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How much you make and how much you spend can be some of the largest factors when applying for an auto loan with bad credit.
Anyone looking for a new car will find that their income and expenses will factor into how much they can be given, and where they can look for a car. At Valley Auto Loans, we understand this situation perfectly and are here to help as much as we can. As such, we know how important it is to fully understand their own situation and what powers they have to deal with.
The first step that bad credit car dealers will take after receiving your application, is consider your debt to income ratio (DTI). You should already know this for yourself, here is how you can find it:
- Add up all of your monthly expenses, literally ALL of them.
- Add to your monthly expenses, the average utility payments and all other bills you are responsible for.
- Divide this sum by your monthly income to reveal your monthly debt percentage.
How This Affects Your Car Payment
Now you know your debt percentage, the next thing you need to be aware of is that most of the second chance auto loans lenders available to you will want your car payment no more than 15% of your gross monthly income. This is your payment-to-income ratio, or PTI.
You need to calculate your total expenses on your future car if you are planning on a loan, this includes gas, maintenance, insurance, etc. If you are aiming for a used car, you need to factor in your approximate expenses in the event you need vehicle repair. You can however – purchase a car service contract – That will help you when it comes to unforeseen expenses like vehicle repair.
Now you understand how lenders view DTI and PTI ratios, and you can see if you meet the standards required for you to get an auto loan. No matter what your credit score looks like however, we at Valley Auto Loans will always work hard to get your approved for an auto loan. We are here to help in any way we can. If you would like to see just how good we are, fill out your auto loan application today!
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