1329 Words About Bad Credit Car Loans – Down Payments, Interest Rates & Where to Get Approved!
Author: Zacharia Taylor
This article covers many different aspects of bad credit car loans and buying cars with bad credit in detail. Topics include the difficulty of obtaining bad credit auto financing, whether or not you actually have to have a down payment, interest rates and whether or not you really have to pay a crazy high interest rate, buying used vs new, where you can get approved and finance add-on products. This article will certainly help you along your way if you are looking to buy a new or used car and have a poor credit rating.
What is a Bad Credit Car Loan in General?
Sub-prime and Secondary finance companies offer auto financing for people that have poor credit ratings. This is commonly known as a “Bad Credit Car Loan”, as it is a car loan for someone that has bad credit. The interest rates for these types of loans can be very high or reasonable, depending on the lender that you choose to apply with. If you have a bad, fair, slow or poor credit rating (which is all the same), then this type of financing is what you will have to use to buy a car on finance. Not all lenders are created equal and some can offer better terms than others.
Get Approved Instantly Online: BuyingCarswithBadCredit.com
Is This Type of Financing Difficult to Obtain?
It depends on what type of lender that you use. Traditional banks are much more difficult to obtain a loan with if you have bad credit. Usually, regular banks and mainstream lenders require large down payments and are very restrictive as to the amount that you can get approved for.
Specialized sub-prime lenders can provide easier approvals and some companies provide their services online, which makes obtaining this type of financing much easier. Generally, if you have a credit score below 680, then a sub-prime lender is what you should deal with if you want to get approved. Credit scores as low as 480 can get approved through special finance programs and in many cases, with little to no money down. While most people become discouraged when trying to get approved with a bad credit rating, it’s much easier if you simply use the right kind of lender.
Do I Have to Have a Down Payment?
Car dealerships request down payments, whether you have good or bad credit. It’s simply another way of getting more money from you in addition to the amount that they receive from the finance company that approves your loan. Buy here, pay here dealerships always require down payments to lower the risk that they incur by offering you financing.
Obtaining a car loan with bad credit, with no down payment is a matter of using the right lender with the right combination of vehicle, finance amount and terms. Just because you have bad credit, does not indicate that you are required to have money down for a car loan. In fact, the need for a down payment can easily be eliminated with the right combination of vehicle and lender.
Do I Have to Pay a High Interest Rate?
Different lenders have very different lending requirements and guidelines that they use to approve auto loans as well as, the specific interest rate that is charged. Contrary to popular belief, your credit score is not the only variable used to determine your interest rate. The year, make and model of the vehicle that you are wanting to purchase can make a significant difference in the rate that you are charged. So do you have to pay a high interest rate? It depends on where you apply and with which company that you get approved with. You will pay a higher rate than someone that has excellent or good credit, but it doesn’t have to be all that bad.
One thing that many people aren’t aware of is that car lots can actually increase your interest rate above and beyond what the loan company actually approved you at. This happens all the time and is the main source of profit for the dealership’s finance department. It’s called back-end profit.
For example, if you get approved at a rate of say, 12%… the dealer can add to that rate from 3% to 5%, depending on the number of “add-on points” allowed by the finance company. So if you’re real interest rate is 12%, it’s common that you will be told that you’ve been approved at 15 to 17 percent. The difference that you pay in additional finance charges is profit for the dealership and paid to them by the finance company. The dealership finance manager is paid a portion of the amount, usually 25% of the additional finance charges that you pay as a result of this increase in your interest rate.
The way around paying the higher interest rates is by using a direct lender. By bypassing the dealership finance department you can get lower interest rates and also have the ability to negotiate as if paying cash.
Do I Have to Buy a Used Car?
New cars that are priced reasonably can be obtained with bad credit just as easily as used cars. The added benefit is that there frequently are manufacturers rebates that can be applied to lower the price of the car below invoice, which puts you in good standing as far as the amount requested vs the loan value of the vehicle (great way to get a no money down new car loan with bad credit).
So no, you don’t have to buy a used car just because you have bad credit. In fact, many people think that car payments are always lower on used cars. That’s not the case and the reason is simple. New cars can be financed for longer than used cars. Also, it’s easier to get a lower interest rate (much lower) on a new vehicle than on a used one.
Where Can I Get Approved Easiest?
As described above in the first section, you will need to use a sub-prime or secondary finance company to get a bad credit car loan. You should use a good lender that is legitimate and has a long track history of getting people approved, regardless of their credit history. Some are available online and can provide quick approvals in minutes. But beware of scams and hoax sites that don’t deliver.
While you can try to get approved by going directly to a car dealership, it is best if you work with a lender directly. Dealing with a direct auto loan lender will certainly get your loan approved easier and with less hassles. Just because you have credit problems, does not mean that you can’t get an auto loan direct, just like people that have good credit. You just have to use the right kind of lender as mentioned above (sub-prime or secondary).
