Second Chance Auto Loans
Qualifying for an auto loan isn`t easy when you`ve hit a few bumps in the road. Individuals who have defaulted on payments, filed for bankruptcy, had previous repossessions or simply just have bad credit may benefit from a second chance auto loan.
There are plenty of lenders willing to offer loans to people with poor credit, but this doesn`t mean that you should buy the biggest and best brand new car. A second chance auto loan is considered high risk, so inevitably the interest rates are going to be much higher than regular loans. This means that you`ll actually end up paying more for the car than someone with good credit taking out a traditional loan. This is an unavoidable situation for those with poor credit. Regardless of your credit history, don`t take on a loan you cannot afford to pay back, even if this means buying a used car rather than a new one.
One way to avoid paying higher interest rates is to have a co-signer with good credit co-sign the application. This may put you in a better position to get a loan with better terms, but remember that you are still responsible for making those monthly payments. If you miss a payment, your co-signer`s credit score may take a hit.
Those that don`t have co-signers can find second chance car loans. These are often available through dealerships. They`re also available online, so it`s easy to locate a loan and apply for it. Many times, approval is instant and you receive the funds rather quickly, which is a plus if you`re desperately in need of a car. The downside is there are plenty of lenders out to take advantage of people.
Compare your options carefully and do your own research before going with an online lender. Established dealerships are reputable and you can read customer reviews to be sure of the quality of service. Look over the lender`s policies carefully before signing. To save money, ask if add-ons like car insurance can be combined with the loan. Keep in mind that you won`t exactly have your pick of the cars on the lot. A major disadvantage of second chance auto loans is that you won`t have the wide selection of vehicles to choose from. Companies only offer predetermined vehicles to be sold under bad credit loans, which will limit your choices drastically.
If time isn`t of the essence, consider waiting a while to purchase a car so you can get your credit score back on track. Improving your credit history will help you stand a better chance at qualifying for a regular loan, which means lower interest rates and fewer restrictions.
As with any financial product, shop wisely and don`t rush into anything. Holding off even a few months could mean the difference between getting a bad credit loan and being able to qualify for a better one. Weigh the pros and cons carefully before deciding and check out automotive blogs