are considered secured loans as the car you are buying becomes collateral for your loan. If you do not make your payments, the lender may repossess your car. You do not own the car until you pay off the loan.

When you get an auto loan, the lender allows you to borrow a set amount of money. You promise to repay that loan by making regular monthly payments. The lender adds interest on to your loan as a fee for allowing you to borrow money. This is the case for all types of loans. The interest rate varies from lender to lender and it is based on your credit score. The better your credit is the lower your interest rates tend to be. It is important for you to shop for the best auto loan rates. Most lenders require you to have auto insurance with full coverage. They want to make sure you have full protection in case you are in an accident.

Are There Different Types Of Auto Loans?

When looking for the best auto loan rates, you should understand the different types of loans. There are secured and unsecured loans. I mentioned secured loans in the proceeding section when I talked about loans from the dealer. A secured loan has collateral attached to it to make it less risky for the lender. In other secure loans, the collateral can be any item of value. However, in an auto loan, the car you are purchasing becomes the collateral.

Another type of loan is a personal loan that is unsecured. This means that there is no collateral attached to it. If you do not make your payments, the lender would not have collateral that the lender could take. This makes the loan a little more risky for the lender. There are many different types of auto lenders, so you should research them before deciding on one.

Online Auto Loans – Get Best Loan Rates

You can always look online for an auto loan. Often, you can find the best auto loan rates online. Many websites compare the interest rates and loan options for different lenders and present them to you online. Another great thing about auto loans online is that it is fast and easy to apply for a loan. You fill out the application and submit documentation all on the lender’s website. It takes minutes and you never have to leave your home. You usually find out if you were approved in 24 hours. If you are approved, the money is in your bank account the next day.

In the past, online loans were considered to be only for those with bad credit. That is no longer the case. Many people with all types of credit are turning to online loans because of the ease with which they can apply. They are also enticed by how quickly money is deposited into their bank account. A downside to online loans is they tend to have higher interest rates. You should also pay attention close attention to the online lenders in which you are interested.

There are some shady online lenders. I am sure you already know that there are always people looking to scam others, so you must be careful. You want to find out everything you can about any online lender you are considering. All lenders have to be certified in your state, so make sure they are certified to lend in your state. Make sure they are a legitimate business.

Auto Loan Rates When You Pay with a Credit Card

Yes, you can use your credit card to purchase a car, most of the time. The dealership where you would like to buy your car may have some restrictions on if you can use a credit card. They may not let you use a credit card to buy a car. You can use it for services or parts, but not to purchase the car. When you use a credit card to make a purchase, there is a fee for it. The dealership has to pay the fee, which is usually anywhere from 1 to 3 percent of the cost of the car. Some dealerships do not want to pay that fee. They can make more money if you finance the car through them, so they require you to finance the car.

You are probably better off if you search for the best auto loan rates you can find. Cars are expensive and that is a large amount to charge to your credit card.  Depending on the interest rate on your credit card, you may have incredibly high payments. If you are able to pay the balance in full after you charge the car, then maybe it is a good decision for you. Another consideration is that you have enough available balance on your credit card to pay for the card.

If you can find a credit card that offers you a special promotion of 0 percent interest for a specified amount of time, that might be a good idea. It is only a good idea if you can pay off the credit card before the time period ends. Otherwise, you could be charged for all of the interest. It may be a negative impact to your credit, also because it increases the balance you are carrying on your card. It also increases your debt to income ratio. You should really carefully consider if using a credit card is the best idea for you. Just because you are able to do so, does not mean you really should.

Auto Loan Rates When You Get a Car Loan from a Car Dealership

Yes, you can always attempt to obtain a loan from a car dealer. Usually when you finance through a dealership, the car maker is who finances the loan. For example, if you want to buy an Accord, Honda is the company that finances the loan. Sometimes, going through the auto dealer makes financing easier for you. You do not have to go on a search for the best auto loan rates. Getting a loan through a dealership prevents you from having to do all the comparison shopping for loans. The dealership handles all of the financing for you. When you decide to finance through the dealership, you already know what vehicle you want and how much it will cost, so you know how much needs to be financed.

Can I Get An Auto Loan With Low Income?

It is possible for you to get an auto loan if you have a low income. Be warned, it may not be easy. You should also pay attention to make sure the lender is legitimate. There are many people in this world just waiting to scam those in desperate situations. Make sure that any lender you use is certified to provide loans in your state. There are some tips for you to consider you are trying to get the best auto loan rates on a low income.

You need to do some research and shop car loan rates available to you. It may take you a little bit of time upfront, but it can save you a lot of money in the end. You may need to consider having a larger downpayment to show the lender you are serious about paying off the loan. Some lenders want you to have up to 30 percent for a down payment. This also decreases the amount you need to finance, which makes your monthly payments lower. If your monthly payments are manageable, you are able to pay them. You might want to consider having a cosigner. This person’s name is on the loan and is agreeing to make sure you pay the loan. If you do not repay the loan, then the cosigner is responsible for paying it. This loan shows up on both of your credit reports.

You should have all of your paperwork with you when you go to buy the car. If you receive other types of income that may not be reported for tax purposes, such as child support, alimony, or Social Security, you should bring proof with you. You may need proof of these funds to secure the loan. Make sure you have proof of identification and insurance with you. You do not want to have anything delay your ability to obtain a car loan.

Auto Loans with Low Income: Ride Here

Does My Credit Matter?

Yes, it absolutely does! Your credit always matters any time you want to borrow money. There are many ways in which your credit impacts your loan options. You should be aware of these items before you begin to look for the best auto loan rates. Having more knowledge makes it easier for you to get the loan you want. I mentioned above how your credit score impacts your interest rate. The lower your credit score is means the higher your interest rate is going to be. You should have all the information you can about your credit report and credit score so you can understand what type of credit you have and the loan for which you may be eligible.

Some key items you should know about your credit score are it is available for you on your credit report. This report shows a listing of all of your credit activities. It has items such as payment history, your current and past debts, and indicates how you use your debt. Also, it lists late or missed payments, as well as any on which you have defaulted. It takes time to build your credit, but only a few missed or late payments destroys it. It gives lenders an idea of your credit worthiness. Credit scores range from 350 to 850. The average person has a credit score between 600 to 750. A good credit score falls between 670 and 800. A credit score that is below 570 is considered bad credit. This score or lower makes it challenging to get a loan with a reasonable interest rate.

What If I Have Bad Credit?

Get an Auto Loan with Bad Credit

There are a few items you should put on your to do list before you begin searching for the best auto loan rates. You should absolutely do these things if you know or suspect you have bad credit. While it is not the best scenario to have bad credit, if you know ahead of time, you can make sure you get the best deal. There are places where you can get bad credit auto loans.

Lenders want you to be honest with them. Many are willing to work with you, but you have to be upfront. If you think you have bad credit, you should first pull your credit record. When you look at your credit record, you can see all the items listed. There could be errors on your report. If there are, fix them immediately. Taking a few simple steps to correct what is listed on your report can increase your credit score.

You should work hard to improve your credit score. One of the top reasons for a low credit score is late payments. You should make sure all of your payments moving forward are on time and for the correct amount. It takes consistent work to improve a credit score, but it is possible. After making six payments on time, you should begin to see an increase in your credit score. I know that it seems like it takes forever, but that is what it takes consistent work.

You should decrease your debt, which increases your credit score. You can work to increase your income by getting a part time or side job. This helps to improve your debt to income ratio as well as giving you more money to pay towards lowering your debt.

How Do I Get The Best Loan For Me?

One of the top ways to find the best auto loan rates for you is to understand what you can afford. This is where a budget comes in. I know, you do not want to talk about it. But, we are going to just a little further down in this article. It is important. There are some other ways to make sure you are getting the best loan for your needs.

You should always look for a loan with the lowest interest rate. The value of a car goes down immediately after you drive it off the lot. Cars do not typically hold a lot of value. Keep in mind, I am referring to the average car, not a antique or a one of a kind vehicle. Those are different and not what the average person shops for when needing a car. If you obtain a loan with high interest, at some point you may owe more on the loan than the car is actually worth. This can be a problem if the car is totaled in an accident. In those cases, the insurance company may not give you enough money to pay off the loan. Pay special attention to your interest rate and the total amount you are going to pay for the car.

You may not want to read this, but the best way to get a great deal on a loan is to shop around. Car dealers offer financing options, but so banks, credit unions, and other lenders. If you are not set on a specific type of car, you may want to shop for your car based on the best loan deal the dealership can give you. The options may change from dealer to dealer.

What Should I Expect During The Auto Loan Process?

If you have ever purchased a car or been with someone who purchased a car, you know it can be a long process. Even with advances in technology, the car buying process still seems to take a long time. There are some reasons for this, the first being that if you finance through the dealer, they have to go through the entire loan process. Often car dealers have a loan officer on site, but it is usually one person working for the entire dealership, or even multiple dealerships. You are waiting around because that person is working on multiple people at the same time. You can decrease some of this wait time by already having your loan approved before buying the car. The more you have accomplished ahead of time, the less involved it is in that moment.

If you are trading in a car, they have to asses the car to determine the value and that adds time. You have to fill out loan paperwork, which you guess it, adds more time. All of these little steps along the way add up to more time you are sitting at the dealership. You should research the best auto loan rates, so you already know where you want to obtain the loan. If you get it from another source, you can walk into the dealership with money in had and that cuts your car buying time in half.

What Is A Loan Calculator?

A loan calculator is a tool that you can use to determine which are best auto loan rates for you. There are many available online. All you have to do is search for loan calculator to find one. It helps you calculate the payment you make each month based upon your down payment, interest rate, and the length of the loan. You can change those amounts to see what the monthly payment is and help you determine if you can afford it. A loan calculator can also help you adjust your idea of what you can afford. You may think you can afford a car that is $40,000 but when you see the monthly payment, you realize that you cannot afford it.

