If you have bad credit due to unemployment, illness or any other type of dramatic life change, you're probably thinking that you're out of luck when it comes to buying a used car. However, that is simply not the case. According to a recent report from Experian Automotive, more auto lenders are taking the plunge on offering loans to customers in the subprime risk tier, with those loans representing more than one in four new vehicle loans for the second quarter of 2012. Given these circumstances, now is perhaps the right time to look for an auto loan that not only fits your needs, but also your budget.
You Have Options
The last thing you should do is let a less-than-perfect credit history in the way of your chances of buying a solid vehicle. Keep in mind that while you might not be able to get the newest vehicle on the showroom floor for 0.9-percent APR, there are plenty of excellent options for you to utilize in order to get yourself behind the wheel of a decent vehicle.
- Work with the Loan Specialist. Depending on who you talk to, the loan specialist may be able to work with you on a case-by-case basis, especially if you've been making efforts towards restoring your credit history.
- Go With a Cosigner. Having your loan backed by a cosigner with an excellent credit history and stable income can increase your chances of obtaining a reasonable car loan.
- Save Your Money. The more money you are able to put down as a down payment, the smaller your overall monthly payments become.
- Buy Smart and Sensible. It may be easier to obtain a loan for an affordable compact or midsize sedan rather than something that is a bit more extravagant.
Designing a home or providing staging services as a growing company often requires the purchase of a van or similar vehicle to transport furniture, artwork and other design elements for the space. Before looking for an appropriate vehicle, finding financing solutions is a necessity for the continued growth of the company.
Obtain Credit Information
Business owners need a copy of the company credit report and a personal credit report before seeking an auto loan. According to CarsDirect.com, verifying the information in a credit report and disputing inaccurate data is important before seeking funds. If information is inaccurate, then it can lower the score and result in a denied loan.
Personal credit may or may not be necessary, depending on the auto loan and the amount of time since the company was established. Newer businesses will often need the owner’s credit information due to the limited information available on the company.
Read the Paperwork
Lenders are required to provide information relating to the loan. According to the Federal Trade Commission, the Truth in Lending Act requires full disclosure of details relating to the interest rate, terms, conditions and monthly charges on the loan.
Finding the right lender for the loan requires comparing the details. The contract will fully disclose all of the information and ensures the interest rate and payment plan is appropriate for the company budget.
Buying a van or truck to transport furniture and goods for a home staging or design company requires financing solutions. With a great credit rating and comparison shopping, it is possible to find an appropriate loan for the business.
When you go to apply for an auto loan, one of the questions your lender will ask is how long you want the repayment term to be. The repayment term affects two major factors: your monthly payment and your total interest cost. Before you visit the lender, learn the benefits of longer and shorter repayment terms.
Benefits of a Longer Repayment Term
- Lower monthly payment because payments are stretched out over a longer time frame, which can help alleviate strain on your cash flow and live on a balanced budget
- Making payments on the auto loan will provide you with more years of credit history, which can help you boost your score and get better rates on loans in the future
Benefits of a Shorter Repayment Term
- Finish paying off the auto loan sooner, which makes that portion of your monthly income available for other purposes, like paying down debt or saving for a down payment
- Pay less total money in interest because you are paying down the principal balance of your loan faster than you would be on a longer repayment term
- Gain equity in your vehicle faster, which helps you avoid being underwater on your auto loan when you get your next vehicle
Choosing a repayment term isn't a decision you should jump into without understanding the implications of your choice. There are advantages to longer and shorter terms, so choose the length that works best for your needs.