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All About
auto loans, car financing tips & scams to avoid
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Where to obtain car financing, car loan scams, avoiding high
APR, money saving tips, comparing financing options.
This chapter is presented in cooperation with
CarBuyingTips.com.
Getting the right auto loan is extremely important. Unlike a home, buying a car
is an investment that GUARANTEES you will lose value. With this in mind you want
to spend as little as possible on financing. Read this section carefully and
make use of all of the tools we offer so that you can save money. Tips for
saving you money on a scam free car loan, reviews of top car loan web sites like
Capital One Auto Finance and
HSBC
Auto Finance, guide to credit unions, bank loans, car refinancing, used
car loans, and avoiding dealer car loan scams. We'll show you how to make
yourself more likely to qualify for a loan, get your credit report, cleanup your
bad credit, debt consolidation loans, budget spreadsheets.
What A Low Credit Score Means To You
Your credit score is the most important factor determining whether you'll get
approved for a car loan, and what your APR will be. If your score is low, you'll
pay extremely high interest rates on a car loan, up to 23%. If your score is
below 750, you can forget about getting that elusive 0% car financing we hear
about once in a while. Are you aware your credit score affects how much you'll
pay for
car insurance rates? Maintaining your credit score should be an ongoing
process, not a task you rush into when buying a new car. In fact, that's the
worst time. The reason is banks will reject you if you have disputed items on
your credit report, until it resolves. It can take 60 days to clean up your
credit score, so don't apply for any credit until all disputes are resolved and
you verified your FICO Score. You have been warned! I have seen people get
rejected for applying while closing accounts. Right now, you should be asking
yourself "How good is my credit score?"
| What Should Your Credit Score Be For Credit & Loan
Approval? |
- If your credit score is above 680, you are considered a
"prime borrower" and will get a good APR on your home loan, car
loan, or credit card.
- If your credit score is below 680, you are "sub prime",
and will pay much higher APR on your loan. Below 550, you can forget
about a home loan, car loan, or credit card.
A car dealer shouldn't know more about your FICO Score than you. They
can use errors in your credit report to scam you into higher interest
rates. So get your credit score now. In 2001 it became possible for you
to get your own Beacon FICO Credit Score when you get your credit report
online. Congress fought hard for your right to get at your credit score,
so you better use it. Previously lenders kept this beacon score secret
from you, so they could charge you higher APR. Get your Credit Score so
dealers who run your credit report can't lie and say your score was low
just so they can charge you higher APR. This happens all the time, and
now you must use your power to stop it.
Where to get your credit score: Online at Experian,
Equifax or
TrueCredit
. So what did your credit score turn out to be? I hope it was good,
otherwise, time to get to work. |
|
Credit score myths: "I've never missed a payment. My score must be high!"
A lot of fools tell me this: This could not be more wrong. I'm amazed how many people I know were very upset when they got their credit score and found out just how
low it was. Sure paying on time is one of the best things for your FICO score, but it's only one of over 100 variables making up your credit score. Having several
open accounts does just as much damage to your credit score, because there is potential for you to run up your credit limit on all your accounts. People with good
credit tend to have too much credit, and too many old accounts that they never use. Lenders view that as a risk. When I got my score it was ok, but needed improving
by closing half a dozen computer store and department store cards which I no longer use, that were dragging down my score.
These are the steps to take before you apply for a car loan:
- Get your
Credit Score so dealers can't lie to you about your score.
- Close old accounts, they are excess luggage dragging down your credit score.
- Remove erroneous previous addresses and other errors.
- Try to get any "Charge Offs" removed by negotiating with your creditors.
- Wait until your score goes up before applying for a car loan.
Sources of Auto Financing
Car dealer financing is just another product that the dealer sells you.
In the past, we had no choice, we had to finance at the dealer. But many people don't realize that car dealer financing is just another product that the dealer sells
you. Unless there is a subsidized low APR from the manufacturer, you'll almost always find lower interest rates and no scams whatsoever from online car financing
sites, your credit union, or your local bank. Now you have automobile loan web sites with banks that bid for your car loan, with APR much lower than car dealers.
