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Car Loans
Car loans in general can be hard to understand if you have never purchased a car. This article will give you information on the 3 types of car loans including bad credit, no credit and good credit car loans.
Good Credit
Those customers with good credit can expect the easiest time finding financing for car loans. Interest rates are lowest for this group, as well as incentives coming easier. Those with good credit are seen as the lowest risk to lend to, and therefore are given opportunities to save money that other consumers are not given. With good credit, interest rates are as low as 5%, and incentives such as loan forgiveness, early payoff bonuses and shorter loan periods are seen. Most finance companies will have good credit consumers approved within an hour of application during normal business hours. It is important to know that many with good credit buy new cars, and the cost is higher for the vehicle, but the loan period is shorter.
Bad Credit Car Loans
Those customers with bad credit will have the hardest time finding financing for a vehicle. Auto loans are some of the easiest loans to obtain, but for those with bad credit, finding a company willing to extend credit is hard. Pulling a credit history will give the lenders the chance to see how you have previously paid on accounts. This helps them to decide if you are more likely to pay or not, and therefore their decision is based on this report. Checking your credit history from one of the major credit reporting agencies is imperative to deciding if you can be approved or not. Interest rates will be highest for those with bad credit, and auto loans in this category have been found as high as 29%. Even with bad credit, there are options and you are not required to take the first company that approves you. Shop around and look for lower interest car loans, or those that will take a cosigner to get better rates.
No Credit Car Loans
People with no credit are more or less in the same boat as those with bad credit: it is hard to find a company that will lend to you. This is due to the fact that the credit report is pulled as soon as you apply. The lenders for car loans look at this to see if you will be a high or low risk customer. Since there is no credit history to look at, the decision has to be made and assume that you are going to not be able to pay the loan back. Almost all companies require a cosigner for those with no credit history. This is to ensure that payments will be made, and that the loan is secure. Asking someone to cosign means that they will assume this debt if you are unable to pay it. Just because one person says no does not mean all people will, and you can always ask a parent or grandparent to cosign as long as they have good credit.
Auto Loans
With the economy being slow, it is harder for people with all credit ratings to get auto loans. Auto loans for those with good, bad and fair credit are declining, due to the stricter guidelines for auto loans from the economy& 8217;s downfall. Banks are becoming more selective when it comes to approving the financing of new or used autos, considering the sizeable losses that many have previously taken due to nonpayment.
Bad Credit Auto Loans
Look at your credit history to determine what type of credit you have. It is a hard task indeed for those with bad credit to find financing for a vehicle, even when the economy is in better standings. The biggest concern for those with bad credit is not finding a vehicle you like, but finding one you can afford and actually get auto loans to pay for. Many dealerships will offer financing through a company they normally work with for those with bad credit. There are criteria that have to be met for you to become approved, so you should not assume you will be approved even if the car lot or dealership says that you will. Review your own history to know about your credibility.
Finance companies look at outstanding accounts, revolving accounts and repossessions. The number of closed accounts in good standing should be higher than the number of accounts open in bad standing at all times. With bad credit auto loans, you can expect to pay a higher interest rate, and have higher payments than with any other auto loans. The reason for this is that the finance company feels that those with bad credit are at a higher risk of not paying back the loan. Find financing prior to looking for a vehicle, so that you know how much you have to work with, and where the loan will be accepted.
No Credit Auto Loans
Those with no credit have as hard a time finding auto loans as those persons with bad credit. This is due to the fact that when the credit history is pulled from the major credit reporting agencies, there is no information. The finance companies or banks have no prior information to make a decision on, and therefore most of the time will require a cosigner. The cosigner must have good credit and be willing to pay back the auto loans if the other signer does not pay. No credit history would mean simply that there have been no credit cards used or owned, no loans of any kind including student loans, and no revolving credit from chain stores such as electronic or department stores. If approved for auto loans with a cosigner, you can expect to pay a slightly higher interest rate because of the lack of history for a company to make a decision on and therefore you may be a high risk customer.
Good Credit Auto Loans
Those with good credit rule the world. With good credit you are able to obtain auto loans through most banks and finance companies with a small down payment. Interest rates can be quite low, and if taking advantage of a financing promotion, those with good credit can even have part of their loan forgiven over a period of on time payments.