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An In-Depth Guide on How to Take out a Loan for a Car

An In-Depth Guide on How to Take out a Loan for a Car

An In-Depth Guide on How to Take out a Loan for a Car

Money and business concept car

Taking out a loan can be beneficial in many ways. We share our in-depth guide on how to take out a loan for a car and the benefits it has.

Did you know that 107 million people have taken out an auto loan to help pay for their car or truck in America?

Purchasing a car can be a costly expenditure. Most people don’t have the cash on hand to pay off the debt of a car immediately, which is where auto loans and personal loans come in handy.

Discover our guide on how to take out a loan for a car and familiarize yourself with the process of buying a car.

What Are the Different Types of Loans Available?

If you have never dealt with loans and credit scores, it can be a very difficult thing to navigate and understand.

There are many different types of loans available. Some of which are great for buying a car, and some that aren’t as good for this type of purchase.

For example, the best types of loans are auto loans, bank loans for a car, or alternatively, you can use a personal loan to buy a car.

Personal loans for car purchases sometimes have costly interest rates, so some people prefer not to use personal loans when they are purchasing their car.

Research has found that car loans are typically cheaper because they are secured by an asset (i.e. the car, which the lender can repossess to cover the costs if you can’t pay your loan).

Federal Reserve found that in May 2018, a 24-month personal loan from a commercial bank had an interest rate of 10.31%, whilst a 48-month new car loan from a commercial bank had an interest rate of 5.05%.

How to Take out a Loan for a Car

Unlike buying a car outright with cash in hand, like you might have done for your very first car, taking out a loan for a car needs to be thought through.

These are the key things you need to do when you want to take out a loan for a car.

Calculate Your Budget

The very first thing you need to do when you want to take out a loan for buying a car is to work out your budget. Calculate how much you can comfortably pay off each month.

According to the Federal Reserve Bank of New York, a record of 7 million Americans are at least three months behind on their car loan payments. It is critical that you work out how much money you have coming in each month, and how much you can pay off.

The best way to work out what you will actually be paying for your car is by calculating how much you will be paying each month and for how many months. This calculation needs to include interest rates, too.

Check Your Credit Score

Whether you want a personal loan for a car or an auto loan for a car, you need to check your credit score and history.

Poor credit history might mean that you pay higher interest rates than if you have a good credit history. If this is the case, you might want to hold off getting a loan and focus on improving your credit score.

If you have a good credit score, you might be able to negotiate a better deal with your loan lender.

Find out how you can secure an auto loan without having previous credit experience or a credit score.

Research Your Options

Once you have an idea of how much you have to spend and what your credit score is, you can research your options. There are a number of loan lenders available, however, not all of them will be right for you.

You can get car loans from banks or credit unions, dealerships, or online lenders. Compare the different types of deals and payment plans each of them offer and work out which one is best for you.

Car loans typically come with 3-, 4-, 5-, or 6-year terms. The longer the payment plan, the more interest you’ll end up paying, so make sure you work out which plan is the most cost effective for you.

Get Pre-Approved for a Loan

Once the lender has given you a quote for the loan, you will be pre-approved, which doesn’t mean that it’s guaranteed. Once you have been pre-approved, you the lender will then check your credit.

Once you are pre-approved for a loan, the lender will give you a letter that you can take when you go car shopping. This letter can help you see if you can get a better deal from the car dealership.

Even though you have been pre-approved, it doesn’t mean that you need to sign up for the loan. It is still your choice whether you pursue this loan or you can choose another one.

You also can adjust the terms of your loan, for example, if you find a cheaper car and don’t need an as bigger loan, you can apply for a smaller loan instead.

Find Your Car

The final step is the most enjoyable one. Once you know how much you can afford each month, and you know what kind of loans you can get, you can go car shopping.

Make sure you do your research and find a car that is the right price and has the right features that you need.

Car Loans

Applying for a car loan doesn’t have to be complicated or confusing. Just follow our guide on how to take out a loan for a car and you’ll soon be driving away with a new vehicle.

