Ways and where to find value for money auto finance.
It is amazing how aloof most people are with the financing of their car. They will fight to death if they feel a restaurant is cheating them out of fifty dollars on the bill but they bend over and take it with a smile when it comes to auto financing companies offering APR rates that would make your eyes water. This article will try to offer some helpful tips and explain how and where to find value for money on your auto finance. But let’s start from the beginning with two questions you will need to know the answer in order to make the most of this advice.
What is APR? APR is a useful indicator of the interest you pay on a loan. It stands for Annual Percentage Rate. What this rate does is combine the fees, expenses and interest rate on a loan and give you a yearly interest rate on the capital you borrow. It does get a little complicated when you look deeper into what you are actually paying. The devil is as they say in the details. But overall the Annual Percentage Rate will give you the real cost of the loan bells and whistles aside. This rate will help you compare auto finance loans giving you a useful tool to decide which is best for you.
What is credit rating? You have probably heard about good and bad credit. What does it mean? It is rating that is worked out from your past loans and debts. Put simply if you have paid your loans and debts in the past you will have a high credit rating and all banks will be begging you to be their customers. If you have not paid your bills then your credit rating will be low and you will be kindly asked by most banks to find auto finance elsewhere.
With those definitions under our belt we can continue with our tips and advice for finding value for money in auto financing. It is not complicated, in fact it is deceivingly simple. In the current economy we are experiencing a somewhat ironic situation. Apparently the credit crisis and bad loans taken on in the past decade has catapulted us into a depression. However the only way out of this recession is to get consumers to spend more. Banks are cautious on giving loans to bad customers but they need to lend to survive. This has created a paradise for borrowers with good credit and a steady income.
The Government has helped Banks and Finance Companies to drop interest rates to never before seen lows. Of course your credit rating must be good. So here is what you must do:
A) If your credit rating is bad, fix it. Check our many articles on www.talkinghomeloans.com to find how to improve your rating.
B) Re-finance your auto loan with current interest rates. In order to make sure you are actually making a saving. Ask your bank for your current APR and confirm it with the quotes of five finance companies. You will be amazed on how much you can save.
How to find auto finance with bad credit rating?
Let’s begin by debunking some myths. Having bad credit is a big deal, it is not “No Problem”. You should try your very best to keep your credit in top condition, not only because it will save you a lot of money but because it is the right thing to do. However bad things happen and it is possible that any of us could end up in bad credit. Losing your job, a turn in the economy, an increase in the interest rates or any number of unfortunate situations could cause us to spoil our credit rating. So what can you do to find auto finance even if you have bad credit.
Well let’s start from the beginning. What does bad credit rating mean anyway? If we understand that we will be more proficient at improving our rating and doing the best we can with the rating we have.
Many people honestly have a victim complex and feel that the finance industry is out for them. “They won’t give me finance the nasty banks”. Let’s debunk another myth. Banks like to turn down your loan. WRONG. Banks love to approve loans, it is just that they don’t like people that do not pay their bills, which might be you, or look like you, if you have a bad credit rating.
So what is credit rating? Credit rating is a system of qualifying people according to their borrowing history. In auto finance a whole lot of other factors come in to play also, like your driving history and unpaid fines. However the main issue is how good you have been in the past about paying debts. If you have paid every debt on time you will be considered a top borrower no matter how many times you have taken on a loan. In fact the more loans you have taken on successfully the better borrower you will be in the eyes of finance companies.
But what if like we said you have had some bad times and your credit is not good? Well the first step is to improve your credit rating, more on that issue in other articles in this site. The second step is to look for alternative finance options.
If your credit rating is very bad it is unlikely you are going to get great deals, but that doesn’t mean you don’t have options:
A) Subprime loans. These are loans that finance companies provide for high risk borrowers. No surprises here, you will pay higher interest for the privilege of your loan. You are considered a risky customer so you won’t be given too many breaks. These lenders are those that advertise, Good credit, Bad credit, No credit; or “No credit, no problem” and similar gems of advertising literature.
B) Hard money lenders. These lenders use different “techniques” than traditional lending companies. The interest will be high in order to cover the losses they suffer on customers that don’t pay. A high collateral is often required.
So if you really need the loan, get ready to pay top buck or improve your credit rating, it really is that simple.