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Have bad credit but need to buy a car...
What do you do...
where do you start...
This is a [THREAD] for you!
What do you do...
where do you start...
This is a [THREAD] for you!
Itâs likely that if you want to buy a car itâs not something you just woke up and put into your mind.
Itâs likely something youâve been thinking about
While you may not be sure about timing in the moment the best thing for you to do is to figure your finances
Itâs likely something youâve been thinking about
While you may not be sure about timing in the moment the best thing for you to do is to figure your finances
What can you afford?!
No Iâm not asking you to tell me what your comfortable paying...
I want to know what you can afford.
What you will need to do is try to get preapproved from one of your banks...
But Terrance I have bad credit I canât get preapproved... (keep reading)
No Iâm not asking you to tell me what your comfortable paying...
I want to know what you can afford.
What you will need to do is try to get preapproved from one of your banks...
But Terrance I have bad credit I canât get preapproved... (keep reading)
Thatâs okay even if you canât be preapproved right in the moment donât let the time go to waste...
Ask your lenders about their Car loan programs.
Itâs likely a tiered system based off your credit rating. The better the tier the more risk the bank will take.
Ask your lenders about their Car loan programs.
Itâs likely a tiered system based off your credit rating. The better the tier the more risk the bank will take.
The banks loan on LTV or loan to value.
Itâs important to know the value that most banks are using is trade in value.
How it works is they may say for a 650 credit score we will loan 110% LTV on a car that is worth 10000 they would loan up 11,000
Itâs important to know the value that most banks are using is trade in value.
How it works is they may say for a 650 credit score we will loan 110% LTV on a car that is worth 10000 they would loan up 11,000
The lower the score the lower the value the bank would be willing to loan on...
For example while a 650 may qualify for 110% LTV a 580 may only qualify for 90%
It is important to know the total loan amount is based off of the LTV so that is tax tags and title
For example while a 650 may qualify for 110% LTV a 580 may only qualify for 90%
It is important to know the total loan amount is based off of the LTV so that is tax tags and title
The bank will also take into consideration your Debt to income ratio or your DTI.
In other words how much do you borrow monthly vs what you actually bring in.
Banks typically donât want to see you over a 36% DTI.
When applying for auto loans
In other words how much do you borrow monthly vs what you actually bring in.
Banks typically donât want to see you over a 36% DTI.
When applying for auto loans
Side note Iâve seen 800 credit scores be denied credit because they are over extended!
I would suggest to anyone bad credit or not that your monthly car note (insurance & payment) not be anymore than 15% of your net monthly income
While this may substantially reduce your budget it will also keep you in line for uncertain times like we are in right now
While this may substantially reduce your budget it will also keep you in line for uncertain times like we are in right now
Speaking with your lender & having an idea of their programs will help you when you reach out to a credit professional like @_creditqueen so she can understand what your exact goals are
If your too shameful to work with a professional than try DIY guide https://gumroad.com/l/STBeU
If your too shameful to work with a professional than try DIY guide https://gumroad.com/l/STBeU
If you have bad credit then you need to anticipate putting money down!
30% on a financed vehicle is a good rule of thumb if you are the average driver.
For example 15000
Would be 4500 down.. it may sound like a lot but understand you are trying to minimize the banks exposure
30% on a financed vehicle is a good rule of thumb if you are the average driver.
For example 15000
Would be 4500 down.. it may sound like a lot but understand you are trying to minimize the banks exposure
Couple of tips when dealing with LTV.
Credit unions are usually good partners here because typically they use retail value as their basis for LTV
You can also find a car with a damaged car history.
Usually those car are being sold for less than what the banks values them
Credit unions are usually good partners here because typically they use retail value as their basis for LTV
You can also find a car with a damaged car history.
Usually those car are being sold for less than what the banks values them
Generally speaking a damaged vehicle history can be a hit of 5-15% of its value.
You may also want to look for cars that have been on the lot longer than 60 days.
They are also usually discounted so heavily that it is below banks value
You may also want to look for cars that have been on the lot longer than 60 days.
They are also usually discounted so heavily that it is below banks value
Getting approved with bad credit is about positioning yourself as lower risk than what the score says!
You need to be on the right car (LTV)
Thatâs within your budget (DTI)
Skin in the game (down payment)
You need to be on the right car (LTV)
Thatâs within your budget (DTI)
Skin in the game (down payment)
