5 Steps for Getting a Car Loan

July 5, 2018 &• 10 min read by Lacey Langford Comments 10 Comments

div#contentdisclaimer {background: #fff;padding: 1.5em;line-height: 1.25em;max-width: 500px;}
Advertiser Disclosure

Disclaimer

This Article was Updated July 5, 2018

When you are looking to buy a vehicle, the first thing you should do is apply for a preapproved loan. The loan process can seem daunting, but it’s easier than you think and getting preapproval prior to going to the car dealer may help alleviate a lot of frustration along the way.

Here are five steps for getting a car loan.

  1. Check Your Credit
  2. Know Your Budget
  3. Determine How Much You Can Afford
  4. Get Preapproved
  5. Go Shopping

1. Check Your Credit

Before you shop for a loan, check your credit report. The better your credit, the cheaper it is to borrow money and secure auto financing. With a higher credit score and a better credit history, you may be entitled to lower loan interest rates, and you may also qualify for lower auto insurance premiums.

Review your credit report to look for unusual activity. Dispute errors such as incorrect balances or late payments on your credit report. If you have a lower credit score and would like to give it a bit of a boost before car shopping, pay off credit card balances or smaller loans.

If your credit score is low, don’t fret. A lower score won’t prevent you from getting a loan. But depending on your score, you may end up paying a higher interest rate. If you have a low credit score and want to shoot for lower interest rates, take some time to improve your credit score before you apply for loans or attempt to secure any other auto financing.

2. Know Your Budget

Having a budget and knowing how much of a car payment you can afford is essential. You want to be sure your car payment fits in line with your other financial goals. Yes, you may be able to cover $400 a month, but that amount may take away from your monthly savings goal.

If you don’t already have a budget, start with your monthly income after taxes and subtract your usual monthly expenses and how much you plan to put in savings each month. For bills that don’t come every month, such as Amazon Prime or Xbox Live, take the yearly charge and divide it by 12. Then add the result to your monthly budget. If you’re worried, you spend too much each month, find simple ways to whittle your budget down.

You’ll also want to plan ahead for new car costs, such as vehicle registration and auto insurance, and regular car maintenance, such as oil changes and basic repairs. By knowing your budget and what to expect, you can easily see how much room you have for a car payment.

3. Determine How Much You Can Afford

Once you understand where you are financially, you can decide on a reasonable monthly car payment. For many, a good rule of thumb is to not spend more than 10% of your take-home income on a vehicle. In other words, if you make $60,000 after taxes a year, you shouldn’t spend more than $500 per month on car payments. But depending on your budget, you may be better off with a lower payment.

With a payment in mind, you can use an auto loan calculator to figure out the largest loan you can afford. Simply enter in the monthly payment you’d like, the interest rate, and the loan period. And remember that making a larger down payment can reduce your monthly payment. You can also use an auto loan calculator to break down a total loan amount into monthly payments.

You’ll also want to think about how long you’d like to pay off your loan. Car loan terms are normally three, four, five, or six years long. With a longer loan period, you’ll have lower monthly payments. But beware—a lengthy car loan term can have a negative effect on your finances. First, you’ll spend more on the total price of the vehicle by paying more interest. Second, you may be upside down on the loan for a larger chunk of time, meaning you owe more than the car is actually worth.

4. Get Preapproved

Before you ever set foot on a car lot, you’ll want to be preapproved for a car loan. Research potential loans and then compare the terms, lengths of time, and interest rates to find the best deal. A great place to shop for a car loan is at your local bank or credit union. But don’t stop there—look online too. The loan with the best terms, interest rate, and loan amount will be the one you want to get preapproved for. Just know that preapproved loans only last for a certain amount of time, so it’s best to get preapproved when you’re nearly ready to shop for a car.

#animation-wrapper { max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif } #animation-wrapper .box { background-color: #f5f5f5; color: #000; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px } .content .box p { margin: 0 0 } .box .btn-primary { color: #fff; background-color: #ff7f00; margin: 10px 0 } .chat ul { margin: 0; padding: 0; list-style: none } .message-left .message-time { display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier } .message-right .message-time { display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier } .message-left { text-align: left; margin-bottom: 8px !important; } .message-left .message-text { max-width: 80%; display: inline-block; background: #79af3e; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em } .message-right { text-align: right; margin-bottom: 8px !important; } .message-right .message-text { line-height: 1.5em; display: inline-block; background: #2e5e89; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left } .chat { background: #fff; margin: 0; border-radius: 0 } .chat-container { height: 450px; padding: 5px 15px; overflow: hidden } .spinme-right { display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinme-left { display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinner { margin: 0; width: 30px; text-align: center } .spinner>div { width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000 } .spinner .bounce1 { -webkit-animation-delay: -.32s; animation-delay: -.32s } .spinner .bounce2 { -webkit-animation-delay: -.16s; animation-delay: -.16s } @-webkit-keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0) } 40% { -webkit-transform: scale(1) } } @keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); transform: scale(0) } 40% { -webkit-transform: scale(1); transform: scale(1) } } .ad-container { padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto } .ad { padding: 10px 6px; max-width: 630px } .ad-title { font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px } .ad-link { line-height: 18px; padding-left: 26px; position: relative } .ad-link::before { content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0 } .ad-link a { color: #006621; text-decoration: none; font-size: 14px; line-height: 14px } .ad-copy { color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block } .ad .breaker { font-size: 0 } .box .box-desc { font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600 } .btn { display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none } .btn-group-lg>.btn, .btn-lg { padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px } #ad-4 { font-family: Arial, sans-serif; background-color: #fff } #ad-4 .ad-title { color: #2130ab } #animation-wrapper .cta-amone { background: #79af3e; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 7px auto } #animation-wrapper .amone-logo { display: block; margin: 0 auto } @media (max-width:500px) { .ad { padding: 20px 18px; max-width: 630px } }

Get matched with a personal loan that’s right for you today.

Learn more

However, when you apply, the lender will run a credit check—which will lower your credit score slightly—so you’ll want to keep all your loan applications within a 14-day period. That way, the many credit checks will only show as one inquiry instead of multiple ones.

When you’re preapproved, the lender decides if you’re eligible and how much you’re eligible for. They’ll also tell you what interest rate you qualify for, so you’ll know what you have to work with before you even walk into a dealership. But keep in mind that preapproved loans aren’t the same as final auto loans. Depending on the car you buy, your final loan could be less than what you were preapproved for.

In most cases, if you secure a pre-approved loan, you shouldn’t have any problems getting a final loan. But being preapproved doesn’t mean you’ll automatically receive a loan when the time comes. Factors such as the info you provided or whether or not the lender agrees on the value of the car can affect the final loan approval. It’s never a deal until it’s a done deal.

If you can’t get preapproved, don’t abandon all hope. You could also try making a larger down payment to reduce the amount you are borrowing, or you could ask someone to cosign on the loan. If you ask someone to cosign, take it seriously. By doing so, you are asking them to put their credit on the line for you and repay the loan if you can’t.

When co-signing a car loan, they do not acquire any rights to the vehicle. They are simply stating that they have agreed to become obligated to repay the total amount of the loan if you were to default or found that you were unable to pay.

Co-signing a car loan is more like an additional form of insurance (or reassurance) for the lender that the debt will be paid no matter what.

Usually, a person with bad credit or less-than-perfect credit may require the assistance of a co-signer for their auto financing and loan.

5. Go Shopping

Now you’re ready to look for a new ride. Put in a little time for research and find cars that are known to be reliable and fit into your budget. You’ll also want to consider size, color, gas mileage, and extra features. Use resources like Consumer Reports to read reviews and get an idea of which cars may be best for you.

Once you have narrowed down the car you are interested in, investigate how much it’s worth, so you aren’t accidentally duped. Sites such as Kelley Blue Book or Edmunds can help you figure out the going rate for your ideal car. After you’re armed with this information, compare prices at different car dealerships in your area. And don’t forget to check dealer incentives and rebates to get the best possible price.

By following these steps, you’ll be ready to make the best financial decision when getting a car loan. Even if you aren’t ready to buy a car right now, it doesn’t hurt to be prepared. Start by acquiring a free copy of your credit summary.

It is always a good idea to pull your credit reports each year, so you can make sure they are as accurate as they should be. If you find any mistakes, be sure to dispute them with the proper credit bureau. Remember, each credit report may differ, so it is best to acquire all three.
If you want to know what your credit is before purchasing a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image: istock


Source: credit.com

What Happens When You Pay Off Your Car Loan?

July 20, 2020 &• 5 min read by Julia Eddington Comments 1 Comment

div#contentdisclaimer {background: #fff;padding: 1.5em;line-height: 1.25em;max-width: 500px;}
Advertiser Disclosure

Disclaimer

According to the Consumer Financial Protection Bureau, around 2.3 million car loans originate every year. Car loans can take years to pay off. So when you finally pay it off, you might be wondering—now what?

What happens when you pay off your car? What should you do with the money you were previously putting towards your monthly payments? We’ve got a few ideas, but keep in mind that everyone’s finances are different. So while our suggestions might work for some people, they probably won’t work for everyone.

What to Do When You Pay Off Your Car

Firstly, paying off your car loan is a huge accomplishment. So congratulations! Paying off any loan isn’t always easy. And now you finally own your car, which is a pretty big deal.

