Credit Financing CA

People have been using car financing to purchase both new and used vehicles for decades. It is probably one of the easiest ways to get you hands on a new car without having to spend half your life saving up for it. Car finance has made it possible for people that can’t save money but need a car as soon as possible to get the car they want in the shortest possible time period. There are many people who can afford to purchase a car outright but still opt for car finance simply because of the many advantages that auto finance has.

There are various types and kinds of auto finance each has its own perks and downsides however its imperative that you search for a car finance option that offers you the lowest interest rate possible. For people that have the money to purchase a car outright getting car finance means that they can save the money in an interest bearing account or put in an investment which will yield more money for them i.e. which will earn them a high ARP or annual percentage rate that what they are currently paying for their car. This means that they will end up with more money at the end of the month than they otherwise would if they purchased the car outright.

There are many dealerships which also offer car financing however the problem with getting car finance from a dealership is a high interest rate. Dealerships tend to offer the highest interest rate however they may be a good option for people with poor or bad credit since they have fairly lenient lending policies. In many cases it’s not actually the dealership which is extending the vehicle finance but a finance company which is working on the backend and gives the dealership a kickback from the financing business they provide to the company. This in turn benefits both the dealership as well as the person purchasing the car. This is why typically many dealerships will be unwilling to do business with people who are looking to pay for the vehicle in full. This is because this way they don’t make much of a profit and they just make the money which is built into selling the vehicle.

Deciding to opt for car finance is your personal decision but there are more perks associated with good car finance than drawbacks. This is why it’s recommended that if you need a car you start signing up for automobile finance right now.

Robert Worley has been a part of the car loan industry for many years and writes and publishes articles to help consumers better understand the car loans and bad credit car loans. Robert answers common questions consumers have about car credit in his articles and news posts.

Car Finance FAQ:

Question: Is a letter good enough car finance?
I just bought a car privately. With all the paper work was a letter from the finance company saying the final payment had been completed. Is this good enough proof?

Answer: No, the letter would indicate the loan was paid and there was no lien holder, but since cars are transferred from seller to buyer by means of a title, if you didn’t get a signed clear title, you haven’t bought a car yet. Go get either the title or your money back.

Question: Which would be better to do: Finance a car w/the dealership or get an auto loan from a bank?
I live in Texas, and have fair credit. How much do you think my interest rate would be?

Answer: Go to a bank and ask for pre-approval (they give you a blank check that has a maximum amount it can be cashed for). You will NEED a down payment! Then when you go to a dealership you can get a “cash price”. Much easier to negotiate on a price. You may end up paying less then the sticker price.

Question: Is there any chance you could finance a $23,000 car if you have no job?
But I am able to put down $13,000 and have good credit, well as in credit I mean I paid for a $14,000 car fully before and I payout yearly insurance? I’m not sure if that even matters for credit?

Answer: I’m sorry but that is a horrible idea. If you have no job, you must NOT get yourself into debt. You do not need a $23,000 car. You only need a $3,000 car. Get a cheap used car, get a job, and begin to budget your money.

Especially if it’s a NEW car. Never buy a NEW car unless you can truly afford it and really want it. Like, paid off house, fully funded emergency fund, retirement funded, etc.

Question: Buying a car, getting a loan to finance?
I am purchasing a 2010 Chevy Camaro. I am trading in my car for the new one. The dealership has tried getting a bank of theirs to finance me but I have little credit. I am now going through my bank (or at least trying). Since the dealership has already ran my credit about three times, will it effect the decision of the bank?

Answer: Their pulling your credit will affect your score. Generally a dealership pull drops your credit roughly 20 points, (each time). So you do want to be cautious about that. Hopefully you got your application in with your bank before the results show. Don’t give up though, credit is certainly tight but there are avenues to get financing regardless of your credit. Just be sure to compare offers and choose the best. You only really run into difficulty if you make the mistake of accepting the first offer that you get.

Question: When financing a car do you pay back the interest from the loan everytime you make a payment?
I plan to finance a car and I want to know whether I will be paying back the interest every month or only when I’m late or miss a payment like with a credit card.

Answer: Every time you make a monthly payment, some of your payment goes to interest, some goes to principle (which is the amt of the loan you originally took out). The monthly payment they give you factors in interest ALREADY. If you pay more than the monthly balance, it will eat at your principle more, essentially allowing you to pay off the loan quicker with less interest.

