What to expect from the car dealer when you have bad credit
Some lenders like ELoan will only approve you if you have a prior auto loan in your credit history. If you have bad credit, I bet these scenarios below have happened to you when you bought a new car from a corrupt dealer, as many DriverLoans visitors with bad credit have reported. The dealer charges you a very high interest rate APR (much higher interest rate than you should have paid), and lies to you about the bank "requiring you" to buy the extended warranty, the credit life insurance, the glass VIN etching, and probably lies to you about your credit score, telling you it's lower than it really is. Or maybe with your credit so low you were rejected, so the dealer tricked you into a co-sign auto loan but tricked your co-signer into being the borrower with a little sleight of hand during paper signing. Since you know you have bad credit, and are low on self esteem, and you have been turned down by other lenders for bad credit or high debt loads, the dealer's Jedi mind tricks sound believable so you agree to sign up for all this, not knowing the devastation on your financial future. You become upside down on your bad credit car loan, and deeper into debt, most likely with monthly payments you can't handle. Then you get the dreaded call from the dealer 2 weeks later (he pulled the Spot Delivery Scam on you) and delivers bad news that your auto financing fell through and your payments are going up. Then you find out a few months later from the angry lender of your old trade-in, the dealer did not pay off your trade.
If your credit is really bad, work out your car loan first, and choose your car second
You know my opinion, if your credit is bad, don't buy a car until you cleanup your finances. Sometimes people with really bad credit are blindsided by the fact that if your situation is really bad, you don't have a choice on cars or dealer brands. People forget that buying a car is a privilege, not a God given right. This challenge in getting you financed occurs because your high risk online car loan application is sent to a few dealers for them to report back which of their affiliated lenders is willing to risk giving you a bad credit auto loan. You'll find for example that you are trying to finance a Toyota Camry, but your local Toyota dealer cannot find a lender to approve your car loan. But a local Honda dealer across town is looking at your application and has found a lender willing to provide auto financing to you. This is why you don't always have a choice on car brands, and you might have to work out the auto loan first, and choose your car second. That's life at the bottom. Usually your minimum monthly income should be $1500, otherwise don't bother applying for an auto loan anywhere. If you can clean up your credit score to 680 or above, these problems will disappear.
Why car buyers with bad credit get raked over the coals
It alls boils down to ignorance, lack of information, high debt load, and low credit score. You don't notice the veil being pulled over your head, you don't see how you are descending into the burning depths of bad debt and despair, not realizing you lose $4000 to $6000 every time you trade in a car, all you know is you are getting out from one bad upside down car loan and into another car loan with lower payments, but 72 or 84 months on the loan. Your problem is you are focusing on the monthly payment instead of the selling price of the car, and the items that make up your monthly payment, and how you can reduce your monthly payment. The reason you lose out every time is you don't have the same information the car dealers have about your own credit history. That is why we here at DriverLoans, will educate you so this won't happen to you. If you have bad credit, you should get the web download Do-It-Yourself Credit Repair, from our partner, VehicleLoansNow.com. It is available by clicking HERE.
Avoid financing extended warranties and extras into high APR loans
Many people with bad credit make this mistake. If you know you are paying 18% APR, then forget about adding items like Warranties and Window VIN# Etch, and insurance into your loan, why pay 18% on those too? That just digs you a deeper hole. You can buy them after the fact direct without middleman car dealer markups, and no 18% APR.
New car finance Rule: Don't trade in a car that you still owe money on.
I get complaints from people who traded in a car they owed money on for new car financing and 2 months later were shocked to hear the new car dealer did not pay off their car loan in 10 days as promised. With this scam dealers pay you less for your trade. When the bank calls, YOU are responsible because the old car loan is still in your name, until the dealer pays it off. If you trade a used car in for new car, make them verify it in writing that they'll pay off your car loan in 10 days, or no deal.
"Subject To Financing": why the dealer called you 2 weeks later to re-sign your auto loan.
