Zero Percent Financing – A Consumer Benefit Or a Marketing Trick?

Posted by Credit Financing Guru on 31st May 2010

In recent years, zero percent financing has become an increasingly popular financing option offered by most car manufacturers on new cars and trucks. While it does sound great and is extremely appealing to many car buyers, there are few things attached to it that may diminish the benefits.

Commonly, car dealers offer an alternative of a zero percent financing or a cash rebate on the vehicle purchase price. Let us say, that you are confronted with an offer of getting a cash rebate of $3,000 or a zero percent financing. While you are going to have no interest to pay, you will end up paying $3,000 more for a vehicle that you may have saved otherwise. Should you pay off your loan early, the advantage of taking zero percent financing would become null.

It is important to keep in mind that any car is a quickly depreciating asset. Taking a rebate instead of a zero percent financing incentive may help you to reduce the gap between the loan balance and the vehicle fair market value. Since your car depreciates most in the first year of use, having it totaled or stolen may leave you upside down on your zero percent auto loan since your insurance company would not cover extra $3,000 you paid for your vehicle. That means that you would have to come up with the difference to cover the remaining loan balance.

It is important to remember that nothing is truly free in this life. Financing incentives, typically coming from the corporate offices of car manufacturers, are most commonly hidden in the vehicle selling price. Car dealers, sometimes offering zero percent financing on their own, follow the same strategy.

How Does It Work?

While it is somewhat understandable how financing incentives offered by auto manufacturers work, zero percent financing offered solely by a dealer may raise your eyebrows. Obviously, banks are not going to finance you at no interest, no matter how good your credit is, since they have to make money off you to stay in business.

What usually happens is that auto dealers rebate the bank upfront for the interest charges that a customer would accrue and pay to the bank otherwise. In simple terms, your dealer pays your interest for you. Since they are not going to make it a money-losing proposition, they have to compensate these expenses somehow. That is why these costs are built into the vehicle purchase price.

Typically they are offset by a rebate that a car manufacturer would give you on a new car purchase and/or an incentive that an automaker gives a dealer for higher volume sales. What this also means to you that there is less negotiation power on your side, since a dealer would be less eager to go down on a vehicle price in this case.

Financing Incentive or a Cash Rebate?

What this means to you is that a simple mathematical equation needs to be solved. When approached with a choice between the rebate and a zero percent financing, calculate how much interest you would normally pay on a car loan and compare it to the amount of rebate. If your interest charges are going to be greater, it may be time to consider zero percent financing. Should they be not, take the rebate and run away from the zero interest deal!

Mary Wise is a personal loan consultant who has been associated with Bad Credit Loans and has more than thirty years of experience in finances. She has helped a lot of people to obtain Fast Unsecured Loans, and many other products regardless of their credit situation. If you want to learn more about Personal Loans you can visit her at

Zero Percent Financing FAQ:

Question: Is it better to take the zero percent financing or the cash rebate on a car loan and pay the interest rate?
My payments will be less with the zero percent on a 60 month loan, only by $22

Answer: Financed cars is more expensive to insurance cause it requires full coverage. If you plan to pay the car off early, like many people do, take the cash rebate.

Question: Should I use low financing or home equity to buy a car?
I could probably get low or even zero interest on a car loan or use my home equity at 4 percent.

Answer: With home values falling these days, I wouldn’t use home equity, or you’ll be upside down on your mortgage like most of us. Get the car loan at low interest, check credit unions, they are typically better than dealerships.

Question: Zero percent financing good for buying car?
I’m very skeptical on these zero percent financing. I say the interest is built into the price. Any thoughts?

Answer: They are only offered to those with stellar credit, a rating of 720 or better, and are for a limited time. You might have zero percent for the first year for example.

Question: What is zero percent financing?
I’m not a expert on interest rates but I’m in the market for a vehicle and I keep hearing zero percent financing at dealerships. Is it a good thing or will it end up screwing you over in the long run?

Answer: In most cases, the “no interest financing’ is offered in lieu of a substantial cash rebate at the time of purchase. Read the proffered agreement very carefully. While I do not have experience with such arrangements, I have heard horror stories about your ‘zero interest’ disappearing if you are so much as late on ONE payment. Check ALL the fine print before you sign.

Question: Are there any hidden charges with zero percent auto financing?
We are in the market for a new car, and would like to wait until at least September or October, when the dealers will be trying to clear their showrooms/lots of old models. We’d like to take advantage of any zero percent financing offers available, so I’d like to hear from someone who has experience with these offers.

Answer: I bought a 2006 Chevy Cobalt over the 4th of July weekend in 2006. I took advantage of the 0% financing for 72 mos. It was straightforward and there were no surprises or hidden fees. My monthly payment was the price of the car, divided by 72 mos. Just because you are getting 0% financing, don’t think you have to pay MSRP. They will try to pull this crap on you, but it’s crap. Do you have a system for figuring out how much to pay for a car? You really need to have your ducks in order. I recently got a deal accepted for a GMC Sierra which I ultimately changed my mind on. But it was also a 0% financing deal for 72 mos, and they agreed to sell it to me for invoice (invoice is what the dealer pays for the car, as you probably know) in addition to the 72 mos 0%. I don’t know why you would wait til Sept or Oct, there might not be 0% financing during that period. 0% financing seems to be a summer promotion, mostly. Plus you won’t have the availability in the fall that you have right now. (smaller selection, that is).

Question: Who’s offering zero percent financing on new cars?

Answer: Go directly to the dealers web site and the deals will be advertised. Example,… and so on. The bad news is unfortunately most people do not qualify for the Zero percent interest unless you have an absolute perfect credit rating, then it seems they can also come up with something to not be able to offer the Zero Percent. Beware and good luck!

Question: What is zero percent financing? is this a good way to get a car?

Answer: You would have to run the numbers and compare the zero percent loan against an interest rate car loan to see which is better if the choice is between a zero percent loan and cash back. The cash back is better in virtually every case.

Question: What can I do to buy a Chevrolet suburban 2010 at a good deal?
I am in the market to buy a suburban 2010 texas edition. I have a down payment of 5k and I want to finance the rest. I know the MSRP is around 41k and the invoice price is 38k but I want a lower price and zero percent financing for 5 years AND new car. If anyone has good tips please do let me know.

Answer: Are you aware that invoice does not represent what the dealer pays for the car? Dealers will be happy to sell you a vehicle at invoice. You can only get 0% financing when it is being offered by the factory. If that offer is on the table the dealer must participate which raises the cost or cuts into the profit.

