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.
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.
Payday Cash Advance Loans – Turning to Payday Lenders For Quick Money
28-02-2010 by admin
Not everyone has a savings account, or is able to stash away money for an emergency. A lot of us are living from paycheck-to-paycheck, with very little spending money to enjoy, let alone money to save for an unexpected situation. Unfortunately, a money emergency is a fact of life for everyone, and it can be tough to get through for many. This is the time that getting a payday cash advance can be the best solution for whatever issue you are having. Instead of worrying about how you are going to pay that bill or put gas in your vehicle, turn to a cash advance lender for your needs.
Why Online is Better
Turning to a payday lender is a convenient way of getting money when you need it as soon as possible. Using online services is superior than going to a location in a car. For one, you may not have a lending company that is close for you to get to. You’d just waste time and gas driving to one, as well. Plus, you’d have to work with their hours of operation, which may not be convenient for you. Bypass the locations in your area and instead, stay on your computer. With just the click of your mouse, you can find the company that best suits your needs, apply for a loan online any time of the day, and get quick money. Remain anonymous, apply 24 hours a day and 7 days a week, and get a loan up to $1,500 within minutes.
What Do you Need to Apply?
Another great reason that a payday loan is so popular is that there is so little you need to be approved for a loan. If you have bad credit, don’t worry, because the company will not even check your credit score. You simply need to be 18, have an open and active checking or savings account, and be employed. As long as these simple criteria are met, you’re loan will almost always be approved. When you’re next payday rolls around, re-pay the loan back simply by having the money withdrawn automatically from your account.
No one needs to go without the money that they so desperately need. Turning to a payday lender is nothing to be ashamed of, and can take a huge weight off of your shoulders. Apply today for your own loan and be approved within minutes.
1 Hour Loans – Fast Personal Loans For Emergencies
20-02-2010 by admin
Emergencies happen and they often require you to have funds available for immediate use. If you find yourself in an emergency situation and need cash in a few hours, a one hour personal loan may be your best option.
Borrowing from a bank
If you have great credit and more time, you can try working with your bank to get a personal loan. However, it should be noted that a bank will require more time to process your loan application and you must be able to show from your credit history that you can pay of your loan on time.
Getting a loan in 1 hour
If you have average credit or less-than-perfect credit, a short term personal loan is a good option. These loans are offered in amounts ranging from $100 to $1500 depending on your monthly income.
In most cases, it is easy to qualify for these personal loans because the lenders do not conduct a credit check and you can apply for the loan online. One of the biggest advantages to getting a no credit check loan is that there is no inquiry on your credit report and it also doesn’t matter whether you credit score is 400 or 700. You can still qualify for a loan.
Will I qualify for a loan?
Most lenders require you to have a steady stream of income, meaning that you must be employed for a least 3 to 6 months with your current employer. You must also earn at least $1000 a month after deductions such as taxes, insurance, child support, etc.
Home Equity Loans – Source Of Cheap Rate Finance To Meet Needs
15-02-2010 by admin
Over the years you have made timely repayment towards the loan you took against your home. There is a greater price of the home in the market now. This clearly means that in the eyes of lenders your home is now a safer property if you take a loan against it. There is a good amount of equity build up in homes which can enable in borrowing money at cheaper rate.
Home equity loans are given against equity in the borrower’s home that is pledged as collateral. Equity is the amount that is arrived at by subtracting balance payments towards the home from market price of the home. You have repaid many installments of the home loan and in the mean time market price of your home has substantially increased. So there is a good amount of equity in the home. It is this equity that the lender will approve a loan against. This clearly means that you would be given loan almost equal to the equity. These are safer loans for lenders as in case of payment default; the lender will get back the loan on selling borrower’s home.
The advantage is that the borrower can release equity in home. The extra cash in the home can be used of variety of purposes like home improvements, holiday tour, wedding, paying for child’s tuition fee.
Because the loan amount approved is restricted to the equity, the lender feels more secured and so the rate of interest on the loan is kept low. These loans are therefore best suited option when it comes to searching a cheaper loan.
What is more if you have a bad credit history, then also a loan based on your home equity is easier to take and with better rate of interest. Since you have been making regular payments for past many months towards home loan, your credit score may have improved a lot. So the lender will seldom hesitate in giving you the loan.
Prefer online lenders over banks or financial institutions. Online lenders not only have lower interest rate but they process the loan without many additional costs and the loan approval comes within days.