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Car financing pitfalls and solutions that you should know

Snapshot: We discuss some common car financing problems that a customer faces and ways of fixing them quickly.

Auto loans reduce the costs of your financial commitment towards your next used or new car. However, car finance is not merely confined to the leasing of your dream vehicle, the figures shown by the financial calculator, credit checks, etc. It has certain pitfalls too. In general, most auto loan issues take place when the contract is being made. Under the circumstances, you end up with avoidable expenses on your hand. Here, we discuss some common car financing problems and ways of fixing them quickly.

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Be aware of your credit rating

As a buyer, do know that the primary factor to make your costs go down is your credit rating. If you have a good credit score, car finance providers can trust you with timely payments of the principal amount, car loan interest and other financial charges. A higher credit rating will also help you get a more advantageous interest rate. First of all, ask the Credit Bureau for your credit report, check out the ‘wrongs’ if any, and find ways of improving upon the score.

Contractual agreement is a must

It is very important to have a deal in place with your car dealer in black and white as a contract. The contractual agreement will lay down the amount of installments, interest payable, and other charges pertaining to the loan that you may intend taking for the purchase of a used or new car. Make sure that the agreement collates all the details clearly and comprehensively.

Compare rates of interest

You may avail independent car financing from a credit union, bank or web based lender. Check out the cash rebates and discounted cash loan offers from multiple lenders to reduce the vehicle’s price. As quite a few lenders would run a credit check after receiving your application, and then quote their interest rates, its best to be on top of your credit score before reviewing and comparing their interests.

 

Discounts and cashback

Most dealers offer generous car loan deals such as zero percent interest or rebates. You should opt for a financial incentive that brings more savings across the life of the loan. While zero percent financing will reduce your EMI amounts (and monthly burden), the rebate will serve as the down payment or a percentage of the same. If your pocket allows, make a large down payment even if you do not qualify for zero percent interest car financing. You will also find incentive offers with reduced interest rates that start at zero percent and go on increasing on the basis of your qualifications as a credit seeker and the length of the loan.

Hard bargaining

Refrain from arriving at the dealership minus any approved auto financing in your hand. Also, it is wrong to assume that you will qualify for low interest rates at the dealer. Have a fair idea of all financing options available to enhance your bargaining power and negotiate the lowest permissible interest rate.

With these tips in place (and a bit of shopping around) you will find yourself on top of your car financing task. Get cheap interest rates on your auto credit and become a winner - long before you hit the roads in your dream vehicle.

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