Once you meet the basics

Knowing that you have bad credit, you should be aware of some of the basic requirements that need to be met in order to qualify for a bad credit auto loan. We’re familiar with them, because at Auto Credit Express we’ve been working at the retail level with car buyers that have poor credit for over twenty years.

Being familiar with the embarrassment and obstacles that customers with bad credit often face, we even created a web site that incorporates a secure bad credit auto loan application. We then match up applicants with dealers in their area that specialize in customer credit issues by using lenders that look for ways to get you approved, instead of turning you down because of a low credit score.

The alternative for most bad credit buyers, financing a vehicle from a tote the note, we finance anyone car dealer, can be a problem because these dealers usually don’t report car payments to the credit bureaus. This means the next time you apply for a loan, you may very well find yourself in the same credit position you are now.

But before applying for a bad credit car loan, you need to understand some of the basic requirements of auto loans for bad credit:

Know the score

Know your credit score. Most subprime lenders deal with FICO scores in the 500 to 640 range. Anything above 640 is in the near-prime range (prime starts at about 720). And while bad credit lenders also work with near-prime customers, credit unions, captive finance companies and some banks also dabble in this market as well. In most cases, the more mainstream the lender, the lower your interest rate.

Don’t be a credit “ghost”. All lenders look at how long you’ve been “in the bureau” – that is, how far back your credit history goes. Although credit decisions can be very subjective, having a history of at least 3 years in the bureau is usually considered to be a minimum. A big plus: having at least one previous auto loan showing on your credit report.

Minimum Income

Minimum income requirements are all across the board. To qualify for a bad credit car loan, a $1,500 monthly gross income is usually considered to be the minimum, although even this amount will limit the number of lenders that will consider your application (as well as the number and types of vehicles you will qualify for). As a rule, the higher your monthly gross income, the larger your available selection of lenders will be.

Lenders will also compare your monthly debts to your income and use your debt to income ratio to determine how much available income you’ll have once your bills have been paid. This is the income you’ll need in order to finance a vehicle plus its related monthly costs.

Usually, bad credit lenders prefer that your debts, including a car payment, not exceed 40% to 50% of your gross monthly income. Most lenders also prefer to approve car loans that result in a monthly payment that’s below 15% to 20% of your gross monthly income.

Your participation

Bad credit lenders like down payments, either in cash or in real trade equity. Customers that come into a loan with a big down payment usually keep up with their monthly payments. Larger down payments mean fewer repossessions.

Vehicles

Most bad credit lenders will not allow you to have more than one car payment at a time. If you are currently financing a vehicle, you’ll need to either pay it off or trade it in. In addition, bad credit lenders will not finance commercial vehicles, conversion vans, motor homes or vehicles with salvage, rebuilt or branded titles.

Other factors

•    Job Time – The longer the better. Short job time can be offset by other factors such as higher income, employment in the same field, and/or stability in other areas, such as residence time and home ownership.
•    Bankruptcy – Bad credit lenders will usually not finance open or multiple bankruptcies. Only a few will consider an applicant that is currently in a Chapter 13. Even then, an order to incur additional debt must be received from the court before a lender will even consider reviewing your application.
•    Accuracy – Be prepared to back up anything you state on the application with documented proof. Now is not the time to begin a career in “creative writing”.

Once you’re sure

At Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help get them financed. These affiliate dealers are knowledgeable and work with a broad spectrum of lenders to ensure you have your best chance at getting approved for a car loan.

So if you are serious about getting your car credit back on track, you can begin a new chapter in your life by filling out our bad credit car loan application now.

Choosing a dealer

If you currently have bad credit, you may be considering a car dealer that advertises no credit check auto sales. We’ve seen this before at Auto Credit Express because for the last two decades we’ve worked with car buyers that have poor credit. Knowing the embarrassment and frustration that these customers often face, we even constructed a web site where you can securely submit a bad credit auto loan application and have it sent to a dealer that specializes in customer credit issues for your best chance at getting approved for car loans with bad credit.

