One of the questions that you may ask yourself when you are actively seeking a new or used auto may include, how do you comparatively shop auto loans, particularly if you have a bad credit score? What are the variables you need to consider when you compare automobile loans? Each banker will most likely offer a different interest rate, length of contract, and a range of terms and conditions. The average consumer may find it difficult to decide which loan may be the correct one for them. Here are some pointers on how to compare auto loans.
Search For Loans Online
The best place to start your research and compare auto loans is on the Internet. Car dealers, banks, credit unions, and other lending institutions offer comprehensive services online to assist you in comparing quotes. Many have online loan calculators, links to loan resources and methods of comparing loans. Starting your research online can make the process efficient and easy (not to mention all the time and gas you’ll save because you’re not running all over town).
Obviously the cost of the loan is one of the most important factors when deciding on which vendor you’ll choose. The cost of the loan is determined by several factors. First is the amount of the loan itself. The more expensive the car you select, the higher the loan amount will be (assuming your down payment is negligible or non-existent). The higher the loan amount, the more you will make in monthly payments.
Decide carefully which vehicle you want to buy and whether you would like a new car or a used one, as this determines the loan amount. And if you are burdened by bad credit, you probably should choose basic, reliable transportation and put off the BMW until your credit is back up to snuff.
The second factor to consider would be the interest rate you are quoted. The higher the interest rate, the higher will be the total cost over the life of the loan. This rate will depend on various items including, but not limited to, your credit score, your past payment history, your employment record, whether any collateral is being provided and sometimes, by your appearance (another good reason to apply over the internet).
Another point to think about when you compare car loans are the types of loans that are available. A secured loan means you must pledge some type of collateral, but you will usually get a better interest rate. An unsecured loan with no collateral requirement will have a higher rate of interest. If you are suffering from a bad credit rating, which many people are in this economy, then you will most likely be offered a secured loan and/or you will have to provide a significant down payment. Make sure you also compare any fees a lender may add-on for taking out the loan, and if they charge late payment fees and/or early loan payoff fees.
All of these items can add significantly to your overall cost for the purchase of a car. Thus, to compare car loans, you have to compare the cost of each loan option offered by each banker. You cannot compare car loans considering each factor singularly, you have to consider them all together and find out the total cost over the life of the loan.