(1) If you’re securing an auto loan for bad credit with a high APR, what is one of the items you should exclude from your financing?

(a) Don’t include any additional insurance in your payment amount.

(b) It’s best not to add the costs of any type of extended warranty into the amount of your loan.

(c) You should always include the costs associated with an extended warranty or additional insurance in your payments regardless of the APR.

(d) Both a and b

Answer: (d) Both a and b. Since you already carry auto insurance, you should refrain from including any additional insurance in your loan amount as well as the costs associated with an extended warranty. Wait until you can refinance the vehicle at a lower amount to add these types of amenities.

(2) What items will lower your credit score when applyng for a bad credit auto loan financing?

(a) Making applications for credit will reduce your score.

(b) Attaining your credit score before you walk into the dealer.

(c) Obtaining your credit report online.

(d) None of the above.

Answer: (a) Anytime you try to apply for credit, an inquiry is made that will lower your credit score. Simply obtaining your credit report will not affect your score.

(3) With regards to obtaining an auto loan for people with bad credit, what is the “car enhanced score?”

(a) A car enhanced score is a score that is either higher or lower than your regular credit score and is based on your credit worthiness when applying for an auto loan with bad credit.

(b) This score is the score used to measure your payment habits on your credit report.

(c) If your credit score is high, it’s referred to as a “car enhanced” score.

(d) The car enhanced score is a statistical formula used to assign a value to the number of applications you’ve made to obtain a bad credit auto loan refinance.

Answer: (a) The car enhanced score is a variation of the credit score that lenders use when you apply for a bad credit auto refinancing loan.

(4) What main criteria do lenders use in appproving you for an auto bad credit loan with regards to your credit report?

(a) They review the amount of open accounts you have and your length of employment.

(b) They consider your payment habits and the number of loan and credit accounts your hold.

(c) They determine your credit worthiness based on the number of financial transactions you have on your report and how long you’ve been at your residence.

(d) None of the above.

Answer: (b) With regards to your credit report, the key criteria lenders consider in the approval process for a bad credit auto loan financing are the number of open accounts you have and your history with respect to paying them on a timely basis or paying them off.

(5) Which of the following can be used as a down payment when obtaining a bad credit auto loan refinance?

(a) Cash

(b) A manufacturer’s rebate

(c) Trade Equity

(d) Both (a) and (c)

Answer: (d) Although you may still have to secure cash in addition to the trade-in value of your car, they can both be considered a down payment on the purchase price. A manufacturer’s rebate can be used to reduce the sales price of a vehicle but it is not considered to be a down payment when applying for an auto loan for people with bad credit. Therefore, if you’re trying to secure a bad credit auto loan and need a down payment to attain a loan, a manufacturer’s rebate will not count in this regard.

Hopefully, you’ve been able to garner a bit more understanding from answering the above questions. Look online and research the various lenders who provide bad credit auto loans and see how much more you can find out with respect to buying a vehicle for your current needs.

The Bad Credit Blues
Forget that you have a credit score that you wish you could junk with your old vehicle. You can get back behind the wheel of a new model car by applying for a bad credit car finance loan. So, what do you need to do in order for this to take place? Well, besides selecting a car to buy, you’ll need to make sure you can meet the criteria that most lenders who provide car financing for bad credit are looking for in the way of eligibility.

Eligibility Requirements

If you have no credit history, you should be on your job a year before applying for a loan. With a credit history, you’ll need to show proof that you’ve been on the job two years before trying to secure any car financing for bad credit loan. Typically the minimum monthly income requirement is $1500 for most bad credit car loan financing programs. In addition, you can’t have a repossession within the last year unless it’s part of a bankruptcy. Oh! And one more thing, it’s a requisite that you be at least 18 years old.

The Payment Structure
Your monthly payments for your car financing with bad credit loan will be based on the sales price of the vehicle you’re purchasing and your credit report. If you choose to buy a newer model automobile with lower miles, many times lenders can extend the terms of the loan making the payments lower. This is especially helpful if you have to finance your vehicle for a higher APR. If you’re so fortunate, you can secure a great deal on most vehicles that are lower priced with an odometer reading of less than 5000 miles.

