When tax time arrives, take advantage of the opportunity to find an auto loan that works for you. If you've got bad credit, there'll be certain criteria that need to be met to get approved – such as a down payment. Your tax refund could well provide the necessary funds! With this newfound financial boost from your taxes, it's easier than ever before to qualify and secure a car loan at Car Choice.
What are the Down Payment Requirements?
If you're a borrower with less-than-favorable credit, you likely need to work with a lender specifically devoted to helping people in tight financial predicaments. These lenders are referred to as subprime lenders and understand that individuals whose credit scores do not look good still require car loans. Subprime loan companies have extra requirements borrowers must meet which help compensate for the risk poor credit can bring about when buying a vehicle.
To mitigate their original risk, subprime loaners typically ask for a down payment. The exact amount varies but usually, it is around $1,000 or 10% of the car's cost. At Car Choice, we can people approved for vehicles with our in-house financing for as little as $500 down. Making an initial down payment doesn't only benefit the lender though; evidence suggests that those who shell out a significant sum upfront are much more likely to finish paying off their loans in full.
Making a larger down payment on your car loan can save you in the long run, minimizing interest and allowing you to keep more equity over time. Not only will this lower your monthly payments but also provide access to different loan options depending on the size of your deposit.
What are My Tax Refund and Down Payment Options?
Tax season is the perfect time to explore your options for a new vehicle. Not only can you benefit from deals that car dealers offer, but if you receive any additional money in your tax refund, then it can give you, even more, leeway when making such an expensive purchase. A lot of people in Arkansas might use their refunds to fund large purchases as saving up enough funds for a down payment can be difficult.
Even if your tax refund is insufficient to make a down payment, you don't have to despair. Cash isn’t the only way to put money down - most lenders will accept a combination of cash and equity from your car as meeting or surpassing their requirements for the initial deposit.
If you're interested in using the equity of your current car along with a tax refund, be sure to understand its value. You can get an approximate sale or trade-in rate for it by consulting reliable value sites like Kelley Blue Book or NADAguides.
To accurately determine the equity of your vehicle, compare your estimated value to the 10-day payoff amount of your car loan. If you owe more money than what it is worth, then unfortunately you have no equity that can be put toward a down payment – otherwise known as being in a negative equity position. On the other hand, if you own it outright and debt free, then its entire value is considered equity and could be used for any future loan payments!
Where Can I Find Bad Credit Car Loans?
When considering whether or not to offer you an auto loan, bad credit lenders evaluate a variety of factors that they deem necessary in assessing your financial capability. These include proof of stable employment and income levels sufficient enough to cover the car payments as well as any associated insurance premiums, along with having the required down payment.
Subprime lenders understand that you are more than your credit score, and seek to get you into a car loan that is affordable for you. To demonstrate this, they look at various elements - such as your income history and payment behavior - to determine your capability, stability, and willingness in taking on the loan.
At Car Choice, it can be difficult to find a dealer that works with special finance lenders. Thankfully, we've been connecting customers like you to reliable and quality vehicles across Arkansas, Tennessee, and Kentucky for over a decade! Our process is easy: just fill out our credit application form without any obligations or risks — it's completely free and fast! Don't wait any longer - get on the road to your dream car now by submitting your application today.