Calculating your chances of getting a car loan has become much easier over the years with online tools, like our car loan estimator. However, you must provide accurate information to obtain reasonable estimates. Otherwise, your results will be just a stab in the dark.
Why it’s important to know your information
Accuracy is important or you’ll be in for a big surprise when you get to the dealership. Although the specifics vary by site, auto loan tools all use the same basic formula to calculate the estimated auto loan amount.
When using one, you’ll want your credit score and gross monthly income to be accurate. Guessing these will change your estimated loan amount, and it won’t help you if you’re looking for vehicles in a specific price range if that price range is far out.
For example: you estimate that you earn at least $2,300 per month and your credit is not that bad, so you enter a minimum credit score of 575 (situational bad credit) into the calculator. The result is an estimated loan amount of $18,400. But if your credit score is actually 540 (bad credit) and you only earn $1,800 per month, the estimate you will receive is $12,600. That $5,800 difference can have a big impact on the vehicle you can finance.
Keep in mind that these online tools only estimate amounts. The more precise the information entered, the better your estimate. Actual approval amounts are only from lenders, and Auto Express Credit is not a lender.
What if I don’t know my information?
If you’re not sure what your credit score looks like or how to find your gross monthly income, the good news is that this information is relatively easy to find.
It’s always a good idea to know your credit before shopping for car financing. This way, you will know what lenders are seeing when considering your approval. Remember that credit scores and credit reports are different, but both are important.
Lenders use your credit reports to see how successful you have been with credit in the past, and credit scores to help determine the interest rate. You can get a free copy of your credit reports once every 12 months by visiting annualcreditreport.com, and credit scores can be obtained for free from any number of credit services such as Credit Karma or Discover Credit Score card.
Gross income is the amount of money you earn before taxes are taken. This can be found on your pay stubs, but you may need to add up a few numbers to get a monthly total if you get paid weekly or bi-weekly.
Another way to locate an estimate of your gross monthly income is to multiply your hourly wage by the number of hours you work in a week, then multiply that result by 4.33. Using the calculation of 4.33 allows you to obtain a monthly average that takes into account the 52 weeks of the year. Typically, most lenders who work with bad credit require a minimum gross monthly income of $1,500 to $2,000.
Know before you go
Knowing the proper information to enter into online tools can help you research your options before approaching a dealership. However, your chances of getting approved for an auto loan will of course depend on the lender you visit. That’s why it’s important to approach a lender who can help you with your specific credit situation.
AT Auto Express Credit, we work with special finance brokers across the country who have lenders available to work with many credit situations. Let us help you find one in your area. Simply complete our auto loan application form to get started today.
