Once you’ve have an auto loan approval, it’s time to decide which of the vehicles you’ve qualified for will help you successfully establish your car credit.

This may sound odd especially if, in the past, you’ve qualified for a traditional auto loan. But after two decades of helping applicants with less than perfect credit here at Auto Credit Express, we’ve come up with some suggestions to help you through this particular credit repair process. Specifically, it has to do with choosing the right kind of car.

Keep the budget in mind

Often, credit-challenged buyers with approved auto loans want to finance a van, larger sedan, or even a full-size SUV.  But choosing something like this can lead to problems later on.

In the first place, due to the higher than normal interest rates charged by subprime auto lenders, the monthly payments of many of these types of vehicles put them at or over the limit of most budgets.

Secondly, more expensive car insurance and lower fuel economy also adds to their costs.

Auto Club survey

According to a recent AAA survey, the cost of fuel is among the most important items that can lead to an increase in vehicle operating costs. Based on driving 15,000 miles per year, this is what AAA has determined are the average costs of operating a vehicle based on its size and type:

Small sedan – 43.3 cents per mile or $6,496 per year
Medium sedan – 56.2 cents per mile or $8,436 per year
Minivan – 62.0 cents per mile or $9,301 per year
Large sedan – 70.2 cents per mile or $10,530 per year
4WD SUV – 73.9 cents per mile or $11,085 per year

The total costs allow for depreciation as well as fuel, tire, and car insurance expenses – all important considerations if you have bad credit.

Year over year costs

The report also noted that “The small sedan category experienced the smallest increase of the five categories of vehicles, rising only 2.9 percent from last year to 43.3 cents per mile or $6,496 per year, based on 15,000 miles of yearly driving. The minimal increase was primarily due to the increased popularity of small sedans led by higher fuel prices. It resulted in the small sedan category being the only one where depreciation costs were lower than last year, falling 1.9 percent.”

This means that buyers, regardless of their credit, can save over $2,000 a year just by choosing a small sedan instead of a midsize one – savings that can be used to shorten the loan term or lower the payment and free up money to pay other bills.

The Bottom Line

Financing a vehicle if you’re someone with less than perfect credit means that it’s time to get practical when picking one out. By doing this and making your monthly payments on time, the next car you buy will qualify for a lower interest rate.

We do have one more suggestion: at Auto Credit Express we assist people with credit issues in finding a dealer that can offer them their best chance for an auto loan approval.

So if you find yourself in this situation and you’re ready to reestablish your car credit, you can begin now by filling out our online car loans application.

Ally Financial is the former lending organization for General Motors Co and was formerly known as GMAC. The auto-lender’s mortgage unit was once a large profiteer in the subprime lending field before the housing market took a nosedive in 2008.

Since then, the company has been plagued with losses due to the housing market’s slow recovery.

The bankruptcy filing was reportedly favored by some of ResCap’s creditors, according to Reuters.

Although the process will inevitably be a long and drawn out process, Ally Financial’s filing is hope to be a catalyst to paying back $12 billion in bailout money.

During the financial crisis, the US Treasury Department funneled more than $17 billion to the lender and subsequently now owns around 74 percent of the company.

Ally is the fifth-largest mortgage servicer in the United States.

The company also plans to sell some of its international operations to fund the repayment of bailout money. The overseas operations have about $30 billion in assets overall.

During the 2012 election year, the Obama administration is eager to report recoveries from the bailout-era that Obama had led to kick start the economy in a time when many had little faith in the US economy. Ally will be closely observed in this bankruptcy process in order for the company to not become the blemish on the 2012 campaign trail that Obama administration has been trying to avoid.

According to Reuters, ResCap and its advisors believe that this is the first time a financial services company with retail operations not unlike a bank has filed for bankruptcy and has been able to continue operating.

Ally Financial CEO Michael Carpenter stated that he believes ResCap will have paid back two-thirds of the bailout money after the processes have been completed or near-completed. He also stated that he expects ResCap to emerge from bankruptcy within the year, according to Reuters.

Why Bankruptcy? Why Now?