This means that if you’ve had a bankruptcy, slow pay, repossession or other credit issues, these dealers can give you the opportunity to drive a quality vehicle and reestablish your car credit at the same time. The process is quick, easy, and you can begin from the comfort and privacy of your own home.

No credit check auto sales

The alternative to the loans our affiliate dealers offer can be found at no credit check auto sales dealers. Buying a vehicle from one of these tote the note, guaranteed auto credit, we finance anyone car dealers is often the only choice for many consumers with bad credit. The problem is, these dealers usually don’t report your payments to the credit bureaus and often the end result is repossession, since high-mileage old cars and high interest rates don’t mix very well.

But if you do decide to apply for a bad credit car loan online, how can you be sure the web site has your best interests in mind?

Look for the come-on

How many times have you seen the following headlines in search results: Car Loans with Instant Credit Approval, Guaranteed Credit Approval, No Credit Check Auto Sales, Car Credit Approval Instantly, Get Online Approval In Seconds, 100% Bad Credit Approval Guaranteed?

In fact, you see these no credit check auto sales ads all the time, whether they’re on the internet, in the classified sections of newspapers or in fliers sent through the mail. Some are just come-ons, designed to get your personal information. So how can you tell the difference between a legitimate company, like autocreditexpress.com, and some of the others out there requesting that you send them your private information?

Research

As a consumer, even one with bad credit, if you have the time to read these ads you also owe it to yourself to research the sites where they’re found. If it’s on the internet, you can go to one of the sites that will tell you who owns the domain name. These sites include companies such as GoDaddy.com, Register.com and NetworkSolutions.com.

Companies that are actually in business to help you will have their names, contact people and phone numbers listed as a registration source. Others will have a “blind” company listed under their registration name. If a company is truly interested in helping consumers, why would they attempt to hide their name and location, such as being registered with Domains by Proxy, Inc.? You should also check with the Better Business Bureau in your local area as well as nationally to see if any complaints have been made against the company and, if so, were they resolved.

Can you believe what they advertise?

Finally, ask yourself if the offer seems too good to be true. You don’t have to have two decades of experience in the car business to make that kind of decision.

The Bottom Line

At Auto Credit Express, we specialize in placing people with bad credit with dealers that can help them, while helping these folks avoid no credit check auto sales dealers. You will also see the Better Business Bureau logo on the site. It’s as simple as this: trust – the cornerstone to building a relationship between you and us.

So if you are serious about getting your credit back on track, you can begin a new chapter in your life by filling out our bad credit car loan application now.

Getting started

Quite often, the first step is the hardest one to take if you’ve finally decided that the next car you’ll buy will have to be financed with a bad credit auto loan. We realize this, because here at Auto Credit Express we’ve been working with credit-challenged car buyers for over two decades. We even developed a web site so that we can take applications and match up our applicants with local dealers that specialize in affordable auto credit for a broad range of customer credit issues. This way, every applicant has the best chance of getting approved for a car loan, even if that means a bad credit car loan.

We did this because we’ve seen consumers with credit problems experience frustration and embarrassment when shopping for a car and applying for financing. Not only that, getting turned down at a car dealer can lead many buyers to a tote the note or we finance anyone car lot. And while they may end up driving a car from one of these dealers, it’s a choice that usually won’t improve their car credit and a finance situation that often leads to repossession. This is also not affordable auto credit, with interest rates of 25% to 30%, or even higher.

Finding affordable auto credit

Our customer service department here at Auto Credit Express hears many of the same stories every day: potential applicants call to tell us that they wasted hours and sometimes days in an increasingly frustrating attempt to find a dealer that could get them financed. In most cases, they learn that finding the right dealer if they need a bad credit car loan is like looking for a needle in a haystack.

Here are some of the tips we’ve learned in the last twenty years about affordable auto credit bad credit auto loan dealers:

It needs to be a franchised dealer

You will get a better deal at a franchised car dealer than at a neighborhood tote the note or we finance anyone car lot. If you’re looking for a new car, this is where you’ll have to go, since only a franchised dealer can legally sell you a new car.

