Auto loan poor credit
The United States is the second largest manufacturer of passenger cars in the world after Japan. In addition it is also the largest market for cars with over 10 million cars are sold annually. What does this show? It shows that the owning a car is one of the priorities in an Americans life. But what can stump you is bad or poor credit. But do not despair as poor credit is no bar to your owning a car on a loan.
A plus point in this scenario is that this massive production of cars by the Auto companies needs to be marketed. With a slump in sales the pressure to sell cars is much more. Companies have to survive after all.
Thus Market forces dictate that dealers through their financers sell cars to people even if their credit is bad. Bad credit really is directly related to your credit score. Each lender has its own definition of what is bad credit. Generally a score of below 620 is considered as bad credit. This translates to the fact that your chance of a default is higher than a normal person with good credit.
In case your application is rejected then you are in what is known as subprime territory. The answer as to what is sub prime refers to a borrower with bad credit who is offered a loan at a rate much higher than prime individuals qualify for prime rate loan s.
Despite being in the subprime territory, yet there is a good chance that you will still be able to get a car loan.
Firstly market forces dictate that in the United States, there are many lenders who will lend to persons with bad credit. For this you will have to surf the net and you will come across quite a few lenders who give loan s to people with bad credit.
However you have to be ready for a shocker as far as interest is concerned. The lenders will charge you interest rates that can touch the roof. Be prepared for this as the lender is taking a bigger risk by giving you a loan and it\'s natural for him to charge you a higher rate of interest.
If you are mentally prepared for a high rate of interest then you can take steps to buy a car with a loan though you are in subprime territory. Next shop around for people who lend money. Also bear in mind that rates of interests for lenders will vary a lot. With cut throat competition this is something inevitable in a free market economy.
It will be of interest to you that many Banks have dedicated departments that examine and provide loan s to people with bad credit. If you are already their client and have some relationship with the bank than your chances for a loan are that much better. Your credit union is also a good place to turn. For years, credit unions lent money to members with good credit only, but that\\\\\\\'s begun to change. Thus car loan s for persons in subprime territory are not a distant dream. However do bear in mind that the lender will have lien on your car.
However when you apply for a bad credit loan than do examine a few small points.Make a point to examine your source of income. Buying a car is ok, but there are other expenses like insurance, gas, repairs and tires that have to be catered for. Do not wish them away. Secondly live within means. A car loan will entail a monthly installment and failure to pay could be disastrous for you and damage your credit much more.
Follow the following steps and you will be the wiser for it to get your bad credit loan sanctioned. First step- obtains a phone connection in your name. A phone connection in your name will show permanency of residence. A lender will certainly verify whether you are ordinarily resident at that place and for how long. Generally you must have been a resident at that place for at least a year. Second step- concerns your stability of employment. Lenders look for persons who have a steady job and regular income. This is important as the risk of giving you a loan with bad credit is much more. Remember that the longer you work with one employer the better your chances of getting a car loan. So don\'t keep switching jobs too often. Stability in employment is a big plus point in a subprime loan for a car.
A bad credit car loan certainly puts the lender at a greater risk. Hence down payment may be a requirement. Your credit rating among other factors like your income and the car you plan to buy will have a bearing on the down payment you may be required to make. Bad credit card loan s are disbursed by many companies.
But in case your credit is abysmally low then do contact a dealer of new cars and select a car and then meet the credit manager in a one to one meeting and try and hammer out a deal. There is a good chance that you will be able to work out a bad credit loan for the car. Lastly what to do if even this fails? In that case contact a second hand car dealer. It should not be very difficult to work out a good car with some common sense. Finally my advice to people with poor credit -don\'t despair as there is always light at the end of the tunnel