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The Essentials of Applying for Bad Credit Auto Financing

Posted on: September 24th, 2012 by credit

Arkansas bad credit auto financing may be good news for people with bad credit who are in dire need of a car. However, it comes with risks and borrowers need to be very careful in securing one. If they are careless in their choice of Arkansas bad credit auto financing offer or if they are not taking the payments seriously, they could just make their credits worse. In order to avoid this, here are three important aspects of bad credit auto financing you need to pay attention to.

The Credit Report

The credit report is basically a document that has your personal information, payment history, and credit score. You credit score indicates whether you have a good credit or a bad credit. If your credit score is 649 and below, you have a bad credit. Examine the document for errors or any inaccuracies. Even the three most reputable credit bureaus in the country—Equifax, Experian, and TransUnion—are still prone to make mistakes. Sometimes, there are errors in your payment history which further make your credit bad. If you find any errors in your report, send a request for corrections to the reporting credit bureau immediately.

It is important that you pull out a copy of your credit report before approaching a lender or a dealer. In this way, you will avoid being lied to by unscrupulous dealers about your credit score. These dealers would volunteer to do credit inquiry for you as part of their service but once they get a hold of your score, they could make some alterations so they can charge you a ridiculously high interest rate.

The Income

In bad credit financing, the credit report is sometimes less significant in the lender’s loan decision. The lender would sometimes pay more attention on the borrower’s income than his or her credit report. Since it is given that the borrower has a bad credit, and this lessens his or her chance of getting approved for a car loan, his or her income becomes his or her only hope to get approved for a car loan. Therefore, make sure that you are enough to suffice the monthly payments. If you have a stable job and a sufficient income, you will most likely get approved for a car loan even if you have a bad credit.

The Down Payment

The amount of down payment usually required by a lender is 20 percent of the total loan amount. As a bad credit holder, make sure that you will be able to pay this during the onset of the loan. It is better to pay a bigger amount so that you will only pay smaller monthly payments and less interest. Do not consider taking a car loan that does not require a down payment. Such loan program may seem appealing at first but its disadvantages outweigh its benefits. No money down auto loans can only make your credit worse. If you don’t put any money down, your monthly payments will grow huge and you’ll end up paying more interest. Therefore, make sure to save up for the down payment before taking out a car loan.

Bad Credit Car Loan Fail: You Had the Wrong Attitude

Posted on: September 24th, 2012 by credit

There are many borrowers who fail in paying off their bad credit car loans successfully and there are many reasons for this. One is you could fail in your Arkansas bad car credit loan if you have the wrong attitude when buying a car and when taking out an Arkansas bad car credit loan. Here are some examples:

1. You stop being rational.

Humans are rational beings. But this is suddenly not true when you let emotions drive your decisions at a dealership. Do not be too overjoyed with the fact that you can get financing for a car even if you have a bad credit. Yes, it is true that bad credit car loans exist and that lenders have made them more accessible and easier to obtain. However, they come with risks and dangers which you should be wary of.

Another scenario where you could let your emotions rule instead of your reason is when you fall in love with a car. The problem with letting this emotion take control is you can end up buying an expensive car which you cannot really afford. It would be too late to take a U-turn before you realize that you cannot afford the monthly payments and that the decision is wrong.

2. You compromise.

One of the reasons why car buyers fail in their car loans is they have compromised somewhere during the process of buying a car. One of things commonly compromised is the budget. You plan the budget carefully and you swear to stick with it before shopping for cars and car loans. However, some car buyers would spend a bit more on a car when the car salesman convinces them to do so or when they want to buy their dream car right away. Spending a bit more is still going beyond your budget. A small compromise can come with great consequences. Moreover, do not choose your wants over your needs. You have a bad credit and therefore, you need to be practical and wise with your decisions. You can spend on your wants later when you have a better credit already.

