Thinking about getting a loan? Setting a loan up through a bank is a great option for many. Not only do you entirely bypass the finance department at the dealer, but you can often get a better rate from a bank. This is especially true if you are thinking about buying a used car. In addition, by getting your financing through a bank, you'll be able to approach the dealer as a cash buyer, which will likely mean that you'll get a better price. Here's a little more information to help you understand what to expect with a bank loan.
Types of bank loans.
There are a couple of different ways that people approach getting a car loan from a bank. The first is to shop at the dealer first, and then go to the bank knowing the amount you'll need for the car you'll have in mind. This can be a bit tricky because you'll need to have the backbone to say "no" to the option to finance the car on-site, and get a number for the full amount that you'll need to cover the loan, including any taxes or fees. Another option is to request a "blank check" loan from your bank. In this type of loan, both you and the bank, agree on an acceptable range for the loan, and the terms for the loan. You can shop for a car within this price range. Once you have the full amount, you just write that amount into the blank check given to you by the bank. This option has the added advantage of having a little bit of flexibility.
Documents to bring with you to the bank.
Regardless of your credit standing, there are certain documents that you'll need to present before you can purchase the car. You'll need to show your driver's license, to show that you are legally able to drive the car. You'll also need to present proof of insurance. A minimum of liability coverage is required in all 50 states, and you can expect that some lenders will also require you to carry comprehensive and collision insurance to cover the vehicle while you are paying off the loan. You'll also need to show some proof of income, whether through past paystubs or other means. Finally, you'll need to show proof of a permanent residence, usually by showing business mail with your name on it.
Getting a loan at a bank is a fairly easy process, provided that you have done your homework. If you are not sure of what documents your bank requires, talk to them before your loan appointment so that you will be prepared.
Are you serving in the armed forces? Or are you veteran? Few people sacrifice more for their country than those who agree to serve in the armed forces. If you are a current or past member of the military, we want to thank you for your service and help you with some tips on how to get the best deal on your next military car loan.
1) Beware of dealers located near military bases.
Although there are many dealers who operate their business honestly, there are also a number who attempt to scam those who buy cars from them. The number of shady dealers is proportionately higher among those who do business close to a military base. These tend to attempt to take advantage of young soldiers looking to buy their first car, and often fly oversized flags and have big signs that say "WELCOME MILITARY". Although the appearance outside is inviting, inside you might feel like you've stepped into a hornet's nest. Unscrupulous lenders will set up what seems like a good deal for a buyer, and then call a few days later and say that the terms have changed for some reason that is "beyond their control". Of course the dealer will give the buyer the option to back out of the deal, but they will find that the car they brought for a trade in has already been sold, making them feel compelled to take the new, less favorable terms of the loan. If you're in the military, it might benefit you to drive a little further off base to do your auto shopping.
2) Consider buying through a federal credit union.
Navy Federal Credit Union is the largest credit union in the world and welcomes people from all four branches of the military, as well as the Department of Defense. They are famous for having highly competitive car loan rates. If you aren't a member already, consider opening an account with Navy Federal Credit Union to take advantage of these great rates.
3) Do some research on special discounts.
Depending on the car you buy, the manufacturer may often have special discounts available to members of the military. These can be doubled up with current incentives, giving you an even greater discount.
If you are thinking about buying a car, get some advice from people who have been on base for a longer period of time. They may be able to give you a name of an honest, military-friendly dealer.
Are you getting ready to buy your first car? If you will be needing a loan for the car, there are some things that you can do to help get ready for this big purchase. If you have no credit, taking these extra steps can help save you some money and make the process go more smoothly.
Get a secured credit card.
One of the biggest catch-22's that first-time buyers face is the problem of a credit history. You can't get credit without a credit history, but you don't have credit you can't begin to build a credit history. What to do? One option to begin building credit is to get a secured credit card from your bank. A secured credit card is linked to a savings account at the same bank, and the limit on the card is identical to the amount in the savings account. For example, say that you open a savings account and deposit $2000. The secured credit card linked to this account would have a spending limit of $2000. If you make regular payments on the credit card, you'll slowly but surely begin to build a credit history.
