March 6th, 2010
If you have bad credit and need an auto loan you may be stuck trying to decide what you would be better to try for a new car or a used car. Many people would like to have a brand new car if they didn’t need to consider monthly payment, depreciation, and total cost. If you have bad credit there are a million variables at play here, I should address a few of those variables.
You need to consider your end result, if you can’t afford a big payment you can’t afford an expensive car. New cars cost more than used cars and with a higher interest rate than someone with excellent credit you will have a higher payment. Keep in mind that on a regular term of five years, your payments could be 25 to 35 dollars per thousand that you finance. On a ten thousand dollar loan, that means you’ll pay $250 to $350 per month.
In a bad credit situation, the dealership will most likely need to absorb a fee from the bank. Fees vary from $95 to over $5,000 and they need to be absorbed into the deal without passing a fee on to the buyer; this is usually more difficult to get over the worse the buyers credit is and can become very difficult to do. If a bank will approve your loan they may issue whats called a conditional approval. Once a dealer can match the banks terms they will allow the loan. A bank will usually allow a low percentage of the value of the vehicle to be financed by the buyer. The dealer must also absorb the banks fee without marking up the car. A new car has a given rate of mark up between invoice price and the manufacturers suggested retail price (M.S.R.P.) and hence can absorb a given amount of fee from the lender. Some new cars have more mark up than others do but, generally speaking it is harder to absorb a lender fee into a deal on a new car because they don’t have enough mark up.
Hopefully, if you have bad credit and are buying a car, you won’t always have bad credit and will use this car loan to get yourself re-established. Since you are using this loan to get back on track, you may want to have a loan that you can get out of once you have improved your credit. Once you have improved your credit, you will be have more options of what you can buy and should have a lower interest rate. If you buy a new car it will take longer to get out of your negative equity because the highest depreciation takes place in the first two years.
Don’t get in over your head on a temporary situation. If you plan on rebuilding your credit with your next auto loan, don’t go out and make a bad decision, don’t go out and get yourself buried in a car that you won’t be able to get out of when you are re-established.
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Tags: auto loan, bad credit, Interest Rate, New car or a used car, Payment
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March 4th, 2010
If you need a car loan and live in Ohio but have bad credit you may have wondered why it’s so hard to find financing. Each state has a few legal rules that may affect your ability to get a loan for a car because it makes it harder for the bank to maintain a profit in their overall portfolio. If a state like Ohio has tough repossession laws, in may be difficult, time consuming and expensive to repossess a vehicle.
Another factor that banks will consider is interest rate laws in effect in each state. It may be easier for an Illinois resident with bad credit to get an auto loan than an Ohio resident with the same bad credit because of the rules put on the bank from the state of Ohio.Â
If you need a car loan and live in Ohio but have bad credit, you may need to seek out assistance from a finance manager that deals with bad credit customers and is familiar with the Ohio lenders and regulations. Special finance managers (finance managers that get loans for people with bad credit) in Ohio are accustomed to dealing with customers with bad credit and are familiar with the lending programs in Ohio.Â
New Start Auto Loans can get you in contact with finance managers in Ohio that are familiar with the programs in your area, and can help you find a program that’s right for you. Just CKICK HERE to fill out the easy 60 second application.
Tags: Bad credit Car loans, Interest Rate, Ohio, Repossession
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March 2nd, 2010
If your credit is less than perfect and you have been to a dealer and been disappointed with the amount of time it takes to get everything done you are not alone. The bad news is that even if you have perfect credit it is not a quick process to leave with a car. If you break the time up into segments you can probably allow at least 30% of the time to looking at cars and test driving. This is something that the dealer has very little control over. They want to make sure that you are going to be happy with the car before they try to get everything out together. With this in mind, you are not doing anyone a favor by telling them you like the car and don’t want to drive it. You don’t spend thirty dollars on a pair of shoes without trying them on why would you spend ten thousand or more dollars on a car without driving it. Does it save time to not drive? Yes, technically, but when you are sitting in the finance office trying to close the deal you will have doubts and this may ultimately result in a missed opportunity for you and you will leave having just wasted the entire time there.
At some point the dealer must verify your identity. I’m sure you know who you are but how would you feel if someone just walked in and bought a car in your name without proving it. It’s not just a good idea it is the law so it’s not something they can skip.
If you have perfect credit, this is one thing. The lenders are far less strict in their requirements for finance managers accommodating these loans and for customers buying. If you have less than perfect credit, the lenders will usually require many documents; Proof of income like most recent check stubs, proof of your address like a utility bill, references, and auto insurance. Once these documents are received, your finance manager must look through everything to make sure everything matches what the sent to the bank. If it does not, they need to be aware of it and overcome any problems it may cause up front.
