Tuesday, March 25, 2008

Getting a Car Loan With Bad Credit is Easier Than You Think

Bad credit car loans

are quite common as nearly a quarter of Americans are credit-challenged. If you have imperfect credit, you should have little problem of getting the car you're interested in, as several thousand bad credit car loans are issued everyday in the U.S.

Before applying for one of these bad credit car loans there are a couple things you can do to ensure that the process goes smoothly for this specialized area of car finance:

Review your Credit History – Experts say you should review your credit report at least once a year to make sure there are no errors, and this is especially important if you are applying for a bad credit car loan. You can order a copy of your credit report, and sign up for credit management products through our partner, Experian. You can get a free copy of your report at annualcreditreport.com. The site allows you to get a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies. This is mandated by the Fair and Accurate Credit Transactions Act (FACT Act).

Determine How Much You Want to Pay – You should have in mind how much you can comfortably afford for your car, for both a down payment and monthly payments. You can use our car loan calculator to help you crunch the numbers for your bad credit car loan.

Prepare Documentation – You may need to provide proof of employment and income. It’s helpful to have documentation in hand, such as pay stubs, in case you’re asked for it. This will speed up the process of getting your bad credit car loan.

Keep a Clean Credit History – You'll want to make an effort to make on-time payments to keep your credit history clean. Also, if you need immediate cash, you'll want to avoid unscrupulous car title loans. Many people lose their cars because of unfair terms. It's much smarter to consider a refinance car loan, which involves accessing the equity in your vehicle.

Bad Credit Car Loans at CarsDirect

Bad credit car loans are one of CarsDirect’s online car loan specialties. In fact, we help more consumers get bad credit car loans and no credit car loan products than any other website in the country. We work with a network of dealers who specialize in this area of financing. The dealer has access to a number of financial institutions and will shop around to find you the best deal available on bad credit car loans.

Simply fill out a quick and easy application, and you’ll be on your way to getting your new car! The service is free and absolutely no obligation is required.

Bad Credit Car Loan

Compare Quotes with our Loan Calculator »

A past bad credit car loan history need not be a problem in obtaining car finance.

Your ability to obtain finance and the interest rate you will be charged is determined to a large extent by your credit history. Lenders look at your credit report when determining the rate of interest they will charge.

If you are a homeowner obtaining finance for a car purchase should be easier as a lender can use your home as security. The lender will however take into account other factors such as any current borrowings, your income and employment status before making an offer. For tenants options are more limited and generally speaking if you have a bad credit history expect to pay high interest on any credit as lenders will see you as a higher risk. It is important that you consider the impact of any monthly loan repayment you will be required to pay.


Getting a Car Loan with Bad Credit

You've just learned that your request for an auto loan with XYZ Bank has been denied. The loan officer explains that the decision has to do with your credit score. XYZ lends only to prime borrowers; your credit score, she continues, places you squarely in subprime territory.

Subprime. You're not sure exactly what it means, but it sounds like a condemnation that will forever brand you as being somehow deficient to lenders.

However, being deemed subprime doesn't necessarily mean that your borrowing days are over. It may still be possible for you to get that sought-after car loan (albeit from a different lender).

But first you need to understand the term that defines you. A subprime borrower is one with bad credit. Each lender has its own definition of what constitutes a subprime borrower, but typically, a credit score of less than 620 lands you in this less-than-desirable category. For more information on credit scores, and what sort of factors cause them to suffer, please see Credit Scores Demystified and Understanding Your Credit Report.

There are plenty of credit grantors specializing in subprime lending who are eager and willing to loan money to those with bad credit. Naturally, though, there's a catch. The interest rates for subprime borrowers are frequently quite steep — significantly steeper than those paid by their more credit-worthy brethren.