Luckily for you, the hard part is over. But there are still a few steps you should take after you pay off your car.

1. Get Your Car Title

You usually don’t have to take action for this step. In most states, your lender notifies the Department of Motor Vehicles—or BMV or other equivalent entity in your state—of the title change. Once the paperwork clears, the title is mailed to you.

There’s not much for you to do except keep an eye on the mail. If you don’t get your title a few weeks after paying off your loan, call your lender. You’ll need the title if you ever want to sell your car or use it for collateral when applying for credit.

2. Reconsider Your Finances

If you’re paying off a vehicle and not planning to buy another with a new loan, you’ll have a little more extra room in your budget. In 2019, new car buyers committed to an average monthly payment of around $550. So when you pay off your car loan, there’s a good chance you’ll have an extra $300 (or more) per month.

You might be tempted to splurge on fun stuff or to make large purchases you’ve been putting off. But unless your transportation situation is radically changing soon, you’ll always need a car. And that means you’ll eventually need to pay for the next one.

Plus, owning a car is expensive—even if you’ve completely paid it off. You’ll have to your oil changed, new tires and much more. And that’s just regular maintenance. If you get in even a minor accident, you could have a major repair expense on your hands.

That’s why it’s a good idea to put that some of that extra money in savings. If you end up getting a new car eventually, you can pay for all or part of your next vehicle with cash. That reduces how much you have to finance, which can significantly reduce the total cost of your next vehicle. Another option is to use the money to continue to pay down other debt to put yourself in a better financial situation in the future.

It’s also worth putting part of that cash in your short-term savings. You could easily dip into those funds if you need to get any work done on your car. But whatever you plan to do with the money, take the time to look at your personal budget. That gives you a chance to see exactly where this extra money might make the most difference.

3. Notify Your Car Insurance Company

Notify your car insurance company when you’ve paid off your loan so you can remove the lien holder from your policy. You don’t need to wait until you have the title in your hand to make the call.

This step is important because if your financed vehicle were totaled in a wreck, the insurance payment would go to the lender. Once you’ve paid off the car and own it outright, the payment goes to you.

#animation-wrapper { max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif } #animation-wrapper .box { background-color: #f5f5f5; color: #000; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px } .content .box p { margin: 0 0 } .box .btn-primary { color: #fff; background-color: #ff7f00; margin: 10px 0 } .chat ul { margin: 0; padding: 0; list-style: none } .message-left .message-time { display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier } .message-right .message-time { display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier } .message-left { text-align: left; margin-bottom: 8px !important; } .message-left .message-text { max-width: 80%; display: inline-block; background: #79af3e; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em } .message-right { text-align: right; margin-bottom: 8px !important; } .message-right .message-text { line-height: 1.5em; display: inline-block; background: #2e5e89; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left } .chat { background: #fff; margin: 0; border-radius: 0 } .chat-container { height: 450px; padding: 5px 15px; overflow: hidden } .spinme-right { display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinme-left { display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinner { margin: 0; width: 30px; text-align: center } .spinner>div { width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000 } .spinner .bounce1 { -webkit-animation-delay: -.32s; animation-delay: -.32s } .spinner .bounce2 { -webkit-animation-delay: -.16s; animation-delay: -.16s } @-webkit-keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0) } 40% { -webkit-transform: scale(1) } } @keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); transform: scale(0) } 40% { -webkit-transform: scale(1); transform: scale(1) } } .ad-container { padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto } .ad { padding: 10px 6px; max-width: 630px } .ad-title { font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px } .ad-link { line-height: 18px; padding-left: 26px; position: relative } .ad-link::before { content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0 } .ad-link a { color: #006621; text-decoration: none; font-size: 14px; line-height: 14px } .ad-copy { color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block } .ad .breaker { font-size: 0 } .box .box-desc { font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600 } .btn { display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none } .btn-group-lg>.btn, .btn-lg { padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px } #ad-4 { font-family: Arial, sans-serif; background-color: #fff } #ad-4 .ad-title { color: #2130ab } #animation-wrapper .cta-amone { background: #79af3e; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 7px auto } #animation-wrapper .amone-logo { display: block; margin: 0 auto } @media (max-width:500px) { .ad { padding: 20px 18px; max-width: 630px } }

Get matched with a personal loan that’s right for you today.

Learn more

4. Consider Any New Insurance Options

Most states have requirements for what type of coverage you must carry on your car. At minimum in most states, you need bodily injury and property damage liability that will cover the losses of other people if it’s caused in a wreck that is deemed your fault. There are some exceptions to those requirements, though.

But your lender will likely require additional insurance coverage until you pay off the loan. Many lenders require you to also carry comp and collision coverage. This is the part of your insurance policy that pays for damage to yourvehicle if you get into an accident that is deemed your fault.

Lenders require this extra coverage to protect their investment. They want to know that if your car is totaled, they can recover the value that you owe them. Once you pay off the loan, whether or not you carry this level of coverage might be your choice.

Talk to your insurance agent to find out what your options are and if you can save money by changing your insurance coverage. Just remember that if you drop this coverage and get into an accident, you may have to cover the costs of repairs or a new vehicle on your own.

You can also check rates for auto insurance online. In addition to saving money on your monthly vehicle payment, you may be able to save a lot on your insurance coverage.

Does Paying Off Your Car Loan Early Hurt Your Credit?

To get out of debt or change your current car, you might decide to pay off your car loan early. Your credit isn’t penalized by making early payments on debt. However, paying off an entire account can cause a small dip in your credit score temporarily. That’s because open accounts with a positive payment history impact your score more than closed accounts with positive payment histories.

Your wallet might also take a small hit depending on how your loan is structured. Find out if your loan includes any penalties for paying off the principle early before you make a decision to go this route.


Source: credit.com

What Credit Score Do I Need to Buy a Car?

July 18, 2018 &• 10 min read by Joshua Adamson Comments 0 Comments

div#contentdisclaimer {background: #fff;padding: 1.5em;line-height: 1.25em;max-width: 500px;}
Advertiser Disclosure

Disclaimer

Article Updated July 18, 2018.

If it’s time to purchase a new vehicle, you may be wondering about one obstacle that could get in your way: your credit. Maybe you’re unsure how good your credit is, and you don’t know what credit score is needed to buy a car either. It is better to educate yourself with the knowledge you need to move forward with the car buying process to help alleviate any frustration or challenges you may find along the way to car ownership.

No matter your credit score, you can probably find a way to finance a car loan if you absolutely must buy a new vehicle. The real question is what your credit score will cost you when you make the purchase. The better your credit score, the better your chances may be of receiving a cheaper and more affordable interest rate and payment per month.

So, while there’s no minimum credit score required for car loans, your credit history and credit score can definitely make a big difference in the car buying process.

Bad Credit Scores Mean Much Higher Interest Rates

According to data from Experian Automotive, the difference in interest rates on a new car loan for someone with excellent credit versus someone with very poor credit is over 11 percentage points.

In fact, 2.84% was the average interest rate someone with a super-prime (excellent) credit score paid in the first quarter of 2017, while those with deep subprime (very poor) credit paid an average interest rate of 13.98% or higher.

To illustrate this difference, consider that you apply for a 60-month loan on a car that costs $25,000. With a 2.84% interest rate, the total cost of your car would be $26,847 with payments of $447 per month. Not too shabby.

For the same loan but an interest rate of 13.98%, your car loan would cost you $34,887, and you’d pay $581 per month. That’s more than $8,000 extra! Clearly, poor credit can result in you paying a lot more for your new vehicle.

The difference was even starker in comparison to those financing used cars. Those with super-prime credit paid an average rate of 3.56%, while those with deep subprime credit paid an average of 19.62%—more than 16 percentage points higher.

Average New Car Loan Rate by Credit Score (Q1 2017)

  • Super-prime (781–850): 2.84%
  • Prime (661–780): 3.77%
  • Nonprime (601–660): 6.60%
  • Subprime (501–600): 11.05%
  • Deep subprime (300–500): 13.98%

Note that the credit labels above represent Experian’s credit ranges. Other credit reporting agencies use different scales and labels so the information may differ between each credit bureau.

Experian uses a scoring model of 300 to 850. You will find the prime borrowers on the top of this spectrum, and the deep subprime borrowers are at the lower end of the spectrum.

Even if your credit score doesn’t fall into the average ranks as outlined below, you may still be able to qualify for a vehicle loan with a score of between 600 and 660.

Average Used Car Loan Rate by Credit Score (Q1 2017)

  • Super-prime: 3.56%
  • Prime: 5.29%
  • Nonprime: 9.88%
  • Subprime: 16.48%
  • Deep subprime: 19.62%

The dealer may also evaluate your credit using another type of credit score called VantageScore. VantageScore, which was developed by all three of the major reporting agencies, assigns different weights to different parts of your credit history, such as on-time payments, balances, and utilization.

