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Tue, Jan 20th - 3:17AM

The Cost of a Sub-Prime Car Loan

In the past, traditional banks and lenders considered sub-prime credit borrowers risky and rejected their loan application. People with sub-prime credit history were often forced to obtain obnoxious rates and horrible car loan terms of buy-here-pay-here dealers. But, today the story is different.

Stiff competition in the auto financing market and increasing number of people with credit issues has compelled lenders to offer their services to sub-prime credit borrowers.

Are you eligible for Sub-prime Car Loans?

Every sub-prime car buyer does not receive car loan approval. If you want to obtain the loan program, you should fulfill the following requirements:

Current Employment

You must be working with your current employer for at least six months. Lenders will need your employment verification letter as well as copies of recent pay stubs to confirm the employment status.

Down Payment

It is important to manifest your stable financial capacity to lenders. It will help them in taking a favorable decision. If you are buying an inexpensive used car, you can make a down payment of ten percent. But, if you are opting for a brand new car, it is wise to save up to twenty percent of the car cost for down payment.

Lower Debts

Lenders won't have any problem in approving sub-prime loan application of car buyer with few financial commitments. So, if you have several loans, it is important that you pay off a few of them and improve your DTI ratio.

No Open Bankruptcy

Every auto lender considers open bankruptcy as a bad sign. He/she will not offer you loan quotes if you are in the middle of a bankruptcy. So, don't apply for a loan during bankruptcy.

What Costs should you consider before signing a Sub-Prime Car Loan Contract?

A recent report published by Experian suggests that auto loan delinquencies rose by 8.6 percent in the third quarter compared to last year. Most experts are attributing this rise to sub-prime car loans.

Many car buyers obtain sub-prime car loans without considering their financial condition and end up in a financial mess. If you are thinking of obtaining a sub-prime car loan, understand your financial condition and take into consideration the several car buying costs.

The Loan Costs

When you have sub-prime credit history, you will receive higher loan rates than the average market rates. It will make your loan expensive. You must consider the increased cost before signing the loan contract. You must also pay attention to other loan-related expenses such as application fees, document charges, pre-payment penalty, etc.

Dealer Fees and Taxation

Fees structure varies from one dealer to another. But, here are the most common fees charged by dealers:

1. Vehicle license and registration fee

2. Title fee

3. Documentation fee

4. Compliance fee

5. Floor plan fee

6. Advertising fee

7. Dealer preparation fee/Shipping fee

8. Sales tax

A dealer charges additional fees such as emissions testing fee, fee for vehicle inspections and smog checks from a used car buyer.

The Car Costs

Once you buy a car, you will have to consider several expenses such as car insurance, repair and maintenance costs, fuel costs, etc.

If you think you can manage the cost of buying a car, only then sign the sub-prime car loan contract. Remember that assuming financial obligation without thorough thinking can cause a financial disaster. So, don't be in a hurry to obtain a sub-prime car loan. Think about it and then say yes.

EZ Auto Finance helps sub-prime car buyers in obtaining second chance auto loans. The company will understand your financial situation and provide you with guaranteed auto loan quotes to fulfill your car dream. Apply on the secure website today.

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Fri, Jan 9th - 7:25PM

3 Tips for obtaining Bad Credit Car Loan in Washington

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 financing in Washington.

EZ Auto Finance is a bad credit auto financing company that caters to the needs of sub-prime car buyers. It provides Washington bad credit car loans with low rates. Simply apply now and obtain no obligation loan quotes.

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