It is a fairly simple tool that you can find online, but it easily helps you determine the best auto loan rates for your current situation. It also requires you to be honest with yourself about what you can afford to pay each month. This is also why a budget (see next section) is helpful to you. It can help you understand what you truly can afford, not just what you want to be able to afford.

Do I Need A Budget?

Yes, you need a budget. Not just to find the best auto loan rates when you want to buy a car, but in general. If you do not have a budget, you should stop right now, click here and use the tools on the website to create a budget. Simply put, a budget gives you an understanding of how much money you make and how much you spend. It allows you to see how much money you are spending and where. It may even surprise you how much money you spend without even realizing it. A budget allows you to be in control of your money and not let your money control you.

It is important to understand how much you can afford to pay each month when you are looking for the best auto loan rates. The easiest way to determine how much you can afford is to list your income in one column and list all of your expenses in a separate column. Then you add up the expenses column and subtract it from the income column. Hopefully, you have a positive number after doing that. Many people do not. The amount of money that you have left is what you can afford to pay each month for a car loan. If that number is much less than you thought it would be, now is the time to make some adjustments to your spending.

Since you have listed out all your expenses, you can begin to reduce them. You can start with easy items, such as any memberships that you are not using. If you have a gym membership and you have not been there in months, cancel it. Unless you have an injury preventing you from going, most likely you are not going back. Now is the time to cancel that membership and you have instant savings. Determine if there are any other subscriptions that you have automatically deducted each month. Change them from automatic to something you have to control. When you control it, you can decide if it is something you really need instead of it just shipping automatically.

After that point, it gets a little harder. Now, you can take a look at how much you eat out. I mean look at everything, including coffee runs and trips to the convenience store for a snack. You should cut out as much of that as you can. Start small and reduce all the times you eat out by half. It may surprise you how much you see in savings. It may encourage you  to further reduce the amount you eat out to save even more money.

Conclusion

The key takeaway is that you must do a little bit of research to find the best auto loan rates for you. You know what is in your best interest and you should drive the decision. Take a hard look at your budget and determine what car you really can afford. It may not be the car you really want. Then you must determine how hard are you willing to work for the car you want. Are you willing to get another job? Are you willing to cut your spending? That car may be worth it to you to do all of those things, but you have to make those decisions for yourself.

Getting a Car Loan with Bad Credit: Money Speed Bump

My poor little car is pretty much on its last leg. Sometimes I get in it and it simply will not start. The heat and air recently went out. There are some issues in the wheel well and the brake area. I could go on with this list, but the bottom line is that I try not to drive any farther than I am willing to walk back.

We bought the car used in February of this year, so we have had it less than a year. I have nothing against used cars as a whole- in fact, I have only ever owned used cars- but this particular one had not been cared for at all by the previous owners.

About a week after bringing it home, we knew that it was going to cost more to fix it than replace it. I have known it needs to be replaced, but I honestly hoped it would at least last until tax season. I am thinking that is not going to happen. Now, I am faced with finding a new car with nothing saved and credit that leaves much to be desired. Sound familiar? We are in this together, so let’s figure out how to get a car loan with bad credit.

Basics of an Auto Loan

An auto loan is like every other loan- you borrow money, you get what you need, you repay the loan. Also like every other type of loan, there are pros and cons to it. These should be considered carefully before rushing to get a car loan with bad credit.

Pros

  • You have your car almost immediately. Unlike saving to buy your car, you can drive away with the car as soon as the money comes through and paperwork is signed. This could simply be a matter of minutes or hours.
  • Drive now and pay over time. Again, you do not have to wait to purchase. You can be driving the car the entire time you are paying on it. This is always a bonus, especially if it is going to take you a long time to save enough for the purchase.
  • You might be able to afford a nicer vehicle. With an auto loan, you may get approved for more than you could save. This means that you could typically purchase a better vehicle than if you simply paid outright.

Cons

  • It is a debt and you are at the mercy of a loan and lender. Without being too dramatic, lenders and debt are a type of prison, in my opinion. The lender may be a very nice prison warden, but you are still a captive of that debt until you pay it off. Debt can affect a lot of your life, including your mental health.
  • You might be tempted to over spend. Since you may get approved for more than you could save, you may be tempted to buy a more expensive car than you can afford. Before even applying for a loan, you need to determine how much you can afford every month. Whatever that amount is should be what you stick with. Otherwise, you are putting unnecessary stress on yourself.
  • You risk losing the vehicle. While you owe the loan, you are at a potential risk of losing that car. If you do not make your payments, they have the right to repossess it. This does not typically happen on the day after you are late. Nobody really wants to repossess your car because that is just something extra for them to deal with. They would much prefer that you just pay the loan, so you probably will not lose the car right after missing one payment. However, this is the lender’s business. If you do not pay, they are losing money, so they will not let you go forever without payment. If you continue to be late on your payments and have a delinquent amount, you just might find yourself without a car on top of losing any money you have put into it.
  • It may require additional insurance. Most lenders require you to carry full coverage insurance while you owe the loan. This is to make sure that their investment is protected. Closer to the end of the loan, they may drop this requirement, but expect it for the majority of your loan term. The cost of this insurance should be factored in to how much you can afford to pay each month.

Car Loan with Bad Credit: Is It Possible?

It is most certainly possible to get a car loan with bad credit. The issues tend to come in with the loan rates and terms. It will also limit where you get financing.

How to Shop for a Car Loan with Bad Credit

When you know how to shop for a car loan, you can get a much better deal. While it is most definitely possible to get a car loan with bad credit, you can expect to put in more work than someone with good credit. Not all lenders will provide loans to people with bad credit. Those that do may require high monthly payments or charge ridiculous interest rates, so you really have to look for a good car loan with bad credit.

Auto Loan from Financial Institution vs Dealership Financing

The first thing you should know is that there are two basic types of auto loans. One is financing from the car dealership. The other is financing from a completely separate financial institution. Each will have different credit requirements, terms, and so on. It is not possible to say which one is better without knowing what each is offering, but you should know what to pay attention to. The interest rates should play a large role in your decision.

The Effect of Interest Rates

When you are trying to decide between the two, obviously the price of the car itself matters along with the interest rates. Sometimes interest rates can be so close to one another that you think it will not make much of a difference. That is not true. Let’s say you are buying a $15,000 car. This is what different interest rates would look like:


10%= $1500
12.5%= $1,875
15%= $2,250
17.5%= $2,625
20%= $3,000


These are simplified and fictitious numbers, but hopefully you can see what a big difference interest rates can make. It is incredibly important to shop car loan rates. When you are carrying out your auto loan shopping, choose the loan with the lowest rate possible, even if it is only 1% cheaper than another. Of course, you want to weight this amount against other factors, such as the repayment length, but most often, the lowest interest rate will provide the best option.

Wouldn’t it be great to have a mall where you can shop for loans? Wow…that would be so awesome…what? There is?! You’re right here! Loanry is the place you’ve been waiting for.

How to Get a Car Loan with Bad Credit AND Low Income

Many people wondering how to get a car loan with bad credit are also wondering how to get an auto loan with low income. While this does pose an additional- but very common- problem, you do not have to give up. You will just need some additional planning, saving, searching, and that kind of thing. There are places that will work with you, even with low income. Be prepared to take some time to really search, though, so that you can get a loan with good terms and rates.

Choosing the Right Car Loan with Bad Credit

We already talked a bit about interest rates. That should be a deciding factor in which loan to choose. However, choosing that loan is simply where it starts. You must also consider how the loan will affect you while you are paying on it.

Consider Your Situation and Lifestyle

As a freelancer, my income ebbs and flows. Some months I make excellent money, and some months not so much. Knowing this means that I have to really consider financial decisions I make. I cannot make any of those decisions based off of my great months because those do not happen consistently. Instead, I factor in the bad months and the mid-range ones. I would prefer to know that I can make the payment even at the worst times than to risk it.

What about you? Are there any special considerations you need to make? Do you have the type of job where you only work a certain amount of months out of the year, i.e. seasonal or oil related jobs? Are your finances already stretched so much that they are about to snap? Do you want to take a month off this year to write your novel or take care of your parents? If there is anything like this, you have to factor this into your decisions or you will end up worrying about how to make payments.

Alternatives to a Car Loan with Bad Credit

Obviously, paying cash for a car would be awesome, if it is possible. Pick up extra shifts at your job, pick up a side job, anything you can do to put some cash away. With patience and diligence, you might be able to pay cash for a car cheaper than you think.
You might not be able to afford to pay cash for it, but maybe a family member will pay for a cheap used car up front and allow you to pay them back.

They might also be willing to cosign with you so that you can get a much more favorable interest rate. Though both of these options are still technically a loan, they will be much better than getting a loan with bad credit.

How to Decrease the Amount I Need to Borrow

One of the best moves that you can make if you must get an auto loan is to decrease the amount you have to borrow. The less you borrow, the less interest you owe. It may require some extra work in the beginning, but it can save you a lot of work down the line. Get creative with ways to save, as there is always a way. Here are a few factors to consider as you do:

Consider Used VS New

Many people have an issue with used cars, and to some extent, I can understand it. There are some who simply have too much pride to be seen riding around in a used car, or they just have to have a new one. If that is you and you can afford it, you can get all of the new cars you want.

Many people reading this though are reading for the purpose that they cannot afford it, at least not all at once. If this is you, join the club. Very few people can simply pay for a new car out right. Let’s consider the numbers to prove my point.

In 2018, there was a total of 27 million new auto loans. And as of March 2019, Americans owed $1.16 trillion. Unless all of these people are taking out these loans for fun or simply because they do not feel like paying it all at once, this shows that the majority of us need help buying a car.

