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6 Steps to Fix Bad Credit

Fix Bad CreditWe live in tough economic times. No matter how often the media tells us the economy has bounced back, there are a lot of folks out there suffering under the crushing weight of bad credit. Having non-ideal credit can damage your ability to buy a house, a car, and even in some cases get or maintain a job. If you have suffered credit problems, you are not alone. The good news is that bad credit can be fixed. Here are a 6 steps to fix bad credit  to put you back on the road to success.

Know Your Credit Report

Obtain a copy of your free credit report from annualcreditreport.com and review it carefully for errors and other problems. You might be surprised at the mistakes you find on your report: well over 2/3 of all credit reports have errors that can easily be repaired.

Get Right with Creditors

If you are behind on any payments, work hard to get current. Remember that keeping your payments current always results in a better score. Many creditors are more than willing to work with you to arrange a new payment schedule to help get you current and in good standing. For others, credit counseling agencies can help.

Secured Credit Cards

Secured credit cards are one of the best kept secrets in the industry. These cards require a security deposit, which determines the amount you can spend on the card. Once you have secured this card, make small purchases with it every month and immediately pay them down. This is a great way to rebuild credit.

When you have good enough credit, upgrade to non-secured cards and maintain the same practice: small purchases, paid off promptly.

Avoid Closing Cards

Do not close out your current credit accounts, and do not let them languish unused. Both of these create a negative impact on your report. It is unfortunate that the more credit accounts you have, the harder it may be to maintain positive credit. Still, maintain your accounts. Talk to your creditors about perhaps switching to more advantageous terms on your various cards.

Limit Inquiries

Every credit inquiry you make will damage your score. Make sure that if you are shopping for a loan, you do it in a small and targeted period of time. When you get a loan, do not look for more credit for at least several months. This way you will keep your credit history strong and clean.

Stay on Top

Above all else, stay on top of your credit report and credit score. Continue to monitor your expenses and use of credit moving forward. Stay on top of all of your payments and keep your score clean and clear. This requires discipline and diligence, but many people find that when they get their score clean they can increase it to levels that far outstrip many who have always had good credit. This happens just by being responsible.

Do you have any tips or ideas on how to fix bad credit? Leave a comment below and let us hear your thoughts!

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Can You Get an Auto Finance Loan Post Bankruptcy?

Rebuild Your Credit with Your CarAfter the 2008 mortgage crisis, society became more understanding to the fact that anyone can fall upon tough times. The event triggered a global recession and helped lessen the stigma of defaulting on loans.

Debtors can still feel as if they have no hope of getting an auto loan once they have decided to file for bankruptcy. Fortunately, finding a loan after bankruptcy is possible. It only requires some searching and some careful monitoring of your finances once you secure a loan.

Where to Find a Loan Post-Bankruptcy

New auto lots and franchise banks are less likely to give you a loan after declaring bankruptcy. When they do, you may abide by strict repayment terms and have high interest rates.

Typical rates hover around 4-5 percent for those that can find them. After declaring bankruptcy, you may see a lot of offers easily doubling these amounts. Try to avoid interest rates 15 percent or higher if you can help it; these may hurt your ability to rebuild credit.

Another option for finding a loan is to visit your local credit union. They are typically more generous and understanding to those who live and work in the community.

Outside of credit unions, there are smaller lending institution that specialize in car loans or loans to people with troublesome credit history. Always try to review and compare terms with these organizations since you will have many options at your disposal.

BKCarFinance offers a unique auto financing solution for people with bankruptcies or other credit problems.  Our integration with bad credit car financing companies provides the opportunity to receive up to four loan offers from the privacy of your home.

Any lender is likely to be more favorable to the idea of lending you money if your financial troubles did not stem from missing car payments.

