You’ve done all your homework.

You know your three FICO credit scores.

You determine that your highest FICO credit score is from Equifax (also known as your BEACON score).

So, you find a car dealer who uses your highest score (which increases your opportunity to get approved at a good rate).

You get to the dealership and ignore all the salespeople by going directly to the finance director’s office.

But as the finance director reviews your credit file in front of you…you can’t help but think something is wrong.

Sure enough…the dealer says your Equifax/BEACON score isn’t high enough for their lowest interest rate.

How can this be? You just checked your FICO credit scores through www.myfico.com/12 a few hours ago. It’s possible—although unlikely—the information on your credit report has changed and that your scores have decreased since you last checked them. Remember, your credit scores are dynamic and will change whenever information on your credit reports changes.

Your credit reports can change several times each month as new information is added or updated by your lenders. But more than likely, your scores wouldn’t change in this situation (especially if there were only a few hours between when you checked your scores and when the dealership reviewed your credit reports).

So, if your credit reports didn’t change, why is the finance director staring at your scores with such a discouraging face?

Car Dealers Can Use “Different” FICO Scores Than The Ones You See

The car dealer is probably using what is known as the FICO Auto Industry Option score instead of a traditional FICO credit score. You see, car dealers not only get to select the credit reporting agency they receive FICO credit scores from…they also get to decide if they will use a traditional FICO credit score or a variation of a FICO score called an Auto Industry Option score.

What’s the difference between these two types of scores?

Not a whole lot to most people…but there’s enough variation to make the majority of auto lenders use the Auto Industry Option score. The real difference between the two scores is that the Auto Industry Option score pays a lot more attention to how you handled previous auto credit.

- Have you made late payments on a current or previous auto loan or lease?
- Have you ever settled an auto loan or lease for less than you owed?
- Have you had a car repossessed?
- Have you had an auto account sent to collections?
- Did you include your car loan or lease in your bankruptcy?

Those actions will affect your Auto Industry Option score more than they’ll affect your traditional FICO score. Bottom line, if you handled your previous auto credit perfectly, you should have a high FICO Auto Industry Option score—that’s a good thing.

But what if you’ve had a few bumps in the auto credit road in the past? You guessed it…your Auto Industry Option score will be lower. You’ll be perceived as a greater credit risk and the auto lender may either deny you or use your lower score to justify charging you a higher interest rate.

You see, auto lenders are different than other types of lenders. And I’m not talking about their slimy ways, leisure suits, short ties, manly hairy chests, or gold bling.

A lot of other lenders look at your whole credit picture to determine whether or not to give you a loan. But many auto lenders care about only one thing…how you handled your past AUTO credit. That’s what a FICO Auto Industry Option Score gives car dealers—a way to pinpoint how you’ve handled what matters to them the most.

So, even if everything else on your credit reports went down the toilet after your bankruptcy, if you didn’t include your auto loan in your bankruptcy and never defaulted or missed a car payment, your Auto Industry scores will probably be better than your traditional FICO scores!

What a Former Auto Finance Director Revealed to Me

I recently spoke with a former finance director, and this is what she told me…

“So many people I have helped couldn’t believe their scores were so high with the FICO Auto Industry Option score. They had included all their credit card debt and their mortgage in their bankruptcy, but they reaffirmed their auto loan. What’s good about the auto score is that it truly helps the auto lender concentrate on what is important—how the customer handles his/her auto loans.

By our dealership having the auto enhanced FICO, it helped 30% or more of our customers get better rates.”

I don’t believe I’m going to say this, but I think I may actually have found something good to say about car dealers! Well, some of them, anyway…

As you can see, the FICO auto scores can work in your favor, if they are used correctly.

OK, I just wouldn’t be able to live with myself if I only said good things about car dealers.

So, in the interest of fair and balanced reporting, here’s how to protect yourself against slimy car dealers that can use your FICO Auto Industry Option
scores against you…

A Dirty Trick Car Dealers Can Play with Your FICO Scores

Let’s imagine your Equifax/Beacon FICO score is 585. Not too good. With a score that low, if you do get approved for a car loan, you’ll probably wind up with a high interest rate and high monthly payment.

So you go to a dealership and talk with the finance director and tell him your Equifax FICO score is 585. The finance director then reviews your FICO Auto Industry Option score. And, unknown to you, this score is actually higher than the Equifax/Beacon FICO score you pulled.

With this higher score, you’ll get approved at a better rate…right?

Not necessarily!

Here’s what unscrupulous car dealers can do. They won’t tell you that your auto score is higher than your traditional score!

They figure they have a sucker sitting in front of them. So they’ll try to get you financed at a higher rate based on the lower FICO score (thus making more profit for themselves).

How Some Car Dealers “Play the Spread” to Get You to Pay More

Now check this out…

It’s possible that a car dealer has the ability to pull your traditional FICO scores AND your FICO auto scores. That means they’ll have six scores on you. It’s a guarantee that some of those scores are going to be higher than the others. So which ones will they use when trying to get you financed?

