Auto Credit

When Is The Right Time To Apply For Auto Loans?

n auto credit is meant to assist you in buying the car of your dreams. Naturally, you would want to apply immediately you spot the vehicle you want. This is logical but you may need to consider certain factors.

The auto credit will certainly cater for almost all the expense of buying the car. However, it does not erase the fact that you will be paying for the car for as long as the loan term states. That is, the finance is just a borrowed assistance but the cost of purchasing the car still lies squarely on your shoulders. So, when is the appropriate time to ask for auto loans?

When you have already secured a stable job with an adequate monthly income, you can easily shop around for the car you need and then apply for the auto loans. This will put you in a good position to repay the loan over the time duration you will be given. The lender could also cut down on your interest rate knowing you are worthy and capable of repaying within the shortest time possible. Furthermore, a good income enables you to come up with a handsome down payment that any lender cannot refuse.

It is also advisable to apply for an auto credit immediately after verifying your credit rating. If you have a good credit, it is automatic that your chances will be high and your choice range will be wide. With a bad credit, you will seek the specific lenders dealing in bad credit auto loans or no credit check auto loans.

Finally, you could take advantage of tough economic times like now to apply for auto loans. This may sound absurd, but if you have some cash and a good job, you can take advantage of the current low demand for cars that has driven dealers out of business or forced them to offer great incentives.

 

Calculations Involved In Auto Credit Financing

Auto credit leasing or personal contract purchase is the new entity in the lending community and transactions which allows borrowers to take a car for few years at very low monthly installments. The main talking point about this auto credit option is that the applicant can get finances for any car, get a new car after few years and still pay low monthly installments for it. If one hears it like this then it might seem a little hard to believe but the following mentioned example carries the calculations involved in leasing which can be read to see for sure.

For example, take the price of the car in the current scenario to be 1000 dollars. This is just taken as example to clarify the calculations. Let the loan term be a couple of years and the interest charged be 10 percent. When auto credit is taken, the yearly installment comes to 600 dollars every year because of the interest amount addition in the loan. However, in auto credit leasing, the lender or leaser calculates the price of the car after two years. It is calculated by checking the reduction rate of the car or depreciation factor. Let’s say that the car’s price drops to 700 dollars after two years. The depreciation factor is taken high but it is the case with many cars out there.

Now, the difference of the prices is 300 dollars and this is what is taken on auto credit. This means that by adding the interest the total money that the applicant has to pay back over the course of the loan is 360 dollars. One can easily see that the price of the total installment in auto credit leasing is less than what it is for simple auto credit for the first year. However, this thing should be noted that the applicant doesn’t retain the car and gives money just for driving it for few years.