New car financing at the dealer can be a headache. The "Subject to Financing" clause appears on paperwork of all new car loans. It means the deal is not done, yet you think you are signing a contract. Then 2 weeks later the car dealer calls saying "your new car loan fell through." They knew what APR you qualified for when you bought the car, a common auto loan scam, usually pulled on people with bad credit. You should not buy a new car first then worry about new car financing. Sometimes dealers call and say they found you a lower APR, come on back down and re-sign the paperwork! Oh, Really? Have them fax you over all the new figures and APR in writing, and make sure they did not increase the number of months, or payment, or anything. Otherwise do not re-sign any contracts. This is why we are big proponents of online new car loans. Don't get stuck with a bad credit auto loan if it's not necessary. This would have been avoided if you used online auto financing.
If your credit is really bad, work out your car loan first, and choose your car second
You know my opinion, if your credit is bad, don't buy a car until you cleanup your finances. Sometimes people with really bad credit are blindsided by the fact that if your situation is really bad, you don't have a choice on cars or dealer brands. People forget that buying a car is a privilege, not a God given right. This challenge in getting you financed occurs because your high risk online car loan application is sent to a few dealers for them to report back which of their affiliated lenders is willing to risk giving you a bad credit auto loan. You'll find for example that you are trying to finance a Toyota Camry, but your local Toyota dealer cannot find a lender to approve your car loan. But a local Honda dealer across town is looking at your application and has found a lender willing to provide auto financing to you. This is why you don't always have a choice on car brands, and you might have to work out the auto loan first, and choose your car second. That's life at the bottom. Usually your minimum monthly income should be $1500, otherwise don't bother applying for an auto loan anywhere. If you can clean up your credit score to 680 or above, these problems will disappear.
Why car buyers with bad credit get raked over the coals
It alls boils down to ignorance, lack of information, high debt load, and low credit score. You don't notice the veil being pulled over your head, you don't see how you are descending into the burning depths of bad debt and despair, not realizing you lose $4000 to $6000 every time you trade in a car, all you know is you are getting out from one bad upside down car loan and into another car loan with lower payments, but 72 or 84 months on the loan. Your problem is you are focusing on the monthly payment instead of the selling price of the car, and the items that make up your monthly payment, and how you can reduce your monthly payment. The reason you lose out every time is you don't have the same information the car dealers have about your own credit history. That is why we here at DriverLoans, will educate you so this won't happen to you. If you have bad credit, you should get the web download Do-It-Yourself Credit Repair, from our partner, VehicleLoansNow.com. It is available by clicking HERE.
Avoid financing extended warranties and extras into high APR loans
Many people with bad credit make this mistake. If you know you are paying 18% APR, then forget about adding items like Warranties and Window VIN# Etch, and insurance into your loan, why pay 18% on those too? That just digs you a deeper hole. You can buy them after the fact direct without middleman car dealer markups, and no 18% APR.
New car finance Rule: Don't trade in a car that you still owe money on.
I get complaints from people who traded in a car they owed money on for new car financing and 2 months later were shocked to hear the new car dealer did not pay off their car loan in 10 days as promised. With this scam dealers pay you less for your trade. When the bank calls, YOU are responsible because the old car loan is still in your name, until the dealer pays it off. If you trade a used car in for new car, make them verify it in writing that they'll pay off your car loan in 10 days, or no deal.
"Subject To Financing": why the dealer called you 2 weeks later to re-sign your auto loan.
New car financing at the dealer can be a headache. The "Subject to Financing" clause appears on paperwork of all new car loans. It means the deal is not done, yet you think you are signing a contract. Then 2 weeks later the car dealer calls saying "your new car loan fell through." They knew what APR you qualified for when you bought the car, a common auto loan scam, usually pulled on people with bad credit. You should not buy a new car first then worry about new car financing. Sometimes dealers call and say they found you a lower APR, come on back down and re-sign the paperwork! Oh, Really? Have them fax you over all the new figures and APR in writing, and make sure they did not increase the number of months, or payment, or anything. Otherwise do not re-sign any contracts. This is why we are big proponents of online new car loans. Don't get stuck with a bad credit auto loan if it's not necessary. This would have been avoided if you used online auto financing.
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