Most franchised dealers also have a wider selection of used cars, which is especially important if you hope to finance one with a bad credit auto loan. Since new car dealers are usually larger than the average neighborhood used car lots, they get trade-ins on both the new and used cars they sell. New car dealers also get more of these trade-ins than smaller lots. And while used car lots can get their inventory from the auctions, just like the franchised dealers, the new car dealer can also take advantage of lease turn-in programs and manufacturer-only auctions that are not available to smaller used car lots.

Bigger is better

If you have a choice between a small dealer and a big dealer, you should pick the big one. Although there are many reasons for this, here are just two: Even though both small and large dealers pay the same for their vehicles, larger dealers have a higher sales volume. Vehicles tend to turn over at a faster rate on the lots of bigger dealers, ensuring a newer inventory. Big dealers also have large inventories of vehicles. This means that, as a bad credit auto loan customer, you’ll have a larger selection of vehicles to choose from that meet your budget and payment requirements.

A second and even better reason to go to a larger dealer is financing. Since larger dealers send more business to their lender partners, they are usually able to offer a wider range of financing options to their customers, especially if they have a special finance department (they key word here is “if”). By sending their bad credit lenders more customers, these dealers usually have more negotiating “leverage” with these banks.

Finding the right car dealer

There are currently over 30 lenders that offer affordable auto credit bad credit car loans. Many are small local and regional banks, while some lend to customers in all 50 states. Each of them has its own set of lending requirements and most do not do direct lending (they only lend through car dealers). But since they don’t publish their dealer lists, how can you pinpoint one of their dealers? You could try driving around to every dealer in your area hoping to find one that can get you financed, but you might end up just wasting a lot of time. What should you do?

Most of our applicants have discovered that the easiest way to locate one of these dealers is to go to a web site, such as ours at www.autocreditexpress.com. We know where these dealers are and can place an application with one that has a finance department that specializes in bad credit auto loans.

The Bottom Line

If you have bad credit, you can waste a lot of time and even risk embarrassment by driving around town looking for a dealer that can help get you financed for a new car.

Or, you can go to Auto Credit Express, where we have helped thousands of people with bad credit buy cars and reestablish their credit through our network of affiliate dealers that offer affordable auto credit bad credit auto loans.

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.

Know before you go

Helping your spouse reestablish their auto credit by cosigning for car loans with bad credit can sometimes result in headaches. I know this is true because here at Auto Credit Express, we’ve spent the last two decades working in special finance departments throughout the Midwest with consumers who have bad credit.

This experience, and others, led us to develop our web site at www.autocreditexpress.com that features a secure online bad credit auto loan application form so that car shoppers can apply for a loan from the comfort and convenience of their home or office. The application is then processed and forwarded to a dealer that specializes in all aspects of car finance.

Unlike tote the note dealers, the lenders these dealers use will report your payment history to the credit bureaus so that by paying your loan in a timely manner, you’ll have a good chance of reestablishing your car credit and improving your credit scores.

And speaking of improving your credit scores, you need to think long and hard before co-signing any kind of loan, including auto loans for bad credit, because you could end up paying for that loan even if you get divorced. If you don’t pay up, your own credit scores could take a big hit.

Divorce papers

We are sometimes asked that if a divorce decree makes an ex-husband responsible for a loan that was cosigned, and those payments are not made, will that affect the credit history and credit scores of the ex-wife. After all, the decree states that the ex-wife is not responsible for the loan. If you think it won’t, you could be in for a rude surprise (by the way, feel free to substitute ex-husband for ex-wife and vice-versa).

Agreement outside the contract

When a bank makes a loan, it is based on the information provided on the loan application. Once the application has been approved and the loan papers are signed by both parties, it is considered a contract.

Even if the judge in the divorce rules that your ex-spouse is responsible for the bad credit car loan that you co-signed and puts that stipulation into the divorce papers, the lender will still hold both parties that signed the second chance auto loan contract to be jointly and individually responsible for the loan.

