Bad credit auto loan implications

At Auto Net Financial, where applicants can fill out our online bad credit car loan application and begin the process of rebuilding their credit, we see that TransUnion has released its latest report on automotive lending – this time dealing with how auto loans performed in the fourth quarter of 2009.

These auto delinquency forecasts from TransUnion, one of the three major credit bureaus, are extracted from a huge database consisting of 27 million consumer records that are randomly sampled every quarter. As such, it’s fair for us to assume that the results are relatively accurate.

According to TransUnion, the national auto loan delinquency rate showed no change between the third and fourth quarters of 2009, while the year-over-year delinquency rate actually decreased by 5.81 percent. This could be welcome news for many of our applicants who are either currently waiting for an approval or are thinking of re-applying after a previous turn-down.

TransUnion analysis

“Going against traditional seasonal patterns, the flattening of auto delinquency rates in the fourth quarter may be an optimistic sign for payment behavior over the remainder of this year,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit. “Since 2000, auto delinquency rates have increased in the fourth quarter except for one occasion back in 2003. In fact, at the start of the recession (fourth quarter of 2007), the auto delinquency rate increased nearly 15 percent from the prior quarter. Part of the reason why we may be seeing a gradual turnaround in delinquency rates is the impact of new lower risk loans over the past several quarters including new loans from the popular government program, Cash for Clunkers.”

TransUnion’s report shows that 18 states witnessed a decline in quarter-to-quarter delinquency rates while a total of 35 states experienced a decline on a year-over-year basis.

The Bottom Line

The good news for bad credit car loan applicants is that the drop in loan originations seems to have halted and that subprime lenders are beginning to increase the actual number of bad credit car loans they are writing.

The bad news is that while many lenders are increasing the number of loans they originate, these same lenders are continuing to apply conservative lending criteria to these loans. When comparing year over year car loan environments, this means that an individual with bad credit and a given credit score will still be subjected to historically higher interest rates with a given credit score (probably with a shorter loan term) and will be asked to put down a fairly sizeable down payment.

At Auto Net Financial, our advice to consumers seeking bad credit car loans remains the same as it has been since the beginning of the current recession:

•    Know your credit score (FICO score) and what’s contained in your credit report
•    Plan on coming into the loan with at least 10 percent down in cash or trade equity
•    Keep the loan term as short as possible
•    Buy a compact of midsize vehicle and put off looking at your dream car until after you’ve reestablished your credit.

Helping you find the right dealer

For more information about subprime car loans, go to www.autonetfinancial.com and begin the process of rebuilding your credit by filling out our secure online bad credit car loan application. If you need additional assistance, go to the “About Auto Net” tab and click on the “Contact Us” line where you will find our toll free number. Our customer service representatives are available to answer your questions during normal business hours.

Rebuilding your credit

At AutoNet Financial, we are in the business of helping our customers reestablish their credit by filling out a credit application and financing either a new or a newer pre-owned vehicle with bad credit automotive financing through high risk lenders. In the process, we have helped many of our customers raise their credit scores and reestablish their car credit by financing a vehicle with a bad credit auto loan. We also do our best to educate these consumers on the bad credit car loan process as well as the different types of lenders that are involved with these types of transactions.

One of the keys to a successful bad credit car loan is an understanding of how the bad credit automotive financing process differs from traditional car loan methods. So today we’ll begin by listing the different types of lenders and how someone with bad credit can apply for a loan with them.

Two different lender types

There are two basic types of lenders: those that deal directly with consumers and those that work through dealer “agents”.

Direct Lenders

Direct lenders are banks, credit unions and finance companies that lend money directly, hence the name, to the customer. Once approved for a loan from a direct lender, you can shop for a car like a cash buyer. Having this type of an approval also means that you don’t have to worry about whether or not the dealer can get you financed. Many direct lenders maintain a web site where you can directly apply for a car loan and receive an almost immediate response to your request.

The downside to these direct lenders is that most have stricter automotive financing underwriting guidelines. This means that they don’t do a very good job of approving applicants who have poor credit. Although a few bad credit lenders have had web sites where credit-challenged consumers could apply for a loan online, most of those lenders are no longer in the market.