Question: When getting a car on finance do I need to get vri on it or is the dealer trying to rip me off?

Answer: No you don’t have to have VRi. You don’t have to have anything you don’t want. Just tell them, simple. Every Dealer has a duty of care to tell you about every benefit that is available to you so they are not trying to rip you off.

Question: Should I finance my first car?
I want to buy a car the summer before I start college but will not have saved but $2500 by then. I figured since I will have $750 a month after that if a dealership can let me pay a low monthly rate then I can afford it but everyone tells me no. Especially if I do it on a cheap car like a 2006 kia rio or 2003 Honda Civic, but Should I?

Answer: I did…but then again I didn’t have $2500 either. I think if you have that type of money you should buy your first car cash only, not financing. Not sure if you have to pay for college or not but save your money for other expenses you may have. $2500 can get you a pretty decent car.

Question: What happens to the car after it is written off by insurance?
My car was in an accident and the insurance company is telling me that the car will be a write off. It is still being financed but I have purchased GAP insurance through my bank when I re-financed the car. I am just curious as to who owns the car or gets possession of it if the GAP is covering the remaining balance of the loan? I would like to get the car back to sell for scrap in order to raise some money for a down payment towards another car.

Answer: You do not own the car as you financed it and still have outstanding payments, therefore you will have to pay the outstanding balance even if you no longer own the car, because it is a write off it will go to the scrapyard, don’t think you can buy it back, sorry for the bad news.

What may come as quite a surprise is the simple fact that there is no minimum credit score that you need in order to buy a car with bad credit. There are requirements that you must be able to meet and there are good companies online that can help you to get into a vehicle, without regard for your actual credit or “beacon” score.

What are the requirements in order to be able to qualify for a car loan with bad credit through these types of companies?

First of all, you must be at a minimum, 18 years old. That’s going to be anywhere that you try to get a loan because of simple laws regarding contracts. You can’t enter into a legal contract until you are of “legal age”.

Secondly, you must have a minimum monthly income of at least $1500.00 per month. At least $1700.00 per month is ideal, although $1500 is acceptable. To calculate your monthly income, multiply your weekly gross pay (before taxes) and multiply that number by 4.2 as there are slightly more than exactly 4 weeks in a month.

Third, you have to have a steady income. Whether it is from a job, disability or retirement income. If you are self-employed, you’ll have to be able to substantiate your income by providing previous year tax returns.

Finally, the issue of repossessions and bankruptcies are always important. If you have had a bankruptcy of any type, whether Chapter 7 or 13, it must be discharged. The only exception to this rule is if you are in a Chapter 13 and have written permission from the court to incur debt. Cars are necessities so that is frequently allowed.

On the subject of repossessions, if you’ve had one there are two conditions. One is that it has to be at least 12 months ago that the repo took place. Or, if it’s been within the last 12 months, then it must have been included in a bankruptcy. If you’ve had a repo recently and it wasn’t included in a bankruptcy proceeding, then you won’t be able to obtain financing.

You don’t have to use buy here, pay here financing to get a car loan if you have bad credit. There are companies that provide financing services to people that have had any number of credit problems. Many of these companies help people without taking into account their actual credit score. Credit scores are nothing but a computer generated estimate of your credit worthiness. Companies that work with bad credit on a regular basis look beyond that number and see you as a person, taking into account your situation.

Here’s a place you may want to visit to see what you can get approved for. http://www.BuyingCarswithBadCredit.com has helped thousands of people to obtain auto loans with low credit scores.

I’m Jason Lanier and thank you for reading.

Credit Score FAQ:

Question: Does taking a loan out for a used car improve your credit score?
Right now my score from experian is 636; and that’s only because I’m paying off an old debt. I need to buy a car, but I don’t know if getting a loan for a used car would be a good idea.

Answer: It’ll improve if you pay on time. Your score will go up based on credit line available to you… again as long as you pay on time.

Question: My husband is trying to buy a car and is telling me my bad credit is affecting his ability to buy a car. True?
I have been trying to pay off my credit card debt for a few years now. This was all attained before I even met him. I have paid off about 6 creditors and am down to the last 4. I’m expecting to pay them off all next month. Hubby is telling me that my credit is affecting his credit score and he’s having trouble buying a new car. Is this true? He keeps trying to get my bank statements and trying to run a credit report on me.

