Getting the Best Used Car Auto Loan

It's not a matter of filling in blanks and making sure you spell your name correctly, but more a matter of answering important questions and letting the lenders know who you are as a BUYER. The banks want to see what you will be able to provide for them. It's the bank's job to protect their investment, so it's your job to sell them the loan.

• Know your credit score. Typically, if your credit score is above 670, you would be considered a prime buyer by many lenders. As a prime buyer, you can choose the best bank for you based on who is offering the lowest available APR. Conversely, if your score is at or below 670, you would be considered a secondary customer.

  People with challenged credit will pay higher interest rates and not have as many choices and options for used car auto loan terms. Some banks rely heavily on your credit score as a beacon where as others don’t depend on it as much. Regardless, it is very important. It may not be the most important factor to some banks, but it opens the door for everyone.

• How much existing debt do you already have? Many lenders will closely examine the debt that you already have and make judgment based on that. TIP Many people say, “I have never made a late payment. I should have perfect credit and no problem getting a used car auto loan.” Making payments on time is just one of the many variables that affects your credit. When it comes to applying for used car financing, having an excess amount of credit can actually be detrimental.

  For example; John has 5 credit cards with $2500 limits. Chris has 2 credit cards with $3000 limits. Both have similar credit scores. When they both apply for auto loans, Chris will get a better APR and better terms than John. The reason for this is that Chris has lower debt than John.

  When looking at your debt, try to examine how much credit you already have and also look at your Debt to Income Ratio. This is the ratio between how much you owe (in dollars) and how much you earn a year. Make sure that you can provide recent pay-stubs or any other proof of income. It may come in handy.

• Anything else? Consistency is key. If you have worked at one job and lived at one residence for a steady amount of time, you may stand a better chance of landing a used car auto loan than someone who jumps from job to job and apartment to apartment.

  Also, make sure that you can provide a land-line in order to contact you. Many lenders will disapprove of using a cell phone or an email address as a primary means of contact.