Indirect Lenders

Most direct lenders also offer indirect lending through automobile dealers. Under their indirect lending programs, these lenders will often offer car dealers slightly better “buy rates” than they offer their direct customers. The dealers then have the choice of either offering their customers this rate, or marking it up in order to earn additional profit. It should be noted, however, that most of these direct/indirect lenders as well as the lending programs that feature these mark ups are associated with the most creditworthy customers, not those consumers with bad credit.

For credit-challenged customers, though, the indirect lending model is also the most common type of lender when it comes to dealing with consumers with poor credit. Unfortunately, since these lenders only do business through car dealers and the lenders don’t advertise which dealers they do business with while the dealers don’t list which lenders they’re signed up with, finding a dealer that can get you financed is often a hit-or-miss process.

Bad credit auto loan web sites

Not to be confused with lender web sites, bad credit automotive financing web sites such as www.autonetfinancial.com offer credit-challenged consumers an easy way to find a dealer that caters to, and has a department that specializes in, bad credit car loans.

By filling out a bad credit car loan application on this site, consumers can eliminate the necessity of driving around town in order to find a dealer that does special finance and possibly avoid the potential embarrassment of getting turned down for a loan.

As we see it

There are other ways and then there is the smart way of applying for a bad credit car loan.

For more information about subprime car loans, go to www.autonetfinancial.com and begin the process of rebuilding your credit by filling out our secure online credit application. If you need additional assistance, go to the “About Auto Net” tab and click on the “Contact Us” line where you will find our toll free number. Our customer service representatives are available to answer your questions during normal business hours.

Bad credit car loans

At Auto Net Financial we realize that after they fill out our online bad credit auto loan application, most bad credit car loan consumers will end up purchasing a used car. For the most part, this is due to the fact that they are less expensive than most new vehicles.

New and used cars

The process of reestablishing your auto credit can be an expensive one – especially if, as a credit-challenged consumer, you choose the wrong kind of vehicle. Although new cars are considerably more reliable than most used cars, often the added expense puts them out of reach for many bad credit car loan customers.

Fortunately, discounts such as new car incentives, usually in the form of customer cash-style rebates, can not only lower the price of a new vehicle; this same money can also contribute, at least in part, to the down payment requirements of many subprime lenders. This “cash on the hood” can be especially important given the current economic situations of many cash-strapped car buyers.

Toyota’s new car incentives

Earlier this month, Toyota Financial Services unveiled a new and aggressive finance and lease program designed to lure buyers away from new programs offered by both General Motors and Chrysler and highlighted by 0% financing and special leases on some of their best-selling models. Unfortunately, both the finance and lease offers are reserved only for those “most qualified” customers, a category that doesn’t include consumers with bad credit.

But by looking more closely at Toyota’s incentive programs for March, we can see that bad credit customers hoping for a good deal and interested in a Toyota can save anywhere from $750 to $1,000 of some of the most affordable models the company makes. And although these rebates cover most of Toyota’s lineup of new vehicles, we are going to concentrate on those models that have an entry level price (after rebates) of under $20,000.

And while most of Toyota’s vehicles surpass the $20,000 price that makes them too expensive for the majority of bad credit buyers, new car incentives on their three most affordable vehicles are available during the month of March for these 2010 models (these rebates are available to all buyers regardless of their credit score):

2010 Toyota Yaris - $1,000
2010 Toyota Corolla - $1,000
2010 Toyota Matrix - $750

Examples: 2010 Toyota Yaris and Corolla

The Yaris is a good example of a quality small car that is currently unaffected by any of the company’s recalls. With a base sticker price of $14,155 that includes an automatic transmission, the delivered price in most states would be about $15,300 – before deducting the $1,000 in customer cash.

The Corolla LE with an automatic transmission is $17,600 and a delivered price would be close to $19,000 in most states and very near the upper end of affordable cars for bad credit customers. Still, we feel that the resale value of the Corolla will rebound from the current market and continue to remain strong. Besides, the $1,000 in customer cash is something Toyota rarely offers Corolla buyers.

As we see it

New car rebates and customer cash are a great way to not only make a vehicle more affordable, but also contribute towards your down payment. There is also no better way to begin reestablishing your car credit than by filling out our secure online bad credit car loan application.

