Can You Get A Car Loan After Bankruptcy?

Some people have the idea that after you have filed for bankruptcy your prospects of getting a loan are nil, and they somehow believe that applies to car loans as well. Nothing could be further from the truth.

Car Loan

OK, you might have to jump through a few more hoops to get a car loan after going through a bankruptcy, but it’s not impossible. Generally, auto lenders want you to have a history of stable employment, a down payment, no previous auto repossessions and enough income to be able to handle your car payments. If you can prove that you can make your monthly payments and that you meet the other loan qualifications then you should be able to get a car loan relatively easy. A large down payment will help.

You want an income of at least three times the amount of your car loan, but four times is better. For instance, let’s say that you are applying for a car loan that will set your payments at $400 per month. You want your monthly income to be at least $1,200 per month. If you have a monthly income of $1,600 then that is even better.

As well, if the vehicle you are expecting to purchase is going to cost you a total of $5,000 then you want to lower your loan amount as much as possible. If you have a bankruptcy on your record then you want to put down at least $1,000 toward the purchase. That will mean that you’ll be financing $4,000. If you can put $1,500 or $2,000 down then you’ll increase your chances of getting the loan.

It’s very important that you not have a repossession within the past year unless that repossession was a part of a bankruptcy. If that is the case then be sure you disclose that to your lender right up front.

You also don’t want to apply for a car loan too soon after your bankruptcy. If you are applying for a car loan the next month after your bankruptcy then it will appear that the bankruptcy wasn’t necessary and you may be suspect of fraud. Try to wait at least six months.

It’s not impossible to get a car loan after a bankruptcy, but you do want to make sure your finances are in order and that you can demonstrate an ability to pay off the loan.

Get Your Auto Loan Quote In Writing

It often happens that a person will ask about an auto loan then go away only to return some future day hence expecting the same loan rate. But to the person’s surprise the quoted loan rate had gone up. There was no written quote or document stating the quoted amount so the borrower lost his chance to get a loan at a lower rate. This could have been avoided by getting your auto loan quote in writing.

Contract

However, understand that just because you got your quote in writing doesn’t mean that you are guaranteed those quoted rates. If you wait too long then the rates will go up and the quote is no good. If, for instance, you waited six months then you waited too long and you’ll need a new quote in writing.

By getting your auto loan quote in writing you protect yourself and your lender. No one can say that the deal you want to agree to is not a valid deal. A good auto loan quote will have the date of the quote in writing, the amount of the proposed loan and the interest rate. It should also include other pertinent details like the total price of the car you are buying and the make, model and year of the vehicle. This ensures that your loan applies to the specific vehicle you want to purchase.

An auto loan is an important business agreement. You need to understand all the details before you agree to it. Get it in writing.

Refinancing Your Auto Loan

Many homeowners who fall on hard economic times find a solution in refinancing their mortgage, but can you do the same with an auto loan?

Actually, you can. But it plays out a little differently.

car loan refinancing

Since your auto loan is usually underwritten by an auto finance corporation or, in some cases your dealer, then there are fewer hoops to jump through to refinance your auto loan. You still need to undergo a credit check. If that checks out to the satisfaction of your lender then you could very well refinance your auto loan in a short time.

The benefit to refinancing your auto loan is that you can lower you car payments. The ideal time to do it is when interest rates are low, which will give you a better rate on your loan and make your car loan easier to pay over time. You could, in some cases, lower your car payment without extending the life of your loan.

But you don’t always have control over situation that requires financial rearrangement. If you need an auto loan refinance then you need it when you need it.

If your car loan payments are too high then now is the best time to refinance. And just so you know, you don’t have to keep the same lender. You can refinance under a different auto loan financing company. The main thing is that you lower your car payments.

How Much Is Your Used Car Worth?

Determining value on a used vehicle can often be a difficult task, but if you are selling your used car then it’s a necessary pre-sales step. If you don’t determine the value of your vehicle before listing it for sale you’ll either have a difficult time selling it because you have it listed too high or you’ll end up with money on the table because you sold it for less than it was worth.

Two great resources for helping you determine your used car’s value are N.A.D.A. and Kelley Blue Book.

Kelley Blue Book

There are two types of value with regard to selling your vehicle. There is trade-in value and private party value. Your trade-in value will be much lower. The private party value is the retail value of your used car. If you are planning to trade your used car in for a newer vehicle then consider those values because the auto dealer will not give you retail value. One advantage to selling to a dealer, however, is you can usually sell it much more quickly than if you tried selling your car to an individual.

