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An In-Depth Wells Fargo Auto Loans Review: What You Need To Know

Taking out a car loan comes with making important decisions. That is why this Wells Fargo auto loans review will provide you some essential details that you must know and should carefully consider before signing any car loan document from the company.

Wells Fargo Auto Loans Review

Based on an Experian study published in March 2020, the American people do already have an existing $1.3 trillion in auto loan debt as of 2019, which is an 81% increase as compared to how much it was back in 2009.

Furthermore, to date, Americans owe more by average as compared to a decade ago. In fact, the average debt is $19,231 already, which has increased by 25% from 2009 as well.

Meanwhile, according to a study by the Federal Reserve, around 35% of American adults rely on an auto loan to pay for car purchases in the same year.

Although the increase of the number of American people taking out a car loan seems to continue this year and the years to come, according to a Finder article, “the percentage of Americans with car loans has actually decreased over the past few years.

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Nevertheless, one thing’s for sure – Americans do get auto loans to be able to purchase vehicles that they have been eyeing for.

Now, similar to any other loans out there, there are a lot of lending companies or financial institutions that provide auto loans. In fact, the industry is pretty much competitive.

Among the financial institutions that offer auto loans is Wells Fargo. Yes, it is one of the very well-known banks in the country.

But just like what we always say whenever we make reviews, as borrowers, we owe it to ourselves to research before we deal with any lending company or financial institution. It is our responsibility to know the details and be informed to avoid regretting it in the end.

Having said that, in this Wells Fargo auto loans review, we are going to provide you some if not most of the details that we though borrowers need to know before signing any auto loan document from the said financial institution.

In particular, we are going to provide you answers to the following – most commonly asked – questions:

  • What is Wells Fargo?
  • What auto loan products do Wells Fargo offer?
  • What do borrowers need to know about Wells Fargo auto loans?
  • Who qualifies for a Wells Fargo auto loan?
  • How to apply for a Wells Fargo auto loan?
  • What are the pros and cons of Wells Fargo auto loans?

WHAT IS WELLS FARGO?

Wells Fargo and Company or simply known as Wells Fargo is an American multinational financial services company.

While it is headquartered in San Francisco, California, the company does have central offices across the United States.

Based on its market capitalization, Wells Fargo is the world’s fourth-largest bank. More so, it is ranked as the fourth-largest bank in the US based on total assets.

As earlier mentioned, Wells Fargo is a multinational financial services company. It particularly engages in banking, investments, insurance, mortgage, as well as consumer and commercial finance.

Furthermore, the financial institution operates through various segments, which include Wholesale Banking, Community Banking, as well as Wealth and Investment Management, and many more.

The Community Banking segment in particular offers a complete line of financial products for both individual consumers and small businesses, which include checking and savings accounts, credit and debit cards, as well as student, small business, and automobile lending. The latter being our highlight in this review.

By the way, recently, the bank was involved in an auto insurance scandal, which in a way tarnished the bank’s reputation.

If you want to know more about it, and how the company managed such a challenge in their business, watch the video below by The Young Turks:

WHAT AUTO LOAN PRODUCTS DO WELL FARGO OFFER?

Wells Fargo is definitely one of the biggest rather largest auto lenders in the country today.

But although it is known to have a really good reputation when it comes to the products and services it provides, as borrowers, it is important that you still look into the details — in this case, about what particular auto loan products does the company provides.

First and foremost, it is important to take note that starting annual percentage rates (APR) will be based on the lender’s credit scores and the amount of income and debt he or she has.

Wells Fargo offers a variety of auto loan products, which include the following:

  • New Car Financing – This product is available for those who want to buy a new car directly from a dealer. Generally speaking, this does have a fairly low starting APR — somewhere around 4%.
  • Used Car Financing – This product is ideal for people who are either planning on buying a used car from a dealer, or those who are opting to buy from a private car seller. If you choose to buy from a private seller, the ARS is usually around 7%.
  • Lease Buyout Financing – This product is applicable to those who leased a car and eventually decide to keep it by the end of the lease term. If you opt to buy the car instead, the APR usually are close to 4.5%

While it does offer a good variety of auto loan products, unfortunately, Wells Fargo does not offer auto loan refinancing for borrowers who have an existing car loan but are not satisfied with their current rate.

You see, based on the firm’s list of auto loan products, as a car buyer or as a borrower, you really also need to take time to consider what kind of product you will go for. If we are going to base it on APR though, buying a new car does have better rates. But again, the final rates will depend on your qualification, particularly, your creditworthiness.

So, the better your credit score is, the more likely you are to get better rates.

WHAT DO BORROWERS NEED TO KNOW ABOUT WELLS FARGO AUTO LOANS?

As we mentioned earlier, this Wells Fargo auto loans review will provide you with important details you need to know before applying for an auto loan from the firm.

Apart from APR, there is actually more information that you, as a borrower needs to know to avoid confusion or worse, regretting the decision you made.

In particular, we are going to provide you information on the following:

  • Loan Amounts
  • Interest Rates
  • Loan Terms
  • Fees and Penalties
  • Discounts
  • Disbursement of Funds
  • Limitations
  • Other Information

Now, let’s get to it one by one —

Loan Amounts

While it is important to have a specific amount in your head, it is also important to consider the loan amounts offered by the lending company or financial institution you are looking for. By doing so, it helps you reconsider your options, or you can stick to it and just specifically look for a lender that could cater to your needs.

At Wells Fargo, it is important to note that the funding a borrower gets from an auto loan depends on a number of factors including credit score, credit history, as well as the type of car the borrower is eyeing for.

Wells Fargo, however, provides funding that starts from $5,000 and without an upper limit. Please take note, though, that the amount borrowed will depend also on the state you are from.

But technically, compared to other lenders, Wells Fargo definitely has one of the best and most flexible loan amounts.

Interest Rates

Another important thing to factor in when looking for an auto lender is the interest rate. Every lender does have their own rates and qualifications on specific rates.

However, as a general rule, people with high credit scores usually end up having the best rates possible. Meanwhile, borrowers with fair or poor credit score get a higher interest rate.

The company’s auto loan rates usually range from 0% to 11%, with an average of 4.99%. But for your reference, here’s what APR you can expect based on auto loan type:

  • New Car Financing – around 4%
  • Used Car Financing – around 7%
  • Lease Buyout Financing – around 4.5%

Again, as mentioned, the final APR will depend on several factors especially your credit score. Thus, we highly recommend working on having a high or excellent credit score to be able to take advantage of lower rates and other perks.

Loan Terms

Loan terms refer to the length of time you are going to repay the loan. It’s definitely another factor to consider when taking out a loan as you need to gauge if you are able to pay off the loan based on agreed terms.

As compared to other lenders with a lot of loan term options, some even offer long repayment periods, with Wells Fargo, the firm’s auto loans do only offer repayment periods between 60 months and 75 months (average).           

So, if you are looking at repaying on a longer-term, you may then consider other lending companies instead.

By the way, it is important also to keep in mind that if you will opt for long repayment terms, this could probably lead to paying more in interest over the life of the loan as compared to paying it off in a shorter period of time.

Fees and Penalties

Apart from APR, another money-related factor to consider when taking out a loan, or in this case, an auto loan, is fees and penalties.

Although Wells Fargo does not charge early payment fees, which means a borrower can repay the loan any time before it is due without having to worry about such charges, Wells Fargo borrowers could run into potential late fees and a credit score impact if they make a late payment.

In addition, a borrower may have to pay additional charges in specific states because of insufficient funding in his or her account.

Currently, the company decided to halt lending money to most independent car dealerships because of the financial fallout brought by the current COVID-19 pandemic. Just so you know if you are intending to get into this.