At Auto Net Financial, we feel it’s important that you make the right choices when it comes to a bad credit car loan buying decision. Those choices include finding the right dealer and the right car to help you reestablish your auto credit. Any of the affordable models from Toyota, with the additional $750 to $1,000 in customer cash, will make a bad credit car loan more affordable, while keeping your interest costs down.

For more information and to begin the bad credit auto loan process by filling out our secure bad credit car loan application, please visit our web site at www.autonetfinancial.com.

Insurance costs

At Auto Net Financial we understand the budget constraints many of our customers face when they fill out our bad credit auto loan application. But in working with credit-challenged consumers, we have also noticed that many of them are unaware of how they can save money and, at the same time, can ensure that they have a better chance of success in the process of raising their FICO scores and reestablishing their credit.

One of the things that we recommend is to keep the loan term as short as possible and the total monthly transportation budget as affordable as possible. This means bad credit car loan applicants should consider a mid-size or compact car instead of that SUV to keep their payments low and the loan term as short as possible in order to save on finance costs.

Picking out an affordable vehicle not only saves on finance costs, it can also be more affordable to insure. So with that in mind, here are some money-saving insurance tips to follow before making that final car-buying decision.

Eight insurance savings tips

1. Shop around for your policy

There are basically three types of auto insurers. Companies that use direct writers (i.e. Geico and Progressive) have employees who will sell directly to you. Other companies, (Allstate and State Farm are good examples) work through exclusive agents who will sell only their policies. Finally, independent agents are able to sell policies from those companies they are signed up with.

Although direct insurers are usually the most affordable, this also means that they can be picky about who they insure. Your best bet, then, would be to get quotes from at least one insurer in each category. You can also go online and receive quotes directly from insurers or go to one of the many insurance web sites that will comparison shop for you.

2. Consider combining your policies

In many cases, buying your homeowners insurance and auto insurance from the same provider will qualify you for an additional discount. But it’s always a good idea to check this out first. If you’re thinking of combining your policies, shop both of them around to make sure you’re getting the best deal on a combined rate.

3. Review your credit report first

Bad credit car loan buyers should always pull their credit report a few months before shopping for a car. By doing this, you can correct any mistakes and possibly raise your credit score before visiting the dealer.

Many auto insurance companies also look at your credit report, since it’s been proven that drivers with high credit scores tend to file fewer insurance claims. By improving your credit score before you get that new car, bad credit car loan consumers could also be saving themselves money on their auto insurance.

4. Join a professional association

Many auto insurers give discounts to associations such as AARP, university alumni, and military groups.

5. Check for student discounts

A number of insurers will discount your policy if your teenage driver is a good student or has taken a defensive driving course. If your children are attending college and at least 100 miles away, there is also a discount for that. You should also keep in mind that if you have a child that is sixteen or over and doesn’t have a driver license, you are not required to insure that person.

6. Choose your car wisely

Bad credit car loan applicants should realize that now is not the time to finance their dream car. But in addition to lowering your monthly payment and reducing interest charges, a small to mid-size sedan can also save on insurance costs.

One additional tip: if you’re looking at two different vehicles and can’t decide on which one to buy, check with your insurance agent before making that final decision – you could save yourself hundreds of dollars a year simply by choosing the model that is less likely to be stolen.

7. Check for low mileage discounts

Some insurers also offer discounts if you drive below certain mileage thresholds each year.

8. Consider electronic payments

You can save money with some insurance companies by having your monthly payment electronically transferred from your savings account, checking account or credit card account. Some insurers will also offer you savings if you receive your monthly bill electronically.

The Bottom Line

There is a smart way of approaching a bad credit car loan. By choosing an affordable car and taking advantage of as many auto insurance discounts as possible, you will give yourself a better chance of coming through the auto credit reestablishment process successfully.

Auto Net Financial is in the business of helping consumers with bad credit find a dealer that can get them financed so that they can begin to reestablish their auto credit and improve their FICO scores. These affiliate dealers are knowledgeable and treat all their customers, regardless of their credit background, with dignity and respect.

