You're in the market to buy a new car and that's great. Today most everyone buying a new vehicle will need some form of auto financing and if you find your personal finances or credit are less than perfect, you can still get a very affordable car financing if you know how.
An informed car buyer is a smart car buyer. When you know your auto financing options and you have your car financing set up and approved before you talk to any sales person, you can walk into a car dealership and negotiate a better deal on your terms without feeling intimidated, regardless of your financial situation.
If you know that you have certain credit challenges, you should understand the differences between bad credit car loans and guaranteed auto financing.
Bad Credit Car Loans...
Bad Credit Car Loans typically have been available through new car dealerships on the purchase of a new car or a pre-owned certified used vehicle. The actual auto loan financing paper-work is handled at the dealership but in general, the bad credit car loan finance contract is sold off to another lender. That lender will maintain and service your loan. Loans typically have a term of 24 months up to 60 months. The downsides to a bad credit car loan are that many franchise car dealerships are not set up to arrange these type loans in-house, interest rates and cost can vary widely and limit your auto purchase choices.
Guaranteed Auto Financing...
Guaranteed Auto Financing differs from a bad credit car loan primarily in that this type financing is offered directly by smaller or independent auto facilities. Your finance contract is provided by the actual auto wholesale dealer and the loan is paid directly to the auto dealer that sold you the car. In other words, you would be financing your car purchase from the company that owns it and sold you the vehicle. Guaranteed auto financing is used for the purchase of used or pre-owned vehicles and not typically for purchasing a brand new car or truck. Loan terms are shorter than more conventional auto loans and they rarely offer terms over 36 months.
The big advantage to guaranteed auto financing is that often no credit check is required to obtain this financing. Payments are normally made weekly and sometimes in person. One disadvantage to this type of auto loan is that many car dealers providing guaranteed auto financing will never report your credit to the credit bureaus. So if you're making payments regularly and establishing an excellent payment history, this will not be reflected in improving your personal credit profile or your credit score.
Monday, January 10, 2011
Best Auto Insurence
Purchasing a car will not only give you transportation and greater freedom, it is an opportunity to invest in an asset and build your credit rating if you take out a loan. Choosing car finance brokers to help you secure the loan you need means you can get the best possible deal, securing a rate or loan option that may not have been available to you if you had applied directly to a bank or lender on your own.
Understanding Car Finance
A car loan can be a great option if you are buying your first vehicle or you are upgrading to a newer car. When borrowing to buy a car there are generally two types of loans, secured and unsecured. A secured loan is one that is lent against the value of the car. This type of loan is limited based upon the value of the vehicle being purchased, as well as regular loan restrictions such as income, repayment ability and so on.
The other type of car loan is an unsecured loan or personal loan. This option requires demonstrating your ability to repay the loan and a good credit history, but the actual car is not listed as a particular security against which the money is lent to the borrower. Different rates of interest are offered based upon the type of loan taken out - and there is often the opportunity to select between variable or fixed interest rate when securing a loan.
The Benefit of Using a Broker
There are a number of benefits to using a broker. Firstly, the broker can give access to deals that you might not be able to take advantage of if you apply directly to the bank or lender. As a professional with an established relationship and network of contacts within the finance industry, the broker can help you to secure the most suitable loan for your particular situation. Secondly, a broker may be useful if you need someone to help you with securing a loan if you have unusual circumstances that might make it difficult if you applied directly to a lender. This could mean someone who is self-employed, has a bad credit history or has previously defaulted on a loan.
Hints for Finding a Broker
Choosing car finance brokers should be about finding someone that is able to help you secure a loan and someone who understands your particular financial circumstances. The broker can then make contact with lenders on your behalf to help you find someone who is willing to lend you money to purchase your new vehicle. You may also find it useful to do some due diligence and find a broker with a stable background and solid reputation, as you may need to divulge some of your personal financial information to the broker in the course of the loan process.
Understanding Car Finance
A car loan can be a great option if you are buying your first vehicle or you are upgrading to a newer car. When borrowing to buy a car there are generally two types of loans, secured and unsecured. A secured loan is one that is lent against the value of the car. This type of loan is limited based upon the value of the vehicle being purchased, as well as regular loan restrictions such as income, repayment ability and so on.
The other type of car loan is an unsecured loan or personal loan. This option requires demonstrating your ability to repay the loan and a good credit history, but the actual car is not listed as a particular security against which the money is lent to the borrower. Different rates of interest are offered based upon the type of loan taken out - and there is often the opportunity to select between variable or fixed interest rate when securing a loan.
The Benefit of Using a Broker
There are a number of benefits to using a broker. Firstly, the broker can give access to deals that you might not be able to take advantage of if you apply directly to the bank or lender. As a professional with an established relationship and network of contacts within the finance industry, the broker can help you to secure the most suitable loan for your particular situation. Secondly, a broker may be useful if you need someone to help you with securing a loan if you have unusual circumstances that might make it difficult if you applied directly to a lender. This could mean someone who is self-employed, has a bad credit history or has previously defaulted on a loan.
Hints for Finding a Broker
Choosing car finance brokers should be about finding someone that is able to help you secure a loan and someone who understands your particular financial circumstances. The broker can then make contact with lenders on your behalf to help you find someone who is willing to lend you money to purchase your new vehicle. You may also find it useful to do some due diligence and find a broker with a stable background and solid reputation, as you may need to divulge some of your personal financial information to the broker in the course of the loan process.
