Auto Loans With Bad Credit

 Nowadays with a few clicks of a mouse you can apply for auto loans with bad credit from the comfort of your own home. Sub prime lenders spend a lot of money to get their ads placed on different web sites and search engines to ultimately reach you the consumer. The sub prime market represents a huge profit center for these lenders because the margins they can hold are higher than on their prime loans they approve. The turn around time on these loans is usually very quick, many times even the same day. This will save you a lot of time over driving to different banks in person to apply. By doing your due diligence online you can have a pre approval in hand before you go to the dealer. This greatly increases your negotiating power when you find the car of your dreams.
Here are some things to consider when applying online.
 
1)      Make sure they are a sub prime lender- If you already know your credit is bad it does you no good to apply with a lender that doesn’t work with damaged credit. When searching through the ads look for phrases like “car loans for bad credit” or “no credit car loans” things of that nature. This will tell you that they are willing to work with individuals with bad or limited credit.

2)      Have them compete for your business- Narrow your choices down to two or three lenders to submit your application to. Once you receive an approval from one lender contact the other lenders and try to get them to approve you at a lower rate. These sub prime lenders want new business so if they have already approved you it never hurts to ask for a cheaper rate especially if you have an approval from another lender in hand. The worse they can do is say no.

 
3)      Have documentation available- Most sub prime lenders will require you to prove your income. Have a few of your most recent pay stubs available to fax or mail to them. They may require proof of residence for where you live so have a recent utility bill available also. Having these documents available ahead of time speeds up the approval process.
 
By spending some time getting your documents ready and applying to a few select lenders online you will save the most time and money on your loan. Having your pre approval letter in hand will give you negotiating power at the dealership to save you the most money on your new car.

Technorati Tags: auto loans with bad credit, car loans for bad credit, no credit car loans

Easiest ways to get approved for auto loans with bad credit.

If you already know your credit is bad here are a couple suggestions to save you the most time, cause you the least headaches, and make your purchasing experience smooth and enjoyable. There are many lenders out there who specialize in car loans for bad credit and they are just looking for ways to approve you. The sub prime market is a huge profit center for these lenders because it allows them to hold larger margins on the loans they approve. To qualify though you need to fit within their approval guidelines. All of these lenders have very different criteria and guidelines that they will follow. Some prefer new vehicle loans to used vehicle loans. Some prefer higher mileage cars; some will only lend money on lower mileage cars. Some will allow self employed 1099 income while others will only accept W2 income. Some will have very strict debt to income guidelines while others may not have any debt to income restrictions at all. These are just some examples. Whatever the case may be the key to getting approved for auto loans with bad credit is fitting yourself within whatever guidelines the lender you are dealing with has. These are two effective ways I have found that work very well.

1)  Apply online-These days you can apply online with several different lenders with a few clicks of the mouse. Sub prime lenders spend a lot of money to get their ads for auto loans with bad credit posted on the different sites and search engines. They will usually get you a response very quickly. At some point though you will probably have to talk to a human that works for the bank before they will actually issue a check for the vehicle you want to purchase. But the majority of the info they will need can be entered right online. Be careful here because applying too many times will result in a lot of inquires on your credit report which can lower your credit score. Search online until you find a bank web site or add you want to apply through take the time to read what their requirements are first, many of the sites will indicate if they specialize in car loans for bad credit. As an example if their guidelines indicate they do not accept self employed 1099 income and you are self employed, there really is no reason for you to apply with that particular lender. Read through their FAQ section on their site if there is one, you can get a lot of answers right there. Once you find a couple that look like you will fit into their guidelines apply through them. Let them compete for your business. They will do the majority of the work for you. Having a pre approval in hand while shopping for a car gives you a lot of leverage to make your best deal.

2)  Apply through a reputable dealer-Lets face it you don’t work for the bank so how are you suppose to know what all their approval guidelines are. Most large dealerships have indirect lending agreements with sub prime lenders. This gives them an avenue to get people approved who have bad credit and want to purchase vehicles from them. These dealers originate huge amounts of loans through these lenders they are signed up with. They know better than anyone else the ins and outs of the different lender guidelines. Most dealers have a person employed that specializes in these types of loans called a special finance or custom finance manager. This person’s sole responsibility is to get loans approved for people with bad credit, period. That’s all they do all day long. Contact the dealership you want to do business with and ask for the special finance manager. They will more than likely set an appt with you and tell you what documents to bring with you. It is very important to be honest and upfront with them during this initial appointment. The questions they will be asking you are to help them determine which one of their lenders would work best for getting an approval for you with the most favorable terms. The more accurate the information you give the easier it is for them to get you approved. After they have gathered all the information they need from you they will go to work on your loan. Remember dealerships are in the business of selling cars so they want to get you approved. They have a vested interest in getting you approved. Let them do the work for you.

