1. Know your credit score.
Get a copy of your credit report. Review it for errors and make any corrections before you try and get a loan. If there are major errors in your credit report, consider delaying your application until the corrections are completed. This will make sure you keep the car dealers honest. If you desperately need transportation, try renting a car short term until your credit report is straightened out. You may actually save money on fuel, insurance and repairs by renting which you can add to your down payment.
2. Have an explanation for your credit issues.
Don’t be apologetic. Bad things happen to good people. Be specific about any problems or crisis that caused your problem. Let the bank know about any major upheaval in your life that may have led to your problems such as an illness or a natural disaster, like Katrina, or 9-11. Make sure that you can substantiate your claim.
3. Don’t lie about anything on the credit app.
Lenders will turn reject your loan if they find you lied to them.
4. Know your income.
Make sure you can prove what you make. Have your proof readily available.
5. Save your down payment.
More down means more car. Larger down payments can sometimes get a lender to view your application more favorably.
6. Know what the payoff on your trade-in is.
If you are trading in a car with a payoff, get a ten day payoff from the lender. If you have a warranty or additional policies bought with the vehicle, find out if you can cancel them. This will lower your payoff or entitle you to a refund after the vehicle is paid off.
7. Know what your car is worth.
Check out NADA or KBB first. Go to CarMax and see what they will buy it for. Use these figures to negotiate the best trade in value. Remember, If you get more than the payoff, that amount becomes down payment.
8. Buy what you need, not what you want.
Set realistic expectations. Don’t buy more payment than you can truly afford. Rebuild your credit first, than rebuild your image later.
9. Don’t be argumentative.
Nice people get better deals than people who give sales reps a hard time.
10. Try other sources to get a loan.
Check online. Lenders such as Capital One, HSBC, Roadloans, and CitiFinancial all have websites which let you apply direct to them for a loan. You may get better rates and terms from lenders online than from a dealer.
Check your credit union or insurance co. They may have a loan program or lender relationship. A good payment history with your insurance company may help you get a loan from their bank. Credit unions can sometimes do automatic payroll deductions, which guaranty you pay the loan, so they may be more receptive.
10.5 Don’t go from dealer to dealer.
Excessive inquiries can be a reason a lender declines your application.
BONUS HINT!
Don’t be misled by “Every application is accepted”
Just because a dealer says your application is accepted, that doesn’t meen that your loan is approved. Accepting your application means that the dealership will take your infomration to submit to a lender. It’s up to the lender to approve your loan application, not the dealership.
DOUBLE BONUS HINT!!
Adverse action notification under the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA) requires a creditor obligation to furnish certain information to a customer seeking financing
whenever a decision is made that is adverse to the customer. This means that a dealership must submit your application to a lender for adecision or THEY (the dealership) must furnish you with an Adverse Action Notice describing why THEY (the dealership) declined to approive your request for a loan, AS SUBMITTED. Unless the dealership has their own finance company, they are required by law to either submit your application to a lender or tell you what information the dealership has used in order to decline your request for credit. If a dealership dopes not submit your application, they may be in violation of these two federal laws!
