There are not many people in Moose Wilson Road who do not get excited by the prospect of buying a new car. This excitement can sometimes be deflated by the whole finance thing. If your credit history is not so good, or basically non-existent, then you may need to find a bad credit car loan.
The fact is buying a car for most people is one of the biggest purchases they will ever make. Owning a car is kind of like a right of passage for a lot of people, and definitely a sign of “coming of age” for most teenagers. Let face it, we all need a reliable car to get around, and most of us would rather drive a nice new or late car than an old bomb. But nice new or late model cars are obviously a lot more expensive than old cars, and that means that most of us will require some sort of auto loan. The problem is that if you have a poor credit history, or have not had time to establish a good credit record, then its going to feel like the whole financial system has it in for you. Unfortunately banks and most financial or lending businesses do not look favorably on people with no or bad credit history.
When buying a car, some things to keep in mind may include. If you are planning to buy a used car, get a friendly mechanic to give it a once over. Keep in mind additional costs such as insurance, registration etc. And most importantly, to enjoy the pride and freedom that owning your own car creates.
How Do You Know What Kind of Loan is Right For You in Moose Wilson Road?
If you still owe at least $7,500 on your current car loan, and the car is not older than seven years old, you may qualify for a refinance car loan. What are the reasons you would want to take the time to procure a new loan? If you are experiencing a budget crunch, as many people in this economy are, you could greatly appreciate the financial savings that await you by refinancing your car loan. If you are familiar with mortgage refinancing, picture the same situation but with your car loan rather than your mortgage. There are a couple of situations you may find yourself in where refinancing your auto loan could be a huge benefit to you.
Perhaps your financial situation is not what it was when you took out your original car loan. Making payments then may have been easier than it is now. Perhaps job loss is at play or your hours have been cut back. No matter the reasons, you would more comfortably be able afford your monthly car payments if the interest rate was lower. With a refinance car loan, that is exactly what you can achieve. Your tricky financial situation will be easier to manage if you can keep your car but lower your payments at the same time.
If you are not sure you want to deal with the process of obtaining a refinance loan, even if you qualify, consider your current situation, including the rate you are paying and the standing of your credit. The people that benefit the most from refinancing their loans purchased their car and took out the original loan with bad or at least not ideal credit. If you have been paying your car loan diligently each month, along with other bills you currently have, your credit will surely have improved and you may qualify for a better rate. Why would you choose to not save hundreds, even thousands of dollars over the length of the loan term?
Perhaps you are not necessarily in financial straits, but you know that interest rates are lower now than when you obtained your loan. As long as you fit within the qualifying parameters, which do not include financial instability, you may be able to obtain that lower interest rate you have been coveting of borrowers with newly-acquired loans. If you took out your loan and chose a certain repayment term, you can change your mind when you obtain a refinance car loan. This is one of the larger draws of going through the refinancing process.
Remember that no matter what your current financial situation is, or the reasons behind why you want a refinance loan, your credit score will be a huge contributing factor in the rate you can currently obtain. If your credit is better now than it used to be, you will likely be able to benefit greatly from refinancing options. Even if your interest rate drops by only a one percent, you can save hundreds or more, freeing up your money for the purchase of other things you and your family need.
What Are First Time Buyer Auto Loan Programs?
Whether you are buying your first new or used car or are planning to apply for online auto loans for the first time, understanding how automobile dealerships and lenders see you, and what you can do to improve that image, can help you to be prepared in advance of applying for online auto loans for the first time, so that you will be in a better position to get approved for an car loan with a lower interest rate and better terms. After all, you want your monthly auto loan payment to be the lowest it can possibly be, right?
Who might apply for first time buyer car loans? Some people that first time auto loan programs can help could be:
* Teenagers, personally buying their first car in their own name will need to apply for first time buyer auto loans as they have no credit history behind them
* College students living away from home for the first time frequently have not had time to build a credit history before leaving for school and so will often need to apply for first time buyer car loan programs
* People that have always paid cash for a vehicles in the past, but now want to upgrade to a newer one or are forced to take out automobile loan because they do not have the cash funds to buy a vehicle at present
* Immigrants that have moved here from other countries, and thus have left their credit histories behind, may need to apply for first time auto loan programs in order to start building a credit history
Not All First Time Auto Loan Borrowers are in the Same Boat
The first thing to realize is that not all first time borrowers are in the same boat. There can be a lot of differing factors that can either work in your favor, or against you when you are applying for online auto financing. For instance:
* Are you employed full or part time? If you are not employed, do you have an income? Not being employed is not necessarily a game stopper, but if you plan to have your name on the title of the car and on the auto finance, you will need to demonstrate that you have either a job, regular income, or other funds that you will be paying your monthly auto loan payment from. Of course, the higher that your income is, the easier it will be to qualify for lower interest rate first time buyer auto loan programs.
* Do you have no credit history, because you are just starting out your financial life, or do you have a bad credit history/low credit score because you have had a few credit slip-ups in the past? Dealerships will certainly work with you in either case. However, if you have a low credit score, depending on how bad your credit history is, the dealership may be inclined to offer you a higher rate of interest and a lower credit limit on first time buyer auto loans as opposed to someone that has not made any credit mistakes in their financial life yet.
Note, see our recent article entitled "How to Get Approved for an Auto Loan with Bad Credit if you have Low Income" to learn how to get unwanted items removed from your credit report to bring up your credit score.
* Will you have any funds available to make a down payment on your auto loan? Whether you are applying for first time buyer auto loans, or if you have had auto loans in the past and just need another one now, what every auto dealership or lender is going to take into consideration when assessing your application and the items on this list is; how much of a risk are they taking in making an auto loan to you and what if anything can they get you to do to mitigate that risk. Making a down payment is one thing that you can do to mitigate the dealership's risk, making them more likely to quickly approve your automobile loan and to give you a more reasonable interest rate. In addition, a down payment will obviously bring down what you owe on the vehicle and so your monthly payments will be lower and more affordable. Down payments are usually not required to get online auto loans, but they can be very helpful when negotiating with a dealership. Even a small down payment can make a difference in how the dealership sees you.
* Is there someone that you know that would be willing to cosign for you on your auto loan? Cosigners are not required in order to get online auto loans, even if you have bad credit or no credit history at all. However, the use of a cosigner can save you a lot of money and make the application process go much more quickly and smoothly. A cosigner is someone that puts their name on your loan application along with yours, guaranteeing that the loan will be repaid. The limit and maximum amount of your automotive loan will be determined by the cosigner's income and credit standing, not yours. So, if you choose to have a cosigner, make sure to pick one that has a high credit score. With a cosigner, there is really no need to look for first time buyer auto loans because you will be treated by the dealership as though the higher credit score and income were yours.
* What is the ratio of your monthly housing payment as compared to your income? A little known fact is that auto dealerships and lenders pay attention to this number. For instance, if you make $1,000 per month income, and your monthly housing cost is $300, then your housing cost takes 30% of your income. Anything over 40% will send up a red flag to the dealership/lender and they may need convincing that you can make your monthly payments on time. Take this into consideration when you complete your auto finance application.
Taking the above items into consideration, you should be able to get a clearer picture of how automotive dealerships and automotive loan lenders see you, and what you can do to control that image, at least to some extent. Once you have submitted your application, the die has been cast and you will see what the dealership offers you at that point.
It is important to be smart when applying for first time buyer auto loan programs and to take any advantage available to you, regardless if you are applying for auto loans online or in the dealership itself. Be prepared. After all, how high or low that your car payments will be every month for probably several years will depend on it.