{"id":156,"date":"2018-10-20T11:48:57","date_gmt":"2018-10-20T11:48:57","guid":{"rendered":"http:\/\/loanstar.com\/us\/?page_id=156"},"modified":"2019-06-29T13:51:34","modified_gmt":"2019-06-29T17:51:34","slug":"autoloan","status":"publish","type":"page","link":"https:\/\/loanstar.com\/us\/loans\/autoloan\/","title":{"rendered":"Autoloan"},"content":{"rendered":"

\"\"Car Loans<\/h2>\n

Are you in the market for an auto loan? Before you pick the first car that catches your eye, sign on the dotted line, and drive off the lot, you\u2019ll want to do some legwork. Otherwise, you could end up with much more than you bargained for financially, in the form of excessive interest and a monthly payment that you can\u2019t afford.<\/p>\n

Types of Lenders<\/h2>\n

Unless you\u2019re planning to spend months or years saving up, you\u2019ll need to secure financing. There are three types of lenders you can choose from:<\/p>\n

Traditional lenders<\/h3>\n

Banks, credit unions, and other large-scale financial institutions that offer auto loans fall into this category. If you choose to go with a traditional or direct lender, you have the option to either get preapproved to determine how much you can borrow or pick out the vehicle and then apply.<\/p>\n

Regardless of which route you take, the lender will cut the dealership a check for the total amount of the vehicle, plus any applicable taxes, fees, and add-ons (minus the down payment). And from that point onward, you\u2019ll be obligated\u00a0 to repay the loan to the lender.<\/p>\n

The primary benefit of using a direct lender is the power it gives you as a buyer when negotiating the final terms and conditions of the purchase. Since you\u2019re using funds from an outside party to purchase the vehicle, you\u2019re perceived as a cash buyer in their eyes and can request the most favorable pricing they can afford to extend to you.<\/p>\n

Online lenders<\/h3>\n

\"\"Want to take the hassle out of shopping for the perfect auto loan? Consider doing business with an online lender. Many have prequalification tools directly on their website, so you can apply with no impact to your credit score. Even better, online lenders allow you to complete the entire process, from application to funding, directly from your smartphone or computer. This is a convenient option if you\u2019re strapped for time or always on the go.<\/p>\n

And if you really want to maximize the online auto loan experience, use a loan search and comparison tool to explore a plethora of options that may be available to you at the tap of a fingertip. All you have to do is answer a few questions about your financial situation and income, and the tool will do the legwork for you.<\/p>\n

In-house financing<\/h3>\n

Dealerships make it easy to get the financing you need in a jiffy, even if you haven\u2019t shopped around elsewhere for a loan. While it may seem like a convenient option, there are a few drawbacks. For starters, they will only check with lenders from within their small network to select the loan offer for you. Furthermore, there\u2019s always a possibility that you aren\u2019t getting the most competitive rate and loan term that you may qualify for. So, if you settle for in-house financing, be sure you\u2019ve done your homework to ensure that what they\u2019re offering is the most ideal funding option for your situation.<\/p>\n

Qualification Criteria<\/h2>\n

Credit<\/h3>\n

\"\"Afraid your credit score will prevent you from securing an auto loan? It\u2019s true that lenders evaluate your creditworthiness when reviewing your application for financing. However, having less than perfect credit doesn\u2019t automatically disqualify from getting approved. It just means that you\u2019ll more than likely receive a higher APR. But if your credit score meets or exceeds the lender\u2019s minimum criteria and your income is up to par, chances are you\u2019ll be approved for an auto loan with their most competitive financing terms.<\/p>\n

You should also know that there are lenders that specialize in providing auto loans to consumers with past credit issues.<\/p>\n

Income<\/h3>\n

The loan amount you\u2019re approved for heavily depends on your income. While the lender is concerned with your creditworthiness or the likelihood that you\u2019ll repay the loan, they also want to know that you have the means to make timely payments each month.<\/p>\n

How Long Will You Have to Repay the Loan?<\/h2>\n

You should expect a loan term of anywhere between three and six years, but longer timeframes may be available for larger loan amounts to make the monthly payments more affordable. It all depends on the lender and the terms and conditions of the loan they are offering to you.<\/p>\n

But keep in mind that a longer loan term is more costly. Each month that you\u2019re paying on the loan, the lender is collecting interest. And the more months you remit payment, the more interest you\u2019ll pay.<\/p>\n

Before You Apply<\/h2>\n

Check your credit<\/h3>\n

Visit AnnualCreditReport.com to access a free copy of your credit report. If you spot inaccuracies, address them right away by filing formal disputes with each of the three credit bureaus, which are Equifax, Experian, and TransUnion. This should be done before you apply for your loan to give yourself the best possible chance of being approved and receiving a decent interest rate. And it\u2019s much better to know where you stand than to be caught off-guard when applying.<\/p>\n

If you have several credit issues and aren\u2019t in a rush to purchase a new car, it may be worthwhile to devise a plan of action to repair your credit. You\u2019ll increase your odds for approval\u00a0 and more than likely qualify for more competitive financing terms.<\/p>\n

Run the numbers<\/h3>\n

How much can you really afford to pay each month for your new ride? When running the numbers, don\u2019t forget to factor in the cost of car insurance, gasoline, maintenance, and repairs. These are hidden expenses that can wreak havoc on your wallet if you don\u2019t plan for them.<\/p>\n

If you have no idea how much an auto loan will cost you, use a loan calculator to get an estimate of the total cost and monthly payments based on a ballpark figure of how much a car seller is quoting for the car you are looking for. Total costs could vary drastically depending on the interest rate and loan term, but you\u2019ll at least have an idea before applying.<\/p>\n

Shop around for loans<\/h3>\n

\"\"It\u2019s never a good idea to settle for the first loan that you\u2019re approved for. Instead, shop around to see what loan offers are out there. And don\u2019t worry about damaging your credit score. According to myFICO, multiple applications for credit are lumped into a single hard inquiry as long as you select a product within a 45-day window. Simply put, you\u2019ll only receive one hit to your credit score, usually between two and five points, rather than several hits for each application. This is known as rate shopping.<\/p>\n

Get preapproved<\/h3>\n

A loan pre-approval allows you to take the guesswork out of the equation by knowing exactly how much the lender will finance. It also gives you peace of mind that you\u2019ll actually be able to secure the car of your dreams when you finally find it as you\u2019ve already taken the proper actions to cut the red tape.<\/p>\n

When seeking a preapproval, you don\u2019t need to have the exact make and model of a vehicle in mind. The purpose is to determine how much you qualify for. And to move forward, the lender will need the following information:
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