3. You are too lazy.

Being too lazy to do some research, comparisons, and computations can deprive you of the best deals you may find. You are also more vulnerable to scams if you are not that knowledgeable about what you are about to venture in. Make it a part of your car shopping procedures to read car reviews, look up dealerships, compare car loan rates, be familiar with various scams, and read about how to save money on bad credit car loans.

4. You can’t wait.

Lack of patience can also put you in a danger zone in a bad credit car loan. Some borrowers can’t wait to get behind the wheel that they don’t mind improving their credit first. Keep in mind that because of your bad credit, you could only get approved for loans that have high interest rates. The best way for you to get a car loan with a lower interest rate even if you have a less-than-perfect credit is acquire a better credit. There are many ways by which you can improve your credit. You just need to patient enough spending time for it even if it will delay the purchase.

Minimizing Risks of Taking a Used Car Loan

Posted on: September 24th, 2012 by credit

Taking an Arizona used car loan is risky especially that the quality of the car you are about to buy is uncertain. Borrowing a big amount also puts you in danger of bankruptcy or acquiring a bad credit especially if you don’t keep your budget. If you are planning to take an Arizona used car loan, consider the following pointers to minimize the risks:

Pay the down payment with credit card. The use of credit card may be discouraged in some purposes. But using it to make the down payment for a used car purchase could be one of the best uses of a credit card. Paying the initial payment with a credit card makes it easier for you to retract the payment if anything suddenly goes bad—for example, the deal turned out to be bogus. Whereas if you paid it with cash, the cash is already gone and it is almost impossible for you to get it back. Just make sure that you have allotted money for the down payment already so that you can pay it on your credit car due date.

Put bigger money down. Lenders usually require 10 to 20 percent of the loan to be paid upfront as down payment. If you make something bigger than that, your monthly payments will be smaller as well as the total interest you will pay at the end of the term. This eliminates the risk of being upside-down on a loan or even bankruptcy. If handing out a huge amount upfront is not possible, you can delay the purchase to save enough cash for the down payment. In addition, never resort to no money down auto loans as the drawbacks are greater and long-term.

Read about scams. You cannot avoid used car loan scams if you are not familiar with them. You should know what you are guarding yourself from. Familiarize yourself with the various schemes and abusive practices of bogus and unscrupulous lenders and dealers. The Federal Trade Commission (FTC), Better Business Bureau (BBB), and National Automobile Dealers Association (NADA), have all provided information and warnings about scam artists in the industry. Study about the red flags of these scams and be on the alert whenever you shop for cars and used car loans.

Run an inspection on the car. Buying a used car is riskier than buying a new car simply because you wouldn’t know immediately if you are buying a lemon. That is why, thoroughly inspecting the car before purchasing it is important. You can hire a mechanic—someone you know and trust—to run the inspection on the car. However, the test drive must be done by you so you would know if you are comfortable with the car and if it still performs well. Get also the vehicle’s history report and check the VIN with the one indicated in the car’s registration papers. The records and information must be clean and show consistency. This procedure is important in ensuring that the car you are buying is not a lemon.

In a word, buying a used car is associated with many risks. But with the given pointers given above, you can certainly minimize or even eliminate those risks by being a wise used-car buyer.

Buying a Used Car Alone: Women Car Shoppers Need to be More Careful

Posted on: September 24th, 2012 by credit

Car shopping seems to be more dangerous to women than to men. This is because women get a different approach from dealers—a condescending one, usually. Car shopping for women is even more threatening if they are buying a used car. One of the best ways for women to survive this game is to outwit dealers. Here are some pieces of advice:

Research. This part of car shopping is sometimes referred to as doing your homework. This includes reading car reviews, shopping for dealerships, reading car buying tips and advice, and the like in preparation for the actual car purchase. Equipping yourself with knowledge is important because scam artists prey on car shoppers’ ignorance and dealers often look down on women car shoppers.