Now, let’s consider the difference in new and used. You can find used cars for less than $10,000- much less. In fact, one of the best cars I have every owned was a cute little Toyota Camry that I bought from an elderly couple for $1,200. They had been the only owners of the car and had taken good care of it. The only reason I got rid of it is because I found out we were pregnant with our fourth child, and- as much as I wanted it to- it could not fit the six of us. We upgraded to an SUV that could fit us all.

As far as purchasing from a used dealership, I have done this, too. In fact, the SUV we upgraded to was a 2001 Chevy Suburban that was $8,000. Our payments were $300 per month for two years. We ended up paying for one year, then paid it off the next tax check we got.

While we were paying this, a friend decided to buy a new car. She went to a dealership and signed the paperwork for a $30,000 car. Her payments were nearly $600 per month and she would be paying for five years. That payment is more than we were paying in rent at the time for a pretty nice house. Yikes!

Additionally, we only needed $1,000 down to drive the Suburban off the lot. I do not remember the exact amount, but she had to come up with three or four times that much. Call me cheap, but if I am going to have to come up with thousands for a down payment and pay $600 per month, I would prefer to do so to buy a house, not a car.

One reason people are against used cars is that they are not always in great shape. While used cars may not always be the best solution, they often are much better than you might expect. If you are concerned about a used car, take it to a mechanic during your test drive. They can tell you if anything is wrong. Many used car lots will fix most problems while you are making payments. If they do not, you can always negotiate on the price if there are any problems.

Another idea is to look for a used car through a rental car company like Enterprise. At regular intervals, they replace “old” cars with new ones. Though their idea of old and mine are a bit different. The good thing about these cars is that they have been taken very good care of, so they tend to be a good investment.

Save for a Down Payment

A great way to cut back on your loan or financing amount is to put down the biggest down payment you possibly can. Even if you can only come up with $500, that is $500 you do not need to borrow or pay interest on. If you can put off purchasing your car for a few months or more to allow you to save, this will be a great way to go.

Make Some Quick Extra Cash

If you cannot wait months to purchase your car, you can still put down a nice down payment by making some quick cash. The ways to do so are only as limited as your creativity. But a great ways is through having a yard sale or two. Everyone who knows me or has ever read any of my advice knows that I am a huge advocate of yard sales. This is because I know that they work and they have multiple benefits, the biggest of which is that you get to clear out your house and make some money for doing it.

Take a run through your home. Throw everything in a box that you do not use, do not want or like, have used as much as you think you can, have unnecessary duplicates of, and so on. Then, go through your home again to do the same. Sometimes you do not notice things the first time, but notice them later.

It can often be tempting to think, “No one is going to want this stuff.” But one man’s trash really is another man’s treasure. You never know who is on a tight budget and will be more than happy to pay you $3 for what you consider an old pair of jeans. You never know what single mom will gladly pay you a couple of bucks for pens, scissors, glue, and more to save money on school supplies.

That is another thing I love about yard sales. Not only does my family and my home benefit, but so do others. During some yard sales, I have met some people truly in need that I have been blessed enough to pass things on to for no charge. If this seems counterproductive to making money, you must not understand the laws of sowing and reaping, karma, or whatever you choose to call it. Basically, when you help others, help somehow finds you, so giving is investing in yourself and others.

Be sure to advertise your yard sale, even if it is just on Facebook. Take pictures of some of your items to go with the post. Trust me when I say that some people absolutely live to go to yard sales and markets on the weekends. Price your items fairly so both you and your customer can benefit. Be willing to cut down on your prices, especially if it is getting later in the day.

If you have a lot of clothes, consider a $5 bag sale. This is my favorite thing to do. I always have piles of clothes. Trying to get rid of them one piece at a time almost always means I have to pack most of them back up. Instead, I hand my customers a grocery bag and say, “Fill it up for $5”. They stuff the bag so a lot of clothes are moving out, and I make some money. Try it yourself. You might just come away with a hefty down payment for your car.

Getting a Car Loan with Bad Credit to Build Credit

If you have had to get a car loan with bad credit, you probably wish your credit was better. Though there may not be a lot you can change this time, you can use this experience to make it better in the future. It is absolutely possible to build your credit with a car loan, if you handle things the right way.

The right way basically means that you pay your payments on time. While it may be a struggle, we have some advice for you: budget- my other favorite financial advice. Think about it: how are you going to pay something that you do not know when to pay, how much to pay, or where the money will come from? As much as I wish they did, bills do not just take care of themselves. You actually have to put the work in.

The first thing to do, in my opinion, is to put the payment date in or on something that you cannot ignore. This will differ depending on your preferences. If you are more of a paper and pen person, write “Car Loan Due” on every monthly page of your wall calendar on the correct date. If you are more of a digital person, type it up on your Google calendar and set it to repeat every month.

Next, set aside a day each month to sit down and plan out your bills. You should have the dates all of your monthly bills are due down on something. If you do not, now is the time to do so. Use this to determine how much needs to come out of each check to go to your bills. If you see you will not have enough for any of your bills, including your auto loan, find a way to make some extra cash then- not the day before the bill is due.

If- after all of your planning- for some reason you will be late on your payment, call your creditor. It is much better to speak with them and let them know what is going on than to hide from it. More often than not, they will try to work with you, which means the late payment may not show up on your credit report.

As long as you are making your payments on time, you should see an increase in your credit score. If you have purchased from a used car lot that does not normally report to the credit bureaus, you can still often use your receipts or some type of statement from them and report it to the credit bureaus yourself. It takes a little more time and effort on your part, but it is well worth it.

How to Establish Credit History When You Have No Credit History?

Conclusion

When you decide that it is time for a new car, try not to jump too fast into a situation. That is when mistakes tend to happen. All financial decisions, including getting an auto loan, should be carefully considered prior to signing on the dotted line. When shopping, simplify your work by using a platform that brings lenders to you. This will help you compare them more easily, and probably discover some you did not even know existed.

The Car Loan Process that Moves Fast

A record seven million Americans are at least three months behind on their auto loan payments. While Americans have been borrowing to buy cars for decades, auto debt has increased considerably since the financial crisis. A good number of consumers find it challenging to make their loan payments on time as a result of going for the wrong loan product. This is why it is necessary to get to know the car laon process. And compare the different options available before taking out a loan. In the end, you will be sure that the loan you go for is right for your needs.

Buying a car makes for a huge investment. Whether you are planning to buy a brand new or used vehicle, it is important to do due diligence before making the purchase. If you are contemplating financing options, you will need to understand the car loan process. This means familiarizing yourself with issues such as interest, prepayment penalties, other charges as well as the consequences of defaulting on these loans. It is also important to educate yourself on ways of ensuring the loan process moves fast. Below is part of the information you need to know about how to get an auto loan.

What Is a Car Loan?

Purchasing a car is a big and important financial decision, making it important to plan ahead. One of the factors you will have to think about is how you will finance the purchase. Considering the high price tags with which cars come today, a significant number of prospective car owners turn to vehicle finance. However, before entering any financial commitment, it is essential that consumers understand what these loans are and how they can affect their financial health.

Simply put, a car loan is a type of personal loan whose proceeds are used to purchase an automobile. In other words, a lender gives the borrower the money they need to purchase a vehicle. The borrower, in return, agrees to repay the loan amount plus accrued interests in equal monthly installments until such a time that the amount owed is paid off in full. While most personal loans are usually unsecured and are issued on the basis of the borrower’s trustworthiness, car loans are a bit different. These loans are almost always secured, with the vehicle to be bought serving as collateral. This means that the lender can repossess and sell the vehicle to pay off the loan debt in the event that the borrower fails to make their payments.

There is a lot that you need to know about the car loan process when considering it as an option to finance your vehicle purchase. This information will go a long way in helping you compare different lenders based on their terms. In the end, shopping for auto loans will help you make the best choice.

Ways to Increase Your Chances of Getting Approved

After preparing to apply for vehicle finance, it can be very frustrating if your application is rejected. Similarly, the excitement that comes with the prospect of owning a car means that you will want to see the car loan process moving fast. Below are some of the ways to increase your chances of getting approved for a car loan.

Borrow What You Will Afford to Pay

Generally, lenders are likely to offer you the amount you need if they establish that you will be in a position to afford to repay. Taking out an amount that you will pay back comfortably will also help you maintain your financial health. It is important to consider your income level, debt-to-income ratio, and the monthly repayments.

Raise Your Income

With the important role that income plays in determining whether you qualify for a loan, you should consider working on ways to increase your income. These include doing a second part-time job, engaging in a freelance business, or getting a side hustle. This will go a long way in ensuring that you can afford the loan you want to apply for.

Put Up Collateral

One of the common reasons why lenders will decline your application is because they see you as a risky borrower. Putting up some form of collateral as security for the loan will offer security for the loan. Since almost every car loan process uses the vehicle as collateral, you should find out if you can include another asset in order to get approved.

Make a Down Payment

You can also consider exploring the option of making a down payment. A down payment will reduce the amount of money you borrow, a factor that will ensure you repay the loan without additional pressure on your wallet.

Request a Meeting with the Loan Officer

A face-to-face meeting with the loan officer will give you a chance to show important personal information that is not captured in your credit report. Knowing how the car loan process works will also help increase your chances of getting approved. It is essential to apply for loans that you know you qualify for.

Paperwork to Bring With You

Bringing accurate and complete documentation to your meeting with the loan officer will help to make the car loan process fast. While your credit score will show your repayment of credit card debt and other loans, it does not include your bills, monthly mortgage or rent or payment of private loans. You will need to prove that you have a source of regular income on a regular time cycle. This is why you should carry with you paychecks from all the jobs you maintain.

