Bad Credit Car Loan: Buying a Car with Adverse Credit |
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Peter Nisbet
February 8, 2013
A bad credit car loan is designed for those buying a car with adverse credit. If your credit score is low, then you might have problems securing a car loan - but don't get too depressed, because there are companies that understand your problems and are prepared to offer you a loan.
Many people find themselves in a difficult situation through no fault of their own, and this has been happening more frequently lately because the country has never really recovered from the sub-prime mortgage fiasco. Because some greedy bankers decided to give mortgages to people who were obviously unable to afford them, people like you have to suffer because of the crash in stock prices and increased unemployment.
Reasons for Needing a Bad Credit Car Loan
Young people want to purchase a car and are finding it difficult because their credit is shot due to their savings having lost their value. Mortgage lenders became more sensitive to what they were lending to whom, and young couples bore the brunt of this. Many found themselves with a poor credit score simply because their parents living at the same address could no longer afford their mortgage.
Others without insurance have been ill or had an accident, and been unable to work. Some had to stop work to look after their children after the loss of a spouse, and yet others have been made unemployed. There are many reasons for people being unable to pay their bills for a while, and this goes onto their credit record no matter what the reason was.
You might have been offered new job where you need your own car, or have been offered work at a good distance from your home where a car is the only way to get there on time. You need to buy a car, yet cannot afford the cash to pay for it. You need a loan - a bad credit car loan as they are referred to. Most lenders will refuse you.
Buying a Car with Adverse Credit
Don't despair, because there is way out for you. Some banks and lenders are still prepared to offer you a bad credit car loan - buying a car with adverse credit scores is no longer impossible. Why? Why should a lender offer money to somebody with bad credit to buy a car?
It all lies in the balance between your ability to repay the loan, and the security you can offer. The security is needed in case you stop paying, in which case the lender must have another means of recovering their investment. That is what a loan is to a lender - an investment. They make money from the interest you pay to get the loan. If you cannot pay, they must have a form of security that covers at least the capital sum loaned to you.
That could be your home, the car itself or some other item that you own. If you are already paying a car loan, then you could refinance it at a lower interest rate over a longer period - this would reduce your monthly repayments.
However, if you are seeking a new bad credit car loan, buying a car with adverse credit is still possible. Depending on the firm you deal with, you could be charged a higher interest rate than normal, so that the risk to the lender is spread between all the adverse credit loans. Your loan might be secured on your home, or your vehicle could act as security. If you fail to make your repayments, the car will be repossessed.
Mitigating Circumstances
Having a low credit score or a bad credit record does not mean that you cannot get a car loan. You can be offered a bad credit car loan if there are mitigating circumstances for your poor credit record. Unemployment, for example is a valid reason for defaulting on previous credit agreements, and you might now have started full time work again.
Your wife or husband might have stopped work for a specific reason - to look after a new baby or because of illness. Perhaps you have taken steps to mitigate the effects of this loss of income, and feel that you can now afford a car.
Even without such mitigation, buying a card with adverse credit is not impossible. In fact it can be fairly easy to arrange if you find an understanding lender. A bad credit car loan can help you get back to work by providing you with transport, and there are companies online that will help you to do this.