It depends.

Are you familiar with the term “spread”? It’s how car dealers make money when they finance you. If they can quote you a higher interest rate than you deserve—then they stand to make a nice chunk of change from the bank that finances you.

The only way to make a killer “spread” is to make you think that you have lower scores.

So, what can you do?

Don’t despair…I can help you.

How to Use Your FICO Scores to Your Advantage when Buying a Car

Fortunately, you don’t have to fall for their dirty tricks. Now that you know all about FICO Auto Industry Option scores, you can protect yourself. Here’s what I suggest…

1. When you first walk into the finance director’s office, don’t tell him what your FICO scores are. Wait until he reviews the scores himself. Then ask him what your scores are.

2. If the scores he reviewed are higher than the ones you have, don’t say anything and just go by his scores.

3. However, if your scores are higher, then pull them out and show him. If he has a choice in the type of scores he can use, there’s a possibility that he’ll be able to use your highest score. And, it will let him know that he doesn’t have a fool sitting in front of him. He can’t take advantage of you!

How do you find out what your FICO Auto Industry Option scores are before you walk into a car dealership?

You can’t.

Sorry. They’re not for sale—at any price. Only lenders have access to them.

FICO would like to sell them…but there just isn’t enough demand. I mean seriously, up until you read this article, had you ever heard of the FICO Auto Industry Option score?

Exactly.

Remember, we were just given access to purchase all three of our traditional FICO credit scores on June 11, 2003 at 8:00 a.m. (I actually got misty that day…what a geek I am.)

Only a very small percentage of the population even knows they have three FICO credit scores…let alone three Auto Industry Option scores.

So How Can You Use This Information to Help You Get Your Next New Car Financed at the Best Interest Rate

1. First, get your three credit reports. If you handled your previous auto credit well—your FICO Auto Industry Option scores will be higher than your traditional FICO scores. So expect more from the lender.

2. You can also ask the lender to show you their tier levels. Tiers are basically charts lenders use that have different interest rates based on your scores. You want to see which tier your fall in. To see an example of an auto lender’s tier schedule, click here.

3. If they won’t show you…at least have them break it down verbally for you. (Personally, I like to see it with my own eyes, as I never believe a word that comes out of most car dealers’ mouths.)

4. If you’ve handled your auto credit poorly…then you should simply try to find an auto lender that uses just the traditional FICO credit scores. When you find a lender that uses a traditional FICO credit score, you’ll have your best chance to get the lowest interest rate.

5. Start by calling dealerships and asking the finance director if they use a traditional FICO credit score to make their lending decision or if they use the FICO Auto Industry Option score.

These steps will get you headed in the right direction. This won’t be easy, as a lot of car dealers use the FICO Auto Industry Option score.

Stephen Snyder is the founder of the After Bankruptcy Foundation a non-profit organization that provides free bankruptcy recovery information He has helped thousands of people get a car loan after bankruptcy by showing them how to increase their credit score.

But you’re different. You’ve worked hard to improve your credit score by making sure you’ve paid all major credit cards on time every month without fail. But consider this: could a late payment to the local video store rental club unravel all you’ve achieved?

A record number of credit card companies have built “universal default” clauses into their agreements, which allow them to raise your interest rate if you’re late making a payment — even to someone else!

Is there such a danger lurking in the fine print of your credit card contract (blithly referred to as “the agreement” by the companies)? Is there a nasty surprise waiting inside your next monthly credit card statement?

Lately, news reports of more and more people becoming aware of the so-called “universal default” clause buried in the fine print in their credit card agreements; becoming aware not because they were curious about this heavy-handed new trend, but because they have been personally affected by the clause — a clause that sometimes spikes the monthly revolving interest rate up as high as 30%!

How could this happen, you say? Well, some credit card companies — apparently on a new search to implement new fees to increase corporate profits — have introduced this onerous high-interest penalty on their customers.

Is it fair? Not in the minds of those affected — and certainly not to those who have never even missed a payment due date with that particular company!

See, the universal default clause could affect you if you so much as get a late medical bill (which is a common occurance since hospitals in our part of the country are notorious for having outdated billing systems).

The trend is definitely on the rise. A recent survey detected nearly 4 out of 10 credit card issuers report that they apply the rule to their customers, even if those customers had no late payments on their own card! (How’s that for “customer service” ?!?!)

It could affect you if your credit score slips due to a late car payment, or a late utility bill, or a number of other reasons that you probably won’t know about until it’s too late and you’re faced with loan-shark-level interest rates on your total balance. It could involve a late phone bill or a forgotten $15-a-month book subscription service — easy to forget, yet hard to swallow when the higher credit card interest kicks in.

It’s a shame that these companies take advantage of the very people who are contributing to their record profits by basically playing hardball over trivial payments, especially when these payments do not affect those companies’ stream of regular payments in any way. They can profess that such behaviours present an unacceptable credit risk for their shareholders. But they should be ashamed of doing this to ordinary, hardworking middle class people who are struggling to make ends meet.

