Consumer Car Buying Advice Blog

What you can expect prior to and after receiving an approval for poor credit car loans

We understand

Car shoppers applying for terrible credit auto loans often don’t know what to expect once they’ve submitted a credit application.

We understand where they’re coming from because since 1992 we’ve participated in bad credit auto sales here at Auto Credit Express. We even went so far as to create a website so credit-challenged car buyers can research topics like certified used cars and bankruptcy as well as today’s issue, understanding the bad credit auto loan process.

Applying

When you apply for a bad credit car loan, you’ll notice that you haven’t chosen a vehicle yet. That’s because once you’re contacted by a dealer that fits your profile, you’ll first be interviewed by a finance manager.

When the interview is complete, your credit application will be submitted to a lender or lenders that fit your credit profile. Once this happens, you’ll usually wait until the finance manager receives a notification from the lender before you’re shown any vehicles.

Here’s why:

Budgeting

Once your application is received, the lender will examine your income and expenses and may require that you furnish pay stubs to verify your stated income. You may also need to prove your job time and income history with W-2 wage statements from prior years.

Any additional sources such as child support or disability also typically need to be validated with court orders, determination letters and possibly even bank statements.

The lender will then compute a payment range you can afford using your monthly debts and factoring in such things as auto insurance costs.

Program tiers

Once you’re approved, the lender will then typically place you in a program tier based on your credit scores plus additional factors such as job stability and credit payment history.

The tier you’re placed in will dictate such items as the interest rate, contract term and down payment requirements.

This information is then transmitted to the dealer in the form of a payment call.

Vehicle choices

Once the dealership receives this information, the finance manager will then determine which cars in inventory meet the requirements of the payment call. For example, with typical bad credit auto loan programs, the newer the car and the lower the mileage the longer the loan term allowed. In many cases, newer vehicles will also qualify for comparatively lower interest rates.

When the choices are not what you want

This is usually when problems can crop up. Many customers will pick a car based on what they want, such as a 5 year old pickup with 70,000 miles. Even if it looks good and drives nicely, the available loan term may be short and the interest rate charged by the lender may also be higher due to its age and mileage.

In other words, the truck you want may look nice, but because it’s older and has higher miles, the payment may not fit into the budget set for you by the lender. In this case, it’s time to choose a different vehicle.

As we see it

With a basic understanding of the loan process, you can avoid some of the problem issues that include picking the wrong vehicle.

Remember that the goal here is to establish your car credit, not finance your dream vehicle.

At Auto Credit Express we specialize in placing customers with bad car credit with dealers that can give them their best chance at getting approved auto loans.

So if you want help getting your car credit back on track, you can begin now by filling out our online auto loans application.

Tags: approved auto loans, Bad Credit

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