At a time of great financial instability across the global and domestic markets, the amount of data, shifting opinions, and conflicting headlines can be confusing.
Many consumers do not engage with the global financial debate on the level of the broadsheets, and it can often appear as if credit itself is a dying concept that rolled through a glory-age and has now disappeared.
But, it may not be as easy as this. For any consumer who is investing in a new car, a low rate car loan is still a great option.
Here is a list of everything to consider when searching for such a loan:
Own credit history is vitally important. If you possess an excellent credit rating with a history of prompt repayments, you are deemed “safe” by the institution. It means that you will be given a loan with much smaller interest and repayment rates, as the lender is confident that their money is in good hands.
If you believe your credit rating is poor, due to late payments or personal errors, it can improve by making timely payments to direct debits on existing credit cards.
If you obtain a credit agreement that you then struggle to manage, you must immediately speak to your lender.
Discussing your situation with them before you miss a payment will often result in negotiating the repayment schedule with you, making it easier for you to manage.
A personal debt ratio is another important factor in finding the best loan possible. The debt ratio is the proportion of debt that an individual possesses concerning their assets. For example, if you are in £30,000 worth of debt but own your house and have no mortgage, this is an excellent debt ratio.
To maintain a positive debt ratio, you should ensure that your existing credit limits are much lower than the maximum amount you are allowed by existing financial institutions.
If this is beginning to feel technical, consider finding a financial adviser near you to pelt with questions about this topic!
If you have an existing credit card but are only borrowing a small proportion of the amount you are allowed to, it shows lenders that you use money wisely, do not overspend and borrow, what you need to.
Another great tip to achieve a good personal debt ratio is to keep zero-balance accounts open, without actually using them.
It helps to show a lender that you have the option to borrow money on several accounts. It, in turn, explains that you are not just choosing them out of necessity but because you feel they offer something that others don’t – such as more competitive rates or better rewards. You’ll look like a much better investment to them.
Various websites will offer a comprehensive guide to achieving a good credit rating, a high starting position for those interested in improving their financial situation.