(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

Courtesy of ARAcontent

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Know your FICO and other credit report items. The overall number assigned to measure your credit worthiness doesn’t tell the whole story about you or your ability and willingness to repay a loan. But it’s used by every lender you approach and will have a strong influence on whether the loan is approved and what rate you might receive.

When shopping for a car loan, be sure to get current copies of your credit report from the three major agencies and review them thoroughly.

[Equifax: PO Box 740241, Atlanta, GA 30374; www.equifax.com

Experian: PO Box 2002, Allen TX  75013, www.experian.com

TransUnion: PO Box 2000, Chester, PA 19022; www.transunion.com]

Next, consider carefully whether any 0% loan offered by a dealer is the best deal for you. That number certainly looks attractive, compared to the 4% or higher that is often the next best thing. But you might actually be better off taking the immediate cash rebate instead.

For example, at 4% with a $2,000 rebate on a 36-month loan, your monthly payment will be $30 lower and you’ll save over $1,100 on the total cost over a 0% loan. You can run various scenarios yourself by using one of the readily available online loan calculators.

Always be sure to pre-arrange financing before you go car shopping. That has a number of benefits. You’ll find out in advance how much the loan can cost you and what you can afford, both in terms of monthly payment and total cost.

You’ll also have a bargaining advantage negotiating with the dealer, since part of the purchase price they offer is always dependent on whether they will make the loan. Dealers will often accept a lower purchase price if you take their financing offer. Run various scenarios in advance to determine where your trade-off amount starts.

It may well be worth accepting their financing offer if the purchase price is low enough. You can refinance the day after, after all. That too has costs, though, so be sure to include that in your calculations.

Another advantage of having pre-arranged financing is the confidence you get from being able to walk away from any unattractive deal. New cars especially are virtually identical from one dealership to the next. If you get a better deal elsewhere, it may be worth it to go on to the next. Before you do, though, consider not just the immediate or lowest price but also what service you’ll get after purchase.

Last, be sure to calculate the pros and cons of leasing versus a car loan versus another form of financing. Getting a home equity loan, for example, can give you ready cash with tax deductible interest and most contracts don’t require you to spend the money on the house.

Being creative when considering financing options can save you money.

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