Searching for Auto Loans: Some Tips

by : John Mcfadden

Very few people use their own funds when they decide to buy a car but how much do you know about auto loans? This kind of loan is widely available and increasing numbers of people are applying for it as they are secured by liens on the automobiles being financed; as payments are made, the loan gradually reduces in favor of the borrower. Before you can decide on the type of car you want you will need to ascertain your budget level; then it just a simple matter of carrying out a search online.

The best way to search for a car is using the many online services now available which speed up the search tremendously as all you need to do is enter the type of car and budget and the search engines can do the rest, all without leaving your home. If you have a specific car in mind but the amount you can borrow won't cover the cost of a new car then why not go for the same model but a couple of years older and get a real bargain. Despite the ease with auto loans can be obtained, they can be refused if the applicant has a bad credit record so check to make sure there aren't any problems first.

After reviewing it find out if there is anything that needs to be fixed as a bad credit or any error may affect your rate and you may have to pay more interest. To take advantage of preferential interest rates, applicants need to have a score above the 550 mark; those below this level will probably be charged more if they do not clean up their record. Auto loans are available through many different sources including your bank, the internet, credit union and of course the car dealership themselves but rates will vary so shop around for the best deal.

Although it is a good idea to keep your monthly repayments low, this is only one thing to consider and low repayments now may mean increase costs later on. Do not fall into the trap of believing that the lowest monthly repayment is going to be easiest in the long run as the overall loan cost will probably be greater. Protection insurance can be a good idea and you will often find that interest rates may be slightly lower; the finance company does not have the same risk if protection is in place, should anything happen to the borrower.

Most car dealerships will offer a rebate against the car if you decide to take out their finance package and this is a worthwhile action to take; however, there is nothing stopping your from applying for finance at a lower interest rate online once you have received the rebate. It is quite normal for lenders to make charges when a loan is arranged but neither E-Loans nor Capital One Auto Finance make any charge and these are both available online. You will find the best interest rates, unsurprisingly, from internet based finance companies and these are the rates that car dealers must try to better.