Three solutions come to mind:

(1) Get rid of debt now. Make the decision to read over the free information on this website and do whatever it takes to eliminate the balances on these credit cards, and once they are paid off, call the company and close the account.

(2) Be careful to make all your future payments on time, and aim to make them BEFORE they are actually due.

(3) Carefully, cautiously, painstakingly, read, read and re-read all future (even current) credit card agreements you are affected by. I’ve noticed a few of my card issuer’s have included new terms and agreements in recent credit card statements that specifically tell me they DO NOT follow this practice — but then go on to alert me to other penalties I could face if payments are ever late.

The solution for me — and hopefully for you — is to develop a satisfactory, working system to track all your debts, pay your bills on time, and take steps to reduce debt through the tips found on this website and at others. We’ve tried our best to link to good quality resources to help you in your quest.

There is a great new book we’ve come across, “Solve Your Money Troubles: Get Debt Collectors Off Your Back & Regain Financial Freedom” written by Attorney Robin Leonard and published by NoloPress, that offers a comprehensive solution to getting your finances in order. It’s a great resource.

Paul Richard, executive director of the San Diego-based nonprofit Institute of Consumer Financial Education was recently quoted as saying:

“Universal default complaints are definitely on the increase — at a disturbing rate. More than one-third of major credit card issuers now say they act on these clauses regularly.”

He added that many consumers were still unaware of the dangers because they either don’t read or don’t understand the credit card agreement. I, for one, would like to add an “Amen” to this last reason, as the language of these agreements seem like you’re signing away ALL of your rights!

Scott Bilker, author of “Talk Your Way Out Of Credit Card Debt” reports a growing number of credit card companies check your credit file at regular intervals, and if you’re late paying any other bills — not just theirs — they raise the low interest rates enjoyed at the beginning of your cozy credit relationship you started with them, and, in many cases, double or triple what you are charged to carry a balance!

Credit card firms have ways to review your credit report monthly, quarterly, even yearly. It is also true that some companies never do this (yet!). Experts note that customers who have made late payments on their accounts in the past can expect to get reviewed more often than those who always pay their bills on time.

The real worry growing is that this default clause can do lasting, unexpected damage to your FICO credit score in ways most people have never imagined. Sometimes it could happen at the worst possible time, like right when you are planning on buying a new car or a new home. Problem is, at the time negative marks appear on your credit report, the scores will drop, the damage is done, and only the passing of time and intensive effort on your part will be required to start the process of improving your credit history all over again.

More questions you need to ask yourself:

Do you carry a large credit balance? Transfer to a low fixed rate card that does not include the universal default clause buried in the fine print. If you are unsure, call the issuing company and ask.

Do you know what’s happening with your accounts? Review them carefully. Read over each bill when it arrives in the mailbox, check its due date, pay the bill RIGHT THEN, or mark on your calendar when to mail it (we recommend mailing it ONE WEEK BEFORE THE DUE DATE or else making the payment online THE DAY BEFORE IT IS DUE. For added safety, you can pay about 60cents at the U.S. Post Office to have your credit card check signed for. If you have 5 or less bills you pay this way every month, that would only add up to $36 for the year, and you’d have written proof as to when those payments were received if a dispute ever arose.

Do you know how to file a dispute with the companies you do business with? We are rapidly leaving behind the days when you can call up and ask for forgiveness for a late payment, it just doesn’t work well these days. But if you take action promptly to work out something with your lender or with your credit card issuer, then perhaps you have a chance to avoid these incredibly high interst rate surcharges. Don’t avoid the problem and wait to deal with it until after your account has been sent to a collection agency. By this time, your credit score is probably doomed to deflate.

Do you have lists of your credit cards, balances, limits, interest rate and payment due dates safely tucked away where you can quickly find them? Get your financial house in order and come up with a master bill paying list to help yourself track which payments are due when. Usually, this is pretty easy, since most payments fall due on the same day of each passing month. A cheap calendar ought to work in a pinch.

Is the timing of your payments creating a hardship? If you are paid twice monthly, and your payments all come due at once in the month, perhaps you need to get in contact with your credit card companies and ask them to have your due dates changed to help you make the payments on time. I’ve found that most firms appreciate such a proactive approach and will do what they can to accommodate you.

Do you pay your bills ON THE DAY THEY ARE DUE or do you allow proper time for mail delivery? Maybe you can give yourself a comfortable cushion by paying your monthly bills when they arrive in your mailbox instead of piling them up on your counter or in a drawer in your desk and paying them when they are due. We all get busy. It’s easy to forget a due date every now and then if the information isn’t right in front of you. Better to keep the reminders in plain sight than to hide them away. Even better: write out the check the very same day you receive the bill, put in in the payment envelope with receipt, and place these in a hard-to-miss place in your home (perhaps under a magnet on your refrigerator?) No, you don’t have to mail the check until it’s due and you have the funds in your checking account (Never pay a bill until the money is in your account!!!), but getting into the habit of writing your bills out ahead of the due date will help you from falling into the late-pay trap.

