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Auto Loans Q-n-A

  1. Do I need to make a down payment for my car?
    Not necessarily – many lenders offer zero-down loans.
  2. I am right after bankruptcy and my credit is really bad. Can I still get a loan?
    First 6 months after bankruptcy is usually a hard NO for most auto lenders, however there are lenders who are offering sub-prime loans designed for that specific category of customers. Co-signer or some sort of colateral might be needed in this case.
  3. What are the score definitions?
    There are many definitions of what “good credit, bad credit or fair credit” means. In auto loan market you can often find the following credit stand definition adopted by many lenders:
    FICO ScoreInterest Rate
    720-850 5.73%
    690-719 7.37%
    660-689 9.40%
    620-65912.76%
    590-61917.68%
    500-58918.50%

  4. Where should I shop for auto loan? What are the main loan lrovider groups?
    There are three distinct group of lenders in financial industry:
    1. Banks
      Banks usually offer better rates but are more picky in approving loan applications.
    2. Non-Bank Private Lenders
      Private lenders compensate what banks don't want to do - they target all groups of loan applicants including people with good credit, bad credit, no credit or people after bankrupcy.
    3. Dealerships
      Note, that dealerships actually are not the real lenders – they are the proxies to lending businesses.
  5. Should I get car loan online or visit lender/dealer in person?
    The answer is simple – you should choose the lender with better offer not the lender who is located closer to your home. Online lenders usually provide very good rates as they cut their expenses on offices and have fewer administration staff. However territorial lenders could be better adjusted to your local market and therefore should not be taken out of consideration.

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