If you have some credit problems because of past mistakes in loan repayments, then a fresh loan for buying a car may not be that easier any more as lenders tend to see you as risky. The remedy is to apply for specifically designed loan for bad credit. There are numbers of lenders providing . Such a loan is meant for aspiring car buyers who have against their names arrears, late payments, payment defaults or county court judgments.
To ensure that bad credit is not a factor, you should preferably opt for secured bad credit car loan, which comes against your home or any asset. You can even take the loan against the very car you are buying. The loan will be approved against the car deal papers which the lender takes in his possession and returns only when the loan is fully paid back. Secured bad credit car loan comes at competitive interest rate. You can borrow greater amount of loan depending on value of collateral.
Unsecured bad credit car loan is provided without taking any property as collateral. The loan amount approved is kept smaller for cutting risks. Interest rate on unsecured bad credit car loan is higher and depends on personal circumstances like credit history and repaying capacity of the borrower. The lender will extensively look into income and bank statements of the borrower before approving the loan.
Take a copy of your credit report and make sure it is free of errors. Also if your credit score is too low then you would be paying interest at very high rate. So it is advisable that first you pay off easy debts and improve credit score and then apply for the loan.
You are also required to make a down payment in taking bad credit car loan as is required for all types of car loans. The down payment varies from lender to lender. Study each lender's terms-conditions carefully to find out which one suits you. Take rate quotes of as many lenders as you can and you are aware of prevailing rates on the loan for your circumstances.
