Consumer Car Buying Advice Blog

Know what to expect when applying for auto loans for bad credit

Auto Credit Express and bad credit car loans

Many of the inquiries that we receive at Auto Credit Express come from customers who have gotten a regular car loan in the past and don’t understand the special finance process. In this article, we will explain how the process works.

But first, we want you know where we’re coming from. Most of us here have been in the bad credit auto loan business for more than 20 years. Through our car loans with bad credit web site at www.autocreditexpress.com, we have helped thousands of applicants just like you locate a dealer that can get them financed so that they can reestablish their car credit and raise their credit scores.

You can begin the process simply by filling out our online bad credit car loan application. By avoiding a tote the note dealer and qualifying for a second chance auto loan at one of our affiliate dealers you will be able to not only reestablish your auto credit, but by paying your other bills on time you can actually raise your FICO scores at the same time.

What to expect with a bad credit auto loan

When customers apply for a bad credit car loan, one of the first things that they notice is the way the dealer handles the process of finding a vehicle. Instead of picking out a car, the special finance manager will first wait to hear back from the bank and then show you the cars that fit the program.

Who determines your car budget?

Guidelines for a bad credit auto loan are much stricter than for a regular car loan. In part, this is due to the fact that customers with bad credit are usually considered by lenders to be a higher risk than customers with good credit.

When you submit a credit application, the bank looks very closely at your income and expenses. In fact, the bank requires you to prove your income with pay stubs that show your year to date income. You may also be required to prove job tenure with a W2 statement from a prior tax year.

Any additional income such as child support or disability needs to be verified with court documents, determination letters and bank statements.

Once the lender has verified your income, it uses the information on the credit application, as well as estimates for other bills, to compute your monthly debts. The lender factors in such things as utility payments and car insurance to compute the maximum dollar amount that it believes you can afford for a monthly car payment.

Your program tier

Once you are approved, the bank will then place you in one of their tiered programs based on your credit score and credit history. The particular program that you qualify for will dictate the interest rate, loan term and down payment requirements. This information will then be sent to the dealer in the form of a payment call.

Selecting a vehicle

Once the special finance department receives the loan information, the finance manager will then determine which cars in the inventory fit the approval requirements based on model year, price and mileage. With most bad credit lenders, the newer the car and the lower the mileage the longer the loan term allowed.

Most customers that have not financed a car with a subprime l0an will choose a vehicle based on what they like – such as the model or color. What they’re looking at could be a 5 year old pickup with 70,000 miles on the odometer. Even though the vehicle is clean and drives nicely, the interest rate charged by the lender will be higher due to its age, while a service contract (which you’ll want, especially for a pickup) will also be more expensive, since it is also based on age and mileage. In addition, the loan term offered by the lender may also be shorter due to its age and mileage.

In other words, this particular pickup may look nice, but, because it’s older and has 70,000 miles, it also may not fit into the lender’s payment call.

The Bottom Line to reestablishing your credit

By understanding the buying process, you avoid being disappointed by looking at the wrong kind of car. Remember, the object of a bad credit auto loan is to reestablish your car credit, not to get you into your dream car.

At Auto Credit Express we have helped thousands of people with bad credit buy a car and reestablish their auto credit at the same time. Our national network of affiliate dealers specializes in bad credit car loans and, since our inception, we have processed over 2 million applications and our dealers have closed over $2 billion in auto loans. Unlike other sites, our toll free number is listed on every page in case you have any additional questions.

So if you are serious about getting your credit back on track, why not begin a new chapter in your life by filling out our bad credit auto loan application now.

Tags: Bad Credit, child support, credit, credit score, credit scores, fico, FICO score, special finance, subprime loan, tote the note, w2

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