Consumer Car Buying Advice Blog

In most instances there is only one way for credit challenged consumers to once again qualify for an auto loan with regular interest rates and that would be auto loans for bad credit.

What we do

If you’re reading this, it could mean that you belong to a growing number of consumers that, because of the current economy, have bad credit. If you’re looking for an auto loan, Auto Credit Express can help you. By filling out our online car loans with bad credit application there is a good chance that you can begin a new chapter in your life by getting approved at one of our affiliate dealers for a bad credit car loan. You will then be on the way to re-establishing your auto credit and raising your credit scores.

Your alternative, buying a vehicle from a tote the note car dealer, could pose a problem if you are hoping to reestablish your car credit. Because these dealers don’t report your payment history to any of the credit bureaus, any positive credit history that you have with them will not be reflected on your credit report.

On the other hand, taking out a loan with a bad credit lender that does report to the bureaus and making a mistake, such as choosing a vehicle that’s too expensive, can also be a problem. In many cases, this can stretch your budget and even result in a possible repossession. If this happens, rebuilding your auto credit will be set back at least a year since most bad credit auto loan lenders will only consider applicants with a repossession on their credit report that’s over a year old.

Going through the process

We’ve heard this question many times: “Why should I get a bad credit auto loan? I can pay cash for a car and get a credit card to rebuild my credit.” Even though this would seem like a logical approach, there is at least one reason why it probably won’t work – even if timely payments on your credit card do raise your credit score. Here is why:

Revolving versus installment loans

A charge card is a type of revolving credit. This means that if you don’t pay off the balance every month, the credit card company will allow you to carry over (revolve) the remaining balance to the next month – while charging you interest for this privilege.

A car loan is a type of installment credit. With installment credit, you sign a loan contract that states you will pay back the amount borrowed, plus interest, at a set amount per month for a fixed term (for example, $300 per month for 48 months). As a rule, installment credit limits are usually much higher than revolving credit limits and require a higher monthly payment as a percentage of the loan balance. Installment credit contracts are also much less flexible to any changes in the loan terms, meaning that the buyer has to exercise more diligence in paying back the loan.

Automotive lenders

In determining your FICO score, the credit scoring company includes both types of credit. And while automotive lenders will look at your entire credit history they put a special emphasis on your installment car credit history. To put it another way, while a good payment history with a credit card will help your credit score, it is not the strongest type of credit to bring to the table if you’re applying for a car loan.

For this reason, many applicants with decent credit scores can still be turned down for a car loan if they’ve never had a car loan before or if it turns out that that one of their previous car loans had a spotty payment history. In both of these cases, the applicants might have to prove themselves by applying for a car loan and establishing a solid payment history through another lender – and in most cases, that lender will have to be a bad credit lender that caters to a lower credit tier of customers.

How to apply for a bad credit auto loan

At Auto Credit Express, we specialize in placing customers with limited or bad credit with dealers that can help them get financed. Our affiliate dealers are knowledgeable and treat every customer that walks through their doors with understanding and respect. If you have any questions that our web site can’t answer, feel free to call us at the toll free number listed on every page.

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 car loan application now.

Tags: auto credit, Bad Credit, car credit, credit, credit bureau, credit card, Credit Repair, credit report, credit score, fico, FICO score, repossession, tote the note

This entry was posted and is filed under Credit Repair. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.