One thing that is vitally important in a bad credit car loan is to make sure you budget wisely for a car…

How do I budget for a car loan?

If you go to our website,, you will find a loan calculator that will help you estimate what your car payment might be. The first thing that you need to do is to add up the total amount of your monthly bills. This would include your mortgage or rent payments, credit car payments, loan payments and average utility payments. Once you have this amount, divide it by your total gross income (before taxes). This will give you your monthly debt percentage. As a rule of thumb, most subprime lenders will limit your total monthly debt to 50% of your total income.

If this figure is below 50%, then you probably have enough additional income to support a car payment. Also remember, though, that most subprime lenders don't want you to have a car payment (including insurance) that exceeds 15% of your gross income. As an example, if your monthly gross income is $3,000, your payment for a car and insurance can't exceed $450. It is customary to estimate full coverage insurance at about $100 per month. That would leave $350 for a car payment.

Plan on expenses for gas and maintenance

In addition to the monthly loan payment and insurance payment, you also need to budget for gas and maintenance. In addition to normal maintenance, if you don't plan on purchasing an extended warranty, you should also be setting money aside for a major repair. This is why an extended warranty is such a good idea and why you should include it in your purchase price – this type of warranty forces you to set aside money for unforeseen mechanical problems that could otherwise cost you hundreds of dollars.

Stay at or below your budget

Staying within your budget is especially important with a bad credit car loan. With the high interest rates that are common with a subprime car loan, you will be paying much more in interest expenses than with a regular car loan. Remember that the object of a subprime car loan is to reestablish your car credit, not buy your dream car. Keep the loan amount as low as possible by purchasing a sedan and not an SUV. Also, keep the loan term as short as possible in order to keep interest expenses down.

What to do during the loan

During the time that you have your bad credit car loan, try and pay more per month than stated on the loan contract. When you do this, include a note with your payment or make a notation on the check that indicates the additional amount should be put towards the principle. Also call the loan company and indicate this is what the additional payment is for. In this way, you can pay the loan off earlier and actually decrease the amount of interest that you're paying.

At Auto Credit Express, we are here to help you

Be smart with your bad credit car loan. Use it as a stepping stone to loans with better interest rates. Go to and do some research. If you have any additional questions, there is a toll-free phone number that you can call that is listed at the bottom of every web page. During our business hours, this will put you in touch with one of our customer service representatives who can address any other issues that you may have. They can also walk you through the application process with our secure online application. This form is SSL encrypted to ensure your privacy. Remember, here at Auto Credit Express, we want you “on the road” to better credit.