Posts Tagged ‘Loan’

Harbor Credit Breaks Down Auto Loans (And How Auto Loan Applications Are Approved)

Nowadays, obtaining auto loans online has never been easier. Typically, you’ll come across forms that are not only short, but simple too. If you’re spending more than five or ten minutes filling in field after field, you’re probably just wasting your time. Instead, it should take just a few minutes to submit the necessary information. Most lenders, especially the most qualified, will contact you within a matter of days, sometimes hours, to discuss your auto loan options. The same lenders will also have bad credit car loan options as well. So, whether you are a prime or sub-prime candidate, it shouldn’t be too difficult to find a lender that can help.

Car loans work like this: First, you trade in your car for an agreed amount. Next, you make a down payment. And the difference between the sum of those and the price of your new automobile is the amount you will need to borrow for your car loan. Here’s the oversimplified mathematical formula:

[(Total Price of Car) - (Down Payment + Trade-in Value)] = Auto Loan Amount

With car loans, the Annual Percentage Rate, or APR is very important. Your monthly payments are a function of the interest rate and the length of the car loan. APR is designed to help you understand the car loan’s entire cost, create a level playing field for lenders, and prevent them from advertising low rates and then hiding fees. The better your credit is, the lower the APR on your car loan will be.

Many car loans offer 60- or 72-Month loan periods, for smaller payments each month. Though lower payments may seem easier to manage, the interest paid over the financed period means you pay more, increasing the total cost of your car loan.

To better prepare for the car loan process, use an auto loan calculator – you’ll find them on major lending websites – to estimate your payments based on a car’s price, length of the car loan and interest rate. By testing different auto loan scenarios, you’ll better understand what you are capable of handling.

If you’re financing a used car loan, lenders may only approve it for a model up to 5 years old. The used car loans process is more restricted because much older cars are harder to resell. Some banks charge at least 2% higher APR on used car loans, than they do for new car loans. Though, many online auto loan providers today, offer better rates.

Whether it’s a new or used car, however, applying for a bad credit car loan can be intimidating. But there are car loans for people with bad credit. Believe it or not, you can control interest rates by understanding your finances, your credit report, and all related costs. If a bad credit car loan is what you are looking for, request your credit report. This way you’ll not only understand where you stand financially, but you can also fix blemishes to improve your rating and APR.

While the amount borrowed and interest rate are important parts of auto loans, look at other factors too. Your auto loan term and the fees you pay for credit checks are crucial. Fees and interest shouldn’t exceed the total cost of the car.

If, in the end, you’re not comfortable with the terms of any auto loan, consider leasing. This is a great alternative to auto loans, especially if you’re battling with bad credit.

To increase your chances of being approved for an auto loan, do the following:

• Fix your credit report – Correct mistakes and “charge offs”
• Pay attention to your credit score – Know what APR you deserve
• Close old accounts – Credit scores can suffer with them
• Understand the process of car loans – Be prepared
• Utilize an auto loan calculator – Test different APR scenarios

How Applications for Auto Loans Are Approved

Applications for auto loans are approved (or disapproved) through a standardized process that involves a lender closely reviewing a list of an individual’s financial statistics to gauge their eligibility.

The following are those key factors. So before you apply for an auto loan, have a look at what lenders look at.

Income
Your gross monthly income should be about $2000 per month or more.

Debt-to-Income Ratio
It must be less than 50%. Calculate this ratio by dividing the sum of your total debt (e.g. car payments, credit card balances and unsecured loans; exclude mortgage or property debt) by the sum of your total income.

Credit Reports
A credit report must exist in your name and all information on the auto loan application must match it. Remember to complete all fields on the auto loan application accurately – with proper format and no typos. Most applications for auto loans are approved or declined automatically based on entered data.

FICO
You must have a FICO credit score (Fair Isaac) of 540 or greater (sub prime), 600+ (near prime), and 680+ (prime lender). If you don’t know your credit score, you should get a copy of your credit report.