Categories: Auto Financing

Six Steps on How to Refinance Your Car Loan

Posted by Credit Financing Guru on 30th January 2010

Many people go on living with high interest rates and expensive car loans since they are unsure on how to go about the process of refinancing a car loan. Car loan refinancing can save you a great deal of money if implemented at the right time in the most appropriate manner. This article outlines six steps that will not only enable you to successfully refinance but to also manage your auto loan.

Step 1: Get organized – Before starting the process of refinancing your auto loan, you will need to be armed with detailed information about the vehicle. This means, you will need a duplicate of your current auto loan, the owner’s names and the VIN. VIN can be found on your registration paperwork or dashboard. In addition, you will need the model of your car, any modification performed on the car as well as the age of the car.

Step 2: Contact your current lender – The next thing is to contact the lender currently servicing your car loan and request for a pay off amount. The payoff amount is different from the outstanding balance and you should therefore be specific when asking for the accurate amount to pay off. You should also note how long till the quote expires. Many quotes run for four to ten days. Be sure to request a longer payoff period if you need more time to pay.

Step 3: Check your Credit Score – The new lender will base new interest rates on your credit rating in addition to other factors. It is therefore important to ensure that you have a better credit score than when you first applied for a car loan. A good credit score attracts better interest rates. Make sure your credit is up to date and free of any errors. Also offset any outstanding credit card debts.

Step 4: Comparison Buying - You can run online comparison of automobile loan refinancing. The process is simple and takes less than one hour. From the results you can get quotes and any other auto loan refinancing relevant information. While doing online comparison, it is necessary to take precautions and avoid refinancing scammers.

Step 5: Update lien, insurance and Bank information – After you decide to refinance your car loan, it is necessary to update lien, insurance and bank information to avoid problems later.

Step 6: Ensure the lien was paid – Before refinancing you should verify that the existing lien is paid in full and the paper work was processed properly.

In summary, vehicle loan refinancing should not be considered a daunting task as the process is simple and easy. Car refinancing saves you a lot of money.

Robert Worley has been entrenched in the car loan industry for numerous years and writes articles to help consumers understand the upsides and drawbacks of getting car loans and bad credit car loans. Robert is amazing at answering common, everyday questions in his articles and news posts.

Car Finance FAQ:

Question: What are my options for financing a high mileage vehicle?
Will a bank finance a car with over 100,000 miles on it? The car will cost under $5,000 and is a Pontiac Grand Prix, no older than a 2004.

Answer: When determining whether or not to approve a car loan, lenders take certain things into consideration, none the least of which is YOUR credit background. The better your credit score, the more likely they will be to approve your loan, regardless of the mileage.

If your credit score is lower, they will certainly consider the value of the car you intend to purchase, and the car’s mileage certainly plays a factor in it’s value. Most lenders will probably NOT want to get involved with a vehicle with over 100k miles.

The question is basically “will the banks lend for a vehicle that isn’t worth much”, and the answer is basically “no”, and honestly, the lenders who would, are probably lenders you want to stay away from.

Question: What is a formula for calculating how much my monthly payments would be on a car loan?
Isn’t there a formula for calculating how much your monthly payments are on a fixed-rate loan where you know the term, the amount financed, and the interest rate? Here are the numbers: $22,870 over 72 months @ 3.9%

Answer: It’s so much easier to just find an online loan calculator. They are everywhere.

The better question is why would anybody finance a car for 72 months? That’s at least 12 months too long and probably 24 months longer than it should be. If you can’t afford the car payments, buy a cheaper car. Don’t drag the payments out to 6 years. You have no idea what you’ll be doing 6 years from now, why obligate yourself to a debt for that long a period.

Question: I want to give up my car that the repo people have been looking for.. HOW? HELP?!?
I lived in Michigan and financed a car, paid on it for awhile and then lost my job. Instead of giving the car back I decided to move outta state with the car. Its now been like a year and a half and I’m afraid of what’s gonna happen and I just wanna give it back. How do I? I can’t take it back to Michigan.

Answer: Call the finance company and give them your address. They will come to your residence and pick it up.

Question: Buying a car with a cash down payment?
I recently bought a car, I traded in my car and put a downpayment. I have a contract of sale that has the total price minus the trade in value minus the cash down payment plus taxes, fees, etc. and equaling the amount being financed. I got a couple other papers as well. Does that contract count as my proof/receipt that I made a cash down payment? Or should I have gotten anything else? Just want to make sure I have everything in order, these clowns have caused me issues before.

Answer: As long as it is clearly stated on the bill of sale, then that is sufficient as a receipt. Make sure the tax is calculated based on the net amount AFTER your cash down payment was made. Depending on the state you live in, your trade-in may decrease the amount you are being taxed on, as well. Rebates are subtracted after tax is added, based on the net amount of your financing.

Question: Can I get financed for a car with $4500 down payment and bad credit?
I’m 22 I have bad credit, but I have a steady job where I make $3000 a month. I have been at my job for almost a year. I have saved $4500 as a down payment. I can easily make monthly payments on a car $15,000 or less being that my rent and utilities are $500 and and my phone bill is $65. These are my only bills. Do you think someone will finance me. I need good advice from someone who knows something about this stuff.

Answer: That is not an unreasonable loan request, given that you are putting down (smartly may I add) a 20% down payment. Because of your credit, your interest rate will suck, but you should be able to still find a loan.

Question: Does anyone know what the law is in IL if you put money down on a new car and do not take delivery of it?
I put down money but have not signed any of the financing paperwork. I am having second thoughts of the buy. Can I get out of it without losing money?

Answer: Its up to the dealer. The money you put down is considered a “good faith deposit” and many if not most dealers would keep that money if you back out. Now, if they are unable to get you financed then you will get your money back.

Question: I bought a car from dealer but only put a 1000 deposit. What happens if I don’t bring the rest like I promised?
I signed the deal and agreed on a price, put down a $1000 non-refundable deposit and said that I will be there with the rest in 5 days when I pick up the car. I didn’t finance. What happens if don’t bring the rest and not take the car at this time. Besides losing $1k what will happen. Can they come after me and make me pay the rest?

Answer: They can’t come after you and force you to pay for a car you don’t want. But they will keep your $1000 because you agreed to let them have it if you backed out.

Dealers love guys like you because it’s the easiest grand they’ll make this week for sure. I wish my customers would come in and give me $1000 for merchandise they don’t take home.

Question: What can I do to buy a Chevrolet suburban 2010 at a good deal?
I am in the market to buy a suburban 2010 texas edition. I have a down payment of 5k and I want to finance the rest. I know the MSRP is around 41k and the invoice price is 38k but I want a lower price and zero percent financing for 5 years AND new car. If anyone has good tips please do let me know.

