Car shopping is an exciting yet time-consuming process for most people. It includes some brainstorming with your family members and friends as to what kind of vehicle you may need, preliminary research online to learn about vehicle options, reliability, insurance, and maintenance, and test driving few vehicles that you find the best match for yourself. Price negotiation, auto loan application, and paperwork routine are the final steps of a vehicle purchase. It all goes smoothly if you have stellar credit. If you do not, all the excitement of car shopping may turn into disappointment, caused by credit denial.
That is why people with bad credit often treat car shopping as an unpleasant routine, as they fear loan rejection, high interest rates, unaffordable loan payments, and huge down payment requirements. All this hassle may be completely taken away by getting pre-approved for 100% auto financing that is now available to people with past credit problems.
What Is 100% Financing?
100% financing, commonly referred to as zero down financing is a form of auto lending that does not require a borrower to spend any out-of-pocket cash when purchasing a vehicle. Simply put, it means that once you are approved you only have to sign necessary paperwork and take delivery of a car. In most cases, 100% financing, in addition to vehicle price, covers state sales tax amount and optional features, such as extended warranties, aftermarket options, and so forth. 100% financing is the most convenient way to purchase a car you want, as all you need is your signature.
Bad Credit and Zero Down Auto Loans
In most cases, bad credit and 100% financing do not go together, as lenders who finance borrowers with poor credit try to minimize their risks. For most lenders, a significant down payment is a sign that borrower would not walk away from the car loan and keep up with monthly loan payments. In addition, a down payment guarantees higher equity in the vehicle and minimizes lender losses in case of vehicle repossession. While lender logic is clearly understandable it does not make things any better for people with poor credit who are in need of a new car or truck and do not have money for a significant down payment. The good news is that there are lenders who are able to offer 100% financing to individuals with blemished credit. While the number of such lenders is very little, finding them is possible.
Finding 100% Auto Financing with Poor Credit
As was established earlier, there are lenders who offer 100% financing to people with low credit scores. However, they do have certain criteria that borrowers need to meet. First, lenders who offer 100% financing to people with credit problems typically issue loans for purchasing a new or slightly used vehicles. Second, such loans commonly feature higher interest rates, as 100% financing is a risky proposition to lenders. Last, loans that do not require a down payment require longer processing times, as lenders issuing them require more supporting documents in addition to a loan application, as well as take their time to examine your circumstances and properly access your individual situation.
Therefore, once you find auto lenders that offer 100% financing to people with poor credit online, do not expect instant approvals that other auto loans feature and be prepared to collect and submit detailed documents regarding your income, expenses, and employment to potential lenders before getting a loan-granting decision.