Using a Car Purchase to Recover from Bankruptcy

Once you are able to secure a car loan, you are in a great position to rebuild your credit. Making payments on time will demonstrate fiscal responsibility and a dedication to fixing your blemished past. Here are even more ways to help you stay on track:

  • Find a reliable used car with mileage lower than 100,000. These will be cheaper and easier to secure financing for.
  • Make as large of a down payment as you can. This tactic will help reduce your interest rate.
  • A cosigner can help you get better loan terms, but make sure it is someone you trust.
  • Set aside savings for several payments in advance if possible. This strategy will help you avoid missing payments should you suddenly become strapped for cash.

Refinancing Can Help

Once you have made payments on time for six to eight months, your credit score may have improved. Refinancing after this period will help reduce your interest rate and get better loan terms.

Just like with finding your initial car loan, shop around for the best deal when refinancing.

Compare the fine points such as interest rate, loan terms and monthly payment amounts. Try to arrange a large enough monthly payment to be comfortable for your situation while still clearing the loan away as quickly as possible. Calculating the total amount you will spend on the loan including interest will also let you get a “big picture” assessment on how helpful a refinance plan will be.

These strategies will aid you in your mission to get back on the road. If you are careful with your spending and make your payments on time, your car purchase can be a foothold towards establishing better credit and leaving your troublesome past behind you.

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What You Need to Know About Car Refinancing Loans after Bankruptcy

car refinancing loansWhile everyone who wants a car is aware they can find an auto loan to help them pay for it, many people are not aware of what exactly car refinancing entails. Refinancing is a powerful tool to help you manage an existing auto loan. Knowing about what it does and what it can accomplish is important for harnessing its helpful potential.

The Refinancing Process

When you refinance, you are basically seeking out someone to pay off your existing auto loan and give you a new one. The refinancing lender will take care of the remaining balance on the loan you currently have and then offer you a completely new line of credit with a new set of terms and conditions.

Here are some of the top reasons people refinance:

They Got a Bad Loan

Whether they were pressured into an unfavorable loan by a car dealer or they simply were not aware of how burdensome a loan would be, some people end up strapped down by bad auto loans. These loans can have harsh repayment schedules, unfair payment amounts, unreasonable interest rates or all of the above.

When you refinance, you get the chance to throw the baggage of a bad loan out the window. Shopping around for the best refinance rate and terms means you can get out from underneath a toxic loan and get back on a path to repayment.

Their Credit Improved

Your credit score is a large determining factor for your interest rate. If you have an improved credit history or have been making progress in the past year or so, you just might have a big enough credit score increase to get a better interest rate.

The National Interest Rates Changed

Lenders set their rates according to how the national economy is doing, especially the rates set by the Federal Reserve Bank. When the reserve cuts interest rates or several large banks change their lending policies, the interest you get on an auto loan can reflect this difference.

They Want to Pay the Loan Off Quicker

Some people end up doing well on their auto loan and want it paid off quicker than they initially expected. While they could just add to their payments every month, having a set payment schedule is helpful for keeping on track. A refinanced payment schedule could also gear more money spent every month towards the principal balance rather than just interest payments.

Trouble Making Monthly Payments

Personal finances can be a delicate matter. A number of mistakes or miscalculations could place someone in danger of defaulting on their auto loan. This can create a huge blemish on their credit history.

Many customers use refinancing to keep afloat. Refinancing can give them lower monthly payments. They can also be placed back on track if they were behind on their personal finances.

If any of these situations apply to you, refinancing could be your best option. You get the chance to wipe your old loan clean and start again on a new one that will hopefully place you in better financial standing.

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Not All Online Car Loans are Created Equal

blog-bkf-not-all-online-car-loans-are-created-equalTaking out an online car loan involves no small amount of personal responsibility. One should always review loan terms carefully and assess one’s own financial situation before coming to a firm decision.

That being said, some auto loans actually are too good to be true. They may have requirements lurking in the fine print that are almost impossible to detect at a glance, or they may even be intentionally dishonest.

Spotting trouble lenders can help spare your credit and your personal sanity. Here are some red flags to help you avoid certain types of online car loans.