So, now that you understand what your playing field looks like, how can you finesse the game in a way that gets you a reasonably priced car loan? Here are a few tips:

  • Check your credit report. Make sure that everything on your report is accurate; it could be that information has been entered in error, and that your credit history is a lot less blemished than you've been led to believe. If you do find information on your report that is inaccurate, you need to address it right away. Contact the credit bureaus in writing, listing your name and address and clearly detailing the nature of the error.

  • Access your credit score. For a long time, credit scores were available only to prospective lenders, who used them to evaluate those seeking loans. That has changed; it's now possible for consumers to access this all-important number. Your score is available online from each of the three credit bureaus: Trans Union, Experian and Equifax. If you've got bad credit, it's helpful to know it beforehand. Knowing your credit score will help give you a sense of exactly where you stand in your search for an auto loan.

  • Don't rely on the dealer. Dealers take a cut of all car financing deals they land; as a result, any loan that they're able to get you with a bank or financing company is likely to wind up being more costly to you than if you had contacted the lending institution on your own. Ideally, you'll want to secure your auto loan before setting foot inside the dealership.

  • Shop around. Rates will vary from lender to lender; take the time to look around and see what deals are available. Lenders typically define their business according to credit tiers (A, A- and so on.); speak with loan officers regarding how each tier is linked to credit score and interest rate. Ask for a matrix detailing the tiers and their implications; having something in writing from each lender will make it easier to compare your options effectively. If you have a checking account, make sure to include your bank in your search for a loan. Many banks have entire departments dedicated to providing loans to those with flawed credit, and they tend to look more favorably upon applicants who are current clients. Your credit union is also a good place to turn. For years, credit unions have had a reputation of lending only to members with good credit, but that's begun to change. Many are now beginning to expand their business to include those with less-than-perfect credit.

Remember that your credit score is malleable and ever-changing. When it comes to your credit history, the ball is entirely in your court. You can improve your bad credit by paying your bills on time, and not overextending yourself when it comes to loans and credit cards. With proper attention paid to the state of your credit, you could conceivably hoist yourself out of subprime territory in as few as two or three years. Going forward, check your credit score at least once annually. You may have to pay more than you'd like for the auto loan you're about to receive, but in a couple of years, if your credit score has improved, you'll probably be able to refinance your loan at a much lower rate.

Monday, March 17, 2008

Personal Finance to Avoid Crippling Deficits and Bad Credit Scores

What is Personal Finance?

Though literally speaking, personal finance may mean arranging finance to meet your personal needs, personal finance is the implementation of the rules of financial economics in making personal financial decisions. It takes into account the sources of income or finance including mortgage loans, channels of expenditure, savings for emergencies, old age, payday payments and so on. Personal finance includes keeping income records, budgeting based on those records, preparing and net worth statements, credits, savings, investments, estate planning, insurance, taxes and so on.

Origin and the History of Personal Finance

The concept of personal finance and its management owes its origin in the hoary past when there were no hard currencies to quantify income, purchases and sales. Earnings were received in commodities and the same were exchanged in buying, selling and meeting personal needs. People were advised to look about their personal finance by making hay while the sun shone and store grains for the rainy seasons.

After the introduction of currency, services and products started being exchanged with money. Since carrying large amounts of even paper money is both cumbersome and insecure, we now have the plastic money called Easy Auto Credit.

The Origin of the Credit Card

The origin of credit cards, however, has a different story. It was not initially introduced as a convenient and securer substitute for carrying large amounts of money, though this advantage came about as a natural corollary. Credit cards, in their earlier avatar as dog-tag style metal plates appeared in the United States just before the beginning of First World War. They were introduced by the department stores for their favorite customers. Later on gas credit cards were issued for automobiles that could be used all over the country. One reason for the explosion of the credit card was the increased mobility of an average person. Credit cards and the easy mobility mutually promoted each other. A gas merchant in California would hesitate to accept a personal check from a customer but would willingly take an American Express or MasterCard.

