Auto finance – buying a car during a credit crisis
In a country where the credit situation is becoming unbearable for many people, the last thing some people want to do is buy something major, like a car for example.
However, if your credit is strong, you are actually in a very strong position when it comes to buying a car. The best way to think about it is to remember that lenders want to give money to people because if they don’t then their industry suffers. No one likes to lose money, especially financial institutions, so having good credit and wanting to purchase an automobile, makes you an attractive prospect.
Securing an auto loan is not hard at the moment if you have great credit.
The current situation is such that those who have credit scores in the 700-850 range will find it easy to secure an auto loan.
If things are difficult for you when it comes to your credit score, it may seem that it will be impossible to find an auto loan. Being proactive is key. Shop online, check out real finance companies that make loans, not the sites that send you to dealers. At this point, you still have choice.
If you can take positive steps towards making sure that your credit score is repaired as best as possible, and this means making a clear, concerted effort to make on time payments and reduce your credit load, then you should find that in about six months down the line, your score improves and you become an attractive lending prospect. Get your auto loan financing pre-approved from an online source and you then become the same as a cash buyer.
In fact, even while approval rates for loans are falling dramatically (down by 20% this year), many people with poor to fair credit scores are taking the initiative and making sure that their finances and credit situation become stronger.
Get your credit score
The first thing you must do if credit is a problem is find out why. To this end, you have to acquire your credit score. Once you have this you can use the information in the report to find out where the problems lie and what you have to do to correct or eliminate the problems or errors that you find. One good thing to bear in mind when looking at your credit score is to make sure that there are no mistakes. These credit reporting errors will directly affect your potential for obtaining an auto loan approval.
Even if you are the kind of person who is very careful with their bills and tries to pay them on time, you may find yourself with a poor credit rating due to the fact that you fell behind once or twice by mistake and have been penalized. One key measure you can take is to get aggressive about your debts and start budgeting.
Pay off your balances on credit cards and other loans until you have the best possible financial situation in which to apply for an auto loan.
It used to be that achieving a good auto loan was part of the American Dream, and available to everyone. But the financial situation is tight, and if you want an auto loan, make sure that you have done all you can to make yourself credit-worthy. Remember, paying on time is a critical factor in increasing your credit score.
While the math behind FICO scores is extremely complex, there are several key principles that you can follow to raise them. Here are the key factors:
1. 35 % – How well bills are paid on time
2. 30 % – Your debt to available credit ratio
3. 15 % – How long you have managed credit
4. 10 % – How often have you applied for credit over the last 60 days
5. 10 % – How many different types of credit have you managed?
Pay off or pay down your balances on credit cards and other loans until you have the best possible financial situation in which to apply for an auto loan.
It used to be that achieving a good auto loan rate and driving a new car was part of the American Dream, and available to everyone. But the financial situation is tight, and if you want an auto loan, make sure that you have done all you can to make yourself credit-worthy.
Sahail Ashraf is a freelance writer. To find out more about financing your auto, visit http://www.myautoloan.com. Article Source: http://EzineArticles.com/
