Bad Credit/No Credit Used Car Financing For Tennessee Drivers
At our used car dealership, bad credit financing is not a problem. Autos & More in Knoxville, TN, is managed by a team of caring professionals who know what it is like to be in the market for a used model with a tight budget.
Read on to get precise answers to common questions regarding bad credit used car financing. Whether you have a large down payment saved up or you want a used car with no money down, our team members will do everything they can to assist you. Book an appointment to get started on your journey to used car ownership now!
Our Guaranteed Credit Approval Program Can Help You Finance a Used Car With Bad Credit
The process is simple:
- Pick out the vehicle you like
- Answer a few questions
- We will show you exactly what it takes to drive your car home today
You will need to provide proof of income to receive used car financing. Please bring or have access to one of the following:
- A pay stub showing tax deductions
- Three months of bank statements showing your deposits
- Three months of checks from your employer
- If you are paid in cash only, we will accept a letter from your employer on company letterhead that shows your wages, hours worked each week, and how long you have been with your employer
Insurance is required to finance a vehicle, but we can help you get insurance, if needed.
For the best financing terms it helps, but is not required to have: A valid driver's license and active checking account.
Not a problem. We understand things happen.
We may not need any money down. If a down payment is needed, it's based on a number of factors. We will do our best to work within your budget. Bring what you can afford to put down and we will see what we can do. Keep reading this page for more information about how down payments are figured.
What You Need to Know as a First-Time Buyer
Several of our lenders have first time buyer programs. The details vary slightly, but as a general rule lenders will try to keep your monthly payment 15% or less of your monthly income on a non luxury or exotic vehicle.
A few things to keep in mind are:
- Price: Explore models within your budget
- Mileage: Lower mileage values can mean more life with the vehicle
- Monthly income: You will need to be able to prove that you receive at least $2,000 a month in income or have a qualified cosigner
- Bank account: A REAL checking account, open at least 30 days from a brick and mortar bank will greatly help.
We recommend opening an account with one of our local credit unions. Having an existing relationship with one, at times, can help us qualify you for better terms.
We'll work with you to create a plan to stair step you up to the vehicle of your dreams.
Understanding Lending
Loans are made based on a tremendous amount of risk factors. Generally speaking, the main categories lenders look at are the customer, the collateral (vehicle purchased), and the terms.
Think of each of these as a sliding scale. The riskier one factor gets the more conservative other factors need to be to balance out the equations. Let's break it down:
Customer
The golden rule for lenders is to look at stability, ability, and intent to pay.
How long has an applicant worked at their current job, and how stable is their income? How long have they lived at their residence? How long have they been in the region? These are all factors that exhibit stability and responsibility.
How much income does the applicant have to invest in a monthly payment, vehicle maintenance, and insurance? Payment-to-Income (PTI) and Debt-to-Income (DTI) ratios are important here. A good rule of thumb is that the closer a monthly payment is to 10% PTI, the better - a $3,000 monthly income, for instance, would ideally translate to about a $300 monthly payment. We have some lenders that will go up to 25% PTI, but the more this ratio goes over 15%, the more other factors will need to compensate for it (with a larger down payment or shorter loan period, for example).
When the applicant incurred debts, did they pay them? For a first-time buyer, the answer to that question has yet to be determined. Still, a negative credit history is not a deal-breaker at all - For both of those situations, we just need to mitigate that risk elsewhere in the loan.
Collateral
Not all vehicles are created equal. Lenders are looking at mileage, anticipated reliability and maintenance costs, as well as anticipated vehicle use. A $10,000 BMW 7 Series is an extremely high risk for a lender compared to a $10,000 Hyundai Elantra. A vehicle that will be used for work purposes (towing, food delivery, door to door sales) is a much higher risk for a lender than one that will only be driven for personal use.
Used Car Financing Terms
The length of the loan is determined by the amount being financed, life expectancy of the vehicle, and the customer's stability, ability, and intent to pay.
The amount of the loan versus the value of the vehicle (LTV) is determined by the overall risk of the car and the consumer.
Cars or customers that are considered to be higher risks will require a higher down payment. A low-risk customer on a low-risk vehicle can often get a used car with no money down.
The interest rate is a reflection of all the other variables in the overall deal.
If you have more questions about bad credit used car financing, please speak to our financing expert team members.
Visit Our Used Car Dealership for Bad Credit Financing Options in Knoxville, TN, Today!
We work with dozens of lenders both locally and nationally to be able to offer the best terms we possibly can for you.
We can't sell cars saying 'No."
Our job is to work with you and our lenders to make the metrics work, so everyone is happy. The best way to do that is sitting down face to face talking through the variables together. Come see us, and let us get started making your dream ride a reality.