Free Money Saving Auto and Home Loan Tips

Free Auto Loan Tips

The following tips should help increase your chances of getting a car loan at a better rate.

Tip #1 - If you just started a job (recently graduated from college) then wait 6 months to apply for your car loan.

Tip #2 - If you have currently have bad credit then repair it before applying for an auto loan.

Tip #3 - If you've recently moved then wait until you have lived at your new address for 6 months before applying for a loan.

Tips #4 - If you have had a previous auto loan or home mortgage on your credit report then your chances for a new loan improve greatly.

Tip #5 - Try and pay off all of your credit card balances or at least lower them. You may want to consider finding the best debt consolidation loans to erase all of your credit card bills. The bottom line is don't keep a high debt load or credit card balances.

Tip #6 - You must have a stable job or occupation.

Tip #7 - Other examples of credit extended to you should appear on your credit report. Verify this with a quick and easy online credit report. Also avoid charge off's on your credit report.

Tip #8 - If you've filed bankruptcy before then you should wait 3-4 years before trying to get an auto loan.

A Brief Look at Various Types of Loans Available

A Brief Look At Loans

"Innovative financial packaging" is how it is sometime known. Essentially what this means is that financial institutions look for more and more ways to lend to their customers - after all, charging interest on a debt is the main way that they make their money. But, with more and more loans now available, it can sometimes be difficult to know exactly which loan to apply for. The following explanations try to clear this issue up a little for you:

Personal Loan

Probably the mainstay of financial institutions is the personal loan. As the name suggests, personal loans are money borrowed from a financial institution for personal use. In nearly all cases, a personal loan is going to be unsecured, which means you'll likely be paying a premium on interest. Once the personal loan is given, you repay it by making monthly repayments to the lender. In effect, this is the multi-purpose loan.

Auto Loans

Auto loans are where you borrow money from a financial institution in order to buy a car or vehicle. In most cases auto loans are done by the car dealer, but there is no reason why you cannot make arrangements with your bank before buying the car to borrow the money from them. As with a personal loan, most auto loans need to be repaid by monthly installments. Sometimes, although not always, the financial institution will secure your loan with the vehicle, which means if you cannot repay the loan they'll repossess your car. One additional expense with an auto loan is that most lenders insist that you take out fully comprehensive insurance during the period that the auto loan is outstanding.

Home Improvement Loans

As the name suggests, home improvement loans are where you ask a lender to lend you money so you can improve your home. In most cases a home improvement loan is granted on the condition that you give the lender a second rank mortgage on your home. As such, the loan amount can rarely exceed the valuation price of your home - including the increased value after the improvements have been made. Again, home improvement loans usually need to be paid by monthly installments; however, balloon (or bullet as they're also know), one-off, payments are also sometimes accepted.

Facts You Should Know About Types of Loans

When you set out to borrow, you often come across terms like unsecured loans, revolving loans, adjustable rate loans, etc. While these terms are more or less self-explanatory, it is still useful to be clear on their exact meanings and what they imply before you finalize a loan contract.

Unsecured versus secured loans

As the name implies, a secured loan is one where you offer some kind of collateral against the loan. The agreement is that if you default on the loan, the lender has the right (but not the obligation) to take possession of the asset you have pledged.

In most cases, this asset would be what the lender has financed. For example, when you take a home loan, you offer the home as collateral.

There may also be cases where you may need to offer additional collateral over and above the asset that is being financed. This happens, for example, when the lender is financing close to 100% of an asset that is prone to rapid reduction in market value. In such cases, the lender may insist on your putting up another asset so as to provide a reasonable margin of protection in case of default.

Unsecured loans are those where such collateral arrangements do not exist. These loans are granted based on your credit standing, ability to repay and other factors.

In cases where there's a choice available to the customer to take either a secured or an unsecured loan, the former may be offered at a somewhat lower rate. That is, assuming every other factor remains equal. This is because of the lower risk involved to the lender, who has recourse to a specific asset in case you default. However, this situation is comparatively rare in consumer financing, although it is more common in financing businesses.

Installment versus revolving loans

A revolving loan is one where you have access to a continuous source of credit, up to a pre-determined credit limit. If the limit is say, $10,000, you can borrow any amount up to $10,000. And typically, you can repay all or part of the amount you borrowed at a time of your choosing, within the overall tenor of the loan.

You pay interest only on the amount you borrow for the time you borrow it. Sometimes, banks may charge a commitment fee for making a revolving line of credit available to you. This fee is usually charged on the average unutilized amount of your limit.

You can also re-borrow the amount you have repaid. In effect, you have a loan that's always available to you on demand.

Unlike revolving loans, installment loans have a fixed repayment schedule. In most cases, the full amount of the loan is drawn down (i.e., borrowed) at once and both repayment schedule and amounts are fixed in advance. You do not have the option to re-borrow the amount that has been repaid.