Autoloancars

Best Car Loan Rates – Prime Lenders vs. Sub Prime Auto Lenders

The best car loan rates are out there if you search for them. Based on your credit past, you may find either a prime or sub prime auto lender is your best choice. The surest way to find the answer is to request free online loan quotes to narrow your choices.

The Differences Between Prime and Sub Prime Lenders

Prime and sub prime lenders differ in the types of loans they offer. Prime lenders offer A loans to those with credit scores of 650 or higher. Sub prime lenders provide loans to everyone else. Sometimes though, financing companies offer both types of financing.

Sub prime loans have higher rates and fees since the risk is higher for lenders. Reasonable lenders will only charge a couple of points higher for most types of loans.

Who Has The Best Rates?

The only way to find who has the best rates is to do your own comparison shopping. Depending on your credit score, you may be surprised who can offer you the most competitive package.

As important as low rates are, fees should also be considered. Fortunately the government made comparison shopping easy by requiring lenders to disclose the APR of any loan. The APR includes both closing costs and rates.

Find The Right Lender

You should start your car loan shopping online, not at the dealership. There are too many incentives for the salespeople for you to be sure you are getting the best deal.

Start with a car loan broker site that brings many lenders together. You can quickly access free quotes from there. Then follow up with other lenders.

And dont give permission for a lender to access your credit report unless you are pretty sure you want to go with their offer. Otherwise, you will find that multiple credit inquires will lower your score and hurt your loan application.

While there are no instant solutions to finding the best auto loan rates, online sites do make it faster. A couple of hours spent securing your vehicle financing will both save you money and make the car buying process easier.

When it comes to an auto car loan, you will want to think about taking many actions before you file your application. The first step to getting an auto car loan is to check your credit rating. When you go for your credit rating you are able to know exactly what your chances are. You need to have at least a 640 to be considered in good credit, however, the higher the rating the better off you will be.

In fact, most of the time, if they get a good credit report back for you, you will more than likely get an instant approval. However, if you do have an “iffy” credit rating, you will find that it will take much longer. Not only do they look at your credit rating, but also a lot of other personal things. Everything that you do will affect your chances of getting an auto car loan.

When it comes to giving out loans, the creditors need to know that you can and will pay them back. The interest that they charge you will give them some added insurance. You should know that there are three main topics that you are judged on and that you need to make sure that you have nothing negative in your file. You are basically judged by your character, capacity, and capital.

You will also find that they need to know where you live, how long you’ve lived there, what your assets are, what your assets are worth, how much you have in the bank, how much you make a month or year, if you pay your bills on time, your employee history, and your debts. They need to know practically everything before they are willing to give you an auto loan.

First, you need to learn how to build good character. To do this, you have to have integrity. You have to pay your bills correctly and on time. You have to go the extra mile to do honest transactions and you have to make sure that you have an outstanding character when it comes to your finances. To help you based on capacity, this is where they compare your debts to your credits.

They need to make sure that you have more credit than debts so that you will be able to have a high credit rating. Basically, you should never have more than 23rds of your credit used up. Even half of your credit used could make a mark against you. As for capital, there is not much you can do. You can get some extra credit cards just to have more credit to increase your capacity, but as long as you don’t ever overdraw or forget a payment, you should be financially secured if you can focus on building good character.

Its generally a good idea to only take out a loan for no more than 48 months (4 years). Most people choose the 60 month (5 year) option because their payments will be lower.
However, vehicle ownership entails more than just the car payment. You need to add in insurance, gas, repairs, etc. when considering what you can afford in a car. You dont want to spend the next 5 or 6 years paying off a car that will depreciate in value the moment you drive it. You run the risk of ending up in a situation where youll owe more than what the car is worth.
Another solution to car financing is to find a co-signer to apply for the loan with you. Most often, this would be a parent or spouse, but anyone can co-sign for you. Of course, you will want them to have good credit to improve your chances of securing the loan.
A co-signer will sign the credit application basically saying that they are willing to back you in the purchase of this car. They are agreeing that if, for some reason, you dont make the payments, they will be responsible for re-payment of the loan.
This is a big deal for your co-signer because they are putting their credit score on the line for you. Its important for you to realize that if you dont make your payments, you are not only jeopardizing your credit, but theirs as well. Plus, if you dont make the payments, the car will be repossessed and future liens could be put on their income.
When you ask someone to co-sign for you, be very conscientious about what you are asking them to do. Some people just arent willing to take the risk, so dont be offended if they say no.
Since their name will be on the loan, it will appear on their credit report as an additional item. This could affect their borrowing ability in the future since most lending companies look closely at debt-to-income ratio before they give out money. Carrying too much debt including your car loan could cause them to be turned down when applying for credit.
When you apply with a co-signer, your name and their name will be on the loan. This means the loan is really in the names of two parties at once, but it does benefit you by establishing credit in your name, as it is also in your name.
Having a co-signer is a risky and delicate matter for many people as it is a gamble for them to trust you completely to fulfill the loan commitment. However, if you are serious about establishing your credit or rebuilding your credit, theres no reason why it has to be such a risk.
One warning about co-sign loans is there are some real unscrupulous car dealers out there, who lie to you and say you are getting a co-sign loan. Then they trick the cosigner into signing the wrong line of the loan papers and the loan ends up in their name alone, instead of both of your names together. This is known as a Straw Purchase.
They pull this scam because they know you would never get approved, and they just want to sell the car, and it happens ALL the time. The law requires both people to be present and sign at the same time, and you need to make sure the correct names go on the correct lines of the application, identifying you as the borrower, and the co-signer as the co-signer.
There is one other option you may want to look at when it comes to buying a car. You can try and take over payments from an individual seller who is no longer able to afford their car.
A few years ago an industry emerged that served the needs of individuals who have had past credit problems, but can now afford monthly car payments. These companies help people with past credit problems. They will find vehicle owners who can no longer afford their monthly payments and match them up with people who can afford to make car payments but have trouble getting financing.
These owners would gladly allow someone to take over payments on their vehicle in order to save their credit, with no credit check. These companies charge the buyer between $1,500.00 and $3,000.00 for their services just to put these two parties together, without doing a credit check. However, you CAN do this on your own with a little know-how.
Start by looking in the local newspaper for newer model cars with a higher asking price over $9,000 is a good starting point. Most people will not own a newer model car outright and be asking a higher price, so chances are good that they still have a lien on the car.
The easiest owner to work with is one who is considering letting his car go back to the lien holder for repossession. You can find these owners in your local newspaper or local car magazine.
Best results are obtained in aging these issues for two or three weeks before calling. The owners will always become more flexible the longer they try to sell their vehicles if you focus on ads proclaiming “Take over payments” or “Down and take over payments”. These are individuals who realize that they are in a negative equity situation and can’t sell their vehicle outright.
Even though their ad might request a down payment, they will almost always waive it. Most lenders who recommend to the seller that he finds someone to take over his payments will still hold this individual liable for the payments if there is a default.
Many of these lenders will request an application to be submitted from the assignee. If the seller has been making his payments on time, the lien holder may want to keep him in this vehicle. They will want the buyer to have a stronger credit rating than the seller, before they will give their approval at all.