If you have good credit, a Car Loan through your bank or credit union will get you the best financing possible. If your credit score is not so hot, get on the internet. A quick search for “car loan” will return hundreds of sites, so you can imagine the competition for your business. In the past, getting a bad credit car loan was a bit more difficult. Today, however, because of the economic situation and with so many people in financial straits there are more options available as banks and other financial institutions have had to accept the fact that if they were to stay in business, they would have to lower their credit standards.

car loanPick several lenders off the first page of your internet search and fill in their short application forms. They will ask for the same information as any bank’s loan officer (how long on the job, how much money do you want, proof of your current residence and current employment, etc.) They will get back to you (usually within 48 hours) with a quote. Compare the auto loan quotes closely. You’ll be surprised at how much rates will differ from one lender to the next. That’s why it’s important to get as many quotes as possible. One of the greatest benefits of doing business online is the time you save, and the stress you avoid (no confrontation with pushy lenders, just hit the “back-button”). See how your monthly payment is amortized with the quick and easy Car Loan Calculator.

A minimum monthly income of at least two thousand dollars, and a steady employment history (2 years or more) will greatly improve your chances of getting your car loan approved. There is no obligation to accept the loan once you’ve been approved. And, it is probably not be in your best interest to accept a loan through a car dealer’s lender. Car dealers often act as agents of auto loan providers in exchange for a commission. While this saves you the hassle of hunting for a lender, the lender recoups the dealer’s commission by charging you a higher interest rate. To avoid this, find an independent lender.

When working with an online lender to obtain a new or used car loan, make sure that the interest rate will remain the same throughout the life of the loan. This can save you from costly payment increases down the road and help you maintain (and improve) your credit score. You should also make sure that you will not be charged a prepayment penalty if you decide to pay off your loan early. A prepayment penalty can erase all of your hard work and negate the good deal you thought you had.

Good car loan financing companies will provide you with several payment options. You should be able to make your loan payments by phone, through the mail, or on the lender’s website. It’s to your advantage to have the financing worked out and your loan pre-qualified before selecting a vehicle. Even though good lenders should be able to process and approve your loan quickly; finding the perfect vehicle, then having to wait around for several days to find out if your loan is approved is stressful, to say the least. Being pre-qualified lets you know exactly how much money you have to safely play with in your battle with the car salesman.

Your credit history will dictate your car loan options. A good credit score will mean that you will more easily get loans with reasonable interest rates. However, if you have bad credit history, you will only be offered auto loans at higher rates. This the lender’s way of covering the risk of non-payment. If you are taking a loan on a used car, make sure the vehicle is in good condition. Lenders are often unwilling to approve a car loan for an old or damaged auto. It is even better if you go in for a car with a warranty from its manufacturer.

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