An Introduction to Car Loans and What You Should Avoid

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Today’s consumers have the benefit of belonging to a generation where car buying is easier than ever before. Technology has made it possible to view, research, and purchase all types of vehicles and for most consumers, the car shopping and buying process has, in many ways, been simplified significantly.

Car loans from Latitude and other financial institutions make it easy for consumers to not only select and research a vehicle but they also have streamlined the car buying process. Even with the ease with which cars can be purchased, there are still an abundance of potential pitfalls when purchasing a car. However, consumers can avoid many of these common mistakes with a little preparation and planning.

Let’s take a look at some of the most common mistakes many consumers make when getting a car loan and what you can do to avoid them.

Not Taking Financial Inventory

More than creating a budget, car buyers should first take inventory of their overall financial standing. Some of the factors that should be taken into consideration include existing loans, disposable income and savings. More importantly, car buyers should make sure they know their credit rating before heading into the financing office. Taking inventory of your financial position before going into the dealership or financing office can give you more leverage in seeking out a loan that best fits your budget and requirements.

Not Shopping Around

Typically, when purchasing a vehicle, the first instinct is to head to the closest dealership in search of the perfect vehicle without ever having considered alternative financing. Many times car buyers find themselves entering into loan contracts that do not provide them with the best possible conditions for the sake of convenience. Before even choosing a car, consider shopping around for financing deals from other institutions to ensure you get the best arrangement possible.

Most banks and financial institutions offer competitive car loans. In addition to conventional banks, credit unions and online financing companies also provide consumers with competitive interest rates. By shopping around, consumers can be sure of for securing the right loan.

Not Getting Pre-Approved

One of the best parts of financing today is that financial institutions have helped consumers in doing much of the footwork in terms of finding an appropriate loan. The pre-approval process involves the consumer providing lenders with all of the relevant information through the application process. The lender collects all of the consumer’s information in terms of employment history, income and wage, savings, and credit history.

With this information, the lender determines not only the risk but hey can also pre-approve you for a loan amount and interest rate. This is beneficial as the consumer goes into the car shopping experience knowing exactly how much he/she can spend. Furthermore, the amount of time devoted to buying a car is drastically reduced in that consumers do not have to fill out applications at the dealership, wasting time that could be spent doing something more constructive.

Not Making A Down Payment

The great thing for those buying a new car is that it is possible to finance the entire cost of the vehicle. The only caveat is that unless your credit is in good shape the interest rate on the loan will be slightly higher, and consumers with poor credit are at the mercy of financing companies that might hike the rate up in response to hedging the risk. However, one way to guarantee lowering the interest rate on your loan is to make a sizable down payment. As with other loans, when paying a down payment on the loan, you not only reduce your interest rate but you also reduce the amount of money you pay over the term of the loan.

Avoiding Mistakes Through Preparation

While the car buying process has changed significantly in recent years, consumers can gain an advantage by preparing themselves before ever visiting the dealership. By taking the right steps, you can make the entire process much easier, while reducing the amount of money spent throughout the loan term. Ultimately, by tackling these few tasks, you will end up with a positive car buying experience instead of one filled with potential problems.

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5 Ways To Pay Off Your Car Loan Sooner

Getting rid of debts like car loans sooner rather than later can be a solid investment in your future for a number of reasons. It not only improves your credit history, but means more money in your bank account, so if you’re lumbering away under the cloud of debt, here are five ways to ease the burden and help pay off your car loan sooner.

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Extra repayments

The key to paying off any loan sooner is to regularly make extra payments. Loans can be paid via interest only or via principal plus interest repayments. That means you are either just paying off the interest or making headway into the actual debt, so ensure you’re paying back more than just the interest-only amount to get your loan paid off sooner.

For example, if your charges are $167 per month, try to pay back $200 a month. Even a small extra repayment can make a difference over time. Also bear in mind that the more you pay off your loan, the smaller the interest, meaning paying that little bit extra can help you save money in the long term.

Check your loan to make sure you can make extra payments and, if you’re signing up to a new loan, ensure there are flexible payment options and no exit fees. Organisations like Zoom Car Loans have some great packages available.

Change the Date

It’s a small thing but something as simple as making weekly instead of fortnightly or monthly repayments can also help you reduce your debt sooner. For example, loan repayments of $100 per week add up to $5200 in a year, but $400 per month equals $4800 annually.

Lump Sums

Got a solid tax return or Christmas bonus pending? Funnel it into your loan. A decent lump sum every now and then can go a long way to paying off your car loan quickly.

Spare Change

A great way to rid yourself of a loan is to channel spare change into it. Have a look at your weekly budget and see where corners can be cut. It might be something as small as foregoing that daily barista-made coffee and opting for the office tea room instead. But that saving could be around $20 per week.

Extra cash

There are plenty of ways to pull in a little extra cash when you’re serious about a goal. From getting rid of your unused items on EBay to a little freelancing or odd jobs. Again, just a small amount per week can add up over the life of any loan.

The sooner you pay off a loan, the sooner an item is truly yours. It’s also the chance to demonstrate some great habits for your credit rating and have a little extra spare change each week. All it takes is commitment and a small amount of financial common sense.

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Planning Out Bad Credit Auto Loans

There are a lot of factors that a person borrowing money needs to plan about if the person is using the bad credit auto loans. This is one of the kinds of loans that are provided to a person who is in need of money to buy a car. As we know a car is one of the necessities in life and a person needs it to go to work. Other than this, the person may also need a car to take family members to different places. So, one of the common kinds of loans that many lenders have to provide is the auto loans.

For a person who is having a good credit, the lenders will provide the loans without any problems at all. This is because of the fact that when the money is given to a person who is having a good credit, there will be minimal risk and the individual will repay the loan. This makes the lender to be able to get back the principal amount with the interest payable for the loan. The bad credit auto loans are one of the loans that are provided to people who have a bad credit. When a person who is having a bad credit needs a loan, then he has to approach a lender who is providing the bad credit auto loans.

When the planning of the bad credit auto loans is done, there are some factors that the individual needs to consider. They are listed here.

1. High interest cost: The bad credit auto loans will command a high interest rate. This is because of the fact that the loan is a risky one for the lender. So, the rate of interest on these loans could be as high as even 30% annually. This means that the person who is borrowing money to buy the car should pay 30% of the loan amount as interest every year. This amount of money if paid as interest will need a lot of financial planning. If your income does not allow you to pay such a high amount as interest on the loan, then you will need to seek a lower rate from another lender or do something else.

2. Planning to buy a car: When you are planning to use the bad credit auto loans, you need to plan a lot on the kind of car that you are interested in buying. There are some cars that are available at a much more economical price and this will be the best buy for you, considering the interest cost. Other than the interest cost, there are instances when the lenders will not even provide the loan to you, if you are planning to buy a very expensive car.

3. Planning the repayment: If you have too many loans, then you can even think or plan to consolidate the loans. This will help you to reduce the interest rate on loans.

These are the major factors that you will have to plan for when you are planning to take out the bad credit
auto loans.

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