The trend toward longer loans and higher payments is not a good one – especially for borrowers with problem credit – as this increases interest charges as well as the length of time a borrower is upside down in the loan.
Borrowers with credit issues, in particular, should keep the loan term and amount financed as low as possible so they can trade out earlier and into another vehicle with a more manageable interest rate.
If you have credit issues, everything else being equal, the more stability you can prove the better your chances of a loan approval. In addition to stability, the type of vehicle you’re considering as well as who you plan on buying it from also enter into the equation.
Likewise, bankruptcy situations as well as application accuracy are also important.
It may be stretching it a bit to say that this will help all members of the military and their families that have poor credit, since it probably won’t. But the fact is that even if a few of these buyers can take advantage of the expanded program, it represents a step in the right direction.
The latest survey of bank risk managers shows there’s a bit of caution in the car loan sector. To better their chances of an
approval, consumers with past credit issues need to make sure they have a down payment and, if a trade in is involved, any negative equity is offset by cash.
Not all buyers with credit issues will be given the option of financing a new car, but if you are and the approval is through one of the franchises listed above, you probably wouldn’t go wrong choosing any one of these “cool” cars.
The good news for car buyers with bad credit is that subprime lenders are increasing looking at new cars as a finance option. On the other hand, both new and used car interest rates are climbing.