#animation-wrapper { max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif } #animation-wrapper .box { background-color: #f5f5f5; color: #000; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px } .content .box p { margin: 0 0 } .box .btn-primary { color: #fff; background-color: #ff7f00; margin: 10px 0 } .chat ul { margin: 0; padding: 0; list-style: none } .message-left .message-time { display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier } .message-right .message-time { display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier } .message-left { text-align: left; margin-bottom: 8px !important; } .message-left .message-text { max-width: 80%; display: inline-block; background: #79af3e; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em } .message-right { text-align: right; margin-bottom: 8px !important; } .message-right .message-text { line-height: 1.5em; display: inline-block; background: #2e5e89; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left } .chat { background: #fff; margin: 0; border-radius: 0 } .chat-container { height: 450px; padding: 5px 15px; overflow: hidden } .spinme-right { display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinme-left { display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinner { margin: 0; width: 30px; text-align: center } .spinner>div { width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000 } .spinner .bounce1 { -webkit-animation-delay: -.32s; animation-delay: -.32s } .spinner .bounce2 { -webkit-animation-delay: -.16s; animation-delay: -.16s } @-webkit-keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0) } 40% { -webkit-transform: scale(1) } } @keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); transform: scale(0) } 40% { -webkit-transform: scale(1); transform: scale(1) } } .ad-container { padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto } .ad { padding: 10px 6px; max-width: 630px } .ad-title { font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px } .ad-link { line-height: 18px; padding-left: 26px; position: relative } .ad-link::before { content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0 } .ad-link a { color: #006621; text-decoration: none; font-size: 14px; line-height: 14px } .ad-copy { color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block } .ad .breaker { font-size: 0 } .box .box-desc { font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600 } .btn { display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none } .btn-group-lg>.btn, .btn-lg { padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px } #ad-4 { font-family: Arial, sans-serif; background-color: #fff } #ad-4 .ad-title { color: #2130ab } #animation-wrapper .cta-amone { background: #79af3e; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 7px auto } #animation-wrapper .amone-logo { display: block; margin: 0 auto } @media (max-width:500px) { .ad { padding: 20px 18px; max-width: 630px } }

Get matched with a personal loan that’s right for you today.

Learn more

Some people may benefit from a lender using their VantageScore, while others may be at a disadvantage.

Subprime Auto Loans

If you find that you are ineligible for a traditional car loan because you have a low credit score or less than perfect credit, or your income is below where it needs to be, then you will need to look into a subprime auto loan.

Subprime auto loans tend to be a lot riskier than regular or traditional car loans, and they typically come attached to much higher interest rates and fees, and you are paying for much longer terms.

Subprime lending is also often referred to as near-prime, subpar, non-prime, and second-chance lending. However, instead of using this type of high interest loan, if available, you should instead improve your credit, so it is no longer less-than-perfect-credit. You could also see if you could instead qualify for in-house financing at the dealership, so you do not have to be a subprime borrower and risk putting yourself under even more financial strain.

Where to Start If You’re Unsure

If you’re nervous about letting a car dealer check your credit—but even if you aren’t—it’s helpful to check your score yourself in advance. You can check your credit report for free to make sure you don’t have any surprises and to find mistakes.

Note that the credit scores an auto lender uses may be slightly different because it will be tailored for an auto loan. Still, it’s a good start—if your general credit score is strong, you can also bet that the score the dealer uses is strong.

We also recommend that you try to get pre-approved for a car loan from a bank or credit union before setting foot in the dealership. With a set interest rate in hand, if the dealer can offer you a better rate, perfect! If not, you’ll be prepared to pay what your bank approved you for.

How to Get Pre-approved for a Car Loan

You can apply for pre-approval for a car loan easily online, in person, or even over the phone. The lender will perform a hard credit check to see the state of your credit, and they will then gather all of your financial information such as your monthly income, and they will then have a better idea about whether or not they will provide you with the car loan.

All of these factors will figure into the interest rate, monthly payment, loan amount, and even the length of the loan. There is also something called pre-qualification, but this process will not be as accurate as the pre-approval process because they are not able to take such a close look at your credit.

If and when you are pre-approved, the lender will provide you with an offer statement in the form of a letter, certificate, or another form of proof so you can take it to the car dealership of your choice and begin the car buying process.

Remember, even if you are pre-approved, you will want to set a very realistic budget for yourself prior to looking at cars so you will have a better idea of what you can afford and what you should be looking into.

Getting the Best Auto Loan

Getting the best auto loan is important when it comes to affordability and value. It is recommended that you look at options from different banks and credit unions and other online lenders to make sure you are getting the lowest possible interest rate you can get. Finding a car dealership that offers financing may also prove to be a beneficial idea as well; especially if your credit is less than ideal.

When planning to finance a new or used car, it is always best to take your time and plan it out because it is a big purchase and investment. If you are able and have the time, you should consider working on your credit score to improve your credit, so you are able to lock in a much better deal.

Pull your credit report and look through it thoroughly. Always be on the lookout for any errors so you can dispute them and get them removed. It is also important to make sure you are paying all of your bills on time, your credit balances are low, and you are not opening any new lines of credit except when you actually need to.

You will be presented with better financing options if you can show the potential lenders that you are responsible and can pay your bills on time and maintain good credit.

A Word of Caution

Credit inquiries related to auto loans made within a short time frame (usually 14 days, or 45 days depending on the credit score model being used) are supposed to count as a single inquiry. However, some of our readers have found their credit scores dropping after multiple car dealers sent credit inquiries for financing. This is another reason why getting pre-approved before going to the dealership is a good idea.

If want to make sure your credit is good enough to purchase a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get a free credit score updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Here’s What Else You Should Know about Auto Loans:


Source: credit.com

How Much Does a Cosigner Help with Getting Auto Loans or Better Loan Terms?

August 6, 2020 &• 4 min read by Gerri Detweiler Comments 0 Comments

div#contentdisclaimer {background: #fff;padding: 1.5em;line-height: 1.25em;max-width: 500px;}
Advertiser Disclosure

Disclaimer

Imagine you’re shopping for a new car and finally find a reasonably priced set of wheels that you like. But when the dealer pulls your credit, that seemingly affordable monthly payment is no longer available to you. Instead, you’re offered a subprime car loan at 10% or even 20% interest because your credit isn’t strong enough to get a better rate.

How much does a cosigner help on auto loans when you’re facing this type of situation? Get more information below to help you decide whether seeking a cosigner is the right option for you.

How Does a Cosigner on a Loan Work?

A cosigner is basically someone who backs the loan. They sign agreeing that if you don’t make the payments as promised, they will step in to pay them.

If you don’t have much of a credit history or your credit is bad or poor, lenders are typically hesitant to give you an auto loan. They perceive you as risky. Will you pay as agreed? There’s not enough data or credit history for them to make that call.

However, a cosigner with a long history of good credit is different. The lender is more likely to believe that this person willpay as agreed. So, if you can get a cosigner to back you, you might have a better chance of getting a loan or getting better terms.

How Much Does a Cosigner Help With an Auto Loan?

How much can you save? Imagine you finance $37,851, the average price for a new light vehicle in the United States as of February 2020.

The average interest rate as of the end of 2019 for new car loans was 5.76%. If you’re able to get that interest rate and a loan term of 72 months—that’s 6 years—you would pay a total of $44,742. That’s $6,891 in interest and a monthly payment of around $621.

If you financed at 10% without a cosigner for the same terms, you’d pay a total of $50,488 for the vehicle. That’s $12,637 in interest and around $701 in monthly payments.

This is obviously just an example, but you can see that a cosigner can save you a lot. In this case, it’s $80 a month and more than $5,700 total.

Cosigner Versus Co-Applicant

It’s important to note that having a cosigner for a car loan is not the same thing as having a co-applicant. A co-applicant buys the vehicle with you. Their credit history and income are used alongside yours to determine if you, together, can afford the vehicle. The co-applicant also has an equal share of ownership in the vehicle purchased with the loan.

A cosigner, on the other hand, doesn’t have an ownership share in the vehicle. Their income may also not be a factor in the approval. Typically, they’re along only to provide a boost in the overall credit outlook.

What Are Some Downsides of Having a Cosigner?

Most of the risks or disadvantages are held by the cosigner. If you don’t pay the loan, they could become responsible for it. They could also suffer from a lower credit score if you’re late with car payments because it might get reported to their credit too.

As a borrower, you might experience a few disadvantages in using a cosigner. First, you have to get someone to agree to this, and you typically want it to be someone with good credit. Trusted family members are the most common cosigners, but that could mean that they might want to have a say in what type of vehicle you get.

And if something happens and you can’t pay the vehicle loan for any reason, you run a personal risk. You could damage your relationship with the cosigner if they do end up having to pay off the loan or face damage to their credit.

So, Should You Get a Cosigner for an Auto Loan?

The decision is personal. Before you do anything, check your credit and understand where you are financially. That helps you know what your chances for getting approved for a loan are on your own and how much loan you might be able to afford.

Then, check out some potential auto loans and consider whether you should apply for them on your own. If you know your credit is too poor or you try to apply for a loan and don’t get favorable terms, talk to a potential cosigner. Be honest about your situation and have a plan to pay the loan on time each month so they feel more confident supporting you as you make this purchase.


Sign up now.

Source: credit.com

Can I Get a Car Loan If I Have No Credit?

