Does Cash Down Help Get a Car Loan If You Have Bad Credit ...

People that have bad credit sometimes ask if money down will help their chances in getting approved for a car loan.? When sub-prime lenders review an application for an auto loan, they asses risk.? Anything that will lower their risk factor will increase your chances of getting an auto loan.? Long job time, a long time at your current address, low debt ratio?s, and a good equity position in the loan that your applying for are all things that can help you get approved.? When I worked at a dealership, I would tell customers that they can get just about any car they want with the right amount of money down.? Sometimes lenders will only approve your loan if you have a very good equity position.? This may means that you need to finance less than what the car is worth.?

Lets say a dealer buys a car at auction.? The car has a value of$ 10,000.? They only pay 8,000 but by the time they ship it, fix it, and clean it they own the car for $9,500.? They will certainly need to make a profit so let just assume that profit is $500.? That means that they need to get no less than $10,000 for the car.? Now, since you will need to pay taxes, let?s assume that is $600.? Now they need to get a minimum $10,600.? We can further complicate this by assuming that since you are a high risk borrower, the lender will asses a fee to the dealer to allow your loan.? This fee will vary but lets assume the fee is 10%.? If they have the car listed at $11,600 and the lender will give you 100% of the value in loan, you will need $1,600 down in order to drive away with that car.? Since risk varies from person to person, and car to car, the fee can vary a lot.

Since more money down will lower risk for the bank, you may be able to get better finance rates and terms if you put more money down.? Lets compare two loans.? Let?s say you take the $10,000 car from above and put the minimum of $1,600 down and your loan starts at 100% of is value.? The lender offers you 20% interest for 5 years.? Your payment will be about $265 a month.? In another scenario, you put $2,500 down and the lender offers you 15% interest because of the better equity position and lower risk for the bank. Now you are only financing 91% of the value.? You pay less interest of course, you payment is lower by almost $50 a month, you save over $2,000 not including the $900 you put down, and you have a better equity position in case you decide to trade the car of before the loan is done.? Why would anyone try to buy a car with less money than they have available for a down payment?

Apply For A Car Loan Here

Source: http://www.newstartautoloans.com/blog/does-cash-down-help-get-a-car-loan-if-you-have-bad-credit/

doppler radar colorado rockies moonshine news channel 4 radar weather weather channel lionel richie