Save a down payment.
While you're building credit, you'll also want to be setting aside a percentage of your income for the purposes of making a down payment. How much of a down payment you want to make is up to you, but the general rule is to make the biggest one you possibly can. At a minimum, you should make a down payment of at least 20% of the price of the car. This will help ensure that you pay off the car loan faster than the rate of depreciation on the vehicle, which will mean you won't be upside-down on the loan.
Ask for references.
In the absence of a credit history, lenders will sometimes ask for references to get an idea of the buyer's character. In general, references from a current employer are good, but you can also include references from past lenders, or people of authority who might be able to vouch for your character. You may find that a good reference will be what you need to tip the scales in your favor.
Getting a car with very little or no credit history can be hard, but not always impossible. If you have patience and are willing to let your credit history and down payment savings build, you'll find that the process is a lot easier.
For some, shopping for larger purchases online is outside of their comfort zone. They might be afraid of getting scammed, or don't like the idea of not being able to see who they are doing business with face to face. If you think that you might fall into this category, rest assured that shopping online with a reputable country is nothing to be afraid of. Here are some advantages to shopping online that you might not have considered.
Faster turnaround time.
While applying for car loans in person might take awhile to complete, shopping online for a car loan could take as little as 24 to 48 hours! This is because the process is expedited by your loan adviser, who works to get you back on the road as fast as possible.
One of the biggest reasons to shop for a car loan online is because you can take advantage of a network of lenders. Just as other industries compete for the business of customers, by working with an online company you'll have lenders competing to do business with you. The customer simply submits their application to the online company, and the loan adviser will match the application up with two or three of the best options available for that application.
Only speak with the best options.
Some people have a fear of working with an online company because they believe they will be bombarded with solicitations from lenders. Rest assured that no reputable company will let this happen. Most will only share your information with the best matches, for the purpose of getting you the car loan you need.
How can you tell if a company is reputable? One of the best ways is to check for their standing with the Better Business Bureau. Companies that have many unresolved complaints will not have a good rating with the BBB. Another way is whether or not they charge money for using their services. Normally, the lenders will pay the online company for the privilege of new leads; the customer does not pay to have the loan adviser match them up with a lender. If the company you are working with asks you for money, run fast in the other direction!
Hopefully this information will help you gain some confidence in using an online company for your next car loan. Hundreds of thousands of people have used online companies for their loan with great success, and we're certain you'll have a similar experience.
If you asked a group of people where they bought their last car, most likely virtually all of them would say at a new car or used car dealer. There are many good, honest dealers out there, but there are also some that do business dishonestly. If you were burned on your last experience with a car dealer, here are some options for alternatives on where to buy a car.
One of the most common ways to get a used car outside of a dealer is to purchase it through a private seller. Private sellers list their vehicles through newspaper classifieds, but also through websites such as Craigslist. If you choose to go through this option, make sure that the seller is willing to let you get the vehicle checked out by a mechanic of your choice. This is especially important as the mechanic will be able to alert you to any possible issues you might face in the near future. It's also a good idea to run the VIN # through Carfax.com, to get a history on the vehicle and see if it has been in any bad accidents.
Another source for private sellers is through online auction websites. You might have used such sites in the past to purchase housewares and kids' clothing, but were you aware that you can also purchase cars on internet auction sites? This can broaden you options beyond what is available in your immediate city. Should you decide to purchase the car at a remote location, make sure that you still have it checked out by a mechanic who is local to the seller before finalizing the sale.
What about Financing?
One of the reasons people opt to purchase a car through the dealer is that they need financing. But are there options for financing if you purchase through a private seller or online auction? The answer is YES! Banks and credit unions can help you get the car that you want, even if its through a private seller. You would go to the lender and explain to them the type of car you are looking for. Assuming that the bank approves your car loan, they will give you a cashier's check for the full amount of the vehicle. You would then use this check to pay off the seller, and you would make payments on the loan to the bank. Visit with your local bank or financial institution to find out what your options are when dealing with a private seller.
Whether you are an undergrad, recent grad, or working on a master's or doctorate, car dealers love students and have special deals to help make it easier to get into your first car! However, there are special considerations when buying a car for a student. Here are some things to mull over when you are considering buying a car as a student, or for a student.
