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Thread: bad credit financing

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    God/dess greenidlady1's Avatar
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    Default bad credit financing

    I have posted in the past and my credit isn't great. I have paid everything that is showing negative on my report and my score is now 570 (was 530). I need to purchase a vehicle. I want to put appx. 3000 down. Do you guys happen to know of an auto loan company that will finance me? I saw a few online including fundingway.com and barnone.com. Any suggestions?

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    Veteran Member LusciousLyzz's Avatar
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    Default Re: bad credit financing

    Have you gone in and found a car you wanted yet? Sometimes, even with a not so good credit score, they'll still finance you, just at a higher rate. I was suprised that i was approved when I tried to buy a car last year that they said I could, but the rate was too high and the monthly payments were too high for me. It also depends on the vehicle year and make as well, I ended up buying a used Explorer off a lot and made payments, but they wouldn't finance me for the Bronco that I really wanted that was just a few $100 more. This may all be different in every state, I don't know.

    i think I've heard of barnone.com before, but I don't know for sure how it works.

    Good luck with your car purchase!

    p.s. I don't know how much you know about cars, so if you don't know much, bring some one who does, so they can ask lots of questions about the car and the engine and what not, my boyfriend ended up getting me this truck at a lower price because he was talking all this stuff about the engine or something and he was like well, its not worth that much, so they knocked a couple $100 off the price!!

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    God/dess greenidlady1's Avatar
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    Default Re: bad credit financing

    Yes, I want a 2006 Saturn Vue. I couldn't financed for a new in September because of my credit only being 530. They would have financed me for a used one but I don't like the Vue's prior to 2006. I would financing appx. 17,000. With my credit score 570 now I wonder if they would do it or I should go to barnone.com?

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    Banned Melonie's Avatar
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    Default Re: bad credit financing

    It would appear that Saturn dealers now have factory backed incentive financing on 2006 Vue's to the tune of ...

    2.9% on 36 month loan
    3.9% on 48 month loan
    4.9% on 60 month loan

    now the question is where GMAC will draw the dotted line on a 570 credit score versus a $3,000 down payment in regard to approving a loan with incentive financing versus approving a loan with 'market' interest rate financing, versus rejection. You won't know until you go see a dealer and ask !

    In regard to the financing world in general, FICO scores below 600 are considered to be 'high risk' with high probability of rejection (or acceptance but at 'above market' interest rates), FICO scores between 600 and 720 are considered to be 'acceptable risk' with high probability of acceptance (albeit at 'market' interest rates), and FICO scores above 720 are considered to be 'low risk' with virtually guaranteed acceptance (often with 'below market' interest rates).

    Of course, many other factors go into the approval equation i.e. proven income level, future job security, other debt load. In regard to the financing world in general, being an exotic dancer falls pretty low on the list of occupations which typically represent low risk borrowers.

    As you are already aware, there is a niche in the financing industry that caters to 'sub-prime' borrowers with low credit scores, with other factors which are negative etc. However, these 'sub-prime' lenders ALWAYS compensate themselves for the increased risk they assume by charging interest rates in their loans to 'sub-prime' borrowers which are WELL above 'market' rates.

    Just a personal opinion, but the 31 FICO points you are lacking between your current 570 and a potential 601 are going to cost you a significant amount of extra hassle and extra interest charges. If GMAC turns you down or only offers you a loan at a 'loan shark' interst rate, if there is any way that you could delay the purchase of a new vehicle until you can goose your credit score over 600, it would allow you to save a significant amount of hassle and extra interest charges in the future versus seeking a loan through a 'sub-prime' lender.

    ~
    Last edited by Melonie; 01-22-2006 at 11:32 AM.

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    Veteran Member leebay88's Avatar
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    Default Re: bad credit financing

    Have you tried to work with a company that will help you clean up your credit?

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    God/dess greenidlady1's Avatar
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    Default Re: bad credit financing

    ^^^Well. actually everything that is negative against my credit score has been paid. What I think affected my score is the fact everything was so delinquent.

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    Veteran Member leebay88's Avatar
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    Default Re: bad credit financing

    Credit repair agencies use loopholes in the system to get the bad stuff from even showing up on your reports even if they are paid already. Completely legal. You don't hear about them often because they are not allowed to advertise by law.

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    Featured Member Vamp's Avatar
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    Default Re: bad credit financing

    Green,

    My advice is check your credit report. Make sure any collections have been taken off. You can always dispute items on your report yourself. Companies that promise to take things off your report thru "loop holes" are often a scam. I have said this in other posts but will again. When you dispute an item, if the other party doesn't respond to it, the credit reporting agency is required to take it off. It is worth a try and free to do.