Answer: Are you aware that invoice does not represent what the dealer pays for the car? Dealers will be happy to sell you a vehicle at invoice. You can only get 0% financing when it is being offered by the factory. If that offer is on the table the dealer must participate which raises the cost or cuts into the profit.

Categories: Auto Financing

Auto Financing For People With Bad Credit – 3 Tips That Will Help You to Save Real Money

Posted by Credit Financing Guru on 29th January 2010

Here are a few tips that are sure to save you thousands of dollars on your next auto purchase and if you have bad credit, will help you to get approved easier. Saving money is very important when you have a low credit score, and in particular you should be aware of a few things that can make that happen for you.

1) Don’t put the “cart before the horse”. When you have good credit, you can just go pick out whatever vehicle that you want and then see what the lowest interest rate is going to be. When you have bad credit, you’re going to have challenges with getting your loan approved. So rather than picking out a vehicle, submitting a credit application and hoping for the best, you should do the opposite. Getting your financing arranged prior to your purchase will make a big difference. By knowing exactly how much of a loan you are approved for, as well as, what interest rate you’ll be able to get that loan at, you can then shop smart. You’ll be able to make a better decision, save yourself a lot of headaches and also be in a better position to negotiate the price on a vehicle.

2) Don’t act desperate. This is so simple, yet so profound when it comes to saving money on a car purchase. Car dealers deal with thousands of customers every year and they can tell when you’re excited about buying a car. When they see this excitement, they know that you’re less apt to walk away from the deal over a thousand dollars or more. So keep your emotions in check, act relaxed and certainly don’t act you can’t live without buying the vehicle.

3) Negotiate price before payments. It’s a common tactic in car dealerships to get customers negotiating on payments rather than price. This is because when payments are the focus, you don’t have any real idea of what the price of the car is and the interest rate that you’re paying. Sometimes, people agree to payments simply based on perception. They assume that a nice car is going to be $400.00 per month and agree to those payments. When in reality, the dealer may have to add on additional finance products such as extended warranties and gap insurance to be able to raise the total amount financed enough to be that high.

Do your homework, make an educated decision and think about what you’re doing, without letting your emotions get the best of you. You’ll save hundreds if not thousands by focusing on price rather than payments initially. Keeping a cool head will keep more negotiating power in your hands. Getting preapproved for your auto loan will not only help you to save yourself from aggravation, it may provide a better deal for you.

Would you like to see what you can get approved for? can point you in the right direction for legitimate online lending sources. I’m Jason Lanier and thank you for reading.

Car Finance FAQ:

Question: What is down side of retail financing for a car?
Say you want to buy a car is there a down side from retail financing for say 84 months instead of 12 months?

Answer: The dealer will SAY he will get you a low interest rate on a 84 month financing loan but in the long run your paying way more then you would if you just got the 12 month. What people look for is small monthly payments, so dealers will give a long finance like 7 yrs and something high like a 13% interest rate, compared to a 5yr and something lower like a 9% rate. The 5 yr will have higher payments but in the long run your not paying as much. Trust me don’t get long financing on a vehicle, get the shortest possible.

Question: What is a normal rate for interest on financing a car with a credit union?

Answer: Mine’s offering 3.9 percent these days, if you put 20 percent down. Otherwise, their regular rate is 4.9 percent.

Question: Can I add my son’s girlfriends car to my auto insurance policy?
My son’s girlfriend is 18 and she is purchasing a new car. She is financing part of it. The insurance for her is very expensive so I thought maybe I could add her to my policy. I figure if the car was in my name it wouldn’t be a problem, but since it is going to be in her name and since she’s not actually related to me I may not be able to do it.

Answer: Yes, you can as long as she lives with you in the same household. One thing to keep in mind that people don’t realize when adding young drivers is that your policy premium will go up and at any time they get into an accident or get a ticket your premium will go up due to their negligence but as soon as they get their own insurance the incident will follow them and not effect your policy anymore. The reason the insurance may be cheaper with adding her onto your policy opposed to her having her own policy is because the risk is spread over however many people are on the policy instead of just her. For example, if you have a solid clear driving history the chance of you getting involved in an incident is a lot less then her, so the insurance company won’t have to charge as much because there is a chance you might drive the vehicle since it is at your residence and she lives with you. If she doesn’t live with you, it might be an issue. You will have to check with your insurance company about garaging locations if that’s the case. Hope it helps.

Question: Can my insurance deny the option to have a second opinion (shop) on my car?
My insurance is taking the steps to declare my car a total loss, I asked the insurance for a second opinion and they said is not possible, I think my car is not a total loss. I went today to see it, and doesn’t seem as bad as the report says. Now my car is still on financing, does that affect the fact that they don’t allow me to do that?

Answer: You can buy the car from the insurance company and have it restored. The financing status has nothing to do with it other than who they pay for the loss. GAP insurance is supposed to cover the difference between what you owe and what the car is worth. Some people buy it, some don’t.

Question: I want to buy a new car. What are the documents needed to buy it in bank finance?

Answer: You go to a dealers and when you see a car that you like you ask for a Purchase & Sales and then you take it to the bank (credit unions usually have lower interest rates) and they will tell you if you are approved for a loan.

Question: Is there a way to get out of a financed car without damaging my credit?

Answer: If you can sell it for the amount you owe the bank or have someone refinance it at the same bank that is carrying the loan then it will not damage your credit. If you can’t do any of these options then give it back. Don’t make them come after you, that will make the credit report look even worse.

Question: Do I need to enter a finance agreement to qualify for scrappage allowance?
I want to get a new car but will the car companies expect me to take up their finance deals or can I try and secure myself a better loan deal and pay cash? Plus what are the best scrappage schemes out there, who has the best deal? I am looking to replace my daughters car that she crashed recently.

Answer: Arrange a private loan. That puts you in the position of cash buyer, then shop around. A lot of dealers will give you a healthy discount (haggle for a good one – they have a bigger negotiating margin than they let on!) which will be worth more than the scrappage scheme allowance. And if you go for that scheme, dealers will not give any discounts from list price.

Plus a bank loan will almost certainly charge you less interest than a dealer’s finance scheme.

Question: I bought a car for my in-laws that I financed. It is registered to me. Can I add them to the registration?
I need to figure out how to get my in-laws names on a registration of a vehicle that I own so that they can insure the vehicle. Any ideas?

Answer: It’s never a good idea to put things under your name for someone else. Yes, you can add them to the registration and you can stay on the title. The title holder does not have to be listed as one of the registrants. However, keep in mind that if the car is financed under your name you will be responsible for any payments to the car until the loan is paid in full.

