Tales of Credit: What is the Average Credit Score to Qualify for an Auto Loan?

Purchasing a car is a big decision in your life. Investment of money and effort are equally expended during the entire car buying process. However, all too often you will require a financial backing in order to make your dream car a current reality. Credit score plays a crucial role in determining the outcome of your auto loan application. Many a times, buyers neglect the importance of a credit score. However, the presence of a strong credit score can become a backbone in getting good interest rates as well as help you to obtain your dream car. 

What is the Average Credit Score for getting an Auto Loan? 

Typically, credit score ranges from 300 to 850. Amongst the various categories, if your credit score lies below 620, you will be regarded as a subprime consumer. A median credit score of 707 and above is the ideal fit that will ease your car financing process. Therefore, a credit score of 707 or more attracts lower interest rate and gives you the opportunity to make the most out of your auto financing deal. 

A Shift in the Lending Pattern: What does it mean for you? 

The lending patterns of the banks as well as lenders have seen a significant shift in the last two years. In a Bloomberg report, the Federal Reserve Bank of New York has declared that the median credit score for auto loans in the Q3 of 2017 was 705 as compared to 696 in Q3 2015. The data strongly suggests that online auto lenders are increasing their standards and scrutinizing the credit score before approving a loan request. Super-prime and prime credit consumers will enjoy good rate of interest as well as earn a higher probability of getting faster loan approval.

What Steps can you take to improve your Chances of Auto Loan Qualification? 

1) Stable Income & Employment

Income and employment are two important factors that will help you build creditworthiness in the eyes of the lender. Make sure you choose a car that you can comfortably pay off in regards to your current income. Additionally, the longer you have stayed at a job, the better your chances of loan approval. College graduates or first-time car buyers should be employed at the same place for at least six months to display stability. 

2) Repair any errors

Prior to walking into the car dealership, get a report of your credit score and check for any errors that may have gone unnoticed. Correct the errors before you apply for car financing. Also, make it a point to pay off your past debts and clear any risky venture that may diminish your chances of auto loan approval. Minimized errors and cleared debts will give you a greater leverage while negotiating your auto loan. 

Obtaining qualification for an auto loan can be an easy task, provided you are proactive before vising the dealership. Maintaining the ideal credit score will help you to get the best rates. And, it will ensure that you are able to pay off the loan easily. So, do not ignore the importance of your credit score. 

Remember the best way to prepare for auto financing is to keep your credit score in check and take preventive measures to improve it for a smoother auto loan approval. 

Buying a car becomes easy with a good credit score. But, not everyone has the advantage of a stellar credit history. If your credit score is below average, apply for a bad credit auto loan. Choose a reputed subprime car financing company to obtain car financing quickly. Apply now for guaranteed auto loan approval.

How to ascertain LTV Ratio on your Next Car Loan?

Are you ready to buy your dream car this year? If you have already shortlisted the model and are beginning the loan process, take a breather. It is not necessary that the lender will approve you for the total cost of the car. It is possible that you may have to lighten your wallet and pay a part of the total amount from your savings. Let’s understand how will the lender decide on your LTV ratio and how much money is he willing to lend you.

How does a Lender evaluate your Auto Loan Application? 

For a lender, deciding the lending amount is pure math. When it comes to deciding the LTV ratio, he will consider several factors and make a practical decision. Let’s understand the factors to use them to your advantage. 

1. Credit score

Everyone seeking an auto loan approval knows the importance of FICO score. Lenders check your score to understand your repaying pattern. Several late payments on your report can prove to be a red flag for the lender. So, check your credit report beforehand. If you fall into the category of a high-risk borrower, your loan approval amount may not cover the entire cost of the car. In such a situation, you must work with a lender who specializes in bad credit auto loans and seek approval on a larger loan amount. 

2. Loan Repayment Capacity

Once the lender analyses your credit report, the next step is evaluating your loan repayment capacity. It will give an idea of your current financial situation. The lender will use your monthly income and debts to calculate it. Experts suggest that the debt-to-income ratio should be below 40%. For example, if your monthly income is $5000, your total debt should not exclude $2000. If you have higher debt, the lender will reduce the loan amount to decrease the risk factor. 

3. Value of the Car

Don’t think lenders will forget the price of the car. If your credit score and income do not provide comfort to the lender, he may approve you for a smaller loan amount. Banks, traditional lenders and online auto financing companies take help of NADA, Kelley Blue Book and other online sources to determine the value of the car. When you are applying with the lender, discuss whether he will include the taxation costs, insurance premium and other miscellaneous costs to the loan amount. It will help you to calculate the amount that you will be required to pay out of your pocket. 

LTV Ratio: Is the Lender approving you for a Smaller Loan Amount? 

