Find Auto Loans Online – Auto Loans For People With Bad Credit

Find Auto Loans Online – Auto Loans For People With Bad Credit

Posted 07.03.2012 in Articles by Angela

Are you constantly thinking about getting a new car but don't think you'll be pre-approved for an auto loan because of your bad or absent credit score? Luckily, there are plenty of places that offer bad credit auto loans. You can call around to different dealerships or go to a bad credit auto loan website. These websites work their hardest to pair you up with a local dealership to help get people on their feet. Don't be discouraged or embarrassed if you've been turned down in the past either; bad credit auto loans exist to give you a second chance. Not only will you get your new car, you'll also reestablish your car credit, rebuild your credit history, and raise your credit score.  Applying for a bad credit auto loan can help you get “back on the road” to better credit.

A bad credit auto loan is a loan for a car extended to someone with bad credit. This generally means people with credit scores lower than 680. People with bad credit run into more difficulties when applying for a car loan, including higher interest rates, a higher down payment, etc. The first step is to get your credit score and credit report. Equifax, Experian, and Transunion, the three big credit unions, will provide one annual free credit report. Once you get your credit report from them, make sure that it is accurate and there are no errors in it. Then determine your budget; how much are you going to pay for the car, total? Many advisors for car financing say that a common mistake is that car buyers look at the monthly payment, not just at what the total payment for the car will be. Keep in mind that those with lower credit scores may have penalties including higher interest rates and a higher down payment required, and that the repayment term may be a lot shorter (24-48 months).

It is recommended that those with bad credit scores work on improving their credit scores and raise a down payment of at least 20%. Before you go car shopping, find a loan. You do not have to get a loan from the dealership; there are other sources such as credit unions or banks. There are online websites that provide bad credit auto loans or resources to find bad credit auto loans, such as CarsDirect.com, InstantCarLoan.com, CapitalOneAutoFinance.com, AutoCreditFinders.com, and BakewellFinancial.com. Compare or apply to different loans to find the best one for you. Make sure your lender is flexible so you aren't trapped into a rigid plan that will charge, for example, for prepayments or for eventual refinancing. 

Those with bad credit scores should also consider not buying a new car, but getting a loan for a used car instead. You could also consider guaranteed new car loans, which involve a third party who assures the dealer they will pay the loan off if you default. There are companies that work in guaranteed new car loans, if that is what you're seeking.

These options may be preferable to going to the car dealer directly for a loan and to buy a car. The problem with going to the dealer directly is that the dealer may want to trick or scam you, especially by telling you that your credit score is lower than it actually is or trying to convince you to pay for extras such as VIN numbers. The dealer may trick you into higher interest rates than you need to pay. Worse, car dealers sometimes run scams, such as the “spot delivery” scam where you are sent home with you car without a final contract and later discover that you need to pay higher payments or a higher interest rate than previously stated at the dealer. If you prepare beforehand and do your research with bad credit auto loans, you can avoid such pitfalls when buying a car and applying for a loan.

Although bad credit auto loans can be more expensive than auto loans for people with high credit scores, they are good ways of rebuilding your credit score if you are sure you can fulfill the terms of the loan. Bad credit auto loans are good for people who have the money, but just don't have bad credit. Before applying, prepare and do your research and comparisons with the sites mentioned above to make sure you aren't ripped off or forced into an agreement which is detrimental for you. Having a bad credit score won't bar you from getting an auto loan, and so long as you get one and pay it off, your own credit will rise and make getting future loans easier.   

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