Car Buying Tips
Fresh Start's Car Buying Tip's
There are many things lenders may require of you for qualification of a “bad credit” auto loan. These are things that usually are not required of people with good credit. The Auto Lender that will approve your auto loan needs to be sure that you will be able to make payments considering blemishes in your past credit history. Some of the requirements that may apply are:
Drivers LicenseLenders and/or dealerships will ask you for a current drivers license (for obvious reasons) as well as proof of insurance Make sure your drivers license is valid and is the same state of where you reside.
Proof of Residence
Expect to bring a phone bill, electric, water, cable, etc… This will show you reside at that address. It's okay if the bills are not in your name.Proof of Insurance
If you currently have auto insurance, take a copy of your policy with you to the dealership. If not, your local dealership can usually provide you (through an affiliate) with low cost auto insurance so you can still take immediate delivery. This is designed to protect both you and the auto loan and lender, should you have an unfortunate accident. This will help pay off the auto loan, so you can purchase another car, truck or van with the credit you helped protect.
Proof of Income
If you have excellent credit, ou probably will not need to prove your income. The lender is strictly looking at your ability to repay the auto loan. You must have a means to make the monthly payments. When deciding whether or not to make you an auto loan, the lender will be looking at your employment and imcome. An auto laon is far easier to repay if you are currently employed! This will help establish your good credit for future auto, home or other loans in your future. Thsi is done on a case-by-case basis.
- Hourly/Salary - Las 2 pay stubs
- Overtime - Minimum 6 months on a regular basis to consider as income
- Self Employed - Last (2) yrs Tax returns including the Schedule C
- 2nd Job - Minimum 6 months on the job in order to qualifty as additional income
- Tips - Must be claimed on your taxes or some cases bank statements can be used to prove this income
- Other Income - Disability, child support, alimony, social security & retirement
How to Calculate your Income Correctly
I have seen too many applications get turned down (banks would call this "debt to income ratio") or rejected becasue the gross monthly income (before taxes) was never calculated correctly.
Calculate Hourly Rate:
Hourly rate X hrs worked per week X 52 divide by 12 = Gross Monthly Income
Salary Bi-weekly (every 2 weeks):
Salary x 26 divide by 12 = Gross Monthly Income
Salary Semi-Monthly: Salary x 2 = Gross Monthly Income
Salary x 2 = Gross Monthly Income
For example, lets assume your are being paid $12.00 per hour for a 40 hour work week:
Down Payment
However, banks are getting more and more aggressive with their auto loans and may finance 100% of your new or used car or truck purchase (on a case-by-case basis). Mnay people wonder whether or not they need a down payment. With a bad credit auto loan you generally need some sort of down payment. This does not have to be a large down payment. Remember that the dealer wants to sell the car and the amount of teh down payment is negotiable. They will generally work to fit your needs and available funds.
References
A minimum of 6 referrences, with names, address, zip code, telephone number and relationship.
Bad credit and / or bankruptcy do not limit your options as much as many people assume it does. You may feel that you will not be able to qualify for financing of any kind, especially if you have bad credit, or have recently filed for bankruptcy. This is simply not true. Companies and dealerships alike; specialize in bad credit loans and are very willing to work with you and your credit situation and will provide proper information and give you options. Although it may seem that no one will lend you money, people a eager to sell cars and will therefore find a way to approve your bad credit vehicle loan. The bottom line is the finance companies want more money on their books and dealerships want to sell more cars. This makes them willing to do just about anything to sell you a car.
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