With the economy in the state it is in and lenders tightening their belts, it is still possible to find bad credit car financing. You may not be able to get this through your bank, but you may be surprised to find that some car dealerships themselves can offer credit to people to make a purchase,even without having stellar credit.
One of the main things to keep in mind when looking for bad credit financing is the down payment. The more money put down on a car means less money needs to be lent out. The lower the balance of the loan, the lower the payment, and the more likely someone is to get approved. What money down also does is give the auto more value as collateral. It is easier to get financing on a $10,000 car that will only have a $5,000 loan balance then say an $8,000 or $9,000 loan balance. There are dealerships who can handle their own financing, but it is also easier for them to outsource the loan to another lender with possibly a lower interest rate if there is a substantial down payment, even if the customer has poor credit.
Another thing to think about, especially when dealing with used car sales, is to look for a “buy here,pay here” dealership. These kind of used car dealerships will actually provide car finance for people with bad credit directly through them, provided they also make their payments directly to them. While most car payments are made in monthly installments, these type of dealerships usually require weekly or bi-weekly payments, but again they don’t require people to have good credit. Keep in mind however, when dealing with these types of companies that any missed payment could result in your car being repossessed very quickly. Since they feel they are taking a chance by letting people with poor credit drive away with a car without having to go through the full blown lending process, they don’t like letting cars stay on the road without the agreed upon payments coming in. Knowing this may make it feel more risky, but the fact is that this is no different from many bad credit car loan financing arrangements. The lenders are almost always more risk aware. The simple fact is that if you want to finance a car with bad credit you must tolerate such risks until you have resolved your credit issues. If you want to take advantage of these arrangements you usually just need to fill out a short application and work out payment arrangements and the car is yours.
Financing a car with bad credit can also be helped by the trade-in value of your old vehicle. Much like the down payment, the better the value of the trade-in, the more likely someone will be approved. This goes back to the financing analogy talked about earlier as the more you get for the value of a trade in means less money that will be needed to be financed.
So far we have looked at used car financing bad credit but when applying for a new car loan, but have both a trade-in and a down payment, your likelihood of getting approved becomes that much better. This is especially helpful if you can show job stability and a long term residence. Usually if you are at your place of residence and your job for more than 3 years, even a bad credit loan won’t be that difficult to attain, especially if you have money to put down and another auto to trade in.
Bad credit car financing is not as hard to get as a personal loan for people with poor credit, mainly because the car is used for collateral. What people need to remember when getting approved for this type of loan is the need to make your payments on time. This becomes especially important because as your payments are made and the loan balance is going down, your credit rating will be going up. Continue making timely payments and over time your poor credit can become better again.