Due to poor credit ratings, a lot of people have their car loan applications turned down. This can often be attributed to their poor preparation for the application process or the poor timing of their application. Presently, owing to the economic recession, people with low FICO scores can often obtain credit services from money lenders.
Financial institutions sell loan products with the aim of making interest. It has, however, become necessary for these institutions to switch to less demanding requirements for granting loans, because only a fraction of clients seeking loans today can fulfill the previous, more stringent demands. Read on to find helpful tips about how to access an auto loan even with a bad credit rating.
Qualifying for an Auto Loan with Poor Credit
A bad credit car loan will allow you to get the vehicle you really want – new or used – without having to pay too much over time. Possible reasons that your bad credit auto loan application may be rejected include:
- Inadequate or incorrect data
- Incorrect submission of forms
- Not filing credit reports, bank statements and employment info
However, minimum earnings of $2,000 every month are necessary for any car finance loan. Carefully select a car insurance option that befits you, since insurance is added to the car purchase charges. It is advisable to do research to ensure you prepare and submit your loan application correctly.
Knowing your credit score makes it easier to understand what you’ll need to get a car loan with bad credit. It is just like getting a normal loan, but you will be required to pay a higher interest rate and make a higher down payment. Interest rates for bad credit car loans range from 5% to 26% and normally vary based on your credit score. The loan is paid back after 2 to 5 years.
Based on the severity of your bad credit, your required down payment can vary from 20%-50%. Normally, the down payment affords borrowers the chance to negotiate better interest rates. It is important that a borrower is informed enough to avoid paying extra for bad credit loans. Be certain that you can afford the cost of the car plus the dealer’s profit, as this is what you will be paying for.
Be wary of lenders that make false assertions. Certain lenders can’t afford to take the risk of lending to those with bad credit. Carefully search for and compare all the available bank credit loan options before opting in. Pay attention to the terms and interest rate proposed by lenders. The fact that you’ve qualified for a bank credit loan doesn’t readily mean you should accept it. If you feel you can’t repay the loan, then don’t borrow until you are sure you can pay it back.
Unique Auto Finance Services for Individuals With a Poor Credit History
Having a bad credit history doesn’t necessarily make you a bad person; it may only be the evidence of hard times. Loan lenders now understand this, and this has led to the introduction of bad credit car loans. Now a bad credit history shouldn’t prevent you from acquiring that dream car.
To obtain a loan from conventional loan providers like banks, credit lending institutions, and some car manufacturers, you will require awesome credit ratings and a high FICO score. Since a lot of people cannot meet these conditions, they cannot access these loans.
Now, experienced lenders have taken advantage of this opportunity and are now providing loans for the vast majority of individuals with poor credit rating. Companies can make substantial interest from these loans. These days, a lot of financial institutions have embarked on the business of giving loans to individuals with poor credit ratings.
The internet is replete with information on institutes that provide bad credit auto financing. Their interest rates, turnaround times, loan options, and loan tenures are usually included on these sites. Numerous sites also have online loan calculators for the easy computing of loan tenures and other information; you can use these to find a repayment plan that works for you.
To make a good car loan deal with a loan provider, you need sound negotiation skills. Use an expert negotiator if you are in doubt of your negotiation skills. Besides getting you cheaper deals, these experts will work to make sure that your auto loan application is duly prepared and organized.
Finding a dealer
You need not worry even if you have experienced severe financial issues in the past. With “no credit check” car loans and adequate planning, you can overcome these issues and get back on your feet. To find out which car dealers may be willing to finance people with iffy credit, pay attention to radio commercials or billboards from dealerships that say things such as “Your job is your credit!” or “Bad credit? No Problem!” These are good places to start.
There are numerous “no credit check” car loan dealers and manufacturers with different modes of operation. Research and review various companies, then choose the best deal after careful analysis. Some may demand higher interest rates; others require a larger sum as down payment. You should opt for a company that allows a fair amount of down payment as well as low interest rates.
Even with a bad credit history, “no credit check” car loans deliver an interesting alternative that can finally put you behind the wheel. With a good plan, you will certainly find a bad credit car loan to finance that dream car.
Featured photo credit: Pierre Money Mart via pierremoneymartblog.com