Category: Auto Loans

$5,000 Auto Loans with Bad Credit

You’re looking for $5,000 auto loans for people with bad credit, but the fact is lenders aren’t looking to lend a specific amount. They’re looking to lend as much as possible without taking excessive risk. So let’s look at how a lender would decide whether to give you an auto loan for $5,000.

First, let’s estimate the payment. Now, because we know you have a shoddy credit score, your interest rate is going to be between 11% and 20%. For quick math let’s call it 15%.

$5,000 financed at 15% for 36 months gives a payment of about $174 per month. The lender already knows your credit is bad, but they’ve offset their risk by charging you 15% interest (or more). The only question remaining is whether you can handle another $174 in monthly debt service. To make this decision they use a ratio of the sum of all your current debt payments compared to your monthly gross income. What ratio are they going to want to see? It’s hard to say because it varies so much by lender. Some lenders care a huge amount about your income; others don’t care as much because an auto loan is a secured loan – meaning they can repossess the car if you default (repossessing the car can actually be profitable for them because they get the car back, keep all the money you’ve already paid, then turn around and sell the car again).

But I’d say you want to keep your total payment to income ratio below 40%.

For example:

Your gross income is $4,000 per month (you’ll have to prove that with pay stubs and possibly a letter from your employer).

  • Your mortgage payment on your townhouse is $950 per month.
  • You have another car payment at $250 per month.
  • You have student loans at $150 per month.
  • The minimum payments on your credit card debt is $140 per month.

So before we add the $174 per month for your new car loan, you’re at $1,490 per month.

Adding your $174 for the new loan you’re at $1,664, which is 41.6% of your gross income.

This leaves slightly over the 40% ratio we were shooting for. Does that mean you won’t get the loan? Not necessarily. Like I said, some lenders don’t care a ton about your debt to income ratio. On the other hand, you have to ask yourself if YOU want the loan. You’ve already got credit card debt, student loans, and another car payment. Would it make more sense to hold off on this car? Could you ride your bike or a $500 scooter to get where you need to go? I know it’s not glamorous, but trust me when I tell you that getting out of debt is worth feeling a little nerdy on your scooter. Think it over.


No Credit Check Auto Loans with Repo

Listen closely. It doesn’t exist. There’s no such thing as a no credit check auto loan, with our without a repossession on your record.

Of course, that doesn’t mean you can’t get financing. You’re operating under the assumption that because there’s a repo in your recent past a lender won’t touch you. That’s not the case, but that doesn’t mean they’re not going to check your credit before they give you a loan. Why is that? Because your credit goes beyond just your Fico score (which I’m sure is pretty awful, but don’t feel bad – that’s just about everybody these days). Prospective lenders are going to look at your credit history to get an idea of whether they should treat you as anything other than a really bad credit score.

They’re going to look at:

  • how much credit you’ve had in the past (both number of credit lines as well as total available credit on things like credit cards, etc)
  • how many late payments you’ve had on those credit lines (although typically they’ll only go back 24 months)
  • what your current outstanding balances are (including judgments, active credit lines, home loan, etc)

Make no mistake, if someone gives you an auto loan (even relatively small $5000 auto loans) after you’ve had a repo, they’re going to stick you with some ridiculous interest rate. I’m talking upwards of 20%. But that doesn’t mean they won’t give it to you at all. They likely will give it to you. But before they do, they’re going to look very closely at your provable income and your current monthly payments on other loans.

After all, whenever you had your repo, it wasn’t because you were flush with cash and just decided to stop making payments, was it? Probably not. Whether it was unemployment or some other emergency cash issue in your life, you didn’t have the money to stay current on your car payment. So the big tow truck came in the night and hauled it off to auction.

Here’s what your new lender will need to see:

  • most likely at least 30 days of pay stubs
  • a letter from your employer (on company letterhead) saying that not only are you still working there, you will continue to be employed by the company for the foreseeable future

Once you’ve proven the income, the lender will add your new payment to existing loan balances, calculate the total payments as a percentage of your gross and net income, and make a decision about whether you can handle the payment. If he feels like you’re likely to make your payments on time, he’ll give you the loan and courteously charge you 23% interest on it. And if you’re dumb enough to default again, he’ll repo your car, keep all the money you’ve already paid him, and sell the car to somebody else who’s on the hunt for no credit check auto loans after their repo.

