Minggu, 08 April 2018

Five Things You Need to Know About Automated Loans Before You Get a Car Loan

Most people who buy new or pre-owned vehicles from dealers choose to finance their purchase rather than paying cash in advance. While this makes financial sense to most people, making the mistake of negotiating the terms of a car loan can cause the borrower to spend a lot of money. Here are five tips to help anyone cope with auto loans like a professional.

1. Credit reports sometimes have errors.

People with lower credit scores often have to pay higher interest rates for loans, so anyone considering borrowing money should be very familiar with his credit report. Sometimes an error occurs. This error should be fixed before meeting with the lender. Some buyers may even find that dishonest lenders may try to claim that their scores are lower than they really are. Being familiar with these three reports can give additional borrowers the power of negotiation and save a lot of money in the long run.

2. Shop to get the best deals for car loans.

Although dealers often advertise low special offer APRs, these rates are usually reserved for borrowers with the best credit. Many people will find better terms in credit unions or online banks or communities. If the borrower gets a pre-qualification at the bank, they will be in a better position to negotiate at the car dealer without being legally bound by any agreement with the bank. Bonus tip: Any credit request within the same two week period will only count as one question when it affects the report.

3. Some lenders will utilize subprime borrowers.

Some dishonest lenders will offer a high-interest loan to the driver with bad credit, and as soon as the driver skips the payment, the dealer will confiscate the car and resell it. Determining on the loan will cause additional damage to the already bad credit, so the borrower must be sure they can pay the payment before approving the loan. Even subprime borrowers should shop for the best APR. Automated loan requirements are usually lower than mortgage requirements, so buyers should check to make sure they get the best deal.

4. Lower monthly payments may actually be more expensive.

One tactic that is sometimes used in auto lending is for dealers to advertise low monthly payments while hiding higher total purchases. Lower monthly payments also extend the terms of the contract, and longer loans usually have higher interest rates. The buyer must make sure to negotiate the total purchase price separately from the APR and monthly payments.

5. Read the fine print.

Before driving in a new vehicle, the buyer must ensure that the auto loan process is complete. If the lender says that the deal is still waiting for approval after you leave, they can call later and request a higher APR or monthly payment, or request that the car be returned to the parking lot. Good writing should also say that APR has been improved; if not, maybe up, maybe make payments out of control. In addition, some dealers charge a penalty if the borrower pays the loan early.

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