Ridiculous Interest Rates

A reasonable interest rate on a car loan will be between three and eight percent, on average. Some loans will try to stick you with sky-high rates as much as 30 percent. No matter how much incentive they give you, you should never agree to a loan with this rate.

Even if a high interest rate is not stated outright, it could still exist in a roundabout way. A common tactic for unscrupulous lenders is to offer zero or low interest for the first several months, but then hit you all at once with the back interest.

One of the biggest reasons online car loans became so popular is because they would offer interest rates far lower than most institutions. Read the fine print carefully and make sure that you are getting an interest rate that benefits you. Otherwise, you are better off going to a regular bank.

Overly Long Payment Plan

Even with low interest, a car loan that is drawn out over a long period of time will end up costing more than could be anticipated. Experts like Clark Howard recommend sticking to a loan that lasts 43 months or less. With a longer loan, you can end up with monthly payments that barely scratch the surface of the principle while piling on the interest.

This horrible scenario is referred to as an “upside down car loan,” which refers to a car that is worth less than what is owed on it.

Go ahead and plug in the numbers when you see any loan terms offered. Try to figure out the resale value of your car by the time you are done paying off the loan and see if you will still end up in the hole. Owing thousands of dollars on a car that is not worth as much can be quite a disheartening situation.

Weird Fees or Requirements

Some lenders will try to disguise the revenue they get by avoiding discussion of fees until the very last minute. Most loans should not cost much to arrange; the interest is how that company is getting paid. Avoid any sort of loan agreement that feels the need to tack on any unreasonable extra fees without a good explanation as to why.

Likewise, some lenders may try to include hefty penalties for delinquency as part of their loan terms. While one should always ensure that they can keep up with payments, having a company crossing their fingers so they can take you through the cleaners is another matter.

The bottom line is to not fall victim to enticing offers if the basic terms will not work out in your favor. Do the math to figure out which loans will benefit you the most from a purely financial standpoint, and ignore everything else. With enough hard work and careful assessment, you can find an online car loan that will work in your favor.

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Types of Bad Credit Car Loans

car loan applicationIf you do not have an impressive credit history, you can still qualify for a bad credit car loan. Many banks, car lots and other lending institutions offer special plans for financing a vehicle that do not require a high credit score.

If your FICO credit score is below 640, then consider the following bad credit car loan options:

Manufacturer Loans

It may come as a surprise, but the same financial institutions that service the dealerships who turn down people with bad credit may also be able to make some exceptions. Certain auto manufacturers’ in house finance divisions can make concessions for customers with subprime credit ratings.

These loans typically only apply to new vehicles, but they can possess favorable terms such as low APR- even if the loan payment is stretched out over five years.

Many customers get to take advantage of these offers in order to secure a new car. In fact, Dodge reports that 20 percent of their customers are considered subprime. Here are some other manufacturers that offer special financing:

  • Dodge
  • Chrysler
  • Fiat
  • Hyundai
  • Mitsubishi

Local Lenders

If you have been denied a loan by a larger institution, seek out local banks, credit unions or other financial institutions to see if they can give you a break.

A local branch or affiliate of your bank may be more forgiving in terms of auto loans if you have a checking account with their bank and a credit history. Credit unions in particular encourage economic development of their area, meaning they have a vested interest in giving loans to members of their local community.

Dealer Financing

If the banks, the manufacturer and most everyone says no, you can usually find a dealership that will finally say “yes” if they offer Buy Here Pay Here auto loans.

These loans are provided directly by the business and are backed by another bank or financial institution. They often do not even require a credit check to begin the process. The dealer will review your income history and offer you a loan on vehicles that they think will qualify for your budget.

Be sure that you review the terms of any loans, as payment consequences for Buy Here Pay Here loans tend to be quite strict in order to protect the dealer from customers who may try to abandon their loans and keep the vehicle.

