Chances of Getting an Auto Loan Become Higher

For those consumers who have poor credit and planning to get an auto loan, Experian Automotive’s report last May 29, 2012 will be good news for you.

According to the report, average credit scores for customers purchasing a car have declined close to prerecession levels. Moreover, Experian’s director of automotive credit, Melinda Zabritski, said that there has been more promising situations for auto loans during quarter one of the current year. Some of the positive indications for the market include a decrease in the average credit scores, lower interest rates and extension of loan terms.

Zabritski added that the reports indicates automotive lending is back to being healthy as it was since the time of recession in the year 2008. Borrowers have been making payments for their loans on time and the percentage of dollars might reach its lowest point after six years. As a result of these, terms have been extended and lower rates have been offered by lenders.

The reduction of the credit pipeline has been beneficial for all, from customers to lenders to automotive dealers.

The most encouraging indications for those consumer who had problems with credit before is that nonprime, subprime, and deep-subprime car loan buyers were up by 11.4 percent during quarter one of the year 2012.

For those who have low credit scores, here are some tips you can follow to increase your probability of getting approved for a loan.

First, check the information in your credit reports from the three credit reporting agencies whether it is accurate or there are some erroneous information.

Second, be aware of your three FICO score because you are required to pay for them.

Third, choose a car loan which has a reasonable price and has a monthly payment of not more than 10 percent or 15 percent of your gross monthly income.

Fourth, pay a huge amount as cash down payment, preferably 15 percent or more, because your chances of loan approval will be higher.

How to Buy a House Without a Bank Loan

It can be very challenging for you to get any loan or mortgage from the bank when you succumb to bad credit. Bad credit history is a big turn off for financial institutions, but do not fret, there may still be a way to revert your unfortunate scenario – with the help of a single seller of course.

Though the system has its pros and cons and this article will be very useful to point those out. Let us answer the question, why would a seller help us out and pay for our mortgage? The answer is the low interest rates. Now that the prices of property in the market has decreased and even so the industry still finds it difficult to sell them off the owners become more desperate.

The good thing about these lenders is that even if you have bad credit history, they will lend you the money you need to get your business running. Another thing, if you get a direct loan from them, you do not have to pay additional fees. You save a great deal of money and commissions, but apart from all that you could talk and arrange to get a lower interest rate with the seller.

So how do you find the right person to get a loan from? Simple, find out who is willing enough to help you out and lend you the money you need. You need someone who has excellent equity, and no mortgage. It would be wise to ask friends and family to help out in seeking for this seller.

Real estate agents and other dealers may even give you the information you need. They themselves may even agree to be your seller. Just make sure you keep them interested in your property. To convince a seller to engage in business with you would not be a breeze. You should make them feel secured that you are responsible and trustworthy, that you will be paying your bills on time.

You can make them feel that way by giving a large down payment for the loan. You also have to present financial statements that support the fact that you will be able to pay them on time.

Processing a Car Loan with Bad Credit

When your car loan is approved despite having a bad credit, what are the things that you should expect?

The fact is, consumers with credit issues have no idea what comes next after their car loan is approved.

Here at Auto Credit Express, we have been assisting people for the last twenty years on how to buy a car even with low FICO Scores. Our website is available for any topic they want to research on such as repossession and how to process car loan with bad credit.

Application Process

In buying a car, you cannot instantly pick a car you like. The car dealer will first contact you to have an interview with the finance manager. After the interview is completed, your application will be forwarded to different lenders that suit your credit profile.

The finance manager will have to wait for the lender’s notification before you can choose a car you want.

Verified Information

The lender carefully checks your income and pay slips, your length of employment and W-2 wage statements of previous years for your work and income history. Any other necessary information to qualify your car loan application may be required by the lender such as your expenses so that he can compute accurately the amount you are capable of paying monthly.

Credit level

The lender after having checked your credit scores and other factors such as job stability and credit history will then place you in a credit program tier. This will determine the interest rate, the term of payment and the down payment required. The car dealer then will be notified by the lender in the form of payment call.

