Do not let bad credit stop you from taking an auto loan. Many loan companies can get your approved car loan even if no credit, bad credit or bankruptcy. The announcements of bad credit car loans almost promise that you can buy a car no matter what type of credit you have. Most of these listings are based on truth, but it is best to know your options and understand how the system works.
Even with bad credit can get a car loan through direct funding. The process is the same as for a good auto loan credit. The only difference is that borrowers with bad credit will have to make a larger down payment and your interest rate will be higher. Borrowers may be asked for a down payment of 20% to 50%, with interest rates from 5% to 26%. In general, borrowers with bad credit can expect to pay a 7% to 18% interest. Amortization of bad credit auto loans can range from 2-4 years as opposed to good credit borrowers whose car loans may extend to five or seven years. The advantage of these loans is that they can be used to rebuild your credit.
Bad credit car loans can be abused by some merchants who inflate car prices or interest rates for financing. For example, a dishonest merchant may charge $ 6,000 for a car that normally sells for $ 3,000. After making the payment, the concessionaire will finance the balance at a high interest rate, say 24-26%. The borrower is left to deal with an expensive car and a loan that is too high.
Finally, the borrower will end up defaulting on the loan and further ruining their credit. Or, you can end up paying two or three times the price of the car if it had purchased from a legitimate dealer. Before deciding to buy a car, be sure to investigate their true value to avoid paying more than they should.
In some cases the purchase of a car can be an advantage for the buyer, especially if the dealer is desperate to make a sale. The concessions may apply for a lower down payment or interest rate. This is particularly true for new vehicles financed by the arm of the automaker’s own funding. For newer cars, the repayment period may be longer too.
With the Internet, now easier to get a car loan bad credit. The Internet is a network of distributors where you can click on a site advertising car financing. You will be asked some information and it should be transmitted to a distributor who is willing to work with someone who has bad credit. You and the dealer can make a plan so you can get auto financing even with bad credit.
The Internet also allows multiple presentations of financial information to potential creditors. You will be asked to provide information in financial depth, which refers to a network of lending sources willing to fund your loan. You may end up with a few lenders that compete to offer the best rates and terms.
Almost anyone can obtain vehicle financing although people with bad credit and little or no down payment can be difficult to get car financing. Do not be discouraged if your first attempts at financing. If you persevere and improve your credit, you should be able to get an auto loan despite having bad credit or even bankruptcy