For more information on the bad credit auto loan process and filling out a bad credit car loan application, please visit our web site at www.autonetfinancial.com.

A real question

Here at Auto Net Financial one of our customer service representatives recently fielded the following question from a reader:

“I have a Toyota Camry and with all the recalls I do not feel safe driving the car, even if they “fix” the problems. I went to try to trade it, and because it’s not a year old and has all the recalls, the car is worth $10,000 less than what I owe. Looking at my credit, I can finance a second car without trading. Someone told me that I should finance a new car and then turn in the Camry to Toyota. He said that it would lower my credit score by 100 points, but what else could happen in this case? He said that I could get a judgment on my credit, but I didn’t have to pay the judgment… is this true?

Thanks!”

Going downhill

At first, the question took us by surprise. That’s because here at Auto Net Financial we normally deal with customers who are hoping to improve their credit scores by filling out an application for a bad credit car loan, as opposed to utterly trashing them. After all, if you have really good credit (anyone who was able to finance a new Toyota Camry a year ago through what we are assuming is Toyota Financial Services must have at least one FICO score of 720 or higher), why would you want to kill it with a repossession?

The obvious answer is that this person is afraid to drive her Toyota Camry due to a series of recalls that have recently made the national news as well as caused a series of hearings to be held by committees of both the U.S. Senate and the House of Representatives.

So let’s look at that first.

Toyota recalls

The Camry recalls involve two separate issues: floor mats and sticking accelerator pedals. Here is what Toyota Motor Sales president and COO Jim Lentz had to say about both in the February 15th issue of USA Today:

“We have investigated this issue, and have identified two specific causes that we can address and are addressing with our recalls — pedal entrapment caused by floor mats and sticking accelerator pedals. In the case of sticking pedals, we were first able to uncover a defect trend in the U.S. late last October and moved quickly to pinpoint the cause and establish the fix. Dealers are now making the repairs for our customers at a rate of roughly 50,000 vehicles a day.”

Lentz goes on to state:

“Still, it is worth putting this issue in context. Confirmed incidents of unintended acceleration are a very small fraction of vehicles on the road, and Toyota’s track record for reliability remains strong.”

The company has also requested that those customers who still have questions and concerns should contact the Toyota Customer Experience Center at 1-800-331-4331.
The Toyota Customer Experience Center hours are:
Mon - Fri, 5:00 am - 6:00 pm PST
Sat, 7:00 am - 4:00 pm PST

Voluntary repossession

As far as “turning in the Camry” is concerned, we’re afraid that this person’s friend was a bit misinformed. The fact of the matter is, the higher your credit score, the more it will drop if a negative item appears on your credit report.

According to the myFICO web site, someone with a credit score of 780 can expect their credit score to drop nearly 160 points as the result of a foreclosure – which is the homeowner’s equivalent of an automotive repossession. And that is just for starters.

Once the repossession occurs, the lender is legally required to sell the Camry at auction and, at that time, the deficiency balance (the difference between what is owed, plus fees, and the selling price) may very well be equal to or greater than the $10,000 in negative equity that the dealer’s appraisal indicated. If that amount isn’t paid, the lender can then go to court and obtain a judgment against the borrower and, following that, an order of garnishment.

The civil judgment will also appear on the borrower’s credit report with a corresponding drop in her credit score (myFICO estimates a 120 point drop for a 780 score for settling a credit card debt, and a civil judgment is sure to affect a credit score more than a debt settlement).

In all, this means that a beginning FICO score of 780 could now be in the 500 range and, in addition, the borrower’s employer could be receiving a letter from the court requiring them to garnish her wages.

As we see it

Even if this person did have a high enough credit score and the income to afford to buy a second car and turn in the Camry, she shouldn’t do it. Call it what you like, but it would be credit score suicide for this person to choose to do a voluntary repossession on a Toyota Camry simply because of the current recall situation.

For customers who feel as strongly as this, there are a number of law firms lining up for class action suits against the company – a route far more financially responsible than repossession.