Apply for one of our auto loans now and see how we can help you.

Alternatively, if you need help with your loan process, get in touch with our team and discuss your loan requirements.

How to Obtain No Credit Car Loans

How to Obtain No Credit Car Loans

Though good credit is valuable, is there a such thing as no credit car loans? Yes! Find out how to easily obtain an auto loan without credit experience.

How to Obtain No Credit Car Loans

Did you know that approximately 45 million Americans have no credit score at all?

If you’re part of this group, you might think that it’s impossible for you to get approved for a car loan. That’s not exactly true, though.

There are lots of loans out there designed for people with low credit scores, as well as those with no credit score.

Read on to learn more about no credit car loans and how you can increase your chances of getting approved for one.

No Credit Car Loan Minimum Qualifications

If you have a bad credit score or no credit score, you can still qualify for a car loan. You just have to make sure you meet some other basic qualifications, including the following:

  • Have a gross monthly income of at least $1,500
  • Provide proof that you are a legal U.S. or Canadian resident
  • Provide proof that you are at least 18 years of age or older

If you have filed for bankruptcy in the past, you may also need to complete some additional paperwork to show that you authorized to purchase a car.

Many car dealerships also work with specific lenders to provide financing to people who might not otherwise qualify for an auto loan.

When you begin looking to purchase a car, consider asking the lender which dealerships they work with or recommend purchasing a car from.

Increase Your Chances of Approval

If you meet these minimum qualifications, there’s a good chance your auto loan application will be approved.

There are some other steps you can take to increase your chances even more, though, including the following:

Check Your Credit History

You may think you have no credit history, but it’s a good idea to double check before you apply for an auto loan. You might find out that you do, actually have a credit score.

Checking your credit report also allows you to notice and correct any errors that might affect your credit in the future.

Set a Budget

Figure out how much money you are able to spend on a car before you apply for a loan, too.

Think, specifically, about what you can afford to spend each month on the car and insurance. Don’t forget about maintenance and gas, too.

Doing these calculations and putting together a budget first will help you figure out how much money you should ask for when you fill out your loan application.

Consider a Higher Down Payment

You’ll have an easier time getting approved for a car loan — even if you don’t have a credit score — if you’re able to put down a larger down payment.

This makes you a more credible lending candidate. It will also help to lower your monthly car payments, so it’s a good strategy for every car buyer to use.

Consider a Co-Signer

You can also increase your chances of getting approved if you find someone who can co-sign your loan.

A co-signer is someone with a high credit score who agrees to take over your loan payments if you default.

Having someone co-sign your loan can help to bring down the monthly payments and give you better terms and interest rates.

A co-signer is a great option to consider.

Just keep in mind that it’s a big responsibility, and it can be difficult to find someone who’s willing to co-sign your loan. You may have to ask a few different people before you get a “yes”.

Gather Appropriate Documents

Make sure you have all the necessary documentation ready to go when you apply for your auto loan, too.

The following are some documents that will help you make a good case for yourself and prove that you can pay back the loan:

  • A copy of your bank statement to verify your monthly income
  • Documentation of recurring bills like your cell phone or utility bills — this helps to show that you pay your other bills on time each month
  • Pay stubs or other documents that provide proof of employment

If you can provide these documents when you’re applying for a loan, you’ll have a much better chance of getting approved.

Work with an Online Lender

You can also increase your chances of having your auto loan application approved if you work with an online lender.

Online lenders are often more flexible than traditional lenders and are willing to work with a wider range of customers.

Keep in mind that online lenders also tend to have better loan terms and rates, so it’s worth working with them even if you do have a good credit score.

Tips for Building Your Credit Score

If you want to build up your credit score before you apply for a car loan, there are a few different steps you can take, including the following:

  • Make all of your loan payments on time
  • Pay your utility bills and other bills on time, too
  • Open a credit card account and pay your balance in full each month (it’s a common mistake to assume that you should carry a balance over from month to month)
  • Don’t apply for too many credit cards or loans at once (this has a negative effect on your credit score)

Once you have your auto loan application approved, you can also use that loan to build your credit score.

