Top 4 Approval Factors For Auto Loans
Auto loans vary from individual to individual depending on a number of factors
. Once you are aware of these factors, you will be able to use them to your advantage. Here are the major 4 factors that play a important role in your approval 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. Order an annually free credit report from Experian, Trans Union, or Equifax today.
Factor 2: Your income. The more stability you have in this area, the better the auto loan. Lenders want to make sure you have money to cover the loan for the amount of months you will be paying for it. In regards to 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 reduces your interest rate.
Factor 3: The type of car you are looking to purchase. Used cars tend to have higher interest rates than new cars; the lender is worried the car may stop running before you have a possibility to pay off the entire auto loan. If this happens, usually, people stop paying on a commodity that does not work, and therefore default 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 term of the 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 penalty, which will save you in interest payments.
Each of these aspects plays a part in whether or not you qualify for an auto loan. Understanding 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. Keep in mind that when you are applying for auto loans to focus on these areas so that will greatly improve your chances in being approved for your car financing.
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