Once they verify all of your information, they need to enter it into their systems. Their is a ton of paperwork for you to sign and they all have a lot of information on them it takes time carefully to enter this information. After they get all of your information entered they can send any information over to the bank that they require so they bank can verify it if necessary. Your finance manager may also have to negotiate with the bank to try to get your payments to fall into place or get by with a smaller down payment than they would like to see. This is not always possible but sometimes your finance manager can negotiate you a better deal. Since this is obviously in your favor you don’t want them to skip this step. Finally, once they have done all of these things they need to load the banks terms into the computer so they can finalize your deal.
Once they have all of those steps complete you will need to go into see the finance manager and go over the terms. If you agree, they will need to print all of your paperwork and explain all of the information, disclosures and policies. Finally, when you complete this you will need to go out and pay your down payment and have them answer any final questions you may have before you leave.
Tags: Credit is less than perfect, Proof of income, Proof of your address, references, Test Driving, Verify your identity
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March 1st, 2010
If you have bad credit, banks may require you to put some money down on your auto financing. Banks may have a few reasons for you to put money down. Probably the biggest reason for requiring a down payment is that the bank wants you to participate in your car loan. If you put three thousand dollars down on a car, it’s more likely that you will make all the payments in fear of loosing your car. Since you’ve already paid a big portion you will be more invested in your loans success than without money down. If you’ve got bad credit, your track record already indicates that you haven’t paid on time before.
Second, a down payment may help the financed amount fall into place. If the car you want is $15,000 and the bank only wants to finance $13,000 on the car, that means you will need to put $2,000 plus your tax title, license, and doc fee down. Remember, if your credit is less than perfect, the bank may not want to finance the whole car value, this is not your dealerships fault it’s the banks setting the rules here.
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Tags: Bank, Car loan, Dealership, finance, money down
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January 24th, 2010
If you have bad credit and are looking for an auto loan, the banks are usually going to look for a good equity position. The easiest way to achieve a strong equity position is with money down. If a car is worth $15,000 and you are financing $15,000 you have neither positive nor negative equity. To create a good equity position you must finance less than what the car is worth. If you have very little or no money down, you may be able to reach the desired equity position by purchasing a car from a dealer that was able to get the car for less than its actual value. This is not as common since usually cars cost approximately the same for all dealers; however it does happen. If you have flexibility with your car choices it will be easier for the dealer to match you with an auto loan that you can achieve the banks desired equity position with little or no down payment.
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Tags: auto loan, bad credit, equity position, negative equity, no money down
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January 23rd, 2010
Once again it’s tax season. The time when people scurry to file taxes in hopes of getting the biggest refund possible. Many people that have bad credit are going to need a vehicle loan and are wondering how much if any, of their tax return they should use for a down payment. It may be hard to give a blanket answer because their may be a few variables here. First of all, do you have any very important bills that need to be paid? For example, it you mortgage two payments behind and about to be foreclosed upon? If this is the case you should strongly consider using whatever portion of your tax refund toward this that is needed to get you caught up again. If you don’t have anything like this and you still plan to buy a car, I would recommend using most if not all of your refund to use as a down payment on you next car. Of course it would be nice to get a new big screen t.v. but you need to set priorities here. Can a big screen t.v. get you to your job every day? Can a big screen t.v. bring you to the grocery store when you need to get supplies? You can always save up money later for some of those thing but consider this. If you have bad credit, that means you are not going to get the best interest rate. Since you are not going to get the best interest rate, you will pay higher amounts of interest over the period of the loan. If you have a large down payment, will pay less in finance charges because you will be paying interest on less money. If you have a $15,000 balance on a car and put $3,000 at 20% interest you will save almost $2000 dollars in interest charges and have payments that are only $318 a month instead of $397 a savings of $79 each month!
Tags: bad credit, down payment, Finance Charges, Interest Rate, Refund, Tax Season, Vehicle Loan
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January 20th, 2010
First of all, to avoid too much extra info; A bankruptcy is a legal process to eliminate your obligation to pay some or all of your debts. The two most common types of bankruptcy are chapter seven bankruptcy and chapter thirteen bankruptcy. In a chapter seven bankruptcy, you are being released of your obligation to repay most bills collections and judgments completely. In a chapter thirteen bankruptcy, you will be required to repay a large portion of your debts, without interest over several years. This is common if you have too many assets to declare chapter seven.
