Tuesday, October 2, 2007

auto finance poor credit no credit

How to get the right sub prime auto loan

Auto Finance Poor Credit No Credit loans are created for consumers who fail to meet qualification for traditional bank financing such as credit unions, financial institutions, and banks due to their low credit scores, previous vehicle repossession, recent bankruptcy, low income, or inability of producing specified down payment. On average, the car dealers fund bad credit auto loans initially, which are then either sold or assigned to the particular car company.

Pull your credit report.

Knowing what’s on your credit report is very important. However if sub prime credit is involved it is simply a must. Most dealers can supply you with sub prime financing alternatives, but the consumers that shops for their financing before they look for a car usually save money. Make sure you have done a fair amount of homework before heading to a dealer.

This prevents you from ending up at a dealership that is not equipped to handle your special needs.

Next, try financial institutions that you've researched that seem to have a good track record. "You really want to shop the prime lenders," says Michael Stegman, professor of public policy and director of the Center for Community Capitalism at the University of North Carolina-Chapel Hill. Many lenders now have subprime divisions. If you go in for a prime loan and don't qualify, they may be able to refer you to another part of the same company. Also, some lenders have community development requirements.

Another very important tip is don't give permission to just any auto loan company to access your credit report and credit score. Only give them permission if you like their offer. The reason for this is because multiple credit inquiries made over a short period of time will lower your credit score.

Five questions to ask a car dealer in order to get the best deal

Here are some good questions to ask:

Which credit reporting agency do you use to make a lending decision?

What is your minimum credit score requirement to get approved?

What credit score is needed to get the best interest rate?

Do your lenders prefer offering lease or purchase financing to a bankrupt debtor?

What incentives are there to lease or purchase right now?

At this point it's important to remain open to either leasing or purchasing. Evaluate your options and incentives. Remember, you're buying the financing.

In other words, the most important factor is the willingness of the lender to loan you money.


The only 3 auto lenders you should consider using

by Stephen Snyder

The only lenders I would consider using are:

First choice: Captive lenders (car manufacturers)
Second choice: Banks (not finance companies)
Third choice: Credit unions

Ninety-nine percent of the cars I've leased over the years have been with captive lenders. Just one was leased by a bank.

That particular deal came from a conversation I had with Amy, the finance manager at the local Land Rover dealership here in Indianapolis. Nice gal. I told her I was open to her financing recommendations, but I preferred financing through the car manufacturer.

I told her my current FICO scores. She immediately said that with my scores she could do better through a local bank. I signed a credit application and told her to go for it.

The next day I signed a lease agreement with that local bank. Being open to her advice literally saved me hundreds of dollars a month on that car.

So be flexible...but be careful. It seems most car dealers call all of their funding sources banks. When in reality some are banks, some are credit unions, and most are sub-prime finance companies.

source: lifeafterbankruptcy.com

Secret Credit Score Car Dealers Won't Share With You

Car dealers can use "different" FICO scores
than the ones you see

by Stephen Snyder

The car dealer is probably using what is known as the FICO Auto Industry Option score instead of a traditional FICO credit score.

You see, car dealers not only get to select the credit reporting agency they receive FICO credit scores from...they also get to decide if they will use a traditional FICO credit score or a variation of a FICO score called an Auto Industry Option score.

What's the difference between these two types of scores?

Not a whole lot to most people...

...but there's enough variation to make the majority of auto lenders use the Auto Industry Option score.

The real difference between the two scores is that the Auto Industry Option score pays a lot more attention to how you handled previous auto credit.

Have you made late payments on a current or previous auto loan or lease?
Have you ever settled an auto loan or lease for less than you owed?
Have you had a car repossessed?
Have you had an auto account sent to collections?
Did you include your car loan or lease in your bankruptcy?
Those actions will affect your Auto Industry Option score more than they'll affect your traditional FICO score.

Bottom line—if you handled your previous auto credit perfectly, you should have a high FICO Auto Industry Option score—that's a good thing.

But what if you've had a few bumps in the auto credit road in the past?

You guessed it...your Auto Industry Option score will be lower.

You'll be perceived as a greater credit risk and the auto lender may either deny you or use your lower score to justify charging you a higher interest rate.

