Car Choice Comes Last for Bad Credit Buyers

Here at Youautomotive auto loans, we often receive comments from consumers who are looking for their next car. Typically, people who are looking for an auto loan tend to pick out a car first and look for financing second. This process may work for someone with good to great credit, but for many people—especially those with bad credit—the process works differently.

 

Take this customer who recently wrote to us about finding a vehicle:

“I'm looking for a dark purple car would love to get Camaro but I would be willing to get a different model like Impala or even an SUV but I can't afford a new one…”

To be clear, we are not a car finder or a finance company. We help people with bad credit get connected to local special finance dealers who can help people get the vehicles they need.

Why the Bad Credit Process is Different

Wanting a particular car is one thing, but when you have damaged credit, it's more important to get what you need—or what you can afford—rather than trying to find the exact car you want. This is due to the fact that when you are looking for financing with bad credit, you first have to get an approval from a subprime lender.

Subprime financing is typically needed when you have a credit score around 640 or lower. This type of auto loan is done through indirect lenders who work with special finance dealerships. Not all dealers have subprime lenders, so choosing the right one to meet your needs is important. Once you have found a dealer with a sub prime finance department, you will need to sit down with the special finance manager, fill out an application and submit the necessary documents.

You will need to provide:

  • A valid driver’s license or state ID.
  • Proof of income – your most recent check stub.
  • Proof of residence – a current utility bill in your name.
  • Proof of a working phone – a landline or cell phone from a national carrier, in your name.
  • Six to eight complete references – including names, addresses, and phone numbers.

Once you have completed this process, the dealer will transmit your application and documentation to the lender. The lender will either approve or deny your loan request. If you are approved, the lender will transmit a “payment call” to the special finance manager with the program you qualify for along with any additional requirements.

Choosing Your Vehicle

Once the lender has approved your auto loan request, the dealer will present you with a list of eligible vehicles that you qualify for, based on the information from the lender. Then, you can test drive them and choose the one you like that best fits what you need.

The good news is your choice of vehicles will typically be restricted to those that are less than 10 years old and with less than 100,000 miles. It is also good to note that your loan term can vary depending on vehicle mileage and model year.

As you can see, when you are dealing with subprime financing, choosing a vehicle comes at the end of the buying process, rather than the traditional loan process where you choose your vehicle first, then get financed.

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When Can I Refinance My Car Loan?

 

Refinancing your auto loan can save you money on interest, lower your monthly payments, or potentially do both. With online lenders reducing the hassle of the refi process, it can be a no-brainer for some people. But if you only recently bought your car, or you’ve had it for a few years, you might be wondering:

  • “When should I refinance my car?”

  • “How soon is too soon?”

  • “Is it too late to refinance?”

To remove the guesswork, here are five signs that could indicate now is a good time to refinance your car.

    1. You purchased and financed a vehicle at a dealership

Did you buy and finance your car at a dealership? You’re not alone – over 85% of new vehicle sales and over 54% of used vehicle sales are financed.1And if you bought your car at a dealership, there’s a good chance you financed it there, too. What you may not know is that dealer-financed auto loans are often not the best deal.

Auto dealers can mark up your interest rate, charging as much as 3% more than the APR you could’ve qualified for with another lender.2

Want to know if you can do better? It takes just one minute to check your auto refinance rate with Youautomotive.com, and it doesn’t affect your credit score.*

            2. You’ve had the loan for at least 90 days

How soon can you refinance a car you just bought?

Most lenders require that you’ve had the loan for a few months before you apply (at Youautomotive.com, the minimum is 90 days). This is usually to confirm that you’re making on-time payments, so stay on top of those payments if you’re hoping to refinance in the near future.

            3. Your current loan term is longer than 24 months

On the flip side, if you don’t have long to go before paying off the loan, you may not be able to refinance. At Youautomotive.com, we require at least 24 months remaining on the term.

            4. Your credit has improved

Has your credit score increased since you took out the loan? Have you consistently paid your debts on time? If so, you may qualify for a lower rate than you did when you first bought the car—which means savings in your pocket.

You can check your credit report for free on an annual basis to monitor whether things are looking up.

             5. You could use the extra cash

Refinancing at a lower rate can lower your interest bill (Youautomotive.com auto refinance borrowers could save up to $1,350).3 However, you can also refinance to lengthen your auto loan’s term and reduce your monthly payment. If bills are tight, refinancing to lower your payments may be the solution you’re looking for.

When Should You Refinance Your Car?


Auto refinancing can make a lot of sense in some situations. In fact, many people don’t refinance their car even though they would qualify, simply because they think the refinance process will be long and arduous. That’s simply not the case anymore—Youautomotive.com’s auto refinances process is completely online and hassle-free.

If you want to know whether now is the time to refinance your car, check your rate now to get the answer in less than a minute, with no impact to your credit score.

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