Poor Credit Car Loans – Helping You Get Into the Car of Your Dreams

If you have poor credit scores, it can affect your ability to borrow all kinds of essential items including a home mortgage, credit cards and even your next auto. Poor credit scores may signify your inability to repay a loan to a finance company, and it makes you appear to be a greater credit risk. Even with this obstacle, if you are in the market for a new car, you may be able to obtain a car finance loan even with problem credit scores.

Determine Your Credit Score
Assessing your credit circumstance is an important initial step. Experts suggest you order a copy of your credit score report from every of the three major credit report score bureaus: TransUnion, Equifax and Experian. Review your credit scores to see where you stand. Generally, anything over 700 is considered great credit score eligible for the best finance terms. If your score is under 500, you can need to spend some time correcting your credit report score before a bank will lend to you. If you notice any inaccuracies on your credit score report that may be dragging your scores down, send a certified letter to each of the reporting bureaus to request correction. Request an updated report reflecting the corrections.

Poor Credit Score Loans
Even if you do have poor credit, many financial institutions and automotive finance companies specialize in loans for consumers with damaged or less than perfect credit scores. Some online companies specialize in connecting consumers with finance companies that offer financing for both used and new cars even if you have had a history of late payments, judgments, liens and even bankruptcy. You may also be able to take out a loan even with less than perfect credit from your local credit union. You must be aware that you will in all probability be required to pay a higher interest rate on the loan due to your poor credit scores. Some lenders may also charge added fees on the loan to help cover their costs in case you default. Many consumers with poor credit are looking online for their car finance needs. With an online lender, you are more likely to receive a favorable interest rate on your car loan and have fewer requirements.

Refinance Your Car Loan
Once you are able to get a car loan, even if you pay a high interest rate, you may be eligible to refinance that car loan down the road and dramatically lower your monthly payments. Make sure you make all of your payments on time for at least six to 12 months. After you have established a solid history of payments, you may apply for a car refinance loan. A refinance will assist you in reducing your monthly payment by lowering your interest rate or shortening the term you are paying. A car refinance will also allow you to build equity in your car loan faster helping you pay the car loan off quicker.

You can find more information about car loans and car refinancing online at OpenRoad Lending. There you will find useful tips on negotiating with the dealer and a helpful auto finance calculator to support find out the monthly payments.

Creative Financing – Financial Tools and Ideas – Part One

PROBLEM

In the recent past-the past twenty-five years or so-banks have been the primary source for real estate financing. Over a much longer period of time, other sources of financing supplemented the banks, and in many situations replaced the banks. These other sources were, at one time or the other, primary sources of financing; their use and importance ebbed and flowed; the determining factor as to which source of financing to use, was the balance existing between the supply and the demand for financing and the willingness of the banks to loan. If the banks said no, then a substitute had to be found.

Presently, bank financing has all but disappeared for many transactions that previously automatically applied for and a received it. The challenge and the problem that we face today is: how to do real estate deals without the normal availability of bank financing.

SOLUTIONS & IDEAS

1. Assumption of the existing mortgage loan on the property

Ask the lender holding the existing mortgage note to allow the loan to be assumed and agreed to be paid by the new property owner. Many existing mortgage loan documents contain a “Due on Sale clause. This clause gives the lender the right, but not the duty, to call the entire balance of the loan due in full if the ownership of the property changes. In today’s environment, with millions of defaulted loans and millions of delinquent loans, lenders are not actively seeking to create more of the same. In many cases the lender will approve the assumption of the loan by the new owner; this results in the new owner effectively obtaining bank financing!

