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Tips To Get An Approved Auto Loan

April 09, 2012 | Comments: 0 | Views: 119

Car is one of the most convenient means of transport. In today's world, car is more of a necessity than a luxury. Prospective buyers may want to buy pre-owned cars or brand new cars. Most of the mid-income group buyers would want to avail finance options to buy the car. It is a known fact that finance companies and banks rely on the creditworthiness of the borrower before granting the loan. Buyers who have poor credit history or bad credit may find it extremely difficult to get a car loan. Do not be disappointed, buyers will poor credit score can also avail auto finance by following basic tips.

Increase the down payment: Down payment is a lump sum amount paid at the time of purchase. Buyers can avail the finance option for the remaining amount. Borrowers, who fall in high-risk category, should increase the amount of down payment to brighten their chances of getting a loan. Amount of down payment is inversely proportional to the risk taken by the finance company. Higher down payment would mean lower risk for the financial institution; hence, it is easier to get a loan. Another benefit of increasing the down payment amount is that the borrower will have to pay lower interest rates.

Collateral: If the borrower's credit history is extremely bad, then the financial institution may ask for security collateral. Collateral refers to an asset pledged against the car loan. Providing collateral on demand reduces the risk factor and increases the chances of getting an approved auto-loan.

Spread the loan application: Prospective buyers must tap every available opportunity. Prospective buyers must apply for the loan in maximum finance institutions. One should also seek help from private finance companies, individual lenders or car dealers and brokers. Applying for the loan in more than one institution increases the chances of approval. It also helps the borrower's in understanding the different types of interest rates that may be available to them. One must keep in mind that every application will call for a credit check.

Check for credit report discrepancies: Credit report plays a crucial role in determining the credit worthiness of the applicant. Borrowers must carefully inspect their credit reports for any discrepancies. One must ensure that all disputes and discrepancies are resolved before applying for any loan.

It is best that the borrower's try to build their credit before applying for an auto loan.

Author is Gagan Modi, who provides online car loan eligibility calculator along with lowest quote on car loans in India.

Source: EzineArticles
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