Loan Amount
A new or used auto loan is typically between $5,000 and $50,000, depending on the length of the auto loan period. If you need a car loan for less than $5000, it’s wise to get a credit card, instead of approaching a lender.

Employment History
Steady employment is preferable for an auto loan. If you’re self-employed, proof of two years minimum employment history must be provided with tax returns.

Collateral
Any vehicle that is offered is generally no more than seven model years old (as of January 1st of that year).

Vehicle Type
The lending process is compounded if the automobile is a sports car, motorcycle, collector vehicle, hot rod, or similar type car. Some lenders are also particular with other vehicles such as SUVs and trucks.

State-by-State
Some states have auto loan restrictions. As a result, some lenders do not offer all services therein.

Other Considerations
• Complete all fields on the loan application accurately with proper format and no typos.
• Be sure you work with the most trusted car loan lenders. Do your research by reading thorough reviews of only the most qualified companies.
• Apply for a car loan online. It is secure and fast.

The right loan can mean the difference between wasting money and saving money. Once you get started, you’ll be one step closer to your new car!

What You Should Know Before You Get An Online Auto Loan

When considering the purchase of a new auto, many of us simply do not have cash lying around to pay for it. Therefore, an auto loan becomes a necessity. There are many things you should know before obtaining an auto loan. First and foremost, realize that there is a wonderful opportunity awaiting you on the World Wide Web- an online auto loan. There are many companies that offer online auto loans, and with just a bit of research, you will be able to determine what type of auto loan is best for you.

Let’s examine the different types of online auto loans that are available:

Long-term-These auto loans are usually only offered with the purchase of a new car, and typically last for a term of either 36, 48 or 60 months. This type of auto loan features a smaller monthly payment, but you will end up paying more over the life of the loan. One problem that can arise when having a long-term auto loan is that the value of the car may fall below what you actually have left to pay on the loan.

Short-term-These auto loans have higher monthly payments, but over the life of the loan you will end up paying less, and will probably also be offered a lower interest rate than that which is available with a long-term auto loan.

There are also numerous different avenues you can take to secure an auto loan. Different types of institutions offer different types of auto loans, and you should investigate all available options before deciding what type of auto loan is best for you.

Credit Unions-If you are a member of a credit union, you will be able to apply for a larger auto loan with a smaller interest rate than at some other institutions. Be sure to check with your credit union to see what types of financing they offer for auto loans.

Auto Dealers-It is much easier to secure an auto loan through an auto dealer than by other conventional methods. Although the interest rate will be a bit higher on this type of auto loan, it is processed more quickly, and approval rates are high.

Home Equity Auto Loans- By offering your home as collateral, you will be able to secure an auto loan. Although this type of auto loan carries with it the potential for a higher interest rate, there are some tax advantages that can offset the costs incurred by the higher interest rate.

Don’t forget to do your online research when searching for an auto loan. You may just find an online auto loan that suits your needs without ever having to leave the house.

Business Finance and Commercial Real Estate Mortgage Loan Choices

Even though longer-term business finance techniques might be appropriate for many circumstances, there are some important short-term business loan options that will be less costly in producing improved credit card processing and commercial mortgage results for business owners. Short-term business financing choices can be misunderstood because of a preference by many business owners for long-term commercial real estate loan and commercial loan programs.

Two Important Short-Term Business Finance Options

Two of the most overlooked short-term working capital business loan strategies are short-term commercial mortgage loan programs and business cash advance programs in conjunction with credit card processing. Both of these business finance options are relevant for most business owners but are frequently misunderstood.

Short-term Programs for Commercial Real Estate Investment Financing

A long-term business loan is appropriate for many businesses that own commercial real estate investment property. Business properties should normally be financed with a combination of short-term and long-term business finance funds. When a longer-term commercial mortgage is viable, it is preferable to secure long-term business financing, preferably for 30 years.