Categories: Auto Financing

What is So Good About Car Finance?

Posted by Credit Financing Guru on 29th January 2010

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.

Categories: Auto Financing

Is There a Minimum Credit Score Needed to Buy a Car With Bad Credit?

Posted by Credit Financing Guru on 29th January 2010

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. 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.

Categories: Auto Financing

Your Used Car Finance Choices

Posted by Credit Financing Guru on 21st October 2009

There are options open to you if you want to buy a used car. Maybe you have relatives that are able to lend you the money, or you may be able to borrow on your credit card if the vehicle is relatively cheap. However usually when looking for used car finance, you have to consider other options and two of these are hire purchase and personal loans.

· When buying your vehicle privately you have two basic options, you can look for a loan yourself, which may take some time, or you can choose to go to a specialist motoring website and let them search on your behalf. Some websites allow you to browse through used cars online so you may be able to find not only the best deal on finance but also a great used vehicle too.

· If you have savings that you are able to put towards the car, you may have to borrow less. This may work out to your advantage, as there is less interest to pay on the borrowing. This means you save money of course, you may choose to pay something towards the cost of the vehicle if you are taking a loan, it just means you borrow less and with hire purchase, a deposit is usually a requirement.

· If you decide to choose the hire purchase option when looking for used car finance then you may want to take into account that you do not own the vehicle until the final installment has been made on the loan. This means you cannot sell the vehicle or trade it in until this time. However if you have chosen to take out a personal loan, providing you keep up your repayments on the borrowing you are free to do whatever you want with the vehicle.

· You are able to spread out the cost of car finance whether you decide to choose a personal loan or you choose hire purchase. The longer amount of time you take the loan out over, then typically the cheaper the regular repayments may be. However the downside is that you will pay more in interest.

· The cheapest rates of interest are sometimes offered to those individuals whose credit rating is perfect. Your credit score is taken into account by all lenders whatever type of loan you decide to choose. You might therefore want check your credit file before applying for any type of finance to buy a vehicle so that you are able to see what the lender sees. You can contact any one of the three main credit reference agencies – CallCredit, Experian or Equifax.

These of course are just some of the many things you may want to take into consideration when looking for used car finance. You may want to spend some time online researching loans and your options before rushing into taking on a loan of any type.

Louis Rix is a Director of NetCars, one of the UK’s leading motoring websites. First established in January 2000, its mission is to become the number one site for used car searches. NetCars provide Used Car Finance.

Used Car Financing FAQ:

Question: Used Car Financing ?
I will be a first time car buyer. I would like to purchase a 2007 Cadillac for $20,500 after the dp and taxes. My question is what will the terms likely look like for first time car buyers? I have about 2 years of revolving accounts and that’s it! I have a 650 f(A)ko. Is it possible to finance @ 5% for 60 months or is this pushing it? If not what will my offers look like?

Answer: Expect more like 10% or more. To get around 5% you need a score of over 700 or higher. Talk to your bank and get some firm figures. You may find you will have to spend less on a car in order to afford the payments.

Question: How long is the longest you can finance a used car in texas?
I have really bad credit and the last car I bought not to long ago I had to pay 21% interest.

Answer: With bad credit, I doubt you could get anyone to finance you for over 48 months. Many will only go 24-36.

Question: Car Buying Advise, financing or paying cash?
What is your advise regarding car buying. I want to spend 20k on a used car. I do have the cash in hand. Should I finance (and use my cash money for something else) or buy it cash? My only Concern at this point is the insurance cost associated with financing a car.

Answer: If you have the cash, you can save the cost of financing and interest. However, if you have more productive uses for the money or need it in case of emergencies, you might want to consider financing.

Your concern about insurance with financing is interesting. You mean you would buy less insurance than a bank or loan company would require of you? Their insurance requirements are no higher than the level of insurance any intelligent person should have anyway. If the bank would want to protect their financial interest in a car, why wouldn’t you want to protect your own if you pay cash? Without insurance, paying for a new car after your old car is totaled is very expensive.

Question: Is it possible to finance a used car from a dealer with no money down?
Can they put the taxes and other fees into the cost of the car?

Answer: Depends on the dealer and your credit. The worse the credit, the higher the interest rate.

If you are in a situation where you can get an inexpensive used car and pay cash, I would do so. Then you can save until you can pay cash for an upgrade.

Yes, they can put the taxes and other fees into the loan if the total loan is less than or equal to the cars value.

For example, if you get a car valued at $5000 and the dealer sells it to you for $4000 then you have $1000 leeway that will cover taxes and other fees if the dealer will do it.

Question: How likely is it for a person with a 630 credit rating to finance a used car with a trade & no money down?
I am looking to trade in my 2000 Jetta, good condition, 118K miles. Not sure how likely this would be but I work out in the field and need a gas efficient vehicle.

Answer: Really hard to say looking at the current economic situation. Do you have any delinquent accounts on your credit report? 2 years ago it wouldn’t have been an issue, but now it may be. The only way to know for sure is to go to a dealership. Then they will have different banks “fight” over your loan, assuming you get approved.

Question: Can I finance a USED car with SSD as my only income?
I live in NYC and I NEED a car. I don’t want a car but NEED one for my sons occasional emergency issues and to get around the city since trains/buses are hard for him. My credit after I got ill went downward to my current score of 563 because of my inability to pay off my student loan since I could not work or anything but that debt has been discharged. I rent a home and rely only on mine and my sons SSD income that reaches a total of $1,380 a month altogether. The car I’m looking for doesn’t have to be a top of the line vehicle. I’m looking for any sedan/minivan from years 1990-1999. I was wondering if it would be at all possible to finance a car from a dealer?

Answer: Sorry – it is highly unlikely that you will be able to finance a car with that credit score and that income. Car finance agencies will want to see you have a steady source of income, and something that can be garnished if you stop paying, which SSD cannot. Insurance alone will eat up 1/4 of your income in the city. I don’t think you can reasonably afford this on your income.

You may want to look into the Zip Car program, where you pay for hourly use of a car that includes everything (parking, gas, insurance), or the disability transit options on the MTA.

Otherwise, pretend you have a car, and put $400 a month into a savings account (which is about what you will spend on a payment, insurance, tags, parking and gas) for the next year. If you do that, not only will you know you can afford a car, but you will have almost $5,000 for a down payment, which will increase your ability to get a loan.

Question: How new does a car have to be to finance?
I want to buy a used car for around $6000 with a $2000 down payment. So the year of the car will likely be 1997-2003 and I was wondering if a bank will still finance a car that is that old. Is there a set year?

Answer: There’s no set year. It depends more on your credit score and credit record, and the value of the car vs. the amount of loan.