Other car-related expenses.
Money is a commodity that is in short supply while you are a student. If you are thinking about buying a car, there are additional expenses to consider. The price of the new insurance must be considered, as well as any maintenance costs. Domestic cars are a good choice for these reasons, as the maintenance costs on a domestic car tend to be relatively low. The cost of gas will also need to be factored into your budget.
Very often, driving through college towns means navigating narrow streets and lots of parallel parking. You'll want a car that has good rear visibility. It should also be easy to turn down smaller roads. With this in mind minivans and SUV's are usually not good choices for cars while on campus. You're better off going with a smaller car, such as Chevy Cobalt.
New car specials.
To help move their new car inventory, some manufacturers offer specials for students. Credit isn't considered as much as the student's current transcripts, to show that they are a student in good standing. The types of specials offered vary throughout the year, but often include very low or no APR financing, as well as Bonus Cash offers to be put toward the purchase of a vehicle. If you choose to purchase a new car, it could also have the added benefit of helping you to establish credit. As you make regular, on-time payments to your car loan, you'll begin to build a credit history.
While some students do just fine without purchasing a car while in college, others may find that it is a necessity. If you fall into the latter category, be sure to consider how much driving and the type of driving you'll be doing in your new car. Think about how many miles you'll be logging each week, as well as how often you'll be driving home, and if anyone else will be relying on you for transportation, such as younger brothers and sisters. You want to make sure that you choose a car that matches your budget, as well as your lifestyle.
Rich or poor, everyone loves a good deal. This is especially true on big-ticket purchases such as cars. However, determining what a good price on a car is can feel like trying to hit a moving target. Many cars have a variety of options available, which will greatly impact the price of the car. While the dealer is likely to laugh at you if you ask him to tell you what he paid for the car, there are ways that you can get a fairly good idea as to what the invoice price on the car is.
If you want to figure out the approximate invoice on the car, you need to know more than the make and model. For example, let's say that you are considering purchasing a Ford Mustang. Do you want a hard-top, or a convertible? If it's a hard top, do you want a moon roof? Are the seats cloth or leather? What color is the car? What kind of stereo system does it have? What type of engine does it have? Get as specific as possible. If the car you are considering is on a dealer's lot, you may want to pay the dealer a visit after hours and take some notes on the car's fact sheet.
Do The Research.
Once you have pin-pointed the car that you want, use the internet to help you do your research. Websites such as Edmunds and Kelley Blue Book allow you to enter the various options on a particular make and model. The more detailed you can get in the trim options on the car, the more likely it'll be that you'll get an accurate estimate of invoice price. You'll want to go through this process with a couple of different sites, to ensure that you are getting accurate information.
So you've picked out your car. Is it perfect as-is, or do you want to customize it? Adding options on will obviously increase the price of the car. Again, it helps to be specific. For this part of the process you may need to meet with the dealer to find out what options are available, and how much extra they would be.
Although it can take awhile to do the homework involved, it is well worth the effort to get an estimated invoice price on the vehicle. Knowing this one number will put you in a better position to know if you are getting a good deal.
If your credit score has taken a dive recently, you'll no doubt feel the impact when you attempt to apply for car loans. Its understandable that the car loan might be necessary to procure a means of transportation, but there are some things you'll need to be aware of if you decide to go this route.
1) The interest rate on your car loan will be higher than usual.
If you have bad credit, the interest rate on your car loan could be anywhere from a few points to several points higher than the normal rates. Good interest rates are a means to reward customers who have done a good job maintaining their credit history. If you don't have a history that shows that you would be responsible for the loan, lenders could charge a higher rate to offset the risk of offering you the loan.
2) You'll need to make a sizable down payment.
Depending on the state of your credit score, you could be expected to make a down payment of 20% or more of the price. The reason for this comes back to the risk that the lender takes as accepting you as a customer. Should you default on the loan for some reason, they already have amount that you have given as a down payment, which will help lessen the possible loss on the loan. Being willing to make a larger down payment will also send a message to the lender that you quite serious about paying on the car loan, as you would obviously stand to lose that money if you default.
