Different Types of Car Loan Programs

Cars we love but loans we hate!

Every car aspirant feels hatred towards car loans. Each one of us loves the automobile but detests the car loan process. And, the reason is simple. Lenders and dealers often confuse car buyers with different loan programs and leave them distressed. But, you don't have to worry anymore.

Whenever you decide to buy a new car, you must plan for the purchase and understand the different loan program available in the market. This way you will be able to protect yourself from shoddy lenders.

Plan your Purchase

It is very important to plan before choosing a car because it will help you in creating your "Affordability Range."

Affordability Range = Total Monthly Income - (Total Monthly Expenses + Savings)

If you keep your monthly payments in the affordability range, it won't create any problem in making regular payments. It will also help you in deciding whether you should go for a used car or a new car.

Make Financial Decisions

After you decide the amount of monthly payments that is comfortable for you, you have to make a few decisions that will help you in choosing the right loan for your dream car.

1. Loan Amount (Do you want 80% LTV or more?)

2. Loan Term (Are you comfortable with a 60-month loan term or not?)

3. Loan Fees (Are you okay with Application Fees, Process Fees etc.?)

4. Down Payment (Are you willing to make down payment and how?)

5. Co-Signer (Do you have someone to co-sign loan contract?)

Understand Different Car Loan Programs

America is the Land of Choice. Car buyers can choose from several loan programs available. Here are the most common financing programs offered by lenders, dealers and online auto financing companies to car buyers:

1. Good Credit Car Loan

A good credit car loan program is available at low rates for car buyers with:

>> Excellent/Good/Average/Prime Credit Score

>> Gross Monthly Income more than $2000 per Month

>> 10%-20% Down Payment/Trade-in

>> A Co-Signer with Good Credit

>> No Past Bankruptcy

>> No Recent Repossession

2. Poor Credit Car Loan

If you are a car buyer with credit score in the range of 580 to 619, lenders will offer you a poor credit car loan. You will receive slightly higher rates than the usual rates. Don't worry. If you make regular payments on the loan and improve your credit score, you will be able to get better rates in future.

3. Bad Credit Car Loan

These loans are reserved for car buyers with credit scores less than 580. Most bad credit car loan borrowers receive interest rates that are double to those offered to people with excellent credit score. But, all hope is not lost. You can make the loan rates affordable by:

>> Reducing the LTV

>> Bringing a Co-Signer

>> Choosing a Used Car of Lesser Value

4. Sub-Prime Auto Loan

A lender may approve you for a sub-prime loan if your credit score is anything but good (lower than 620). There are few lenders who don't differentiate between bad credit buyers and poor credit borrowers. They simply categorize them as borrowers with sub-prime or non-prime credit ratings and so, offer them sub-prime loans.

5. Zero Down Finance

Zero down finance is the name of the program that lenders approve without asking for down payment. This loan program is available at slightly higher costs because the lenders assume higher risks by providing a loan with higher LTV.

6. No Co-Signer Car Loan

The loan program is usually provided to car buyers with good monthly income and higher down payment. You must remember that both the things reduce lender's risk and so; he/she will not have any problem in approving your loan application without a co-signer.

So, these are the common loan program offered by the lending agencies. Whenever you go out to obtain a loan for your car, ask the lenders about all the different type of programs available with them. Choose the one lender that offers you multiple loan programs because it will give you the power of a favorable choice.

EZ Auto Finance is an online auto financing company that offers a wide variety of loan programs to its customers. Apply on the secure website for obtaining low rate bad credit auto loans and quick no down payment car financing. Apply now.

4 Tips 4 Better Rates on Sub-prime Auto Loans

A car is a requirement for each and every individual. It is a necessity for a borrower with good credit score. You need a car even when you have a subprime credit history. Yet, most bad credit borrowers complain of constant car loan rejection. But, things are changing with subprime auto financing.

Subprime Auto Financing – A Common Phenomenon

People with good credit scores are called prime borrowers. And, people with bad credit scores are known as subprime borrowers. Lenders that offer auto loans to subprime borrowers are called subprime lenders.

Subprime car financing is common these days as many Americans are having a bad credit history. Lenders know that they cannot shy away from offering auto loans to bad credit borrowers because there are so many of them. They would lose a considerable amount of business if they didn’t offer subprime auto financing options.

Important Tips to Get Guaranteed Approval on Sub-Prime Credit Auto Loans

Yes! It is possible to get guaranteed approval on subprime car loans if you understand these important tips and follow them.

Credit History

Your credit scores play an important role in getting any type of loan. Even if you have subprime credit, it is necessary that you check it. An accurate credit score can help you avoid scams. There is a possibility that lenders may con you by not offering lower rates under the pretext of a bad credit score. So, always check your credit score.

When you check your credit ratings, you must go through your credit report as well. Look for discrepancies. If you find any error, report it to the concerned credit bureau. It is better to remove all errors from your credit report because it will improve your credit score. You can also increase your credit score by making regular monthly payments.

Down Payment and Co-Signer

A large down payment increases your chances of getting a subprime auto loan. When you put money down, the car loan amount reduces. There is also a decrease in the lender’s risk. As a result, getting lower interest rates becomes easy for you.

When you have a co-signer, the lender is sure that his investment is safe. This will increase his trust in you and your car loan approval chances will increase.

Search for Lenders after Making a Budget

When you make a subprime car loan budget, you get an idea of your affordability. A budget is a necessity because a planned credit purchase is easy to manage.

Once you know how much you can actually afford as monthly payments, start your search of finding a subprime lender. It is always better to search for car loans first and then choose the vehicle. When you have a pre approved auto loan, it takes pressure off your mind and you are able to make a better car choice. Also, you avoid unpleasant car financing surprises at the dealer’s lot.

Submit your car loan application at many places because lenders don’t have common criteria for subprime auto loans. It is possible that few lenders may consider your score very bad while others may think of it as average. So, it is always better to apply with several car lenders.

Traditional financial institutions and banks are reluctant in offering auto loans to subprime credit borrowers. So, it’s better to avoid them. You can apply with a credit union if you are its member. You can even opt for online subprime auto loans by applying with online auto financing companies. These companies offer instant approval because they work round the clock with a large network of lenders and dealers. Remember to check the authenticity of the website. Apply with only reliable car financing companies.

Comparison and Negotiation

After receiving several car loan quotes, compare them on factors like interest rate, monthly payment, APR, car loan terms and conditions, pre-payment penalty, etc. When you compare on all these aspects, you get a clear picture.

Once you have chosen the best subprime easy auto financing program, negotiate with the lender. If he is convinced that you will make regular payments, he will definitely lower your monthly payments.

Subprime auto loans not only allow you to buy a car but also help in improving your credit score. With simple yet extremely effective tips, getting subprime car financing will become very easy. Don’t forget to use them while applying for your next car loan.

Getting Subprime car financing is simple with EZautofinance.net. We have several subprime auto lenders in our network who help us offer instant and guaranteed approval on subprime auto loans. Apply now and get an opportunity to own a car!