Many potential customers with poor credit often wonder if they can get no money down bad credit car loans. The answer is it is difficult to find lenders that approve bad credit no money down car loans. In fact, the no money down option is usually for people with great credit.
If you suffer bad credit, you should remind yourself not to look for bad credit car loans no money down. This is because any lender that works with poor credit customers requires a down payment. So, if you are looking to get your car financed, be prepared for the lender to ask for a down payment.
First, there are not many lenders that deal in pre approval car loans for people with poor credit. And the ones that do want to minimize the risk of defaults. This is because the lenders believe that once you are invested in the loan, you are less likely to default on the repayment.
The standard requirement of a down payment is 10% of the purchase price of the car or $1000, whichever is lesser. If you can’t pay the required down payment in cash, instead of looking for no money down bad credit car loans, opt for trade-in of your old car. This is as good as making a down payment. This will make you eligible for lower interest rate for the loan.
Often people dread down payment. However, a down payment works to your advantage. If you make a significant down payment, it lowers your loan-to-value ratio. You then stand a good chance for pre approval car loans. It lowers the loan amount, so your monthly repayment amount is reduced. Many lenders agree to shorten the loan term, so you can pay off the loan faster and in turn save on interest amount. A down payment also prevents you from being upside down. So, you are able to trade out or refinance more easily.
No money down bad credit car loans are not only difficult to get but also turn out to be expensive in the long run. The interest rates are higher as you are considered a high risk customer. And, you also pay more towards the interest amount over the life of the loan.
It is, therefore, wiser to repair your credit and save some funds towards down payment instead of looking for bad credit no money down car loans.
Faheem Jutt is a senior editor of US Updates; that a website which is specialized in providing natural home remedies, tips and also nutrition facts to improve the well-beings.