Your car choice

The finance manager once he receives the payment call will check the car inventory to determine a car that fits your paying capacity. For newer cars with lower mileage, the term of payment is longer and the interest might be lower.

Wrong car choice

The problem arises when for example you choose a 5 year old pickup with a mileage of 70,000 miles. Even if the car is in good running condition, the problem is the term of payment is shorter and the interest rate is higher. In other words, the car budget may not fit your choice. Therefore, you have to make another choice.

In Conclusion

In choosing a car, it is important that your choice fits your budget. Your goal is to establish a good credit and not to get the car that you dream of.

Answers to FICO Score Query

Everyone with bad credit might be interested to know the issues discussed in the latest TweetChat between FICO and Bankrate com.

It is important that consumers with bad credit understand how credit scores work.

In Auto Credit Express, for the last twenty years we have been helping people with bad credit how and where to find a car they want to buy through credit. They can go to our website to do research on how to get a car loan. There are other topics in the website which they can make use of. Topics on credit life insurance and on FICO scores which is now discussed in this article.

The best source of information about FICO scores are naturally from people working at FICO. The most widely credit scores used are coming from FICO. Recently, a “TweetChat” with Bankrate.com was conducted.

Here are some of the few questions and answers discussed which might be of great interest for those with bad credit.

Question and Answer taken at TweetChat

Does getting a credit depend entirely on credit score?

Credit score plays a significant role in getting a credit. But lenders do not have uniform way of viewing it. Their tolerances for risk differ. Some demands higher credit scores than others for the same item. There are lenders that require additional information aside from credit score. Information like income, length of employment, house owned or house rented, credit history with previous lenders and the price or value of property you want to buy whether it is a car or a real estate.

How can I improve significantly my credit score in just a couple of days?

Improving credit score cannot be done quickly. It takes time. You have to develop good habits to fix and establish a good FICO Score. These habits are:

* Paying bills on or before the due date

* Keeping balances low

* Avoid applying for a new credit unless it is necessary

Credit reports must be checked to determine its accuracy. Free reports are available and you can get it once a year from www.annualcreditreport.com.

Does it harm my FICO score if I do self checking of my credit report or credit score?

No, it is because FICO does not mind if you do it.

Are the FICO Scores sold by my FICO.com viewed by lenders as precise?

Yes, the FICO Scores coming from my FICO.com are the ones used by other U.S. lenders and businesses in their credit decision making. To avoid misleading and confusion about credit scores, the Genuine FICO Score are marked properly.

In Conclusion

It is important to know how credit score works if you want to fix it.

How do Subprime Lenders Deal with Self Employed?

Important points

You are your own boss if you are self-employed. What is the challenge in applying for a car loan when you are self-employed and your credit score is bad? Surely, you will face a problem to convince the lender to approve your car loan.

Here at Auto Credit express, we provide assistance to borrowers with credit issues. This is the task we have been doing for the last twenty years. In our website, we provide necessary information to help people find a dealer for the car they want to buy.

Problem in Income

People who are self-employed and with bad credit think that the only option to buy a car is through the buy here pay here and nothing else. This is true if you are not reporting all your income in filing your income tax return. It can reduce the amount you pay for your taxes but it will give you difficulty to get a car loan because this will result to a low FICO score which might drop below 640.

Income Verification

Therefore if you intend to make a car loan, you are advised to report all your income in filing your income tax return. This is the only way for you to get a valid proof of income which subprime lenders require because they consider you as high risk borrowers. Through the professionally prepared tax return, the lenders can do income verification before giving approval to your car loan. If your income does not appear in the list of tax return, then they will conclude that your income does not exist even if you provide him with bank records.

Requirements needed by Lenders

The minimum monthly income is required by most high-risk lenders. This income is verified through the wage statements and tax returns to qualify a car loan. The debt-to income (DTI) ratio is also required to determine the budget for car.

The subprime car lenders typically require a minimum income which ranges from $1,500 to $1,800 monthly or $ 18,000 to $21,600 yearly.

In Conclusion

If the borrower has poor credit and his income is not reported properly and accurately which results to high debt to income ratio, chances are the car loan will be denied.