A Bad Credit Auto Loan is a loan that is granted to a customer should they have “poor” credit. Such loans require the borrower to have a valid driver’s license, an active job with a steady income, and a stable and long-term residence. Borrowers with low FICO scores are also required to pay higher interest rates (typically more than 16%), depending on their employment status. Borrowers who have no history of creditworthiness or bankruptcies are not eligible for such loans.
This is a form of credit that is not free from the consumer’s debt cycle, and the poor credit score may mean higher risk. Therefore, lenders will want to make sure they are compensated for this increased risk. A loan with high-interest rates is the obvious way to do so.
Can you get an auto loan with bad credit?
Yes. A Bad Credit Auto Loan offers you a means to buy a new used vehicle or sometimes even a new car without a good credit history. In fact, some lenders design special loan products such as “new car only” loans, “flexible terms” loans, and “no money down” loans for those with bad credit.
Like all credit products, Bad Credit Auto Loans usually have more stipulations than good credit auto loans. Lenders and dealers alike are looking to limit the risk they take on when giving a loan to someone with a poor credit history.
Are there guaranteed auto loans bad credit no money down?
Even if you have bad credit, you can still finance your car with low money down. Approximately 40% of car buyers put no money down when financing their vehicles. That means that by default, you could find yourself in the same situation. If all these companies are offering loans to people with bad credit, then honestly speaking, they are financially sound enough to take on such a transaction. Today’s economy is not fully recovered from the after-effects of the economic fallout of the latest events in our world. As a result, while we do not see large numbers of firms going out of business, we also do not see many major businesses expanding and creating new jobs either. Many firms are still sitting tight and taking care of what they have; however, once things turn around, they will start making moves to expand their business and take more workers on board.
Pre-approved car loan bad credit online?
Can your car be totaled in an accident? There is a fairly decent chance. If the automobile you crashed or totaled was one of your own, then technically you should not have to pay anything because you did not cause the accident. But there is a slight problem with the reasoning as you could be liable for medical bills and bodily injuries to yourself or others. As a result, it is often better to purchase an automobile insurance policy (with a high deductible) that will cover both medical bills and the total cost of your vehicle in case of an accident.
The average rate for Bad Credit Auto Loans is 11.73%, but remember that this does not mean everyone will pay this much for their loan; nor does it mean these rates are locked in for more than just a year at a time. In fact, they can differ greatly from lender to lender just like credit scores do.
What is the lowest credit score to buy a car?
There isn’t a precise answer to this question. Every lender has its own standards for what qualifies as a “good” or a “bad” credit score. Lenders use your credit score or your credit report as the basis for reviewing your creditworthiness.
Lenders and dealers in the used car industry tend to lend to people with bad credit while the lenders and dealers low-ticket new automobile websites are not as willing to do so.
What is the minimum interest rate I can get for a bad credit auto loan?
Bad Credit Auto Loans have an average interest rate of 11.5% which is on par with good credit car loans. If you are thinking, oh gee, I don’t think I can qualify because these rates are so high, then you might want to think again.
There exists a loophole called A+ Auto Loans which has the lowest interest rates in the industry. Unlike other lenders, they go beyond FICO scores and look into your unique situation as a person and use that to determine if you need a loan, or not. By doing this, they are able to give you lower interest rates on their auto loans than any other lenders – all while giving you choices otherwise reserved for those with outstanding credit. You could potentially get a 6.99% interest rate!
Interesting Facts you should know about bad credit auto loans.
- If you have a low score of 640 and do not qualify for new car loans, you can apply for used car bad credit loans which typically pay off higher interest rates than good credit auto loans. Even though a lower FICO score results in higher interest rates, it does not guarantee that you will get the loan approved. You are subject to the lender’s credit policies and what they set as guidelines for approval.
- Statistics show that the average interest rate on a Bad Credit Auto Loan is about 11.5%. This is similar to the average interest rate on a New Auto Loan for good credits. Lenders and dealers will want to insure against risk, and the best way to do this when lending to someone with bad credit is through high-interest rates. The higher the interest rate, the more money they get in return. They also charge higher interest rates to compensate for the risk you pose as a borrower.
- A Bad Credit Auto Loan can cost you between 20 to across the board. For example, a $10,000 auto loan at an average interest rate of 11.5% for 60 months would end up accruing over $1300 in interest fees when paid back over 3 years. Choosing a lower interest rate will save you money in the long run.
- A Bad Credit Auto Loan is also a form of non-secured debt meaning it is not secured by any collateral. This means that your lender cannot repossess your car or house if you fail to pay back your loan as their only remedy lies in suing you. If you are sued by creditors, they can garnish your wages or put a lien on your house; however, there are limitations on what they can do depending on how you qualify for non-secured credit which is usually below 640 depending on the lender and the type of loan applied for.
- If you do not make your payments on time and get behind, you may be subject to late fees. These fees are bid dependent and vary from $15 to grange of $30 and may increase depending upon the term of your loan. These are charged after your 30-day grace period has expired. Some auto dealerships may add additional fees regarding the acquisition of your car which may depend on where you live in the country you apply in. If this happens to you, ensure the details are included in the contract paperwork.
What are the requirements for Bad Credit Auto Loans?
Bad Credit Auto Loans are basically secured auto loans that people with bad credit history apply for in order to buy a car. You need the following to apply for a loan:
- You must have a valid driver’s license;
- You must be employed for at least 2 months;
- You have to have an income of at least $1,000 monthly;
- You have a steady residence – meaning you have no plans of moving in the near future;
- In some cases, you must pay some money down as a down payment.