Consumer Car Buying Advice Blog

The road to better auto credit for most bad credit customers usually involves getting approved for auto loans for bad credit

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If you have bad credit you should know that Auto Credit Express has helped thousands of applicants, just like you, reestablish their auto credit and raise their credit scores. By filling out our online car loans with bad credit loan application and avoiding a tote the note dealer, consumers with bad credit can begin a new chapter in their lives by getting approved at one of our affiliate dealers for a second chance auto loan. Along with paying the rest of their bills on time, they are able to eventually qualify for better interest rates on everything from their next auto loan to other types of credit, as well.

From experience, we are also upfront about what it takes to do this. For example, choosing the wrong kind of vehicle can stretch the budgets of many credit-challenged consumers and even result in repossession. If this happens, the only remaining choice for most people is a tote the note car dealer. It also means that rebuilding your car credit has to be put on hold for at least a year, since even bad credit lenders will only consider applicants with a repossession on their credit report that’s over a year old.

It also underscores the reality of why it is necessary that most bad credit customers need to go through the process of initially financing at least one vehicle with a bad credit car loan in order to once again qualify for competitive interest rates.

Applying for a bad credit auto loan

We have heard this question many times: “Why should I get a bad credit car loan? I can pay cash for a vehicle and get a credit card to rebuild my credit.” Even though this might seem logical, there is at least one reason why it probably won’t work – even if a secured credit card does raise your credit score.

Installment and revolving credit types

A secured credit card is a type of revolving credit. Revolving credit means that if you only make the minimum payment and don’t pay off the remaining balance every month, the credit card company will allow you to carry over (or revolve) the remaining balance to the next month – while charging you interest on the average daily balance for this privilege.

A car loan, on the other hand, is a type of installment credit. With an installment credit contract, you agree to pay back the amount borrowed, plus interest, for a set amount per month for a fixed term (such as $300 per month for 48 months). As a rule, installment credit lines are usually much higher than revolving credit lines and require a higher percentage of the loan balance as a monthly payment, since the object is to pay off the entire balance by the end of the loan term. 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.

What auto lenders look at

In determining your credit score, the credit bureaus include both types of credit. In addition to looking at your entire credit history, however, automotive lenders will put a special emphasis on your installment car credit history when determining whether or not to approve your loan application. To put it another way: while a good payment history with a credit card may help your credit score, it’s 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 FICO scores can still be turned down for a car loan – especially if they’ve never had one 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 first prove themselves by taking out a car loan through another lender – and in most cases, that lender will have to be a higher risk (read: bad credit) lender that caters to a lower tier of customers.

How Auto Credit Express can help you

Autocreditexpress.com specializes in placing customers with limited or bad credit with dealers that can help them. These affiliate dealers are knowledgeable and treat each 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 auto, credit card, Credit Repair, credit score, fico, FICO score, repossession, secured credit card, tote the note

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