Seeking Car Loans With Bad Credit: Factors to Consider Before Applying

Buying a car is a major investment for young people, and a vital one for others. Whether an automobile is needed for work purposes or simply to get around in, it is hard to survive in this society without one. The trouble is secure a car loan with bad credit is not a simple thing.

Just how an applicant might have attained a low credit score is down to any number of reasons. The most common is simply falling behind on repayments, but losing a job or getting county court judgments can also be major contributors.

Getting loan approval with poor credit scores is never easy, but there are options available. And even when it comes to getting a car loan, applicants with very low credit ratings can get the green light to buy the car they want.

Why Seek The Loan?

Young drivers are finding it more difficult to buy a car because their credit ratings are low. The reason for low credit scores can vary, but the lack of a credit history is partly responsible. So, young people usually have to apply for car loans with bad credit scores holding them back.

Therefore, getting a loan with which to purchase a car is not a simple task. This comes as no surprise, given that approval with poor credit scores is never easy anyway. But by applying for a loan specifically designed to cater to the bad credit borrower, the chances of success are greater.

Of course, the reasons for having bad credit can also be down to financial woes, perhaps created by a sudden loss of employment. However, the need to buy a car for a new job, or to develop your own business, means a car loan is necessary.

The Trouble With Bad Credit

It might seem strange that even with a terrible credit rating applicants can get the funds they need to buy a new car. But it is no strange thing at all. Securing car loans with bad credit comes down to the simple fact that bad credit scores are not a major issue for lenders – there are bigger influencers on a loan application.

Bad credit ratings are only an indication lenders go by when assessing an application, telling them the degree of risk associated with a loan deal. But today, so many people have seen their credit status adversely affected through no fault of their own that the score alone no longer has much influence.

Instead, getting loan approval with poor credit scores is dependent on income and the debt-to-income ratio. The ratio permits no more than 40% of income to be spent on debt repayments. So, if the repayment on the car loan pushes the percentage above that rate, the application will be rejected – if not, then approval is almost certain.

Clearing the Bad Credit Hurdle

The temporary nature of credit scores means that approval of a car loan can always be justified. Other than proving a large enough income and establishing repayments are affordable, showing an improvement in credit scores can have a major impact on an application.

Remember, not everyone gets bad credit scores because of poor money management. In many cases, it is as a result of redundancy, or economic developments or just plain bad luck. So, there are mitigating circumstances that lenders take into account. That means loan approval with poor credit scores is always possible.

Clearing some minor debts does improve matters, while a consolidation loan to completely restructure debts is also helpful. However, the car loan is unlikely to come cheaply, with higher interest rates to pay. This means the loan is more expensive, but approval makes it worthwhile.

Used Car Loans With Bad Credit – Don’t Feel Depressed Because of Your Credit History

Fashion comes and goes. Fads disappear. But, style stays forever. And, everyone will agree that a car is the most stylish thing that a person can own. There is nothing wrong in buying a used car because nowadays most people constantly upgrade their cars and the used vehicles available for sale are not very used.

If you are a bad credit borrower, used cars can really be a boon for you. You get to own a car and that too at reduced rates.Also, used car loans are very easy to acquire. There cannot be anything better than this.

Why Used Cars are a Better Option for People with Bad Credit Score?

1. Today, there are multiple options available in the market for buying a used car.
2. Economically priced.
3. Several lenders and dealership offer used car loans. It is very easy to obtain them.
4. Lower cost means low auto loan amount. This makes monthly payments easy.
5. Improvement in credit score by choosing an affordable used car loan program.
6. Less chances of upside-down auto loan.

What Factors should be kept in mind while choosing a Used Car?

When you have a bad credit score, used car loans can act as a savior. You will get to own a reliable-low priced car plus you will also get the opportunity of improving your credit score. But, to truly enjoy owning a used car, you must choose it wisely.

1. Decide – Private Party or Dealership
2. VIN No.
3. Check the Car Title – If it has a lien, ask when you can get the Title under your name. Don’t buy a car with a Salvage Title.
4. Ask your Trusted Mechanic to inspect the Car.
5. Check the Automobile by taking it for a Test-Drive.
6. Vehicle History Report – Know the details of past owners, accidents, repairs, etc.
7. Warranty Details.
8. Car shouldn’t be older than six years because most lenders don’t finance very old cars.

