If you are considering purchasing a vehicle with the help of a car loan, you will need to consider a few crucial factors to ensure that you are able to qualify for the financial assistance. This is because lenders determine the approval of your application according to qualifying criteria. While it is vital to have a good credit score, there are additional qualifying criteria that will determine whether or not you will qualify. Before applying for financial assistance, you should consider these top tips.
The Importance Of Your Credit Score
It is vital to have a good credit score in order to qualify for financial assistance in the form of vehicle finance as lenders expect a credit score of 670 to 730 as an essential qualifying criterion. Your credit score will determine how reliable you may be in terms of making regular payments and conforming to the terms and conditions of your car loan. If you have a low score you may want to consider taking measures to boost your credit score.
Find The Best Deal
It is best not to settle for the very first car loan you qualify for as there are likely better deals available. Money Expert offers great services that you will find useful for comparing car loan deals. It is recommended to practice patience while comparing deals to establish financial assistance that is most appropriately suited to your unique situation.
Determine Affordability
While comparing deals will help you gain clarity as to the realistic amount that you should budget for repayments. Before applying for the best available deal you should determine your affordability. You will need to have a stable form of income as an additional qualifying criterion that is expected although you will need to establish that your income is capable of accommodating the repayments before you can apply.
Get Preapproved
Once you have established affordability and located the best deal you can apply for preapproval. You will need proof of identity as well as proof of residence and income for the application process. This will help you establish the relative interest rates offered by different lenders. It is best not to apply to multiple lenders within a short period of time as this will negatively affect your credit score. This means that you should compare deals and only apply for preapproval with suitable lenders.
Down Payment Or Trade-In
To reduce your monthly repayments and your interest rate you can consider making a down payment or alternatively trading in your current vehicle. In the event that you opt for a trade-in, the car dealership will be able to reduce the sales price of your new vehicle by the value of your current vehicle. With this in mind, it is vital to maintain the value of your car to ensure that you are able to receive a good offer when trading in. However, it may be a more suitable option to consider selling your current vehicle to a private buyer as you would usually be able to receive a larger amount, which you could use a down payment.
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