You see, auto lenders are different than other types of lenders.

And I'm not talking about their slimy ways, leisure suits, short ties, manly hairy chests, or gold bling.

A lot of other lenders look at your whole credit picture to determine whether or not to give you a loan. But many auto lenders care about only one thing...how you handled your past AUTO credit.

That's what a FICO Auto Industry Option Score gives car dealers—a way to pinpoint how you've handled what matters to them the most.

So, even if everything else on your credit reports went down the toilet after your bankruptcy, if you didn't include your auto loan in your bankruptcy and never defaulted or missed a car payment, your Auto Industry scores will probably be better than your traditional FICO scores!


The power of manufacturer rebates

The power of manufacturer rebates

by Stephen Snyder

A lot of new car manufacturers offer huge rebates to move new cars out the door. There's a big incentive for a dealer to sell a new car.

You need to locate the highest rebate offer you can find and work toward trading-in your car to eliminate any upside down situation.

Before you go to a new car dealer, go to www.edmunds.com and look up the rebate and interest rate on every new car and truck a manufacturer offers. This way, if the car salesman isn't being fair with you (as far as rebates and interest rates are concerned) you'll know.

Just go to www.edmunds.com and click on "New Cars" and then on "Incentives & Rebates" and you'll get all the information you need.

Some car manufacturers offer
rebates up to $6,000

It's not a good situation to be upside down on a high-interest car loan that you need to refinance. However, you can get around it by purchasing a new car with a large rebate. You just use the rebate to offset the amount you owe on your old car.

And if you find a car with a higher rebate (highly recommended), you're in even better shape. If the rebate is high enough, it can eliminate your negative equity and you can use any remaining amount as part—or maybe even all—of your down payment.

So, if you're $6,000 or less upside down, you can still come out smelling like a rose if you play your cards right.

Ask the car salesman this magic question...

In addition, don't be afraid to ask the car salesman this important question: "What car or truck on your lot do you need to sell immediately?"

If you're in a negative equity situation (meaning you owe more than the car or truck is worth) you need every advantage you can get your hands on. Ask the auto dealer to sell you the oldest car in their inventory.

Car dealers are willing to take a loss on vehicles they're having a tough time selling because it costs them more to keep these cars on the lot compared to selling them right away at a slight loss. This could mean another $500 to $3,000 discount for you!

You still need a high enough score to qualify

Just like every other major purchase you make on credit, you need to meet a minimum FICO score requirement in order to qualify for a loan from the lender...especially if the lender is a bank or credit union.

For instance, on new cars one manufacturer requires a FICO score of:

680 and above to get a 125% loan

650 to 679 to get a 115% loan

620 to 649 to get a 110% loan

And a FICO score below 620 gets you only a 100% loan
Any loan over 100% will go toward paying off what you owe on the car you're trading in.

Bottom line: the higher your FICO credit scores are—the more options you'll have and better terms you'll receive. That's why we're always preaching to increase your credit scores.


Is It Okay To Buy A Repo Car?

If someone wants buy a car, there are two most common places to go which is probably the only known locations where people can buy cars: new car dealers and used car dealers. The fact is, there are several, not so popular alternatives to these two places. And one of those is buying repo car.

What are repo cars?

Repo cars are privately owned vehicles that have been seized either by the bank, financial institutions or the government. Reasons vary why these cars have been repossessed. It may be because the owner fails to pay for the car mortgage or the car has been used as a lien for another loan, probably a house mortgage. Either way, these cars will become a bank's, financial institution, or government's property.

These cars are not so much of a use to their new owners so they will be sold to the highest bidder, through auction.

Why are repo cars so cheap?

Repo cars occupy so much real property which equates to money lost. So, instead of storing these useless vehicles, it would be much economical to sell it off converting them into liquid assets at the same time saving the real property. Depending on the seller, the car can cost as little as $100.

The question now is: Is it okay to buy repo car?

This is not a simple question with an instant "yes" or "no" response, since there are several factors to take into consideration, plus the fact that different people have different standards and priorities when it comes to buying a car. However, there are some things you should know about repo cars which should help you decide whether or not to buy one.

