If you lose your job, how are you supposed to keep up with your car payments? Is repossession inevitable? Absolutely not. There are ways to navigate this difficult situation and to keep your head above water until your finances can be straightened out.
For borrowers with bad credit, a very large down payment can often offset a number of other negatives, including income that cannot be garnished. But in addition to exceeding the down payment requirements, many subprime lenders will also look at a borrower’s stability, income and past credit habits before approving the application.
One of the most challenging things for car buyers is when a situation arises where the current car becomes either unsatisfying or unaffordable. What can you do when you need to get a new car even though you still owe money on the one you currently own?
The fastest solution is to roll the negative equity (what you still owe) into the new car loan. While some dealers will allow you to do this, there are a few factors you need to consider, such as the remaining balance on the current loan, and the quality of your credit.
In most cases, consumers who have had a vehicle repossessed will need to wait at least a year until they can expect to get approved for a car loan with a subprime lender. While there are exceptions to this rule and buyers should still give it a try, the number of lenders willing to do this is so small that most borrowers should be prepared for a high interest rate and with the large down payment BHPH dealers will require, if they need a vehicle right away.
When buying a car, lenders want to know that they can rely on you to maintain the monthly payments. That is why if your primary source – or only source – of income is disability, they may have a problem approving you. The problem lies in the income you are receiving. Disability, unemployment, workers compensation and retirement are just some examples of income that cannot be garnished. Lenders need to have the ability to garnish your wages in the event that you stop making your loan payments, and they cannot do this with these types of income. There are a couple ways you can improve your chances of getting approved for a car loan, even if you are receiving disability payments.
Since a borrower’s income and bills as well as the lender and lending tier all have to be taken into consideration, there is no way we can know, ahead of time, what a borrower’s approval amount might be.
How can you get the most out of your tax refund? It may work to your advantage to put it towards your current auto loan. If you have other debt to consider, you could pay off your remaining balance, or, if applicable, you could eliminate negative equity.