Sound familiar? Maybe not to you, but we hear it often. At WA Auto Credit, we help people with bad credit get approved for an auto loan to buy a car through one of our auto dealers. Obviously, if you have good credit you can pretty much buy whatever you want. However, if you have bad credit, your options are usually a little limited by the auto lender.

The Important Question: What do you want?

A few years ago, I had an applicant who was in his thirties and married with four children. His last vehicle had been repossessed (his forth repossession over the previous five years). The vehicle that had been repossessed was a nine year old regular cab pick-up truck, with over one-hundred thousand miles, and he still owed about nine-thousand dollars on it. His wife had a sixteen year old Buick beast of some sort that had just stopped running that day.

I will never forget this guy as he explained that he only had about one thousand dollars cash down which he had been saving for sometime. His situation was really bad, and simple things like running to the store to get some formula for the baby (babies) had become almost impossible.

Although he had over eight pages of credit, he had no credit score with having all eight pages filled with collections, charge-offs and judgments. He had two bankruptcies over the previous seven years along with his four vehicle repossessions. The poor guy couldn’t qualify for an auto loan from just about any bank or auto lender out there. He even had four different employers in the last year (although in the same field of work, and no he wasn’t a used car salesman). If it weren’t for bad credit, this poor guy wouldn’t have had any credit.

The dealership that I worked at did have a Guaranteed Credit Approval program. Despite his terrible credit and predicament, he qualified for the program. For sake of shortening this story, I won’t get into all of the program’s details other than the lender we ran this program through is real (not in-house financing) and does report ALL account activity to ALL the credit bureaus (important for rebuilding credit). So as far as the financing went – it wasn’t a problem for me to help him as long as we met the program parameters with his loan.

As good luck would have it, or so I thought, it just so happened that one of our dealers had just taken a minivan in on trade-in, that was about three years old with around forty-thousand miles on it. Additionally, the vehicle fit the loan program that we had for him (Higher risk lenders tend to like newer, low mile vehicles to lower the lender’s risk). In my naive excitement, I told him the “GREAT NEWS,” that his family (him, his wife and four kids) wouldn’t have to stand around at anymore bus stops. I would have him and his family driving home in a reliable, safe and comfortable ride just as soon as we could do the paperwork.

What’s the Problem? Everything Sounds Perfect…

He didn’t want a minivan – he said something like this: “I know I have bad credit, but I’m not going to buy something that I don’t want!”

What could he want? A car maybe?

No. He insisted on only buying a 4×4 SUV with three rows and twenty-two inch rims, (he actually said, “something sexy!”). He went on to say that he would rather take the bus then drive a minivan. His wife agreed.

Anyone who works in Secondary Finance, like we do at WA Auto Credit, runs into this type of situation fairly often. The problem is not that we couldn’t help this guy buy a vehicle. The problem is much larger than that.

I would think that if someone has bad credit, they would probably want to improve their credit, right? Additionally, if they do not have a car or are currently driving a higher mile, older, unreliable vehicle: they would be better off driving a newer, lower mile vehicle that you can rely on to get you to work and the grocery store, right? To me, it makes sense to do both things at once.

The REAL Goal

Obviously, your situation and/or credit is unique to you. However, those factors affect what type of loan your qualify for, which affects the type of vehicle you are qualified to buy.

It is very important to analyze your NEEDS vs. WANTS. Obviously, the customer from my story was thinking more about his wants (4×4 SUV that looks cool) instead of his needs (6 seat belts, starts when it is supposed to, get to work on time). Had the customer had $3000-$6000 for a down payment, we would have been able to help him get the SUV he wanted…even with his credit. Then again, he probably wouldn’t have just repossessed his truck if he had that kind of money laying around.

“I will just wait…”

What happens if you decide not to start rebuilding your credit with an auto loan? Time will pass.

You can pass that time improving your situation OR you can continue to hope, wait and wonder – and a year from now, your credit will look pretty much the same that it does today…and you will qualify for the same loans that you do today. We see it all the time. You do not want to be that person. Same credit, one year older.

What about Credit Repair?

Simply repairing your credit, or waiting for negative credit items to drop off your credit (7-10 years) is not going to change the fact that you have not “reestablished” your credit. Credit repair works great with an auto loan, but not all by itself. We even offer a free credit repair software program to our applicants (whether or not you choose to buy).

What Lenders Look For

When you apply for an auto loan, a prospective lender will review your credit worthiness as established on your credit bureau in combination with your income and residence situation. The lender will consider loans you paid well in the past, and credit items you paid poorly.

If your credit history is bad, and you have not taken out a reestablishing auto loan, you will continue to be classified as a “high-risk auto loan applicant”. In other words, time in itself doesn’t matter – it is what you do in that time that matters.

You need to show the lender that the “bad time” is over, and now you can pay your bills on time. Paying a major loan over a period of time is the way to do it. Going inactive by putting things off, or adding a “revolving credit card account” on your credit bureau will only make it more difficult in the future for you to obtain a loan. Not having active credit accounts can even result in you not having a credit score at all. Not only that, but revolving accounts lower your score as you increase your balance.

How We Can Help

We have Guaranteed Credit Approval, a program designed especially for people with poor credit or hard to prove income. This program is available to any applicant, even if you are considered “high-risk” by traditional lenders.

The lender will base the loan largely on the vehicle (loan collateral), the applicant (you), and the structure (down payment, term, etc.). We will need to prove your income and residence, to show the lender how large of a payment you can afford and where the car will be parked.

If you want help, all you have to do is apply for an auto loan with us, either online or over the phone. We can show you all of the vehicles that work for your loan. It is a much more efficient process than looking for the perfect vehicle at some dealer, only to find out you cannot buy it.

This could be your opportunity to reestablish your credit and show future lenders that starting today, you can pay your credit obligations on time.

What happened to the guy that wanted the “Sexy” SUV?

To the best of my knowledge, the applicant in my story didn’t get to buy that big SUV 4×4 with three rows and twenty-two inch rims. However, I spoke to his wife every couple of weeks or so over the following four months and during that time they never bought anything and still insisted on that SUV. The next month, their phone was disconnected and I never heard from them again…but I am sure their credit is much better now

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Shane S. Edwards

Approval Specialist
WA Auto Credit
www.washingtonautocredit.com
888-300-3502