Evidence of your other income streams will demonstrate your ability to repay the loan in the unfortunate event that your employer reduces your hours or terminates your employment. You should remember to carry statements from your checking account, stocks and bonds, certificate of deposits, savings account, and retirement fund. In case you receive supplementary income such as alimony, veteran’s benefits, or child support, you should include documentation to show that.

The best way to know how to get an auto loan is to do your research. The information you gather in this way will make it easy for you to know what to expect and how to prepare for the process. You will also understand the different documents that are required by your lender of choice. Today, there are numerous lenders in the market, each offering different interest rates on their auto loans. When you are shopping car loan rates, you can work with a third-party that is not in the loan business. We make it easy for you to find a lender that will help you meet your financial needs.

Advantages of Auto Loans

A car loan, just like any other lending product, can have a positive impact on your life if managed well. However, mishandling can result in financial and emotional stress. This is why it is important to not only understand the car loan process but also know the pros and cons of these loans. Here are some of the advantages of car loans.

Flexibility

One of the advantages of auto loans is that they offer consumers flexibility; allowing you to buy a vehicle now and pay for it over a period of time. This is important for buyers who cannot pay for the car upfront but will afford to repay a loan in monthly installments.

Future Savings

Financing a new car helps you avoid the problems associated with purchasing a used car just to avoid having to take out a loan. A new car is likely to offer better fuel efficiency and fewer repairs, helping you not only save money but also enjoy peace of mind.

No Collateral Needed

Generally, you will not need collateral to get a car loan. In most cases, the car you want to buy will serve as the collateral for the loan. In case you fail to pay the outstanding balance, the lender can seize the car and sell it to repay the loan.

Improved Budgeting

Depending on the agreement you reach with the lender, you will have a chance to decide how much you will be paying every month. This ensures that you do not overspend or have to make adjustments in other areas of your life.

Build Your Credit Profile

A car loan, just like other types of loans, gives you an opportunity to improve your credit score. However, you must ensure that you make all the payments on time. In order to do this comfortably, you need to shop car loan rates to find a loan that you will afford.

Disadvantages of Auto Loans

There are a number of short-term and long-term problems that vehicle financing can pose. It is necessary to know about these problems and identify ways of avoiding them.

Paying Interest

A car loan will require you to pay interest on top of the principal amount you borrowed. Although your interest will depend on several factors, it will push up the total cost of the car. In case you have poor credit, you will end up paying even more in total cost, a factor that could have an impact on your budget.

Financial Implications

When it comes to car financing, there is always the temptation to bite off more than you can chew. Once you are at the dealer’s showroom, you can be tempted to buy a car that is more expensive than what you can afford. While you can make a few adjustments to your budget, this may hurt your long-term financial outlook.

Insurance Considerations

Most of the people who finance a car go for relatively high-value vehicles. This means that auto insurance premiums are bound to be higher. The lender may also require that you carry higher liability and physical damage coverage to ensure the vehicle and their interests are protected.

Possible Repossession

A simple understanding of the car loan process will reveal that the lender will have the right to repossess the vehicle if you default on payments. This will not only force you to find a new way of moving around but will also have a negative impact on your credit history, making it more difficult for you to access funding for a considerable number of years.

Factors to Consider before Taking Out a Car Loan

It is normal to be excited at the prospect of buying a new car, especially if you are about to buy your first car. However, it is important to keep a level head to ensure that you make sound decisions. Beyond being familiar with the car loan process, here are a few things you should keep in mind before taking out a car loan.

Car Loan Rate

This is a critical aspect to consider since the interest rate will affect the amount of the loan as well as your monthly repayments. Make sure you do your research and read the fine print before committing to a contract.

Credit Score

Most lenders will look at your credit score to determine your risk profile. While a high score can help you enjoy lower interest rates, a low score might get you rejected. It is important to work on improving your credit score if you are to increase your chances of being approved for a loan.

Fees and Charges

Apart from the interest, there are other fees and charges that affect the cost of borrowing. You should find out about fees such as discharge fees, establishment fees, and late payment fees. Since these fees vary from lender to lender, you should do due diligence before taking out a car loan.

Loan Term

As a borrower, you have the capacity to choose how long you want to repay the car loan. However, you should remember that a longer loan term will see you paying more in interest despite offering cheaper monthly repayments. This applies to any car loan process.

Car Loan Repayments

Another critical factor to consider is the amount you will be expected to pay back every month. This will help you determine whether you will be able to afford the loan. You will need to input the value of the vehicle, loan term, interest rate, deposit, and balloon payment in a car loan calculator to arrive at this figure.

Balloon Payment

A balloon payment is a lump sum that is paid to the financial lender at the end of the loan term. This ensures that the monthly repayments are lower, helping to make the loan affordable during that period. However, you will have to pay the loan in full once the loan term ends.

What to Know When Financing a Car

When you apply for a car loan, you will be getting the car itself and the loan for the new vehicle. The key to ensuring that your experience is rewarding is knowledge. As such, you should know all the important issues about the car loan process.

Determine Your Budget

The first step would be to create a budget. Once you know the type of car you want and how much it costs, you will be in a position to determine the loan amount you need. This will go a long way in helping you plan properly for your needs and the monthly repayments.

Choose Between Used and New

Although this may seem like a no-brainer, it is one of the most commonly overlooked issues. The choice you make will have a huge impact on the purchase price, repair costs, the cost of maintenance, depreciation, and the condition of the vehicle.

You Can Negotiate a Lower Interest Rate

What most people do not know about the car loan process is that borrowers can negotiate for a lower interest rate. A good number of dealers who offer in-house financing will be willing to offer you a lower rate depending on your credit score and down payment. Negotiating a lower interest rate will help you save a significant amount of money.

There Are Other Ways to Pay for a Car

Apart from car loans, there are other ways to pay for the car you want. Even as youare shopping for auto loans, you should take time to consider other options. Using your savings, borrowing from a credit union, or borrowing from family are some of them.

Direct Lending Versus Dealership Financing

There are two options available to lenders seeking vehicle financing. While direct lending involves getting a loan directly from the bank, dealership financing entails getting a loan through the dealership.

Car Loan with Bad Credit

During the car loan process, a borrowers’ credit score will have an impact on how much they qualify for as well as the interest rates they pay on the loan. As such, you should work on improving your credit score before taking out a car loan. However, if you have poor credit but do not have time to improve it, you can apply for car loan with bad credit. The good news is that there are several steps that you can take to ensure you get a car loan with bad credit.

Look Over the Credit Report

There is a chance that your low credit score is as a result of errors and oversights in your credit report. Before applying for loans for people with bad credit, you should look over the report to establish whether there are any errors. In case of errors, you should get them rectified to increase the loan opportunities you can enjoy.

Get a Co-signer

If you have poor credit, you can consider getting a co-signer. This should be someone with a better credit score than you. The co-signer will repay the loan in case you default. Lenders see this as security for the loan. So it’s a factor that can help you get a car loan faster.

Look at the Overall Loan Terms

Rather than simply focusing on the monthly payments you will be required to make, borrowers should look at the loan terms in their entirety. The loan term and interest rates will also have a significant effect on your finances.

Do Your Research

Today, there are lenders who offer bad credit loans to people who cannot be approved by traditional lenders. A little research will help you find lenders who can assist when you have poor credit. However, just with other types of loans, you should look into different rates to ensure you get a favorable deal. Make sure you are connecting only with reputable lenders.

Dealing with Future Car Issues

Beyond knowing how to get an auto loan, you should also be aware of the car issues you are likely to deal with in the future. Whether you buy a new or used car, there are several expenses that come with ownership. In order to be safe, you should take the necessary steps to minimize car trouble and reduce the impact it has on your life and finances.

Regular Maintenance

If you are a first-time car owner, it is important to familiarize yourself with the various maintenance issues you will have to deal with from time to time. Ignoring basic and regular maintenance can cause a lot of trouble, leading to inconveniences and higher expenses. It is advisable to have an emergency fund. This will allow you to take care of any unexpected issues that may come up.

Maintain Insurance

Most of the lenders who offer car loans will require that you purchase the types of insurance coverage that will protect their interest in case of damage to the vehicle. You will also need to buy insurance that covers some of your car issues. Since you will have to make sure that your insurance is paid and up to date, you should shop around for the best rates before choosing an insurance provider.

Carry a Few Essentials

Once you have bought your car, there are a few essentials that you will need to be carrying with you. Some of the most important items include a spare tire and a portable battery charger.

Final Thoughts

Even as you think of ways to ensure a successful car loan process, you should be ready for the challenges associated with car ownership. In case you really needed the car, there is a good chance you will get value for your money.

One of the important things to do before applying for a loan to purchase a vehicle is to learn about the car loan process. However, once you have gone through it, obtained the money you need, and purchased your car, you should remember to make all loan payments on time. You can do this by setting up auto-pay, putting it on your calendar. Or controlling spending, and going for debt consolidation if you have trouble making the monthly payments consistently. We make it easy for consumers to find a lender. This helps to save you time and offer you the convenience you need. The next time you are looking for a car loan, kindly consider working with us for a hassle-free borrowing experience.

Auto Loans with Low Income: Ride Here

There are many reasons you might consider getting an auto loan. Are you purchasing a new or used car and do not have enough money in the bank to pay for this vehicle out of pocket? Are you looking for a chance to refinance an auto loan you already have? If either of these situations reflect your own personal situation, then it may be time to consider getting an auto loan? Are you concerned about being able to buy the car you need because you have a low income or bad credit. Don’t worry — it is possible to get auto loans with low income and bad credit. You can even get auto loans for bad credit online.

