What you need to look for before availing your car loan
Going in for a car loan? Working out your financial options for your car? There are a few things you need to check out before “buying” your car. Here are a few pointers which will help you prepare for your “buy”:
• Financing your new car
Unless you’re paying hard cash, you need to undertake a crash course on becoming a quasi “loans expert” if you’re planning to buy a car in the near future and don’t have an expert to handle your loan repayments. It makes no difference about the type of car you desire; the basic remains the same for all car types – cars, sedans, SUVs, pickups, mini vans, jeeps etc. You “borrow” once and “repay” on a monthly basis. Since you don’t have enough cash to fund your vehicle, or maybe you do have cash but still prefer to go in for a car loan (you pay a “down payment” – a fraction of the car’s cost), you are going to need financers. Different financers provide loans for different purposes. And the loan criteria also changes with the type of loan you need. So do your homework and research the financers – “what person” or “company” is providing “what”, and what are the criteria for availing the credit. It’s important to avail loan options that offer affordable car loan rates.
• Get pre-approved
It’s possible to buy your car if you end up getting the required credit. So the ownership of your car depends upon the availability of your car loan. Therefore it makes sense to “shop” for a “loan” first and once you get the approval, you “shop” for your car. The process of “approving” or “arranging” for your “loan” before actually deciding upon the vehicle is referred to as “pre-approval”. Getting your “pre-approval” is important since you are sure you have a source of finance for your car and your efforts put in while selecting or deciding your vehicle won’t go to waste.
• Find the right financing company
All creditors are not alike. You can save a significant amount of money by selecting the right kind of finance providing car loan rates which suits your needs. Creditors follow a common pattern for charging the interest rates; however their monthly repayment schedule can vary. It’s the creditor’s discretion to decide how he or she wants the debt to be paid off. Finding the most cost effective loan will help you save a lot of money in the end – when you totally pay off your loan.
• Borrowing money against some investments or savings
There’s another option available. If you’ve saved some money and invested the same in bonds or deposits in banks, chances are you might be eligible for “overdraft” facility against your investments. In such cases the car loan option works out to be very much in your favor as a lot of latitude is given in repaying the loan back. And you end up paying the difference of your savings rate minus the “borrow” or “interest” rate.
• The quicker you payback, the more you save in the end
Creditors charge their interest on the duration of the “borrowings” i.e. for how long you need to avail the car loan facility. It means your net payable interest amount is in direct relation to the time you avail the credit facility. So if you make plans to pay off your debt within a short span to time, you end up paying lesser interest and end up saving money.
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Help answer the question about finance a car loan
What happens when you received a settlement figure for a finance agreement / car loan…?and you can't manage to pay the full amount within a month? My insurance company is paying off most of my car loan after my car's been written off, but there is £400 outstanding and I don't have the cash right now to pay to clear this loan.
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Posted on August 9, 2009 | Under Car Loan Finance | 6 Comments
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6 Responses to “What you need to look for before availing your car loan”
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On a 2005 model you can chose however long you want to finance the vehicle for. Usually if the car is older, they won't allow you to finance it as long. I would strongly not recommend financing it longer than 3 years though. You may end up with negative equity. Your choice…
Your loan has to be paid off before you can legally sell the car. If you find a buyer, they can either pay off your loan with cash, or if they have to get a loan, their bank or loan company will pay off your loan. Unless you got a real good deal when you bought it, don't expect to walk away with any cash in your pocket. It may even cost you some $$ if your payoff amount is higher than the value of the car. Also, call your loan company, tell them you want to sell the car, and they will tell you what to do. They may even be able to set up financing for someone who wants to buy it.
wait at least a month after the cards close so that your credit report is updated with the information. Also, it depends on where you are at with the current car loan. Most refi's will only finance you upto 100% of the value of the car <www.kbb.com to find value> if you owe more than that, youll have to pay your current lender the difference before you can do the refi. Also, because you were on a debt management program, it will be looked at negatively, and will take several years for it to fall off, so you may qualify, but not for the best rate.
A car loan will only bring the score itself down if you do not make payments in a timely manner. Now having car dealers pull your credit each time you find a car you might like.. yes that will bring it down dramatically.
I had a car dealer pull my credit 13 times and it took me wayyyyyyy down. I was furious.
This will change your income ratio though as far as being approved for other things. If you have a car loan against your name then you will need to make sure you for the next loan you are making enough to cover both or they will reject it.
The best way to get good rate is to secure financing before you go see the dealer. They will usually offer to beat your rate.
the best think is contract the finance company and work out a payment agreement — since they do not have a car to repro they should work with you!!!