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How to Choose A Lender For Special Financing Auto Loans
What's On This Page:
- 1 How to Choose A Lender For Special Financing Auto Loans
- 1.1 Lenders for People With Low Credit Scores
- 1.2 How to Find A Low-Interest Car Loan
- 1.3 Know Where to Shop And Save Money
- 1.4 Types of Special Financing For Cars
- 1.5 How Special Financing Auto Loans Rebuild Credit
- 1.6 What Kind of Cars Are Available
- 1.7 Getting A Better Quality Car
- 1.8 How to Find the Best Car Deal
- 1.9 Final Thoughts
In these economic times, it can be challenging to maintain an excellent credit rating. However, job losses, illnesses, bankruptcy, divorce, no credit history, and other financial issues crop up in the lives of most families sooner or later. It can be difficult to keep a good credit rating during these times of trouble, and it is easy to drop some credit score points when finances get stretched.
Lenders for People With Low Credit Scores
If you are in the market for a car loan, you already know lower credit scores equal higher interest rates. You also know that means you will pay more to borrow money than someone with a higher credit score than you. However, did you know that there are ways to shop for the best car loan deal even if you have a low credit score?
People in your financial situation still need reliable transportation to get to work or take your kids to school. This may cause you to think it is impossible to qualify for financing.
Here is the good news!
The good news is that you can find second-chance special car financing or bad credit auto financing companies that are willing to provide special financing with lower interest rates for auto loans to people without excellent credit histories. Your credit score is not the only factor that car loan lenders look at when they set your interest rate.
Here are five easy steps you can take to improve your chances of landing a good deal on a car loan.
As you research a pool of auto finance lenders for various types of car loans in the United States, you will see that the amount of interest they charge their borrowers varies from lender to lender even though they have the same credit score. Personal loans also fall into a diverse array of APR rates for a person with the same credit rating. When choosing to take out a personal loan, bad credit car loan or benefiting from a refinance car with bad credit, you should look at the facts.
How to Find A Low-Interest Car Loan
- The lowest interest rates seem to be offered by the vehicle manufacturers such as Ford Motor Credit, Toyota Motor Credit Corp., and Chrysler Capital just to name a few. They typically offer about 40% lower interest rates than the average lending rate, however, qualifying for these rates can be difficult if you have a bad credit history.
- Local or Regional Banks and Credit Unions are different sources of auto loan lenders, but they have been known for having the highest lending rates to people with subprime credit and can be one of the most difficult places to qualify for a low-interest car loan. On average their rates can run about 10% higher than average.
- The best option for someone with bad credit to get a lower interest car loan is to shop around the lending pool for special auto financing. Also, the best way to do that is to use an auto loan broker service. These services are known for finding you the best offers quickly, and this allows you to be selective as to which loan offer you choose. Many loan brokers like Valley Auto Loans offers free application and no obligation services.
Know Where to Shop And Save Money
For a typical Auto loan from the average lender, your credit score will play a significant role in determining how much money you stand to pay for your loan. If you have a reasonable credit score of about (620-659), you will spend approximately four and a half times more compared to someone with a credit score of (720 or higher).
With Special Financing from Valley Auto Loans, the lenders look closer at your work status and your ability to repay the loan. This is typical for bad credit lenders, and that is how they can be more competitive with their interest rate offers for each person applying. This means that compared to other lenders you may be able to save a couple of thousand dollars on a $20,000 car over a five-year loan term depending on the interest rate you qualify for.
At Valley Auto Loans, we specialize in helping people find the best possible car loans in a variety of situations. Self Employed Loans, Student auto loans, Bankruptcy Loans, total loss due to an accident, high risk and no credit check auto loans just to name a few.
We can offer the best information about special financing options like In-House Financing, Tote-The-Note Financing, Zero Down Financing, Financing with Child Support and more. All these topics can be found in this Special Financing information guide under the appropriate heading to help you make the best financial decisions when you are looking for special financing auto loans.
