Increasing Your Approval Rate for Car Loans
When shopping for car loans, you may be wondering how different lenders come up with a range of rates for you. While they may have their own formulas and calculations, they are generally guided by the three C’s: collateral, capacity to repay, and credit history.
Collateral
In the case of car loans, the collateral is the value of the car you want to buy. The lender considers the value of the collateral because if you don’t pay your car loan, they will repossess your car and then sell it.
Capacity
Capacity refers to the ability of the borrower to repay the loan. Lenders want you to repay the loan from your income, not from your savings. They want to know if you have stable employment or if you have another source of income other than your job.
Credit history
Lenders look at your payment history on all the debts on your credit report. This tells them if you pay your bills on time or not. This is also reflected in your credit score.
Using this information, lenders ultimately decide how likely it is you will pay back your new loan as agreed. For more on our car loans, contact us at 954-745-2400.