Technorati Tags: car loans for bad credit

In general terms there are two kinds of bankruptcy and individual or couple can file for. They are chapter 7 and chapter 13. If you file for chapter 7 all of your debts are discharged under the bankruptcy guidelines and you are no longer liable for that debt. The creditor will write the loss off and report it to the credit bureaus accordingly. If you file for chapter 13 you enter into a repayment plan approved by the bankruptcy court that repays all of your creditors over a specific time period usually three to six years. The court will schedule a meeting of the creditors and assign a trustee to your case. Agreements are made with each individual creditor as to how much they will accept each month as repayment based on what you can afford. You in turn will make one lump payment to the trustee every month and the trustee will disburse the agreed upon amounts to each creditor monthly. When your payment plan is complete your bankruptcy will be discharged. Common sense would tell you that it would be easier to get approved for auto loans if you entered into the chapter 13 option because you are actually repaying the debt not just wiping it out as with the chapter 7 option. This unfortunately is not the case, most sub prime lenders shy away from an applicant that has an open chapter 13 on their credit report. The reason for this is that the individual can add any new debt they incur to the chapter 13 payment plan and the lender has to wait in line to get paid back or will be paid much less monthly than the original contract stated. There are however some sub prime lenders that will approve you if you are currently in a chapter 13 bankruptcy plan here are some ideas to help you get approved and make the process go smoother.

1) Find out ahead of time if lenders guidelines allow for chapter 13- Some sub prime lenders guidelines will not allow for a chapter 13 under any circumstances. Talk the lender or lenders your are dealing with and ask them what their guidelines are when it comes to a chapter 13. If they don’t allow for it there is no reason to even apply with them, all it will do is put another inquire on your credit report and to many inquires will lower your credit score. Move on and find a lender that does allow for open chapter 13 bankruptcy filings. Spend some extra time on the phone inquiring with different lenders; this will save you a lot of headaches and aggravation during this process.

2) Get approval letter from the trustee- The bankruptcy protection laws will not allow any lender to enter into an installment agreement with you without approval from your trustee. This letter will need to be requested in writing by both you and the lender you are applying with. The letter will simply state that the trustee does not have any objection to you entering into or acquiring any new debt. If you just started your repayment plan or are behind on your monthly payments to the trustee chances are they will not supply this for you. This would be an indicator that you are struggling with the debt you already have and cannot afford to add any additional debt at this time. When you get current or demonstrate good payment history to the repayment plan you can request that the trustee reconsider.

By doing your due diligence on the phone ahead of time and having your approval letter from the trustee in hand you will greatly increase your chances for approval on auto loans. Take the time to gather your recent pay stubs, recent phone bill, and make copies. Have them neatly packaged with your trustee approval letter and present them to the loan officer.

Technorati Tags: auto loans with bad credit

There are many things that factor into your credit score. Some of them affect it negatively more than others. Here are some easy ideas to help raise it up without spending a lot of money and help you if applying for auto loans with bad credit.

 Request a copy of your credit report to review- You are entitled to one free copy per year of your credit report. Below is a list of phone numbers and addresses for the three main credit reporting agencies. Simply call or write them to request a copy to be mailed to you or visit one of the many advertised credit report sites for a faster copy.

               -Experian

                 P.O. Box 2104

                 Allen TX 75013

                 888-397-3742

               -Trans Union

                 P.O. Box 2000

                 Chester PA 19022

                 800-888-4213

                -Equifax

                  P.O. Box 740241

                  Atlanta GA 30374

                  800-685-1111

Get any incorrect or outdated info removed- It is very possible for incorrect or outdated information to appear on your credit report. If this happens it can drastically reduce your credit score and hurt your chances for loan approvals. This can also cause you to have to pay higher interest rates. Review you credit report carefully for outdated or incorrect items.

 Contact the credit reporting agency that is reporting the incorrect info- They will advise you on any forms you may need to fill out to start the process. Once they have the appropriate information they will conduct their own investigation. Any documentation or proof you have should be sent to them as well this will ensure that it gets resolved quickly. They in turn will contact the creditor in question to verify the accuracy of the account. Any creditor that finds they have made an error in reporting is required by law to update the correct info to the credit reporting agencies within 30 days. If the creditor in question is no longer in business or does not respond the item can be removed from your credit report. Once removed your credit score will be adjusted automatically.

Payoff any credit cards that you can afford to- Having high amounts of revolving credit card debt dramatically reduces your credit score. Search through all your credit cards and payoff those that you can afford to. Start with the smallest balances first, once paid in full contact the creditor and request that the account be closed. Continue this process with all your credit cards and you will start to see your credit scores climb.

