Consumers with less than perfect credit need to be aware of their exact financial situation before applying for a car loan
Before applying for an auto loan
Here at Auto Credit Express, a potential applicant recently asked us this question: "I own my own business I make between 1500-1600 monthly am I a candidate for financing? I probably have student loans or hospital bills so bad credit. I live & work from home which is owned by my mom. I do not have any other bills."
Since there is more than one question here, let's break it down.
Do you really have bad credit?
What we first have to consider here is, does this person really have bad credit? Obviously, he or she only believes they have bad credit since "I probably have student loans or hospital bills" means they haven't checked their credit report lately and probably don't know what even one of their credit scores is.
So, first things first: always check at least one of your credit reports and find out at least one of your credit scores. Credit reports are free (one per year from each of the three credit reporting agencies), while you can pay for a score from each or sign up with a site like CreditKarma where you can also view your score for free.
Is your monthly income really what you say it is?
Self-employed consumers can get themselves in all kinds of trouble when it comes to reporting their income. This being the case, if you have bad credit then subprime lenders make it simple for self-employment borrowers: to prove your income, all you have to do is produce at least 2 years of professionally prepared Federal income tax returns showing at least $1,500 in net income (after expenses) per month from the Schedule C.
Even though this individual lives with their mother and maybe even for free, most subprime lenders will still budget $300 per month from that net income for rent. The reason for this is simple: if something were to happen to mom during the term of the loan, there is $300 worth of wiggle room for the borrower to find a place to live without having to walk away from the loan.
The Bottom Line
The first thing borrowers should do before applying for a car loan is to check their credit reports (and correct any errors) and find out at least one of their credit scores. In addition, if they have poor credit and are self employed, they will need at least two years of professionally prepared tax returns showing after-expense proceeds from the business that meet the minimum requirements of subprime lenders.
And one more thing: if you find yourself in this situation and you meet these requirements, we want you to know that Auto Credit Express matches people with car credit difficulties to those new car dealers that can offer them their best chances for approved auto loans.
So if you're ready to reestablish your credit, you can begin now by filling out our online auto loan application.