One thing to consider – find out how much the car will depreciate over the next few years, and compare that to the balance of the loan you want to get. You want to avoid a situation where the car depreciates faster than the balance of the loan, or you’ll end up owing more for the car than it’s worth. If you can’t make the payments, and you have to sell it, you won’t be able to get out from under the loan, and you’ll be screwed.

Also – remember that as long as you have a loan on it, you’ll probably have to carry full coverage for the insurance. Factor that cost into the cost of ownership, and call your insurance agent for quotes on cars before you commit to buying any vehicle.

Question: Trying to finance a car, but I’ve got a question?
I’m interested in financing a used car. The car I want is from a used car dealership around 200 miles from my current residence. Will they finance me even though I live so far from them? Does it usually matter?

Answer: Your location should not matter. I would suggest you go ahead and talk to a local bank about getting pre approved for a loan. That way you will get a better rate and don’t have to worry about the loan when you are at the dealership.

Categories: Auto Financing

Typical New Car Finance Options

Posted by Credit Financing Guru on 21st October 2009

Most of us at some point have overstretched ourselves, whether it is by spending a bit too much on the monthly shopping or splashing thousands of pounds in savings on a lavish holiday. It is also possible to overdo it when it comes to buying a new car, as there is always the temptation to get wrapped up in a vehicle which you can’t really afford. Taking a pragmatic approach to new car finance may be one of the best ways of sticking within your budget and making sure you don’t buy something which you can’t really afford.

It is easy to be tempted by more expensive vehicles – if you can’t really afford them, the level of new car finance that you end up having to take out may dominate your budget from one month to the next and rule your life.

It may be beneficial to write down an exact budget in relation to how much you may afford on a loan each month, plus work out how much of a deposit you are capable of getting together, as these two factors combined may define how much you spend.

Then you may want to turn to a specialist motoring website which may help you to compare different makes and models and prices, and which may also be able to compare loan products and rates for you.

Something else which may be worth doing is considering carefully how much the car you are after costs to run. The purchase price is one thing, but vehicles have their own set of everyday costs, from filling the petrol tank to regular servicing and the costs of replacing the tires.

It may be a good idea to even phone a few garages and get a quote from some of them for how much it may cost to service the vehicle you are thinking of buying. This may be a good way of getting a true picture of the budget you need to run it.

When the time comes to buy the vehicle you may typically get hire purchase offers from dealerships. Essentially this is a seller’s own form of finance, normally meaning you put down a deposit and then spread the cost of the rest over regular installments. In many cases you may pay a considerable amount of interest which may be higher if you spread the payments over a particularly long period.

However, some dealerships are prepared to offer zero per cent interest, particularly if you put down a sizable deposit.

A second common method of arranging new car finance is to set up your own personal loan with an independent company such as a loan specialist or bank. Again a specialist motoring website may be able to compare deals for you and give you an idea of the interest and repayment rates.

You may be able to go straight to a dealership with your approval and use your pre-existing buying power to negotiate. If the dealer knows that you may stump up all of the money straight away and don’t need to pay back in installments they may be more inclined to drop the price of a new vehicle.

Whatever you decide, while a new car finance deal is the main way in which people may afford to buy a brand new vehicle, that does not mean they are to be taken lightly. A considerable debt needs careful budgeting, and you may want to do a considerable amount of your own research before you take the plunge.

Louis Rix is a Director of NetCars, one of the UK’s leading motoring websites. First established in January 2000, its mission is to become the number one site for used car searches. NetCars provide New Car Finance.

Car Financing FAQ:

Question: How does a new hire go about getting car financing?
I just graduated from university with a BS degree and will begin work soon. I need to buy a car and need financing. The conundrum is that I am planning to drive myself to the new city I will be in, which means I will be signing my lease after I buy the car.

Am I technically employed for the purpose of a loan application? Is there any special way for new hires to go about loan applications?

Answer: No just apply like normal & ask if they have a first time car buyer discount.

Question: Where can I download a private party car financing contract?
We are purchasing a car from a family member who is allowing us to do payments on it until tax time when we will pay the remaining balance in full. For the protection of both parties we would like to have a contract stating our “financing” terms. I know I can just write one up myself, but there has to be someplace online that has like a PDF format or something I can just fill in.

Answer: I am not sure what type you are looking for (term etc) or how much you are willing to spend, but if you type legal documents into the internet search bar then many options of websites will come up, you can click on any of those and you’ll be able to find your sub topic needed- purchase fill in print and get notarized.

Question: Just bought new car, financed through dealer, can I change to bank financing?
I live in MA and I just bought a new car about a week ago. I think I can get better financing through my credit union. Can I switch financing without a penalty or how does that work?

Answer: Read your contract, it depends on the terms of the loan…but normally yes you can refinance if you have good credit and the car is worth the amount you got loaned.

Question: Do I need full coverage insurance if I get in-house car financing?
I have no credit and I think in-house car financing is the only way I can get a loan for a cheap car (I’m looking for something up to $3000).
Is full coverage car insurance mandatory if I get in-house car financing?

Answer: Any time you finance a vehicle full coverage is required to protect the interest of the lender.

Question: Which bank to go to for new car financing?
Now that bank of america is loosing its worth because of credit card and auto load default, is it okay to get a new car financing from Bank of America.

Answer: Yes, it’s fine to go to Bank of America. I would suggest if you have great credit, the best interest rates you’re going to get are through the dealer. Many of the car companies have rates under 4%, including some 0% interest rates for short loan periods.

Another good avenue is to go through a credit union. Pentagon Federal has new auto loans at about 4.25% right now. If you qualify for a credit union through your job or through some other means, definitely check that route out.

Question: What is the average used car financing percentage?
I am just trying to calculate how much it would cost me to finance a car. Down payment will be anywhere from 10% to 20% of the car price. I have good, not excellent credit.

Answer: There are a number of factors that will affect the rate you get. Credit, miles on the car, year model of the car, term, etc. I would say just as a generic answer without knowing any details but what you have given that anything from 8.5% or lower would be ok. If you go 72 months term it might be slightly higher.

Question: For tax purpose, can I amortize the cost of the financing or leasing car for my business?
I plan to finance or lease a car for my business. My friend told me that: For tax purpose, I cannot amortize the cost for a leasing car. But I can amortize the cost for a financing car. Is that correct?

Answer: There is no such thing as amortizing in Canada. Leasing or financing interest can both be deducted as expenses. You also can claim Capital Cost Allowance on the cost of the car.