This is because the lender that holds the original finance contract, in this instance, considers the divorce decree to be an outside agreement that was made after the loan was signed by both parties. Since the divorce decree is not part of the original loan contract, both you and your ex-spouse are still responsible, jointly and individually, for all loan payments.

Furthermore, if payments aren’t made on time, or if the vehicle is repossessed, this negative information will be sent to the credit bureaus under each of your social security numbers and the information will bring down the credit scores of both you and your ex-spouse.

The bottom line

If you are involved in a divorce and have joint accounts with your soon-to-be ex-spouse, make sure those accounts are closed and payments on the balances are made on time. Better yet, before the divorce is final, make sure all joint loans are refinanced under an individual name – so that one person, only, is responsible for any one loan.

At Auto Credit Express, during the past two decades, we have helped thousands of people with bad credit buy cars and reestablish their credit at the same time through our nationwide network of affiliate dealers that specialize in bad credit car loans.

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.

Making a choice

You have probably seen those billboards along the highway that advertise “Your Job is Your Credit” and “We Finance Everyone.” But if you do have bad credit, should you consider going to one of those car lots? Without knowing how they work, the different kinds of car dealers can be confusing. We should know, because at Auto Credit Express we’ve been working with credit-challenged car buyers for over two decades. We even developed a web site so that we can accept applications and match up these applicants with local dealers that specialize in customer credit issues so that they have the best chance of getting approved for a car loan, even if that means car loans with bad credit.

We did this because consumers with serious credit problems often experience frustration and embarrassment when shopping for a car and applying for car loans. Getting turned down at a car dealer can lead many buyers to a tote the note or we finance anyone car lot, a choice that usually won’t improve their car credit and a finance situation that often leads to repossession.

Your job is your credit car financing

It’s also called tote the note financing or your job is your credit car loans. But however it’s worded, it refers to car lots where the dealer furnishes the car loans for the vehicles in his inventory. Unlike indirect lending, where the car dealer arranges for a loan with the bank, with we finance anyone car loans, you are borrowing money from the dealer you buy the car from.

Your job is your credit car loans explained

We finance anyone car lots sell cars and, quite often, turn around and sell them again. In many cases, these dealers will sell a car with a large down payment, repossess it a few months or even weeks later after a missed payment, then turn around and sell it again. It’s a form of bad credit car loans that have been around for many years. In fact, in-house lending was the first form of subprime car l0ans. While this type of lending may have made sense when it first began, just like the Model T, it has been replaced by programs that offer many more advantages to the customer.

Let’s take a look at the good and bad:

The Good

Most of the advantages of buy here pay here lending lie in the fact that, for the most part, all you need to qualify for one is a down payment and a job. Most of the cars are fairly cheap, and you make payments every week. It’s also easy to find a tote the note dealer – they can be found on the main roads of larger towns.

The Bad

While the cars are affordable, they are older, with high miles, and are usually priced way over their book value. Being older, they more likely to break down. But the biggest problem with these We Finance Anyone car lots is that even if you make all your payments on time, it won’t help you establish car credit. This is because most of these smaller car lots don’t report your payment history to the credit bureaus.

On the road to better credit

The reason most bad credit customers can’t get financed with a regular loan is because their credit score is too low. Buying a car from a tote the note or Your Job is Your Credit car lot won’t help because these dealers don’t report your payments to the credit bureaus. Without any new, positive payment history, the customer remains a bad credit car customer.

At Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help them. In the process, we have helped thousands of people with bad credit buy cars and reestablish their auto credit through our nationwide network of affiliate dealers that specialize in bad credit car loans.

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.

Good news

The news from both General Motors and AmeriCredit that the automaker’s acquisition of the Texas-based subprime lender is about to become official is probably good news for many bad credit customers. We should know, because here at Auto Credit Express we’ve been working with credit-challenged car buyers for over two decades. We even developed a web site so that we can accept applications and match up these applicants with local dealers that specialize in customer credit issues so that they have the best chance of getting approved for a car loan, even if that means auto loans for bad credit.

