What Factors Go into Determining Eligibility for a Bad Credit Car Loan?

What factors go into determining your eligibility for a car loan? If you’re approaching a big bank or credit union, your credit score is the biggest determinant. Your income and debt to income ratio are secondary factors. What factors determine your eligibility for a bad credit car loan?

Income versus Debt Loan

If you have bad credit, your credit score obviously isn’t going to be a determining factor. Instead, the lender has to use manual underwriting and run the numbers to determine whether or not you can repay the loan. This is why websites like these offering auto loans want to know your income first and foremost. Lenders will also look at the car payment you’re seeking relative to your income and what other debt payments you have to pay. They will reject a car loan application if they don’t think you can afford to eat and drive at the same time.

This doesn’t mean you can’t buy a car with bad credit. Instead, it means you need to save up a larger down payment, search for a cheaper car, or tighten your budget and pay off a few small debts to free up cash flow.

Your Age

A car loan is a contract. Lenders can’t enter into an agreement with a minor unless the parents are signing up, too. Age information in other cases is simply information marketing wants to have. If there is a discrepancy between the age you list on the online application and other personal information, this red flag will be investigated by the lender before your loan is approved.

Your Contact Information

A car loan application online is a legal document. They need to know who wants to do business with them And they need to know how to contact you with questions and when collecting the information necessary to finalize the loan agreement. Know that it is a crime to apply for a loan online in someone else’s name, with or without their permission.

The car lender that works with those who have bad credit can refuse to do business with someone who defaulted on their last loan, especially if it was their loan you defaulted om Know that giving falsified or misleading information, and the lender can terminate the business relationship

Your Zip Code

The zip code is relevant to the purchasing process. Canadian lenders typically only do business with Canadian citizens or legal residents. The laws that apply to the loan are based on where the business and customer are located. This means an online lender may refuse your application if you’re based in a province they don’t do business in.

An Agreement to Their Terms and Conditions

An online car loan application can be a soft inquiry to find out what you would pay with an alternate lender, or it may be a hard request for a loan. In both cases, you will be told to agree to their terms and conditions. That says you have read their rules regarding use of the website and the regulations that affect the transaction.