Although the rise in median family income means that new cars are becoming more affordable, borrowers dealing with credit problems would do well to maximize their down payments while keeping both the loan term and payment-to-income ratio to a minimum. This means lowering expectations (at least until their credit is reestablished) and financing a more affordable car for a shorter term, rather than taking out a long-term loan on a more expensive vehicle.
Not all borrowers with credit issues, students or parents, will be given the option of financing a new car, but if they are and the approval is through one of the franchises listed above, they probably wouldn’t go wrong choosing any one of these “back to school” cars.
The three vehicles we’ve chosen from AutoPacific’s list are not only winners in their class, they represent affordable values with starting MSRPs of less than $18,000 – a price point that’s important to borrowers with credit issues.
While a balloon car loan can reduce the monthly payment on a vehicle, lenders that offer these loans, because of the higher risk involved, usually only approve them for their most credit-worthy borrowers.
Although it may look similar, an ITIN is not a Social Security Number. Since anyone with an ITIN is not eligible for an SSN, these consumers are also not eligible to take out a loan here in the U.S.
It is very difficult getting approved for a car loan on a 10-year-old vehicle with more than 100,000 miles, especially if the buyer has bad credit. Although an older car with higher miles might seem affordable, subprime lenders perceive these vehicles as high risks for breaking down (a real issue especially for a high-performance car like a WRX STI).
Even drivers with credit issues should ask their car insurance provider about low mileage, marriage, occupational, good student, and defensive driver discounts. Although they must be self-reported (by the driver), taking advantage of even a few of them could save the policyholder a substantial amount of money – but only if they inform the insurance company.