Auto Loans for People with Poor Credit and ‘Repos’

Is it possible to get an auto loan after a repossession?

Yes, it’s completely possible. Depending on the dealer you’re working with it could be very easy or very hard to get car financing after you’ve had a car taken by the bank. Ironically, the easiest lending situations won’t always be the most desirable for you. Let me explain:

Certain car dealerships – usually those with the somewhat homemade looking banners hanging on the front of their office that say “everyone is approved!” – should be avoided like the plague. Here’s a quick glimpse into how they operate: first of all, they take used cars of questionable dependability and they price them something like 20% above their bluebook value. Then when you come into look at cars, they tell you you can be financed as long as you can put around 20% down. See what’s happening there? You’re paying cash for the 20%, unjustified markup, which means before you ever make a single payment you’ve already given them a really nice profit on the car.

This is why getting no credit check auto loans with repo can be so risky. Once you’ve made the ridiculous down payment they’re going to tell you that they’ll finance the remaining amount at something like 23% to 25% interest. So now they have your 20% down payment and you’re on the hook for high payments at a ridiculous interest rate. These dealers aren’t stupid – they know your track record with making payments. They know there’s probably a 50/50 chance you’ll start missing payments, which means they’ll come repossess the car. So they take the car back, keep your down payment plus any additional payments you’ve made, and then wait for you to come into to plead your case.

This is an almost no-lose situation for the shady dealer who’s offering to finance a car after your repossession. One of three things will happen:

  1. You’ll come into the office, get current on your payments, take the car, and keep making payments at the 25% rate.
  2. You’ll walk away from the car, which lets the dealer keep all your money and then resell the car to some other poor credit borrower.
  3. You’ll decide that car was too much for you to handle financially, so you’ll make a new down payment on a different car, and start the ugly cycle over again.

Do you see how it would be best for you to avoid this whole situation in the first place? It’s going to be much safer and smarter to work with a dealer that actually cares about its reputation. The terms of the auto financing after a repo may not be much better, but they’ll have less desire to treat you poorly.

Are there car dealerships that finance people who have had a previous repossession?

Yes, there absolutely are. And that should be a relief to anyone who’s gone through the stress, frustration, and discouragement of an auto repossession. Here are a few things to understand about financing a car after you’ve been through a repossession.

First of all, your credit will have be negatively affected by the repo, which means most credit unions and banks aren’t going to want much to do with you. So not only are there dealerships who will lend to you – they’re likely your only option. Before you visit or even contact any dealers, do some homework on the internet to make some decisions about which car is right for you. It’s a mistake to start shopping for cars before you know what you want, what you actually need, and most importantly – what you can afford.

What a tragedy it would be for you to go to some used car lot and have the salesman tell you to buy a huge, gas-guzzling SUV, and then finance you at 25% interest – promising no credit check auto loans with repo –  so you can leave with it that day. That would probably leave you just as badly off as you were before, and you’d probably be on the fast track to another repossession. Here are three ideas for making sure you never have to go through the stress of a repossession again:

1. Make a BIG down payment – as much as 50% of the purchase price of the car. There are several benefits to forcing yourself to come up with a big down payment. First of all, your payments will be small and more manageable. Second, saving the money for the down payment will force you to exercise personal financial discipline.

2. Buy something SMALLER. Even if you have three kids, you don’t need an SUV! Even if you have to cart around three or four kids at a time, get a nice used minivan. Guess what? They’re cheaper to drive, cheaper to insure, and cheaper to maintain than a big SUV.

3. Buy from a reputable dealership. Many smaller car lots advertise that they’ll finance anyone, and they will, but it’s not going to be in your best interest to borrow from them. They’re going to require a huge down payment AND charge you 22% to 26% interest on the loan. When your payment becomes unmanageable, they’ll repo the car again and then try to sell it back to you. It’s a vicious cycle.

