03.30.09
Bad Credit Auto Loans
Bad Credit Auto Loans
In today’s economic environment it’s not hard to see why people are struggling with their monthly bills and obligations. Layoffs, business shutdowns and downsizing can spell financial disaster for most people, in particular families who depend on 2 incomes to make ends meet. With incomes falling it becomes very easy for monthly car, mortgage or credit card payments to fall behind. One late or missed monthly payment can drop your credit scores 10, 20, 30 or more points! The lower your credit score the harder it becomes to obtain financing for the items you need such as car loans.
Bad Credit Auto Loans in one form or another have been around for over 40 years. In the past bad credit car loans were not that common, but with the increase of bankruptcies in the last 10 years they have become very common place. I obtain bad credit auto loans for people who have had repo’s, foreclosures and bankruptcies.
I meet a lot of people who think because they have gone through repo’s, foreclosures and bankruptcies that they can’t get an auto loan or that the interest rate will be extremely high. This is simply not the case. Bad credit auto loan lenders make loans based on risk. That is to say the rates and terms in most cases can be improved with good down payments and smaller loan amounts.
If you are trying to get an auto loan and have had credit issues here are a few tips.
1. Have a down payment. If you have had credit issues the lender is going to want to see some kind of commitment from you so they are not the only ones taking a risk.
2. Be realistic about how much car you are trying to purchase. For example if your gross income (before taxes) is $2000 a month your monthly car payment should not exceed 15% of that amount which in this example would be $300.00 a month.
3. Make sure that all of your monthly bills including your car payment does not exceed 40% of your total income. For example $2000 a month income before taxes = $800 a month in total bills including your car payment.
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