The Benefits of Finding a Lender Online
Rather than secure your loan from a “buy here, pay here” dealer, using the Internet to find a lender who specializes in financing a car with bad credit is the better choice for most sub-prime borrowers. With a “buy here, pay here” dealer, you don’t need to reveal your credit history which many sub-prime borrowers like. However, once you purchase the vehicle, none of your payment transactions are recorded on your credit history. Therefore, you don’t have the chance to climb out and away from your poor credit standing. With bad credit car financing, by making your monthly payments, you’ll have the chance to qualify for a lower interest loan in the future.

Look online today if you’re in the market for a new car. There’s a lender out there who will help you with your bad credit car finance loan.

photo credit: Rachel Strohm

(1) When applying for auto bad credit loan, if you need to remove disputed items on your credit report, you might have to wait at least 6 weeks before you can apply for an auto loan for bad credit.

Answer: False. Normally, it takes about 60 days to remove disputed items on your credit report.

(2) If you’ve just moved, a lender will still look favorably on your application for an auto loan for people with bad credit.

Answer: False. If you’ve moved in the last six months, lenders will not consider this to be a favorable item in considering you for an auto loan with bad credit. Lenders do not like people who move around. They like people who are stable and continue to prevail in their circumstances.

(3) You’re usually considered a sub-prime borrower at any credit score below 500.

False. Generally, if you’re score falls below 500, you’re not considered any type of borrower even for a bad credit auto loan refinance. Sub-prime borrowers have credit scores that range from 550 to 680.

(4) If you want to be considered for a bad credit auto refinancing loan you should make sure you’re not trading a car you still owe money on, that disputed items are removed from your credit report and that your debt to income ratio and credit balances are low.

Answer: True. Lenders like to see this kind of stuff.

(5) If you’re a recent college graduate and have yet to obtain a job, you can still qualify for an auto bad credit loan.

Answer: False. If you’ve just graduated from college, you shouldn’t consider applying for an auto loan for bad credit until you’ve been on the job for at least six months.

(6) It usually helps to show that you’re paying on a mortgage or that you’ve had a past refinance when applying for bad credit auto loan financing.

Answer: True. Mortgage loans and refinances show a degree of stability and that the consumer has been and is making regular payments to pay off a debt.

(7) With regards to obtaining an auto loan for peole with bad credit, if you do not have a credit history, you should be on the job at least one year with the same employer.

Answer: True. This is the minimum requirement.

(8) If you have a credit history, you should be on the job at least 6 months with the same employer to qualify for an auto loan with bad credit.

Answer: False. You should be permanently employed for at least two years to be considered for a bad credit auto loan refinance.

(9) When being considered for bad credit auto refinancing loan, you should not have had a repossession in the last 2 years unless it was included in a bankruptcy.

Answer: False. Normally you’ll be considered for a bad credit auto loan if the repossession occurred within the last year outside a bankruptcy.

(10) If you’re a sub-prime borrower and you have a co-signer, the lender can use the co-signer’s income in order to approve a bad credit auto loan.

Answer: False. Your loan will still be based on your income even if you have retained a co-signer to pledge to pay the loan amount.

How did you do? You can still obtain an auto loan with bad credit. It just takes knowing what steps to take and you’ll be in a new car in a small amount of time.

photo credit: shelms

(1) What is an auto bad credit loan?

An auto bad credit loan is designed for people with bad credit, typically those individuals who have a credit score below 680 so they can obtain reliable transportation.

(2) Can you still qualify for an auto loan for bad credit if you’re self-employed?

Yes. You can still qualify for bad credit auto loan financing if you’re self-employed although your income is harder to prove. Therefore, when being considered for this type of loan, make sure you provide tax returns for the past two years that have been completed by a tax professional.

(3) What documentation do you need when you apply for an auto loan for people with bad credit?

For income verification, you will need a pay stub from your employer. Other documentation includes a telephone or utility bill to verify your address and phone number and your most recent bank and credit card statements from the last 30 days. In addition, about four references are required and, if you don’t own a home, a phone number for your landlord to verify that you’re up-to-date on your rent.

(4) I’ve heard that obtaining a loan through a “buy here, pay here” dealer is an option for people with bad credit. Is this a good way to secure an auto loan with bad credit?