How to get Used Car Loans with Bad Credit?

Get your Accurate Score

It is essential that you know your current credit score. There are many lenders who can dupe you by showing you incorrect credit scores. So, it is always better to check your credit ratings and your credit report before applying for a used car loan.

Meticulously scrutinize every transaction on your credit report and report every error to the credit bureau. This will improve your score.

Choosing a Car

It may happen that the lender will require you to choose a car from few specific dealerships. But, that doesn’t mean you cannot choose a car before applying for bad credit used car loan. You must have an idea about the car that you are interested in.

Do you want to go for a convertible or an SUV? If you have a kid, safety would be very important factor. Traveling longer distances means you must choose a fuel-efficient vehicle. So, take time and decide on the kind of car that you want.

Complete Paperwork

When you have bad credit and want to buy a used car, it is essential that you are ready with documents. It will establish the fact that you are currently capable of assuming the responsibility of car financing program.

So, make sure you are ready with the following documents along with your credit report:
1. SSN
2. Employment Proof – Employment Verification Letter
3. Income Proof – Recent Pay Stubs
4. Receipts of Utility Bills
5. Car Details, if you have already selected a car

Dealing with Down Payment

Any problem can be solved with just 10% of the auto loan amount. Remember that bad credit history reduces your credibility. But, you can win it back with down payment. If you don’t have cash for down payment, you can trade-in your old car.

Co-signing – Important for Bad Credit Borrowers

When you have bad credit, the lender is unsure of his money’s security. Your past financial transactions suggest that you have made a few mistakes and that’s why; lenders insist for a co-signer. You can find someone with a good credit score to co-sign your used car loan contract.

All these tips will help you get an auto financing for used car despite bad credit history. Take your time in making a decision because a used car loan will improve your credit score and give you a great chance of buying a reliable car.

Online Car Loan Lenders Have No Match!

Online Car Loan lending has many advantages over traditional financing and dealership financing that makes it the most attractive and beneficial financial option for those seeking credit to purchase a new or used vehicle. Learn why it is to your advantage to apply for a car loan with an online car loan lender.

Traditional Lenders and Car Dealerships

Traditional lenders offer car loans to people with good to perfect credit scores and provide fixed amounts for purchasing new vehicles. These pre-defined car loans are created for mass consuming and offer little flexibility. It is not always easy for any consumer to meet the credit and income requirements needed to get approved for a car loan with banks and traditional lending institutions.

Car dealerships also have a lot of limitations. Though the loans are specifically designed for purchasing their cars, your options are restricted; you can only get finance for purchasing new cars or used cars that they handle. The monthly payments will be high because they include additional charges and higher interest rates. Besides, if you want to purchase a vehicle directly from the owner, you can’t resort to car dealership financing.

Online Lending Benefits

Online car loan lenders, on the other hand, provide many benefits that can’t be ever matched by traditional lenders and car dealerships. For starters, online car loan lenders offer a wide variety of car loans that can be tailored to your needs so anyone can obtain finance for purchasing the car of their dreams.

Bad credit and no credit are not a problem for online car loan lenders since they are specialized in dealing with people with credit and income problems. There are no limitations as to the loan amount as long as you can meet the monthly payments. Besides, you can purchase the car you want and if the price is high, you can always get lower monthly payments by extending the flexible repayment programs that online car loan lenders provide.

The interest rate charged by online car loan lenders is always lower than that of car dealerships and lower than traditional lender’s loans with similar loan types. Car loans for people with bad credit and no credit, charge slightly higher interest rates but traditional lenders do not provide this kind of loans.

Most importantly, you can purchase the car you want. If you’ve found a car from a private lender that wants no intermediaries and you need finance, you can apply for an online car loan and chances are you’ll easily get approved regardless of your credit. If you have a steady income you have nothing to worry about.

The benefits of online car loan financing are out-and-out and if you are planning to purchase a car, online car loans should be your first option. They are an excellent way to obtain finance for a car purchase fast and without hassles. Online Car loan lenders provide advantageous loan conditions and do not overcharge for their services like traditional lenders and car dealerships do.