Getting a car loan is undoubtedly one of the toughest steps involved in buying a car. However, with our tips on getting your auto loan approved, you will not only be able to get a car loan quickly, you will also be able to get it cheap.
Improve Your Credit Score: Your credit score is the most important factor determining the approval of your car loan and the amount of interest that you will pay for it. Therefore, the first step towards getting car loan approval should be to get your credit report and check whether you have a score good enough to get a loan approved. In order to get a low APR car loan, you should have a credit score of 680 or more. If you have a score below 680, then you will still get a car loan but at a much higher APR than you would have gotten in the earlier case. If your credit score is less than 550, then be prepared to apply for a bad credit auto loan and pay an extremely high rate of interest.
Clean Up Your Credit Report: Once you have received your credit report then clean it up before you apply for an auto loan. Check your report for errors, redundant or old addresses, unused accounts and request to get it updated as soon as possible. Apply for a car loan only when your credit report is clean, crisp and shows a good credit score.
Get Rid Of Extra Credit Accounts: Owning a large number of credit cards or accounts leads to a substantial lowering in your credit score. So it is better to close all your unused or lesser used credit accounts or cards before you apply for a car loan. This would increase your credit score considerably and also your chances of getting your car loan approved. However, remember not to close your oldest credit account, since this would help in creating a more positive credit picture. Similarly having taken an auto loan earlier increases your chances of getting a new one.
Show Stability: Almost all auto loan companies are more predisposed towards giving loans to people who are stable and have a regular income. Therefore, if you are fresh out of college, have just moved to a new city or own your own business, your chances of getting an auto loan go down considerably. The best thing to do is to wait till you are firmly established in your job or your new city for at least six months to an year and then apply for your auto loan. If you cannot wait, then apply for your auto loan before you move to a new city or before changing jobs.
Show A Substantial Monthly Income: Auto loan companies have to ensure that you have the means for paying back your auto loan during the allotted time period. Therefore, your chances of getting an auto loan approved go up considerably if you have a regular monthly income of at least $1800 or more. If not, then you better start looking for a co-signer for your auto loan.