Posts Tagged car loans for people with bad credit
Bad Credit Car Loans – Frequently Asked Questions
Posted by Owen in Bad Credit Auto Loans on September 23, 2009
If you are thinking about getting a bad credit car loan but have questions, you’ve come to the right place. This article will cover the 5 most common questions when it comes to car loans with bad credit. After reading this article you should be much more prepared to start shopping for the right car – and loan – to meet your needs.
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.
Bad Credit Loans | Part Three: Car Loans for People with Bad Credit
Posted by Owen in Bad Credit Auto Loans on September 8, 2009
Overview
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
Bad Credit Loans | Part One: Loans for People with Bad Credit
Posted by Owen in Bad Credit Auto Loans, Bad Credit Mortgages, Bad Credit Personal Loans, Bad Credit Refinance, Credit Repair on September 8, 2009
In this series of articles, I will be giving an overview of different types of loans for people with bad credit. Many of these loans have features in common. Feel free to jump to the article that applies most to the subject you’re interested in. Each article has a table of contents at the end, as well as a link to the next article in the series.
Overview
Most of us have had financial hardships at least one in our lives. It doesn’t take much to upset the normal flow of finances – a loss of a job, unexpected medical expenses, auto accident – in my case, it was the unexpected closure of my small business. Regardless of the cause, bad credit is one of those things that many of us have to deal with. Just because you’ve got bad credit doesn’t mean that you don’t have the same financial needs everyone else does when it comes to borrowing. It just means that in order to get a good rate, you have to work a little harder and a little smarter. You may also have to look at bad credit loans as more of an opportunity to meet your financial needs while rebuilding your credit.
What is your situation?
Before you start your search, know what kind of loan you need. Are you looking for personal loans for people with bad credit, or a bad credit refinance? Knowing the type of loan you need will speed up the process of finding the right financial solution for you.
Know your Score
Regardless of the type of loan you need, the first thing you should do is know your credit score. Order your credit reports from all three reporting agencies – Equifax, TransUnion and Experian. You can usually find a way to get these reports for free, especially if you have been turned down for credit in the last 30-90 days. Once you’ve got your credit report, look at it for errors and be sure to write to each credit agency to report the errors right away. Know the meaning of credit scores and use that knowledge to improve your credit. Your credit score will be a factor with almost any loan you apply for, but will be most critical for home loans for people with bad credit.
Have a Plan
When you start shopping for a bad credit loan, have a rough idea of what you’re looking for. If you need student loans for people with bad credit for example, know when you expect to be able to start making payments. You probably don’t want to sign up for a loan that requires you to begin making payments when you’re still attending classes. If you are looking for car loans for people with bad credit, have in mind the price range of the car you’re thinking about buying. With all loans know the upper limit of what you can afford in monthly payments.
Shop Around
Most financial needs are immediate. You have pressing bills or expenses that need to be paid now. It is very tempting to take the first loan that you qualify for. It can make a huge difference though to shop around – especially for mortgage loans for people with bad credit. Small differences in interest rates or closing costs can cost you thousands of dollars over the life of a loan. Auto loans for people with bad credit can be costly as well – know in advance the total cost of financing your new car and the total monthly payments. Don’t forget to factor in insurance on a new vehicle – newer cars generally cost more to insure and can come as a surprise later on.
Summary
Bad credit doesn’t have to be the end to borrowing. You just have to know your situation and be prepared to look for the right product to suit your needs. Once you find the right loan for people with bad credit, think about how you can restructure your finances to improve your credit to eventually get better rates.
In the next article, we will be going into more detail on a particular type of bad credit loan – mortgage loans for people with bad credit.
Bad Credit Loans | Part Two: Mortgage 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