Auto Loans
Auto Loans from your bank, savings and loan, and credit union will give you the best interest rates available. The better your credit rating, the lower your rates and total cost of your vehicle. Auto loans on the internet are easily found, but the lenders are primarily targeting those with bad or no credit histories. In the past, getting bad credit car loans was more difficult, but lenders understand that current consumers are facing financial situations that were uncommon just a few years ago. Today, because so many people are suffering financial hardships, there are more options available for consumers with less that stellar credit scores.
One of the greatest benefits of doing business online is the time you save. Your online search, for an auto loan, can easily return many car loan quotes within a couple of hours. There is no obligation to accept any offer, but you will be asked to fill out a credit application with some basic information (employer, proof of income and proof or residence). The entire process should only take a few minutes, and not involve any “sensitive” information. Look for lenders who offer “guaranteed and immediate approval”, and who ask the fewest questions. Explore the various lenders’ websites. “Live chat” can be a handy feature in case of problems or questions. Once you have decided on several lenders, call your local Better Business Bureau and inquire about any complaints or negative feedback against them.
Many car loan plans offer a no money down option. This can be very useful, if you’re caught needing a car but don’t have a large deposit on hand. If you have had bad credit, then you know how frustrating it can be to find someone to finance a vehicle. Traditional lenders have been typically unwilling to loan money to people with poor credit. And, those subprime lenders that do issue loans, will charge extremely high interest rates, which make a new car even more expensive, then set up the loan contracts with terms that are highly unfavorable to the borrowers. These terms may include exorbitant late charges, prepayment penalties, and other elements that can make paying off your car more difficult.
You can, however, get approved for subprime auto loans without being laden with such burdensome terms and conditions. One of the best ways to negotiate better terms is with a substantial down payment. Twenty percent or more of a car’s purchase price down will give you a much stronger bargaining position. By having saved a down payment, lenders are much more apt to believe that you are making an effort to straighten out your financial affairs, and be willing to work out terms and rates that you can more easily live with.
You can get an auto loan with better rates by shortening the loan term. Statistics show that borrowers are more likely to default on longer term loan. Many borrowers, nowadays, want six and seven year car loans to reduce monthly payments on more expensive vehicles (average new car price is $30,000). With a loan term of two or three years, you become a better risk and a much more attractive customer to the loan companies.
A steady employment history (at least two years with the same employer) will improve your chances of getting an auto loan at a better interest rate.
Every lender will quote you different terms, so it’s to your advantage to contact as many lenders as possible to find the loan that is most favorable to you. You’ll have to submit an application with the same information required by any bank or finance company. Financing at the best rates is easier if you have a good credit history, but a bad credit record doesn’t mean that you won’t be able to get the auto loan, just that you will be paying a higher rate of interest because of added risk the lender assumes. Car finance bad credit companies service high risk loans, and make their money on bad credit car loans by charging higher rates. Contacting as many lenders as possible will give you a better idea of the services and programs available from the various finance companies for your particular situation.
A monthly payment book is issued by the lender, who holds the car as collateral until the vehicle is paid off. Bad credit financing is more expensive, but it’s a way of rebuilding your credit history and is better than having no credit at all. Bad credit won’t necessarily stop anyone from purchasing a vehicle. You can find companies offering instant approval for a car loan even if you have filed bankruptcy in the past.
Getting “pre-approved” lets you know exactly how much money you can spend, and helps keep you “in the ballpark” when negotiating with the car salesman. The loan application can be completed in less than five minutes and with “instant approval”, you can apply in the morning and drive your new car home in the afternoon.
Online lenders are the best sources of bad credit auto loans. Often, you will be dealing with “brokers” who submit your one loan application to many finance companies all at once, and quickly provide you with quotes for your consideration. There are several types of auto loans that individuals can apply for. These include plans for new and used car purchases, as well as refinance loans on a vehicle you already have. Each lender has different qualifications for each type of loan. Some companies, for example don’t offer loans for recreational, commercial, or sports vehicles like ATVs.
Before you begin browsing for auto loans online, order your free credit report. This will give you a good idea of the items in your credit history that may affect your loan terms. A few late payments on your credit card accounts may not be of much consequence, but a repossesion or recent bankruptcy will make it more difficult to find an auto loan with acceptable terms.
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