How to Get an Auto Loan with Low Income

Getting a personal loan is so easy it can be done in three simple steps. If you are looking for auto loans with low income, then you may feel like your task is impossible. Trust me, it’s not. You can do this. Searching for auto loans with low income just requires you to work a little bit harder. For instance, you cannot be afraid to ask for help. There are many companies whose sole purpose is to help consumers find auto loans with low income.

These companies offer their services for free and help consumers find a local dealership in their area that will help you find auto loans with low income. Or they help you find a lender that is right for you. You usually apply by filling out a short form online that can be completed in just a few minutes.

When it comes to getting an auto loan with low income, patience is the key. You may stumble upon several obstacles, and surely getting a loan will not be as easy. But it is far from impossible. With the right help, you may find great auto lenders and get approved for a loan.

How to Get an Auto Loan with Bad Credit

While we’re at it, let’s talk about another unfavorable situation – bad credit. Same as with low income, bad credit is an obstacle to getting a loan. It will not stop you from getting a loan, but it can hurt your chances of getting a loan with a low-interest rate. In fact, if you are looking for an auto loan with bad credit, then there are auto loans out there made just for you.

In order to get auto loans with bad credit, you should consider requesting a meeting with a loan officer. At this meeting, you can show the loan officer who you are, with a positive presentation and demeanor, as well as explain what your personal situation is. This meeting can give you a leg up in your chances of getting an auto loan.

In addition to meeting with a loan officer, consider the cosigner or collateral option. If you have bad credit, then you may still be able to get an auto loan if you have someone cosign with you. This other cosigner is agreeing to the absolute responsibility of repaying the auto loan, so that if you do not pay, then the lender knows that someone will. If you are not comfortable asking someone to cosign with you, then you can consider putting up collateral for an auto loan. This means that if you do not make the payments on your auto loan, you could lose the collateral you put up for the loan, such as your car or house.

Auto Loan Basics

Auto loan basics are basics for a reason: they’re the basics that everyone should know. This does not mean you should feel bad or uneducated because you do not know something here, but if you don’t know something mentioned below, then it means you are definitely in the right place. If you are considering getting an auto loan, then you need to make yourself familiar with these auto loan basics:

What Is a Car Loan and How Does It Work?

There are two types of auto loans. You can either get direct lending or dealership financing. If you choose direct lending, then you get to make the arrangements of your auto loan with the financial institution of your choice. If you choose dealership financing, however, you will have to make the arrangements through the dealership. Both options have pros and cons, and in general, the two options are not dramatically different.

Direct Lending

When choosing to go with direct lending, you are choosing more freedom. Because you can choose whichever financial institution you most prefer, you have the freedom to comparison shop for auto lenders. Auto loan shopping allows you to find an option that fits your budget, with realistic payment options and better rates and terms. Plus, if you have pre-approved financing, then you are sometimes able to negotiate a better price.

Dealership Financing

Dealership financing can be a simpler option. You do not have to deal with auto loan comparison shopping, spending a lot of time and effort to find the auto loan with the best terms. If you choose dealership financing, then the dealership will do this for you. They will either do the financing internally — if they have their own financing department — or do the financing externally — through a finance company that they have a prior agreement with. One benefit of dealership financing is that it means you already know what car you want, which means that you already know how much financing you need before getting your loan. This could save you money in the long run, so that you don’t have to pay back even more — including that compounded interest — in the future.

The Car Loan Process

Getting a car loan isn’t very difficult, but it can be made even easier if you understand the car loan process. The first thing you should do is to use an online auto loan calculator to set a realistic budget for yourself. Once you have your budget, you should check your current credit report, so that you have an idea of what loan options you will have. It is possible to get auto loans for bad credit online, but it is a good idea to inform yourself of your situation early on in the process. This can allow you to set realistic expectations for what your loan options will be.

Before getting a car loan, it is a good idea to know what you are looking for in a car. Research is essential. If there is a specific make or model you prefer, or any special features you know you do not want to go without, then you should keep that in mind when researching the range of prices for similar cars to your preferences. Many people trust and rely on the Kelley Blue Book to see what current average prices of specific cars are.

Once you know what your current financial status — including your credit score — is and what your will be likely to have to pay on average for the kind of car you want to buy, then it is time to do some auto loan shopping online. This can help you find the best auto loan for you and your personal needs.

Auto Loan Basics Spelled Out: Lending 101

Types of Loans

Before you make a commitment to getting an auto loan, you should know what your options are. There are many types of loans out there, and there is certainly an option out there that is right for you. An auto loan is just one type of personal loan. Below are some other types of personal loans:

Unsecured Loan

An unsecured loan is a type of personal loan that does not have collateral backing it up. This means that if you do not make your monthly loan payments in full and on time every month, then the lender cannot just take something from you in order to make up for the money you did not pay. This means that an unsecured loan is more risky for lenders. Though very uncommon, it is possible to get an unsecured auto loan.

Secured Loan

A secured loan is a type of personal loan that does have collateral backing it up. Items put up for collateral are typically worth a lot of money, so that they can make up for whatever you decide not to pay on your loan. For instance, if you get a secured auto loan and do not make your payments on the loan on time, then your new car can be taken away. Auto loans are most often secured loans.

Open-End Credit

Open-end credit is a type of credit where you can “withdraw money as you need it, over an extended period of time.” Two common options for open-end credit are lines of credit and credit cards. This is a good option for someone who is, for instance, working on a project where they need to take out multiple smaller sums of money, depending on what individual expenses they have. One advantage of open-end credit is that you typically do not have to pay interest on whatever money you do not withdraw.

Closed-End Credit

This is a type of credit where you get one set lump sum. Closed-end credit is typically done in the format of a traditional loan. You request to borrow a certain amount of money, and you get that amount of money in a lump sum. Then, you must repay this lump sum, plus interest, over an agreed-upon period of time. If you decide to get a single payment loan, then you will be required to pay the entirety of the loan — what you borrowed plus interest — in one lump sum.

Auto Loan Rates

It is impossible to say what your auto loan interest rate will be without knowing your exact situation. Rates can vary from lender to lender, and dealers may push special promotions in order to quickly get rid of certain stock. Regardless of these uncertainties, there are some things you can be certain will have an effect on what rate you end up getting.

The Impact of Credit History on Auto Loans for Low Income

Your credit history will be sure to affect what interest rate you get. Though it is possible to get auto loans for bad credit online, you are not likely to be able to get an interest rate as low as someone who has good credit. On the other hand, getting a loan — and repaying the full amount due on time every month — could actually help strengthen your credit. For more information about how getting a personal loan can help your credit, read on here.

The Length of the Loan

The length of the loan can also have an impact on your interest rate. Generally, though not always, loans that will last longer have higher rates. Sometimes you don’t have a choice; if you cannot afford to take an option with a shorter loan, then get the longer loan that is more realistic for you, however, if you can afford to get a shorter loan, then that is a better option that will allow you to spend less overall in the end.

Which Car You Want

Not all cars are equal. What you buy will determine how high or low your interest rate is. If you are interested in financing to purchase a new car, then you may be able to take advantage of introductory rates or special financing. If, on the other hand, you are interested in financing to purchase a used car, then you may not be able to find such deals. This is because “used cars are considered a greater risk for lenders, since their resale value is already lower and the chances are good you’ll owe more than the car is technically worth at some point down the road.” Used cars may come with a lower sale price, but they also come with higher interest rates.

A graph showing the variation in auto loan rates by credit score.

What You Need to Know About Auto Loan Shopping

If you have decided to take part in auto loan shopping, then there are some basics that you need to know before taking action. First of all, you should budget before you shop for auto loans. If you budget before beginning auto loan shopping, then you will be more aware of your realistic expectations in finding an auto loan. For instance, budgeting will help you determine how much you are able to pay up front for a car, as well as how much you will be able to pay in monthly payments after you get the car.

Besides budgeting, it is important to explore all of your options. This is why auto loan shopping is so important. If you take the time to look at multiple auto lenders, then you will see what options are available — with what terms and rates. This could help you get better rates in the end, since you usually do not get the best offer on your first try. Exploring your options will help you find the absolute best auto loan for you.

For more information about what you need to know about auto loan shopping, such as information on auto loan discrimination and how to negotiate auto loans, read on here.

Auto Loan Statistical Overview

You shouldn’t feel alone if you are considering getting an auto loan. According to the Federal Reserve Bank of New York, auto loan debt is on the rise. In fact, auto loan debt has been on the rise for the past decade, however, while people with lower credit scores — credit scores of 719 or less — have plateaued recently, people with higher credit scores — credit scored of 720 and higher — have “[continued] to grow as a percentage of total borrowing.” This indicates, among other things, that “people across the U.S. are improving their overall credit scores.” For more information about the statistical overview of auto loans, read on here.

Conclusion

Getting auto loans with low income can be stressful, but with the help provided above, the process should be much easier. You can also get help from Loanry and look into our lender recommendations.

Bad Credit Auto Loans To Get Driving Fast

Unless you live in a major city like Chicago, New York City or Tokyo, you’ll need a car, truck, motorcycle or moped to get around. The alternatives are constant Lyfts and Ubers or taking the bus or subway. While both options, vehicle ownership and mass transit, cost money, owning a vehicle of your own has convenience advantages.

Purchasing one’s first car also stands as a rite of passage into adulthood. When you buy a car, you negotiate with the salesperson and arrange your financing. It is a show of your adulting skills. So, what do you do if you have little to no savings, no credit or bad credit, but need the convenience of a vehicle? You apply for Bad Credit Auto Loans and motorcycle loans designed specifically for those with bad credit.

Get an Auto Loan Fast

Avoid jumping into bad credit auto loans without doing your research. Read on to know more about the process.

