Planning to purchase a new car as well as choosing a correct auto loan both are very important tasks. As many lenders are available in the market it is difficult to choose the exact lender who offers best auto loans to suit the requirements of the customer. People can go in for banks to get auto loans, but it is a lengthier process and it takes much time.
Nowadays, many of the auto dealers offer more finance options. The customers have to shop for better dealer and negotiate the interest rates and ask for discounts also. Choose a lender who offers good interest rates, which will lead the applicant to repay the loan easily. Several online lenders offer auto car loans with good interest rates and selection of a reputable lender is a tough job.
The first factor considered by most of the lenders is the credit history of the applicant. So before applying for the loan, it is necessary to ensure a good credit score which will facilitate to get loan with less interest rate. If the applicant doesn’t have a good credit history, he must try to improve his credit score before applying for the loan, to avoid high interest rates. Generally auto loans come under secured loans category and so, the interest rates will be less and it will be easy for the customer to make his payments. This applies to the people with bad credit score, but only thing is they have to pay sub prime rates and in the later period, they can go for refinancing.
Some of the criteria to be followed before applying for auto loan with nominal interest rates are:
Applicant must complete eighteen years of age.
Applicant’s level of income for a particular loan is fixed by the lender.
Borrower must possess an asset of his own.
Good credit history of the applicant.
If the applicant has a high credit score, then chances of obtaining low interest rates are more and he can negotiate further. Having a high credit score, the applicant is under low risk. Persons who have high or above average credit score will fall into the category of low interest rates or zero percent interest schemes, where the applicant is not charged any interest. If the applicant does not fall in this category then he must try to improve his credit history by paying the bills on time, payment of credit card bills on time etc. All this will make the report favorable to the lender.
In case of zero percent interest schemes the applicants have to look for any hidden charges before signing up the contract. Interest rates will be more in case of used cards compared to new cars because of more risk. Thus interest rates differ from lender to lender and also from loan to loan.