Bad Credit Auto Loan Tips & Advice

Tips to consider when applying for car loans

Financing a car is a big decision

As a consumer, we realize there are many places you can apply for a bad credit car loan, and we realize how important it is to make sure you carefully choose what company you will apply with. At CarLoan.Expert, we have over 10 years experience in dealing with consumers with bad credit and helping these same people re-establish their credit by financing a vehicle with a bad credit auto loan. As the nation's leading bad credit auto loan source, we connect you with our country wide network of bad credit auto lenders and car dealerships to help you secure your next new or used car.

At the same time, we provide tools and resources online to help educate our applicants on the loan process, ensuring they have the best possible chance of getting approved for their bad credit auto loan.

Read below for Tips & Advice to help guide you through your online loan application process with CarLoan.Expert.  

Check your credit report

Did you know that you are entitled to a free credit report each year? Now is the perfect time to order a copy of your personal credit report if you haven’t done so already. Why? Your credit score plays a major role in your interest rate. Improving your interest rate allows you to negotiate a better Annual Percentage Rate. The lower your APR, the lower your over-all cost will be. Improving your credit rating even slightly could have a big impact on your bad credit auto loan.

Carefully examine your credit report and make sure there are no mistakes or errors that could be causing your credit score to be lower than it is. If you do find any errors, try to get them removed by disputing the items with one of the three major credit bureaus by contacting them directly (Experian, TransUnion, and Equifax). Keep in mind it can take a few months to get desired results, and there are other factors that you can also control now to help mitigate a lender's or dealership's risk in making a bad credit auto loan to you.

Consider your qualifications and monthly income

Another important factor to consider that will be used to determine if you are an acceptable candidate for a bad credit auto loan is your monthly income. Even with a history of bad credit, with a high enough income, or with a bigger down payment, your chances of becoming eligible for an auto loan are increased. 

Because this is such an important factor, be absolutely certain that you have accounted for every penny of your income – including income from your regular job, investments, part-time jobs, or allowance from a family member. The monthly income you state on your online application with CarLoan.Expert should be the sum or total of all sources of income you have for one month. Be prepared to provide paycheck stubs, invoices, statements from your bank, or letters to substantiate your total monthly income claim. Also consider using some of CarLoan.Expert's auto loan resources and tools, such as our auto loan calculator, to help estimate what your monthly car payment will be, by giving the estimated car loan amount, interest rate, and term of the loan.

Another qualification to consider when applying for an auto loan is the length of time you have held the same job or lived at the same place of residence. The longer you’ve had the same address and same job, the better. Lenders and dealerships consider this to be an indicator of stability and a greater likelihood that you will make car payments on time. If you’ve only recently been hired, you may want to wait until your employment status becomes more permanent before applying to increase your chances of qualifying for an auto loan. 

Consider your ratio of monthly housing payment vs. your total monthly income

Though a lesser known fact, this is an additional factor that will be often be considered on your bad credit application for a car loan. To compute this ratio, simply take your monthly housing cost (your portion of the rent or mortgage) and divide it by your total monthly income. So, if your monthly housing cost is $400, and your monthly income is $1200, then your ratio of monthly housing cost to monthly income is 33% or .33. Lenders prefer for you to have a housing cost versus income ratio of up to 35% or so; a ratio of over 40% may urge the lender or dealership to have you put down a larger down payment or have a cosigner for the loan for more assurance that you will be able to make your monthly auto payment each month. 

This is why it is essential that when completing your bad credit auto loan application, make certain that you only claim your share of the mortgage or rent payment. For example, if you rent an apartment for $600 per month, and you have two roommates that equally split this cost with you, then your monthly housing cost should only be $200 on your auto loan application. The same scenario holds true for a mortgage payment that you may be splitting with a partner or spouse. 

Consider making a larger down payment

Your down payment determines how long you will pay on your bad credit auto loan. The higher your down payment, the better your interest rate will be, and the shorter your payment period. Your car trade-in counts towards your down payment. Trading in your used car could allow you to trade up while lowering your payments and improving your credit. 

By paying more upfront on your car loan, you become less of a risk to a lender or car dealership. Therefore, making a higher down payment than what is required increases your chances of auto loan approval, and may even help you to negotiate a lower interest rate on better terms. For example, if you need a reliable car now, but your income doesn’t match the lender's payment schedule, you can apply or request for an extended term bad credit car loan, thereby reducing your monthly car payments over time.

Consider getting a cosigner

A cosigner can reduce the interest and thus the over-all cost of your bad credit auto loan. However, your cosigner must have good credit. If you find a cosigner, you have found a person that trusts you to fulfill your debt obligation. Your cosigner's credit rating will suffer if you fail to make your payments. 

Request a lower rate

Even if you have a bad credit rating, it doesn’t hurt to negotiate for a better repayment term. You should stress to the lender that getting approved for a car loan would be a huge help in regaining good credit, which you are actively working towards. Many lenders will consider a reduction of your rate simply because you have made the request. Thankfully, The CarLoan.Expert presents you with a variety of car loan choices and lenders for you to choose from, based on your individual circumstances.

Compare loan rates

When you apply with CarLoan.Expert, we do the homework for you when comparing loan rates. We connect you with a nationwide network of bad credit auto loan specialists, and we can connect you to an auto dealer in your local area. We can match you with a new car or used auto that best matches your individual needs and situation. Feel free to shop around. We guarantee you will find the best deal with us. Avoid the hassle!

It takes less than a minute to fill out our online auto application.
What do you have to lose? Let us put you in a new car. 

Apply Now for a bad credit auto loan with CarLoan.Expert


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