We did this because consumers with serious credit problems often experience frustration and embarrassment when shopping for a car and applying for financing. In addition, getting turned down at a car dealer can lead many buyers to a tote the note or buy here pay here car lot, a choice that usually won’t improve their car credit and a finance situation that often leads to repossession.

But even when a car shopper decides to take the bad credit car loan approach, there are issues other than qualifying for a loan that can complicate the process, not the least of which is finding a dealer with the right mix of lenders. But recent news from General Motors and bad credit lender AmeriCredit could certainly be good news for credit-challenged buyers.

GM Financial

Earlier this year, GM announced that it planned on acquiring AmeriCredit, one of the larger national non-prime lenders. Today, that became official, with GM announcing that, as of October 1st, AmeriCredit would be known as GM Financial and become part of the company.

Although AmeriCredit currently has relationships with 4,000 General Motors dealers, buyers with bad credit might now have an easier time getting financed at a GM dealer.

GM’s chief financial officer, Chris Liddell, summed it up this way, “With AmeriCredit providing us niche capabilities in leasing and non-prime financing, along with the continued strong support of Ally Financial and others for prime retail and dealer financing, we’ve set up a very competitive solution for our financing needs…”

So does this change mean that customers with bad credit can now walk into any GM dealership and be sure that that they are getting the best chance to get financed on a car? Not really.

Lender portfolio

Unfortunately, no on single lender can handle every kind of bad credit situation. To be really effective, a dealer that specializes in bad credit auto loans needs to be signed up with a number of subprime lenders in order to handle the credit problems of as many kinds of customers as possible. And the best way to find those dealers is to apply online at a web site that knows who and where they are.

The Bottom Line

At Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help them. In the process, we have helped thousands of people with bad credit buy cars and reestablish their auto credit through our nationwide network of affiliate dealers that specialize in bad credit car loans.

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.

Getting back in the game

Raising your credit scores quickly and getting back in the game can sometimes take quite a while, especially if you have bad credit and you’re currently financing a vehicle using car loans with bad credit. I know this is true because here at Auto Credit Express we’ve spent the last two decades working in special finance departments throughout the Midwest with consumers who have bad credit.

A number of years ago, this experience led us to develop our web site at www.autocreditexpress.com that features a secure online bad credit auto loan application form so that car shoppers can apply for a loan from the comfort and convenience of their home or office. The application is then processed and forwarded to a dealer that specializes in all aspects of car finance.

The lenders these dealers use will report your payment history to the credit bureaus (unlike a tote the note dealer) so that by paying your loan in a timely manner, you’ll have a good chance of reestablishing your car credit and improving your credit scores.

And speaking of credit scores, there a number of things that can be done in addition to auto loans for bad credit to raise your FICO scores. Most are legal, while some are not.

One particular legal method, while it won’t help you reestablish your auto credit, involves being added as an authorized user on a credit card account and it can raise your credit scores in a very short time.

Understanding the authorized user

An authorized user is someone assigned to a credit card account that is someone other than the account holder. The practice of adding someone as an authorized user to a credit card account is known as “piggybacking.” When someone becomes an authorized user on a credit card account with an account holder that has a high credit score, this can raise the FICO score of the authorized user in a couple of ways.

The first advantage of “piggybacking” on the account of someone who pays like clockwork every month is that this positive credit activity will appear on the credit report of the authorized user and will raise that person’s credit score, as well. The second advantage is that the increase in available credit will increase the authorized user’s credit “ceiling”, lowering their debt ratio, which, in turn, will further raise their credit score.

Rebuilding credit

In many cases, companies that specialized in credit repair will solicit credit card account holders that have high credit scores, offering to pay these account holders for the use of their accounts for the sole purpose of adding an authorized user. The company will then assign their clients to one or more these accounts in order to raise their credit scores.

These authorized users are not able to charge anything to these accounts and in no way do they have access to any of the personal or financial information these accounts contain. Simply by being on the account, they are able to take advantage of the regular payment history of the original account holder and this positive credit history is also reflected in the authorized user’s credit report, thus improving that person’s credit score as well.

