How to Get an Auto Loan Despite Bad Credit

It may be difficult to get approved for Auto loans when you have a splendid FICO score, but imagine just how much more difficult it would be when you have bad credit.

So if you want to get a car loan despite bad credit, here’s what you should do: first, find a dealer. For some credit challenged customers, it is difficult to find a dealer who is willing to offer the right loan for them. This is because despite the number of car that sellers have to sell, they also have to offer toting their records in their note loans.

These kinds of dealers can provide you with a car, but your FICO score will not change in anyway because these transactions are not reported to the bureaus. This also means that the next time you need a car; you will be finding yourself in the same dilemma you were before your present car.

Furthermore, these buy here pay here car dealers do not provide new car franchises; most of the cars in their garage are high-mileage cars that are often not very reliable. However, most new car dealers still will not engage on subprime loans or high-risk lenders.

The second option for someone who has bad credit is to search an automobile deal online. There are plenty of sites in the internet that would cater the needs of customers and help them in finding the right dealers who offer just the right amount and several lending provisions to the customers.

These dealers would be able to provide clients with the choice to choose from more vehicles, lenders that have reasonable mileage for their new or used cars, and they even provide loans and payment information that are reported to the bureaus, so your credit score improves and you can reestablish your car credit.

How to Get a Car Loan While Filing for Bankruptcy

It may seem almost impossible to get approved for a loan if you have bad credit, most especially if you have recently file bankruptcy. However, applications for automobile loans even after you have filed bankruptcy is quite common these days, but if you are in dire need of a car loan in the middle of your filing then the process may vary depending on which personal bankruptcy you chose: Chapter 7 or Chapter 13.

The Chapter 7 bankruptcy would settle a person’s assets and evaluate how much will be given to his unsecured creditors. It would only take a few months to finish the process of this personal bankruptcy, and it could only be file once after 8 years.

Chapter 13 however takes about three to five years to complete. This form of personal bankruptcy would involve getting a payment schedule that must be adhered to and completed by the one who filed it.

Of course, since Chapter 7 would be faster to complete compared to Chapter 13, automobile loans would vary too.

If you have filed a Chapter 7 bankruptcy, then this is what you should do: first, you must make sure you are eligible for it. If you are, then you should have a 341 meeting with the creditors and a judicial hearing would be in charge of evaluating your assets and the truthfulness of the personal information you have placed in your debt schedule.The time of the meeting you set with a 341 creditor is important since only some of them would check an applicant’s file after the meeting.

Meanwhile, if you have filed a Chapter 13 bankruptcy, it is important that you send your request to a trustee so that you can ask the court for a petition to prevent you from acquiring more debt. If you are granted the petition, you will have the privilege to get a loan and you can get the maximum interest rate and dictate the terms of the amount of the loan. But if you are declined the privilege, then you cannot apply for any loan.

Subprime Lending Gets New High

Subprime lending is recovering again in the United States. Although there is still a limited number of subprime mortgages available in the market, because of the large amount of loans that still remain unpaid by home buyers.

Lending to people with less than stellar credit has increased for both auto loans and credit cards, banks are anticipating the number of loans to rise up to $600 billion for car loan purchases in the near future. Lenders are being less tight with car loans because it is surprisingly a profitable business today.

Only 25 percent of lenders think that subprime lending will continue to be profitable in the next few months. Half of them see that this increase will come from automobile loans; this is according to the latest survey released this week.

Andrew Jennings, the chief analytics officer of Minneapolis Fair Isaac Corp., believes that it is a significant figure to take note of. It just means that the lenders in the industry are currently starting to loosen up, although it does not necessarily mean that the number of subprime loans will increase rapidly.

Experian says that 44 percent of all the citizens in America that had loaned for a car in the first three months of this year had FICO scores lower than 680. The ratio is up by 2 percent compared to last year, however still 2 percent lesser than the ratio prior to the recession in 2008. Most of the loans still came from commercial banks.

When the housing industry fell into a flop, the number of subprime mortgage lending has been inexistent. However, loans for cars to people with less than fair credit have continued to be profitable even after the failure of the housing industry.

Customers continue to progress and work hard in paying back every last cent they had borrowed for their car mortgages. Though the sudden increase in the automobile industry still remains a mystery to many analogists, it does prove on thing: subprime lending to cars are safer for money lenders and consumers alike.

Credit is What Matters Most

During the 1990s, Ray Pridmore, the manager of the Australia Bank would ask Scotland Yard police to escort him in managing his loan problems. In those years he was feared by many, now he is retired and is living a happy life with his wife, Patsy Pridmore.

Pridmore was in charge of over 280 autonomous teams, handeling over $6 billion worth of loans across Australia, United States, Ireland and Britain. His three brothers were police officers from London.

In his term, Pridmore started the use of warning systems and their banking principles were able to save the bank from losing hundreds of dollars from being written off. The efforts of the NAB also have major roles in the success of the operations of the bank.  Most of the members of the NAB were called “lifers” because they started out in the company wearing cheap clothing and worked their way to success. They were driven in making the bank the best among others and they have done this all because of passion and not contracts nor bonuses.

Don Argus was the credit assessment team of the banks in the 1980s before he became its chief executive officer in 1990. He was very strict with disciplining his staff and in the lending regulations of the banks. Back when Pridmore first joined the company his main option was to go to Argus’s office when he needed help. Credit was most essential in the business it was the life of the whole bank.

The managers of the banks were very cooperative with each other. They shared their ideas and trusted each other in the business. Pridmore would still find time to catch up with his old staff members and co-manager. In fact, they would meet every month in an unofficial distinguished old gentlemen’s club also known as DOGS.

A new hope for small businesses

After the financial crisis has broken in the United States in 2008, the larger banks have held the majority of the shares over small business loan markets. According to the Small Business Administration’s data, the market shares they held is slightly over 39 percent in  2005 and rose up to 39 percent in 2009. But these past two years have not been as good for these large banks as their shares fell to 38 percent last year.

Though it is currently still too early to tell whether the drop was due to the problem in the sales of the big banks, or if the financial state of the economy is going back to the way it used to be; but it is very good news for the owners of small businesses.  With the big banks losing their grip on the sales of the industry; this means that they no longer dictate who gets a loan and who does not.

It is no secret that your bank credit is your ticket to expanding your business. Almost one-third of businessmen come to banks for loan in hopes of making their business grow, this is according to the new Census data. Though businesses seem to have increased independence on credit cards, the bank loans are still much larger compared to credit card loans.

The value of loans in smaller banks has decreased by 19 percent between 2008 and 2011, and they greatly need to re-evaluate their market shares. But it is still easier for consumers to borrow from these banks compared to large banks because they do not focus on credit scores of applicants and the businesses’ financial statements and they can be open-minded to small businesses compared to big banks.

These financial institutions according to the 2004 Journal of Financial and Quantitative Analysis study are more reliant on the character and relationships of the applicants and business owners. Though big banks may have more perks when they loan money, but business owners would turn to small banks because more often than not, they would give the amount of money the business needs.