According to the Illinois CPA Society it might be very difficult to get a car loan if consumers with poor credit rely on debt settlement to cure their financial woes
Credit repair choices
We are often asked by car shoppers with poor credit, "How hard is it to get a car loan?"
Here at Auto Credit Express we know that the answer to that question depends upon that individual's credit situation. It also has a lot to do with how that person may have dealt with their credit problems in the past. We know this because for more than twenty years we've been helping car buyers with poor credit find those new car dealers that can give them their best opportunities for approved auto loans.
But since we're not experts on another approach the credit repair process, that being debt settlement, we'll defer to those who are.
Issues surrounding debt settlement
Not that long ago, the Illinois CPA Society issued a press release that dealt with debt settlement. Here are some questions that it answered:
How Does Debt Settlement Work?
Simply stated, debt settlement is an approach to debt reduction in which the debtor and the creditor agree on a reduced balance that will be regarded as payment in full. A credit company must have a solid reason to believe that you are actually unable to pay them before entering into a debt settlement agreement. Unfortunately, you prove this by not paying them which is an instant black mark on your credit score that doesn't go away for seven years. Once you've proven you can't pay them, you must negotiate a balance you can pay. The debt doesn't go away, it just gets lowered.
What are some of the Consequences of Debt Settlement?
In addition to having already hurt your credit score by non-payment, you must pay the negotiated balance immediately. Also, any debt that is forgiven is considered income – and you will have to pay taxes on that income.
Are There Alternative Solutions?
You can call your credit card companies and ask them to reduce your rate. Point out that you've been a loyal customer who's paid on time in the past. If the first person you speak to isn't authorized to lower your rate, ask to speak to a supervisor. Be persistent and assertive.
Also try to get rid of your payments faster by trying to pay more than the minimum; even $5 makes a difference.
How do you get on top of already large minimum payments?
Cut out extras to make it work and pay your credit balances down first – no more premium cable, expensive data packages on your phone or eating out too many lunches or dinners. What you save goes to paying your credit card. Also consider selling through consignment shops or eBay things you bought but aren't using. Look at your budget and lifestyle carefully to see where you're living outside of your means and identify where you can cut back.
The Bottom Line
As far as how all this shakes out, Illinois CPA society puts it this way: "Debt settlement is a serious decision with serious repercussions. It's important to think beyond your current situation. With debt settlement you'll have a black mark on your credit report that could keep you from any number of new things you'd like in the future – a house, apartment, job or car."
Needless to say, we agree with that assessment.
One other thing to keep in mind if you are currently having issues with car credit: at Auto Credit Express we specialize in helping applicants with questionable credit find those dealers that can give them their best opportunities for auto loan approvals.
So if you're ready to reestablish your auto credit, you can begin now by filling out our online auto loans application.