Question: Need Help Finding Online Car Financing Service.
I’m looking for a reputable online Car Financing Company that will cater to me so I can avoid the dealer “tricks” and the insulting low-ball offer that my bank just presented me with. I am a first time car buyer and only 22 years old so I understand that some companies will just not want to deal with me.

Answer: Financing is something you need to take care of locally and in person. Visit a Credit Union of your current bank isn’t offering you a decent rate. But you are correct in one thing, you need to bring in a pre-approved loan from a 3rd party lender in order to avoid the financing shell game the dealers play.

But in this economic climate don’t be put off if all the offers you get are slightly unfavorable. You are a young first time buyer and your credit history probably isn’t what it needs to be to get the best rates. Money is tight, I’d be happy with any reasonable approval from a traditional lender.

Categories: Auto Financing

Bad Credit Auto Loan Financing – How to Get Approval For Your Loan

Posted by Credit Financing Guru on 21st October 2009

Owning a car is something that most people around America have the luxury of doing. Even people who have low credit scores still have the opportunity to get access to automobiles. Due to the recent decline in the auto industry, there has never been a better time to own that car of your dreams. Getting bad credit auto loan financing has never been easier if you are willing to look around.

The key to getting any car loan approved is to show the value that your loan offers to lenders. Because the auto industry is very competitive, most lenders are willing to work with people who don’t have the best credit rating. This usually means that you can get very competitive interest rates if you find the right lender.

One thing that you can do if your credit history is extremely bad to get a loan approved is provide collateral. By providing collateral for the loan, you are reducing the risk that lenders bear when they approve your loan. The less risk that the lender bears, the more willing they are to approve your car loan with a good interest rate.

When it comes to finding the right lender, you should use the internet. Bad credit auto loan financing is possible if you are willing to look at the different lenders that are available. You can get comprehensive quotes from different lenders to ensure that you get the best interest rate possible. Remember that you will need to look around in order to get your loan approved.

If you are looking to get a Bad Credit Auto Loan the first place you should look when it comes to getting car loans is the internet. Get a comprehensive quote from an Online Loan Lender to ensure that you get the best interest rate possible for your loan.

Bad Credit Auto Financing FAQ:

Question: Auto loan, but no credit history? How do I get one?
Is there any way for me to get a loan for a used vehicle? I have no credit history. I’m employed part-time with $5k-$6k annual. I need a $4k loan.

My bank (USAA) will not finance me because I have no credit history (good or bad). They said I need to build up credit over a year or more before I’m applicable for a loan. Does anybody have any ideas?

Answer: Best thing is to get a co-signer to help get you a loan, usually if you are buying through a car dealer it is easier to get a loan, than a regular bank. The loan will help build your credit as long as you pay on time.

If you are talking about a regular purchase from another person, it is more difficult to get a personal loan that way.

Question: Am I a bad risk (auto loan)?
I have been trying to secure a loan via my banks and was denied. I have been working for a little over a year at a Ford Dealership (mechanic) with a gross income of $25,000. My credit score is 762-750 depending on which company is contacted. I have paid off cards (2) and one student Sally May loan out ($1500) that I won’t start paying for another 3 years (due to agreement terms.) I am trying to secure a used 2008 GM certified Vehicle that is list price of $26k but I beleive I can easily wiggle down to about a final price of $22k. I have yet to try the dealers financing which I assume would be harder to obtain then the banks.(?)

Answer: Auto finance is what I do for a living and it comes down to simple math. You make $25,000.00 a year divided by 12-months is $2,083.00 most major lenders on allow 16% of your gross monthly income for a car payment so all you qualify for is a $333.00 payment. There is no way you can afford a $22,000.00 vehicle period.

Even with good credit your looking at a payment around $440.00 a month.

Question: How can I get real Auto Financing?
I need to get a car, I don’t have any credit, but I have like 3 jobs. any one know of any good auto financing places online?

Answer: CapitalOne, Lending Tree, and eLoan are good online companies for people with good credit. You may have trouble, however, if you have no credit or bad credit. You may have to look for subprime lenders, which are harder to find, and expect to pay high interest rates and make high down payments.

Question: Where can I get auto financing with co-signer but insurance on the principal applicant only?
I have limited credit score so my dad is co-signing to get my auto financing application approved, but I need the insurance on my name only? is it possible?

Answer: Well, if the COSIGNER is NOT a co-owner, then anywhere. But if the cosigner is also CO OWNER, then they can be sued, regarding your car! That means, they need to be INSURED for the damage the car does!!

If you don’t want him listed to DRIVE your car, you can always specifically exclude him from coverage. But, if you need a cosigner for the loan for your car, most likely, the insurance is going to cost you more than the car loan, and if you have an accident the first two years, your car won’t be worth as much as your loan payoff.

Question: How does bank auto financing work?
I went to a bank in order to get preapproved. The banker told me everything was fine and that they need a car purchase agreement and letter of origin and proof of insurance. I don’t get it. How do I get these things without actually buying the car? And how do I buy a car without having some kind of financing already in hand when I am ready to buy? Can somebody explain the process?

Answer: The process is very simple. Shop around until you find a car that you like. Negotiate your best price with the dealer. When you are comfortable with the deal you are getting, you will sign a purchase agreement. You then have to obtain a certificate of origin for the particular car you are purchasing to prove that the vehicle exists. You will also need to arrange insurance to be effective the day you are to pick up the car. Bring all of this to the bank and they will arrange to pay the dealer for the vehicle.

Question: What’s the best way to get auto financing with minimal credit history?
My FICO score about 4 months ago was about 650, I’ve since cleared up some bad marks, so I’m guessing it’s a little higher now but I haven’t checked to be sure.

I’m a recent college graduate just about to start a full time job, and I really need a new car. Are there any reliable online lenders I should look to? Or should I stick with dealer financing? I already tried Capital One and they denied my application based on lack of credit history and one bad mark I have on my credit history.

Answer: Many car companies like Honda & Toyota offer incentives for recent college grads, perhaps their in house financing (American Honda, Toyota Financial Svcs) also offer discounted finance rates. As far as being a first time buyer, many banks such as Cap One are going to need you to find a cosigner. Go to the dealer and if you have a 650 FICO (you must have SOME credit or else you wouldn’t have a score) you should fit into a first time buyer program offered by one of the many finance companies they work with as long as it isn’t a little Mom & Pop dealership.

Question: Where do I go to get auto financing?
I am in need of auto financing that I can take anywhere to get a used car. I have a low credit score and I live in michigan. I am not interested in a dealer. I already have the car but they only use outside financing.

Answer: A local credit union would be your best bet. I think some of the online companies like HSBC Auto still do loans with lower credit scores, but your rate will be very high if your credit isn’t good. Nobody is giving loans to people with really bad credit right now.

