Life happens and bills fall behind, leading some to declare bankruptcy and in some cases, just outright fall behind on all of their bills for a prolonged period of time. This leads to very bad credit problems that can seem impossible to overcome. When applying for a car loan, the result of those credit problems become strikingly evident as it becomes obvious that getting approved for a car loan with bad credit, is just downright difficult.

Buy here pay here car lots (car dealerships in general that offer in house financing) are a common place for people with bad credit. Do they have to be used though? Is there a solution that can help the average person with credit problems to get approved for a traditional auto loan that can help them to rebuild their credit history with timely payments.

You’ll soon find, yes there is a better way.

Let’s talk for a moment about why the buy here pay here industry has the reputation that it does, in general. Buy here pay here dealerships usually charge down payments up front, high interest rates which result in high payments, and in addition, the vehicles are usually high mileage cars and trucks that are less desirable than what is found on new car dealership lots.

So it’s clear to most people, that buying a car using in house financing terms is a very expensive way to get behind the wheel. What alternatives are there for those seeking auto financing with bad credit?

Online companies that specialize in helping people with bad credit to not only get approved, but to get approved for a late model car with reasonable payments are the answer. Now, I’m not talking about the fly by night websites that pop up from time to time offering the moon and back if you just apply. I’m referring to established companies that have proven track records of helping people with the worst credit situations to get a good car loan.

Do these companies charge for their services?

A reputable car buying service is never going to charge you a dime for helping you. You can apply online in most cases and get a quick approval from the lender/dealer that will be closing your auto loan. There are enormous benefits to using this type of service. Having a car loan approval in hand when you start your shopping for the perfect vehicle that suits your needs, is a much more pleasant experience than driving around town applying in multiple places.

See our recommended service provider here.

Some people don’t have time to wait, and have to buy a car immediately. For those, there are special programs and arrangements through companies that can help with not only buying a car with bad credit, but with helping you to get the budget terms you need so you can begin rebuilding your credit.

Credit Score vs FICO Score

Credit.com – Credit scores are commonly referred to as “FICO scores”.  FICO stands for Fair Isaac Corporation, which is the company that created the industry standard credit scores used by almost all lenders. FICO has been in business since the 1950s but began building the famous FICO score in the mid 1980s.

A “FICO score” is simply a numeric summary of the information in your credit reports that represents your potential credit risk.  These scores are delivered to lenders when they purchase your credit reports and review your application. A higher FICO score means that you are a lower credit risk and you will probably be approved at better rates and terms than if your FICO score is lower. If you have low scores, you could be approved with less attractive interest rates or be declined all together.

The highest FICO score you can get is 843 and the lowest is 250. The vast majority of the U.S. population scores between 500 and 799. It is very uncommon to have a credit score over 800. Anything over 750 is considered an excellent score.

There are also other types of credit scores, called non-FICO credit scores, which are not commonly used by lenders.

Credit Score Statistics

According to available sources, the following shows the percentage of the American population that have a credit score within a particular range.

• 6% have a credit score of 250-499
• 10% have a credit score of 500-549
• 10% have a credit score of 550-559
• 10% have a credit score of 600-649
• 11% have a credit score of 650-699
• 12% have a credit score of 700-749
• 16% have a credit score of 750-799
• 25% have a credit score of 800-843

Steps to Improving Your Score

Once you’ve checked your credit report, take a look through each of the reports from each of the three bureaus and you’ll find step by step instructions on how to correct any mistakes that are found on your report. By law, the bureau has to investigate and find proof that the disputed error is valid and has 30 days to do so, once you dispute the error. If they cannot verify the information being disputed on your credit report within 30 days, they have to remove the item from your report by law.

Pay off small items on your report. Most people have small collection accounts that have lingered for a few years. Use the contact information from your credit report to call these companies and ask them for the smallest settlement amount that they will accept. You may be pleasantly surprised at how easy it is to get a reduced amount that will help you to get those small items wiped off into “never never” land.

Frequently, credit card companies that you no longer have accounts with will still report your account as being active, even after you’ve called to close the account. Call them up and ask them to update their records being reported to the credit bureaus.

Finally, make your payments on time. That’s very simple, yet is the most effective means of improving your credit score.

Tip: Don’t fall for credit repair schemes. While there are companies that can help you to dispute items on your credit report, it’s not anything that you can’t do yourself for free.

If they were buy here, pay here car lots then there is a good possibility that they absolutely required a down payment. Other dealerships and lending services can help you to get an auto loan without a cash down payment, based on a few criteria that are unique to each special finance program.

There are a number of different factors that go into providing someone that has bad credit, auto financing without a down payment.

• Model Year
• Mileage
• Loan Value
• Sale Price
• Trade Equity
• Rebates
• Incentives
• Special Finance Incentives
• Credit Score
• Trade-In Allowance

Once you’ve applied for buying a car with bad credit, the indirect lender that you are matched with that can provide you with the best financing terms based on your situation will help you with vehicle choices to help make a no down payment bad credit car loan work for you. As listed above, there are many different factors at play that have to work together in order to accomplish this.