    Also if you have a bank or credit union you already have accounts with in good standing try to get pre-approved there first. Fincial institutions that you already have an established relationship with are more likely to work with you. Keep in mind with a lower credit score you will pay a higher interest rate. Banks and credit unions wont finance a car for more than blue book either. Which gives you some bargaining leverage against the dealership even with a new vechile.

    If you are declined asked what were the reasons. They are required to tell you the differant factors that went into their decision. That way you know what you need to work on in addition to the credir score alone.

    Good Luck!

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    God/dess VenusGoddess's Avatar
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    Default Re: bad credit financing

    Quote Originally Posted by Vamp
    If you are declined asked what were the reasons. They are required to tell you the differant factors that went into their decision. That way you know what you need to work on in addition to the credir score alone.

    Good Luck!
    Most companies will not tell you why you were declined, or they will tell you that it's your 1) credit score, 2) number of delinquent accounts (paid or not) or 3) inadequate income for the size of the loan.

    The thing that companies are REQUIRED to do is get you a free copy of the credit report from the reporting agency they use. That's it.

    With a score of 570, you are going to get gob-smacked with the rate (think around 18%). That will make your payments around $500-$600 a month, or more. We have a loan on a $28,000 (financed) Forester and our montly payment runs around $400 (it's a 4% apr). You have to figure in insurance...which a lot of companies base upon your credit score, as well.

    Go to the website of each reporting agency bureau. http://www.experian.com, http://www.transunion.com, and http://www.equifax.com. They have an online dispute system that will easily allow you to dispute any and all collections/negative impacts against your score. DISPUTE EVERYTHING. No matter what, dispute it. You'll get information in the mail within 35-40 days with the results. If a creditor/collector cannot prove you owe the debt to them, it will be deleted, if any creditor/collector does not respond to the request, the item will be deleted. If the creditor/collector reports the information, again, a few months down the road, it will show up again...but in the meantime, your score will go up immediately. Some creditors/collectors will not bother with disputes with old accounts as it takes more time than it is worth to them.

    Do NOT go for a loan now. You really should wait AT LEAST another 2-3 months for this dispute to take effect. If you get a car loan now, most companies will not refinance you before 1 year is up. That means that you will be locked into your loan for 1 year at a very high percentage rate. Wait a few months and once your credit score goes up, you can get a better rate. Just be more patient. It'll save you quite a bit of money in the long run.

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    Senior Member NaughtyAngel's Avatar
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    Default Re: bad credit financing

    Greenidlady... you may want to try out http://www.americredit.com

    One of my girl friends went through them to finance a truck. After about six months her credit score improved. She said about 50 points. That's in addition to paying her other bills on time mind you. Anyway you may want to check them out.

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    Default Re: bad credit financing

    You might want to read around on the message boards at www.artofcredit.com. I learned a lot about rebuilding my credit there though there is still a ton I don't know. It gets me really confused but I do know if you seem desperate for a loan somebody will give it to you and they'll charge you as much interest as they can. My bf is currently paying about 28% interest on a car loan. That should be against the law, but they get around the usury laws because they are some certain type of company. Are you a member of a credit union? I know someone who got a 10% loan at her credit union for a new car about 3 years after filing chapter 7 bankruptcy but I don't know what her scores were or her downpayment, etc.

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    Featured Member Vamp's Avatar
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    Default Re: bad credit financing

    [QUOTE=VenusGoddess]Most companies will not tell you why you were declined, or they will tell you that it's your 1) credit score, 2) number of delinquent accounts (paid or not) or 3) inadequate income for the size of the loan.

    The thing that companies are REQUIRED to do is get you a free copy of the credit report from the reporting agency they use. That's it.



    There are many factors that go into the approval of a loan. In addition to the ones you mentioned also debit to income ratio, employment history, etc. Where I work we are require to give a rundown of each factor why it was denied and the information for a free credit report. Not all companies or loan offiers are the same so it is worth the try to ask.

    Just as a side note. The purchase of a new vechile in my mind just isnt worth the expense. Today cars are loosing their value faster than you think. Most new cars loose at least $5,000.00 the second you drive them off the lot.

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    God/dess greenidlady1's Avatar
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    Default Re: bad credit financing

    Thanks for the advise guys. I will start a dispute against what is on my report.