Just because an institution says it offers auto loans for those with bad credit, does not mean that loan will work great for you. It may have a short pay back term or an exceedingly high interest rate. Take all of the following steps to get your finances ready for loan applications before you try to apply for a loan. You’ll save yourself time and money. Then shop for bad credit auto loans online.

Loan application may even require an application fee that accompanies it. These range from $20 to $50. That can add up. It is best to wait until you know you and your credit score are ready to apply.

“Know your budget, check your credit score, and review your existing credit accounts to ensure they are reported accurately,” said Joe Pendergast, the vice president of consumer lending for Navy Federal Credit Union in an interview with Credit.com.

Get Your Credit Score Ready

First, your definition of bad credit probably does not match that of a financial institution. Credit scores can range from 300 to 900. Banks and credit unions tend to think of bad credit risks beginning at about a score 640 or less. You might think that your score of 540 is pretty good, but banks see it differently. Banks know that you do not have to be rich to have a terrific credit score. You simply have to manage money really well. Many people of normal means have high credit scores. So, when they see a lower credit score, they see a person who does not manage money well. You can change their perception of you by changing how you manage things. You may still only qualify for bad credit auto loans, but you’ll get a better interest rate. Errors on a credit report negatively impact score, which is a big disadvantage when trying to secure an auto loan interest rate

Here are a few things you can do, starting today, to increase your credit score and achieve a better perception of yourself by financial institutions. After completing all of these steps you may qualify for more than just bad credit auto loans.

1. Check Your Credit Report

You can quickly increase your credit score by checking your credit reports. It’s free to do this once per year. Obtain a report from each of the three major credit reporting agencies.

a. Check each credit report for inconsistencies or errors. Not every agency will have the same data points. Some agencies collect more data than others because they include aspects the others do not in their report. For instance, Experian lets individuals opt into a collection of data

from their utility payments and cell phone payments. The credit reporting agency then includes this in the calculation of the score.

b. Address report inconsistencies and errors to the credit reporting agency. Include proof of the correct information, such as payment, credit card or bank statements showing the payment dates and accounts. It will take a few weeks for the agency to correct the data, but once they do, your score will be recalculated.

2. Pay Your Bills on Time

Pay your bills on time. It sounds so simple, but it raises your score so quickly. You can increase your credit score after only six months of timely payments.

You can make this easier by consolidating your loans, either by taking out a consolidation loan that lets you pay off each of the smaller loans fully or by using a non-profit agency like CareOne that helps you contact each creditor and restructure your debt. This reduces your monthly payment to each creditor. It also results in a single payment you make to the non-profit that it then distributes to each creditor, for you. This method can quickly reduce your overall debt. Since another party makes the payment distribution and is legally required to distribute the funds in a timely manner, it means your payments are never late. This quickly raises your credit score by making on time payments.

3. Raise Your Income

You can do this by asking for a raise at your existing job or by adding another stream of income. If you have been with your current employer for a while, ask for a raise. You can typically obtain a raise if you have been employed there for a substantial amount of time and have performed well.

You could add another income stream by getting a second job or starting a freelance business. Get a part-time job and work at it for a few months before applying for the loan. Six months is a good length before applying for a loan. You will need about six months of paystubs to show a loan officer.

Either bank the money you earn from your second job or use it to pay off existing credit cards and loans. This reduces your debt-to-loan ratio so long as you keep the credit card open after paying it off and that raises your credit score. If you choose the savings account option, you should take the account statements to the loan officer to show that if you did lose your job for a few months, you’d have means to still pay the loan payments.

You can earn money by freelancing as an appointment setter, personal assistant, blogger on a topic you know well, Lyft or Uber driver or some other pursuit. While you will not have traditional pay stubs, you can take print outs of your PayPal reports that show your earnings. You can also show the results of your labor by banking everything in a savings account.

4. How Budgets and Loan Calculators Help

You can find out what you need your income level to be to obtain a loan for a specific amount. Look at your current budget. Your total loan repayments including the bad credit auto loan or motorcycle loan you want to obtain, should equal less than 30 percent of your monthly income. If it would all require more than 30 percent, you have three options:

  1. get a second job or freelance to increase your income,
  2. pay off existing debts before applying for the new loan,
  3. apply for a smaller loan.

Use a Loan Calculator

You can also use an auto loan estimator to help find the affordable options for you. You can calculate your monthly payments using various options for down payment and loan term, plus interest rate. This lets you see how easily certain options fit into your budget.

While you may have your heart set on a brand new, $30,000 car, you may be able to reasonably afford a $15,000 used car. It can be the same model car, but a different year. Perhaps you have Norton or Harley-Davidson dreams, but a used Yamaha budget. Find vehicle options that fit your budget, not vehicles that kill your budget.

Once you are ready to apply for bad credit auto loans or motorcycle loans, you can do a few things to increase your chances of getting a “yes” from the lending institution. Instead of traipsing around town trying to speak to each bank and credit union, use Loanry to go auto loan shopping. It offers much more than bad credit auto loans and simplifies your process.

Motorcycle and Auto Loan Shopping with Loanry

Loanry provides individuals and businesses with a simple process for vetting financial lenders. Its participating institutions offer a plethora of loan types, including no credit or Bad Credit Auto Loans. Follow these quick steps to use this loan mall that makes finding a loan a breeze.

  1. Visit Loanry Auto Loans
  2. Choose the loan type you need at the top of the screen.
  3. Complete the short form with your basic information.
  4. Loanry sorts through its database of financial institutions.
  5. Loanry may help you find a lender
  6. You complete each lender’s long application.
  7. A lender work with you directly.

Shopping for an Auto Loan: What You Should Know

Loanry does not make loans. It simply helps you find a lender. These lenders work with Loanry’s site to offer auto loans products  including bad credit auto loans. That cuts down on the research you have to do. Using Loanry helps you determine which institutions offer loan products who may be willing to work for your need situation. It also saves you unneeded application fees to banks or financial lenders whose qualifications you did not meet.

The Loanry tool cuts your research time, so can determine the appropriate lenders to approach more quickly.

Using it also may reduce the number of requests on your credit report. These report requests happen every time you apply for credit, no matter what type. Each application for bad credit auto loans or motorcycle loans creates a request that lowers your credit score just a little. If you apply for many credit cards and loans, you will reduce your score, even if you did not take any out or were refused for each one.

While Loanry is not a lending institution, it does offer educational articles and tools to search for auto loan lender for bad credit – to help its users make better decisions about money. It offers these financial educational articles for free.

Once you are ready to apply for loans, you may find that your bad credit offers you limited opportunities. Before you go to a loan shark, explore your other options. While you will still end up paying higher interest than someone who could afford a prime interest rate loan, you do not have to resort to that high of an interest rate. You do have alternate options though since the Internet has spawned the peer-to-peer craze.

Try a Different Kind of Legitimate Lender

You have new legitimate bad credit auto loan opportunities besides banks and credit unions. Approach peer-to-peer lending services. This uses a one-to-one concept similar to that of an angel investor, except, you pay back the funds in full with interest.

Also, approach online lenders. Some offer smaller loans, some offer no credit or Bad Credit Auto Loans.

Either way, conduct extensive research on any lending institution of any type before you apply or provide any identifying information such as your Social Security number. Have an accountant look at the loan product of any non-traditional lender, before you apply and definitely before you sign any papers. Once you find a few options you’d like to pursue, you are ready to make your applications. Here are a few tips to help you obtain the best results from your bad credit auto loans applications.

Request a Loan Officer Meeting

If you have bad credit, you can help yourself by requesting a meeting with a loan officer. Even your local bank may have an online application, but you can request a loan meeting at the local branch of their organization. These meetings improve your chances of a “yes” from the bank or credit union by showing them your personage – presentation and demeanor – and important finance information that does not appear in your credit report or go into your credit score.

Paperwork to Take With You

Your credit score reflects your repayment of credit cards and loans. What it does not include is your monthly mortgage or rent, bills or private loan payments. Experian, Equifax and TransUnion do not get these items reported to them nor do they always have accurate information on your employer or salary. Take your pay stubs from all jobs you maintain with you to the meeting proving you have regular employment. This also establishes your amount of regular income on a regular time cycle, such as weekly or monthly.

Take with you statements from your checking accounts, savings accounts, Certificate of Deposits, stocks and bonds and/or retirement fund or annuity. If you receive any type of supplemental income, such as alimony, child support, veteran’s benefits, etc. you should include documentation of this. All of these income streams document your ability to continue payments if your employer reduces your hours or terminates your employment.

Present this documentation to the financial lender to strengthen your application. You can also take in proof of your timely payment of monthly bills to utilities, your phone company and your landlord. These items show that you pay on time and in full.

Sometimes, no matter what you do, the bank determines that it cannot offer bad credit auto loans to you unless it has evidence you can pay it back immediately if needed. They do this by requiring you to have either a cosigner or collateral.

The Cosigner Option

This is common for teenagers or college students buying their first car. These two groups rarely have credit established, so they can only qualify for bad credit auto loans. You use a cosigner to boost your credit worthiness.

The term cosigner refers to an individual who applies for the loan with you. They add their awesome credit score to yours to help you obtain the loan, but in the process, they accept absolute responsibility for the repayment of the auto loan. While you actually make the payments, if you miss one, it hurts their credit, too. If you default on the loan, the bank expects them to pay for it. This risk transfer takes the pressure off of the lender but means it takes special person to step up as your cosigner. In many cases, a parent will cosign a loan for their teenager.

Put Up Collateral

You can put up collateral for a loan. This provides a guarantee to the bank that you will pay back the loan. Collateral refers to a tangible asset that the bank could claim, then sell, to cover the amount of your loan. Examples include a boat, houseboat, vehicle, land or stocks and bonds.