The model year of the vehicle that you’re looking to buy along with the vehicles mileage will help to determine book value, which will need to be “strong enough” to support the amount of the loan requested. If the car’s price exceeds the loan value, then those monies will have to come from somewhere on paper. By shifting trade allowance against the total amount for financing, many dealers/lenders are able to make this work with no out of pocket expense for the car buyer. Specific dealer incentives and rebates are very helpful in this scenario when applied to reduce the total amount financed.

For future reference on your next car purchase, if you do have any available funds to use as a down payment, there are significant advantages to putting money down. The most obvious would be simply reducing the amount financed. This saves you interest costs over the term of your auto loan, and also lowers your monthly payments. You will also be in a better equity position. Owing less on your auto loan makes trading next time much easier!

Apply for a Bad Credit Car Loan with No Money Down.

Here are a tips on the topic of getting a car loan after a repossession…

If using the service listed on our home page, your repossession needs to have either been included in a bankruptcy that has been discharged or be at least over 12 months since the date of the repo. Beyond that, you’re going to simply have to wait in order to get a normal bad credit car loan through special finance programs.

If your repo does fall within those parameters and was either included in a bankruptcy or it is over 12 months old, then you will need to make sure that you have the following when you go to close your auto loan with the lender or dealer:

1) Copy of drivers’ license.

2) Proof of residence – this is usually a utility bill that comes to your physical address and lists your name as the recipient. In some cases, if you use a post office box, you may be able to provide a printed utility bill showing the meter address as being your physical residence with your name listed on the bill.

3) Social security card. In today’s times of identity theft, it’s not uncommon to have to show proof of your social security number.

4) Proof of home telephone. Some lenders through special finance programs will accept a cell phone number, but an actual phone number that is for your physical address is preferred.

5) Proof of income. Standard pay stubs are usually acceptable, but don’t be surprised if you have to provide your last two or three most recent stubs showing your year to date income to establish that your income is in fact consistent. This goes along with being able to show that you can actually afford your car payment, based on your monthly/biweekly or weekly income.

6) Proof of auto insurance. You won’t be able to leave the dealership without the vehicle being verified as being insured.

7) Other documents may be required, although making sure that you have the above listed items in order will make your loan approval go more smoothly.

Frequently, the lender may ask why you had the vehicle repossessed. Was there a dramatic reason, such as loss of employment, home foreclosure or other problem beyond your control? If you had a good credit history before the repossession and have not had any other credit problems since, that may also help.

Furthermore, don’t be surprised if you need to have a down payment at least equal to your monthly car payment or more when closing your auto loan. Keep in mind that this article is provided as general information based on experience in the auto finance industry and your specific lender that you are matched with for your auto loan may very well have different stipulations or requirements for documentation.

Apply for a car loan after a repossession.

If this is you, the best thing that you can start doing right away after your bankruptcy discharge is to begin taking steps to rebuild your credit history. Some people go for secured credit cards as a first step, but when it comes to really getting your foot back in the door credit wise after a bankruptcy, a good car loan for people with bad credit can get things moving in the right direction, quickly. It does take some time to get your score back up, but as you make timely payments on a sizable loan such as a bad credit car loan, your score will steadily rise so long as the rest of your accounts do not fall dilinquent again.

Many car dealerships offer their customers bad credit auto financing options through a number of different sub prime lenders. These types of lenders do not lend directly to customers for them to purchase vehicles from private owners, but only lend “indirectly” through car dealerships.

Most dealerships will be more than happy to work with you to obtain an auto loan after bankruptcy, although offers and interest rates can vary widely from one dealer to the next, depending on the particular lender that they send you through. While there are many tips that can be offered on the topic of auto loans after bankruptcy, one of the first is to make sure that you compare offers and don’t pay more than you have to.

Just because you’ve had a bankruptcy, doesn’t mean that you can’t get a fairly reasonable offer to review. Once approved, it’s a great idea to get ahead on those loan payments. Preparing for a rainy day can be more than just having a little extra cash available. There is nothing better than having your car loan payment a month or two ahead to avoid having to come up with the cash should an unexpected need arise.

Special note: Many people think that the best way to get auto financing after a bankruptcy is by using buy here pay here car lots. This simply isn’t the case and there is one main reason. Buy here pay here car lots that offer in house financing for cars do not report your timely payments to any of the three major credit bureaus, thus no matter how good you pay on your “loan”, you’re not going to see any rise in your credit score.

Whether you’ve had a Chapter 7 or a Chapter 13 bankruptcy recently discharged, there is a great company or two that can help you with buying a car with bad credit after bankruptcy.

2. One out of every 230 vehicles was stolen in 2011.

3. In Tennessee, it is against the law to drive a car while asleep.

4. In New York, it is against the law for a blind person to drive a car.

5. The average car horn beeps in the musical key of “F”.

6. The first known automobile was built in 1668, it was a two foot long steam powered model constructed by Ferdinand Verbiest, a Belgian Jesuit priest.

