Subprime Auto Loans?

I've been researching this myself......with no luck. Some say try Eloan or Roadloan.com. I was denied for both.

lb

 

DONT WASTE YOUR TIME.

If you have the mentality you are subrpime, you'll get a crappy rate..

1. Get a decent down payment.
2. Choose a decent car (ie no kia).

Demand a good rate. you'll be suprised.

My TU (chase only pulls tu) was 579 when I applied. Was approved for 30K loan @ 7% with $3500 down.

The dealer "stacked" my loan with a bunch of people that had nice scores and forced it in.

Household -- 15% approved
Peoplefirst -- DENIED
CAP 1 finance -DENIED

(i wasted 3 inquiries, trying that route).

 

I was approved by Auto One Acceptance at 16.9% at a time when my scores were lower than most of those I'm seeing on this board. The only problem is, they describe themselves as an "indirect" lender, meaning (I assume) that you can only work with them through a dealer.

wajaba

 

My FICO just went down from 557 to 510. I think I'm gonna try putting the two negatives I have into dispute, raise my score a bit and try again.

LB

Has $3500 for down payment but no lender!!!!!

 

Where ever you go for financing - read Remar Sutton's "Don't Get Taken Every Time" before buying. Marie suggested it to me and the book is incredible. Sam is right; if you walk into a dealership feeling "sub-prime", they will stick it to you, needlessly.

Remember: the price of the car will have nothing to do with financing or your credit situation.

Apply for an outside source of financing (at a bank or Credit Union ). Whether you get approved or not, walk into the dealership and tell them "I don't need to worry about financing now; let's discuss the price of the car". DON'T ACT SCARED. They'll see the bank inquiry, but won't know if you've been approved or denied. You want to act as if you've been approved for financing, but don't lie. If they ask outright, change the subject and take lead of the direction of the conversation.

Remember: the price of the car will have nothing to do with financing or your credit situation.

Once you get the price of the car quoted and guaranteed (that way you're protected from a sub-prime scam on the front-end), then let them pull your credit for lender financing, but don't act like you're dependent on their financing for the car (even though you are). Ask them what can they offer you in terms of financing. Offer a nice cash down payment (10-20%).

If they say 10+% apr, ask them to stack it, as Sam suggested, especially in light of your downpayment. Or offer them 2-3 points less than what they say, telling them that not only are they making money on the front end but they can make money on the back end (since you're paying down a substantial amount into the loan) - or if they stall, you'll have to talk more more with your bank. Just leave it at that, and they'll get the hint, may not call your bluff and offer you a livable rate, not the best, but liveable. Then get your credit cleaned up and refinance with a bank or credit union.

 

Great info, Marci.

Don't know if it will work for me though. My FICO just went down from 557 to 510 and my husband's FICO is 472. We have $3500.00 to put down but as of now, I have no driver's license (If I applied online and was approved, I would take care of it ASAP to get the car.) Basically, we're depending on my husband's credit and right now and I don't think he cuts it.

LB

 

There are some non-prime rather than sub-prime lenders that would be happy to work with you. WFS is one for example. Unfortunately most of them are indirect, you have to go through a dealer.

Marci's advice is right on. With 10-20% down, on a secured transaction, you should be able to get a decent rate, well below 16%. The dealer may try to add 2-3% to the deal, but you can walk away if they won't come down.

Remember, the lender's exposure isn't that great, they can always repo the car if you can't make the payments. Don't walk in there thinking no one wants your business, you'll get screwed every time. If you have the DP and a job, and your BK proof right now, you will look pretty good to a lot of lenders. The on-line services will never quote you less than 16%.

 

kozman,

I know this probably isn't helping very much, but would there be any way you could come up with more than $1k? After taxes, tags, etc., that wouldn't put very much towards the car itself.

I was in a situation much like yours (less the BK, but with poor credit nonetheless), having relatively little to put down. The salesman worked out an arrangement for me to sign a promissory note for another $1k due in 45 days. I don't know if this is a widely-used tactic, or if it would work for your situation, but you can always ask.

Also, if you're shopping for a new car, it never hurts to get one with some sort of rebate you can use towards the down payment.

Good luck,

wajaba

 

kozman,

I would try a prime lender that pulls only one CR (your best CR, if the BK7 isn't reporting on all three) or I would try a prime lender that will listen to your reasons for the BK7. If it was for medical reasons, you may have a chance to ask someone to give you a chance. Also, stress that with the BK7, your money is safe and protected from creditors AND that you have money in your pocket since you don't have to pay those other loans. OFFER automatic withdrawal from your bank account.

