Car Loan Dealers

Buying a Car With a Bad Credit - Car Dealers Scams
By [http://ezinearticles.com/?expert=Keith_Londrie] Keith Londrie

Buying a car with a bad credit is not leaving car buyers with a lot of options. Sometimes their only choice for finding finance for their new purchase is a car dealer loan.

Car dealer load deals are not that bad as many people think. However it is true that they may hide a lot of surprises so if you are planning to use a car dealer loan you should be extra careful.

The first thing to watch out for is if the interest rate is fixed. By fixed we mean clearly stated in your contract and that all is written in a way that wouldn’t allow the car dealer to change it later. What many car dealers do is to approve your car loan application, make you sign the documents and give you the car. Later they just give you a call to say that in fact you do not qualify for this loan because you are with a bad credit (which you already know anyway) and that you will have to pay higher interest rates. If you fall into this situation either try to find financing from another place or report this scam and fight back.

Another very popular scam applied by car dealers is to make you find a co-signer for your loan dumming you that this is the only way to get finance since you have a horrible credit history. It will not be difficult to convince you – first of all it sounds reasonable and second of all the car dealer will make you believe that this will in fact repair your bad credit. Later you will discover that your name is not included in the loan documents and that the loan in the name of the “co-signer” although you are repaying it. Not only that this is in fact illegal and may lead to serious penalties but it is not helping your bad credit at all. If a car dealer offers such thing to you must refuse.

If you are a bad credit customer and have difficulties finding a loan, it is quite obvious that you should not overstretch. This means to buy a reasonably priced car and not to buy any extras such as extended warranty. However many car dealers will try to trick you by making you believe you must buy a warranty that will increase your loan in order to qualify. Since you are desperate in getting the car you would say OK. However if you think for a second you will easily see that this is simple trick to increase your loan.

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Car Loan Dealers

Easy Car Loan Application Online - Why You Should Apply Online Instead of Through a Dealer
By [http://ezinearticles.com/?expert=Carrie_Reeder] Carrie Reeder

Applying for a car loan online is easy. If you are buying a new or used car, you have several options. These include obtaining dealership financing, bank financing, and financing through an online finance company. There are several benefits to using an online auto loan company. These companies specialize in all types or loans, for all types of credits. Moreover, the application is straightforward and the response time is quick.

Why Obtain a Car Loan with an Easy Online Application

Applying for a car loan online is the quickest method of getting approved. Moreover, online auto loan companies offer better rates. Some prefer to obtain financing through the car dealership. However, dealerships are in the business of making money. Thus, they may not offer you the best rate. Dealerships work with specific lenders, and they have the power to increase your interest rate to boost their profit.

In addition, most dealerships are unable to accommodate bad credit candidates. Online auto loan companies include a variety of lenders. These lenders specialize in loan programs for people with no credit and bad credit.

How to Complete an Easy Online Application

Completing and submitting an online application is effortless. You have the option of submitting an application for a specific lender, or submitting an application through a broker. Brokers are advantageous because they provide multiple offers. It is recommended that car buyers receive quotes from at least three lenders.

Online auto loan brokers are able to negotiate the best rate. Moreover, brokers have relationships with sub prime lenders. Thus, if you are looking to build or rebuild your credit, brokers can provide quotes from lenders who offer loans for “less than perfect credit.”

Online Application Response Time

Online car loans are extremely convenient because the response time is very quick. On average, you can expect a reply within 1 hour. This is perfect if you are seeking an instant approval or looking to get pre-approved for a car loan. Broker responses will include quotes from several lenders. Carefully review quotes, and compare the rates and terms to the offer provided by the dealership. Choose the loan package with the lowest interest rate and best terms.

Here are our recommended [http://www.abcloanguide.com/autoloans.shtml] Auto Finance Companies online.


Carrie Reeder is the owner of [http://www.abcloanguide.com/] ABC Loan
Guide, an informational website about various types of loans.

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Car Loan Dealers

A Secret Credit Score Your Car Dealer Won't Tell You About
By [http://ezinearticles.com/?expert=Stephen_Snyder] Stephen Snyder

You're ready to buy a new car.

You've done all your homework.

You know your three FICO credit scores.

You determine that your highest FICO credit score is from Equifax (also known as your BEACON score).

So, you find a car dealer who uses your highest score (which increases your opportunity to get approved at a good rate).

You get to the dealership and ignore all the salespeople by going directly to the finance director's office.

But as the finance director reviews your credit file in front of you...you can't help but think something is wrong.

Sure enough...the dealer says your Equifax/BEACON score isn't high enough for their lowest interest rate.

How can this be? You just checked your FICO credit scores through www.myfico.com/12 a few hours ago. It's possible—although unlikely—the information on your credit report has changed and that your scores have decreased since you last checked them. Remember, your credit scores are dynamic and will change whenever information on your credit reports changes.

