Car Loan Questions

In today's tough economic times, car buyers don't want to have to pay more than they have to. Shoppers are paying more attention to car prices and interest rates than ever before. Many have questions about how they can get the best deal on their car loan. These are some of the most frequently asked questions by car shoppers.

What Affects The Interest Rate on Car Loans?

There are many factors that come into play when deciding the interest rate that you get when you apply for a car loan. Your credit score, amount of money that you are willing to put down on your car loan, length of the loan, and whether you are buying a new or used car all factor into the interest rate that you will get. Interest rates will also vary by lender, so it's a good idea to get a few quotes before you decide on the loan that you want.

What is Gap Insurance, and Do I Need It?

When you buy a new car, the vehicle will depreciate in value about as quickly as you drive it off the lot. A car might depreciate as much at 35% in its first year. The average car will lose 65% of its value in the first five years, according to KBB.com. If you make a small down payment, or owe money on your trade-in and roll over the amount you owe into a new loan, you will be upside down in your car, or owe more on the car than it is worth, for quite some time. Gap insurance will help protect you if your car gets stolen or totaled. Without gap insurance, if something happens to your vehicle, you will still owe money on your car even after the insurance company completes your claim.

Do I Need Good Credit To Get a Car Loan?

You don't have to have excellent credit to get a car loan, but good credit will help you negotiate better loan terms. Before you go shopping for a car loan, it is a good idea to clean up your credit as much as you can. Check your credit report for errors, and dispute any mistakes with the credit reporting agency. Fixing any mistakes, clearing up some simple dings, and paying your bills on time will do a lot to help you get a better credit score, which will help you get a lower interest rate.

How Do I Get the Best Interest Rate on My Car Loan?

One of the best things that you can do is compare quotes before you buy. The dealer will probably offer you financing, but you might not get the best rate. Alabama Car Loans can help you compare quotes to find the best rates. Another thing you can do to get the best interest rate is clean up your credit score. Fix errors on your credit reports, pay down credit cards, and make on-time payments. You also may be able to lower your interest rate by taking out a loan for a shorter time period, or making a larger down payment.

Does Alabama Car Loans Lend Money?

Alabama Car Loans does not lend money. We work with several different banks to help you get quotes for your next automobile loan. You will then be able to pick the bank that works best for you. The bank that you choose will work with you and lend you the money.