Finding Vehicle Financing
Luckily, financing isn’t as difficult as it used to be so that just about anyone can get into a car. Financing is a word that intimidates most people, but it doesn’t have to be a difficult process. Before you even begin to look at a car you just need to do a few things to prepare yourself.
The first thing you need to do to prepare for vehicle financing is look at your finances and decide how much you can realistically pay each month for your car. $200 may not sound like all that much, but if you pay $200 for 60 months it can seem like a lot more than you had anticipated! Vehicle financing usually isn’t short term, so it needs to be a price that you are truly comfortable with. Take all of your bills and estimate high on them, also consider gas money, money for groceries and other incidentals.
The pre-financing work is not over yet. Now, you need to find the last couple pay stubs you have from your job. Most lenders want to see proof of employment so that they are sure you have the income necessary to make the payments. You should also find a copy of your last tax return, as this will prove your yearly income. You might also want to locate a bill such as a utility bill or even a bank statement that has your name or address on it as proof of residence. Next, if you don’t know what your credit looks like you’ll want to pull your credit reports. Every citizen is entitled to a copy of his or her credit report once a year for free, so don’t be caught spending too much to see what lenders past and present are saying about you. Once you have an idea of what your credit score is, you are ready to go to work.
Generally, people with a credit score over 580 will have no problem finding vehicle financing. You might find a dealership or individual lender that is willing to finance a vehicle with credit scores lower than this, but typically speaking you’ll find the cut off for financing is at or around 580 give or take about 20 points. If your credit score is lower than this, it isn’t over for you. You can still find financing; you just might need to make a down payment on the vehicle or find a friend or family member to co-sign on the loan with you. Not only will this put you in the vehicle you need or want, it will help you improve your credit score so the next time around vehicle financing doesn’t require another signature or even a down payment.
So, now it’s time to think about financing. If you have a decent credit score and you have a good working relationship with your bank or credit union, this is a great place to go for vehicle financing. Not only will this make payments easier as you can pay right at your bank or have the funds taken out of your bank account, you will usually secure a better interest rate with your own bank than you will with any other lender. Interest rates may not be important to you now, but they will be when you see how much even five points can change the amount of your monthly payment. Your bank knows you, has your information, and gaining vehicle financing is typically a lot easier.
If your bank is not an option, you can always go straight to the dealer. Luckily, the lender for each dealer is usually a third party and not open to discrimination by those that actually work at the dealership. This means even if you do not necessarily appreciate the sales people you can gain financing through their dealership. If you have decent credit you can gain financing through these people fairly easily because they already have all of the vehicle information, they just need your information and hopefully they’ll come back and say that they can help you out. Most dealerships work with lenders that are willing to work with those that have credit challenges so that no one needs to be afraid to apply for financing. If you don’t have great credit, the dealership may request that you put down one to two percent of the cost of the vehicle as a down payment to secure the loan.
If you cannot or do not want to obtain financing through the lender you can always go to individual lenders and apply for car loans. You’ll find that the Internet is a great resource for those looking for independent financing. Online you’ll find lenders that cater to those that have great credit, terrible credit, and everything in between. Interest rates will vary from one lender to another, but decent financing is out there for anyone that applies. Obviously, the better your credit the better your interest rate, but with a down payment even those with less than perfect credit can secure vehicle financing that is affordable.