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Finging Auto Loans with Bad Credit [ Auto Loan Refinancing ]
January 15, 2011, 8:27 am

Those that had really bad credit couldn't afford to get an auto loan earlier. But all that has changed now. Even credit unions that were wary of extending auto loans for those with bad credit are doing so. If you want to take an auto loan, then you would need to check your credit report and credit scores. Almost 90% of the banks, credit unions, dealerships and other credit institutions use the FICO score. You can get your FICO credit score free each year. They have scores that range from 300 to 850. A FICO score of 850 means that you have excellent credit rating. While credit scores under 600 are rated as bad credit scores.

The credit score is an amalgamation and a compilation of all the credit that you have taken. It includes the student loans, mortgage loans, other loans taken, credit card loans and payments. It also includes the payments that are overdue and the unpaid amount on the loans. Bankruptcies, foreclosures, vehicle repossession and history of all credit transactions including bank reports are stored on your credit report.

Most lenders require that you should have the following for getting an auto loan:

1. You should have a monthly income of $2000 or more for getting the loans.
   
2. You should be a resident of US and should be 18 years or more.
   
3. You should be able to prove your residency through utility bills and credit card bills.
   
4. You should be able to prove that you have a steady income for the past 12 months. If you don't have a credit rating, then you should be able to prove that you have been in employment for the past 24 months. It's important to show your salary stubs or the bank statements of your bank account in which your salary is credited.
   
5. You shouldn't have had vehicle repossession in the past 12 months.
   
6. If your vehicle was repossessed due to bankruptcy, you are eligible to get an auto loan.
   
7. If you are in Chapter 13 bankruptcy, you would need an "Authorization to incur debt" from your trustee.

These conditions can slightly differ from lender to lender. Some lenders may ask for a score of at least 625 to offer auto loans. While other lenders may ask for a gross monthly income of $1700 and above.

Getting auto loans for private purchase and used vehicles:

Many banks, credit unions and even dealerships don't finance private purchase. If you want an auto loan for a private purchase, then you approach lenders who specialize in giving these loans. If you are looking at used auto loans, then look at the condition of the auto before purchasing the auto loans

If you are planning buy a used vehicle and want to get it financed through auto loans, then ensure that vehicle should be five years or younger. This ensures that the auto that you buy is fairly new. This saves high maintenance and repair costs. Moreover you can getter lower insurance premium for the vehicles that you purchase. Get an auto loan for the vehicle that has run for less than 60,000 miles.

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