What You Should Know About Bad Credit Car Loans

Looking for a car loan with bad credit can be an overwhelming challenge. With personal transportation being such an important part of our daily lives, finding a reputable lender and auto dealer are essential to getting you into the right car at the right price. The outlook is far from hopeless if you’re looking for a new vehicle with poor or no credit. On the contrary, it is possible for individuals with damaged credit ratings to receive a car loan through a dealership and a bad credit car loan may even help you rebuild your credit rating. While bad credit car loans aren’t for everybody, with the right financial advisor working with you, you can establish a rate that works for both you and your budget. Most dealerships have a team of financial experts to help you decide if a bad credit car loan is the right choice for you, and they may even be able to get you into a new vehicle that same day.

Before entering into any financial agreement, it’s important to have all the information needed to make an informed decision.

What is a bad credit car loan anyways?

A bad credit car loan is a sub-prime vehicle loan with a higher interest rate than you would receive with a high credit rating through traditional lenders. While the length of your term may vary, they typically run from 36 – 72 month. Of course, the longer the agreement, the more interest you will end up paying in the end. You also need to consider the type of loan you are going to need, are you looking for a new vehicle or a used one? The financing can be different depending on your needs. Should you decide that a bad credit car loan is right for you, you should consider that loans come in two different forms:

Secured auto loans – Secured auto loans have a 95-100% approval rate and will offer you financing with little or even no down payment. These loans are able to offer better rates and financing because they use your new vehicle as collateral. This means that failure to make payments will result in not only damaging your credit score further, but possibly repossession of the vehicle.

Unsecured auto loans – These loans are more difficult to acquire and are riskier for the lender than the borrower. The vehicle is not taken up as collateral but this means that the down payment is higher and so is the interest rate. Because of the increased risk, these rates are less competitive and more difficult to secure.

How can a bad credit car loan help me?

It can take time to rebuild your credit score. Sometimes even just a bit of bad luck can negatively affect your financing options. Securing a bad credit car loan and making all of your payments on time can help to rebuild that score and help you secure loans in the future. So, not only can you get into the vehicle you want, you can build up a credit score.

How do I get a bad credit car loan?

Most dealerships have a finance office that can help you choose what the best loan for you is. It may be more difficult to acquire an auto loan than for someone with a great credit score but it’s more than possible that you’ll be able to drive away in the new car that you need. You can apply online or through the dealership to find out if you’re approved and how much financing you’re able to receive. Don’t be intimidated by the process, it’s quick and easy with the right advisor.  Do your research to ensure that you’re able to get the best rate possible and don’t rely strictly on the opinions of others. Make sure you look into your credit rating yourself and don’t just take someone’s word that your credit is poor. The more information you have the better equipped you’ll be to make a decision.

Overall, a bad credit car loan can help you get on the road, or replace your current vehicle. Having access to personal transportation is so important and these loans should be considered if you’re in need of financial assistance. They can also help to repair some of the damage done to your credit score, so finding an appropriate rate is important to make sure you’re able to keep up with the payments. Make an appointment with the financial assistant at the dealership to talk about what options are best for you.