Your best bet is to work with a dealership attached to a major auto manufacturer. Their goal is to get you into a car that’s reliable and affordable, not put you on the repo merry go round.

Low Interest Auto Loans

If you’re planning to buy a car, you’ll want to carefully consider your options to get the lowest interest rate possible. Even $5000 auto loans‘ interest can add up fast if your rate is too high.

Before you start car shopping, check your credit history. Make sure your credit reports are accurate, and correct any mistakes before you seek financing. This can improve your credit score and help you secure a lower interest rate. If you have enough time before you need to buy a car, you can improve your score by repaying any unpaid bills.

One possible option is to use a home equity line of credit or a home equity loan. These loans offer a lower interest rate than a car loan because they are secured against the value of your house. For these two options, a home equity line of credit typically offers a lower initial interest rate, but they can fluctuate with interest rate changes. If you are considering a shorter term, such as 3 years, this might be your better choice, but if you are seeking a longer loan, a fixed interest rate loan through a home equity loan might better. They both offer the added bonus of deducting the interest on your income tax, which a car loan doesn’t. Of course, there are risks; you are using your house as collateral, and if you default on the loan, you may be forced to sell your home. Also, consult a tax advisor about your individual tax situation.

If a home equity loan isn’t for you, try to get pre-approved through a bank before car shopping. Depending on your credit history, banks usually will offer a more attractive interest rate than a car dealer, and this way, you’ll know how much you can afford before you get on the car lot.

Also, car dealers often try to explain a loan in terms of your monthly payment, rather than the interest rate. This gives them the room to increase the interest rate to match the amount of payment you can afford.

Finally, leasing can sometimes provide a good alternative to purchasing because lease payments are often lower than loan payments. Be sure you understand the terms of the lease, such as mileage allowances and purchase price at the end of the term, should you choose to buy the car then. The downside is that you have no equity at lease end.

Refinancing Your Car With Bad Credit

Out of all the problems associated with having bad credit, getting a car refinance loan often isn’t one of them. Refinancing your car with bad credit is fairly easy, due to the fact that the car serves as collateral. A willingness to put up decent collateral is often reciprocated by lenders, who suddenly become willing to deal with you.

There are several possibilities for refinancing your car with bad credit (we could be talking about $5000 auto loans – or much bigger numbers). The best of these options include banks and other well-established lenders. Many of them even have online applications where they specifically solicit bad-credit customers. Even though interest rates are higher for people with bad credit, these lenders are often about as good as they get in the industry, with repayment terms being fairly straightforward. These operations, as a rule, will stick to the contract, so you can rest easy knowing that if you pay the bill, you keep your car.

In cities of any decent size, it is possible to find independent lots who claim that they are willing to lend to everyone who has the ability to breathe. This part of the car-refinance industry, unfortunately, has a big reputation for being shady or worse. Horror stories abound. Therefore, it’s best to avoid these operations, and go for a big lender, preferably one which is nationwide or at least statewide. Large lenders, if only because of their size, have to withstand more regulatory scrutiny. Therefore, big lenders are more likely to play by the book.

One good source of car refinancing may be a bit surprising. There are credit card companies which also have auto and even home refinancing arms. Some of these companies specialize in dealing with people who have bad credit. Refinancing your car through them can work very well.

Refinancing your car with bad credit does not have to be hard or cause undue grief. With good research, you can find plenty of reputable companies to deal with. When looking online, look for car refinance deals which are attached to banks or credit card issuers. Many bad-credit lenders online also advertise through various affiliate sites and promoters. This is fine, as long as the company actually doing the lending is a reputable one. Look in the tiny type in any agreements you are asked to approve to see who is actually behind a bad-credit refinance offer, as well as to see all of the relevant terms and conditions.

Auto Loans for People with Poor Credit – Do You Need One?

There is no denying that transportation is an absolute necessity in most circumstances, but securing an auto loan can be very tough for an individual plagued with credit problems and a poor beacon score. Many people find themselves in an incredibly difficult situation when shopping for a vehicle and there is no immediate fix to a negative credit rating. Although there are many lenders that have designed auto loans for people with poor credit, there are some important things to realize about these offers.