Do you pay bills automatically by electronic draft or through online bill pay options? If not, consider experimenting. I used to say I’d never do this, but for the past 2-3 years, I don’t think I’ve paid for a stamp to pay credit card payments. I’ve always paid my bills online. It’s easy, and you can tie your payment schedule to e-mail reminders.

When you apply for a new credit card, do you read the fine print? Yes, those new juicy zero-interest intro offers look good at first, but you might be stepping into a financial landmine if the terms don’t offer you some protection from things like the universal default clause we’ve discussed here today. Never let your guard down and forget the fact that you are entering into a legally binding agreement… one that could cost you dearly if you’re not careful.

Steve Johnson is publisher of http://www.FindHow2.com, which offers free advice on cleaning up your credit report to help improve your FICO credit score, as well as numerous free “how-to” articles on debt management, refinancing loans, and saving money.

A: A private investor is an individual who lends out their own funds to borrowers who are unable to obtain a loan from a traditional lender such as a bank. It is also possible for private investors to pool their money into a fund that lends out money on a larger scale. Private investors are often wealthy or retired individuals who want a better return on their investments than they could expect to make in the stock market or other investment vehicles.

A private investor is essentially the same thing as a hard money lender. A private lender differs from a subprime lender in that the latter still funds loan through a lending institution such as a bank, although the interest rate is higher than a traditional conforming loan.

Q: Why would a bad credit lender fund my loan when traditional banks would not?

A: Hard money lenders, sub prime and bad credit lenders are often referred to as “high risk lenders.” These lenders have a unique understanding of specific types of real estate situations and markets. As long as the lending situation fits into the lenders comfort zone, they will usually make the loan. It isn’t that a bad credit lender gravitates towards overly risky loans or situations. Rather, there are additional safeguards in place for a bad credit lender. Namely, a borrower must have a 20% or higher equity stake in a property to qualify for a bad credit loan — the loan is therefore secured by a larger property ownership portion than many traditional loans.

In addition, the bad credit lender receives a higher rate of return than a bank would with a traditional conforming loan. The greater the risk for the lender, the higher the interest rate for the borrower. If one or more traditional lending institutions deny a borrower’s loan because of credit problems or a small level of liquid assets to use as collateral, a borrower will need to apply with a subprime, hard money or bad credit lender.

Q: If I qualify for a hard money loan, is there a way to eventually work into a normal loan?

A: Of course. A bad credit loan should be a short term loan – anywhere from several months to 2 years. After a borrower has spent a year or 18 months paying off their private loan, our mortgage team will try to transition you into a subprime or alt A loan. Hopefully, this is enough time to rebuild your credit and get on a more stable footing financially.

Q: What kind of financial documentation does a borrower have to show to qualify for a bad credit loan?

A: While the type of documentation needed to secure a loan will vary from lender to lender, most require either bank statements or income tax returns. The lender will usually need to see an appraisal of the property, as well as the title to make sure that the borrower is indeed the owner and to see if there are any existing liens or legal issues with the property in question. Each bad credit lender will analyze the necessary documents and then decide whether to provide the loan.

Q: What if I have damaged or bad credit as well as a low FICO score?

A: The majority of bad credit borrowers apply for a bad credit loan due to damaged credit along with a lower than normal FICO score The whole point of hard money or private loans is to provide a loan to an individual with past, recent, or current credit issues so they can rebuild their credit and eventually refinance to a more traditional type loan.

Q: What is my FICO score and how can I find out what mine is?

A: A FICO score is a basic credit score that estimates the creditworthiness of a borrower and is used by financial institutions to determine credit limits and interest rates. FICO scores are held by the three major U.S. credit agencies (Equifax, Experian and Trans Union) and all vary slightly depending on the formula used to generate the score.

FICO scores range from about 300 to 850. A score above 720 is considered to be “good credit,” while a score below 600 is considered to be fair to poor. Conforming lenders want to see a credit score of usually 640 and higher. High risk lenders will look at credit scores as low as 500, as long as the borrower has 25% or higher equity in a property for collateral.

Q: How do I Apply for a Bad Credit Loan?

A: Do a search on the internet for “bad credit loans” or “bad credit lenders” and will find different bad credit lenders that offer bad credit loans in various states. Then either call them and explain your situation to them or fill out their short online application to be considered for a hard money loan. Be sure to read the language of the loan documentation carefully to protect your self from predatory lending.

Corey Senn is a Senior Partner with Bad Credit Lender, a California based private lender that specializes in hard money loans and bad credit loans. Located in La Jolla, California, Bad Credit Lender provides competitive private California hard money loans, bad credit home loans, and bridge loans. In addition, Corey is one of the main contributors to the California Home Mortgage Loan web blog.

