HOW TO GET AN AUTO LOAN WHEN YOU HAVE LOW INCOME
Itís easier to get an auto loan now even if you have
bad credit. But what if you have low income?
Your income is the next biggest factor lenders look at when
assessing your creditworthiness. If you are not earning enough, you
might be denied an auto loan.
So take a look at the tips below on how you can get approved for a
car loan even with bad credit and improve your income.
How to Get Approved for a Car Loan
LESS EXPENSIVE VEHICLE. Buy a car on the lower end of the price
scale. This advice doesnít suggest that you pick something that will
need constant repairs. Just donít buy an expensive car that you
might not afford to pay up over time in relation to your income now.
DOWN PAYMENT. Save a decent amount of money for a down payment.
Not only will a down payment help you qualify for a loan, but it
will also make you look more dependable and responsible to lenders.
COSIGNER. Maybe someone you know with a good credit report can
cosign for a car loan. A close relative or friend may be willing to
help you get the car you need if they can trust you to pay the loan.
Just make sure youíll be able to pay on time so that you will not
cause damage to your cosignerís credit when you default.
CREDIT UNIONS. You may be able to finance your car through a
credit union since they will be taking your payments directly from
your check. If you are a member of a credit union, try getting a car
loan from them first.
GOOD LENDER. Look for the best lender you can find. A good lender
will not only approve your loan, but will help you improve your
credit score by reporting your consistent payments to one or more
BE HONEST. Lying about your income or credit score wonít help.
Itís better to be honest about it with the lender, especially that
there are several lenders now that are willing to create a workable
budget for you.
SHORT TERM. Keep the loan term shorter. Do not stay in debt too
long. Even if monthly payments look bigger in a 48-month auto loan
than in a 72-month, itís okay. Tell lenders that you prefer a
short-term auto loan to a long-term one. It minimizes the risk of
being delinquent. It is also what lenders actually want.
How to Improve Your Income
- Eliminate as much debt as you can or start
paying your bills on time.
Even if you have low income, you can get more chances of getting
approved for a car loan when you have less debt.
- Get another job. You can take a part-time job or do something that
you like and make money from it.
- Turn some clutter into cash. There are certainly things in your
house that you are not using anymore. Instead of just throwing these
away, sell them for some good price.
- Save money. If you are really serious about paying off an auto
loan on time and keeping a good credit, make sure you are
disciplined enough to save money. You can cut down on your food
allowance, for instance, and spare some money for the loan payment.
You can also minimize the use of your credit card.