Why a Shorter Loan Term is Better

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A dilemma that comes over any buyer is the idea of how long they should pay off an auto loan.  A longer loan can lead to smaller payments made off a longer time, making it less stressful on a slim budget.  On the flip side, a shorter loan period is harder on a monthly budget, but can free up a great deal of funds in a shorter amount of time by having the car fully paid off.

Edmunds looked at their data and saw that the average car loan term is about 5 and a half years now.  Some are even in excess of 7 years!  The reason many consumers are choosing a deal like this is because of how much money they can afford a month.  Even though a deal like that might be tempting, it is best to try and get a shorter car loan term.

A reason for this is because of interest rates.  Basically, the longer the payment, the more interest being paid.  Even though the monthly payment one is making a month on a shorter term may look cheaper, it is actually more money due to the adding up of the interest rate by the time the loan is finished.  You’d be very surprised to see just how much money that can be.

Another reason why such a longer term is a bad idea is because of the life of the vehicle.  These days, newer cars are seemingly announced every month.  There is a point in a car’s life where a driver wants to get a better deal on a newer car.  Those who opt for the shorter term can find themselves able to get into a newer vehicle while the longer term people are stuck.

If you need help with financing, contact us at Bayside Chrysler Jeep Dodge.  We’ll work with you to find the right possible loan to suit your situation.  We love to say yes, you’re approved!  Like us on Facebook and follow us on Twitter to see our monthly news and special offers.

What to Do When Your Loan is Denied

ID-10098880This was a write-in question for Fox Business for some advice on getting a loan:

Dear Debt Adviser,
I applied for a home equity line of credit with my mortgage lender. I was denied, in part, because I’ve been late occasionally on my mortgage payments. I now have a credit score of 670 and a high-interest auto loan for $5,400 that I’d like to pay off. Do you have any financial advice for someone like me? Please help!
— Sherry

The response isn’t just about home equity. It’s about all kinds of loans, auto loans included.

The writer for the response piece starts out by labeling the most obvious problem the person ran into when they applied for for another loan. The person was denied because being late on their mortgage payments marked them as high-risk borrower. Their credit score was also dragged down because of that risk. The final reason, using the same collateral from the same lender.

That’s the bad news. Thanks to a weaker credit score and being high-risk due to late payments meant that the application was sent back denied. Where does someone go from there, though? Just because you were denied doesn’t mean it’s over. It just means that you need to take a different approach to getting the loan you need.

Start by doing what you can to raise your credit score. Get your current loans paid off, on time or early if you can manage. Don’t get any new credit unless it’s necessary. You’ll want to keep your balances as low as possible. If you can, make a rule of not getting another loan until everything you currently owe is paid off every month.

In order to achieve this goal, you need to set yourself up to succeed. Without a solid plan that you can commit to, it’s very likely you won’t be able to pull it off. Put together a spending plan that manages your current bills. Make sure a portion of your monthly budget is dedicated to setting some money aside for saving, which will help you with wiggle room should any unexpected expenses come up.

If you follow these guidelines, you’re going to see an improvement in your score. It’ll take some time and effort, but in the long-run, you’ll be able to get the loans you need.

If you need a car, now is the perfect time to stop in to Bayside Chrysler Jeep Dodge and sit down with us as we work to put you in the vehicle you need.  We provide the Queens area with top quality customer service and want to work with you to satisfy your car-purchasing needs. We love to say yes! Like us on Facebook and follow us on Twitter for more financial advice and monthly parts and service specials.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Should You Consider a Down Payment?

If you’re someone looking to purchase a vehicle and are suffering from poor credit, then there’s a term you maybe familiar with. The term down payment is very different depending on who is looking at it. For most people in the position of needing a car loan, it can be seen as quite evil. There’s a problem with this logic, as Auto Credit Express is showing in a new blog, that putting money down can be quite helpful in the long run.

Lenders that deal with people that are having credit problems need a down payment in either the form of money or real trade equity. The reasoning behind this is that having a down payment is a way to up the chance that the borrower will make their payments on time and in a regular manner. If there’s no money invested in a vehicle, lenders can lose a lot of money if the borrow walks away from a loan. If someone is willing to come up with 10% of the money, it’s a good bet that they mean to keep making payments.

So what are those advantages that were brought up earlier to having a down payment on a vehicle? One of them is that the larger the down payment is, the lower the monthly payment will be. It may also shorten the length of the loan. That means that you’ll have the chance to trade out of a car sooner. There’s also the possibility of getting the loan interest down.

If you have poor credit but are still in need of a car, then you may want to consider having a down payment. The way it can help reduce cost overall maybe worth the extra trouble up front. Fill out an online application and see how Bayside Chrysler Jeep Dodge can work with you to get you a vehicle. You can view our new and pre-owned inventory online. Like us on Facebook and follow us on Twitter for more auto finance information.