Car Financing: What Kinds of Cars Are Rejected by Lenders

 Every perfect thing requires time. And, finding a perfect car requires a lot of time and patience because you have to find the right combination of beauty and technology. Won't you feel irritated if lenders reject your car and all your hard work goes to waste?

Why will Lenders reject your Car?

If you want to buy your chosen car quickly, you must know about the kinds of cars that are rejected by lenders. It will help you in making a decision and ensure quick completion of the buying process.

Extremely Cheap Cars

Today, the car prices have become obnoxious because of rising inflation and increased government regulation. Finding a car that is within your budget can be a difficult task. But, if you manage to find an extremely cheap car, don't think lenders will be happy. They will avoid financing because of the following reasons:

1. Cheap cars are damaged or totaled.

2. Usually, they are very old to function.

Also, lenders make a profit from the interest amount that you pay. If they approve a cheap car, they will not be able to generate enough profit from the interest amount. So, they avoid financing an extremely cheap car.

Extremely Old Cars

Old cars demand regular repair and require frequent maintenance trips to the mechanic's garage. If you buy an extremely old car, you will have to spend a large part of your income on repair. It will make regular monthly payments difficult and also, increase the risk of missed payments. So, lenders will not support your decision of buying an extremely old car.

Remember that lenders do not provide financing for cars that are older than 8 years. They also prefer less than 100,000 miles on the odometer.

Extremely Expensive Car

Lenders have to consider the risk factor while approving your loan application. If they approve an expensive car and you do not make regular payments, they may incur loss. So, they shy away from financing an extremely expensive car because they know that it is unwise to put all eggs in one basket.

Antique Cars

If you are an antique collector and want to buy an antique car, you will face difficulty in acquiring it. Lenders do not fund an antique car because:

1. It is challenging to find its accurate market value.

2. In the event of repossession, it becomes difficult for lenders to sell it.

Race Cars

Racing is a risky sport and several cars are damaged during the racing events. If your race car is damaged and totaled, it will be very difficult for lenders to recover money from you. So, they do not approve such a high-risk asset.

How to Deal With An Auto Loan After Divorce

 Divorce is not only emotionally difficult for you but it is also difficult for your financial condition. How?

When a marriage ends, individuals split assets and go separate ways. But, what happens to liabilities such as an auto loan?

In an ideal world, both the individuals assume the responsibility of the debts they created and part ways. Unfortunately, the reality is different. So, take care of debts after a divorce.

The Legal Liability of an Auto Loan

Do not believe that just because the divorce agreement holds your former spouse responsible for the auto loan, he/she will make regular payments. It is plausible that he/she may not make payments.

You must remember that the divorce agreement is separate from your loan contract. Lenders do not give importance to the divorce agreement. Your former spouse may be responsible for the loan in the eyes of a court. But, if you applied for a joint auto loan, lenders will hold you accountable for the loan as well.

How to manage an Auto Loan after Divorce?

It is important to remember that your marriage may be history, but a loan will continue to affect your present and future. Here's how you can manage your auto loan and save your credit score from plummeting.

1. Get rid of the Loan

After a divorce, the best way to manage an auto loan is to get rid of it. If your former spouse is responsible for making payments, the loan should be in his/her name only.

But, remember that no lender will remove your name from the loan contract because of your changed marital status. So, your former spouse will have to refinance the loan and complete the loan process individually.

2. Get rid of the Car

If you are worried about refinancing the loan, you can sell the car and pay off the lender. It is possible that an upside down loan situation may force you to pay money to the lender, but it is important to understand that a loss today is better than constant tension forever.

3. Make sure the Lender gets paid

If your former spouse is responsible for the loan and both of you decide against selling the car, you will have to make sure that he/she makes the payments regularly.

If your former spouse doesn't make payments, contact your attorney. It is possible that you will have to make a couple of payments to avoid any negative impact on your credit score. So, keep aside a part of your income for it.

Taking care of your auto loan might be the last thing on your mind. But, it is important to understand that your marriage is over and not your auto loan. If you don't manage it effectively, you may ruin your credit score forever.