Types of Special Financing For Cars
What is special financing? Auto loans are a form of secured debt. This means that the loan is secured by the vehicle that is purchased with the loan. Mortgages are another typical example of secured debt. In that case, the mortgage is guaranteed by the home it is used to buy.
Contrast that to unsecured debt like credit card balances. Credit bureaus and finance companies tend to look more favorably on secured debt when they calculate credit scores or decide whom to loan money to. This is partly because secured debt is already backed by a valuable asset. There are several reasons that secured debt is more favorable than unsecured debt, and these include:
- Credit bureaus and financing companies understand that most people cannot afford to pay cash for expensive and essential items like houses and cars.
- The items that secure the debt should have value while the loan is getting paid off.
- Once a secured loan gets paid off, the credit does not automatically renew, but one paid loan can make it easier to secure another one.
- Interest rates for secured loans tend to be lower than interest rates on unsecured debt.
Bankruptcy Auto Loans
Bankruptcy does not have to be the end of the line. Fortunately, consumers who have filed bankruptcy no longer have to settle for traditional lenders. Valley Auto Loans wants to help people who have filed bankruptcy get the special finance auto loan they need to get behind the wheel. We'll help you get a special finance auto loan. The timing of your car loan is just as important as the amount of money you'll be paying each month. If you plan to finance a car after your bankruptcy is discharged, you simply will need to present the paperwork to the lender and assure him of your ability to repay the loan. If you are still going through bankruptcy proceedings and desperately need a vehicle and accompanying loan, the type of bankruptcy will have an impact on the kind of car loan you can get.
We can give you the best advice for finding a special finance bad credit auto loan even if your credit reputation has been devastated by a chapter 7 or chapter 13 bankruptcy and explain the process of getting approved.
Child Support Auto Loans
Many borrowers who receive regular monthly child support payments report these payments as income on their loan applications to boost their chances of qualifying. However, sub-prime lenders view this type of income differently than income earned through working. The reason is these wages cannot be garnished if a default accrues. We can show you how to avoid this type of trap and the best way to handle your Child Support.
High Risk Auto Loans
Learn about the High Risk Auto Lenders that are right for you when you need special financing. Maybe you've experienced some difficult financial situations, and as a result, you have a poor credit score. People who have no credit history or poor credit, make it necessary for lenders to create special conditions to help set up credit for those needs. However, that does not mean that dealing with these companies is not a good idea. You might expect to find that interest rates will be somewhat higher than those offered to car buyers with prime credit. However, you might use a special finance auto loan as a way to rebuild your credit so you can get low-interest rates next time you need to buy a car. We want to inform you about things like choosing a Lender, tips for getting the best deal, refinancing your loan, co-signing and more.
How Special Financing Auto Loans Rebuild Credit
- With a special finance auto loan, each time you make a payment on time, this gets reported to major credit bureaus like Experian, TransUnion, and Equifax.
- Over time, my good payment record has a positive impact on my credit score.
- When it comes time to apply for my next auto loans, all sorts of lenders will be eager to work with me because I have re-established a good credit history.
- I may even be able to refinance my car loan at a lower rate after making payments for several months.
What Kind of Cars Are Available
Not only can special finance lenders help you rebuild your credit, but it can also help you get back on the road in style. Some people assume that they can only afford old, worn, and even unsafe cars without good credit. This is not true, and you might even find that you can get better rates if you purchase new or like-new used cars with special financing auto loans than if you buy older vehicles.
Getting A Better Quality Car
Lenders consider the financial situation and credit rating of borrowers. However, they also consider the type of vehicle that will end up securing the loan. If they are going to provide you money, they would rather have you purchase a more reliable and more valuable vehicle that is likely to outlive the term of the loan. This gives them more assurance that the loan will not put you in a bad situation. This is because your car will not run or need to be replaced before the loan term is over. In the end, this makes auto financing companies more eager to have you as a customer.
In other words, you may very well be able to use a high-risk loan to buy a very nice car. This might be a new vehicle right from the manufacturers delivery truck. In other cases, it might be a late-model used car. Either way, you can drive out with a reliable and safe vehicle that you can be proud of.