November 27, 2017 &• 6 min read by Gerri Detweiler Comments 4 Comments

div#contentdisclaimer {background: #fff;padding: 1.5em;line-height: 1.25em;max-width: 500px;}
Advertiser Disclosure

Disclaimer

Yes, lenders have auto loans for people with no credit, but getting one is not guaranteed. It will depend on the lender’s flexibility, the down payment you can afford, and the kind of car you want to buy. It may even depend on how you ask.

Phil Reed, senior consumer advice editor for the consumer auto site Edmunds has some good advice on how to get a car loan with no credit. He says a surprising number of people simply walk into a dealership and say, “Hi, I have no credit, and I want to buy a car.” He doesn’t recommend this approach. Instead, he offers these five tips for people who need a no-credit car loan.

1. Get Pre-Approved

If you have no credit or a thin credit profile, you should try to get preapproved for a loan before heading to the dealership. This will let you compare rates with any loan the dealer may offer. It may also give you a bargaining chip when negotiating the final deal.

If you have a relationship with a bank or credit union, you should start looking for financing there. Reed recommends making an appointment to meet with your bank’s loan officer in person.

“Make a case for yourself,” he says. That means bringing your pay stubs and bank account records with you. You should also check your credit reports, if they exist, and credit scores. You want to know as much about your credit profile as a lender would. If you don’t know your credit score, don’t worry—you can check your credit score for free every month on Credit.com.

If you can’t get a loan from your financial institution, you may be able to find a no-credit auto loan online. Just make sure it’s from a reputable lender. Credit.com can also help you find auto loan offers from trustworthy lending institutions.

2. Negotiate a Good Price

A dealership could beat the offer you get from your bank or credit union. However, if you know you’re already approved for a loan, you can focus on comparing rates and prices instead of worrying about financing.

Reed says that it’s important to be wary. You don’t want to feel so indebted to the dealer for “giving” you a loan that you fail to negotiate the price of the car. And if the dealer’s financing isn’t better than the bank’s, at least you still have an approval in your pocket.

Having a good down payment or trade-in can also help your case. A trade-in would reduce the amount you’ll need to borrow, and a larger down payment would show the lender some commitment on your part. Edmunds recommends putting at least 10% down on a used car, so start saving now.

3. Choose the Right Car

Be sure the car you’re buying is affordable for you, even if it’s not the car you’d choose if you had more money and better credit. “If you have no credit, it’s not the time to get your dream car,” Reed says. “You have to choose the right car and the right amount [to borrow].”

You want reliable transportation you can afford. Making regular, on-time payments won’t just pay down your load, it will also build your credit, so don’t get a loan that requires higher payments than you can comfortably make.

Sites like Kelley Blue Book, Cars.com, and Edmunds can help you find information on the cars that match your budget. When you’re at the car dealership, remember your budget and don’t spring for optional add-ons you don’t really need.

4. Don’t Let Interest Rates Scare You Off

Reed cautions that when you get a loan with no credit, the interest rates you’re offered may seem appallingly high, but that’s part of the cost of having no credit history.

When you don’t have a credit score, lenders can’t assess how big of a risk they’re taking by giving you a loan. To protect the money they’re lending, they will likely treat you as a high-risk borrower, which means the loan will have a higher interest rate.

As you make payments, you’ll establish a pattern of reliably paying back money. Over time, you can improve your interest rate by refinancing. Reed says that, according to a dealership employee, a customer once lowered his interest rate from 13% to 2% in two years’ time by improving his credit and refinancing.

5. Give Yourself Some Credit, Not a Cosigner

Reed advises against cosigning—a process that involves checking someone else’s credit and using that score to qualify for a loan. It might get you a lower rate and help you get approved, but Reed says that if you bite the bullet and pay a higher interest rate rather than get a cosigner, you’ll have the opportunity to build credit.

In addition, having a cosigner will tie that person’s credit to yours, and the way you repay your car loan will influence their credit. Reed says if you’re going to do it, do it only as a last resort, and make sure the cosigner is a relative.

Bottom line, though, as Reed explains, “It’s asking a lot.” It’s better to finance the car yourself, pay on time, and build your credit. That way, the next time you need a loan, you won’t have to worry about whether you’ll qualify.

Good credit doesn’t just help you get reliable transportation: good credit can make a huge difference in improving your financial security and the peace of mind that comes with it. Start tracking your credit for free today at Credit.com. Your new car will get you moving around town, but your new credit score will get you moving up in the world.

Image: iStock


Source: credit.com

A Millennial’s Guide to Getting Your First Car Loan

February 13, 2018 &• 8 min read by Miranda Marquit Comments 0 Comments

div#contentdisclaimer {background: #fff;padding: 1.5em;line-height: 1.25em;max-width: 500px;}
Advertiser Disclosure

Disclaimer

Buying a car is almost a rite of passage. Making that first car purchase, negotiating with the seller, and arranging financing (if you need an auto loan) all require a certain amount of savvy.

And, once you successfully achieve the car-buying milestone, another signpost looms in the distance: Refinancing.

Whether you’re getting an auto loan for the first time, or you want to refinance your existing car debt, it’s important to be an informed consumer. Here’s what you need to know.

Get your finances in order

Before beginning your car search, you need your finances in order, according to Joe Pendergast, the vice president of consumer lending for Navy Federal Credit Union.

“Know your budget, check your credit score, and review your existing credit accounts to ensure they are reported accurately,” Pendergast said. Your credit situation can directly impact the interest you pay on your auto loan.

Emily Shutt, a certified financial coach who works closely with millennial women to help them manage a variety of money issues, suggested calling around to different dealers and banks or credit unions to see what credit bureau they use to check your score. Then you can check your report for errors and have them fixed before you talk to someone about financing your car purchase.

“Having errors on a credit report can negatively impact score, which can put you at a huge disadvantage when you’re negotiating for an auto loan interest rate,” Shutt said.

You should also know ahead of time where you stand with your budget. Use an online loan calculator to determine what you can afford in terms of a monthly payment. For example, if you think you can handle a $305 monthly payment, and you have the credit to get an interest rate of 2.9% for a five-year loan, you might feel you can afford to borrow up to $17,000 for a car.

Save up for a down payment

Just because you might be able to borrow so much for a car doesn’t mean you necessarily should. In fact, saving for a down payment makes a lot of sense, Shutt said. Not only does having a down payment help you to better negotiate your loan rate, but it also can allow you a shorter loan term and save you money in the long run.

Play around with the numbers a little with an online calculator. If you can put $7,000 down, so that you borrow only $10,000 of that $17,000 car, you could maybe get an interest rate of 2.5% and a loan term of three years. Even better, your monthly payment would only be $289 — and you’d save $1,494 in interest.

The less you borrow, the more money you have in the end. And that’s money you can put toward investing in your future, rather than paying interest to someone else.

Know what you want — and what it costs

Once your finances are in order and maybe you have a down payment saved up, it’s time to figure out what you can actually buy. Avoid over-borrowing by knowing what you want in a car and having an idea of what it costs, Shutt suggested.

“Everything should already be online so you can get a sense of what all the options are,” said Shutt. A little research can go a long way toward helping you get a sense for which cars will fit into your budget.

#animation-wrapper { max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif } #animation-wrapper .box { background-color: #f5f5f5; color: #000; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px } .content .box p { margin: 0 0 } .box .btn-primary { color: #fff; background-color: #ff7f00; margin: 10px 0 } .chat ul { margin: 0; padding: 0; list-style: none } .message-left .message-time { display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier } .message-right .message-time { display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier } .message-left { text-align: left; margin-bottom: 8px !important; } .message-left .message-text { max-width: 80%; display: inline-block; background: #79af3e; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em } .message-right { text-align: right; margin-bottom: 8px !important; } .message-right .message-text { line-height: 1.5em; display: inline-block; background: #2e5e89; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left } .chat { background: #fff; margin: 0; border-radius: 0 } .chat-container { height: 450px; padding: 5px 15px; overflow: hidden } .spinme-right { display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinme-left { display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinner { margin: 0; width: 30px; text-align: center } .spinner>div { width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000 } .spinner .bounce1 { -webkit-animation-delay: -.32s; animation-delay: -.32s } .spinner .bounce2 { -webkit-animation-delay: -.16s; animation-delay: -.16s } @-webkit-keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0) } 40% { -webkit-transform: scale(1) } } @keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); transform: scale(0) } 40% { -webkit-transform: scale(1); transform: scale(1) } } .ad-container { padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto } .ad { padding: 10px 6px; max-width: 630px } .ad-title { font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px } .ad-link { line-height: 18px; padding-left: 26px; position: relative } .ad-link::before { content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0 } .ad-link a { color: #006621; text-decoration: none; font-size: 14px; line-height: 14px } .ad-copy { color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block } .ad .breaker { font-size: 0 } .box .box-desc { font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600 } .btn { display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none } .btn-group-lg>.btn, .btn-lg { padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px } #ad-4 { font-family: Arial, sans-serif; background-color: #fff } #ad-4 .ad-title { color: #2130ab } #animation-wrapper .cta-amone { background: #79af3e; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 7px auto } #animation-wrapper .amone-logo { display: block; margin: 0 auto } @media (max-width:500px) { .ad { padding: 20px 18px; max-width: 630px } }

Get matched with a personal loan that’s right for you today.