However there will be many commercial mortgage loan situations in which longer-term real estate business financing is not appropriate for the business owner. In such circumstances it is important for a business owner to realize that there are viable short-term working capital management options.

When a Short-Term Commercial Mortgage is Appropriate

If a business owner plans to sell or refinance their business within a few years, it is preferable to explore short-term business finance options. The best short-term business loan will have minimal prepayment penalties in comparison to terms commonly included with long-term commercial real estate investment property financing.

The avoidance of business finance prepayment fees and lockout fees fees in some short-term business financing programs is an important benefit of these short-term commercial mortgage approaches. The absence of these potential fees could produce a savings of up to 20% or more if the business property is sold during the period which would have involved lockout fees in a longer-term commercial loan.

Short-Term Commercial Real Estate Investment Property Financing Limitations

There are some trade-offs that need to be understood if a business owner chooses shorter-term business financing even though prepayment fees will usually be avoided with a short-term business loan. When short-term commercial real estate financing is a realistic option, the loan-to-value will usually be no higher than 70%, the commercial mortgage will not be readily available for special purpose business investment properties such as golf courses and the interest rate will frequently be in the range of about 12%.

Best Investing Possibilities for a Short-Term Commercial Mortgage Loan

Warehouse, multi-family, office, mixed-use and retail business properties are the best possibilities for short-term business financing. Business owners should be comfortable with a time period of less than three years for a typical short-term business loan.

Fewer Mortgage Lenders for a Short-Term Commercial Real Estate Loan

There will typically be a very small number of commercial real estate investment property lenders who are effective at implementing the short-term commercial mortgage loan strategy properly. There are also a number of problems to be avoided with a short-term commercial real estate loan, so choosing an appropriate provider is extremely important to any business owner considering a short-term business finance program.

Credit Card Processing and Business Cash Advance Programs

For any business that accepts credit cards as a method of payment, a business cash advance is a critical working capital management tool that is often overlooked. Even thriving businesses frequently need more working capital than they can borrow. One of the least-known business finance strategies for successful businesses is potentially the single best working capital loan strategy for obtaining needed cash for growing their business: the use of a merchant cash advance or business cash advance program.

Primary possibilities to take advantage of this business financing program are service and retail businesses. This credit card processing and credit card financing strategy uses credit card receivables to determine the amount of a merchant cash advance.

Working Capital Management: Credit Card Financing and Credit Card Processing

This business financing technique is called credit card financing or credit card factoring. Some business owners might have used a business finance technique referred to as receivables factoring to sell future receivables at a discount and receive immediate cash.

Many service and retail businesses cannot document business receivables to obtain a business loan. Businesses such as bars and restaurants do not typically have receivables to use for business financing.

What these businesses do have in many cases is documented sales volume and documented credit card sales activity. It is this documented level of sales volume and credit card sales activity that becomes a financial asset to the business and its business finance strategies. Business cash advances from $5,000 to $300,000 can usually be obtained based on a merchant’s sales volume and future credit card sales.

A business financing merchant cash advance must usually be paid back in less than 12 months. For business owners that want to renew the working capital cash advance program, it is typically possible to get more working capital after payback of the initial advance.

Limitations and Problems to Avoid with Credit Card Processing and Merchant Cash Advance Programs

As with any successful business finance strategy, there will typically be only a small number of commercial lenders who are effective at implementing this working capital management strategy properly. There are also a number of problems to be avoided with business cash advance programs, so choosing the appropriate provider of this commercial financing service is extremely important to any business owner considering a credit card financing program.

Business Opportunity Investment And Business Loan Finance

Buying a business opportunity is likely to be an extremely challenging task when arranging the business loan. This is largely due to the usual lack of commercial property as collateral for the business financing to buy a business opportunity. When buying a business that does not include commercial real estate, business borrowers need to realize that business loan options will be greatly reduced in comparison to a business purchase that can be financed with a commercial mortgage.