Diners Club Cards

Nineteen fifties brought in Diners Club Cards. The Diner Club cards were introduced by Francis McNamara, an operator of a small loan company. He issued credit cards made of cardboard. It bore the holder's name and account number on the front and a list of 28 restaurants and Manhattan nightspots where his credit cards could be used. He charged an annual fee of five dollars. Later on he expanded this network of cards to the national level and covered restaurants, hotels and air travel expenses. In 1951, Franklin National Bank of New York too entered into market with a credit card that could be used to buy a variety of merchandise. Other banks notably the Bank of America in San Francisco joined the fray with its BankAmericard which later evolved into its present day Visa Card. Visa was followed by the Master Card of today. The credit card business exploded exponentially when by the end of 1960s many banks started mailing out credit cards to anyone with a name and an address with a good and even bad credit. The explosive proliferation of credit cards and the easy availability of finance have created more urgent need to regulate the personal finance than ever before.

Bad Credit Mortgage Loans

At the time you begin your search for a house, Auto Bad Credit Dealer are probably not on your mind. Everybody would love to have the option of being able to sign a check with a flourish and make a single payment for the entire home at one go. However it is only the fortunate few who are actually able to enjoy such a privilege in life, with the majority only being in a position to purchase a new home with the help of a bad credit mortgage loan. Given a choice, there's nobody who wishes to have bad credit but circumstances make it inevitable.

A late payment of a few bills, due to a lack of funds or mismanagement, takes a negative toll on your credit score. Too many credit cards, too much holiday shopping and too much fun on vacation can easily result in too much debt. Too much debt in turn can put you in a high risk category in applying for a home loan and you may end up needing to try for a bad credit mortgage loan. This may be a humbling experience but ideally you can make it a learning experience too.

If you find yourself with no option but a bad credit mortgage loan, treat it as an opportunity to start afresh. With time and effort, you can very well make your credit score improve. However it will be no overnight miracle. Make a conscious effort to make payments on time. It may at times be easier said than done but keeping a track of the effect it has on your credit will prove encouraging. Debt consolidation is worth considering to get better interest rates than those charged on your credit cards. Doing this will enable you to pay off debts a lot sooner and reduce the amount on payments every month.

The Disadvantage of Bad Credit Mortgage Loans
The biggest drawback of bad credit mortgage loans is the higher interest rate that you will have to pay compared to that paid by people with better credit scores. It's really as simple as that. Anyone the mortgage lender considers a higher risk has to pay a higher interest rate to qualify for the loan. The higher the interest rate on bad credit mortgage loans, the higher the monthly payments to be made. Higher monthly payments could also mean that you'll have to settle for a home that is far less expensive than you would ideally have liked.

The Bright Side of Bad Credit Mortgage Loans
On the positive side of bad credit mortgage loans is that despite your interest rate being high, you still qualify for a loan that enables you to purchase your own home. While you may be paying a substantial amount of interest every month, it still beats having to rent and you get to enjoy the numerous advantages of homeownership. The other bright aspect is that this high interest rate will not last a lifetime.

When your credit score begins to show improvement, it is proof of success in your efforts to pay off your debts and that you have a pattern established to make timely bill payments, including payments for the bad credit mortgage loan. This enables you to apply for refinancing. When you have a credit rating that is more desirable, you are in a position to qualify for a more desirable interest rate.

Apart from saving you money on interest, this will also enable you to lower your monthly payments and consequently will make all your efforts worthwhile. You will have a credit score to take pride in and be able to take advantage of better bad credit mortgage loans.

Free Application

Free Application

At least $1,500 gross monthly income required for credit scores less than 625.
Chapter 7 Bankruptcy. 341 meeting of creditors must be completed.
Chapter 13 Bankruptcy. An Authorization to Incur Debt from the trustee is required.
Zero auto loan repossessions in the last year unless included in a bankruptcy.
Auto loan approvals are for buying a car direct from our authorized licensed car dealer lots.
Residents of USA and Canada at least 18 years of age.