Discounts

Being one of the country’s largest auto lenders, it is not surprising that Wells Fargo offers perks.

In particular, the firm offers discounts to borrowers who are already Wells Fargo customers, as well as those in the military.

Disbursement of Funds

If you need quick credit decisions, and fast funding (in as soon as same-day), then Wells Fargo may just be the right match for you.

Yes, the firm could provide you with the amount you need as soon as the same day you applied for an auto loan — provided, of course, you pass all the requirements and qualifications.

Limitations

While some auto lenders may provide funds for any type of vehicle, with Wells Fargo, there are some limitations.

There are certain vehicles that are not eligible for Wells Fargo financing. This includes large commercial-type vehicles (like dump trucks) as well as vehicles that auto manufacturers have already discontinued.

This is very important also when taking out an auto loan. Make sure that the vehicle you are purchasing is eligible for the lender’s auto loan products.

Other Information

Apart from the details and/or information we have already mentioned, Wells Fargo also has another feature that borrowers must look into.

Unlike other auto lenders, the firm allows borrowers to change the due date on your payment loan once over the entire period of the loan. This may come very handy if a borrower fell short on cash one month or that he or she wants to line up the car loan payment due date with his or her paycheck schedule.

To be fair, this kind of feature is not that common among lenders, so, it’s nice to take advantage of it if the need arises.

WHO QUALIFIES FOR A WELLS FARGO AUTO LOAN?

As part of this Wells Fargo auto loans review, we are also going to provide you what you need to be able to borrow money from the firm.

First off, you have to have fair to excellent credit score. Based on Wells Fargo’s Q1 2020 quarterly report, during the first quarter of the year, nearly 34% of auto loans issued by it went to borrowers with FICO scores under 680.

So, if your credit score is somewhere around that, there is a chance that you can also get approved for an auto loan.

Apart from the FICO score, auto loan borrowers must also present a copy of the following financial documents during the application process:

  • Social security number
  • Previous and current residential addresses
  • Employment history and status of current employment
  • Proof of income
  • A statement that details your rent or mortgage payments on your home or apartment

In addition, you will also need to provide details on the vehicle you intend to apply for an auto loan. Details such as the following:

  • VIN
  • Year
  • Make
  • Model
  • Mileage

Similar to other types of loans, when applying for a Wells Fargo auto loan, make sure you are:

  • A U.S. citizen or a permanent resident card holder
  • At least 18 years old (or 19 years old depending on the state)
  • Employed or are self-employed

HOW TO APPLY FOR A WELLS FARGO AUTO LOAN?

At the moment, the only way to apply for a Wells Fargo auto loan is by filling out a credit application with a dealer within the firm’s network. Currently, Wells Fargo does have 11,000 partner dealerships.

Unfortunately, though, a list of their network of dealers is not available on their website, which means borrowers need to call and ask dealers directly if they work with Wells Fargo.

Once you found a dealer that is within the firm’s network, you will then have to fill in an application form that dealers send over to Wells Fargo underwriter for assessment and approval.

It is important to take note that Wells Fargo conducts a hard credit check, which may affect your credit score.

Once approval is granted, expect funding in as soon as the same day as the auto loan application.

WHAT ARE THE PROS AND CONS OF WELLS FARGO AUTO LOANS?

To sum up this Wells Fargo auto loans review, at the same time, to help you make an informed decision, we are also listing down the things that we like and the things that we do not like about Wells Fargo auto loans.

As you know, while the firm has its share of good things, like any other lenders out there, it does have its share of flaws as well. As borrowers, it is important to know it all so you get to consider them when making a decision.

Anyway, here’s our list of pros and cons for your reference:

PROS

  • Wells Fargo does have better rates as compared to other auto lenders out there.
  • The firm can fund your up to 100% of the amount of the vehicle you are purchasing.
  • Fees are included in your monthly payments instead of charging them upfront.
  • Wells Fargo auto loans do not require down payment.
  • It offers discounts to Wells Fargo customers availing an auto loan, as well as those working in the military.
  • It does not have a minimum credit score requirement, which makes it appealing to all types of customers.

CONS

  • You need to go through a dealership within its network in order to avail of a Wells Fargo auto loan.
  • The company website is not as informative as other websites — it does not include a list of partner dealerships.
  • Wells Fargo does not offer a refinancing option.
  • Wells Fargo auto loans are only available for up to 75 months.
  • The company, unfortunately, has been involved in a recent auto insurance scandal that may deter customers from using the bank’s auto loan products.

FINAL THOUGHTS ON WELLS FARGO AUTO LOANS

Wells Fargo may have its share of highs, but, it sure does have its lows as well, which is not surprising. After all, there’s no such thing as a perfect company or auto lender for this matter.

Given all the facts we share, are you considering taking out an auto loan at Wells Fargo?

We do hope that through this Wells Fargo auto loans review, we were able to provide you with all the information you need in order to come up with the right decision.

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SunTrust Bank Auto Loans Review: The Best Auto Lending Company For You

While there are a lot of auto loan options out there to help finance your dream car, in this SunTrust Bank auto loans review, we are going to provide you essential information to help you understand why it’s one of the auto lending companies you should take into consideration to get a loan from.

SunTrust Auto Loans Review

According to a Finder report, “Americans had $1.3 trillion in auto loan debt in 2019,” which is an increase of 81% since 2009, according to an Experian study published in March 2020.

Furthermore, in the same Finder’s report, it says that American people who get auto loans owed more on average compared to that of a decade ago. By end of 2019, American auto loan borrowers owed $19,231 on average — a 25% rise from 2009.

In addition, according to a study by the Federal Reserve, it was found that around 35% of American adults rely on car loans to pay for or buy their vehicles in 2019 alone.

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Based on the experts’ view, the number of auto loans shows no sign of slowing down. In fact, experts project that it will continue to rise in the year and the years to come.

This assumption is not surprising at all especially with the recent events in the country and in the world, more and more people will definitely aim to buy their own vehicle to get them around – providing them ease and safety transportation service.

Now, as the demand when it comes to auto loans increases, more and more lending companies are opening its doors to auto loan borrowers as well. One of them is SunTrust Bank through LightStream.

For those who do not know, LightStream is an online lending division of SunTrust that offers auto loans for both new and used sealer purchases, as well as refinancing, lease buyouts, private party purchase, classic cars, and unsecured loans for borrowers with a good or excellent credit score.

In this SunTrust Bank auto loans review, we are particularly going to answer some very important questions that borrowers usually ask. This includes the following:

  • Who is SunTrust?
  • What is SunTrust LightStream?
  • What auto loan products are offered by SunTrust LightStream?
  • What do borrowers need to know about SunTrust Bank auto loans?
  • Who qualifies for a SunTrust Bank auto loan?
  • How to apply for a SunTrust Bank auto loan?
  • What are the pros and cons of a SunTrust Bank auto loan?

WHO IS SUNTRUST?

Headquartered in Atlanta, Georgia, SunTrust Bank is an American bank holding company. It is the largest subsidiary of SunTrust Banks, Inc., having an asset of $199 billion as of March 31, 2018.

In 2019, SunTrust Bank merged with a fellow regional bank, which is the BB&T. Both of them created a new bank called Truist, which is currently positioned as the country’s sixth-largest bank, having a combined asset amounting to a total of $442 billion.

Although the two banks merged, both retained their own branding as well as products, which is why SunTrust still exists.

Now, SunTrust Bank offers a wide variety of banking products, as well as lending, credit cards, mortgages, and wealth management. Among the products offered by SunTrust Bank is an auto loan, which is offered through LightStream.

