Auto Loans for Borrowers with Poor Credit

Bad credit car loans are more expensive than loans available to borrowers with good credit, but they are at least available. No matter how bad your credit is, you are likely to find a lender willing to loan you the money you need, for a price.

First, choose a car and figure out how much money you need. The lender will want to know this before anything else: How much money do you want?

Once you know the price, and don’t forget to negotiate the best deal, you can start shopping around for lenders.

Start looking for lenders who specialize in loaning to people with bad credit. Local banks are one option, and even some online financial institutions are currently making loans to buyers with less than great credit. Interest rates will be much higher than they would be if you had a better credit rating, but this is to be expected. Find as many different lenders as possible because each one will have their own restrictions and terms for lending to people with bad credit.

Once you have narrowed down the search to a few key lenders start filling out applications. They will want your social security number, proof of income usually in the form of several recent pay stubs, and proof of residence. Some lenders may want to perform a complete background check and ask you for a minimum $1,000 down payment before they loan you any money.

Once you have completed and submitted your applications, there is the wait! This could be a few minutes or a few days. If you didn’t apply to lenders specializing in bad credit loans, don’t be too upset about being denied.

However, lenders who advertise poor credit loans should result in several offers. If, of course, you meet with all of their requirements.  Although it is not pleasant to have poor credit, there are lenders that will give you the car loan you need. Just remember, a high-risk car loan comes with high interest rates.

After you have secured a bad credit auto loan you can start the process of rebuilding your credit. Be certain to make your payments on time and continue to pay down all your existing debts. This will help you improve your credit rating and possibly, eventually, help you qualify for a refinancing option with a better rate than the original bad credit auto loan you did finally secure.

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