A “buy here, pay here” dealer type of loan is where the sub-prime borrower obtains his loan through the same dealership he purchases his car. No credit history is required which may lead you to believe this is a good loan to obtain if you have a damaged credit score. However, attaining a bad credit auto loan refinance  over the Internet is, in most instances, a better choice . Your payments for a dealer financed loan are not recorded on your credit report where payments are documented if you don’t obtain dealer financing. Therefore, a bad credit auto refinancing loan not obtained through a dealer gives you the opportunity to prove, by making your monthly payments, that you can qualify for a lower-interest loan at a later date.

(5) How are my monthly payments determined for an auto loan for bad credit?

Your monthly payments are based on your credit profile and the sales amount of the automobile you choose to purchase.

(6) How can I qualify for extended terms if I want to lower the amount I spend each month even more?

Usually, if you purchase a newer, lower-mileage vehicle, you’ll be able to qualify for an extended term on your bad credit auto loan financing amount.

(7) If a down payment is required, how much should you put down in order to assure you’ll be approved for an auto loan for people with bad credit?

If you can put down 20% of the sales price, you’re pretty much guaranteed that you’ll secure an auto loan with bad credit.

(8) What are some steps you can take in order to get a better APR on a bad credit auto loan refinance?

If you can repair your credit before applying for the loan, this can be most helpful. Paying off some large debt credit cards can raise your credit score by as much as 200 points. Therefore, lowering your debt and making timely payments six months before applying to obtain a car loan can assist you in getting a better deal. Also, know your credit score before making application. Be well-prepared to handle any questions a lender may have about the negative items on your report. If you can lower your score, maintain a habit of paying on time and reduce some of your debt load, you’ll have the leverage to succeed in obtaining a bad credit auto refinancing loan.

(9) What type of auto is the preferred type of vehicle to finance when it comes to a bad credit auto loan?

Typically, if you select a newer model car (1 or 2 years old) with less than 50,000 miles, you will have a vehilce that most bad credit auto lenders prefer to finance.

There’s a lot of opportunity on the Internet to finance your vehicle even if you now suffer from a low credit score. Check out your options. There’s a lender out there who is willing to work with you.
photo credit: dno1967

A Large Selection of Lenders
You can obtain the car you want through bad credit car loan financing sometimes in 24 hours. Some programs will even work with people with scores below 500 without a required co-signer. Even if you’ve had bankruptcy, some lenders are more than willing to work with you so you can get into the transportation you need. Whether you have a bad credit history, need to purchase an auto after repossession or bankruptcy, or have no credit history, there are car financing with bad credit funding programs that can help you get back on your feet again financially.

A Chance for a New Beginning
One thing that is great about financing a car with bad credit funding is the fact that you can start rebuilding your credit the instant you do so. By obtaining such a loan and paying your auto installments on time, you can start to make inroads towards improving your credit score.

Additional Savings
Many of the loans that are secured through bad credit car financing can be financed 100% with nothing down. Some will even give you the choice of buying from a private individual or you can use your trade-in as equity towards your loan amount. This way, you don’t have to rely on a dealer to grant you the loan for your auto which in many cases will provide you with an additional savings when financing a car with bad credit.

Getting the Best APR
Nevertheless, it’s important to remember that your APR will be determined by your credit report as well as the equity or additional down payment you provide for your bad credit car finance loan. That’s why it’s important that you can find and work with a lender who will give you the best deal possible with respect to your bad credit car loan financing loan. Although many lenders will forego the down payment requirement, if you do provide a down payment and can increase your credit score to some extent before you apply, you’ll no doubt get a lower interest rate on your loan and therefore lower payments. Also, take note that securing car financing with bad credit is more auspicious if you buy a new car versus financing an older model car as purchasing an older model will add to your APR.

Income Requirements
Even if you use a co-signer in some cases when obtaining car financing for bad credit, you still will have to meet the requirements when it comes to income. Usually if you’ve been on a permanent job for at least a year, you should qualify.

Whatever the reasons behind your credit problems, there is a solution. Search online and you can find a remedy with a car financing with bad credit loan.
photo credit: aresauburn™

Q: What does my credit score need to be to qualify for a car loan for bad credit?

A: Fortunately, your credit score will not keep you from getting a loan as long as you have a good job history, are over 18 years old and make over $1500 per month. Your credit score will determine your interest rate however, so if your score is very low you may be looking at a pretty high rate. Decide in advance how much you are willing to pay per month so you can stick to your guns at the financing table.

