When you are looking for someone to loan you money, no matter what the purpose, you want to be as attractive to that person as possible. So, who do lenders feel most comfortable with when writing car loans? An excellent credit score as well as a low debt-to-income ratio always makes you attractive to a lender. In addition, many banks and traditional lenders prefer to lend money for new vehicles.
If your car loan will be written on a used vehicle, and it is a newer model, less than the book value, and you have a relatively short repayment schedule, your loan will look more attractive.
Car Loan If You Are Not the Ideal Borrower?
Less than perfect credit, borrowing money for an older car, or needing to finance for an extended period are all reasons that a lender may look cautiously at your application. If you are unable to get a car loan, you may ask what would help your case. Often a small down payment may be enough to ease the lender’s mind.
If traditional financing is out of the question, the next step is to attempt to get financing through the dealership. Most dealerships offer this service, and would prefer to finance your loan as well as sell you the car. The interest rate will likely be higher than through a bank or online lender, but still reasonable. The dealership who, of course, wants to sell you a vehicle, will often act as an intermediary between you and the lender, and help work out a deal.
Other Choices in Financing Your Car
If you are unable to obtain a car loan through a traditional or online lender, or through one of the major motor company’s credit department, you are left with a few options. If you own your home, you can take out a home equity loan to pay for your car. The interest rate is reasonable, and you can normally write-off the interest on your taxes, but, you stand to lose not your car but your house if you default.
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY. THIS IS IN NO WAY GIVING ANY LEGAL ADVICE OR REPRESENTATION. THE INFORMATION CONTAINED HEREIN WAS COMPILED FROM VARIOUS ARTICLES. FOR ANY LEGAL ADVICE OR REPRESENTATION SEEK YOUR OWN LEGAL COUNSEL.