FundingWay - Bad Credit Car Loans

All of our bad credit car loan options are used for buying new or used vehicles from leading auto dealers across North America. We provide car loans for people with bad credit who need a little extra help when it comes to auto financing. Used car loans can usually be obtained the same day or overnight in less than 24 hours.

Fundingway is here to help you get a bad credit auto loan

You don't have to settle for a cheap high mileage bad used car, truck, or suv from a buy here pay here lot with in house financing just because you have poor credit, a previous bankruptcy, or you've been turned down for auto financing from one of the major manufacturers financing arms such as Ford, Honda, Chrysler, Toyota, or GMAC. Get your used car loan preapproved today and let us open the door to your financial freedom.

Auto Auctions

Receive an excellent purchase price on your next vehicle by bidding on repossessed vehicles from Columbia Credit Union. Place your bid with our online auto auction, in cooperation with TitleAuction. After placing the winning bid, you can apply online for a auto loan.

Finding the auction
Finding the auction is easy. Simply locate the "How Can We Help You?" menu, which is on every page within our site. Scroll down and select "Bid on Auto Auction," or click the link below.

Please note that by clicking on this "Continue to Auto Auction", you will leave the Columbia Credit Union web site and enter another site created, operated, and maintained by Title Auctions.

The information that Title Auctions collects and maintains as a result of your visit to its web site may differ from the information that Columbia Credit Union collects and maintains (please see the Columbia Credit Union web site privacy and security notice for privacy protections Columbia Credit Union provides to web site visitors). We recommend you review Title Auctions' information collection policy or terms and conditions to fully understand what information is collected.

The page you are about to enter is framed with Columbia Credit Union's web page navigation for your convenience.


Your personal bank vs. car dealer financial institutions—which is the best approach when obtaining a loan for the purchase of a new vehicle?

Auto dealers are positioned to be a one-stop shop, from search of the vehicle to securing a loan to handing you the keys as you drive off the lot. As easy as it sounds, are you actually spending more money on your new vehicle through this method?

According to one expert, the answer is yes.


Auto dealers will always sell you on payments. The higher the payments the client is paying, the more money the dealership stands to make. Dealerships bump up the rate to the consumer on the payment, yet they receive a lower rate from the auto services departments of the different banks with which they work. Again, this is not going to be the best rate for the consumer because they are selling based on the payment, not the loan itself.

Obtaining your loan through your bank in advance of heading to the auto lot will position you as a stronger buyer, because you are negotiating with cash. Since you’ve already secured financing, you walk onto the lot with negotiating power, and this disarms the car dealer in their ability to make more money off your purchase.

There are several key factors to consider in helping you save money while obtaining a new auto loan, which include:

1. If you are pre-approved, this means you have decided in advance of your first test drive that you can afford the car. You may not have yet picked out the car, but you are already comfortable with the payments you will make and the overall dollar amount of the loan.

2. In working with your personal banker, you will always be dealing with a live person vs. an 800# and voice-activated system.

3. If you experience any problems with the loan, you can go directly to your private banker vs. 800#, where you will be a number and get lost in the bureaucracy of the financial institution.

4. Using your own bank will help you gain a better understanding of the loan because the bank will more clearly explain the terms so you know what are committing to. Your personal bank doesn’t care about payments—their focus is on the loan itself.

5. In working with a bank in advance of visiting the auto dealer, you will not have the tendency to overspend. You’ve already decided in advance what you will do, so you won’t be likely to get in over your head. Driving off with the affordable Honda Accord vs. the less affordable Lincoln Navigator will ease your mind and your pocketbook as you know in advance your payments and insurance costs.

Automobiles depreciate quickly, and the dealer will sell you on the length of the loan in addition to the finance payment to seemingly lower your payments. This means that by the time the car is paid off, your car is worth almost nothing, and may be in a position to either be replaced or in need of major repairs.

Financing before you shop positions you as a strong buyer, places you in the position of negotiating power, and enables you to buy the car you can realistically afford.

What is bad credit?

