Bad Credit Car Loans – Your Questions Answered…..
Let’s not tip toe around it, if you only qualify for a Bad Credit Car Loan it’s not ideal. You’ll pay more and you’ll have less choice and flexibility but it doesn’t mean that you have to get ripped off and it doesn’t mean that you can’t make it work for you. Here’s your chance to get the straight talking information that you’ve been looking for.
Bad Credit Car Loans – Your Questions Answered:
1. What is a Bad Credit Car Loan?
Also Known As – Poor Credit Car Loans, Second Chance Car Loans, Adverse Credit Car Loans, Problem Credit Car Loans and Sub Prime Car Loans.
Credit History Problems – The term ‘Bad Credit Car Loan’ refers to the type of loan available to people with credit history problems. Credit history problems include issues from the past 7 years such as; defaults, utility bill or loan payments which are 60 days or more overdue, debt collection actions, and debt agreements, which include, bankruptcies, court judgements, debt agreements, and personal insolvency agreements.
Don’t Qualify for Standard Loans – If you have encountered any of the above issues over the past 7 years it may well have an impact on your ability to get a loan or other credit facilities. If your problems are deemed serious enough then it’s unlikely that you’ll qualify for a standard loan from one of the mainstream lenders. In all likelihood you’ll have to consider what the finance industry refers to as a Bad Credit Car Loan. The name is hardly a marketing man’s dream but it’s what these loans have become commonly known as.
2. How do Bad Credit Car Loans Work?
How a Bad Credit Car Loan is Different – For all intents and purposes a Bad Credit Car Loan is pretty much the same as any other loan. It will enable you to buy a car but the loan features are generally more restrictive than a standard type loan. The biggest restriction is the interest rate. If you only qualify for a Bad Credit Car Loan then you’re going to have to pay a higher interest rate. How high will depend on the lender and how bad your previous (or current) credit history problems are. Because people with credit history problems are regarded by banks and finance companies as a higher risk they increase the interest rates that they charge to cover for anticipated losses. Fair or unfair, that’s the reality. In saying that if you need a car, a Bad Credit Car Loan is still likely to be a more cost and time effective option than relying on public transport for example. The term of the loan available may be shorter. You’re probably looking at more like 4 or 5 years maximum as opposed to 6 or 7 years. Deposits are sometimes required and it may be more difficult to include extras like accessories, extended warranties and insurance products within your loan.
Required Preparation – With a Bad Credit Car Loan you’ll often be required to provide explanations of why you experienced credit problems. You may even be asked to provide evidence that you have now paid off what you owed. Because your track record may not be the best you may also be required to provide bank statements that confirm your income and outgoings and show that you can a) afford the loan and b) budget effectively and live within your means.
3. How to Get the Best Deal on a Bad Credit Car Loan?
Take Corrective Action – Wherever possible fix up any outstanding issues that you have.
Do Your Homework – It might sound obvious but know exactly what situation you are in. Understand what your credit history is and what the issues you’ve experienced are. A $200 default with a telecommunications provider is a lot different from bankruptcy and should be viewed that way by lenders. The more you know about your own circumstances the better position you are in to negotiate a better deal.
Shop Around – Get quotes from a number of lenders and find out what’s the best deal that you qualify for. Just trying one lender isn’t going to tell you the full story. All lenders have their differences and while one may see you as a very high risk another may view you as a medium risk and reflect that in the interest rate that you qualify for.
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