If you make the monthly payments on time, you’ll start building credit and will have an easier time getting approved for loans in the future. You might also be able to refinance your loan later to get better terms.

Apply for No Credit Car Loans Today

If you don’t have a credit score but need a car, you still have options (that don’t involve taking public transportation for the rest of your life).

There are lots of no credit car loans that you can apply for.

If you meet the minimum qualifications listed above and keep these other tips in mind, you’ll have a much easier time having your application approved.

Are you ready to apply for an auto loan? If so, we can help at First Financial.

Contact us today to learn more about our auto loan requirements or to fill out an application.

Is Now the Right Time for a Personal Loan?

Making a decision about the economy

Is your job stable enough to justify a personal loan? 

Until 2012, many viewed having a personal loan as risky. Having to pay for money you didn’t have would drive a consumer further into debt, jeopardizing their financial situation.

Today, the economic outlook has changed. Economists predict that 2017 will see a slight rebound.

First: wages are actually growing. According to the Atlanta Federal REserve Board, wages have enjoyed their fastest in crease in the past year. With unemployment at a low 4.6% today, most economists explain that the U.S. is at “full employment.” As workers get harder to come by, wages will rise.

The rise in consumer spending of 3.8% in just the last six months, too, boosts the U.S. Gross Domestic Product which helps the overall economy. This may have been a result of the rise of the employee’s wages over this time also. This is highly comparative to the 3.6 percent of gain for the take-home pay, thus a noticeable drop in the savings rate. The perceptions of the individual also about sending is better than the average and this has come to be stable for the previous months of observation. It is highly likely that they would have their expenditures increasing as directly proportional to the wages that they get to receive in their respective jobs.

Another factor that can be viewed as an advantage is the construction of more houses. The more of them that are built, the lower the prices could go. Houses with lower prices than the usual average price can be a driving force for the individuals to avail, thus setting the economy to be rocketing. The apartments have the most gain for this, though. This is because multifamily starts have an increase of 14 percent over the previous year while the single family has an increase of a mere 1.3 percent.

However, if you do not feel that there is an increase in your wage over the previous months, then you should ask for a raise. The U.S. Census Bureau has already increased the median incomes during the previous year after it has its years of falling or just being stagnant. You can just as your employer to give you a raise. If not, then it are better for you to look for another company that could serve you well as you have served them.

What could this say about the economy of the country? It can be that the business all over the place is booming in such a way that it creates a great many opportunities for the employees to get their own savings and even encourage personal loans.

Unlike a housing loan or a car loan for that matter, a personal loan can be used for the tuition fees of your children, or for the expenses of your travels when you feel like paying another place a visit just for mere relaxation, or anything else that you may want in your life. Further, if you want your personal loan to be secured as you should, you will be required to have a collateral such that it could back your personal loan. Some common cases for this are having a house or a car to comply the said requirement. You can also have your personal loan unsecured, and in this case, you would not need a collateral for your loan.

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Does a Better Economy Translate into Favorable Personal Loan Rates?

We certainly think so!

As economic conditions continue to improve, Janet Yellen at the Federal Reserve Bank will increase interest rates. That means rates on all loans will increase, although not too fast and not by too much.

Those considering a personal loan should do it right now while it is still early. Most Americans have been putting off home improvements and car upgrades because of concern over the economy. The above information should give you the confidence that we are in a stable period.

 

 

Trust A+ Rated First Financial to Get You a Personal Loan Fast and at the Best Rates!

When considering personal loans, don’t forget that online lenders have the automation and reduced overhead to offer the best loans and terms. First Financial is the national leader in providing personal loans for borrowers of all types, even bad credit borrowers. Just fill out some forms, upload documents and get the money in your account in a matter of days. The Better Business Bureau rate First Financial A+ because we make customer service our highest priority.

 

 

 


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