A Guide to Solve Your Trouble and Help You Get a Car Loan in Houston - Finance - Estate Plan Trusts

A Guide to Solve Your Trouble and Help You Get a Car Loan in Houston   by Williams Orchard

in Finance / Estate Plan Trusts    (submitted 2012-09-14)

Many Houstonians drive to work. So, it’s no secret that cars a definite necessity in the Space City. Over the time, there has been an incredible increase in importance of cars. Sadly, so has been the rise in car prices. Not everyone can afford to make a cash purchase and car loans seem to be the only alternative.

There are misconceptions when it comes to car loans. People often get the wrong impression that credit scores are the sole important thing for getting a car loan in Houston, Texas. But, the reality is that there are several other things which are important to the lender. If you get them right, then you can easily achieve instant approval.

What Factors are considered by the Lender in Approving Your Houston Car Loan?

Income and Employment

Lenders want you to earn an amount that can at least help you make regular payments. Most set their minimum limit at $1,000. Also, when you have stable job, it helps to pay off debts. So, lenders insist on it.

Credit Score

Credit score and credit history help in ascertaining your debt repaying ability. Lenders can know everything about your credit behavior by taking a look at your report. So, it is important that you remove all errors before applying for a car loan in Houston, TX.

Total Debt to Income Ratio

This ratio is important because it manifests your total debts and shows whether your income is sufficient to pay off the debts. Lenders won’t offer Houston auto loan to you if this ratio is over 50% because it will make you a very risky credit borrower.

Term of Loan

Shorter the term, more the savings! This is true as you’ll save money by avoiding paying interest for a longer term. Also, if you agree to opt for a shorter term, lenders will see your financial strength and offer better rates on Houston auto financing.

Vehicle Requirements

Don’t think that lenders in Houston will not have a say in your car buying process. Your new car will be used as collateral and that’s why it is important for lenders to know all about it. Lenders may ask you to avoid few cars and even request you to buy your car from a specific dealer/s. You will also be required to give all vehicle related details. So, be ready for it.

Time at Residence

The longer you live at your residence, the better it is because it manifests stability in your life. It also shows that you are regular in paying off utility bills like rent and electricity.

Down Payment

It reduces your car loan amount which makes it a crucial factor. Money down of at least 10% is essential to reduce your interest rates.


A co-signer is someone with a good credit score who is ready to co-sign the Houston car loan contract. When a co-signer enters the equation, there is a substantial reduction in risk because the lender can now get back the loan amount from him if you fail to make payments.

How to Secure a Houston Car Loan with Bad Credit?

When you are a poor credit borrower, you must improve on other aspects of the approval criteria. E.g., you can increase the down payment amount and get a co-signer to reduce the risk factor.

Do You Have Low Income?

If you want to apply for car financing in Houston, TX but earn a low income, then you can opt for a less expensive car. This will reduce the total car loan cost. Also, a co-signer will help. You can even ask your employer to provide you with an Employment Certificate. Use it as a proof to show that even if you earn low income, you have a steady job.

How to Get Student Auto Loans in Houston?

Most students are first time car buyers who have limited knowledge of buying an automobile. They usually have no credit history which makes it difficult to get instant auto financing options in Houston. But, students can get a car loan by providing pay stubs of their part-time job income. A down payment and co-signer would definitely prove to be useful.

Now, that you know all about the factors that decide approval, you can solve every car loan problem. So, if you are a first time auto buyer or a student or even have troubles like bad credit score, no credit history, low income, no co-signer, no down payment, etc, don’t panic. Just concentrate on other factors, improve them and your weak aspect will become pale by comparison.