The bank also offers unusual perks to its customers in 10 southeastern states and the District of Columbia. As of the last quarter of 2016, SunTrust Bank had 1,400 bank branches and 2,160 ATMs in the U.S.

WHAT IS SUNTRUST LIGHTSTREAM?

As mentioned earlier, SunTrust Bank offers a wide variety of products and services, which include auto loans through LightStream.

LightStream is the online division of the bank, which makes providing loan services to customers easier for SunTrust Bank.

LightStream offers a full spectrum of auto loans to borrowers with very attractive credit and equally healthy finances.

The online lending division of SunTrust bank offers a variety of auto loan products for private party purchases, new and used dealer purchases, lease buyouts, refinancing, as well as classic cars and unsecured loans.

The SunTrust LightStream auto loan is specifically ideal for borrowers with good or excellent credit with a “background of solid financial management,” those who want to get an immediate response to their auto loan application (as LightStream gives a decision as soon as a few hours after filing of an auto loan application), and those who want maximum flexibility (because LightStream does not have any restrictions on car make, model as well as mileage).

Meanwhile, if you want to know more about LightStream auto loans, check the video below by Honest Finance. He shares a very insightful review, and we thought you got to check this out:

WHAT AUTO LOAN PRODUCTS ARE OFFERED BY SUNTRUST LIGHTSTREAM?

Again, as mentioned, LightStream is SunTrust online division, which caters to auto loans.

One thing that LightStream is popular is that it offers a variety of auto loans to its customers.

Customers may choose on the following auto loan options:

  • New Dealer Purchase
  • Used Dealer Purchase
  • Private Party Purchase
  • Refinance
  • Lease Buyout
  • Unsecured Auto Loans

We just want to point out that LightStream’s classic car option does not have any restrictions on make, model, age, or mileage.

Furthermore, unsecured auto loans basically mean your car will not be used collateral in case of default payments.

In addition, you can use SunTrust LightStream auto loans to refinance, as well as buy out a lease, and even to finance an RV or a motorcycle purchase.

By its list of products offered alone, as compared to other auto lending companies, SunTrust definitely has an edge. It’s safe to say that their line-up of auto loan products is well-thought-out. They ensured everything is covered, and that they have a product that fits every kind of auto loan borrower – leaving no room to look elsewhere.

WHAT DO BORROWERS NEED TO KNOW ABOUT SUNTRUST BANK AUTO LOANS?

As we always say, when eyeing for a loan – whether it be an auto loan or not – it is important to shop and compare. Look around and see what auto lenders offer. Compare their loan offers before making a decision, before sealing the deal.

By doing so, you get to choose the best deal possible – leaving no room for regrets. Well, as borrowers, the last thing you want is to realize you actually cannot afford to pay off the loan, which means, you might end up broke or in a bad light.

With that said, as part of our SunTrust Bank auto loans review, we are going to share with you some of the most vital information regarding what they offer.

In particular, we are going to share with you information on the following aspects:

  • Loan Amount
  • Interest Rate
  • Loan Terms
  • Refinancing Options
  • Fees and Penalties
  • Collateral

Now, let’s discuss the items one by one to give you clarity and a better understanding of what to expect with SunTrust Bank auto loans —

Loan Amount

When borrowing money from a bank or any lending company or financial institution for that matter, make sure you have already determined the amount of money you need to purchase the vehicle. That way, you get to save time and energy – focusing only on banks or lending companies that offer loan amounts based on how much you need.

SunTrust Bank, through LightStream, offers loan amounts from as low as $5,000 up to $100,000.

Compared to other lending companies and financial institutions offering auto loans, SunTrust’s LighStream definitely has one of the highest loan amounts.

So, if you are looking at borrowing money within this range, SunTrust’s LightStream is definitely a good fit for you.

Interest Rate

Another very important thing that every borrower needs to consider when getting an auto loan is the interest rate or the annual percentage rate charged by the lending company or the bank. This will help you gauge if you are able to pay off the loan or not. Needless to say, this helps you determine if the loan is worth it or not.

Take note that every financial institution has its own rate – thus, the importance of shopping/looking around and comparing before anything else.

For your reference, here’s how much SunTrust’s LightStream charges for auto loans depending based on loan category:

  • New dealer purchase – 3.49% to 8.34%
  • Used dealer purchase – 3.49% to 8.34%
  • Private party purchase – 4.99% to 9.19%
  • Refinance – 3.49% to 8.34%
  • Lease buyout – 4.99% to 9.19% (with autopay discount)

The interest rate varies depending on certain factors like your credit score or creditworthiness, your location, loan amount, loan terms, etc. So, if you want a concrete detail, it is best to check with SunTrust’s LightStream as soon as you can.

As we have mentioned, SunTrust Bank offers unusual perks. One of them is that if you have been offered a lower rate by another lender, what SunTrust does is that it will offer .10% points less than the rate that you have been approved for. Of course, the evidence must be submitted.

In addition to SunTrust Bank auto loan perks, if a borrower sets up auto pay, he or she gets an additional 0.50% off from LightStream.

Loan Terms

Another important thing to factor in when deciding where to borrow money from is the loan terms or the length of time you are going to repay the loan.

Every lender has its own loan terms. As for SunTrust’s LightStream auto loans, the loan terms are flexible. The minimum length of borrowing is 24 months, while it can also be as long as 84 months.

However, like in any other type of loan, the lengthier the loan term is, the bigger the interest becomes. Meanwhile, if you opt to repay the loan as soon as possible, you definitely can enjoy a lower interest charge.

Refinancing Options

As mentioned earlier, SunTrust Bank through its online division, LightStream, offers a variety of auto loan options, which include refinancing.

Yes, you can borrow money from LightStream intended to help pay off any existing auto loan.

Fees and Penalties

Some lenders may offer lower rates, but they charge a lot of fees and penalties, which can be burdensome for borrowers. Imagine paying off an interest plus fees and penalties.

Anyway, as a borrower, you also need to take into consideration the fees and penalties charged by the lender before making any concrete decision.

At the end of the day, you want to save as much money as possible, right? An auto loan is useless if you are paying way more than what you are supposed to pay.

What we particularly like about SunTrust Bank auto loans is that they do not charge an origination fee, late payment fee, as well as prepayment penalties. On the latter, it means you can repay the loan in full anytime you want before the scheduled end of the term without having to worry about prepayment penalties.

Collateral

Unfortunately, the auto loan offered by SunTrust Bank’s LightStream is only applicable to borrowers with good or excellent credit. Those with unattractive or poor credit score may consider looking for other auto loan providers.

Now, SunTrust Bank auto loans can either be secured or unsecured. Secured auto loans mean your vehicle automatically becomes the collateral of the loan, which means, in case of default payment, the bank has all the right to get the vehicle from you.

Meanwhile, with SunTrust’s unsecured loans, the company requires borrowers to have an excellent credit score. According to the bank, borrowers must have the following to get approval for the unsecured auto loan:

  • Minimum of five year’s substantial credit experience in different credit account types
  • Excellent payment records, with no delinquencies or record of bankruptcies
  • Proven ability to save money

WHO QUALIFIES FOR A SUNTRUST BANK AUTO LOAN?

Borrowers, it is important to know that every lending company or financial institution have their own set of requirements or qualifications.

These requirements or qualifications are set to make the approval of auto loan applications easier.

Ideally, before anything else, borrowers must first and foremost check the requirements set by the lender to help save time and effort.

