I know this may be a thought running through your head as you start this journey to rebuilding your credit and getting back to the good score you once worked so diligently to have. I want to give all of you who are reading this some quick tips and some clarifications on what your next steps are going to look like if you are needing to make a car purchase in the present or near future. (And no offense to the person reading this that still drives a 1993 Geo Metro)
What sort of price range or type of car should I be considering when rebuilding my credit?
Most people think they need to look for a super old 100k mileage plus car that they can finance. WRONG!! The bank or lender is going to prefer you to stay with a 2-3 year old car with low miles. That doesn’t mean go pick out a 2 year old Lexus for $55,000 Crawl…Walk…Run Find something under $20k that you can get back on your feet with.
Should I get pre-approved?
Often times it is a good idea to shop a loan by getting pre-approved with a lender like Capitol One or Wells Fargo. Of course if you went through foreclosure with one of them, they may not consider you for a new loan for a while. However, if you go this route you will probably get a blank check in the mail that you can spend up to a certain amount. READ THE INSTRUCTIONS Carefully!!!! There are parameters and guide lines that need to be met on these types of loans.
Example:
No cars older than 5 years back.
No cars with more than 75,000 miles.
Not valid on Kia, Suzuki, Oldsmobile etc. due to the fact of low re-sale value.
Must be less than 100% of Retail Value including taxes etc.
This is where it is a good idea to find a great Sales Professional that you can trust to help navigate these waters.
Date the car don’t marry it
Don’t think this is the car your are going to keep for the next 5-8 years. The loan you are about to use to get this car is going to be at a higher interest rate than if you had perfect credit. If you are looking at a car that fits in your budget but you are not all that excited about the color or features, don’t freak out. Use this opportunity to re-build. Keep the vehicle or loan only 12-24 months and sell/trade it in on something else. A 24 month perfect payment history will do wonders to the old credit score.
Use your Brains!!
Look online and shop smart. Dealers often times use intimidation and fear to generate sales. There are hundreds of dealers in every market that all have nice cars and they all use the same banks to get the deals approved. Don’t feel obligated to sign paperwork if you are getting the wool pulled over your eyes. Negotiate the price up front and then have them work on getting your loan worked out if you don’t have a pre-approval. If you start getting the run a round, go somewhere else. They will change their tune by the time you make it to your car door.
Rates are Cheap!!!
You may or may not have noticed that money is super cheap right now. (what does this mean?) This even goes for people re-establishing their credit. A few years back a typical rate for somebody coming out of a Bankruptcy was 18%-24% I have seen on multiple occasions rates between 9%-15% on fresh out of Bankruptcy. Shop online for your loan. www.capitalone.com/autoloans/ www.wellsfargo.com Check with your bank or credit union you bank with. Sometimes they will be the best way to go based on your relationship with them.
You can do this!
Remember that your money and business is just as good as somebody with perfect credit. Matter of fact it may be worth more. You deserve to be treated with respect and integrity, if you feel you are getting anything less go somewhere else. Trust me in this day and age, Dealers can’t afford not to have your business. Be patient, you may have to provide much more documentation to prove income and verify employment etc. Don’t feel bad, lately this has been a typical precaution most dealerships are implementing with even the most qualified buyers.
So remember if you are licking your wounds from a previous financial meltdown event, don’t freak out! Get online with a lender and get your budget worked out. Then hop on over to a autotrader.com or a cars.com and get shopping. Our economy needs you!! 
Jim Cook
Director of eComm
Nelson Auto Group
