How to get Approved for Auto Financing with Limited Income
Comfortable commute - A gift that Man received from the car! A car was a great invention but it became popular because of auto financing. It made car buying possible for everyone. Because of easy auto financing, anyone from a king to a pauper is able to own a car.
Don't think that lack of huge income will prevent you from buying a car. With increasing number of online auto financing companies, many people with limited income get approved for loans. And, it is not because of their luck. Working hard for an auto loan will ensure that you get approved for it. Here are six simple steps to follow:
Step 1. Create a Budget
Not everyone is born with a silver spoon in their mouth. Most of us have to budget every purchase. And, there is nothing wrong with it. A budget ensures that you never overspend.
When you are ready to buy a used car, know your affordability. Understand the amount of money that you can spend on a car. Do remember that payment is not the only expense. You will have to spend money on fuel, repairs and maintenance as well.
Step 2. Keep Documents Ready
Lenders and used car dealers require certain documents to ascertain your credibility. Keep the following list of documents ready:
- Your ID and SSN
- Income & Employment Proof
- Residential Details
- Bank and Financial Statements
- Receipts of Utility Bills, if any
Step 3. Manage Down Payment & Cosigner
No matter what amount of money you earn, your car loan approval chances can be increased by having down payment and cosigner. This amazing duo has the potential to turn the tides.
Make down payment of at least 10% of the total car loan cost. If you don't have money for making a down payment, use your old car as trade-in. It is an ideal way of avoiding cash down payment. Also, convince someone with a good credit score to become your cosigner.
Step 4. Apply with a Lender
Before applying with a lender or an online auto financing company, make sure that the company offers auto loan options to people with limited income. There is no point in wasting time with lenders that don't offer loans according to your requirements. Also, check the reliability of the lenders.
Step 5. Compare Auto Loan Quotes
When you receive auto loan quotes for buying a used car, do not just consider monthly payments. Do remember to study APR, loan terms and conditions, clauses, penalties, etc. before choosing the best car loan quote.
Step 6. Choosing a Used Car
When you get approved for an auto loan, it is time to buy your reliable used car. You can buy a car from a private party or a dealer. Do ask the lender if he is fine with your choice. Ensure that the title is clean and it is not a salvage car. Also, ask your trusted mechanic to check the car.
If you earn limited income, used cars are the best option for you. Pre-owned car are priced lower than a new car. It ensures a lower auto loan amount. When you have a smaller loan amount, monthly payments will become more affordable for you.
Most people change cars every 2-3 years. It means used cars that are available in the market are not very old. Also, the depreciation rate of an old car is very low. If you are worried about ending up with a lemon, you can opt for CPO cars and end your doubts. All these points prove that a used car is exactly what you need.
By following the process, you will definitely get approved for auto financing despite limited income.
:- Posted by Admin on 15th July, 2022