Things You Should Never Do When Applying For Auto Loans With Bad Credit

When applying for auto loans with bad credit there are many things you can do to increase your chances for approval, but there are also a few things that will automatically get you turned down. Here is a list of things you should never do.

1) Do Not Over Estimate Your Income- Sub prime lenders have very strict “debt to income” guidelines that they have to follow. If you over estimate your income your loan will get declined in the verifications process. All sub prime lenders at some point will request a recent pay stub and will verify your job by phone with your employer. If your not sure what your gross monthly income is always estimate low on your application, if it turns out to be more during the verifications process that’s all the better.

2) Do Not Over Estimate Your Residence Time- Most lenders will want a 5 year residence history. Stability is very important to a lender when deciding whether or not to approve a loan. When you indicate to a lender how long you have resided somewhere they need to know that you truly do live there or have lived there. Most lenders will require you to produce some type of proof of residence; examples of this would be a recent phone bill, utility bill, or even a copy of your lease. Sometimes people make the mistake of listing a long residence time because they have lived in the same area for a long length of time. Again this will come out in the verifications process. Always be accurate about your residence time regardless of how short it is. The lender would rather have your residence history be accurate and documented than have it be inaccurate.

3) Do Not Over Estimate Your Job Time- Most sub prime lenders will request at least a 5 year job history. Again it is important to be accurate about your current and previous employment time. Do not make the mistake of listing a long job time on your application just because you have worked in the same industry for many years. Give the lender an accurate list of all the employers you have worked for to cover the 5 year history. Names and phone numbers will help speed up the process. They will be verifying the information your give them.

4) Do Not Pick Out The Most Expensive Vehicle You Can Find- When you are applying for auto loans with bad credit it is important to remember that you are in a rebuilding mode. This is not the time to go pick out the car of your dreams. Sub prime lenders are only going to approve you for a loan that fits within your budget. After you submit your application they will calculate your debt ratios to determine a payment that they feel is affordable to you given your current financial situation. It is important to stay within the parameters they are willing to approve otherwise you will be turned down. Once you start making payments on a timely basis and your credit score starts to move up maybe then you can shop for the car of your dreams.