"How To Get An Auto Loan With Bad Credit!"
By Tony Iorio
People with credit problems number in the tens of millions. If you're one of them don't worry...you're definitely not alone!
Having a bad credit rating is nothing to be ashamed of. It can happen to anyone. Given time and some diligence on your part a bad credit rating can slowly be changed for the better.
Of course, if you're experiencing credit problems and want or need to buy a decent, reliable car you may not have the luxury of waiting until your credit rating changes for the better.
Not to worry! People with credit problems are getting financed on car loans all the time.
Now before I go any further, let me remind you of several very important points:
- Don't take on a car payment that you know deep in your heart you can't afford.
- Don't allow a car sales person or a Finance Manager in a car dealership to talk you into something you're not ready for, because they most certainly will try...and they don't care if you make your payments or not!
- Don't get caught up in the euphoria of being able to get a car loan... tossing all rational thinking to the wind!
There are many different ways you can go about getting a bad credit auto loan when your credit isn't up to snuff. But first you have to understand this: You must have an income sufficient to pay your current bills plus a car payment, car insurance and occasional repairs and maintenance costs.
No one is going to take a chance on you if you don't have a steady and sufficient income. That's only common sense, right?
You also need to have a phone in your name. No lender will take you seriously if you don't have your own phone. There's an old saying that Loan Officers use,
"No phone - No loan!"
Most lenders want to see you at your current job for at least a year or more. The longer you work for the same employer the better the chances of you getting financed.
A lender also wants to see you at your current address for a year or longer. Obviously, the longer at the same address the better.
Also, depending on how bad your credit rating is, you will undoubtedly need to come up with a substantial down payment in order to be considered for a car loan. How substantial? That varies according to the type of car you are buying and the individual circumstances...Probably thousands rather than hundreds!
When I was working in car dealerships as a Finance Manager I arranged loans for many people with bad credit who had $4,000 to $5,000 cash to put down. Of course, if you have that much cash available you can buy a pretty decent used car in that price range and not worry about making car payments at all!
One of your best bets for getting financed is to belong to a Credit Union and apply to them for a car loan. Very often they have relaxed criteria that will enable you to get a loan through them when you can't get one through a bank. This is especially true if you have had a relationship with them for any length of time. It's well worth a try.
If you have a relationship with a local bank - especially if you've had any kind of small loan with them they may be willing to take a chance on you. Some banks only care about how you pay them. If you've paid off a loan with them in the past you may have a good shot.
Now...if your credit is borderline, or if you simply have no credit you might have someone available to you who would be willing to co-sign a loan with you. This person must have a good credit rating and meet the lender's criteria regarding time on the job, time at the same address, etc.
However, if your credit rating is too bad chances are the banks still won't consider you even if your co-signer has impeccable credit!
A good bet in this case is to go to a large volume new car dealer, pick out a vehicle and make a deal based on the tips and secrets advanced on InsiderCarSecrets.com. Read New Car Buying Tips and Used Car Tips to discover the techniques that will help you negotiate a great car deal and save money.
After you've agreed on a deal sit down with the Finance Manager and ask this person to work with you to get a loan. A good, aggressive Finance Manager can have a lot of leverage with the lending institutions he deals with. He sends them a lot of business, and sometimes he can sway them to take a deal that they would normally reject.
If the Finance Manager doesn't seem to have the enthusiasm to help you then go to another dealer, and keep doing that until you run into a Finance Manager who has the enthusiasm and hustle to get the job done. Believe me, the Finance Manager can make all the difference in the world when it comes to getting a bad credit auto loan.
Your first preference should be a Ford dealer. Why? Because all Ford dealers, in addition to being associated with local banks, have Ford Motor Credit at their disposal. It has been my experience that a good, aggressive Finance Manager can get Ford Motor Credit to take a chance on your loan when no one else will.
...And understand this as well: if you do get financed somewhere, don't expect a low interest rate! Your rate may be in excess of 20% depending on the year of the vehicle you're getting, but you're just going to have to pay it! If you pay your loan on time as agreed then the next time you finance a car you can expect a little better interest rate and so on down the line.
Another angle that used to work quite well with Ford Motor Credit is the lease option on a new vehicle. Ford Motor Credit is very aggressive in leasing, and this could be to your advantage. (Please keep in mind that Ford Motor Credit, as well as other lending institutions become more or less aggressive depending on certain business variables, so there's no guarantee this technique will work for you at the time you're looking for a vehicle, but it's another option to look into.)
First of all, if you lease a new vehicle you still have to qualify much the same as with a conventional loan...And if you get leased it will count towards building your credit just the same as a regular car loan will.
Again, the more you can put down the better your chances are. Find out if there are any special lease incentives on any vehicles. Sometimes, Ford Motor Credit will have lease incentives on specific vehicles. When they have these incentives going on you can usually get a decent payment and a nice vehicle in the bargain.
Now tell the Finance Manager how much you have to put down, and tell him you have a fair amount to put towards the security deposit! When you lease a vehicle you usually need your first payment, license fees and a security deposit generally equal to your first payment.
Tell the Finance Manager that when he presents the deal to Ford Motor Credit to tell them you are willing to double or even triple the security deposit! This makes Ford Motor Credit breathe a whole lot easier, and the beauty of it is that at the end of the lease lease term you get your security deposit back less any abnormal wear and tear on the vehicle!
One last thought on the leasing option: Shoot for a 2 or 3 year lease. Don't go any longer than that. Don't let the Finance Manager talk you into any longer term than that. 2 years is ideal.
Another area where you have an excellent chance of getting financed is with what are called "Special Finance" or "Sub-Prime" lenders. Most large car dealers will have a Special Finance Manager to arrange this type of loan for you. You can also apply right online at: AutoLoanSoup, MyAutoLoanFinder.com, or AutoLoanSolutions.
Again, you will need some money down, and you must be prepared to pay a high interest rate, but as long as you meet minimum standards as to your job, residence, phone, etc. you stand a very good chance of getting financed this way.
Last but not least, if all else fails go to a reputable "Buy-Here Pay-Here" car lot. There are plenty of them out there, and with a minimal amount down they will usually put you in a car. It may not be a new car, but you can find a decent used car if you try hard enough.
And remember, if you've filed for bankruptcy don't worry. As long as it's discharged (finalized) you can get a car loan or lease using the strategies in this article. I've arranged loans and leases many times for people who have been bankrupt!
So hang in there, be persistent, use your head and the chances are very good that you'll be driving a decent vehicle and be on your way to re-establishing a good credit rating in no time at all!
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