Special Finance Lenders

Outside of banks, manufacturers and dealers, some companies also offer loans that specialize in helping customers with subprime credit ratings. Many of these companies can be found online. They are usually dedicated to securing bad credit car loans for people that have no other option, or for those who do not want to encounter the hassles of auto loans like they have experienced in the past.

Other Strategies

Sometimes, proper tending and managing of your credit can improve a lender’s outlook on your history. Do yourself a favor and personally review your credit history to make sure that what a lender is telling you and what is actually on paper for your FICO score are the same thing. 

You may also discover errors in your score that can be addressed. Getting these false claims off of your credit report can sometimes cause it to become positively readjusted after 30 days. 

Other methods can involve closing out unused credit accounts, resolving debt for high APR lines of credit, or resolving discrepancies from creditors that may be inaccurate.

If you properly tend to your credit and seek out help from those who won’t turn down a subprime customer, then finding a loan for the vehicle you want can be a tangible reality.

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Secrets for Getting a Low Rate Car Loan

BKcarfinance Industry SecretsInterest rates fluctuate wildly in today’s economy. One day, you can get great prime rates, with the next, rates a few points higher. When you are financing a car, you want to get the best rate possible, and there are several secrets you can keep in mind to ensure you get the best rate.

 Go For Fixed Rate Loans

Sometimes, lenders will try to talk you into getting a variable rate loan, pointing out that with these types of car loans they can get you a very low initial rate. This is often true; however, in the long run you will pay as the rate can change every month. What began as a 4% interest rate can end up being 11% or higher down the road. It is almost always better to go for a fixed rate that may be a few points higher. This way you know that your interest rate will always remain the same.

 Loan Principal and Term Matters

Sometimes taking out a larger car loan will get you a lower rate. Lenders do this to tempt buyers into borrowing more money. However, when you take out a large loan, you may end up paying out the same even though your interest rate is lower. This is because your loan term will likely be longer, meaning that even at a lower rate, you accrue more interest over the longer period.

 Clean up Your Credit Rating

Watch your credit rating closely, and do whatever you can to clean up black marks on your credit report. The better your credit rating is, the better your interest rate will be. Take the time to get a free copy of your credit report from the three major agencies and review it closely. Clean up what you can and you will improve your interest rate.

 Choose the Right Car

Buying a high-cost new car may carry a lower interest rate, but again, you will be borrowing more money, often at a longer term, which may balance out in the end. A used car, on the other hand, may carry a loan rate that seems a few points higher, but will be a lesser amount of money, allowing you to pay it off quicker and consequently pay less interest.

 Choose a Reputable Lender

This may seem obvious, but many people overlook it. There are a lot of predatory lenders out there who will go after people with poor credit, and hit them with high interest rates. Banks, credit unions, and auto dealers often partner with lenders that are in a position to offer better rates. Just because you have bad credit doesn’t mean you shouldn’t go for prime lenders.

In the end, clear up your credit, and go for a short-term loan with a fixed rate through a reputable lender, on a less expensive car, and you will find yourself paying less interest over time.

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Can You Keep Your Car If You File for Bankruptcy?

keep your carBankruptcy is a word that makes people shiver. It’s a nightmare, akin to admitting failure. However, for many people, it also offers a clean slate, a way out from under crushing debt and a chance to start over and do things right. Still, bankruptcy carries with it a number of scary problems.

 

Loss of Assets

Not only does bankruptcy take up to ten years for it to come off of your credit reports, in some cases you have to sell all your assets to pay portions of your bad debts. Your car, unfortunately, is considered an asset and your car loan must be included in the bankruptcy. So what if you need your car to get to work? What if you still intend to continue your payments?

 

Reaffirmation Agreements

If you want to keep your car this is possible, but you will need to sign what is known as a Reaffirmation Agreement. This agreement is a contract you establish with the court, which states that you intend to keep and maintain a debt that the bankruptcy otherwise would’ve cleared.