Avoid Inquiries to your credit-Every time an entity pulls your credit an inquiry is listed on your credit report. Too many of these inquiries can reduce your credit score because it is an indicator that you have been or are attempting to acquire a lot of new debt.

Avoid filling out lots of online applications for credit cards and be cautious who you give your social security number to. The more times your credit report is pulled the lower your credit score will go. Only apply for credit after careful consideration.

By following these steps you should be able to raise your credit score without incurring any additional debt in the process. Even if you have filed bankruptcy in the past this process still works and remember every little bit helps. Take the time to gather any documentation needed and start the process right away.

Technorati Tags: how to raise your credit score

Maybe you don’t agree with it philosophically but I think most people would agree that the CARS program was a success for dealers all across the country. People were lining up to trade in their clunkers and take advantage of the $3500.00 to $4500.00 that the government was doling out. It was a win win scenario the dealers had customers buying cars again and the consumer basically had a windfall check from the government. As the demand increased the supply started to decrease and before we new it many dealers were sold out of inventory. But did it help people with bad credit? Below are some observations that make me think it did:

1)      Auto loans with bad credit are difficult to obtain without a down payment-Most sub prime lenders are going to require a substantial down payment before they will give any type of approval. Someone with bad credit typically will not have the resources to come up with $3500.00 to $4500.00 in cash for a down payment. If they did they probably would not be behind on their bills to begin with. If they met the criteria to qualify for the cash for clunkers program they automatically had a very sizeable down payment in the form of a trade in. This gave dealers an avenue to get approvals for people who otherwise would have had very little trade equity or down payment. Sub prime lenders were more than happy to approve many of these loans because of their equity position in the collateral. In the event the customer defaulted they had very little risk out there because the vehicle was worth more than the outstanding loan.

2)      Cost less to maintain-With the warranty that come on a new vehicle the consumer doesn’t have to budget for any unexpected repairs. They have full factory warranty coverage for at least three years or longer depending on the manufacturer. With their old car expensive repairs are more likely to happen which in turn could cause financial hardship if not budgeted for.

3)      Better Gas Mileage- The whole idea behind the CARS program was to get old gas guzzling vehicles off the road and get new more fuel efficient models on the road. Many people were trading in vehicles that got 8 to 10 miles per gallon for vehicles that got 20 to 25 miles per gallon or more. This makes for a substantial savings in gas mileage every month leaving more money in the consumer’s pocket.

4)      Reestablishing Credit- Very few things bring a credit score up like a paid as agreed auto loan. As discussed before the CARS program gave many people who otherwise would not have qualified for a loan the opportunity to start rebuilding their credit. If they make their payments on time it will cost them less money on loans in the future as their credit score starts to rise.

Technorati Tags: auto loans with bad credit

Technorati Tags: auto loans with bad credit

Getting approved for auto loans with bad credit, after filing bankruptcy is possible provided you have a down payment and can demonstrate that you are creditworthy despite your tarnished credit report. To prove this to a lender you need to do some careful preparation and document gathering ahead of time. For example:

-What caused you to file bankruptcy? Many lenders will listen to circumstances that surround this. Hopefully this was an isolated event in your history. Did you start a business that failed? Did you get divorced? Was there a significant medical event that caused you to be out of work for an extended period? Was your job eliminated? Whatever the case may be you need to be able to document this and show that you are in a better financial position now.

-Can you show that you have recovered financially? Be prepared to document that the circumstances that caused you to file bankruptcy are behind you and have been eliminated. In other words if your job was eliminated are you back to work full time now. If you got divorced produce copies of your divorce decree showing that the assets and debts have been divided up between both parties. If your business failed show that you are back to work for another company. Showing that you have stable job time by producing paystubs, and stable residence time by producing a utility bill or lease are also great ideas. This demonstrates stability and banks love stability.

-Have you obtained or paid off other loans since the bankruptcy? This is a big one because your payment history after a bankruptcy is very indicative of your future patterns. It shows the bank that yes some type of circumstance caused you to have to file bankruptcy but that circumstance no longer exists and you have proven that you have the ability and desire to repay a loan. No matter how small the loan was produce documentation to prove this to the lender.

Remember, the big picture here is to show the bank that you are in a much better financial situation now then you were when you had to file bankruptcy. The better you can convey this to the bank the better your chances for approval and favorable terms.
Take the time to gather all the items I’ve outlined here before you go to apply for a loan. Make copies and have them neatly packaged to show the loan officer. This will greatly increase your chances and make the whole process go a lot smoother.

Technorati Tags: auto loans with bad credit