Americans who are shopping for a new auto loan but don’t have the best credit can find themselves spinning their wheels, unable to move forward to a car purchase. Qualifying for a car or truck loan can be tough enough with toxic credit, let alone trying to find a good deal with low auto loan rates and favorable payment terms from auto industry financiers.
Why It’s Getting Harder to Qualify for the Best Auto Loan Rates
You can’t really blame the auto finance industry, however. With the economy getting better, lenders’ auto loan portfolios are growing: According to recent data from TransUnion, average auto loan debt per borrower is expected to rise to $18,244 at the end of 2015. That translates into 19 consecutive quarters of increases since the first quarter of 2011, when auto loan debt was at $14,954, per individual. This strong demand for auto financing allows lenders to be much choosier about who gets a green light for a new auto loan.
And auto lenders have further reason to be cautious because auto loan delinquency is on the rise. TransUnion estimates the national auto loan delinquency rate (the ratio of borrowers 60 or more days past due) will be at 1.27 percent at the end of 2015, up from 1.20 percent in 2014.
All that means a busier market for auto loans, and tougher climate for consumers burdened by bad credit.
5 Ways to Get Auto Financing With No Credit or Bad Credit
Despite the greater market factors, there are ways individual consumers can get solid auto loan deals even with credit problems. For starters, improving your credit score quickly can help. A secured credit card is an accessible credit product that can help to start repairing bad credit, said Harrine Freeman, author of the book “How to Get Out of Debt: Get an ‘A’ Credit Rating for Free.”
If you don’t have time to wait for your score to improve, there are still some measures you can take to improve your chances of getting a better auto loan deal. Here are five ideas that can make it easier to obtain auto loan financing with no credit history.
1. Open a savings or checking account.
Opening savings account or checking account and keeping it in good standing can help you establish a relationship with a lending bank. “Once you have maintained an account for at least three to six months, ask if you are eligible to apply for an auto loan,” said Freeman. “Applying for an auto loan at your bank, where the staffers and managers know you, can play a big role in getting loan financing.”
2. Buy a used or certified used car.
Consider buying a used car or certified used car, since financing is typically more lenient for used cars, trucks and SUV’s. The risk of losing big money is reduced for financiers who don’t have to account for off-the-lot depreciation of the car’s value, making it easier for you to get a loan with decent terms.
3. Make a good-sized car loan down payment.
If you can make even 25 percent of the car’s down payment in upfront cash, that dramatically improves your odds of getting a good financing deal. Selling your own car or truck and using the proceeds toward the down payment can be a big help in that regard.
4. Shop around for pre-approved auto financing.
This tip comes from Edmunds.com, which acknowledges that a bad credit score means a higher auto loan rate could be inevitable. But if you check around with lenders and get pre-approved for an auto loan, you might find a lender that’s willing and able to offer a better rate deal, especially if you come to the table with a larger down payment.
5. Bring proof of income and payment history.
Bringing some ‘value’ paperwork to a meeting with an auto loan financier can bolster your case. Some documents to consider providing include two of your most recent pay stubs and a copy of your tax returns, if you make a good income but are getting tripped up by some bad credit history. It can also help to show paid receipts of on-time mortgage and rental payments, which are high dollar value payments that are held in higher regard by creditors and auto loan dealers.
Having bad credit does put you in the back of the line for a good auto loan deal. But you can get ahead by being prepared, being creative, and canvassing as many lenders as you can, with as much good paperwork as you have.
This article originally appeared on GOBankingRates.com: How to Get the Best Auto Loan Rates When You Have No CreditSource
I am constantly seeing chefs and health/nutrition experts on TV claiming it’s a myth that it costs a lot to eat a healthy diet. They go through all of these examples to disprove this “fallacy,” which usually involve some really unbelievably low prices for the healthy options. Well, sorry—I’m just not buying it.
Granted, maybe they live/shop in an area with more grocery shopping options, or in a region where the warmer climate makes fresh produce easier to get (and therefore more affordable). But that’s not the case in my area.
The food shopping options within a 25-mile radius of my home consist of a Walmart and two mid-sized grocery stores that are part of a regional chain. Despite the fact that I’m a pretty savvy shopper, I’ve been unable to buy nutritious grocery items without spending a fortune. more »
If you’ve found yourself needing some quick cash recently, you may have considered heading to a pawn shop. You’re not alone. The bad economy has prompted many people to visit a pawn shop for the first time. “We are seeing more people who have never been in a pawn shop before looking for short term solutions without having to sell the farm,” says Rick Harrison, whose family owns the Gold & Silver Pawn Shop in Las Vegas and stars in The History Channel series Pawn Stars.
(Note: a pawn shop can also be a great place to find bargains, especially on stuff like electronics and jewelry.)
When you’re stretching every dollar, your purchase decisions (the few you are able to make) revolve around sales. You pounce on the sale ads as soon as they come out, eagerly hoping you can find a good bargain on something you need. When you’re lucky enough to spot a great deal, you celebrate because it means you’ll have a little more to use for other essentials.
So it can be very discouraging to find that you can’t actually get that item for the great sale price—and, in fact, you never had a shot at getting it all. That’s because, you realize later, you’ve become the victim of a store’s attempt to do a bait and switch.
What’s a bait and switch? It may sound like a fishing term—and in a way it is, only you and I are the big catch stores are hoping to reel in. A bait and switch is when a store lures you in by promising a really great deal—only to then try to sell you a more expensive item instead.
The dirty little secret of retail is that many stores, including huge retail chains, engage in bait and switch tactics.
Chances are, you’ll receive at least a few gift cards for the holidays. And if you’re like many people, you may just leave them sitting around or forget all about them. One study estimates that Americans are sitting on $30 billion in unused gift cards! How do you make the most of your gift cards? Here’s some advice from consumer savings expert Andrea Woroch:
1. Review Details
Despite new federal regulations for gift cards resulting from the Credit CARD Act, retailers are finding their way around the rules. A recent article in Canadian Business points out bank-issued gift cards from MasterCard and VISA often include additional purchase fees on top of the balance of the card. Other cards included as a bonus with your purchase are actually treated more like coupons, with short expiration dates or product restrictions. Before you stick these away in your wallet, read up on the rules and regulations.
2. Follow the News
With the economy still struggling, businesses come just as quickly as they go. If you have a gift card for a store that’s struggling to stay afloat, it’s smart to use it up as quickly as possible. Once they go under, you’ll lose out on the entire balance.
3. Sell or Exchange Unwanted Cards
There’s no mystery when it comes to gift cards; you either like them or you don’t. If your plastic haul falls on the “don’t” side, there’s still hope for getting something out of them. Gift Card Exchange Day – a one day event created to raise consumer awareness about exchanging gift cards for cash — is set to take place on Dec. 26. Just enter the store name and gift card amount to receive instant bids from resellers wanting to purchase your card.
4. Consider Regifting
Do you have family or friends with a post-Christmas birthday or perhaps an upcoming wedding or baby shower? Unwanted gift cards make quality presents at no cost. Just make sure such holiday gift cards don’t feature a season-specific design when gifting for another celebration.