Answer: If your credit card debt is in your name only and was acquired before you were married there is no possible way for it to be affecting his credit even if you live in a community property State. Why is he using your credit for a car? I was married, bought a car, and never did I need my husband’s credit to get a car. Something is wrong. Perhaps he is having trouble getting credit on his own, so they asked for your credit.

Question: What can I do with a credit score of 629?
I’m 19 and have a credit score of 629. I use to be up to like 720, but my credit card went over the limit. (Paid it off, but it seems it hasn’t updated yet on the credit score.) Anyways, I make money on my own at the house by selling items online. If I were to buy a car for 2-5k, would I be able to get financed? Like get a loan from the bank or something, and just pay them back month by month?

Answer: The short answer is no way without a parent co-signing. You have not been in the credit bureaus long enough, you can not prove your income, you don’t the number of established trade lines required, you can’t have the payment history required, your self employed and not for long enough, the amount your looking to borrow is well below every major lenders minimum. Your only chance is your own local bank or credit union with one of your parents to co-sign.

Question: How to get a car loan if you have low credit score or no credit at all?
I want buy my own car but I don’t have cash.

Answer: Most people that have no or bad credit go to “Buy here, Pay here” car lots where they will do their own financing. You will have to have a down payment, and it’s usually the amount that the car is really worth. Then they will finance weekly payments for the rest of the over inflated price of the car.
If you have not so bad credit, but a low credit score, you may be able to get a car at a regular car lot with a co-signer who will be responsible for the loan if you default on it. You will pay higher than normal interest on that loan. You could get a family member or good friend to get the loan in their name if they have good credit and the payments will be lower, and let you make the payments, and when it’s paid off, have them sign it over to you.

Question: Does checking your credit score really lower your credit?
People keep saying this but it makes no sense, You obviously need to know what your credit score is. Like when they run your credit so you can buy a phone or a car, does this ruin it? I havent had my credit card for 6 months yet but when I do get a credit score can I check it?

Answer: Although it varies slightly depending on where you are (Country, province/state, etc), usually it does not directly affect your score, but your report does show how many times certain kinds of checks have been performed on your credit. (As I understand it, there are two basic kinds of checks – one where the company name is revealed on your report, and the other is a ‘soft check’ that is only indicated on your report by being included in the total number of soft checks requested.) As I mentioned, this doesn’t directly affect your score, but I’m sure how you can see that a company might be concerned if there are a high number of requests to view your credit – this could indicate that you have applied for a lot of credit lately, and that can make you a higher risk. You can, however, request to see your own credit, and this does not show up on your report.

Question: What is the best and/or faster way to build a credit score?
I am 18 years old. I have a no credit score. How would I go about starting and building my credit score? I’m the kind of guy that if its anything short of a car or house save up to buy it, but seeing as how my attempt to get said car failed miserably due to my parents not having a good credit score. I am lost in how I am supposed to start getting a good credit score if no one is willing to give me a chance due to my parents lack of discipline with their money.

Answer: The fastest way to build credit is to get a credit card, spend a little and always pay it on time.

Question: When paying off a car, what is the best way to improve my credit?
I don’t want to make payments on my car anymore, and pretty soon I will have saved enough to pay it off. The thing is, I want to do whatever will best reflect on my credit score. Is there a minimum amount of time you should make payments for? In March it will be 2 years since I bought it.

Answer: It really doesn’t matter. The account will show that it was paid as agreed on your credit report. There is no minimum amount of time you need to make payments for. Paying it off early may help your score by lowering your total debt, but it may not make a difference over paying it over the full term of the loan. It just depends on your situation. I’m sure it will feel good to have it paid off. Congrats!

Question: Buy a car outright or get a loan?
I can afford a new car and just pay for it myself. However, I have no credit and looking to buy a house as well. So to help me get some, I was gonna take out a loan for the car instead and pay the loan off. But again, with no credit, it was hard for me even to get approved for a loan. I applied for a vehicle loan for the price of the truck I was looking at and the maximum I was willing to spend on it, through a credit union finally and it looks like I got approved.

But I’m thinking I may be moving to fast… is this a good idea or should I just pay for the car myself? I need to build up credit cause I have absolutely zero but is this the best way? I’d like to have a decent credit score in 6 months so I can buy a house then.

Answer: Get the loan and in 24 months you can pay it off at that time if you wish. You should also be able to get a secured credit card from a bank. Just put up $500 Use it for gas and small items and always pay the balance the following month. Make sure they belong to the credit bureau.