Your credit reports can change several times each month as new information is added or updated by your lenders. But more than likely, your scores wouldn't change in this situation (especially if there were only a few hours between when you checked your scores and when the dealership reviewed your credit reports).

So, if your credit reports didn't change, why is the finance director staring at your scores with such a discouraging face?

Car Dealers Can Use "Different" FICO Scores Than The Ones You See

The car dealer is probably using what is known as the FICO Auto Industry Option score instead of a traditional FICO credit score. You see, car dealers not only get to select the credit reporting agency they receive FICO credit scores from...they also get to decide if they will use a traditional FICO credit score or a variation of a FICO score called an Auto Industry Option score.

What's the difference between these two types of scores?

Not a whole lot to most people...but there's enough variation to make the majority of auto lenders use the Auto Industry Option score. The real difference between the two scores is that the Auto Industry Option score pays a lot more attention to how you handled previous auto credit.

- Have you made late payments on a current or previous auto loan or lease?
- Have you ever settled an auto loan or lease for less than you owed?
- Have you had a car repossessed?
- Have you had an auto account sent to collections?
- Did you include your car loan or lease in your bankruptcy?

Those actions will affect your Auto Industry Option score more than they'll affect your traditional FICO score. Bottom line, if you handled your previous auto credit perfectly, you should have a high FICO Auto Industry Option score—that's a good thing.

But what if you've had a few bumps in the auto credit road in the past? You guessed it...your Auto Industry Option score will be lower. You'll be perceived as a greater credit risk and the auto lender may either deny you or use your lower score to justify charging you a higher interest rate.

You see, auto lenders are different than other types of lenders. And I'm not talking about their slimy ways, leisure suits, short ties, manly hairy chests, or gold bling.

A lot of other lenders look at your whole credit picture to determine whether or not to give you a loan. But many auto lenders care about only one thing...how you handled your past AUTO credit. That's what a FICO Auto Industry Option Score gives car dealers—a way to pinpoint how you've handled what matters to them the most.

So, even if everything else on your credit reports went down the toilet after your bankruptcy, if you didn't include your auto loan in your bankruptcy and never defaulted or missed a car payment, your Auto Industry scores will probably be better than your traditional FICO scores!

What a Former Auto Finance Director Revealed to Me

I recently spoke with a former finance director, and this is what she told me...

"So many people I have helped couldn't believe their scores were so high with the FICO Auto Industry Option score. They had included all their credit card debt and their mortgage in their bankruptcy, but they reaffirmed their auto loan. What's good about the auto score is that it truly helps the auto lender concentrate on what is important—how the customer handles his/her auto loans.

By our dealership having the auto enhanced FICO, it helped 30% or more of our customers get better rates."

I don't believe I'm going to say this, but I think I may actually have found something good to say about car dealers! Well, some of them, anyway...

As you can see, the FICO auto scores can work in your favor, if they are used correctly.

OK, I just wouldn't be able to live with myself if I only said good things about car dealers.

So, in the interest of fair and balanced reporting, here's how to protect yourself against slimy car dealers that can use your FICO Auto Industry Option
scores against you...

A Dirty Trick Car Dealers Can Play with Your FICO Scores

Let's imagine your Equifax/Beacon FICO score is 585. Not too good. With a score that low, if you do get approved for a car loan, you'll probably wind up with a high interest rate and high monthly payment.

So you go to a dealership and talk with the finance director and tell him your Equifax FICO score is 585. The finance director then reviews your FICO Auto Industry Option score. And, unknown to you, this score is actually higher than the Equifax/Beacon FICO score you pulled.

With this higher score, you'll get approved at a better rate...right?

Not necessarily!

Here's what unscrupulous car dealers can do. They won't tell you that your auto score is higher than your traditional score!

They figure they have a sucker sitting in front of them. So they'll try to get you financed at a higher rate based on the lower FICO score (thus making more profit for themselves).

How Some Car Dealers "Play the Spread" to Get You to Pay More

Now check this out...

It's possible that a car dealer has the ability to pull your traditional FICO scores AND your FICO auto scores. That means they'll have six scores on you. It's a guarantee that some of those scores are going to be higher than the others. So which ones will they use when trying to get you financed?

It depends.

Are you familiar with the term "spread"? It's how car dealers make money when they finance you. If they can quote you a higher interest rate than you deserve—then they stand to make a nice chunk of change from the bank that finances you.

The only way to make a killer "spread" is to make you think that you have lower scores.

So, what can you do?

Don't despair...I can help you.

How to Use Your FICO Scores to Your Advantage when Buying a Car

Fortunately, you don't have to fall for their dirty tricks. Now that you know all about FICO Auto Industry Option scores, you can protect yourself. Here's what I suggest...