The down payment required with a poor credit auto loan may be significantly higher, so shoppers should be prepared to raise more money if needed. A larger down payment not only decreases the lender’s risk, but it also lowers the amount financed which results in lower and more manageable payments. A large down payment may be the only way that an individual can qualify for an auto loan.

There are typically higher interest rates associated with no credit check auto loans with repo. As a result, a higher percentage of the payment will actually go towards the interest rather than the principal of the loan. It is often recommended that a borrower pay a little extra each month if at all possible to decrease the total finance charges over the life of the loan. Higher interest rates are largely dependent upon the amount of increased risk that a lender may face due to a poor credit borrower.

It is also important to note that almost all poor credit auto loans will require a consumer to maintain both comprehensive and collision coverage on the vehicle financed. Auto loans for people with poor credit also typically mandate that the deductible on the auto insurance is no higher than $500, so this can raise premiums as well. A lender simply wants to ensure that they will receive their money if the car is involved in any accident or loss.

Many individuals find that there is no viable alternative to owning a vehicle, but luckily there are options available for financing a car with poor credit. The ability to drive to and from work may be taken for granted by many consumers, but it is a privilege that should not be taken lightly. Responsible payment activity on an auto loan for people with poor credit will actually increase a borrower’s beacon score, and perhaps the next loan will have even more favorable terms.

Car Loans for Poor Credit

Nearly every day I see ads – freeway ads, internet ads, and TV ads – appealing to car buyers with bad credit. The constantly echoed mantra is “we finance everybody, regardless of credit score.” The fact is, most of these advertisers aren’t lying; they’re being truthful about the fact that they’ll lend to nearly anyone. The question is whether they’re acting in the best interest of their customer.

As a person looking for car loans for poor credit, you need to accept two realities before you do your first web search for a new car or visit a single dealer: you’re going to pay a higher interest rate and you’re going to have to make a higher down payment, period. Those two facts are a foregone conclusion. Where you need to be cautious is in deciding whether the price of the car and the interest rate you’re being offered are anything reasonable.

The research I’ve done tells me there are some very unscrupulous lenders who will try to take advantage of your credit-challenged status – taking car loans for people with poor credit to another level. For example: they know that you’ll feel your options are limited due to your low Fico score, which means you’ll be less likely to walk away from their car lot if you really believe you won’t be able to find better deals out there. Knowing that, they’ll take a car whose normal value would be somewhere in the $2,500 range and stick a price of $5,000 on it. Then they’ll say they need $1,500 down and finance the remainder at something like 23%.

Sure, you could walk away with a car, but almost anyone’s standards you got screwed (pardon my french). The key to avoiding this situation is to do your own research on different makes and models of cars you might be interested in buying, studying their blue book values beforehand so you’ll at least have a sense of whether the dealer is trying to take advantage of you.

One of the best places to get a car loan with bad credit is an actual new car dealership (used cars got their reputation for a reason). If you can actually afford a new car, you’re much more likely to be treated honestly and fairly by a new car dealer who doesn’t just make their money from these outrageous financing deals – they actually profit from the sale of the car. That gives them better incentive to give you the best possible financing options so you’ll actually purchase the car.

The burden is ultimately on you to make sure the deal is in your best interest; you can’t count on anyone to care more about your financial situation than you do. My best advice is to get a small, economical car with you’re using a poor credit car loan to get it. Drive a little beater for a couple of years while you reestablish your credit and save some money, and then you can go out and buy a car you really want with terms that won’t make your financial advisor sick to his stomach.

Bad Credit Auto Loans after Repossession or Bankruptcy

For a guy like me who has spent more than two decades in the loan business, it’s still hard to imagine a type of loan where absolutely anybody gets approved. But the fact is there are bad credit auto loans that absolutely anyone can qualify for. I suppose that’s not such a bad thing. If people can’t get reliable transportation, they have a very hard time keeping steady employment. I don’t want more people in the welfare offices just because they had a repo a couple years back and now they can’t get a loan to buy a car.