As for SunTrust Bank auto loans, please take note of the following requirements or qualifications:

  • Must have a good or excellent credit score (at least 660 to qualify for lowest rates and most lenient terms)
  • No delinquencies or record of bankruptcies
  • Must have a proven ability to save money
  • Must have sufficient income to cover debts
  • Must have at least five years of credit history
  • Must own a variety of account types

In addition, you must of course be of legal age and a U.S. citizen or a permanent residence cardholder to be able to obtain a SunTrust auto loan via LightStream.

HOW TO APPLY FOR A SUNTRUST BANK AUTO LOAN?

At this point in our SunTrust Bank auto loans review, we are going to talk about how to actually apply for an auto loan at SunTrust Bank.

Following below step-by-step guide will definitely help make the auto loan application easier.

First, go to the SunTrust Bank website, and choose the type of loan you want to apply for — in this case, it’s auto loan — and then, click “Apply Now.” You will then be directed to the LightStream loan application portal.

Second, fill in all the details required to process your auto loan application. At this point, you have to indicate whether it’s an individual or a joint application. You will also be asked to input your desired loan amount and the loan term that you prefer. Once done, click, the “Next” button.

Third, fill in your personal information, which includes your contact details, place of residence or address, citizenship, work status, as well as your annual income, monthly housing costs, and your assets. When done, click the “Next” button.

Fourth, create a user ID and input your preferred password to be able to access your account. Then, choose a security question and answer. This enables you to access your account in the future.

Lastly, confirm your application details, and then submit them.

Please note that SunTrust Bank may provide funding for you as soon as the same day of your application provided you review and sign loan documents by 2:30 p.m. Eastern time, provide your bank details, and have completed the verification procedures.

By the way, SunTrust provides a satisfaction guarantee. In case, however, you are not happy with your loan experience with the company, the lender will give you $100 in return.

WHAT ARE THE PROS AND CONS OF A SUNTRUST BANK AUTO LOAN?

This review will not be complete if are not going to share with you what we like and what we do not like about SunTrust Bank auto loans.

Without anything else to say, here’s our list of pros and cons of SunTrust Bank auto loans:

PROS

  • It provides a variety of auto loan options, which include dealer or private party purchases, refinancing, classic car loans, and lease buyouts.
  • Fast auto loan processing, which allows borrowers to receive funding in as soon as the same day of the loan application.
  • Offers some of the best auto loan rates in the market today — definitely cheaper as compared to its competitors.
  • Beats competing for APR offers by offering a 0.10% points off (with conditions).
  • Does not charge an origination fee, late payment fee, as well as prepayment penalties.

CONS

  • It only caters to borrowers with strong credit.
  • It does not offer a phone or email application process, which could be an issue for non-tech savvy borrowers.
  • It has very strict requirements for auto loan approval.

FINAL THOUGHTS ON SUNTRUST BANK AUTO LOANS REVIEW

To sum it all up, SunTrust Bank auto loans through LightStream offers great deals. It comes with perks such as a rate match guarantee, as well as a customer satisfaction guarantee. Needless to say, the bank offers one of the lowest rates in the industry today.

Unfortunately though, qualifying for a SunTrust auto loan can be quite daunting. It has very stringent requirements. Unless you have very good credit, and you meet all the qualifications set, then, there should be no problem at all.

So, do we recommend SunTrust auto loans?

With everything we have shared in this SunTrust Bank auto loans review, we definitely say, yes, we do recommend it especially to borrowers with excellent credit records. They definitely will benefit a lot from it.

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7 Ways On How To Pay Off Your Car Loan Early

There are plenty of ways out there on how to pay off your car loan early, and we are going to share with you some of them. This way, you’ll have an idea of how to be debt-free sooner than you can.

ways on how to pay off your car loan early

According to the United States Consumer Financial Protection Bureau, as of April 2019, there are 2.3 million auto loans that were originated, while $52.3 billion volume of new loans were recorded at the same time. Based on this data, the bureau found that there is a 3.6% increase in year-over-year originations, 2.1% in year-over-year inquiries, as well as a 1.9% decrease in year-over-year credit tightness.

Meanwhile, in data presented by Statista, it says that as of May 27, 2020, the car loan interest rates in the United States amounts to 4.35%. Furthermore, in the same report, it says that the “average amount of new car financing in the U.S. was 32,797 U.S. dollars at the end of the fourth quarter of 2019.”

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If you come to think of it, based on the numbers, Americans love cars, and most of them, get an auto loan to be able to purchase their dream car.

If you have had an auto loan before, you probably know by now that financial institutions offer different terms and rates that are really pleasing to consumers.

But the thing is, some of us are not that fully aware of how car loans go. Just so you know, the common rule when it comes to an auto loan (or any type of loan for that matter) is that the longer you pay for a loan, the expensive the loan becomes. Meanwhile, the shorter the car loan is, the cheaper the car loan interest rates are or that the loan in itself is cheaper.

So, ideally, when you have an auto loan, it’s best to pay as soon as possible. That way, you get to save yourself a few bucks.

Having said that, we are going to share with you some ways on how to pay off your car loan early.

In particular, we are going to talk about the following:

  • What are the pros and cons of paying off an auto loan early?
  • What are the steps to paying off an auto loan early?
  • How to pay off your car loan early?
  • What to do if you have more than one car to pay off?

WHAT ARE THE PROS AND CONS OF PAYING OFF A CAR LOAN EARLY?

Before we talk about the process on how to pay off your car loan early, we thought it’s important also to share with you first the benefits as well as the downsides of paying off your car loan early.

As a consumer, you have to understand and be fully knowledgeable about this so you know your options, at the same time, you will be able to decide what will work for you best.

So, having said that, let’s take a look at the pros and cons of paying off a car loan early:

PROS

  • You get to eliminate debt sooner. Paying off your car loan early helps decrease your monthly expenses, which means you get to save money, at the same time, you get to focus on paying other debt you have faster as well.
  • You get to enjoy a reduced interest rate. Normally, the interest of a loan accumulates over the life span of a loan. Thus, paying off your car loan early will help reduce the total amount of interest you pay from your creditor. This also means you get to save money for yourself or for other things you need to pay off.
  • The lien of your car will be automatically removed. According to Investopedia, lien refers to a creditor’s legal right to “sell the collateral property of a debtor who fails to meet the obligations of paying off a loan.” Unlike personal loans, car loans are secured loans, which means the car automatically becomes the collateral. Should you fail to meet your financial obligations to the lender, the lender has all the right to take the car away from you. However, when you pay off the loan early, the lien is automatically removed and you will have all the rights to your car.
  • You get to have an improved debt-to-income ratio. A good debt-to-income ratio is vital particularly when buying a house. Mortgage companies usually look at it to help ensure that you can afford to pay off for the mortgage. By paying off your car loan early, it puts you in a better financial position and definitely helps improve your debt-to-income ratio.
  • It gives a positive impact on your credit score eventually. We all know how important it is to have a good credit score, right? So, if you want to improve rather than increase your credit score, we highly recommend paying off your car loan early.

In the video below by Brad Finn, he shares tips as well as benefits of paying off your car loan early. Just click the play button to watch the whole thing:

CONS

  • You may be charged for early payoff penalties. Unfortunately, some financial institutions or lenders charge an early payoff penalty, which means you are charged for paying off the loan early instead of its supposed maturity date or original payment schedule. That is why we highly recommend that before you even apply for a car loan, make sure to check with the lending company if they charge early payment penalties. If yes, consider checking out other lending companies.
  • There may be a need to refinance your car. Not all lending companies allow penalty-free early payoffs or partial payments towards a car loan or any loan for that matter. So, to be able to get terms that make paying off worthwhile, you may consider refinancing your car loan instead. Later on, we’ll talk more about refinancing your car loan.
  • The total loan balance may stay as it is. There are lending institutions that use pre-computed interest, which means all of the interest for the whole duration of the loan is tallied and applied to your account even before you make the first payment. In this particular kind of arrangement, lenders normally apply whatever extra payments to pay down the interest first. Thus, paying your loan off early may mean not saving money at all. Again, better check this with your lender to be sure.
  • There is a chance that your credit score may drop. Although we earlier mentioned that your credit score may improve when paying off the loan early, during the first few months, it actually may drop. But as we have said, it will eventually recover and may even improve your credit score.

