Advantages Compared to Leasing  Sep 26th, 2012 
With an auto loan, each monthly payment you make goes toward eventually owning the vehicle yourself. When the loan is paid off, you own a piece of property. In a lease agreement, you rent a car for a specific time. At the end of your lease contract, you have the option to buy the vehicle or return it to the dealer. Auto loans do not limit the amount of miles you can drive the car before incurring costly over-mileage charges, as is the case with a lease. Another consideration is auto insurance. If you finance through a loan, the amount an insurance company will pay for damage depends on the market value of the vehicle. When a leased vehicle is damaged, the dealer's repair costs often are greater than the insurance company will pay, leaving you responsible to cover the difference. 
How Bad Credit Auto Loans Can Help Credit Repair  Sep 26th, 2012 
The first thing that you should consider doing, if you haven't already started it, is to create a budget for yourself. Consumer credit repair (bad credit auto loans are also a form of credit repair), in its simplest form, is all about setting up a budget and sticking to it. This involves looking at your income and controlling how much you spend. Once you have calculated how much of your paycheck needs to go towards basic expenses (food, utilities, rent/house payment) the balance can be set aside for the next step in the process.

The second step is to prioritize the balance of your debt. You should first determine the line of credit with the highest interest rate. If you have any additional funds, try and make more than the minimum payment on at least this one account. Pay the minimum due on all the others until this account is paid off. Once the account with the highest interest rate is paid off, look for the account with the next-highest rate. Repeat the procedure until all lines are paid off, including the loan you received through bad credit auto financing.

Finally, keep some money in reserve, but concentrate on paying off your debts. It always makes sense to have an emergency cash fund, but don't put any more money in it than necessary. Savings accounts pay notoriously low interest rates. Keeping your cash in one that pays 5% while your credit card interest is costing you 17% is a losing proposition all the way around. It's better to use any extra cash you have to pay off high-interest debts, such as a bad credit auto loan

Always keep this in mind: reestablishing your credit requires a two-pronged attack. Decreasing your debt while establishing a positive payment history with an auto loan using bad credit auto financing can help raise your credit score and put you back on the road to better credit.  
Get The Best Loan Possible   Sep 26th, 2012 
Before you seek preapproval for a car loan, there are some things you can do as far as a year in advance (if you are that forward-thinking) to improve your credit score and improve the chances that you will get a larger loan if you need one for the car of your choice. Here are some tips for convincing lenders to 'go all out' for you when it comes to your preapproval:

Pay down debt:  If you have a lot of credit card or other debt (such as title loans or mortgages), it will reflect poorly on your ability to pay for a new car loan unless you have significant income above and beyond your monthly payments. What banks and credit unions like to see before offering a car loan is that if you have many credit cards, they are all carrying relatively low balances (less than 50%). If you have the time before you need to buy, you should pay down your other debts or loans as much as possible before applying for your car preapproval.

Eliminate any collections: If you've had a few 'issues' in the past with your credit that have lead to your account being placed in collections, you should deal with that right away before you apply. Having one or more accounts in collections is a sure way to sour any lender and may relegate you to the subprime lending market before anyone will approve you.

Don't be late: For as long as possible before you shop for your car, you should stay on top of all of your payments, both to your debts such as credit cards or loans, but also to your utilities and other bills such as your rent/mortgage and utilities. This is because if you are significantly late on any debt you owe, it may be reported to the credit reporting agencies and damage your chances of getting a loan in the future.
Build up your down payment: Having a strong down payment built up for your car does several things for you:

It convinces lenders that you are serious about doing your part to borrow less from them and make this deal work.
It gives you significantly more negotiating power at the auto dealership.
It may help keep you from going upside down in the value of your car. Since cars depreciate immediately after leaving the lot, if you have paid atleast 20% down on your vehicle, that depreciation is much less likely to catch up and surpass how much you owe on the car.

In order to maximize your credit before getting preapproval, you should get a copy of your credit report from the three major credit reporting agencies; Equifax, Experian and TransUnion. Study it carefully, note any errors or mistakes, and write to the CRA in order to have mistakes removed. Then deal with any other issues you find such as paying down debts or making any collections accounts 'disappear' by negotiating or paying off the debt.
Some Essential Auto Loan Info   Sep 26th, 2012 
When you are approved for a car loan the lender typically will set the maximum monthly payment for which the loan is approved. Generally, the maximum payment is either 12% to 18% of your gross monthly income or 45% of you income less your monthly obligations.
Other items to include in the budget are the total cost of ownership of the vehicle. When comparing the total cost of a vehicle consider such things as insurance rates, gas mileage, and repair costs. To mitigate repair costs we recommend including an extended service contract with the vehicle at time of purchase.

Consumers with a poor Fico score pay higher finance rates than consumers with Fico scores above 700. If you have a Fico score below 700 we recommend buying a car that meets your basic transportation needs. Wait until your Fico score improves before buying a more expensive automobile. 
If you have a low credit score we recommend selecting with the shortest repayment term possible. This will allow you to trade out of the vehicle, and finance another car at a better interest rate, much quicker if your credit improves.
If you have negative equity, consider buying an affordable new car with a cash rebate. A lot of folks in Dallas TX fall into the negative equity trap. This cycle occurs by continually buying more expensive cars and rolling negative equity from their pervious car loan into their next auto loan.
In fact the only way to avoid rolling money on to your new loan is to own you car until the lien is paid, use enough money down to cover the previous lien, or buy a car that you can pay off fast. We should also mention that in most cases, if you the money you own on your used car trade in is greater than the lien amount, it is probable that your new auto loan payment will be higher than the payment on the vehicle you are trading in.
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