How to Finance a Car Purchase With Bad Credit

Owning a car is a real luxury in life. Unfortunately, it is one that comes at a cost. Vehicles are not cheap and this can make it very difficult for some consumers to afford them. While it might seem like all hope is lost when you discover that you’re not able to afford the ride of your dreams, it is important to keep in mind that there are some options available to you. Bad credit car loans exist for exactly this reason.

The Basics

This is a type of loan that can help you to get the car that you have your eyes on. Before you rush out to sign up, it is important to learn a little bit about how this financing option works. Essentially, bad credit loans are structured for borrowers who do not have the best credit. Many lenders deny loans to potential borrowers with bad credit but this option is very different. By choosing this type of loan, you can get the money you need to buy a vehicle and make your life easier.

The Reality

While this is an excellent choice for people who do not have great credit, it is important to keep a few points in mind. Bad credit loans often have high interest rates attached to them. This can be frustrating but it is one of the only ways that lenders are able to afford being able to supply this loan option. To keep your payments manageable, be sure to put down a sizeable payment in advance and you are likely to see lower monthly payments to follow.

Getting behind the wheel of the car of your dreams is a difficult goal to achieve when your credit is in bad shape. While it might be disheartening, there are ways around this issue. Take a look at your credit score and see if you are in a good place. If not, consider how you can get the best results with loans structured for buyers with bad credit.

3 Car Loan Myths

If you have your eye on a new or used car, you may have to consider financing options. The problem that a lot of people face is that they don’t have optimal credit and may not think that they qualify. While many lenders offer bad credit car loans, there are still a lot of myths that circle the choice. You shouldn’t let these turn you away from the financing that could get you your dream car. Here are the three top myths when it comes to car loans.

A Low Credit Score Guarantees Rejection

This isn’t true at all. In fact, there are dealers and lenders that specialize in car loans for people with bad credit. Poor credit will not stop you from financing a car.

You Can’t Refinance if You Had a Poor Credit Score

When you’re approved of a car loan with a low credit score, you are given the opportunity to build your credit over again. After a while, as your score builds you will be given more options. It’s common for people to refinance their loan and come up with a cheaper rate after they have built up their credit score.

Income Doesn’t Matter if You Have Bad Credit

Income absolutely matters! Income and the other debts that you owe play a big role in the size of the loan you can be awarded. While lenders do pay attention to your credit, your income also plays a large role in whether or not you’re approved. This can also affect the rates that you’re given.

Don’t allow myths to turn you away from car loans. Even with bad credit there are many options out there. While it can be a difficult choice for many people to decide whether or not they want to look into financing for a vehicle, it’s important not to be deterred by myths. Only the facts should be an influencing factor on your decision.

What to Expect With Poor Credit Auto Loans

When you are looking to buy a car, but you have a history of bad credit, it can seem like your dream is over before it has had a chance to begin. Luckily, there are plenty of options available out there for those who are looking to buy a car but do not have the credit that they wish. One way to do this is with poor credit auto loans. Taking out this type of loan can help you get behind the wheel of the car that you wish in practically no time at all. There are a few things to remember when you are considering this type of financing.

Taking Out the Loan

The first thing that you need to keep in mind is the amount of the loan itself. The size of the loan will be determined by several factors. The price of the car itself can make a huge difference, so if you are looking at a car that is not within your reasonable budget you can expect higher payments over the course of time. The duration of the financing plan will also change what you can expect in payments. The shorter the timeframe, the higher the payments. Sit down and create a reasonable financial plan in order to make the best decisions for your poor credit auto loans.

Making the Payments

As with any loans, making consistent payments in a timely fashion is a wise idea. How you make the payments is entirely up to you. When you make larger payments each month, you will be done paying off the car in a much quicker fashion. However, if you can only afford a specific amount each month, it is better to stick with whatever payment you can afford that meets the monthly requirement so you can get your credit in better shape. No matter how you choose to pay back the loan, it is important to stay on top of your game throughout the process so that you do not miss payments or harm your credit in any way.

Get Your First Car Regardless of a Low Credit Score

You may have studied hard and practiced for weeks before taking the test to get your driver’s license. Now that you have a license and can drive around to different places, such as work, school and even the grocery store, you may want to make sure you have your own vehicle to get around. It is certainly not fun relying on other people and waiting around for them to drive you to the different places you would like to visit. However, you may think it is impossible to get a car at this moment.

Is your credit score low? When reviewing your credit report, you may have noticed that your score is not so good for a number of different reasons. For example, you may have a lot of debt and inquiries. Even if you are making payments on your credit cards in a timely manner, your score could still be low if you have too many inquiries and way too much debt compared to available credit. Even so, that does not mean you should be denied the opportunity to get a car that you want and need for different reasons.

If you are worried about getting denied, you can visit our car dealership. We offer bad credit car loans for those with less than perfect credit scores. We realize that things happen and not everyone will have the perfect score, but we believe in offering an opportunity to those who are in need of a vehicle. Our dealership offers a large selection of different cars to choose from, too. If you want to stop depending on others for a ride and be able to drive around on your own as often as you would like, consider coming down to our dealership to complete the application process for a loan. The process is simple and fair. Before you know it, you could be driving away in your first car.

3 Car Loan Myths

If you have your eye on a new or used car, you may have to consider financing options. The problem that a lot of people face is that they don’t have optimal credit and may not think that they qualify. While many lenders offer bad credit car loans, there are still a lot of myths that circle the choice. You shouldn’t let these turn you away from the financing that could get you your dream car. Here are the three top myths when it comes to car loans.

