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Car Finance Companies - General Information about Car Finance Companies

credit rating condition of car loan term area of the country bar none autobytel jd byrider

If you are looking for a loan for a car, getting dealer financing is not your only option. Car finance companies are companies that specialize in offering loans to prospective auto buyers and may offer better rates or terms than auto dealerships. However use caution when considering these companies since, like in other areas of the lending industry, these companies may use sneaky or predatory lending tactics if you choose the wrong one. The following is some basic information about car finance companies.

Relevant factors in determining the rate of a car financing loan

There are a number of factors that come together to determine the interest rate and terms of a car financing loan offered by a car finance company. These are as follows:

Credit rating

Just as with most other loans, an individual’s credit rating has a large affect on the interest rate. Car finance companies will look at your credit report, which shows your general credit history, in order to get a sense of whether you are a good risk or not. It stands to reason – if you have a worse credit rating, the finance company may raise your rate in order to cover the potential that you will not pay the full loan amount and interest back. Many car finance companies promise that they will be able to lend to borrowers regardless of bad credit, but the subtext here is that the interest rates may be on the high side. Just as in the real estate industry, these can be considered subprime loans and people should be aware of the potential dangers associated with that.

Condition of car

The condition of the car you are receiving the loan for is also a factor in the interest rate. New cars usually have lower rates than used ones. This is probably because newer cars cost more and thus the company seeks to reduce the repayment burden somewhat.

Loan term

The term of a loan is the amount of time a borrower has to pay it back. Shorter loans usually have lower interest rates than longer term ones, since the company recoups its money more quickly and with less risk.

Area of the country

Car loan interest rates simply vary depending on what part of the country you’re in. This is merely a demographic fact. It is caused by economic factors in the regions in question and can be fairly marked.

Once a car finance company has taken these factors into account, they will either approve or deny a loan. If they approve it they then arrive at a loan interest rate and term or negotiate various options with you concerning these numbers.

Here are a few large and prominent US car finance companies

Bar None

This company is well known from TV ads featuring a sock puppet speaking into a microphone. Its motto is “Everyone deserves a second chance!” It claims that 5 million individuals have been helped to buy cars they were interested since the company was formed in1995. The online information passes the Better Business Bureau’s Online Reliability Program, which means that there is informational security to the online buying process.


Based in Irvine California, this company was founded in 1995. It deals in both new and used cars and oversees a network of dealers around the country. It has an online purchase process that allows a borrower to finance car purchases regardless, it claims, of credit history.

JD Byrider

This company dates back to 1989 and is the largest auto finance company in the US. This is another subprime loan companies that attempts to assist buyers with bad credit.

Car finance companies are a way to avoid the sometimes tricky tactics of dealer financing. It is recommended, in fact, to shop for the money to buy a car before shopping for the car itself. There are many automated loan calculators available online that make calculating rates and terms quite easy, and somebody can figure out fairly exactly, based on how much they are willing to pay per month and for how long, what their auto budget really is. Then they should consult a few car finance companies (as well as banks and credit unions) and see if they can beat the dealer’s financing offer.

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