Various vehicle finance problems exists, which are mainly the result of credit issues or other information reviewed by the bank that may result in a declined application, such as employment, income or address history. Whichever the case, solutions do exist for common finance issues. You may have alternatives to consider for your vehicle purchase if you run in to finance problems.
Types
Several types of vehicle finance problems exist. A declined finance application means you cannot finance through the particular lender you applied to. Or, maybe the dealership let you take a vehicle, had you sign the contracts but later called to tell you to bring the vehicle back or that you have to come in to re-sign your paperwork because of a higher interest rate. Other issues may include having to put money down because of loan-to-value ratio, meaning the bank only wants to lend a certain percentage of the vehicle's value. This can happen because of inflated sales price or trying to carry over money from another loan, known as being upside-down. Debt-to-income ratio problems mean you do not make enough money to afford the vehicle's payment, as determined by the bank.
Credit and Personal Informatiom
Many vehicle finance problems are a direct result of credit history and score or income, job and address history. A lender prefers to see stability in a borrower's address and job history. A two-year history with your employer and at your address is a preference for most banks. Your credit information is also a consideration. Your time on the job and at your address may not matter if your credit score is in the good to excellent range. At the same time, if you have long-term standing at both your address and job, the bank may be more lenient with you even without an excellent credit score. Income is also a consideration. You cannot lie about your mortgage or monthly credit card bills; major revolving debts are listed on your credit report. Even if you share your expenses with someone else and have been turned down because you pay out more than you make, you cannot state you pay for half of the cost if you are the sole person on the mortgage or an additional car loan listed on your credit report.
Solution
Finding a co-signer will solve most vehicle finance problems. A co-signer joins you on the loan and becomes responsible for the vehicle's payment, even though she is not the main borrower. The co-signer's income, debts and personal information is used to determine risk. A co-signer with a good to excellent credit history can help if you do not make enough income to borrow, lack credit history, have bad credit, want a lower interest rate or longer term or even if you do not want to put money down.
Alternative Options
If you do not have excellent credit and were turned down for leasing or a manufacturer's offer in which good to excellent credit is required, you may be able to apply for traditional financing. You may not get a preferred rate, but traditional lenders, such as Chase, Bank of America, HSBC or even your local credit union may approve your application with a slightly higher interest rate. Subprime financing, which exists for risky borrowers with poor credit history may prove another option, but you can expect a high interest rate. Putting money down to increase equity in the vehicle you want to finance may also get you an approval. Sometimes putting down as much as half of the vehicle's value can warrant you a loan.
Warning
Keep your budget in mind. If you run into any vehicle finance problems, do not make a desperate decision to purchase a car you cannot afford. High interest rates can increase a car payment more than $100 per month in comparison to regular, competitive rates. You may also be required to go a shorter term than you originally intended, which again can significantly increase your monthly payment. If you need time to find a co-signer or fix your credit, do so instead of agreeing to a loan you may not be able to afford.
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