0% Auto Financing

0% auto financing means an auto dealership will give a car-buyer an auto loan without interest. While there is usually a down payment involved, the buyer will not have to pay interest on the amount borrowed. That’s right: 0% auto financing will provide a loan free of interest payments. This could seem like a great deal. But buyers need to know when zero percent financing works for their benefit and when it works against it.

Why zero percent auto financing is difficult to get: credit scores and loans.

Zero percent car financing is difficult to acquire because it’s usually offered to such a thin slice of qualified buyers. In order to qualify for any car loan, even one with zero percent, a borrower needs to have a good credit score. Only buyers with nearly spotless credit ratings can qualify. And even those buyers with some very slight tarnish on their credit scores could be refused.

Select vehicles and options often erase the 0% financing option.

Zero percent loans are only often offered as a financing option for the dealer’s choice of vehicle. Slower-moving vehicles are often tagged with the 0% financing incentive to move cars off the lot. This works fine for people looking for vehicles that aren’t selling well. But for buyers looking to buy a more popular vehicle, or for those searching for specific vehicle options, zero percent financing may not apply. While a dealer may be happy to provide someone looking for a car with, say, leather seats instead of cloth seats, the loan that previously didn’t have any interest may suddenly find itself coming with interest charges.

0% loans often discredits manufacturer’s rebates.

Auto dealers will often offer a 0% percent option to attract potential buyers to a dealership. When a buyer looks to capitalize on a manufacturer’s rebate as well as the 0% financing, the dealer tells her it’s one or the other. But this can sometimes work to the benefit of some borrowers. If your credit score doesn’t qualify you for the 0% auto financing, you can search out the manufacturer’s rebate and still save yourself money.

Zero percent auto financing can sometimes be more expensive than interest-charging loans.

Depending on the interest rate and a borrower’s qualifications, an interest-bearing loan can sometimes be more affordable on a month to month basis than options offering zero percent financing. Often, a dealership will offer a zero percent auto loan for a much shorter term than a typical, interest bearing loan. This quickened repayment schedule will cost the borrower more each month than a traditional, longer interest bearing loan. Let’s use an example. Say the loan amount for a new car is $20,000. Through a typical interest bearing account, and ignoring any down payment, a buyer would stand to pay off the loan in about 72 months. At 6.75% on the loan, the buyer would pay about $296.53 each month. With a zero percent auto financing option, that same buyer would need to make her payments in a far shorter period of time. Let’s say bout 36 months, which is typical for zero percent auto financing. Those $20,000 would cost our zero percent buyer $555.56 each and every month.

Bad Credit Auto Finance Options

People who are looking at bad credit auto finance will find that there are many different options available that can be structured to meet their needs. Because of the state of the many financial institutions finding the best options may take some time and effort.

There are different levels of “bad” credit. When looking at bad credit auto finance it is important to know which level the individual looking for financing is in. A person with a credit score of below 400 does not have any financing options. This score is below bad. Actually 400 is about as low as it can get. A person with a credit score of 400 will need to have family or friends provide the financing for an auto. In most cases this low of a credit score will not even qualify for a loan with a co-signer.

There are two other levels of “bad” above this score. If one is the next step up, they will be able to get bad credit auto finance completed more easily if they have been paying on their loans regularly for a period of time and the low score was due to a significant event such as medical expenses.

In most cases either level of “bad” will require a co-signer to get a bad credit auto finance loan. The loans that are given for bad credit auto finance are extremely high. Most of the time people getting these loans are trying to re-establish their credit and this is taken into consideration when they apply for the loan.

There are very few financial institutions at this time that will give bad credit auto finance loans to individuals unless they are at the 3rd, or best “bad” level. These are usually individuals who are just coming out of a bad situation, had a history of paying their debts on time and then hit a slump but resumed paying timely after a short time.

When looking for bad credit auto finance loans it is important to be aware that there will be more effort required on the part of the person getting the loan than a person with good credit would need to do. An individual getting one of these loans will want to check the lending institution out thoroughly and find out their policies and procedures on loans.

It is important to what their policies are regarding late payments and whether or not they will report a late payment to the credit bureau if it is one week late. A loan of this type can wind up causing more damage to an already bad credit history and needs to be avoided.

One important thing to remember is that even if one is trying to get a bad credit auto finance they are still the customer. In many cases lenders treat individuals who are getting loans as though they are doing them a favor. However, the customer is keeping the lending institution in business and without the customers who pay the extremely high interest rates the lender may not be in business.

Getting the Best Interest Rates on Auto Financing

If you are in the market to purchase an automobile, you also need to have your eyes peeled in order to find the auto financing that you will need for your purchase. In that regard, if you are like other people shopping around to buy an automobile, you want to get the best interest rates on auto financing. However, in these challenging economic times, it can be a bigger challenge to obtain truly favorable interest rates on auto financing.

There are some tips and pointers that you should bear in mind when it comes to seeking and finding good interest rates on auto financing. By following these pointers, you will be in the best position to save money on the interest rates on any auto financing you obtain.

Get Your Auto Credit History in Order

When you are seeking auto financing it absolutely is imperative that you get your credit history in order. In this day and age lenders are becoming more restrictive when it comes to who they will make loans to … even when it comes to bad credit loans. Therefore, you really do need to make sure that you credit score is as high as it possibly can be and that your credit report is in as good of shape as possible.

In this regard, the first step that you will want to take is to make sure everything on your credit report is accurate. Unfortunately in this day and age the majority of credit reports contain inaccurate information. Therefore, you by making sure your credit report is accurate you will be taking an important step in making sure your credit score and history is in the best position and condition possible.

You will also want to make sure that all of your current credit accounts and loans are current. Lenders will closely at the status of any outstanding financing when it comes to your own application for auto financing.