Learn more

Shutt pointed out that the job of salespeople is to get you to spend as much money as possible. The more you spend, the more you have to borrow — and the more you’ll pay in interest. “Confidently stand your ground when a salesperson tries to upsell you or steer you in another direction,” she said.

Pendergast agreed on the need to research your car choices ahead of time. “Know the price other dealerships in the area are offering so you can make an informed purchase,” he said.

It’s even okay to play one seller’s price off another’s to get the best deal. Don’t be afraid to let the other dealerships know you’re shopping around. They’ll be more inclined to negotiate with you, potentially resulting in a better deal.

Get an auto loan quote from a bank or credit union

Before you ask for dealer financing, suggested Pendergast, talk to a bank or credit union.

“You should see what type of loans your financial institution has to offer,” said Pendergast. “This will give you guidance for your budget, but will also increase your purchasing power to help you in negotiations, regardless of the dealer’s proposition being on par with the lender’s.”

Donald E. Peterson, a consumer lawyer with almost 30 years of experience, warned that dealer financing still often requires the involvement of a bank or credit union. Dealers submit your information to lenders and get interest rates quotes back.

“Sometimes dealers mark up the interest rate above the rate banks would buy the loan at,” Peterson said. “The bank and the car dealer split the excess interest, usually 50-50.”

This practice isn’t just limited to banks, either. “Some credit unions have entered into interest-rate kickback agreements with car dealerships,” Peterson said. “You must apply to the credit union yourself to get the best rate.”

Starting with a financial institution allows you to get an idea of what’s available to you. Then, you’re in a position where a dealer who wants to finance you has to match the rate you’ve already been offered, rather than steer you toward an alternative arrangement.

Consider a cosigner

With my own first auto loan experience, I had to deal with the fact that I had a thin credit file. I didn’t have enough credit established to get a car loan without an unacceptably high interest rate.

I went through the steps of creating a budget and deciding how much I could afford, including factoring in my car insurance costs. However, after checking my credit report, I realized that having a credit card for six months wasn’t enough for me to establish much of a credit history.

After compiling research about the types of used cars I could afford, and how my earnings from my job were enough to cover an auto loan payment, I approached my parents. My dad was willing to cosign on a modest car loan through his credit union.

My interest rate — and my monthly payment — were lower because I had cosigner with good credit. I made all my payments on time, helping build my credit history so that the next time I bought a car, I was able to get a good interest rate without the need for a cosigner.

As you research your options, don’t forget about the possibility of using a cosigner. If you don’t have the credit history to get a good auto loan rate on your own, borrowing someone else’s good name can help you save money — while at the same time allowing you a way to establish your own credit for the future.

Don’t fall for the monthly payment scheme

While you do want to figure out what monthly payment you’re comfortable with, you don’t want to get caught up in it at the dealership, cautioned Shutt.

“Focus on the all-in price of the car,” said Shutt. “If the salesperson can get you to verbalize a monthly payment target, they’ll just manipulate other factors like the duration of the loan.”

When that happens, Shutt pointed out, you might end up hitting your targeted monthly payment, but long-term interest charges and other factors could mean that your car ends up being a lot more expensive. She said you should figure out about how much you’ll pay each month over a loan term you’re comfortable with, and then buy a car with a final price that fits those parameters.

“Take your time, and don’t be manipulated,” Shutt said. “If you’re not comfortable negotiating, bring a friend or family member who can support you in sticking to your budget.”

What about refinancing?

In some cases, you might discover that you qualify for a lower auto loan interest rate than you currently pay.

“Maybe you’ve been making timely payments for a year or two and your credit score has gone up,” said Shutt. “Now you can consider refinancing the loan.”

However, it’s important to be careful moving forward. Just as you shop around for the best auto loan rates on a new loan, it makes sense to shop for refinancing rates. Check with a few banks and credit unions to see if you can get a few quotes for refinancing.

When you refinance, watch out for lengthening the loan term. If you only have three years on your term, it might not make sense to refinance to a five year loan. Instead, only refinance what you have left. You could save on interest charges and still get rid of your car debt in the original time frame.

Shutt also recommended looking online for car loans. Compare the rates you find with online auto loan refinancing platforms to what your local financial institutions offer. By playing different lenders off each other, you could strike a better bargain — especially if you have good credit.

Know your finances and be ready to negotiate

Auto loans are a massive industry, with more than $1 trillion owed to U.S. lenders. Rather than being just another statistic, consider how you can come out on top.

Know your finances and understand what you can expect, Pendergast said. When you know where you stand, and when you research ahead of time, you can call dealers and lenders out. Shop around for the best auto loan rates and terms, and let dealers know you’ve done your homework, so that negotiations will go much better, saving you time and, importantly, money.

If you want to be sure your credit is good enough to purchase a car, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14 days.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image: iStock


Source: credit.com

3 Simple Steps to Leasing a Car

Shopping for the best auto loans? Whether you are looking for the best car loan rates for a new or used vehicle, or you want to refinance an auto loan, we can help. Today’s auto loan rates are displayed in our helpful car loan calculator. Get the lowest rate when you compare rates from multiple lenders, even if your credit isn’t perfect.

With a lower interest rate, you’ll save money and pay off your car loan faster. It pays to shop for the best car loan rate! *

The single most important thing you can do to save money on an auto loan is to shop for the best auto loan rate before you set foot in a dealership. By knowing what kind of rate you qualify for before you try to buy a vehicle, you accomplish three things:

  1. You’ll know what kind of car payment you can qualify for
  2. You can focus your negotiations with the dealer on the vehicle price rather than on the financing
  3. You won’t end up getting stuck in a higher cost loan than you can qualify for

As you shop around for financing on a new or used vehicle, keep in mind the following factors that will affect your payment:

Length of loan:

Many buyers are opting for car loans that are five years or longer. Experian notes that in the last quarter of 2012, the average car loan length was 65 months. That’s almost five and a half years! The advantage of a longer car loan is that your payments will be lower. The disadvantage is that you may be “upside down,” – you owe more than the vehicle is worth – for a longer period of time.

Downpayment:

A larger down payment will reduce the amount you borrow and may make it easier to qualify for a better car loan rate. If you haven’t saved much for a down payment, you may be able to sell your current vehicle and use that money toward the down payment, or trade in your current vehicle to reduce the price of the car or truck you are buying. But if you are short on cash, don’t panic. Not all lenders will require a down payment.

Credit score:

Your credit score will be used to help determine the interest rate you’ll pay. But just because you have less than perfect credit, that doesn’t mean you can’t get a decent rate. The credit score that an auto lender uses may be somewhat different than the score you see if you get your own credit so don’t get too hung on up the number.

Refinance Auto Loans

Is your current auto loan rate higher than the rates you see in the loan rate comparison table above? If so, you may want to refinance your car loan. If you can get a lower rate, you’ll save money and you may be able to pay off your loan faster, too. Another option is to extend your loan term to make your payments more affordable. It’s easy. Just choose refinance from the options above and apply to see if you qualify for an auto loan refinance.

Bad Credit Auto Loans

If you have credit problems and need to buy a car or truck, you may be tempted to just use a Buy Here Pay Here (BHPH) car dealer that advertises it makes bad credit car loans. With one of these arrangements, the dealership arranges the financing and usually you make your payments to the dealer rather than a third-party lender like a bank or credit union.

Before you go this route, make sure you try to get preapproved for a car loan online or with a local financial institution. If you can get financing elsewhere then you’ll have more freedom to shop for the best deal on your car from a variety of sources, rather than limiting yourself to the cars available at that dealership. And when you do find a car or truck you like, you’ll be able to try to get the price down, rather than taking whatever they offer you.

Keep in mind that even if you are offered a high-rate auto loan online or through your bank or credit union, you can always ask the dealer to beat that rate – after you have negotiated the price for the vehicle you want.

Protect Your Credit When Auto Loan Shopping

Every time a lender checks your credit or requests your credit score, that fact will be noted on one or more of your credit reports as an “inquiry.” Your credit score can drop as a result. The good news is that most credit scoring models will ignore recent auto-related inquiries, and will count multiple inquiries from auto loan applications in a short period of time as one. To protect your credit, it’s best to shop for an auto loan in a focused period of time: two weeks or less is best to be safe.

You can check your credit score for free using Credit.com’s free Credit Report Card. Requesting your own credit score through this service will not affect your credit score.

Car Title Loans

If you are desperate to borrow money but you have bad credit, you may be tempted to get a car title loan. These loans require you to pledge your vehicle as collateral for the loan. They are not legal in all states, but where they are, they usually lend up to 25% of the value of the car or truck you own free and clear.

Watch out! Interest rates on auto title loans are very high; often 25% per month – or about 300% per year – according to the Center for Responsible Lending. According to the CRL report, the average car-title borrower renews a loan eight times, paying $2,142 in interest for $951 of credit. If possible, you should try instead to get a personal loan or, if you can’t, see whether a non-profit credit counseling agency can help you find another solution to your financial difficulties.

-APR = Annual Percentage Rate. Rates based on credit worthiness and are subject to change without notice. Your actual rate and monthly payment may vary. Must be 18 years of age or older to apply. Loans subject to credit approval and could be subject to credit union membership.