The companies generally do not look at the actual credit report. They just look out for the credit score. In fact they receive the credit score from any of the three major national credit depositories – Equifax, Experian and TransUnion. Credit scoring is a method to determine the likelihood that credit users will pay their bills.

Credit scores are prepared by analyzing a borrower’s credit history. The factors considered while calculating a credit score are:

• The duration for which credit is used.
• The amount of credit used versus the amount of credit available.
• Record of whether payments are made in time.
• Employment history.
• Length of time at present residence.
• Negative credit information such as bankruptcies, charge-offs, collections, etc.

Now the insurance score is based on the FICO score. It is a credit score developed by Fair Isaac & Co.

Raise the FICO score: One can raise the FICO score over a period of time through the following ways:

• Pay your bills in time. Late payments can have a serious impact on your score.
• Reduce your credit-card balances. If you are “maxed” out on your credit cards, this will affect your credit score negatively.
• If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
• Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.

Insurance score: There is another concept called insurance score which also plays an important role in determining the cost of insurance. An insurance score predicts whether a person is likely to file a claim in the future. This helps the insurance companies to determine the amount of premium to be charged. An insurance score is a numerical ranking based on a person’s credit history. It predicts the average claim behavior of a group of people with essentially the same credit history. Typically a good score is assumed to be above 760 and a bad score is below 600. People with low insurance scores tend to file more claims. But there are exceptions. For example, It has been found that teenagers as a group have more accidents than people of other age groups. But there are some teenager drivers who never had an accident.

Insurance scores do not include data on race or income because companies do not collect this information for insurance. Insurance score is not much concerned with the tendency to take a new credit. Instead it focuses on the issue of stability.

Studies have shown that how a person constructs his financial planning is a good predictor of insurance claims. It is accepted that people who manage their finances well can also manage other important aspects of their lives, such as driving a car. The factors such as geographical area, previous crashes, age and gender, insurance scores collectively enable auto insurers to price more accurately, so that people less likely to file a claim pay less for their insurance than people who are more likely to file a claim. Insurance scores are useful to the insurer to differentiate between lower and higher insurance risks people and thus to charge a respective premium.

There exists a kind of debate regarding the use of insurance credit scoring. Insurance companies claim that the use of these scores helps them to issue new and renewal insurance policies based on objective, accurate, and consistent information, better anticipate claims and better control risk. This enables them to offer more insurance coverage to more consumers at a fairer cost.

Opponents of insurance credit score argue that companies can use insurance credit scores to non-renew coverage regardless of whether a claim has been filed or premiums have been paid in time and that credit scoring focuses on a consumer’s economic status. People with poor credit scores sometimes pay 4 to 5 times as much as the other consumer.

One aspect of insurance score is very important. While it is easy to obtain the credit score, it is difficult to get the insurance score. There is no hard and fast rule on the part of companies to hand it over and most companies don’t.

This article may be freely republished in any electronic media provided author biobox and the links are kept as it is.

Evan T. Smith is a contributing author to the Insurance Discussion Board.

Chances that you are getting Bad credit car loans are extremely bright. Banks, credit unions, finance companies all are providing loans for bad credit. People who would not qualify for bad credit car loans just five years ago can now easily meet the criteria.

When a borrower has bad credit, it will be a good start to begin with credit report. Every borrower is assigned credit score based on his performance with previous loans. It is a three digit number that most of the lenders use to evaluate the risk while lending you car loans. Each one of the credit bureaus – Equifax, Experian and Trans Union will have a copy of your credit report. Most lenders use Fico score which ranges from 300-850. Fico score 580 -500 and less means bad credit. This means you are heading for bad credit car loans. Now knowing your credit score is important for many lenders can take advantage of your ignorance.

Okays, assuming that you do know your credit score – let’s talk about bad credit car loans process. There is not much difference, yet there is a significant difference. Interest rates and down payment is the place where real difference shows. Interest rates with bad credit car loans will be higher as is the case with any bad credit loan. So there is no escaping that. Interest rates for Bad credit car loans would vary with credit score and will range from 5%-26%.

Down payment depending on the severity of the bad credit can range from 20%-50%. Bad credit car loans are short term loans. A down payment is a good way of negotiating bad credit car loans interest rates in your favour. Even small down payment can open some seriously good options for bad credit borrowers. Bad credit loan term will range from 2-5 years. Extending it further won’t be beneficial in financial terms.

Not every loan lender will be offering bad credit car loans but there are lenders who are ready to take the risk. You will find many lenders offering bad credit car loans. Therefore, it becomes necessary for you to search. There are many lenders who would make false claims. Look around for interest rates and terms offered. Compare the various bad credit car loans and then opt for the best one.