WHAT ARE THE STEPS TO PAYING OFF A CAR LOAN EARLY?

As we have mentioned earlier, car loans are secured loans, which means your car automatically becomes the collateral should you fail to make on-time payments. Now, when paying off a car loan early, it involves more than just submitting your payment. You need to take certain steps to ensure that everything is properly documented and that all rights to your car are yours.

So, to help you with that, here’s a step-by-step guide on how to pay off your car loan early:

1. Make a call to your lender, and request a payoff balance. Do not forget to ask how long the payoff balance is valid. Usually, the interest accumulates daily on the loan. So, make sure to ask and take note of the validity period.

2. Pay for the exact payoff balance to the lending company. When paying off, you can either pay the balance in-person or pay it off via online transaction or online payment. Once payment is made, make sure to take note of the processing date. Also, double-check to ensure that you made the payment before the validity of the payoff balance provided by the lender expires. Meanwhile, if you are mailing the payment, make sure to verify the delivery date to ensure that it arrives before the payoff balance’s expiration date.

3. Once payment is received and processed by the lender, request for a release of lien. This especially applies to those paying payoff balances online or via mail. Make sure to check if the payment has been received and processed. Once the lender makes a confirmation, immediately request for release of lien on your vehicle. Do not forget to request for a completed loan payoff letter as well.

4. Once the release of the lien of your car is received, take your car title, loan payoff letter, and release of lien to your local Department of Motor Vehicles. Then, request a new title that officially removes the lien to make sure all the rights to the car is yours already.

5. Make sure to keep copies of all the paperwork for your records, and for future reference. Even after you paid off the loan, it is important to keep copies of all your records. No one knows what you might encounter in the future, so, better be safe than sorry.

HOW TO PAY OFF YOUR CAR LOAN EARLY?

As we have mentioned earlier, there are plenty of ways on how you can pay off your car loan early.

If you do not have a lump sum to pay off your loan, here are some ways you can do to help expedite paying off your car loan:

Refinance Your Car Loan

Did your credit score improve since you bought that vehicle? If yes, then refinancing should not be a problem. Usually, if you had been paying all payments on-time for a year or two, most likely your credit score has already improved.

Now, when refinancing your car loan, make sure to opt refinancing at a lower rate. This is an effective way to pay off your car loan sooner than expected.

By lowering your interest rate, your monthly payments will be slightly reduced. Now, if you are able to pay more than the monthly payment, then, you are on your way to reducing your debt.

There are key points to remember though when refinancing a car loan. These are:

  • Knowing your interest rate
  • Finding a lower rate either at a bank, credit union, or online
  • Financing for a lower rate, at the same time, a shorter term

Keep in mind that you are trying to pay off the loan sooner. Thus, reducing your interest rate means you are going to pay less all in all. But, take note that it does not necessarily mean you are paying it off quickly if you opt for a long term loan.

When refinancing, make sure that it will be beneficial and not like an extra load you need to think of. Make sure that it will help lessen the load of paying the debt.

What are the benefits of refinancing?

To put it simply, refinancing can help lower your interest rate, which gives you an alternative way to save money over the course of your car loan.

Refinancing is also another way to get rid of bad customer service you get from your current lender.

Just remember though that if you opt for refinancing, most lenders will not refinance a car that’s over seven years old, which means, you should process refinancing as soon as you can or before your car turns seven years old.

Pay the Car Loan Bi-Weekly

Instead of paying once a month, consider taking your monthly car payment, and then divide it by two. Once done, make that payment amount every two weeks.

If you come to think of it, if you pay every two weeks, it means you make 50% of your payment 26 times as compared to a usual 12 payments annually. Essentially, it means paying an extra payment in its entirety per year.

Apart from that, one more benefit you get from paying on a bi-weekly basis is that you will pay less interest over the course of the car loan. When you pay every two weeks, your balance continuously decreases, which leads to a lessening the amount of interest charged against your remaining balance as opposed to paying once every month.

This step may not help you pay off your loan very quickly, but it is still good to get into the habit of paying your loan off regularly.

Use Your Tax Refunds, Bonuses, and Pay Raises

Instead of using your tax refunds, bonuses, and pay raises to shop or for other non-essential things, why not use them to help pay off your car loan early instead?

Whatever extra money you get in a month or in a year, make sure to put it directly towards your car loan. You will be surprised at how big a difference it can make. You will just realize you actually have enough money to pay off your car loan.

Get an Extra Job

Another way to help you pay off your car loan sooner is by getting an extra job.

There are so many online jobs out there that can add your monthly earnings, and would definitely help you gather the money you need to pay off your car loan earlier than scheduled.

Round-Up

Instead of paying the agreed amount between you and your lender, make round payments instead of up to the nearest $50 to help repay the loan faster.

For example, you loaned money amounting to $10,000 at a 10% interest for 60 months. Instead of paying $212.47 amount, make it $250 instead. By doing so, you will get to repay the car loan in just 47 months! Needless to say, having only paid $2,214.69 in interest instead of $2,748.23. You see, that’s over $500 money saved.

Always Pay On Time, Never Skip Payments

There are lenders that allow borrowers to skip payments once or twice a year. While this set up is so tempting, make sure to avoid such temptation. Why? It’s because skipping payments will actually lengthen the term of your loan and even cost you more interest! Thus, make sure to not skip making payments, and to always pay on time. Late payments may cost you a lot, and that means losing money that you could have used to pay off your car loan early.

Sell Items Online

Whether it be pre-loved or brand new items, it doesn’t matter. Selling online is another legit way of earning money to help you pay off your car loan early. It doesn’t have to be big. Remember that whatever amount you get, no matter how small or big your profit is, once you put them together with other funds you saved, that could help suffice the amount you need to pay off the loan sooner.

WHAT TO DO IF YOU HAVE MORE THAN ONE CAR TO PAY OFF?

Many American households do have multiple cars and/or vehicles, and most of them are under car loans as well. So, what to then if you have more than one car loan that you want to pay off early?

The best way is to choose the car or vehicle you find really helpful and suitable for you or your family, and then focus on paying that off first — as soon as you can. Remember that it’s always easier to pay off another loan once you have already finished off or have eliminated one of your payments.

Another way is to focus on the car that offers the greatest financial savings for you and your family based on the terms of the loan.

For example, one vehicle comes with a 10% interest rate, while the other has a 6% interest rate. Between the two, choose to pay down the higher-interest debt first. That way, you get to free up more money to pay off the other car loan.

FINAL THOUGHTS ON HOW TO PAY OFF YOUR CAR LOAN EARLY

Getting car loans is inevitable – especially these days when commuting is a big risk health-wise. Contrary to what we believed in though, there are actually a lot of ways to help pay off a car loan earlier than scheduled – for as long you got the will and determination to do so.

How do you plan to pay off your car loan early?

As we said, there are plenty of ways on how to pay off your car loan early. You just need to pick one or two among the many ways to help you achieve your goal of becoming debt-free sooner.

