Auto Loans for People with Bad Credit
Bad credit auto loans are designed for people whose credit rating is too poor to allow them to qualify for a conventional loan. In most cases, these prospective borrowers have a low credit score or a history that includes bankruptcy, a vehicle repossession, or repayment problems. Today, securing one of these auto loans for people with bad credit is just about as simple as getting a loan that has traditional credit requirements. A higher interest rate is the greatest disadvantage to the bad credit loan.
You might have come across television ads pitching these “auto loans for bad credit” programs, and, although they could be a viable option for you, generally making a decision from what a paid advertisement says is not a smart idea. These programs are often offered by established banks, credit unions, and other lenders, too, and they may have better interest rates available.
Sometimes, selected auto dealers can grant auto loans for people with bad credit. They will base your maximum loan amount on your current income and how much they feel you can repay each month. Therefore, you may not need a credit check to get the loan. The downside of using this type of dealership loan is that you may pay an exorbitant interest rate, perhaps as high as 20 percent. Dealerships frequently buy time to promote these loans on radio and television, so keep your eyes and ears open if you are considering this possibility.
You may need an auto loan and have very poor credit. You do have a few choices for that tough situation. You will most likely need a cosigner in order for a bank to lend you money if you have a credit score of less than 550. Having a cosigner lessens the bank’s risk, so they may approve your loan request. If you do not have someone that can help you, your best bet is to meet with a dealer who will not check your credit. You will have to pay more in interest charges, but you can buy a vehicle to take you to work, school, etc.
You may be in the market for a guaranteed bad credit auto loan to refinance your current loan. Unfortunately, they are hard to come upon. Your ability to get a refinance loan will rely heavily on your credit history, and if you don’t have someone who can cosign, your loan application may be denied.
As a whole, there are several options if you are a person hunting for auto loans for people with bad credit. Find a bank offering different types of bad credit auto loans, then apply for one. The lender can discuss your loan options, if you can get past the fairly humiliating process of admitting to your credit problem. They will tell you if a cosigner will be required. They will also tell you if you’ll have to pay a higher than normal interest rate. Another excellent way to find out if you qualify for a loan is to visit the websites of some lending institutions.