The best way to protect your investments is knowledge. An uneducated lender will always pay more for bad credit loans. First know the real cost of the car you want to purchase and add the dealer’s profit. This will be the bad credit car loan amount you will be applying for. Make sure you can afford it. Just because you can get bad credit car loans doesn’t mean you have to take it. If you have hesitations regarding repayment refrain from borrowing until when financial condition is better.

With Bad credit car loans there is an added benefit. Bad credit car loans are a great tool to rebuild credit. If make no faults with your bad credit car loans then they can actually improve credit. Your performance with bad credit car loans is bound to shine in your credit report if it is good.

Many borrowers who think that with bad credit they have no options and have to take whatever they are offered. This of course is not true. There are many options available with bad credit car loans. Therefore look around carefully. You will find that the search is worth it. You will save a lot in the long run. Plan ahead when you are looking for bad credit car loans and you are bound to find a bad credit car loan that places you behind the wheels you want.

Few identifiers are necessary to identify your kind of loan. An unprepared borrower might find it very confusing to get out of the jargon of loans in UK. A loans borrower/user demands for timely, reliable, accessible, comprehensive, relevant and consistent loan service.Pamella scott is constantly trying to help you find such a loan service online.To find Secured loans,secured personal loans,secured debt consolidation loans in uk that best suits your need visit http://www.easyfinance4u.com.

People with bad credit, often find it difficult to finance big name purchases such as homes, cars, furniture, appliances, etc. Having repossessions, bankruptcies, charge-offs, liens or judgments on your credit report identifies you as a credit risk and creditors are likely to be reserved when, it comes to extending you credit.

These obstacles however should not prevent you from owning what you need. Yes, it is true that you will probably have to make your purchase at a higher interest rate than someone with a good FICO score and you will have to shop around longer to find reasonable interest rates – but all is doable. If you have bad credit and your are trying to purchase a car, follow these guidelines and will drive off the lot in your own car:

Get your credit report

If you suspect that your credit leaves something to be desired, the first thing you should do, is understand your credit situation and how creditors view you. The only way to do this, is to get a copy of your credit report. Get your free credit report to find out your credit score.

Once you get your credit report, inspect it to ensure that all details are familiar and that they are no red flags. If you find any discrepancies, you will want to immediately fix any errors, as this will probably raise your FICO score and help you in your quest to purchase a car.

Financing before shopping:

Before you start shopping for a car, shop around for financing through companies, who specialize in servicing bad credit auto loan consumers. It is important to do this before you go to the car dealership. The excitement of test driving a nice car and the sweet tongues of smooth car salesmen will have you driving off the when you haven’t even secured financing. This is a big mistake because you should never take possession of a car until everything is in writing. Tricky salesmen will sometimes goad you into taking possession of the car before all contracts and financing are finalized. Once you have taken possession of the car, they will call you and tell you that the financing did not go through and then slap you with a higher interest rate.

You can shop Online and at larger banks or smaller local banks. Each of them have their own advantages. Online vendors and larger bank may have a whole departments totally decided to people with credit issues and so they will be very familiar with your situation. A smaller bank is likely to consider a car loan on a loan by loan basis. Walk into your local bank and sit down with a bank officer and explain your situation face-to-face. They are more likely to give you a loan once they understand your predicament. Also a face-to-face meeting will allow you to explain any discrepancies on your credit report.

An Online loan or bank loan is preferred because these companies will not take advantage of the fact that you have poor credit by raising the price of the car, giving you a low trade in value or adding unnecessary extras like credit insurance and extended warranties.

Dealer Financing

If you are not able to secure a bank loan, your only choice is dealer financing. This is not a bad thing. You can still find a decent interest rate. The most important thing to remember here is not to get blinded by the interest rate. Some tricky dealerships might give you a low interest rate but hike up the price of the car or give you a low trade in value.

Access the list of lenders, who specialize in bad credit car loans and reviews on each lender at www.poorcreditgenie.com

It will save you time and frustration—but more importantly, it will help you avoid credit inquiries that may lower your FICO credit scores up to 12 points per inquiry.

Step 1 in making a lease or buy decision is to determine a lender’s credit guidelines.

You start by asking if they lend to people with a bankruptcy. If so, on what terms?

That’s right. You have to be upfront that you’ve filed bankruptcy. Don’t hide it. We have to face the fact that some dealers just won’t work with people who’ve filed bankruptcy. So our job is to find the ones that do.

Some lenders will only lease to people with a bankruptcy. Others will only offer purchase financing. Yet still others will only lend using a hybrid of the two—this is especially common in Texas.

Ask the finance director at the dealership to direct you as to what structure the manufacturer prefers.

And here’s a quick tip for you: if your bankruptcy doesn’t appear on the credit report your lender pulls—then, in the eyes of the lender, you’re not bankrupt.

The only lenders I would consider using are:

- First choice: Captive lenders (car manufacturers)

- Second choice: Banks (not finance companies)

- Third choice: Credit unions

Ninety-nine percent of the cars I’ve leased over the years have been with captive lenders. Just one was leased by a bank.

