Chances of Getting an Auto Loan Become Higher

For those consumers who have poor credit and planning to get an auto loan, Experian Automotive’s report last May 29, 2012 will be good news for you.

According to the report, average credit scores for customers purchasing a car have declined close to prerecession levels. Moreover, Experian’s director of automotive credit, Melinda Zabritski, said that there has been more promising situations for auto loans during quarter one of the current year. Some of the positive indications for the market include a decrease in the average credit scores, lower interest rates and extension of loan terms.

Zabritski added that the reports indicates automotive lending is back to being healthy as it was since the time of recession in the year 2008. Borrowers have been making payments for their loans on time and the percentage of dollars might reach its lowest point after six years. As a result of these, terms have been extended and lower rates have been offered by lenders.

The reduction of the credit pipeline has been beneficial for all, from customers to lenders to automotive dealers.

The most encouraging indications for those consumer who had problems with credit before is that nonprime, subprime, and deep-subprime car loan buyers were up by 11.4 percent during quarter one of the year 2012.

For those who have low credit scores, here are some tips you can follow to increase your probability of getting approved for a loan.

First, check the information in your credit reports from the three credit reporting agencies whether it is accurate or there are some erroneous information.

Second, be aware of your three FICO score because you are required to pay for them.

Third, choose a car loan which has a reasonable price and has a monthly payment of not more than 10 percent or 15 percent of your gross monthly income.

Fourth, pay a huge amount as cash down payment, preferably 15 percent or more, because your chances of loan approval will be higher.

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