How To Increase Your Chances Of Getting An Auto Loan Approved

By Author: J.J. Yong
Total Articles: 963
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There are a lot of different types of loans which we will encounter in our life, for a variety of different reasons. Getting an auto loan to finance a car is one of the most common types of loans today. Regardless of the different intention to obtain the loan from, the most important part is to get the loan application approved off first of all. There is no magic in making this happen; however there are key tips which we can use to increase your chances of getting the loan that you have applied for.

I. The higher your credit score is, the greater your chances of getting your loan approved. When you apply for a loan, the bank or financial institution will request for a copy of your credit report, this is used to weigh your credit standing and what is the risk impact of lending to someone at that credit position.
a.The higher your credit score is, the lower the interest rate on the auto loan which you will be offered
b. It is advised by the credit specialist that it is beneficial to improve on your credit score and only apply for an auto loan when you reach for a credit score of 680 or above.

II. Avoid ...
... applying for any loan if you had declared of bankruptcy in less than three years time. Wait for the disruption from the bankruptcy to be cleared off before seeking for the loan. This helps to increase your chances of getting your auto loan approved.

III. Clear off your credit cards balances as soon as possible. Don't just pay for the minimum amount but try to clear your outstanding credit card balances as promptly as you possibly could. Priority to pay off your credit card payment above everything else will definitely help.

IV. Don't apply for any new auto loan if you have just changed to a new employment or moved to a new house. It is advisable to wait till you are at least six to twelve months into your new employment and have settled down nicely in your new home before you activate your auto loan application. It is never too late to wait for the appropriate timing, never rush to get any until everything are stabilized.

V. The higher the down-payment that you are able to spend, the higher the approval you will likely be getting because the bank has less skeptical over their applicants who are willing to place a high down-payment on their loan. By increasing the down-payment, you are actually trying to reduce your monthly repayment amount, considering everything else such as loan tenure and interest rate to be the same.

VI. Find yourself a co-signer who can act as your guarantor will definitely increase your chance in obtaining the necessary approvals. But in reality, finding a co-signer is extremely difficult as you are asking for a big favor for someone to put himself in risk if you default with the loan payment one day. Even if you found someone who is willing to be your guarantor, you need to be fully committed to be liable for the loan payment because you may end up not only hurting your own credit but your co-signer' credit at the same time.

VII. Check your latest credit report and highlight should there are any erroneous records which need to be corrected as soon as you possibly can. Remove any old inactive accounts as they will only victimize your credit score.
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