Question: What does my minimum credit score need to be to get auto financing at a good rate?

Answer: 750 for the top deals. That’s the low down payment or lease deals. You can still get a pretty good rate above 700 but probably not the zero or $299 down deals some dealers advertise.

Categories: Auto Financing

Subprime Auto Loans – How To Get Financed With Bad Credit

Posted by Credit Financing Guru on 21st October 2009

Finding a bad credit auto lender is simple. When buying a new or used car, the auto dealer may offer bad credit financing, or refer you to a good lender. Even so, car buyers should consider arranging their own financing. Bad credit auto loans are tricky, and some lenders will take advantage of you. For this matter, it helps to choose a good lender and know your available options.

Check Your Personal Credit Report

Before applying for an auto loan, bad credit applicants should request a copy of their personal credit report. Review the report, and take note of your FICO score. Upon submitting your application, the auto lender will base approval on your credit score and credit history. Additionally, checking your report prior to applying reveals your credit standing. Some auto lenders classify sub prime borrowers as persons with scores below 640. On the other hand, another lender may qualify a borrower with the same score for prime rates.

Compare Different Auto Loan Rates

Making comparisons is a surefire way to get approved and find the best auto loan rate. Auto lenders qualify applicants for varying rates. If you have bad credit, failing to shop around and obtain multiple rates will cost you more money. For example, a dealer’s finance company may charge an interest rate of 10%, whereas a credit union may charge the same applicant 8.5%. The percentage difference could save you $50 – $70 a month.

The best way to compare rates is to visit an online auto loan broker site. Request a no-obligation quote, and wait for a response. Each quote received will include details such as qualifying interest rate, loan approval amount, loan term, and estimated monthly payment. Review the quotes carefully, and pick the lender that offers an affordable deal.

Make Efforts to Boost Low Credit Score

Improving your credit score doesn’t happen overnight. However, if an auto lender recognizes improved credit habits, they are more inclined to approve a bad credit loan application. Before applying for a car loan, practice submitting regular payments to creditors. Furthermore, attempt to reduce your overall debt ratio.

For a list of Recommended Poor Credit Auto Loan Lenders, visit ABC Loan Guide, an informational website about various types of loans.

Subprime Auto Loans FAQ:

Question: What is the highest interest rate for a subprime auto loan?
I have really horrible credit due to my divorce…like 400! I am working very hard to build it back up. I was “approved” for a subprime auto loan but I want to know what I can expect the interest rate to be on a used auto. What is the highest ( worst ) it can be? Are we talking 30% or more? I live in New York if that matters.

Answer: With your score it will be what ever your States maximum rate is.

Question: Where can I get an auto loan if I have subprime credit?
I am hesitant to apply at banks or credit bureaus because of my credit, so I applied at 2 different websites. One said that they aren’t offering loans at this time, and they didn’t pull my credit. The other said that they don’t offer loans in my area. So, where should I apply?

Answer: If your employer has a credit union and you are a member, that is a good place to get a loan, since they usually have the facility to do a payroll deduction. If not, call around and see what the qualifications are for local credit unions (you may find you qualify for membership). Other than that, you are limited to banks or some of the high-interest “we finance anyone” places.

Question: Usury laws: do they NOT apply to subprime auto loans?
I am in the market (unfortunately) for a bad credit AUTO loan. My score is horrendous thanks to a messy divorce (400!) I am aware that this score will qualify me for the state MAX interest rate.

I was told that the interest rate here in NEW YORK will be 30-35%, but when I looked up New York’s usury laws, they said the state max is 16%. I’m confused, can local auto dealers charge me 30-35% interest for an auto loan or not?

Answer: Although New York’s usury laws may state 16% as a maximum, National Banks (see if there is an N.A. after the bank’s name) are governed by the state in which they are registered. For example, if the bank you are dealing with is based/chartered out of Delaware, they in essence can charge whatever they want, since Delaware has no law pertaining to usury.

Try applying for a car loan at a local bank chartered in New York, who would be regulated by the state and subject to New York’s usury laws.

Question: How can I exit this subprime auto loan hole?
If I threw $1400 at the principle on a $6700 balance w/24% interest what will be my balance?

Answer: Your new balance should be $5,434.00. The interest payment for $6,700 (interest rate 24%) is $134.00.


If you send a monthly payment of $469.00 after the $1,400 You will pay off this account is 12 months.

Question: My credit score is 511, does anyone know who will finance an auto loan with credit as poor as mine?
I need to buy a car that’s safe for my 14 week old son and I, and I have some pretty bad credit. 511 to be exact. Does anyone know of a bank, or online bank to go to ask for a loan. I have good income, and a little bit of a down.

Answer: Auto finance is what I do for a living and with your score and a “little bit down” your not going to find a major lender that will finance a vehicle for you.

As much as I hate to say this your best bet is most likely going to be a “Buy here pay here” lot. Try and find one that actually reports to the credit bureaus, a lot of the larger ones do, otherwise all the payments you make will do nothing to help your credit.

Question: No credit auto loans?
I am in need of a car fast. I have tried two of my banks. I can’t get a loan due to my low income (1200 to 1300 a month) and no credit. I need an auto loan with VERY LOW interest. Car price range I’m looking for is $8,000 or under. The max I can pay a month is 140 not including my car insurance.

Answer: Yes there are bad credit auto loans online for people with a poor credit history and low FICO scores who need transportation, and need a fresh start in repairing their credit. Although it may seem hopeless if you have blemishes on your credit there is a solution. First you will want to get rate quotes from various sources this is very important, you should shop around to find the best deal. However, keep in mind that there are different factors at play with each lender, as to whether or not you get a loan and if so at what interest rate. You can get approved for a auto loan.

Question: What factors are to be thought before buying a car?
bad credit auto loan, bad credit car finance

Answer: The following information can help you “prepare” your case, before you actually sign your buying contract:

* Compare the dealer cost price with prices displayed on window stickers
* Get a quote from the dealer in writing
* Check out many dealerships
* Negotiate independently
* If you’re not confident about arbitration avail car buying services
* Shop around and compare
* Work out the auto insurance before you buy
* Test drive before buying etc.

Categories: Auto Financing

Bad Credit Car Finance – How to Get Pre-Approved for an Auto Loan with Poor Credit

Posted by Credit Financing Guru on 21st October 2009

Getting pre-approved for bad credit car financing will help you get the best rates possible. Pre-approved auto loans also give you an edge during car shopping, providing you with the most options. Your car shopping experience can be focused on getting the best price on a car, rather than worrying about financing.