The credit bureaus response

As this practice became more prevalent, it began to attract the notice of FICO (the company behind the credit score) as well as the three major credit bureaus – Experian, TransUnion and Equifax. Their response was to create a new credit-scoring model, called “FICO 08”, which contained an algorithm designed to ignore authorized user accounts when calculating a credit score.

This plan, however, ran into a snag – and a large one, at that. According to FICO, ignoring authorized users would block the company’s compliance with Federal Reserve Regulation B. This regulation requires lenders to consider shared accounts of spouses when considering a married person’s credit risk. If FICO’s new scoring model ignored these relationships, it would’ve run afoul of the regulation.

FICO says it has discovered a way to restore authorized user accounts to its formula while, at the same time, reducing the impact of piggybacking. The fact is, however, that authorized users are still a part of FICO 08′s mathematical analysis – although possibly not as big a part as in past formulas.

The downside

Even if you do decide to go the authorized user route and the account appears in your credit report, there is a downside to the issue. The fact is, if the account holder continues to pay his or her bill like clockwork, your credit scores will likely continue to reflect this positive activity. But if, for some reason, the account holder begins to fall behind or even miss a monthly payment or two (or worse), your credit score could also take a serious hit.

The Bottom Line

When all is said and done, you need to decide for yourself how you want to go about repairing your credit and improving your FICO scores. Just be sure, before you go ahead with your plan, that the process you’re using is legal and, if you choose to be an authorized user, that you can cope with the possible downside if the account holder suddenly changes their paying habits.

One thing you can do that is legal is to apply for a bad credit auto loan at www.autocreditexpress.com. During the past two decades, we have helped thousands of people with bad credit buy cars and reestablish their credit at the same time through a nationwide network of affiliate dealers that specialize in bad credit car loans.

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.

We get questions

If you have bad credit and you’re married, you may be wondering what implications your marital status may have when applying for car loans with bad credit. The reason we bring this up is that we’ve seen this situation before. Here at Auto Credit Express we’ve been working with credit-challenged car buyers for over two decades. We even developed a web site so that consumers who fill out our bad credit auto loan application can be matched up with local dealers that specialize in customer credit issues. We’ve set it up this way so that these applicants have the best chance of getting approved for a car loan, even if that means auto loans for bad credit.

We did this because we’ve seen consumers with serious credit problems experience frustration and embarrassment when shopping for a car and applying for financing. In addition, getting turned down at a car dealer can lead many buyers to a tote the note car lot, a choice that usually won’t improve their car credit and a finance situation that often leads to repossession.

But even when a car shopper decides to take the bad credit car loan approach, they often have questions about the loan process. In this case, we’ll be discussing how marital status and federal law affects applying for a bad credit car loan.

Marital status

In the auto loans for bad credit business, it’s always good to get back to the basics. Today, that means looking at the relationship between your marital status and bad credit car loans. But there really is no discussion at all, since it turns out that it doesn’t matter if you have a marriage certificate or not. In fact, there’s a federal law that covers this very topic.

ECOA, whatever that is

The Equal Credit Opportunity Act, or ECOA, basically states that a creditor, such as a bank or other type of lender, can judge a customer only on their ability to repay a debt and not on any other factors. One recent example of a lender failing to follow the rules culminated in a settlement between the Justice Department and Compass Bank of Alabama. A Justice Department release describes it this way:

“The government’s complaint alleges that Compass Bank violated the Equal Credit Opportunity Act, which makes it unlawful for any creditor to discriminate against any applicant based on race, color, religion, national origin, sex, marital status or age by unlawfully charging higher interest rates to co-applicants for automobile loans who were not married to each other than to co-applicants who were married.”

How this affects bad credit applicants

Assistant Attorney General Wan J. Kim made this statement about the court’s decision: “Under the law, marital status should have no effect on an individual’s access to credit…” This means that a lender is not allowed to ask you if you are married or not when, as an individual, you apply for a loan. It also means that if you apply for a loan as a couple and unless you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas or Washington), the creditor, if permitted, can only ask if you are married, unmarried or divorced. Finally, the creditor cannot charge you a higher interest rate if you are unmarried.