Little do people know that when it comes to quality pre-owned cars, a good place to find them is at repo car auction. Quality is not the only thing that makes repo cars so easy to love, you can certainly own a car at a very affordable price. You can even buy a car with as much as 90% savings. Some repo cars can be a little over (or under) a year old. Some may be as good as brand new. Others can be a good old car waiting for its new owner for a great deal.

Finding repo car sellers/auctions is easy. Most bank websites publish a list of repo cars on sale. Government repo cars on the other hand are announced publicly through listings and announcements. There are also specific websites that offer great collection repo cars that are up for bid. Usually, repo car websites require you to pay a membership fee to gain access to their database and some useful information about the vehicle for sale. Membership fee has other advantages. It eliminates "joybidders" and reduces the risk of fraud (however asking for a membership fee is not an assurance of the legitimacy of a repo car website).

Once you find a repo car seller, understand the terms and condition of purchasing be it through auction or non-auction purchase.

In the end, the decision whether or not buy a repo car is up to you but come to think of it, there is nothing wrong with buying repo cars. They are legal, same as other pre-owned cars, and most of all cheap.

To search for repo car auctions, visit http://www.repocarforsale.net

Article Source: http://EzineArticles.com/?expert=Anthony_Lee

Auto Financing: Dealer Tricks To Avoid

At the core, most dealers aren't out to rip you off. But they employ experienced and aggressive salespeople who have a bag of tricks designed to maximize the salesperson's cut and the dealer's profit.

The single transaction strategy: Many people view buying a car as one transaction. It's not, and dealers know this. It's really three transactions rolled into one -- the new-car price, the trade-in value, and the financing. The dealer sees all three as ways to make money. Treat each of these as separate transactions, and negotiate each one. If you get a new car for $200 over invoice, but receive only $1,000 for a trade-in car that's worth $2,500, you haven't done as well as you could.

The payment ploy: A dealer might say, "We can get you into this car for only $389 a month.'' Probably true, but how? In some cases, the dealer may have factored in a large down payment, or may have stretched the term of the loan out to 60 or 72 months. Focus on the price of the car rather than the monthly payment. Never answer the question, "How much can you pay each month?'' Stick to saying, "I can afford to pay X-dollars for the car.''

The rollover ruse
Often, it's tempting to want to trade up to a more expensive car -- even before you've finished paying off the car you're currently driving. One way that some car buyers do this is by "rolling over" the remaining payments on your current car into a new car loan or lease.

While this isn't illegal, it's risky. Why? You'll end up owing more on the second car than it's worth. In the parlance of the automobile world, you'll be "upside down" in the vehicle. If it's totaled in an accident, or if you decide down the road to trade it in, you'll end up writing out a big check to cover the remaining amount of the loan.


7 Insider car-buying tips

1. Financing
It's always good to be pre-approved by your bank or credit union, it helps you negotiate a better rate when you get to the dealership. If you qualify, the dealer can sometimes offer a better rate than your bank or credit union.

2. Leasing
Leasing can also be an attractive option by getting more vehicle (equipment) for a smaller payment than financing and less out of pocket cash. But beware of the restrictions with leasing, i.e. mileage constraints, wear & tear costs, higher insurance rates and many have a disposition fee at the termination of the lease from $250 to $400.

3. Look to buy your car on the last three days of the month
Dealers need to make their quotas for the month, which has them pay less on floor plan dollars and allocates more vehicles to the dealer (the more vehicles sold, the more the dealer gets in return from the manufacturer). Dealers must sell their oldest inventory to avoid paying interest on the new cars they have in their inventory. Ask how long the car you’re buying has been in their inventory, you may even get a better deal if it has been in their inventory over 90 days.

4. Know what you want
Narrow your choices to a particular make and model. Don't buy options you don’t need, such as a 4X4 when you drive mostly in the city and your vehicle is never used in off road or in extremely bad road conditions.

5. Negotiate
Always negotiate. Before you arrive at the dealership, know the incentive programs available for the vehicle you’re interested in (if any are available) — even with less than desirable credit you should still negotiate the price.

6. Read the fine print on your warranty
It may NOT cover you bumper to bumper. They are usually a limited bumper to bumper and in some cases non- transferable.

If you follow these car buying tips the sales manager will always take your deal and you’ll leave with a new vehicle.