2. Should I pick out my car before I apply for an auto loan? No! You do not want to choose the automobile first! Your first goal is to apply for auto loan financing. Upon receiving an auto loan approval your lender will determine the maximum amount of payment, based on your current debt-to-income ratio and your current credit standing.
3. Does applying to multiple lenders for auto financing have a negative affect on my Credit Bureau score? No. At the present time, the credit scoring agencies say that all credit inquiries within a 14-day period associated with one type of buying are consolidated into one inquiry for scoring purposes.
4. What determines my auto loan interest rate? Interest rates are set according to the condition of your credit. Lenders use a credit rating score and their own internal rating criteria to determine APR to be set for your auto loan. The credit rating score is normally referred to as FICO or Beacon. Prime borrowing is usually a score above "680", and interest rates for a prime customer are generally 9.99% and lower. A score below 620 is usually considered special finance or sub prime. Sub prime lending rates will usually fall between 17% and 29% depending on your score and present personal credit circumstances.
5. Will I be required to have a down payment? Down payments usually are 10% or $1,000 whichever is lower. Your present credit standing will determine the need for a down payment. It is always wise to be prepared to have a down payment, and then be pleasantly surprised when one is not required when finalizing your auto financing.
6. What basic criteria are needed to apply for auto financing? You must be at least 18 years old. Your monthly income from one source of employment and "other income" (court ordered child support, documented rental Income, etc.) should be a minimum of $1100. You need good residence and employment history showing of at least 2 years at the same location.
7. Can a subprime loan be used to purchase a commercially rated vehicle or a vehicle considered "classic"? No. Loans are provided for a private passenger motor vehicle, light truck, or van for personal, family or household use. The autos being financed must be no older than 6 years and have less than 80,000 miles.
8. I already have an auto being financed; can I still get another auto loan for a second automobile? The basic laws of sub prime or special finance lending are only one automobile per applicant can be financed at a time. If your goal is to purchase a second automobile you will need to complete a "joint" application, otherwise it will be required of you to trade your current vehicle. Likewise, when completing a joint application, if you currently have two loans outstanding, one of those automobiles will have to be traded.
9. There are so many "Bad Credit Auto Loan Dealers" to choose from, how do I know which one is best? Bad credit - Special Finance - Sub prime auto loan dealerships basically use the same direct lenders. By applying on multiple sites you could be creating duplicate applications being sent to the same lenders, thereby causing multiple credit reports being pulled on you by the very same auto loan lender for the purpose of obtaining only one loan. Choosing a dealership that you have confidence in and knowing they have your best interest at heart is probably your safest bet, and will accomplish the same goal.
10. What if I am completing a joint auto loan application and my co-applicant's credit is worse than mine? When completing the online auto loan application always remember the first applicant needs to have the strongest credit. However, the first applicant also needs to meet the minimum qualifications required by the lender. (See Question #6)
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