Carloans and Auto Refinancing Loans

2007-03-08 10:33:40

( Financial )



Carloans are loans for individuals who wish to purchase a car, but cannot afford to pay for its full price in cash. Carloans can be obtained from most banks or financing companies. The amount of the loan that can be granted and its interest depends greatly on the bank, or financing company of your choice. Banks and financing institutions have certain criteria in determining whether you can qualify for a car loan. Banks and financial institutions normally review your source of income, your credit score (the higher your credit score, the lower the interest rate that can be offered), and your relationship with other banks and creditors.

Before taking out a car loan, it is important that you come up with a monthly expense budget projection so that you can determine how much you can afford to pay for your car loan each month. Adding up all of your projected expenses, and subtracting this amount to your projected income can determine this. The difference will be the amount you can pay for your car loan each month. Keep in mind that you will need to add to your expenses the cost of car registration, insurance, gas and maintenance.

Carloans can be paid anywhere within 1 to 25 years, and interest rates vary depending on the bank, or lender. Interest rates can be lowered if you provide your home as a security or collateral; however, one must be careful, as if one is unable to make payments to the car loan, as they can not only risk losing the car they purchased, but their home too.

With the high interest rates that are offered on carloans, people sometimes opt to apply for auto loan refinancing. The best time to apply for auto loan refinancing is when interest rates go down, or when one’s credit history improves.

Refinance auto loans are also ideal for those that have difficulty in meeting their monthly payments. The terms of carloans may be extended at a lower monthly amortization, but at a higher interest rate.

When one wishes to apply for a car loan or refinance auto loan, it is strongly recommended that a comparison be made between several banks in order to obtain the best deal possible.


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