In our experience

At AutoNet Financial, we are in the business of helping our customers reestablish their credit by filling out a credit application and financing either a new or a newer pre-owned vehicle with a bad credit car loan through high risk lenders. In the process, we have helped many of our customers raise their credit scores and reestablish their car credit by financing a vehicle with a bad credit auto loan. We also do our best to educate these consumers on the bad credit car loan process as well as the different types of lenders that are involved with these types of transactions.

One of the things that we’ve learned through the years is that the key to a successful bad credit auto loan is focusing on the basics. This means that in order to rebuild their credit, bad credit car loan customer need to understand how the subprime auto loan process works, which includes understanding some points covered in an article that we recently came across that discussed 3 dangers of subprime auto loans.

Statements and answers

Article introduction:

“Many people are forced to use subprime auto loans as a means to buy a car because of their poor credit history. The subprime lending market is there for those that have made some financial mistakes and have blemishes on their credit report. While it can be beneficial to some, it is also known for causing its fair share of problems. Getting involved with a subprime auto lender could compound your financial problems if you are not careful.”

What we have to say:

We have to agree with the gist of everything that was said in this opening statement. But at the same time, we should also note that getting involved with any kind of lender could compound your financial problems if you don’t pay back the loan as agreed.

Article issue of financial distress

“One of the worst things about subprime auto loans is that they are always going to have a higher interest rate than other types of loans. When you are paying a substantially higher rate of interest than everyone else, this means that your payment is going to be higher in most cases. When you are having financial trouble, you do not need another payment weighing you down. This can be especially troubling if the payment is a large one. When you agree to a subprime auto loan, you could be tying your hands financially for the future. A huge car payment can be the source of significant financial distress.”

What we have to say

There is no question that bad credit auto loans carry higher interest rates than traditional auto loans. Because the lender is taking on more risk if you have bad credit, borrowers should expect to pay higher than normal interest rates. But there are at least three ways to lessen the impact of these higher rates:

1. Plan on coming into the loan with at least 10 percent down in cash or trade equity. The larger the down payment, the less you will need to finance – which will lower your monthly payment and reduce your interest expenses at the same time
2. Buy an affordable compact or midsize vehicle and put off looking at your dream car until after you’ve reestablished your credit. The lower the selling price, the lower your monthly payment and overall interest expenses will be.
3. Keep the loan term as short as possible to keep negative equity in the vehicle at a minimum. This will allow you to trade out of the vehicle sooner and, assuming all your payments have been made in a timely manner, enable you to more quickly apply for a new loan at a lower interest rate.

Article issue of the risk of repossession

“When you deal with subprime auto loans, there is a good chance that you will have your car repossessed at some point. Since the payments are often higher than you can afford over the long term, many borrowers get in the habit of missing payments as a result. When you miss enough payments on your auto loan, they are going to come and repossess the car. You will lose your primary means of transportation, which can lead to even bigger problems. When you don’t have a car to get to work, your job is on the line as well.”

What we have to say

With any car loan you will run the risk of repossession if you miss enough payments. If you read the fine print closely, you’ll notice that most regular loan contracts have a clause that states that the lender has the right to repossess the vehicle if you are even one day late with your loan payment.

To prevent this from happening with a bad credit auto loan, refer to the three suggestions we offered above.

Article issue of doing further damage to your credit

“Since there is a higher risk of repossession with subprime auto loans, there is also a higher risk of damaging your credit even worse than it already is. When you have a car repossession on your credit history, it will drastically affect your credit in every way. You will not be able to get a loan for another car or most likely anything else. A repossession will stay on your credit file for as long as seven years in most cases. Therefore, you will be living on a cash basis for the next seven years if this happens to you. Your credit is one of the most important things that you have. When you sign up for a subprime auto loan, you do not plan on being in the ‘bad credit’ category for your entire life. However, with the way they have it set up, it often leads you to stay there for a lot longer than you would like.”

What we have to say

Repossession is a big black mark on your credit history – you’ll get no argument from us about that. Repossession is especially bad if it happens to be with a bad credit auto loan lender. Once it happens, you won’t necessarily be living on a “cash basis” for the next seven years, but it probably will be at least two years before you can apply for another bad credit auto loan (with a higher down payment requirement due to your previous repossession).

But with that being said, if you approach a bad credit car loan in a responsible manner and basically follow the three steps that were outlined above, you should have a really good opportunity to reestablish your car credit and improve your FICO score at the same time.

