Christian Auto Financing For Bad Credit
More and more people are searching for Christian auto financing for bad credit. With household debt being at an all-time high, credit ratings keep dropping. Just a few years ago, individuals with low scores found it nearly impossible to be accepted for a car loan. Today, things have changed. Banks and lenders have realized that with the increasing debt, opportunities do exist to not only help consumers get a loan, but to help them rebuild their financial reputation once again. Many have begun to offer auto financing for bad credit to individuals who might not get approved from more traditional lenders.
In an ideal world, individuals have the opportunity to save the money to pay cash for large purchases such as furniture, college tuition and vehicles. But that financial utopia exists for very few in, if any, our society today. Even those who don't pursue the latest, most expensive trends need to borrow money to cover costly items and have trouble repaying debt. Some encounter financial hardship for just a brief time, but dropping scores may follow them for years to come.
Many lenders are now extending loans to these "high risk" or "subprime" individuals. Auto financing for bad credit borrowers comes in many forms. Consumers can file applications with their own bank or credit union, which will often now extend additional financing to current customers. Most car dealerships also have contacts with lenders who specialize in auto financing for individuals with lower financial scores. Plus, hundreds of web-based companies will offer private loans with interest rates that top local banks and dealerships.
Although finding auto financing for bad credit is easier than ever before, it is not without its problems. Borrowers with lower ratings will be expected to make a larger down payment as well as pay higher interest rates. Percentages vary from state to state, but high-risk consumers should anticipate paying interest rates between 7% and 18% where lower risk individuals will generally receive lower interest rates. The time scheduled to repay the loan will also be extended to lower monthly payments - sometimes as much as 3-4 years. Combined with higher interest rates, the total amount of money spent will actually be higher than loans given to people with better ratings.
But consumers still need to be aware. Some lenders who promise easy auto financing for bad credit can get borrowers into even more hot water. Some automotive dealers abuse the system. They artificially inflate vehicle prices and interest rates of their loans. Others try to convince consumers that extra amenities such as extended warranties and added insurance are non-negotiable. Make sure to read all documents thoroughly. A few lenders have used a bait and switch tactic, claiming that the initial loan "fell through" and must be replaced with a higher-interest loan. "Beware of false prophets, which come to you in sheep's clothing, but inwardly they are ravening wolves. Ye shall know them by their fruits. Do men gather grapes of thorns, or figs of thistles? Even so every good tree bringeth forth good fruit; but a corrupt tree bringeth forth evil fruit. A good tree cannot bring forth evil fruit, neither can a corrupt tree bring forth good fruit. Every tree that bringeth not forth good fruit is hewn down, and cast into the fire. Wherefore by their fruits ye shall know them." (Matthew 7: 15-20).
Always enter the process armed with knowledge. If possible, negotiate a loan before deciding to purchase a vehicle. Not going through a dealer may eliminate a first choice of an automobile, but may secure a more affordable loan. Also, consumers must know their credit score. Some lenders may fabricate, even lower, a customer's rating in order to negotiate a more costly loan. Reports are available for free on many online websites, but to obtain a more accurate rating, consumers must contact each of the three credit agencies: Equifax, Experian and Trans Union. Experts advise to check these reports annually and correct any errors immediately. Misinformation can lower ratings and jeopardize future loan applications. Cancel unused credit cards and limit the amount of finance requests, which also lower ratings. Finally, shop around. Compare rates and deals offered through banks, dealerships and online lenders. Many online companies have a network of lenders who specifically focus on auto financing for bad credit and can often get consumers better deals. But even websites vary in their scope. Some deal with hundreds of lenders nationwide while others focus on a local region.
When applying for loans online, most web companies focusing on auto financing for bad credit will need basic personal information such as full name and social security number as well as specific information about rent or mortgage, length of time at current address, and addresses from the past seven years. They will also question borrowers about recent bankruptcy, report numbers, and even alimony support. Before applying, review financial history, prepare all documentation and decide how much to borrow. This will make the application process easier and quicker to complete.
The good news is that credit ratings are always changing. Ideally, lenders are looking for individuals with a minimum monthly salary of at least $1,600 and a rating of 680 or higher. Consumers with lower ratings can auto financing for bad credit with a little more research and effort. People with ratings below 550 should consider further financial planning before applying for an automobile loan. Very few lenders will approve loans for individuals with ratings so low. However, one's score can be improved in as little as one year.
