• Check Your Credit: Having a good credit score is of high importance for borrowing a secured vehicle loan. With a higher credit score and a good credit history, the borrower may be entitled to lower interest rates and convenient loan terms. As long as the borrower pays bills on time, settles his debts, and avoids penalties, he can have a good credit score.  Also, it is important to review the credit report to look for any unusual activity. Check for incorrect balances and late payments. If credit score is low, take steps to improve it before applying for the vehicle loan.
• Know The Budget: It is essential to have a predetermined budget and know how the budget for buying a car. The borrower should be sure that the vehicle’s cost is aligned with other financial goals. To determine the budget subtract usual monthly expenses from monthly income after deducting taxes. Also, include intended monthly savings in the expenses.
• Determine Affordability: After understanding current financial situation, it is required to decide on a reasonable monthly vehicle payment. Check with the loan officer to figure out the maximum loan amount that can be afforded. It should include the monthly payments, interest rate, and the loan period.
• Get Preapproved: It is important to research for the terms of the loan and get preapproved from the credit union. Getting preapproved for a vehicle loan will help expedite the process, determine eligibility, and find the right price.

• Borrow Wisely: A thumb rule is to borrow what you can pay back easily. Create a budget based on your monthly income and expenditures to have a clear picture of how much you should spend with your credit card.
• Check The Interest Rate: While applying for a credit card do make sure that you research the market and get a card which offers lowest rate of interest. Do pay attention to the annual fee and reward system offered by the lender. You may consider getting a credit card from a credit union for a competitive rate of interest.
• Pay Off Debts On A Monthly Basis: Restrict your interest charges from growing exponentially by paying off your balance every month. Avoid skipping a payment, as this will lead to higher expenses due to late fee and will negatively impact your credit score.
• Maintain A Low Credit Utilization Ratio: Use less than the credit utilization ratio i.e. borrow less than what you are authorized to borrow. Experts recommend keeping this ratio under 30 percent.
• Keep Checking Your Credit Reports: Keep a tab on your credit reports by asking for a copy from a credit reporting company annually. The report will provide you an insight into your credit history and also throw light on fraudulent accounts, incorrect information, if any and more.
• Beware Of Hidden Fees: Ask the lender for any hidden fees such as late payment fees, processing fees, balance transfer fees, credit limit fees etc. before applying for the credit card.
• Limit The Number Of Cards: Limiting the number of credit cards you own, makes it easier to manage them. Having more cards may translate into higher debts which can affect your credit score. Once you have decided the cards that you want to keep, hold onto them. Sticking to your credit card, keeping the account active and maintaining a good payment history can build your credit score.
• Use Technology: It is much easier to manage accounts now as most financial institutions offer free online tools to enable clients to keep a tab on their accounts.

Auto loans come in various loan repayment terms. A car loan can be taken for 24, 36, 48, 60 or even 72 months. This means that one can get a short term loan as well as a long term one. Some people prefer short term loans as they have to pay less interest. Others go for long term loans as they will have a smaller amount of monthly installments to pay. A long term loan can enable one to purchase an expensive car easily as it’s less burdensome to repay. Despite the high interest rates that come with long term loans, a rising trend has been observed of those who prefer these loans.

Lenders and finance companies are increasingly approving 6 to 8 years auto loans on new cars. This is probably because new cars are better manufactured than they were in the past. The average life of automobiles is increasing and due to this lenders are exposed to fewer risks while lending. However, it’s important to consider both sides of the coin and check out the pros and cons of long term loans.

Pros:

• Smaller monthly payments: This is a major reason for which most of the people prefer long term loans. The total amount is spread out over a longer time period. This significantly reduces the monthly payment and allows the common man to drive a car he could not otherwise afford.
• Refinancing: Long term loans can be refinanced after a few years. This will shorten the time period of the loan and consequently reduce the interest rates.

Cons:

• Costly: Loans that stretch over a long period of time are more costly in the long run. This eventually proves costly for the consumer.
• Depreciation: Vehicles depreciate at the rate of 15-20% each year. Taking a long term auto loan means that by the time you are about to pay off the loan, your vehicles worth will be a little more than the loan balance.

We at Greater Central Texas Federal Credit Union provide you quick and cheapest car loans in Texas. For more information about our services, kindly visit us at 3305 E Elms Road, Killeen, TX 76542 or call us at 254-690-2274.

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