Why Arizona Consumers Should be More Careful with their Car Loans

About 85% of Arizona car buyers finance their vehicles. This makes sense, of course, because cars, trucks, vans, and SUVs typically cost a lot of money – even used. Most Arizona consumers don’t have enough cash to pay for a reliable vehicle upfront, so they finance. However, according to a recent study, too many Arizona consumers get the wrong car loans. They don’t shop around for the best rates, and end up throwing money away on overly high interest charges. Either that, or they settle for cheaper vehicles to compensate for steep interest rates. Unfortunately, some Arizona car buyers end up defaulting on overly expensive car loans and hurting their credit scores. Others finances older, unreliable vehicles to save money. Yet, most Arizonians can avoid these bad situations by shopping more carefully for car loans.

Common Mistakes Arizona Consumers Make with Car Loans

Recently, researchers from MIT’s Sloan School of Management and Brigham Young University’s Marriott School of Business conducted an auto financing study. These researchers looked at more than four million car loans from 326 lenders in Arizona and other U.S. states. In the course of their investigation, they found that 80% of vehicle buyers didn’t get the lowest interest rate available to them.

This is bad news considering that most Arizona consumers now finance their cars for at least 69.3 months. Sadly, paying heavy interest charges on a loan for nearly six years can add up to thousands of extra dollars. This is how Arizona car buyers end up with unaffordable car payments and negative equity in their vehicles. In the worst cases, they miss payments and face repossession and heavy credit score damage. Yet, future auto loan seekers can save themselves money and frustration by changing a few behaviors. These include:

Not checking their credit scores before filling out loan applications.

This, according to experts, is the worst mistake made by Arizona car shoppers. After all, interest rates on car loans are largely based on credit scores. Therefore, there’s no way to know whether or not an assigned interest rate is fair if you don’t know your credit score. Ideally, you should look at both your FICO score and VantageScore before heading to the dealership. Then, check your credit reports to ensure the accuracy of your credit scores. It also helps to use an online loan calculator to determine the best interest rate for which you qualify.

Not shopping around for the best interest rates.

Another 2016 study from Bain & Co. revealed that more than 50% of Arizona vehicle buyers don’t compare offers before accepting car loans. Strangely, though, many of these same shoppers take a lot of time to research vehicle prices. It seems that they don’t realize that financing terms contain most of their money-saving opportunities. Yet, it’s possible that some Arizona consumers worry that too many hard inquiries on their credit reports will bring down their credit scores. Fortunately, though, multiple credit checks for car loans typically count as one inquiry if they happen within a certain timeframe.

Assuming that all lenders offer the same auto loan terms.

Even if they don’t worry about hard credit report inquiries, other Arizona car buyers just assume that get the same deal from any lender. So, why should they take the time to shop? However, different lenders have different requirements. Also, not all car loan providers treat low credit scores the same way. In addition, you may assume that your bank or credit union will offer you the best deal. While this is possibly correct, it still pays to shop around and compare interest rates and terms.

Why Arizona Consumers Should Check their Credit Reports Before Applying for Car Loans

Knowing your credit score before financing a vehicle is important. Of course, Arizona consumers should also check their credit reports to verify that their credit scores are accurate. All too frequently, creditors and the credit bureaus make mistakes. Then, these errors can result in credit report inaccuracies that bring down credit scores.

So, in order to avoid an unnecessarily high interest rate on your car loan, check your credit reports from TransUnion, Experian, and Equifax. The Fair and Accurate Credit Transactions Act (FACTA) entitles Arizona residents to free copies of their credit reports every twelve months. Also, you can request credit reports from all three major credit bureaus at www.annualcreditreport.com.

If, while reviewing your credit reports, you find mistakes and errors, contact Credit Repair Lawyers of America in Arizona. Whatever you do, don’t attempt the credit report dispute process on your own. Instead, call or email our firm, and allow an experienced credit attorney to fix your credit issues and get you clean credit reports for free.

How Arizonians can Get a Free Credit Repair Lawyer

Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.

Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (480) 771-6001 or contact us on our contact page.

For more information about Free Credit Repair, please visit https://creditrepairlawyersam.com/arizona/credit-repair/.