How to Find the Best Car Deal
You might be able to find loan offers from local dealers who deal with people who do not have excellent credit. They may even offer in-house financing or work with special car lending companies of their own. However, you are never obligated to take advantage of financing from a dealer. You are free to bring in your own loan offer.
In fact, some auto dealers may figure that they have a captive audience. They might offer poor credit car loans, but these may come with harsher terms, higher interest rates, and larger payments than you could get if you shopped around. You could shop by driving around from dealership to dealership, but this can be frustrating and time-consuming.
In House Financing Dealerships
In-house lenders exist for two reasons. Dealerships want to sell more cars to more people. Moreover, there are responsible, hard-working people out there with damaged credit that need to buy a car. If you are dealing with an ethical business, it can be a win-win for everyone. If it is a buy here pay here dealership, you purchase your vehicle through the dealership instead of a third-party lender, and you probably won't be repairing your credit score.
In order to rebuild or repair any bad credit issues or even no credit history issues that you have, you must use credit and keep it in good standing for a period of time. This is why it is important to get a High Risk auto loan to rebuild your credit. When you make your payments and pay down the loan over time, you will build a good credit history. In-House loans will not do this for you because your loan will not be shown on any credit report. Learn how you can avoid this.
No Credit Check Car Loans
Let's understand how dealers can offer a car loan without checking a persons credit history. We will explain how No Credit Check Loans are possible and how to qualify. The effects they will have on your loan over the term of your contract. If it will help your poor credit history and earn you good credit status. We will also explain Buy Here Pay Here and its advantages and disadvantages. We will also show you how to qualify for a good traditional loan to rebuild your credit.
Lease Car Buyout Loans
If you are leasing a car and you wish to purchase the car at the end of the lease period, you will need to find a lender to finance the buyout. A Lease buyout can be stressful in itself. But when you have credit problems and you are faced with buying the lease car or paying ridiculously high penalties fees. It is better to get a pre-approved auto loan with a lender who understands bad credit situations and can help you rebuild your credit as you purchase your car.
Self Employed Car Loans
You can get a self employed auto loan for a new or used car with a bad credit history, even if you are self employed but you may need some instruction on how to show your income and how to repair your credit status. Let us show you how to prepare all the necessary information to get an auto loan even if you are self employed or a private contractor and don't have a W2. We will also explain why self employed people get treated like they have bad credit even if they make a lot of money and what you can do to avoid this trap.
Student Car Loans
There is no need to use your student loan funds to purchase a car while you are still in school. You can obtain an auto loan for college students to cover the purchase. Complete a Valley Auto Loans application on the site and allow us to find a lender that will work with you. Our lenders meet you where you are – in your current situation. They understand the challenges you face as a student, and they can help.
As a student, you probably lack the necessary credit to get a traditional auto loan, but don't give up before you get started! Many options are available to students who lack the credit history often required for a car loan. You just need to know where to look. Valley Auto Loans understands the difficulties and will work with anyone to get them the car that they need, even if they have a credit score of 500.
Tote The Note
Tote the Note dealers auto financing can be a viable option for bad credit borrowers. There are some major differences between traditional and tote-the-note deal car dealerships. A traditional dealership caters to consumers who have fair or good credit. On the downside, tote-the-note dealerships completely skip third-party financing options. They also do not report to the major credit bureaus, they accept almost any type of credit situation and provide consumers with a unique shopping experience. Let us share with you some of the basic information in dealing with Tote The Note loans.
Zero Down Car Loans
If you decide to purchase a new car without a down payment, shop around before agreeing to purchase. Many car dealers will attempt to trick you into a loan with a high interest rate, which is why you should check several dealers and negotiate not only the price of the car but the loan terms as well.
Auto loan brokers such as Valley Auto Loans can search auto loan lenders for you, so you will not have to spend your time running around. Many financial advisers recommend that you arrange a special finance car loan by getting pre-qualified before you visit the dealership as that often provides for better negotiations.