3) Your options may be limited.
Even with being willing to pay a higher interest rate and make a larger down payment, you may find that not all lenders are receptive to doing business with customers who have bad credit. If you need help finding a lender for a car loan with bad credit, websites such as carloans.com can be a great help. This type of company already has a network of lenders in place, including several that specialize in customers with bad credit or no credit. By using the network of carloans.com, you can save yourself lots of time in the process of completing the loan application.
The purpose of this article is not to discourage you from getting a car loan if you have bad credit, but to give you a realistic expectation of what the loan experience will be like if you need a car loan with bad credit. This can help you be mentally prepared for the process of getting a car loan with bad credit.
Are you aware of your options for car loan sources? Here is a short list of places to consider if you need a car loan.
The most common place that people get a car loan from is onsite with a dealer. Nearly all dealers have a finance department where people can get a car loan for the vehicle they have just selected. In some cases, going through the dealer is the most logical choice. This is especially true if you are purchasing a new car. Dealers have extra leeway because the loan is financed directly through the manufacturer. As such, the manufacturer can offer perks such as zero percent interest. However, you may find that by going through a dealer you end up paying more for the vehicle.
All banks offer options for auto loans. If you have a good relationship with your bank, it's definitely worthwhile to find out what kind of terms they can offer you on the car you are considering. If you choose to finance your car through a bank, it's usually best to visit the bank before visiting the car lot. Do some research on the type of car you are considering, so you'll have an idea as to how much you'll need for the loan. If your credit is good the bank may be willing to offer you a "blank check" loan. This means you are approved for a loan up to a certain amount, with the terms previously negotiated. You can then visit the dealer and negotiate terms for the car as a cash customer, which will almost always get you a lower price on the vehicle.
Though similar to banks in their operation, credit unions are different from other financial institutions in that they are non-profit. Most often credit unions are set up through large employers, or through a group of employers. Their main function is to serve their members, not to make a profit. For this reason credit unions tend to offer better service than banks, and in some cases can offer lower interest rates than banks. Although credit union membership is not an option for everyone, if it is available to you it might be worth investigating.
Because you will be making payments on your car loan for many months to come, it is important to make sure you get the best rate possible. By shopping around you can be sure that you'll get the best deal for you.
Few numbers will have more impact on your car loan application than your FICO score. A FICO score can tell a lender at a glance whether or not you will be a good credit risk. Most people know that a higher FICO score is desirable, but may not be aware how a FICO score is determined. Here is a breakdown of what factors will impact your FICO score.
1) Payment history on loans
Without question, your ability to make payments on time will impact your FICO score more than anything else. A whopping 35% of your FICO score is determined based on your payment history for other loans. This includes car loans, credit cards, personal loans, mortgages, and even utilities. If your FICO score is low, keeping your payments current is one of the easiest ways to improve it over time.
2) The amount of debt in relation to your income
30% of your FICO score is determined by the amount of debt that you have. For this reason, it's not good to have too many credit cards maxed out, as a high debt-to-income ratio will lower your credit score. Paying off your credit cards and keeping the balances low will definitely help your FICO score improve.
3) Length of credit history
Although it only accounts for 15% of your FICO score, the length of your credit history definitely is important. This is the most frustrating aspect for many young adults as most are working to build a credit history. Secured credit cards can be one way to begin building a small credit history. A secured credit card usually has a smaller balance, which is backed by an account at the same bank where the card is issued. The account is maintained solely for the purpose of insurance for the credit card. Should the customer default on a card payment, the bank can take the money out of the account. However, by keeping monthly payments on the card current, the customer can begin to build a credit history.
4) Number and diversity of accounts
Rounding out the list of factors are the number of accounts and the diversity of accounts. Each of these factors impacts the FICO score by 10%. While you certainly don't want to have too many accounts opened, having a few open can show that more than one lender believes you are a good credit risk.
In a way, all five factors are tied to each other. Ultimately the best way to improve your FICO score is to make regular payments on your current loans, keep your balances on credit cards low, and do not open new loan accounts unless you absolutely need them. These three things will guarantee that your credit score will go up over time.