The most important thing you’ll need to learn to do in determining the value of used cars is judging condition. A good vehicle will be worth more than a vehicle in poor condition.

Used car buyers want to know how available parts are for the vehicle they want to purchase. For that reason, common vehicles are more easy to sell than exotic cars. But in terms of value, a classic vehicle can often be valued at more due to its collectible status.

If you have trouble determining your used car’s value then take it to a dealer and ask for an appraisal. Most dealers will do this free of charge if you are planning to trade your vehicle in for a newer model.

Applying For Auto Financing Has Never Been Easier

Applying for auto financing has never been easier than it is now in the age of the Internet. You can apply for a car loan online and be approved more quickly than ever before.

Auto Financing

Of course, if you are one of the people who still distrust the Internet then you can still apply by phone, but let’s count the benefits to applying for a car loan online:

  • Less embarrassment. How many times have you sat down to fill out a loan application and needed personal information about yourself that you forgot to bring with you. You either had to leave and go home to get the information or call someone to tell it to you over the phone – while the credit manager sat and watched. No more embarrassing moments. You can fill out your loan application in the privacy of your own home where you already have all the information you need.
  • Complete security. Believe it or not, sending information online is more secure than sending it by phone. Phone wires can be tapped and cell phone messages are never secure. However, due to encryption technology, sending personal information online is safe and secure.
  • Fewer distractions. Since you are filling out your auto finance application in the privacy of your home with no one sitting in front of you, there are fewer distractions. No credit manager asking you questions and no background noise – unless you turn on your own TV or radio.
  • Quick approval. When you apply for credit at most places, you have to wait. But not when you apply online. You can find out if you’ve been approved within seconds.
  • Your information is private. All Federal, State and Local laws that apply to personal privacy apply online as well. Your information will not be handed out without your prior approval. Your privacy is protected.

Applying for auto financing online is safe and secure and you’ll get approval faster than applying for credit by traditional means. Super lightning fast!

Repairing Bad Credit Through Auto Financing

One myth about credit repair is that a simple letter to the credit reporting agency will fix all problems. A letter can help you dispute an error or a false claim against your credit, but it will not fix accurate reporting of bad credit. If you have negative information on your credit report that is accurate then the only thing that can fix that is the passage of time.

Credit Report

Most credit information remains on your credit report for a period of seven. The exception to this rule is bankruptcy, which can remain on your report for ten years. If you have unpaid judgments against you then the statute of limitations on those judgments can exceed seven years.

The best way to remove negative information from your credit report is to go back to your creditors and request that the information be removed in exchange for your payment. This is usually very effective. Creditors just want their money.

However, after you remove negative information from your credit report, if you have no new credit then you all you’ll have is a blank credit history. That doesn’t do you much good either. It’s time then to begin building credit to increase your credit score and improve your credit rating. Financing an automobile purchase can be a good step in that direction

If the purpose of purchasing an automobile is to restore your credit, don’t buy a new car. Buy a used car instead. Work your way to the large purchase by improving your credit score first.

Follow these steps to repairing your credit with auto financing:

  1. Find a good, trustworthy tote-the-note auto dealer
  2. Locate the vehicle you want to purchase (Try to stay within a reasonable range based on your income and credit repair goals; a good rule of thumb is to purchase a vehicle between $1,000 and $2,500 on credit.)
  3. Apply for a line of credit for auto financing.
  4. Faithfully make your monthly payments on time (Late payments will work against you and decrease your credit score rating.)
  5. After making monthly payments for at least six months, you can go ahead and pay off your car loan. The six months of good credit history will improve your credit score. Now you can make larger purchases on credit and get better terms.
  6. When you are ready to purchase another automobile, take the vehicle you are currently driving and trade it in on another vehicle. Again, make sure you pick a vehicle in the price range of your budget and credit goals. Don’t get in over your head. That’s how bad credit develops.

Should You Buy A New Or Used Car?

There are pros and cons to buying a new car just as there are pros and cons to buying a used car, also called pre-owned. For every family there may be a preference, but for others it might be a matter of doing your homework and discovering which automobile fits into your needs.

Used Cars

It is not always less expensive to purchase a used car. Pre-owned vehicles can have their own hidden costs. For instance, if you buy an older vehicle you may have to pay for constant maintenance, which could be more expensive than purchasing a new car over the long run. Aside from that, a used car can also be more expensive than a new car depending on the make and model and the dealer from which you make your purchase.

