Bad Credit Auto Loans
There are a number of consumers that are looking to get a new car. While most people have good credit, there are others who don’t have the best credit. As a result, these people usually struggle to get a reasonable rate for their auto financing. While there are a number of individuals who may not be in position to get an auto loan with a low interest rate, there are a number of ways of how to get a loan for a car when you have bad credit. Many financial institutions and buy here, pay here auto dealerships offer a number of loan programs that will enable people to get a car with bad credit.
When it comes to getting bad credit auto loans, there are certain types of people who can best use this option. The most common individual who will benefit from getting car loans with bad credit are those who have had a recent bankruptcy.
These individuals legally declared insolvency at one point and therefore their credit is likely below average. However, individuals who have filed for bankruptcy will benefit from bad credit car loans. Another type of individual who may benefit from bad credit car loans are first time car buyers. While they usually don’t have bad credit, having little to no credit history can often lead to a high rate and difficulty qualifying for most loans. Using bad credit auto loans are a good option for those who are looking to finance their first car.
Car loans for people with bad credit have considerable benefits. The first benefit of this type of loan is that it enables people to get a car financed despite having below average credit. These types of loans also benefit those who are looking to rebuild and improve their credit rating. When getting auto loans with bad credit, another benefit is that they have less rigid qualification criteria.
Benefits of New Car Loans and Used Car Loans
Let’s compare both new car loans and used car loans:Benefits of New Car Loans
Obviously, buying a new car means getting a car in excellent condition, with advanced safety features, latest technology, add-ons, your favorite model, manufacturer’s warranty, and no maintenance problems as well.
- More Affordable than Used Car Loans – New car loans are usually lower than those of used ones, according to the Federal Trade Commission, even though periods are longer.
- Special Rates – Manufacturers can often provide benefits like low or 0% APRs (Annual Percentage Rates) on some models and year vehicles to reduce finance charges. These rates are usually negotiable and may be up to the credit history of the consumer. You can negotiate the APR as well as terms of payment.
- Sale – Be sure to finance a car during a holiday season or the end of the year when most automakers provide a lot of offers like discounts and special rates.
Benefits of Used Car Loans
Used cars provide several benefits to buyers. Lower average prices are the major attractions. There are several certified, quality, and pre-owned models offered. Here’s how used auto loans can benefit you:
- Slower Depreciation – It is a well-known fact that around 20% of the value of a new car is reduced in the first year. You don’t have to suffer a huge depreciation if you buy a pre-owned vehicle. You also won’t have to be upside down on your finance. It means you won’t have to owe more than the vehicle’s value.
- Shorter Terms – Used cars may have higher APRs as compared to new cars but have shorter periods of loan. So, your debt can be paid off faster.