Used Car Financing: Car Loans And Credit Application

This myth isn't true. Checking your own credit report is what's known as a "soft inquiry," which does not affect your personal credit score. Only "hard inquiries" made by a creditor or a lender when you apply for a car loan can drop your credit score. These "hard inquiries" can typically bring your score down by 3-5 points.

It's not as bad as it may seem. With enough time and patience, all poor-credit situations can be rectified. A credit score is only one small factor that comes into effect throughout the credit approval or car loan process. A short period of financial hardship does not mean you're a bad person. All situations can be turned around, and with the right vehicle selection we can help guide you to always improve your current credit score so that you can enjoy a better future.

Aside from ones credit score, another factor that affects loan approval is the debt service coverage ratio (DSCR). The DSCR is the ratio of cash that the buyer has available to pay their debts against their principle loan amounts. The higher the ratio, the easier it is to obtain a loan, however common lending standards suggest that 30% is an industry benchmark. As an example, if you make $10,000/month and have $3,000 in monthly debt expenses, you may have trouble getting approved for another loan at a preferred interest rate.

Annual Percentage of Rate (APR), Nominal APR, and Effective APR are all descriptions of the annual interest rate, rather than monthly fees and rates; they're the charge of financing expressed as a rate over the year. Effective APR is your fee plus the compounded interest rate, whereas Nominal APR is the simple-interest rate for the year.

It is more important now than ever for people to understand the importance of bad credit repair, and attain the skills necessary to survive their bad credit situation. Your credit score can affect you in many different ways, from the type of bank account you can get, to the interest rate that you pay when you take out a loan. Individuals with good credit scores will likely pay interest rates as low as 4%, but those with poor credit scores can pay up to 29%.

The question is, How do the people with bad credit scores get out of those situations? Although these high rates may be discouraging, they can be reduced over time with good planning and timely payments. By not missing your payments, and gaining the trust of your lender, you'll likely be eligible for a lower interest rate within 12 months or less.

AutoPark is here to help you reconstruct your credit rating, and ultimately lead you toward a better financial future. Our experienced staff can provide you with the best methods to fix past financial hardships. There are a variety of programs available today that teach you how to properly manage your debt, however AutoPark Loans specializes in actually acquiring the perfect car loan for you, even if you have a poor credit history. We’ve assisted hundreds of individuals in Barrie, Brampton, Toronto and surrounding areas to find the perfect auto loan. Apply today to get approved!

Negative equity occurs when a person takes on a loan for a vehicle and then applies for another vehicle loan before the first one is fully paid off. The remaining amount from the first loan will then get added on to the amount of the second loan; the difference between the two amounts is what’s known as negative equity. This is not usually an issue if it happens once, but if it continues to happen, it may get to the point where the individual will never be able to pay off their total debt.

To prevent situations like this, avoid impulse buying, and purchase reliable vehicles that will stand the test of time. Additionally, ensure that your loans are paid off before you apply for another one; this is easier said than done, but it is a key factor in securing the wellbeing of your financial future.