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Tags: finance, auto loans, bad credit auto loans
 First of all, the bad credit status is “rewarded” to those people who skip out on their payments, or even have delays with their payments. The more delays and skips, the greater the impacts on your credit score. This will then result to you being constantly rejected when applying for any kind of loan, which of course includes car loans.
If you have any interests in borrowing the right amounts of cash to pay for your dream car, or at least just to have a ride, but have hesitations because your FICO score (credit score) says otherwise, then a bad credit auto loan might be the solution to your problem.
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But before you leap for joy and pull out one for yourself, slow down! There are a couple of things that you should know before you go rush out and avail one to buy the poor excuse for a car you’ve been itching to buy. Without any further delays, here’s what you should know: bad credit auto loans are short-term loans, which basically means that you aren’t given that much time to pay it back.
It’s not like one of those loans where you put up your house as collateral, which can grant you a repayment period of up to 20 years, heck no! The usual payback period that’s allotted for bad credit auto loans is 4 to 5 years, which should be more than enough time for you to comply with the payments within the given period, hopefully.
The next thing you should know is your FICO score, which is stated in your credit report, and can be obtained from a credit bureau. It’s said that these organizations are obliged to give you a free copy of your report once a year, so before you go out and pay for one, find out if you could get one free of charge.
Now, when you do get your hands on the report, take a look at the score stated. If the number stated says 600, and you feel that’s pretty high, think again: anything below 650 is considered to be bad, which can affect the terms you engage with when actually applying for an auto loan.
Why is this number so important anyway? Because the lending institutions base the interest they slap on the loan you pull off, on it – it’s safe to say that the lower your rating, the higher the interest (a reciprocal relationship). Get it low enough, and they’ll probably refuse to lend you any money, and kick you outta their office.
One advantage of bad credit auto loans is that they help to rebuild your credit history, which does make you more worthy in the eyes of the lenders – where can you avail of such a service? Well there are plenty of them out there, like banks, dealers, brokers, and many other loaning institutions –the web is also a good source for finding the financial assistance you’ll need.
They will assess you based on a “risk-meter”, or in other words, a meter that tells how much interest they should charge you to compensate for your bad history of borrowing. Here’s a tip: getting a co-signed loan can help lower the interest, how? Because the co-signer has to agree to pay back any default payments you make, which lessens the risk (for the creditors), and in turn, lowers the interest.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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