Special Auto Financing For Bad Credit Individuals – 7 Tips

The ability to qualify for auto financing is something that just about everybody aspires to, but not everybody is able to achieve. The reason: bad credit.

You see, any FICO score under 600 is considered to be a poor credit score by the vast majority of auto financing lenders. And, what is even more challenging for poor-credit applicants is that most auto financing lenders consider the applicant’s credit score exclusively – but they often ignore other factors that could be relevant. They do not look at other factors that might otherwise indicate credit-worthiness, such as employment history or individual items on the applicant’s credit report.

If you have a poor credit score, you have no doubt experienced some challenges in getting approved for a loan. Here are 7 tips for finding special auto financing for bad credit individuals:

1. Find a car that is within your price range:

First, let’s get practical. You have a much better chance of qualifying for auto financing if you simply choose to purchase a car with a lower price tag. Yes, it would be great to get that all-frills-included, top-of-the-line model you have your eye on. But, with a poor credit score, beggars can’t be choosers, as they say. Do yourself a favor and select a lower-priced car now. In a couple of years, as you work to improve your credit score, you can always trade up to that better model.

2. Put together a sizable down payment in order to reduce your loan amount:

Another way to reduce the size of your loan – and increase your chances of getting special auto financing for bad credit individuals – is to come up with a larger down payment. This may not be possible for you, and that’s okay. But, if possible, scrape together more money for the down payment than the minimum required amount.

3. Run a credit check on yourself:

The bad credit auto financing lenders you are going apply to (see below) are going to run your credit score. That’s why it is a good idea to run a credit check on yourself first. By doing so, you can examine your report and look for anything that stands out – good or bad. Run your report with all three of the top agencies and become familiar with each one.

4. Approach one lender to get an idea of the rate you can qualify for:

The next strategic step to take is to establish a “baseline” quote by applying to just one new lender. Write down all of the details of the loan terms they offer you, including interest rate and repayment period (e.g., 60 months). You will request identical or better terms from the additional lenders to whom you apply.

5. Now, build a list of at least 5 bad credit auto financing lenders:

Your next step is to cast an even wider net by putting together a list of even more bad credit auto financing lenders. Your list should include at least 5 lenders. Search online.

6. Submit an auto financing application to each lender on your list:

Now, it is time to start submitting those applications. Apply to each and every lender on your list. Don’t get lazy and stop after you get your first offer or two (this will be tempting!). Instead, follow through to the end of the list.

7. Go back and negotiate for an even better offer:

Now, it is time to go back to those that made you a reasonable offer and negotiate for an even better one. Your chances of success will go up if you negotiate instead of just accepting what they offer you the first time around.

Try these 7 tips for getting special auto financing for bad credit individuals.

Loan: Advantages and Disadvantages

If you’re struggling to overcome financial difficulties and debt, you might consider taking out a loan, but there are so many different kinds of loans available that it may seem difficult to decide which type of loan will work best for you. Each has their own advantages and disadvantages, so here is a quick rundown of the loans that are available and most commonly opted for and what benefits they entail.

Secured Loans: a secured loan is simply a loan that is ‘secured’ against an asset. This is known as ‘collateral’ for the loan. In many scenarios, the home is used as collateral for a secured loan.

Advantages:

Interest rates for secured loans are often lower as they are considered to be ‘low-risk’ by the lender.
You can borrow greater amounts.
Repayment of the loan can be spread out over a longer period.
Disadvantages:

You will lose whatever is used as collateral if you default upon loan repayments.
You may get a bad credit rating.
Unsecured Loans: unsecured loans are loans that do not require collateral.

Advantages:

Unsecured loans are lower risk for the borrower as they will not lose a valuable asset if they struggle with repayments.
Disadvantages:

Smaller amounts are offered and the repayment period is significantly shorter than that of secured loans.
Defaulting or falling behind on repayments can result in court judgements.
If the matter goes to court, they have the ability to change the loan to a secured loan, resulting in a loss of assets in order to repay the loan.
Home Loans: home loans are simply mortgages and are used to pay for a home over an extended period of time.

Advantages:

When your mortgage is paid off in full, you own your home.
Disadvantages:

Mortgages required a deposit which is normally a specific percentage of the overall value of the house.
If you fail to keep up with mortgage payments, your home may be repossessed.
Debt Consolidation Loans: this kind of loan is used to ‘consolidate’ all of your debts into one, instead of having separate debts. Money given to the borrower is instead transferred directly to the creditors and the debts if repaid to the new lender.

Advantages:

Debt consolidation loans can help to reduce monthly repayments.
Payments are spread out over a longer period of time.
Interest rates are reduced
Disadvantages:

Longer repayment period means more interest to pay.
Pawnbroker Loans: similarly to a secured loan, a pawnbroker loan is a loan that requires a valuable asset as collateral, but this can be almost any suitable item of value like jewellery, watches, antiques, coins and bullion or scrap gold.

Advantages:

No credit checks are necessary to get a loan from a pawnbroker.
Getting a pawnbroker loan is often very fast.
You can borrow very little or you can borrow significantly more.
Pawnbrokers do not require information about what you intend to do with the borrowed amount.
Online pawnbrokers like unclesmoney.co.uk can offer twice as much for your valuables as highstreet pawnbrokers.
Disadvantages

You will lose your asset if you default on repayment after the term has ended or if an extension cannot be agreed upon.
Interest rates can be high depending on the pawnbroker.

How to Use Car Loan Calculators

There are a number of car finance products available that can help consumers to cover the costs of a new car. With car finance you will not have to pay the full sale price for the car upfront out of your own money. This means you can spread the payments over a specified period and this makes it much easier for you to afford a new car.

Getting the Best Deals

It can be confusing to work out which are the best deals on car finance as there are so many different options available. Not only could you fund your new car from a personal loan but the dealer could also offer credit products as well. You will need to look at three main factors when you are choosing credit products to fund your new car:

- How much money you can borrow – lenders can offer many different loan amounts so you should be able to find an option to cover the money you need to buy your new car. Make sure you only borrow as much as you can afford to pay back each month. Always check how much the monthly repayments will be including interest when you are working out how much money to borrow.

- How long the loan term is for – the length of the loan will help to determine how much you will have to pay back each month. With shorter term loans you will have less time to pay back the money so the monthly repayments will be higher. With longer term loans you will have more time to pay back the money and so the monthly repayments will be lower. In general you will pay less interest overall on a shorter term loan.

- How much the interest is on the money you borrow – interest rates, or APR, are very important as this will tell you how much the lender is charging you for borrowing money. In general terms you should be looking for a low APR deal, however the lowest option may not always be the best for your needs. You also need to consider the term of the loan and the monthly repayments as well.

Using Car Loan Calculators

Car loan calculators are essential tools when it comes to choosing the right car finance option. Car loan calculators are available online from websites like Carloanadvisor.co.uk. They offer you a simple tool to work out exactly what you will need to pay back on loan deals. This is a very quick and easy way to compare deals as you can simply input the amount you want to borrow, the loan term and then the interest. The car loan calculator will then work out at just the click of a button how much you will have to pay back overall and also what your monthly repayments will be. This is a very effective way to compare different loan offers to find out which one can really provide you with the best deal.