If you are applying for a bad credit car loan, there are a number of things you can do to make the process go more smoothly.
Apply online
While applying online may sound more than a little self-serving, it can help you avoid many of the pitfalls in the loan process. Many of us here at AutoNet Financial have talked to customers who have visited a local dealer only to be turned down for a car loan. In most cases, this was due to the fact that the dealer they chose simply didn’t want to get involved with a customer that had bad credit. This could be due a any number of factors but most often it boils down to the fact that a special finance department in a car dealership requires a great deal of additional time and effort as well as the right kind of new and used inventory that many dealers aren’t willing to commit to.
When you apply for a bad credit car loan at AutoNet Financial, we will immediately assign it to our nearest affiliate dealer. These program affiliates are dealers that are experienced in bad credit financing and they are specialists when it comes to getting customers financed.
The application process
You may find that our application is longer and more thorough than any other credit application you have ever filled out. There’s a reason for this: the more information that the dealer has, the better they can match you up with one of their lenders – in order to get you the best deal possible. It’s important that you are totally honest and upfront with all your information. Since bad credit car lenders usually check this information themselves, it is important that the information you furnish is as accurate as possible.
Once the dealer receives your application, someone from their special finance department will be contacting you to go over the information and possibly ask you some additional questions. The special finance manager does this to get the “rest of the story”, if there is one, from you. Many times customers have had medical problems, family health issues or other events that caused their credit problems. Knowing these issues will help them explain your situation to the lender.
Supporting documents
In addition to checking on the accuracy of your application, most subprime lenders will require that you furnish the dealer with documentation proving your income and residence. These “stipulations”, as they are called, can include utility bills, phone bills as well as paycheck stubs and W-2 forms. It’s a good idea to assemble all this information ahead of time so that you have it available when you visit the dealer. Of special note: if you are claiming child support or disability income, it will probably be necessary to have the court order or the award letter to prove that income, as well.
Reasonable expectations
A bad credit car loan is designed to repair your credit, not give you the opportunity to buy your dream car. Although a minivan isn’t an SUV, chances are good that it will not only be more affordable to buy, it will also give you better gas mileage, thereby saving you money on fuel costs, as well. A small sedan is even more affordable and will keep monthly payments and fuel costs even lower. Remember, the object is to keep monthly payments as low as possible and to keep the loan term as short as possible to cut down on interest expenses. You should put as much money down on the loan as you can comfortably afford while avoiding trading in a car that you are “upside down” in.
GAP insurance and service contracts
While many dealer extras are a waste of money, you will want to make sure that you’ll be able to pay for any unexpected repair bills. One way to avoid unexpected repair bills is to purchase a service contract that covers the full term of the loan. Check on the internet for pricing before you visit the dealer to be sure the price they quote you is competitive. Getting it at the selling dealer also means that it can be added to the monthly payment, making it more affordable.
If you are taking out a loan that’s longer than 48 months with little or no down payment, GAP insurance is also a good idea, since you will be in a negative equity situation for much of the loan period and your car insurance will only pay for the current value of the car, not what you owe on the loan contract (GAP insurance will cover the difference).
Agreements must be in writing
Finally, you need to realize that the dealer is acting as an agent for the lender. If something you’ve discussed and agreed to is not in the contract or on the buyers order, then it doesn’t exist. Remember, there is no cooling off period for a car loan. Once the papers are signed, the deal is final. Take the time to read over all paperwork before you sign the loan contract to make sure it matches the terms that you agreed to and always get a copy of everything that you sign.
The Bottom Line
Here at AutoNet Financial, we have helped thousands of people with credit issues reestablish their credit while driving a new or low-mileage, reliable used car. On our website, www.autonetfinancial.com, we try and answer as many of your questions as possible. Our toll-free number, listed at the bottom of every page, will put you in touch with one of our knowledgeable customer service representatives, who can answer any other questions that you might have. Remember, here at AutoNet Financial, we want you “on the road” to better credit!
