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