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Information on car loans and credit score

Posted on Nov 10, 2011 by Thalia Green
Nov 10

Those looking at acquiring a new car may probably be concerned about their credit scores. This is because; one’s credit rating is an important factor that is considered during the loan approval process. With the current economic turbulence, it is only natural for many people to lag behind in paying some of their bills. Previously, a large percentage of the lenders would only approve car loans for those with very high credit scores of six hundred points and above. However, times have changed since the lenders are also dealing with business challenges such as increased competition and the adverse effects of the economic recession.

 

The interest rates on the car loans offered in the past were quite high. In this day and age, those who have a credit score of above four hundred and eighty usually get reasonable interest rates. There are several online lenders who are ready to approve car loans very promptly as long as the applicants meet the basic requirements. It is possible for one to get more than one offer from lenders who are ready to issue out these loans. However, do not be too quick to jump in to the first boat that comes along; take time to do some research. It is also worth mentioning that loan approval for people with bad credit is also possible today. Surprisingly, the approval process for such loans is also very fast.

 

Competition in the auto industry has compelled the players and stakeholders to work together in a bid to lower the average credit score needed for approval of a bad credit low interest loan. The lenders have reduced on the credit score expectations with the aim of making car loans accessible to more people.

 

It is very simple to identify a car loan lender online. This is because there are many sites that issue this service. However, one should ensure that he or she deals with a well renown company since there are those that are out to take advantage of innocent applicants. 

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General Car Loans Tips

Playing Offense: Being Proactive in Lowering Your Interest Rate

Posted on Oct 14, 2011 by Thalia Green
Oct 14

Lowering the interest rate on your car loan can save you several hundred to a few thousand dollars, so it definitely makes sense to do so if it is an option. If you are currently stuck with a car loan that has a high interest rate, here are some steps you can take to improve you situation and get a lower interest rate.

 

Look over your credit report.
Some people think that identity theft is what happens when someone takes your credit card and uses it illicitly. However, this type of theft is usually very easy to clean up, as the card company will usually reverse the charges for you, and it does not affect your credit score. But what if someone opens a line of credit (like a new card or a loan) without your knowledge? The only way to find out if this has happened is to review your credit report. The three big credit reporting companies, Experian, Equifax, and TransUnion, will permit you to download your credit report once a year for free. While it will not include your FICO score, you will be able to see your entire credit history. Read over the report carefully and make sure there is nothing on it that you don't recognize. You should usually review your report with at least two of the three bureaus, as items are not always reported to all three. If there is anything that you believe is in error, contact the credit reporting bureau to find out what can be done to remove it.

 

Pay your bills on time.
Your credit score is determined by a number of factors, but the biggest one is your history in how often your bills are paid on time. If you've missed a payment or two, this can have a significant impact on your credit score. Without a doubt one of the easiest ways to improve your credit score is to establish a history of on time payments to your creditors. This includes rent or mortgage, utilities, and outstanding credit cards. The longer you pay your bills on time, the more your score will improve.

 

Responsible borrowers have the power to improve their credit score significantly. This can mean that you'll be able to negotiate a lower interest rate on your car loan, which would give you more money to use elsewhere in your budget. 

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Interest Rates

The Ins and Outs of Interest Rates

Posted on Sep 13, 2011 by Thalia Green
Sep 13

Interest rates can have a profound impact on the amount you'll ultimately pay on your car loan. A few percentage points can mean a change in thousands of dollars over the course of the car loan. If you are new to the car buying process, here is some information to help you understand what interest rates are, and why they can go up or down.



What is an interest rate?
The best way to define interest is to consider it a fee which is paid for the privilege to borrow money. For example, let's say that you need a car loan in the amount of $10,000. The lender approves your loan, and charges a rate of 7% interest. This 7% is the fee that must be paid for the privilege to borrow money. In this way, banks make money on the loans that they offer.



Why interest rates can go up?
There are many reasons why interest rates can increase. Choosing a shorter length of loan is one reason. If you opt to go with a 36-month loan rather than a 48 month loan, the lender might opt to charge a higher interest rate in order to make the loan more profitable for them. How you handle stewardship of the loan is another reason the rate can increase. If you miss payments, this too can cause the interest rate to increase, assuming that the car isn't repossessed. Having a bad credit score can also cause your interest rate to be higher than usual.



Why interest rates go down?
Just as being neglectful of your credit can cause the rate to rise, keeping your credit good can be a wonderful bargaining chip in getting your interest rate lowered. If you started out at a high interest rate, but make payments on time, you may be able to refinance the loan with a different lender and get a lower rate.



Zero interest?
Car loans with zero interest might seem like a no-brainer, but there are a couple things to keep in mind. First, zero interest loans are almost always only offered at the dealer, and then on new cars only. This is because the car manufacturer will use zero interest as a marketing strategy to help keep their new car inventory low. Secondly, if you opt for a zero interest loan, there will be less room for haggling on the price with the dealer. You can expect to purchase the car at or close to MSRP if you accept a zero interest loan. Finally, zero interest might only be temporary, for maybe the first year or two. After that you might be expected to pay interest on the loan.



Hopefully this information has helped you understand a little better what interest is, and why it is so important to both buyers and lenders.

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Interest Rates

Interest Rates for Car Loans

Posted on Aug 27, 2011 by Thalia Green
Aug 27

Car Loan ratesToday's difficult economic environment has a silver lining for people with good credit ratings who are looking to purchase a new or used vehicle. Car loan rates have fallen to new lows, resulting in reduced borrowing costs for car buyers. These interest rates are largely driven by the yields on the intermediate three-year and five-year U.S. Treasury notes. As people flock to the safety of treasuries, these yields have fallen dramatically, resulting in corresponding reductions in car loan rates.

 

The nationwide average three-year new auto loan rate, as of August 19, 2011, is only 3.87 percent, which is 0.44 percent lower than the prior week. The average rate for three-year used car loans is just 4.79 percent. It is important to note that these low rates are generally only available to those with excellent credit ratings who are in solid financial shape. Lenders continue to be very cautious in their lending to ensure that they are not left holding bad or non-performing loans.

 

Other financial resources for those looking for the best interest rate on a car purchase are the auto manufacturers themselves. With the current economic uncertainty, car makers are offering powerful incentives to drive sales of vehicles. These incentives include extremely low interest rates, which can be anywhere from zero to 1.9 percent. These incentive loan rates are offered by several auto manufacturers, both foreign and domestic.

 

Moreover, it appears that this favorable interest rate environment for borrowers will persist for quite some time. The Federal Reserve recently announced their commitment to keep short term interest rates near zero for nearly two years. Furthermore, with the economic uncertainty continuing unabated, investors continually seek the safety of Treasuries, which maintains the downward pressure on consumer loan rates. Indeed, there has never been a better time for car buyers.

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Interest Rates

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