Car Loans With Bad Credit and No Down Payment - They Do Exist!
Finding funds to buy a car is almost as important a task as finding a mortgage to buy a home. This is the case even for those of us who are lucky enough to have a good credit rating, so for those with low credit scores and without a lump sum to use as a down payment, it is surely impossible. However, it is possible to get auto loans with bad credit and no money for a down payment.
Bad credit car loans may seem silly to lenders, but it's also true that not all bad credit scores are the result of irresponsible money management. In many cases, it was out of their control, and the state of the economy led to reductions in income and even unemployment.
However, when it comes to getting approved for auto loans despite poor credit, there are a few specifics that need to be considered. And, at the top of the list is the fact that looking for a financing agreement with the car dealer is not a good idea.
Why the dealer is a bad choice
It stands to reason that when someone knows that their credit rating is bad, they will take the first financing option available. Often times, the same dealerships are willing to make the loan to make the car their own. But the issue of bad credit auto loans should not lead the applicant to the dealer's option.
The reason is that dealers charge higher rates than even traditional lenders. A bank can issue auto loans with a high interest rate, but the dealer will add an additional 2% or 3% to increase their own profits. This is common in the auto trade, and many dealers claim it is to cover their own administration costs.
But, the question is why an applicant is willing to pay an additional $ 50-150 per month just to get approved for auto loans, despite their bad credit. In that case, it would be better to limit yourself to the banks.
Why a down payment is not necessary
As we all know, a down payment is made to effectively seal a purchase, but it is also said to reduce the actual amount of the loan needed, and thus the cost of the bad credit car loan. But the truth is, there is no real benefit, and certainly no requirement, to make a down payment.
In general, car dealers will do their best to increase your profit, so the down payment will go directly to your bank account. And due to the increase in the interest rate, the borrower will pay close to the full sale price through his loan anyway.
It is a bad sign if a dealer pressures a customer to make a down payment. Therefore, it is probably better to take your business elsewhere. The good news is that there are better ways to get approved - that is, online lenders.
Online loan option
With traditional lenders so expensive (though less than dealer financing), the bad credit auto loan terms available online are clearly the best to go for. The fact is, online lenders are notorious for their lower interest rates and more flexible repayment schedules, so their loans are hard to beat.
Still, it's important to check out a preferred lender before seeking auto loan approval despite poor credit. Maybe get a pre-approved car loan, then all it takes to deliver the check. If you want to know more about our website, please visit: eFourwheel.com