Unfortunately, there are many mistakes people make when they are going to secure a car loan and many come down to your credit activities that could be hindering you from buying your next car.
Credit is a complicated game and frankly, banks and other financial institutions need to know and trust that you will play by the rules of the game before they will approve you for a car loan. There are other mistakes outside of credit but credit is the one thing that seems to affect people most when they are looking to get a loan to purchase a new vehicle.
There are some mistakes you need to avoid when you are looking to secure a car loan.
Mistake 1 – Not good enough credit score
- If you have not built your credit, you would need to build it to at least 660 for most loan institutions to consider you for a car loan. To start building your credit, get a small limit credit card or a secured credit card. Be sure you use the card to at least 50% of the card limit and make sure you make the payments on time. These activities show to credit institutions that you are responsible with credit.
Mistake 2 – Too much credit is not good
- If you have many credit cards or many lines of credit compared to your income ratio this could be hurting your chances to be approved for a loan.
- Also, something to be aware of is to make sure you do not apply for credit too often.
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Mistake 3 – Lack of job stability
- Whether you are an entrepreneur or you just started a new job, for you to be approved will require some things.
- You will need to show you have been at your job for at least over 6 months.
- You will need to provide a letter from your employer with what your guaranteed income is.
- And if you have been at your job for over a year, you can show your lender a T-4 proving your last year’s annual income.
Mistake 4 – Downpayment is too small
- If you bring a significant downpayment to a loan situation, the bank sees that as you being responsible with the loan and you are more likely to be approved, have better interest rates, and a longer-term.
- Typical loners like to see you provide that bigger down payment. If you are just short of the minimum downpayment and you need to make up for it, be sure you talk to an Alberta auto title loan expert for your getting a title loan on your current vehicle. It is immediate cash you can put towards your car loan.
Mistake 5 – Not getting a good term
- If your terms are too short, you will have much larger monthly payments. If your term is longer, your payments will be more affordable. Sometimes the length of the term will affect how much interest you pay. If you pay a substantial amount of interest each month, then your term is usually longer and your payments are smaller. Something to watch for when you get a car loan is getting your interest rate around 6% or lower and your terms no longer than 5 years.
Car title loans in Alberta is a place you can turn to when you are in a tight spot with being able to qualify with a typical lender. If you currently own your vehicle, RV, camper trailer, ATV, motorbike, you can get a title loan on your current vehicle to use towards the purchase of your new vehicle.
