Posts Tagged ‘regular payments’

Lenders defy Conventional Norms by offering 8 Year Term on New Car Loans – Is it worth it?

Cars and car loans have become equivalent. If you want to buy a new car, an auto loan has become a complete necessity. With growing need of auto financing and increasing competition in the car loans market, lenders are constantly trying to innovate. Past several years have seen pioneering ideas like no money down auto loans and no co-signer car loans. This year has been no different in terms of innovation because lenders have brought highly unconventional “8 Year Loan Terms”.

Auto lenders have become increasingly enthusiastic in offering car loans with unexpectedly longer terms. Experian Automotive March 2013 report divulged information about the average loan terms. The average terms have increased to an all-time high of 65 months. And, now the experts are predicting that 96 month loan term will become popular.

Why are Loan Terms becoming longer?

The report also disclosed the rise in new car loan amount. The average new auto loan amount for Q4 2012 has increased by $272. This shows that car prices are rising steadily which makes it difficult to buy a new car. But, if the new car sales dip, it would affect the automobile industry. So, lenders have started offering longer terms to help Americans fulfill their new car dream.

Also, there is a growing appetite of consumers for car loans. The current economic period is better compared to the recessionary years. Credit borrowers have performed exceptionally well in making regular payments. This allows the lenders to have faith in car buyers.

Benefits of Longer Car Loan Terms

Buying your Dream Car

It is not possible for everyone to buy a new car because of high monthly payments. But, longer terms ensure affordability. This gives you the opportunity of buying any car you want.

Lower Payments

If you opt for shorter term, you have to deal with high payments. But, longer loan terms allow you to lower your monthly payments. This means you will experience considerable ease in making payments. An example will make things clear. If you buy a car for $35,000 at 4% for 4 years, monthly payments will be $790.27. And, if you extend the term to 8 years, payments will be approximately $426.62.

Regular Payments can improve your Credit Score

A 7-8 year loan term is a big responsibility. If you are able to make regular payments, your credit score will definitely increase. It will also show other lenders of your commitment and financial capacity.

Problems with Extended Loan Terms

Pay More towards Interest

Longer loan terms give you flexibility by offering affordable payments. But, you have to pay a price for it. Over the entire term, your total interest amount will be on the higher side. Let’s use the same example of $35,000 car at 4% for 4 years and calculate your total payment towards interest. It will be $2,932.81. And, if you opt for 8 year loan term, it will be $5,955.97. This means you will have to pay $3023.16 more.

Higher Chances of Upside Down

A car is a negative asset because its value decreases over the period of time. The depreciation rate of a new car is phenomenal which means there are higher chances of an upside loan. If such a car is stolen or is involved in an accident, the insurance amount won’t cover your loan amount. This will be detrimental to your financial condition.

Maintaining your Car

If your car has warranty, your maintenance cost will be low. But, when you opt for 8 year loan term, your car will not have any warranty in the last few years. This is because most new automobiles come with warranty of 3-5 years.So, your maintenance cost will increase in the future.

Every innovation has its pros and cons. And, its importance is going to be different for every individual. So, think through and decide whether “8 Year Loan Term” is a stunning opportunity for you.

Best of luck in choosing the best new car loan term!!!

Be the first to comment - What do you think?  Posted by Rock Watson - July 6, 2013 at 4:37 am

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Renew Your Hopes of Getting Bad Credit Car Loans with These Important Tips

Facing constant rejection because of your bad credit history? Do you believe that low interest rates are just reserved for people with good credit? Do you think buying a car is just a distant dream for you?

Well, this piece of information can provide you relief and substantially increase your chances of getting an affordable auto loan. Last month Reuters ran published an article titled, “Car lenders ease credit standards and terms to spur loans”. It mentions that lenders consider car loans safe in comparison to mortgage and credit card loans. Also, lenders are now offering lenient credit terms due to weak credit demand. One of the credit bureaus, Experian, mentioned that percentage of new car loans for bad credit borrowers increased by 11.4% this quarter compared to last year. This means people with bad credit can even buy a new car without any trouble.

