There are a number of things to consider if you are looking for auto loans for bad credit. Unlike conventional car loans, bad credit car loans have a number of basic requirements that must be met in order to qualify for one. One other thing: don’t fall for the web sites that tell you all customers will qualify. If these sites are working for legitimate lenders that will help you reestablish your credit, there are always minimum requirements that are required from lenders including income, age and citizenship as well as employment.
The first requirement is income. For most auto loans for bad credit, the lender will require a minimum monthly W-2 (regular employee) income of $1,800 if your credit score is less than 640. This figure is for your gross income, meaning the amount you are paid before withholding and Medicare/social security taxes are taken out. Lenders are looking for this minimum so that you can afford a car payment and full coverage insurance in addition to your other bills.
This income requirement is, if you will notice, for W-2 employees. This means that your employer furnishes you with a W-2 income form at the end of the year that reports your wages. If you receive a 1099 form (which means you are an independent contractor) or you are self-employed, the situation becomes much more complicated. Due to current economic conditions, most bad credit lenders will not accept anything other than W-2 employees. Those lenders that might consider self-employment income will only do so with three previous years of income tax statements that have been professionally prepared. You may even be required to furnish bank statements to support your stated income.
The next requirement is your employment, itself. As a rule, most auto loans for bad credit lenders will require at least one full year with your current employer as well as three years of verifiable employment history.
A third requirement is your age and citizenship status. All auto loans for bad credit applicants must be at least 18 years of age and U.S. citizens. There are no exceptions to these two rules.
The next requirement has to do with the status of any bankruptcies. Again, as a rule, most lenders will require that all Chapter 7 bankruptcies be discharged. If you are currently in a Chapter 13, you must be at least half way through and obtain an order to incur additional debt through the court (this is accomplished through the trustee).
The final requirement has to do with vehicle repossessions. You need to know that all lenders will look at any repossessions in your credit history. If you have any within the past year, they/it must be included in a bankruptcy (this includes voluntary or involuntary repossessions). If you have a repossession that occurred before or after your bankruptcy, you will not qualify for auto loans for bad credit.
That pretty well sums up the basic requirements. If you have any more questions, there are a number of legitimate web sites where you will find additional information on auto loans for bad credit as well as an SSL-encrypted application that you can fill out in the privacy and security of your own home. These sites have helped thousands of qualified applicants with bad credit obtain reliable transportation and reestablish their credit at the same time.
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