1329 Words About Bad Credit Car Loans - Down Payments, Interest Rates & Where to Get Approved!

This article covers many different aspects of bad credit car loans and buying cars with bad credit in detail. Topics include the difficulty of obtaining bad credit auto financing, whether or not you actually have to have a down payment, interest rates and whether or not you really have to pay a crazy high interest rate, buying used vs new, where you can get approved and finance add-on products. This article will certainly help you along your way if you are looking to buy a new or used car and have a poor credit rating.

What is a Bad Credit Car Loan in General?

Sub-prime and Secondary finance companies offer auto financing for people that have poor credit ratings. This is commonly known as a "Bad Credit Car Loan", as it is a car loan for someone that has bad credit. The interest rates for these types of loans can be very high or reasonable, depending on the lender that you choose to apply with. If you have a bad, fair, slow or poor credit rating (which is all the same), then this type of financing is what you will have to use to buy a car on finance. Not all lenders are created equal and some can offer better terms than others.

Is This Type of Financing Difficult to Obtain?

It depends on what type of lender that you use. Traditional banks are much more difficult to obtain a loan with if you have bad credit. Usually, regular banks and mainstream lenders require large down payments and are very restrictive as to the amount that you can get approved for.

Specialized sub-prime lenders can provide easier approvals and some companies provide their services online, which makes obtaining this type of financing much easier. Generally, if you have a credit score below 680, then a sub-prime lender is what you should deal with if you want to get approved. Credit scores as low as 480 can get approved through special finance programs and in many cases, with little to no money down. While most people become discouraged when trying to get approved with a bad credit rating, it's much easier if you simply use the right kind of lender.

Do I Have to Have a Down Payment?

Car dealerships request down payments, whether you have good or bad credit. It's simply another way of getting more money from you in addition to the amount that they receive from the finance company that approves your loan. Buy here, pay here dealerships always require down payments to lower the risk that they incur by offering you financing.

Obtaining a car loan with bad credit, with no down payment is a matter of using the right lender with the right combination of vehicle, finance amount and terms. Just because you have bad credit, does not indicate that you are required to have money down for a car loan. In fact, the need for a down payment can easily be eliminated with the right combination of vehicle and lender.

Do I Have to Pay a High Interest Rate?

Different lenders have very different lending requirements and guidelines that they use to approve auto loans as well as, the specific interest rate that is charged. Contrary to popular belief, your credit score is not the only variable used to determine your interest rate. The year, make and model of the vehicle that you are wanting to purchase can make a significant difference in the rate that you are charged. So do you have to pay a high interest rate? It depends on where you apply and with which company that you get approved with. You will pay a higher rate than someone that has excellent or good credit, but it doesn't have to be all that bad.

One thing that many people aren't aware of is that car lots can actually increase your interest rate above and beyond what the loan company actually approved you at. This happens all the time and is the main source of profit for the dealership's finance department. It's called back-end profit.

For example, if you get approved at a rate of say, 12%... the dealer can add to that rate from 3% to 5%, depending on the number of "add-on points" allowed by the finance company. So if you're real interest rate is 12%, it's common that you will be told that you've been approved at 15 to 17 percent. The difference that you pay in additional finance charges is profit for the dealership and paid to them by the finance company. The dealership finance manager is paid a portion of the amount, usually 25% of the additional finance charges that you pay as a result of this increase in your interest rate.

The way around paying the higher interest rates is by using a direct lender. By bypassing the dealership finance department you can get lower interest rates and also have the ability to negotiate as if paying cash.

Do I Have to Buy a Used Car?

New cars that are priced reasonably can be obtained with bad credit just as easily as used cars. The added benefit is that there frequently are manufacturers rebates that can be applied to lower the price of the car below invoice, which puts you in good standing as far as the amount requested vs the loan value of the vehicle (great way to get a no money down new car loan with bad credit).

So no, you don't have to buy a used car just because you have bad credit. In fact, many people think that car payments are always lower on used cars. That's not the case and the reason is simple. New cars can be financed for longer than used cars. Also, it's easier to get a lower interest rate (much lower) on a new vehicle than on a used one.

Where Can I Get Approved Easiest?

As described above in the first section, you will need to use a sub-prime or secondary finance company to get a bad credit car loan. You should use a good lender that is legitimate and has a long track history of getting people approved, regardless of their credit history. Some are available online and can provide quick approvals in minutes. But beware of scams and hoax sites that don't deliver.

While you can try to get approved by going directly to a car dealership, it is best if you work with a lender directly. Dealing with a direct auto loan lender will certainly get your loan approved easier and with less hassles. Just because you have credit problems, does not mean that you can't get an auto loan direct, just like people that have good credit. You just have to use the right kind of lender as mentioned above (sub-prime or secondary).