7. The fastest time for removing a car engine, and replacing it is 42 seconds for a Ford Escort, on 21 November 1985.

8. The first car radio was invented in 1929.

9. The city with the most Rolls Royce’s per capital is Hong Kong.

10. The first cars did not have steering wheels. Drivers steered with a lever.

11. The first speeding ticket was issued in 1902.

12. In 1916, 55 percent of the cars in the world were Model T Fords, a record that has never been beaten.

13. Buick introduced the first electric turn signals in 1938.

14. The average car uses 1.6 ounces of gas idling for 1 minute. 1/2 an ounce is used to start it.

So often, people that have bad credit don’t know what to do about getting a car loan. Is this you? If so, this short article will provide you with some pointers that are bound to improve your auto loan possibilities. If you’ve been turned down at a local bank or car dealership, then make sure you read this article in it’s entirety.

You have two choices and I’ll let you decide which one seems like a better idea.

1) You can go from one dealer to another, taking test drive after test drive, filling out multiple credit applications and waiting to see what you can get approved for. Then, you’ll be told that you can’t get approved on this, that and the other, and that you have to cough up some cash to even get approved for an older car.

Or…

2) You can get prequalified and approved for an auto loan. Then go pick out a car that fits your budget.

Doesn’t this make good common sense? Everyday people that have bad credit go straight to the dealerships to try to get a car loan. That is one of the most frustrating experiences of life. It’s gut wrenching to have to sit in front of car salesmen and finance managers over and over trying to get approved. Quite frankly, it’s a big waste of time and money. It’s a waste of money because you’ll end up paying more in interest rates, down payments and car payments when you don’t have all of the information.

The information that you need is this…

• How much of a loan can you get approved for?
• How much car will this allow you to buy?
• What will your payments be, based on that amount and car?
• What interest rate will you have to pay?

It should be easy to see why getting your financing arranged prior to shopping is a big time and money saver, as well. Knowledge is power and having everything in line will make things so much easier for you.

There are some good places online that can help and they don’t cost a single dime to use their services. Years ago it was unthinkable to get approved for a bad credit auto loan online. Today, things are different.

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 pre-approved for your auto loan will not only help you to save yourself from aggravation, it may provide a better deal for you.

Which is better or which is worse when it comes to buying a car and getting approved?

Auto loans for people with bad credit and no credit are available through a wide variety of sources. Knowing which one to use is a challenge. This short article will help to point you in the right direction in your search.

Bad Credit

This can depend on the severity of your situation. If you’ve had a recent repossession in the last few weeks and are trying to get a car loan, chances are that those late payments are going to be showing on your credit report and there just won’t be any help for you. Buy here, pay here car lots that finance their own vehicles would be about the only finance option that you would have. However, if you just have the typical old bad credit blues that many people have, then there are good options to help you to get back into the game and get that credit report built back up with a good auto loan.

No Credit

If you have no credit history whatsoever, there are companies that are willing to give you a first shot at car credit. Rather than your credit report or beacon score being a key player in the credit decision, your time on the job, whether or not you are a college student and other credit references will come into consideration. How long have you been working in the same industry? Have you lived at your current residence for 6 months or more? Your monthly income will make a difference in the amount of “car” that you can buy.

In Summary

Bad credit vs no credit is a very broad debate. Someone with mild credit problems may qualify for more of a car loan than someone with no credit and little income. Every situation is different and the your particulars are unique to you.

Article Source: http://EzineArticles.com/4145291

Bad credit affects people of all walks of life and getting approved for a car loan is a challenge in most cases. This article offers tips that will help you along your way to getting a lower price and better payment terms when getting a bad credit car loan.

More than likely, you’ve had the experience of the “look” that you get when you’re at a dealership and the salesperson learns that you have credit problems. They try to hide it, but salespeople seems to change their pace a bit when they find out that a customer has bad credit. Normally, you’re invited off the showroom floor and into an office to fill out a credit application. “Let’s see what we can get you approved for”, is a common remark. What happens at this point usually puts the customer at a disadvantage.

When you’re at this stage in the buying process at a dealership, it’s common to change from looking at a car that you want to buy, to just trying to see what you can get approved for. This mindset can cost you thousands of dollars in the total amount of your payments. Both in the sale price of the vehicle and the interest rate that you’re offered through the dealership.

A Negotiation Advantage…

A more advantageous approach and one that will save you quite a bit is to reverse this process. Rather than just trying to get approved for a car and having limited choices as to what you can buy, there is a better solution.

By getting pre-qualified for financing, you are able to get approved first before going to a car dealership. This allows you the negotiation advantage. Rather than being in an office in a dealership at the mercy of the finance manager, you’re able to choose what you want to buy based on the amount that you’re qualified for.

The most convenient way of going about this is to find financing opportunities for people that have bad credit online. There are real, legitimate companies that cater to helping people in this situation to overcome past bankruptcies, foreclosures, collections and charge-offs so that they can get a good car loan.

Car loans help to rebuild your credit score and history as it’s the second largest credit purchase that most people make aside from a home. By working with a good company and having a bad credit car loan that will reflect positively on your credit report, you’re one step ahead of the game the next time you need to buy a car.