If you are in the market for a new or used vehicle, one of the first things to consider is how much can you afford. There are many factors that go into the determining loan amount for an auto credit approval. The end goal is to get into a loan that has a reasonable, low rate that results in a short-term and affordable monthly payment. In order to get financed through a lender, you will have to meet a specific criteria for auto finance prior to approval. Here are a few things to consider before you speak to your lender about financing.
Credit Score
One of the most important factors in obtaining auto credit is your overall credit score. Your credit score or FICO score is a number that is calculated based on results from all three credit reports; Experian, TransUnion and Equifax. Information that is gathered and highlighted from your credit reports include; past and current credit history, delinquent accounts, credit card types, revolving account statuses and past and current address. If you have credit cards that have defaulted or unforeseen accounts that have been placed with a collection agency, it will negatively affect your FICO score. A good FICO score is one over 650. Each lender has different credit criteria for auto finance and more stringent credit rules than others, so it is important to speak with a few different lenders or banks before you decide who to borrow from.
Down Payment
A substantial down payment when applying for auto credit is essential for getting your loan payment down and helps with qualifying for a lower interest rate. When you offer up to 10 percent of a down payment on the balance of the new vehicle, you are establishing a form of collateral on the auto finance loan. Underwriters look at this favorably because you are less likely to default on the auto finance loan in the long-term.
Debt to Income
Your debt-to-income ratio is extremely important when it comes to getting the best interest rate for your auto credit loan. Information about your overall debt and history can be obtained from the data on your credit report. Once you provide proof of all of your income such as your previous year’s tax filings and recent pay-stubs, the lender will analyze and review your monthly income with how much your monthly bills or debts are. You will want to keep the amount of current owing debt low in order to get the best interest rate. If you have outstanding debt or high credit card balances, consider paying them off prior to applying for an auto finance loan.
Getting the best interest rate for your auto credit loan will simplify your car buying experience and help improve your credit score long-term.
Roi del’Auto is car dealer in Gatineau that offers a wide selection of new and used vehicles as well as auto finance services at the lowest rates possible. We offer second chance auto credits and guarantee that you application will be approved even if your credit history has not been perfect. Apply for your auto credit today and tomorrow you’ll be driving your new car! Article Source: http://EzineArticles.com/?expert=Gustavo_Natotschiev_Lopes Article Source: http://EzineArticles.com/8313996