The suggestions and advice in this commentary build upon commercial loan covenants that are commonly provided by commercial lenders willing to offer commercial financing throughout much of the United States for buying a business opportunity. There will often be various private financing scenarios in which the seller might be willing to wholly finance a business opportunity acquisition, and we will not attempt to discuss those commercial loan possibilities in this commentary.

Length of Business Loan to Expect When Buying a Business Opportunity

When purchasing a business opportunity, commercial loan terms will almost always include a reduced amortization period in comparison to a commercial real estate loan. A business loan term of ten years is normal, and that length of loan is likely to be tied to a requirement that the commercial lease will not expire before the loan matures.

Likely Business Loan Interest Rates to Buy a Business Opportunity

The likely range to buy a business opportunity is 11 to 12 percent in the present commercial loan interest rate circumstances. This is a reasonable level for business opportunity borrowing since it is not unusual for a commercial real estate loan to be in the 10-11 percent area. Because of the lack of commercial property for lender collateral in a small business opportunity transaction, the cost of a business loan to acquire a business is routinely higher than the cost of a commercial property loan.

Business Loan Down Payment Requirements for Buying a Business Opportunity

Although there will be variations based on the type of business and several other factors, a common down payment requirement for a commercial loan to buy a small business opportunity is 20-25 percent. The presence of seller financing might lessen the down payment needed to acquire a small business opportunity.

Buying a Business Opportunity – Business Loan Refinancing Options

A related business loan issue to anticipate when buying a business is that refinancing the business opportunity loan terms will normally be even more difficult than the original business financing. There are currently some new business loan programs in the final stages of development that could dramatically improve future refinancing options. But until these new business financing options are finalized, it is important to arrange the best possible terms initially and not depend upon refinancing possibilities.

Avoiding Problem Lenders When Buying a Business Opportunity

The selection of a commercial lender might be the most important phase of the business financing process for buying a business. An equally important task is avoiding lenders that are unable to finalize a commercial loan for buying a business.

By avoiding such lenders, commercial borrowers are likely to avoid many other business financing problems frequently associated with buying a business opportunity. Avoiding problem lenders will be instrumental to the eventual success of both the business loan process and the long-term financial health of the business being acquired.

Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.

Current Auto Loan Rates: the Facts as They are

I have written before that the most important thing to consider when applying for an auto loan is the current auto loan rates. These loan rates are responsible for determining how much you are going to end up paying for the car. So the most important thing you have to me in the look-out for is low car loan rates. In this article I’m going to talk to you about the current auto loan rates and give you some extra tips on the best places to look for low loan rates.

First off, you should know that there a 4 main different kinds of auto loan rates:

• 36 month car loan

• 48 month car loan

• 60 month car loan

• 72 month car loan

Each of them have different loan rates that fluctuate between 6.5% and 14%, sometimes climbing up to the 15% or 16%. The actual rate depends on you location and if you want a new auto loan or a used car loan, but the general rule of thumb is the lower number of months for the auto loan, the lower the car loan rate. Of course if you want a used car loan you should expect slightly higher loan rates than for new cars.

I’ve learned that depending on where you apply for your auto loan, you can expect to find lower or higher rates. I won’t talk about it in-depth but you can anticipate lower auto loan rates from credit unions and higher – but safer – rates from the auto dealers.

Auto Loan Rates Different Locations

If you are part of a credit union, you’ll be able to opt for larger auto loans with lower auto loan rates. You should check your union and compare the auto rates with your local bank to see which one is better. The other place, auto dealers, can offer you auto loans with a slightly higher loan rate but are much safer. When I say safer I’m saying that the whole loan process faster and approval rates are much higher.

But don’t worry if you’re not a member of a credit union or only find high auto loan rates with your auto dealers. There is another kind of auto loan you can apply for called a home equity auto loan. By placing your house as a collateral, you’ll be securing your auto loan no matter what. Always remember to research for the current auto loan rates until you have nowhere else to look for