Consumer Car Buying Advice Blog

How to improve your chances of getting a bad credit car loan

Bad credit car loans and us

At Auto Credit Express we’ve spent close to 20 years focusing on consumers with bad credit and helping these same customers raise their credit scores and reestablish their car credit by financing a vehicle with bad credit auto loans. Along the way, we try to educate our applicants on the loan process, since these very same consumers can find themselves trapped in a loan they can’t afford if they’re not careful.

As with anything else, the key to a successful bad credit car loan is focusing on the basics. So forthwith is a list of things that you can do to make the loan process go more smoothly and, as we have seen time and again, more successfully.

Know thyself

We are continually amazed at the number of applicants who have no idea what their credit score is or what is contained in any of their credit reports (there are three major ones). As we’ve said before, buying a car without knowing your credit score is a lot like going on vacation to a place you’ve never been before and forgetting the road map. Just as the road map tells you where you are going and how to get there, your credit score can tell you how to buy a car and, in many cases, where to buy a car.

A FICO score above 640 with a fairly extensive credit history that includes car credit should get you at least a near-prime loan. Anything below that and we’re talking a bad credit auto loan.

Apply in the comfort of your home

While this may sound a bit self-serving, many of us at Auto Credit Express have talked to customers who visited a local dealer and were turned down for a car loan. In most cases, this was due to the fact that the dealer just didn’t want to get involved with a bad credit customer. A special finance department, which deals with credit challenged customers, requires a great deal of time and effort as well as the right kind of new and used inventory that many dealers aren’t willing to commit to.

When you apply for a loan online at www.autocreditexpress.com, we will assign it to our nearest affiliate dealer. These are dealers that specialize in bad credit financing and take the time to study your application.

Don’t get creative

You may find that our form is longer and more thorough than any other credit application you have filled out before. There’s a reason for this: the more information that the dealer has, the better they can match you to one of their lenders – in order to get you the best deal possible. It’s important that you are totally honest and upfront with all your information. Since bad credit car lenders usually check this information themselves, it is important that the information you furnish is as accurate as possible.

Once the dealer receives your application, the dealer’s special finance department may contact you to get some additional background information – the “rest of the story”, so to speak. Often, customers have had medical problems, family health issues or other events that caused their credit problems. Knowing these issues will help them explain your situation to the lender.

Keep those documents handy

In addition to checking out the accuracy of your application, most subprime lenders will require that you furnish them with documentation proving such things as income, residence and job time. These “stipulations” can include utility bills, phone bills and paycheck stubs or W-2 forms. It’s a good idea to have all this information available and ready to bring with you when you visit the dealership. If you are claiming child support or disability income, it will probably be necessary to have the court order or the award letter to prove you are entitled to this income.

Maintain reasonable expectations

A bad credit auto loan is designed to reestablish your car credit, not finance your dream ride. Although a minivan isn’t an SUV, it’s usually more affordable and gets better gas mileage. A small or mid-size sedan is even more affordable and will keep your monthly payments and fuel costs low. With a bad credit car loan, the object is to keep the monthly payments as low as possible and to keep the loan term as short as possible to cut down on interest expenses. Put as much money down on the loan as you can afford and try to avoid trading in a car that you are “upside down” in – as most bad credit lenders are staying away from negative equity lending at this time.

At least consider gap and a service contract

While many dealer extras are a waste of money, you want to make sure that you’ll be able to pay for any unexpected repair bills if you’re buying a used car. Check out the added cost of an extended service contract. If you are taking out a loan longer than 48 months with little or no down payment, gap insurance can also make sense, since you will be in a negative equity situation for much of the loan period.

Get it in writing

You should understand that the dealer is acting as an agent for the lender. If something you’ve agreed to is not in the contract or on the buyers order, than it doesn’t exist. There is no cooling off period for a car loan, which means that once the papers are signed, the deal is final. Take the time to read over all paperwork before you sign the loan contract to make sure it matches the terms that you agreed to and always get a copy of everything that you signed before leaving the dealership.

As we see it

For nearly 20 years, Auto Credit Express has been helping people with credit problems get approved for new and used car loans. Our dealer affiliates work with a broad spectrum of bad credit auto loan lenders to get you approved. Since our inception, we have processed over 1,000,000 online bad credit auto loans and closed over 1 Billion dollars in auto loans.

For more information, please visit www.autocreditexpress.com to see what we can do for you.

Tags: bankruptcy, black book, car loan quote, chrysler employee discount, credit monitoring, credit score, gm, gm employee discount, reposssession, subprime

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