With all of this in mind, it is important that you start working on getting your credit history in order well in advance of the time that you will be applying for auto financing. You truly need to be proactive in this regard if you intend to be successful in obtaining auto financing today.

Shop Around for the Best Auto Financing Interest Rates

Keep in mind that there can be differences in the costs associated with auto financing from one lender to the next. This can include differences in the interest rate as well as in the other costs and fees associated with auto financing.

Therefore, it is in your best interest to spend a bit of time shopping around for the best rates, the best deal when it comes to auto financing. For example, even a minimal difference in the interest rate from one lender to the next can add up to thousands of dollars over the life of an auto loan.

Don’t Be Afraid to Negotiate

Finally, if you have decent credit, when it comes to auto financing you should not be afraid to negotiate. In this day and age, many lenders will be amenable to at least some negotiation on your part. Therefore, as you start to undertake the auto financing process, you do need to be prepared to do a bit of wheeling and dealing.

Bad Credit Car Loan Vs Guaranteed Auto Financing – Will You Save Money?

You’re in the market to buy a new car and that’s great. Today most everyone buying a new vehicle will need some form of auto financing and if you find your personal finances or credit are less than perfect, you can still get a very affordable car financing if you know how.

An informed car buyer is a smart car buyer. When you know your auto financing options and you have your car financing set up and approved before you talk to any sales person, you can walk into a car dealership and negotiate a better deal on your terms without feeling intimidated, regardless of your financial situation.

If you know that you have certain credit challenges, you should understand the differences between bad credit car loans and guaranteed auto financing.

Bad Credit Car Loans…

Bad Credit Car Loans typically have been available through new car dealerships on the purchase of a new car or a pre-owned certified used vehicle. The actual auto loan financing paper-work is handled at the dealership but in general, the bad credit car loan finance contract is sold off to another lender. That lender will maintain and service your loan. Loans typically have a term of 24 months up to 60 months. The downsides to a bad credit car loan are that many franchise car dealerships are not set up to arrange these type loans in-house, interest rates and cost can vary widely and limit your auto purchase choices.

Guaranteed Auto Financing…

Guaranteed Auto Financing differs from a bad credit car loan primarily in that this type financing is offered directly by smaller or independent auto facilities. Your finance contract is provided by the actual auto wholesale dealer and the loan is paid directly to the auto dealer that sold you the car. In other words, you would be financing your car purchase from the company that owns it and sold you the vehicle. Guaranteed auto financing is used for the purchase of used or pre-owned vehicles and not typically for purchasing a brand new car or truck. Loan terms are shorter than more conventional auto loans and they rarely offer terms over 36 months.

The big advantage to guaranteed auto financing is that often no credit check is required to obtain this financing. Payments are normally made weekly and sometimes in person. One disadvantage to this type of auto loan is that many car dealers providing guaranteed auto financing will never report your credit to the credit bureaus. So if you’re making payments regularly and establishing an excellent payment history, this will not be reflected in improving your personal credit profile or your credit score.

Your best approach would be to start now and see what financing options are available for you. There are excellent specialized auto financing services available online today that offer a whole range of affordable car loan programs even if you’ve been turned down for financing or you have poor credit, bad credit or other financial considerations, you’ll be surprised at how they can help you to buy a new car.

You see now that there are major differences between a bad credit car loan and guaranteed auto financing and there are other financing options besides these. Get approved for the best car loan for you first, then walk into the car dealers and negotiate on your terms.

Auto Financing Online – Get Pre-Qualified for an Auto Loan

Before you start shopping for a new or used car, make sure your finances and credit are in order in advance. Getting pre-qualified for an auto loan is a fantastic way to get into a new car faster. Following are some tips that can help you to secure some solid financing for your new vehicle.

Auto Financing and Pre-qualification

Getting pre-qualified for a car loan doesn’t have to be hard. Most of the time, auto consumers can get auto financing as soon as they have selected a car. If that is the case, the auto dealership usually submits their loan application through a third-party, finance company. This finance company has the ability to either grant or reject your loan application. In cases where credit is acceptable, the auto loan is approved. What makes this easier is that the funds in theses cases are protected by the vehicle. However, in some cases, the car dealerships and the third-party financial institutions charge higher rates when the applicant has a low credit rating. While this can sometimes be a nuisance, you need to remember that at least you are getting financing on your vehicle. When it is possible, it is important to secure your own financing.

Auto financing online is beneficial because loan amounts tend to be based on a number of financial factors such as your personal income, your total consumer debt, and other financial obligations that you may have. Therefore, you need to be aware of sale prices in relation to your available budget. Once you have secured your pre-qualified loan amount, you can start looking for your new vehicle.

Getting Pre-qualified

There are several different ways to go about getting pre-qualified for a car loan. Auto financing online is one good way to secure a car loan if you have decent credit. Doing things in this manner, you will have the widest selection of loan options. The first step is usually to talk with your bank or credit union. These institutions offer good rates that are often better than rates you could receive from financial companies. If you have ever financed a car before, you may want to request additional loan information from the previous lender.

If you have a poor credit rating you may have to get pre-qualified from what is called a sub prime lender. The easiest way to get a sub prime lender is to go online or by getting an auto loan broker. Getting pre-qualified for a car loan is just like applying for any other type of loan. The only difference is that instead of going off of official credit information, they will be going off of unofficial personal information that is stated by you. Success will result in you receiving a pre-qualified offer.

After your acceptance of the pre-qualification offer, the lender will send you a written note that does not guarantee the loan but allows you to submit an official application for the loan. once this application has been validated, and proof of income has been proven, the lender will either retract the offer or grant you the loan.