But if you have damaged credit and you’re looking for $5000 auto loans, you probably have a few questions, and I’m guessing two of the more commonly asked ones will have to do with repossessions and bankruptcy.

First, repossession. Yes, there are lenders who won’t mind a repossession, even if it happened in the last year. But there will be some conditions. The repossession can’t have been part of a bankruptcy, and there still technically needs to be a balance on the account (even if you’re not making payments anymore). If you’ve had a repo you’ll have to bring a bigger down payment to the table, and lenders aren’t going to want to finance an old clunker, so you’ll need to buy a more recent model car that still has a warranty in effect. Make sense, doesn’t it? If you flake again and they’re left with a car, they want one under warranty so they can fix it for free (if it needs repairs) and sell it at a higher price.

And what about bankruptcy? Yeah, you’ll still be able to get financed even if you have a bankruptcy on your record. But again, some conditions. One, the bankruptcy will have to be complete and discharged. They don’t want you applying for a loan while you’re in the middle of asking the courts to let you off the hook with the rest of your debt. Second, your bankruptcy trustee will have to give you a document called an Authorization to Incur Debt for you to include with your application. That pretty much explains itself doesn’t it? If you’re bankrupt and looking to borrow more money, the lender is going to want to know that you have permission from the folks who handled your bankruptcy.

This topic isn’t a glamorous one, I know. But you, and millions like you, are in the dog house with the credit agencies right now. You still need transpo to get yourself here and there, and you need an opportunity to borrow some money so you can make payments and rebuild your credit. No credit check auto loans with repo are a great tool to get the process going.

Bad Credit Car Loans

The worst case credit scenario for all of us is bankruptcy. I read an article by a bankruptcy attorney once that people’s biggest fear when they’re deciding whether to go through bankruptcy is that they’ll never be able to own a home again and they’ll never be able to buy another car. Those fears aren’t really justified, but it’s true that borrowing for cars and houses is going to get much tougher after you’ve gone through the big BK. Elsewhere on this site we’ve talked about getting a mortgage when your credit is bad, but let’s talk about bad credit car loans.

Surprisingly, working with an actual new car dealership might be the way to go when you’re trying to get a car loan with bad credit. You’d think the opposite right? Especially when you drive by those little used car lots and they have the big banners (next to the giant inflatable gorilla) that say “No one will be denied! Everyone approved!” But new car dealerships know that a very high percentage of the people who walk onto their showroom floor have messed up their credit in some way and will need some creative financing.

If you want to save yourself having to drive to the dealership only to find out they don’t want to play ball, call ahead. Ask to talk to the financing department, and if you can get the finance manager on the line ask him or her what kind of bad credit financing options could be available to you. If they say they don’t have anything to offer, move on to the next.

I’d be surprised if that’s the case, though. I’ve heard of plenty of places that are willing to set up some kind of short term lease that they’ll convert to a permanent loan at a lower rate after you’ve made payments for a couple of years. It’s going to be more expensive that way, but you ought to expect that, given your credit status.

You also might be surprised to hear that credit unions very often have great bad credit new car loans. Call around to the credit unions in your area, explaining your situation. If they’re smart, they’ll walk you through kind of a verbal prequalification process on the phone (what’s wrong with your credit, how much do you make, how much are your other monthly debt payments, etc) and then they’ll let you know what programs are available to you.

Yes, the interest rate is going to be pretty ugly compared to what a good credit borrower would get, but who cares? This loan gets you the car you need and it helps you rebuild your credit. If you have to pay 8% to 10% interest so be it. Learn the lesson, make your payments, and enjoy your new car.

Low Interest Car Loans

In a perfect world we would all pay cash for every car we bought. No financing, no payment, no interest, no additional debt. It’s not a perfect world though, is it? No, almost no one has $5,000 to $25,000 to buy a car they can count on, so they have to finance. The best advice I can offer (as obvious as it seems) is to look for low interest car loans.

First of all, there’s something you need to acknowledge before you ever go car shopping, test drive one you like, and fill out a loan application – car loans with low interest are reserved for people with good credit. I know that’s not what you want to hear, and it really can complicate (or severely delay) the purchase of your next ‘ride,’ but it’s a fact you can’t get around. If you want to get a really good rate on your car loan you’ll need to have a credit score in the neighborhood of 700 to 750.

