If you are tempted by the 0 to 4 % interest rates offered by the big car companies such as Toyota and Chrysler, and are considering an auto loan, the first thing you should do is check you credit score. If yours is not very, very good, you won’t qualify for such low interest rates.
Americans are entitled to one free credit report every twelve months from the three main credit reporting agencies of Trans Union, Experian and Equifax. If you do not currently know what your credit score is then check it out before walking into a dealership to buy a new or used car. You can do this online by visiting Annual Credit Report.com which is a central website for all three credit reporting agencies, and when you receive your reports, check them carefully for errors as many mistakes have occurred. You will want to sort these out before seeking financing for a new vehicle.
Don’t forget that auto insurance is necessary to drive on America’s roads, and if you don’t have it you will face major financial problems if you have an accident involving another person or vehicle. You need to be insured for yourself and passengers as well as for damage and injury caused to others.
Banks offer auto loans which can have a maximum 6 year period for paying them off, by which time you will probably be in the market for a new vehicle again. If you don’t have a good credit score, then you can apply for an auto loan online as there are sites which offer them even if you have bad credit or no credit score. At least that is what they claim. However you need to read the fine print very carefully before you sign any contract and sit down and work out exactly how much you will be paying for a new vehicle, and whether or not you can afford it.
Did you know that the auto industry actually make more money on auto loans than they do on selling vehicles in America? They do, so think about it very carefully before you sign up for an installment plan with a dealership. You will pay 12 % interest a year, while you can get a bank loan if you have a good credit score, for around 4 % a year interest. Typically you can have an auto loan from a bank for up to $50,000, for a maximum period of 6 years. However to qualify for such a loan you have to show that you have a monthly income of around $2200. You can have an auto loan from a bank for a new or used car that has a certificate of pre-ownership, has not done more than 90,000 miles and is under 7 years old.
You may not have thought about auto refinance, but it is a quicker way of freeing up cash than home loan refinancing. It works in much the same way, although you have to have a reasonably good credit score to go down this route. The experts claim that you can save up to $50 a month with auto refinance deals. Most auto refinance firms will give you a free quote, so it may be in your interest to get one if your car is only a few years old and you have a history of paying installments on your existing auto loan on time. However cars depreciate in value rapidly, so you may not have much equity in your car. However, if you are currently paying 10 % interest with your current lender it would be worth checking out an auto refinance quote. It is something not many people are aware of, so check it out.
Have you thought of auto leasing? This may be a cheaper option than buying a new car, especially if you usually change vehicles every few years. When you lease a car, you pay for its depreciation costs while you are driving it. That being the case, you need to have a discounted starting price for a lease car which can be worked out with a dealer, and you should realize that European and Japanese cars depreciate at a lower rate than do American cars. Honda, Toyota and Volkswagen are best to lease as regards depreciation value, and in the luxury range, Mercedes are usually the best along with Lexus; luxury cars in general depreciate more slowly than others.
It is worth doing some research online regarding all your options including auto leasing and auto refinancing before you decide to go for an expensive auto loan.