Qualifying for an auto loan follows a basic formula, and lenders compare specific factors about each applicant. Credit scores, income, work history, and down payment options improve a borrower’s chances of approval. A credit assessment is just the start, and if the applicant qualifies, the next step is accepting an offer. Smart shopping for an auto loan helps buyers make sound decisions and get a fair and reasonable deal.
Become Familiar with Your Credit Scores
Checking credit scores has never been easier for consumers, and they have apps to track their scores and any accounts listed on their credit report. To make positive changes, auto buyers review the details and find out ways to improve credit scores and qualify for more loans or better loan terms. A simple way to test their buying power is to apply for an auto loan from a reputable lender. Want a pre-approval for an auto loan? Apply at Consumer Portfolio Services now.
Space Out Applications by Two Weeks
All efforts to shop for an auto loan should be spaced out in 14-day intervals. The strategy stops a major reduction in credit scores, as each application has only minor effects on their scores.
Get A Pre-Approval If You’re Just Shopping
A pre-approval for an auto loan gives the applicant a great starting point when they’re planning to buy a car. The lender either tells them they aren’t eligible for the loan or an offer arrives showing how much is available and what payment plans are included. Borrowers don’t have to accept any offer they receive if they are just shopping around. If the application is denied, the customer reviews their credit history to better determine the reason for the loan denial and how to resolve the issue.
Calculate the Total Cost Before Accepting Offers
The total cost of the loan includes the down payment, the loan principal, the total interest, and any fees added to the loan. An itemized list of these fees shows how much each loan costs the borrower. A comparison between the offers helps the customer make a well-informed decision and find a loan that is affordable and fair.
Have a Plan for Paying an Auto Loan?
A contingency plan prevents auto buyers from facing dire circumstances that lead to the repossession of the automobile. An emergency fund is helpful, and the customer adds money each pay period to the account. If they lose their job, the savings account helps cover the payments until they find new employment.
A loved one may also take over the loan payments until the buyer is back on track. A co-signer has the same authority over the loan as the primary borrower, and if the customer cannot cover their payments, the co-signer steps in and makes decisions about the loan.
Financing a car doesn’t have to become a major obstacle. Consumers know that credit scores affect their chances of approval, and careful planning helps them prepare for the responsibility of paying off an auto loan. Trying to buy a car? Get a pre-approval from a lender now.