 

If you want to keep your car in a bankruptcy, you will likely need to sign one of these agreements. In fact, without it, some lenders will outright repossess your vehicle. Others will still allow you to make payments, but will cease reporting to the credit bureaus unless you fail to make payments, meaning that while usually “good debt,” your car loan will no longer help you improve your credit score. This is often the case, however, even with a reaffirmation agreement, so you need to carefully weigh your options.

 

Should You Sign?

There are several factors that come into play when determining whether you should sign a reaffirmation agreement. The first, obviously, is to assess whether you can actually make the payments. If you’re filing bankruptcy it’s probably because of financial distress.

 

The second is, do you need your car or is it just sentimental? If you’ve got a good public transportation system, you might be able to go awhile without a car while you rebuild your credit.

 

If you can still make payments and you determine you actually need the car, assess the amount you still owe and how long you’ve got left to pay. If you’ve only got a couple years left on your payments (2 or less), and have a low balance on your loan, it might be worthwhile to sign the reaffirmation agreement.

 

Keeping your car after filing for bankruptcy is a tricky situation, and a decision you must make carefully. Do not view it as an opportunity to rebuild credit, be sure that you can make the payments on your car loan, and that you really need the vehicle. Otherwise, it may be better to let it go.

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Your First Post-Bankruptcy Car Loan

Just because you filed for bankruptcy doesn’t mean you can’t get a post-bankruptcy car loan. The first time you finance a big purchase after filing its-possiblebankruptcy is a major challenge that many people encounter every day. Bankruptcy, after all, pretty much destroys your credit and hangs with you for a long time. How can you get someone to lend you money for car financing, for example, with a bankruptcy filing marring your credit report? The good news is, it’s possible.  You just need to keep a few important strategies in mind before diving in, and you’ll find that re-establishing your credit is within your grasp.

 

Know Your Priorities

You may really want to dive in and buy a brand-new, high-end car. The truth is, that may be the kind of thing that got you in trouble in the first place. Obtaining car financing depends on being able to prove that you are responsible beyond that bankruptcy on your reports. Go for the least expensive car you can that will still be reliable. That’s your priority—reliability, not luxury.

 

Find the Right Deal

Take the time to search for the right option. It can be tempting to grab a car for $2,000 that will get you where you need to go for a year or two, and then do the same thing all over again. This results in a string of “drive it into the ground” purchases which can be a vicious cycle of you paying for repairs that you might not pay for if you can afford a car for $10,000 that you’ll be driving for five years. Know your budget and get the best car you can for what you can afford. While you don’t want to go for all the bells and whistles, you don’t want to skimp on quality, either.

 cost_vs_worth

Work on Your Credit

Obtain a new credit card—there are secured credit cards that you can use specifically to rebuild your credit rating by making small purchases that you immediately pay off in full. This will help you to build a new, good credit history which is a must for getting any kind of decent deal on car financing.

 

Do Your Research

This is the best advice that is often ignored. Call a number of dealers in your area, explain your situation, and ask if they’ll finance you. Then get them to give you a straight answer about the terms of the financing before you ever let them run a credit check on you. Don’t let them look into your background until they’ve told you they can get you a loan. This may take a long time and require many calls, but it will be worth it in the end.

Just because you have a bankruptcy doesn’t mean you can’t finance a car. You’ll need to carefully strategize your purchase and work on your credit, but if you know your priorities and are willing to be patient and research, a new car is within your grasp.

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Getting a Car Loan after Bankruptcy

Bankruptcy can be a stressful headache. Nobody declares bankruptcy because they want to—you ended up in a situation that you couldn’t escape without help, and bankruptcy cleared many, if not all, of your bad debts away. The problem is, now it will haunt you for up to ten years, and you need a new car to get to work, so you don’t get into even more trouble. How can you do this without good credit?

Fear not—financing a car after bankruptcy isn’t rocket science. It requires many of the same steps as getting a loan on good credit. Here are some things to keep in mind when you go to purchase a new or used vehicle.

