Auto financing is a popular choice for individuals and families who want to get behind the wheels of their dream car without breaking their budgets. Consumer Portfolio Services specializes in helping customers buy a vehicle and make payments over a set period of time. Read on to learn more about how auto financing works and the benefits it provides.
Understand Your Credit Score
Before beginning your search for an auto loan, it’s important to understand your credit score. This three digit number is based on your credit history, taking into account factors such as debt levels, past loans and payment history. Knowing your score helps you know what kind of interest rate you are likely to qualify for, and it also helps determine whether you need to seek out subprime or near-prime lenders. Both traditional banks and specialty lenders can offer auto loans, and the best one for you depends on your credit score.
Choose the Right Loan
When shopping for an auto loan, there are several factors to consider. First and foremost, know the type of loan you need. Secured loans require collateral, such as the vehicle itself, while unsecured loans have no asset requirements. Additionally, determine the length of the loan term, whether it’s for 36 months, 48 months, 60 months or even longer. Lastly, consider the interest rate you’ll be receiving, as well as any additions such as warranties, GAP insurance and other add-on protections.
Apply for Auto Financing
Once you’ve done your research, it’s time to apply for auto financing. Make sure you come prepared with proof of income and identification, such as pay stubs, bank statements, IRS forms, etc. The lender may also request your vehicle model preference and the dealer where you plan to purchase the car. Once approved, you should negotiate the terms of the loan including the interest rate, monthly payments and down payment amount. It’s also helpful to ask about fees, as sometimes hidden costs aren’t initially included in the loan.
The Benefits of Auto Financing
One of the major benefits of auto financing is that it allows you to purchase a car for less than the full amount. For example, if you were to purchase a car for $20,000, but only had $5,000 to put down, you would then finance the remaining $15,000. Auto financing makes vehicles more affordable. It can also help build your credit rating by making consistent payments on time each month. Keep in mind that the better your credit score, the lower your interest rate and the faster you can pay off the loan.
Steps to Take After You Secure Auto Financing
Once you secure auto financing, it’s time to shop for your new vehicle. Before heading to the dealership, you should also check your credit report for errors or inaccuracies. From there, shop around for a car and compare prices from different dealers. Additionally, take your time reading through the contract before signing anything. Finally, get a copy of the paperwork and keep it in a safe place.
Make Your Auto Financing Dreams Come True
With the right auto financing plan, you can get out on the open road and enjoy your favorite cars and freedom of the road. Don’t hesitate to explore financing options if you’re considering buying a car. Your first step should always be to figure out your credit score and start researching lenders. Having the right information can empower you to choose the right auto loan that fits your budget.