Some Troubles With a First-Time Auto Loan

When applying for an auto loan for the first time, chances are that no lender would take the applicant seriously as they don’t have any record of prior credit and payments. Giving finances for first time applicants is quite a risk for lenders as they don’t know whether their money can be made back or not. A good credit score shows a good record of payments, most of which are made on time but no such thing is shown in nil credit score applications. However, this can be usually taken care of by going for a used car which comes with lower installments and lower amount. One might think that this is the first and only major worry that they are going to face in first auto loan but there are several others which include:

In case of a used car auto loan, most lending institutions refuse to approve the finances if the car in question is older than five or six years. This is usually because of the low price of the car and as well as its low life. Moreover, some of the major problems include being overcharged on interest rate which results in ridiculously high monthly installments. There have been several first loan cases in which the applicants ended up facing repossession, defaults or went in upside down situation during the loan term. These problems impact their credit score for life and make it very difficult for them to get approved for finances again.

Moreover, used car auto loan also comes with the expenses of car servicing, detailing, maintenance fees and getting new body or spare parts which are important to make the car run smoothly again. This increases the cost of the loan or completely eliminates what little down payment was being provided by the applicant to the lending institution.

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