back to articles | July 13, 2020 | Dale Peterson
Categories:   Auto Loans & Financing    The myAutoloan Difference
Benefits of Online Auto Financing
Most people do not have the financial resources to pay for a new or used car out of pocket. As we all know, this is where an auto loan comes into the picture. Auto loans help you buy cars that cost more than you can afford with cash.
Most people do not have the financial resources to pay for a new or used car out of pocket. As we all know, this is where an auto loan comes into the picture. Auto loans help you buy cars that cost more than you can afford with cash. Most auto loans are repaid on a monthly basis and if paid on time, increase your credit score. If you do your due diligence and make a wise choice about borrowing money, an auto loan can offer you two primary benefits:
- You will spend less money, maybe even thousands of dollars less, on your vehicle
- You will be able to purchase a new or gently used vehicle that may not require repairs for a long time
You need to plan for your loan before you shop for your car. Sounds backwards but it is always better to have an idea of what you can afford, before you get locked in a terrible deal at the dealer. This will improve the chances of you finding a car that fits your budget. If you have done your due diligence before applying for an auto loan, you will know about your credit history and other factors that could impact your ability to get a loan. This will allow you to proceed with confidence. This Finance Guide is a very handy tool when you begin your search for financing. Two more tools that will help you plan are a loan amount calculator and a rate widget.
The Role Your Credit Score Plays in Your Auto Financing
Whether you are applying for a loan for a new vehicle or a used vehicle, your credit score and your income influence whether or not you will be approved for a loan. Your credit score reflects your history of borrowing money from lenders and then paying these loans back. A good credit score tells lenders that you have a good history of repaying loans.
The better your credit history, the lower interest rate you will qualify for. This means that you will end up paying less money for your vehicle, both in terms of monthly payments and in total interest cost. It’s recommended that you review your credit report before you apply for an auto loan. By federal law, you are entitled to a free credit report, so take advantage of this before getting loan. It may help with timing of your purchase if you can boost your credit in any 30-day time frame.
Getting a New Auto Loan
A new car will lose 10 percent of its value as soon as you drive it off the lot. Within one year, a new car will lose another 10 percent of its value. This means that in just 12 months, your car is worth 20 percent less than what you paid for it. What’s the alternative? Some financial advisors may recommend purchasing a car that is at least a year old so that someone else can take the 20 percent depreciation. It’s worth taking a look at anyway.
However, you may have your heart set on driving a new vehicle off of a lot. There is nothing wrong with that. Millions of people do it every year. A new vehicle comes with extended warranties and many come with financing offers and benefits.
Getting a new auto loan with bad credit is not impossible, but it is difficult and expensive. A money saving idea might to be finance now and as your credit improves, look for an auto refinance loan. A lender understands that they are taking a considerable risk by giving a loan to a person who has bad or no credit, so they will take steps to mitigate the risk. They may ask for an additional down payment, or they may charge interest rates that are at least 10 points higher than for a person with good credit. That’s why it is so important to work on raising your credit score by making on time payments for all your credit responsibilities (Cr Card, Rent, mortgage, etc.)
A person with bad credit will have a better chance of getting a loan if they can cover up to 30 percent of the cost of the down payment with the dealer. It may not be possible at this time but it’s something that can help you down the road. They may still have to pay higher interest, but a few years down the road there may be the opportunity to refinance the loan once the credit score has improved.
A Used Auto Loan
People who have a lower credit score usually purchase used cars because they can’t get financing for a new car. It is still possible so checking out our site provides you with an opportunity to get up to four real-time lending offers. They are direct to consumer loans so that you can walk into a dealer and know what you can afford. The upfront cost of new cars tend to be higher for those who have debt/credit issues.
Lenders face more risk when financing a used car. If the borrower defaults, it may be difficult to try to resell a used car. A used car will have shorter loan terms. There may be age restrictions (under 18) and value restrictions on vehicles that are financed.
What Is a Private Party Loan?
Here is another thought. If you purchase a vehicle from an owner of a car (private party) as opposed to buying from an auto dealer, you are going to have a few financing options. Good credit applicants should have not trouble getting approved. If you can’t pay cash, you may try to get a private party loan where your car serves as collateral. With a private party loan, a lender will loan you the money to buy the car from a private seller. The lender pays the seller the amount you owe and then you repay the lender with interest over the term of the loan. We have a number of lenders on our platform so we make it very easy to obtain a private party loan.
What Is an Auto Refinancing Loan?
As mentioned earlier, refinancing an auto is where you get a secure loan to pay the existing balance on the loan for a car you currently have. The advantage is making on time payments of the auto you want to refinance. Your car is used as collateral for the new refinanced loan. The refinanced car loan comes with a set interest rate and set monthly payments for a predetermined period of time. This is a great time to take a look at refinancing your auto since rates have dropped, you’ve made on time payments, so you might be able to save a considerable amount of cash by initiating this process. Take a moment and see just how much you might save.
Why Use myAutoloan.com?
MyAutoloan.com is a good option to look for an auto loan or an auto refinance loan, if you want to save time and money. Our applications are free and fast. We provide real-time rates and terms directly from a group of great direct to consumer lenders. We never pressure you to use one of our lenders or accept a loan. You get to choose what’s best for you. Let me say that again, YOU get to choose from the offers provided, which lender will fit your needs the best. Contact us today and complete our quick, secure, and confidential application. You can receive offers for a loan decision in minutes as opposed to days.