* IMPORTANT NOTE FROM CREDIT.COM: Credit.com is not a lender. The above offers are provided by third-parties from whom Credit.com receives compensation. Credit.com will not call you about any loan application resulting from the above offers, and will not ask you over the phone, via email or otherwise for financial information or other sensitive personal data.

REMEMBER never to share any financial information or other sensitive personal data over the phone or via email without independently confirming the identity of the company calling first!

† Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom Credit.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). It is this compensation that enables Credit.com to provide you with services like free access to your credit scores at no charge. Credit.com strives to provide a wide array of offers for our members, but our offers do not represent all financial services companies or products.

Source: credit.com

What to Do Before You Lease a Car

October 20, 2020 &• 6 min read by Gerri Detweiler Comments 18 Comments

div#contentdisclaimer {background: #fff;padding: 1.5em;line-height: 1.25em;max-width: 500px;}
Advertiser Disclosure

Disclaimer

Getting a new car is a big decision, and you should choose your next vehicle carefully. But if you think finding the right car is difficult, deciding whether to lease or buy can be even more overwhelming. Start the process right by understanding the minimum credit score to lease a car and determining whether this is the best decision for you.

1. Check Your Credit

According to Experian, companies that lease automobiles typically like to see a credit score of 700 or higher, though you might be able to get approved for some leases with a score that falls below that. In some cases, it’s easier to qualify for a lease for certain vehicles, such as those that come with a lower price tag.

#animation-wrapper { max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif; } #animation-wrapper .box { background-color: #0e2249; background-image: url(“https://www.credit.com/content/dam/ccom/common/images/450×150-white.png”); color: #fff; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px; } .content .box p { margin: 0 0; } .box .btn-primary { color: #fff; background-color: #63d1c6; margin: 10px 0; } .chat ul { margin: 0; padding: 0; list-style: none; } .message-left .message-time { display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier; } .message-right .message-time { display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier; } .message-left { text-align: left; margin-bottom: 10px; } .message-left .message-text { max-width: 80%; display: inline-block; background: #52a1f6; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em; } .message-right { text-align: right; margin-bottom: 10px; } .message-right .message-text { line-height: 1.5em; display: inline-block; background: #0e2249; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left; } .chat { background: #fff; margin: 0; border-radius: 0; } .chat-container { height: 450px; padding: 5px 15px; overflow: hidden; } .spinme-right { display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2; } .spinme-left { display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2; } .spinner { margin: 0; width: 30px; text-align: center; } .spinner>div { width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000; } .spinner .bounce1 { -webkit-animation-delay: -.32s; animation-delay: -.32s; } .spinner .bounce2 { -webkit-animation-delay: -.16s; animation-delay: -.16s; } @-webkit-keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); } 40% { -webkit-transform: scale(1); } } @keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); transform: scale(0); } 40% { -webkit-transform: scale(1); transform: scale(1); } } .ad-container { padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto; } .ad { padding: 10px 6px; max-width: 630px; } .ad-title { font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px; } .ad-link { line-height: 18px; padding-left: 26px; position: relative; } .ad-link::before { content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0; } .ad-link a { color: #006621; text-decoration: none; font-size: 14px; line-height: 14px; } .ad-copy { color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block; } .ad .breaker { font-size: 0; } .box .box-desc { font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600; width: 325px; margin: 0 auto; } .btn { display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none; } .btn-group-lg>.btn, .btn-lg { padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px; } #ad-4 { font-family: Arial, sans-serif; background-color: #fff; } #ad-4 .ad-title { color: #2130ab; } #animation-wrapper .cta-lex { background: #63d1c6; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 4px auto; } #animation-wrapper .cta-lex:hover { background-color: #074768; border-color: #107b8b; transition: all .3s ease-in-out; } #animation-wrapper .lex-logo { display: block; margin: 0 auto; width: 120px; } @media (max-width:500px) { .ad { padding: 20px 18px; max-width: 630px; } }

  • Did you ever figure out what was going on with your credit?
  • Nope, all I know is, it’s still bad
  • Yikes. You should try Lexington Law.
  • A law firm for my credit?
  • Yeah, I used them and they’re great.
  • They’ll show you your score AND what’s actually hurting it, totally FREE

Get your FREE Credit Assessment online with Lexington Law

Get started

/*Chat Animation*/ #animation-wrapper {max-width: 450px; margin: 0 auto; margin-bottom: 50px; width: auto;} #animation-wrapper .box {background-color: rgb(44, 74, 94);color: #fff;text-align: center;font-family: “ProximaNova-Regular”, Arial, sans-serif;height: 153px;padding-top: 10px;} .content .box p {margin: 0px 0px;} .box .btn-primary {color: #fff;background-color: #ff7f00;margin: 10px 0px;} .chat ul {margin: 0px;padding: 0px;list-style: none;} .message-left .message-time {display: block;font-size: 12px;text-align: left;padding-left: 30px;padding-top: 4px;color: #ccc;font-family: Courier;} .message-right .message-time {display: block;font-size: 12px;text-align: right;padding-right: 20px;padding-top: 4px;color: #ccc;font-family: Courier;} .message-left {text-align: left;margin-bottom: 16px;} .message-left .message-text {max-width: 80%;display: inline-block;background: #e5e6ea;padding: 13px;font-size: 14px;color: #000;border-radius: 30px;font-weight: 100;line-height: 1.5em;} .message-right {text-align: right;margin-bottom: 16px;} .message-right .message-text {line-height: 1.5em;display: inline-block;background: #5ca6fa;padding: 13px;font-size: 14px;color: #fff;border-radius: 30px;line-height: 1.5em;font-weight: 100;text-align: left;} .chat {background: #fff; margin: 0; border-radius: 0;} .chat-container {height: 450px;padding: 5px 15px;overflow: hidden;} .spinme-right {display: inline-block;padding: 15px 20px;font-size: 14px;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2;} .spinme-left {display: inline-block;padding: 15px 20px;font-size: 14px;color: #ccc;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2;} .spinner {margin: 0;width: 30px;text-align: center;} .spinner > div {width: 10px;height: 10px;border-radius: 100%;display: inline-block;-webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both;animation: sk-bouncedelay 1.4s infinite ease-in-out both;background: rgba(0,0,0,1);} .spinner .bounce1 {-webkit-animation-delay: -0.32s;animation-delay: -0.32s;} .spinner .bounce2 {-webkit-animation-delay: -0.16s;animation-delay: -0.16s;}@-webkit-keyframes sk-bouncedelay {0%,80%,100%{-webkit-transform: scale(0)}40%{-webkit-transform: scale(1.0)}}@keyframes sk-bouncedelay{0%,80%,100%{-webkit-transform: scale(0);transform: scale(0);}40%{-webkit-transform: scale(1.0);transform: scale(1.0);}} /*Text Ad*/ .ad-container {padding: 15px 30px;background-color: #FFFFFF;max-width: 690px;box-shadow: 1px 1px 4px #888888;margin: 20px auto;} .ad {padding: 10px 6px;max-width: 630px;} .ad-title {font-size: 20px;color: #0077BB;line-height: 22px;margin-bottom: 6px;letter-spacing: -0.32px;} .ad-link {line-height: 18px;padding-left: 26px;position: relative;} .ad-link::before {content: ‘Ad’;color: #006621;font-size: 10px;width: 21px;line-height: 12px;padding: 2px 0;text-align: center;border: 1px solid #006621;border-radius: 4px;box-sizing: border-box;display: inline-block;position: absolute;left: 0;} .ad-link a {color: #006621;text-decoration: none;font-size: 14px;line-height: 14px;} .ad-copy {color: #000000;font-size: 14px;line-height: 18px;letter-spacing: -0.34px;margin-top: 6px;display: inline-block;} .ad .breaker {font-size: 0px;} #ad-4 {font-family: Arial, sans-serif;background-color: #FFFFFF;} #ad-4 .ad-title{color: #2130AB;} #animation-wrapper .cta-lex{color: #FFFFFF; width: 80%;} #animation-wrapper .lex-logo{display: inline-block;} @media (max-width: 500px) {.ad {padding: 20px 18px;max-width: 630px;}}

Before you apply for a lease, you should check your credit report, giving yourself plenty of time to dispute and fix any negative mistakes to enhance your chance of getting approved for a lease. You can get a copy of your credit report from AnnualCreditReport.com. Usually you get one copy per year from each of the three major bureaus, but due to COVID-19, you can get one copy every week through April 2021.

You should also check your credit score to check if you have the right credit score to lease a car. This lets you know if you fall below the potential requirements for most lease companies. Sign up for ExtraCredit and get 28 of your FICO Scores plus your credit reports from all three credit bureaus so you’re armed with the right information.

2. Make Sure a Lease Is Right for You

Leases offer some advantages over buying. The down payment and fixed monthly payments for a lease are typically lower than the cost of financing. You get to drive a newer car, and many repair costs may be covered by the manufacturer’s warranty or the lease agreement.

However, leases also come with many limitations and the potential for additional costs. If you exceed a lease’s mileage limit, you’ll pay a fee for every additional mile. You’ll also be charged for extra wear and tear, and you aren’t allowed to modify the vehicle. If you decide the car isn’t right for you, you could pay a steep penalty for terminating your lease early.

Despite the lower monthly payment, the lifetime cost of leasing is generally much higher than buying, especially considering you don’t own your car at the end of the lease. Before you decide if a lease is right for you, make sure to understand the pros and cons of leasing.