Q: Can I get turned down for car loans for people with bad credit?

A: The primary things that keep people from getting approved are a lack of a current job, under the age of 18 or a recent repossession that was not part of a bankruptcy. Some of these things you can get around with the help of a co-signer. A co-signer will help you qualify by using their credit. Make sure you can make the payments if you are getting the help of a co-signer because if you make a mistake, it will negatively impact their credit as well.

Q: Where is a good place to get a bad credit car loan?

A: Start with your bank and see what kinds of programs they offer. Often you can pre-qualify for a loan which takes some of the pressure off when you begin to negotiate for a good price at the dealership. If you are prequalified you can also shop from local classifieds and for-sale-by-owner listings where you may get a better deal. You can also look for pre-qualification loans at a Credit Union. If those two options don’t work out, apply for financing at a reputable car dealership.

Q: Am I limited in the kind of car I choose?

A: Yes. Most banks will not grant a car loan on a car over 7 years old.

Q: Can I refinance an existing car loan with bad credit?

A: Yes – there are refinance car loan bad credit programs out there – call the financing company who you currently pay your payments to and ask them if they have a refinancing option available. You can also check banks and credit unions about refinancing your loan. Often you can extend the term of your loan and/or lower the interest rate which can put much needed dollars back into your pocket each month.

Summary

As you can see, if you have a good job history, make at least $1500 per month and are over 18, you will likely qualify for car loans with bad credit. Be sure to stick with a reputable lender and choose a car that is no older than 7 years. With the information in this article you should be prepared to start your search for the right bad credit car loan for you.

photo credit: JLaw45

One – A Low Credit Score will Not Prevent You from Getting a New(er) Car

Fortunately, most auto loans for bad credit do not require a particular credit score. The main criteria for qualifying are: reliable, stable employment, be over 18 years of age, be a US Citizen (usually) and make at least $1500 per month. Your credit score will be checked, and will be used to determine your interest rate – but by itself will not disqualify you from a loan.

Two – Reliable Transportation Can Help You Improve Your Credit

One of the reasons many of us get behind on our payments is because of job problems. Sometimes it’s getting to work on time, or at all. If you don’t have reliable transportation, it really can impact your job performance and attendance. If you have reliable transportation, getting to work will no longer be a problem. Having reliable income to count on to pay your bills is an important step in repairing your credit. Car loans for people with bad credit can help people get reliable transportation to meet their goals.

Three – A History of Regular Car Payments will Improve Your Credit

Your credit score is calculated in a number of ways, and one of those factors is the variety in the types of loans you have on your credit report. Adding a car loan to your credit report will add variety – and if you are careful to always pay on time, this loan can improve your credit rating.

Four – Having a Car You Are Proud of Will Help You Stay Motivated

Most of us Americans love our cars. They are practically members of the family. Owning a car you love, that provides you reliable transportation and that you spend a good deal of time in each day can really be a motivator.” How’s that?” you might be thinking. If you have a car you love, you’re more likely to make sure you make the payments – and make them on time – to ensure that your car will not be repossessed and that you can look into a bad credit auto loan refinance down the road once your credit improves. Having something you value always helps you stay motivated to meet your goals.

Five – A Bad Credit Auto Loan Refinance Can Improve Your Budget

If you took out a car loan, made your payments for awhile, but now find that your financial situation has changed – don’t stress. You may be able to find a bad credit auto loan refinance. If you have had your car long enough and have paid down the principle, many banks or credit unions will refinance your car for a longer term, or even a lower interest rate. Refinancing your car can shave much needed dollars off your monthly payment. Although not as dramatic as a mortgage refinance, a car refinance can still put an extra $50 or so back into your wallet.

Summary

Thought a bad credit loan was all bad news? Not at all. Hopefully you can see that qualifying for an auto loan for bad credit has many advantages – not having to have a high credit score for one thing. Hopefully this article has given you some insight into how a bad credit auto loan can help you on your path to improving your finances.

photo credit: JLaw45

How to Qualify for an Auto Loan for Bad Credit

The most important factors in qualifying for this type of loan are: proof of employment, be over the age of 18, be a US Citizen (not always required), and have a minimum monthly income – generally around $1500 per month. It will also benefit you if you have lived at the same address for more than 3 years. You will be asked to prove your income with paystubs and possibly tax documents. You may also be required to show proof of residency – usually utility bills.

