How to Get Bad Credit Auto Refinance
Adverse Car Credit- Defaults, Delinquent Accounts and Bankruptcies
Oct 15, 2009
Bad credit auto refinance becomes necessary when an individual has failed to comply with the T&C's of an earlier credit agreement. That could be due to something as minor as a late payment to a more serious transgression, such as filing for chapter 7 bankruptcy or mortgage foreclosure. Car loans after bankruptcy and foreclosure are available.
Bad Credit Auto Refinance
Whilst not representing the ideal candidate for a loan, it is still possible to get auto loans for poor credit. This is due to the lender having collateral in the form of the vehicle and because it is possible to charge a higher rate of interest on the loan. These business terms make the borrower an attractive business proposition due to the higher profit margin.
Low FICO Score Loans for Cars
The individual's credit score will be a major determinant in the rate of interest. Whilst there is no getting away from the fact that an individual has a low score, there are things that can be done to improve FICO credit scores and the likelihood of a successful car loan application. For example, get hold of a copy of the credit report and request that any incorrect and erroneous entries are amended.
Deposits on Auto Loans for Poor Credit
Given the problems that a low FICO score presents, the provision of a realistic deposit is very important. This sum of money will help to demonstrate to the lender that the person seeking bad credit auto refinance is serious about their commitment to making the necessary monthly repayments. This is because they are prepared to take on some of the risk.
Stable Employment History
The longer that the prospective borrower has been in the same job, the more favorably this will be received by the lender. It can be difficult for those who are still in their probationary period or have been self-employed for less than a year to get approval for bad credit auto refinance. Lenders want to be as certain as realistically possible that the borrower's personal circumstances aren't likely to change.
Bad Credit Auto Refinance Income Requirements
Lenders don't want to offer money to an individual when they already have a high debt-to-income ratio. Whilst it is possible to repossess the vehicle following default, this is a costly and time consuming activity. The golden rule is that the lower the applicant's FICO credit score, the more disposable income will be needed. A gross income of at least $1,500 is required for those with a score of under 600.
Car loans for people with bad credit are more widely available than they once were. However, it will still be necessary to prove a stable employment history and that sufficient disposable income exists. Once a reliable repayment history has been established (typically after 24 months), bad credit auto refinance will be available at a more favourable interest rate.
Readers who found this article useful may also be interested in buying a car with a HELOC loan.
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