Ally Financial has been reportedly mulling bankruptcy since 2009. The filing in court on Monday signaled that the company is finally ready to start paying back the taxpayers that had lent the company billions of dollars by way of the US Treasury Department.

The bankruptcy option, which has become a popular option for many companies ranging from all different sizes, has been a light at the end of the tunnel for many institutions.

With the filling, ResCap is able to restructure its business and restore its creditor’s investments in the company.

Although bankruptcy is seen by many as an unfortunate situation, it can also be a tool to start anew and prosper in future years as company or as an individual. Whether it’s Chapter 7, Chapter 11 or Chapter 13, you as an individual (or a business in this case) must choose the right path to future financial prowess and in doing so, researching the facts is the most important step you can do.

As dealer backend products go (backend products are those things the dealer business manager is in charge of selling), we can think of at least two situations in which at least one of them, gap insurance, might make sense. This is especially true if you have less than perfect credit and, believe it or not, are on a tight budget.

We’ve come to this conclusion here at Auto Credit Express after over twenty years of helping consumers with credit issues find a dealer that can get them approved for a car loan.  Our website is even designed so that applicants can research all aspects of the bad credit auto sales process including today’s topic, the pros and cons of gap insurance.

Understanding gap insurance

Although gap insurance is never a requirement in qualifying for an auto loan and you should never believe anyone who tries to tell you it is there are times when choosing it can be the right decision.

That’s because until the last payment is made, your car really belongs to lender.

While it’s being financed, if you’re involved in an accident with your car other than one involving a total loss, your full coverage car insurance (required by the lender) will pay to repair any damage, less the deductible.

At the same time, if you’re involved in an accident where the car is declared a total loss, the insurance company will typically pay its retail value (possibly less any deductible) at the time of the accident.

The only problem with a total loss accident is that if it occurs any time during the first half of the loan term or even further depending on the size of the down payment, the insurance settlement could be thousands of dollars less that the loan payoff amount.

If this happens, payments must continue until the remaining balance is paid in full.

Admittedly this is a worst case situation but it can and it has happened. This is also where gap insurance coverage pays off.

If you have it, the insurance company will pay the difference between the insurance settlement and the balance owed on the loan (less the deductible – although if you weren’t at fault, in many states your car insurance company will cover this as well).

When gap insurance is needed

Gap insurance doesn’t make sense if:

•    You have a short-term auto loan (36 months or less). In this case you’ll be in an equity situation fairly quickly.

•    Your down payment is 20% or more. There’s a good chance you’ll be in an equity position with most car loans – especially for terms of 60 months or less.

On the other hand, in just about every other situation it usually makes sense to at least consider gap insurance.

As we see it

There are at least two instances where purchasing gap insurance means means avoiding possibility of paying thousands of dollars to a lender for a vehicle that’s damaged beyond repair – a loan term of over 36 months or a loan in which the down payment is less than 20% of the selling price.

At the same time, we want you to know that if you have poor credit Auto Credit Express will forward your information to dealers that understand this situation and can offer you your best chance for an auto loan approval.

So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loans application.

Regardless of your credit situation it’s always a good idea to consider the total cost of a new car over time.

This is even more of a concern if you have poor credit. We understand, since for over two decades here at Auto Credit Express we’ve been helping credit-challenged applicants find a dealer that can get them approved for a car loan. Our website reflects this experience on topics such as credit repair as well as today’s issue, choosing an affordable car once you’ve received a loan approval.

Kelley Blue Book

According to Kelly, “The cost of owning a car over several years can easily exceed the initial purchase price and vary greatly from car to car.”

In compiling this information, Kelley uses “real-world data updated every 60 days,” which makes this information even more accurate for car buyers. The five-year cost figure includes depreciation, fuel, insurance and financing (although this last figure will be more for car buyers with less than perfect credit).

“With Total Cost of Ownership information, consumers can better understand the financial implications associated with the initial five years of owning a car,” said Juan Flores, director of vehicle valuation for Kelley Blue Book.  “As Kelley Blue Book’s data reveals, depending on the model’s MSRP, fuel costs and other financial factors, other models on their consideration lists could offer a greater value over time.”

