Lenders Aren’t The Bad Guys: Programs To Keep You On The Road

lenders Lenders Arent The Bad Guys: Programs To Keep You On The RoadIt is sometimes difficult to not blame a potential lender when you are turned down for an auto loan, especially if you did not expect to be denied. But the fact is, lenders work within certain criteria and cannot grant loans to individuals who fall too far outside the lines drawn for them on their important-looking stacks of white office paper. Lenders will use your personal and financial information to determine your ability to repay the loan for which you are applying, while also considering your previous credit history, employment history, and other property ownership status. For example, lenders are usually more akin to loaning money to someone who has a history of repaying their loans and who possibly owns a home or other property, than to someone who has defaulted on a loan recently and owns no other real property. Unstable employment history or frequent moves in your residence history can also give lenders pause when considering your loan application.

So, what is a person to do when faced with the realization that getting a car loan won’t be as easy as they thought? There are options to explore if you are not able to easily secure a car loan. Initially, consider applying with an organization who specifically deals with individuals who have difficulty qualifying for a loan, such as Cars Direct or Witt Special Financing. Both are geared for handling less-than-perfect financial situations in their loan applicants, and can usually find a loan for even the most difficult to finance individual. A point to bear in mind is that usually you can expect to pay a much higher interest rate when you have a difficult loan history, so though you will probably find a lender willing to work with you, you can definitely expect to pay significantly more in interest over the life of your loan than someone who qualifies for a lower rate. Many lenders who work with hard-to-finance individuals will charge as much as 22% interest on a vehicle loan, assuring that they don’t lose their shirt based on their high-risk clientele, and leaving the borrower with a higher monthly payment and/or a longer loan period than they might expect.

Another point to consider is your initial down-payment. Lenders are usually more willing to finance an individual who offers a sizeable down-payment on a vehicle loan, and may even offer a lower interest rate on the loan if you are able to provide a sizeable down-payment. If you are trading in an older vehicle as part of your purchase of a new one, consider what can be done to increase the trade-in value of that vehicle as part of your down-payment.

In the end, be persistent. There are lenders out there who are willing to work with an applicant who is sincere and deals with them honestly, so keep your integrity intact and keep applying until you receive a “Yes”. Ultimately, you probably will.

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