No Credit Checks Necessary When Applying For Car Title Loans
When you are using your vehicle as collateral when applying for a loan, there is no credit history check required in the application process to get an estimate to borrow money and get a loan against your car.
You do not have to disclose your credit history or your current credit score, that has no weight in the process and will not influence how much you are approved for.
Your vehicle is a tangible, physical item that can easily be repossessed if you default on your loan or cannot make repayments on it.
You Will Be Lured Into An Eternal Debt Trap
Unfortunately, most people will actually not be making their regular car payment on that same car in year 7.
Around year 5 or 6, theyll get bored with their current ride and trade it in for a new vehicle. Since theyll still be owing on their car loan, theyll roll the remaining balance, called negative equity, into a new car loan, effectively never getting out of debt.
Some who trade-in for a new vehicle before year 4 or 5 might actually never get out from underwater of their car loan. They NEVER stop owing more than their car is worth!
You can avoid all the above headache by simply committing to pay off a 7 year car loan way ahead of schedule.
Apply And Review Offers
You may want to get prequalified with several lenders before submitting your first personal loan application. Applying for the loan could be as simple as accepting one of the prequalification offers. Or, if you haven’t checked your rate with the lender, you may need to submit your personal information. Either way, you generally have to agree to a hard credit check at this point. Hard credit inquiries may hurt your credit, but that impact is typically small and temporary.
Lenders will then review your information to determine whether you qualify for a loan. If they like what they see and want to take you on as a borrower, they’ll make an offer. Once you have an offer in front of you, look it over in detail, including the offered loan amounts, repayment terms, interest rates and monthly payments. Know that you don’t have to accept a personal loan offer, and you may be able to accept less than the full loan amount if you’d prefer.
Once you accept a loan offer, you may need to verify the information that you’ve submitted by sending copies of the documents you gathered earlier. You could also be given the option to set up a direct deposit to have the money sent to your bank account, or your loan may be sent by check. If you’re using a personal loan to refinance or consolidate debts, some lenders can send the funds directly to your current creditors.
The timing can vary by lender, but the verification and funding process often takes around one to six business days.
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Check Your Interest Rate
When you submit a loan application for a personal loan , your credit score might take a hit. Thats because a personal loan applicationlike applying for a new credit cardtriggers a hard inquiry on your credit report. Inquiries arent necessarily bad, but having too many might look like a red flag. Luckily, many online lenders, like LendingClub Bank, let you check your loan rate and review your potential loan offers before applying without impacting your credit score.
Discuss With Your Lender Before Deciding
When youre having financial difficulty and are not sure if youll be able to afford your car loan, the stress of it all can cause you to make rash decisions. However, the best thing you can do is to stay calm and get ahead of the situation by discussing it with your lender. Since your lender will likely not want to go through the motions of repossessing the car or having you transfer the loan to another borrower, they will be open to negotiating a solution to the problem. Overall, what they want more than anything is to be repaid in full, even if it takes fewer or more years than was originally planned.
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Dont Fall For The Gap Insurance Speech
Gap insurance is something car dealers and lenders sell you to cover the gap between what an insurance company thinks your car is worth and what you owe on your car loan in the event youre in an accident and the insurer declares the car a total loss.
Lets say you crash your car. The insurance company pays out $10,000, but you still owe $12,000 on the loan. Gap insurance would cover the remaining $2,000.
The thing is, if you structure your auto loan properly with a 20% down payment and a short, three-year term, you shouldnt need gap insurance. With good loan terms, there should never be a scenario where youd owe more than the car is worth.
So if your dealer is really pushing you for gap insurance, that might be a sign that your loan terms need re-evaluating.
Tips For Avoiding An Upside
Its best to avoid an upside-down car loan altogether whenever possible. Be diligent with research before you buy a car and understand all the costs of options, financing and taxes so you arent already upside down when you drive out the door.
For most people, that means accepting that you cant afford to purchase a new car. Instead, look for a late-model used car with low mileage. The original owner will have paid the price for depreciation in the first year, so the purchase price should be at least 20% off the original cost.
