Pierre Money Mart Blog

An auto loan is a good way for individuals with bad credit to make a fresh start and re-establish a positive credit history. A range of factors contributes to a low credit score. Yet, you have the ability to change your current credit standing. For some, improving credit may be simple. Their situation may simply require paying past due bills and settling collection accounts. On the other hand, if a bankruptcy or repossession damaged your credit score, consider obtaining an automobile loan to improve rating.

Get Pre-Approved for an Auto Loan

Prior to beginning your search for a new or used vehicle, it may help if you get pre-approved for an auto loan. Accepting dealership financing with bad credit may not be the wisest choice. Most dealerships offer financing to individuals with poor credit. However, dealerships do not specialize in bad credit loans, thus they will not offer the best rate.

To assure getting a fair interest rate, secure your own private financing before negotiating with a dealership. Getting pre-approved for an auto loan is easy. Simply complete an online auto loan application. The lender will review your

complete a formal application to get pre-approved.

Apply for Auto Loan with a Sizeable Down Payment

Even though it is feasible to get an auto loan with bad credit, you are not promised the best auto loan rate. To raise the likelihood of attaining a slightly lower rate, apply for an auto loan with a down payment. Typical down payments are about 10% of purchase price.

Choose the wrong auto loan and you might drastically increase the chances of defaulting and losing your car. Find out step-by-step how to avoid a money pit.

Car loans are certainly less costly than home mortgages, student loans, or other kinds of loans. So why do so many people end up defaulting and losing their cars? Find out these hidden dangers:

Biggest Hidden Car Loan Danger: The Inherent Money Pit

Unlike home mortgages, student loans or other big-ticket loans, car loans are inherently money pits. A house can build equity; higher education can increase earning potential; even jewelry can sometimes be re-sold for as much as was paid for it. If you borrow to buy one of those things, you may eventually get a return on investment. But every single car loses significant value and keeps losing it as time goes by.

Solution: spend as little on your car as possible.

Of course, in order to spend as little as possible over the life of the vehicle, you need to get a well-made, fuel-efficient car, rather than the one with the lowest price on the windshield.

But a pickup truck, SUV, sports car, or “luxury” model is a guaranteed money-loser. Don’t worry about what other people will think. Think about it: when was the last time you saw an expensive automobile and thought, “I really like and respect whoever owns that!”

The best buy? Many economists actually recommend buying a used car that’s a year or two old. That way you can actually benefit from the fact that cars only drop in value. Even a car that’s just six months old may offer you a substantial savings. Just have it inspected thoroughly so you don’t lose what you’ve saved on maintenance payments.

Hidden Car Loans Danger: Dangerously High Monthly Payments

Unfortunately, most people never figure out the total cost before signing on the dotted

____What you can spend on a car (from           above)
____Amount you’re spending per month on          gas (raise or lower this figure
depending on whether you are getting          a car with higher or lower gas
mileage).
____Monthly maintenance (remember: your          new car won’t stay new long, so
maintenance will be an issue).
____Monthly insurance (remember that for          a new car, your insurance premiums          may go up).
____Tax.

= ____ Maximum monthly loan payment.

Now plug the number above into a vehicle loan rate calculator to figure out big of a car loan, and how much interest you can afford.

Final Hidden Auto Loan Danger: Unnecessarily High Rates

If you simply take the first loan the dealer offers you, you are probably paying too much. Do some comparison shopping on the internet, and bring a list of the best loans with you when you negotiate loan terms with the dealer.

Don’t let the dealer cheat you by shifting the cost from the car loan to the car price to the deal on your trade-in. Make sure you get a good deal overall.

Congratulations! You now are far better prepared to stay out of an auto loan money pit than the vast majority of car buyers. Now you’re ready to go shopping for a loan.

Book Value: the estimated value of any used automobile in a specific region. These estimates are recorded in appraisal guidebooks (i.e. Black Book, Kelley Blue Book) and provide guidance on the value of a car at any given time.

Lemon Law: refers to various state laws that protect consumers against persistently defective automobiles.

Manufacturer’s Suggested Retail Price (MSRP): the manufacturer’s recommended selling price for a vehicle and accompanying options.

Upside-down: when the balance owed on a loan (including auto loans) is greater than the current value of a vehicle.

Shopping for auto loans can be confusing. Buying a car is one of the biggest purchases you will make, so it is important to make a plan before you make a decision. Remember, the person selling you the car wants to make the sale; it is up to you to make sure that you have done your homework so you can make the best purchase necessary.

The first thing you will need is a budget. Don’t buy more car than you can afford. You will need to decide whether a used car or new car is better for you. You will also need to choose between buying a car and leasing one.

When looking for auto loans, you should know your credit score before you start shopping for a car and for auto loans. The more knowledge you have about your credit situation, the less likely you will have a finance officer stick you into a worse auto loan than you deserve.

Auto loans are offered by different sources, such as banks, credit unions, and the dealers’ own finance arms. Make sure to shop around, to get the lowest interest rate and a payment you can afford.

Questions on Bad Credit Auto Loans

Q: Is it possible to get an auto loan even though I filed for bankruptcy?

A: Yes, it is possible to get an auto loan with a bankruptcy still showing on your credit report. As long as a bankruptcy has been discharged and your credit is ok since the bankruptcy, you should have no problem getting auto loans.

Q: Will I be limited to older model vehicles just because my credit is bad?

A: Certainly not! You will be suprised at the choices you will have, including late model, dependable cars, trucks, vans, and SUVs.

Q: Can I buy a car from an individual and get the loan from you?

A: At this time, we are not able to offer this service. You can choose a vehicle from one of our nationwide dealers.

Q: How much money will I need for a down payment?

A: Because everyone’s situation is different, and there are many things that factor into figuring a down payment amount, it is impossible for us to give you a definite amount. If you think coming up with a down payment will be difficult for you, ask about the down payment options that are available to you.

Q: I have no credit and would like to buy my first vehicle; can you help me?

A: Of course! We welcome first time buyers,and will ensure that you drive away in a nice, affordable vehicle.

Q: I would rather apply over the phone, can I do this?

A: We do not accept phone applications because of safety concerns. Applying on our secure server is a much safer way to apply.

Q: Can I get a bad credit auto loan with 0% interest?

A: To be honest, probably not. 0% interest rates are often reserved for people who have excellent credit. If you are a first time buyer, or a buyer who may have credit problems, the interest rates you get vary from state to state and fluctuate daily. If you start out paying a higher interest rate, you can always refinance your auto loan in a year or so, as long as you have shown that you are creditworthy.

Q: Is you dealer network limited to any one state or are you a nationwide company?

A: We serve all 50 states and Washington D.C.

Auto loans and programs for bad, little, or even no credit are available nationwide. Bad credit car loans are being approved daily for most all credit situations. Even if you have suffered from current or previous credit struggles, we encourage you to see how our special finance network has helped thousands of people in situations just like yours, who have recently applied online for bad credit auto loans. We provide you with car loan services for new or used vehicle purchases and you can obtain the most competitive rates available online for car loans with bad credit. If you have been thinking that you would like to get an auto loan to purchase a new or used car, truck, sport utility, or van we are here to help you. Car loans are made very simple with our national team of car credit specialists who can assist you today with programs that specialize in Bad Credit Auto Loans.