Potential Savings on a Poor Credit Auto Loan

You may think that there are few chances of actually saving money on a poor credit auto loan.  While you cannot get a poor credit auto loan through comparing rates online (but you can apply online) there are other ways you can cut down on interest and fees paid.  The key reason you are unable to compare rates online is that the finance companies for poor credit lending work in conjunction with the dealerships.  So you have to go to a dealership to get a loan quote.  You can find out if you qualify for a poor credit auto loan through your online application.

Cutting the length of the loan itself is a good way to lower interest rates on a poor credit auto loan.  Yes, your monthly payment will be a little higher but you will pay off the loan in less time.  Let us say, for instance you take a loan for a term on 48 months versus 60 months (4 versus 5 years).  A concrete example: you get approved for a poor credit auto loan for 15,000 dollars.  You go to the dealer and buy a 15,000-dollar car.  You put a couple of thousand down then pay sales taxes.  So you actually drive away with around a 14,000-dollar loan.

You final question before signing the contract and driving away is this: do you take a four-year loan or a five-year loan?  If your ultimate desire is to save money then take the four-year loan.  Yes, a four-year loan will increase your monthly payments between fifty and sixty dollars a month based on fifteen percent interest that is the norm for poor credit auto loans.  However, paying that extra fifty to sixty dollars a month will save you between 1,300 and 1,500 in interest charges on the entire loan.  Plus, you pay your car off a year early!

Another benefit to taking a shorter loan period besides saving money in interest is keeping your car’s value even or above the amount of the loan.  Then, if the car is involved in an accident prior to the loan being paid off you may not be over financed or upside down in the loan.  If you keep the car for the length of the loan the car will be worth more for a trade in because it is one less model year older versus a 5-year loan.

Apply for a poor credit auto loan here, online, today!

Post-Bankruptcy Bad Credit Auto Loans

If you have filed bankruptcy, but it now discharged by the court, you may be able to take the first step to getting your credit back with a bad credit auto loan.

It is easier to get a bad credit auto loan if your bankruptcy was a Chapter 7 versus a Chapter 13.  Chapter 7’s usually only take a few months while Chapter 13’s can take a few years.  If your Chapter 7 has not been discharged simply apply for the loan once it has been in a few months.

Chapter 13 bankruptcies are a different ballgame since they can last several years.  If your Chapter 13 has not been discharged your Trustee must ask the court for an order to incur additional debt.  If the court allows you to take the loan you will get an official court document stating such.  The bad credit auto lender will need to see this document.  Additionally, the court will decide how much you are allowed to finance.

Whether you are in Chapter 7 or Chapter 13 bankruptcy you must never have a bankruptcy dismissal.  Courts will dismiss a bankruptcy if you skip court hearings and skip making required payments.  You will never get a bad credit auto loan if you have a dismissed bankruptcy on your record.

On the other hand, if you have a discharged bankruptcy, it means you did everything the court required you to do.  You will get an official letter of discharge on the bankruptcy.  Store this in a safe place so it will be handy for your car loan.

Next, check your own credit report.  This can be done by going to each bureau: TransUnion, Experian and Equifax, respectively.  You may also request your legally required free credit report from annualcreditreport.com.  If you see mistakes in your credit report, such as loans you never took or someone else with your same name, let the credit bureaus know immediately.  Then the mistake can be corrected before you apply for a loan.

Lenders look at your credit in two key ways.  First, they look at what is called revolving credit such as credit cards.  If your recent bankruptcy disqualifies you for a credit card you can get a secured credit card by paying up front.  For instance, get a secured credit card with a 500- dollar limit by paying $500 cash into the card before using it.  Second, lenders look at your installment credit, which are car payments.  You pay a set amount monthly for a set period of time.

There is a way back after bankruptcy.  A bad credit auto loan is a great place to start!

Leasing is an alternative way to finance your next car

One option to financing which often results in a lower monthly payment is leasing. The reason for this is that in leasing you aren’t paying the entire price of the car but rather only for that part of the value of the car that you used. An example of this is say a car costs $20,000 and you lease it for 3 years. At the end of 3 years the car is considered to have a “residual” value which is the value of the car at the lease’s end, of $10,000 or 50% of the new car price. What you have to cover with your lease payments is the $10,000 between the original price and the $10,000 residual. Not the total value. The result is a smaller monthly payment.

There are several significant “restrictions” on leasing and these include:

1. there is often a monthly or mileage cap which may or may not fit your needs. This is often between 800 and 1000 miles per month.
2. Generally leasing is available only for new cars and a new car may not fit your finances.
3. Leasing often requires good or very good credit making it hard for someone with very poor, bad or very bad credit to get approved
4. A lessee (the person who is leasing the car) has to carry very high limits of liability insurance and good collision – better than many people want to carry.
5. The car has to be strictly maintained in agreement with the lease terms

We’ve been working with folks who have very bad or very poor credit for over five years in helping them get the financing they need to get into their next car. What we don’t want you to do is make the big mistake of going to a “buy here / pay here” used car lot to get your next car. We work hard to show you much better alternatives if your credit is bad. What we’ve learned in this process is that local franchised auto dealers are often your best choice in getting the financing you need. They offer both leasing as well as financing and if leasing works for you they can provide it. They have a dual incentive, unlike lenders who have only one motive, to work with you. They:

1. Want to sell you a car and develop you as a customer and a return customer,
2. They want to make reasonable profit on the auto financing.

So when you are looking to finance or lease your next car, go on the internet and apply. Your application will go to a local dealer experienced in bad credit financing who can help.