And not only that. All types of lenders are tightening their qualification processes, which means your good credit alone won’t be enough. They’re also going to look carefully at your overall debt profile and decide whether another payment will be too much for your given level of income. If you can’t pass their ratios, it’s going to be no loan for you. And what are those ratios? Any conservative lender will not want your new payment to put your monthly payment to monthly income ratio higher than about 25%. Really aggressive lenders will still only be comfortable with about 33% payments to income ratio.

So here’s a plan for you to be ready to buy the car you want, and still get a good low rate car loan.

1. Get a free copy of your credit report and examine it carefully for two things: blemishes and mistakes. You need to do everything you can to clean up that report if you want a lender to give you a good interest rate. If there are mistakes on your credit report, write a letter to the credit agencies explaining the error.

2. Elimiate other debt. Set up a more strict montly budget for yourself, and make an aggressive plan to pay off credit cards, store credit, and other outstanding balances. Paying off debt will free up money for your new car payment (so your income to payment ratios look better), and it will also improve your credit score. Oh yeah, not to mention that it just feels great to have less debt!

3. Look for ways to increase your income. Ask for a raise, apply for a promotion, or think about starting a small side business. If you could add just an additional $500 per month to your income you’ll have more than enough to make the payment on your new car, and you’ll have the satisfaction of earning more money.

I really hope you’ll follow these steps for the next few months. They’ll make your overall financial situation much stronger, and they’ll make it ten times easier to get a low interest car loan.

Car Loans for Bad Credit

Car loans for bad credit are actually a lot more prevalent than you might think. After all, in the neighborhood of one in every four Americans has had some kind of problem with their credit that would put them in the class of bad credit borrowers. Your ability to buy the car you want may not necessarily be impeded by your sketchy credit past, but you should go into the loan application process  well prepared. A few tips:

1. First, and most importantly, decide beforehand how much you need to spend on your new car. Notice I said decide how much you need to spend, not how much you want to spend. Putting your wants ahead of your needs might have been a big factor in why you’re a bad credit borrower in the first place, is that fair to say?

2. Take advantage of your free annual credit report, and make sure there aren’t any unfair or inaccurate blemishes on it. Again, note that I said your free credit report – provided through the US government – as opposed to one of the free reports that costs you a monthly fee or a one time fee.

You’re already a credit-challenged applicant. You really want to go over your credit report with a fine tooth comb to make sure there’s nothing you could reasonably do to get your credit score just a little higher. Bad credit car loans exist, but you’re always better off going into the application process looking as good as you possibly can.

3. Learn about, and sign up for, your bank’s billpay program. A prospective lender will be encouraged to see that in spite of past bad behavior, you’re now in a position to make your payments on time every month without even having to remember. I personally set as many of my bills up as possible with billpay just to avoid having to keep track of them month to month. It’s extremely convenient.

If you’ll follow through with these three relatively simple steps, you’re going to find it much easier to qualify for the car loan with bad credit you need to get that new car. Now make sure you use this new loan as an opportunity to rebuild your credit and improve your standing with the credit agencies. Nearly every aspect of your financial life will be simplified by an improved credit score.

Poor Credit Auto Loans

You have bad credit, but you need transportation and your current clunker just isn’t getting the job done. You need poor credit auto loans, and you probably have several questions on your mind. Hopefully this article gives you some insight. You’re wondering ‘how much can I qualify for?’ ‘what interest rate will I pay?’ and ‘will my current debt load be a factor?’

