Bad Credit Car Finance Specially Designed for People who have poor credit.
Bad credit car finance is a fact of life for many people. In today’s modern world it is normal practice to need to have a loan to buy the car you want. Most lenders continue to give finance to those with a bad credit rating, but in current tough economic conditions, this is often the exception rather than the rule.
Bad credit card finance is designed for those people who have problems such as arrears, non-payments, and defaults on their record. For these lenders, the main criteria when considering an application is to see whether the applicant can meet the required repayments. To approve they assess income and outgoings to see if you can afford the loan, based on the information that you provide.
There are two main types of bad credit car finance
There are two main types of bad credit card finance, an unsecured auto loan and a secured auto loan version. A secured auto loan is where you will provide collateral, such as your car, which will become the property of the auto loan lender if you should default on the loan. Due to this security, the rates of interest on such an auto loan are much lower than the rates on an unsecured auto loan.
The unsecured loan is the second type of bad credit card finance is a loan where you do not provide any guarantee to the lender. As the lender is taking much more risk on such an arrangement the amounts you can borrow are much lower and the rates of interest much higher from bad credit car finance
The best way to evaluate the car finance options available is to research online for auto loan application for bad credit. Here you can see some auto loan lenders and compare their interest rates and various terms and conditions they associate with their loans.
Once you have a auto loan approved it is then possible to shop around for the car you want with the knowledge you have cash available to negotiate with from bad credit car finance
The first thing to take put into consideration when looking for bad credit car finance is that it does not totally disregard your low credit score. It is not some magic contract where you come in with a clean slate. Even if you qualify for an auto loan for bad credit, your rating will still be there.
Your rating is important even for this kind of loan because it tells businesses like car dealerships how risky it will be to lend you money. People with good Fair Isaac Corporation scores find it easy to get loans because the risk is low that they will not be able to pay the lender. This is why they get low down payments and low-interest rates.
People with a low credit rating will be asked to pay a higher down payment, around 10% to 20% of the selling price of whatever you are getting. It makes it easier for you to get an auto loan for bad credit if you pay a higher down payment. This tells the lender that you are serious about the loan. Discuss this point carefully with your borrower, though, as you might end up paying a down payment that much than you can afford with bad credit car finance
The interest rates will be more than if you had a good credit rating. If your FICO is low, this tells the potential creditor that you have the past of frequently missing payments, defaulting on loans, or even a bankruptcy filing. The creditor hedges against your higher risk of defaulting (and thus, losing them a good chunk of money) by charging you with a higher interest rate.