8th
04 -
2010
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no comment »
There are a large number of lenders offering car loans for people with bad credit. From your perspective, this is both a good thing and a bad thing. It is a good thing because it means there is lots of competition among lenders to offer competitive loans. But it can also be a bad thing because, if you don’t look hard enough, you may end up with a loan that is not the right one for you.
How do you work out whether a car loan is right for you? Well, it depends on your current financial situation. If you happen to own some capital assets, such as a house, then you are probably eligible for a secured car loan. With a secured car loan, you offer your assets as collateral to the lender. This means that if you can’t pay off the loan, the lender is still able to recover their investment via your assets. While this may sound scary, if you are confident in your ability to pay off the loan, then getting a secured car loan can save you a lot of money because they generally come with low interest rates.
However, car finance for people with bad credit is not reserved only for those with major capital assets. Even if you don’t quality for a secured loan, you may be eligible for an unsecured loan. These loans generally have higher interest rates, but at least you don’t have to worry about a lender taking everything you own in the case that you are not able to repay the loan. In addition, by taking out a loan with bad credit and sticking to the repayment profile of that loan you can actually begin to improve your credit rating. This means that gradually you can begin to convince lenders generally that you are not the credit risk that they believe you currently to be.
You may be able to get car loans with bad credit from some lenders, whereas others may refuse you. For this reason, don’t be dejected if you don’t get a loan from the first one or two lenders you try. Shop around a bit, as different lenders evaluate your poor credit history in different ways. Some lenders prefer to deal with people who have good credit, but there are many lenders out there who do offer car loans for people with bad credit as well.
23rd
02 -
2010
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no comment »
If you have a bad credit rating then you may well find that your experiencing in raising a loan in order to purchase a car is not as positive as you would really prefer. You see a significant part of the problem is that if you do have bad credit then there is a good chance that then lender you are dealing with will classify you as a dreaded sub-prime borrower. This never used to be a problem, back in the days of the good old credit bubble. But all that ended with the collapse of Lehman in the fall of 2008. Now sub-prime borrowers are having a much more difficult time of things. So the question is can you still get car loans for people with bad credit or not?
The short answer to this question is, yes, you should still be able to borrow money in order you buy your preferred auto. However, as you might expect the longer answer includes a number of provisos which make the longer answer more like, it depends!
Firstly, in order to increase your chances of taking out car loans with bad credit you really have to be thinking about purchasing a car which is less than 5 years old. This does seems nonsensical, as in order to purchase a newer car you will almost certainly have to borrow more money, but the lender doesn’t really care about that. They only care that if you happen to default on your auto loan then they can recover some or all of what you owe from repossessing the car and selling it off quickly, most often at some form of auction.
Next, beware of the auto dealer loan deals. They are rarely as good a deal as they seem. Remember you are residing in the territory of need car loans with for people with bad credit. You do not want to fall foul of the seemingly great auto loan deal advertised all over the dealers premises showing a really low rate of interest only to discover that a year or 18 months down the line the interest rates ratchets up sharply and you can no longer afford it. Getting into more financial difficulty when you already have bad credit is something you really need to avoid.
That’s not to say that all auto dealer loan offers are bad. Just don’t fall for the first one you see. It may be good for the dealer, but not so good for you. Look around. Get some comparative quotes so you know what you can end up paying. Try banks and credit unions for some idea of what they would charge you. It could be really important that you do so.
Using car loans for people with bad credit can be really useful if you are also trying to repair your credit score. Remember, if you take out a loan and repay it on time and in full then your credit score will lift. This could make your life a lot easier. Whilst car loans with bad credit are never going to be cheap they are also likely to be lower than unsecured loans so it may well be a worthwhile exercise and you get both a new car and to start the process of credit repair.