Bottom Line | auto loan rates

November 27, 2010

How to Find the Best Interest Rates For a Car Loan

Filed under: Finance — Tags: Automobile Sales, Best Car, Bottom Line, Car Dealerships, Car Loan Interest, Car Lot, Current Rates, Economy, Interest Rates, Loan Agreement, Loan Interest Rate, Looking For A New Car, Money, Regard, Time Lows — @ 1:40 am

Tommy Hilligan asked:

Are you looking for a new car? Perhaps you are trying to locate the best car loan interest rate available today? If you are there are a few things that you should understand when trying to locate a source of financing at the lowest possible interest rate. Here are a few tips on how to find them quickly and easily. The first step is to begin your research. When looking for rates that will make your loan affordable, you must remember to never accept the initial interest rate that is presented to you. This is because car dealerships are designed to make money. Regardless of the state of our economy, and even though interest is at all-time lows, businesses are still out to make a buck and will do so if you are not careful.

The next step is to locate a source of secure financing. If you work for a company that is part of a credit union, this can actually help you in regard to securing the monthly payment you are seeking. Some of them can even help you in the car buying process because they have dedicated professionals that are there for exactly that reason. Finally, before making any decision, look at the current rates that exist today. If you can lock in something that is below what is publicly publicized, you will probably have nailed a great deal. It depends on how desperate the company that you are purchasing from is.

For instance, if you go to a used car lot that is hurting because automobile sales are at all-time lows, they may make a significant deal just for you so that you can drive away with the vehicle that you want and at the same time they will have a monthly payment that will help them stay in business. The bottom line is to always be smarter than the person you are coming up against. This includes the salesman, the manufacturer, and of course the person trying to get you to sign on the dotted line of the loan agreement. If you can maintain a level head, and not react based upon the emotion of the situation, you will end up with a super bargain that will allow you to have the vehicle you have always wanted.

Paul

Comments (0)

July 20, 2010

Why Are Interest Rates Higher on Auto Loans With Bad Credit?

Filed under: Finance — Tags: Auto Financing, Bad Person, Bottom Line, Collections, Credit Score, Financial Situation, Insurance Companies, Interest Rates, Landlords, Loans With Bad Credit, Losses, Staff Expenses, Strict Guidelines, Sub Prime Lenders, Types Of Loans — @ 10:32 am

Scott Stanko asked:

When your credit score gets below a certain point you may have to turn to sub prime lenders for your auto financing needs. As you apply for these types of loans you will notice that their interest rates are considerably higher than your traditional lending sources you have used in the past. Although it may feel like it, sub prime lenders do not charge higher rates just because they think you are a bad person, or to punish you for your current financial situation. There are some very real and calculated reasons that the rates are higher on these types of loans.

1) Higher Risk Of Loss- Sub prime lenders have much larger default rates as a percentage than regular prime banks do. When a lender has high default rates they have to charge a higher rate of interest on all their loans to help off set the losses they incur on the defaults. Banks are in the business of making money and charging higher rates allows them to collect more money in interest up front and hopefully remain profitable after the losses they incur. If they were to charge low rates on all their loans and still incurred the same amount of losses they would go out of business because the losses would exceed the income that their loans generate.

2) Higher Collection Costs- When a lender has higher default rates they also incur higher collections expenses. Repossession, legal, title, and staff expenses all increase when you have large amounts of loans that default. All these expenses affect the lenders bottom line.

3) Verifications- Sub prime lenders have very strict guidelines that they have to follow. Before any sub prime lender will disperse funds on a loan they will verify all the information you provide on your application. Staff is needed to contact employers, landlords, mortgage companies, and insurance companies. This can be a long and tedious process that takes time and hourly employees.

As you can see there are some very real expenses that sub prime lenders incur as cost of doing business. The best plan is to make timely payments on this loan and as your credit score starts to rise look to refinance through a prime lender at a lower rate in the future.

Juan

Comments (0)