Bad credit is when negative listings or lack of credit history on your credit report cause low credit score. This may cause you to be denied for credit or qualifying only if you pay higher interest on financing, credit cards, and home loans. This may be because of poor performance in your credit history, incorrect information, credit fraud or identity theft. Bad credit can cause you to be denied to open a checking account! The best defense is to check your credit report frequently. Free Credit Report with link to dispute inaccuracies.

How did I get bad credit? If you are experiencing or have experienced any of the following you may be considered to have bad credit:

  • Auto Repossession
  • Delinquent Credit Card
  • Law Suits-Judgments
  • Collection Accounts
  • Foreclosure
  • Unpaid medical bills
  • Liens
  • Late Payments

Online Auto Loan

Online car financing has become a huge component in the Canada car loans industry. With the resources offered at Car Loans Canada not only can the buyer arm him/herself with all the information needed before accepting an offer but he/she can fill out an application for an online auto loan. Online car financing is a tool everyone should use.

Online Car Financing

According to Jupiter Metrix, 5.7 million cars will be sold on the Internet by the end of 2006. This works out to one in every three cars sold. J.D. Power & associates claim that 62% of new car buyers visit the Internet before buying a car. It is clear that online car financing is easy and accessible enough for all types of people looking for Canada car loans. Even people looking for bad credit loans apply online.

Canada Car Loans

Many consumers will make the mistake of only looking at their bank when shopping for Canada car loans. The assumption that banks will offer the best rates when it comes to car financing is often a mistake. In many cases, companies who specialize in automotive financing offer better rates than banks due to the shear volume of car loan business they do. Frequently, the automotive dealer will get you a better rate through your own bank than you would. The exception to this rule is the use of a personal line of credit. Banks will sometimes offer their customers a revolving line of credit at a lower interest rate than a traditional car loan. However, you may have to use a good portion of this lending tool that is normally reserved for home or emergency purposes. It is important to keep in mind your long term plans.

The Benefits of Online Car Financing

  • Streamlines the process of securing financing.
  • Free of charge.
  • Can even apply for bad credit loans online.
  • Car Loans Canada uses a secure server for protection of your information.

Credit Information in the Underwriting Process--Auto and Homeowner's

The Office of the Commissioner of Insurance (OCI) is continuing its study of the use of credit information in the underwriting and rating process of personal lines insurance. In order to respond to inquiries from community and neighborhood leaders, legislators and consumers, OCI surveyed the insurers that write private passenger auto and homeowner's insurance in Wisconsin on how they use credit information in their underwriting and rating process for auto and homeowner's insurance. Below is a link to the final report of the summary of the insurance company surveys. (Note: You will need an Adobe Acrobat Reader to view or print the report listed below, which you can download at no cost from Adobe .)

Great Car, Great Price…. but what about the Financing?

Auto dealers have a long history of using questionable sales tactics to bilk consumers in the market for a new car. Many people keep their eye on the sale price and neglect scams involving vehicle financing, which can add thousands of dollars to the price of a car.
Unscrupulous dealers often arrange financing for your vehicle, but studies show that the interest rates on these loans are often much higher than a consumer could obtain on their own. The arranged financing ends up costing a bundle, and dealerships often get a kickback from the lender on the overpriced loan.

These financing markups cost consumers an average of $1,000 per loan. Studies conducted on sales financed by Ford Motor Credit Company (FMCC), General Motors Acceptance Corporation (GMAC), and Nissan Motors Acceptance Corporation (NMAC) showed that between 26% and 50% of auto buyers have been victimized by auto financing schemes.

Although dealerships don’t have the authority to offer loans or act as bank agents, many dealers claim that they will negotiate with the bank for you to get the lowest payment schedule and interest rate. However, a dealer can only legitimately negotiate the retail price of a car and any items added on during the sale price.