Your credit score will be checked, but will probably not exclude you from receiving the loan as long as you meet the criteria above. The credit score will be a factor however in determining your interest rate. The lower the score, the higher the interest you will be likely to pay.

What May Keep you From an Auto Loan for Bad Credit

If you are a temporary worker or a seasonal worker, you may not be able to qualify since you cannot prove stable employment. If you have had a recent repossession that was not part of a bankruptcy, that will also likely exclude you from qualifying. If you are under 18 you will not be able to obtain a loan without a co-signer. If this is the case for you, consider asking your parents or guardian to act as a co-signer for you. Lenders generally will not loan on cars older than 7 years, so keep that in mind when shopping for your car.

Where to find Auto Loans for People with Bad Credit

Depending on your credit and your relationship with your bank, you may be able to be pre-qualified for an auto loan at your banking institution. Talk with your local banker to find out what kinds of programs they offer. Another option is to look at Credit Unions to see if you can pre-qualify with them.  If these two methods do not work, work with the car dealership. Generally they have special relationships with numerous financial institutions and they have a vested interest in helping you find a loan – if they can’t help you, you won’t buy from them. Be careful about “Buy Here/Pay Here” car lots however, those loans may not be serviced by the more reputable financial institutions and you will likely pay far more in interest than you need to.

Summary

If you have less than perfect credit, consider a bad credit auto loan. Although the interest rates may be a bit higher, it can get you into reliable transportation. Remember that you have to have a stable job, be over 18 and be a US Citizen. Also, be sure to shop for a car that is less than 7 years old in order to qualify for most loans. Banks and Credit Unions are a good place to start when looking for auto loans for bad credit, followed by a reputable car dealership.

With this information you should be able to start your search for a bad credit auto loan and find the right program that will fit your needs and your budget.

photo credit: Caveman 92223 — On the Long Road Home

Overview

A refinance loan is different than an origination loan in a couple of respects. First, there is already a loan in place which is generally a good thing. If you’ve made your payments on time, hopefully your credit has improved some since you first acquired the loan. Second, there may now be equity in the property to draw on when refinancing. With the housing market today however, not all home owners are finding that they have equity. There are a few programs that will loan more than 100% of a home’s value.

Get prepared, know the facts and then start shopping for the right bad credit home refinance armed with the right information that can save you thousands of dollars.

Credit Worthiness

Just like when you first purchased your home or your car, your credit score will be an important factor in the kinds of refinance options you have available. Know your score, know what blemishes are on your credit reports and if possible have a written statement explaining the reason for any late payments or other derogatory information. Depending on your credit score, you may not even need a bad credit mortgage refinance.

Equity

Before you start looking for a particular program, it’s a good idea to know how much your home or car is worth. For homes, get a ballpark appraisal from a local real estate agent. You want to know if your house is worth more or less than what you owe on it. Find your most recent mortgage statement – that will be needed to verify your balance.

For a car, check out values on Kelly Blue Book to see what the current value of your car is and compare it to your car loan statement.

A refinance with bad credit is much easier to accomplish if you have some equity built up.

Types of Bad Credit Refinance Loans

• Bad Credit Mortgage Refinance – There are many refinance programs available for homeowners just as there are many programs available for home origination loans. In a way, you are shopping for a new mortgage altogether when you refinance. Refer to our articles on bad credit mortgages to get a broad background on the types of mortgages available.
• Bad Credit Auto Refinance – Most people refinance their car loans in order to lower the monthly payment. When you do refinance, consider the amount of time you want to be repaying your loan. You can lower your payment by either reducing the interest rate or by lengthening the term of the loan. If you have improved your credit since you originally purchased the vehicle, you may be able to negotiate a lower interest rate but keep your initial term which means you won’t be extending the life of the loan. Generally speaking, refinancing an auto loan is fairly straightforward. If your current lender does not have any available programs, make sure you shop around.

Summary

Refinancing is a major undertaking, particularly for bad credit home loan refinance. It is just like shopping for a new mortgage. Refinancing your auto loan is a bit simpler. With either kind of refinance make sure you know your score, know what you can afford and take the time to comparison shop.

I hope you have enjoyed this series of articles on Bad Credit Loans. If you have I would love to hear from you.

