New Start Auto Loans

If you have bad credit, you may have been told that you need some money down to get your auto loan.  The need for money down may be for several reasons.

First, the lenders may approve you for less money than if you have perfect credit.  If you have perfect credit and can barrow $15,000 on a $15,000 car you may only be able to barrow $14,000 on a $15,000 car.  Assuming you need to add tax title and license, you may need to put down $2,000.

Second, many times, lenders will want to have you, as the buyer personally invested in your car right of the bat.  They often call this participation.  Even if they will barrow you most of the cost of the vehicle they may want some money down to get you personally invested so that they feel more secure in getting all of the payments.  People that have put some money down are more likely to continue making payment because they have already paid some of the car off.

Don’t worry, all of the money you use as a down payment will go toward paying down your loan.  Even for people with perfect credit, it is a good idea to put money down; money down will lower your monthly payment, reduce the total of your loan, and lower the total amount of interest you pay.  Sometimes putting more money down will also give you better finance terms or open up a new program that you otherwise may not have qualified for.

Apply For An Auto Loan Here

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When you set in to the auto loan arena, you may have a zillion and one questions.  One of the biggest questions for car buyers with bad credit or no credit is how much will I need to put down?  Getting an auto loan as someone with less than perfect credit sometimes requires a different approach to the auto loan structure itself.  Bad credit banks may want to see a certain equity position in your auto loan right from the start.  If a lender tells the dealer they want to see a 90% loan to value, this means that they will finance 90% of your auto loan and you need to come up with the rest.  To get this to happen the dealer will usually pick some vehicles that they’ve got a good deal on to lessen the amount that you need down.  If a car is worth $15,000 and they only paid thirteen thousand for it you might have to put less down on it to get to your 90% than if they paid all $15,000.

Let’s say they did only pay 13,000 for a car that will work for you.  Obviously the dealer needs to make at least a small profit to stay in business and to pay their sales guy.  Don’t go into this thinking that they can make profit off the next guy.  This job is how dealers support their family and it’s selfish of anyone to try to make them work for nothing.  If, at the end of your work day your boss came to you and said “we are going to keep the pay for Mondays to ourselves from here on out, don’t worry though, you can work overtime the rest of the week to make that up”.  You wouldn’t stand for it!  They can’t do it either.  Next, you have the tax, title, license, and fees.  Let assume that all together this comes to $2,000.  That makes 90% of $15,000, $13,500 so your difference is $1,500.  You may have guessed that this is a hypothetical scenario and each situation is different.

It is adventitious to save up as much money as you can in order to have the most options and bargaining power when it comes time to go to your dealer.  If you have a certain amount that you can put down let your dealer know so that they can help you find the best scenario and the best finance programs for you, right of the bat.  If you have little or nothing down it may be more difficult to get the right situation so you’ll need to be more flexible with your vehicle choices. If you want to get a particular vehicle just ask your dealer, how much will I need to put down?

Apply Here For An Auto Loan

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If you have bad credit and are hoping to rebuild your credit enough to qualify for a home loan you may have wondered if a bad credit auto loan can help re establish your credit enough to get a home loan.  First of all, a home loan is one of the hardest things that an average person will finance in their lives; hence this will usually be the biggest influence on credit history.  The good news is that an auto loan is usually the second biggest factor in determining credit history and since a bad credit auto loan is easier to get, you can get an bad credit auto loan and it will help re established enough to get a home loan. 

The next thing is How Do I Get an Auto Loan with Bad Credit?  This is a whole new subject and is covered in more detail in our other blog articles.  The main thing that will help you get an auto loan with bad credit though, is finding a special finance manager that works with situations like yours.  New Start Auto Loans has a network of finance specialists that can assist you in getting your auto loan approved to start re establishing your credit enough to get a home loan.  Once you have made about a years worth of payments on time, assuming that everything else is current you should see a big increase in your score and overall credit picture.

Apply Here For Bad Credit Auto Loan To Help Re Establish Your Credit

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If you’ve never had credit, you are what’s known as a “ghost” and you have a zero credit score.  You may wonder, what if I’ve never had credit? This is not the worst thing in the world.  First of all, yes it is very difficult for a lender to determine how you will repay them if you don’t have any credit history, but if you don’t have any credit, that means you don’t have any “bad credit” either.  With no credit you have your whole life ahead of you as far as credit goes so this may be an exciting time.  This is a good time for you to think about your future.  How do you plan on using credit responsibly?  What will you do when you have established credit?  How will you make sure you keep your good credit once you have it?  Maybe even more important how do you get an auto loan with no credit?  There are literally thousands and thousands of lenders out there.  Do they all have a first time buyer program?  I’m afraid not.  There are however, some that do and they each have different things that must happen to allow your auto loan.  The most common way to get an auto loan with no credit is to get someone with good, established credit to sign on the auto loan with you, these people are known as co applicants or co signers.  They may also want to see a good equity position in the vehicle.  To get a good equity position in a vehicle you will most likely need to put some money down.  Don’t plan on trying to buy an expensive car the first time out either.  Most lenders are only going to want to lend on an inexpensive car to see how it goes with payments.  Relax it’s not forever.  One you have proven yourself, say after a year or two, you will have a lot more options.

