If you’re in the process of shopping for a new car, you may feel a little uncomfortable about making an application for an auto loan if your credit score is poor. However, there’s no reason to feel dismayed as there are a number of lenders who can help you with an auto bad credit loan. Do you know all you need to know for securing such a loan? Take the following quiz and see if you’re ready to apply.
(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.