3 Factors That Impact Your Auto Financing Options
If you are in the market for a new or used car, you might have the cash to buy it outright or more likely you may be looking for financing options. Most people are in the latter category; if you are, you might be wondering how to get the best deal on an auto loan. Before determining this, though, you should first understand what factors impact your financing options. There are many different things that go into loan calculations, but these three are the ones you should be concerned with.
Being informed is the first step to getting a good rate on your auto loan, so it is a good idea to do your research prior to applying for financing. If you are diligent and know your options, you are far more likely to find a favorable financing offer and keep your monthly payments low for the car you want.
Your Credit Score and History
You are likely already aware that your credit score is one of the determining factors when lenders are calculating auto financing offers. Indeed, it is often the primary factor, so you should know where you stand with your credit history before you start applying for auto loans. If you are unsure, it’s a good idea to take the opportunity to find out. Financing opportunities are not the only expense that is often based on your credit score. Your local insurance options and other credit offers will be, too. Learning about your credit score will let you find the best financing.
Type of Car You Want to Buy
If you are looking for a practical, everyday sedan or SUV, you can expect better financing rates than you might get for a convertible or a luxury vehicle. The type of car you are looking to buy is, in fact, a major component of the financing offers that you will be eligible for. If you want to keep rates low, you should research what kinds of cars are the more affordable to finance before you start your hunt. These cars may offer lifelong savings, too, if they happen to be more affordable for local insurance options.
Nature and Duration of Employment
According to the Federal Trade Commission, there are many requirements for auto financing, and steady employment is often one of them. The exact specifications will vary by lender, but you can expect most financiers to ask for proof of employment and pay stubs or an equivalent proof of income. Why is this so important? Well, lenders want to make sure that you have the income necessary to pay your monthly loan bill. In addition to the proof of employment that you furnish, a lender may go through additional verification steps to ensure that your stated income is accurate.
These are just a few of the many factors that will ultimately determine the rates you are offered for auto financing. You should shop around and do additional research before you make your final choice on a loan.