Credit Problem Car Loans

A damaged credit score and a bad credit history will always create problems when attempting to lease a car. Many people have frequently frustrating experiences when trying to get a loan or a lease for a car. Especially when the financial crisis is decimating company after company. Many banks and other credit and financing companies have tightened the policies of loans or lease acquisitions, and way more careful when dealing with “substandard” borrowers that have bad credit scores. In case you’re having trouble with the payments on your car, try as much as possible to hold on to it, because if you loose it, it will be nearly impossible to get another lease since your credit score will be irrevocably damaged.

On the other hand, car manufacturers and car dealers are highly competitive and some of them quite desperate to get some business going, so they might be willing to take some extra risks in dealing with bad credit.

Usually people that are classified as “substandard” credit holders will pay a higher interest rate, they are expected to make a higher down payment, or even a security deposit for those that are aiming for car leasing. Even car insurance could be a problem at some point, therefore is always advised to check your credit reports for possible mistakes and make sure that it contains only accurate data.

You need to make a thorough analysis of your credit situation. In case you have bad credit, you must know why that happened or how bad is it. Because not all bad credit situations spell failure. For example 2-3 late payments on an account may not be so bad compared to a recent foreclosure. Some problems may need a little tweaking. If you have a good history in car payments, that can be a big advantage despite having payment issues on other debts.

When you head for a car lease or a car loan, the car dealer or financing company will acquire a credit history report along with the score which can be received from each of the three major credit agencies: TransUnion, Experian or Equifax. That history report contains all your current credit accounts, possible loans and leases, other loans and mortgages including ones that you’ve had in the past. It will show eventual missed payments, or the ones that were late, the company you were paying, how much it was or, how frequent were the delays.

Know that car dealers don’t have time to take each customer in check and scan his entire credit history, therefore they simply ask for your FICO score. That score is a single number that represents your credit history. This score measures how “solid” is your credit history and it can find itself between 300 and 850. Each customer that comes with a score of over 680 is considered a “prime” customer and will receive the best possible rates on any lease or loan. The customer’s score is below 640, he is downgraded as a “substandard” and he may have complications, from getting the worst rates to not getting a lease at all. For example if you have a credit score below 500 you can kiss the idea of a loan goodbye.

The best idea for a bad credit case is to seek out companies that specialize in “sub-prime”. Since the car dealer and its associated credit company are not the only possible source, you can always head on to more conventional lenders like CapitalOne, Chase or Wells Fargo which can help you despite your bad credit history.

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