When you have bad credit, trying to shop for a new or used vehicle can be a difficult process. Since paying cash for a vehicle typically is not a realistic option, financing is usually required. Unfortunately, most loans are based upon the borrower's credit score. Some car dealers offer in house financing, but their fees and down payment requirements make purchasing the vehicle nearly impossible. Although huge down payments are common when it comes to bad credit auto loans, they don't have to be a necessity.
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Many people, when trying to buy a car with bad credit, mistakenly believe that their only option is to find a "buy here, pay here" car dealership. These dealers typically offer guaranteed financing regardless of the borrower's past credit history, so they are one of the easiest places to shop if you have a poor credit score. Unfortunately, they are also one of the most expensive. Cars at such dealerships are usually priced much higher than their actual value, and customers are forced to pay even more in fees and interest. In some cases, they are required to pay as much as half the car's total cost as a down payment. Sadly this down payment is often close to the actual value of the car. For these reasons, it is advisable to avoid dealerships that offer in house financing.
Though it can be difficult, it is possible to find bad credit auto loans that do not require down payments. There are lenders that understand that people with past credit mistakes need a break to get back on their feet, so they offer no down payment programs to make buying a car possible. Finding one of these loans can be a challenge, but with careful searching, you can be on your way to driving a reliable vehicle without having to go broke making a huge down payment.
So if you are reading this article, chances are you have had your share of financial difficulties, and you know first hand how difficult it can be to re-establish your credit following bankruptcy, foreclosure, or repossession. In order to improve your credit score, you need to obtain financing and pay it back responsibly. Unfortunately this can be nearly impossible when the majority of lenders only look at your credit score to determine your credit worthiness. Fortunately, bad credit auto loans have become very common, and they are a great way to rebuild your credit score.
Bad credit auto loans are offered to individuals regardless of their credit score. Instead of only focusing on the potential borrower's score, lenders that specialize in financing people with bad credit look at a number of factors including income and occupation. Because bad credit auto loans are easier to obtain than most traditional loans, they serve as an excellent way of boosting your credit score.
If you plan to re-establish your credit by taking out a bad credit car loan, it is important to be certain that you will be able to repay it as the terms and conditions of the loan require. If you are not sure whether or not you can afford the monthly payments, taking out a loan is a bad idea. If, however, you are confident in your ability to pay on time every month, financing a new or used vehicle using a bad credit loan will work to gradually improve your credit score over time. Once you pay off the loan in full, you will be more likely to be able to qualify for financing in the future. Not only will you be more likely to qualify for a loan, you may be able to get a lower, more affordable interest rate.
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