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Registered: ‎07-15-2009
How to cash in with Cash for Clunkers with Bad Credit?

This is my first time posting here and I am looking for advice as to the best way to go about taking advantage of the new “Cash for Clunkers” program when I am sort of credit challenged at the moment. Here’s my situation, sorry for the extensive details, but I thought it might be helpful for those of you willing to share advice/opinions.


We are a couple in our 50’s, decent incomes, each earn about $80K annually, long term employed in jobs that are not likely to be affected by the recession in the near term. With a couple of kids in college, a couple or mortgages, etc. we have found ourselves somewhat stretched the past couple years. .


In any event, we are in need of a newer vehicle. I currently have 3 cars registered in my name—all over 10 years old and all with mileage exceeding 120,000. The recently passed “Cash for Clunkers” program seems like a great opportunity in this situation, as the least serviceable of these vehicles would qualify for the rebate of $3500-4500 (a ’99 Suzuki Grand Vitara that my son has been driving for the past 6 years and is probably worth about $500 at best).


This would all be great, but our credit kind of sucks at the moment, we had some emergency expenses last year that strained an already stretched budget and as a result there were a couple of hiccups that had dealt our credit a pretty bad blow on the face of it. The most devastating being a 30 day on a mortgage about 5 months ago—it actually hit on the 31st day and when my wife sent in the late fees in a partial payment it wasn’t applied as she had hoped, and subsequently we are showing 30 days for the last 5 months on our mortgage. We hope to be able to resolve this by the end of this month, the mortgage company also indicated that they might even be willing to reverse the 30 day marks, but that will likely take some time. I only found out about this when I pulled credit reports in preparation for doing some car shopping.


Bottom line, as a result of this my credit score took a pretty big hit, currently it is now in the 630-640 range across the 3 reporting agencies. My wife hasn’t pulled hers yet, but it is likely to be lower as she has been working to clean up some past issues.


Ideally we would have liked to postpone a car purchase until these things have been cleared up but unfortunately we feel under some pressure to move pretty quickly. Although the initial Cash for Clunkers was supposed to last until November 1 or until the funding ran out, indications are that it will likely last for a much shorter time than originally anticipated—a number of commentaries have suggested just 6-8 weeks as demand is likely to be quite high. I would really hate missing out on an opportunity to get $3500 for a car that’s on its last legs and only worth about $500 at best. I’m not looking for an exotic new car---just a reliable commuter, a Hyundai Elantra Touring valued at $18,500-1500 dealer rebate-3500 cash for clunker rebate=13500 to finance plus taxes/fees.


Sorry for the long winded explanation, but here are my questions:


Has anyone had any experience with bad credit auto financing and can you suggest a reputable source?


Is it better to shop on-line for this kind financing or through the dealer?


Is it possible to get a loan under these circumstances?


I am a member of a credit union, but haven’t talked to them yet—do credit unions do subprime auto loans?


What are average interest rates for subprime loans?


Once we get some of our credit issues cleared up would refinancing be a possibility?


Thanks for any advice you can offer..