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Investment Apps and Websites

5 Of The Best Online Car Buying Sites In The Country

One of the best ways to do when shopping for a car or any vehicle for that matter is to check the best online car buying sites out there. There is actually a lot to choose from, which means more options to compare to be able to get the best deal possible.

the best online car buying sites in town

Perhaps it’s not surprising that a lot of people in the country own a car or two. Owning or having a car is considered a necessity for most people. It’s something that you got to save for because it makes life easier. Going places is made easier when you own one.

In an article published by CNN in 2017, it says that in 2016, car sales in the country set a record of 17.6 million cars and trucks included.

Meanwhile, in data published by Hedges and Company, it says that there were 284.5 million registered vehicles in the United States as of 2019 and that it is expected to rise even more this 2020.

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You see, these numbers are real. This only goes to show that indeed, having a car is not merely want, but a need – at least for most of us.

So, here you are planning to buy yourself a new car. What about now?

Well, if you are not new to this, you probably know by now what to do – unless you want to refresh your thoughts about it. However, if it’s your first time buying a car, it’s a totally different story.

But don’t worry, there are so many references on and offline where you can get idea from –

In fact, you no longer have to go elsewhere because today, we are going to share with you some important details that you need to know prior to buying a car, and of course, we are going to share with you some of the best online buying sites.

Yes, there is such a thing as online buying sites! Later on, we’re going to share with you what these sites are. But first, we are going to tackle some very essential information that every car buyer needs to know.

TIPS WHEN BUYING A CAR

As mentioned, before we move on to our list of some of the best car buying sites out there, here are some of the important things that you need to know first before you even make a car purchase.

TIP 1: Make sure to have a budget.

When buying a car, it is important to set a budget, and of course, stick to it. Avoid buying a car just because you like it even if you cannot afford it. While car loans are everywhere, and they surely help a lot, at the end of the day, you do not want to drown in debt, right? Or that you end up working just to be able to pay for the car that you bought.

You can use different tools to be able to determine how much you can afford. You can either go traditional by simply computing how much space you have in a month to spare for car payments, or you may use an auto loan calculator, which you can find online in different auto loan sites.

TIP 2: Ensure you have a good credit score.

Having a good credit score is a big help especially if you are planning to apply for an auto loan. Financial institutions like banks and credit unions usually check a borrower’s credit score to be able to determine whether or not the person deserves approval of the loan.

Now, if you do not have good credit, don’t worry you may opt to either buy a car through an auto dealership or peer-to-peer credit, or you may choose to look for a co-signer with great credit standing.

TIP 3: Know your auto financing options.

If you can buy a car in cold cash, then, that’s the best option. However, if you cannot afford to do that, there are three common places where you can apply for a car or auto loan. These are banks, credit unions, and an auto dealership.

All these three have their respective pros and cons, you just got to check them, and see for yourself the best possible option based on your preference and what you can afford. Also, make it a habit to compare the APRs and other factors before setting a deal with a financial institution.

TIP 4: Compare car prices.

Before you even make a deal, make sure to compare prices. There are so many car dealers out there, and guess what? While some of them sell the same type of car, they differ when it comes to the price. That is why it is very important to compare prices first before purchasing a car.

Later on, we are going to share with you some of the best online car buying sites. You can check them out and check how one differs from another.

TIP 5: Finalize the deal.

Once you have decided already where to buy the car from, and you have already chosen the car loan provider to deal with, make sure to finalize the deal. Basically, the requirements vary from one dealer or car loan provider to another. You just got to check with your preferred entity.

So, there you have it.

Now, are you excited about our list of the best online car buying sites? Hang in there first as we want to share The List Show TV’s own list first. We find this very helpful especially for those who are new to the idea of buying a car online. Check the video below by clicking the play button:

BEST ONLINE CAR BUYING SITES

With the advent of technology and the internet, it is not surprising that even buying and selling a car is now available online. Technology has indeed changed the way of buying and selling a car is. But let’s be honest here, it’s to our advantage, right? It’s more convenient and easy as compared to shopping cars from one shop to another, which can get exhausting and time-consuming.

Anyway, so, for your car shopping needs, here are some of the best online car buying sites that you should check out – in no particular order:

CARFAX

CARFAX Incorporated is an online commercial service that supplies vehicle history reports to both individuals and businesses regarding used cars as well as light trucks for consumers from the United States or Canada.

The company, which was founded in 1984 is headquartered in Centreville, Virginia.

Over the years, and given the fact that Carfax has been in the market for decades already, the company has become one of the trusted names in vehicle history reports.

However, what a lot of people do not know is that they actually do have an online used-car marketplace as well. The company is integrated with Facebook Marketplace. This brings more transparency as well as the confidence to buyers who are looking for a used car. Given the fact that Facebook Marketplace has already become popular, their partnership made Carfax well-known, particularly to car buyers.

Advantages:

Carfax offers a very simple website. But what makes it a standout is the fact that it provides a quality vehicle history report to future owners of the cars they sell. Every car listed on Carfax comes with a free Carfax Vehicle History Report. Having such will give any shopper peace of mind.

Carfax provides also provides the original price of the car through the Carfax History-Based Value feature. We actually like this because at least you’d know if the current price is worth it.

Another advantage of Carfax is that potential buyers like you have the option to sign-up for email as well as text alerts so in case there’s a similar used car for sale, you will get notified.

Disadvantages:

Unlike other car buying sites, the Carfax website is a bit old-school. Nonetheless, it gets the job done. Apart from car make, model, color, body type, price as well as ZIP code, and quality, the company does not provide any other filters that are original to them. So, if you have something particular that you are looking for in a vehicle, you might find it a hard time.

AUTOTRADER

Autotrader is also one of the best online car buying sites out there. Founded in 1997, this online marketplace aggregates new, used, as well as certified second-hand cars from dealers and private sellers.

The website allows you to research as well as compare cars by searching for the body type, price, mileage, and a lot more other criteria. Autotrader comes with Lifestyle Centers that allow its customers to locate vehicles that meet their needs and preferences and compare them side by side.

Over the years of its existence, the company has earned several awards and recognitions from different organizations. This includes a recognition from J.D. Power & Associates, Information Week, as well as Dealers’ Choice Diamond Awards.

Advantages:

We find the Autotrader’s website very modern and sleek. It comes with bells and whistles, which is already expected by industry leaders.

One feature that really stands out for us is the integration of its homepage with Kelly Blue Book as it allows users to get an offer on their old vehicle while using the site.

Browsing is not a problem with the Autotrader website. You can browse cars and other vehicle types by location, price, trim packages, and many other variables.

If you are particularly looking for a new vehicle, the Autotrader website provides ample research as well as helpful information that you may need.

Unlike other car buying sites, most of Autotrader’s sellers are dealers instead of private sellers. Thus, expect to talk to sellers with a high level of professionalism.

Disadvantages:

Sometimes, too much information can get overwhelming especially if you do not know how to narrow your filters, or you do not know exactly what you are looking for in a vehicle.

Another thing we noticed is that finding financing information is quite a challenge.

CARVANA

Carvana lets you pick up a car from an eerie but “futuristic vending machine”. Sounds interesting, right?

Well, that is exactly what a Carvana experience is all about.

Founded just recently, in 2012 to be exact, Carvana was reported to be the fastest-growing used car dealer in the country today.

The company, which is headquartered in Tempe, Arizona, has gained popularity because of its multi-story Car Vending Machine.

As of this writing, the Carvana website has over 23,000 cars in stock. Each of these cars comes with their own Carfax history report, which is very important for every buyer.

All cars being sold by Carvana are stored in reconditioning centers. All of the cars were inspected and certified. The centers, however, are not open to the public.