That particular deal came from a conversation I had with Amy, the finance manager at the local Land Rover dealership here in Indianapolis. I told her I was open to her financing recommendations, but I preferred financing through the car manufacturer.

I told her my current FICO scores. She immediately said that with my scores she could do better through a local bank. I signed a credit application and told her to go for it.

The next day I signed a lease agreement with that local bank. Being open to her advice literally saved me hundreds of dollars a month on that car.

So be flexible…but be careful. It seems most car dealers call all of their funding sources banks. When in reality some are banks, some are credit unions, and most are sub-prime finance companies.

Here is a list of some of the most commonly used sub-prime auto finance companies:

1. HSBC Automotive

2. Capital One

3. AmeriCredit

4. WFS Financial

You want to pass on the sub-prime finance companies—unless you have exhausted all other options. Sub-prime lenders should be your last resort.

And only use credit unions if they report to all three national credit reporting agencies. How do you find out if a credit union reports to all three credit reporting agencies?

Simple—you ask. Ask the branch manager at the credit union if they report. And after you get the loan, check all three of your credit reports and make sure their trade line appears on each one.

The three worst luxury captive lenders to lease or purchase from after bankruptcy are:

1. BMW

2. Mercedes

3. Porsche

The three worst mainstream captive lenders are:

1. Honda

2. Kia/Subaru

3. Toyota

What makes these the worst?

Once these lenders see that you’ve filed bankruptcy, they are less likely to work with you. However, if they are willing to work with you, they’ll want you to be at least several years from discharge and have perfect credit during that time.

Now that I told you how bad the above six lenders are—there are times where they may offer you good deals. For example, if one of the above happens to be the biggest dealer in your area, they may be able to offer you special deals that a smaller dealer can’t.

Of course, things change all the time with captive auto lenders. They change their credit guidelines on a whim to meet their own financial goals. So, it’s always a good idea to at least research these dealerships—just don’t get your hopes up too high.

OK, so you’ve done your research and narrowed down your choice to one or two car manufacturers.

Step 2 in making a lease or buy decision is to purchase your FICO credit scores.

It’s important you have your most recent scores when you talk to car dealers (just like I did with Amy). It puts you in charge.

When you enter a dealership with your FICO scores, the dealer will know you’re a more informed consumer and cannot be taken advantage of. Just know that the FICO credit scores auto dealers use are a little different than what we see as consumers. The scores the dealers review are called FICO Auto Industry Option Scores. The good news…these FICO scores may be higher than your normal FICO scores if you paid all previous auto loans as agreed.

Some car dealers have told me that if your FICO scores are higher than the scores the dealer reviews—they may even use your scores to get a better deal.

You can buy your scores from myFICO.com.

Step 3 is to interview the remaining car dealers on a deeper level.

Start by asking them these questions:

- Which credit reporting agency do you use to make a lending decision?

- What is your minimum credit score requirement to get approved?

- What credit score is needed to get the best interest rate?

- Do your lenders prefer offering lease or purchase financing to a bankrupt debtor?

- What incentives are there to lease or purchase right now?

At this point it’s important to remain open to either leasing or purchasing. Evaluate your options and incentives. Remember, you’re buying the financing. In other words, the most important factor is the willingness of the lender to loan you money.

I personally view the lease versus buy decision in three ways:

1. If you’re recently recovering from bankruptcy, the only thing that matters is if you can get approved at an interest rate you can afford through a lender that reports to all three national credit reporting agencies. So you should only consider lenders that are bankruptcy friendly.

2. Once your credit scores begin to increase, you can start selecting cars based on which credit reporting agency the lender uses to determine if you qualify. Obviously, you should choose the lender who uses your highest FICO credit score to make a lending decision.

3. When your scores are high enough…or two years have passed after your bankruptcy…or your bankruptcy doesn’t appear on the credit report the lender uses, then you can choose almost any car you like. But make sure you still do your research and use your credit scores to help you compare interest rates, terms and incentives.

Stephen Snyder is the founder of the After Bankruptcy Foundation a non-profit organization that provides free bankruptcy recovery information He has helped thousands of people get a car loan after bankruptcy by showing them how to increase their credit score.

So you go to the local car dealership and believe the salesman when he says…

“Buy this car today at this high interest rate and we’ll refinance you in 12 months at the lowest interest rate possible.”

Recovering from bankruptcy is easier than you thought! Time to celebrate, right?

WRONG!

Don’t Believe Everything a Car Salesman Tells You

Every day car dealers repeat the “refinance in 12 months” lie to bankrupt people to push them to purchase cars at extremely high interest rates. You may have financed a car through a high-interest lender knowing that it’s not the best choice. But you probably thought it was your only option at the time and you justified it by thinking you could refinance to a lower interest rate later.

But, when you try to refinance the car months later, you find out the car dealer lied to you.

Best Way to Refinance a Car After Bankruptcy

The first thing you need to determine is whether you qualify to refinance, or if you’re better off just selling or trading-in your car. So let’s start with how much your car is worth.

