How to make use of Auto Loan Ratios and buy a Car with Bad Credit?
Confused how to make sense of ratios when you have bad credit? Fret not. Knowing the ins and outs of a few helpful things such as debt-to-income ratio, credit utilization ratio and loan-to-value ratio will take care of your car buying needs.
The Ratio Game: Know Different Ratios to boost your Car Buying Process
When you know you have a bad credit score, take help of all the necessary tools to obtain a good deal. The following auto loan ratios will come to your assistance when you need them the most.
● Debt-to-Income Ratio
Wouldn't it be great if you could calculate how much of your income goes towards your debt and other financial obligations?
● Balance-to-Limit Ratio
The credit utilization ratio or balance-to-limit ratio measures how much credit you are using against how much credit is available to you. Say, you have a credit limit of $10,000 and you have used $4,000 out of the given credit, then your balance-to-limit ratio is 40%. The credit utilization ratio is a very important ratio as it composes of 30 percent of your FICO score, resulting in a direct impact on your credit score. Thus, make sure you do consider your balance and credit limit before you start selecting your
favorite car on the lot. Lower your expenses to ensure a better credit utilization ratio.
● Loan-to-Value Ratio
The loan-to-value ratio is the measurement of your loan amount as against the market value of the asset that you are going to purchase, i.e. the purchasing price of the car. A loan-to-value ratio helps a lender assess the risk associated with the transaction. If you need $25,000 for buying a car and the lender provides you with the same amount, your LTV ratio is 100 percent. A higher LTV ratio usually means high risk for the lender. A great way to secure a good LTV ratio is to have a good credit score and stellar income. It will manifest you as a strong candidate for better LTV ratio. If your credit score is weak, pay a hefty down payment amount for the car from your savings and then seek a low rate auto loan (https://www.ezautofinance.net/
Bad Credit, Good Ratios
A bad credit score does not necessarily mean no approval on your auto loan applications for the rest of your life. Make time to understand the auto loan ratios and how they can be helpful to you in the long run of your auto financing journey. Your credit history maybe bad, but if your ratios are good, you can take home your dream car.
Whether you have a bad credit history or you are a young car buyer with zero credit score, do not worry. https://www.ezAutoFinance.net possesses the expertise to help you find affordable bad credit auto financing options in America. Apply with the help of our secure application form and get ready for now down payment auto loan approval.