How to Avoid High Interest Auto Loans

The one thing that many potential car buyers attempt to do is avoid high interest auto loans when they know they must finance their vehicle. However, this becomes more difficult when you have a low credit rating hanging over your head. That is why I want to offer a few helpful tips to keep in mind why applying for a vehicle loan with poor credit, that just might help you lower your interest rates.

Income/Debt-to-Income Ratio

In most cases credit problems means that you will likely have to apply for bad credit auto loans which have very high interest rates, but having a good income can go a long way. While a credit score is one important factor to financing a vehicle, it is sometimes more important to a lender that you can afford the monthly payments. If you're able to prove that you monthly debt-to-income ratio can handle a high risk auto loan you may be awarded with a low interest rate.

Down Payments or Trade-Ins

Another good tactic to employ when trying to finance a car with high interest is to make a good down payment or have another vehicle to trade-in. Often times people think that just because they can possibly qualify bad credit auto financing with no down payment that it's the best option to take. However, placing money down works better in your favor as you can reduce:

• The amount you owe on your loan
• Your monthly payments,
•  Your high interest rates

Cosigner

One other method that can be used to help lower the rates on a high interest car loan is to see if you can locate someone with good credit to cosign on your auto loan. A lender will use your cosigner’s credit status as the measuring stick for your interest rates and qualification status. If they have good credit your rates can be greatly reduced, and making it easier for you to afford you monthly payments.

So the next time you or someone you know is about to apply for a high interest auto loan suggest these three tips to them. You may very well find yourself with the perfect rates and car by implementing this easy to use financing guide.