Car Loans with Bad Credit: How to Get Poor Credit Auto Financing

A low FICO credit score will make getting credit more difficult. However, applying for car loans with bad credit is not a bar to successful automobile financing. This includes buying a car after bankruptcy, provided that the applicant is in stable employment and can prove affordability.

Car Loans with Bad Credit

Poor credit auto financing is necessary when someone has failed to comply with the T&C’s of one or more credit agreements. This includes missed and late payments, those in debt relief programs and individuals who have filed for bankruptcy. These indiscretions will show on a credit report for up to 10 years.

FICO Credit Score

The rate of interest on a bad credit auto loan will depend heavily on the applicant’s FICO credit score. The severity of a credit transgression will determine how much a score falls by. The largest falls take place following bankruptcy, foreclosure, account delinquency.

Make Punctual Monthly Repayments

The longer the period that lapses between default and an application for credit, the higher a FICO credit score will be. This means that it is important to maintain timely repayments on other credit agreements, such as the mortgage.

Correct Credit Report Errors

Get hold of a free credit report and check this for any errors. Should there be any inaccuracies, it is imperative that these are corrected through the credit reference agency prior to applying for a poor credit car loan. Corrections can be arranged by the individual or a licensed attorney.

 

Affordable Repayments

Affordability is critical to both the borrower and lender. Before applying for credit, perform a thorough budgetary analysis to determine how much can be contributed to poor credit auto financing each month. A low debt to income ratio is the key to acceptance.

Car Loan Lender

Rather than going directly to a dealership, use the services of a car loan lender. They will trawl the entire market for the most affordable deal. It also provides the borrower with an opportunity to explain why and how any poor credit arose. The service is far more personal and is vastly more likely to lead to approval.

Car loans with bad credit are achievable, provided that the borrower takes practical steps to ensure approval. Once a FICO credit score improves in a couple of years, be sure to refinance as more favorable deals will be available.

Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional before proceeding.

Rebuild Credit Ratings for Low Cost Loans: Improve Credit Scores for the Lowest Interest Rate Loans

A low cost loan means that the customer pays less interest over the full borrowing term. In order to get approval for the lowest interest loans, it is necessary to have an excellent credit rating. Each month lenders report to credit reference agencies so failing to make debt repayments punctually will lead to a reduced credit score. Miss payments entirely, default on a loan or declare bankruptcy and a credit score rating will plummet. Fortunately, a report is only a snapshot of that person’s current credit worthiness so it is possible to gradually rebuild credit ratings before applying for a low APR loan.

Rebuild Credit Ratings by Repaying Debt Punctually

Making the repayments for mortgages, loans and charge cards on-time will lead to a better credit score. Rebuilding bad credit won’t happen overnight, but there will be a slight improvement following each timely repayment. Miss a payment and the credit history repair process will need to start again. Should there be no active agreements, it may be possible to get a credit card for poor credit. Although the limit is normally low, making the repayments punctually will lead to a higher credit rating.

Improve Credit Scores by Repairing Credit Report Errors

A surprising number of reports contain data that isn’t accurate. The automated process used by lenders means that they are unable to determine whether it is bad credit or bad data. The onus is firmly on the customer to get hold of a free copy of their report to check for errors before applying for a low interest rate loan. The Fair Credit Reporting Act gives consumers the right to get an erroneous information corrected. The credit history repair process can take several months from start to finish so allow sufficient time before applying for a low APR loan.

Improve Credit Scores by Paying Down Debt

The lowest cost loans will only be granted to applicants with an income-to-debt ratio of under 36%. This is because there is an inextricable link between having too much debt and default. Before applying for a low interest loan, try to pay off debt to increase the likelihood of approval. For example, make sure that cards aren’t maxed out. Perform a balance transfer to spread debt across several cards if no savings are available to reduce the overall amount of money that is owed.

Too Many Applications for the Lowest Interest Loans

Each search will show on a report for a period of 12 months. Whilst searches are perfectly normal, lenders may interpret too many searches as a sign of money problems and likely default. Applying for multiple low APR loans at the same time will normally lead to rejection. It is important to be selective and only apply for low cost loans after making sure that the eligibility criteria have been met. Lenders provide plenty of material to help customers decide whether this is the case.

Secured vs Unsecured Low Cost Loans

A secured low APR loan for homeowners is best suited for people who have ample home equity, don’t plan to move house, need to consolidate debt and/or wish to spread the cost of repayment. Customers who have a history of bad credit may find that providing collateral is the only sure-fire way to get the lowest interest rate loans. This is because the provision of security underwrites the risk of default. Unlike an unsecured personal loans, failure to maintain the repayment schedule will lead to the repossession and sale of the property to recover the lender’s money. This is a very important consideration, especially if consolidating unsecured debt.

Loan Options for Senior Home Owners: Reverse Mortgage Advantages and Disadvantages

A loan option for home owners over the age of 62 is called a reverse mortgage. A reverse mortgage makes the home equity, or real property value, available to seniors that want to remain in their home. Reverse mortgages are used to supplement social security, make home improvements, or to pay for caretakers in the event of injury or illness. Though this type of loan is desirable for some, there are pros and cons to a reverse mortgage that need to be considered and evaluated in order to decide if it is the right option.

Advantages

Reverse mortgages have certain advantages that make them a principal option for some people.

Income

A reverse mortgage does not consider current income and pays an individual regardless of their financial situation. A second mortgage, or bank home equity loan, measures income against debt ratio and still charges a monthly mortgage payment.

Repayment

A home owner who takes out a reverse mortgage will never owe more than the property’s appraised value. According to Home and Communities Department of Housing and Urban Development, as long as at least one of the borrowers lives in the house and pays insurance and taxes responsibly, the loan will not need to be repaid.

Payment Options

A reverse mortgage offers five options of payments. A senior can receive equal monthly payments for the duration of residency in the home or they can set their own fixed monthly payments for a set period of time. Another option is a line of credit to be used when needed and until it is gone. Finally, the last two options are a combination of a line of credit with equal monthly payments or a line of credit with fixed monthly payments for a set duration of time.

Disadvantages

Just as there are pros with reverse mortgages, there are also cons that should be considered before moving forward with the process.

Expenses

Bankrate.com states that a disadvantage of a reverse mortgage is that the interest rates are not tax deductible and if one falls behind in expenses such as taxes, insurances and maintenance the loan could become due.

Fees

A lender chooses how much to change for various fees, and they can be quite costly. Among these charges are origination fees, service fees and high closing costs.

When considering a reverse mortgage, it is important to do additional research and investigating rather than relying on the word of a reveres mortgage sales person who will only paint an ideal picture. A reverse mortgage is not right for everyone or every family. Reverse mortgages should be a group decision that has been thought through and weighed carefully.