Christian Auto Financing CompaniesMost auto financing companies require potential buyers to possess reasonably good credit before approving applications for car loans. The process for buying a new or used vehicle really begins long before a buyer reaches the car lot. Finance companies want to lend money to individuals who have a good credit history with a proven record of faithfully making payments on time. Car buyers who have a small amount of debt, long term employment, and collateral, such as home ownership, savings accounts, or retirement funds are considered the best credit risks. Creditworthiness will be reflected in a buyer's credit score, which is based largely on a past history of paying bills on time. Even something as insignificant as making timely payments to a utility company can affect a consumer's credit score and influence car dealers and auto financing companies to take a risk on lending tens of thousands of dollars for a new or pre-owned vehicle. Consumer credit reporting agencies consult one or all of three credit bureaus to determine borrowers' scores. Excellent credit ratings are at a scale of 700 or more, while less than perfect credit is around 600. High-risk borrowers have credit scores of 550 or less, and the chances of getting auto financing without forking paying higher interest rates are slim to none.
Before taking a trek out to the car lot, savvy buyers will want to do some homework and count up the costs of owning an automobile. "For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it? Lest haply, after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, Saying, This man began to build, and was not able to finish" (Luke 14:28-20). Auto financing companies will need an accurate assessment of a buyer's current indebtedness to determine whether borrowers can handle financing a new or used vehicle. Consumers should take a good look at the family budget, weighing income and expenses to determine if buying a car is a wise choice. Outlining a budget is simple: just add up total monthly income, including salaries for the husband and wife and monies accrued on a regular basis, such as disability insurance or alimony. Savings and long term investments should not be included as income, since a buyer should be able to handle auto loan payments without dipping into a nest egg.
After income, add up monthly expenditures, such as mortgage or rental payments, food and utilities, clothing, insurance, education expenses, gas and vehicle maintenance, outstanding credit card or loan payments, and medical or dental expenses. Subtract the total expenses from the total gross income and the net amount is all that's left for a car payment. If the net amount is less than $300, that's cutting it mighty close. Used vehicles might need additional repairs and cut into the budget, while auto insurance, car tags, and the high cost of gas can easily make auto ownership an expensive undertaking. Borrowers should also leave room for contingencies and entertainment. Auto financing companies will want to be assured that borrowers can commit to a four- to five-year loan without discovering that there's more month than money when it comes time to repay the loan.
Establishing a common sense budget and being realistic about an ability to repay will show auto financing companies that a borrower is both conscientious and committed to making timely payments. Once a reasonable payment is established, buyers should shop around for affordable cars. Check out the Blue Book value on used vehicles to make sure sales prices are in keeping with current markets. It's a good idea to go car shopping after hours when car salesmen can't haggle over the price or hassle budget-conscious buyers. Consumers can leisurely shop for vehicles and check out models, makes and car stickers to find the best deal. Classified ads, automotive magazines and tabloids, and online vehicle vendors are all great places to find bargains and compare prices without making an on-the-spot commitment. Consumers with cash or trade-ins are at an advantage when it comes to bargaining. A couple of thousand dollars cash or a good used vehicle offers great leverage for negotiating the best payments on new or pre-owned vehicles. Auto financing companies and dealers love dealing with cash, but a high quality, well maintained trade-in is like money in the bank. Used vehicles are the bread and butter for dealers who can resell models in good condition for a profit. Dealers usually offer to pay off remaining loan balances on trade-ins, giving buyers a fresh start with a newer vehicle and hopefully, a better loan package.
Many auto Christian financing companies offer online applications to pre-qualify customers, which saves time and embarrassment if borrowers don't meet qualifications. But when it comes to financing, auto loan companies can be flexible. Less than perfect credit, repossessions, and slow payment histories can be forgiven; and dealers can usually shop around for financial institutions that are willing to lend to high-risk borrowers. However, for the privilege of borrowing in spite of bad credit, high-risk borrowers may be required to either come up with hefty down payments or higher monthly notes to ride in style. Other creative financing may come from buy here pay here car dealerships, which specialize in selling to high-risk borrowers. As with major auto financing companies, the vehicle serves as collateral and lienholders always have option of repossessing autos if borrowers default. However, if buyers take time to count up the cost of owning a new or used vehicle and accurately assess their ability to pay, rebuilding credit for the future will be well within reach, without the worry of repossession.