Get A No Credit Car Loan Here!

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If you need to re establish your credit, an auto loan is a very good way to do so.  Usually a home loan is the biggest influence on your credit followed by an auto loan.  The thing is, you can pay down a car quickly and trade it off within a short period of time.  It also is a relatively quick process to get an auto loan vs. trying to buy a house.   Also, if you have bad credit, it may be impossible to get a home loan before you re establish your credit.  So, this may leave you with the question, if I get an auto loan to re establish my credit, how long does it take?

To re-establish credit many things should happen.  Also, the fact of whether or not your credit is re-established is in the eye of the beholder.  One thing is usually a give though, to re establish you need to have some sort of credit to build on.  There are three main credit Agencies, TansUnion, Equifax, and Experian.  These credit agencies show the credit history which is reported to them.  Once they have a pattern of information reported to them they with reflect this on a person’s credit profile, otherwise know a credit bureau or credit file.  The credit agencies will tally up all the information that is reported to them and determine your credit risk thus assigning you a credit score.  To simplify the matter, the higher the score the lower the risk for a potential creditor will be faced with if they offer you credit.

Creditor like to see a high credit score and several other positive indicators that you will be a low credit risk in order to approve a loan.  If you have bad credit, they may want to see a recent trend of responsible repayment history.  The credit agencies tend to look at an auto loan as a big part of your credit score and usually give a lot of importance to loans that have been open for more than a year.  If you can get an auto loan and keep it in good standing for more than a year and keep everything else paid on time you will be well on your way to re establishing your credit.

Apply For An Auto Loan To Re Establish Your Credit Here

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If you need a vehicle you may wonder what kind of a monthly car payment you can afford.  In order to answer this you may need to evaluate your monthly budget.  Please keep in mind that without a car you may not be able to get to work, see your friends or get to the store to buy groceries.  This makes your car an important expense; more important than many of the other things that you might buy for fun.  With this in mind, if you think that it may be hard to afford an auto loan, you may consider reducing the money you spend on other things.

When your finance manager works on your auto loan, they will be bound by the maximum monthly payment that the lender sets.  The lenders will usually set a maximum monthly payment that’s somewhere between 12% and 18% of your gross monthly income as long as you do not exceed more than around 50% of your gross monthly income for monthly debt such as credit cards, mortgages, or installment loans.  Since you will be making your monthly auto loan payment to them, they want you to be able to afford it.  If you make $2,500 a month, 12% to 18% is $300 to $450 a month.

When you consider your monthly budget and your monthly auto loan payment ability, think responsibly and be reasonable.  If you have bad credit you may not get prime interest rates and may need to sacrifice some things while you get yourself reestablished.  If you would like to calculate your monthly payment ability click here.  If you are unsure what your gross monthly income is you can use this monthly income calculator.

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Working for cash could mean a few things. Are you getting tips for a portion of your income? Are you a contractor? Or are you working for CASH that your employer does not report because they don’t want to pay taxes? First of all if you have some time before you need to buy a car you should prepare. To prepare for an auto loan with partial cash or all cash job you should develop as many ways to show the lender your income as possible. You should open up an account, whether it be a checking or savings account at your local bank. Once you have an account, you can deposit ALL of your income in. You don’t need to keep it in the bank but showing that money coming in on a regular basis at regular intervals may help prove income. If you are contemplating not showing any or part of your income on your taxes you should reconsider. Aside from being illegal, you may be hiding the very income that will make your debt ratio low enough to get a loan.
If you don’t have any time to set up an account or show all of your income on your taxes, you may be able to get by with a detailed letter from your employer. This letter should include your hire date, your hourly rate, schedule, and that they expect that this will continue indefinitely. This will not pass as proof of income in many cases but some finance managers will be able to use this.

Get A Car Loan

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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.

Apply For An Auto Loan Here

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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.

Apply For A No Money Down Car Loan Here

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High risk auto loans, sometimes called bad credit auto loans, special finance auto loans or credit reestablishment loans, are auto loans made to customers that have either no credit history, a FICO score below 650, or other blemishes on their credit report that would cause a conventional lender to turn them down.  A customer that is a high risk to the lender will have less options to finance a car.  High risk credit customers may need help securing auto financing.  If you are a customer that has bad credit, you are likely considered a high risk to lenders and should get help from a special finance manager. Get A High Risk Auto Loan Today!

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