Bad credit auto loan application
Bad Credit means the applicant has a poor credit rating he earned on account of making late payment or no payment of his past loans. Such applicants for new loans are considered to be high-risk debtors and therefore, fall in the cautious list of the lenders. Their application for a new loan is scrutinized very closely and then only decisions for loan approval is taken up . The interest rates on such application are comparatively higher to cover the extra risk taken by the lender. This bad credit loan segment is spreading in every sector including auto financing. This market niche continues to grow and needs special care . Application for bad credit auto loans sometimes has to wait for very long before getting a loan sanction or being rejected . It is therefore wiser to accept higher interest rate and escape long duration of scrutiny.
The interest rates levied depend upon the credit score the applicant has got. The standard chart is given below: For Credit score in between 720 to 850 the rate of interest is 7% in average . For credit score of 690-790 interest charged is 7 .8 to 8%. For credit score above 620-659 the interest rate is above 10% . An average of 15% rate is charged for a low credit score of 500-589 . These rates are roughly national averages for a 36-month car loan as of January 2008
*The first thing, therefore, before submitting a loan application for auto purchase is to know the credit score of the self. It can be done easily by visiting the relevant website such as www.annualcreditreport.com .
*Next he should verify the expected rate of interest to be paid by him in case the loan is granted by visiting the website www.myfico.com .
150% The applicant should get pre-approval for the budget before spending on the car . He has to understand his resources, other requirements that might demand his budgetary allocation . The dealer would not poke much to go for higher priced car if he knows the actual financing limit and the mind of the applicant. It is always better to carry the loan in the pocket in the form of pre-approval before shopping a car.
*The next step is to understand the overall budget involved in buying the car set for monthly payment by using the monthly payment calculator. Help of certain auto credit brokers can be handy and helpful to expedite the application at one go. They have fine relationship with auto dealers and further to lending institutions.
Finding the right dealer who can provide quick service when required with guaranteed satisfaction is a must. Finally knowing the car, its brand image, its performance, it real value in the secondary market and other such relevant information will make the applicant a wiser customer and owner.
The essential information the applicant is required to furnish in the auto credit application are: the residential address, and duration of stay, work record, gross monthly income, the past loan record. If the refinance of the existing vehicle is required then information on the old vehicle make, model, year of purchase, mileage run by the vehicle, name of the lender, interest rate paid has to be furnished .
There are certain terms and conditions of loan, state disclosure, electric equipment disclosure that has to be signed before the loan is processed.
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