Every person borrows money on credit. A loan on your name marks your progress. It also shows your appetite towards a luxurious life. Thanks to the lenders, borrowing money for a new car isn’t difficult at all.
Although, what bothers people are the interest rates that the lenders charge. It is inversely proportional to your credit rating. It means the higher your credit score; lower will be the interest rate on the auto loan.
What are the Benefits of obtaining Low-Interest Rates on Auto Loans?
Let’s understand how low-interest rates on auto loans can leave you tension-free and make your life pleasurable.
· You can buy Expensive Cars
You can buy expensive and luxurious cars without any worry. The reason is simple. As you get low-interest rates, you need not take tension of a large down payment in order to minimize the loan amount.
So, you need not to worry about saving up too much money for the down payment. Just pay a nominal amount and obtain an auto loan for the remaining amount.
· You won’t end up paying more Money
Let’s take an example to understand the number game easily.
For a loan of $10,000, with an interest rate of 15% for 10 years, you pay a total amount of $19,360.19. It means you pay more than $9000 in the form of interest. If the rates of interest reduces to 6%, the total amount will come down to $13,322.46.
It is simple to understand how the total payable amount differs with a simple change in the interest rates. Hence, become a credible and punctual credit borrower. In return, you will be able to enjoy low rates on your next loan.
· Lenders will trust you
Every company values a genuine customer. If you make payments regularly, you will never face any difficulty in getting an auto loan. Lenders will stay in touch with you and provide you with special discounts as well as cash benefits for buying a car.
Your punctuality will earn you respect and trust of lenders. They will understand your situation and provide you with other benefits such as relaxed lending terms, higher LTV ratio, etc.
· You can apply for Multiple Loans
The best thing about low-interest rates is that you can apply for multiple auto loans without any tension. Whenever you feel like buying a new car for your family member, you will have no problem in getting approval from a lender. Also, you will be able to make the purchase at affordable rates.
Nobody likes to borrow less money and pay more in the form of interest amount. So your priority should be to lower the interest rates. And, here’s how you can achieve your goal:
1) Always keep a check on your credit score – It is a crucial measure for lenders that enables them to judge your credibility.
2) Convey your sincerity – Be confident when you face the lenders. Also, try to convey your sincerity by explaining your plan of making regular payments.
3) Never miss payments – Making payments on time is the key to become a good credit borrower.
4) Be on the move – Your credit behavior determines your growth. So, apply for multiple loans, make payments regularly and do not let your bank account sit idle.
5) Do you have a low FICO score? -You should start by applying for an auto loan of a smaller amount. Repay it on time, build your credibility and carefully nurture your credit score. Make payments regularly and improve your credit ratings. In return you’ll be able to enjoy low-interest rates on your next auto loan.
Considering the interest rates is a very important aspect of the car buying process. Remember that low-interest rates on auto loans can make your life pleasurable. So, strive hard to convince the lender and ensure that you he provides you with a better deal.
When it comes to obtaining low-interest rates on auto loans, choose the reputed auto financing company of Fast Auto Loan Approval. It has a record of providing easy auto loans to people with low-income. Apply now to enjoy buying car without down payment.
Today, everyone needs a mode of transport to commute comfortably. And, cars have become a necessity to commute from home to work. But when you step out to buy a car, you will realize that it is easy to make a purchase with an excellent credit score. But, what if you have a bad credit score? Or, what if you are a first time buyer with zero credit history? Do not worry. You can still buy a car and improve your credit score with subprime auto loan. It is an effective way to begin the credit rebuilding process.
Everyone Cannot Fit into the Prime Category
Prime borrowers are people with excellent credit scores. They are likely to pay off their dues on time. So, lenders prefer to work with them and do not hesitate in providing them with low-interest rates and flexible loan terms.
Everyone wants to enjoy the benefits available to a prime borrower but it is not an option for bad credit car buyers. Subprime auto loan is available for those people who have bad credit or zero credit. The loan provides you with an easy way of improving your credit score.
Work Hard Today, Reap Benefits Tomorrow
As you are a subprime car buyer, you may find it difficult to obtain an auto loan. But with a subprime auto loan, your credit score cannot stop you from buying a car. In addition, you will get an opportunity to improve your credit score by making timely payments. Consider these points before you apply for the loan:
· Save Money for a Down Payment
It may be difficult for you to arrange money for a down payment. But, you can ask a friend or a relative to help you with it. It is essential because it will reduce the loan amount and enable you to lower the interest amount as well. There are additional benefits of a higher down payment such as obtaining better interest rates and ensuring higher chances of approval.
· Read between the Lines
There may be some understated clauses in the loan agreement. It is wise to read the agreement with caution. Clarify the terms and conditions with the lender. And before finalizing the deal, make sure that you are well-versed with the agreement.
