There are basically three components to a loan. TRUTH IN LENDING requires creditors to give you certain basic information about the cost of buying on credit or taking out a loan. These “disclosures” can help you shop around for the best deal. The amount you will finance (principle), the interest rate you will pay (APR - annual percentage rate), and the duration of the loan (term). Payments are usually made in monthly installments over a set period of time.

Even when you understand the terms a lender is offering, it ’s easy to underestimate the difference in dollars that different terms can make. Suppose you’re buying a $7,500 car. You put $1,500 down, and need to borrow $6,000. A difference of one year shorter in the term of the loan can mean almost a $500 savings. A mere difference of 1% APR of a loan can save over $100.

Lenders must tell you the total finance charges, when the finance charges begin, and the method they use to figure the balance on which you pay a finance charge. The most common method is the average daily balance method. Be aware that the amount of the finance charge will vary considerably depending on the method used, even for the same pattern of purchases and payments. Study them carefully; they can significantly affect your finance charge.

Dealer Financing

Getting a loan from the dealer directly is probably the easiest to get. Many dealerships have several relationships with banks and other lending institutions, which specialize in a wide range of lending products. Car buyers with excellent credit, buyers with bad credit, buyers with no credit, zero down, zero percent, and so on. This is very attractive to many buyers, but can also be confusing. The best strategy for a car buyer is to get a pre-approval loan from their local bank or lending institution outside of the car dealership. This will give you the upper hand when bargaining for a lower rate with the dealer.

Home Equity Loans

With interest rates being at record lows and the recent huge appreciation in home values, many homeowners should consider a home equity loan or an equity line of credit when buying a car. Home equity loans are fixed or adjustable rate loans that you repay over a predetermined period. Home equity lines of credit are open-ended, adjustable-rate revolving loans with a maximum credit limit based on the equity of your home. Home equity loans tend to have lower interest rates than credit cards and other types of personal loans. Interest payments on home equity loans may also be tax-deductible up to a certain extent. Home equity loans and home equity lines of credit use your home as collateral, so make sure you are financially capable of paying the monthly installments if you don’t want run the risk of losing your home.

Credit Cards

Many credit card companies are offering low interest rate loans, no fee cash advances, and even 0% interest rate loans. These are usually introductory offers for first time customers in an effort to entice you to do business with them. Read the offer carefully. In particular, look out for fees, interest rate and how long the offer is good for. Some offers are good for the length of the entire initial advance, while others are guaranteed for a shorter initial period of time.

Credit card advances are unsecured and they generally have higher interest rates than home equity loans, traditional auto loans or dealer loans. Financing your auto purchase through credit cards could also leave you vulnerable to hefty penalty charges if you make a late payment or exceed your credit limit. Don’t hesitate to call the credit card company with questions about their offer. Be up front and honest about your credit situation and what you are planning to do with the money. With careful planning and the right offer, you can secure excellent terms and save thousands.

About the Author

Robert Rogers is a writer in the Washington DC area. For more free tips and resources, visit his website

Car Donations Guide

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If you thought getting an auto loan with a poor credit is a mission impossible, think again. The mission IS possible! A large number of Americans have woken up to this fact and are proudly displaying their brand new car purchased with the help of an auto loan despite an unimpressive credit score. So, if they can get it, why can’t you?

Look Before You Leap

What is the biggest mistake that bad credit holders make? Well, they get too carried away with the good news to examine the fine prints of the auto loan contracts. Some even close deals knowingly and end up in a debt trap. They are too short-sighted to look at the far side of closing the deals, which results in accumulation of debts on credit cards and a poorer credit score, as they focus on paying off the auto loan and the debt to income ratio gets skewed.

Auto Loan Is Not An Obligation

You suffer from a bad credit and somebody agrees to give you an auto loan doesn’t mean that you are obliged to them and accept extreme terms and interest. Nowadays, there are hordes of credit unions, banks, and financial institutions with programs meant exclusively for bad credit holders who wish to obtain an auto loan.

3 Ways To Grab A Satisfying Auto Loan

The catch is to hold a strong negotiation position in order to get an auto loan with a poor credit, or defaults, or even a bankruptcy record on your credit. Your aim should be to get the best deal possible. Here are 3 ways to get it.

Provide a substantial down payment: Lenders are aware that if you invest a significant amount on the car, you will be keener to cancel the auto loan, as major part of the car is already under your possession and because of repossession, you are at risk of losing it.

Therefore, the more the down payment you make, the lesser the risk for your auto loan lender. And in turn, you will pay a lower interest rate. So, start saving your dollars to make that down payment!
Your credit report should be accurate: Look hard at your credit report before applying for an auto loan. Is your personal information updated? Is it free from discrepancies? If you spot an error or an outdated detail, call the credit bureau at once and correct it. Don’t worry. It ’s a simple process and will result in an improved credit report with no tensions of legal issues.

Search and compare the lenders quotes: Before giving the final nod, always do a little shopping. Compare the interest rates on auto loans and the fees charged by the lenders. Do not hesitate to bargain. You don’t have to make a forceful decision, as there are a slew of lenders online. The lenders do not want to lose their client, hence, will try to give you a fair deal once they know that another lender is offering you a lower rate.

6 Things You Should AVOID Doing While Getting An Auto Loan

Purchasing the wrong car: Keep in mind the utility aspect of the vehicle while buying. Also, do not forget that your three kids are growing.
Getting sentimental in the showroom: Use your head while buying. Don’t get smitten by the sleek model and overreact.

Picking a dealer on the basis of location: This is an unwise way to buy a car. Every dealer is different. Shop around. Look for the dealer ’s Customer Satisfaction Index. Compare, compare, and compare.
Getting into the trade-in trap: Always bargain for a reasonable price for the car.

So, are you ready to get an auto loan?

About the Author

Bad Credit Auto Loans How to get an auto loan with bad credit by Daniel Wesley

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