Posts Tagged auto loan for people with bad credit
Do You Know Everything there is to Know about Applying for an Auto Bad Credit Loan?
Posted by Owen in Bad Credit Auto Loans on December 11, 2009
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.
The Auto Bad Credit Loan: Test your Knowledge
Posted by Owen in Bad Credit Auto Loans on November 2, 2009
If you wish to purchase a car, you may feel a little trepidation if you have a bad credit score. Nonetheless, it can be achieved through securing bad credit auto loan financing. Take the following “True or False” quiz and see what you know about this subject. You at least have a 50-50 chance in answering each question correctly.
(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.
Applying for an Auto Bad Credit Loan: FAQs
Posted by Owen in Bad Credit Auto Loans, Bad Credit FAQ's on November 1, 2009
If you want to secure funding for an automobile but feel you may be denied in this regard, don’t necessarily give up hope. You can still obtain the cash you need to purchase a vehicle, even with bad credit, by applying for a bad credit auto loan. The following frequently asked questions (FAQs) can further answer your questions in this regard.
(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
5 Benefits of Bad Credit Auto Loans
Posted by Owen in Bad Credit Auto Loans on September 22, 2009
If you think that a bad credit auto loan is a negative thing, then this article is for you. I’ll be discussing the five biggest benefits of auto loans for people with bad credit – maybe I will even surprise you with one or two. After reading this article you should be able to see why auto loans for bad credit can help many people improve their financial situation.
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.
Auto Loans for Bad Credit
Posted by Owen in Bad Credit Auto Loans on September 22, 2009
If you want to learn about auto loans for bad credit, then you’ll want to read this article. Specifically, we’ll discuss how to qualify for an auto loan for bad credit, what will make you less likely to qualify for a bad credit auto loan and where to find an auto loan for people with bad credit. After reading this article, you should be able to know enough to start your search for the right auto loan for you.
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.