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Before applying for auto or mortgage loans, do your research...it can save you money in the long run. Auto loans and mortgages are among the largest loans you will ever borrow, be sure to do your homework. Compare several different loans before you sign one.
(ARA) - While the number of auto and mortgage loans issued are down, and the effort it takes to get a good loan these days might seem daunting, there are signs that consumer lending is improving with positive economic reports.
And even though dollars aren't handed out as quickly or easily as they were just a few years ago, it is possible for a person to obtain a mortgage or auto loan.
Signs that consumer lending is improving include:
1. Interest rates remain low.
2. Banks are stronger and evaluating loan requests in depth.
3. Inflation is staying low.
Consumers interested in either a mortgage or auto loan should first review their credit scores to determine whether they can afford the loan. A bad credit score could mean denial or paying a lot of extra money. Federal law requires everyone to be able to access a free credit report from each of the three credit agencies once a year. With that credit report information, you can find out if your report has errors or if you have areas where you can work to improve your score.
"Once you have determined that your credit score will assist you in acquiring a mortgage or auto loan, you need to do some research on the loans available," says Daniel Wesley at CreditLoan.com. "In the mortgage loan area, you need to investigate whether an Adjustable Rate Mortgage works better or a Fixed Rate Mortgage. And in the auto loan area, secured and unsecured loans are available through direct and indirect financing, giving you plenty of options to research to best fit your budget."
ARMs are good if you plan to live in your house for only a few years because your mortgage rate will be fixed for a set number of years at a lower interest rate. But they can fluctuate quickly once the time period expires, increasing your payments greatly. You may be eligible for a refinance on the mortgage at that time – make sure you research the terms of your ARM closely.
Fixed Rate Mortgages – while higher than typical initial ARMs – are at a historic low, which has made these types of mortgages very popular. They are also popular for families looking to refinance.
Auto loan interest rates for new car purchases also have fallen from a year ago according to interest.com. Some tips for getting an auto loan include:
1. Check your credit report
2. Know what you can afford in payments
3. Determine whether a low-cost option is really the best idea in the long run