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The continued challenge to the most profitable auto loan rates is important at present as the economy continues to trend downward. People in several states, especially Florida, Nevada, California, Arizona, Georgia, Michigan and Ohio, are facing massive home foreclosures and job losses. Here’s how you can find the lowest cost auto loan rates possible if you live in one of those states and also have a foreclosure.
When you’re desperate to buy or refinance your vehicle, it doesn’t seem realistic to spend months trying to locate as many lenders as possible and get quotes from each one of them. However, as far as the best car loan rates depend on the lender, there are some other factors involved as well which will be discussed in the following paragraphs.
The paramount question is how to help yourself get the best car loan rate. The first thing to do would be to get your most recent credit report and credit score from one of the big three credit reporting agencies. Your credit score is one of the primary determinants of the interest rate that the lender will charge you for the car loan. If your score is 600 or lower, you’ll pay a higher interest rate than someone who scores 725. Favorable when you go for a car loan. If you have multiple small balance credit cards, you can try to pay them off as quickly as possible, before applying for the car loan. Each card you pay off will help increase your credit score.
Maintaining a healthy credit score is of utmost importance while seeking any type of loan. If your score is already bad, you can try buying a good, solid used car instead of a new one. This will reduce the amount you finance and keep your monthly payments low.
Another way to get the best interest rate would be to get a secured car loan. In a secured loan, you have to pledge collateral equal to the loan amount. This collateral can be any asset you may own, such as stocks, bonds, jewelry, antiques, your home (which I would not recommend), and any other valuable assets you own, free and clear. Some lenders who specialize in bad credit auto loans will even allow the car you are financing to be pledged as collateral for the loan. Secured loans have to be handled with care, as you can lose your collateral if you default on the loan. Although you can get a lower interest rate with a secured loan, you are also running the risk of losing the asset you pledge.
Another option for a car loan is an unsecured loan where no collateral is required by the bank. These are difficult to obtain if you are sitting on a bad credit report. Secured loans are much less risky for lenders as they can take possession of your pledged collateral in case you default. Because of this, most lenders are willing to offer secured loans at low interest rates and to consumers with bad credit problems.
There are now many online lenders that specialize in bad credit auto loans. Do your research, be prepared to fill out an application with integrity, and you could be in a new or used vehicle before you ever thought possible.
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