Search online from their thousands of car options, and once you have picked your car, Carvana will deliver it right at your doorstep, or you can pick it up yourself at a car vending machine.

By the way, one thing that draws people to Carvana is the fact that they offer a next-day delivery feature. Now that is customer service at its finest, don’t you think?

Advantages:

All paperwork can be filled out on the site. Carvana also offers free delivery to most major cities — that saves you money.

Carvana does not require a minimum credit score when applying for financing. More so, they only do a soft credit inquiry. You can obtain financing online, too, which makes it really convenient for customers.

Now, for those who want to experience the Car Vending Machine, Carvana usually subsidizes your flight.

Disadvantages:

While they do not have a minimum credit score requirement, Carvana requires a minimum income of $10,000 a year to be able to apply for car financing. So, if you are a part-time employee or a student, this may not work for you.

Also, the fact that it’s an online marketplace for cars means you cannot check the vehicles in person. However, Carvana offers a seven-day return policy just in case you find something odd about the vehicle you purchased.

VROOM

Vroom is an online car buying site known for selling cars that are preowned, have low mileage, under three years old, which are the same as pre-owned vehicles. The cars that the company sells online come from dealers, private sellers, as well as auctions.

To ensure safety and the readiness of the car for sale, all units go through several inspection levels.

Basically, all transactions with Vroom are made online. When you buy from the company, rest assure that Vroom handles all paperwork, and deliver it anywhere in the lower 48.

One thing to like about Vroom is that they give a quote for trade-in. Also, they pick up your car once they deliver the one that you purchased.

Once you have the car, you are given a week or 250 miles to test drive the vehicle.

As of this writing, Vroom offers approximately 5,000 vehicles on their site. Also, the company does not offer to haggle pricing. As with financing, they do offer car financing through over 12 banks.

While Vroom may not be the largest online marketplace for cars, it sure does have lots of high-end, clean vehicles to choose from

Advantages:

As mentioned, once you buy a car from Vroom, you are given seven days to test drive.

Each vehicle comes with a 90-day, 6,000-mile limited warranty. Rest assured that all cars from Vroom have clean titles that have undergone inspections and that each comes to their respective Carfax report.

What we like about Vroom also is that most of the vehicles they sell have low-mileage and that a lot are still under the original manufacturer’s warranty.

Disadvantages:

Vroom is ideal for people with good credit — although technically, the company does not have a minimum credit score requirement. So, yeah, even with a not-so-good credit score, you can still shop around their site.

Unlike other online car buying sites, Vroom charges a delivery fee amounting to $499. However, you have the option to pick up the car in Houston to get away with the fee.

CARMAX

Headquartered in Richmond, Virginia, CarMax is known to be the country’s largest used-car retailer. It is also a Fortune 500 company.

CarMax takes pride in the kind of service they offer to their customers. They ensure that all the cars they sell have gone through extensive inspections before they even show up on their site.

We consider CarMax as one of the best online car buying sites in the country because of several factors. Apart from the extensive inspections of car units, the company also offers a number of purchase protections such as a seven-day return window should the buyer find anything not good about the unit, limited warranty on all cars, and they also offer an option to buy a comprehensive service plan.

Advantages:

There are a few things we like about CarMax — like they free vehicle history reports, they deliver the car for a test drive (although this includes certain fees), they provide a seven-day return window, 90-day or 4,000-mile limited warranty.

CarMax also allows you to apply for car financing through their site. They also have stores across the country in case you want an in-person experience.

Disadvantages:

The company does not welcome price negotiations. They also do not provide price guidance to know if the price is a good deal or not.

If you want to see a car or test drive a car, fees apply.

FINAL THOUGHTS ON THE BEST CAR BUYING SITES

As you can see, we only provided five of the best online car buying sites. There are actually a lot more to choose from. Each comes with their respective offerings.

What’s nice about using car-buying sites is that it is not time-consuming. It’s very accessible – like you can check what they offer anytime and anywhere you want.

So, if you are someone looking for a car – new or pre-owned – but does not have the time to shop from one store to another, car buying websites are the best for you.

Just remember though to make sure you are searching for cars from legit, and only from the best online car buying sites.

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Investment Apps and Websites

The Basics Of Car Loans: What You Need To Know

Before you even purchase a new car — whether it is your first car or not — especially if you intend to borrow money, it is very important to know and understand the basics of car loans.

the basics of getting a car loan what you need to know

Are you planning to buy a new car through a car loan?

If your answer is yes, are you fully aware of what a car loan is all about? Do you know what it entails to loan money from a financial institution? Do you know the pros and cons of getting a car loan?

These questions are not merely questions to confuse you or for you to think twice about getting an auto loan. That’s not the point. We are asking you these questions because it matters to know the basics of car loans. This will help you make informed decisions, at the same time, save yourself from future trouble.

A car loan is probably one of the basic or most common types of loans available out there. In fact, it is too popular that in data published by Statista, it says that “the outstanding car loan balances in the U.S. amounted to 1.23 trillion U.S. dollars in the fourth quarter of 2019”.

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Meanwhile, according to the country’s Consumer Financial Protection Bureau, as of April 2019, there were 2.3 million auto loans that originated. Furthermore, the volume of the loan was $52.8 billion, while the year-over-year originations increased by 3.6%.

These data are proof of how many people are getting auto loans. Well, it is not surprising because according to one study, people find having their own car a necessity. Yes, it’s not simply a want, but a need.

How about you? Are you buying a car because you want it or because you need it?

Whatever your reason is, for as long as you are buying a new car through a car loan, it is important that you know what car loans are all about.

Having said that, today, we are going to share with you some of the basics of car loans. In particular, we are going to tackle the following:

  • What is a car loan?
  • What is the process of getting a car loan?
  • How to ensure a car loan approval?
  • How much does a car loan cost?
  • Where to apply for a car loan?

WHAT IS A CAR LOAN?

As the name suggests, a car loan refers to the sum of money borrowed from a lender or creditor in order to be able to purchase a car or any type of vehicle for that matter.

Generally, a loan refers to the amount of money that is lent to an individual, or a business, or even to another entity. The lender or creditor refers to the party (usually a financial institution) that lends the money, while the borrower is the person to where the money is being lent to.

A lot of people are usually confused between a car loan and a personal loan, while the latter allows borrowing money to buy a car, the former is very specific to purchasing any form of vehicle. More so, one big difference between the two is that a personal loan is usually an unsecured loan, which means it does not require collateral to be able to borrow money.

Meanwhile, a car loan automatically makes your car the collateral for the loan. Thus, if you, the borrower, fail to make payments for the loan, the financial institution does have the right to repossess the car.

Now, car loans follow almost the same rules as well as procedures that apply to other forms or types of loans offered in the market. All car loans are for a specific period of time, which usually lasts between 24 and 60 months. However, there are lenders that allow longer periods.

In almost all car loans, lenders charge specific fees and taxes, which, are generally added to the total loan amount.

Car loans are available in different financial institutions, however, the most common of all is, of course, banks.

In case you want to know, car loan officially originated back in the year 1919. It was established when the General Motors Corporation, which is an automobile manufacturer in Flint, Michigan, established what they then call as the General Motors Acceptance Corporation or GMAC. GMAC was founded in response to the growing demand for vehicles among Americans after World War I.

Just before we get into details, here’s a very informative video about getting a car loan by Honest Finance, which we thought you should watch especially if you are interested to know more about getting a car loan. Hit the play button below:

WHAT IS THE PROCESS OF GETTING A CAR LOAN?

Part of learning the basics of car loans is knowing the process of getting one. Having said that, here’s a step-by-step guide on getting a car loan. Hopefully, this helps you get familiarized with the whole process.

