The factor that will have the most impact on the interest rate for a guaranteed car loan is your FICO credit score. Your FICO score is based on certain credit behaviors and patterns, such as the credit you have had extended to you, the amount of credit that you had extended to you that you used, the amounts that you paid back, and most importantly, the timeliness of your monthly payments. It will also reflect any bankruptcy proceedings that you have been party to, as well as unpaid bills and other delinquencies. The lenders study your credit report, and if it is good they will offer you lower interest rate, and if it is bad then you will have to settle for a higher rate.
You are entitled to one free copy of your credit report from all major credit bureaus each year. However, you may have to pay additional charges to get your updated score from them when you want to check it before applying for a loan. It is possible to any inaccuracy in the report with the credit bureau. It is very important that you make sure everything in your credit file is accurate, including your name, address, social security number, employment and payment history on all of your credit accounts. If you find anything that is incorrect, send a letter to the credit bureaus and dispute the information immediately.
When a negative remark is removed from your reports, your credit score will go up and you will be eligible to lower interest rates. Also try to improve your score by paying as much as possible toward eliminating your current debt prior to your application. If your debt to income ratio is too high, the lending institution may feel that you are unable to pay the car loan back.
If you are planning to apply for a car loan, avoid applying for any other type of credit for a period of 6 months to a year. Each time that you apply for credit, it reduces your FICO score. And, if too many requests for credit are made within a short period of time, it could make the lending institution wonder why you have been requesting so much credit and may be less likely to approve your car loan.
If careful, an average consumer could save over 1,000 UK pounds over the life of a typical guaranteed car loan. A lack of knowledge of the finance market has long prompted car buyers to simply take the high car loan rates offered them by dealers. Some dealers have pressured or manipulated buyers into believing they had to accept dealer terms to get their car. Others have just benefited from the fact that buyers were unprepared with knowledge of their options. For example, taking a secured loan can lower the interest rates significantly as you are taking a loan against collateral.
It is possible to save even more money on your guaranteed car loan by going with an online lender. Online lenders have historically lower interest rates than traditional credit unions and lending institutions. Additionally, online lenders give you the freedom of applying online from the comfort of your home or office at any time.
With the increase of online brokers and independent loan specialists, consumers are in a better position than ever to find great loan products at the best rates. Borrowers with excellent or poor credit can work with an independent loan specialist to find out what loan products, terms, and interest rates are available. Taking care of all these factors makes getting lower interest rates for your loan much easier.
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