The Bottom Line

At Auto Credit Express we want you to be aware of your rights when it comes to applying for a bad credit car loan. And at the same time, you should be aware of the fact that here at Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help them. In the process, we have helped thousands of people with bad credit buy cars and reestablish their auto credit through our nationwide network of affiliate dealers that specialize in bad credit car loans.

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.

The difference

Our bad credit auto loan web site at www.autocreditexpress.com can help you if you’re serious about reestablishing your auto credit. By filling out the online car loans with bad credit loan application you can begin a new chapter in your life by getting approved at one of our affiliate dealers for a bad credit auto loan. Along with paying the rest of your obligations on time, you will then be able to raise your FICO scores and re-establish your car credit.

The alternative, buying a vehicle from a tote the note car dealer, can be a problem because the majority of these dealers don’t report your payment history to any of the credit bureaus. On the other hand, taking out a loan with a bad credit lender and choosing a vehicle that’s too expensive can also create problems since this can stretch your budget and might even result in repossession. If this happens, rebuilding your car credit has to be put on hold for 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.

You should also be aware of the fact that you may not be able to rebuild your car credit on your own. This means that there is the possibility that you may need an additional person on the finance contract in order to qualify for auto loans for bad credit. But there are also two different ways to approach this and if the banks know the difference, you should too.

Co-signers and co-borrowers

There are two ways of adding an individual to the finance contract of a bad credit car loan. Another individual can be added as a co-signer, or a second person can be added as a co-borrower. Although the terminology used is different, there are a number of things that are similar when it comes to both co-signers and co-borrowers:

1.    Both co-signers and co-borrowers are considered co-applicants and, as such, they are equally responsible for the loan. If the primary borrower is unable to meet the loan obligations, than the co-signer or co-borrower is expected to make payments on the loan.

2.    Both the co-signer and co-borrower are signatories on the loan. This means that in addition to the primary borrower, the co-signer or co-borrower appear on the loan as well as sign the loan documents.

3.    Both co-signers and co-borrowers, along with the primary borrower, can be subject to collection action that includes wage garnishment in the event the loan goes into default.

4.    During the loan application process, the lender will review the credit reports of the co-borrower or the co-signer and take their credit histories into consideration for the approval process.

How income is treated

While the credit histories of both types of co-applicants will be taken into consideration, lenders treat the incomes of each type of co-applicant differently. In fact, the bank will classify a co-applicant as either a co-signer or a co-borrower depending on how their income relates to that of the primary borrower.

Co-signer – This individual’s income can be added to (commingled with) the applicants income in order to meet the income requirements of the lender. The total income of both individuals is used to qualify for the loan. In most instances, this would mean that the co-signer is the husband or wife of the applicant.

Co-borrower – While the credit score of this individual will be considered in meeting the credit requirements of the loan, the co-borrower’s income will not be added to that of the borrower in order to meet the income requirements of the loan. This means that the incomes of both the primary borrower and the co-borrower have to individually qualify for the income requirements of the loan.

Who qualifies as a co-applicant?

As a rule, it is easier for someone to qualify as a co-applicant if they are related to the primary borrower. As was stated previously, wives and husbands are usually recognized and treated by the lender as co-signers on a loan. Fathers, mothers, sisters, brothers, grandmothers, grandfathers as well as sons and daughters who are co-applicants are usually considered to be co-borrowers, since their incomes usually cannot be co-mingled with that of the primary borrower.

As we see it

At Auto Credit Express, we want you to be aware of the different aspects of a bad credit car loan. Over the past 20 years, we have helped thousands of people with bad credit find a dealer in their area that specializes in bad credit car loans and can help get them financed.

So if you are serious about reestablishing your car credit, you can begin the process right now by filling out our secure online bad credit car loan application to see what we can do for you.

