Once the excitement of driving around in your own vehicle has died down, and it’s time to make the first payment on your bad credit auto loan you’ve probably discovered that you have a few questions.
It’s not uncommon for car buyers to have several questions and concerns about their high interest auto loan after the excitement of purchasing a vehicle has finally worn off. To help consumers find the answers they need regarding their bad credit car loan, we have put together a list of their most frequently asked questions.
20 Questions About Your Bad Credit Car Loan
- When will the first monthly payment on the bad credit auto loan be due?
You have the option of choosing to make your first monthly payment 30 or 45 days from the date you took possession of the vehicle. If you already have several bills due at the same time each month it might be best to choose to make a payment every 45 days. The only downside is that the amount you owe each month will be slightly higher.
- Will past and present monthly statements be made easily available?
You will be receiving your monthly bad credit auto loan statement either by post or email, making it easy to access your current information. Most lenders will also allow you to view your past and present statements online, once you have set up an account.
Not only will this make it easier for you to calculate interest paid at tax time, it also allows you to keep an eye on your account.
- Are there different options available for making payments?
While this will vary slightly, depending on the type of lender, most offer a variety of payment options. If the auto loan is through the Buy Here Pay Here lot you can usually make the payment in person at the finance office. This is a convenient way to ensure that the payment gets there in time so you can avoid late fees and dings to your credit history.
Before you choose a payment option you do want to make sure that it doesn’t charge a fee.
- Will I be able to get a copy of the amount of interest paid on the bad credit auto loan annually?
The amount of interest you pay each month on the auto loan is listed on the statements. You can also find a record of the amount of interest paid the previous year in your online account. Your lender should also send you a copy annually for your tax records.
- Is there someone to contact with questions about the auto loan?
If there isn’t anyone to contact when you have questions about your bad credit auto loan, you might want to consider looking for a different lender. You should always be able to contact someone in the finance department during normal business hours, and some of the top rated subprime lenders are even available on weekends.
- Will it be possible to pay off the bad credit auto loan early?
You can pay off a bad credit auto loan early, but there are some pros and cons associated with doing so. The upside is that there will be one less bill to pay monthly. Paying a loan off in full will also help raise your credit score, though it will take some time before it appears on your report.
Showing that you can make loan payments on time is one of the best ways to raise your credit score. Some lenders might also charge an additional fee when an auto loan is repaid early.
- Are there any penalties or fees associated with paying off the auto loan early?
The answer to this question will depend on the lender, and it is one that you will want to ask. Most brick and mortar financial institutions do not charge a fee or assess any penalties if you pay off your high interest auto loan early. Some online lenders and even a few less than reputable Buy Here Pay Here dealerships do charge a fee if you pay off the loan early and the amount can vary.
The best advice is to ask your lender before you consider paying off a bad credit auto loan early.
- Can my loan be transferred to another lender?
Most lenders will not transfer an auto loan to another lender, especially if you have poor or bad credit. The majority of financial institutions simply do not want to assume the risk you represent.
Generally if you want to “get out” of a bad credit auto loan you will have to sell the vehicle and the new owner will have to apply for financing. Refinancing the auto loan through another lender is another option, but it might also entail fees and certain penalties.
- If the auto loan is assumed will my payments stay the same?
Your monthly payments will not stay the same if the auto loan is transferred. If the vehicle is sold and you followed the proper steps, the new owner is now responsible for making the payments. This means that there is one less bill for you to pay every month.
- Will transferring my auto loan hurt my credit rating?
As long as the monthly payments are made on time, transferring your high interest auto loan won’t hurt your credit rating. In the long run, it could actually help it improve. The lower monthly payments that are typical of refinancing or transferring an auto loan are easy to make on time, and a steady record of this will result in a higher credit score.
Another bonus to transferring a bad credit auto is that it often comes with a lower interest rate.
- How long will it take to receive the vehicle’s title once the auto loan is paid off?
The length of time it takes for you to receive the title to a vehicle once the auto loan is paid off will vary. If the title is being mailed to you it can take four to six weeks, but it rarely takes this long unless it is an out of state lender.
Some Buy Here Pay Here lots will allow you to pick up the notarized title in person as soon as the final payment is made, while others require a few days to finish the paperwork. It is also best to check with your lender to find out when the vehicle title will only be in your name.
- When will the final loan payment show up on my credit report?
Final payments on auto and any other type of loan typically take 30 days to show up on your credit report. This is because the three major credit reporting agencies only update once a month. If the final payment on a bad credit auto loan has appeared on your credit report, and it has been over 60 days, it might be a good idea to speak with your lender to ensure that all of the paperwork has been properly submitted.
- What happens if I can’t make a monthly payment?
If for anyone reason you can’t make a monthly payment or its going to be late, it is important to immediately contact the lender. In some cases the due date can be extended so the late payment doesn’t affect your credit report. The lender might also recommend refinancing as a way to lower the amount of your monthly payments.
They would rather extend the length of the loan and receive lower monthly payments than have to take possession of your vehicle, which generally results in them losing money.
- Will my information be sold by the lender?
This is an important question to ask, unless you don’t mind getting bombarded by advertisements. Most reputable lenders will not sell your private information, though you should be advised that some details will be available for the public to access. This is especially true whenever you purchase a “big ticket” item.
Your social security number and any other personal identifying information should be kept private, and in some cases it is illegal for any financial institution to sell it or make it public.
- Will job loss affect my bad credit auto loan?
Job loss unfortunately can happen for any number of reasons, but it doesn’t always have to affect your bad credit auto loan. If you are fortunate enough to qualify for assistance during unemployment, making your monthly loan payments on time might not be a problem. If the loss of your job is making it difficult to keep up with the loan payments, it is important that you speaker with the lender immediately.
- If I move do I have to let the lender know the new address?
Even if you are receiving your monthly statements via email and making payments online, it is still important to keep your lender apprised of any changes to your address. In most cases you can simply fill out short form online or even mail in your new address with your monthly payment.
- Can I extend the length of the bad credit auto loan?
Auto loans can be extended, even if you have poor or bad credit. If you need to lower the amount of the monthly payments, you can speak to your lender about refinancing through them. You might also want to also consider refinancing through a different lending company. In some cases this can result in lower monthly payments, without the length of the auto loan increasing.
- Is it possible to have a co-signer removed from a “high risk” auto loan before it is paid off?
There are two ways that a co-signer can be removed from a bad credit auto loan, even if it is not paid off. You can ask your lender to remove the co-signer if you can show your income has increased enough to assure them that you can make the monthly payments by yourself.
You can also apply for refinancing through another lender without a co-signer. While this is often the easiest way to remove a co-signer from an auto loan, you could incur fees and penalties from your original lender.
- If my credit score improves before the auto loan is paid in full can I get a lower interest rate?
It’s not uncommon for consumers to notice that their credit score has improved after they have been making regular payments on their auto loan. When your credit score is high enough you might qualify for lower interest rates, and this could mean that it is time to refinance your auto loan.
- How long after the auto loan is paid off do I have to wait until there is an improvement in my credit score?
According to Experian it usually only takes 30 days for you to see an improvement in your credit score, once the auto loan has been paid off. If you haven’t noticed a change after 90 days, it might be a good idea to request a free copy of your credit report. You are entitled to one free credit report each year from each of the three agencies.
If you have any additional questions about your bad credit auto loan you should speak with your lender as soon as possible. Not only will you get the answers you need, it can also prevent any confusion that could end up having a negative effect on your credit report.