If not for car loans, many people won’t be car owners today. We all know how important having a private car is, especially if you have a large family and you need to haggle your way to get public transport. Auto-loan provides a safe means by which you can own a car now, and pay later. By paying later, this means you pay the auto-loan over a period of time in monthly installments. Let’s take a look at how auto loans work and how to get a quick auto loan approval.
Table of Contents
How Does Auto Loan Work
Auto-loan refers to money borrowed to finance the purchase of your car, It is also called auto-financing.To understand how auto-loan works, you need to understand some key terms:
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Down payment
The downpayment can represent any percent of the overall cost of the car, it depends on the agreement between you and the lender. Down payment is the amount of money you pay out-rightly that covers the part of the cost of the car. It also signifies your commitment to fully purchase the car. The more the amount you pay as down payment, the lesser the amount of money you have to pay as monthly installments and vice versa.
Loan Term
The loan term refers to the total duration of time you are expected to pay the total amount. It varies depending on where you get the loan. either from a bank, a cooperative society or the car dealer. The longer the loan term, the longer the amount of time you have to pay up in monthly installments.
Also Read: How to Get Vehicle Finance in Nigeria 2021- Top List of Auto-Finance Companies
Interest Rate
The interest rate is actually the cost or the extra money you have to pay for taking a car loan. Simply put, it’s the amount you have to pay for borrowing the money. The higher the interest rate, the more you have to pay in monthly installments.
Monthly Installment
The amount you have to pay in monthly installments depends on the interest rate, the cost of the car, and the estimated loan term. These key terms are the parameters you will need to calculate how much you will have to pay in monthly installments. It’s always advisable to go for the auto-loan option that has the lowest interest rate. This is because a too large interest rate will significantly increase the amount of money you will have in total for obtaining the car loan >> Buy A Car And Pay In Monthly Installment Guide In Nigeria
How To Get Quick Loan Approval
If you urgently need a car, and you don’t presently have the cash in hand to buy it, then you need to get your car loan approved in time. Normally, obtaining a car loan approval shouldn’t take too long. However, there are certain things you need to know and do to get your auto-loan approved in record time.
Get The Required Documentation
Getting an auto loan approved can be as fast as you can provide all the required documents your loan provider wants to see. Top Of the list of all documentation is proof of your source of income. Since the money will be paid back in monthly installments, your auto lender will want to see evidence that you are able to pay. If your loan provider is a financial institution, it will be required that you have an account with them from which your monthly installment will be automatically withdrawn every month.
Other documentation you will need is proof of identification such as your driver’s license, voter’s card, or any other official means of identification. You might also be required to provide a statement of your account especially if your auto-lender is not a financial institution.
Determine The Type Of Car You Want To Buy Before-Hand
Before any lender will give you the money for the car you want to buy, they will require that you give details of the car including the year, model, type, price, etc. Both new and used-car can be bought with auto-loan, it all depends on what you want. If your lender is a bank, they will require a proforma invoice which is a draft invoice that shows that you have shown interest in the car and the car price.
You will delay the approval of your auto-loan if you wait till you are in the presence of your lender and don’t have the details of the car you want an auto-loan for.
Fill Out The Application Letter Correctly
Regardless of your auto-loan lender, you will be required to fill out an application form or letter to obtain an auto loan. When filling out your application letter, ensure that your details are correctly imputed. This will ensure that there is no confusion concerning the details you put down and what is contained in other documentation you provide. If any misalignment is noticed in your application form, you will unnecessarily create a delay for yourself; as the process of correcting this might be complex.
Ensure You Have Sufficient Money For Down-Payment
Like I said earlier, down-payment is the money you pay upfront that shows your commitment to buy your desired car and even complete the full payment. The down payment will be subtracted from the overall cost of the car, and also reduce the auto-loan you have to take. When you are applying for a car loan, your approval will be quick if you have sufficient money to pay for your down payment at once. Auto-loan lenders usually have a percent of the total cost of the car that you are required to pay as a down payment. Do your calculation beforehand, have the money at once and immediately deposit it. This way, your auto-loan application will get quick approval.
Search Out Online Lenders
Online lenders provide a quick means for you to get your car loan approved within the shortest possible time. You will need to provide required documentation which will be verified and apply online for you to qualify for an auto loan. A disadvantage, however, for online auto-loan lending is that the interest rate is usually high. Online lenders can be a good means for you to obtain an auto loan when your credit score is low.
CONCLUSION
It is always advisable for you to research thoroughly when choosing an auto-loan provider to finance your next car purchase. This will ensure you get the best deals that will be easy for you to pay back.
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