Five year ownership costs

Here are the rankings of their current top five vehicles, along with their five-year costs of ownership:

Rank    Model                  5 Year Ownership Cost
1    Nissan Versa            $26,186
2    Hyundai Accent        $26,884
3    Toyota Yaris               $27,330
4    Kia Soul                      $28,203
5    Ford Fiesta S             $28,355

“As an analytic powerhouse, Kelley Blue Book would be doing a disservice by not sharing this valuable information,” said Flores. “Because cost of ownership can vary significantly from car to car, car shoppers should be aware of everything their purchase entails before making a final decision on which new vehicle to buy.”

As we see it

Picking the right vehicle is especially important for people with bad credit since, for many of them, a car is the largest purchase they will make. This means the vehicle not only has to meet their transportation requirements, it also must be affordable to own. If you are one of these individuals, we hope this information helps you in the decision process.

You should also know that at Auto Credit Express we assist people with credit issues in finding a dealer that can offer them their best chance for an auto loan approval.

So if this is your situation and you’re ready to reestablish your car credit, you can begin now by filling out our online car loan application.

Many Americans believe that statement to be true, even in an economy where recent college grads have a tough time finding sustainable careers and job prospects become something of a tough find.

However, there are factors in which determining what a college degree will mean to you or your family whether you are deciding on where to go and what to do after high school or planning on returning to college to obtain a degree.

According to The Wall Street Journal, students and families lack sufficient data to determine the long-term viability and profitability of a college degree over a life span.

Not knowing what college will cost you or how it will benefit you in the span of your lifetime can have dire consequences in the form of student debt if you do decide to pursue a degree in higher education.

There are distinct advantages to those who obtain a college degree. According to the U.S. Bureau of Labor Statistics, college brought a higher weekly pay of $1,053 versus the $638 weekly amount to those who only obtained a high school diploma in 2011.

Also, last year’s unemployment rate for college graduates was 4.9% as opposed to the 9.4% unemployment rate for high school graduates without a college degree.

The non-for-profit organization The College Board, calculated that a typical student who enters a four-year college at age 18 and borrows for the entirety of his collegiate career, earns enough by age 33 to make up for his college costs.

Although this may look enticing to high school juniors and seniors applying for college, the data assumes that every student goes to a public college and also doesn’t account for dropouts and extra years needed to obtain degrees.

The schools with the best returns on investment often focus on majors concerning engineering, computer science, economics, and natural-science programs.

Colleges with the worst return on investment tend to focus on nursing, criminal justice, education, and sociology.

The Nuts And Bolts of College Finances

Recently, outstanding student loans surpassed credit card debt as the nation’s largest debt problem amongst Americans.

A staggering issue compounded by the fact that, unlike credit card debt, student loan debt is not typically forgiving through filing for Chapter 7 or Chapter 13 bankruptcy.

In an economy where many parents and students alike have faced tough financial situations such as bankruptcy and foreclosure, student loan borrow is on the rise. Applications for federal assistance has rose 59 percent since 2006, according to The Wall Street Journal.

Many schools that offer financial aid have funds set aside for the appeal processes that arise from financial aid cases being awarded. Many students find themselves “under covered” and perform appeals on the amount they get awarded.

Experts point to the appeal process as a viable way to potentially increase your financial aid coverage, just as long as circumstances call for it (i.e. your parent’s business recently filed for bankruptcy or you lost your home to foreclosure). The more information the college has on the finances of the student and their family, the better knowledge they have to make the best possible offer.

As difficult as it sounds to obtain a desirable amount of financial aid to assist you in your collegiate career, many believe it is worth the hassle. Ask yourself, is college right for me? Do your homework on financial aid and you’ll be better prepared to take college by the horns and make a lifelong investment that will payoff big in the end.

In order to regain or establish your auto credit you may need to work with one of the subprime auto lenders that offer approved auto loans to credit-challenged individuals.

We know this is usually the case because since 1992 we’ve spent a great deal of time helping car shoppers with less than perfect credit here at Auto Credit Express. We even created a website so that applicants could research such subjects as certified used cars as well as today’s topic: why it is sometimes necessary to take out a high-risk auto loan in order to reestablish your car credit.