Save Up for a Big Down Payment

You can improve your ability to qualify for a loan easily. Save your money up for a large down payment. This reduces the amount of money you need to borrow. It can also help you get a “yes” from the lending institution. Another plus is it can net you a lower interest rate to put down a larger down payment.

Smart Money Tip!

“Know the price other dealerships in the area are offering so you can make an informed purchase,” Joe Pendergast, the vice president of consumer lending for Navy Federal Credit Union in an interview with Credit.com.

Research the Autos or Motorcycles

Do a bit of local research before you apply for a loan. You need to find out the car or motorcycle you want and how much it will cost you locally. The prices you see online do not relate to what you’ll find locally. So, as Shutt advises, start your research online to broadly determine vehicles you can afford. This also prepares you for visiting local car lots.

At the local lots, the salespeople will try to do their job – to get you to spend as much money as possible. Remember that the car you choose determines the loan you need. Choose a reasonable car to borrow less and pay less interest.

Show what a tough negotiator you are by pitting one dealer’s price against the other’s. Many dealers will match or beat the price of the other’s and that could get you a rebate, discount or other special savings. It’s your job to get yourself the best deal on a car.

It’s Loan Application Time

You have done your research and you think you are ready to buy. You’ve also researched various loan options and have looked at the cars. You have priced them. You are ready to obtain your financing so you can make your big purchase.

Car Lot Financing

Beware of using the car lot’s financing. Some car dealers mark up the interest rate from the one the actual bank rate, then the two split the excess interest fifty-fifty. Carefully read any offers from car lots partnered with credit unions, too, because they often do the same thing. Apply directly to the credit union to get the best rate.

Loanry Listings

Revisit your interaction you received from a lender who use Loanry. Read their terms carefully. Choose from them one and make your application. If they extend a loan to you, you can go purchase your car quickly. Some lenders that use Loanry deliver the funds electronically and will deposit the funds into your bank account within a couple of days. You then make your purchase.

If you get turned down, you can keep auto loan shopping. They may have a slightly higher interest rate or some other terms that made you rank them lower than others, but you may get a “yes” from them when you got a “no” from the first bank.

However, remember that each application could create a hit on your credit report. Using Loanry may reduce these hits, but if you apply directly to local banks or credit unions, each of those application creates a unique hit to your credit report which lowers your score a little bit. An application through the car lot does the same thing.

Even if you do not get a yes, you need to stop applying if you get three “nos” in a row so that you do not damage your newly re-built credit score excessively. It could be time to ask for a private loan from a parent or guardian to fund your car, truck, moped or motorcycle purchase. You can borrow the money from family and create a monthly or weekly repayment schedule. This gets you on the road without further damage to your credit.

On the Car Lot

When you go to actually make the purchase, the sales person will try to upsell you. Do not fall for it. Stick with the vehicle you have decided to buy in advance.

Stick to the total value of the vehicle you want to buy. Whatever you do, do not let the salesperson trick you into saying what monthly payment you can afford. They will simply manipulate other factors of the loan, such as its duration, to make a more expensive vehicle seem affordable. You are not getting a deal. This is called the “monthly payment scheme” and every car salesperson gets taught this.

If you are approved for a $17,000 loan, then buy the car or motorcycle that you had chosen in the first place. You will end up with the vehicle you researched at the price you planned on paying. You will already know the loan duration since you researched it. Remember, the duration combined with the interest rate of the loan determines how much extra you will pay to the financial lender for the privilege of getting funding for your car purchase.

Buying a car with bad credit can still be done. You simply need to start earlier in the loan process with your research. Loanry can help with that. Let Loanry help you find an auto loan lender for bad credit online today.

Auto Loan Basics Spelled Out: Lending 101

Ever notice how there are things it feels safe to ask about and other things you feel like you’re supposed to just magically… know?

A friend of mine recently mentioned she’d purchased a car. She told me the color, make, and model. I asked about the engine, its features, and how it felt to drive. These are the polite things one does when someone is excited about a recent purchase, right?

What I really wanted to know, however – but didn’t feel I could ask – was how she financed it. What interest rates are auto lenders offering these days? Also, what sorts of terms can someone with average or even bad credit get? Is the process as painful as I seem to recall from when my parents were doing it a generation ago, or has it gotten any better?

Too many of us feel foolish asking about auto loan basics when there’s really no reason we should. You’re not missing some critical link in your genetic code. You weren’t skipping the day they covered auto financing in Adulting 101. Maybe you’ve simply not financed a vehicle lately. (If it makes you feel any better, I know plenty of people who have financed their cars. Those often still don’t quite know how it works.)

Let’s look at a few auto loan basics.

What Is a Car Loan and How Does It Work?

I know – it sounds so simple, right? But for most of us, purchasing a car is one of the biggest and most important financial decisions we’re going to make. Surely that’s worth a little planning ahead?

There are two basic types of auto loan: direct lending or dealership financing. With direct lending, you make arrangements with a financial institution of your choice. Usually before you buy. Your

Source: Federal Reserve Bank of New York via Finder

local bank, credit union, or other auto lenders are usually happy to share their current rates and terms with you. This gives you the freedom to comparison shop ahead of time. You can figure out your budget and realistic payment options before even talking to a car dealer. Pre-approved financing can sometimes help you negotiate a better price. Especially since your funding is already secured.

Dealership financing is not dramatically different. However – as the name suggests – takes place through the dealership. Some automakers have their own financing departments. It means your loan is actually through them. Most have arrangements with outside finance companies. They transfer your loan to them before your first payment even comes due. Dealership financing offers you additional convenience in that you know exactly what car you want. You also know how much you need to finance before setting up the loan. Plus, it’s available whenever the dealership is open. Either late nights, long weekends, holidays, etc. Dealers also love running promotions with special interest rates or other terms which you might find appealing.

Did you know?

The average new car loan in 2018 was $30,977, while a used care loan was $19,861. Generally speaking, a higher the credit score results in a higher loan amount. Another interesting stat is those in the 2nd highest credit tier borrowed the most coming in on average at $32,630 for new cars and $21,293 for used ones.

The Car Loan Process

Don’t feel foolish if you’re not sure how to shop for a car loan. Auto loan shopping isn’t difficult, but it is different than it was a generation ago.

The good news is that technology has made it easier than ever to get started. The first thing to do is to figure out a realistic budget using an online auto loan calculator. In the 21st century, this is an essential requirement of Auto Loan Basics 101. Most versions will let you play with interest rates, lengths of the loan, and other factors to figure out what works best for you. Then, check your current credit report. The earlier you begin this part, the easier it will be to address or correct any errors.

It’s also a good idea to research your vehicle options ahead of time. This should be part of everyone’s auto loan basics, but sometimes our emotions take over and we get careless. Make note of what features you consider essential and which would simply be nice to have. Check the range of prices you might be able to negotiate using sites like the National Automobile Dealers Association, Kelley Blue Book, or Edmunds.

Once you’ve got your information together, you’ll find auto loan shopping online to be relatively painless. You’ll probably be surprised how quickly you hear back from multiple auto lenders. Obviously you should consider each offer carefully before committing, but personally, I much prefer having lenders compete for my business over the old way. Maybe our parents were willing to slog from lender to lender, sit in an endless array of hygienically-suspect chairs, and endure suspicious looks and questions from disgruntled loan officers, but you don’t have to.

Unless you’re just into that sort of thing, of course. In that case, have fun.

How Is Auto Loan Interest Calculated?

This is another part of auto loan basics which too often makes us feel foolish when there’s no reason we should. Most auto loans involve simple interest, meaning you pay interest only on the principle of the loan (the actual amount borrowed to pay for the vehicle and related costs like taxes). The alternative is compound interest, in which the borrower pays not only on the principle amount but on any remaining interest owed – interest on interest, as it were. Usually you only want to hear the term “compound interest” when you’re earning money on your savings!

If you want to dive into the nitty gritty details of what interest can look like over the life of your loan, check out this breakdown by IFS. They explain it quite effectively with plenty of visuals.

Who Offers the Best Auto Loan Interest Rates

Source: WalletHub

How Do Car Payments Work?

This is an easy one, right? They send you a bill each month and you mail in your check. Done!

It’s true that once you have the car and have signed the paperwork, the terms are largely set and you should pay what you owe each month. That’s foundational to auto loan basics. But let’s look at those payments and what goes into them ahead of time. Maybe we can avoid a few careless mistakes.

You’ve probably figured out that a lower APR (“annual percentage rate”) means you’ll pay less over the life of the loan. That’s absolutely true, but APR is not the only factor. The length of the loan matters as well.

Make Your Payment…

According to Lending Tree, “Delinquency rates for auto loans trend together including loans 30 days past due, loans 90 days past due and loans at least 90 days past due. All three peaked following the 2008 downturn, with 30-day delinquencies spiking to near 11% in early 2009, but have stayed around 7% since 2011.”

Let’s take an example!

Let’s say the car you want will cost you $30,000. You’ve managed to save about $3,000 in anticipation of this glorious day, but that’s clearly not enough. You check around and discover one lender who’ll loan you the full amount and let you pay it back over 48 months, another who’ll offer you 60, and a third who starts at 72. That last offer has the lowest payments of any of them and you get to keep your $3,000! Sounds good, right? And if those are the terms you want, there’s nothing wrong with that.

Still, what are you paying in total over 72 months for the same car you could finance for 60, or 48? That should always be something you consider (not just the size of your monthly payments). You’d be surprised at the difference, even if the interest rate is the same for each – and it’s probably not.

The third factor is your ability to make a down payment. Remember that $3,000 you set aside? Applying that upfront would not only make your monthly payments be lower, but the total interest you’ll pay over the life of the loan would be less as well. It might even be enough to help you do 60 months instead of 72, or 48 instead of 60, which then saves you even more.