The best way to decide whether to buy a new or used car is to research the specs on the individual makes and models in which you have an interest. Don’t just read consumer reports. Although they are helpful, you should also ask your mechanic what kind of issues are typical of a particular make and model of vehicle. If you know, for instance, that a specific auto part is replaced in the majority of vehicles of a particular make and model after five years and that car part is expensive then you might give a second thought to purchasing that make and model of a four-year-old used car.

Financing terms might also be a deciding factor for you. If you can get better terms on a new car than you can on a used car then it could make a difference in your total cost over the term of your auto loan. It’s important to consider all the factors.

Auto dealers themselves can also be a great source of information. Your car salesman can give you the details on particular specs for new and used cars in their inventory. At the end of the day, which type of vehicle you purchase depends on what makes you happiest.

How Buying A Used Car Can Improve Your Credit Rating

If you have bad credit you might be wondering if you’ll be approved for a car loan. A lot of people have that concern and it is a legitimate one. The truth is that you can still purchase a car on credit and improve your credit rating while doing so.

It’s important to understand that you can check your own credit rating at any time. You are entitled to one free credit report annually and you can apply to receive that report online at http://www.annualcreditreport.com.

Your credit rating is established every time you apply for a new loan or seek to rent an apartment. In essence, every time you conduct a financial transaction that is not all cash you are affecting your credit rating. Your rating is also affected any time someone runs a credit check on you. In fact, if you apply for credit too often then you can drive your credit rating down so it’s important that you limit the number of loan applications you put in during a short period of time.

Many used car auto dealers will work with you to help you improve your credit rating. This is done in a number of ways.

1. You might be asked to put up a larger down payment
2. You could pay a higher interest rate
3. You may be required to make weekly payments instead of monthly payments
4. Some auto dealers may require you to pay them directly rather than work through a credit agency or financial institution

Usually, six months of solid and faithful credit payments will improve your credit rating. By find a used car dealer that will work with you to improve your credit you can work up to a nicer vehicle one small step at a time. Each time you complete a pay off on a debt you improve your credit rating.

Get more answers to your credit rating and auto loan questions now.

Five Things that Will Kill Your Credit Score, Part 2

Last time we told you about two financial habits or blunders that can wreak havoc on your credit score. Here are three more things that can be a main problem that you should consider before applying for that next auto loan.

Having a Large Balance
About one-third of your credit score depends on your ratio of debt to available credit. As a result, the higher balance you are carrying in total, the lower your credit score is going to be. The new CARD Act requires credit card companies to include a graph on how long it will take you to pay off your particular balance if you only make minimum payments. They must also show you how much you would need to pay on your balance each month to pay it completely off in three years. These and other tools can help you lower the balance you are carrying and raise your credit score considerably.

Opening New Accounts
Every time you open a new credit account, you damage your credit score. The amount of damage you do depends on your current score, the type of account you open and how soon you open new accounts after opening others. Companies check your credit when you apply and each inquiry can drop your score by about five points. You can also risk up to 15 points just by applying. These dings to your report are short-lived, but they can mean higher interest rates if you do not wait until they drop off your report before applying for that auto loan.

Not Paying
Other than late payments, defaulting on your credit card balances is the worst thing you can do to your credit. Unfortunately, more and more people are defaulting these days due to the economic problems we are having. These bits of information will follow you for at least seven years, but you can still start rebuilding your credit as soon as possible.

Five Things that Will Kill Your Credit Score, Part 1

If you plan on getting an auto loan any time soon, one of the things you have to keep an eye on is your own credit score. Your credit score will determine the interest rates you pay on that auto loan and even if you get a loan or not. Here are five things that will make your credit score drop and cost you money in the long run if you are not careful with your financial habits.

Making Late Payments
Late payments are deadly to a credit score. If you have a good score, it could drop by more than 100 points by simply making one late payment. For people with average credit scores, the score could drop by as much as 80 points. Actually, late payments are the biggest killer for credit scores, yet your score does not increase as quickly by making your payments on time after it has already dropped.

Closing Accounts
When you close your credit accounts, you drop your ratio of debt to available credit. This has a bad effect on your credit score. The actual drop in score varies between cardholders because it depends on how many cards and accounts an individual has and the amount of debt and available credit.

Those are two main killers to a person’s credit score. Be sure to come back to see the other three before you apply for that auto loan!