Imagine expecting a baby and having to race in your trendy sports car for a handy minivan. Or maybe you’re moving away from your hometown – and its reliable public transportation – and into a new city that requires owning a car. Or maybe you’ve been driving the same set of wheels for 5 years when a shiny new SUV in your local showroom catches your eye.
You may be one of the lucky few to have the tens of thousands of dollars needed to buy a car open saved at the bank – and if so, congratulations!
But if you’re like most people, a new car will only come if you take out a car loan.
While you might be able to pick up a dealer about your credit line offer to buy a vehicle, you may doubt that you can get a better deal elsewhere – and you’re probably right. You have heard from friends that they have recently got a great rate by seeking a car loan through a lender, and are curious as to whether or not you should use your loan. Should you?
Making a car loan
Before we talk about a lender and whether it’s the right option for you, it’s important to understand what goes in and out of car loans. The total cost of the loan will be the amount you borrow (the principal) in addition to the money you will pay for the privilege of using someone else’s money to pay your car (interest rate). The higher the payment and the cheaper the vehicle, the lower the principal will be.
The higher the credit score and, in general, the shorter the length of the loan, the lower the interest rate will be.
Why should I buy a car for a loan?
The more research you do, the better your chances of getting the best conditions for your loan. If you know what kind of car you want to buy and how much money you will be able to drop off from the start, you may be able to get a pre-approved loan – and then you will be in the perfect position to drive a heavy purchase at the dealership mentioned above.
However, it is best to buy loan calculations in one drop-off letter, as your credit score has been reviewed multiple times by looking for offers for many different loans in a short period of time, could indicate to credit reporting agencies that you are desperate for money – and it would negatively affected your credit score.
How long does it take to get a car loan offer?
I took it for a quick test ride just for you – and was pleasantly surprised. It took me about 4 minutes to respond to the brief needed to see the car insurance rates. They ask for your name, current address, income, assets and the type of car you buy, as well as information on how much you want to borrow and the amount of payment you can afford.
What if you have bad credit?
In an ideal universe, we would make all our credit card payments on time and we would never have a balance, have a high income, and not borrow a lot of money. However, life is not perfect, and chances are, neither is your credit score. If you have another way of reliable transportation and you do not need to buy a new car right away, it is definitely a good idea to focus on paying off the balance of your other debts, paying on time, saving on your vehicle and improving your credit score.
If you really can’t wait to buy a new set of wheels, don’t despair – there are still things you can do to get a bad credit car loan. Try to find the most appropriate vehicle that you can still safely bring to your location. Consider setting up a friend or relative who is more financially stable to co-finance your loan.