Auto Loans for Bad Credit
By Jennifer Bailey
Auto Loans for Bad Credit
By Jennifer Bailey
Auto loans for bad credit are offered to
people who have acquired bad credit by late and/or missed payments. A bad credit auto loan helps to re-establish the credit history of borrowers. Bad credit auto loans can be used to buy a used vehicle. Sometimes, these loans can be used to finance a new car. Bad credit auto loans are short-term loans, and their repayment period extends from 48 to 60 months.
The first step in the process of applying for a bad credit auto loan is to determine your FICO score, also known as credit score. Credit bureaus such as Equifax, Trans Union, and Bradstreet can determine your credit score. A credit score of 650 and below is regarded as bad credit. Borrowers with poor credit are usually offered high interest rate auto loans. The next step is to search for a trustworthy lender. The Internet is a good source to locate lenders dealing in bad credit auto loans.
Financial institutions, banks, credit unions, dealers and brokers extend bad credit auto loans. All of them employ a kind of risk based valuing approach in offering bad credit auto loans. A co-signed loan is one of the best options for a bad credit auto loan. If borrowers fail to repay the loan, the co-signer undertakes the responsibility to pay back the loan. In order to secure bad credit loans through dealership, borrowers have to pay premium prices.
The last step is the comparison and evaluation of interest rates and fees charged by various lenders. Auto loan quotes from multiple lenders can be used to select the most competitive interest rates.
Bad Credit provides detailed information on Bad Credit, Bad Credit Loans, Bad Credit Credit Cards, Fix Bad Credit and more. Bad Credit is affiliated with Bad Credit Auto Refinancing.
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How To Get Auto Loan With Bad Credit?
By Verapol Chaiyapin
There are millions of people with bad credit and it can happen to anyone so it’s really nothing to be ashamed of. But it can be frustrating when you need or want to buy a decent car and don’t have the luxury of waiting until your credit
score improves. You have a higher chance of being rejected a loan but it is possible. The first thing you have to understand is, if you do get financed somewhere, you will NOT get a low interest rate! Lenders verify your income and address so you must have a sufficient income to pay your bills, car payment, insurance as well as being able to afford the repair and maintenance costs. Nobody will take a chance on you unless they are certain you can afford it. Keep in mind that you should never take on a car payment you know you can not afford. Other thing lenders will consider is the length of time you have been at your current job, obviously the longer the better chance you will have. The same thing applies with how long you have been at your current address.
Your best bet of getting a loan with bad credit is to belong to a Credit Union and apply to them if you can’t get one from the bank. They often have more relaxed loan criteria and it is especially true if you have been involved with them for a length of time. Now, don’t give up hope on the banks either. If you’ve had a relationship with your local bank, they’re also worth a try. Specially, if you’ve had any small loan with them and a better shot if you’ve paid off a loan with them in the past. If the manufacturer of the car you want has their own credit institution, they can be another good source. They’re more flexible on the loan criteria and can be aggressive in financing.
But all in all, trying to get an auto loan on a bad credit is not highly recommended. You not only have to pay higher loan rates but also a rather substantial down payment that could be as high as in the thousands rather than hundreds. So if possible, consider waiting and working on fixing your bad credit and get your score up to at least 680 before applying for your auto loan.
If you are looking to buy a car, I advise you to do your homework. Don't forget to check out our
Tips & Auto Value Quotes Review section. We have the best car buying tips.
verapol chaiyapin
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Consumer Fact Sheet on Predatory Auto Lending
What is predatory auto lending?
- Predatory auto lending is the practice of charging consumers excessively
high interest rates for auto loans.
Who is doing it and why?
- Some car dealers may enter into agreements with lenders, to charge you a
much higher interest rate than you could get by shopping around. This
higher interest rate is known as a dealer “markup”, which allows dealers
and lenders to profit at your expense. The more interest you pay, the more
profit the dealer makes.
How does this affect consumers?
- How does this affect consumers?
- For example, you may qualify for an auto loan at 4%, but the dealer may
charge you 8% and tell you that is the best you can do. In reality, you can
do better by shopping around for lenders and save a bundle.
Who does this happen to?
- Even the most sophisticated, savvy buyers can end up paying interest rate
“markups” – and never know it. Consumer groups point to studies showing
that “markups” for African-American and Latino car buyers are higher than
those for Caucasian buyers with similar financial backgrounds.
What is being done about it?
- On July 14, 2003 Governor Gray Davis signed SB 508, an important first-
in-the-nation consumer protection bill.
- SB 508 helps ensure fair auto loan rates in California. It requires dealers to
keep your sales records on file for at least seven years, showing how the
dealers determined your credit worthiness.
- Law enforcement and consumer agencies will now have a paper trail for
investigating excessive “markups” that don’t match the creditworthiness of
the consumer. Dealers failing to comply with a court order to hand over
these documents to the Attorney General could face a $5,000 civil penalty.
Tips on How to Fight Back
- Shop around for financing before you even think about buying a car.
• Many banks, credit unions and online lenders offer competitive rates. Try
to get at least 3 different quotes and don’t just take the first offer.
- Many banks, credit unions and online lenders offer competitive rates. Try
to get at least 3 different quotes and don’t just take the first offer.
- If the interest rate on your current loan is too high, consider refinancing.
Falling interest rates can help save you a bundle. Check with your bank,
credit union or go online and shop around for the best rate on refinancing.
- If you think you were overcharged on an auto loan, you can contact:
| California Dept. of Consumer Affairs
400 R Street, Suite 1080
Sacramento, CA 95814 |
California Attorney General
Public Inquiry Unit
P.O. Box 944255
Sacramento, CA 94244-2550 |
Consumers for Auto Reliability
and Safety (CARS)
926 J Street, Suite 522
Sacramento, CA 95814 |
- For more details, including news reports about predatory auto lending and
further updates, visit CARS’ Web site at: http://www.carconsumers.com.
- California Dept. of Consumer Affairs
400 R Street, Suite 1080
Sacramento, CA 95814
- California Attorney General
Public Inquiry Unit
P.O. Box 944255
Sacramento, CA 94244-2550
- Consumers for Auto Reliability
and Safety (CARS)
926 J Street, Suite 522
Sacramento, CA 95814
Article Source:(http://www.dca.ca.gov/r_r/predatory_lending_fact_sheet.pdf)
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