I’m sure you can understand why there’s no clear answer to these questions. Quite a few different factors determine how much a lender will offer you. They include:

a. How bad your credit really is, because there are varying degrees of ‘poor credit.’ Have you been through a divorce? Was it an injury or illness that caused you to miss loan payments and consequently damage your credit? Did you unexpectedly lose your job? If the circumstances surrounding your drop in credit status were beyond your control, some lenders may be able to offer you auto loans for poor credit with special circumstances. After all, they’re going to treat you differently who just stopped making payments because they bought more car than they could afford, for example.

b. Your stable gross income, especially as it compares to your credit rating. If you earn a lot of money (say $75,000 per year or more), and you have bad credit, your chances are going to be better than if you have bad credit and low income. The higher your income, the less your credit matters. Lower income, the more your credit matters.

c. The total amount of your other debt, as well as your monthly payments. Most borrowers are accustomed to having lenders look at the new loan payment in addition to their existing payments, considering the total as a percentage of your income. If you total loan payments are more than 25% to 33% of your monthly income, and you already have poor credit, getting an auto loan will be tough.

Auto loans for poor credit are tricky business, but if you persist and shop several loan providers, you’ll get the loan you need to buy the car you want.

No Credit Auto Loans

I didn’t buy my first car until I was 21 years old, and I didn’t have enough money to pay cash. That meant going to my parents’ credit union and trying to qualify for a car loan. I did have some credit established at the time, but not enough for the credit union to feel comfortable giving me a no credit auto loan. My parents had to co-sign on the loan.

But what if you don’t have parents (or some other relative) that can co-sign on your loan? Will you be able to find a lender who offers no credit check auto loans? It won’t be easy, but if you can find the right bank, you better be ready for some ‘creative’ financing.

Most of the time these kinds of car loans are going to be offered at the dealerships themselves. You’ve probably seen signs waving outside used car lots all over the city where you live screaming ‘no credit? no problem!’ They’ll lend you the money alright, but it’s going to come at a price.

I used to have a friend whose family got into the used car business and I got to watch closely how they operated. None of the people they sold cars to would be considered traditional or A-class borrowers. These were people that no bank or credit union was going to touch. My friend and his family regularly gave people loans to buy cars and charged them upwards of 21% interest. Can you imagine paying credit card interest rates on a car loan? Well, if you need no credit check auto loans with repo that’s what you’re going to be up against.

The only advice I can really offer is to look long and hard for a person who could co-sign your loan. It will probably be the difference between paying double-digit interest and paying in the neighborhood of 7% interest.

This is a loan you’re probably going to have for three to five years, and that big of a difference in the interest rate will save you hundreds and hundreds of dollars.

Auto Refinance for Bad Credit

Let’s not kid each other. We both know why you’re looking for a bad credit auto refinance loan. I’m guessing it went a little something like this:

A couple years back you started a new job, and it paid double what your previous job was giving you on a monthly basis. Suddenly, you decided that income was bullet proof and it was time for you to start living the life you had dreamed about and so obviously deserved. You went right out and bought a $60,000 SUV and immediately put $5,000 worth of rims and tires on it, not to mention the aftermarket entertainment system. You never felt cooler pulling up to your weekly softball game with your buddies; you were finally living the dream. But oops – the dream carried a $1200 monthly payment.

Next thing you knew, things started to go a little sideways at work, and you missed a couple of those $1,200 payments. You went from being Mr. Shiny Credit to  Mr. I need an auto refinance for bad credit. Not too fun is it? You’re wishing you had gone for $5000 auto loans, instead of $55,000 auto loans huh?

So what are your lenders going to be looking for when you try to get that refi done? Well, first of all they’re going to want to look at your overall debt profile. In the months since you started missing payments what have you done to improve your situation? Have you paid off any of your consumer debt? Have you reduced your overall debt at all? Has your income stabilized?

These days your lender will probably want to see at least three or four of your most recent pay stubs, and if you’re a commission-based earner they’ll want to see even more than that (after all, any salesman can have three or four good weeks. I’ve been there).

Once you’ve shown that you actually produce enough money to keep your payments current after you go through the auto refinance with bad credit, you better prepare yourself to see a pretty gnarly interest rate. I’m sure you understand that being a bad credit borrower you’re now facing double-digit interest rates at a minimum. It’s not out of the question to pay over 20% on your car loan after the refi. Can you handle that? I guess you don’t really have a choice.

Hopefully you’ve learned this lesson in life: those that create the appearance of having the most money very often have nothing except the most debt and stress. People who choose to live life driving used cars in and living well inside their means may not look like much, but they have more fun and they sleep better at night.