Five Ways Overspending Hurts Your Chances of a Loan

Hey, we all like to cut loose a little bit from time to time. Who doesn’t like going out for a nice meal or taking in a concert for your favorite band? And when it comes to furnishing a home, you want things you can take pride in and enjoy. Unfortunately, there’s one thing that many people do to get those finer things, and that’s overspending.

What Is Overspending, Really?

To some, overspending is spending more than you earn in a month. But that’s not the best definition of overspending. A clearer picture is this: you’ve set yourself a clearly defined budget and know exactly how much you need for your payments, your utilities, your expenses, and how much you want to save. But instead, you blow it. You don’t save what you want, or you might not keep enough aside to satisfy your payments. That’s overspending. It hurts your chances of getting a loan when you’re constantly overspending. Here’s how.

You don’t have a down payment

When overspending is your habit, you aren’t likely to save your money towards a down payment. Most lenders encourage a down payment of 10 percent of the loan value or more. If you don’t have it, there’s a chance your loan application will be denied.

Your credit cards are maxed out

For those who are frequently overspending, credit cards are a popular trap to fall into. It’s so easy to charge purchases to a credit card, thinking you’ll pay for them the next time you get paid. All too commonly, it ends up that balances are carried over month to month with high interest charges paid. It doesn’t look good on your credit score.

You’ve missed payments on your obligations

If you regularly spend more than you bring in every month, there’s a good chance you’ve missed bill payments. One of the worst things on your credit report are late and missed payments. What it tells lenders is that you can’t be trusted to pay on time, every time. That obviously hurts your chances at getting a car loan.   Whether you’re an overspender or not, Jay Wolfe Honda will help get you approved for a car loan. A new Honda or a pre-owned car – we’ll work with you and our lenders to get your application the green light. In the meantime, it’s up to you to adjust your spending habits!