May
9
Document Checklist for Bad Credit Auto Loans
If you have bad credit and you’re looking for a car loan the process can be time consuming and frustrating. One of the things you can do to save yourself from spending an entire day at the auto dealership is first gather the documents that a dealer finance manager needs to help get you approved.
To make that process easier, here is a checklist that you can print and bring to the auto dealership when car shopping for a bad credit auto loan. Printer friendly version here.
CUSTOMER LOAN DOCUMENT CHECK LIST
Proof of Residence
___ Valid Driver’s License with Current Residence
___ Phone Bill in Your Name at Current Residence
Proof Of Income
___ Payroll Stub Not More Than 30 Days Old Showing YTD Earnings
___ Military: Current Leave and Earnings Statement (L.E.S)
___ Self Employed: Last 2 Years Tax Returns with Schedule C
___ Child Support Income: Official Court Documents and 3 Current Bank Statements/Court Receipts Showing Deposit
Bankruptcy
___ Chapter 7: Proof of Discharge
___ Chapter 13: Letter from trustee allowing new payment (many banks cannot finance an open Chapter 13; ask dealer)
References
Six Personal References from friends and family that do not live with you. Must include complete name, address and zip code and phone number with area codes.
Additional Information
The finance manager at your dealership may ask for additional documents to help prove your income, residence or other relevant information that the lender is asking for. It’s a good idea to call the finance manager to make sure that you have everything you need before you leave for the dealership.
When is the last time you saw your credit report? See what your credit report says about you at RestoreMyCreditReport.com.
Have any other questions? Contact Us and let us know. We’ll get right back to you.
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Apr
24
FTC Consumer Guide for Auto Buyers
Filed Under legal | Leave a Comment
Before Financing an Automobile Check out the FTC Website
The Federal Trade Commission regulates many industries, including the automotive business. Their job is to protect consumers like you.
The following is excerpted from the FTC website regarding automobile financing:
Federal Laws
Familiarize yourself with laws that authorize and regulate vehicle dealership financing and leasing.
Truth in Lending Act – requires that, before you sign the agreement, creditors give you written disclosure of important terms of the credit agreement such as APR, total finance charges, monthly payment amount, payment due dates, total amount being financed, length of the credit agreement and any charges for late payment.
Consumer Leasing Act – requires the leasing company (dealership, for example) to disclose certain information before a lease is signed, including: the amount due at lease signing or delivery; the number and amounts of monthly payments; all fees charged, including license fees and taxes; and the charges for default or late payments. For an automobile lease, the lessor must additionally disclose the annual mileage allowance and charges for excessive mileage; whether the lease can be terminated early; whether the leased automobile can be purchased at the end of the lease; the price to buy at the end of the lease; and any extra payments that may be required at the end of the lease.
Credit Practices Rule – requires creditors to provide a written notice to potential co-signers about their liability if the other person fails to pay; prohibits late charges in some situations; and prohibits creditors from using certain contract provisions that the government has found to be unfair to consumers.
Equal Credit Opportunity Act – prohibits discrimination related to credit because of your gender, race, color, marital status, religion, national origin or age. It also prohibits discrimination related to credit based on the fact that you are receiving public assistance or that you have exercised your rights under the federal Consumer Credit Protection Act.
Fair Credit Reporting Act – Gives consumers many rights, including the right to one free credit report each year. It allows consumers to call one number to notify credit reporting agencies and credit card companies of identify theft. It also provides consumers with a process to dispute information in their credit file that they believe is inaccurate or incomplete.
For more information on federal credit regulations and consumer rights, contact:
Federal Trade Commission
Washington, DC 20580
Phone: (877) FTC-HELP (382-4357)
Web site: www.ftc.gov
Federal Reserve System
Washington, DC 20551
Phone: (202) 452-3693
Web site: www.federalreserve.gov
Apr
10
Ways to Improve Your Credit Score
Filed Under credit report, credit score, improve your credit score | 2 Comments
What Is Your Credit Score?
Your credit score is a numeric guide that shows lenders what your future risk is if they give you a loan. It is based only on the information contained in your credit report. In evaluating your credit application, lenders may use only the credit score, a combination of the credit score and your credit application, or their own proprietary scoring system that may combine each of these ingredients.
Your credit score is based on the following variables: payment history, amount owed on accounts, length of credit history, the nature of any new credit, and types of credit you’re using. I don’t know exactly in what percentage these areas have importance, but I can tell you that more than half of the credit score is based on payment history and amount owed.
How Do You Improve Your Credit Score?
1. Focus On Your Payment History
The more payments that you pay on time, the higher your credit score will climb. If you’ve been turned down for a bad credit auto loan because of your credit score, you probably have had several late payments. One or two tardy payments won’t kill your score. However, if you’ve been excessively late your score is probably pretty low. Get yourself back on track right away. Six months to a year of good payments can do wonders for your score.
2. Pay off Collection Accounts
You can’t remove a collection account by paying it, but paying them off can improve your score. It doesn’t hurt to ask the creditor to remove the account when you pay it off, but don’t expect them to do that. Many mortgage companies will insist that you pay off collection accounts before giving you a home loan.
3. Focus On the Amount You Owe
If you’re carrying high balances on your accounts, your credit score may suffer. Being close to your credit limit on your credit cards may show that you’re overextended, and your credit score will suffer as a result. If you can, pay off your cards, or at least get the balances down. When your credit report updates with lower balances your score may be able to raise your credit score fast.
Having said this, carrying small balances on your cards that you have managed to pay on time is much better than carrying no balance at all.
Also, pay off your debt instead of just moving it around. Shifting balances from one card to another does not qualify as paying off your balances.