Many people want to get out from underneath many of their bills or collection accounts. Sometimes due to uncontrollable events a person could find themselves with more debt than they can pay back in a reasonable amount of time. Before you declare bankruptcy there are a few things you should asses. First, will it be impossible to get your budget under control without bankruptcy? Many times if you just rearrange this a little you’ll find that with a little sacrifice you can get out of debt in a few years. Second, are you prepared to have a very negative brand on your credit bureau for many years? Once you are out of the bankruptcy you don’t start at the beginning again you start below that, with no positive credit, AND with the black mark of a bankruptcy on your credit. Next, has the situation that caused you to get into all this debt and bad credit changed? If you are still not making enough or still incurring large bills you can’t handle or getting divorced or any other thing that will make it difficult to get through without picking up some big debt don’t do it. There is no good reason to declare bankruptcy now and then wind up in the same jam later but with worse credit. Finally, are you prepared to change? Many people that declare bankruptcy are in this situation because they were not responsible. Maybe they used credit card too much or bought things that weren’t in their budget, or maybe just maybe they didn’t feel like paying the bill because they wanted to use that money for something else.
So the idea is, you need to be completely prepared for a bankruptcy, it’s after effects, and the road ahead of bankruptcy if you are even going to consider a bankruptcy. Getting into a bankruptcy before you have taken a careful look at the situation will lead you back to the same rut you are in now, maybe even worse.
Tags: chapter seven, chapter thirteen, collections, debt, Declare Bankruptcy, judgments
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January 18th, 2010
Gap Coverage is designed to cover the difference between the value of your car at the time it is totaled and what you owe to the finance company on your loan. There are many scenarios that would call for you to get gap coverage. First, consider this. Even if you paid exactly what your insurance company would pay out in the event you crashed your car for the car you purchase, you still will also have tax, title, and license fees on top of your loan. Also, most people have a deductible on their insurance so add on around another $500 dollars. If you have bad credit, that means you will probably not get prime finance rates. This will cause more of your payments to go toward interest decreasing the amount you knock off your loan. This will likely make you have negative equity for a longer period of time. If you are trading in a vehicle and have negative equity on it you will need gap coverage because you are already putting yourself in a negative equity situation. You will need to have gap coverage on most auto loans unless you have put between 30% to 40% down on your auto loan. This will make it less likely that you will have negative equity on your vehicle if it gets totaled. Picture this, you are leaving for work one sunny morning and look up to see a large tree branch has crashed down on your car causing structural damage. Not only could this ruin your day but if you have negative equity you will need to continue paying off your totaled car until the loan is done. Your Insurance company isn’t required to pay off your loan, they only need to give you what your car is worth, guess who decides what your car is worth? They do. Gap coverage can save you a lot of problems down the road when you have an unpleasant incident with your car.
Tags: deductible, Gap Coverage, Insuance Company, Negative Equty, Totaled Car
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January 18th, 2010
An extended service contract is coverage for mechanical repairs and or maintenance of your vehicle. An extended service contract is sometimes referred to as an extended warranty. A new vehicle usually comes with a factory warranty. This will cover various things that may break due to normal use for a set period of time. The period of time will depend on each manufacturer. After the warranty period is up you will be responsible for paying for anything that needs to be done to your vehicle. If you purchase an extended service contract (extended warranty) for your vehicle you may be able to get your repairs or maintenance covered after your factory warranty expires. Their are many different extended service contract options. Each dealer may have a different extended warranty available and may even have more than one for you to choose from. Some warranties will give you the option of what level of coverage you can get. A power-train warranty will usually only cover the engine, drive-train, and transmission. This is the foundation of your car, If you want the minimal amount of coverage this may be the one for you. Electrical, this covers some or all of your electrical components. Comprehensive, otherwise know as bumper to bumper will generally cover most components that can go wrong due to normal wear. Some warranties need to be used at a franchise dealer. For example you might be offered a Chrysler warranty on a Chrysler vehicle. This type of warranty may be ok if you think you will never break down were you are not close to a franchise dealer, however, if you would like to be able to use your warranty anywhere you may want to get a warranty that can be used at any certified repair shop. If you think that an unexpected repair of somewhere between $800 and $3000 will set you back, you may want to consider getting an extended service contract. Even though the extended warranties do cost money, you can usually add them into your financing to spread out the cost evenly over all of your payments to make it affordable.
Tags: Bumper to Bumper, Comprehensive, Coverage, Drive-train, Electrical, Extended Warranty, Mechanical Repairs, Power-train, Service Contract
Posted in Bad Credit Car Loans | 1 Comment »
January 1st, 2010
You don’t have to come here just to read these Bad Credit Car Loan articles, although giving you answers is our main goal. If you want to share a story or whatever just send us your comments! Note* it doesn’t need to be about cars or loans.
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