Do I Have to Buy an Extended Warranty to Get Approved?
This question is being addressed because some car dealerships will try to pressure you into purchasing an extended car warranty. Some will state that it looks favorable to the lender or is a requirement that the lender has stipulated for the approval. This is not the case and you absolutely do not have to purchase any type of extended warranty as a requirement for an auto loan.
What About GAP Insurance Added to My Loan?
GAP insurance covers the difference between what you owe on the vehicle and what it is actually worth. In cases where the amount that you will owe will be more than the market value for the car, GAP insurance can be good to have to protect you from having to come up with that amount should the vehicle be stolen or totalled in a car accident. It is against the law for a dealer to force you to purchase it, so be careful when signing the dotted line and don’t let a dealer pressure you into having it added to your loan contract.
About the Author
Jason Lanier is the editor of http://www.BuyingCarswithBadCredit.com. At his website, you can find good sources for bad credit auto financing for new and used vehicles, regardless of your past credit history.
Special Finance Programs are available for residents of all 50 states.
Regardless of what company that you choose to obtain your financing with, make sure you are dealing with a legitimate online company that can provide you with a real car loan.
Article Source: http://EzineArticles.com/?expert=Jason_Lanier
Car loans?
I am looking to get a used car and I want to finance it through my bank. How do car loans work? Do I need to find a car first or do I get the money from the bank first? What if I get a loan for 12k and I find a car that is 10k – do I need to give back the extra 2k?
Go to your bank or credit union and get approved for a loan. Go to the dealership and buy the car. They write the contract or purchase order and you can take that to your bank or cu and your loan is for the amount of the purchase of the car. The dealer might have access to your bank or credit union directly and they can take care of all the paperwork. They might also be able to get you a better rate than the bank.
Car Loans?
Are there any car loans out there that send the check to the borrower instead of the dealer?
BTW, I have excellent credit 740 FICO. But I am trying to buy a car from an individual instead of a dealer which is why I am looking for a car loan that pays to me instead of a dealer.
Today every person has need of car, because it has become the necessary need for the people and status symbol also. If you have bad credit history or poor credit history and look for purchase a car, then it is very tough for you. Due to bad credit history, lenders are not keen toward
car loans?
im 18 years old and i need a car, where and how do i get a loan to buy a car.. i’m not wanting a brand new car i just need a loan to buy one now and how does it work? how do i pay loans back? i dont want to mess up my credit for the future.. thanks
im not wanting much money from a loan just need a car for now and im still in school and i get 209 a week but the phone bill kills i have 669 soo far i just need a car like maybe a cav or something like that.. but thy are like1500 or a lil more.. can i get a little loan like that or something? i dont want it shitty so i have to have it in the shop every week i need to to get me to and from school and work and not break down.. i want it decent not luxury car
To have a decent shot and getting a car loan on your own, you’ll need 6 months or more of a good credit history. Having a year or more is better. Usually you’ll start getting a good credit history by getting a credit card with a low credit limit, and making the payments on time. Lenders also want to see that you have a stable residence and job history.
The larger down payment you have, and the more income you make, the greater your chances for approval. The main issues I see with you getting a car loan are having a limited credit history, having limited job history, and possibly not having enough income.
Applying for a car loan is easy – regular dealerships have contacts with many different lenders, and will request the approval for you. You can also apply for a car loan online through companies like Capital One. If you do decide to get financing through a dealership, have this information readily available.
1. Names, addresses, and phone numbers of 3 references.
2. Recent pay stubs from your current employer.
3. Your current and previous employers’ name, address and phone number.
4. Current and previous addresses.
CAR LOANS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?
When you get a car loan and someone cosigns for you…if you prove to the bank or whatever after a year can you have that cosigner taken off? Because it shows you build can make your payments on time for you a year (well that is if you do) and you build credit.
No the cosigner cannot be removed until the loan is paid off or you refinance without a cosigner…………..md
What do lenders look for when giving out car loans?
I want to buy a car, and am considering applying for a car loan.
What do lenders look for as a bare minimum to get a loan?
I have no possibilities for a co-signer, I have been in the same job for 3 years, so I have steady income, and I live at home so I don’t pay rent/mortgage.
Also, what lenders are usually more willing to give loans? Banks, credit unions, etc..?
Thanks!
Here are some factors that lenders consider: credit score, employment and proof of income, residential address, value of car to finance, length of terms, downpayment, current loan standings or recent credit records.
Since you have a steady job, a stable income and a house you fully owned, you can easily get a car loan. However, the amount they will lend to you and the annual percentage rate of interest they will impose will be affected by the factors i mentioned above.
Banks offer better interest rates and are more quick in their approval and release of loan amount. So, I would say, you check the banks first.
Ken
http://www.carbuyhelp.com
1-800-951-4714