The entire series of articles is listed below for reference.

Bad Credit Loans | Part One: Loans for People with Bad Credit
Bad Credit Loans | Part Two: Mortgage Loans for People with Bad Credit
Bad Credit Loans | Part Three: Car Loans for People with Bad Credit
Bad Credit Loans| Part Four: Personal Loans for People with Bad Credit
Bad Credit Loans| Part Five: Bad Credit Refinance

photo credit: woodleywonderworks

Buying a car with less than perfect credit is similar to qualifying for other bad credit loans – with the added wrinkle that often dealerships make their money at the financing table. It is important to separate the negotiation of price from the discussion of how you’re going to pay for your new set of wheels.

Be Prepared

Know what you can afford in terms of total cost and monthly payment before you go car shopping. When shopping for a new car it can be so easy to fall in love with your perfect vehicle and get seduced by promises of low monthly payments –  only to find out you’ve signed up for a seven year car loan with a balloon payment at the end. If you do your research and go prepared, you are much more likely to keep a clear head and know when to walk away from a bad deal. It’s a good idea to also know your credit score and what your credit score means. That way, you will be prepared for the types of loans offered to you.

Types of Bad Credit Car Loans

• Secured vs. Unsecured loans – Nearly every kind of car loan is secured by the vehicle you are purchasing.  However, sometimes lenders ask for an added layer of security such as the equity in your home or in another vehicle that you own free and clear. Be very clear when you sign your loan paperwork what is being listed as security for the loan.

• Pre-Approved bad credit car loans – It can be a good idea to try for a pre-approval with a bank or credit union before shopping for a car. Often banks and credit unions can help you even if you have less than perfect credit. If you are pre-approved, you can shop for your car and focus on price rather than worrying about whether or not you can get qualified for a loan.

• Dealership bad credit auto loans – Dealerships almost always have bad credit loan programs. Be wary of the financing table at a car dealership however – it is generally where they make the most money. Try to keep the negotiation of the car separate from that of the loan. Do not be afraid to walk away from a bad loan.

Car Buying Tips

• Negotiate the price and the terms separately – When you arrive at the dealership, act as though you will be paying cash for the car. Negotiate the very best price possible before mentioning anything about financing. If you are pre-approved, you can mention you will need to finance the car but don’t say you are pre-approved as the salesperson may give you a great deal on the price of the car expecting to make his profit in financing. Once you’ve locked the price of the car and have it in writing, then inform them that you have a loan lined up.

• Don’t be afraid to walk away – The dealer needs your money more than you need his car. You have a lot of options to choose from when it comes to car buying. Don’t be afraid to take a break and walk away. Many people return to the same dealer three or four times over a month to continue to negotiate the price of the car – all the while reminding the salesperson that the car in question is still on the lot costing them money.

• Trade-Ins – If you have a car you plan on trading in, do not let the dealership know until you’ve negotiated the lowest price possible on your new vehicle. If you don’t often the dealership will not give you the proper value for your trade in. Also make sure you know the value of your trade by checking what it is worth on Kelly Blue Book.

• Look at the total cost, not the payment – Dealership salespeople are professionals. Don’t let them lure you into a car because they can offer you a low payment. Look at the total cost of the loan before signing anything. A low payment per month does not mean a good deal.

Summary

It is to your advantage to negotiate the price of the car separately from the terms of a car loan for people with bad credit. If you can, try to get pre-approved through a bank or credit union or if that is not possible, only discuss financing with a dealership once you are certain you have obtained the best pricing available on the car in question. Having bad credit should not keep you from owning the vehicle you’ve been thinking about – but if you plan a little more and do a little research you can end up paying thousands less by getting the best loan possible.

In our next article, we will be discussing personal loans for people with bad credit.

Bad Credit Loans| Part Four: Personal Loans for People with Bad Credit

For reference, the entire series of articles is listed below.

Bad Credit Loans | Part One: Loans for People with Bad Credit
Bad Credit Loans | Part Two: Mortgage Loans for People with Bad Credit
Bad Credit Loans | Part Three: Car Loans for People with Bad Credit
Bad Credit Loans| Part Four: Personal Loans for People with Bad Credit
Bad Credit Loans| Part Five: Bad Credit Refinance

photo credit: Ian Muttoo