| Nowadays, obtaining auto loans online has never been | | | | auto loan, do the following: |
| easier. Typically, you'll come across forms that are | | | | • Fix your credit report - Correct mistakes and |
| not only short, but simple too. If you're spending | | | | "charge offs" • Pay attention to your credit score |
| more than five or ten minutes filling in field after field, | | | | - Know what APR you deserve • Close old |
| you're probably just wasting your time. Instead, it | | | | accounts - Credit scores can suffer with them • |
| should take just a few minutes to submit the | | | | Understand the process of car loans - Be prepared |
| necessary information. Most lenders, especially the | | | | • Utilize an auto loan calculator - Test different |
| most qualified, will contact you within a matter of | | | | APR scenarios |
| days, sometimes hours, to discuss your auto loan | | | | How Applications for Auto Loans Are Approved |
| options. The same lenders will also have bad credit | | | | Applications for auto loans are approved (or |
| car loan options as well. So, whether you are a prime | | | | disapproved) through a standardized process that |
| or sub-prime candidate, it shouldn't be too difficult to | | | | involves a lender closely reviewing a list of an |
| find a lender that can help. | | | | individual's financial statistics to gauge their eligibility. |
| Car loans work like this: First, you trade in your car | | | | The following are those key factors. So before you |
| for an agreed amount. Next, you make a down | | | | apply for an auto loan, have a look at what lenders |
| payment. And the difference between the sum of | | | | look at. |
| those and the price of your new automobile is the | | | | Income Your gross monthly income should be about |
| amount you will need to borrow for your car loan. | | | | $2000 per month or more. |
| Here's the oversimplified mathematical formula: | | | | Debt-to-Income Ratio It must be less than 50%. |
| [(Total Price of Car) - (Down Payment + Trade-in | | | | Calculate this ratio by dividing the sum of your total |
| Value)] = Auto Loan Amount | | | | debt (e.g. car payments, credit card balances and |
| With car loans, the Annual Percentage Rate, or APR | | | | unsecured loans; exclude mortgage or property debt) |
| is very important. Your monthly payments are a | | | | by the sum of your total income. |
| function of the interest rate and the length of the | | | | Credit Reports A credit report must exist in your |
| car loan. APR is designed to help you understand the | | | | name and all information on the auto loan application |
| car loan's entire cost, create a level playing field for | | | | must match it. Remember to complete all fields on |
| lenders, and prevent them from advertising low rates | | | | the auto loan application accurately - with proper |
| and then hiding fees. The better your credit is, the | | | | format and no typos. Most applications for auto loans |
| lower the APR on your car loan will be. | | | | are approved or declined automatically based on |
| Many car loans offer 60- or 72-Month loan periods, | | | | entered data. |
| for smaller payments each month. Though lower | | | | FICO You must have a FICO credit score (Fair Isaac) |
| payments may seem easier to manage, the interest | | | | of 540 or greater (sub prime), 600+ (near prime), |
| paid over the financed period means you pay more, | | | | and 680+ (prime lender). If you don't know your |
| increasing the total cost of your car loan. | | | | credit score, you should get a copy of your credit |
| To better prepare for the car loan process, use an | | | | report. |
| auto loan calculator - you'll find them on major lending | | | | Loan Amount A new or used auto loan is typically |
| websites - to estimate your payments based on a | | | | between $5,000 and $50,000, depending on the |
| car's price, length of the car loan and interest rate. By | | | | length of the auto loan period. If you need a car loan |
| testing different auto loan scenarios, you'll better | | | | for less than $5000, it's wise to get a credit card, |
| understand what you are capable of handling. | | | | instead of approaching a lender. |
| If you're financing a used car loan, lenders may only | | | | Employment History Steady employment is |
| approve it for a model up to 5 years old. The used | | | | preferable for an auto loan. If you're self-employed, |
| car loans process is more restricted because much | | | | proof of two years minimum employment history |
| older cars are harder to resell. Some banks charge at | | | | must be provided with tax returns. |
| least 2% higher APR on used car loans, than they do | | | | Collateral Any vehicle that is offered is generally no |
| for new car loans. Though, many online auto loan | | | | more than seven model years old (as of January 1st |
| providers today, offer better rates. | | | | of that year). |
| Whether it's a new or used car, however, applying | | | | Vehicle Type The lending process is compounded if |
| for a bad credit car loan can be intimidating. But there | | | | the automobile is a sports car, motorcycle, collector |
| are car loans for people with bad credit. Believe it or | | | | vehicle, hot rod, or similar type car. Some lenders are |
| not, you can control interest rates by understanding | | | | also particular with other vehicles such as SUVs and |
| your finances, your credit report, and all related costs. | | | | trucks. |
| If a bad credit car loan is what you are looking for, | | | | State-by-State Some states have auto loan |
| request your credit report. This way you'll not only | | | | restrictions. As a result, some lenders do not offer all |
| understand where you stand financially, but you can | | | | services therein. |
| also fix blemishes to improve your rating and APR. | | | | Other Considerations • Complete all fields on the |
| While the amount borrowed and interest rate are | | | | loan application accurately with proper format and no |
| important parts of auto loans, look at other factors | | | | typos. • Be sure you work with the most trusted |
| too. Your auto loan term and the fees you pay for | | | | car loan lenders. Do your research by reading |
| credit checks are crucial. Fees and interest shouldn't | | | | thorough reviews of only the most qualified |
| exceed the total cost of the car. | | | | companies. • Apply for a car loan online. It is |
| If, in the end, you're not comfortable with the terms | | | | secure and fast. |
| of any auto loan, consider leasing. This is a great | | | | The right loan can mean the difference between |
| alternative to auto loans, especially if you're battling | | | | wasting money and saving money. Once you get |
| with bad credit. | | | | started, you'll be one step closer to your new car! |
| To increase your chances of being approved for an | | | | |