Credit Ratings And Auto Loans
With the rising cost of living, many people are looking for ways to save money and cut costs. Often this means reducing outgoings and unnecessary spend, however when it comes to cars, sadly most of us are too reliant on them to ever imagine resorting wholly to public transport! There`s no denying that owning a car is an increasingly expensive burden, with petrol prices and insurance premiums soaring, alongside costs of repairs, road-tax and other associated costs.
Cars themselves are also expensive `big ticket` purchases. Unless you`re prepared to maintain and spend money on the upkeep and repairs of a very old, cheap car, the likelihood is that you`ll be spending at least a few thousand on your new vehicle.
This is where the importance of a competitive loan comes in. Of course the ideal is to save money to purchase a new car and pay by cash (negotiating a cash discount in the process.) However this is a distant dream for many and car loans are the order of the day. When dealing with a car loan tipping the thousands mark, differences in interest rates, terms and conditions can become key indeed.
There are two important factors when choosing a car loan. Firstly, checking your credit record for accuracy and secondly looking around for a competitive loan.
Your credit record is checked by any loan provider, when deciding to give you a loan. You can check your credit record via two main agencies – Experian or Equifax. It costs just a couple of pounds and can be done online. Once you have done this, look to update any missing information. If there is incorrect data on there, you can request that an explanatory note be added by the credit agency. There are also steps you can take to improve your rating and so improve your likelihood of being accepted for more competitive loans. These include closing down any redundant savings, current or credit card accounts. Also, ensure that you are paying correctly and on time for other debts – if there are incidences of missed or late payments, this will worsen your credit rating, making it harder for you to gain further competitively priced credit and loans. If this is happening, it may be worth waiting a while to re-build your credit rating if it is currently causing you to be rejected for well priced auto loans.
Once your credit rating is strong, you can search around for competitive auto loans. Avoid these out on the garage forecourt – they are liable to be very expensive. Instead head online and do a search for personal loans via a price comparison website. These will allow you to input certain criteria – loan amount, repayment time etc and will return the most competitively priced (eg: with the lowest interest rate) loans available to you. It`s important to choose a loan with a low interest rate or you will pay greatly in excess of the original borrowing amount over time. Also, avoid the lure of low monthly repayments where the overall loan term is highly increased – you will similarly end up repaying far in excess of what you originally borrowed.
Other online tools that are useful include a loans calculator which helps you to understand the impact of desired loan amounts and repayment periods on the monthly repayment amount. These tools are worth spending some time with and investigating how much you can afford to pay each month, to clear the loan as early as possible. Also consider loan insurance to cover your repayments, should you ever be out of work through accident, sickness or redundancy – again, price comparison websites or a high street adviser can steer you towards the best products for your circumstances
