With the rise in bankruptcies, repossessions, and general bad credit in the United States it has given birth to a whole new segment of the car business that is designed specifically to prey upon these types of people. That's right I said prey upon. If you see slogans like ?Credit Doctor? or ?We Finance Anyone? run away! Well, at least be careful. Dealerships have learned over time that people who know they have credit problems will not argue or haggle as much as someone who does not have credit problems.
This is why every major automotive dealership now has a bad credit department. They have developed special sales techniques and they have fulltime ?credit doctors? to work with people who have or even think they have bad credit. They advertise in the newspaper and on the radio that the credit doctor will help you fix your credit. You've heard the ads, ?Good Credit, Bad Credit, No Credit, if you have a job and $99 down we can get you financed!?
The industry has now evolved to the point where they actually have establishments that exist solely to cater to the bad credit customer. They promote themselves as if they are doing the public some big favor but unfortunately this is far from the case. These dealers exist to make as much as they can off of people who are already in financial trouble.
The way these new dealerships operate is that they have sub par vehicles that a conventional dealership will not sell and they have in house financing as well as aggressive venture capitalist financing that enables them to command huge profits and charge outrageous interest rates.
Whether or not it is a dealership with a ?credit doctor? department or a stand alone full time bad credit dealership they work in the same way. They seek to get the maximum amount of profit that they possible can from you by maxing out the profit in the car, getting you to borrow from a credit card, whatever it takes to increase the profit and then on top of that they will charge whatever your state maximum credit rate is which could be 28% or more. By the time it is all said and done you may pay $15,000 for a $5,000 car!
This is the absolute worst that the automotive industry has to offer, but until legislators step in and do something about it the secondary finance business will remain in place.
If you failed to make past payments in time or were involved in lot other credit problems than surely a loan for buying a car may be harder to come. The lenders prefer avoiding such a borrower. But thanks to many lenders that even bad credit borrowers are now being approved for a car loan. This means if the borrower knows well as to what the lender ensures first in making loan deal, than it becomes a bit easier to get the approval.
A loan for buying a car is both secured and unsecured. Lenders’ first concern is to reduce risks in offering the loan. To reduce lender’s risks and hence timely approval it would be better if you take the loan against some property. If you do not wish to risk home or any valued property than the very car you intend to purchase can be pledged as collateral. The lender will take car’s deal papers only to return at the time of full repayment of the loan. You can drive car till then.
The advantage is that your bad credit is not a big factor in taking the loan. Such a secured car loan for bad credit people also is comparatively cheaper as rate of interest is kept a bit lower. The loan amount depends on car value and repaying ability of the borrower.
On the other hand if you are a tenant or non-homeowner or do not wish to risk any property, you can opt for unsecured bad credit car loans which are approved without collateral. But interest rate will be higher. If your credit score is too low then the rate may go further higher. The loan amount will be smaller of up to £25000 depending on lots of other factor like your income. Both secured and unsecured options carry 5 to 7 years of duration for returning the loan.
You would also be required to make a down payment which is a certain percentage of the loan amount that you have to deposit to the lender. You can use down payment to your benefit The more down payment you make the lower will be the interest rate despite your bad credit as it makes the loan lot safer for the lender.
Ensure that you have a copy of your credit report and you have checked it for errors. You should also know your credit score.
As far as sourcing is concerning, people with credit problems should prefer taking car loans from online lenders whose rates of interest are competitive as against higher rates of banks or financial institutions. Online lenders are also known for timely processing the loan without many additional charges.
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Both Gregg Hall & Eva Baldwyn are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Gregg Hall has sinced written about articles on various topics from Lingerie, Desserts and Mortgage. Gregg Hall is a business consultant and author for many online and offline businesses and lives in Navarre Florida with his 16 year old son. Get quality