Lenders for People With Low Credit ScoresIf 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.
Let’s Look at the answers to a few basic questions you may be asking:When should I apply for a Special Financing auto loan?Where is the best place to get the best interest rate on an auto loan?How do I find the best car loan lender for special financing situations?
Table of Contents
- 1 Lenders for People With Low Credit Scores
- 2 Here is the good news!
- 3 How to Find A Low-Interest Car Loan
- 4 Know Where to Shop And Save Money
- 5 Types of Special Financing For Cars
- 6 How Special Financing Auto Loans Rebuild Credit
- 7 What Kind of Cars Are Available
- 8 Getting A Better Quality Car
- 9 How to Find the Best Car Deal
- 10 Final Thoughts
- 11 Related Reading
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 refinance a car loan, 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 MoneyFor 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 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 CarsWhat 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 LoansBankruptcy 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 has been devastated by a chapter 7 or chapter 13 bankruptcy and explain the process of getting approved.Child Support Auto LoansMany 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 LoansLearn 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 CreditWith 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 AvailableNot 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 a new or like-new used cars with special financing auto loans than if you buy older vehicles.
Getting A Better Quality CarLenders 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.