So, getting bad credit car loans has become possible today. There is no better time to buy the car of your choice. But, are you still unsure of getting an affordable car loan? If you are still in doubts, make use of these strategies and not only get instant approval on your bad credit car loan but also avail the lowest possible rates.

Preparation Is the Key

Buying a car is major decision because you spend your life-savings on it. It is a commitment of making regular payments. You just cannot go to a dealer without thorough research. So, before purchasing a car or applying for an auto loan, here are few important things that demand your attention.

Clean-Up Your Finances First

Whenever you want to buy a car, do not just rush into the decision. You must sign the dotted line only after you are sure of what you are getting into. There have been instances where lenders have duped innocuous borrowers on the pretext of bad credit score.

It is always important to study your credit report before visiting the lender’s office. You can get a free annual copy of your credit report from annualcreditreport.com. Study all the entries and dispute for any unwarranted transactions and errors. It is a known fact that credit bureaus commit mistakes while calculating your credit scores. You can improve your credit by removing all the errors. Also, start making payments on your debts. Even if you can pay-off a few of your debts, it will have a positive impact on your credit score. Doing all this requires time and that’s why you must comprehensively plan your car purchase and avoid a hasty decision.

Down Payment to Down Your Rates

The initial upfront amount that you pay for buying a car can be a useful way of reducing interest rates. Making a substantial down payment of ten to twenty percent can lower your loan amount and thus, the lender’s risk. Also, the lender will be assured of your financial stability. This will definitely bring down your car loan cost.

Co-Signer – A Comforting Thought for the Lender

When you have someone to co-sign your car loan contract, the lender is assured of his money. This is so because he can get it from the co-signer if you miss out on payments. Finding a co-signer is a bit tough but if you can manage one, it would work wonders for your car loan.

If you just cannot find a co-signer, you can avail auto loans without co-signer which come with slightly higher interest rates. Nonetheless, it is important that you exhaust all your options before opting for no cosigner car loans.

Online Bad Credit Auto Loans – A Better Option

An online bad credit car loan offers you the option of getting an auto loan without leaving the comfort of your house. You can apply by logging in to your computer. Online car financing companies are a perfect choice because banks do not entertain people with poor credit. To avail money from a credit union, you need to be its member. When you apply for a car loan from an online bad credit auto financing company, you have the option of comparing several auto loan quotes. This is not possible when you avail dealership financing.

Also, online car financing companies work with several subprime auto lenders which make it easier for them to process your auto loan application. This drastically improves your chances of getting a low interest bad credit auto loan.

How to Choose Your Bad Credit Car Loan?

Choosing a bad credit car loan is easy if you carefully read the vehicle loan contract. It is essential that you do not just focus on low interest rates, but instead look at the bigger picture. Calculate Annual Percentage Ratio (APR) which will tell you the interest rate for a whole year instead of the usual monthly rate. It also considers fees like loan origination fees and other miscellaneous expenses which will give you a better idea of the cost of car loan.

Check for any pre-payment penalty because it can significantly increase your expenses if you decide to pay-off your loan early. Ensure that the lender is a reputed name in the auto financing industry.

A little bit of caution can take you a long way in securing the best auto loan option. Bad credit is never an issue if you know how to tackle it. These strategies and important cues will help you get easy approval on your car loan application.

Remember bad credit is just your history; it is in your hands to write your future. Go out there and turn your car dream into reality!

Rapidcarloans.net firmly believes that bad credit history should never become an obstacle in buying a car. We offer bad credit car loans at competitive rates to buy new as well as used cars. Apply today and forget all about your poor credit score!

Be the first to comment - What do you think?  Posted by badcreditcarloans - December 4, 2012 at 10:56 am

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Quick and Easy Guide to Help You Get Car Loans for Bad Credit in Colorado

For every American, cars are a necessity and the same applies to the residents of Colorado. Cars are a must to commute everyday to work and also for enjoying the beauty of the Centennial State. If bad credit score is keeping you away from buying a car, bad credit auto loans are your answer. Read the article to know more.

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Be the first to comment - What do you think?  Posted by coloradocarloans - April 12, 2012 at 6:51 am

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