3. Know What You Can Afford

One of the biggest advantages of leasing is that you might get a lower monthly payment compared to a car loan on the same vehicle. Leases are cheaper because you’re only paying for the depreciation of the car’s value plus interest, taxes, and fees. With a loan, you’re also paying off the entire purchase price of the vehicle.

However, these monthly costs don’t take down payments or trade-in values into account. While leases typically have lower down payments, you’ll have to turn in or buy your car when the lease is up. And you’ll have no ownership in the car to show for the few years of payments you already made. It’s important to consider whether you can afford the monthly payment now and the cost of buying or leasing a new vehicle in a few years.

4. Shop Around for a Car and a Lease

Auto loans can be found at banks, credit unions, car dealers, and online. Leases, on the other hand, are largely controlled by the manufacturer. You may be able to get a better deal if you consider vehicles from different manufacturers instead of sticking to one make and model.

The manufacturer will consider your credit score to lease a car, your debt-to-income ratio, and the “lease-to-value” ratio. That’s how much you are financing compared to the vehicle’s value. If you are having trouble qualifying, you may need to put down additional money or get a cosigner for your lease.

Just as with auto loans, you can negotiate the cost of a leased car. So if you aren’t getting the deal you want, make a counter-offer or keep looking.

Not Ready to Lease?

If you aren’t ready to commit to a lease term of two to three years, you can potentially take over the remaining term on someone else’s lease. As long as your credit is in the same tier or better than the person whose lease you are assuming, you’ll likely qualify to take over their lease. Sites like SwapALease.com and LeaseTrader.com help connect consumers who want to get out of leases and consumers who want to assume one.

#animation-wrapper { max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif } #animation-wrapper .box { background-color: #f5f5f5; color: #000; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px } .content .box p { margin: 0 0 } .box .btn-primary { color: #fff; background-color: #ff7f00; margin: 10px 0 } .chat ul { margin: 0; padding: 0; list-style: none } .message-left .message-time { display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier } .message-right .message-time { display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier } .message-left { text-align: left; margin-bottom: 8px !important; } .message-left .message-text { max-width: 80%; display: inline-block; background: #79af3e; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em } .message-right { text-align: right; margin-bottom: 8px !important; } .message-right .message-text { line-height: 1.5em; display: inline-block; background: #2e5e89; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left } .chat { background: #fff; margin: 0; border-radius: 0 } .chat-container { height: 450px; padding: 5px 15px; overflow: hidden } .spinme-right { display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinme-left { display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2 } .spinner { margin: 0; width: 30px; text-align: center } .spinner>div { width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000 } .spinner .bounce1 { -webkit-animation-delay: -.32s; animation-delay: -.32s } .spinner .bounce2 { -webkit-animation-delay: -.16s; animation-delay: -.16s } @-webkit-keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0) } 40% { -webkit-transform: scale(1) } } @keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); transform: scale(0) } 40% { -webkit-transform: scale(1); transform: scale(1) } } .ad-container { padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto } .ad { padding: 10px 6px; max-width: 630px } .ad-title { font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px } .ad-link { line-height: 18px; padding-left: 26px; position: relative } .ad-link::before { content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0 } .ad-link a { color: #006621; text-decoration: none; font-size: 14px; line-height: 14px } .ad-copy { color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block } .ad .breaker { font-size: 0 } .box .box-desc { font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600 } .btn { display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none } .btn-group-lg>.btn, .btn-lg { padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px } #ad-4 { font-family: Arial, sans-serif; background-color: #fff } #ad-4 .ad-title { color: #2130ab } #animation-wrapper .cta-amone { background: #79af3e; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 7px auto } #animation-wrapper .amone-logo { display: block; margin: 0 auto } @media (max-width:500px) { .ad { padding: 20px 18px; max-width: 630px } }

Get matched with a personal loan that’s right for you today.

Learn more

Get Started Now
Privacy Policy

If you’d rather buy a car than lease one, we’ve got some tips on how to finance a car. We can also help you find a lender to apply for a car loan.


#animation-wrapper { max-width: 450px; margin: 0 auto; width: auto; height: 600px; font-family: ProximaNova-Regular, Arial, sans-serif; } #animation-wrapper .box { background: linear-gradient(#0095D8, #1D4BB6); color: #fff; text-align: center; font-family: ProximaNova-Regular, Arial, sans-serif; height: 130px; padding-top: 10px; } .content .box p { margin: 0 0; } .box .btn-primary { color: #fff; background-color: #ff7f00; margin: 10px 0; } .chat ul { margin: 0; padding: 0; list-style: none; } .message-left .message-time { display: block; font-size: 12px; text-align: left; padding-left: 30px; padding-top: 4px; color: #ccc; font-family: Courier; } .message-right .message-time { display: block; font-size: 12px; text-align: right; padding-right: 20px; padding-top: 4px; color: #ccc; font-family: Courier; } .message-left { text-align: left; margin-bottom: 7px; } .message-left .message-text { max-width: 80%; display: inline-block; background: #0095D8; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; font-weight: 100; line-height: 1.5em; } .message-right { text-align: right; margin-bottom: 7px; } .message-right .message-text { line-height: 1.5em; display: inline-block; background: #1D4BB6; padding: 13px; font-size: 14px; color: #fff; border-radius: 30px; line-height: 1.5em; font-weight: 100; text-align: left; } .chat { background: #fff; margin: 0; border-radius: 0; } .chat-container { height: 450px; padding: 5px 15px; overflow: hidden; } .spinme-right { display: inline-block; padding: 15px 20px; font-size: 14px; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2; } .spinme-left { display: inline-block; padding: 15px 20px; font-size: 14px; color: #ccc; border-radius: 30px; line-height: 1.25em; font-weight: 100; opacity: .2; } .spinner { margin: 0; width: 30px; text-align: center; } .spinner>div { width: 10px; height: 10px; border-radius: 100%; display: inline-block; -webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both; animation: sk-bouncedelay 1.4s infinite ease-in-out both; background: #000; } .spinner .bounce1 { -webkit-animation-delay: -.32s; animation-delay: -.32s; } .spinner .bounce2 { -webkit-animation-delay: -.16s; animation-delay: -.16s; } @-webkit-keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); } 40% { -webkit-transform: scale(1); } } @keyframes sk-bouncedelay { 0%, 100%, 80% { -webkit-transform: scale(0); transform: scale(0); } 40% { -webkit-transform: scale(1); transform: scale(1); } } .ad-container { padding: 15px 30px; background-color: #fff; max-width: 690px; box-shadow: 1px 1px 4px #888; margin: 20px auto; } .ad { padding: 10px 6px; max-width: 630px; } .ad-title { font-size: 20px; color: #07b; line-height: 22px; margin-bottom: 6px; letter-spacing: -.32px; } .ad-link { line-height: 18px; padding-left: 26px; position: relative; } .ad-link::before { content: ‘Ad’; color: #006621; font-size: 10px; width: 21px; line-height: 12px; padding: 2px 0; text-align: center; border: 1px solid #006621; border-radius: 4px; box-sizing: border-box; display: inline-block; position: absolute; left: 0; } .ad-link a { color: #006621; text-decoration: none; font-size: 14px; line-height: 14px; } .ad-copy { color: #000; font-size: 14px; line-height: 18px; letter-spacing: -.34px; margin-top: 6px; display: inline-block; } .ad .breaker { font-size: 0; } .box .box-desc { font-family: ProximaNova-Bold, Arial, sans-serif; font-size: 17px; font-weight: 600; width: 225px; margin: 0 auto; } .btn { display: inline-block; margin-bottom: 0; font-weight: 400; text-align: center; vertical-align: middle; touch-action: manipulation; cursor: pointer; background-image: none; border: 1px solid transparent; white-space: nowrap; padding: 6px 12px; font-size: 14px; line-height: 1.428571429; border-radius: 4px; -webkit-user-select: none; -moz-user-select: none; -ms-user-select: none; user-select: none; font-family: ProximaNova-Semibold, Arial, sans-serif; text-decoration: none; } .btn-group-lg>.btn, .btn-lg { padding: 10px 16px; font-size: 18px; line-height: 1.3333333; border-radius: 6px; } #ad-4 { font-family: Arial, sans-serif; background-color: #fff; } #ad-4 .ad-title { color: #2130ab; } #animation-wrapper .cta-ec { background: #79af3e; color: #fff; width: 155px; height: 41px; font-family: ProximaNova-Semibold, Arial, sans-serif; font-size: 14px; margin: 10px auto 4px auto; } #animation-wrapper .ec-logo { display: block; margin: 0 auto; width: 140px; } @media (max-width:500px) { .ad { padding: 20px 18px; max-width: 630px; } }

Get everything you need to master your credit today.

Get started

Sign up now.

Source: credit.com

10 Things You Need to Know before Buying a Car

According to Kelley Blue Book, the average price for a light vehicle in the United States was almost $38,000 in March 2020. Of course, the sticker price will depend on whether you want a small economy car, a luxury midsize sedan, an SUV or something in between. But the total you pay for a vehicle also depends on a number of other factors if you’re taking out a car loan.