2. Wrap-Around of the existing mortgage loan on the property

This is a follow-up step to number one above. After obtaining permission from the existing mortgage lender to assume and agree to pay its loan, a second mortgage loan can be created that “wraps-around” the existing first mortgage loan. Example:

$300,000 property value

$200,000 existing 1st mortgage loan

————

$100,000 equity

$ 50,000 cash down payment from purchaser/new owner

$ 50,000 new 2nd mortgage carried by seller

The new 2nd is created in the amount of $250,000 ($200,000 existing 1st plus $50,000 new 2nd). Its terms spell out that it consists of two parts-the existing 1st and the new 2nd-and that one payment will be made to the seller/2nd mortgage holder that consists of the amount due on the 1st plus the amount due on the 2nd. It becomes the holder of the second’s duty to pay the 1st mortgage loan and to account to the buyer that the 1st is being kept current. Once again the result is that of obtaining a bank loan for the amount of the 1st and structuring the payments from the borrower to all go to the seller in order that the seller knows that both the 1st and the 2nd are current.

3. Traditional 2nd mortgage loan on the property

This is a follow-up step to number one above. Example:

$300,000 property value

$200,000 existing 1st mortgage loan

————

$100,000 equity

$ 50,000 cash down payment from purchaser/new owner

$ 50,000 new 2nd mortgage carried by seller

The new 2nd is created in the amount of $50,000. Its terms spell out that it is in a junior position to the existing 1st mortgage loan. The borrower has the responsibility of making two separate monthly payments-the 1st mortgage payment and the 2nd mortgage payment. The seller-holder of the 2nd-is depending on the borrower to keep both loans current.

The fundamental benefit of these tools is that an existing bank loan is preserved and re-used rather than being repaid. In these examples $200,000 of bank financing is used to facilitate transactions that possibly could not have occurred without it. The goal of and the reason for creative financing is to cause real estate transactions to happen that might have failed if they depended on only traditional bank financing. Thinking “outside of the box” is the key concept. Thinking of ways to do a deal after the bank says no is not optional in today’s financial environment, it is mandatory for survival!

In subsequent articles we will explore additional creative ideas and tools that are required to do real estate deals today.

How Low Doc Car Loans Can Help the Self-Employed

Traditionally, when it came to applying for finance, the self-employed person was significantly disadvantaged. With financial and income documentation playing such a significant role in the approval process, this often meant that sole traders were unable to provide financial institutions with the paperwork required to obtain a loan. Luckily for those people who are self-employed, lenders have finally realized the deficit in this area and they have really worked hard to open up the market for this group of people. This has been achieved through providing a wider range of low doc car loans especially designed for individuals who don’t have the supporting documentation required to obtain a conventional car loan.

So, who can apply for low doc car loans? Essentially, low doc car loans are designed for anyone that does not have the income documentation to support a traditional loan application. These loans are especially useful for sole traders, contractors, independent consultants and anyone who is engaged in changeable employment. For many years these people have experienced great difficulty when it came to getting finance, as they found themselves in a situation where they had difficulty showing proof of a stable and long term personal cash flow. Low doc car loans make it possible for anyone without evidence of long term earnings, to purchase a vehicle under finance.

How do low doc car loans work? They work like any other auto loan, except for the fact that very little paperwork is required. The one catch with low doc car loans however, is that slightly higher interest rates are generally applied. But, if you are in a position to make repayments that are above the minimum scheduled amount, then you will end up paying your loan off sooner, saving you money in interest and the higher rates of your loan will barely be noticeable.

When it comes to obtaining a loan that requires fewer documents, the most important aspect of your financial status that a lender looks at before deciding on whether or not to approve your application, is your credit history. Providing you do not have a bad credit history, you will generally be in a good position to be granted these types of loans. Lenders who deal in low doc car loans usually require bank statements as proof of your capacity to repay the loan, and when these statements satisfy their lending criteria, then low doc car loans are an easy and quick way to get you into a new vehicle.

Perhaps one of the most frustrating aspects of being self-employed is when it comes to getting finance. You may be confident in your abilities to afford such a loan, but convincing a lender can often be difficult without the paperwork to prove consistent and ongoing income. If you are in a situation where you know you can afford to make the repayments on a loan but just have difficulty in providing the proof of your earnings, then low doc car loans can certainly put you on a more equal platform to wage earners, when it comes to getting finance.