Car buyers with an impeccable credit score and good income enjoy 100%+ loan to value ratio. But, not everyone has a strong credit application. If you want to buy your dream car, you can pay the remaining amount in the form of a down payment. You can trade-in your old car to avoid paying cash to the dealer. Or else, you can discuss with the lender and request him to re-consider your application. Bringing a cosigner can help you in making a strong point. If nothing else works, buy a cheaper car. 

Remember that if you have plans of buying of your favorite car, do not let it remain a dream. Understand how the lender will consider your loan application and take calculative steps to prepare for the outcome. 

When you want to buy your dream car, you need to work with an experienced guaranteed auto financing company. Do not worry about your credit score or debt. Work with a bad credit auto loan expert to enjoy higher LTV on auto loans. Apply now; buy car without down payment.

No Cosigner Car Loans because Cosigning and Family Don’t Mix

Just as mixing business with pleasure is not wise, having a family member cosign your loan agreement can have immense ramifications, financially as well as personally. If you search the web for “cosigning with family member”, you will realize that several people have borne the brunt of asking a family member for help. It can lead to unresolved money issues between families. So, what should you do when the lenders compel you to search for a cosigner?

A Car Buyer’s Guide: Tips on dealing with a Cosigner

Buying a car is no joke. You have to find a car that you love and then seek a lender that you like. Usually, lenders ask car buyers with zero credit scores, insufficient income, or new jobs to bring a cosigner. With a cosigner in picture, they are assured of timely payments. But, finding one is not easy. Learn how to deal with a cosigner and make a perfect purchase. 

1. Explore options!

Family is not the only option for cosigning. You can consider your friends, spouse, colleague, etc. for the job. It is not compulsory for the cosigner to be related to you. It can be anyone who is ready to help you out. 

Sometimes, it is better to take financial help from someone who will not judge you continuously or discuss your financial situation with everybody. You certainly do not want your aunt to tell everyone about your late payments during the Christmas dinner. So, find someone who wants to help you without passing any judgment. 

2. What about the Future?

Your brother may agree to be your cosigner. But, you must explain him the consequences of becoming one. They will not be responsible for the loan, but it will also affect their prospects of getting a new loan. If your brother is considering opting for a student loan, helping you can make things difficult for him in the future. 

When you are thinking about future, do not forget to ask the lender about the process of removing the cosigner from your loan agreement. A few lenders allow borrowers to change the contract rules once they have received a certain number of payments. 

3. What’s your Plan?

Anyone thinking of becoming your cosigner will be interested in knowing your loan repayment strategy. It is always a good idea to save for the rainy day. If you lose your job, or suffer from an illness, make sure that your payment schedule is not affected by it.

And, do not forget to prepare for the scenario of buying the car on your own. If you are buying a car for the first-time and you do not have any credit history, apply for small loans, pay them off and improve your chances of getting a car loan. Another way to get approval is by reducing the loan amount. Either bring a down payment or choose a less expensive used car for eliminating the loan burden.

What to do when there is no Cosigner?

No one wants to avoid making payments and damage their credit scores. But, a few unforeseeable events can make things difficult for you. In such a situation, you do not want your family members to suffer because of you. So, how can you buy a car without having the financial and emotional burden of damaging your loved one’s credit score? Seek a no cosigner car loan.

No cosigner car loans help young car buyers in making a car purchase on their own. With the loan, you do not need someone with a stellar credit report to help you out. It is useful when you need a car and cannot wait to manage a down payment or improve your credit score. If you are starting your new job or moving to a different town and need a car immediately, avoid spending time in convincing your family members. Simply search a lender who helps people with special needs and make buying a car easy. 

Find the perfect auto financing company for making a quick purchase. Submit your loan application and get approved for a no cosigner car loan. Choose a lender who not only makes cosigning optional but also offers special financing rates on bad credit auto loans.

Long-Term Auto Loan: Understand the Pros & Cons before saying yes

Buying a car has never been more convenient. Today, cars are better built, technologically equipped and offer a variety of financing options. However, the scenario of expensive monthly payments and poor credit score become an unwanted hindrance. Opting for a long-term auto loan is one way to overcome the limiting obstacles. Typically, it ranges from six to eight years. However, before you choose a long-term auto loan, it is essential to evaluate the pros and cons of your decision. 

Pros of a Long-term Auto Loan

1. Reduced Monthly Payments

As compared to a short-term loan, a long-term auto loan has smaller monthly payments. The total amount of the auto loan is spread over a longer time frame, thereby, significantly reducing the monthly payments. Due to a small monthly payment, you can afford to buy an upgraded version of the car as it is less burdensome to repay the loan. 