Get the 4-1-1 on financing a car so you can make the best decision for your next vehicle purchase.

/*Chat Animation*/ #animation-wrapper {max-width: 450px; margin: 0 auto; margin-bottom: 50px; width: auto;} #animation-wrapper .box {background-color: rgb(44, 74, 94);color: #fff;text-align: center;font-family: “ProximaNova-Regular”, Arial, sans-serif;height: 153px;padding-top: 10px;} .content .box p {margin: 0px 0px;} .box .btn-primary {color: #fff;background-color: #ff7f00;margin: 10px 0px;} .chat ul {margin: 0px;padding: 0px;list-style: none;} .message-left .message-time {display: block;font-size: 12px;text-align: left;padding-left: 30px;padding-top: 4px;color: #ccc;font-family: Courier;} .message-right .message-time {display: block;font-size: 12px;text-align: right;padding-right: 20px;padding-top: 4px;color: #ccc;font-family: Courier;} .message-left {text-align: left;margin-bottom: 16px;} .message-left .message-text {max-width: 80%;display: inline-block;background: #e5e6ea;padding: 13px;font-size: 14px;color: #000;border-radius: 30px;font-weight: 100;line-height: 1.5em;} .message-right {text-align: right;margin-bottom: 16px;} .message-right .message-text {line-height: 1.5em;display: inline-block;background: #5ca6fa;padding: 13px;font-size: 14px;color: #fff;border-radius: 30px;line-height: 1.5em;font-weight: 100;text-align: left;} .chat {background: #fff; margin: 0; border-radius: 0;} .chat-container {height: 450px;padding: 5px 15px;overflow: hidden;} .spinme-right {display: inline-block;padding: 15px 20px;font-size: 14px;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2;} .spinme-left {display: inline-block;padding: 15px 20px;font-size: 14px;color: #ccc;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2;} .spinner {margin: 0;width: 30px;text-align: center;} .spinner > div {width: 10px;height: 10px;border-radius: 100%;display: inline-block;-webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both;animation: sk-bouncedelay 1.4s infinite ease-in-out both;background: rgba(0,0,0,1);} .spinner .bounce1 {-webkit-animation-delay: -0.32s;animation-delay: -0.32s;} .spinner .bounce2 {-webkit-animation-delay: -0.16s;animation-delay: -0.16s;}@-webkit-keyframes sk-bouncedelay {0%,80%,100%{-webkit-transform: scale(0)}40%{-webkit-transform: scale(1.0)}}@keyframes sk-bouncedelay{0%,80%,100%{-webkit-transform: scale(0);transform: scale(0);}40%{-webkit-transform: scale(1.0);transform: scale(1.0);}} /*Text Ad*/ .ad-container {padding: 15px 30px;background-color: #FFFFFF;max-width: 690px;box-shadow: 1px 1px 4px #888888;margin: 20px auto;} .ad {padding: 10px 6px;max-width: 630px;} .ad-title {font-size: 20px;color: #0077BB;line-height: 22px;margin-bottom: 6px;letter-spacing: -0.32px;} .ad-link {line-height: 18px;padding-left: 26px;position: relative;} .ad-link::before {content: ‘Ad’;color: #006621;font-size: 10px;width: 21px;line-height: 12px;padding: 2px 0;text-align: center;border: 1px solid #006621;border-radius: 4px;box-sizing: border-box;display: inline-block;position: absolute;left: 0;} .ad-link a {color: #006621;text-decoration: none;font-size: 14px;line-height: 14px;} .ad-copy {color: #000000;font-size: 14px;line-height: 18px;letter-spacing: -0.34px;margin-top: 6px;display: inline-block;} .ad .breaker {font-size: 0px;} #ad-4 {font-family: Arial, sans-serif;background-color: #FFFFFF;} #ad-4 .ad-title{color: #2130AB;} #animation-wrapper .cta-lex{color: #FFFFFF; width: 80%;} #animation-wrapper .lex-logo{display: inline-block;} @media (max-width: 500px) {.ad {padding: 20px 18px;max-width: 630px;}}

Decide Whether to Finance a Car

Whether or not you should finance your next vehicle purchase is a personal decision. Most people finance because they don’t have an extra $20,000 to $50,000 they want to part with. But if you have the cash, paying for the car outright is the most economical way to purchase it.

For most people, deciding whether to finance a car comes down to a few considerations:

  • Do you need the vehicle enough to warrant making a monthly payment on it for several years?
  • Does the monthly payment work within your personal budget?
  • Is the deal, including the interest rate, appropriate?

Factors to Consider When Financing a Car

Obviously, the first thing to consider is whether you can afford the vehicle. But to understand that, you need to consider a few factors.

Synchrony Financial
  • Total purchase price. Total purchase price is the biggest impact on how much you’ll pay for the car. It includes the price of the car plus any add-ons that you’re financing. Depending on the state and your own preferences, that might include extra options on the vehicle, taxes and other fees and warranty coverage.
  • Interest rate, or APR. The interest rate is typically the second biggest factor in how much you’ll pay overall for a car you finance. APR sounds complex, but the most important thing is that the higher it is, the more you pay over time. Consider a $30,000 car loan for five years with an interest rate of 6%—you pay a total of $34,799 for the vehicle. That same loan with a rate of 9% means you pay $37,365 for the car.
  • The terms. A loan term refers to the length of time you have to pay off the loan. The longer you extend terms, the less your monthly payment is. But the faster you pay off the loan, the less interest you pay overall. Edmunds notes that the current average for car loans is 72 months, or six years, but it recommends no more than five years for those who can make the payments work.

It’s important to consider the practical side of your vehicle purchase. If you take out a car loan for eight years, is your car going to still be in good working order by the time you get to the last few years? If you’re not careful, you could be making a large monthly payment while you’re also paying for car repairs on an older car.

Buying a Car with No Credit

You can buy a car anytime if you have the cash for the purchase. If you have no credit or bad credit, your options for financing a car might be limited. But that doesn’t mean it’s impossible to get a car loan without credit.

Many banks and lenders are willing to work with people with limited credit histories. Your interest rate will likely be higher than someone with excellent credit can command, though. And you might be limited on how much you can borrow, so you probably shouldn’t start looking at luxury SUVs. One tip for increasing your chances is to put as much cash down as you can when you buy the car.

If you can’t get a car loan on your own, you might consider a cosigner. There are pros and cons to asking someone else to sign on your loan, but it can get you into the credit game when the door is otherwise barred.

Personal Loans v. Car Loans: Which One Is Better?

Many people wonder if they should use a personal loan to buy a car or if there is really any difference between these types of financing. While technically a car loan is a loan you take out personally, it’s not the same thing as a personal loan.

Personal loans are usually unsecured loans offered over relatively short-term periods. The funds you get from a personal loan can typically be used for a variety of purposes and, in some cases, that might include buying a car. There are some great reasons to use a personal loan to buy a car:

  • If you’re buying a car from a private seller, a personal loan can hasten the process.
  • Traditional auto loans typically require full coverage insurance for the vehicle. A personal loan and liability insurance may be less expensive.
  • Lenders typically aren’t interested in financing cars that aren’t in driving shape, so if you’re buying a project car to work on in your garage during your downtime, a personal loan may be the better option.

But personal loans aren’t necessarily tied to the car like an auto loan is. That means the lender doesn’t necessarily have the ability to repossess the car if you stop paying the loan. Since that increases the risk for the lender, they may charge a higher interest rate on the loan than you’d find with a traditional auto loan. Personal loans typically have shorter terms and lower limits than auto loans as well, potentially making it more difficult for you to afford a car using a personal loan.

Steps You Should Follow When Financing a Car

Before you jump in and apply for that car loan, review these six steps you should take first.

1. Check your credit to understand whether you are likely to be approved for a loan. Your credit also plays a huge role in your interest rate. If your credit is too low and your interest rate would be prohibitively high, it might be better to wait until you can build or repair your credit before you get an auto loan. Sign up for ExtraCredit to see 28 of your FICO scores from all three credit bureaus.

2. Research auto loan options to find the ones that are right for you. Avoid applying too many times, as these hard inquiries can drag your credit score down with hard inquiries. The average auto loan interest rate is 27% on 60-month loans (as of April 13, 2020).

3. Get your trade-in appraised. The dealership might give you money toward your trade-in. That reduces the price of the car you purchase, which reduces how much you need to borrow. A few thousand dollars can mean a more affordable loan or even the difference between being approved or not.

4. Get prequalified for a loan online. While most dealers will help you apply for a loan, you’re in a better buying position if you walk into the dealership with funding ready to go. Plus, if you’re prequalified, you have a good idea what you can get approved for, so there are fewer surprises.

5. Buy from a trusted dealer. Unfortunately, there are dealerships and other sellers that prey on people who need a car badly. They may charge high interest or sell you a car that’s not worth the money you pay. No matter your financial situation, always try to work with a dealership that you can trust.

6. Talk to your car insurance company. Different cars will carry different car insurance premiums. Make a call to your insurance company prior to the sale to discuss potential rate changes so you’re not surprised by a higher premium after the fact.

Next to buying a home, buying a car is one of the biggest financial decisions you’ll make in your life, and you’ll likely do it more than once. Make sure you understand the ins and outs of financing a car before you start the process.

Source: credit.com