Different Types Of Auto Loans For Bad CreditThere are many reasons why one may have bad credit. Although the reasons may vary for having bad credit, creditors do not care what the reasons are, they are likely to deny you for a loan regardless of the circumstances for your bad credit. Luckily, there are creditors who will give loans to those who have bad credit, but you must search around, and there are stipulations in which you must follow in order to be considered for these type of loans. When looking to purchase a car, there are auto loans for bad credit, but there are requirements that must be followed in order to obtain it.
Auto loans for bad credit can be obtained through third-party lenders, as opposed to going directly through a dealership. Even though it's possible to work directly with the dealership in order to obtain a loan, usually their requirements are difficult to live up to, and usually a massive down payment may be required. If you are in need of a car, and you can meet all the qualifications for a dealership loan, then you may choose to go that route. Usually the minimum down payment required, will be $1,000 or more, depending on the dealership you choose.
To find third-party lenders that are willing to do auto loans for bad credit, you can search online for loans specific to your needs, or you can go from one dealership to another, to see if they have third-party lenders that they work with. Many who have bad credit must expect to pay high-interest rates when purchasing their car. Interest rates can go as high as 28% or more, for those who have bad credit, and get loans from third-party lenders, dealerships, or other financial institutes. Even though it may be unlikely that your bank will finance your auto loan with bad credit, it's worth a try.
By financing through a bank, you're more likely to get lower interest rates, and better loan terms that can work into your lifestyle and not be as problematic. If a bank loan is not a possibility, then try other lenders that deal with persons with bad credit. Usually lenders who will give auto loans to those with bad credit, will require payments weekly, biweekly, or in some cases, once a month. It's more popular for payments to be paid weekly or biweekly, as a good-faith gesture from the person with bad credit.
If you're not able to meet these stipulations to buy a car with your bad credit, then it's best to save up and buy a car when you can pay in full. When you get an auto loan, and you have bad credit, paying on the loan regularly, will help you establish better credit, and will pay down the principal on the loan. Even with bad credit, there is a way to start over, so don't underestimate the fact that you've received an auto loan with high interest rates, because it can be the new beginning to having better credit. When you're ready to purchase a car, do some research on auto lenders who cater to those with bad credit.