Bad Credit Car Loans - Are They Possible, and Should You Apply For the Money?
Buying a new or used car or other vehicle is one of the most common reasons for applying for a personal loan. It is also a common inspiration to applying for a secured loan, whether it may be secured against the car itself, or against a house as a second mortgage.
What, though, if you have a bad credit record? Can you still apply to borrow in order to buy a car? After all, a vehicle of some sort may be essential for your work, so the loss of a vehicle could be enormous if you need to replace your car, van or truck.
The answer to the first question posed in the title is "yes, it is possible for someone with a bad credit history to get a car loan." Your own personal record and where you live will dictate whether it is possible for you personally, but in the UK and US you may well succeed if you take care and shop around.
Lenders recognize the difficulties some might face in not having their own car, so some will consider you despite your poor record. In fact, a car is almost an absolute necessity for millions in the UK and US. Apart from the social stigma of not having a car in these material minded countries, it can be incredibly difficult to get from place to place without one.
I know from my own experience in England. I spent my last two months in the country without a car, as I had an opportunity to sell it and it was not worth buying another as I was leaving the country permanently. When it came to getting anywhere outside of town, it was more difficult than planning to to cross the world. My first attempt took three hours to get a mere 30 miles with seemingly endless waiting around. Public transport is just not a feasible option for many in such situations.
So, when someone needs a new car, a touch of desperation may creep in if your credit rating has taken a knock, for whatever reason. It is important to try to overcome any emotional drive to buy a new car and get the first available loan. The article below may help in that respect, setting out some sensible steps to take to find a lender who will take you on.
But that does not answer the second question: "should you take out a bad credit car loan?" There is no simple answer to that. You need to weigh up all the practical aspects of not having a car against the potential costs of what may be an expensive loan, due to your low credit score. However, whatever you decide in the end, it is worth considering it as an opportunity to consolidate any debts you may have and budget for a better future.
Car Loans After Bankruptcy - Tips to Getting Approved
By Carrie Reeder
A car loan after a bankruptcy is one way to help build back your credit history. In fact, once your bankruptcy closes, you can apply for a car loan the next day. To get approved with the best rates for your car loan, follow these tips.
Review Your Credit Report
Before you start applying for a car loan, check out your credit report and make sure all your accounts are in order. It is not uncommon after a bankruptcy to see open accounts that should be closed, which hurt your credit rating.
While looking at your credit report, consider adding a page explaining the situation that resulted in your bankruptcy. If there were extenuating circumstances, lenders may approve you for a better rate than under normal conditions.
Plan Your Car Purchase
Before purchasing a vehicle, decide what you can afford in a monthly car loan payment. This will help you decide which financing package is best for you. Both the loan amount and length of payments will determine your monthly payments, so there is flexibility in determining which vehicle you can afford to purchase.
Use A Car Loan Lender
Car loan lenders make their money by finding you a loan. Car loan lenders work with several financing partners to back loans with all types of credit risk, including bankruptcies.
Online car loan lenders deal with thousands of loans, and can usually find you a better deal than your local car dealerships. Online car loan lenders will send you a check when you are approved, basically making you a pre-approved car loan buyer.
Explain Your Situation
Car loan applications will ask if you have ever declared bankruptcy and why. This is your chance to explain what led up to the situation and what steps you have taken to resolve your credit situation. Be sure to include improvements in your financial history too.
Consider Refinancing
Once you are approved for a car loan, keep your eye on future refinancing. By making regular payments on all your bills, in a year’s time you could qualify for significantly lower interest rates. In three years, you can build your credit score to near excellent and qualify for even lower rates.
To view our list of recommended auto loan companies online, visit this page: Recommended Auto Loan Companies Online.
Carrie Reeder is the owner of
ABC Loan Guide, an informational
website about various types of loans.
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