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    Featured Member scorpio's Avatar
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    Default Re: bad credit financing

    first of all, you will be paying loanshark rates for a long, long time, so get used to it. second, if you get a car loan, and you certainly will, make sure you pay on time EVERY TIME!!!! If that means skipping the Vue (piece of crap anyways) and getting something cheaper for a year, so be it. The very act of getting a car loan and paying 12 payments on time will totally jack your score because creditors will look and see that you have the capacity to pay a big ticket item on time. I went from a 570 to a 660 in alittle over a year. here is how I did it:

    bought a car at 20% interest and made sure payments were on time. If it is achoice of eating or paying the car, pay the car.

    Got a loan shark credit card with a $1000 balance. paid on time.

    Ordered credit reports from www.transunion.com, equifax.com, and experian.com and disputed old or incorrect tradelines. You can do this right online for about $30. Do not spend money on "credit cleaning" It CANNOT work and it will only clean your wallet. Go right to the source-the credit agencies themselves.

    btw, you would think that with a 660 score, I can get low rates or do whatever-WRONG! A cell phone company asked for a $400 deposit due to collections on my report from 1999. credit companies are tightening up severly, I know, I work for one.

  15. #15
    AudreyLeigh
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    Default Re: bad credit financing

    Im wondering why you have to have this certain car? Best bet would to be what I just did. Financed a cheap little honda at a killer rate (which is what youll get, were paying 24%). Pay double on all payments. Pay it off in a year... which will build your credit THEN go get the nice car you want at a WAY BETTER interest rate....

    It takes time and patience

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    God/dess greenidlady1's Avatar
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    Default Re: bad credit financing

    I understand a lot of the older model Vue's are a piece of crap. Have you checked out the new one at all? It has a honda engine and I test drove it and loved it. You have any other recommendations for a small SUV? I have three dogs and frequent dog shows. I need something I can get them and the equipment in and out of. Right now I own a Daewoo. It has 120.000 miles on it and has been an excellent car, knock on wood but I want to make future preparations because I am worried it may not last much longer. My husband has a 1986 Jeep Grand Wagoneer that is currently broke down. He has been trying to fix it but has been loaned a car by a friend of ours in the mean time. He just got a secured credit card so hopefully he will have obtained some credit in the next couple of years. So, basically we only have one decent vehicle. I need to do something pretty soon and the vehicle needs to be reliable. I am open to vehicle suggestions. I am just going by what I have tryed and what I like.

  17. #17
    AudreyLeigh
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    Default Re: bad credit financing

    What about a Honda Pilot - get an 05 and itll be WAY cheaper then a new one... i adore those cars... much cuter than the ugly CRV....

    Problem with buying a new car (as i learned) is that its value falls as soon as you drive it off the lot.. you pay $17K you leave the lot its worth $12-13K...

    Most people i know who are well off say NEVER buy new... they always buy used... 5K miles on a car make a HUGE difference than 0miles.

    Maybe wait a few months for people to start turning in the 06 Vues... and then get one but used... itll be easier to finance and be a lot cheaper with a few miles on it.

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    God/dess greenidlady1's Avatar
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    Default Re: bad credit financing

    I like the Pilots but they are a little too big. I need something more spacious but I don't want to be gas hog either. The CRVs are okay but don't have as many futures as the Vue's. I would like something straight drive too but with a V6 engine. I wouldn't mind a 4 cylinder engine but if I am carrying a lot of stuff I still want the vehicle to get up and go.

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    Banned Melonie's Avatar
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    Default Re: bad credit financing

    Problem with buying a new car (as i learned) is that its value falls as soon as you drive it off the lot.. you pay $17K you leave the lot its worth $12-13K...

    Most people i know who are well off say NEVER buy new... they always buy used... 5K miles on a car make a HUGE difference than 0miles
    I agree with this entirely. However, while 5000 miles of depreciation applies in both cases, there IS a difference between buying a 'program car' with 5000 miles on it, versus buying a 'used' car with 5000 miles on it. In the latter case, someone else besides the manufacturer/dealer has held title to the vehicle making you the 'second owner' so to speak - which generally makes you ineligible for dealer incentive financing or 'loss leader' new car financing, as well as cutting into factory warrantee coverage. In the former case, the car has previously been leased or used as a demo, you are the first person other than the manufacturer/dealer to hold the title, which generally makes you eligible for dealer incentive financing and/or 'loss leader' new car financing plus full factory warrantee coverage from the date you buy the vehicle.

