Financing with bad credit

[deduncan]

Friends of ours are looking at re-financing their car. They bought it with a 21% interest rate @ $15k and are looking to re-finance to get a better interest rate. Their credit situation has improved, but no where near where it is needed to get a decent rate (below 7%). Some banks are even telling them to wait until some of their blemishes are off of their record before applying with them.

 

Do any of you guys have suggestions of where I could tell these people to go for financing? Do they have any options?

 

They tried USAA and got declined, I suggested Peoplefirst, but they haven't had a chance to apply through them yet. I thought I'd pose the question here to see what you guys have to say.

 

Thanks!

[Animeboy]

Everytime they re-apply for credit somewhere else, it will bring down there score a little... Sad but true. So make sure they are very choosy before they acutally agree to allow a score to be run.

 

If they are homeowners, it might be worth their time to see if they can get a home equity loan instead. They'll still probably have around 10-12% Interest, but they can at least write that off their taxes.

 

Typically though it takes 3 years for late payment to get off your history if they exist and up to 7 for bad references. 10 years for a bankruptcy.

 

If they have any Credit Card debt, paying that off before trying to refi can help them ALOT. If say you have a score of like 680 for example and 15000 in CC Debt, Halveing that CC Debt can raise your score to over 730, in just 30 days, once it reflects on the reports. Revolving accounts and open balances are the worst really.

 

Installment accounts (Car Loans) and home loans paid on time after the first 6 months will actually help raise your score...

 

Mark