Car Loans Are Secured

Car loans tend to be easier to get than personal loans because they are secured. This means that you are borrowing money against the car itself—if you don’t pay, the lender takes the car and sells it to recoup their funds. This may sound scary, but it’s very standard regardless of your credit history, and once you pay off the car, it’s yours.

This means that while your interest rate may be a bit higher than those of people with good credit, you may be surprised that dealers can still finance you.

Buy What You Can Affordsensible-car

Don’t go after a Jaguar or a Corvette. This should be common sense. If you are coming out of bankruptcy, target a vehicle that will be economically sound, reliable, with good gas mileage and will get you where you want to go. Look at compact cars and other economy models. Not only will these cars be more affordable, lenders will see this as a responsible decision.

Examine Your Options

There are a surprising amount of options out there these days.  Don’t jump to agree to the first offer that comes along. In fact, beware of early offers, especially those that cater to people with credit problems. These offers will be at severely sub-prime rates and you can end up paying exorbitant interest rates on your loan, which could result in you getting in over your head in debt all over again.

Get quotes from several companies, and look at places like your personal bank or a credit union, if you belong to one. These places may be willing to overlook prior credit problems in favor of your personal relationship with the institution. Peer-to-Peer lenders, who are individuals that direct loan money, will also listen to personal stories over credit history.

Take time and do your homework. You may find there are better options than you realize.

 

 

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Bankruptcy Doesn’t Have to Control Your Car Buying Future

Bankruptcy Doesn’t Have to Control Your Car Buying Future

Financial difficulties happen to all kinds of people. No matter whether you’re good with money or struggle to keep up with piling bills, with today’s economy, there’s no guarantee that you won’t face ever rising credit card debt that negatively impacts your credit score or a bankruptcy that can impact it even more. Life happens, and it can often be discouraging when you don’t have the credit to make the purchases you need to make. Most people realize that buying a new or used vehicle is next to impossible with bad credit. If you’ve been through a bankruptcy, even if you need a used vehicle, it may not even cross your mind to attempt to make a purchase of a vehicle because you think there is no way you could acquire car financing for your purchase with your current credit score.

Don’t fall into that way of thinking. You need a vehicle and life’s hardships don’t change that. In fact, life’s hardships often make having a vehicle more of a necessity. The only thing that can help your less than perfect credit score is paying off your debt, and the surest way to do that is to have a steady flow of income. Unless you work from home, a vehicle is vital to your well-being. What if you have children? How will you get them to school and picked up each day?

Financial hardships can make walking into a car dealership and driving out with a financed vehicle difficult, but not impossible. You just need a lending solution from a company that understands that hardships happen and that your need for a vehicle doesn’t change just because your financial situation does. The great news is that even if your credit score has been hurt by life’s circumstances, you still have options if you’re in need of a vehicle. You don’t have to let bankruptcy determine your car-buying future.

BKCarFinance is a company that specializes in bankruptcy car loans for people who have bad credit due to bankruptcy and trying to acquire auto financing in order to purchase a vehicle. We understand that life sometimes suddenly brings difficulties and financial hardships into our lives. We also understand that you need all the help you can get to keep your life and the lives of your family afloat as you’re recovering from a past bankruptcy. You don’t need the hassle of not being able to get financing to purchase a vehicle.

BKCarFinance has partnerships with several bad credit card finance companies, and they will work with you to help you secure financing for a vehicle purchase with one of these companies. In fact, you could receive up to four loan offers from the privacy of your own home. After you fill out our secure online application, one or more of our direct lenders will contact you with your loan decision within minutes. If your credit situation is more difficult, it could take a few hours. You’ll have the opportunity to compare loan options and make the best choice for your situation.

If your credit has been impacted by bankruptcy, whether it’s a Chapter 7 bankruptcy or a Chapter 13 bankruptcy,  BK Car Finance is dedicated to helping you find the vehicle financing you won’t find anywhere else. Fill out our application today, and you could be approved in minutes.

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