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Do You Qualify to Apply for an Auto Loan?

Obtaining an auto loan is a part of a better finance management, where you do not spend lump sum amount for purchasing a car without saving a penny in your account. With numerous auto loan lenders in the market who are there to assist you in getting that long desired car home, you must be wondering based on what criteria do these lender offer loan.

The answer is your credit worthiness, to determine which the history of your credit and debit activity is scrutinized. Two most important things which are looked into to determine that are: Income and Credit Scores.

Income: Your source of income is examined by the lender, where you are asked to submit pay slips if you are a working employee. In other cases, like being self employed you need to submit your other sources of income. With this your bank activity is also noticed, the frequency of debit and credit of amount and your other liability management. Some lenders seek a guarantor to be appointed by you who agrees to pay in case you default or fail to pay off the loan. Another way to seek that security is placing the car as collateral which may used by the lender to pay off the loan in case of default from you.

Credit Scores: The other factor for credit worthiness is your Credit Score. These are simply credit reports and ranking given by various banks, lender or credit bureaus. An important part of such reports are FICO scores. The common trend is that a minimum of 600 credit scores is required for you to be eligible for applying for an auto loan. Anything below 600 you are disqualified.

Depending on these two factors at a satisfying level you can easily obtain an auto loan.

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