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What to Look For in an Auto Loan |  |
There are many factors which go into the determination of your auto loan, a great many of them having to do with your personal finances, stability, job security and consistency, and your credit standing. All of these points are weighed carefully by the legitimate lender in order to determine your credit worthiness and how capable you will be of carrying out your end of the deal. The rest of the choices to be made have to do with the vehicle in question, and this is especially true for those wishing to purchase a used vehicle. Banks are not willing to stretch past a certain set of standards when dealing with an auto loan. This is a good thing, though it may seem a bit nerve wracking during your search.
First, most legitimate auto loan originators want to know every detail about the vehicle in question, and it is not rare for many potential cars to be thrown out of the equation for one or more of the following reasons: age, mileage, condition, mechanical record or lack thereof, tire condition, and title discrepancies, just to name a few. Where one person may walk into a shifty dealership and be approved to buy a car with 140,000 miles on it for $6,000, another would be denied firmly by the bank due to insufficient collateral. The moral here is for you to think like the bank.
A great amount of your job will be to understand the lifespan of the vehicles which interest you, and trying to estimate the amount of wear, tear, and mileage you will add to the car over the length of the loan. The average used car loan is signed into at three to five years, with the very rare occasion that a slightly used car would be eligible for a six or seven year loan. So, if you see a car that you really like, but it has 90,000 miles on it already, and you know that you will put at least 16,000 more miles on it per year, what are the chances that the car will still be drivable at the end of a five year auto loan? That is how the bank thinks.
Those who are members of credit unions are often offered some of the best rates, and the waiting game is not usually as much of an issue when you are already affiliated with a lender such as this. For those who are winging it and shopping around, it is important to remember to avoid the dealership financing terms offered, no matter how desperate you may be feeling about a new or new-used car. There are online sources that you can and should tap, those who will compile offers for you from lenders that you may not otherwise know of or find, and this can often lead to the most competitive terms and options on your behalf.
You may be given a strict list of specific that you are and are not allowed to present when utilizing your auto loan pre-approval, and it will save you a great deal of time and frustration to stay well within the bounds of your checklist. If you don’t, you may get your heart set on ten different cars, only to have each one denied or disapproved based on that small thing that you overlooked or hoped to pass through. If you do this the right way, being preauthorized on year, mileage, and price can give you a greater sense of security, knowing that you will not be taken advantage of on any lot that you visit. Keep thinking like the bank, and you’ll do just fine.