WHAT IS GUARANTEED AUTO FINANCING?
Millions of Americans who once had a decent credit rating now find
themselves desperately looking for lenders who will finance a car
despite their poor credit record. Whether they’ve experienced job
loss, bankruptcy or foreclosure, circumstances have thrown them into
finding alternative methods of financing a car.
Are you part of that population? Do you want quick financing for
your car even if you have bad credit? Lenders that advertise
guaranteed auto financing are the ones to approach. But before
filing an application, learn how to play the game first.
How Guaranteed Financing Works
Guaranteed auto financing is for everyone, especially for people
with poor credit rating. It works pretty much the same as regular
auto loans, except it guarantees approval regardless of your credit.
Down payment of at least 20% of the purchase price is required.
Repossession can happen. The car, which serves as the collateral, is
owned by the lender until the loan is paid off.
But just like any other bad credit auto loan, guaranteed auto
financing carries a high interest rate. And the
is usually limited to only 3 years or 48 months.
One good thing about guaranteed car loans, though, is you can choose
the car you want from a dealership of your choice. Not all lenders
give borrowers that kind of freedom.
What’s the Catch?
You can get a guaranteed auto loan as long as you show lenders that
you are earning enough to pay it back. You can prove your ability to
pay by providing the lender with copies of your most recent pay
stubs and paperwork containing employment information.
But what if you have low income? Just make sure that your car choice
is realistic. You can’t borrow a huge amount of money for an
expensive car if you’re not earning as much.
Moreover, consider the age of the vehicle you want to buy. If it’s a
1994 model, for example, you might want to buy it in cash instead of
taking out a loan for it.
Things to Remember
1) If your credit score isn’t too low, try improving it first. A
higher score can get you a lower interest rate-always.
So if your credit is not greatly damaged by a bankruptcy,
repossession or foreclosure record, spruce it up and earn a higher
score before applying for an auto loan.
2) Be careful. Many lenders offering guaranteed auto loans are
dishonest. They want to make more money at your expense. Do screen
your prospective lenders before doing business with them.
3) Don’t feel that you have to accept the first offer you find. If
you don’t need a car immediately, shop around and compare prices and
financing terms first. In this way, you will be able to find the
best deal around.
4) Find lenders who want to help you improve your credit through
their car financing program. Such lenders would report your payment
behavior to credit bureaus so it will be reflected on your credit
5) Be on time when making payments. Some lenders would require you
to pay every week, every two weeks or every month, depending on
which schedule really helps you. In any case, do not miss a payment
or you will never see significant improvement in your credit