What are the Best Bad Credit Auto Loans?
Your bad credit record should no longer keep you from the convenience of owning a car. Poor credit is very damaging and will definitely affect how good of an auto loan you get but if you are patient and careful enough, you will manage to get a decent loan with favorable terms that will help you get a good car without charging you high-interest rates or a lot of annual and other maintenance fees.
You must, however, contain your expectations when applying for these loans. The lenders are aware that you have a bad credit for a reason and hence a lot of them will limit how much they can lend you since no one wants to end up making losses. This shouldn’t discourage you though because as you are going to notice, a couple of companies are still willing to trust people with bad credits and offer them auto loans with better terms and less strenuous monthly payments. In this article, we will discuss the best bad credit auto loans which will not only help you secure a decent car, but will also allow you to repair your credit record.
Factors to Consider When Applying for A Bad Credit Car Loan
a) Know your credit score
You should not start applying for auto loans without knowing how your credit score will look like to the lender. It’s advisable that before applying for a loan, you get your credit score and try to address any issues that can raise red flags. In case there are any issues that you are in a position of solving immediately go ahead and do so before making your application. These minor factors may improve your credit score increasing your qualification for a better auto loan.
b) Do your research
Your bad credit record shouldn’t stop you from doing a proper research and getting a lender with favorable terms. There’s quite a number of companies in the market all of which are focused on lending money to individuals with bad credit. These companies compete against each other and hence they tend to offer different terms in an attempt of luring in customers. Do a thorough research to determine which lender’s loan is more favorable for you. Check out the Annual Percentage Rate, Kelley Blue Book value in case you are planning on buying a used car, penalty fees, and all other crucial factors.
It’s also best to mention that you shouldn’t fully rely on monthly payments when determining which loan is best for you. An auto loan may have low monthly payments spread over a long period of time which in the long run, ends up becoming too costly. If you are not careful, you could end paying for a lot more than the car is worth. Ensure that the loan low APR over a short period. These loans are usually more manageable and the interest rates are also reasonable.
This research should help you filter through the various lenders in the market and remain with two or so to choose from.
c) Determine how much you can afford
Knowing how much you must pay on monthly basis is important but that alone isn’t enough to tell you whether indeed you can afford the loan/car. You must factor in insurance costs and fueling to get a more comprehensive picture of how much the total cost will be.
If you realize that the cost is too high, you can always compromise and consider going for a used car with a more affordable budget. Don’t let your excitement of owning a new car overwhelm you into signing up for a loan that you cannot afford. This will put you at a risk of destroying your credit score even further and you may also lose the car in case you are dealing with lenders who use the car as a security.
d) Consider having a co-signer
Having a trusted friend by your side while applying for any loan can be very beneficial. They will serve as that extra pair of eyes that will make sure every detail in the loan agreement is as it should be. They can also help you with bargaining for more favorable terms before reaching the final agreement. A few lenders also have the co-signer option that allows you to use such a friend as an assurance while applying for the loan. This can help in improving the terms of the loans and will also reduce the interest rates that you have to pay. An agreement with such a company is, therefore, very beneficial but you must ensure that you make all the payments on time since your friend will be liable in case you fail to do so.
e) Read keenly through the final agreement
Once you’ve found your ideal lender and reached an agreement, take your time and read through the terms watching out for any potential red flags that may cause complications in the future. You can also have your friend read over the documents to make sure that nothing suspicious is in the agreement. Once you are satisfied, you can go ahead and sign the agreement.
Top 3 Bad Credit Car Loans
The following are the lenders offering the best bad credit car loans in the market right now:
1. Auto Credit Express
Auto Credit Express is an incredible platform dedicated to connecting individuals with bad credit, low credit or no credit with lenders who might be willing to give out the loans. The company is hence not the lender themselves but they help in vouching for you to the real lenders who will give you the money. Now, don’t assume that since they function as a middleman that the loans are going to be more expensive. No, that’s not the case. The interest rates that will be charged will depend on your credit, financial history, and personal situation. The rates will also depend on the specific lender that ends up giving you the loan.
Auto Credit Express is also a favorite to a lot of people because it has very minimal requirements compared to other lenders. You can qualify for a loan with a monthly income of just $1500 and a full-time employment. They may also consider incomes from child support, disability insurance, social security, public assistance, and alimony. The company also considers various factors and not just your credit score. They may, for instance, take into account the reason for your bad credit score and if it’s a major event such as divorce or chronic illness then the chances of getting approved are higher.
On the other hand, if the reason for your poor credit is delayed payment, chances of getting your loan approved are very minimal.
Auto Credit Express offers special auto loans to both active and retired military personnel. If you are or were in the army, this company will link you up with a decent lender with fair interest rates.
This online marketplace works with various partners to offer different kinds of auto loans to people with fair and bad credit. Through MyAutoloan, you can get a loan for a used or new car and a loan to buy either from a private part or from a dealership. All you have to do is fill up a single application and you might receive multiple loan offers from their partners.
To get an auto loan from MyAutoloan, you must have a minimum credit score of 500 and at least $1800 monthly income. Applicants can qualify for loans from $8000 going all the way to $100000! They also offer competitive interest rates with some being as low as 2.49% APR. The exact interests will depend on various factors including your credit report and personal financial situation. Loans from MyAutoloan can be paid from 24 to 84 months.
Take note that MyAutoloan conducts thorough credit checks before pre-approving you. This can appear and affect your credit report and hence you should only apply once you are ready and confident of being approved. The company also doesn’t offer loans to Hawaii and Alaska residents.
This online lender has been offering auto loans and refinancing services to Americans of all credit records since 2000. Roadloans is an efficient lender that allows you to make your application, approves it (in case you qualify) and lets you start shopping for the car on the same day. Once you are done and have visited the dealer and found your ideal car, the lender will finalize the deal with the dealership before you can collect it.
Roadloans offers its customers with financing for either used or new cars from dealerships. To increase your chances of getting qualified, Roadloans offer you the option of having a co-signer or co-borrower with a better credit record.
Something else that makes Roadloans a decent option is the fact that they provide their customers with various offers from which you can choose one that suits you best.
The above piece pretty much covers everything you need to know when looking for an auto loan if you have a bad credit. Remember to stay vigilant throughout the process because there are a lot of scammers out there seeking to collect personal data from desperate people. You should also stay away from suspicious lenders that offer loans with hefty interest rates, fees, and other penalties. In summary, don’t let any lender take advantage of your bad credit record and extort you yet there are decent companies, such as the ones discussed above, that are ready to offer you affordable loans with favorable terms.