· Be Flexible
Pick out the right car that suits your budget. As you are a subprime car buyer, you may have to settle for a low-priced car. It is essential to choose a cheap car. It is because a lender is likely to approve a car for which you can afford monthly payments. So being flexible in choosing the car will help you in easing the loan process.
· Be Regular
Keep a healthy habit of making the payments on time. The timely payments will look good on your credit report. It is a great way of buying a car and improving your credit score at the same time.
When your credit score is not good, you may be turned down for an auto loan. But don’t worry because subprime auto loan is there to help you out. Remember that you can drive down the road of credit recovery with the help of the loan.
Apply for subprime auto loan with RapidCarLoans and get ready to enjoy a quick financing process. Get in touch with the bad credit guaranteed auto loan specialist today.
With the rising delinquencies, one thing is sure, the lenders have become skeptic about lending money to people with credit issues. Now, they are more cautious regarding their investments and need an assurance before lending money to anyone.
Does it mean that a person with low FICO score or zero credit history won’t get an auto loan? Of course not. The credit borrower only needs a helping hand in the form of a cosigner to support his loan application. So, let’s get enlightened about a cosigner and how he will affect your loan application.
Who is a Cosigner?
A cosigner is a person who signs the loan documents along with the credit borrower. He is obligated to pay for the auto loan if the credit borrower fails to repay the borrowed amount.
The lenders see a cosigner as a guarantee for regular loan payments. That’s why; having a cosigner by your side will support your loan application positively.
When do you need a Cosigner?
When a credit borrower has credit issues such as a bad credit history, a zero credit score, repossession in the past, etc., the lender will be reluctant in approving his loan request. He will require a cosigner to provide guarantee of regular monthly payments.
If you fail to make timely payments or decide to avoid them, the cosigner will have to shoulder the responsibility of the loan amount and he will have to pay it to the lender.
What are the Eligibility Criteria for a Cosigner?
A person with a very good credit history and a high FICO score is considered as a strong contender for becoming a cosigner. A friend, a family member, a neighbor, etc. is eligible to become cosigner for your auto loan.
Remember that the cosigner must be enlightened regarding the loan terms and payment schedules. And most importantly, he should support your loan application willingly.
What are the Advantages of having a Cosigner?
· Your loan application will get approved easily as the lender will enjoy the necessary trust and with the help of the cosigner.
· Despite your credit issues, the lender will provide you with low-interest rates because of the cosigner.
· Making timely payments will boost your credit score and put an end to your credit issues.
· The lender will not scrutinize your financial details and raise unnecessary queries.
· Getting auto loan approval becomes easy.
A cosigner is a helping hand that will ensure quick and definite auto loan approval. So, find someone who can become your cosigner and apply for an auto loan without any tension.
We all might have experienced a situation where a friend or a family member asks you to become a cosigner. Before saying yes, it is best to know what you are getting into. Typically, when you consider cosigning for an auto loan, you are agreeing to repay the loan amount if the primary borrower stops making payments. While you agree to it, the risks outweigh the benefits. You may consider it as a way of improving your credit score, but do not delve into it before fully understanding the risks associated with it.
Risks associated with Cosigning an Auto Loan
1) Damaged Credit Score
Earning a good credit score requires decent effort. When you become a cosigner, any form of delay or non-payment of the auto loan will reflect on your credit report. Inability of the primary borrower to make the payments can decrease your credit score. Also, your debt-to-income ratio increases when you become a cosigner. Ideally, a debt-to-income ratio should not be higher than 36 percent. Being a cosigner increases your debt against your income. And, your credit score decreases due to increased debt amount. Therefore, if the borrower has a poor credit history, rethink your decision.
2) Enforceable Legal Judgments
When the primary borrower is unable to repay the loan, the lender may take legal action against the cosigner. Also, there is a high probability that you are sued before the primary borrower. It is because you are likely to repay the loan amount fast in order to protect your credit score. In case, the primary borrower is unable to repay the loan, a cosigner’s assets and salary can be in jeopardy as the lender can claim his assets.
3) Reduced Credit Ability
When you are a cosigner, other lenders see you as someone who has already agreed to guarantee a loan. The lenders assume that you are already making monthly payments on the loan you have cosigned for, thereby leaving little money to make payments for a new loan. Thus, a new auto loan approval might become difficult for you.
Does it make sense to become a Cosigner?
While it may not be a financially sound decision to become a cosigner, you can agree to it when you are in a position to afford the risk. If you have a good amount of surplus cash or possess substantial assets to repay the loan amount of the primary borrower, you can think about it. Also, if you will be using the car, it makes sense to say yes.
Cosigning an auto loan may look like a lucrative method to improve your credit score. However, it can mean all risk and no reward when you have to deal with a damaged credit score, enforceable legal judgments and reduced credit ability.