Then go with dealer financing. Only let them pull your report ONCE. Make them sign a letter agreeing to pulling the credit report once and NOT shopping it around. They get one chance with in house financing and that's it. Here's one reason whay you want to limit them to one report (other than the obvious of protecting your score):

If they do pull it more than once, or shop it around - you've got them on $1000 per violation with the FCRA. Accuse them of pulling the report multiple times in order to purposely lower your credit score in order to offer you a higher rate (this happens a lot with recission clauses, described below). Fill out a small claims suit form (you don't have to file it in the courthouse yet), take it to the GENERAL MANAGER of the dealership, and ask them to negotiate the apr with you in order for you to drop the suit. Tell them the lower credit score caused you to go with ___% intolerable apr with Loan Shark, INC and if you have to go with Loan Shark, INC - you will hold THEM responsible for the difference in interest you coudl have paid. Having said that, pull your credit reports that morning before going into the dealership to give yourself an idea of where you stand before and after.

Tell them you'll also put them on the local consumer interest section on the news for deceptive practices. They'll be more willing to negotiate for a decent apr if you catch them breaking the FCRA.

If the dealership says "no way" to financing, then go with Wells Fargo Financial, PeopleFirst, or Cap One.


One more thing - if you do get dealer (or any) financing -absolutely REFUSE to agree to a recission clause in the contract (that if something doesn't work on their end, they can get the car back or rearrange the financing terms). Never agree to that, as it is a way for them to get more sub-prime money out of you.

Make sure that your financing is simple interest, not "Rules of 78".

Make sure that you don't have a pre-payment penalty.

Pay more than the minimum due each month to put equity in the car. When you refi, you won't have to put money down if there's equity in the car.


A brand new Toyota Echo would be a nice, reliable car for $10K or less.

 

Sam,
I totally agree with you. In fact I was getting ready to post my good news about my new car when I saw this thread.

I just got a brand new 2002 Jaguar X-type. Just picked it up yesterday. I too wasted a few inquiries before heading straight to the dealer. I was denied by People1st/Cap 1, Roadloans, and E-loans. People1st and Cap 1 actually put 2 inquiries on my EXP.

I finally gathered the courage to go to the dealer, and I was approved for 31K loan, at 5.9% . I put down $8000 though. My scores b4 I went to the dealer were:EQ 620, EXP 675 and TU 631. I still had 3 charge-offs that are due to drop next year. Overall, I had a great experience at the dealership and they really worked with me.

So, personally, I'll advise dealer financing if one can come up with a good down payment.

 

It's a clause in the purchase and financing contracts that says that if the purchase price or financing apr falls through or isn't approved that they can reposess the car or ask you agree to re-arranged financing:

This happens at a dealership, when they know that the buyer is:

1. desperate for a car (i.e. they have no car to drive at all)

2. desperate for financing (i.e. had to go with the dealer)

3. has pride and seems shameful about being sub-prime (won't want to return the car).

So what happens is:

They give you a much needed car, the financing you need, the signed contract but with this clause.

A week later after you've driven your car around family and friends (especially if they've dinged your CR with 10 inquires) they call with "we're sorry but the purchase price/financing we thought we could get for you did not pan out as hoped (i.e. manager did not approve, credit report score is too low, etc...). We'll need you to put down an extra $2000 or bring the car back. If you don't have the $2000 cash, we'll help you get a loan with Loan Shark, INC to cover the $2000 as we have an inside contact there who will work with us in spite of your credit."

They are banking on the fact that you're too proud or desperate for a ride to bring the car back and that you'll take the Loan Shark Loan. It only puts profit in their pocket.

By the time they finish all of this - they've already made the wholesale cost of the car back based on your initial money down, intial profit in their price (holdbacks. etc..), financing profit from the original dealer finance source (the dealer often gets 2-3% apr from the financing in their pocket) and now the financing profit from the Loan Shark, INC - which is usually owned by dealer anyway.

Then you're paying the car note - have no cash reserves - paying the $2000 loan shark loan note, fall behind and they reposess the car anyway... and start over with someone new. Or you keep paying on time by the skin of your teeth and they make 100-200% profit (or more) on the car.



1. Make sure the sales AND general manager signs the purchase/buyer's order with no recission clause.

2. Make sure that the finance AND general manager signs the financing contract with no recission clause.


If they refuse - RUN out. You don't want to deal with them at all.

 

Thanks Marci. What exactly is a recission clause?
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I've heard of this happening. Visit www.carbuyingtips.com to find out what things to avoid when car shopping.

Good Luck to Us Both!!!

LB

 

Kozman,

Another thing I just found from the www.carbuyingtips.com website. Try this site:

https://www.customerfunding.com/autocreditfinders/application/application.asp?AppSource=affid_64

instead of shopping around different places for loans adding on inquiries. They specialize in helping people with bad credit. I'm gonna give it a shot. Let me know how it works out for you!

LB