APR stands for Annual Percentage Rate. Higher the APR, the higher will be the monthly repayment. Paying a high APR on auto loan is a sheer waste of hard-earned money. Getting a low APR loan should be on top of every loan taker’s agenda. This guide details how a person can qualify for low APR loan deals even when he is paying off a high APR auto loan.
How to qualify for cheap APR loans
How good is the borrower’s credit history? The car loan company checks the borrower’s credit score. Red-flags, if any, will work against getting the cheapest and best loans in UK. Prospective borrowers must get a copy of their credit history from Equifax, Experian and TransUnion and correct any errors. The loan company will also check how much has been borrowed, what is the total borrowing limit, etc. A good credit history can qualify the borrower for cheap APR loans. Debt servicing capability Is the borrower’s income enough to service all his debts, including the new "best rate loan"? If the income looks stretched, then a low APR loan is not given. Down payment If the borrower can put down a good chunk of cash as down payment (10% and over of the car’s value), he can get a low APR loan, assuming every other condition is fulfilled satisfactorily. So, a borrower must save up to put down a 10% or more for down payment if he wants to qualify for cheap loans in the UK. Overcoming bad credit history If the borrower just cannot erase his bad credit history, then he must apply for a loan in a joint name. If the borrower’s close friend or relation has a good credit history, then he can apply for the loan as the 1st applicant with the original borrower acting as a co-signer. Short-term loans A short term car loan that is repayable within three years carries a low APR than a five-year loan. The short term loan will increase monthly repayments, but will save big on interest. Such loans are cheap loans. Auto refinance If a borrower is stuck with a high APR loan, then he can always look at refinancing auto loans, which will help him get a low APR loan. However, he will have to pay the old loan closure charges and other penalties as may be specified in the agreement.
The market is very tough today and lenders are very choosy. If a person qualifies for a low APR loan, he will be welcomed by most financial institutions and be presented with the best loan deals. Not only will he save money, he will also get a new set of wheels.