It is also important that you know the current loan rates. Today’s rate for a used car loan may be different from tomorrow’s rate. Hint: When taking a used car loan, consider the length of the term. If you are planning to take a 60 month used car loan, for example, make careful computations first to see if a 60 month used car loan is really the best choice. Such loan term is considered as long and long loan terms make a borrower pay more for the car.

Deal with the Dealer Smartly. Keep in mind that sales people in a dealership always want to make sales and gain more profit. So, you cannot completely trust them when they say they will help you get the best deal. They must still gain profit somewhere in the deal. Therefore, be smart when negotiating with them. Do not agree with the first offer they will present to you with all their smiles. Dealerships are marking up prices and interest rates so be aware of this when you sit down with a sales person. Always negotiate for better terms. Moreover, whether you hate or like a car, do not express it to the sales person too much. You don’t want to give him an idea of how he can get you into the sale so easily. Finally, if things get uncomfortable—like the sales person is dealing with you in a condescending manner—walk away and move on to another dealership.

Read the contract. Do not be too excited about the car that you forget to read the contract before signing it. That would be a serious mistake. Sometimes, sales people in dealerships think that women car shoppers are gullible. Prove them wrong by examining the contract before signing it. Check for any inconsistencies or if there is ambiguity in the terms. Make sure that all the important details are precisely written down and that the terms are consistent with what you have agreed upon during the negotiation. Do not shake hands with a dealer unless all concerns are settled.

Women car shoppers may be seen differently by dealers and their sales people. And this is why women have to be more careful and wiser when buying a car. By just having the knowledge about cars and financing and being aware of various scams and abusive dealer practices, women car shoppers will succeed in getting the best terms for a used car purchase.

Comparison Shopping on Used Car Loans

Posted on: September 21st, 2012 by credit

Arizona used car loan rates differ in various loan sources. You would need to spend some time and shop around to find the best used car loan rate. Here are some tips when doing comparison shopping.

Pull out your credit report. The first thing to do when shopping for Arizona used car loan rates is to obtain a copy of your credit report. Send a request to a credible credit bureau and once the copy is in your hand, examine it for errors. If you find any, ask the reporting credit bureau to make the necessary adjustments. The credit report tells you your payment history and credit standing. If you have a high credit score, you have a good credit. Otherwise, you have a bad credit and getting approved for a loan may be difficult. It is important that you know well about your credit situation before approaching a lender or a dealer. This is to avoid being lied to about your credit score by some unscrupulous lenders and dealers.

Know the car that you want. List down all the features, accessories, and specifications of the car that you want before shopping for used cars. Be specific and realistic. Remember that you are working around a certain budget and it is important not to go beyond it. Describing your dream car on your list is irrelevant. After you have decided on the kind of car that you want, search for car models that almost fit your preferences. Have at least three car models and read some reviews on them. You can also ask advice from your family members, relatives, or close friends who are knowledgeable about cars.

Shop for loan sources. You can get a used car loan from banks, credit unions, dealerships, and online loan companies. You need to spend time comparing the Arizona used car loan rates from these sources. Get quotes from various sources and use an auto loan calculator to make further comparisons. When comparing quotes, focus on the annual percentage rates or APRs rather than the interest rates. Remember that a low interest rate does not necessarily represent a competitive deal. The APRs tell more about if a car loan offer is expensive or economical.

Use an auto loan calculator. The auto loan calculator computes the monthly payment, interest, total payments, total interest paid, and sometimes provide an amortization schedule. When making computations, look at the total interest paid and total payments to see whether or not you’ll be able to save on a certain loan offer. To save on a used car loan, choose a shorter loan term. A long loan term would only cause you to pay too much interest. You can also put bigger money down to make the monthly payments smaller. If you don’t have enough cash for a bigger down payment, make sure that you have enough to pay at least 20 percent of the loan amount. But never resort to no money down auto loans.

Comparison shopping requires ample time so you can surely arrive at an informed decision. Some car buyers are not willing to do this because they don’t want to delay the purchase. However, the effort is worth it especially if you found the best rate.