Don't fall for dealer 2% APR advertisements. You must have squeaky clean perfect credit, not one late payment, in order to get 2% financing at car dealers. Very very
few people can get that deal. Subject to financing...
|
Best Sites For New Car Loans and Used Car Loans
Use these sites to lookup interest rates and get your loan from the lowest APR site.
|
|
Capital One Auto Finance can give you lower APR with hassle-free auto financing, approval in minutes. Bring
your auto loan check to the dealer.
Click Here to Visit Capital One Auto Finance |
Complete
HSBC's easy on-line application. Your auto loan rate will be locked for 45 days
from the day your application is approved so you can shop for the car of your dreams with confidence.
HSBC's
TurboCheckSM enables you to purchase a new car from car dealerships, eBay, and more.
HSBC Auto Finance offers competitive rates to car loan customers of all credit types.
Click Here to Visit HSBC Auto Finance |
|
Bad credit loans: how to get a car loan for people with bad credit
If your
Credit Score is < 680 and you're rejected, don't submit apps all over that keep
getting you rejected.
Submit one FREE application
to a bad credit auto loan site like
AutoCreditFinders, that
specializes in finding bad credit car loans for people with low credit scores. Send in extra principle payments to buy down the APR and pay off your car loan faster.
- They can find you car financing from
high risk underwriters.
- Even if you have a discharged bankruptcy, tax liens, or bad credit.
- If your credit score is 525 or above, your chances are good.
- If you're working at least 6 months, no bad credit last 6 months.
If you have good credit but got rejected because you have no car loan history,
AutoCreditFinders
can be useful. |
Try your own bank:
If you still prefer medieval banking, go down to your bank personally sign in, wait for an hour to see someone, and ask how much
you qualify for and get their current APR. Ask them if they match other bank rates. Usually in the Sunday or Monday business section in the newspaper they publish a
table comparing all sorts of consumer loan rates from many banks in your city. Usually the bank rates are higher than the internet sites, that's why I recommend the
internet sites first. Don't waste your time going to a bank and risk the humiliation of rejection without knowing what's on your credit report. You can get your
credit report from Experian,
Equifax or
TrueCredit.
Credit Unions:
If you're a corporate employee, school district, government agency, college, etc., you probably have a credit union. Credit unions are easier on you
than banks, they'll lend you more money at favorable rates, usually 2% better, but not as good as the car loan sites. Your credit union can approve you
over the phone in minutes, printing your credit report during the call. They'll tell you what you qualify for. I have found more often than
not, the online lenders rates usually beat even the credit unions.
Remember, get a copy of your credit report so there's no surprises.
They can deduct payments from your pay check if you desire. Credit unions also give more favorable benefits than leasing companies. Most don't require a security
deposit, down payment, other fees, and are generous with mileage. If you use a credit union, make sure there is no fine print that says they can put a lien on your
home if you default on the car loan. The Postal Service credit union has this lien.
Family:
Your family is a good source of financing for automobiles. Wouldn't you rather pay the bank of Mom instead of a bank? The only problem is that it does not establish
credit for you, or re-establish bad credit. If you are looking to establish credit, just use family money as a 20% down payment and finance the auto loan in your
name.
Equity In Your Home Can Fund Your "Car Loan":
If you have equity in your home, you can take out a home equity loan for down payments. Try for one with no fees. You can usually deduct interest from home equity
loans from your taxes, effectively making your APR even lower! Don't borrow more than the house is worth. Banks will lend you 80% of the equity in your home.
Forget those junk mail "checks" you get saying they'll lend you "up to" $80,000 based on the equity in your home. Home equity loans are usually 2% or higher APR
than car loans.
For more tips on car buying and avoiding scams, visit CarBuyingTips.com, a well-written, free consumer advocate
site, the best of its kind. They reveal dealer scams, negotiating tips, dealer cost, buying & selling used cars, and have tons of info on financing, leases.
The information on this site is Copyright © 1996-2008 ConsumerNet, Inc.