As we see it

There is the smart way and then there are other ways of approaching a bad credit car loan. By choosing an affordable car, using a large down payment, and keeping the loan term as short as possible, you will give yourself a better chance of coming through the auto credit reestablishment process successfully.

For more information about subprime car loans, go to www.autonetfinancial.com and begin the process of rebuilding your credit by filling out our secure online credit application. If you need additional assistance, go to the “About Auto Net” tab and click on the “Contact Us” line where you will find our toll free number. Our customer service representatives are available to answer your questions during normal business hours.

Our job

At AutoNet Financial we are in the business of helping our customers reestablish their credit by financing either a new or a newer pre-owned vehicle with a bad credit auto loan. But in addition to using a bad credit auto loan to raise your credit score, there are a number of other things that you can do to ensure that your FICO score rises.

TransUnion TrueCredit division’s vice president of consumer education had this to say about financial management: ” While it can be overwhelming, now more than ever, consumers need to play a more active role in their financial management to ensure they are in the best possible position with lenders.”

With that in mind, here are two ways that credit-challenged consumers can go about monitoring their credit:

Credit monitoring 101

Monitoring service

A number of independent services, such as freecreditreports360.com, will, for a fee, allow you to monitor all three of the credit bureaus (freecreditreports360.com merges the information from the three bureaus onto one report) at the same time as well as view your three FICO scores from each bureau. The three major credit bureaus, TransUnion, Experian, and Equifax, also offer this service.

Programs that monitor a single bureau usually start around $6.95 a month while it will cost you at least $12.95 to monitor all three. Other options include such extras as score monitoring, reports that contain scores, score watch, score power and credit watch. With Equifax, you can even “protect” an entire family of four for $344 per year.

As you can see, these services don’t come cheaply. There is, however, another strategy that you can employ before you apply for a bad credit car loan that is recommended by a number of consumer groups and it takes advantage of a law enacted seven years ago.

The FACT and your own credit monitoring service

The Fair and Accurate Credit Transactions Act (FACT Act) was signed into law in December 2003. It allows consumers to get one free credit report from each of the three bureaus once every 12 months. This is in addition to laws that allow you to receive free reports if you are denied credit, discover there are errors in your report or if you suspect identity theft.

By staggering these free reports throughout the year, you can essentially monitor your credit (albeit one bureau at a time) at no cost. As an example, you could order the first report in January from one bureau, the second report in May from another bureau and the third in September from the last bureau. And just like that, you’ve created your own credit monitoring service. If you find any mistakes, the government provides for even more free services and here’s where it gets interesting:

If you find any errors from any one bureau, such as an account that isn’t yours, you can immediately order reports from the other two credit agencies under the ID theft free report system. Finally, as if that isn’t enough, you can, as we previously stated, also order a credit report – at any time and from any of the three bureaus - if you are denied credit, even for a bad credit car loan, based on the information that they contain.

As we see it

If you don’t have the time or feel that the services offered by the credit bureaus are worth the cost, then by all means sign up for one on the dotted line. But with a little time and not much effort, you can set up your own “credit monitoring service” and save yourself at least $100 per year.

For more information on the bad credit auto loan process, please visit our web site at www.autonetfinancial.com.

Affordable and reliable used cars

Here at Auto Net Financial we know that with the cost of new vehicles rising every year, most credit-challenged customers decide that it makes more sense to go with a 2 or 3 year old pre owned car.  With the quality and durability of cars at an all-time high, this decision makes sense. Now they’re faced with another decision: should they buy a regular used car or a certified used car?

This decision became even more difficult (which is a good thing) when General Motors released a statement last week that GM Certified Used Vehicles was announcing the addition of Saturn models to their lineup of GM CPO vehicles.

According to the GM press release, “All Saturn model years 2005-2010 are now available for purchase at any of the 3,400 Buick, Chevrolet and GMC GM Certified Used Vehicles dealers across the nation.”

CPO vehicles

If you’ve read any of our previous articles, you know how we feel about certified used cars – known in the industry as certified pre-owned or CPO vehicles. We believe that, for the most part, certified used cars are a good choice for credit challenged consumers.

