Surviving in America can be rough when you’re on a budget. While people around you seem carefree around the holidays, you are focused on finding new ways to make your money last longer. Everything about having a low income can be stressful, especially trying to find a lender that will help you buy a car with bad credit. People on low incomes are often trapped in a never-ending cycle due to their inability to find car loans, but it doesn’t have to be that way. Complete Auto Loans helps people in virtually any economic situation find and qualify for car loans.
Why Do Banks Care?
When a bank gives someone a loan, they are taking a calculated risk that the person will pay the loan back on time. If a borrower pays his/her loan back, the bank collects the principal of the loan as well as a profit margin called “interest.” Interest differs between loans, roughly corresponding to the amount of risk that a bank is taking with the loan. High-risk loans, such as loans to people with low incomes, carry high-interest rates because banks want to make their money back faster, and with additional profit to justify the risk they are taking.
Banks consider a number of factors when they determine how much risk a loan presents. When lenders have low incomes, they are categorized as high-risk loans because banks believe it will be relatively difficult for them to continue making loan payments along with their other expense.
Factors in your Favor
Banks (and other lenders) don’t just consider your total income when they make loan decisions, there are other factors at play as well. For example, lenders like it when you’ve been in the same job for multiple years, as it shows stability. Unemployment is one of the biggest reasons for loan defaults, so a steady job is very valuable to lenders. Additionally, lenders like it if you don’t have a lot of existing debt, and if your housing expenses are low. There is a basic calculation that all lenders use that state a borrower’s consumer debt should not be more than 1/3 of their income on any given year, thus ensuring that they will be able to make their loan payments. It is also possible to have a low income but a great credit score, it is just a matter of personal responsibility and careful planning.
Finding a Lender that Cares
Even if you have taken great lengths to straighten out your credit score and get your finances in order, some huge lenders will disqualify you immediately when they reach your income statement. Other lenders will offer massive interest rates to see if you are desperate enough to take the bait. Shopping around is the only way to find a lender that won’t take advantage of you and will give you a fair deal. Complete Auto Loans is one of a few internet-based lenders that take advantage of its low expenses to offer great interest rates to a wide variety of people and credit types. We are confident that we can show you a lower interest rate than most of our big-box competition.