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 theÂ loan termÂ 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