A Low Credit Score Guarantees Rejection

This isn’t true at all. In fact, there are dealers and lenders that specialize in car loans for people with bad credit. Poor credit will not stop you from financing a car.

You Can’t Refinance if You Had a Poor Credit Score

When you’re approved of a car loan with a low credit score, you are given the opportunity to build your credit over again. After a while, as your score builds you will be given more options. It’s common for people to refinance their loan and come up with a cheaper rate after they have built up their credit score.

Income Doesn’t Matter if You Have Bad Credit

Income absolutely matters! Income and the other debts that you owe play a big role in the size of the loan you can be awarded. While lenders do pay attention to your credit, your income also plays a large role in whether or not you’re approved. This can also affect the rates that you’re given.

Don’t allow myths to turn you away from car loans. Even with bad credit there are many options out there. While it can be a difficult choice for many people to decide whether or not they want to look into financing for a vehicle, it’s important not to be deterred by myths. Only the facts should be an influencing factor on your decision.

Common Types of Car Loans

Approximately two-thirds of all vehicle purchases are financed. If you are in the market for a car, you are likely looking at financing options also. It is important to have some basic knowledge about the types of loans available as you shop. Here are four types of car loans you may see.

Pre-Computed Interest Loans

A loan with pre-computed interest will lay out a specific payment schedule. The schedule will include predetermined principal and interest portions. With this type of loan, there is no benefit to making small additions to your monthly payments in order to reduce the principal balance and pay less interest. The finance (interest) charge is the same each month. If you plan to pay down your loan quickly, a pre-computed interest loan may not be the best option.

Simple Interest Loans

With a simple interest loan, interest is calculated periodically. This can be daily, weekly or monthly as determined by the lender. In this scenario, the interest you pay is calculated on the outstanding principal balance owed on the loan. Therefore, the interest you pay will go down when you pay additional amounts toward the principal. This is a good loan option if you intend to pay off your loan early.

Secured Loans

With a secured loan, the lender places a lien on property. With car loans, that lien will usually be the vehicle purchased. Sometimes other borrower assets such as another car or home will be used to secure a loan. With a secured loan, it is important to understand what assets are being put up as security. Should you default on a secured loan, assets offered as security are at risk of repossession.

Unsecured Loans

Unsecured loans are not secured against any property. In cases of default, the lender must take legal action. As such, these loans are generally more difficult to obtain and carry higher interest rates.

A little knowledge can go along way when buying a new vehicle and comparing car loans.

Effective Ways to Lower the Cost of Your Loan

Few things are more exciting than getting a brand new car. That being said, you don’t want to let your excitement blind you to taking steps to reduce your car payment. There are a few strategies we recommend for reducing the overall cost of car loans.

BOOST YOUR CREDIT SCORE

If you’re still a few months away from buying your car, do everything you can to improve your credit score, even if you feel you already have a good score. Every extra point you add helps to minimize you as a risk and maximizes your savings on your loan.

EXTEND THE LENGTH OF YOUR LOAN

You’ll likely have the option of choosing a seven-year car loan. Even if you can pay your car off faster, a longer loan term is a great way to lower your monthly payments. With this fact in mind, know that your longer terms are likely to result in higher interest over the life of your loan. Only you can decide if this sounds like an ideal situation if it means you can easily afford your monthly payment. S

AVE UP A LARGER DOWN PAYMENT

It’s best that you save up as much as possible to cover your initial down payment. The more you save, the less you have to borrow and the lower your monthly payments will be. If this means being saddled with your old wheels for a few extra months, it could very well be worth it in the long run. It’s always best to focus on long-term gains over the short-term sacrifices.

BUY A LESS EXPENSIVE CAR

It’s always best to buy well within your means. While a less expensive car may not be as flashy and luxurious as a top-of-the-line ride, the less expensive car may be better for your future finances. After all, no one wants to spend a majority of their money on a car payment. Do everything you can to lower your car payment as much as possible before signing any documents. A little foresight can save you a lot of money.

What to Expect With Poor Credit Auto Loans

When you are looking to buy a car, but you have a history of bad credit, it can seem like your dream is over before it has had a chance to begin. Luckily, there are plenty of options available out there for those who are looking to buy a car but do not have the credit that they wish. One way to do this is with poor credit auto loans. Taking out this type of loan can help you get behind the wheel of the car that you wish in practically no time at all. There are a few things to remember when you are considering this type of financing.

Taking Out the Loan

The first thing that you need to keep in mind is the amount of the loan itself. The size of the loan will be determined by several factors. The price of the car itself can make a huge difference, so if you are looking at a car that is not within your reasonable budget you can expect higher payments over the course of time. The duration of the financing plan will also change what you can expect in payments. The shorter the time frame, the higher the payments. Sit down and create a reasonable financial plan in order to make the best decisions for your poor credit auto loans.

Making the Payments

As with any loans, making consistent payments in a timely fashion is a wise idea. How you make the payments is entirely up to you. When you make larger payments each month, you will be done paying off the car in a much quicker fashion. However, if you can only afford a specific amount each month, it is better to stick with whatever payment you can afford that meets the monthly requirement so you can get your credit in better shape. No matter how you choose to pay back the loan, it is important to stay on top of your game throughout the process so that you do not miss payments or harm your credit in any way.

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