If you need to get a car loan but do not have collateral to submit, this article was written just for you. Take note that not all lending companies offer unsecured loans. Submitting your application to the wrong lender can only lead to rejection. Check out the following factors to consider when applying for an unsecured car loan:
The APR (Annual Percentage Rate). All lending companies are mandated to disclose the loan APR with their advertisements. However, the APR advertised may not be the exact rate that will be given to you. The interest rate you will get will still depend on your personal credit score. Thus, a higher credit score will surely win you quick approval.
Your Personal Credit History. Order a copy your credit report from the three major credit bureaus before searching for a car loan. Good credit history will give you more advantage particularly since the loan does not involve the submission of collateral.
Many unsecured loan lenders exclusively extend their best deals to customers with good to excellent credit history. If you have bad credit history or a low credit score, you may find it difficult to get approved or you may be offered higher interest rates.
Early Settlement Penalties. Finishing your loan payments earlier than scheduled repayment period will save you a significant amount of money. However, some lenders may impose high prepayment penalty fees to discourage a borrower from completing payments sooner than the arranged repayment period. It is wise to check how much the prepayment penalty is before signing up for a car loan.
Deferred Payment and Breaks. Some lending companies may allow borrower to skip the first month of payment or enjoy payment breaks during the repayment period. While this may sound like a great option, keep in mind that the skips and breaks will always be charged with interest rate. As much as you can, do not skip or take breaks with your payments. Remember, the sooner you complete your loan payments, the more you can save on interest rates.
Other Penalty Costs. Check your unsecured car loan contract for possible penalty charges that you can incur. Make sure that you are clear about the lending company’s policies. For instance, if you are going to set an automatic payment system with your bank, see to it that your monthly loan payments will be posted on time. Remember, if your lender does not receive your payment on your due date, you may incur late penalty charges.
About the Author
Sandra Thompson is a loan consultant with Unsecured Loans Now and has been providing consumers and business owners with Unsecured Loans since 1989. For years she has helped people with loan and credit problems especially pertaining to Unsecured Personal Loans, Business Loans and Unsecured Credit Cards. Copyright 2010.
