Auto Loan – A Few Key Points to Obtain One
Being in a position to attain a new auto these days means that you either have the cash available to spend or you have yourself a good credit rating and thus can get an auto loan. The first of these points – having a lot of cash lying in the bank, is fairly unusual, and to be honest, the second point – having a good credit rating is now not as common either. With this in mind why not consider a purchasing a used auto rather than new?
Buying a second hand car is not only more affordable but you can actually get lower interest rates too. There are many pre-owned autos that have a good maintenance record and have low mileage on the clock, while at the same time their prices are low too, in comparison to brand new.
Its not however, just so simple to get a used auto loan. Let’s now have a look at a few key points to consider before making the application.
1. Credit rating. With a good to great credit rating – just like when applying for a new auto loan – its easier to attain a used auto loan, and with competitive terms too. It makes sense to assess your own credit ratings before making a loan application. If its poor then take steps to try to improve it – check for mistakes on your credit records and challenge any you feel are incorrect; reduce your credit card debt as soon as you can; reduce any other debts when you can etc.
2. Make the decision how much you are willing to spend paying back your auto loan each month. How much can you afford? If you want to spend more than you can afford, how are you going to get your hands on the money to afford this?
3. Make sure to compare different lending options and companies. The best way to do this is to spend some time on the internet finding out which loans suit your needs and which do not.
4. As an estimate and rough guide, let’s presume you borrowed $5000 on your auto loan. This would entail you repaying around $100 a month – give or take a bit when considering variations of interest rates. For every $1000 you borrow you can expect to pay back about $20 a month. With this in mind it makes it easier to work out how much car you can afford.
Just as you would with any form of loan, with your used auto loan in place, try to ensure you pay your dues in a timely manner. If you are to get into the habit of missing a payment here and there, you are thus putting your car at risk as it could be repossessed. Furthermore, your credit score will take an unhealthy plunge too. Late payments can knock a whopping 100 points of your credit rating in no time! The lower your credit score then less chance of being able to get a loan in future, and even if you do, you will suffer with far higher interest rates.