Shopping for loans is never as much fun as it is to take a car for a test drive, but in order to afford a gently used or pre-owned car or truck you will usually need to go looking for a pre-owned loan. But there is no reason to worry in 2010, despite the doom and gloom of recent economic news. That’s because once you are equipped with some knowledge about how to get the best loans this year – and what constitutes the main difference between a bad loan, a good loan, and a really great loan – then you should have nothing to stress-out about.
Let’s start with the nuts and bolts of what you need to do in order to qualify for the best pre-owned loans on the 2010 market. Then after that we’ll touch on what to do if you aren’t in a position to meet those requirements so that you still have choices and opportunities to get pre-owned loans.
First, here’s what you need to get the premium quality loans that offer the lowest interest rates and the easiest, most user-friendly terms and conditions.
A Great Credit Score:
In today’s tight credit environment you will want to have a score in the high 600s or the 700s to get a good pre-owned car loan. If you are between 620 and 680 you’ll get a decent loan. Less than that you’ll have to pay more or you might even be denied a loan unless you go to a bad credit loan specialty company. But to get the best deals out there you should have a FICO number that is in the upper end of the scale – or above 700. Get up in the 750 range and they should roll out the red carpet and give you special loan incentives and discounted rates.
A Substantial Down Payment:
Having a nice down payment puts lenders at ease even more, because they know that you are offering them some real collateral that is worth cold cash no matter what may happen in the future. Combine your high FICO score with at least 20 percent down – or 25-30 percent if you can scrape it together – and you’ll be in fine shape to get a super loan even during these crazy and difficult economic times.
A Really Good Idea of What Vehicle You’re Buying:
Of course before a bank or lender gives you a loan they will want to know what kind of car or truck you are buying so that they can look it up in their handy blue book of used car values and figure out what it’s really worth. So bring as much detailed info as you can to the bank, including pictures and the date, model, and make of the vehicle. They may require an informal appraisal or send an expert to go look at the car, but that is just standard operating procedure for many lenders.
A Few Important Documents:
You’ll also want to have a file with you that includes copies of your latest tax return, your recent pay stubs, and recent bank account statements. Call the lender, ask them what they need to see, and then gather the papers before you go to visit them and it will make your pre-owned car loan application process go a whole lot faster.
Now if for one reason or another you aren’t in a good position to borrow, you can take steps to improve your borrowing power – like repairing your credit, saving up for a down payment, going shopping to nail down your choice of a specific used vehicle, or getting your paperwork in order.
But if your credit is seriously damaged, order a copy of your credit report and then sit down with a credit counselor or lender and come up with a practical strategy to get started raising your credit score. While you’re doing that try to set aside some cash for a bigger down payment, too, and soon you will be in a much better position to go apply for a pre-owned loan. You can also shop for your loan with a lender that specializes in loans to people with bad credit, or see if the car dealer has any special financing for people in your situation. One way or the other you will probably be able to find a loan for you and then go through with the pre-owned car purchase you’ve been planning for the New Year.
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