There are thousands of lenders who offer the bad credit auto loan for those consumers who don’t qualify for a regular car loan. This relatively new occurrence of so many choices of subprime lenders has come about due to the fact that many people have lost their jobs and their good credit ratings. They have no other choice than to buy a car through such lenders.
Getting a car financed with bad credit is not as difficult as it once was. First of all, you didn’t have much choice in how much you could spend for a car. The maximum amount of the loan was very low which meant you couldn’t buy a really nice car that would last the length of the loan. Also, maintenance costs were extremely expensive.
Secondly, you needed a substantial down payment that usually covered the price of the car. The rest of the balance carried a high interest rate and monthly payment over several years. The borrower ended up paying up to three times the price of the car.
And last but not least, you had to have a very good income to even be considered for a bad credit auto loan. That eliminated a great number of consumers who were not eligible because their incomes didn’t meet the minimum requirements.
You may wonder what’s different about this type of loan these days. First off, if you meet certain criteria, you can buy a late model or even a brand new car with prices that exceed the maximum amount borrowed in the past.
Second, there are many companies that don’t require a down payment in order to get a loan approved. The whole price of the car is financed.
And lastly, there are low-income bad credit auto loans available for people such as students and part-time workers who have lower incomes.
The first concern of anyone needing one of these loans is to finance transportation they desperately need to get back and forth to work or school. However, you can also plan to jump start your new financial portfolio in several ways with a bad credit auto loan.
- As you look for a lender, find one who is dedicated to helping you improve your credit score. You want a lender who will systematically report your prompt payments to one or more of the credit reporting bureaus.
- Some lenders will lower your interest rate after several months of consistent payments that are paid by the due date. This can help reduce your payments or reduce the time needed to pay off the debt. Watch out for lenders who may reduce your interest rates but increase the length of the loan.
- A few lenders will allow you to upgrade your transportation after a period of prompt payments. If you decide to go this route, check the terms to see if this move will help in your financial plan to increase your credit rating.
You have been given several moves to consider before you find a bad credit auto loan lender. It’s not just about obtaining transportation, but improving your credit status as well.