Car buying doesnít mean going to a dealership and selecting a car model. It includes preparing for car loans especially if you have bad credit score. Usually, bad credit car buyers shy away from buying a car because of the complex loan process. But, donít take tension if you want to obtain bad credit car loan in Washington, here are a few tips to help you.
Tip# 1 - Cash
Lenders donít offer 100% LTV on car loans. They require you to pay at least 10% of the loan amount as down payment. So, make arrangements for it.
If you donít have enough savings for down payment, you can trade-in your old car or apply for a personal loan. You can also use your home equity and generate cash.
Why is it important to make down payment?
Car is a depreciating asset. It loses value the moment you drive it out of the dealership lot. If you donít make down payment and obtain 100% LTV, you will have an upside down loan from the beginning of your loan term. When you owe more than your carís worth, it creates problems if your car is totaled in an accident or if you decide to sell it.
Also, when you donít make down payment, lenders offer you high interest rates. This can create a problem in making regular payments andcan ruin chances of improving your credit score. So, try to make at least 10% of the total car loan amount as down payment.
Tip# 2 - Co-Signer
Whenever you decide to obtain a car loan in Washington, ask someone to co-sign your loan contract. Co-signing helps in reducing lenderís risk because a co-signer provides guarantee of regular payments. It will help you in reducing the loan rates on your Washington car loan.
How to find a co-signer?
People with bad credit history or past bankruptcy are not eligible for becoming a co-signer. So, donít convince anyone with credit issues to become your co-signer. A co-signer should fulfill the following requirements:
>> Minimum Age of 18 years
>> Regular Job and Stable Income
>> Lower Debts
Tip# 3- Car
Deciding on a car model is a huge decision because there are several options available. If you have bad credit history, it is important to buy a used car. The reason is its cost. You will be able to manage a used car loan in a better way because of its low monthly payments.
What Factors should be kept in Mind while buying a Used Car?
>> The car should not be older than 8 years
>> The car should not be driven for more than 100,000 miles
>> The car should not be salvaged or totaled
So, these are the few tips that will help you in completing the car loan process tension-free. Use them and obtain a bad credit car loan in Washington.
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