Why Pre-Approved Loans Are Better

Some dealerships would have you think that getting financing with bad credit is nearly impossible. Not so. By researching lenders and their financing packages, you can find near market rates.

By getting pre-approved, you also remove a barrier when negotiating the price of your car. With a blank check in your hand, you can buy from any dealership or person. Sellers are much more willing to go down in price in order to seal the deal.

Start By Finding A Good Sub Prime Lender

Most financing companies deal with prime and sub prime car loans. So start your financing search by asking for loan quotes from several different lenders. If you have no idea who to look at, start with recommended sites.

When you ask for quotes, consider all possible terms. For example, selecting an adjustable rate loan will give you a lower initial payment than a fixed rate loan. Buying from a dealership will also get you better rates.

Look at fees and closing costs, not just fees, when comparing car loans. The APR number will give you the overall cost of the loan, a helpful number to use. If you are planning to refinance, lean toward a low application fee loan with slightly higher rates. This can save you money in the long run.

Online Application Speeds Car Loan Process

Car financing companies have developed online loan applications to save time and money. By having you enter your basic personal and financial information, lenders can limit the number of personnel needed to process your loan.

As a result, you can receive a blank check for you car purchase in five to seven days. You will also receive your loan contract at the same time. When you are ready to purchase your car, you simply sign both the check and loan contract.

View our recommended lenders for bad credit auto loans online.

Struggling with too much debt? Check out our recommended online debt consolidation and management companies online, or view our recommended sources to get a free credit report online.

Bad Credit Auto Financing FAQ:

Question: Any one get approved for auto financing with bad credit?
My husband and I are going to apply for financing tomorrow for a new car (we are getting rid of my current car for something bigger). The payment would be around what we pay now for our car payment. I have had a flawless payment history for my current car and my previous car. However, we had a lot of credit card debt (paid off now) and late mortgage payments (current now – due to unexpected out of pocket medical costs). My FICO score is in the 620′s. I am unsure of my husbands score but imagine that it is similar to mine since everything is in both of our names. Do you think that we will get approved for financing based on our payment history and credit score?

Answer: Auto finance is what I do for a living and with the scenario you describe there should be no problem getting you approved. Your score is sub-prime so the interest could be higher then you like, but you should be approved.

Question: Does anyone know of any lenders that will do auto financing with repo, bad credit, and bankruptcy?

Answer: Yes their are many and buy here pay-here is always an option… the problem with buy here pay here is whatever you put down in payment usually equals the price the dealer paid for the car. You end up paying way too much for the auto. Do you have all of those problems (Repo, bankruptcy, bad credit etc) as many small car lots offer second chance financing for every type of bad credit. Remember that money down can help you overcome any type of bad credit. Be realistic in what you will get. Try and keep the loan to 12-24 months and make sure the car is not over seven years old and has less then 125,000 miles. And please make sure the dealer will let you take it to a mechanic before you own it.

Question: Auto financing: can banks charge a bad credit fee?
I’m inside of the car dealership now and I’m waiting for the finance manager to finish running my application. While talking about the price, they added $2,000 (this is after putting down $2.000… so basically I just lost that 2k) and the sales manager told me since myself and cosigner have such bad credit (which is true) that the bank will charge 1k-2k extra fee for financing. This sounds fishy, like they are getting money out of me. Is this true?

Answer: Often when you have bad credit there are additional fees involved, plus a higher interest rate. But if you are in a situation where you are not comfortable or unsure, do not sign anything and maybe have some one else look over the paper work and advise you. Even not knowing your situation that fee sounds high. When buying a car with bad credit you need to visit a dealership with a reputable Special Finance Department.

Question: Does anyone know of any Minnesota car dealers that finance bad credit?
or any other bad credit auto loans. I am improving my credit, but it is still bad, and my car is dying!

Answer: Typically, unless you buy from a ‘buy-here, pay-here’ lot, the dealership doesn’t actually finance the car. They submit your application to lenders and try to negotiate an approval. I would suggest to maybe try your bank or credit union to see if they will finance an auto loan for you. If not, then I would go to the nicest dealership in the area and talk to one of the associates about your situation. It’s best to be honest upfront rather than hiding it.

Question: How do you get financed for a auto loan with bad credit?
I am looking to get financed but I have really bad credit in the lower lower end of the 500 range. I will be paying cash for half the car and hopefully getting financed for the other half. Does anyone know if it is possible, I understand my interest will be high if I can but I am willing to take that on I just wanna repair my credit. What are some good places to go through to get financed with the bad credit. I am looking into purchasing a new 2009 altima ….any suggestions?

Answer: Bad credit means you are not a good risk for a loan. It today’s credit market it is almost impossible to get financing if you have bad credit. Take your 50% down and buy a late model used car instead for cash. Repair your credit by getting a secured credit card from your bank.

Question: Are there any good auto dealers that finance people with bad credit in the los angeles area?

Answer: Most Kia & Hyundai dealers have bad credit programs. Call around. STAY AWAY FROM IN-HOUSE FINANCING “TOTE-NOTE” DEALERS!!! Their cars are usually junk and they charge nearly twice the car’s value.

Question: Where can I find a reasonable auto financing company for someone with bad credit?
I actually have a zero credit score and need a new car. I have a great job, make approx $2240 a month gross and bring home approx $1744 been employed with current employer for 2 1/2 years, and previous employment I was with for 4 1/2 years. I have zero to put down due to my hubby’s layoff and our depleted savings, I do have a trade in 2001 Ford Focus probably worth about $1500-$2000, but would like to put -0- down if it’s possible.

Answer: There’s no such thing. If your credit is bad, no prime lender is going to loan you money. You have demonstrated an inability to handle your finances, and you will pay dearly for the privilege of borrowing money. That’s just how it works. Further, you want to buy with $0 down. You will have no equity in this vehicle for several years, and it would be difficult, if not impossible to sell it or trade it before it’s paid off.

Question: Where can I get a bad credit auto loan with a score of 560?
I have already tried one of the local dealers and they told me no yesterday. I have a car financed with Ford Credit right now and I am upside down on it because I deffered a few payments a while back. I want to trade it in, because it is starting to have problems and it is not worth me putting more money into it. I really do not want to go to a buy here pay here lot, because their cars are really over priced and they usually have motor issues too.

Answer: What type of car are you looking to purchase? Some lenders, like Ford Motor Credit and GMAC, will approve your loan based on your tier level, which includes credit score, job time, residency, debt-to-income, and loan-to-value. Each situation is unique, so it’s hard to give you the best advice without more information. How much do you owe on your current vehicle v/s the payoff? What are you looking to purchase? New or Used?

Categories: Auto Financing