Financing my first car with bad credit

[Cars86]

My current credit score according to credit karma is 560 and I'm looking to finance my first car. I'm here for advice on both how I should go about doing this, and how I can improve my credit score.

At present I show 3 accounts in collection, however one has been paid in full for about 7 months now, the second is almost paid-off, and the third should be paid off soon as well.

At present I have no credit cards and no other loans, aside from school loans which I'm paying about $200 a month on those. No other expenses besides basic living, food, clothes, etc.

My finances, I make about $1500/month before taxes. I was just given a raise so I should now bring in around $2,000/month before taxes. One main question I have is whether or not potential lenders look at my past income only, disregarding my new pay being that's it's so recent?

I also run my own business so I have some additional income, the issue there is that it can vary greatly. Some months are only $350 in additional income, others are upwards of $2,500 in additional income.

With all that said, is it even realistic that I can secure a loan on a used car? If so, what price range should I look at, any lender recommendations, and ultimately what should I be doing to get my credit back in good standing?

thanks

[Dustink]

Visit the rebuilding section of this forum to get advise on fixing your baddies. 

As for the car loan. Save up a good down payment, 50% of the purchase price would be a good target. Then go to local banks and CU's and see if they are able to offer you a loan at a good rate. Make sure they know how much you are going to put down. The large down payment will reduce their risk and they will pass that on to you in the form of a lower rate.

Once pre-approved, get a few dealers competing for your business. Find the dealer that will offer you the best price for the vehicle, then take that pre-approval to the dealer and see if they can beat the rate.

Do not buy add-ons from the F&I guy.

[Cars86]

Thanks. Will that create too many inquires though? I was thinking of taking a shot at (hopefully) one financer that specializes in bad credit loans, to avoid a lot of inquires against me.

[Dustink]

NOOOOOOOO

Avoid the people that "specialize" in bad credit loans. They are just leeches looking to drain you with a high rate.

Go to banks and CU's that know you already. With a good down payment they can work out a good deal with you even having the bad credit. As long as you have money down and can show that you are employed, you will be okay.

Keep your apps within a 2 week window and they will count as one INQ towards your credit score.

[coreyb80]

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Great advice DustinK, but most banks won't touch you w/ low scores.  I wish I knew one that would.  

[Dustink]

I think if they spend some time in the rebuilding section of the forum. A little work on the score and a good down payment will go a long way towards a good rate.

[Cars86]

Unfortunately I need a car asap, I have an extremely long bus commute with my current job and I'm trying to apply to new jobs that wouldn't be accessible by bus. I need the higher pay so I have to get something soon.

With that said I applied to roadloans.com and they offered me just over 12k, but at a terrible 21% interest. Monthly payments are $286 over 72 months. Is it worth taking? I would definitely not pay minimum, I can pay at least $400-$500 a month to get it paid off before too much interest racks up. Right now my down would be less than $1,000. Would a dealer beat this rate given my situation?

Or maybe if I got a cosigner it may improve things a bit..

[Cars86]

Also, to add, the only company I have history with (just checking though) is Bank of America. Are they worth trying, I'm not sure what their approval rate is for bad credit.

[mtrsprt]

Contact Wells Fargo Dealer services....

They gave me my first rebuilding loan with a 580 FICO.  Financed $12,000.00 with 1000.00 down.  11.9% APR....

[lookitsma]

at 21% interest, you'll only be paying off the interest for a long long long time. Don't do it.

As someone suggested, go to your favorite bank, local CU and see what rates they can provide you with a auto loan. Don't bother going to "high risk" loan centers as you'll pay close to triple of what the car is actually worth.