Negative equity is never good

If you have bad credit and you’re currently driving a vehicle that’s worth less than what you owe on it, this can cause problems if you need to trade it in before you’ve caught up with the depreciation. Take it from us; we’ve seen this situation before. Here at Auto Credit Express we’ve been working with credit-challenged car buyers for over two decades. We even developed a web site so that we can accept applications and match up these applicants  with local dealers that specialize in customer credit issues so that they have the best chance of getting approved for a car loan, even if that means car loans with bad credit.

We did this because consumers with serious credit problems often experience frustration and embarrassment when shopping for a car and applying for financing. In addition, getting turned down at a car dealer can lead many buyers to a tote the note or buy here pay here car lot, a choice that usually won’t improve their car credit and a finance situation that often leads to repossession.

But even when a car shopper decides to take the bad credit car loan approach, there are issues other than qualifying for a loan that can complicate the approval process. In this case, it has to do with lender requirements for an equity down payment on the loan including equity in your trade in vehicle.

Appraising the trade

Car dealers determine the value of a vehicle by using a number of different tools. NADA and Kelley Blue Book values are the most well known sources. Black Book values and auction reports are also two additional ways dealers can determine what your car might be worth to them. Besides looking at this information, the dealer will also physically inspect the car as well as take it for a test drive. After taking all these things into consideration, the dealer then determines a trade in value for your car.

Customers are often surprised that their car isn’t worth as much as they thought it would be. One reason for this is that the NADA and Kelley Blue Book values that most consumers have access to should be thought of as only a guide. Auction values, available online only to dealers, are more up-to-date. They are also more geographically accurate, since book values cover an entire region while auctions are generally more local.

Another aspect that customers often overlook is the fact that the dealer may have to replace tires and correct other mechanical issues as well as pay for reconditioning and detailing. Those costs also have to be subtracted from a car’s value.

What is equity?

Once the value of your trade has been determined, it needs to be determined if there is equity in the vehicle. If the car is paid off and it’s owned free and clear, the entire value of the trade is considered to be equity. If there is a balance on the loan and the trade value is either more than or equal to the balance, than the difference would be considered either equity or a wash.

So far, so good. If, however there is a balance on the loan and the trade value is less than the balance, then there is no equity or even a wash and you have a situation that is commonly known as “negative” equity. Other terms for negative equity circumstances are “upside down” or “in the ditch”.

Trading in a vehicle

If there is trade equity or enough money to cover the negative equity (plus a down payment if you need a bad credit car loan), then it makes sense to trade in your car. If, however, you trade in a car with negative equity on a new loan without covering the equity difference, you’ll end up paying finance charges on not one, but two cars. When you are dealing with a bad credit car loan with the associated high interest rates, this can be expensive in terms of the amount of interest you end up paying – not to mention the fact that it makes qualifying for this type of loan that much more difficult.

A negative equity trade

You should consider a negative equity trade only if it will save you money. That being said, there are two circumstances where pulling the trigger on a negative equity trade might actually save you money.

The first situation involves a vehicle that is out of warranty with necessary repairs will cost you more than you spend on the difference in interest expenses between your old loan and the new loan.

The second case is associated with a savings in actual operating expenses. For example, if you are trading in a vehicle that gets 10 miles per gallon on a vehicle that gets 25 miles per gallon, the difference in interest expense may be offset by the savings in fuel costs.

If neither of these situations exists, than initiating a negative equity trade means you are essentially paying for two cars at the same time. Considering the high interest rates associated with auto loans for bad credit, if you do have bad credit this is not a particularly good financial decision.

As we see it

Trading in your current car if it is paid off or you have equity in it will help reduce the amount of interest that you will pay on your new loan. If you are “upside down” in your current vehicle, trading in your car only makes sense if you are avoiding costly repairs down the road or if you can offset the increased interest expenses with savings in fuel and/or insurance.

At Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help them. In the process, we have helped thousands of people with bad credit buy cars and reestablish their auto credit through our nationwide network of affiliate dealers that specialize in bad credit car loans.

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.