To find the very best online auto loan, consumer should educate themselves first. There are financial options available that will help you get a reasonable car loan even if you have bad credit.
Auto loan brokers like Valley Auto Loans specializes in finding the right car loan for your budget. This application service is free to you and helps you get behind the wheel of your new car faster and at a good rate too.
You will find that second chance auto lenders offer a range of interest rates. When applying for a loan, you will need information such as your social security number, income, and expenses like mortgage and credit card debt.
While shopping around for the lowest interest rates that will save you money, try to send all of your loan applications as close together as possible.
Submitting many requests for traditional auto loan financing can lower your credit score. Experian allows a time frame of 14 days from the onset of shopping for a loan before multiple inquiries affect your credit score.
With Valley Auto Loans, your application goes to several lenders for consideration before a credit check. Thus, fewer pulls go on your credit history.
Financing With Bad Credit Through Banks and Credit Unions
Many people choose to go to a bank or credit union to finance their car. This is probably not a good choice depending on the state of the economy and your credit score. In tough economic climates, companies that fund traditional auto loans tend to be less generous as they are trying to avoid the risk.
Many times applicants with less than perfect credit are unable to qualify for a bank loan, or the interest rates are so high that the payments are painful.
However, if you have enough credit, banks and credit unions usually have lower interest rates than other lenders.
You will also find banks are easier to work with if you have a stable relationship with them or equity in your home. Banks and credit unions often have flexible terms that accommodate the borrower’s needs. They may provide shorter loan payment periods if you want to pay the car off early or longer ones if you need a lower loan payment.
You should compare all of the available loan options offered by the lender as well. Any penalties for late payment or early payoff that might prevent you from refinancing the vehicle at a later date to lower your payments.
Automobile Dealership Financing
Nearly all car dealerships have some financing program available for getting an auto loan financed. If you opt for dealer financing, they will first ask you to fill out a credit application.
The dealership then submits the application to potential assignees such as banks or finance companies. These lenders check the contract to decide if they are willing to purchase it at wholesale cost. You do not deal with the financiers directly.
The benefit of dealer financing is that they often offer rebates,(new cars) special pricing or financing plans such as reduced APRs or cash back on certain models.
Always make sure you understand the terms and conditions of dealer rebates and financing. Ask questions about anything that isn’t clear to you.
The APR can be negotiated as well as the price.
It is a good idea to have an approved loan before visiting the dealership. This gives you the upper hand in negotiations and making the most informed choice possible in the process. It also prevents you from having a broken heart once you find the car of your dreams should the dealer be unable to provide any other source of financing.
Online Service Lenders/Brokers
Online service lenders and brokers such as Valley Auto Loans can help you find the best auto loan rates available. Rather than submitting individual applications to every prospective lender, you can just enter your information on the application for a car loan, lease or rent to own form online.
This can save you a considerable amount of time. If your vehicle has been totaled in an accident and you have bad credit, it may be difficult for you to replace the car with a conventional loan. Valley Auto Loans also allows you to find available credit sources more quickly.
Pre-approval for online auto loans usually takes a matter of minutes, and you can apply right from home. You can typically find attractive rates with online service lenders since the market is somewhat competitive.
Buying vs. Leasing a Car Through a BHPH Dealer
Buy here, pay here car lots allow you to make arrangements for payment directly to the car dealer. This is referred to as in-house financing.
They usually offer to finance with small down payments. Car payments are typically small and made weekly. Most tote-the-note dealerships have much less inventory than a traditional dealership.
The biggest advantage of choosing a car at a buy here, pay here car lot is that they provide financing regardless of your credit score or past financial history. They allow the credit challenged an opportunity for funding when they have been turned down for a loan by traditional lenders. It also provides the opportunity to improve your credit rating.
On the downside, interest rates are extremely high to compensate for the uncertainty of risky borrowers.
State and Federal Lending Laws
You should be aware of state and federal laws that protect your rights as a borrower.
The Equal Credit Opportunity Act forbids discrimination in credit-related matters based on gender, race, marital status, religion, nationality or age.
The Fair Credit Reporting Act allows you the right to obtain one free credit report each year from each of the three credit reporting bureaus.
The Truth in Lending Act requires that creditors show all essential terms of a credit contract before you sign the agreement. Each state has individual laws regarding lending practices as well.