High risk car loans

You may be wondering why you should even apply for a car loan from a subprime lender. After all, paying cash for a vehicle, while using a regular or secured credit card, can often improve your credit scores.

The fact is doing this probably won’t help your auto credit, even if it improves your FICO scores.

The reasoning behind this is that any type of credit card is a form of revolving credit. With revolving credit if you don’t pay off card balance every month, you are allowed to carry over the remaining balance to the next month.

An auto loan, on the other hand, is a type of installment credit. With this type of loan you sign a contract to pay back the initial amount, plus interest, for a fixed payment each month over the loan term.

Another difference that separates installment credit from revolving credit is that installment loan balances are typically higher than revolving credit limits. Installment loans also carry a higher monthly payment as a percentage of the loan balance and are much less flexible to changes. This means installment buyers have to be more disciplined in paying back the loan.

Credit scores

In determining your credit scores, FICO looks at both types of credit. Automotive lenders also look at both credit types but pay special attention to how applicants have paid on installment auto loans. This means that while a good payment history with a credit card will help your credit scores, it doesn’t carry as much weight when applying for a car loan.

For this reason, even auto loan applicants with decent credit scores are sometimes turned down if they’ve never had one or if it turns out they had a spotty payment record with a previous car loan.

Either way, these individuals might have to first prove themselves by establishing their car credit with a lender willing to take a greater risk.

But if this is the case and you’ve been turned down for a traditional auto loan, where do you find a dealer that’s signed up with these types of lenders?

Our job

Before visiting a tote the note dealer, you should know that Auto Credit Express works with dealers that understand a broad range of credit issues and can offer you your best chance for approved auto loans.

So if you’re ready to establish your car credit, you can begin now by filling out our online car loans application.

People who depend on tips for much or all of their income often face a number of problems when applying for an auto loan.

This can be a problem especially for credit-challenged individuals and we’re aware of this here at Auto Credit Express because we’ve spent the last two decades helping people like this get approved for car loans.

So here is what we’ve learned:

Tip income reporting

People who receive tips don’t always accurately report this income on their tax returns. They don’t do it because it saves them money on their taxes. But it can also prevent them from getting an auto loan if their credit is, shall we say, less than stellar.

Here are four things the IRS wants you to know about tip income:

1. Tips are taxable. Tips are subject to federal income, Social Security and Medicare taxes.

2. Include tips on your tax return. You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip–splitting arrangement with fellow employees.

3. Report tips to your employer. If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.

4. Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer, to record your tip income.

Proving income

With that being said, while traditional lenders usually don’t verify income, this isn’t true for those involved with high-risk borrowers. As far as they’re concerned, if the income isn’t listed on a W-2 or a professionally prepared tax return, there is no proof. This holds true even if there are supporting bank records that show the claimed income.

Income conditions

Non-prime lenders typically have minimum monthly income requirements. This income, along with all monthly bills, is used to compute a debt-to-income ratio and determine a car budget. This can affect people with tip income in two ways:

1. If the income reported on a tax return is too low, the loan application will not be approved.

2. If the income is sufficient but the monthly bills are too high when compared to the reported income (typically because the actual income is higher) the loan application will also not be approved.

The Bottom Line

If you have poor credit and receive tip income, the only solution is to report all of it on your tax return. If you don’t, it could prevent you from getting an auto loan approval.

If you have been turned down for a conventional auto loan here at Auto Credit Express we’ll help you find a dealer for your best chance at an auto loan that can help rebuild your car credit.

So if you’re looking to get your auto credit on track, you can begin now by filling out our online auto loans application.

Car shoppers now have the ability to pull up a vehicle history report on many smart phones, something that could be especially important to buyers with bad credit.

We understand the importance of this because here at Auto Credit Express for over twenty years we’ve been helping people with credit issues find a dealer so they can get approved for a car loan.  Our web site is even designed so that applicants can research all aspects of the loan process including today’s topic, vehicle history reports.

Understanding vehicle history reports

One of the keys to a successful car loan, especially if you’re credit-challenged, is in trusting that the car you’re buying is exactly what the seller says it is.

If it’s a used car, one way to be sure this is the case is a vehicle history report.

