Car Buying Questions

Credit Acceptance
Corp Auto Loans

Some car buying questions from Jimmy K. in So. Carolina...
Credit Acceptance Corp auto loans for buying a car after bankruptcy.

Jimmy: Do you still recommend Credit Acceptance Corp auto loans?

I need an auto loan after my bankruptcy and make about 140k annually. My bankruptcy has been discharged for 14 mos. My Transunion score is 500 which I intend to get up. I have no other short term debt other than a credit card which I can pay off at anytime.

Me: Hi Jimmy,

Yes I do. It will vary from customer to customer, but in my opinion they are great, because everyone is guaranteed credit approval. That being said, there may be better options available for you based on different credit criteria. I'll show you a couple of sources to get approved for an bad credit auto loan below.

As much as I like Credit Acceptance Corp auto loans, they do have some pretty tough terms, usually with short term financing at very high rates.

They also charge the dealer a pretty big fee and therefore you'll essentially have to over pay for the vehicle in order for the dealer to cover that fee. It's not a set fee and is a little difficult to explain how it's figured, but know that it's big, varies from customer to customer and deal to deal.

Ultimately, if one of your goals is to reestablish credit, then a Credit Acceptance Corp auto loan is a great way to do that, because Credit Acceptance reports to all 3 credit bureaus.

It can be expensive to rebuild credit, but in the long run well worth it. By the way, Credit Acceptance Corp can only be applied for through a dealership that is contracted with them.

You may want to try Capital One as well...They oftentimes offer a good Bankruptcy auto loan approval, but again there are a lot of variables involved. Good income and good job stability certainly help your situation.

Jimmy: Capital One told me no...Not sure why.

Me: Then Credit Acceptance Corp auto loans may be the way to go. They approve everyone, but expect to be in the 23-24% APR range with little if any discounts on the sale price of the vehicle.

In addition, the bigger your down payment the more options you will have when it comes to vehicle selection. Credit Acceptance Corp only requires $500 down, but you'll have a very limited choice of vehicles with that small a down payment that will work for their program.

Be sure to keep the loan for a minimum of 12 months in order for it to have a positive impact on your credit...in fact, the longer the better.

If you are not that concerned with credit, then you can pay it off as soon as you like to save on finance charges, which will be high. There should be no penalties for an early payoff, but read your contract carefully.

Jimmy: Are you aware of any lenders who will allow us to pick. We want a 2005 Tahoe w about 55k miles...

Me: Credit Acceptance will allow you to pick, but down payment is what will determine what vehicle you can buy. More than likely on a 2005 Tahoe you'd have to have between $4000 and $5000 down...Of course this will also depend on what tier you are with Credit Acceptance.

There is also another lender that may work for your situation, which is Regional Acceptance. As with Credit Acceptance Corp you'd have to apply through a dealership that is signed with them.

If Capital One was a no, then there are no other lenders that I know of that will give you an approval directly (which is typically the case with bad credit auto loans) and you'd have to work with a dealership that can arrange the financing for you.

Subprime lenders, especially in today's economy, will only loan money through dealerships that they have contracted with.

Come to think of it, there may be one other source and that is RoadLoans. I'm not sure if they are still lending money directly and I know that they stopped lending indirectly, but they may be another source for you. Only problem is that they are not as strong as Cap One and if Cap One said no, then RoadLoans would more than likely result in a turn down as well.

Ultimately, all subprime lenders will allow you to pick the vehicle you'd like to buy, but the loan has to be structured properly, i.e. down payment to help the loan to value to be in line, payment to income ratio and debt ratios. The down payment sounds like it will be the key in your situation.

Jimmy: Many thanks...I can show 140k in income and have less than 2k short term debt. I own a small business and am employed full time.

Me: Being self employed with the bankruptcy will make an approval with other lenders tougher and may cause your approval with Credit Acceptance Corp to slip to a slightly lower tier, but you will still be approved.

Where To Apply For
Bad Credit Auto Loans

Here are two sources to help you find local dealers that specialize in bad credit auto loans and will more than likely work with Credit Acceptance Corp and/or similar lenders...

Option 1
Auto Credit Express. Their service has closed over 1 Billion dollars in online loans (very big) and have contracted with dealers throughout the country that specialize in bad credit auto loans.

You can apply here: 60 Second No Obligation Bad Credit Car Loans Application

Option 2
Look for a note lot in your area. A note lot is a dealer that both sells cars and does the financing in house Buy Here and Pay Here. These types of dealerships can have some pretty tough terms regarding their financing, but most people find they can get approved.

Hope this helped to shed some light on Credit Acceptance Corp auto loans and bad credit auto loans in general. Take care, Justin.

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