Bad Credit Blog

It sounds silly, I know. Pre-approved car loans for people whose credit is tanked. But there are several good reasons for pre-approval - especially if your credit isn’t that great.

As a car salesperson in Phoenix I dealt with a wide range of people with bad credit. The worst ones were the ones with the sense of “entitlement.” Strolling onto a lot as if they were millionaires and picking out a vehicle that was obviously outside their price range based on their credit history and/or their current income.

The second type came on the lot meek and mild and wanted to buy a car “under $5,000″ and finance it. They knew they had bad credit and thought they were “thinking like the bank.” In other words, lending them just enough to get a car, but not enough for a new or newer model.

Both of these types had the potential to be completely ripped off by the wrong dealership. Why? Because they really had no understanding of how credit and financing works in the car business.

So how does getting pre-approved for a car loan this benefit you if you have bad credit?

When you have bad credit often you can’t negotiate for the best price on a car. Or pick out the exact car you want for that matter. Why? Because what most people don’t know is that when you have bad credit lenders “charge” the dealership a fee for the risk they are taking on you.

What does this mean? The charge is usually a percentage of the car’s value - for instance 5%. So if you’re buying a $10,000 car and the fee is 5% then that’s $500 the dealership WON’T take off the price of the car! Not only that, the $500 is part of the amount you’re financing so you are actually paying the bank to assume the loan. I’ve seen charges as high as $2,000 because of a person’s credit!

The difference between pre-approved car loans and getting a loan at the dealership is that you avoid paying this fee!

When you are pre-approved the bank loans you a “fixed amount” of money and it’s your job to go out and find the vehicle you want and then negotiate the price down. This guarantees you the best price on the vehicle of your choice because you’re not paying the bank to assume the loan.

Getting a pre-approved car loan also means you can pick the vehicle YOU want. On the lot I worked at we often had 3 or 4 vehicles (usually the same models) that we knew would “fit” the banks parameters for people with bad credit. So when a person with bad credit came on the lot we would try to steer them to one of these cars. Not necessarily to make more money in OUR pockets, but because we knew that the buyer had the best chance of getting approved on one of those models because they would fit the banks guidelines and had enough markup to absorb the fees without losing money on the vehicle.

Getting a pre-approved car loan also keeps you from looking at vehicles that you won’t get financing for. If you are pre-approved for $15,000 then you won’t be out looking at vehicles that cost $22,000, wasting your time, and having your credit pulled multiple times by the car dealerships. Once you know how much you’re approved for you can find the best vehicle in that price range and negotiate with the dealership for it.

Bottom line - Being pre-approved for car loan a vehicle loan gives you more options and puts you in the drivers seat. You can negotiate for a good car deal and get the vehicle YOU want. So if you’re credit challenged and need a vehicle don’t go out looking for a car without applying for pre-approval first!

For more credit help, please visit our site. We have been there and know how bad credit can affect everything, including your health. Take a look!

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In perusing Yahoo questions doing research for an interesting Blog article, I noted several questions from 18 & 19 year olds anxious to establish credit but wanting to “get it right.” Several people asked the same question, “Is it better to have several credit cards rather than just one?”

The answer is a resounding YES it is better to have two or three - provided you are disciplined enough to handle it.

The reason it’s better is because you have more companies contributing to your credit report. Of course that works both ways. If you are not a responsible person and pay just the minimum amount each month, or max your cards to the limit, or pay late regardless of the reason, your credit score will be damaged. But of course you already know that - right?

To increase your credit score and get the maximum benefit with a credit card keep your credit usage to around 30% of your credit limit. Whenever possible pay your credit card in full each month. If that’s not possible double or triple the payment they request. In other words if they only want $20 minimum you should pay $40 to $60 to keep the total amount owed as low as possible.

Finally. Keep your credit clean! A person in their 50’s can have a few negative things on their credit and still be OK. This is because they have a LOT of history on their report. And if the good outweighs the bad then they can usually be alright. But when you are just starting out you don’t have much good credit to cancel the bad. So every bad thing hits your score a lot harder. So keep your credit clean and don’t go crazy with the credit cards! Use them to BUILD credit, not buy toys you don’t need with money you don’t have!

Good luck to you!

For more credit help, please visit our site. We have been there and know how bad credit can affect everything, including your health. Take a look!

If you know someone struggling to quit smoking we found a great site that offers genuine  help. You can Quit!!

Here is a great site for some wonderful Spiritual articles, short stories, plays, family stories, Bible studies etc. Check it out.