More About Bad Credit Car Loans

Everyone deserves a second chance. Just because you may have a bad credit history doesn't mean you should not be able to get a car loan and put yourself back on the road. After all, it can be hard to get around these days without your very own set of wheels. In this article I'll talk more about bad credit car loans and what they mean for you.

What Is A Bad Credit Car Loan?

Some lenders out there will not loan you a cent if you have a bad credit history, no matter what it's for or what your financial position may be today. But don't despair. When it comes to car loans there are many lenders out there who are willing to give you a chance; financiers who specialise in loaning money to people who have a poor credit history.

So long as you can demonstrate that you are in a stronger and more stable financial position today, these finance companies will lend you the money to buy that car, despite your poor credit history.

You Are In The Driver's Seat

Loans of this nature are generally no different to a loan for a person with a good credit history. Many will finance 100% of the car's purchase price, interest rates are competitive, the lenders are reputable (think finance company, not loan shark), terms and loan structure are flexible in many cases, and loan approval times are fast.

You have control of your loan and you will literally be back in the driver's seat in no time.

What Are The Risks?

The same as with any type of finance. You are borrowing money, there is interest to pay on the amount borrowed and you are required to meet the repayments every week, fortnight or month, however you choose to structure it.

Some Quick Tips

1. Don't overspend. Purchase a car that is within your means to repay comfortably. Remember, cars cost money in upkeep, fuel, insurance and registration as well. It's not just the purchase price or being able to meet the repayments.

2. Do your research and only deal with reputable bad credit car loan finance companies.

3. Take your time and only commit to a deal that you are comfortable with.

4. If you are purchasing a used car, have it thoroughly checked out by a qualified mechanic before committing to the purchase.

Conclusion

A bad credit history doesn't have to spell doom and gloom for your borrowing future. In fact, successfully repaying a car loan obtained through a bad credit car loan finance company can be a great way to restore your credit score, making it easier to obtain finance for other things in the future.

Speed Up the Auto Loan Process to Avoid Reduction in Credit Score

Happiness is the smell of a new car!

Buying a car is an emotional experience for car buyers. It is not like buying a phone or a television set. It gives a sense of fulfillment and satisfaction to car buyers. It is for this reason that many car buyers spend several months in selecting their dream car.

Once you have chosen a car model, finish the auto loan process without any delay. It doesn't mean that you should opt for the first auto loan quote that is offered to you by a lender. But, it is important to wrap up the auto loan process quickly.

Why should you finish the Auto Loan Process quickly?

You should not spend a substantial amount of time in choosing an auto loan because of the following reasons:

1. The dealer may sell your chosen car model to another buyer.

2. Interest rates may increase in the future.

3. The manufacturer incentives program may not be available in the future.

4. Any unexpected expenditure may cause you to delay the car buying process.

Credit Inquiry

Another important reason for wrapping up the auto loan process is credit inquiry. When you apply for a loan with a lender, you give him/her the authority to "inquire" a copy of your credit report. Credit inquiries have the potential to affect your credit score.

Rate Shopping - Is it harmful for your Credit Score?

Credit inquiries reduce your credit score but it doesn't mean you should stay away from rate shopping. Rate shopping is the act of obtaining interest rates from several lenders for a single loan type. The motive behind it is to choose the lowest interest rates from the available options.

It is important to remember that applying with multiple lenders for multiple loans such as auto loan, student loan, home loan, etc. doesn't mean rate shopping. Every such credit inquiry will reduce your FICO score by 5 points.

45 days is the Limit

FICO score considers all credit inquiries related to a single loan type within a time span of 45 days as a single inquiry. It means that you can apply with as many lenders as you want within 45 days in order obtain the lowest interest rates.

Don't take time for granted. As it is limited, try to take in the best from every moment. If you have decided to buy your dream car, do not shy away from making quick and calculated decision. Search for the lowest interest rates and sign the dotted line within 45 days.