Bad Credit Does Not Mean No Loan
Bad credit should not call a screeching halt to getting a car loan. Lending enterprises are out there that will approve a car loan even for those with no credit, poor credit, or even bankruptcies. Some car ads you see for auto loans for those with bad credit seem to promise a car no matter what the state of your credit reports. Believe it or not, many of those are grounded in the truth, but you need a guide to understanding your options and how these loans are engineered.
Process Is About the Same
You can get a car loan through direct financing and the process is much the same as for auto loans made to those with good credit. Of course, borrowers with bad credit may be asked to come up with a larger down payment and endure interest rates that are somewhat higher. Down payments can range form 20% to 50% and interest rates can range from 5% to 26%. Generally, auto loans for those with bad credit can have rates ranging between 7% to 18%. Two to four years is usually the range for amortization for auto loans for those with bad credit as opposed to 5-7 years for those with excellent credit. At least taking on such a loan does provide the opportunity for you to improve your credit standing.
Plenty of abuse occurs in the market for auto loans for those with poor credit. Dealers will inflate car prices or pump up interest rates. If a dishonest dealer sells a car for $5,000 that usually goes for $2,500, then takes a down payment and plugs in an interest rate of 24-26%, the buyer then has an overpriced car and a loan that is unreasonably high. Often, the buyer defaults, further ruining his or her credit. Or just as bad, ends up paying two or three times the worth of the automobile. Do diligent research before buying any car so you will not pay more than the market demands.
Sometimes buyers can find dealers who are anxious to get certain cars off of their lots and can make a good deal. Concessions for lower down payments or interest rates can be made for those who want auto financing for those with poor credit. You may find this particularly true for new vehicles financed by a financing arm of certain manufacturers. The amortization process for newer cars can be longer as well.
Shopping Online for the Best Rates and Terms
Shopping online makes finding auto loans for those with bad credit so much easier. The internet even has a dealer networking system engineered to make shopping a breeze. Simply click on one of the many sites advertising car financing. You will be required to divulge certain information. These facts will be passed on to dealers willing to deal with those who have poor credit. You can work with these dealers to get decent financing even with bad credit.
The internet has another interesting feature. You can make one submission for an auto loan for those with bad credit. This personal and financial information will be forwarded to a lacework of lending resources willing to finance your loan. Even with poor credit you may have lenders competing to offer you the best rates, terms and conditions.
Do Not Be Discouraged
While it is true that almost everyone with bad credit who is seeking vehicle financing with little or no down payment is going to be turned down, it is not always the case. Anyway, do not be discouraged if you are turned down for an auto loan for those with poor credit. You should hang in there, persevere, and set about with a plan to improve your credit ratings. You will eventually be able to land an auto loan in spite of your poor credit history.