Getting access to a vehicle is important for most people, as it is the way that they get to and from work. If you have a very low income, you may be skeptical about your odds of being approved for vehicle financing. Even though you may not be able to qualify for an expensive car, many dealerships will work with those who have low incomes.
How Much Car Can You Afford?
Before you start looking for financing in this situation, you need to determine how much you have to spend each month on a car. When making this calculation, you need to consider the total amount of money that you will have to pay toward the car, not just the cost of the vehicle itself. You will have to pay for maintenance and fuel for the car as well. You should try to keep your mortgage payment below 20 percent of your net income to allow enough money to live on.
Other Factors
When you start applying for financing for a new car, you will be evaluated based on many factors. The lender will want to know not only what your income is, but also what other payments and debts you have. If you have a very low income, you will be more likely to get approved if you have no other debt and very few payments to make. When you are stretched to the limit financially, you will be less likely to get approved.
Buy Here Pay Here
Even if you have a low income or bad credit, you still may be able to get approved at a "buy here pay here" auto dealer. These dealers offer in-house financing programs and are generally very flexible when it comes to financing customers. As long as you can prove that you have some type of regular income, they usually are willing to work with you. With this kind of dealer you make your payment directly to them, usually on a weekly basis.
Down Payment
You can increase your chances of getting approved for auto financing when you have a low income if you are willing to make a larger down payment. If you have some money in savings, you should consider applying it to the down payment on your car. When you put a down payment on the car, the lender is less worried about financing the rest of the purchase. This decreases the risk of default on the loan and makes the deal more attractive for the lender.
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