The biggest mistake most people make when determining the true value of their car is they base their research on the private party value. You need either the trade-in or dealer retail value.

Here’s how to get the value of your car…

Step #1: Go to Edmunds.com. I think Edmunds is one of the best all around automobile sites on the web.

Step #2: When you get on the front page, click on “What’s your car worth?” It’s written in small type and a little tough to find, but it’ll be somewhere on the main page. Or you can go straight to the Used Car Appraiser.

Step #3: Follow the steps and click on the make, model and year of your car.

Step #4: Fill in the vehicle details and any optional equipment your car has.

You’ll see three different values for your car: Trade-In, Private Party and Dealer Retail. The two values you need to pay attention to are Trade-In and Dealer Retail.

Some lenders base their refinancing on the trade-in value and others on the retail value. Ideally, you want to find a lender that uses the retail value, as it’s always higher.

Now that you know the true value of your car, the next step is to call and get your loan payoff from your lender. Loan payoff is what you still owe on the car.Getting a hold of your lender may be tricky. If you’ve defaulted on the loan, your auto lender may cut off all communication with you. So, if you’re having a tough time getting through to your lender, ask for the collections department. They’re your best bet for getting through to a live person.

Ask what the payoff on your car is. If you’re leasing the car, be sure to add the total remaining payments, residual amount and any early termination fees the lender requires so you get the true payoff amount.

Now subtract the value of your car from the payoff amount.

Do you owe less than the car is worth? If so, great…you’ll have more choices and options.

What to do if you owe more than your car is worth

If you owe more on your car than it’s worth (commonly referred to as being “upside down”) you need to dig a little deeper.Now that you know what your car is worth and how much you still owe on it, it’s time to start calling lenders.

Credit unions and banks are the best sources for refinancing your car. Car manufacturers rarely refinance—unless it’s for a luxury car. Just make sure the lender you use reports to all three credit reporting agencies. I talk about the importance of reporting to all three agencies in Life After Bankruptcy Issue #12.

The four most important questions to ask lenders when you’re about to refinance your car

The four big questions to ask each lender are:

1. “Do you refinance based on the trade-in or dealer retail value of the car?”
2. “What percentage over retail/trade-in value will you lend?”
3. “Which credit reporting agency do you use?”
4. “What FICO credit score do I need to be approved for refinancing?”

Keep in mind that lenders who refinance usually will lend no more than 125% of the trade-in or retail value. The average amount a lender will refinance is 110%. This means that if you’re upside down on more than 10% of the value of your car, you’re going to have to come up with the difference before the lender gives you the loan.

If you want to figure out how much you’ll need to borrow from a lender to refinance, download the free Auto Refinance Worksheet™ and I’ll walk you through the calculation process.If you’re not in a position to refinance right now, you have another alternative—trade in your current car for another one with a manufacturer’s rebate.

The Power of Manufacturer Rebates

A lot of new car manufacturers offer huge rebates to move new cars out the door. There’s a big incentive for a dealer to sell a new car.You need to locate the highest rebate offer you can find and work toward trading-in your car to eliminate any upside down situation.

Before you go to a new car dealer, go to www.edmunds.com and look up the rebate and interest rate on every new car and truck a manufacturer offers. This way, if the car salesman isn’t being fair with you (as far as rebates and interest rates are concerned) you’ll know.

Just go to Edmunds.com and click on “New Cars” and then on “Incentives & Rebates” and you’ll get all the information you need.

Some Car Manufacturers Offer Rebates Up to $6,000

It’s not a good situation to be upside down on a high-interest car loan that you need to refinance. However, you can get around it by purchasing a new car with a large rebate. You just use the rebate to offset the amount you owe on your old car.

And if you find a car with a higher rebate (highly recommended), you’re in even better shape. If the rebate is high enough, it can eliminate your negative equity and you can use any remaining amount as part—or maybe even all—of your down payment.

So, if you’re $6,000 or less upside down, you can still come out smelling like a rose if you play your cards right.

Ask the car salesman this magic question…

In addition, don’t be afraid to ask the car salesman this important question: “What car or truck on your lot do you need to sell immediately?”

If you’re in a negative equity situation (meaning you owe more than the car or truck is worth) you need every advantage you can get your hands on. Ask the auto dealer to sell you the oldest car in their inventory.

Car dealers are willing to take a loss on vehicles they’re having a tough time selling because it costs them more to keep these cars on the lot compared to selling them right away at a slight loss. This could mean another $500 to $3,000 discount for you!

You still need a high enough score to qualify

Bottom line: the higher your FICO credit scores are—the more options you’ll have and better terms you’ll receive. That’s why we’re always preaching to increase your credit scores.

Stephen Snyder is the founder of the After Bankruptcy Foundation a non-profit organization that provides free bankruptcy information and recovery steps. Stephen also writes a free weekly newsletter on bankruptcy recovery.