Top 5 Reasons to Avoid Car Loans

In the olden days, owning a car was considered as a part of luxury. But the modern circumstances have gone far from that stage. Today, car has become an inevitable part of a lifestyle and most families now have 2 or more cars. The car can be a necessity in the modern condition but the cost for it is not affordable for everyone. Majority of the car loan companies have come up with easy installment car loans as a possible method to arrange the money for car purchase. However, the car loans are not appreciated to be beneficial at all times.

The primary reason behind the discontent of the experts about car loans is the risk involved in it. Car loans are available in secured and unsecured options. However in most cases car loans are provided on the collateral security of the car itself. In most cases the collateral value will retains its value more or less during the whole loan repayment period. But, in case of car loans the collateral value will be depreciating at higher rates and it won’t be viable to support the loan during the whole loan process. The car loan lenders are forced to compensate their risk by including stringent conditions. This will reflect a practical difficulty, ultimately on the borrowers. And, in effect the car loans will not be advantageous.

Now many options are available for car financing. In most cases the dealers of the car itself will offer the financing of the car loan. Many banks and other private banks are also present in the market. Even then, the rates of car loan are higher than any other secured loans. In several cases unsecured loans are available as car loans. In the case of unsecured loans, the interest rates will be higher than any such loans. If the person has credit liability, the burden of the interest rates will increase in the car loans.

The repayment term of the car loan will also be a problem, as it will be short due to the risk involved in the loan. As the value of car decreases with the time, the lenders will be interested to limit the repayment schedule to as minimum as possible. The high interest and limited repayment track will in effect increases the monthly repayment amount.

In the present scenario, we are forced to change the car, according to the latest trends in the car market. The modern motor vehicle industry has come up with many attractive models that will gain the attention of people. The selling or exchanging of the car will become a problem, if you have a big balance in the car loan repayment. You will not be able to find appropriate deals as most of the people will not feel good to take up the loan associated with it.

Car loan refinancing is a popular option to reduce the hassles involved in car loans. But the efficacy of the car loan refinancing is also a question. Any faults in the repayment will also affect your credit score. In brief, car loans are potential dangers, which can imbalance your financial stability. It will be better to arrange the finance from any other source. And if car loan is inevitable, analyze the terms of the car loans carefully, before stepping in.

Secured Car Loan – if Car Signifies a Second Home to You

Cars – they are your passion, necessity, luxury, earning member. They have speed, they have music, they have curves, they have comfort, they have security, they have safety – they have something for everyone. Secured car loans can realize your car plans especially if your budget is stringent. Secured car loans options are stretched far and wide along the loan market. Buying a used car or a new car can be a pleasant ride with secured car loans.

According to National Statistics’ annual research, more people in Britain have more than two cars rather than no car at all. With such a transformation in the present condition the need for cars has become a precondition. To find a secured car loans is as easy as it is tricky. With such a huge pile of secured car loans alternative, you might want to pick the one that shines the brightest. But all that glitters is not gold. It is very true with secured car loans. They may look all attractive and advertised with 0% APR the bottom line is, it still may not prove to be your secured car loan type.

Secured car loan would mean you need to pledge your home or your property as an assurance. Having prepared yourself for that, you are all set to hear the good news. Secured car loans are in fact very easily available to homeowners. Secured car loans are a great opportunity to finance a car on your own terms. Am I getting too loud with my claims of the goodwill of secured car loans? You need to hear this. Secured car loans are flexible enough to mould in the financial requirement of any kind of loan borrower. With secured car loans you can get into your car and make your first payment after thirty days.

Getting a good secured car loan can save your money to a great extent. Sort out the car you would like to buy and how much it would cost you. This will enable you to figure out how much you need for your secured car loan. After you have set your budget you can go on to see the top secured car loan site. You can ask for a free quote and compare secured car loan rates online.

Secured car loans are a better option than car dealership. Car dealership may seem convenient round the clock service. They will be charging you more for your car finance. It is important to learn about your credit score before you go ahead with your secured car loans. Your credit report or your credit history would have important information about your payment history, mortgages, loans, inquiries from business when you have requested for loan, public records and collection information. Bad credit score would not prevent you from getting secured car loan, though it would increase the interest rate. Some loan lenders specially deal with cases of secured car loan with bad credit. Screen them and work out with them in case you have bad credit.

Car loans are considered precarious as loan types for car loans are for a possession that loses its value easily. Research, browse, study – you would certainly find a secured car loan deal. They are so many options. Read the fine print. Many of the additional costs are hidden in the fine print. Don’t accept secured car loans on impulse. Otherwise ask questions. Clear your doubts especially about monthly management fees, ongoing bank fees, redemption penalties, is the loan daily reducible, extra payments of any amount to be made, and at any time.

Secured car loans are short term loans ranging from 36 to 72 months. According to Automobile finance Study, 82% of the new vehicle loans are over four years while 31% of them are over five years. When you agree to more than 72 car payments, it means that you are overburdening your monthly budget. Car is a possession which depreciates rapidly so in case you intend to sell it, it is not a good idea to sell a car which already has a loan on it. Secured car loans are to be paid back even though you are driving the car you bought through them.

Secured car loans are celebrated for many reasons. Secured car loans mean better car and lesser payments. You are pledging your home or valuable asset and in return on it you get benefits in the likes of lower interest rate, flexible loan terms, varied repayment options so on and so forth. Secured car loan can also be bought with car insurance to protect against misfortune like illness or job loss. I know this car is special and you have been waiting for it for so long. But let us be a little practical and take an objective view while taking car loan. We can write our car legend when we own one. Till then let us write the specification of taking a secured car loan.