1. When you first walk into the finance director's office, don't tell him what your FICO scores are. Wait until he reviews the scores himself. Then ask him what your scores are.

2. If the scores he reviewed are higher than the ones you have, don't say anything and just go by his scores.

3. However, if your scores are higher, then pull them out and show him. If he has a choice in the type of scores he can use, there's a possibility that he'll be able to use your highest score. And, it will let him know that he doesn't have a fool sitting in front of him. He can't take advantage of you!

How do you find out what your FICO Auto Industry Option scores are before you walk into a car dealership?

You can't.

Sorry. They're not for sale—at any price. Only lenders have access to them.

FICO would like to sell them...but there just isn't enough demand. I mean seriously, up until you read this article, had you ever heard of the FICO Auto Industry Option score?

Exactly.

Remember, we were just given access to purchase all three of our traditional FICO credit scores on June 11, 2003 at 8:00 a.m. (I actually got misty that day...what a geek I am.)

Only a very small percentage of the population even knows they have three FICO credit scores...let alone three Auto Industry Option scores.

So How Can You Use This Information to Help You Get Your Next New Car Financed at the Best Interest Rate

1. First, get your three credit reports. If you handled your previous auto credit well—your FICO Auto Industry Option scores will be higher than your traditional FICO scores. So expect more from the lender.

2. You can also ask the lender to show you their tier levels. Tiers are basically charts lenders use that have different interest rates based on your scores. You want to see which tier your fall in. To see an example of an auto lender's tier schedule, click here.

3. If they won't show you...at least have them break it down verbally for you. (Personally, I like to see it with my own eyes, as I never believe a word that comes out of most car dealers' mouths.)

4. If you've handled your auto credit poorly...then you should simply try to find an auto lender that uses just the traditional FICO credit scores. When you find a lender that uses a traditional FICO credit score, you'll have your best chance to get the lowest interest rate.

5. Start by calling dealerships and asking the finance director if they use a traditional FICO credit score to make their lending decision or if they use the FICO Auto Industry Option score.

These steps will get you headed in the right direction. This won't be easy, as a lot of car dealers use the FICO Auto Industry Option score.



[http://www.lifeafterbankruptcy.com/stephen-snyder.html] Stephen Snyder is the founder of the After Bankruptcy Foundation a non-profit organization that provides free [http://www.lifeafterbankruptcy.com] bankruptcy recovery information He has helped thousands of people get a [http://www.lifeafterbankruptcy.com/resources/car-after-bankruptcy/] car loan after bankruptcy by showing them how to increase their credit score.

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Car Loan Dealers

Poor Credit Car Loans - 3 Things to Watch Out For
By [http://ezinearticles.com/?expert=Carrie_Reeder] Carrie Reeder

Even though several auto loan lenders regularly approve poor credit auto loans, these loans do not necessarily include the best rates. When applying for a bad credit auto loan, borrowers must take several factors into consideration. In most cases, the loan will include a high interest rate, which increases the monthly payment. Furthermore, the borrower may receive a bad loan such as a long finance term or balloon payment. Having limited loan options shouldn’t mean accepting a bad auto loan. When applying with a sub prime auto lender, stay on guard against these common tactics.

Unreasonably High Finance Fees

While auto loan lenders are justified in charging high rates, unreasonably high finance fees are unfair. When approving a loan application, a dishonest auto dealer will charge buyers a rate two or more points above the average. For example, if a bad credit borrower qualifies for a rate of 10%, the dealer may charge 12% or 13%. The extra money doesn’t go to the lender. Instead, the auto dealer pockets the difference. You can avoid this common practice by arranging your own financing and shopping around for the best deal.

Complete the Deal before Leaving the Dealership

Sometimes, the auto dealer will convince a customer to drive a car for a few days or weekend. This allows the customer time to make a decision about buying the car. Because the majority of customers get attached to the vehicle, they are more inclined to return to the dealership and complete the purchase, even if it means accepting a bad deal.

In this case, the auto dealer may present a shaky loan deal. These deals generally consist of a high interest rate and longer loan terms. The best way to avoid this tactic is to complete the sales deal before driving the vehicle off the lot.

Read the Auto Loan Agreement Carefully

Some bad credit auto lenders include unfavorable terms into the loan agreement. Buyers who fail to read the contract may end up paying a balloon payment, or agree to an upside down loan. Before signing your name to the contract, carefully read the document. If necessary, ask questions. Additionally, ensure that the loan terms, rate, and payment included on the contract match the original quote.

For a list of
[http://www.abcloanguide.com/badcreditcarloans.shtml] Recommended Poor Credit Auto Loan Lenders, visit [http://www.abcloanguide.com] ABC Loan Guide, an informational website about various types of loans.

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