Car Loan FAQ’s
While many people would love to walk onto a car lot, have their pick and pay in cash, this is not something that happens all too often for people. Generally, people have to secure an auto loan in order to have the vehicle of their dreams. A car loan can be a little intimidating, especially if you do not have much experience with these types of loans. You want to make sure that you learn as much as you can about the process before you even get started. The more educated you are, the better chance you will have at getting the get car loan possible.
How Can I Qualify?
There are many factors that get involved when someone tries to qualify for a car loan. A credit history report will be pulled, as this is often what is used to prove what the applicant can and cannot afford. There are other factors that are taken into consideration as well, such as the loan to value ratio along with the age of the vehicle.
What Is A Good Interest Rate?
Believe it or not, there are some vehicle loan companies out there giving interest rates as high as 19 percent. This is not good however. The good interest rates would be in the range of 5 to 6 percent. Someone with almost perfect credit might even be able to find lower interest rates during special events. There have even been cases where people have been able to drive off the lot with a new car, paying 0 percent interest.
How Long Does The Car Loan Last?
Each loan is a little different but the most commonly seen terms range from 36 months to 72 months. Five years is generally the term that most people find works for them. If you are able to get a loan stretched for 72 months, you will have lower car payments but in the end you pay more because of all of the combined interest fees that you pay over the course of the loan.
What Can I Do If I Am Denied?
If you find that the initial application for a car loan is denied, there may still be a solution. Talk to someone in charge at the car dealership and ask if there are any conditions that can be applied to make you eligible to get the car. This might mean a larger down payment, a cheaper vehicle or a co-signer.
If I Miss A Payment, What Happens?
When payments on the car loan are missed, there will be a report made to the credit agencies about your late payment. Also, when you do not pay for the loan on time, it goes into default. On new cars, lenders will usually start the repossession when the loan becomes 60 or 90 days past due. The exact time it takes for a lender to take action will vary, depending on their rules and policies.
Now that you are a little more informed about the loan process for a car loan, you can begin car shopping. Just make sure that you are asking more questions if you find that you are still not understanding something because the last thing you want to do is to sign for something you do not understand
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