3 Factors To Getting A Car Loan With Bad Credit

In the last few years car loan financing has changed incredibly. The banks have tightened up lending, and people’s overall credit situations have worsened. Buying a new or used car is a big investment, so financing can be tricky! And there’s a few things you should know before going into a dealership and attempting to finance a new or used car — even if you have great credit!

What Car Loan Finance Companies Look For

When financing a vehicle, the rate, term, and therefore payments are going to be determined based on a few different factors. First, is credit bureau through either Equifax or Trans Union. Second, is the amount of investment YOU are making into the vehicle. And third, the vehicle itself.  The worse your overall credit situation, the more the banks will scrutinize each piece of this puzzle. Let’s take a look at each piece to see how you can give yourself the best opportunity for automobile financing, even with bad credit.

1. Your Credit History

In years past, banks would lend car loan money based almost exclusively on your beacon score. Today, that’s totally out the window. Car loans today are based on previous comparable credit performance. What this means is, a loan officer will take a look at your credit history (you can see what that looks like by searching google for “free annual credit report”) and search for previous accounts that would be similar in financed amount and payment to the car you are looking to finance.

I’ve seen many customers who have not paid well on almost everything except previous auto loans, which they paid good on. And because those car loans and or other comparable payments were paid well, they got financed even though they had previous charge-offs, bankruptcy, a large amount of collections, and more. Often times these people had very very low credit scores, but their comparable credit was good enough to get a car loan!

On the other hand, if you haven’t paid other similar credit well at all, or had prior charge-offs, repossessions, or slow payments, it does make securing financing on a car a bit tougher. However, there are two other factors that weigh almost as heavily as your credit history, so don’t fret! Even with slow pays, repos, etc I have been able to secure financing on a new car for people who could satisfy a bank’s wants in the other two areas. Take a look:

2. Your Investment

Another area that banks take very seriously, whether you have good or bad credit, is what type of investment you are willing to make into the vehicle. This can either be a cash investment, or something that can be easily liquidated such as a trade-in vehicle that has equity in it. In general, cash weighs more heavily since it means that you are willing to put some skin into the loan. Remember, a car loan for a bank is a liability. They want to make sure that it will be repaid, and someone who puts any money — especially a significant amount of money, $2,000 or more — makes the loan less risky for them. The less risky a car loan is for a bank, the more likely they are to be free with their money and loan it to you.

I have seen many instances where a customer’s credit history was frankly terrible, and they had no comparable credit that was any good. But they had a significant cash down payment and/or equity in a trade-in vehicle, and so it lessened the risk of the loan and they got approved for auto financing. The same person without the cash investment in the loan would not get approved, simply because the bank won’t feel that the person seeking the loan, if they have poor previous credit experience, is willing to make all the necessary efforts to repay the loan. Banks like to loan money, but even more important is that the money they loan gets repaid in a timely manner. Having a cash investment helps the banks to feel sure this will be the case.

Remember, your investment is just one area that plays a part in getting approved for a car loan with bad credit. It is good to have a large cash investment, but one is not always required.

3. The Vehicle You Are Looking To Purchase

The bank is going to loan money to you which will be secured by a vehicle. So what type of vehicle it is, it’s average value, condition, miles, and who you’re buying it from all play a large part in what type of financing you can receive. Let’s look at each of these points individually: 

  • Type of vehicle — matters because certain vehicles have lower risk factors than others. For example, loaning money on a fast sports car to a younger person carries a higher risk than loaning money on a minivan to a family of five. Because of this, if you have poor past experiences with car credit and not a large investment, but want a car that’s likely not very practical, a bank isn’t going to be as easy to lend money on that car as they will one which is more practical and suited for your needs. Also, newer cars are less likely to cause problems than older ones, so banks are more easy to lend money on a brand new vehicle and give a better finance rate, than on one that’s three or four years old.
  • Average Value — Different banks use different sources to gather information about a car’s value. The value determines how much can be financed on the vehicle and if any negative equity can be carried over to the next vehicle. Cars with a higher value or that hold their value better than others are easier to get financing on.
  • Condition — As mentioned earlier, the bank will be investing their own money into your vehicle, so if it’s not in good condition, it’s not likely something a bank will want to invest money into. This is why it’s typically better to buy from a dealer and banks give better rates to dealers, since there’s someone to stand behind the condition of the car.
  • Miles — The more miles a car has the more likely it is to have problems, and also therefore the less stable the value is on a car. For that reason, cars with lower miles — especially new cars with next to no miles — are easier to get financed on. If you have bad credit, the general rule of thumb is to stay away from cars with more than 60,000 miles. And on used cars, banks like to see it when customers opt for extended warranties to protect them from large future shop bills.
  • Who you’re buying it from — actually plays a larger part than you think. If you’re buying a car from a dealer, the bank knows that dealer is more likely and has better resources to stand behind the car than a private owner. Dealers also often offer extended warranties which help lower the overall risk. So it will be much easier to get financing through a dealer. Picking a larger new car dealership will also lend you a benefit, since they likely have good relationships with lots of banks that they can use to help you get financing.

The Bottom Line on Financing 

The bottom line is, there are many factors to getting financed on a new or used car in Spartanburg — or anywhere! Get to know where you stand in each of these areas and you will have a better idea of what type of financing you are likely to receive on your next car purchase.