Do I Have to Buy an Extended Warranty to Get Approved?

This question is being addressed because some car dealerships will try to pressure you into purchasing an extended car warranty. Some will state that it looks favorable to the lender or is a requirement that the lender has stipulated for the approval. This is not the case and you absolutely do not have to purchase any type of extended warranty as a requirement for an auto loan.

What About GAP Insurance Added to My Loan?

GAP insurance covers the difference between what you owe on the vehicle and what it is actually worth. In cases where the amount that you will owe will be more than the market value for the car, GAP insurance can be good to have to protect you from having to come up with that amount should the vehicle be stolen or totalled in a car accident. It is against the law for a dealer to force you to purchase it, so be careful when signing the dotted line and don't let a dealer pressure you into having it added to your loan contract.

Jason Lanier is the editor of http://www.BuyingCarswithBadCredit.com. At his website, you can find good sources for bad credit auto financing for new and used vehicles, regardless of your past credit history. Special Finance Programs are available for residents of all 50 states. Regardless of what company that you choose to obtain your financing with, make sure you are dealing with a legitimate online company that can provide you with a real car loan. Article Source: http://EzineArticles.com/?expert=Jason_Lanier

Online "Bad Credit Car Loans" Can Help You to Obtain Financing Easier - Here Are the Key Benefits

By Jason Lanier

For people that are not familiar with "bad credit car loans" that are available online and the key benefits of using this type of auto financing, here are the key benefits vs using dealer financing options. Whether you have marginal credit problems or just downright terrible credit, there are loan companies that can help you. Where you choose to obtain your financing makes a big difference when it comes to getting approved easier and with more affordable payments.

Peace of Mind. Normally, when you go to a car dealership to get a car and an accompanying car loan, you have your focus on the vehicle that you want, rather than seeing exactly what you can qualify for, first. By initiating the financing portion of your purchase ahead of time online, you are able to have a better understanding of what you will be able to get approved for. Having this dollar amount in mind when you shop helps you to make a more educated decision about your selection.

Easier Approval Process. With online car loan companies, there is usually just a one page application. When dealing with legitimate sources (companies that truly help people with bad credit), you are able to get instant results based upon your monthly income and other basic information. Rather than just being based upon your credit score, your debt to income ratio (ability to make payments) plays a more prominent role in the approval process. Even for people that have credit scores in the low 500's all the way down to 480, there are financing options available for everyone with some online lending services.

The Power to Negotiate. When you have bad credit and are at the mercy of a dealership for a car loan, you are in a weak position when it comes to negotiating purchase price. Dealers will usually give you a "take it or leave it" deal. When you already have an approval for a specific dollar amount, you are able to make an offer for a vehicle. This gives you the purchasing and negotiating power of having "cash", as checks and cash are all the same to a car lot.

A Source to Consider. Should you be in need of auto financing and have had credit problems or difficulty getting approved, you will find http://www.BuyingCarswithBadCredit.com to be most helpful. Real car loans are hard to find online, and a good lender is listed. Regardless of where you choose to obtain your financing, make sure you take your time and make a well informed decision.

Article Source

Buy a Car With Bad Credit With No Money Down

By Jason Lanier You've got bad credit and dealer after dealer is wanting money down. To buy a car with bad credit, with no money down, you need to know a few things. First, there are only two reasons that a dealer would want a down payment... The most common reason is because it adds profit to the sale. The other less common reason is because it's needed to lower the total amount financed for approval by the lender. Trying to figure out which is the real motivation to pressuring you for cash is a little difficult so long as, you are depending on the dealer to get you approved. Most people think that if they have bad credit, they have to use the financing offered through the car dealership. After all, the local bank won't give you a loan right? This is a common mistake that can cost you thousands of dollars in outrageous finance charges. Let me fill you in on a little BIG secret... Car dealerships mark up the price of the car. Everyone knows that. Did you know that they ALSO mark up the interest rate? Yes, they do. They submit your credit application to lenders. The lender responds with an offer. Let's say that they approve you for a rate of 9%. Guess what? The dealer, knowing that you know you have bad credit will try to convince you that you are approved at 12%. The 3% difference becomes nothing more than profit that the finance manager gets paid a commission on. Guess you pays for it... you. Your payments go up 10, 20, 30, 50 or even $100.00 per month simply because the dealership marked up the interest rate. The truth is this. You can buy a car with bad credit with no down payment and also with lower interest rates by simply avoiding the dealer finance department altogether. If you know where to look and prearrange your financing (yes it's done everyday), then you can have the confidence to walk into a dealership, pick out the car of your choice based on the amount the finance company preapproves you for and had the dealer a check. This puts the power of negotiating price in your favor. Car dealers will be jumping over backwards for your business. Find Legitimate Lending Sources Here: Buying Cars with Bad Credit. (http://www.BuyingCarswithBadCredit.com) Jason Lanier, Expert Author. Article Source: http://ezinearticles.com/?expert=Jason_Lanier http://EzineArticles.com/?Buy-a-Car-With-Bad-Credit-With-No-Money-Down&id=2515580

Can You Get a Car Loan with a Credit Score of 600?

