Here is the truth of the matter not everyone gets approved for car loans with very bad credit.
Here’s a typical question from a bad credit car loans applicant, “I have bad credit and I have been trying to get a car for awhile. Every dealer that I’ve been to wants a big down payment or they can’t help me. If that’s the case, why do they say no one gets turned down?”
Here’s the short answer: not everybody qualifies for a car loans for very bad credit. As a case in point, here are some of the basic requirements for this type of loan:
- You must gross at least $1,500 in monthly income if your FICO score is below 625.
- All bankruptcies must be discharged. (Some lenders will consider a Chapter 13 that is 2/3 completed with an order to incur additional debt.)
- No repossessions in the last year unless included in a bankruptcy.
- Loans are for automobile purchases from authorized licensed dealer partners.
- You must be a U.S. resident at least 18 years of age.
If you can’t pass these requirements, chances are you will not qualify for car loans for very bad credit. However, just because you meet these requirements does not guarantee that you’ll get approved.
Bad credit car loan lenders will also look at your debt to income ratio. If your monthly bills exceed 50% of your monthly income, then most lenders will not allow you to take on additional debt. Lenders will also consider what is known as payment to income. Most lenders will not allow your car payment to exceed 20% of your monthly income.
Car loans for very bad credit lenders also look at the source of your income. If you are a W-2 employee with multiple years at the same job, this works in your favor. If you are self-employed or have less than a year on the job, getting a lender to approve your application could prove to be more difficult.
But even if you don’t qualify for one of the car loans for very bad credit, don’t think that you’ll never qualify for this type of loan. Many credit situations are temporary. Not enough time on the job can be cured by – you guessed it – more time on the job. Debt to income problems can be solved with either less debt (paying off your bills) or more income (changing jobs or getting a raise) and self-employment issues can be resolved with better record keeping and having a tax professional prepare your income taxes. This means that, despite a temporary setback, what is holding you back now could very well change in six months or a year.
Your first step in reestablishing your credit is to deal with a web site that deals with customers honestly. These sites never mislead their customers by using phrases like “all applications accepted” or “guaranteed approval”. The best of them really have helped thousands of customers with bad credit get either a new car or a dependable, safe, low-mileage used car through our affiliate dealers. You’ll know this because the site is up front about the bad credit buying process and furnishes applicants with the tools – loan calculators and online resources – to make informed choices.
Steve Cypher -carguyace
Bad credit Auto Loans
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