Auto Loan Options

Be aware of every detail in your report. In some situations where there are circumstances with really bad credit, dealerships will not always give you a choice of vehicles. Remember that getting approved for a vehicle is a privilege, not a right. Work on your car loan first, and then choose your vehicle. A car loan, when approved, will increase your credit score as you are making payments on time.

DOES MONEY-DOWN HELP YOU GET A CAR LOAN?

Providing money down on your car loan for bad credit improves your chances of getting the loan approved. Since you are considered a liability to the bank, you are showing the lender good intent towards your loan.

WHAT WILL THE BANK NEED TO PROCESS YOUR LOAN?

Most subprime banks will have requirements for you to meet. Make sure you bring these with you to the dealership when signing your loan!

  • Proof of income (current paystub)
  • Proof of residence (utility bill, phone bill, or something that states your name and address)
  • Proof of insurance (insurance card)
  • Driver license (current address)
  • References

HOW DOES A BANK LOOK AT YOUR INCOME?

While subprime banks are diverse, most require the person applying for the loan to have stability at their job for at least two years or more. However, experienced bad credit car loan finance managers will explain job gaps and draw parallels in lines of work. For example, a mechanic may have only three months on the job at one repair shop, but three years at a previous repair shop. Its important that your bad credit auto loan financing is done by a car loan expert. “Stability” also applies with your address. Stability at your residence and employer show the lender that you are consistent. Lenders take into consideration your gross (year to date), when reviewing your loan. There is no right or wrong income, do not let that discourage you.

HOW BANKRUPCTY CAN ACTUALLY HELP YOUR CHANCES

Bankruptcies come with different scenarios, whether it be due to divorce, loss of job or you’re in over your head. Most subprime banks are willing to work with your bankruptcy. As a matter of fact, subprime auto finance companies compete for bankruptcy consumers. Studies have shown that consumers with bankruptcies have a much less likelihood of ruining their credit again. It is for this reason that many special finance lenders and subprime auto finance companies will approve a consumer with a recent bankruptcy for a car loan.

CAN YOU ACCELERATE YOUR LOAN PAYMENTS?

Absolutely! Make out two separate checks; one for the car payment and one stating principle payment only. You are still making your payment, but you are also reducing the principle.

HOW TO DRAMATICALLY IMPROVE YOUR SCORE WITH A CO-SIGNER

Having a co-signer does not always guarantee that your loan stipulations will be perfect, but it can certainly help. You may still need cash down. It is always a good idea to have cash down. Paying your car loan in a timely manner will improve your credit score. This means the next time you apply for a car loan, you should be able to accomplish the loan by yourself.

SIMPLE STEPS TO A CAR LOAN WITH NO CREDIT

Having no credit is often worse than having bad credit. However, there are special finance companies and subprime lenders that have first-time buyer programs. Although you will pay higher interest for this type of auto loan, it can make a lot of sense. Initially you will be paying high interest, but the benefit is that you will be building your credit, and then can refinance your car loan at a lower interest rate. If a bank will work with you and give you an opportunity to build your credit report, don’t screw it up! Banks look closely at how you pay your first car loan for a long time to come; so take good advantage of this type of opportunity to build your auto finance credit.

DOES A TRADE-IN HELP YOUR CHANCES?

Trades do help your loan because they are considered down payment. Something to keep in mind is making sure your trade is paid off or at least knowing the balance. The last thing you want is for a dealer to give you less than what your car is worth or what you currently owe.

REPOSESSION?

Having repossession is marked on your credit report. Generally speaking, having 12 months gone by or a zero balance needs to be listed for normal banks to consider the application. Now, don’t let this discourage you from applying for a car loan. There are recent repossession banks, special finance companies and subprime lenders that will work with you. Keep in mind that higher interest rates will apply, but this is an investment in rebuilding your credit! Do not be afraid of applying for a bad credit car loan. Go into this process knowing that you are not the only one who has had a problem with their car credit. Subprime banking is out there to help you with your bad credit car loan, and subprime auto financing is geared to help folks in this situation.