Loan Shopping: Compare and Choose the Best Financing Option for Buying a Car

Buying a new car is not an easy decision. It is an expensive thing to buy after a house. You can buy a car with cash or consider several financing options available in the market. When you are looking for a car, one of the smartest moves you can make is to compare financing options just as you compare car models.

What Financing Options are available in the Market?

‘You may be running out of options, but running away from making a decision isn’t an option.’

If your credit score is bad or your loan application is weak, do not think that you cannot buy a car. There are many financing options available with you. You can compare the following options and choose the best option for you:

· Car Loan

A car loan offers flexible terms and it is easy to obtain. A bank or a financing company pays the full price of the car. And, then you have to pay off the lender or the financing company in the form of monthly payments. Usually, the loan is approved on the basis of your credit score and income.

· Personal Loan

If you do not want to use car as collateral, personal loan can be the right choice for you. It is an economical way of financing a car. While obtaining a personal loan, the only condition is that you should have a good credit score. You can get the loan from a local bank or a credit union.

· Leasing

If you opt for leasing, you do not own the car until you have made the final payment. Leasing enables you to use the car, while the financier retains actual ownership of the vehicle. People opt for it as it offers fixed monthly lease rentals and affordable interest rates.

· Dealership Financing

The only thing to remember while obtaining dealership financing is that to do research. Check your credit score and ask for quotes from several dealers before making a decision.

Dealers love lazy car buyers who do not do their homework. Keep in mind that there is no point in bargaining a good price for the new car if you are going to opt for a poor financing deal.

· Online Auto Financing Companies

It has become easy to get approval on a loan with the help of the internet. Online auto financing companies offer a second chance to bad credit borrowers and help them buy a car. When you apply for loans with an online auto financing company, you get the advantage of quicker approval with fewer documents.

Loan Shopping is as important as Car Shopping

Loan shopping is a wise decision. Sometimes, it is the only way you can find a lender who will work with you. Keep in mind the following quick reminders because they will help you to have a better loan shopping experience:

· You should have knowledge of the different financing options that are available in the market before you choose one. It is wise to contact several lenders to find the best loan at the best price.

· Different lenders offer diverse terms. If you want to get better terms, then do your research.

· For a better loan shopping experience, it is important to improve your credit score.

· Pay attention to the amount of monthly payments and be sure if you can afford the same.

· Don’t forget to look at the Annual Percentage Rate (APR) as it takes into account the interest rate and other loan charges.

· Before you approach a dealer, decide the financing option that you would like to opt for buying a car.

Few people can afford to buy a car with cash. Luckily, a lot of financing options are available in the market. Do not say yes to the first financing option that you come across. Instead, compare different options and find the best one that suits your needs.

Is a Zero Credit Auto Loan As Rare As a Hen’s Teeth?

You can buy plenty of decent cars with cash. But if you don’t have access to cash, you may need to obtain an auto loan. It is one way of buying a car. If you have a good credit score, you can easily get an auto loan from car dealers, banks and credit unions.

But what if you don’t have a credit score? You fall under the category of zero credit car buyers. If you are a zero credit car buyer, it becomes difficult to obtain an auto loan because lenders are unable to judge your debt repayment ability. But, does it mean that a zero credit auto loan is as rare as hen’s teeth? The answer is no.

Zero Credit Car Buyers can get behind the Wheel

If you are a zero credit car buyer, you can still buy a car. But, don’t get tempted by ads that contain words such as “No Credit Required” or “Anyone Can Qualify!” There’s always a catch. You must remember that nothing is free in the world. Usually, fraudulent lenders aim to persuade zero credit car buyers through false advertising statements. They make you believe that you are getting a good deal but in reality they may charge you a high interest rate.

Usually, zero credit car buyers have to accept the outrageous loan terms and interest rates offered by lenders. But, do not worry. With a little bit of effort, you can get behind the wheel. Consider the following things before stepping out for buying a car:

· You must have a job that fetches income. It will guarantee regular payments to the lender.

· You must have a valid proof of working with your current employer for at least six months.

· You must have the residence proof that mentions you are staying at your current residence for at least six months.

· Search for a co-signer with an excellent credit history. It will reduce the lender’s risk and provide you with instant loan approval.

· Explore various financing options before you choose the one that suits you.

· If approved for an auto loan, make sure that you pay monthly payments on time as it will help you to build a good credit score.

Getting a zero credit auto loan is difficult but not as rare as hen’s teeth. It is not easy as obtaining a loan with a good credit score. But if you are serious about doing your homework, you can convince the lender of regular payments and obtain the loan. Also, it can prove to be a good step towards establishing your credit score.

Is Refinancing Your Auto Loan a Good Idea?

A healthy portion of car buyers secure their purchase with the help of an auto loan. But, very few of those people understand the concept of refinancing and its genuine benefits. It means paying back your auto loan with the help of another loan. It means the new lender will receive all your monthly payments from now on.

But, why would you take another loan? The reasons could be many.

Financial Pressure of Current Payment Plan

Suppose you wish to have smaller payments every month because the current loan is placing too much financial pressure on you, considering your current income. You could get a new deal for yourself where the monthly payments allow a balance with your expenditures.

Improved Credit Score

High interest rates make your monthly payments big enough to take away a sizable part of your income. It could be that you settled for high interest rate because your credit score was weak at the time of applying for the auto loan. But, now that you’ve been paying back your loan consistently, your credit score is better than it was. It means you can search for a better loan deal than you have.

Duration of the Loan Term

If you have moved up in your job, and there has been an increase in your income, you can opt for refinancing your auto loan to shorten the loan term. You could settle for paying more money than you do per month, and settle off your debt sooner than the previous deal would let you.

Dealership Loan

Refinancing your auto loan can also help you if you got the loan at a dealership. Sure, buying the car and getting a loan from the same place is convenient. But, it does not mean that your dealer offered you the best deal. If you find a lender whose payment plan suits you more, you should choose him.


Refinancing your auto loan can help you escape the unfortunate possibility of your car getting repossessed. The lender can repossess your car if the payments aren’t regular and sell it to someone else. By changing your lender at the right time, you could keep your car and pay back your loan at a new, more suitable interest rate.


Looking up deals online is a helpful tool as always. Find lenders in your area who are willing to strike a deal with you. The application takes a few minutes. You can finalize your options without needing to leave your room.

The process of refinancing your auto loan looks like another potential problem but it is actually a problem solver if done right. It helps you find a deal where the interest rate is comfortable for you. There are many lenders who could happily help you with it.