Has your FICO score taken a few hard knocks? Don’t sweat it. You certainly aren’t the only one with “bad credit.” More than 25% of the population have credit scores low enough to be considered subprime, and we’re here to help. We work with a wide array of dealers and lenders across Texas, many of whom specialize in helping people with bad credit. When you apply through our website, our dealers and lenders compete with one another to fund your loan, maximizing your odds of approval. For individuals with below-average credit, this is the best way to get approved.
Minimum Requirements for Texas Consumers
- Resident of Texas.
- Annual income of $18,000.
- Gainfully employed for at least 12 months.
- All bankruptcies discharged.
- No repossession in the past 12 months.
Vehicles Available for Purchase
Vehicle restrictions vary from dealer to dealer, but we can offer a few requirements based on our industry experience.
- Vehicles can be used or new.
- Mileage of 75,000 miles or less.
- Vehicle 6 years old or newer.
- Minimum loan of $7500.
In most cases, you will not have a “blank check” car loan. Rather, you will need to select your vehicle from a particular dealership or network of dealerships. Many dealers and lenders who approve people with bad credit do require a down payment. At least down payments have several advantages for the borrower:
- Improved chances of approval.
- Size of loan is lowered.
- Less paid in total interest.
- Less likelihood of negative equity in the vehicle
You might have seen no money down, “sign and drive” specials advertised in Texas. However, you must keep your wits about you, as dealers sometimes lump the down payment into the total amount borrowed. Yes, you might not have to put any money down, but you’ll end up paying more over the life of the loan.
Can a Car Loan Boost My Credit?
For people with less-than-perfect credit, paying off a car as agreed is a popular means of reestablishing credit. Your history of payments is an important part of Fair Issac’s scoring model. When you make your payments month after month, on time and in full, this establishes your creditworthiness. Of course, there’s a flip side to this. If you miss or fall past due on payments, you could easily worsen your already-damaged credit score. To keep your payments low, devote 10% of your income to your car payment. To illustrate this, let’s have a look at the average numbers for Texas residents.
- Monthly Income: $2,129
- Total Transportation Budget: $383
- Suggested Payment: $213
- Leftover Budget for Fuel, Maintenance, etc: $170
Of course, you have to adapt these numbers to your own budget.
Texas Auto Loans Rates for Bad Credit
Steeper interest rates are to be expected when your credit score is 620 or lower. Your specific rate will depend on a number of factors, including your lender, FICO score, type of vehicle, loan term, and other criteria. However, we can give you a few estimations based on our experience in the industry.
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As we said: expensive. That’s the reason we recommend that you minimize the interest on your loan by supplying a down payment and financing for the shortest term you can.