Auto Loans – Bad Credit Auto Loans

Auto Loans Explained [ Auto Loans ]
December 26, 2008, 7:47 am

Many people are now aware that securing auto loans is a more involved process than it was 2 or 3 years ago with the changes in our economy. As loan officers deny auto loans by the truckload, people must become more aware of their credit score. Your credit score can be increased with a few simple strategies that will improve your chances for obtaining auto loans with bad credit. Even if you can’t raise your credit score enough for bank auto loans, you can improve it to obtain lower interest rates with online financing sources.

FICO Score Basics

Your FICO score is a highly guarded secret formula that indicates your credit worthiness based on a large number of factors. The higher your score, the easier it is to obtain mortgages, auto loans, and other forms of credit at low interest rates. If your credit score is below 725 on the FICO scale, it’s going to be a bit more difficult it is to secure auto loans with a very low interest rate although low rates can be had with lower credit scores.

FICO scores range from 300 to 850 points:

• A score over 750 has excellent credit
  
• 720 – 750 has good credit
  
• 660 – 720 is average
  
• 660 and below is considered bad credit.
  
• If your score is at 300 you’re likely reading this from a prison cell.

Before our economy went in the tank earlier this year, a FICO score above 650 could get the lowest rate auto loans available. That’s no longer the case, now anything below a 725 score is going to put you in the category of searching for bad credit auto loans due to the tightening of lending policies. If you find yourself being turned down for auto loans, there are some things you can do to boost your score.

Boost Your FICO Score

Here are some tips to increase your FICO credit score. Your regular bank or credit may not care; but it will definitely help in securing the lowest interest rate with other lending sources of auto loans.

• You are allowed 1 free copy of your credit report each year. Get yours and carefully review the contents for mistakes as the majority of people find incorrect information which damages your scores. Look for anything that is on there that shouldn’t be. Auto loans that you have paid but haven’t been removed or items that don’t belong to you.
  
  
• If you find old bills you forget and still owe a balance call the company and work out some settlement or reduced balance if you can pay it in full.
  
  
• Work on getting down the balances on your credit cards. Don’t close the accounts if you have them paid off. The credit bureau likes seeing high limits with low balances. It can have a very positive impact on your score. It shows you can manage debt and responsibility.
  
  
• Always pay all of your bills, current auto loans, and mortgages on time each month. If you are having trouble meeting your current obligations in a timely manner, how are you going to manage additional auto loans?

Online Auto loans are Fast and Easy

Now that you have raised your credit score, online auto loans are available to you at much lower rates and flexible terms. If you need that second car or have to replace your current vehicle for more reliable transportation, auto loans from an online vendor is a viable option.

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