Posts tagged ‘car payment’

Student Automobile Financing

As with all new inventions, when cars first hit the market they were a luxury item, but quickly became a necessity. Youngsters these days can’t wait til they are old enough to drive. But, not too many parents are willing or able to buy their child a car of their own! That leaves the parents in the undesirable situation of driving their kids where ever they need to go. As kids get older thoughts of buying a car themselves starts entering their minds.

A Student and His First Car Loan

If you are a student in this situation you are probably wondering how you can get the money you need to buy a car. Even if you have a part-time job, it probably doesn’t pay enough for a large monthly car payment. You also haven’t had time to establish a credit history. Your parents may be able to help by co-signing a loan for you. This makes it much easier for you to get your first loan. But, if your parents can’t help, you still have other options.

Special Student Loans

Fortunately, there are student auto loans available that offer reasonable payment options. Including the option to delay payments until after you get a job or even after you finish college. Arrange a meeting with the lender to see what you can work out. The process is fairly simple and doesn’t require a lot of paper work. You will need a down payment. The size of your down payment will determine the amount of money you need to borrow. You might be able to get an unsecured loan, but if your down payment is large enough you can use your car as collateral and get a secured loan. This will reduce the risk to the lender and lower your interest rate.

Lenders Want Your Future Business

As a potential future customer lenders want to help you establish good credit, good repaying habits and smart buying practices. After all, every one was a first time buyer once. Every one at some point had to establish a credit history. If lenders don’t help first time car buyers, they are dramatically reducing their own future business!

Is a Balloon Payment Car Loan Right for You

If you need a new car but need a little time to pay it off, a balloon payment car loan might be a good choice for you.

With a balloon payment car loan borrowers pay smaller installments in the beginning and larger payments at the end of the loan. This is a great idea if you know you will have more cash on hand to pay off the debt toward the end of the loan repayment schedule.

Balloon payment loans are easier to get if you have good credit. If you have poor credit it is more difficult to get any type of loan, much less a balloon payment loan because lenders consider you a higher risk.

If you are pursuing a balloon auto loan you might need to consider making the deal a little sweeter for the lender. Securing a cosigner with excellent credit is one option for making you a better risk for the lender. You might also consider increasing your down payment. Increasing your down payment decreases your risk and shows the lender you have a vested interest in paying off the loan in order to recoup your investment.

You also need to consider the interest rate the lender is offering you. If the interest rate is too high it will not benefit you to pursue a balloon car payment loan. You need to know how much total interest you will be paying over the term of the loan. This will keep you from over reaching and ending up too far in debt to get out.

You should also be certain the loan fits your circumstances. Balloon payment car loans are best for borrowers who have a maturing investment or some other forthcoming payment which will enable them to repay the largest part of the loan when it comes due. You want the balloon car payment to come due when you are most able to repay the loan. If your loan continues too far beyond that point you will pay too much interest over time.

As the borrower you need to be certain you have the means to meet your obligations. Leaving a car loan unpaid can have drastic consequences for your credit history.

How to obtain low car loan rates

Obtaining a low car loan rate from lenders is easier if you are qualified and by following some of the simple guidelines included in this article.

Tips to obtain low car loan rates

  • Before searching for low car loan rates make sure to obtain the latest copy of your credit report from one of the three leading credit reporting agencies. The credit reporting agencies are Experian, Equifax and Trans Union. These agencies would provide you with free credit report once each year. You can obtain this report from Bear in mind that in order to qualify for lower car loan rates your credit score should be 680 or even higher.
  • Bear in mind you that you would obtain a lower car loan rate if you choose a loan with shorter loan term. For example, your interest rate would be lower in case you choose to finance your vehicle within 36 months instead of financing it within 48 months.
  • You might also reduce your loan rate if you would allow the financing company to withdraw the amount of your car payment automatically each month. Although this might not be a huge discount, it allows you to save hundreds of dollars in the long run.
  • Try to qualify for a loan from a prime lender instead of getting it from a sub-prime lender. Prime lenders usually offer lower car loan rates compared to sub-prime lenders. Start your search by checking reputable websites such as, and
  • In case you want to obtain financing from a dealer do not hesitate to negotiate. Make sure to about the existing car dealership incentives, discounts and rebates. Since most dealers are motivated by the idea of being able to sell the car, you might end up paying lesser amounts in the long run by negotiating.
  • Try to provide a down payment of at least 20 percent of the vehicle