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Choosing a Bad Credit Auto Loan [Bad Credit Auto Loans]
February 25, 2009, 9:58 am
Getting your credit score
The biggest factor that affects the bad credit auto loan is your credit score. The credit score is a compilation or a track record of all the loans, mortgages, credit card payment history that you have done. If you have been consistent with your payments and have always paid on time, then you would have an excellent credit score. If not, then you would have less than a perfect score. In the US about 25% of the population have really bad credit scores but can still get a bad credit auto loan from various financial institutions.
Approach banks and credit unions for bad credit auto loan
Earlier those with bad credit scores weren’t given any loans, but lately financial institutions such as banks and even credit unions have started disbursing bad credit auto loans. If you are taking a bad credit auto loan, be prepared to pay a higher rate of interest than those that have near perfect scores. In fact the rates of interest can be as high as 20% depending on your credit scores. The bad credit auto loan will also include other clauses such as pre payment penalties, adjustable or balloon payments and other hidden costs. All these will also increase the cost of borrowing on the bad credit auto loan.
But there is still a silver lining to the problem. You can shop around for rates of bad credit auto loan. In fact lenders will compete with each other to give you great rates of interest. When you shop online for the rates of the bad credit auto loan, you can compare the rates and the conditions and choose the best rate that is been offered to you. Remember that dealers receive a cut or a commission from banks and financial intuitions when you get a bad credit auto loan from them. Instead approach the bank where you have a checking account or a credit union.
Applying online for bad credit auto loan
When you apply for rates online, you can be sure that you are getting one of the best deals. Online auto loan sites work with a number of lenders to find you the best deal on the bad credit auto loan and will ensure that you have the best rates that are available. In fact you can also get pre approved for a bad credit auto loan even before you actually walk into a car dealership.
The process of applying for a bad credit auto loan online is quite simple. Keep your documentation ready and the credit score ready when applying online for the bad credit auto loan. Fill out all the relevant columns. Within a day or two, a trained loan advisor will contact you. Since the online loan sites make money through the loans that are disbursed, you can negotiate for better rates and terms.
Tell the truth behind your bad credit scores and ask them if they can help you to repair your credit score. Most people can repair their credit score within 2-3 years of they are consistent and pay on time.
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