Most certified used car programs work this way: if a vehicle meets certain age, mileage and inspection requirements, dealers can use a trade-in vehicle purchase back a lease turn-in and sell either one with an extended service contract that is very similar to the warranties found on new vehicles - except that the number of miles and years can be extended past the original warranty date to cover additional months and miles the amount of which depends on the manufacturer and the program.

Because of this built-in warranty coverage and other perks (such as roadside assistance), the dealer can (and usually has to because of the program costs) sell these CPO vehicles at a premium over non-certified used cars.

In the case of GM’s program, this means that every GM Certified Saturn comes with a GM Certified 12-month/12,000-mile (whichever comes first) bumper-to-bumper warranty as well as a fully transferable 100,000-mile/five-year Powertrain limited warranty.

More perks

Other perks of the program include a free vehicle history report on your vehicle, 24-hour roadside assistance, a three-day/150-mile customer satisfaction guarantee (GM’s return policy) and a 3-month trial subscription to both the OnStar service and XM Satellite Radio – such a deal!

A reminder

Remember that the program we’re discussing here is part of the manufacturer’s (in this case, GM) certification programs. Just because a dealer advertises a car as certified does not necessarily mean that it is certified by the manufacturer. Anyone can “certify” a car, since the word, itself, really has no meaning. So make sure that the “certified” car you are buying is certified by GM. If not, you may be required to pay for any repairs up front and submit the receipts to the warranty company for reimbursement – a process that is much less desirable.

The best Saturns

One other thing that we’re more than a little bit nit-picky with around here is keeping your bad credit auto loan payment affordable and, fortunately, many Saturn vehicles fall into this category.

Although the Saturn Sky roadster and Saturn Outlook crossover are beyond the budgets of most bad credit buyers, the Saturn Astra compact sedan, Saturn Aura mid-sized sedan and possibly even the Saturn Vue compact crossover are all vehicles that may very well work.

In order to qualify, all vehicles must be six years old or newer and have 75,000 miles or less. In addition, each goes through a 117-point inspection and reconditioning process.

As we see it

Keep in mind that certified pre-owned vehicles are usually more expensive than their non-certified counterparts. The costs of an inspection, the required replacement of warn and defective parts as well as a fairly expensive service contract all add to the price of a CPO vehicle. Before buying one, it makes sense to do some research and compare the selling prices of both certified pre-owned vehicles and their non-CPO counterparts. Ultimately, you will have to decide for yourself if a CPO car is worth the difference in price.

For more information on bad credit car loans and the bad credit auto loan buying process, visit our web site at www.autonetfinancial.com.

Auto Net Financial

At Auto Net Financial we work with credit challenged applicants that are looking for a bad credit auto loan and match them up with dealers in our nationwide network that can help them get this kind of a loan. But the process of reestablishing your auto credit can be an expensive one – especially if these consumers choose the wrong car.

We all know that new cars are more reliable than used cars, but often the added cost puts them out of reach for many bad credit car loan customers. Fortunately, new car incentives, usually in the form of “customer cash”, can not only lower the price of a new vehicle, they can also contribute to the down payment requirements of many subprime lenders while lowering the monthly payment and the interest expenses of a bad credit auto loan.

For the month of February, Kia is offering customer cash on many models that are ideal vehicles for bad credit car loan financing.

February Kia new car incentives

For the month of February, Kia Motors America continues its practice of aggressively incentivizing vehicles – in particular as a percentage of MSRP (window sticker prices) - on its entire lineup of vehicles from the base Rio to the top of the line Borrego.

These customer cash incentives during the month of February, which are available to all buyers regardless of their credit score, are available for the following 2009 models:

2009 Kia Amanti - $3,000
2009 Kia Borrego - $3,000
2009 Kia Optima - $3,000
2009 Kia Rio - $2,000
2009 Kia Rondo - $2,000
2009 Kia Sedona - $1,500
2009 Kia Sorento - $5,000
2009 Kia Spectra - $3,000
2009 Kia Sportage - $2,000

These customer cash incentives for February are available for the following 2010 models:

2010 Kia Forte - $1,000
2010 Kia Optima - $1,000
2010 Kia Rio - $500
2010 Kia Sportage - $500

Example: how incentives make the 2009 Kia Rio more affordable

A good example of the difference dealer cash makes in a new car deal is the 2009 Kia Rio, an ideal car for bad credit car loan buyers. There still are some 2009’s available and to help move them off dealer lots, Kia is putting $2,000 customer cash “on the hood” of the Rio.

