What advice should you get from a car loan expert?
If you could talk directly to a car loan expert what would you ask? We thought about this and came up with some powerful questions and answers for them.
Should I get a loan from a car dealership?
Salespeople at a car dealership only want to do everything they can to sell as many cars as possible. They will typically try to focus a potential customer on the amount that they will pay for a car per month and not discuss the loans terms, which they might not even know. A better way is to get pre-approved for a car loan and then go to a shop for the car that you want.
How do I find the best deal?
An informed consumer shops around a little to compare rates. It is important when requesting a loan from more than one place that all the lenders are asked only make a soft credit history inquiry for credit evaluation purposes; otherwise, each hard inquiry with a loan commitment will lower a person’s credit score.
The safest way to avoid ruining your credit score is to work with a specialist in car loans that has affiliations with all the major banks and car lenders. They will conveniently shop the loan for you to get the best rate with no negative impact on your credit score.
What are the minimum eligibility requirements for a loan?
The eligibility requirements differ between lenders. In general, a lender looks at a person’s credit history and credit score, verifies income, and calculates a debt-to-income ratio to make sure the borrower has sufficient income to make the loan payments. Just because you are turned down by one lender does not mean that all other lenders will make the same decision.
How do I get the lowest interest rate?
This is another very important question that you should ask a car loan expert. In brief, the lowest rates are given to those with the highest credit scores of 750 or more. A better rate may be possible by putting down a significant down payment or having a co-signer on the loan to lower the risk for the lender.
How do I get a rate discount?
You should always see if there is a discount available. Some lenders offer a rate discount for people from certain groups (military, retirees, etc.) and for those that make automatic loan payments from their bank account. Also, at some places, if you have a perfect credit score. Inquire your car loan advisor about this today.
How much do I qualify for?
The amount you qualify for depends on your credit history evaluation, credit score, income, source of income, and your ability to repay. Loans for a median-priced new car of around $40,000 are regularly approved for most people.
How do I know if there are any hidden fees?
Ask the lender’s representative to disclose any origination fees, monthly payment-processing fees, late payment fees, other fees, and any prepayment penalties. Read the loan contract very carefully. Seek legal counsel to read it if necessary. Do not rely on any verbal statements.
Do all lenders report my payments to the credit bureaus?
Ask the lender’s representative about this. Most, but not all lenders, report payments to the two Canadian credit bureaus of TransUnionCanada and Equifax Canada. You can always get reports from them to see for yourself your ratings.
What are the best payment terms?
Payment terms for car loans range from 12 to 84 months. If there are no prepayment penalties, a car loan expert would advise to take the longest term possible and then have the flexibility to pay the loan off faster by making extra payments. In this way, the loan payments can be kept current with the lowest monthly payment possible, which helps if there is an unexpected financial crisis.
What you should walk away with.
Those are the most important questions we could think of and should help you get a good car loan. Take your time to get pre-approval for your loan. Then choose the car you want. Read the loan documents carefully. Ask the lender’s representative or the loan referral service any other questions you may have before agreeing to sign the loan documents to avoid any surprises later. In the end, you should be walking away with the answers to all of your car loan related questions.