If you are still tempted to buy new, try using the 20-4-10 rule, which means 20% down payment no more than 4-year loan and the monthly car payment plus insurance cant be more than 10% of your gross income. If you cant make those numbers work, its time to go back to the used-car lot.
The following tips can help you avoid an upside-down auto loan:
Choose the shortest repayment plan you can afford. Shorter repayment plans mean lower interest rates and faster payoff. For example, borrowing $25,000 for three years at 6.93 interest would result in $2,764 in interest paid. The same deal over four years would cost $3,716 in interest and a five-year loan would be $4,715 in interest. Thats about $1,000 more each year for the same loan. The difference would be magnified even more if your credit score was under 650.
Make a down payment of at least 20% of the cars total cost. This equals the 20% depreciation on the car that happens when you leave the lot.
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Choose A Few Lenders You Like
Once you know how much you can afford and your credit score, start looking for a lender. A few options include:
- These local institutions often offer low interest rates than large banks. You’ll have to become a member, and membership is usually bound to things like geographic location or an employer.
- Banks. Most banks also give loans like auto loans. Banks you already have a relationship with may offer you affordable rates. However, many larger banks’ auto loans generally start with a higher interest rate than credit unions.
- Online lenders. A number of online-only banks and lenders offer car loans. While they can sometimes offer lower rates due to the fact that they don’t have any overhead costs, there’s no brick-and-mortar office to visit.
Shop Around For A Lower Rate
While securing a lower interest rate wont lead to a smaller car loan, it could reduce the amount of money you pay for your loan over time. With a lower APR comes a lower monthly payment that might make your new car loan easier to handle over the long run.
A car loan calculator can help you estimate how much your payment will be based on various interest rates and loan terms. Make sure to play around with the numbers based on your credit score, then apply for an auto loan before you go to the car dealership. Heres why: Dealers can and often do raise customers auto loan interest rates for their own profit. One of the best ways to make sure you receive the car loan APR you deserve is to get a preapproved car loan.
Apply for a pre approved car loan online
You dont have to know the exact car you want to get in order to get an auto loan preapproval, but you should have an idea of how much you want to borrow and for how long. Then when youre ready to shop, fill out an online form at LendingTree and receive up to five auto loan offers from lenders, depending on your creditworthiness.
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How To Apply For A Student Car Loan
Finding a car loan is pretty straightforward. Heres how it works:
Quickly Compare Personal Loan Offers
Although checking your rate with a personal loan lender is often a quick and easy process, shopping for a loan can still become a hassle. Experian’s tool can help. You can create a free account and log in to submit a prequalification request. Experian then shows you available loan offers from multiple partners, allowing you to quickly see which lenders might be the best fit. The offers are also good for 30 days, giving you time to consider and compare other options as well.
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How Much Will A Bank Loan To Me
This depends on the type of loan, your credit and debt situation, and what you’re personally willing to put forward to secure the loan. In general, better credit, lower debt commitments, and more valuable collateral will help you secure a larger loan. The lower your loan balance is, compared to your collateral, the better.
Get Protection From Dealer Markups
Dealer financing is convenient, but if you havent shopped around, a dealership finance manager might try to take advantage of that and mark up your interest rate. That could mean youre paying 1 or 2 percentage points more than you should, which can add up to hundreds of dollars over the life of your loan.
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How Long Should My Car Loan Be
Historically, 3-5 year terms were the standard for auto loans. However, longer loan have been on the rise in popularity. Now loan terms may be as long as 7 years!
Loan terms are measured in months, and borrowers can choose from 24 to 84 month periods. Short and long-term loans come with their own respective set of pros & cons.
It is almost always best to select the shortest loan term that you can afford.
Short Term Loans: Larger monthly payments. Smaller interest rates. Build equity quicker
Long Term Loans: Takes longer to build equity in your vehicle. Must keep up with payments longer, but payments are smaller. Interest rates are higher than short term loans.
How Do I Qualify For A Car Loan
Answered by Jim Manelis, car enthusiast and Chase Auto Executive.