Let’s price out a 2009 Kia Rio LX. This example comes equipped with a 4-cylinder engine and automatic transmission and also includes AM/FM/CD/Sirius satellite radio with a USB connection for your iPod, power steering, power outside rearview mirrors, tilt steering wheel, rear window defroster and all the air bags. The MSRP (sticker price) is $14,770. With tax and fees (estimated), we’re looking at about $15,800 as a delivered price. The next step is to subtract the $2,000 in customer cash, which results in an amount to finance of $13,800 – a very affordable vehicle even if you’ll be financing it with a bad credit auto loan.

In addition to the affordable price, all Kia models come with an excellent 5-year/60,000 mile basic warranty that includes 24-hour roadside assistance as well as a 10 year/100,000 mile limited powertrain warranty – one of the longest and most comprehensive in the industry.

As we see it

Rebates and customer cash are a great way to not only make a vehicle more affordable, they can also contribute towards your down payment. In the case of the Kia Rio, you can buy a vehicle with a retail delivered price of nearly $16,000 for under $14,000.

At Auto Net Financial, we feel it’s important that you make the right choices when it comes to a bad credit car loan buying decision. Those choices include finding the right dealer and the right car to help you reestablish your auto credit. Any of the affordable models listed above, with the additional customer cash, will make a bad credit car loan more affordable by lowering the selling price and keeping the interest costs down.

For more information on the bad credit auto loan process, please visit our web site at www.autonetfinancial.com.

Our history

At Auto Net Financial we realize that most bad credit car loan consumers will end up purchasing a used car, for the most part due to the fact that they are less expensive. We’ve also spent a number of years focusing on consumers with bad credit and helping these same customers raise their FICO scores and reestablish their car credit by financing a vehicle with a bad credit auto loan.

But even though the majority of new cars usually won’t fit the pocketbooks of bad credit car loan buyers, there are a number of affordable new cars that, with the right new car incentives, will fit into many bad credit car loan programs. General Motors, Ford, and Chrysler are among the manufacturers who sell new cars that work in two important respects: many of their models are affordably priced and, since they are new vehicles, each one comes with a comprehensive new car warranty.

Toyota’s recent issues

Two weeks ago, as the Toyota recall firestorm reached a crescendo, General Motors and Ford Motor Company announced new car incentives aimed squarely at current Toyota owners. A week ago Friday, these two companies were joined by Chrysler.

It should also be noted that even bad credit auto loan buyers can qualify for these incentives.

General Motors incentives

For bad credit car loan buyers who currently own a Toyota and plan on trading it in, General Motors is currently offering an additional $1,000 toward the purchase of a GMC, Buick, Cadillac or Chevrolet vehicle with the program due to expire on March 1st, 2010.

Ford incentives

For credit challenged customers who currently own a Toyota and will be trading it in, Ford is currently offering an additional $1,000 toward the purchase of any Ford vehicle, except the following models: F-150 Raptor, new Taurus SE sedan, Edge all wheel drive models and the Shelby GT500 and KR variations of the Mustang. The Ford program runs through March 1st of 2010.

Chrysler incentives

For current bad credit customers hoping to buy a new Chrysler, the company is offering current Toyota Sienna, Tacoma and Tundra owners the opportunity to receive an additional $1,000 trade-in bonus if they purchase any new Chrysler, Jeep, Dodge car or Ram truck.

The bottom line

At Auto Net Financial, we feel it’s important that you make the right choices when it comes to a bad credit car loan buying decision. Those choices include finding the right dealer and the right car to help you reestablish your auto credit. Any of the affordable models from one of the manufacturers listed above, with the additional $1,000 in customer cash, will make a bad credit car loan more affordable, while keeping interest costs down.

For more information on the bad credit auto loan process, please visit our web site at www.autonetfinancial.com.