SMART Tips for Saving on Your Auto Loan

 Americans love cars. It is one of the reasons why America is amongst the world's top car-owning countries. Every year, Americans spend several thousand dollars on auto loan payments. If you are looking forward to buying a car, make sure that you follow S.M.A.R.T. tips. The tips will help you save money and ensure that you do not opt for exorbitant auto loans.

Follow the S.M.A.R.T. Tips and Save Money

When car buyers have to make a decision about auto loans, logic takes a backseat and emotions become a controlling factor. It is the reason why car buyers say yes to financially harmful auto loans. To save yourself from the possibility of a financial damage, you must follow the tips.

S - Specific

The car is a huge asset. So, it is essential that you understand your requirements before buying a car. It is important that you have a specific image of the type of the car that you want. It will help you stay away from an impulse purchase. Consider the list of following factors because it will help you in choosing your perfect car:

1. Total number of passengers

2. Gearbox - Automatic or manual gearbox?

3. Cargo capacity

4. Vehicle performance

5. Driving conditions

6. Gas mileage

7. Safety features

8. Technological features

9. Parking space

M - Money

Remember that even if you opt for an auto loan, you will need to make a down payment of at least 10 percent of the total price of the car. Down payment is beneficial because it helps in reducing the loan amount. If you do not have money for down payment, do not worry. You can trade-in your old car and ask the dealer to deduct its value from the price of the new car.

A - Affordable

Selecting a specific car will be of no use to you if you cannot afford to buy it. Remember that car expenses are not limited to down payment. You will have to pay money for monthly loan payments, fuel charges as well as maintenance expenses. A general rule is to allocate no more than 20 percent of your total monthly income for car-related expenses. Keep this rule in mind and choose an auto loan that does not exceed your budget.

R - Reliable

There was a time when car buyers applied for an auto loan with the local bank only. Today, there are several ways of obtaining an auto loan. You can apply with a bank, a credit union, or an online auto financing company.

No matter what option you choose, you must ensure that the lender is a reliable one. If you opt for an online auto financing company, check the website's security certificate. If the website doesn't have one, stay away from it and save yourself from a potential identity theft.

T - Time

Car buyers are afraid of rate shopping because they believe that multiple credit inquiries will damage their credit score. But, do not refrain from rate shopping instead, finish it within 30 days. Why?

A time-bound search for an auto loan will ensure that you do not harm your credit score. FICO does not consider inquiries made in the 30 days prior to scoring. So, if you are able to get a loan within 30 days, it won't affect your score. This span of time can change to 14 days if the lender uses older versions of FICO and can increase to 45 days if the lender uses the newest formula.

Car buying is one of the most expensive purchases that Americans make. If you do not pay attention to your auto loan, you can make the worst financial mistake of your life. So, avoid making a bad decision and follow the S.M.A.R.T. tips.

Car Financing: What Kinds of Cars Are Rejected by Lenders

 Every perfect thing requires time. And, finding a perfect car requires a lot of time and patience because you have to find the right combination of beauty and technology. Won't you feel irritated if lenders reject your car and all your hard work goes to waste?

Why will Lenders reject your Car?

If you want to buy your chosen car quickly, you must know about the kinds of cars that are rejected by lenders. It will help you in making a decision and ensure quick completion of the buying process.

Extremely Cheap Cars

Today, the car prices have become obnoxious because of rising inflation and increased government regulation. Finding a car that is within your budget can be a difficult task. But, if you manage to find an extremely cheap car, don't think lenders will be happy. They will avoid financing because of the following reasons:

1. Cheap cars are damaged or totaled.

2. Usually, they are very old to function.

Also, lenders make a profit from the interest amount that you pay. If they approve a cheap car, they will not be able to generate enough profit from the interest amount. So, they avoid financing an extremely cheap car.

Extremely Old Cars

Old cars demand regular repair and require frequent maintenance trips to the mechanic's garage. If you buy an extremely old car, you will have to spend a large part of your income on repair. It will make regular monthly payments difficult and also, increase the risk of missed payments. So, lenders will not support your decision of buying an extremely old car.

Remember that lenders do not provide financing for cars that are older than 8 years. They also prefer less than 100,000 miles on the odometer.

Extremely Expensive Car

Lenders have to consider the risk factor while approving your loan application. If they approve an expensive car and you do not make regular payments, they may incur loss. So, they shy away from financing an extremely expensive car because they know that it is unwise to put all eggs in one basket.

Antique Cars

If you are an antique collector and want to buy an antique car, you will face difficulty in acquiring it. Lenders do not fund an antique car because:

1. It is challenging to find its accurate market value.

2. In the event of repossession, it becomes difficult for lenders to sell it.

Race Cars

Racing is a risky sport and several cars are damaged during the racing events. If your race car is damaged and totaled, it will be very difficult for lenders to recover money from you. So, they do not approve such a high-risk asset.