Late last year Experian, the provider of the AutoCheck vehicle history report, announced that it had launched AutoCheck Mobile for Consumers, an application providing used car buyers with access to these reports through both Android and iPhone devices – the first major vehicle history provider to do so.

Report costs

Just like their web-based service, the cost is $29.99 for a single report or $44.99 for an unlimited number of vehicle history reports over a 30 day period.

According to Experian, “The application can be downloaded at no cost through online application stores for Android and iPhone mobile devices. After launching the application and entering AutoCheck account log-in information, users enter a vehicle identification number (VIN) or simply use the device’s camera to take a picture of the VIN to view the vehicle’s history.”

The first step

Be sure to run a report on any used car you’re seriously considering. While this type of report doesn’t always contain all the information on a car, it’s a good start.

Once you’ve narrowed it down to the vehicle you want, there is one more thing you should do.

Physical vehicle inspection

If the vehicle history report is clean, you should then ask the seller if you can have it mechanically inspected. You should then take it to an ASE certified master mechanic to have this service performed.

This service is offered by both individual mechanics and vehicle inspection companies. The cost typically runs between $100 and $200, but consider it money well spent, as a vehicle with hidden damage not appearing on a vehicle history report could cost you thousands of dollars in repair bills as well result in a lower resale value at trade in time.

If the seller refuses, you should just walk away from the deal.

The Bottom Line

A vehicle history report can be a valuable first step in deciding which used car to buy, as long as it’s followed up by a proper physical inspection. By creating an app for iPhone and Android smartphones, the folks have made it even more convenient for you to do this.

Another thing that’s easy to do, especially if you have poor credit, is to apply for an auto loan at Auto Credit Express, where we’ll forward your information to dealers that understand and can offer applicants their best chance for an auto loan approval.

So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loans application.

If you are someone who’s responsible for or receives child support income you should be aware of how this will affect your application for an auto loan, especially if your credit scores are poor.

We know this to be the case because since 1992 here at we’ve been helping applicants with less than perfect credit get approved for a car loan. Our website, in fact, is even designed so that individuals who have been turned down for conventional auto financing can better understand the subprime car loans process that includes today’s topic, how child support can impact qualifying for a loan in the first place.

Child support income issues

To begin with, lenders who deal with high-risk car buyers have a problem from the very start if all or even some of their income is a result of child support payments. The main reason it’s an issue is because child support income cannot be garnished.

This means that if someone with child support income has their car repossessed, the lender can’t get a court order to take that particular income to pay off the loan. As a result, these lenders are especially careful when considering applicants with child support income.

But there are at least two situations when these lenders typically might consider someone with this kind of income:

1) If the borrower has additional income from a job or other source that can be garnished (the longer the job time and the higher this income, the better the chance for an approval).
2) If there are contributing factors such as long-term residence stability and “situational” versus “habitual” poor credit (when the situation is

a result of a single issue, such as a medical problem, instead of a history of never paying bills on time), this can also help increase an applicant’s chances.

Proof of child support income will also be required. In most cases, copies of the court order or divorce decree stating the amount and length of the payments will need to be provided to the lender.

Child support payment issues

If someone is required to make child support payments and they’re behind, it’s also difficult to get an approval. The reason is simple: people in this situation tend to change jobs frequently. As a result, when the court finds them at an employer and begins to garnish their paychecks to cover back payments, they leave and look for another job just to avoid garnishment.

A judgment for delinquent child support payments also appears on credit reports. After reviewing this information, most lenders will automatically reject the application.

But even in this case, it’s possible something can be done.

If a delinquency exists but arrangements have been made with child services to catch up and this can be proven with written documentation from either child services or the court, then some lenders will still consider the loan application.

As we see it

Child support income or payment delinquencies can be a problem with any car loan, but they’re even bigger issue for people with low FICO scores. To improve the chances for an approval, bring in the proper documentation during the first visit to the dealer.

Also understand that at Auto Credit Express we assist people with credit issues in finding a dealer that can offer them their best chance for an auto loan approval.

So if this is your situation and you’re ready to reestablish your car credit, you can begin now by filling out our online car loan application.