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You go through the process of filling in the paperwork and requesting an auto loan. However, the bank stops you in your tracks and you are headed home with auto loan rejection. Believe it or not, sometimes being turned down for an auto loan can be a good thing. Through rejection, you get the opportunity to analyze your mistakes and fix them at the earliest. There are many ways which can lead you to auto loan approval. The key lies in seeking the important sources and leveraging them.

Effective Remedies to tackle Auto Loan Rejection

Closely examine the below-mentioned suggestions so that the next time you apply for a loan, you enjoy faster approval.

1. Immediate Steps after Auto Loan Rejection

The most important thing to do after getting rejected is to look for the reason. You might receive a letter from the bank or the lender stating the reason for auto loan rejection and why you didn’t make the cut. Once you know the reason for rejection, you can work at fixing the situation before re-applying. Check your recent credit report and correct the mistakes, if any. Also, pay off all your past debts before you look to obtain a new one. However, the most important thing to do after getting rejected is to not lose hope as you can work on your situation, put a strong case forward, re-apply and get approved for an auto loan.

2. Short-Term Steps to improve your Credit Score

There are quite a few ways to increase your creditworthiness in the eyes of the lender. You can apply for your next auto loan with the help of a strong cosigner who will make things easier for you. A huge down payment also lowers the risk and reduces the loan-to-value ratio for the lenders. If you are a student, you can borrow money from your parents and make the down payment. Another source of obtaining an auto loan is an online portal. Several online auto financing companies are available at fingertips.

3. Long-Term Steps to ensure a Stable Financial Situation

Looking forward towards long-term goals is the ultimate key to building a strong financial foundation. Focus on building your credit by making timely payments and clearing off old debt. Additionally, you can ask your lender or bank to generate automatic payment system on your auto loan. It will ensure that you do not have to remember your dates of payment, but only maintain the required balance in your account. Once you start improving your credit score, you can request your creditors to remove any negative information from your credit report. Also, you can work on increasing your current income sources and amount, respectively.

Look Ahead to Better Financial Situation

Despite the rejection of your auto loan request, the days of redeeming your financing situation are surely ahead. By keeping in mind a few important steps for the improvement of your current situation, you can walk into the dealership and choose your favorite car.

According to a report by the National Automobile Dealers Association (NADA), 2019 is going to be a good year for new cars as well as used cars. Car buyers will shop for 16.8 million new cars and trucks this year, but it doesn’t mean you should seek a new car only. According to Patrick Manzi, senior economist with NADA, there is a widening gap in monthly payments between used cars and new cars. And, it is one of the primary reasons why young, college students and value-focused car buyers will opt for used cars.

Used Car Financing Tips: Simplified Answers for Clear Understanding

If you are planning to buy a used car, your mind may be muddled with several questions: How to buy a used car with bad credit? How does used car financing work? What should be the loan term? Is it possible for a no credit car buyer to get a used car loan? How to get the lowest rates?

When your goal is to get the best deal on a used car loan, you need to focus on two things:

A. The Interest Rates on Used Car Loans

A used car loan should not give you nightmares. So, focus on getting low-interest rates. Many car buyers spend time in finding low monthly payments. But it doesn’t matter in the big picture. You can save money only when the interest rates are low. Period.

1. What is the Current Interest Rate on Used Car Loans?

If you take a look at the existing interest rates for an excellent credit buyer, a 60-month used car loan will come with an APR of 3.74%. However, when you have a bad credit score or a zero credit history, the interest rate will fluctuate depending on the severity of your credit score and current financial situation. According to a report on The Simple Dollar, if your credit score is between 500 and 589, the interest rate will 15.24% and monthly payments will be around $478 for a $20,000 auto loan with a term of 60 months.

2. Where to shop for Bad Credit Used Car Loans?

If you have bad credit, stop worrying. Credit reporting agencies know the importance of rate shopping in your car buying journey. If you apply with many banks, credit unions and online auto financing companies within 45 days of your first application, all the inquiries will be considered as one. So, apply with many lenders and choose one that offers numerous benefits: low interest rates, zero application fee, minimal processing charges, zero pre-payment penalty, manageable loan term, zero down payment facility, etc.

Compare different loan quotes. If lenders are offering 10% APR or more on used car loans, make a down payment to lower the cost of the auto loan. Also, bring a cosigner to improve the credibility of your loan application.

B. Your Budget for purchasing a Used Car

According to Experian’s Q2 2018 State of the Automotive Finance Market report, used car loan payment amounts to $378 every month. The average auto loan payment for a new car during the same term was $525. Buying a used car is a better decision. But, to make it a financially sound decision, pay attention to numbers other than monthly payments.

1. Consider buying a certified pre-owned car from a reputed dealer. Even though it will be costlier than buying from a friend, you will be assured of the quality.

2. Save money on the insurance by only buying the insurance coverage that you need.

3. Calculate car registration fees by visiting the local DMV website of your state. It will give you a clear idea of the taxes and fees.

4. Calculate the average fuel and maintenance expenditure.

5. Find ways to add to the down payment amount.

Ascertain the total monthly cost of owning a vehicle via online calculators and compare the number with monthly payments and your income. If the numbers tell you to go for a used car, only then say yes. Remember that thorough understanding of the loan is essential to avoid any surprises later.

Buying a Used Car is a Smart Decision!

An average American buys more than 10 cars in his lifetime. And, if you are going to spend 30,000 (plus interest) on every car that you purchase, imagine the total expenditure. By choosing a slightly pre-owned car, you will be able to fulfill your dream of buying a car at affordable prices. Also, by following a few smart tips, you will be able to nab the best financing deal.

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How Much Credit Score You Can Attain?

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How It Will Be Beneficial for You?

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Is It a Legalized Service?

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