Car Insurance

Just as with any loan a successful car loan application depends largely on the three C’s

• Credit: Potential applicants must be able to demonstrate a history of responsible fiscal management. This is illustrated by a history of paying bills in a timely manner, limiting debt and following a saving and spending plan. It’s a good idea to get a copy of your credit report before you apply for a car loan. You’ll have a better idea of where you stand and what sort of terms you should expect. Those with significant credit blemishes may want to consider postponing a car loan until the blemishes, as they can be costly in terms of interest rates and terms.

• Capacity: Capacity addresses the question of ability to repay the loan. You must be able to demonstrate that you have sufficient income to repay the loan and meet your current financial obligations. If it appears that you will be overextended with the loan payments you are unlikely to get the loan. Potential lenders will consider income from employment as well as secondary income from sources such as child support and alimony payments.

• Collateral: Lenders are generally more comfortable with highly liquid assets that can be recovered in the event of default. In this instance, your car will serve as collateral. If you default on the loan, or become unable to pay, the lender will repossess the car.

There are a number of ways to complete an application when you are ready to apply for a car loan. You may choose to talk with a representative from your current financial institution who can take your information via phone or in person. You can also choose to complete your application via the Internet. Plan ahead so that you won’t have to fumble for required information, such as gross income amount, account numbers, co-applicant information, if applicable, etc. In most cases you can expect a decision within two business days.

You can afford yourself a great deal of flexibility and savings by getting pre-approved for a car loan before you shop. Consider these benefits:

1. Pre-approval puts you in the driver’s seat. When you know how much and what terms you can expect with your loan you eliminate the expense and confusion of dealer financing.

2. You will not have to sacrifice dealer rebates and/or discounts to get a lower interest rate because your loan is already pre-approved.

3. You will know how much car you qualify for before you even visit the dealer.

4. You can avoid having to come up with a large down-payment.

5. You have only to deal with one issue at a time – the money, then the car. Car dealers are trained to close the deal by getting you so excited about the car that you abandon reason and good judgment during the application/negotiation phase. Don’t let this happen to you.

Getting pre-approved for a car loan is fast, easy and simple (in many cases you can expect an answer in as little as a day or two) but there is an important step that you must not skip.

Used car loans are a terrific option for the value and budget conscious shopper. A used car loan can save hundreds or even thousands of dollars over a new car loan. Used car financing is generally available from the same sources that provide new car loans. If you are in the market for a used car you should be aware that the terms of a used auto loan are somewhat different. For example used car financing generally provides for shorter repayment terms.

The upside of used car financing is that you can often borrow less money to get into a used car. The best used car loans are available via the Internet on sites offering used auto loans. You can also find some of the best used car loans at your credit union, which can even provide a pre-approved used auto loan.

The appeal of used auto loans is often found in the terms. Used car loan rates are often attractive enough to overtake the desire to buy new. In fact buying a used car has become quite common place. There are a number of dealers specializing in the sale of the used car and offering used auto loans. Pay here buy here lots are an example of a used auto loan source. Be sure you understand whether you are buying your used car with a warranty or a used car “as is.”

Approach your used car financing plan as you would any loan process. Used auto loans can quickly lose their appeal if the used auto loan applicant fails to read the fine print or ask appropriate questions.

Used auto loan applicants must provide information that proves ability to repay the used auto loan. You are not likely to get a used auto loan to purchase your used car if you cannot demonstrate the three C’s credit, collateral and capacity. Your used car can serve as collateral (it can be repossessed), your credit report and income cover the next two C’s and can make or break your used car financing opportunity.

Whether you want to surprise a loved one with a gift they’ll never forget, swap out for a more fuel-efficient model, or simply replace a car on its last leg, the end of the year is a great time to buy a new vehicle. With some auto manufacturers experiencing sluggish sales and advertisements promoting inventory closeouts, today’s car shoppers have a lot working in their favor. Taking the right steps before you even set foot on a car lot can help put you in the driver’s seat when it’s time to negotiate.

Check Your Credit Score

A survey conducted in July 2006 by AWARE, a nonprofit consumer education group focused on auto financing, found that 54 percent of consumers will check their credit score before purchasing their next car or truck. Knowing your credit score helps you understand how dealers and auto lenders evaluate your credit risk and the interest rate for which you likely qualify. Having this information at your fingertips is the first step in preparing to negotiate for the best terms possible.

Compare Interest Rates

Comparison shopping means more than just pricing out the car or truck you want. Also investigate interest rates on financing from different sources. Start with the relationships you already have – your bank, credit union, finance or mortgage lender. Auto dealers also can offer a range of options from multiple sources. Another resource is the Equifax Rate Finder, a free tool that tells you the interest rates lenders are offering on a specific loan type to consumers with your FICO credit score in your geographic location. This information can confirm when you have found a good deal, or point you in the direction of a better one.

Once you have decided on a vehicle and you are ready to finalize your purchase, you still have one more opportunity to lower your costs.

Negotiate Your APR

Ask about special financing incentives – these are often limited to certain models, makes or model-year vehicles. If no special financing offers are available, you can negotiate your APR just like you negotiate the price of the vehicle. Keep in mind that credit history, current interest rates, market conditions, special offers and competition can impact the interest rates you are likely to receive. Having a holistic picture of your credit history can help strengthen your negotiating position.

# In deciding on a lending agency from which to borrow money to finance your car, you should obtain quotes from a number of agencies about their percentage rates and the total cost of the loan.

# Car dealers may also offer financing plans. Carefully compare these plans with others you may be considering.

# Try to keep the length of the loan as short as possible. A three-year loan with the same rate of interest costs you less overall than a four or five year loan. While you need to keep the payment within your budget each month, you also need to look at your total cost.

# Check with credit unions, associations, auto clubs, banks, or insurance companies to compare their interest rates and the total cost of loans.

# Ask if you will have to pay any fees if you payoff the loan early.

# Do not sign a contract before reading it very carefully and understanding all its provisions. If a clause concerns you, ask to have it explained, or if necessary, changed. Double check all the figures to make sure they coincide with what you have agreed upon.

# Consider getting pre-approval for a loan once you have chosen your lending agency. Some agencies will issue you a check “not to exceed” your pre-approved amount, allowing you to use the check like cash when you go car shopping.