Car buyers often head to a dealership already knowing which vehicle they want to buy. They then discover they can’t obtain the necessary financing and become frustrated. What many people don’t realize is that lenders take the make, model, year and mileage into consideration when determining if they should finance a purchase. They are more likely to approve a loan for a newer vehicle with fewer miles than an older, more luxurious car with higher miles. By choosing a different make and model, a car buyer may find their odds of approval increase significantly.
A complicated formula is used by lenders to determine which vehicles they are willing to finance and which should be avoided. Furthermore, each lender has their own specific formula. However, most do take into consideration factors such as the mileage and history of the car as well as the potential borrower’s credit history. This means one lender may approve the funds for a car while another rejects the application. For this reason, car buyers need to be flexible and not settle on a specific make and model or lender.
The interest rate also needs to be taken into consideration. For example, a person may find they can obtain the older, more luxurious model simply by choosing a different lender. However, doing so may mean he or she pays significantly more in interest. For someone looking to improve their credit and get on a better financial footing, this is often not the right move. Hold off on the desired car for a few years until the financial situation improves. Delayed gratification is good in this situation.
Consumer Portfolio Services works with individuals who have bad credit or no credit and wish to obtain a car loan. However, keep in mind the above tips when choosing which car to buy. Furthermore, keep in mind that a new loan may be obtained once the credit score improves. Talk to the lender to see if there is any prepayment penalty. If there isn’t, obtain the loan. However, if there is, it may be best to continue shopping. The goal is to pay the least amount possible for the chosen car. By selecting wisely, this can easily be accomplished.