Posted Friday, Oct 20, 2023
Getting a loan from your auto dealer can help you cover the financial cost of an expensive used car that you may otherwise not be able to afford. While it is easy for everyone to get approved at Royal Auto Dealer, there are certain steps you can follow to improve your odds of success while also securing favorable interest rates.
When you apply for an auto loan at Royal Auto Dealer, La Verne, our lenders may look at your credit score before proceeding with your application.
The credit score is a way to gauge how reliable you are at making your monthly payments. A good score can help you get favorable interest rates. On the other hand, a poor score may not stop you from getting approved, but it may result in less-than-favorable interest rates.
Once you have determined your credit score, you can take certain steps to increase it. This includes paying your bills on time and lowering your credit utilization ratio. Any missed or late payments can tank your credit score.
It is a good idea to inspect your credit report to see if all the information included in it is accurate. Make sure to correct any mistakes before you apply for a loan.
Any wrong information entered on your credit report will affect your loan application. Note that credit report errors are more common than you think, with the most common errors being incorrect accounts, account reporting mistakes, and the wrong personal information.
These errors can have a dramatic impact on your financial life, especially if you are applying for an auto loan. For this reason, it is important to take steps to address these errors so that your credit report reflects your true creditworthiness.
A trade-in is one of the easiest ways to reduce the sales price of the car you want to buy. Our auto dealer will offer you credit in exchange for the car that can be used for buying the other car.
You could, of course, try to sell the car privately, but this process is usually more stressful and very inconvenient. This is because you will be required to handle all the necessary paperwork yourself.
The best way to reduce your monthly interest payments is to make a sizable down payment. A downpayment is a percentage of the sales price that you pay upfront. It is paid in cash at the time of the transaction. The down payment will reduce how much money you have to borrow, which lowers your monthly payments and the total amount you end up paying in interest.
As a rule, you should try to pay as much as 10% of the price to the used car dealership. If at all possible, you should try to increase the amount of down payment as much as possible.
You can also reduce your monthly interest payments by submitting your application with a co-applicant. Simply put, a co-applicant is someone who will be equally responsible for paying back the full amount. Ideally, the co-applicant should have a higher credit score than you. Having a co-applicant is helpful if you don’t have a good credit score or if you want to get approval for a lower interest rate.
Since co-applicants are financially responsible for repaying what is owed, it makes sense to only ask a friend or family member.
You will need to provide evidence for all the information you put on the loan application. The things you may need from the auto loan application will vary depending on the lender. For the most part, you will need to provide certain documents, such as pay stubs and your driver’s license. You will also have to have these items with you when you walk into the dealership.
Let’s take a look at the most common pieces of documents you will likely need:
Many buyers are in the habit of scheduling the finance and test drive on the same day. This is not a good idea because you will be too preoccupied with making necessary arrangements for financing to properly test drive the car. Trying to schedule both on the same day is possible but could distract you from doing either task properly.
You may be wondering: why are dealers so happy to offer loans for everyone? The answer mostly boils down to market competitiveness. Many dealers offer all kinds of incentives to buyers, including auto loans. By offering loans, used car dealerships can get more clients and increase their sales more readily than waiting for buyers to arrange financing on their own.
Used car dealerships usually have arrangements with many lenders and financial institutions whom they have a working relationship with.
Although buying the car with cash outright may be less expensive in the long run, working with the dealership can reduce both time and effort in doing so. Besides, you won’t have to break into your emergency savings account to finance the sale. Royal Auto Dealer offers these loans to customers who may otherwise not be able to qualify for financing under banks and credit unions.
What’s the tradeoff? There is none. You get competitive interest rates along with the convenience of doing everything at the same place. Dealerships also have an incentive to offer competitive interest rates matching traditional banks and credit unions.
Ready to get approved for a used car loan? Click here to get in touch with the experts at Royal Auto Dealer!