STEP 1: Know Your Credit

Your credit score is vital when it comes to the approval of your car loan application. Most lenders, especially the popular and big ones, do have a specific minimum credit score requirement in order for an application to be accepted.

Furthermore, your credit score helps in determining how much money you can borrow, and the possible interest rate.

Being knowledgeable about your credit score will help you understand when you are getting a great deal with a lender, or if it’s time to look for another one, a better one.

Generally speaking, though, a high credit score will result in a lower interest rate, while a low credit score means a higher annual percentage rate.

It is important to note that having bad credit may lead to your car loan application to get declined. But do not lose hope though as you can always improve your score, and re-apply when you already have better credit.

STEP 2: Know Your Budget

Be realistic. Do not aim to buy a car that you cannot afford. It will just lead you to further debt — needless to say, that may lead to a big-money problem in the future.

But how do you know how much you can afford?

Well, there are two ways to do that. One, is you do a manual computation. Get a piece of paper, and work out how much you can afford based on your savings as well as your monthly income (of course, you have to take into consideration all the other bills you pay to be able to arrive in a realistic budget).

Two, you can use an auto loan calculator, which is very accessible online. There are lots of websites out there that offer this feature for free. This will help you determent your monthly repayments according to your potential APR and loan term.

Any of these works, but if you were to ask us, we’d recommend doing the second option as it will give you better and more realistic estimates.

STEP 5: Shop for the Best Loan Deal

Here’s the thing — rates and terms vary depending on the lender or creditor. That is why it is important to shop around first before deciding which lender to deal with.

There are so many car loan providers out there — too many, in fact, that it can get a little overwhelming for some especially those who are new to car loans.

Just get as many offers as possible, and once you have them, compare one from the other.

When comparing offers or deals, make sure to look into the following features:

  • Loan Amount – This refers to the amount the lender is willing to lend you.
  • Annual Percentage Rate – This refers to the interest rate. The lower the interest rate, the better.
  • Loan Term – This one refers to the length of your loan. How long does the lender will allow you to pay for the loan?
  • Restrictions – This varies from one lender to another. One example of which is that there are lenders that only accept used car that is below 10 years or a hundred miles.

STEP 4: Get Preapprovals from Various Lenders

Applying for a preapproval does not necessarily mean you are dealing with the institution right away. Basically, this allows your lender to confirm whether or not you are eligible to borrow money at an estimated rate from them.

Once you get preapproval, you have 30 to 45 days to shop for your car.

Upon confirmation that you qualify, make sure to gather the information as well as documents you need to get the preapproval application started. Basically, you will need your personal, as well as financial and employment details. In some cases, though very few instances, lenders ask about the car that you want to purchase.

STEP 5: Shop for Your Car

Once you are done calculating, budgeting, as well as getting preapprovals from different lenders, the next and the most exciting thing to do is to shop for your car!

Assuming you do not have a specific brand and model in mind, you may search for cars in the following channels:

Online – This is the most convenient and the easiest manner of looking for a car. As you know, almost everything is online now. So, instead of going from one shop to another, all you have to do is go online. Then, compare dealerships’ advertised options against sources such as Edmunds and Kelley Blue Book. More so, you will also be able to compare the dealership from various manufacturers, which gives you access to the best deals around.

Dealership – Of course, if you want to go the traditional way, you may opt to visit the dealership instead. Visiting dealership is actually the best option for those who are interested in dealership financing.

STEP 6: Finalize Your Loan and Receive the Money

This is the last step. Once you have decided on the car that you are buying, it’s time to finalize your loan. For this step, you basically just have to follow the lender’s instruction with regards to finalizing your loan.

However, just to give you an idea, if you are opting for financing from a third-party lender, funds are usually transferred either by sending it to you so you can personally pay the dealership, or they send it directly to the dealership.

Meanwhile, if you choose to go for dealership financing, you just have to sign some paperwork, and you’re done.

HOW TO ENSURE A CAR LOAN APPROVAL?

Learning the basics of car loans give us the idea also about our eligibility to get a loan. This allows us to assess ourselves on whether we are likely to get approved or not.

We mentioned earlier that the better your credit score is, the likely your car loan to get approved. Furthermore, you can even enjoy a lower interest rate.

But what if your credit is not good enough? What will you do?

Here are some tips that you may want to look into to ensure your car loan gets approved.

Get a Co-Signer – Once you get a co-signer, you basically have to put their name and their credit score on the line so you get to purchase your dream car. This is a little tricky though because in case you do not do your obligation, which is to pay for the loan, the co-signer credit score will be put in a bad light. Normally, a co-signer is someone who is a very close relative of the borrower.

Peer to Peer Auto Loan – To be realistic, finding a co-signer can get a little challenging sometimes. So, if you fail to find one, you may opt instead to loan money from various peer to peer auto loan websites. Please take note though that peer to peer auto loan sites usually charges a higher rate for high-risk loans or those who have a not-so-good credit score.

HOW MUCH DOES A CAR LOAN COST?

The cost of a car or auto loan depends on various factors. Some of the factors that affect the cost of an auto loan are:

Annual Percentage Rate – This refers to the interest rate the borrower has to pay on the car loan. This is essentially the fee that your lender or creditor charges for your loan. Usually, the lower the APR, the less time you have to pay for the loan.

Down Payment – This refers to the cash or money you put down at the outset.

Loan Term – As we have mentioned earlier, this refers to the length or period of time you will need to repay the car loan. The length varies from one lender to another. Some would offer to 36 months, while others may allow you to pay off the debt for 72 months. To be sure, ask your desired car loan provider.

These factors greatly affect how much a borrower pays in interest over time. Ideally, the shorter you pay off the debt, the better. That means less money wasted in paying the interest rate. Meanwhile the longer you pay for a loan, the more expensive it can actually get.

WHERE TO APPLY FOR A CAR LOAN?

From all the basics of car loans, this one’s one of the most important. As a borrower, you need to know your options so you get to choose the best possible car loan offer.

While there are a few options out there, there are three major places where you can avail an auto loan. These are:

  • Banks
  • Credit Unions
  • Auto Dealership

To give you an idea, here’s what makes each different from one another:

Banks

Banks are probably the most common and most accessible place where people can avail or apply for a car loan. What draws people to banks is the very fact that it’s everywhere! The downside, however, is that you have to go there personally to apply for the loan. Also, banks do usually charge higher interest as compared to other financial institutions.

Credit Unions

A credit union refers to a not-for-profit, member-owned financial cooperative. It provides its members with different financial services like car loans. Compared to banks, credit unions charge a lower interest rate, which actually makes them ideal for borrowing money. The downside though is that you have to be a member to be able to avail of a car loan.

Auto Dealership

An auto dealership refers to the business that sells either used or a new car. What makes it a standout compared to the other two is that auto dealers usually give discounts and other freebies/promos. They are also open to borrowers who either have good and bad credit. The downside though is that they tend to charge a higher interest rate.

Between the three options, the best depends on the borrower himself or herself. Remember, there are a lot of factors that need to be considered, particularly the credit score of the person. So, yeah, it really depends from one to another.

FINAL THOUGHTS ON BASICS OF CAR LOANS

As you can see, there is a lot of information that a borrower needs to know first before getting a car loan. All the information we provided is equally vital especially if you want to make the best decision with regards to loaning money for your dream car or for a vehicle you intend to use for business purposes.

With all that’s been said, what is your takeaway? Have you decided already if you are loaning money for your car or not?

Just always keep in mind all the basics of car loans. That way, you will be able to make an informed decision. Something that will keep you out of financial trouble today or in the future.