4. Avoid Taking On New Debt
Although it matters less than your payment history, taking on new debt may affect your score. People who open several new credit accounts at the same time may seem to be a greater risk than those who are lowering their current debt.
If you’re looking to purchase a new or used car or a home, don’t drag out you shopping activity over months. Having your credit pulled by several companies over the course of a year or so looks like a much higher risk than having this done in a shorter period. Instead, do your rate shopping in a shorter period.
Opening up a handful of credit cards, for example, may lower your credit score. Some people do this to increase the level of available credit. You are usually better off applying for credit as you need it. If you really don’t need a new credit card, just don’t apply for it. Especially if you’re trying to improve your score.
5. If You Are Trying to Repair Your Credit After a Bankruptcy or Other Credit Crisis
If you are trying to repair your credit score then opening up a new credit care account may make sense. In that case, you should open a new account so that you can begin to establish a good payment history. If, for example, you are coming out of a bankruptcy, we would recommend that you start with a credit card or small installment account and begin to make payments over time. Just remember, as you build your credit and more credit becomes available, don’t apply for it unless you really need it.
6. Limit Your Credit Inquiries
Every time a merchant or lender pulls your credit in order to evaluate a credit application submitted by you, your score will be dropped slightly. This shouldn’t present any problems for you or the lender. However, numerous inquiries that include several different attempts to get credit can lower your score drastically. Multiple inquiries, for example more than ten in a short amount of time, can signal a higher risk of bankruptcy. The credit reporting agencies can distinguish between normal “rate shopping” and someone looking to max out their credit irrationally.
7. Pull Your Own Credit Every Six Months
Pulling your own credit using any of the reporting agencies or other services does not lower your score. Each of the reporting agencies do not drop your score for checking your own history. Also, any time your credit is pulled as a part of a promotional event or item (for example an unsolicited credit card offer), you will not be penalized for that inquiry.
At least every six months you should pull your credit history to check for mistakes or any kind of identity theft or fraud. Correcting mistakes in your credit report can take time. Don’t wait until you’re at the car dealership to hear that someone has opened a credit card in your name and wrecked your score. This isn’t common, but it happens more than you may think.
This wasn’t an all inclusive list of ways to improve your credit score. Your credit score is based on several factors, not all of them available to the public. However, sticking to basics like making your payments on time, applying for credit only when you need it and not having excessive inquiries should go a long way towards improving your score over time.
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Apr
4
Bad Credit Auto Loan Refinance
Filed Under refinance | Leave a Comment
A bad credit auto loan refinance application is less common than a bad credit auto loan. However, it is possible to benefit from refinancing your bad credit auto loan to lower your interest rate and get better terms. If you have been making your payments on time it is very possible that if you submit an auto loan refinance application you could save a lot of money.
If you once had bad credit and you have reestablished your credit by making your auto loan payments on time, it is worth your time to consider auto refinancing.
The longer you wait to submit your refinance application the more money you will pay in the long run. For example, lets say that you financed a bad credit auto loan two years ago with the following terms:
Interest Rate: 19.95%
Original Balance: 19854.02
Payments: 72 months at: 478.48
Total Interest Paid: 14450.35
Total Cost of Auto Loan: 34,304.37
You can see that your challenged credit auto loan interest rate is very high, and the interest associated with that rate is also very high. Over the course of six years you will pay a lot of interest to the lender!
However, if you refinance your bad credit auto loan with a company like StraightAway.com, you could qualify for good auto loan refinance terms. This is a hypothetical situation, but lets say after two years of paying your bad credit auto loan, the terms of your new loan are as follows:
Interest Rate: 12.95%
New Balance: 15,737.45
Payments: 48 months at: 421.81
Total Interest Paid: 4509.23
Total Cost of Auto Loan: 19,994.71
Amount Saved by Refinancing: $7088.76
Payment Was Lowered by $57
In this hypothetical case, your bad credit auto loan refinance lowered both your payment and your interest charges quite a bit.
Mar
27
Bad Credit Special Finance Car Loan
Filed Under auto finance | Leave a Comment
Getting A Bad Credit Special Finance Car Loan
Financing a car loan with bad credit can be difficult. Dealerships don’t always have the knowledge, lender relationships or expertise to finance auto loans with bad credit. The process, for customers with credit problems, can be time consuming, confusing and embarrassing. In the last few years, many car buyers with bad credit have looked to the internet to help finance a bad credit auto loan or bad credit truck loan. Sending a bad credit auto application online can be a much easier process for customers.
It’s not difficult to find companies online that will take your application for a bad credit auto loan. For example, if you search for “bad credit auto loan online” you will find pages of websites that promise to finance your bad credit automobile loan. More often than not, these companies make their living by selling your information to a car or truck dealership. The problem with that is you don’t really know whether or not the dealership can solve your needs and find a way to finance your bad credit auto loan. You’re going to end up at an auto dealership anyway.
One good thing about sending your bad credit auto application online is that most dealerships who purchase this kind of online application have experience dealing with bad credit auto loans. They are more likely to have relationships with special finance lenders who deal specifically with car buyers with credit problems.
However, before you send your application online, there are things you can do to help you make the process of financing a bad credit auto loan easier. I recommend that you take a look at your credit first. There are many companies that offer free credit reports online. Usually you have to subscribe to their service, but it’s usually very inexpensive and a good idea as you rebuild your credit.
There are also companies that will help repair your credit for you. One company is RestoreMyCreditReport.com.
Taking a look at your credit report ahead of time gives you the opportunity to see what your credit looks like to bad credit auto loan finance companies and banks. Sometimes these companies require explanations for derogatory auto loan applications. Taking a look at your credit report will give you the time to gather documents ahead of time that special finance companies will ask for after seeing your bad credit auto loan application.
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