Bad credit auto loans or special financing is here to stay. Since the economic turn-down began in 2008, over half of Americans, over the age of eighteen, have seen their credit scores drop dramatically. Fortunately, more banks, credit unions, and finance companies, no longer use credit scores as the most important component of approving an auto loan. Reasonably priced vehicles, at fair prices, and interest rates, commensurate with the corresponding credit and other factors, is the norm for most reputable, pre-owned, auto dealers these days.
BAD CREDIT LOANS ON LATE MODEL VEHICLES
Individuals with poor credit no longer have to rely on a, sometimes shady, buy-here-pay-here used car lot. To the contrary, there are more, and more, used car dealerships that specialize in special financing for “like new”, low mileage, inventory. 2010, 2011, 2012, even 2013 models are now available through such specialty dealers. Why? Simple, lenders have determined, after years of tracking bad credit, or sub-prime auto loans, that the bad credit customer is much more likely to pay for a newer, nicer vehicle, in a timely fashion, than for an old clunker that is on its last set of tires.
THE SPECIAL FINANCE DEALER WELCOMES YOU
Most huge, shiny, franchised dealerships, such as Ford, Chevy, Dodge, Honda, Toyota, etc., view bad credit auto financing, or special finance (poor credit), as it is known in the industry, as a “side business”, or even a “necessary evil”. It is not their prime source of profit, and most certainly not their field of expertise.
Find a used car dealership that specializes in Special Finance. They have more lending sources, the right inventory for their targeted market, and the expertise to navigate through the choppy waters of a sea of bad credit to obtain the best deal for you, their customer. Search the internet using the keyword “bad credit auto loans” to find experienced, bad or no credit auto loan specialists in your area looking for you. Not only are you not a “necessary evil”, you, the bad credit auto loan customer, are their life blood.
SET YOUR GOAL TO BUY A NEWER VEHICLE
Prices and interest rates have stabilized for the bad credit customer; however, rates are still somewhat higher for bad credit, than for good credit. This is another reason to pursue the right dealer, with the right inventory. In Texas, interest rates are tightly regulated for the current model year, and two years back. In other words, regardless of how bad your credit score may be, your interest rate will be, by law, on average, 5% lower on 2013, 2012, and 2011 models, than on any other year. Your mindset should be to purchase a newer vehicle because it’s a sound financial decision.
REALISTIC EXPECTATIONS AND REQUIREMENTS
As one who is seeking a bad credit car loan, you must follow a few simple rules of expectation. First, as Mick Jagger, once sang, “You can’t always get what you want, but sometimes, you get what you need.” Think in terms of reliability and economy, such as Ford, Toyota, Honda, etc., as opposed to luxury and “bling”, such as BMW, Mercedes, or Cadillac. When purchasing a used car, buy LOW MILES, then make, and model. BUDGET for your new payment before you go shopping. Calculate your gross monthly income. Your car payment should not exceed 18% of that figure. You should also be prepared to put a minimum of 10% of the sales price down. Do not be a price, or interest rate, shopper.
Your number one concern should be monthly payment. If a vehicle fits your budget, as long as the sales price does not exceed NADA average retail, and the interest rate is not usury, then you have made the right deal, on the right car, and have begun paving your road out of the doldrums of bad credit. If you have found a true “bad credit guru”, he, or she, will help you refinance your car loan, a year after your purchase, to reduce your payment. This is a service every elite Special Finance director offers free of charge to his existing customer base. The longer you pay your auto loan, in a timely fashion, the higher your credit score becomes. Your “finance guru” should be able to reduce your interest rate, as time goes by, thus reducing your monthly payment.
WHAT TO BRING WHEN BUYING
Set your budget, bring your most recent pay stub from work, bring your phone bill, and yes, your mobile phone bill is fine, bring your down payment, and/or title to your trade-in, have your insurance agent’s phone number with you, and come prepared to leave in a great, late model, low mileage vehicle, regardless of your past credit.