A Few Myths About Auto Financing Exposed

Buying a car will likely be one of the largest investments that you can make. Not surprisingly, it is common for individuals to need financing in order to make this purchase happen. Unfortunately, auto financing can be a complicated field that you may not have much experience with. When this is the case, it can be easy for you to assume that some common auto financing misconceptions are true.

Myth: You Will Always Need To Make A Large Down Payment When Financing A Car

There is a common notion among some individuals that they will need to make a rather large down payment on their desired vehicle in order to secure financing for it. While there are some individuals that may have to do this, you should be aware that many lenders may be willing to waive the down payment requirement for individuals that have particularly strong credit histories and incomes. However, you should be aware that financing a car without a down payment may increase the total cost of financing by forcing you to take out a larger loan.

Myth: You Need To Pick Out A Car Before Speaking With A Lender

When shopping for a car, you may want to go looking at dealerships to test drive cars as soon as possible. Yet, it can be very difficult to gauge what type of car you can afford if you do not know how much financing you can receive. For this reason, you will want to speak with lenders before you start looking at cars. By providing you with a pre-authorization for a loan, you will have a much better idea of what you will be able to afford. However, you should be aware that this amount is often given in a range, and you may want to consider cars on the lower end of this range to increase the odds that you will be approved for financing.

Myth: It Is Almost Impossible To Get Financing If You Are Self-Employed

Being self-employed can offer a person numerous important freedoms. However, some people make the mistake of assuming that self-employment can make it much harder to be approved for a car loan, but this is not the case. Lenders will still evaluate self-employed individuals in the same manner as other individuals. This will usually involve a close review of the applicant's credit history, current debts, their income and the amount of the loan that is being requested. The only difference is that self-employed individuals may need to submit multiple years of tax returns to show that their income is stable.

Talk to a business like Western Avenue Nissan to learn more.