The dealers often direct a lot of business to certain banks, and some of these banks offer the dealers a cut of the overpriced financing. The dealer cut usually comes from increasing the original percentage rate of the loan sold to the consumer. The consumer is unaware that they received a higher rate than they would have received from outside financing and ends up paying thousands more that goes to the dealership.

You should also double-check that the terms of the loan and the number of payments have not been altered from the initial agreement. Look out for “balloon” payments, which will mean a big final payment substantially larger than the monthly payments. Often these payments are not disclosed up front or are buried in the fine print.

So, what can you do to avoid falling prey to these shady financing schemes? Here are a few key tips that will help protect you from being victimized by shady dealers.

  • Don’t deal with any lending institutions (including credit unions) offered through the dealership. Find outside financing first, before you go into a dealership. Credit Unions usually offer the lowest auto loan price for which consumers qualify, and outside financing reduces the confusing paperwork shuffle that can conceal fraud at the time of purchase.
  • Shop for the best loan and loan terms as carefully as you shop for the best sticker price. Be sure of the exact number of payments, the total cost of your credit in dollars, the name, address, and contact info for the bank that holds the loan, and whether there is a balloon payment at the end.
  • Don’t give the dealership permission to pull your Auto Credit Loan information or your personal information (such as a Social Security number) until you’re ready to negotiate the sale of a vehicle.
  • Be willing to walk away. Slow down and read the fine print, ask lots of questions. Negotiate away extras and add-ons.
  • Stay away from spot deliveries. Dealers can take advantage of this by inserting writs of rescission in the purchase contract, allowing a customer to drive the vehicle off the lot, then change material terms of the contract later if, for example, the deal is refused by the lender.
  • After selecting a car model, call your bank or credit union for a rate quote. Then compare it to the dealer’s quote.
  • If the dealer offers zero percent financing, the dealer will not give consumers a rebate on the sale price. Ask the bank or credit union whether it makes sense to take the rebate and finance the purchase at the regular rate. Then compare those calculations with those of the dealer.
  • Don’t sign any contract with an auto dealer that includes a binding arbitration clause. More and more dealerships are adding binding arbitration agreements to contracts for new and used vehicles, as well as to financing contracts. By signing the contracts, the consumer is agreeing to binding arbitration to settle any future dispute and also waiving the right to sue or appeal – even if the dealership committed fraud. By agreeing to binding arbitration, you waive your right to sue, to participate in a class-action suit, or to appeal the arbitration decision. Dealerships use these agreements as a way to avoid costly court judgments and often pick the arbitration company.

A car buyer should also watch out for the shady practice of loan “packing” or “loading”. This starts with a salesperson or manager calculating an inflated estimate for a car loan. This creates "room" for the dealership to add in (or "pack") the sale with other products, such as credit insurance, service contracts, environmental protection packages, etc. Although the manager is adding these optional services to complete the over-calculation of the monthly estimate, he will often tell the consumer that the services are "included" in the monthly payment. What isn’t clear is that these are add-ons that you’re paying for. Not only is the consumer charged for something he or she was led to believe was free, but dealerships will often overcharge the consumer for those optional services.

Credit for Young Adults

Why Do You Need Credit?

As a young adult, you'll need credit for immediate reasons like the following:

  • Renting an apartment
  • Getting phone service
  • Financing a car
  • Paying tuition, book, and other school expenses
  • Spreading out payments on high-dollar items

With a good credit history built up, you'll have access to credit later on for things like the following:
  • Getting a job
  • Qualifying for loans for cars, furniture, wedding expenses
  • Making urgent repairs to your car
  • Getting emergency medical care
According to the Jump$tart Coalition for Personal Financial Literacy, the average high school graduate lacks basic personal financial management skills. Yet, two-thirds of college students currently hold credit cards. What happens between the lack of skills in high school and the responsibility of credit in college? Not enough education, according to many experts. Although college prepares young adults for the job market, many graduates enter the real world with a "learn as I go" approach. This lack of education, combined with financial management trial and error, is a recipe for disaster.