General Requirements for High Risk Car Loans
by Steve Cypher on Tuesday, January 15th, 2008One of the questions we get asked frequently is, “What are the basic requirements to get a car if you have bad credit?”
Income
You must have at least $1,500 per month gross income for credit scores less than 625. Gross income means the money you make before taxes are taken out of your check. Even with a score higher than 625, the monthly gross income has to be close to this so that you can afford the car payment and full coverage insurance. If you are self employed, the situation gets more complicated. You will need to prove income from the previous three years with income tax statements that have been professionally prepared. In some instances, lenders will require bank records in addition to tax statements.
Bankruptcies
All bankruptcies must be discharged. If you are not almost finished with a Chapter 13 bankruptcy, you will need to obtain an order to incur additional debt from the court.
Repossessions
No repossessions in the last year unless included in a bankruptcy. This includes voluntary or involuntary repossessions.
Age Requirements
You must be at least 18 years old to apply for a loan.
Other questions regarding High Risk Car Loans
These are the requirements that all lenders require for High Risk Car Loans. (Individual requirements may vary such as time on the job, time at residence, etc). If you have any additional questions, please visit our page about High Risk Car Loans. There you will find additional information on Bad Credit Loans as well as an application that you can fill out in the privacy of your home. At Auto Credit Express, we have helped thousands of people with bad credit get a new car and reestablish their credit at the same time. If this is your situation, we look forward to helping you out.
Income: approx. 200k/yr., very stable job. family/financial hardship in Jan. 2008: evicted from home. Date of Sherrif’s sale: 11/6/06. Bankruptcy voluntarily dismissed by me/ court in Sept. 2006.
Now in new house on Land Contract, all debts paid or up to date, in process of offer of compromise for any outstanding tax debt. Family/ financial issue completely settled: Wife completely handles finances with balances to the penny
Want to spend about 40k on new car, probably less. Would value your insight and advice.
Thanks,
Dave Harvey
David,
The dismissal and tax issues may scare away a few lenders. You are still looking at the probability of a subprime loan for a vehicle (as I’m sure you are aware of). At this point in time, my suggestions are as follows:
1. Keep the vehicle in the 20k to 30k range (possibly a 2 year old vehicle that was originally in the 40k range) and keep the loan term as short as possible (36 to 48 months max). This will lower your interest expense and after 18 to 24 months you should be able to re-finance the vehicle or get into a new loan with a different vehicle at a lower rate.
2. Plan on putting between 15% and 20% down. Not only will this help you obtain a loan (lenders like nothing better than to see customer equity), it should enable you to maintain an equity situation in your vehicle so that you can roll out of it cleanly when the time comes for your next car.