2. Repair Damaged Credit

A long-term auto loan is extended to individuals with bad credit. If you make consistent payments throughout your term, you stand a chance to repair your damaged credit score. Additionally, the likelihood of obtaining refinancing for a long-term auto loan is higher than a short-term auto loan. 

Cons of a Long-term Auto Loan

1. High Interest Rates

While the monthly payments are low, the interest rates on the long-term auto loans are high. A longer term period means increased number of payments with high interest rates. Therefore, you will not only be paying interest rates for a long time, but it will also be higher than other auto loan options. 

2. Lower Resale Value

The depreciating rate of a car ranges between 15% and 20%. By the time you are done repaying a loan, the resale value of your car is likely to drop. As a car is a depreciating asset, the amount you receive after reselling it will be lower than its purchasing price. Therefore, a potential risk of upside down is always associated with a long-term auto loan. 

So, when does it make Sense to choose a Long-term Auto Loan?

If you suffer from bad credit, chances are the dealer will offer you a loan which contains a long-term. Generally, individuals with a damaged credit score can obtain it easily as it requires less credit checks. Also, if you cannot afford expensive monthly payments, a long-term auto loan will help you to afford the car you wish to purchase. 

A decision taken in a hurry is a decision low on evaluation. A bad credit score may limit your probability of getting an auto loan. However, a long-term auto loan can be a means to reach one step closer to purchasing your dream car. Understand the pros and cons before you decide on choosing a long-term auto loan. 

Want a long-term auto loan? Or looking for a bad credit auto loan that you can pay off in just a couple of months? CarDestination.com offers multiple auto financing options and enables you to choose the best deal. Get in touch with the bad credit auto loan expert. Ask for bad-credit 0 down auto loans and enjoy buying a car without a down payment.

What is the RSVP Rule for Car Buyers of Texas?

The party invites start coming as soon as the Holiday Season begins. And, the number one party rule is to fill out the RSVP card and send it to the host. 

The RSVP rule is important even when you decide to buy a car. Do not get confused. The car buying RSVP stands for R-Research, S-Select, V-Visit the Dealer and P-Pre-Approved Texas Auto Loans. 

R-Research

 

For making a successful car purchase in Texas, research is the key. It will not only help you in buying a reliable and useful car but it will also help you in saving money. Start your research in the following way to ensure success: 

1. Decide your car budget by considering your income and expenses.

2. Search for every car make and model that is within your budget.

3. Go to the manufacturer’s website and find online reviews of the cars that interest you.

4. Once you have shortlisted a few cars, concentrate on finding the lowest price for the cars. 

Note: If you are researching for used cars, do not be afraid of buying a car outside of Texas. If the demand for the car that you want to buy is less in another state, it might actually be cheaper to buy the car from an out-of-state-dealership than to buy it from a local Texan dealership. 

S-Select 

 

Once you are ready with the list of your preferred cars, it is time to select a few cars that satisfy your requirements. Remember that your selection should not be on the basis of price only. Here are a few other factors that play a major role in the car selection process: 

>>Number of Passengers

>>Type of Driving - highway, surface streets, off-road, etc.

>>Driving Conditions

>>Fuel Economy

>>Need for All-Wheel Drive

>>Safety Features

>>Cargo Capacity

>>Available Parking Space

Note: Remember to choose more than one car because it will help you in completing the car buying process even if your favorite car is unavailable. 

V-Visit the Dealer

 

Once you have shortlisted a few cars, it is time to visit the dealers and examine the cars. 

Today, car buyers avoid going to the Texan dealership lots by calling the dealer or emailing him for quotes. Even though it is possible to buy a car entirely over the phone or internet, it is not advisable to do so. Test-drive is an essential part of the car buying process. Even if you have read multiple reviews of a car online, it is hard to know how you feel about a car without driving it. So, do not forget to visit the dealer. 

P-Pre-Approved Texas Auto Loan

 

The average price of a new car is $33,560 and you can obtain a reliable used car for an average price of $15,900. The higher prices of a new car as well as a used car manifest the inevitability of a Texas auto loan. 

It is advisable to obtain a pre-approved Texas auto loan so that you do not have to wait for buying a car. With the advent of the internet, you can obtain pre-approval by submitting your loan requirements on the website of an auto financing company. 

Note: If you have bad credit history, ensure that the bad credit auto financing company provides pre-approved Texas auto loans to people with credit issues. Also, do not forget to check the security of the website. 

Buying a car is a big financial decision and any mistake can damage your financial stability. So, it is important that you follow the RSVP rule and make your car buying process simple and successful.

Car Destination is a reputed online auto financing company of the Lone Star State. It has a wide experience of dealing with credit issues and it will leave no stone unturned in finding you Texas bad credit auto loans. It will also assist you with Houston bad credit car financing. Apply now.