Mortgage Loans For Bad Credit & Auto Loans For People With Bad Credit
Due to today’s economic realities, many traditional lending institutions are tightening their lending restrictions for both mortgages and auto loans. Unfortunately for people with bad credit, getting a mortgage or auto loan is more difficult today than ever before. Luckily, there are still options for obtaining either a mortgage loan or auto loan with bad credit.
Mortgage loans for bad credit are widely available, but often come with more requirements from the borrower than mortgage loans offered to people with good credit. Traditional lenders who offer mortgage loans for bad credit normally require a larger down payment out of bad credit borrowers. Most borrowers with good credit can normally be approved for a mortgage with as little as 10% down, but borrowers with bad credit often need to put as much as 20% down.
Lenders also require a lower housing debt to income ratio out of bad credit borrower compared to good credit borrowers. Borrowers with good credit are almost always approved for a mortgage if their debt to income percentage is below 35%. On the other hand, mortgage borrowers with bad credit often need to keep their debt to income percentage below 28%.
Like mortgages, auto loans for people with bad credit are also available. The best way to get an auto loan with bad credit is through a dealership. Many car dealerships have an in house financing department which can offer auto loans to all of their customers. Since an auto dealership will earn a significant profit on the sale of the car, they are much more enticed to approve a borrower with poor credit than a traditional lender. Unfortunately, the auto dealer’s interest rates are normally much higher than interest rates that would be offered by traditional lenders. To get a lower rate, the borrower could offer to put forth more of a down payment.
