Did you know that you can get a car loan to finance a vehicle even if you already have a personal loan? Even if you've already taken out a personal loan to pay for something big, getting a car loan for a new vehicle isn't at all impossible. The key is having a solid credit score and not being over-leveraged with other debts. In this guide, we walk you through the process of getting a car loan amidst your existing loan so you can get that dream car you've always wanted.
Steps in Getting a Car Loan
Here are five easy steps to getting a car loan after taking out a personal loan.
1. Look for a car loan with a lower interest rate.
If you've taken out a personal loan, chances are you've gotten a small interest rate. This means that you've also gotten a small loan limit - just enough for your large purchase. The key is taking advantage of this low-interest rate by getting a car loan with a lower interest rate through an auto finance company. The car loan term will be longer, but with a lower rate, you'll save in the long run.
2. Choose a car loan that fits your purchase.
Remember that taking a car loan doesn't mean you have to buy a brand new vehicle. There are also used car loans, which have a lower interest rate than a new car loan. This means you can get a used car loan and still have a lower rate than your personal loan. This is great news for young people and those who don't want to spend a large chunk of their income on a car loan.
3. Choose a car loan lender that can give you a lower interest rate.
Another way you can lower your monthly payments is by finding a lender that can give you a lower rate with their car loan. These auto finance companies give out car loans to customers who may have a less than perfect credit history and can't get a loan anywhere else.
4. Get your credit in tip-top shape.
Just because you've taken out a personal loan doesn't mean you're doomed to a poor credit score. To get a car loan after you've taken out a personal loan, you should make sure to maintain a good credit score. This means you should avoid taking out more loans and paying off your existing loans on time.
5. Make a down payment.
When you take out a car loan, make sure you have a reasonable down payment to prove that you're serious in your purchase. A greater down payment will not only prove your seriousness about the purchase, but it will also make your monthly payments lower.
Choosing a Car Loan
There are many car loan types that you can choose from, such as a new car loan or a used car loan. On top of that, if you've taken out a personal loan, you can choose to get a loan that is collateralized by your name and your credit.
This means that if you fail to pay off your loan, the lender can take your assets to ensure they're paid back. Some examples of assets that can be taken include your car or your house. If you're planning on buying a house using a home equity loan, you should be careful of taking out a car loan as well since it can be considered as an additional debt to your home.
Conclusion
To sum it up, taking out a car loan after you've taken out a personal loan is possible. You just have to make sure you do your due diligence when it comes to your credit and your down payment. The key is to know how to be frugal with your credit and how to decide which loan fits your needs best.
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