    A couple of years back I bought a Subaru WRX with less than 5000 miles on it as a 'repo' ... which was considered to be a 'used car' even though it was only one year old at the time, which was not eligible for dealer incentive financing, and which required that I buy a third party extended warrantee since the manufacturer's warrantee clock had started running at the time of the vehicle's original sale. Last year I bought a Subaru Legacy with less than 5000 miles on it as a 'program car' ... which was considered to be a 'new car', which WAS eligible for dealer incentive financing, and came with a full manufacturer's warrantee clock which started when I drove it out of the showroom.

    This is not to say that buying a 'repo' or low mileage 'used' car is in any way a bad thing. However, be aware that there is a distinction, which does have potential negative consequences in terms of financing and warrantee versus a 'program' car, and that these differences do have a 'cash value' which should be factored in.

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    God/dess VenusGoddess's Avatar
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    Default Re: bad credit financing

    Quote Originally Posted by Melonie
    A couple of years back I bought a Subaru WRX with less than 5000 miles on it as a 'repo' ... which was considered to be a 'used car' even though it was only one year old at the time, which was not eligible for dealer incentive financing, and which required that I buy a third party extended warrantee since the manufacturer's warrantee clock had started running at the time of the vehicle's original sale. Last year I bought a Subaru Legacy with less than 5000 miles on it as a 'program car' ... which was considered to be a 'new car', which WAS eligible for dealer incentive financing, and came with a full manufacturer's warrantee clock which started when I drove it out of the showroom.
    You got taken for a ride, my dear. Manufacturer's warranties run no matter WHO owns the car. If the warranty is 5 years/50,000 miles, and you buy the car on year 2 with 20,000 miles on it, then the manufacturer's warranty is still good until you hit year 5 (of the car's age) and/or 50,000. The "third party" warranty, in these cases is usually an added "bumper". They offer you stuff like, "additional coverage" and "gap-coverage insurance". You should get them both. The additional coverage insurance covers bumper to bumper what the manufacturer no longer covers (depending on how old the car is) and the gap-coverage covers the difference in the amount financed and the amount the car is worth (which is very important if you ever get your car totalled). For about $500, you can save yourself thousands.

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    Banned Melonie's Avatar
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    Default Re: bad credit financing

    If the warranty is 5 years/50,000 miles, and you buy the car on year 2 with 20,000 miles on it, then the manufacturer's warranty is still good until you hit year 5 (of the car's age) and/or 50,000
    True on the 50,000 miles, but not true on the five years. In the case of a 'used' car, the five year clock started running when the first owner purchased it and transferred the title, leaving 4 years on the warrantee clock for the second owner who buys it as a one year old 'used' car with 5000 miles on it. But in the case of a 'program' car, the five year clock doesn't start running until it is purchased and the title is transferred for the first time, leaving all 5 years on the warrantee clock. To the dealer and the car company, there is no warrantee distinction TIME WISE between a car which has sat on the lot for a year without selling, and a car which has been used as a 'demo' or 'program car' and driven 5000 miles without actually being sold to a private owner. I'm not talking theoretically here, I have actually bought vehicles under both scenarios within the past 2 years and can show you the warrantee paperwork. The manufacturer's warrantee clock does not start as long as the manufacturer/dealer holds title to the vehicle.

    I do agree with you that purchasing a 3rd party warrantee on a late model 'used' car can be a highly worthwhile investment if you plan on keeping/driving the car well past the point where the manufacturer's warrantee runs out based on miles or time. However, if you basically plan to trade the vehicle within 2-3 years (as many owners do), such that the manufacturer's warrantee will still be in effect for 100% of the time that you actually own the vehicle, then the 3rd party warrantee is significantly less worthwhile.

    I understand 'gap insurance', but would personally never put myself in a situation of needing it ... i.e. I would always make a large enough down payment to prevent my loan from being underwater at any stage in the life of the loan. Yeah I know some would think this a 'poor investment' of the down payment money vs say putting the down payment money in a 5% CD and financing 100% of the car purchase at 1.99% incentive interest rates, but it's just part of my nature to avoid ever owing more money on something than its current market resale value would yield !

    But that does lead to a related question for you - is there such a thing as 'gap insurance' for real estate located in bubble markets where the market price of the property is likely to decline faster than the monthly payments reduce the outstanding mortgage balance ?
    ~
    Last edited by Melonie; 01-24-2006 at 05:24 PM.

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    Default Re: bad credit financing

    Seems like being late is almost as bad as never paying at all. Doesn't seem logical to me, but it's how it is. Better to call them and pay something than to ignore your repayment schedule till it's convenient. I suppose it gives them confidence that you are trying to repay the loan.

    Being a minimalist at heart, I wish we would just pay in cash and skip the credit, but without credit, we are all at a big disadvantage at times.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

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