 
Guaranteed Bad Credit Auto Loans
Many people are interested in going to buy a
new car but are afraid that they won’t be able to get one because of
their bad debt. It is likely that in the past you have been turned
down for an auto loan because you were seen as a risk to the
financing companies that worked with the dealership. A lot has
changed over the past few years, however, and many more people are
finding that they are eligible for more auto loans than ever before.
This is partially because the guidelines have become less strict for
lending money in an effort to move cars off of the auto lots. Many
have come up with new guaranteed bad credit auto loans that approve
anyone for a loan no matter what their debt history is. If you’re
interested in learning more, read on!
What Are Guaranteed Bad Credit Auto Loans?
Guaranteed bad credit auto loans are provided
to those who have below-average (or subprime) credit. If you ever
look through your junk mail, you may find that you’ve received
checks through several of your local car dealerships explaining that
you have been pre-approved to buy a car for X number of dollars.
When you get there, you may learn that the amount or interest rates
quoted on the piece of mail apply to someone with better credit,
however you find you are eligible for their “other” loan that has a
high interest rate but it only allows you to buy “this group of cars
over here.” These “anybody is approved” loans are guaranteed bad
credit auto loans. Dealers are in the business of getting cars off
of their lots and they exercise their “by any means necessary”
determination to do so.
Why Would You Need Guaranteed Bad Credit Auto
Loans?
The major reason you would need one of these
loans is if your rating is around 620 or lower. These ratings fall
under the category of subprime and make creditors think you are a
risk to them when offering a loan. By looking at your credit report
they determine whether the actions of your past will dictate the
future – and to them, the answer is yes.
If you have defaulted on a loan in the past, or
have not paid back old credit cards, creditors feel that you will do
the same to them. Throw in a car repossession and/or bankruptcy and
they will never feel comfortable giving you a loan or card. Auto
dealers and financial institutions that give out loans feel the same
way, making them feel apprehensive to give people with bad loans.
However, as the economy has worsened over the past few years, many
more people have fallen under the category of bad credit.
Car dealers found that they were not able to
move as many cars off of their lots as before, which resulted in
having to find a way to offer loans to those who might be a “flight
risk.” To ensure that giving a loan would not be a total loss to the
creditor, they began issuing guaranteed bad credit auto loans;
however, the interest rates that accompany the loans are so
astronomical that people end up paying up to 50 percent of the cost
of the car in interest fees by the end of the loan’s term.
Being Well-Informed Goes a Long Way
Learn How Your Credit Score Affects Interest
Rates – There are plenty of online resources available to help you
determine what interest rates you are likely to pay no matter what
your rating might be. So before you visit any auto dealer, find out
your credit score and do your homework on rates in your state based
on ratings and down payments. This way you can determine whether the
dealer is trying to cheat you out of the deal you deserve.
Never Relinquish Your Personal Power – As a bad
credit holder, you may feel bad about the choices you have made and
in turn think that you are obligated to take abusive rates from
dealers. However, most car buyers are unaware of the schemes some
dealers come up with in order to get more bang for YOUR buck,
including adding hidden fees and throwing in additional interest
points not initiated by their financing company. So if you feel that
you are being taken advantage of by unreasonable fees or
higher-than-normal interest rates, don’t feel that this is your only
option (no matter what they say). Exercise your right to walk away
and find the deal that works best for you.
Refinance as Soon as You Can – If you have felt
forced to take one of the many guaranteed bad credit auto loans at a
bad time in your life, yet have found that your financial situation
has improved, you might want to consider refinancing your loan.
Think about it; when you took your loan out two years ago you may
have been in a financially challenging situation with little to no
extra money to clean up your debt. However, in the past two years,
you found a great job that not only will allow you to easily clean
up your debt. As you clean up your credit and raise your score, you
are making yourself eligible for much lower interest rates (which is
essentially why you wanted to raise your credit rating anyway,
right?). The best way to take advantage of this is to go to a
financial institution outside of your dealership to take out a loan
for the cost of the car. You pay off the cost of the car with their
check and then pay back the loan to the institution at the new,
lower interest rate.
Before you ever decide to take any guaranteed
bad credit auto loans, be sure to do all of the research you can by
calling dealerships, searching online and asking your friends. You
may find that though you are subjected to guaranteed bad credit auto
loans, you might be able to still find a good deal for your money.
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