You’ve found your dream car and can’t wait to get behind the wheel. Now, you have to figure out how to pay for it. Most car shoppers need to finance the purchase. That’s when you borrow money from a dealership or a lender and pay them back over time, usually with interest, to purchase a new or used vehicle.
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Things To Do Before Taking Out A Car Loan
Taking out your first car loan can be tricky but not if youve done your homework.
In the wake of the Barefoot Investor hitting the bestseller list, people are becoming savvier than ever about loans. But with an abundance of information to sift through, researching your car loan can become overwhelming and time-consuming. Thats where we come in here are our top three tips for what to do before taking out a car loan.Research your car financeWhen it comes to car finance, make sure you dig below the surface. Taking the time to understand your car loan options is important to make sure you get the best deal to suit your needs. This might involve searching for car finance options online through different financiers websites or online reviews. You can also reach out to family and friends who have had a car loan, as they can provide advice from their experiences too. Overall, giving yourself the time to see what your options are can definitely help you make a more informed decision.
Cost To Consider When Purchasing A Car
Cars, whether theyre new or pre-owned are a big responsibility and a big expense. There are many different costs to factor in, such as fuel, insurance, oil changes, repairs, tires, etc. Not only that, but youll need to consider other elements, like where youre buying the car from, what your warranty will cover, if any, and of course how youre planning to pay for the car in the first place.
Dont Forget The Car Loan Itself
Depending on your current income and how expensive the car is, it can take years to finance completely, so its common for many would-be car owners to apply for a car loan. A car loan, like any kind of loan, is a system that allows a buyer to pay off the total value of the car in monthly installments, making it more affordable. However, while affordable, it does come with certain costs. Be sure to factor in the interest and fees of getting a car loan.
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Tapping Your Retirement Account
If you really have no credit but you have been putting away money into a retirement account, you might be able to tap into that account and borrow some money so that you may buy a car. Its not something that you want to do when you think about the future but if you manage to put it back as you promised yourself, then no harm should be done. And no one will be asking you questions about your credit history, job or anything.
However, you may want to read the fine print as carefully as you can before proceeding. This is because while some retirement accounts may allow you to borrow without any costs involved, others may have penalties and fees.
Plus, depending on how much you have put aside, there may be a limit to how much you can borrow as it happens with a 401 retirement plan. This is why you may want to ensure that the sum you get can cover the amount you need from the car.
How Does Car Financing Work
When you finance a car, a financial institution lends youthe money you need to buy the car. In exchange, you pay the lender interest andpossibly fees to borrow that money over a specific number of months.
Car financing options include banks, credit unions, online lenders, finance companies and some car dealerships. Financing through a credit union or bank may be less expensive than getting a loan through a dealership because dealers may increase interest rates to pay themselves back for arranging your financing. And some dealerships provide their own financing. Referred to as in-house financing or buy-here, pay-here dealerships, these car dealers may charge interest rates that are much higher than those charged by other types of lenders.
If you plan to finance a car, youll need to shop and apply for a car loan. If youre approved, youll make monthly payments until the loan is paid off. Each payment you make will be split into the following two parts:
Part of your payment may also go toward certain loan fees, likelate payment fees.
Once you repay the loan in full, your lender will usually send a lien release document to the state transportation agency. The cars title will then be updated and transferred to you.
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Cosigners Are Only Responsible For The Loan
In a cosigner situation, one borrow is the primary borrower. Thats usually the person whos going to use the car, and who has the primary responsibility in paying it off. For example, if a parent cosigns on a loan for their daughters 18th birthday, its the daughter who will drive the car and be primarily responsible for payments.
But if she falters and falls behind, then the parents are on the hook to make the payments. The lender will come after mom and dad for the money, in that case. Even worse, the late payments will be listed on both the daughters and the parents credit report, potentially ruining both of their credit scores.
Thats a scary thing to think about if youre on a cosigned loan, but at least the damage is limited to just your credit history. Thats not necessarily the case if youre a co-borrower, however.