Yes, you absolutely can get an auto loan with a credit score of only 600.

In fact, there are some loan companies that don't even consider your credit score to be a factor in approving you for car credit.

So if you're looking for a car loan and have a low credit score, can you say -

SHA-BANG-A-BANG!?!?

Here' s a recommended site to get things worked out for you online if you want to check it out. It's run by a friend of mine... http://www.BuyingCarswithBadCredit.com. (I like to give her a plug on my blogs and if you saw her you would know why:)

If you want some information about buying cars with bad credit in general... here's an article that you can read that might put you to sleep if it's 2 in the morning...

Buying Cars with a Low Credit Score

Bad credit auto financing is primarily for people that have a credit score below 650. This can vary depending on the details of your credit report.

Previously, lenders refused car financing for people that had bad credit or a prior foreclosure, bankruptcy or repossession. Now, consumers that have credit problems don't have to be concerned as much about whether or not they can get approved.

It's just a matter of "where".

It should come as no surprise to discover that there are more lenders that are dedicated to exclusively processing applications and issuing credit to people that have credit problems. Here are a few tips that will help you to get a good deal on bad credit auto financing...

If you do have a credit score below 600, be sure that you know exactly what is on your credit report. This is very important and you want to be sure that there are not things being reported inaccurately, further dropping your score. Get a free copy of your report here.

You may choose to check with a debt consolidation or counseling service that can help to improve your credit report in the quickest time possible. Look for bad credit auto financing companies that are specialized in helping people that have moderate to severe credit problems. Knowing where to apply is what it's all about when it comes to getting approved.

Don't fool around with trying to get approved with mainstream lenders.

The odds are very low when it comes to getting approved with them if you have a low credit score. Before you agree to any offer for credit, you need to make sure that you read the fine print! Make sure that you're getting the deal that you're thinking that you are. It's also a good idea to carefully check your budget to make sure that you can truly afford what you think that you can. Make sure to figure in extra money for the weekends!

Most folks don't set out with a good plan, and you should make sure that you have money set aside for an unexpected expense, to make sure that your car payment is still made on time. This is so simple, yet so important for preserving your credit history or making sure that it continues to improve with time. One missed payment can wreck your efforts to rebuild your credit report. There are some things that are needed during the application process... although you don't have to have them when applying, they'll be needed during the finalization of your loan.

Some of the things that you'll need to have in hand when you sign your loan agreement are your paycheck stubs for the last couple months, some type of proof of residence, proof of auto insurance, a social security card and a valid drivers' license.

Submitting an application for an auto loan on the internet can be one of the quickest ways to get approved. It helps you to avoid the pressures of dealerships, too! You don't have to go anywhere, or deal with a dealership to get approved for auto financing if you choose to do it online, which is one really good benefit if you want to be able to handle everything in the comfort and "sanity" of your own home or office.

Copyright Jason Lanier - Unauthorized Use Prohibited Without Permission of the Author

Getting Approved for Auto Loans After Chapter 13 Bankruptcy

Auto Loans after Chapter 13 bankruptcy can seem like a real challenge.

Have the courts dismissed or discharged your case?

If they have, then you're probably in a better position to get an auto loan than you were before you had the bankruptcy.

You've probably got less debt now, and aren't getting the collection calls and late notices anymore.

Really, you're in better shape now to buy a car even though you now have really bad credit.

The secret is in finding the right lender.

The difficulty in getting an auto loan after Chapter 13 Bankruptcy centers around the notion that due to the current bankruptcy laws, you are actually able to file again at any time.

There is no limit to the number of times that a Chapter 13 case can be filed, which makes traditional lenders, hesitant.

Here's why...

Under BK 13, a car loan owed is reduced to the current loan value of the car at the time the BK 13 is filed, which is a high risk for lenders.

There is financing available through select lenders online that you can use to get approved. You can find auto loans after Chapter 13 Bankruptcy discharge or dismissal by using an online lending service.

http://www.BuyingCarswithBadCredit.com is a good place to start and has recommended sources for auto loans if you've recently had a BK.

You can get auto loans for bad credit with no money down, depending on the car you choose.

Don't be discouraged...

You've made payments for a few years now to pay back your debts and get your financial situation repaired. The services listed above consider this and consider it to be a responsible decision and action that you have taken.

One thing to keep in mind is that you don't have to use buy here pay here car lots for auto financing. Even after a BK, there's still good companies that are willing to help you.

I hope that this page is of benefit to you.