You want to buy that dream car through a loan but your bad credit history may come as a big hurdle. Lenders see bad credit people as risky and may even refuse the loan or may put harder conditions. However, such borrowers can opt for bad credit car loans that are especially designed for people having a damaged credit history.
Bad credit car loans are meant especially for those borrowers who have a damaged credit history with late payments, arrears, payment defaults and CCJs or any of these mentioned in their credit report. Such borrowers also have a low credit score. Since these borrowers carry risks, the lender takes precautions in offering the loan. First of all lenders ensure that the borrower has a good ability to repay the loan in time. So the borrowers' income and past bank statements are seen deeply by the lender.
To cut the risks, lenders usually take security from the borrower before approving Bad Credit Car Loans. Any asset of the borrower or even the very car to be purchased can be put as collateral of the loan. Secured bad credit car loans ensure greater amount at competitive interest rate.
You have the option of taking unsecured bad credit car loans without any security offer to the lender. The lender approves smaller amount under the loan. But to cut the risks, lenders charge interest at higher rate. The repayment duration for secured or unsecured bad credit car loans rages up to 4-6 years. This is because in larger duration the car price may fall sharply and the lender may not get back the loan amount fully in case of payment default.
Online lenders are considered as source of competitive interest rate loans for bad credit people as compared to banks and financial companies. Buy car from reliable dealer for quality concerns.
