Many assume that it is impossible to identify car loans for people with bad credit. However, times have changed with more online lenders providing auto loans for bad credit. Why most people are not able to identify bad credit card loans is because they do not know where to look. Below is vital information that can assist you know where to identify bad credit auto loans.
Where not to look:
Many people are not able to identify bad credit auto loans simply because of using wrong search strategies. Many people start the process by going through their phone book and calling few firms. This strategy is not effective because a large percentage of lenders are not available in the local phone books but rather can easily be found online. Traditional lenders are very rigid and may not even want to consider issuing loans to people who have poor credit history due to the high risk factor.
Also these kinds of lenders are usually very expensive when it comes to interest loan rates. Even after getting a quotation, it is usually still exorbitant and unaffordable to many individuals. Further to this, the quotation is usually saddled with complex terms and conditions.
People also tend to approach dealerships directly in a bid to secure a car loan. It is fruitless to approach a dealer if you have poor credit scores. This is because they simply do not consider giving a loan to anyone with bad credit.
Where to look for Car Loans :
Those with bad credit should concentrate their efforts in dealing with lenders who issue such loans. There are online lenders that specialize on issuing bad credit car loans. The beauty about using online lenders is that they are flexible, provide attractive discounts and take time to make sure that the applicants get the best manageable loan deals possible.
With this information in mind, simply use the search engine and begin the process of looking for bad credit car loans.
When standard auto loans are denied, subprime car loans are sought instead. Subprime creditors lend their money to those without at least a "Fair" rating for a credit score. It may seem like a generous second chance, but often this second chance comes at a steep price. Here are two reasons why someone with a bad or poor FICO score may want to reconsider getting a subprime car loan.
Massive Interest Rates
Every time a subprime lender allows subprime car loans, they take a risk of the borrower defaulting on the loan. To make up for this risk, the lender spikes the loan's interest rates. It will be quite a frustrating experience paying for deliberately elevated interest rates, especially after knowing what the normal interest rate should be. A person with a bad credit history probably won't have a choice in this matter; it's either take the subprime car loan or go without a vehicle.
A Lurking Repo Man
Vehicle repossession is another risk in accepting subprime car loans. Subprime lenders won't hesitate to get the vehicle pulled from the owner's possession. Just one late payment could mean the difference between driving and using public transportation. Some subprime car loan lenders have gotten especially furtive about how they go about repossessing vehicles. For example, they may provide a free GPS device in the purchased car. This implanted device can and will be used to hunt down the vehicle for a speedy repossession.
In October 16th, 2011, this practice got out of hand and ended with a Jacksonville car dealer facing a lawsuit by Florida's attorney general. Having a car repossessed will leave a long-lasting smear on a person's credit rating. Additionally, the harsh interest rates may make a loan seeker think twice about subprime car loans. Even with these potential problems, however, both borrower and lender know that having to deal with subprime car loans is still better than walking. If you're thinking of getting a subprime car loan, please proceed with caution.
Many people have heard of "Subprime Lending" but not everyone understands what that means. If you're curious about the definition of "subprime" and whether you fall into this catagory, read on.
What does "Subprime" mean?
In order to understand the meaning of "subprime", we must also understand the meaning of "prime". Customers are considered "prime" if their credit score is above a certain number, usually 620. Prime borrowers have good credit, a job, and a stable living situation. If the credit score is too low, the buyer may be told that they are "subprime". This is another way of saying they have bad credit. Usually the credit score determines whether a buyer is prime or subprime, but other factors can affect this as well. It is estimated that almost half of all borrowers are subprime. While this is not a desirable situtation, it might be comforting to know that you are not alone.
Does being Subprime mean that I can't get a car loan?
Once a borrower understands the definition of subprime, the next question they might have is whether or not they can still obtain a loan for a major purchase, such as a car loan. The good news is, not only is it possible, but there actually companies that specialize in subprime car loans. The interest rate will likely be higher because of the additional risk associated with subprime buyers. However, if you make your payments on time over several months, you may be able to negotiate a lower interest rate in the future.
Will my credit status be Subprime forever?
The good news is, credit scores can definitely be improved over time. Whether you stay in subprime status is very much in your power. If you make on-time payments on your car loan and other outstanding debt, this will improve your credit score and eventually raise you to prime status.
There are many subprime lenders, but finding them can sometimes be difficult if you don't know where to look. Consider using the assistance of an online company such as Carloans.com, which already has established relationships with many subprime lenders. The online company can perform a search for you and match you up with the best situation possible, so that you don't pay more than you have to.