Don’t let the complex interplay of factors intimidate you. You don’t have to take Algebra II at your local community college before you buy. Just remember those handy online loan calculators we mentioned from Auto Loan Basics 101. Run a few of the options and see what happens. It doesn’t cost you anything to play with it a bit and prepare; it might cost you in the long run if you don’t.

Auto Loan Rates

If you’re wondering what sort of interest rates you’re likely to secure for your auto loan, the solution is pretty straightforward – try several lenders and see. Interest rates vary widely over time and from lender to lender. Add to the mix the various promotional rates offered by dealers anxious to move some stock off the lot and it’s impossible to say ahead of time what a “typical” rate might be.

With that in mind, here are a few auto loan basics which determine that rate, whatever it might be:

Your credit history.

I realize this is a bummer for some of us, and believe me – I totally understand. But we might as well acknowledge up front that this is a pretty big factor in determining what we’ll be paying for our loan. On the other hand, a reasonable auto loan is a great way to rebuild or strengthen that same credit history by making sure you’re realistic about what you can afford and making your full payment on time every month.

The length of the loan.

Generally speaking, longer loans come at higher rates. Even if the rate is the same, you’ll pay more interest over time with longer loan terms. If you gotta do 72 months, do 72 months, but if you can do 60, or 48, consider those instead – even if it means dialing back on a feature or two in order to make it happen. Keep in mind that down payments may or may not reduce your interest rate, but they will reduce how much interest you’ll pay over the life of the loan.

What you’re buying.

New cars are more likely to have introductory rates or special financing. Used cars are considered a greater risk for lenders, since their resale value is already lower and the chances are good you’ll owe more than the car is technically worth at some point down the road. Pre-owned vehicles tend to cost less – which is great – but come with higher interest rates.

The lender.

Do some auto loan shopping ahead of time by comparing your online options to your favorite banks or credit unions. Scan local ads for dealer promotions and be ready to ask about special financing, then compare it to what you’ve already researched from other lenders. There’s no absolute right or wrong, best or worst on this one – it all depends on who’s offering what, when, and under which conditions.

I realize it’s not as exciting to do loan calculations and compare rates from various auto lenders and look up “blue book” values and all that when we’re buying. There’s a certain thrill to following the spotlights and the inflatable dinosaurs and test driving a few dream cars in candy apple red or adding booming stereo packages before signing on the dotted line in triplicate and cruising home covered in new car smell. It can feel good to leap before we look and figure we’ll worry about the details later.

But those car payments keep coming due every month whether we put in real time and consideration up front or not, and by about month three they’re not particularly thrilling no matter how sexy the paint job or how loud those woofers. Maybe it’s worth sacrificing a little “living on the edge” on this one in order to prioritize auto loan basics? It will reduce your stress and improve your financial security for the remaining years of the loan, which is very much a win – however unexciting it might seem compared to those inflatables.

Do Car Dealerships Prefer Cash or Financing?

Generally, dealers prefer financing, since in addition to whatever profit they make on the actual vehicle, they can count on a little extra from finance charges and the interest you’ll pay. Even if they sell your loan to an outside lender, they net a little extra when you finance through them.

That doesn’t mean you have to finance if you want a good deal on a car. If you do walk in pre-approved from an online lender or local financial institution, or with your checkbook ready to simply pay the full amount, however, you might avoid committing on how you plan on paying until after you’ve come to an agreement on the final price.

They’ll ask, of course, just like they want to know if you plan on trading anything in before they start talking specifics with you. That’s auto loan basics from the dealer’s standpoint. That doesn’t mean you have to do everything their way, however. There’s no need to be dishonest or coy, but these days, dealers realize there’s more information out there than they can control about car values and reasonable pricing. They know you have options. Don’t be afraid to proceed based on what you want to know and how you want to handle things. They’ll either work with you on those terms or they won’t, and you can try somewhere else.

“Be willing to walk away” is normally reserved for Auto Loan Basics 201. You’re ahead of the curve already!

How Does Your Credit Score Effect an Auto Loan?

Let’s start with the obvious: a better credit score will usually get you a better interest rate on your auto loan. Anyone who tries to convince you otherwise is either dishonest or delusional. Now that that’s out of the way, let’s talk about a few less-obvious factors when it comes to your credit score and getting a decent auto loan.

First, check your credit report before you get serious about car shopping. It’s a pain to fix errors, but they do happen and it can be done. Pay particular attention to anything your credit report suggests about past vehicle financing.

That brings up a second point. Lenders considering you for an auto loan are primarily concerned with your track record when it comes to auto loans. I realize that sounds a bit silly. However it’s worth considering. Let’s say you’ve done pretty well paying off two previous vehicles – or maybe one used car and one other big-ticket item like a furniture purchase. On the other hand, your credit score is unimpressive due to outstanding medical bills or other uncontrollable expenses. We agree that your overall credit score still matters. Dealerships and online lenders will notice when the issue doesn’t seem to be your ability to pay for planned purchases. Keep in mind they want your business; all they’re worried about is whether or not you’re going to pay them in a timely manner.

Finally, you’ll never get a loan for which you don’t apply. The abundance of local banks, credit unions, and online lenders means financial organizations have to take a few risks if they’re going to do enough business to compete with your other options. The world of credit isn’t what it was a generation ago. Get your information together, then ask.

How To Get A Car Loan With Bad Credit

At the risk of sounding like a broken record (ask your mom what a “record” is if you’re not sure), the most important step towards getting the loan you want, even with your credit, is to apply for the loan you want, even with your credit. Seriously, what’s the worst that could happen? A few lenders might say no, or propose slightly different terms than you’d hoped?

Now that you’re sick of me repeating that point, let’s talk about a few of the many things you can do to increase your odds when it comes to getting the best possible loan (even with your credit):

Get a co-signer.

This should be someone with a strong credit history who trusts you enough to put their credit rating on the line to help you out. If you make your payments as scheduled, your credit record improves without any change to theirs. If you don’t, their credit record is damaged and they may eventually be expected to pay what you’ve promised – so let’s take this one seriously, shall we?

Make a down payment.

It’s not a surprise that you’re going to need a car someday. Saving money is never the easiest thing in the world, but even a few thousand dollars up front can change the equation in terms of monthly payments, interest rates, and even the willingness of lenders to take a chance on you.

Look over your credit report.

Address any errors or fix any oversights on your part if possible. (You notice we keep returning to this theme? It’s like it’s important or something and yet many people simply don’t do it ahead of time. Hmph!)

Research financing options before you shop for your vehicle

Know what sort of APR (annual percentage rate) is being offered through various lenders and the typical prices negotiated for several of your top choices. Play with some online loan calculators so you understand the way various factors shape potential loan payments. Compare local banks, credit unions, and online lenders, even if it means delaying your car-shopping for few days while you do. Don’t be demanding or obnoxious, but there’s nothing like knowing what you’re talking about when you’re trying to secure financing.

Research vehicles, typical selling prices in your area, and other logistics before walking onto that lot.

Know what features are essential to you and what you can live without, and be ready to compromise a bit if the dealer has something pretty close in stock that they’re ready to move. And for goodness sake, don’t get fixated ahead of time; have several options so you can honestly walk away if you’re not happy with the terms. Know your non-negotiables and on what points you can be flexible going in – that’s Auto Loan Basics: The Prequel, my friend!

Don’t become fixated on monthly payments.

Look at overall loan terms. We talked about this above, remember? I’m only mentioning it again because the whole process can sometimes leave us feeling a bit glazed over and I figure a little reminder wouldn’t hurt. You’d do the same for me, wouldn’t you?

Bring a trusted friend or family member.

Sometimes we think more clearly if we bounce things off that colleague from work who always asks the right questions or that sister who isn’t afraid to be irritating when she knows we’re about to do something we’ll regret. Anyone familiar with auto loan basics and willing to be a second set of eyes and ears in the process. (Your spouse or significant other doesn’t count. They’re probably not really a “neutral outsider” when it comes to major purchases – at least I hope not. If they are, you’re doing relationships wrong, my friend.)

Where To Shop To Get A Car Loan

Shopping for an Auto Loan: What You Should Know

I assume at this point you’re tired of me telling you to check with your local bank and credit union. Besides, you probably know how to shop for a car loan this way – walk in, sign the list, and talk to whoever calls your name, right?

If you thought to yourself,

“But first I should check my credit report, estimate what I can reasonably afford, narrow down my vehicle options, and experiment with an online loan calculator…” then YOU GET A STICKER and ONE THOUSAND BONUS POINTS! You are officially gifted and talented when it comes to auto loan basics.

What you may be less certain about is finding reputable online auto lenders. The internet is a magical place, but you’d be foolish to stake all your hopes and dreams at the first search engine result that comes up (which was probably a paid advertisement anyway). That’s where we come in.

Conclusion

We use our expertise to connect buyers with online auto lenders. This flips the traditional dynamic associated with getting an auto loan or any other kind of financing. There’s no reason you should be overwhelmed or frustrated, going from desk to desk like Oliver Twist wanting more warm mush. What you are is a client, empowered to choose from numerous marketplace lenders who compete for your business by putting together their best solutions and hoping you’ll consider giving them your business.

These are experts in creative financial solutions who understand your situation. They exist to help people like us figure out how to figure out situations like this. Some even specialize in helping you rebuild your credit if things haven’t gone, you know… perfectly in years past.

You’re probably wondering about the catch. What are we selling you? Nothing – nothing at all. Loanry gathers some basic information and offers a few tools to help better determine your needs, then helps you find a participating lender to secure a solution both of you decide is best. We don’t charge you any fees or take any payments from you. Period. Once you’ve found a lender that meets your needs, the rest is between you and them.

Good luck, happy driving, and be safe. You’re now an expert in auto loan basics and ready to share your wisdom with others.

After you get that car, of course.