Auto loans vary from individual to individual depending on a number of factors. If you inform yourself of these aspects, then you will be better prepared the next time you apply for an auto loan.
Factor 1: Your credit. Lenders look at your rating, your credit history, and your debt to determine whether or not you qualify for an auto loan. Be aware of what your credit score is to control what auto loan you may receive. Credit reporting companies such as, Experian, Equifax, and Trans Union, offer a free annual report to consumers. Here are the major 3 factors that play a important role in your acceptance for an auto loan:
Factor 2: Your income. The more balance you have in this area, the better the auto loan. Creditors want to make sure you have money to cover the loan for the amount of months you will be paying for it. As for your income, they look at your history at the company, the market predictions, and amount you make to determine the auto loan. Staying at a company for a longer period then you hoped for may prove worth it especially if it brings down your interest rate.
Factor 3: The type of car you are looking to get. Used cars tend to have higher interest rates than new cars; the lender is worried the car may stop running before you have a opportunity to pay off the entire auto loan. If this happens, usually, people stop paying on a asset that does not work, and therefore go delinquent on the loan. RVs and motorcycles are in a different interest rate level as well.
Factor 4: Term of your loan. Auto loans are given by month and can easily run up to eight years (96 months). The shorter the length of your auto loan, the less you will be paying in interest over time. Although, if you can?t pay for a shorter term period, and would prefer smaller monthly payments, ask your lender if there is an early payoff fee. This will allow you the option to pay early without any charges, which will save you in interest payments.
Each of these factors plays a part in whether or not you qualify for an auto loan. Knowing each one and learning how you can improve in that area will help you get the right auto loan for you. If you are denied an auto loan, you may be able to use your stable job as a bargaining chip to coerce the lender into giving you the loan. Remember when filling out applications for auto loans to highlight these areas that make you a superb and dependable person to lend to.
Source: http://www.jawnies.com/what-matters-when-applying-for-auto-loans
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