Buying a car through a loan is not a distant dream for people with bad credit history. These borrowers are of high risks for any lender. But thanks to competition amongst lenders that they are providing finance to risky people as well if certain conditions are met. However, you must be well aware of each aspect of the loan before you apply for one.
All those borrowers who made late payments on more than occasions in the past or defaulted on payments have arrears or CCJs or IVA is tagged bad credit. They can borrow money to buy car if they can convince the lender of timely repaying the loan. They should provide adequate proof of repaying ability with documents of income and bank statements.
are given in secured or unsecured options. Against your valued property you can borrow greater amount as secured car loan. The borrowings however will be determined keeping the price of the car in the mind. The advantage is that bad credit borrower can take the loan at lower interest rate. These loans are easily approved. The loan can be taken against the very car you are buying.
Unsecured loans are best suited when the borrowed amount is smaller in the range of ?5000 to ?25000. Interest rate on these loans goes higher. Both secured and unsecured loans carry shorter repayment duration of 5 to 7 years.
Ensure that you have taken your credit report first to check it for any errors in it. It would be even better if you go for the loan with improved credit score by paying off some debts. Interest rate may be lowered for such a borrower.
You must also know that you are required to make a down payment to the lender. In fact, you can use down payment as a tool to not only ensuring the loan approval but also the lower rate of interest. The higher is the down payment the lower will be the interest charged by the lender. This is because the lender feels safer this way. Keep date with the repayments of the loan for improving credit score.
